<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 11, 1998
MCI WORLDCOM, INC.
(Exact Name of Registrant as Specified in its Charter)
Georgia 0-11258 58-1521612
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification Number)
Incorporation)
515 East Amite Street
Jackson, Mississippi 39201-2702
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (601) 360-8600
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ITEM 5. OTHER EVENTS
Reference is made to the Subscription Agreement relating to the acquisition
of 21,863,174 newly issued ordinary shares in OzEmail Limited, a corporation
incorporated under the laws of New South Wales, Australia ("OzEmail"), by UUNET
Holdings Australia Pty Limited ("Purchaser"), an indirect wholly owned
subsidiary of MCI WORLDCOM, Inc. ("MCI WorldCom"), and the draft Offer to
Purchase, the Part A Statement with attached Appendices and drafts of the
related Letter of Transmittal, the Notice of Guaranteed Delivery and the
Acceptance and Transfer Form, each relating to the proposed tender offer (the
"Tender Offer") by Purchaser to purchase any and all outstanding ordinary shares
of OzEmail (the "Shares"), and Shares represented by American Depository Shares
issued by The Bank of New York, which documents were registered with the
Australian Securities and Investments Commission on December [23], 1998 (Sydney,
Australia time), and to the Credit Facilities dated August 6, 1998 which will be
used to fund the Tender Offer and to the News Releases dated December 13, 1998
(Jackson, MS time) and December 14, 1998 (Sydney, Australia time), issued by MCI
WorldCom and OzEmail, attached as Exhibits 2.1, 2.2, 2.3, 2.4, 2.5, 2.6 2.7, 2.8
and Exhibits 99.1 and 99.2, respectively, which are incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
2.1 Subscription Agreement (the "Subscription Agreement") dated
December 12, 1998 (Sydney time) between OzEmail and Purchaser
relating to the acquisition by Purchaser of 21,863,174 shares of
OzEmail (incorporated by reference to Exhibit 99.1 to Schedule
13D dated December 21, 1998 filed by MCI WorldCom, UUNET
Technologies, Inc. and UUNET Holdings Australia Pty Limited with
respect to OzEmail)
2.2 Form of Offer to Purchase relating to the proposed Tender Offer
2.3 Part A Statement relating to the proposed Tender Offer as
registered with the Australian Securities and Investments
Commission on December[23] 1998, with attached cover letter and
<PAGE>
Appendices
2.4 Form of Letter of Transmittal relating to the proposed Tender
Offer as registered with the Australian Securities and
Investments Commission on December [23], 1998
2.5 Form of Notice of Guaranteed Delivery relating to the proposed
Tender Offer as registered with the Australian Securities and
Investments Commission on December [23], 1998
2.6 Form of Acceptance and Transfer Form relating to the proposed
Tender Offer as registered with the Australian Securities and
Investments Commission on December [23], 1998
2.7 Amended and Restated Facility A Revolving Credit Agreement among
MCI WorldCom (borrower), NationsBank, N.A. (Arranging Agent and
Administrative Agent), NationsBanc Montgomery Securities LLC
(Lead Arranger), Bank of America NT & SA, Barclays Bank PLC, The
Chase Manhattan Bank, Citibank, N.A., Morgan Guaranty Trust
Company of New York, and Royal Bank of Canada (Co-Syndication
Agents) and the lenders named therein dated as of August 6, 1998
(incorporated herein by reference to Exhibit 10.1 to MCI
WorldCom's Current Report on Form 8-K dated August 6, 1998 (filed
August 7, 1998) (File No. 0-11258))
2.8 364-day Revolving Credit and Term Loan Agreement among MCI
WorldCom (borrower), NationsBank, N.A. (Arranging Agent and
Administrative Agent), NationsBanc Montgomery Securities LLC
(Lead Arranger), Bank of America NT & SA, Barclays Bank PLC, The
Chase Manhattan Bank, Citibank, N.A., Morgan Guaranty Trust
Company of New York, and Royal Bank of Canada (Co-Syndication
Agents) and the lenders named therein dated August 6, 1998
(incorporated herein by reference to Exhibit 10.3 to MCI
WorldCom's Current Report on Form 8-K dated August 6, 1998 (filed
August 7, 1998) (File No. 0-11258))
99.1 News Release dated December 13, 1998 (Jackson, MS time) and
December 14, 1998 (Sydney, Australia time), issued by MCI
WorldCom (incorporated by reference to Schedule 1 to the
Subscription Agreement, which appears as Exhibit 99.1 to Schedule
13D dated December 21, 1998 filed by MCI WorldCom, UUNET
Technologies, Inc. and UUNET Holdings Australia Pty Limited with
respect to its acquisition of shares of OzEmail)
99.2 News Release dated December 14, 1998 (Sydney, Australia time),
issued by OzEmail (incorporated by reference to Schedule 2 to the
Subscription Agreement, which appears as Exhibit 99.1 to Schedule
13D dated December 21, 1998 filed by MCI WorldCom, UUNET
Technologies, Inc. and UUNET Holdings Australia Pty Limited with
respect to its acquisition of shares of OzEmail)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MCI WORLDCOM, Inc.
Date: December [23], 1998 By: /s/ SCOTT D. SULLIVAN
----------------------
Scott D. Sullivan
Chief Financial Officer
[EXHIBITS TO BE ADDED]
<PAGE>
This is a copy of one of the proposed Offers referred to in clause 2 of the
accompanying Part A Statement of UUNET Holdings Australia Pty Limited (ACN 085
531 684) dated 22 December 1998 and lodged with the Australian Securities and
Investments Commission for registration on 22 December 1998.
<PAGE>
EXHIBIT 2.2
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
IF YOU ARE IN ANY DOUBT AS TO HOW TO ACT, YOU SHOULD CONSULT
YOUR FINANCIAL OR LEGAL ADVISOR IMMEDIATELY
OFFER
BY
UUNET HOLDINGS AUSTRALIA PTY LIMITED
(ACN 085 531 684)
A WHOLLY OWNED SUBSIDIARY OF UUNET TECHNOLOGIES, INC.
WHICH IS, IN TURN, A WHOLLY OWNED SUBSIDIARY OF
MCI WORLDCOM, INC.
TO PURCHASE ALL OF YOUR ORDINARY SHARES AND
AMERICAN DEPOSITARY SHARES
IN
OZEMAIL LIMITED
(ACN 066 387 157)
FOR
A NET CASH PAYMENT OF US$2.20
FOR EACH ORDINARY SHARE OR US$22.00 FOR EACH
AMERICAN DEPOSITARY SHARE
- --------------------------------------------------------------------------------
THE OFFER WILL EXPIRE AT 1:00 A.M., NEW YORK CITY TIME ON [ ],
FEBRUARY [ ], 1999
AND AT 5:00 P.M., SYDNEY TIME ON [ ], FEBRUARY [ ], 1999,
UNLESS THE OFFER IS EXTENDED
- --------------------------------------------------------------------------------
FINANCIAL ADVISOR TO MCI WORLDCOM, INC.
MERRILL LYNCH
<PAGE>
MCI WORLDCOM LETTERHEAD
JANUARY [ ], 1999
Dear OzEmail Securityholder
I am pleased to enclose an offer by UUNET Holdings Australia Pty Limited, a
wholly owned subsidiary of MCI WORLDCOM, Inc., to acquire all of your ordinary
shares and American Depositary Shares ("ADSs") in OzEmail Limited.
The offer price is US$2.20 per ordinary share and US$22.00 per ADS and will
be paid to you in cash. The offer price provides shareholders with a premium of
approximately 50 percent over the weighted average trading price of OzEmail
shares on The Nasdaq National Market over the three months before the date on
which the offer was announced.
Under the offer you have the option of electing to receive payment in
either United States or Australian dollars. If you choose to receive payment in
Australian dollars, the offer price of US$2.20 per ordinary share (US$22.00 per
ADS) will be converted into Australian dollars based on the prevailing exchange
rate at the time funds are made available for payment.
The three largest holders of ordinary shares are Malcolm Turnbull, Trevor
Kennedy and Sean Howard, each of whom is a director of OzEmail. They
collectively hold 67,000,000 shares (representing approximately 46%) and
announced on December 14, 1998 that they intended to accept the offer, subject
to reviewing the offer documents and absent a more favorable offer.
OzEmail is listed on both the Australian Stock Exchange and The Nasdaq
National Market. In order to comply with United States Securities Laws and the
Australian Corporations Law, the offer documents are complex. Accordingly, you
are urged to read the documents carefully and if you have any questions please
call any of the contact numbers on the back cover of this document.
To accept this offer:
o ORDINARY SHAREHOLDERS should follow the instructions on the enclosed
Acceptance and Transfer Form (blue form); and
o AMERICAN DEPOSITARY SHAREHOLDERS should follow the instructions on the
enclosed Letter of Transmittal (yellow form).
The offer will expire at 5:00 p.m. Sydney time (1:00 a.m. New York City
time) on [ ], February [ ] 1999, unless extended.
Yours sincerely
John W Sidgmore
Vice Chairman
<PAGE>
1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING ORDINARY SHARES
AND AMERICAN DEPOSITARY SHARES
OF
OZEMAIL LIMITED
BY
UUNET HOLDINGS AUSTRALIA PTY LIMITED
A WHOLLY OWNED SUBSIDIARY OF
UUNET TECHNOLOGIES, INC.
A WHOLLY OWNED SUBSIDIARY OF
MCI WORLDCOM, INC.
AT
US$2.20 NET PER SHARE OR
US$22.00 NET PER AMERICAN DEPOSITARY SHARE IN CASH
- --------------------------------------------------------------------------------
THE OFFER WILL EXPIRE AT 1:00 A.M., NEW YORK CITY TIME, ON
[ ] FEBRUARY [ ], 1999, AND AT 5:00 P.M., SYDNEY TIME, ON
[ ] FEBRUARY [ ], 1999, UNLESS THE OFFER IS EXTENDED.
TENDERING HOLDERS OF SECURITIES WILL BE PERMITTED TO WITHDRAW THEIR TENDERED
SECURITIES AT ANY TIME PRIOR TO THE EXPIRATION OF THE OFFER. SEE "WITHDRAWAL
RIGHTS" IN SECTION 4.
- --------------------------------------------------------------------------------
THE OFFER IS CONDITIONAL UPON, AMONG OTHER THINGS, THE MINIMUM ACCEPTANCE
CONDITION DESCRIBED IN SECTION 1.2(i) AND THE OTHER TERMS AND CONDITIONS
CONTAINED IN THE "INTRODUCTION AND OFFER" AND SECTIONS 1, 2, 3, 4 AND 14.
IMPORTANT
THE OFFER IS MADE FOR SECURITIES OF AN AUSTRALIAN CORPORATION. WHILE THE OFFER
IS SUBJECT TO BOTH UNITED STATES AND AUSTRALIAN DISCLOSURE REQUIREMENTS, HOLDERS
SHOULD BE AWARE THAT CERTAIN PARTS OF THIS DOCUMENT HAVE BEEN PREPARED
SUBSTANTIALLY IN ACCORDANCE WITH U.S. FORMAT AND STYLE, WHICH DIFFER FROM
AUSTRALIAN FORMAT AND STYLE. IN PARTICULAR, THE PART A STATEMENT, WHICH IS
REQUIRED BY THE AUSTRALIAN CORPORATIONS LAW AND WHICH IS INCLUDED AS ANNEXURE A
TO THIS OFFER (THE "PART A STATEMENT"), CONTAINS INFORMATION CONCERNING THE
OFFER THAT IS MATERIAL TO A HOLDER OF SECURITIES AND IS NOT SUMMARIZED
ELSEWHERE. HOLDERS OF SECURITIES ARE URGED TO REVIEW THE PART A STATEMENT.
<PAGE>
2
IN ADDITION, WITH CERTAIN EXCEPTIONS PURSUANT TO MODIFICATIONS OF THE
AUSTRALIAN CORPORATIONS LAW GRANTED BY THE AUSTRALIAN SECURITIES AND INVESTMENTS
COMMISSION, THE OFFER IS SUBJECT TO THE U.S. TENDER OFFER RULES APPLICABLE TO
SECURITIES REGISTERED UNDER THE U.S. SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, AND TO THE PROVISIONS OF THE AUSTRALIAN CORPORATIONS LAW.
The consideration payable under the Offer is denominated in United
States dollars. However, all tendering holders will have the right to elect to
receive payment in Australian dollars. In the event a holder does not make an
election, a holder tendering American Depositary Shares will receive United
States dollars and a holder tendering Shares will receive Australian dollars.
The conversion of United States dollars into Australian dollars will be made on
the basis described in Section 3. The attention of all holders of Securities is
drawn to the description in that Section of the mechanism for converting United
States dollars into Australian dollars and of the exchange rate risks attached
thereto. A reference in this Offer to Purchase to "US$" or "US dollars" is to
United States dollars and a reference to "A$" is to Australian dollars.
See Section 18 "Certain Definitions" for the definitions of certain
terms used in this Offer to Purchase.
Questions and requests for assistance, or for additional copies of
this Offer to Purchase, the Acceptance and Transfer Form, the Letter of
Transmittal or other tender offer (known in Australia as "takeover offer")
materials, may be directed in the United States to the Information Agent or the
Dealer Manager, or in Australia to (in the case of additional documents) the
Registry or (in the case of questions and requests for assistance) to the
Financial Advisor, in each case at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Holders of Shares
or American Depositary Shares may also contact brokers, dealers, commercial
banks and trust companies for assistance concerning the Offer.
The Dealer Manager for the Offer in the United States is:
MERRILL LYNCH
January [ ], 1999
<PAGE>
3
IMPORTANT
Holders of ADSs
Any holder desiring to tender all or any portion of such holder's American
Depositary Shares should either:
(i) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal and:
(A) mail or deliver it, together with the American Depositary
Receipts evidencing tendered American Depositary Shares and any
other required documents, to the U.S. Depositary; or
(B) tender such American Depositary Shares pursuant to the procedures
for book-entry transfer set forth in Section 2; or
(ii) request such holder's broker, dealer, commercial bank, trust company
or other nominee to effect the transaction for such holder. A holder
whose American Depositary Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other
nominee if such holder desires to tender such American Depositary
Shares.
A holder who desires to tender American Depositary Shares, and whose
American Depositary Receipts evidencing such American Depositary Shares are not
immediately available, or who cannot comply with the procedures for book-entry
transfer described in this Offer to Purchase prior to the expiration of the
Offer, may tender such American Depositary Shares by following the procedures
for guaranteed delivery set forth herein.
Holders of Shares
Any holder desiring to tender all or any portion of such holder's Shares
should either:
(i) if such Shares are held in a CHESS Holding, comply with the procedures
set forth in the Securities Clearing House Business Rules by:
(A) instructing such holder's Controlling Participant to initiate
acceptance of this Offer, or if such holder is a Broker or Non-
Broker Participant by accepting this Offer, prior to the
expiration of the Offer; and
(B) in order to avoid backup withholding tax, completing and signing
Substitute Form W-8 or W-9, as applicable, set out in Section III
of the Acceptance and Transfer Form and returning it in
accordance with the instructions contained in the Acceptance and
Transfer Form; or
(ii) if such Shares are held in certificated form, complete and sign the
Acceptance and Transfer Form in accordance with the instructions in
the Acceptance and Transfer Form
<PAGE>
4
and mail or deliver it, together with the certificates evidencing such
Shares to the Registry in Australia or, if such holder is located in
the United States, to the U.S. Depositary; or
(iii) if such Shares are held in an Issuer Sponsored Holding, complete and
execute the Acceptance and Transfer Form in accordance with the
instructions which appear on it and mail or deliver it to the Registry
in Australia, or if such holder is located in the United States, to
the U.S. Depositary, in each case at the address set forth on the back
cover of this Offer to Purchase.
A person who is entitled to be registered in respect of certificated
Shares but who, at the time of acceptance of the Offer, is not registered as the
holder of such Shares, must accept the Offer by completing and signing the
Acceptance and Transfer Form in accordance with the instructions in the
Acceptance and Transfer Form and mailing or delivering it, together with
evidence which establishes that person's entitlement to be registered in respect
of those Shares, to the Registry in Australia or, if such person is located in
the United States, to the U.S. Depositary.
<PAGE>
5
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF OFFER.......................................................................6
INTRODUCTION AND OFFER.................................................................8
THE TENDER OFFER......................................................................10
1. TERMS OF THE OFFER...............................................................10
2. PROCEDURES FOR TENDERING SHARES AND ADSs.........................................13
3. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES AND ADSs...........................20
4. WITHDRAWAL RIGHTS................................................................22
5. CERTAIN TAX CONSEQUENCES.........................................................24
6. PRICE RANGE OF SHARES; DIVIDENDS; EXCHANGE RATE..................................26
7. CERTAIN INFORMATION CONCERNING OZEMAIL...........................................27
8. CERTAIN INFORMATION CONCERNING PURCHASER, INTERMEDIATE, AND MCI WORLDCOM.........30
9. SOURCE AND AMOUNT OF FUNDS.......................................................36
10. BACKGROUND OF THE OFFER; CONTACTS WITH OZEMAIL...................................37
11. PURPOSE OF THE OFFER; PLANS FOR OZEMAIL..........................................39
12. DIVIDENDS AND DISTRIBUTIONS......................................................43
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SECURITIES; THE
NASDAQ NATIONAL MARKET AND AUSTRALIAN STOCK EXCHANGE QUOTATION
AND EXCHANGE ACT REGISTRATION....................................................44
14. CERTAIN CONDITIONS OF THE OFFER..................................................46
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS......................................49
16. FEES AND EXPENSES................................................................50
17. MISCELLANEOUS....................................................................51
18. CERTAIN DEFINITIONS..............................................................52
SCHEDULE A - INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF MCI WORLDCOM, INTERMEDIATE AND PURCHASER..................................57
SCHEDULE B - TRANSACTION IN SHARES AND ADSs DURING THE PAST FOUR
MONTHS BY MCI WORLDCOM, INTERMEDIATE AND PURCHASER....................................66
ANNEXURE A - PART A STATEMENT
</TABLE>
<PAGE>
6
SUMMARY OF OFFER
This general summary is solely for the convenience of holders of
Shares and ADSs and is qualified in its entirety by reference to the full text
and more specific details in this Offer to Purchase. Certain terms used in this
Offer to Purchase are defined in Section 18.
Purchase Price Purchaser, a wholly owned subsidiary of Intermediate which
is, in turn, a wholly owned subsidiary of MCI WorldCom, is
offering to purchase all outstanding Shares and ADSs of
OzEmail, together with all Rights attached to those
Securities, at a purchase price of US$2.20 per Share or
US$22.00 per ADS, net to the seller in cash, subject to
the terms and conditions of the Offer. Tendering holders
may elect to have the purchase price converted into
Australian dollars at the exchange rate available on the
day Purchaser makes funds available for payment to the
Registry or U.S. Depositary in respect of the relevant
Securities. See Section 3 "Acceptance for Payment and
Payment for Shares and ADSs--Currency Election".
How to Tender See Section 2 "Procedures for Tendering Shares and ADSs".
Shares or ADSs For assistance in the United States call the Information
Agent or the Dealer Manager. For assistance in Australia
call the Registry or the Financial Advisor or consult your
broker. Telephone numbers for the Information Agent, the
Dealer Manager, the Registry and the Financial Advisor are
set forth on the back cover of this Offer.
Expiration Date 1:00 a.m., New York City time on February [ ], 1999, and
5:00 p.m., Sydney time, on February [ ], 1999, unless
extended by Purchaser, in which event the Expiration Date
shall be the latest time and date upon which the Offer, as
so extended, shall expire.
Payment Date Payment will be made not later than the earlier of (i) the
third U.S. business day after the Expiration Date and (ii)
30 days after the later of the date the Offer is accepted
by the holder and the Condition Waiver Date. See Section 3
"Acceptance for Payment and Payment for Shares and ADSs".
Withdrawal Rights Tendered Securities may be withdrawn at any time prior to
the Expiration Date. See Section 4 "Withdrawal Rights".
Minimum and Other The Offer is conditional upon, among other things,
Purchaser Conditions being entitled at the Expiration Date
to not less than 90% of all Shares (including Shares
represented by ADSs) and either:
(a) three-quarters of the offerees have at the
Expiration Date disposed of to Purchaser (whether by
accepting the Offer or otherwise) the Shares or
Shares represented by ADSs subject to acquisition
that were held by them; or
<PAGE>
7
(b) at least three-quarters of the persons who were
registered as the holders of Shares or Shares
represented by ADSs immediately before the day on
which the Part A Statement was served on OzEmail are
not so registered at the end of one month after the
end of the Offer Period.
Under the Australian Corporations Law, the method of
application of the Minimum Condition to Shares represented
by ADSs is unclear and untested. This is because, in the
U.S., owners of Shares represented by ADSs often hold
through a nominee, and it is neither customary nor a
requirement of U.S. law for a nominee, when lodging an
acceptance, to identify either the names of the persons on
whose behalf the offer is accepted, or even the number of
persons on whose behalf the offer is accepted. For these
reasons Purchaser's ability to proceed to compulsory
acquisition will require consultation with the ASIC, and
may involve modifications of the Australian Corporations
Law. The method of application will be resolved during the
Offer Period, and an announcement made about this method.
As at January [ ], 1999, Purchaser was entitled to
21,863,174 Securities or approximately [ ] % of the number
of Securities outstanding. The Offer is also subject to a
number of other conditions. See "Introduction and Offer"
and Sections 1, 2, 3, 4 and 14.
United States Income The sale of Securities pursuant to the Offer will be a
Tax Consequences taxable event to the holder for United States federal
income tax purposes. See Section 5 "Certain Tax
Consequences--Certain United States Federal Income Tax
Consequences".
Australian Income The sale of Securities pursuant to the Offer will be a
Tax Consequences taxable event to the holder for Australian income tax
purposes. See Section 5 "Certain Tax Consequences--Certain
Australian Tax Consequences".
<PAGE>
8
INTRODUCTION AND OFFER
To the holders of Shares and American Depositary Shares of OzEmail Limited:
The Offer. UUNET Holdings Australia Pty Limited ("Purchaser"), a
company incorporated in New South Wales and a wholly owned subsidiary of UUNET
Technologies, Inc. ("Intermediate"), a Delaware corporation, which is, in turn,
a wholly owned subsidiary of MCI WORLDCOM, Inc., a Georgia corporation ("MCI
WorldCom"), hereby offers to purchase all outstanding ordinary shares, (the
"Shares"), including American Depositary Shares representing Shares (the "ADSs",
and together with the Shares, the "Securities"), together with all Rights
attached to those Securities, of OzEmail Limited (ACN 066 387 157), a
corporation incorporated under the laws of the State of New South Wales,
Australia ("OzEmail"), at a price of US$2.20 per Share or US$22.00 per ADS, net
to the seller in cash, without interest thereon (the "Offer Price"), upon the
terms and subject to the conditions set forth in this Offer to Purchase and (i)
in the case of Shares, in the related Acceptance and Transfer Form, and (ii) in
the case of ADSs, in the related Letter of Transmittal (which Offer to Purchase,
Acceptance and Transfer Form and Letter of Transmittal, as amended from time to
time, together constitute the "Offer"). A holder may accept the Offer in respect
of some or all of such holder's Securities.
This Offer extends to holders of Securities resulting from the
exercise of outstanding options for Securities ("Options"). Holders of Options
who desire to tender Securities issuable upon exercise of such Options must
first exercise those Options and then tender the resulting Securities in
accordance with the procedures set forth in Section 2 "Procedures for Tendering
Shares and ADSs". Securities resulting from the exercise of Options must be
obtained and tendered into the Offer by the holder prior to the Expiration Date.
Purchaser is not offering to purchase (nor will tenders be accepted of) Options
pursuant to the Offer.
Tendering holders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes (including stamp duty) on the purchase by
Purchaser of Securities pursuant to the Offer. A TENDERING HOLDER OF SECURITIES
WHO IS (I) A U.S. HOLDER (AS DEFINED HEREIN) SHOULD COMPLETE AND SIGN THE
SUBSTITUTE FORM W-9 OR (II) A NON-U.S. HOLDER SHOULD COMPLETE AND SIGN THE FORM
W-8, BOTH OF WHICH ARE INCLUDED IN THE LETTER OF TRANSMITTAL AND THE ACCEPTANCE
AND TRANSFER FORM, AS APPROPRIATE. UNLESS A HOLDER COMPLETES AND SIGNS A
SUBSTITUTE FORM W-8 OR W-9 AS APPLICABLE, PURCHASER WILL BACKUP WITHHOLD UNITED
STATES FEDERAL INCOME TAX AT THE RATE OF 31% OF THE GROSS PROCEEDS PAYABLE TO
SUCH HOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. FAILURE TO COMPLETE THE
SUBSTITUTE FORM W-8 OR W-9 IS NOT A CONDITION PRECEDENT TO VALID ACCEPTANCE OF
THE OFFER, BUT WILL GENERALLY RESULT IN THE IMPOSITION OF WITHHOLDING TAX. SEE
SECTION 5 "CERTAIN TAX CONSEQUENCES--CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES--INFORMATION REPORTING AND BACKUP WITHHOLDING". ACCORDINGLY, ALL
HOLDERS OF SECURITIES (INCLUDING HOLDERS OF SHARES HELD THROUGH CHESS) WHO WISH
TO ACCEPT THE OFFER ARE URGED TO COMPLETE, AS APPROPRIATE, EITHER THE SUBSTITUTE
FORM W-8 OR W-9 CONTAINED IN THE LETTER OF TRANSMITTAL AND ACCEPTANCE AND
TRANSFER FORM AND SIGN AND RETURN THE RELEVANT FORM IN ACCORDANCE WITH THE
PROCEDURES SPECIFIED IN SECTION 2.
Purchaser will pay all charges and expenses of Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), as the Dealer Manager in the
United States (the "Dealer Manager") and as Financial Advisor (the "Financial
Advisor"), The Bank of New York as U.S. Depositary (the
<PAGE>
9
"U.S. Depositary"), National Registry Services Pty Ltd as Registry (the
"Registry") and MacKenzie Partners, Inc., as Information Agent (the "Information
Agent"), incurred in connection with the Offer. See Section 16 "Fees and
Expenses".
The purpose of the Offer is to acquire control of, and if sufficient
Securities are acquired, ultimately acquire all outstanding Securities of,
OzEmail. If the Minimum Condition is satisfied, Purchaser will become entitled
to compulsorily acquire all Securities including those issued on exercise of
Options, of holders that have not accepted the Offer and, in that event, it is
Purchaser's present intention to compulsorily acquire, upon the terms applicable
under the Offer immediately prior to the Expiration Date and in accordance with
the Corporations Law, all of those Shares.
In addition, Purchaser will, after the Expiration Date and if
sufficient Securities are acquired under the Offer, be seeking a modification of
the Corporations Law to permit it to compulsorily acquire all Securities which
are issued pursuant to the exercise of Options which remain outstanding after
the Expiration Date, as and when such Securities are issued pursuant to the
exercise of those Options. See Sections 1.2 "Conditions; Waiver", 11 "Purpose of
the Offer; Plans for OzEmail--Intention to Compulsorily Acquire" and 14 "Certain
Conditions of the Offer".
By letter dated December 21, 1998, OzEmail has advised Purchaser
that as at the date of that letter:
(i) there were 146,732,714 Shares outstanding, of which
approximately 42,855,100 Shares were represented by ADSs; and
(ii) the total number of Options outstanding for one share each was
9,958,090.
The conditions of the Offer are described in Sections 1.2 "Conditions;
Waiver" and 14 "Certain Conditions of the Offer". Purchaser expressly reserves
the right in its sole discretion to waive any one or more of the conditions to
the Offer, subject to the limitations imposed by applicable law as set forth in
Section 1 "Terms of the Offer" and Section 14 "Certain Conditions of the Offer".
THIS OFFER TO PURCHASE, THE PART A STATEMENT, THE ACCEPTANCE AND
TRANSFER FORM AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH
SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
<PAGE>
10
THE TENDER OFFER
1. TERMS OF THE OFFER
1.1 Offer Period
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any extension
or amendment), Purchaser will purchase and pay for all Securities validly
tendered prior to the Expiration Date (as defined herein) and not withdrawn in
accordance with Section 4.
The term "Expiration Date" means 1:00 a.m., New York City time, on
February [ ], 1999 and 5:00 p.m., Sydney time, on February [ ], 1999
unless and until Purchaser, in its sole discretion, shall have extended the
period of time during which the Offer is open as described in Section 1.4 below,
in which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by Purchaser, shall expire.
1.2 Conditions; Waiver
The Offer is conditional upon:
(i) Purchaser being entitled at the Expiration Date to not less than
90% of all Shares (including Shares represented by ADSs) and
either:
(A) three-quarters of the offerees have at the Expiration
Date disposed of to Purchaser (whether by accepting the
Offer or otherwise) the Shares or Shares represented by
ADSs subject to acquisition that were held by them; or
(B) at least three-quarters of the persons who were
registered as the holders of Shares or Shares
represented by ADSs immediately before the day on which
the Part A Statement was served on OzEmail are not so
registered at the end of one month after the end of the
Offer Period; and
(ii) the other conditions set forth in Section 14.
Under the Australian Corporations Law, the method of application of
the Minimum Condition to Shares represented by ADSs is unclear and untested.
This is because, in the U.S., owners of Shares represented by ADSs often hold
through a nominee, and it is neither customary nor a requirement of U.S. law for
a nominee, when lodging an acceptance, to identify either the names of the
persons on whose behalf the offer is accepted, or even the number of persons on
whose behalf the offer is accepted. For these reasons Purchaser's ability to
proceed to compulsory acquisition will require consultation with the ASIC, and
may involve modifications of the Australian Corporations Law. The method of
application will be resolved during the Offer Period, and an announcement made
about this method.
Subject to compliance with applicable laws, Purchaser reserves the
right (but shall not be obligated) to waive the Minimum Condition or waive any
or all other conditions at any time prior to the Expiration Date. If the Offer
becomes or is declared free of all conditions, Purchaser will purchase all
Securities validly tendered and not withdrawn. Furthermore, unless the
Australian Securities and Investments Commission (the "ASIC") consents,
Purchaser will not be permitted to purchase Securities if all conditions have
not been satisfied or waived as described above.
1.3 Variation of Offer; Termination
Subject to the applicable regulations of the SEC, Purchaser expressly
reserves the right, in its
<PAGE>
11
sole discretion at any time and from time to time, to:
(i) amend or vary the Offer as permitted by Section 654 of the
Corporations Law, (which, except in relation to increases in the
Offer consideration and certain extensions of the Offer Period,
generally restricts the offeror from varying the Offer without
the consent of the ASIC); and
(ii) if the requisite consent of the ASIC is obtained, and subject to
any conditions as may be specified in such consent, withdraw the
Offer prior to the Expiration Date and not accept for payment
any Securities if any of the conditions referred to in Section
14 have been breached (which breach has not been waived) or upon
the occurrence of any of the events specified in Section 14
"Certain Conditions of the Offer",
in each case by giving oral or written notice of such termination or amendment
to the U.S. Depositary and by making a public announcement thereof, as described
below, and in accordance with the procedures prescribed by Section 657 of the
Corporations Law described in Section 1.5 below.
Purchaser acknowledges that it will promptly return the Securities
tendered after the expiration or withdrawal of the Offer if at that time the
Offer remains subject to a condition that has not been satisfied or waived.
1.4 Extension of Offer
Except as specified below, Purchaser expressly reserves the right, in
its sole discretion, but subject to applicable laws and compliance with the
procedures specified in Section 1.5, at any time and from time to time prior to
the Expiration Date, to extend for any reason the period of time during which
the Offer is open, including as a result of the occurrence of any of the events
specified in Section 14, by giving oral or written notice of such extension to
the U.S. Depositary and by making a public announcement thereof, as described
below, and by following the procedures prescribed by Section 657 of the
Corporations Law, as described in Section 1.5 below. Subject to the rights of
holders to withdraw tendered Securities prior to the Expiration Date, Purchaser
also reserves the right to retain until the Expiration Date Securities which
have been tendered during the period or periods for which the Offer is extended.
During any such extension, all Securities previously tendered and not withdrawn
will remain subject to the terms and conditions of the Offer, subject to the
rights of a tendering holder to withdraw any tendered Securities prior to the
Expiration Date. See Section 4 "Withdrawal Rights". Under no circumstance will
interest be paid on the purchase price for tendered Securities, whether or not
the Offer is extended.
If Purchaser varies the consideration for the Offer, declares the
Offer to be free of all or any conditions or waives an event which would cause
the breach or non-fulfillment of any condition, Purchaser will notify holders of
such variation, declaration or waiver in accordance with the procedures
described below, will provide any additional information required by applicable
laws and will extend the Offer to the extent required by Rules 14d-4(c), 14d-
6(d) and 14e-1 under the Exchange Act.
If, prior to the Expiration Date, Purchaser should decide to increase
the consideration being offered in the Offer, such increase in the consideration
being offered will be applicable to all holders
<PAGE>
12
whose Securities are accepted for payment pursuant to the Offer, and if at the
time notice of any such increase in the consideration being offered is first
published, sent or given to holders of such Securities, the Offer is scheduled
to expire at any time earlier than the period ending on the tenth U.S. business
day from and including the date that such notice is first so published, sent or
given, the Offer will be extended at least until the expiration of such ten U.S.
business day period. For purposes of the Offer, a "U.S. business day" means any
day other than a Saturday, Sunday or federal holiday in the United States and
consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time, as calculated in accordance with Rule 14d-1 under the Exchange Act.
If Purchaser declares the Offer free from all conditions and if at the
time such declaration is made the Offer is scheduled to expire at any time
earlier than the period ending on the fifth U.S. business day from and including
the date that such declaration is so made, the Offer will be extended at least
until the expiration of such five U.S. business day period.
1.5 Notification of Waiver, Variation, Extension or Withdrawal
Any extension, withdrawal, waiver or variation of the Offer will be
followed as promptly as practicable by public announcement thereof. In the case
of an extension, such announcement will be made no later than 9:00 a.m., New
York City time, on the next U.S. business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1(d) under the Exchange Act), and without limiting the generality of the
manner in which Purchaser may choose to make any public announcement, Purchaser
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a press release to the Dow Jones News
Service.
Under the Corporations Law, a variation of the Offer shall be made by
serving on OzEmail a notice signed by two directors of Purchaser (or their
agents) authorized so to sign by a resolution passed at a meeting of the
directors, which notice has been registered by the ASIC and which sets out,
among other things, the terms of the proposed variation and particulars of any
resulting modifications to the Part A Statement. A copy of that notice must also
be sent to each person to whom an Offer is made. Pursuant to a modification
granted by the ASIC, a notice of variation of the Offer will also be served on
the ASX and published in a newspaper circulating nationally in Australia and
will be released to the Dow Jones News Service in the United States as soon as
practicable after the variation of the Offer.
1.6 Options
Under the Corporations Law, the Offer is made to each holder of
Securities on January [ ], 1999. Pursuant to modifications of the Corporations
Law granted by the ASIC, the Offer is also made to all holders of Securities
issued during the Offer Period on the exercise of Options or otherwise.
Accordingly, the Offer relates to and is made in respect of all Securities which
are outstanding during the Offer Period.
1.7 Offer to New Holders
Pursuant to Section 649 of the Corporations Law, if at the time the
Offer is made to a holder of Securities, or at any time before the Expiration
Date, another person is, or is entitled to be, registered as the holder of such
first holder's Securities to which this Offer relates then (i) a corresponding
<PAGE>
13
Offer is deemed to have been made to that other person in respect of those
Securities, (ii) a corresponding Offer is deemed to have been made to the first
holder in respect of any other Securities to which the Offer relates, and (iii)
this Offer is deemed to have been withdrawn from such first holder immediately
after that time.
1.8 Nominees
If at any time during the Offer Period the holder is a trustee for or
nominee of two or more persons, or the holder's Shares or ADSs for some other
reason consist of two or more distinct portions within the meaning of section
650 of the Corporations Law, then a separate Offer will be deemed to have been
made to the holder in relation to each of the distinct portions of the holder's
Shares or ADSs.
1.9 Registers
OzEmail has agreed, pursuant to the Subscription Agreement entered
into between OzEmail and Purchaser on December 12, 1998, to provide to Purchaser
a list of holders of the Shares. A demand may be made on The Bank of New York
as depositary under the deposit agreement pursuant to which the ADSs are issued
for a list of ADS holders. A further demand may be made on OzEmail pursuant to
Rule 14d-5 under the Exchange Act for the use of OzEmail's shareholder list
(including a list of holders of ADSs) and security position listings. Based upon
the information provided pursuant to such requests, this Offer to Purchase, the
Part A Statement, the related Acceptance and Transfer Form and Letter of
Transmittal and, if required, other relevant materials will be mailed to record
holders of Securities and to brokers, dealers, commercial banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
shareholder list of OzEmail and persons listed as participants in a clearing
agency's security position listing, for subsequent transmittal to beneficial
owners of Securities.
2. PROCEDURES FOR TENDERING SHARES AND ADSs
2.1 Valid Tender of Shares
This section should be read together with the instructions on the
Acceptance and Transfer Form. The provisions of this section shall be deemed to
be incorporated in, and form a part of the Acceptance and Transfer Form. The
instructions printed on the Acceptance and Transfer Form shall be deemed to form
part of the terms of the Offer as it relates to Shares.
UNLESS A HOLDER OF SHARES (INCLUDING A HOLDER OF UNCERTIFICATED SHARES
HELD THROUGH CHESS) COMPLETES, SIGNS AND RETURNS A SUBSTITUTE FORM W-8 OR W-9
CONTAINED IN THE ACCEPTANCE AND TRANSFER FORM, PURCHASER WILL BACKUP WITHHOLD
UNITED STATES FEDERAL INCOME TAX AT THE RATE OF 31% OF THE GROSS PROCEEDS
PAYABLE TO SUCH HOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. FAILURE TO COMPLETE
THE SUBSTITUTE FORM W-8 OR W-9 IS NOT A CONDITION PRECEDENT TO A VALID
ACCEPTANCE OF THE OFFER, BUT WILL GENERALLY RESULT IN THE IMPOSITION OF
WITHHOLDING TAX. SEE SECTION 5 "CERTAIN TAX CONSEQUENCES--CERTAIN UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES--INFORMATION REPORTING AND BACKUP
<PAGE>
14
WITHHOLDING". ACCORDINGLY, ALL HOLDERS OF SECURITIES (INCLUDING HOLDERS OF
SHARES HELD THROUGH CHESS) WHO WISH TO ACCEPT THE OFFER ARE URGED TO COMPLETE,
AS APPROPRIATE, EITHER THE SUBSTITUTE W-8 OR W-9 CONTAINED IN THE LETTER OF
TRANSMITTAL AND ACCEPTANCE AND TRANSFER FORM AND SIGN AND RETURN THE RELEVANT
FORM IN ACCORDANCE WITH THE PROCEDURES SPECIFIED IN SECTION 2.
CHESS Holdings. For holders of Shares held through the Clearing House
Electronic Subregister System ("CHESS"), acceptance of the Offer and tender of
those Shares can only be made in accordance with the Securities Clearing House
("SCH") Business Rules. To tender Shares which are in a CHESS Holding, a holder
should:
(i) instruct such holder's CHESS Controlling Participant to initiate
acceptance of the Offer in accordance with Rule 16.3 of the SCH
Business Rules before the Expiration Date and notify the
holder's Controlling Participant whether the holder wishes to
receive the consideration in U.S. or Australian dollars; or
(ii) if the holder is a Broker or a Non Broker Participant, initiate
acceptance of the Offer in accordance with Rule 16.3 of the SCH
Business Rules before the Expiration Date and advise the
Registry whether the holder wishes to receive the consideration
in U.S. or Australian dollars.
If a holder of Shares held through CHESS does not accept the Offer in
accordance with Rule 16.3 of the SCH Business Rules as described above, but
completes and returns the relevant sections of the Acceptance and Transfer Form,
Purchaser may treat that form as a valid acceptance of the Offer, conditional
upon that holder's Controlling Participant subsequently initiating acceptance of
the Offer in accordance with the authorization granted by the holder in the
Acceptance and Transfer Form.
Issuer Sponsored Holdings. For holders of Shares which are held in
Issuer Sponsored Holdings, acceptance of the Offer and tender of those Shares
can only be made by completing and executing the Acceptance and Transfer Form in
accordance with the instructions which appear on it and mailing or delivering it
to the Registry in Australia, or if such holder is located in the United States,
to the U.S. Depositary in each case at the address set forth on the back cover
of this Offer to Purchase.
Certificated Shares. For holders of Shares which are held in
certificated form, acceptance of the Offer and tender of those Shares can only
be made by completing and executing the Acceptance and Transfer Form in
accordance with the instructions which appear on it and mailing or delivering
it, together with any Share certificate(s) evidencing the Shares, to the
Registry in Australia, or if such holder is located in the United States, to the
U.S. Depositary, in each case at the address set forth on the back cover of this
Offer to Purchase.
Beneficial Owners. Beneficial owners whose shares are registered in
the name of a broker, investment dealer, bank, trust company or other nominee
should contact that nominee for assistance in accepting the Offer.
<PAGE>
15
Entitlement to Shares. A person who is entitled to be registered in
respect of Shares but who, at the time of acceptance of the Offer, is not
registered as the holder of such Shares, must accept the Offer by completing and
signing the Acceptance and Transfer Form in accordance with the instructions
which appear on it and mailing or delivering it, together with evidence which
establishes that person's entitlement to be registered in respect of those
Shares, to the Registry in Australia or, if such person is located in the United
States, to the U.S. Depositary, in each case at the address set forth on the
back cover of this Offer to Purchase.
The Acceptance and Transfer Form. The Acceptance and Transfer Form and
the signing instructions set out in it form part of this Offer to Purchase and
their requirements must be observed in the acceptance of the Offer by holders of
certificated Shares, by persons entitled to become registered as holders of
certificated Shares and by holders of Shares in an Issuer Sponsored Holding and
should be observed in the acceptance of this Offer by holders of Shares held
through CHESS. By signing and returning the Acceptance and Transfer Form, a
holder will:
(i) accept the Offer directly, or in the case of Shares held through
CHESS, authorize Purchaser to instruct the holder's Controlling
Participant to initiate the acceptance of this Offer to Purchase
on the holder's behalf in circumstances where the holder has not
previously initiated such acceptance as described above;
(ii) elect whether the holder wishes to receive Australian dollars or
U.S. dollars in respect of the Shares (see Section 3 "Acceptance
for Payment and Payment for Shares and ADSs--Currency Election")
unless, in the case of the CHESS Holder, the holder has
instructed his or her broker as to the currency election; and
(iii) provide certain information required in order to avoid the
imposition of United States federal backup withholding tax (see
Section 5 "Certain Tax Consequences--Certain United States
Federal Income Tax Consequences--Information Reporting and
Backup Withholding").
Acceptance of the Offer by holders of certificated Shares or by
persons entitled to certificated Shares will be deemed effective only when the
duly completed Acceptance and Transfer Form and any relevant Share
certificate(s) or other documents have been received by the Registry or the U.S.
Depositary, as applicable, in each case, at the address as set forth on the back
cover of this Offer to Purchase.
Acceptance of the Offer by holders of Shares in an Issuer Sponsored
Holding or by persons entitled to Shares in an Issuer Sponsored Holding will be
deemed effective only when the duly completed Acceptance and Transfer Form has
been received by the Registry or the U.S. Depositary, as applicable, in each
case, at the address as set forth on the back cover of this Offer to Purchase.
HOLDERS OF SHARES ARE ADVISED THAT THE METHOD CHOSEN TO SEND SHARE
CERTIFICATES, IF ANY, AND THE PROPER COMPLETION OF AND DELIVERY OF THE
ACCEPTANCE AND TRANSFER FORM AND OTHER DOCUMENTS IS AT THE OPTION AND RISK OF
EACH TENDERING HOLDER AND THE DELIVERY THEREBY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE REGISTRY OR THE U.S. DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE DELIVERY
PRIOR TO THE EXPIRATION DATE.
<PAGE>
16
Notwithstanding the foregoing, Purchaser may in its discretion treat
any Acceptance and Transfer Form received by the Registry or the U.S. Depositary
as valid or waive any requirement of this section in any case, but the payment
of the consideration in accordance with the Offer will not be made until any
irregularity has been resolved or waived and any Share certificate(s) or other
documents have been received or an acceptable indemnity in lieu of receipt of
the Share certificate(s), together with any other documents required to procure
registration, have been received by the Registry or the U.S. Depositary.
2.2 Valid Tender of ADSs
This section should be read together with the instructions on the
Letter of Transmittal. The provisions of this section shall be deemed to be
incorporated in, and form a part of, the relevant Letter of Transmittal. The
instructions printed on the relevant Letter of Transmittal shall be deemed to
form part of the terms of the Offer as it relates to ADSs. Except as set forth
below, in order for ADSs to be validly tendered pursuant to the Offer, the
Letter of Transmittal or a facsimile thereof, properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in
connection with a book-entry delivery of ADSs and any other required documents
must be received by the U.S. Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date and (i) the
ADRs evidencing tendered ADSs must be received by the U.S. Depositary along with
the Letter of Transmittal, (ii) ADSs must be tendered pursuant to the procedure
for book-entry transfer described below and a Book-Entry Confirmation (as
defined below) must be received by the U.S. Depositary, in each case prior to
the Expiration Date, or (iii) the tendering holder must comply with the
guaranteed delivery procedures described below.
The Offer in respect of ADSs shall be validly accepted by delivery of
a Letter of Transmittal, the relevant ADRs evidencing ADSs and other required
documents to the U.S. Depositary by holders of ADSs (without any further action
by the U.S. Depositary), subject to the terms and conditions set out in the
Letter of Transmittal. The acceptance of the Offer by a tendering holder of ADSs
evidenced by ADRs pursuant to the procedures described above, subject to the
withdrawal rights described below, will be deemed to constitute a binding
agreement between such tendering holder of ADSs and Purchaser upon the terms and
subject to the conditions of the Offer. IF AN ADR EVIDENCING AN ADS HAS BEEN
TENDERED BY A HOLDER OF ADSs, THEN THE SHARES REPRESENTED BY SUCH ADSs MAY NOT
BE TENDERED INDEPENDENTLY OR IF SHARES HAVE BEEN TENDERED THEN NO ADSs
REPRESENTING SUCH SHARES MAY BE TENDERED INDEPENDENTLY.
HOLDERS OF ADSS ARE ADVISED THAT THE METHOD CHOSEN TO SEND ADR
CERTIFICATES, IF ANY, AND THE PROPER COMPLETION OF AND DELIVERY OF THE LETTER OF
TRANSMITTAL AND OTHER DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF EACH TENDERING HOLDER AND THE
DELIVERY THEREBY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE U.S.
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ENSURE DELIVERY PRIOR TO THE EXPIRATION DATE.
Book-Entry Transfer. The U.S. Depositary will establish an account
with respect to interests in ADSs held in book-entry form at The Depository
Trust Company (the "Book-Entry Transfer Facility") for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities'
<PAGE>
17
systems may make book-entry delivery of interests in ADSs by causing the Book-
Entry Transfer Facility to transfer such interests in ADSs into the U.S.
Depositary's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. Although delivery of
interests in ADSs evidenced by ADRs may be effected through book-entry transfer
at the Book-Entry Transfer Facility, the Letter of Transmittal or a facsimile
thereof, properly completed and duly executed with any required signature
guarantees, or an Agent's Message (as defined below) in connection with a book-
entry delivery of interests in ADSs, and any other required documents, must, in
any case, be transmitted to and received by the U.S. Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date for ADSs evidenced by ADRs to be validly tendered or the
guaranteed delivery procedures described below must be complied with.
The term "Agent's Message" means a message, transmitted by the Book-
Entry Transfer Facility to, and received by, the U.S. Depositary and forming a
part of the Book-Entry Confirmation, which states that such Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering an interest in the ADSs, that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that Purchaser may enforce such agreement against the
participant.
REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE U.S.
DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER PAGE OF THIS
OFFER TO PURCHASE. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE U.S. DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a member firm of a registered national securities exchange, a
member of the NASD or a commercial bank or trust company having an office or
correspondent in the United States (each of the foregoing being referred to as
an "Eligible Institution"), unless the ADSs tendered thereby are tendered (i) by
a registered holder of ADSs who has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If an ADR is registered in the name of a person other than the signer
of the Letter of Transmittal or if payment is to be made, or an ADR not accepted
for payment or not tendered is to be returned, to a person other than the
registered holder(s), then the ADR must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear on the ADR, with the signature(s) on such ADR or
stock powers guaranteed as described above. Evidence of the payment of any
applicable stock transfer tax must also be presented. See Instructions 1 and 5
of the Letter of Transmittal.
If the ADRs are forwarded separately to the U.S. Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a holder of ADSs evidenced by ADRs desires to
tender ADSs pursuant to the Offer and such holder's ADRs evidencing such ADSs
are not immediately available or time will not permit all required documents to
reach the U.S. Depositary prior to the Expiration Date or the procedure for
book-entry transfer cannot be completed prior to the Expiration Date, such ADSs
may nevertheless be tendered if all the following conditions are satisfied:
<PAGE>
18
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser
herewith, is received by the U.S. Depositary as provided below
prior to the Expiration Date; and
(iii) the ADRs (or a Book-Entry Confirmation) representing all
tendered ADSs, in proper form for transfer together with a
properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees (or,
in the case of a book-entry transfer, an Agent's Message) and
any other documents required by the Letter of Transmittal are
received by the U.S. Depositary within three New York Stock
Exchange trading days after the date of execution of such Notice
of Guaranteed Delivery.
Any Notice of Guaranteed Delivery may be delivered by hand or
transmitted by telegram, facsimile transmission or mail to the U.S. Depositary
and must include a guarantee by an Eligible Institution in the form set forth in
the Notice of Guaranteed Delivery and a representation that the holder on whose
behalf the tender is being made is deemed to own the ADSs within the meaning of
Rule 14e-4 under the Exchange Act.
Notwithstanding any other provisions hereof, payment for ADSs accepted
for payment pursuant to the Offer will in all cases be made only after receipt
by the U.S. Depositary within the permitted period of time of ADRs evidencing
such ADSs, or of Book-Entry Confirmation with respect to, a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), together with
any required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering holders at the same time
and will depend upon when ADRs evidencing such ADSs are received by the U.S.
Depositary or Book-Entry Confirmations with respect to such ADSs are received
into the U.S. Depositary's account at the Book-Entry Transfer Facility.
2.3 Securities Issued on Exercise of Options
Pursuant to modifications of the Corporations Law granted by the ASIC,
the Offer is also made to all holders of Securities issued during the Offer
Period pursuant to the exercise of Options. Purchaser is not offering to
purchase (nor will tenders be accepted of) Options pursuant to the Offer.
Accordingly, holders of Options who desire to tender Securities issuable upon
exercise of such Options must first exercise those Options and then tender the
resulting Securities in accordance with the procedures set forth in this Section
2 for the tender of Shares or ADSs as applicable.
In addition, Purchaser will, after the Expiration Date and if
sufficient Securities are acquired under the Offer, be seeking a modification of
the Corporations Law to permit it to compulsorily acquire all Shares which are
issued pursuant to the exercise of Options which remain outstanding after the
Expiration Date, as and when such Securities are issued pursuant to the exercise
of those Options. See Section 11-- "Purpose of the Offer; Plans for OzEmail--
Intention to Compulsorily Acquire".
2.4 Appointment as Proxy and Attorney
<PAGE>
19
By tendering Securities, a holder irrevocably appoints Purchaser and
each of its directors, secretaries and officers from time to time jointly and
each of them severally as such holder's true and lawful attorney-in-fact and
proxy with effect from the date that this Offer or any contract resulting from
acceptance of this Offer becomes free from its conditions or such conditions are
satisfied or waived or, in the case of ADSs, the date from which such ADSs are
accepted for payment, with power to do all things which such holder could
lawfully do in relation to its Securities or in exercise of any right derived
from the holding of its Securities, including (without limiting the generality
of the foregoing):
(i) attending and voting at any meeting of OzEmail;
(ii) demanding a poll for any vote to be taken at any meeting of
OzEmail;
(iii) proposing or seconding any resolution to be considered at
any meeting of OzEmail;
(iv) requisitioning the convening of any meeting of OzEmail and
convening a meeting pursuant to any such requisition;
(v) notifying OzEmail that such holder's address in the records of
OzEmail for all purposes including the despatch of notices of
meeting, annual reports and dividends, should be altered to an
address nominated by Purchaser;
(vi) receiving from OzEmail, or any other party, and retaining any
Share certificates which were held by OzEmail, or any other
party;
(vii) executing all forms, notices, instruments (including an
instrument appointing a director of Purchaser as a proxy) in
respect of any or all of the Securities and resolutions relating
to the Securities and generally to exercise all powers and
rights which a person may have as a shareholder and performing
such action as may be appropriate in order to vest good title in
the Securities in Purchaser; and
(viii) doing all things incidental and ancillary to any of the
foregoing,
and to have agreed that in exercising the powers conferred by that power of
attorney, the attorney may act in the interest of Purchaser as the intended
registered holder and beneficial holder of such holder's Securities. Such
appointment, being given for valuable consideration to secure the interest
acquired in such holder's Securities, when effective, will revoke all prior
proxies given by such holder with respect to the Securities without further
action and no subsequent proxies will be given by such holder with respect to
such Securities. Such appointment is irrevocable, and terminates upon
registration of a transfer to Purchaser of such holder's Securities. Purchaser
reserves the right to require that, in order for Securities to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such
Securities, Purchaser must be able to exercise full voting rights with respect
to such Securities. As set forth in Section 4, the Offer will not be deemed to
be validly accepted in respect of any Securities which have been withdrawn, and
accordingly the foregoing proxy and power of attorney will cease to be effective
in respect of any Securities which are validly withdrawn. If such Securities are
subsequently re-tendered the appointment of proxies and attorneys-in-fact with
respect to those Securities and the effectiveness of such appointment as
described above will apply. If the Offer or any contract resulting from
acceptance of the Offer becomes free from its
<PAGE>
20
conditions or such conditions are satisfied or waived, the proxy and power of
attorney will be effective by reason of such fact unless and until such time, if
any, that the Securities to which they relate are properly withdrawn.
2.5 Determination of Validity
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tendered Securities pursuant to any
of the procedures described above will be determined by Purchaser in the
reasonable exercise of its discretion, whose determination will be final and
binding on all parties. Purchaser reserves the absolute right to reject any or
all tenders determined by it not to be in proper form or if the acceptance for
payment of, or payment for, the Securities, may, in the opinion of Purchaser's
counsel, be unlawful. Purchaser also reserves the absolute right, in its
discretion, to waive any defect or irregularity in any tender with respect to
Securities of any particular holder, whether or not similar defects or
irregularities are waived in the case of other holders. No tender of Securities
will be deemed to have been validly made until all defects and irregularities
have been cured or waived.
Purchaser's reasonable interpretation of the terms and conditions of
the Offer (including the Acceptance and Transfer Form, Letter of Transmittal and
the instructions thereto) will be final and binding. None of MCI WorldCom,
Intermediate, Purchaser, the Dealer Manager, the Financial Advisors, the U.S.
Depositary, the Information Agent, the Registry, the Controlling Participant or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification.
3. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES AND ADSs
3.1 Payment
Upon the terms of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), if the
conditions of the Offer are satisfied or are waived, then subject to Purchaser's
right to withdraw the Offer with the consent of the ASIC, Purchaser will pay for
all Securities validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4) promptly, but in any event not later
than the earlier of:
(i) the third U.S. business day after the Expiration Date; and
(ii) thirty days after the later of:
(A) the date the Offer is accepted by tendering holders of
Securities; and
(B) the Condition Waiver Date.
Payment for Securities accepted pursuant to the Offer will be made by
check (which, in relation to payments for certificated Shares, Shares held in an
Issuer Sponsored Holding or Shares held through CHESS tendered by holders with a
registered address in Australia will be drawn on the Australian branch of an
Australian bank) and be sent by pre-paid ordinary mail or, in the case of
holders with addresses outside of Australia or the United States, by pre-paid
airmail, to the address of the tendering holder as shown in the relevant
Acceptance and Transfer Form or maintained under
<PAGE>
21
the SCH Business Rules, in the case of Shares, or the Letter of Transmittal, in
the case of ADSs (subject to any Special Payment Instructions or Special
Delivery Instructions included therein). UNDER NO CIRCUMSTANCES WILL INTEREST ON
THE PURCHASE PRICE FOR SECURITIES BE PAYABLE.
3.2 Currency Election
The consideration payable under the Offer is denominated in U.S.
dollars. However, all tendering holders will have the right to elect to receive
all (but not part) of the payment in Australian dollars. Provision for and
instructions in respect of such election are contained in the Letter of
Transmittal, in the case of a holder tendering ADSs, and in the Acceptance and
Transfer Form in the case of a holder tendering Shares. In addition, holders of
Shares through CHESS can also elect to receive payment in U.S. or Australian
dollars by instructing their Controlling Participant to make such an election.
Holders of Shares in an Issuer Sponsored Holding and holders of certificated
Shares can elect to receive payment in U.S. or Australian dollars by making an
election on the Acceptance and Transfer Form. In the event a holder does not
make such an election, a holder tendering ADSs will receive U.S. dollars and a
holder tendering Shares will be deemed to have elected to receive Australian
dollars. Conversion of U.S. dollars into Australian dollars will be made on the
following basis: the cash amount payable in U.S. dollars to which such holder
would otherwise be entitled pursuant to the terms of the Offer will be
converted, without charge, from U.S. dollars to Australian dollars at the
exchange rate obtainable by the Registry, in the case of certificated Shares
tendered by holders located outside the United States or Shares held in an
Issuer Sponsored Holding or held through CHESS, or the U.S. Depositary, in the
case of ADSs or certificated Shares tendered by holders located in the United
States, on the spot market in Sydney, in the case of the Registry, and in New
York, in the case of the U.S. Depositary, at approximately noon (Sydney or New
York City time, as applicable) on the date cash consideration is made available
by Purchaser to the Registry or the U.S. Depositary, as applicable, for delivery
in respect of the relevant Securities. A holder of Securities will receive such
amount on the basis set out above in respect of the whole of such holder's
holding of Shares or ADSs in respect of which such holder accepts the Offer.
THE ACTUAL AMOUNT OF AUSTRALIAN DOLLARS RECEIVED WILL DEPEND UPON THE
EXCHANGE RATE PREVAILING ON THE BUSINESS DAY ON WHICH FUNDS ARE MADE AVAILABLE
TO THE RELEVANT PAYMENT AGENT BY PURCHASER. HOLDERS OF SECURITIES SHOULD BE
AWARE THAT THE U.S. DOLLAR/AUSTRALIAN DOLLAR EXCHANGE RATE WHICH IS PREVAILING
AT THE DATE ON WHICH AN ELECTION IS MADE TO RECEIVE AUSTRALIAN DOLLARS AND ON
THE DATE OF PAYMENT MAY BE DIFFERENT FROM THAT PREVAILING ON THE BUSINESS DAY ON
WHICH FUNDS ARE MADE AVAILABLE TO THE REGISTRY OR THE U.S. DEPOSITARY, AS THE
CASE MAY BE, BY PURCHASER. IN ALL CASES, FLUCTUATIONS IN THE U.S.
DOLLAR/AUSTRALIAN DOLLAR EXCHANGE RATE ARE AT THE RISK OF TENDERING HOLDERS OF
SECURITIES WHO ELECT, OR WHO IN DEFAULT OF SUCH ELECTION ARE DEEMED TO HAVE
ELECTED, TO RECEIVE THEIR CONSIDERATION IN AUSTRALIAN DOLLARS. PURCHASER SHALL
HAVE NO RESPONSIBILITY WITH RESPECT TO THE CASH CONSIDERATION PAYABLE OTHER THAN
TO MAKE PAYMENT IN ACCORDANCE WITH THE FOREGOING.
<PAGE>
22
3.3 Acceptance for Payment of Shares
Purchaser shall be taken to have accepted Shares for payment when this
Offer has been validly accepted in accordance with its terms or any defects in
the acceptance have been waived or cured and the Offer is or has become
unconditional in all respects.
3.4 Acceptance for Payment of ADSs
In all cases, payment for ADSs tendered and accepted for payment
pursuant to the Offer will be made only after receipt within the permitted time
period by the U.S. Depositary of (i) (A) the ADRs evidencing such ADSs or (B)
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such ADRs
into the Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, (ii) (A) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, or (B) an Agent's Message in connection with a
book-entry transfer and (iii) any other documents required by the Letter of
Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted
for payment, and thereby purchased, tendered ADSs if and when Purchaser gives
oral or written notice to the U.S. Depositary of Purchaser's acceptance of such
ADSs for payment. Payment for ADSs accepted pursuant to the Offer will be made
by deposit of the aggregate purchase price therefor with the U.S. Depositary,
which pursuant to the Letter of Transmittal will be appointed and act as agent
for tendering holders for the purpose of receiving payment from Purchaser and
transmitting payment to such tendering holders. Purchaser's acceptance for
payment of ADSs tendered pursuant to the Offer will constitute a binding
agreement between the tendering holder and Purchaser upon the terms and subject
to the conditions of the Offer.
Upon the deposit of funds with the U.S. Depositary for the purpose of
making payments to tendering holders of ADSs, Purchaser's obligation to make
such payment shall be satisfied and tendering holders must thereafter look
solely to the U.S. Depositary for payment of amounts owed to them by reason of
the acceptance for payment of ADSs pursuant to the Offer.
3.5 General
Purchaser will pay any stock transfer taxes (including stamp duty)
incident to the transfer to it of validly tendered Securities, except as
otherwise provided in Instruction 6 of the Letter of Transmittal, as well as any
charges and expenses of the Dealer Manager, the Financial Advisors, the U.S.
Depositary, the Registry and the Information Agent.
If any tendered Securities are not accepted for payment for any reason
pursuant to the terms and conditions of the Offer or if Share certificates and
ADRs are submitted evidencing more Shares than are tendered, then, in the case
of certificated Shares and ADSs, Share certificates and ADRs evidencing
unpurchased or untendered Shares and ADSs will be returned, without expense to
the tendering holder (or, in the case of ADSs tendered by book-entry transfer
into the U.S. Depositary's account at the Book-Entry Transfer Facility pursuant
to the procedure set forth in Section 2, such ADSs will be credited to an
account maintained at the Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer and, in the
case of Shares held in an Issuer Sponsored Holding, by notification to the
Registry or, in the case of Shares held in a CHESS Holding, in accordance with
the SCH Business Rules.
<PAGE>
23
IF, PRIOR TO THE EXPIRATION DATE, PURCHASER SHALL INCREASE THE
CONSIDERATION OFFERED TO HOLDERS OF SECURITIES PURSUANT TO THE OFFER, SUCH
CONSIDERATION WILL BE PAID TO ALL HOLDERS WHOSE SECURITIES ARE PURCHASED IN THE
OFFER (INCLUDING ANY SECURITIES WHICH HAVE BEEN TENDERED PREVIOUSLY AND PAID
FOR).
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Securities
made pursuant to the Offer are irrevocable. Holders of Securities will be able
to withdraw their acceptances at any time prior to the Expiration Date. The
Offer will not be deemed to have been validly accepted in respect of any
Securities which have been withdrawn. However, the Offer may be accepted again
in respect of the withdrawn Securities by the holder re-tendering those
Securities by following one of the procedures described in Section 2 at any time
prior to the Expiration Date.
Holders who have validly tendered Securities and been paid for those
Securities in accordance with Section 3, may withdraw those Securities by
providing to the Registry (in the case of a holder of certificated Shares or
Shares in an Issuer Sponsored Holding located outside the United States or a
holder of Shares through CHESS) or the U.S. Depositary (in the case of holders
of certificated Shares located in the United States or ADSs), prior to the
Expiration Date:
(i) a notice of withdrawal in respect of those Securities; and
(ii) cleared funds in an identical amount and in the same currency as
the funds that were paid to such holder by Purchaser for the
tendered Securities to be withdrawn,
in which case Purchaser will arrange for Securities (as originally tendered by
the holder) to be returned to the holder. However, in the foregoing
circumstances, if a holder wishes to effect a withdrawal and has not received
the purchase monies for such Securities even though those purchase monies have
been paid by Purchaser in respect of such holder's Securities, such holder's
notice of withdrawal will be effective upon receipt of a notice of withdrawal in
the manner described herein without providing such funds with the notice of
withdrawal, but (a) such notice of withdrawal will be deemed to be an agreement
to provide such cleared funds as soon as possible following receipt of such
funds by the holder and (b) no certificate or other evidence of ownership of
such Securities will be returned to the holder until such funds have been paid.
All questions as to the form and validity (including, without
limitation, time of receipt) of notices of withdrawal will be determined by
Purchaser, in the reasonable exercise of its discretion, the determination of
which will be final and binding. None of MCI WorldCom, Intermediate, Purchaser,
the Dealer Manager, the Financial Advisor, the U.S. Depositary, the Information
Agent, the Registry, the Controlling Participant or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Withdrawal of Uncertificated Shares. Any withdrawal of Shares held
through a CHESS Holding must be made in accordance with Rule 16.5 of the SCH
Business Rules. Any holder of Shares held in CHESS who wishes to withdraw those
shares from the Offer in accordance with the foregoing
<PAGE>
24
must instruct their Controlling Participant to initiate that withdrawal prior to
the Expiration Date. Withdrawals of uncertificated Shares may not be rescinded.
Withdrawal of Certificated Shares. For a withdrawal of certificated
Shares to be effective, a written or facsimile transmission notice of withdrawal
must be received by the Registry, in the case of holders located outside the
United States, or the U.S. Depositary, in the case of holders located in the
United States, prior to the Expiration Date at their respective addresses set
forth on the back cover of this Offer to Purchase. Any such notice of withdrawal
must specify the name of the person who tendered the certificated Shares to be
withdrawn, the number of certificated Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered the Shares
evidenced by such Share certificates. Withdrawals of certificated Shares may not
be rescinded.
Withdrawal of Issuer Sponsored Holding. For a withdrawal of Shares in
an Issuer Sponsored Holding to be effective a written or facsimile transmission
notice of withdrawal must be received by the Registry prior to the Expiration
Date at the address of the Registry set forth on the back of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares in an Issuer Sponsored
Holding and the name of the registered holder, if different from that of the
person who tendered the Shares. Withdrawals of Issuer Sponsored Holdings may
not be rescinded.
Withdrawal of ADSs. For a withdrawal of ADSs to be effective, a
written or facsimile transmission notice of withdrawal must be received by the
U.S. Depositary prior to the Expiration Date at one of its addresses set forth
on the back cover of this Offer to Purchase. Any such notice of withdrawal must
specify the name of the person who tendered the ADSs to be withdrawn, the number
of ADSs to be withdrawn and (if ADRs have been tendered) the name of the
registered holder, if different from that of the person who tendered the ADSs
evidenced by such ADRs. If ADRs evidencing ADSs to be withdrawn have been
delivered or otherwise identified to the U.S. Depositary, then prior to the
physical release of such ADRs, the serial numbers shown on the particular ADRs
evidencing the ADSs to be withdrawn must be submitted to the U.S. Depositary,
and the signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution, unless interests in ADSs evidenced by ADRs have been
tendered for the account of an Eligible Institution. If interests in ADSs
evidenced by ADRs to be withdrawn have been tendered pursuant to the procedure
for book-entry transfer as set forth in Section 2, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn ADSs, in which case a notice of
withdrawal will be effective if delivered to the U.S. Depositary by any method
of delivery described in the first sentence of this paragraph. Withdrawals of
ADSs may not be rescinded.
5. CERTAIN TAX CONSEQUENCES
5.1 Certain United States Federal Income Tax Consequences
The following is a summary of certain United States federal income tax
consequences of the Offer to holders of the Securities and is for general
information purposes only. This summary is based on the United States federal
income tax law now in effect, which is subject to change, possibly
retroactively. This summary does not discuss all aspects of United States
federal income taxation which may be important to particular holders in light of
their individual investment circumstances,
<PAGE>
25
such as holders who acquired their Securities through the exercise of Options or
otherwise as compensation, or to holders subject to special tax rules (e.g.,
financial institutions, broker-dealers, insurance companies, and tax-exempt
organizations). In addition, this summary does not address state, local or
foreign tax consequences. This summary assumes that holders hold their
Securities as "capital assets" (generally, property held for investment) under
the Internal Revenue Code of 1986, as amended (the "Code"). Holders of the
Securities are urged to consult their tax advisors regarding the specific United
States federal, state, local, and foreign income and other tax consequences of
the Offer.
For purposes of this summary, a "U.S. holder" means a beneficial
holder of the Securities who, for United States federal income tax purposes, is
(i) a citizen or resident of the United States, (ii) a corporation, partnership,
or other entity created or organized in the United States or under the laws of
the United States or of any political subdivision thereof, (iii) an estate whose
income is includible in gross income for United States federal income tax
purposes regardless of its source, or (iv) a trust whose administration is
subject to the primary supervision of a United States court and which has one or
more United States persons who have the authority to control all substantial
decisions of the trust.
U.S. Holders. In general, a U.S. holder will recognize capital gain
or loss upon the receipt of payment in exchange for the Securities pursuant to
the Offer in an amount equal to the difference between the amount realized and
the holder's adjusted tax basis in the Securities tendered. Any such gain will
be treated as income from sources within the United States and, although the
matter is subject to uncertainty, any such loss may be treated as a foreign
source loss for federal income tax purposes.
Under recently enacted legislation, the maximum individual U.S.
federal income tax rate on net capital gain (i.e., generally, capital gain in
excess of capital loss) recognized by an individual holder from the disposition
of Securities that have been held for more than 12 months will generally be
subject to tax at a rate not to exceed 20%. In addition, capital gain
recognized by a corporate taxpayer will continue to be subject to tax at the
ordinary income tax rates applicable to corporations. Certain limitations exist
on the deductibility of capital losses by both corporations and individual
taxpayers.
U.S. holders who receive payments in Australian dollars for their
Securities pursuant to the Offer should consult their tax advisors regarding
whether the receipt of such payments would result in foreign exchange gain or
loss for United States federal income tax purposes.
Non-U.S. Holders. A non-U.S. holder will generally not be subject to
United States federal income tax on gain recognized upon the exchange of the
Securities for cash pursuant to the Offer unless (i) the gain is effectively
connected with the conduct of a trade or business within the United States by
the non-U.S. holder or (ii) in the case of a non-U.S. holder who is a non-
resident alien individual, such holder is present in the United States for 183
days or more and certain other conditions are met. Non-U.S. holders should also
consult applicable treaties, if any, which may exempt from United States
taxation any such gain.
Information Reporting and Backup Withholding. Payments made to
holders of the Securities pursuant to the Offer may be subject to information
reporting to the U.S. Internal Revenue Service and to United States federal
backup withholding tax at the rate of 31% on the gross amount of such payments.
Backup withholding will not apply to a holder who furnishes a correct taxpayer
<PAGE>
26
identification number or a certificate of foreign status and makes certain other
required certifications, or who is otherwise exempt from backup withholding
(e.g., a U.S. corporation). To avoid information reporting and backup
withholding, holders of the Securities may provide the U.S. Depositary or the
Registry, as the case may be, with a properly executed Substitute Form W-9
("Request for Taxpayer Identification Number and Certification"), in the case of
a U.S. holder, or a properly executed Substitute Form W-8 ("Certificate of
Foreign Status"), in the case of a non-U.S. holder. These forms are included in
the Letter of Transmittal and the Acceptance and Transfer Form for your
convenience. If a tendering holder fails to provide a properly completed
Substitute Form W-8 or W-9 Purchaser will withhold tax from payments made to
such holder unless it is otherwise satisfied that such holder is an exempt
foreign person. See Instruction 11 of the Letter of Transmittal or Section III
of the Acceptance and Transfer Form.
5.2 Certain Australian Tax Consequences
Securities Exchanged by Australian Residents. In general, an
Australian resident holder of Securities who, pursuant to the Offer, exchanges
those Securities for cash will be taxed in Australia on any profit arising from
that exchange where the Securities were purchased in the course of carrying on a
business or with the intent of profit-making by sale.
Alternatively, where the Australian resident holder of Securities did
not acquire them in those circumstances (e.g., they were purchased as a long
term investment in order to derive future dividend income), any gain on disposal
of those Securities will be taxed under Australia's capital gains tax rules.
Broadly, if the capital gains tax rules apply, the exchange will
result in a taxable capital gain to the holder if the cash consideration
received for the Securities exceeds the Securities' cost base (i.e., broadly,
the Securities' acquisition cost, in addition to incidental costs associated
with acquisition or disposal), indexed for inflation where the Securities have
been held for greater than 12 months. In calculating the taxable capital gain,
if any, all amounts (e.g., consideration and cost base) are to be expressed in
Australian dollars, calculated at the exchange rate at the time the holder
elects to accept the Offer.
Options Exercised by Australian Residents. In general, an
Australian resident holder of Options who exercises Options and exchanges the
Shares issued on exercise for cash, will be taxed in Australia on any profit
arising from this transaction where the Options were originally acquired in the
course of carrying on a business or with the intent of profit-making by sale of
the Securities.
Alternatively, where the Australian resident holder of Options did not
acquire them in those circumstances (e.g., they were acquired as an investment),
any gain arising from this transaction will be taxed under Australia's capital
gains tax rules.
Broadly, the transaction will result in a taxable capital gain to the
holder if the consideration receivable in respect of the Securities exceeds the
sum of the Option's exercise price, any cost of acquiring the Option and
incidental costs associated with acquisition or exercise and disposal, indexed
for inflation where the Options had been held for greater than 12 months.
Special rules may, however, be applicable to Options issued by OzEmail to its
employees.
<PAGE>
27
In calculating the taxable capital gain, if any, all amounts (e.g.
consideration and cost base) are to be expressed in Australian dollars.
Foreign Exchange Gains. There may be foreign exchange gain or loss
implications which should be considered if relevant to the holder. Holders
should seek their own advice in this regard.
Australian Tax Consequences for Non-resident Holders. Non-resident
holders of Securities will generally be subject to tax in Australia on gains
resulting from the disposal of Securities pursuant to acceptance of the Offer
only if:
(i) the gain is derived in the course of carrying on a business and
results from activities by or on behalf of the holder in
Australia (unless the holder is entitled to the benefit of a
double tax treaty and meets the requirements of that treaty for
exemption from Australian tax); or
(ii) the holder, either alone or in combination with its associates,
has at any time within the five years preceding the disposal
held a beneficial interest in 10% or more of the issued share
capital of OzEmail.
THE ABOVE DISCUSSION IS A GENERAL SUMMARY ONLY OF CERTAIN AUSTRALIAN
TAX CONSEQUENCES OF ACCEPTANCE OF THE OFFER AND MAY NOT APPLY TO CERTAIN CLASSES
OF SECURITY HOLDERS SUBJECT TO SPECIAL TAX RULES, INCLUDING BUT NOT LIMITED TO
EMPLOYEES OF OZEMAIL, BANKS, INSURANCE COMPANIES OR DEALERS OR TRADERS IN
SHARES, SECURITIES OR FINANCIAL INSTRUMENTS. SUCH HOLDERS OF SECURITIES ARE
URGED TO CONSULT THEIR TAX ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES
OF THE OFFER.
6. PRICE RANGE OF SHARES; DIVIDENDS; EXCHANGE RATE
The ADSs trade on the NNM under the symbol OZEMY and the Shares trade
on the ASX under the symbol OZM. The ADSs began trading on the NNM on May 29,
1996 and the Shares began trading on the ASX on May 29, 1998. The following
table sets forth, for the quarters indicated, the actual high and low sales
prices per ADS on the NNM and per Share on the ASX, and dividends paid, as
reported by Bloomberg Financial Markets.
<TABLE>
<CAPTION>
Cash
-------------------
U.S. Market ASX Market Dividend
------------- --------------- -------------------
Price of ADSs Price of Shares Paid per Share/(1)/
------------- --------------- -------------------
High Low High Low
---- --- ---- ---
US$ US$ A$ A$ A$
<S> <C> <C> <C> <C> <C>
Fiscal Year Ended December 31, 1996
Fourth Quarter............. 11.125 6.000
Fiscal Year Ended December 31, 1997
First Quarter.............. 14.875 5.625
Second Quarter............. 8.875 5.375
Third Quarter.............. 16.750 5.875
Fourth Quarter............. 14.250 7.125
Fiscal Year Ended December 31, 1998
First Quarter.............. 17.750 7.500 0.025
Second Quarter (for ASX, 28.875 15.500 3.657 2.800
from May 29)..............
Third Quarter.............. 27.250 11.250 4.150 2.080
Fourth Quarter............. 28.000 6.000 4.000 1.050
</TABLE>
(1) The Australian dividend payable date was March 27, 1998,
while the U.S. dividend payable date was April 6, 1998.
<PAGE>
28
On December 11, 1998, the last full trading day prior to the date of
public announcement by Purchaser that it would make the Offer, the last reported
sales price of the ADSs on the NNM was US$20 7/8 per ADS and the last reported
sales price of Shares on the ASX was A$3.39 per Share. On December 31, 1998,
the last reported sales price of the ADSs on the NNM was US$[ ] per ADS
and the last reported sales price of the Shares on the ASX was A$[ ] per
Share. HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES
AND ADSs.
On December 31, 1998 the noon buying rate in New York City for cable
transfers in Australian dollars as certified by the U.S. Federal Reserve Bank of
New York was US$[ ]:A$. Holders are urged to obtain a current
market quotation for the U.S. dollar-Australian dollar exchange rate.
7. CERTAIN INFORMATION CONCERNING OZEMAIL
The information concerning OzEmail contained in this Offer to
Purchase, including financial information, has been taken from or is based upon
publicly available documents and records on file with the SEC, the ASIC and the
ASX and other public sources. Neither MCI WorldCom, Purchaser, the Dealer
Manager, the Financial Advisors nor any other person connected with this Offer
assumes any responsibility for the accuracy or completeness of the information
concerning OzEmail contained in such documents and records or for any failure by
OzEmail to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to MCI
WorldCom, Intermediate, Purchaser, the Dealer Manager, the Financial Advisor or
any other such person.
OzEmail is a corporation incorporated under the laws of the State of
New South Wales, Australia and its principal executive offices are located at
Ground Floor, Building B, 39 Herbert Street, St Leonards, New South Wales, 2065,
Australia. According to OzEmail's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, filed with the SEC, OzEmail provides Internet
access and Internet related services. OzEmail is a leading provider of
comprehensive Internet services in Australia, providing access to an extensive
network, regionally-focused content, Internet implementation services and a
large customer support team.
Set forth below is a summary of certain consolidated financial
information with respect to OzEmail, excerpted or derived from the audited
financial information of OzEmail contained in OzEmail's Annual Report on Form
10-K for the fiscal year ended December 31, 1997 and the unaudited financial
information of OzEmail contained in OzEmail's Prospectus dated September 1, 1998
included as part of its Registration Statement on Form F-1 (File No 333-9320)
and OzEmail's Form 6-K for the quarter ended September 30, 1998. According to
those documents, such financial information has been prepared in accordance with
U.S. generally accepted accounting principles. Certain additional information
relating to OzEmail since June 30, 1998 is summarized in the Part A Statement
and annexed thereto. More comprehensive financial information is included in
reports and other documents filed with the SEC, the ASIC and the ASX. The
following summary is not
<PAGE>
29
complete and reference is made to such reports and other documents, including
the financial information and related notes contained thereon. Such reports and
other documents may be inspected and copies may be obtained from the offices of
the SEC, the ASIC, the ASX or NNM in the manner set forth below. As a result of
OzEmail's acquisition of Access One in November 1997, results from period to
period may not be comparable.
OZEMAIL LIMITED
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
From Inception to
December 31, Year Ended December 31, Nine Months Ended September 30,
- -----------------------------------------------------------------------------------------------------------------------------------
1994(1) 1995 1996 1997 1997 1998 1998(2)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data A$692 A$8,868 A$27,784 A$55,767 A$38,557 A$78,644 US$46,636
Net Revenues ----- ------- -------- -------- -------- -------- ---------
Costs and expenses:
Cost of revenues -
network operations
and support 160 2,265 6,952 15,976 10,976 19,890 11,795
Costs of revenues -
communications and
other 228 1,630 8,773 19,025 12,490 30,615 18,155
Sales and marketing 92 2,190 7,617 14,387 9,617 16,432 9,744
Product development 58 84 2,284 9,267 6,945 5,128 3,041
General and administrative 114 1,875 4,157 12,498 6,373 14,875 8,821
Amortization of goodwill
and other intangibles - - - 533 - 3,772 2,237
----- ------- -------- -------- -------- -------- ---------
Total costs and expenses 652 8,044 29,783 71,686 46,401 90,712 53,792
----- ------- -------- -------- -------- -------- ---------
Income (loss) from 40 824 (1,999) (15,919) (7,844) (12,068) (7,156)
operations (7) (50) 2,972 1,934 2,635 575 341
Other Income (Expense) Net ----- ------- -------- -------- -------- -------- ---------
Income (loss) before
provision for income
taxes and minority
equity interest 33 774 973 (13,985) (5,209) (11,493) (6,815)
Minority interest - - - - - 13 8
Income tax benefit (expense) (15) (434) (556) (2,783) (3,794) 270 160
----- ------- -------- -------- -------- -------- ---------
Net income (loss) A$18 A$400 A$434 A$(16,768) A$(9,003) A$(11,210) US$(6,648)
===== ======= ======== ========== ========= ========== ===========
Basic net income/(loss) per
ADS(3) A$0.18 A$0.12 A$0.05 A$(1.60) A$(0.87) A$(0.93) US$(0.55)
Diluted net income/(loss) per
ADS(3) A$0.18 A$0.12 A$0.05 A$(1.60) A$(0.87) A$(0.93) US$(0.55)
Weighted average basic
Ordinary Shares(3) 100 32,446 89,286 104,631 103,555 120,497 120,497
Weighted average diluted
Ordinary Shares(3) 100 33,941 94,986 104,631 103,555 120,497 120,497
</TABLE>
<TABLE>
As of December 31, As of
September 30,
- -------------------------------------------------------------------------------------------------------------------
1994(1) 1995 1996 1997 1998(2)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets A$925 A$5,529 A$65,310 A$113,786 A$101,851
Long-term obligations-
finance leases - 500 240 4,423 2,198
Total shareholders' equity A$18 A$1,517 A$54,506 A$49,166 A$65,768
</TABLE>
(1) OzEmail was founded in September 1994 through a number of
simultaneous transactions. As a result of these transactions the proprietary e-
mail service (the "Predecessor Business") previously controlled by OzEmail's
Chief Executive Officer and principal founder, Sean Howard, was transferred to
OzEmail in exchange for all of the then outstanding ordinary shares of OzEmail.
The Predecessor Business had conducted limited operations through September
1994.
(2) Amounts translated for convenience at the exchange rate between
the U.S. dollar and the Australian dollar on September 30, 1998 of US$0.5903.
Source: Bloomberg Financial Markets Australian dollar spot close value on such
date.
(3) Following a 10 for 1 stock split in September 1997, one ADS
represents 10 Shares. OzEmail adopted Statement of Financial Accounting
Standards No. 128, "Earnings per share" ("SFAS 128") during the fourth quarter
of the year ended December 31, 1997. All comparative information has been
restated to comply with SFAS 128.
<PAGE>
30
OzEmail is subject to the information and reporting requirements of
the Exchange Act and is required to file reports and other information with the
SEC relating to its business, financial condition and other matters. These
reports and other information should be available for inspection at the public
reference facilities of the SEC located in Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection and
copying at prescribed rates at the following regional offices of the SEC: Seven
World Trade Center, New York, New York 10048; and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material
may also be obtained by mail, upon payment of the SEC's customary fees, from the
SEC's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. In
addition, the SEC maintains a web-site at www.sec.gov that contains OzEmail's
reports and information statements and other information that has been filed
since OzEmail began to file electronically with the SEC in April 1998. However,
as a foreign private issuer, OzEmail is not required to file electronically and
has stated publicly that it may not do so where such filing in electronic format
would constitute an undue burden upon OzEmail. Reports and other information
concerning OzEmail should also be available for inspection at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
As a publicly listed company in Australia, OzEmail is subject to
regulation by the ASIC and the ASX. The public can obtain information held by
the ASIC about OzEmail by application to ASIC business centers located in the
capital cities in Australia. Members of the public are entitled to obtain
copies of most documents lodged with the ASIC. The ASIC also maintains a
comprehensive on-line computer database and a more limited World Wide Web site.
The public can also access information held by the ASX about any public company
on application to any of the ASX business centers located in the capital cities
in Australia.
All of the information with respect to OzEmail and its affiliates set
forth in this Offer to Purchase has been derived from publicly available
information, unless otherwise indicated herein.
8. CERTAIN INFORMATION CONCERNING PURCHASER, INTERMEDIATE, AND MCI
WORLDCOM
<PAGE>
31
Purchaser. Purchaser was formed for the purpose of acquiring
Securities. It was formed under the laws of New South Wales, Australia, and is
a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of
MCI WorldCom. It has issued share capital of A$2, consisting of 2 fully paid
ordinary shares, issued at A$1 each.
Apart from entering into and performing the Subscription Agreement and
making the Offer, Purchaser has not carried on any other activity. Apart from
making the Offer, holding the Securities acquired under the Offer and other
transactions contemplated by the Offer, it is not expected that Purchaser will
before the expiration of the Offer engage in any activities. Due to the fact
that Purchaser is newly formed and, except for the Shares purchased pursuant to
the Subscription Agreement and the inter-company debt related thereto, has
minimal assets and capitalization, no meaningful financial information regarding
Purchaser is available. The registered office of Purchaser is located at 44
Martin Place, Sydney, NSW, 2000, Australia.
Intermediate. Intermediate is a Delaware corporation which is a
wholly-owned subsidiary of MCI WorldCom. The principal executive offices of
Intermediate are located at 3060 Williams Drive, Fairfax, Virginia 22031,
U.S.A. Intermediate is a leading worldwide provider of a comprehensive range of
Internet access options, applications, and consulting services to businesses,
professionals and on-line service providers. Intermediate is controlled by MCI
WorldCom and therefore the financial statements of Intermediate' activities are
not provided, but Intermediate's financial results are included in the
consolidated financial statements of MCI WorldCom.
MCI WorldCom. MCI WorldCom is a Georgia corporation, the securities
of which are traded on the NNM. The principal executive offices of MCI WorldCom
are located at 515 East Amite Street, Jackson, Mississippi 39201-2702, U.S.A.
As of September 30, 1998, MCI WorldCom and its subsidiaries had:
(i) total assets of US$82.3 billion on a consolidated basis; and
(ii) net shareholders' investment of US$44.3 billion on a
consolidated basis.
MCI WorldCom is a holding company which, through its subsidiaries, is
a global provider of telecommunications services. MCI WorldCom provides
telecommunications services to business, governments, telecommunications
companies and consumer customers through its network of fiber optic cables,
digital microwave, and fixed and transportable satellite earth stations. MCI
WorldCom was one of the first major facilities-based telecommunications
companies with the capability to provide businesses with high quality local,
long distance, Internet, data and international communications services over its
global networks.
In Australia, MCI WorldCom provides telecommunications services to
business customers. These services are provided through fiber capacity leased
from other parties. MCI WorldCom is currently on its own account and in
conjunction with partners constructing or planning to construct local, long
distance and international fiber capacity.
MCI WorldCom is subject to the information and reporting requirements
of the Exchange Act and is required to file reports and other information with
the SEC relating to its business, financial condition and other matters.
Information, as of particular dates, concerning MCI WorldComm's directors and
executive officers, their remuneration, stock options granted to them, the
principal
<PAGE>
32
holders of MCI WorldCom's securities, any material interests of such persons in
transactions with MCI WorldCom and other matters is required to be disclosed in
proxy statements distributed to MCI WorldCom's shareholders and filed with the
SEC. These reports, proxy statements and other information should be available
for inspection under MCI WorldCom's SEC File No. 0-11258 and copies may be
obtained in the same manner as set forth for OzEmail in Section 7 of this Offer
to Purchase. Please call the SEC at 1-800-SEC-0330 for further information on
the operation of its public reference rooms in other U.S. cities. The SEC
maintains a World Wide Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. MCI WorldCom's common stock is listed on
the NNM, and reports, proxy statements and other information concerning MCI
WorldCom should also be available for inspection at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
Set forth below is a summary of certain consolidated financial data
with respect to MCI WorldCom, excerpted or derived from audited financial
statements presented in MCI WorldCom's Current Report on Form 8-K dated May 28,
1998 (filed May 28, 1998) and from the unaudited financial statements contained
in MCI WorldComm's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1998, in each case filed by MCI WorldCom with the SEC (which
Current Report and Quarterly Report are hereby incorporated by reference
herein). Except as otherwise indicated herein, financial information presented
herein is shown in U.S. dollars and based upon U.S. generally accepted
accounting principles. More comprehensive financial information is included in
such reports and other documents filed by MCI WorldCom with the SEC. The
financial information set forth below is a summary only and is not complete and
reference is made to such reports and other documents, financial information and
related notes contained therein which have been filed with the SEC. Such
reports and other documents may be inspected and copies may be obtained from the
SEC in the manner set forth above. Further, on request, Purchaser will provide
copies of such reports and other documents to holders located outside the United
States. Holders located outside the United States may make such a request
through the Financial Advisors at the addresses set forth on the back cover of
this Offer to Purchase. In addition, MCI WorldCom is required to file
electronic versions of these documents with the SEC through the SEC's Electronic
Data Gathering, Analysis, and Retrieval (EDGAR) system, which are available at
the SEC's World Wide Web site as described above.
<PAGE>
33
MCI WORLDCOM, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(in millions, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended and at
and at September 30, December 31,
---------------------------------------------------------
1998 1997 1997 1996 1995
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Voice................................. US$4,247 US$2,972 US$4,062 US$3,067 US$2,509
Data.................................. 1,768 1,160 1,618 956 738
International......................... 976 515 726 225 130
Internet.............................. 1,507 384 566 - -
---------------------------------------------------------
Communications Services............... 8,498 5,031 6,972 4,248 3,377
---------------------------------------------------------
Other................................. 163 333 411 201 259
---------------------------------------------------------
Total revenues........................ 8,661 5,364 7,383 4,449 3,636
Operating expenses:
Line costs............................ 4,141 2,783 3,764 2,397 1,963
Selling, general and administrative... 1,904 1,200 1,626 867 689
Depreciation and amortization......... 1,099 719 976 320 317
In-process research and development and
other charges......................... 3,725 - - 2,740 -
---------------------------------------------------------
Total................................. 10,869 4,702 6,366 6,324 2,969
---------------------------------------------------------
Operating income (loss)............... (2,208) 662 1,017 (1,875) 667
Other income (expense):
Interest expense...................... (351) (289) (395) (253) (253)
Miscellaneous......................... 36 33 41 25 14
---------------------------------------------------------
Income (loss) before income taxes,
minority interests and extraordinary
items................................... (2,523) 406 663 (2,103) 428
Provision for income taxes.............. 462 261 416 130 171
---------------------------------------------------------
Net income (loss) before minority
interests and extraordinary items....... (2,985) 145 247 (2,233) 257
Minority interests...................... 11 - - - -
Extraordinary items (net of income
taxes of US$16 in 1996, US$0 in 1997
and US$78 in 1998)...................... (129) (3) (3) (24) -
Distributions on subsidiary trust
manditorily redeemable preferred
securities.............................. 3 - - - -
Preferred dividend requirements......... 13 20 26 1 18
Special dividend payment to Series 1
preferred shareholder................... - - - - 15
---------------------------------------------------------
Net income (loss) applicable to common
shareholders............................ US($3,141) US$122 US$218 US$(2,258) US$224
=========================================================
Per common share before extraordinary
items:
Basic................................. (2.77) 0.13 .23 (5.02) .58
Diluted............................... (2.77) 0.13 .22 (5.02) .56
Extraordinary items................... (0.12) (0.00) - (0.05) -
Dividends per common share.............. - - - - -
Total assets............................ 82,278 N/A 23,596 20,843 6,803
Long-term debt.......................... 16,032 N/A 7,413 5,356 2,324
Shareholders' investment................ 44,264 N/A 13,801 13,252 2,281
</TABLE>
_________________
(1) On September 14, 1998, MCI WorldCom acquired MCI Communications
Corporation, a Delaware corporation ("MCI"), pursuant to the merger (the "MCI
Merger") of MCI with and into TC Investments Corp. ("Acquisition Subsidiary"),
a wholly owned subsidiary of MCI WorldCom. Upon consummation of the MCI Merger,
Acquisition Subsidiary was renamed MCI Communications Corporation. Through the
MCI Merger, MCI WorldCom acquired one of the world's largest and most advanced
digital networks, connecting local markets in the United States to more than 280
countries and locations worldwide.
As a result of the MCI Merger, each outstanding share of MCI common
stock was converted into the right to receive 1.2439 shares of MCI WorldCom
common stock, par value US$.01 per share (the "Common Stock" or the
"MCI WorldCom Common Stock"), or approximately 755 million MCI WorldCom common
shares in the aggregate, and each share of MCI Class A Common Stock outstanding
(all of which were held by British Telecommunications plc ("BT")) was converted
into the right to receive US$51.00 in cash or approximately US$7 billion in the
aggregate. The funds paid to BT were obtained by MCI WorldCom from (i) available
cash as a result of MCI WorldCom's US$6.1 billion public debt offering in August
1998; (ii) the sale of MCI's Internet backbone facilities and wholesale and
retail Internet business (the "iMCI Business") to Cable and Wireless plc ("Cable
& Wireless") for US$1.75 billion in cash on September 14, 1998; (iii) the sale
of MCI's 24.9% equity stake in Concert Communications Services ("Concert") to BT
for US$1 billion in cash on September 14, 1998; and (iv) availability under MCI
WorldCom's commercial paper program and credit facilities.
<PAGE>
34
Upon effectiveness of the MCI Merger, the then outstanding and
unexercised options exercisable for shares of MCI Common Stock were converted
into options exercisable for an aggregate of approximately 83 million shares of
MCI WorldCom Common Stock having the same terms and conditions as the MCI
options, except that the exercise price and the number of shares issuable upon
exercise were divided and multiplied, respectively, by 1.2439. The MCI Merger
was accounted for as a purchase; accordingly, operating results for MCI have
been included from the date of acquisition.
(2) On August 4, 1998, MCI acquired a 51.79% voting interest and a
19.26% economic interest in Embratel Participacoes S.A., ("Embratel"), Brazil's
only facilities-based national communications provider, for approximately US$2.3
billion. The purchase price will be paid in local currency installments, of
which US$916 million was paid on August 4, 1998 with the remainder to be paid in
two equal installments over the next two years. Embratel provides interstate
long distance and international telecommunications services in Brazil, as well
as over 40 other communications services, including leased high-speed data,
satellite, Internet, frame and packet-switched services. Operating results for
Embratel are consolidated in MCI WorldCom's consolidated financial statements
and are included from the date of the MCI Merger.
(3) On January 31, 1998, MCI WorldCom acquired CompuServe Corporation,
a Delaware corporation ("CompuServe"), pursuant to the merger (the "CompuServe
Merger") of a wholly owned subsidiary of MCI WorldCom with and into CompuServe.
Upon consummation of the CompuServe Merger, CompuServe became a wholly owned
subsidiary of MCI WorldCom.
As a result of the CompuServe Merger, each share of CompuServe common
stock was converted into the right to receive 0.40625 shares of MCI WorldCom
Common Stock, or approximately 37.6 million MCI WorldCom common shares in the
aggregate. Prior to the CompuServe Merger, CompuServe operated primarily
through two divisions: Interactive Services and Network Services. Interactive
Services offered worldwide online and Internet access services for consumers,
while Network Services provided worldwide network access, management and
applications, and Internet service to businesses. The CompuServe Merger was
accounted for as a purchase; accordingly, operating results for CompuServe have
been included from the date of acquisition.
On January 31, 1998, MCI WorldCom also acquired ANS Communications,
Inc., a Delaware corporation ("ANS"),from America Online, Inc. ("AOL") and has
entered into five year contracts with AOL under which MCI WorldCom and its
subsidiaries provide network services to AOL (collectively, the "AOL
Transaction"). As part of the AOL Transaction, AOL acquired CompuServe's
Interactive Services division and received a $175 million cash payment from MCI
WorldCom. MCI WorldCom retained the CompuServe Network Services ("CNS")
division. ANS provides Internet access to AOL and AOL's subscribers in the
United States, Canada, the United Kingdom, Sweden and Japan, and also designs,
develops and operates high performance wide-area networks for business,
research, education and governmental organizations. The AOL Transaction was
accounted for as a purchase; accordingly, operating results for ANS have been
included from the date of acquisition.
On January 29, 1998, MCI WorldCom acquired Brooks Fiber Properties,
Inc., a Delaware corporation ("BFP"), pursuant to the merger (the "BFP Merger")
of a wholly owned subsidiary of MCI WorldCom with and into BFP. Upon
consummation of the BFP Merger, BFP became a wholly owned subsidiary of MCI
WorldCom. BFP is a leading facilities-based provider of competitive local
telecommunications services, commonly referred to as a competitive local
exchange carrier, in selected cities within the United States. BFP acquires and
constructs its own state-of-the-art fiber optic networks and facilities and
leases network capacity from others to provide long distance carriers, Internet
Service Providers, wireless carriers and business, government and institutional
end users with an alternative to the incumbent local exchange carriers for a
broad array of high quality voice, data, video transport and other
telecommunications services.
As a result of the BFP Merger, each share of BFP common stock was
converted into the right to receive 1.85 shares of Common Stock or approximately
72.6 million MCI WorldCom common shares in the aggregate. The BFP Merger was
accounted for as a pooling-of-interests and, accordingly, MCI WorldCom's
financial statements for periods prior to the BFP Merger have been restated to
include the results of BFP for all periods presented.
(4) In the first quarter of 1998, MCI WorldCom recorded a pre-tax
charge of US$69 million for employee severance, alignment charges and direct
merger costs associated with the BFP Merger. Additionally, in the third quarter
of 1998, MCI WorldCom recorded a pre-tax charge of US$127 million primarily in
connection with the MCI Merger. The third quarter charge included severance
costs associated with the termination of certain employees which is expected to
be completed by the first quarter of 1999. Also included are alignment charges,
and other exit activities which include the costs of consolidating and closing
facilities, loss on sale or write down of assets and conformance of accounting
principles. In connection with recent business combinations, MCI WorldCom made
allocations of the purchase price to acquired in-process research and
development totalling US$429 billion in the first quarter of 1998 related to the
CompuServe Merger and AOL Transaction and US$3.1 billion in the third quarter of
1998 related to the MCI Merger.
(5) Results for 1996 include a US$2.14 billion charge for in-process
research and development related to the merger with MFS Communications Company,
Inc. ("MFS") on December 31, 1996. The charge is based upon a valuation
analysis of the technologies of MFS's worldwide information system, the Internet
network expansion system of Intermediate, and certain other identified research
and development projects purchased in the MFS merger. The expense includes
US$1.6 billion associated with Intermediate and US$0.54 billion related to MFS.
Additionally, 1996 results include other after-tax charges of US$121 million for
employee severance, employee compensation charges, alignment charges, and costs
to exit unfavorable telecommunications contracts and US$344 million after-tax
write-down of operating assets within MCI WorldCom's non-core businesses. On a
pre-tax basis, these charges totaled US$600.1 million.
(6) In connection with certain debt refinancing, MCI WorldCom
recognized in the nine months ended September 30, 1998 and in the year ended
December 31, 1996 extraordinary items of approximately US$128.7 million and
US$4.2 million, respectively, net of taxes, consisting of unamortized debt
discount, unamortized issuance cost and prepayment fees. Additionally, in 1996
MCI WorldCom recorded an extraordinary item of US$20.2 million, net of taxes,
related to a write-off of deferred international costs.
(7) In 1995, Metromedia Company ("Metromedia") converted its Series 1
Preferred Stock into MCI WorldCom Common Stock, exercised warrants to acquire
MCI WorldCom Common Stock and immediately sold its position of 61.7 million
shares of MCI WorldCom Common Stock in a public offering. In connection with
the preferred stock conversion, MCI WorldCom made a non-recurring payment of
US$15 million to Metromedia, representing a discount to the minimum nominal
dividends that would have been payable on the Series 1 Preferred Stock prior to
the September 15,
<PAGE>
35
1996 optional call date, of approximately US$26.6 million (which amount included
an annual dividend requirement of US$24.5 million plus accrued dividends to such
call date).
(8) Revenues and line costs for prior periods reflect a classification
change for inbound international settlements which are now being treated as an
offset to line costs instead of revenues. Previously, both MCI and WorldCom
classified foreign post telephone and telegraph administration settlements on a
gross basis with the outbound settlement reflected as line cost expense and the
inbound settlement reflected as revenue. This change better reflects the way in
which the business is operated because MCI WorldCom actually settles in cash
through a formal net settlement process that is inherent in the operating
agreements with foreign carriers.
Additional Information Regarding MCI WorldCom, Intermediate and
Purchaser. The name, citizenship, business address, principal occupation or
employment and five-year employment history for each of the directors and
executive officers of MCI WorldCom, Intermediate and Purchaser are set forth in
Schedule A attached hereto.
Schedule B hereto sets forth transactions in the Securities effected
during the past four months by MCI WorldCom, Intermediate, Purchaser and their
affiliates. There have been no transactions in the Securities effected during
the past four months by the persons listed in Schedule A. Except as set forth in
this Offer to Purchase and Schedule B hereto, none of MCI WorldCom, Intermediate
or Purchaser or, to the best knowledge of MCI WorldCom, Intermediate or
Purchaser, any of the persons listed in Schedule A hereto or any associate or
majority-owned subsidiary of such persons beneficially owns or has any right to
acquire any equity security of OzEmail, and none of MCI WorldCom, Intermediate
or Purchaser or, to the best knowledge of MCI WorldCom, Intermediate or
Purchaser, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing has
effected any transactions in any equity security of OzEmail during the past four
months.
Except as set forth in this Offer to Purchase and Schedule B, none of
MCI WorldCom, Intermediate or Purchaser or, to the best knowledge of MCI
WorldCom, Intermediate or Purchaser any of the persons listed in Schedule A
hereto has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of OzEmail, including, without
limitation, any contract, arrangement, understanding or relationship concerning
the transfer or the voting of any securities of OzEmail, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against loss
or the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, since January 1, 1995, none of MCI WorldCom, Intermediate or
Purchaser or, to the best knowledge of MCI WorldCom, Intermediate or Purchaser,
any of the persons listed in Schedule A hereto has had any business relationship
or transactions with OzEmail or any of its executive officers, directors or
affiliates that would require reporting under the rules of the SEC or the
Corporations Law. During 1997 and 1998, Intermediate provided internet transit
services to OzEmail. Payments made to Intermediate by OzEmail for these services
were approximately US$350,000 and US$300,000 in 1997 and 1998, respectively.
OzEmail has provided since March 1998 network, collocation, equipment
installation and support and engineering consulting services to Intermediate to
support Intermediate's dial-up Internet access services in Australia. As of
December 1998 payments to OzEmail for such services were approximately
US$700,000.
Except as set forth in this Offer to Purchase, since January 1, 1995,
there have been no contacts, negotiations or transactions between, on the one
hand, MCI WorldCom, Intermediate or Purchaser, or any of their respective
subsidiaries, or, to the best knowledge of MCI WorldCom, Intermediate or
Purchaser, any of the persons listed in Schedule A hereto, and on the other
hand, OzEmail or its executive officers, directors or affiliates, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
<PAGE>
36
amount of assets.
The Subscription Agreement
The following is a summary of certain provisions of the Subscription
Agreement, a copy of which will be filed as an Exhibit to the Tender Offer
Statement on Schedule 14D-1 to be filed by Purchaser, Intermediate and MCI
WorldCom with the SEC in connection with the Offer and is incorporated herein by
reference. Such summary is qualified in its entirety by reference to the
Subscription Agreement.
Subscription and Issuance of Shares. Pursuant to the Subscription
Agreement, Purchaser acquired 21,863,174 ordinary shares in the capital of
OzEmail representing in aggregate no more than 14.9% of the ordinary share
capital of OzEmail, after issuance of the Shares, at the subscription price of
US$43,726,348 (the "Subscription Price"), representing US$2.00 per Share on the
subscription date of December 12, 1998 (Sydney, Australia time) (the
"Subscription Date").
Registration Rights. The Subscription Agreement provided that
Purchaser understood that the acquired shares were not registered under the U.S.
Securities Act of 1933 and agreed that it will only offer and sell such shares
pursuant to a registration statement in accordance with the U.S. Securities Act
of 1933, pursuant to an exemption from the registration requirements of the
Securities Act, or in a transaction not subject to the Securities Act. The
Subscription Agreement provided that in the event that Purchaser makes a
takeover bid that is subsequently terminated or is otherwise not entitled to
proceed under the Corporations Law to compulsory acquisition of all the shares
of OzEmail, OzEmail agreed, upon the request of Purchaser, to file one
registration statement under the U.S. Securities Act of 1933 and applicable
Australian laws relating to the sale of the Shares and any other shares acquired
pursuant to the Offer and to use its best efforts to cause the registration
statement to become effective. OzEmail will not be required to file the
registration statement, however, if, in a written opinion of OzEmail's counsel
satisfactory to Purchaser, such registration is not required for the sale of the
shares in the manner proposed by Purchaser. If a registration statement is
filed, OzEmail agrees to use its best efforts to maintain the effectiveness of
such registration statement, including any amendment, supplement or updates
necessary, until the completion of the distribution or such time as the
registration is no longer necessary. The registration would be made at
OzEmail's expense except for underwriting commissions and fees and disbursements
of Purchaser's counsel. OzEmail and Purchaser agreed to indemnify and hold
harmless each other and their controlling persons, and to make contribution, to
the same extent as is customary in a U.S. registration rights agreement between
an issuer and a minority stockholder. Purchaser's registration rights may be
assigned to any transferee who acquires the shares or any other shares of
OzEmail acquired by Purchaser pursuant to the Offer.
Members Register. Pursuant to the Subscription Agreement, OzEmail
must provide a hard copy and a copy on computer disk or computer tape, if
applicable, of the information on the register of members of OzEmail as at the
date stated by Purchaser, within two business days of written request.
Warranties. The Subscription Agreement contains various warranties of
OzEmail relating to the following: (i) the percentage of the capital of OzEmail
represented by the Shares; (ii) options and other rights to acquire shares;
(iii) a three month period following the date of the Subscription Agreement
during which OzEmail will not issue and allot any shares other than those
pursuant to existing rights under any employee share option plan; (iv)
OzEmail's power and authority to
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37
perform its obligations under the Subscription Agreement; (v) the approval of
the issue of the Shares by OzEmail's shareholders and the absence of breach of
the Listing Rules of the Australian Stock Exchange Limited or OzEmail's
constitution; and (vi) the absence of any proceeding concerning the winding up,
receivership or liquidation of OzEmail.
Other Provisions. The Subscription Agreement provided for the
termination of the confidentiality agreement between Goldman Sachs Australia LLC
(on behalf of OzEmail) and Purchaser, subject to certain conditions. The
Subscription Agreement provided that OzEmail must apply to ASX for quotation of
the Shares within two business days of the Subscription Date, and use its best
effort to ensure the Shares are quoted by the ASX as soon as possible after the
Subscription Date.
Announcement of Offer. The parties agreed to issue separate press
releases announcing the completion of the subscription by Purchaser and
Purchaser's intent to make the Offer.
Governing Law. The Subscription Agreement is governed by the laws
applicable in New South Wales, Australia. Each party submits to non-exclusive
jurisdiction in the courts of New South Wales, Australia.
9. SOURCE AND AMOUNT OF FUNDS
The consideration for the acquisition of the Securities to which the
Offer relates will be satisfied wholly by payment of cash. None of the funds
for the consideration will be sourced from Purchaser's own resources.
The maximum amount payable by Purchaser under the Offer for the
Securities to which it is not entitled will be approximately US$297 million if:
(i) all the holders of Shares accept the Offer in respect of all
Shares (other than those represented by ADSs for which the Offer
is accepted);
(ii) all the holders of ADSs accept the Offer in respect of all ADSs
(other than those representing Shares for which the Offer is
accepted);
(iii) all the holders of Options exercise their options and accept the
Offer in respect of all Securities issued upon that exercise;
and
(iv) except the Shares issued upon the exercise of the Options, no
other Securities are issued before the Expiration Date.
MCI WorldCom has agreed to make available, or procure the availability
of, the amount required by Purchaser to fund the acquisition. There are no
conditions precedent to MCI WorldCom's obligation to make available, or procure
the availability of, the amount required to fund the acquisition, except that
Purchaser cannot issue a draw down notice unless and until the Offer is declared
or becomes free of conditions.
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38
MCI WorldCom will obtain the amount required from cash on hand and
from its existing credit facilities. These facilities were not established
specifically to fund the acquisition of the Securities. These facilities
comprise US$10.75 billion in credit facilities consisting of a US$3.75 billion
Amended and Restated Facility A Revolving Credit Agreement ("Facility A Loans")
and a US$7 billion 364-Day Revolving Credit and Term Loan Agreement (the
"Facility C Loans") (together, "Credit Facilities"). There are no unusual or
material conditions to be satisfied prior to drawdown under the Credit
Facilities. The parties to the Credit Facilities are MCI WorldCom and
NationsBank, N.A. (Arranging Agent and Administrative Agent), NationsBanc
Montgomery Securities LLC (Lead Arranger), Bank of America NT & SA, Barclays
Bank PLC, The Chase Manhattan Bank, Citibank, N.A., Morgan Guaranty Trust
Company of New York, and Royal Bank of Canada (Co-Syndication Agents) and the
lenders named in the Restated Facility A Revolving Credit Agreement dated as of
August 6, 1998 and the 364-Day Revolving Credit and Term Loan Agreement dated
August 6, 1998.
The Credit Facilities provide liquidity support for MCI WorldCom's
commercial paper program and are used for other general corporate purposes. The
Facility A Loans mature on June 30, 2002. The Facility C Loans have a 364-day
term, which may be extended for up to two successive 364-day terms thereafter to
the extent of the committed amounts from those lenders consenting thereto, with
a requirement that lenders holding at least 51% of the committed amounts
consent. Additionally, effective as of the end of such 364-day term, MCI
WorldCom may elect to convert up to US$4 billion of the principal debt under the
Facility C Loans from revolving loans to term loans with a maturity date no
later than one year after the conversion.
The Credit Facilities bear interest payable in varying periods,
depending on the interest period, not to exceed six months, or with respect to
any Eurodollar Rate borrowing, 12 months if available to all lenders, at rates
selected by MCI WorldCom under the terms of the Credit Facilities, including a
Base Rate or Eurodollar Rate, plus the applicable margin. The applicable margin
for the Eurodollar Rate borrowing varies from 0.35% to 0.75% as to Facility A
Loans and from 0.225% to 0.450% as to Facility C Loans, in each case based upon
the better of certain debt ratings. The Credit Facilities are unsecured but
include a negative pledge of the assets of MCI WorldCom and its subsidiaries
(subject to certain exceptions). The Credit Facilities require compliance with
a financial covenant based on the ratio of total debt to total capitalization,
calculated on a consolidated basis. The Credit Facilities require compliance
with certain operating covenants which limit, among other things, the incurrence
of additional indebtedness by MCI WorldCom and its subsidiaries, sales of assets
and mergers and dissolutions, which covenants are generally less restrictive
than those contained in the prior credit facilities and which do not restrict
distributions to shareholders, provided MCI WorldCom is not in default under the
Credit Facilities. The Facility A Loans and Facility C Loans are subject to
annual commitment fees not to exceed 0.25% and 0.12%, respectively, of any
unborrowed portion of the facilities.
The amounts available under the Credit Facilities will exceed the
maximum amount payable under the Offer. MCI WorldCom has undertaken to Purchaser
that the funds available to it under the Credit Facilities, and which it will
make available to Purchaser, will be sufficient to satisfy that maximum amount.
Because the Offer is made in U.S. dollars, there is no need to engage in, and
neither Purchaser nor MCI WorldCom has engaged in, hedging activities to account
for exchange rate fluctuations in connection with the Offer.
<PAGE>
39
MCI WorldCom currently plans to repay borrowings under the Credit
Facilities out of operating cash flow and future financings, although MCI
WorldCom has no current specific plan with respect thereto. Such decisions when
made will be based on MCI WorldCom's review from time to time of the
advisability of particular actions, as well as on prevailing interest rates and
financial and other economic conditions. This description of the Credit
Facilities is a summary only and is not intended to be a complete description of
the all of the terms thereof. Reference is made to the full text thereof,
copies of which are filed as exhibits to MCI WorldCom's Current Report on Form
8-K dated August 6, 1998 (filed August 7, 1998) on file with the SEC, as
described in "Item 8. Certain Information Concerning Purchaser, Intermediate
and MCI WorldCom" and which will be incorporated by reference as exhibits to the
Tender Offer Statement on Schedule 14D-1 to be filed by MCI WorldCom,
Intermediate and Purchaser with the SEC in connection with the Offer.
10. BACKGROUND OF THE OFFER; CONTACTS WITH OZEMAIL
MCI WorldCom routinely analyzes other companies within its
subsidiaries' industries for the purpose of evaluating potential commercial,
joint venture, strategic, acquisition or merger opportunities which may be
available. Under appropriate circumstances, representatives may establish
direct or indirect contact with potential candidates identified through this
process. Contact between MCI WorldCom and OzEmail was precipitated in part by
the expansion of MCI WorldCom's operations into the Asia-Pacific region.
In June 1997, international corporate development and finance
personnel of Intermediate contacted Malcolm Turnbull, Chairman of the Board of
OzEmail, and Sean Howard, Chief Executive Officer of OzEmail, regarding a
possible acquisition and began a financial analysis of OzEmail. Goldman Sachs
informed Intermediate that it had been retained by OzEmail in August 1997 in
connection with a potential strategic transaction.
Between June 1997 and February 1998, discussions regarding a possible
acquisition continued intermittently between the international business
development and finance personnel of Intermediate and Messrs Turnbull and
Howard. In February 1998, however, discussions were terminated by Intermediate,
due to its involvement in other activities at the time.
In August and September 1998, Mr Turnbull and a representative of
Intermediate discussed Intermediate's possible interest in considering an
acquisition of OzEmail.
On September 16, 1998, a representative of Intermediate reinitiated
contact with Mr Turnbull concerning a possible acquisition. During late
September and early October 1998, certain Intermediate international business
development and finance personnel requested and received from OzEmail certain
information to facilitate MCI WorldCom's evaluation of OzEmail and the merits of
a possible acquisition and held certain discussions regarding such information.
On October 1, 1998, Mr Turnbull contacted a representative of
Intermediate by telephone to inquire as to the status of MCI WorldCom's
consideration of a transaction.
<PAGE>
40
On October 2, 15, 16 and 21, 1998, international business development
finance and legal personnel of Intermediate conducted various internal meetings
and conference calls to value OzEmail based in part on estimates published by
Goldman Sachs. In addition, after Intermediate retained Australian counsel in
late October 1998 these meetings and conference calls included discussions of
the takeover process in Australia and how this would affect a possible
acquisition.
On November 1, 1998, Intermediate entered into an agreement with
Goldman Sachs, on behalf of OzEmail, pursuant to which, among other things,
OzEmail agreed to make certain information available to Intermediate on a
confidential basis.
On November 4, 1998, John Sidgmore, Vice Chairman of MCI WorldCom, and
finance and legal personnel of Intermediate met with Australian counsel for MCI
WorldCom to discuss aspects of the takeover offer process under Australian law.
On November 5 and 6, 1998, Mr Sidgmore spoke by telephone with Mr Turnbull to
discuss MCI WorldCom's interest in the possible acquisition of OzEmail and they
concluded they would speak again soon.
On November 12, 1998, Messrs Sidgmore and Turnbull discussed by
telephone the possibility of meeting in person and possible dates. On November
29, 1998, Messrs Sidgmore and Turnbull had a telephone conversation about a
possible valuation range for OzEmail. On December 2, 1998, Mr Sidgmore met with
various Intermediate personnel to discuss the specifics of a possible
acquisition of OzEmail. On December 4, 1998, Mr Sidgmore and Charles Cannada,
Senior Vice President, Corporate Development of MCI WorldCom, met in New York
with Mr Turnbull and representatives of Goldman Sachs. This meeting included
the discussion of issues and structure of a possible acquisition, including the
possibility that MCI WorldCom would acquire a stake in OzEmail.
In early December 1998, MCI WorldCom engaged Merrill Lynch to serve as
its financial advisor with respect to a possible transaction.
Between December 7 and December 11, 1998, Mr Sidgmore and
representatives of OzEmail held a series of telephone conversations to discuss
the elements of a possible acquisition, including valuation. In addition,
between December 8 and December 11, 1998, representatives from Merrill Lynch
held a series of telephone discussions with representatives of OzEmail regarding
the structure and terms of a possible acquisition, including the acquisition of
a stake.
On December 10 and 11, 1998 (Sydney time), Intermediate and OzEmail
and their respective counsels, reviewed drafts of a subscription agreement
pursuant to which Purchaser would acquire 14.9% of the Shares (after issuance).
On December 11, 1998, Intermediate and OzEmail and their representatives met in
Sydney, Australia and discussed the proposed subscription agreement and a
possible acquisition.
On December 12, 1998 (Sydney time), Mr Sidgmore and Mr Turnbull
discussed and agreed on the price of the Shares to be purchased by Purchaser
from OzEmail. MCI WorldCom at that time also determined the price at which
Purchaser would make the Offer. Intermediate was informed by OzEmail that its
Board had approved the issuance of 14.9% of the Shares to Purchaser. Purchaser
and OzEmail then entered into the Subscription Agreement whereby Purchaser
subscribed for 21,863,174 Shares of OzEmail at US$2.00 per share representing a
14.9% interest in OzEmail.
<PAGE>
41
On December 13, 1998 (December 14, 1998 in Australia), MCI WorldCom
and OzEmail issued separate press releases prior to the opening of trading on
the NNM and the ASX announcing the sale of the Shares to Purchaser and
Purchaser's intention to commence the Offer.
On December 14, 1998 (Sydney time), Mr Sidgmore and management of
OzEmail spoke by conference call and on December 15, 1998 (Sydney time), Mr
Sidgmore spoke to employees of OzEmail by conference call, in each case,
regarding MCI WorldCom's global strategy.
On January [ ], 1999, Purchaser commenced the Offer.
To the extent any of the foregoing information described events to
which none of MCI WorldCom, Intermediate, Purchaser or their advisors were a
party, it is based on information provided by OzEmail or the parties indicated.
None of MCI WorldCom, Intermediate, Purchaser or their advisors has independent
knowledge as to the accuracy or completeness of information provided by OzEmail.
11. PURPOSE OF THE OFFER; PLANS FOR OZEMAIL
11.1 Intention to Compulsorily Acquire
It is Purchaser's present intention that if, following the close of
the Offer, Purchaser becomes entitled to compulsorily acquire the Shares
(including Shares represented by ADSs) which were subject to the Offer but which
were not acquired under the Offer, Purchaser will proceed to compulsorily
acquire those Shares. In essence, compulsory acquisition allows Purchaser to
compel any remaining holders of Shares (including Shares represented by ADSs) to
sell those Shares to Purchaser in the manner set forth below.
If Purchaser Becomes Entitled to Compulsory Acquisition. If Purchaser
becomes entitled to compulsorily acquire Shares (including Shares represented by
ADSs), Purchaser may, before the end of two months after the end of the Offer
Period, give notice to an offeree who did not accept the Offer to the effect
that Purchaser desires to acquire the outstanding Shares held by that offeree.
Purchaser is then entitled and bound to acquire the Shares to which the notice
relates on the terms of the Offer in effect at the Expiration Date, unless a
court orders otherwise. Provided that a court does not order otherwise,
Purchaser must, within the prescribed period under the Corporations Law, acquire
the Shares by serving a copy of a compulsory acquisition notice on OzEmail,
together with a transfer of the Shares signed on behalf of the holder by a
person appointed by Purchaser. Purchaser also must pay the consideration for
the transfer of the Shares to OzEmail, to be held by OzEmail on trust for such
offerees.
Additionally, Purchaser will be seeking relief from the ASIC after the
close of the Offer Period pursuant to the ASIC's Policy Statement 126 to permit
the compulsory acquisition of Shares that may be issued after the close of the
Offer Period, including at a later date of Shares issued following exercise by
employees of the Options, assuming the conditions necessary for compulsory
acquisition are satisfied under the Offer. Purchaser will also apply to ASIC
for a modification of section 701(2)(c) of the Corporations Law so as to
discount untraceable shareholders in determining whether the compulsory
acquisition requirements of section 701(2)(c) have been satisfied by Purchaser.
<PAGE>
42
If Purchaser does not Become Entitled to Compulsory Acquisition. If
Purchaser is not entitled to compulsorily acquire any outstanding shares within
two months of the expiration of the Offer, it will thereafter only be able to
compulsorily acquire those Shares pursuant to statutory procedure which
authorises compulsory acquisition, such as a further takeover bid or a scheme of
arrangement. A scheme of arrangement between OzEmail and its shareholders
propounded by Purchaser will bind shareholders and permit compulsory acquisition
or cancellation of the Shares held by a person other than Purchaser, if it is
approved by shareholders (other than Purchaser) who are more than 50% in number
of shareholders present and voting at a meeting held to approve the scheme,
being shareholders holding at least 75% of the shares held by all shareholders
present and voting at that meeting and if it is approved by the court.
11.2 Intentions if Purchaser acquires 100% of Shares
If, under the Offer and the operation of the compulsory acquisition
provisions of the Corporations Law, Purchaser obtains ownership of all the
issued Shares (including those Shares represented by ADSs), Purchaser presently
intends to do the following:
(i) Purchaser will in the ordinary course of its management, review
the lines of business, assets and employees of OzEmail to
evaluate performance, profitability, prospects and overall fit
in MCI WorldCom's Internet-related businesses in the light of
the information that is then available to it. Given MCI
WorldCom's plans to enter the facilities-based
telecommunications business in Australia, MCI WorldCom, together
with OzEmail, will be able to provide comprehensive and
competitive telecommunications services in Australia. This
operational review will focus on identifying opportunities to
improve productivity and competitiveness consistent with this
plan.
(ii) Subject to the operational review referred to in paragraph (i),
Purchaser presently intends to:
(A) preserve and grow the existing core Internet services
provider business activities of OzEmail and integrate
them into the MCI WorldCom Internet-related businesses;
(B) have OzEmail be the Internet service provider operating
company in Australia for the MCI WorldCom group;
(C) remove all of the Board of Directors of OzEmail and seek
the appointment of nominees of Purchaser, some of whom
may include existing OzEmail directors (although no
arrangement, or understanding exists in relation to this
possible appointment);
(D) perform a review of all existing telecommunications
capacity requirements of OzEmail and to the extent
practicable and in accordance with OzEmail's existing
contractual arrangements migrate those requirements to
facilities owned or leased by MCI WorldCom;
(E) achieve synergies by the elimination of any duplicate
functions arising as a result of the acquisition of
OzEmail;
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43
(F) combine MCI WorldCom group's and OzEmail's technical,
managerial and sales skills and resources for the
benefit of their combined businesses;
(G) review the capital funding requirements of OzEmail with
a view to utilizing the larger balance sheet of the MCI
WorldCom group and seeking more favorable financing
terms which Purchaser expects would be available to
OzEmail;
(H) have OzEmail removed from official listing on the ASX
and the NNM;
(I) terminate the registration of the Shares and/or ADSs, as
applicable, under the Exchange Act; and
(J) as part of the operational review referred to in
paragraph (i), review the contractual and regulatory
framework within which the combined OzEmail/MCI WorldCom
group would operate in Australia and New Zealand.
(iii) If the steps referred to in paragraph (ii) are implemented, some
employees of OzEmail may be redundant. If suitable alternative
employment within the MCI WorldCom group is not available and
OzEmail employees are made redundant, they will receive their
statutory and contractual entitlements.
Apart from the matters listed above, Purchaser does not presently
intend to make other changes to OzEmail, OzEmail's business (including
redeployment of fixed assets) or OzEmail's employees.
11.3 Intentions if Purchaser acquires less than 100% of Shares
If, prior to close of the Offer, Purchaser has waived the Minimum
Condition and if, at the close of the Offer, Purchaser is entitled to more than
50% but less than 90% of the issued Shares (including those Shares represented
by ADSs), Purchaser presently intends to do the following, subject to OzEmail's
constitution and applicable laws and regulations:
(i) conduct a review of the kind detailed in section 11.2(i) above;
(ii) subject to that review, attempt to procure that the Board of
Directors of OzEmail:
(A) seeks the appointment of nominees of Purchaser to the
Board of Directors of OzEmail in such a proportion as at
least equates to Purchaser's shareholding interest in
OzEmail;
(B) continues to operate the businesses of OzEmail and not
make any major changes to the businesses of OzEmail or
make any redeployment of the fixed assets of OzEmail;
and
(C) co-ordinate MCI WorldCom group's and OzEmail's
technical, managerial and sales skills and resources for
the benefit of their combined businesses, with the
provision of such resources by one to the other being on
arm's length terms;
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44
(iii) if the steps referred to in paragraph (ii) are implemented, some
employees of OzEmail may be redundant. However, it is likely
that there will be fewer redundancies than if OzEmail becomes a
wholly-owned subsidiary of Purchaser since it will not be
possible to eliminate to the same extent duplicate functions in
relation to, for example, certain public company reporting
functions; and
(iv) have OzEmail removed from the official listing on the ASX and
the NNM when and to the extent permitted by the ASX and NNM and
when and to the extent permitted by the Exchange Act, to seek to
terminate the registration of the Shares and/or the ADSs, as
applicable, under the Exchange Act.
Apart from the matters listed above, Purchaser does not presently
intend to make other changes to OzEmail, OzEmail's business (including
redeployment of fixed assets) or OzEmail employees.
If, at the close of the Offer, Purchaser is entitled to less than 50%
of the issued Shares (including those Shares represented by ADSs), then
Purchaser will consider the options available to it as a holder of less than
50%.
The intentions of Purchaser referred to in sections 11.2 and 11.3 have
been formed with reference to publicly available information and without the
benefit of any detailed review of OzEmail's businesses. In particular,
Purchaser has not had access to all of the instruments and agreements under
which OzEmail has financed its operations or engaged in business ventures with
other parties. For example, Purchaser has not had access to all the terms of
OzEmail's contracts.
Following the implementation of the operational review described in
section 11.2(i) or 11.3(i), it will be a matter for the Board of Directors of
OzEmail to determine the extent to which the steps referred to in sections 11.2
and 11.3 are to be implemented (if at all). Final decisions will only be
reached after the review referred to in sections 11.2 and 11.3 above, and will
only be reached in the light of all material facts and circumstances which then
exist. Accordingly, the statements contained in this section 11 are statements
of current intention only which may vary as circumstances require depending,
among other matters, on the outcome of the Offer. The Board of Directors of
OzEmail may only implement the steps in accordance with all applicable, legal,
regulatory, contractual, SEC, ASIC, ASX and NNM requirements and their
fiduciary, statutory and contractual obligations generally.
Except as indicated in this Offer to Purchase, none of MCI WorldCom,
Intermediate or Purchaser has any present plans or proposals which relate, to or
would result in, an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving OzEmail or any of its subsidiaries, a
sale or transfer of a material amount of assets of OzEmail or any of its
subsidiaries, any material change in OzEmail's capitalization or dividend
policy, or any other material change in OzEmail's corporate structure or
business, or the composition of the board or management.
11.4 "Going Private" Transactions
The SEC has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going-private" transactions and which may be applicable
as a consequence of the Offer. Rule 13e-3 may apply if Purchaser acquires less
than 90% of the outstanding Securities in the Offer (and consequently is unable
to compulsorily acquire all of the Securities in accordance with the
<PAGE>
45
Corporations Law), and Purchaser subsequently enters into certain business
combinations with OzEmail or makes certain acquisitions of Securities. Rule
13e-3 would be inapplicable if the Shares and/or ADSs, as applicable, were
deregistered under the Exchange Act prior to any such business combination or
acquisition of Securities. If applicable, Rule 13e-3 would require, among other
things, that certain financial information concerning OzEmail and certain
information relating to the fairness of the consideration offered to minority
shareholders be filed with the SEC and distributed to minority shareholders
before the consummation of any such transaction.
The purchase of a substantial number of Securities pursuant to the
Offer may result in the termination, upon application of OzEmail to the SEC, of
OzEmail's registration under the Exchange Act. See Section 1.3 "Effect of the
Offer on the Market for Securities: National Association of Securities Dealers
and Australian Stock Exchange Quotation and Exchange Act Registration." If such
registration were terminated, Rule 13e-3 would be inapplicable to any such
business combination or acquisition of Securities.
12. DIVIDENDS AND DISTRIBUTIONS
If, on or after December 22, 1998 (the date of lodgment of the Part A
Statement with the ASIC), OzEmail should split, combine or otherwise change the
Shares, the ADSs or its capitalisation, or shall disclose that it has taken any
such action, subject to the provisions of Section 14, Purchaser may make such
adjustments to reflect such split, combination or other change in the Offer
price and the other terms of the Offer (including, without limitation, the
number and type of securities offered to be purchased, the amounts payable
therefor and the fees payable hereunder) provided that Purchaser has obtained
the prior consent of the ASIC to a variation of the Offer in such a manner.
If, on or after December 22, 1998 (Sydney time), OzEmail should
declare or pay any cash or stock dividend or other distribution on or issue any
rights with respect to the Securities payable or distributable to shareholders
of record on a date before the transfer of the name of Purchaser or its nominee
or transferee on OzEmail's transfer records of the Securities accepted for
payment pursuant to the Offer, then subject to the provisions of Section 14, in
respect of any cash dividend or distribution (i) unless such cash dividend or
distribution is remitted to the U.S. Depositary in the case of a tendering
holder of ADSs or the Registry in the case of tendering holders of Shares, the
purchase price per Share or ADS payable by Purchaser pursuant to the Offer will
be reduced by the amount of any such cash dividend or cash distribution and, in
respect of any non-cash dividend, distribution or right (ii) the whole of any
such non-cash dividend, distribution or right will be received and held by the
tendering holder for the account of Purchaser and shall be required to be
promptly remitted and transferred (a) by each tendering ADS holder to the U.S.
Depositary for the account of Purchaser, and (b) by each tendering holder of
Shares to the Registry, or if such tendering holder of certificated Shares is
located in the U.S., the U.S. Depositary, accompanied by appropriate
documentation of transfer. Pending such remittance, Purchaser will be entitled
to all rights and privileges as owner of any such non-cash dividend,
distribution or right and may withhold the entire purchase price or deduct from
the purchase price the amount or value thereof, as determined by Purchaser.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SECURITIES; THE NASDAQ
NATIONAL MARKET AND AUSTRALIAN STOCK EXCHANGE QUOTATION AND EXCHANGE ACT
REGISTRATION
<PAGE>
46
The purchase of Securities pursuant to the Offer will reduce the
number of Securities that might otherwise trade publicly and could reduce the
number of holders of Securities, which could adversely affect the liquidity and
market value of the remaining Securities held by the public.
Depending upon the number of ADSs purchased pursuant to the Offer, the
ADSs may no longer meet the requirements of the National Association of
Securities Dealers, Inc. ("NASD") for continued inclusion on the NNM. According
to the NASD's published guidelines, the ADSs would not be eligible to be
included for listing if, among other things:
(i) the number of round lot holders of ADSs (holders of 100 or more
ADSs) falls below 400;
(ii) the aggregate market value of such publicly held ADSs does not
exceed $5,000,000; or
(iii) there are not at least two registered and active market makers
for the ADSs, each of which must enter a firm two-sided
quotation.
According to OzEmail's Annual Report on Form 10-K for the year ending
December 31, 1997, there were 121,226,250 Shares outstanding, 33,820,000 of
which were represented by ADSs held by 38 holders of record. By letter dated
December 21, 1998, OzEmail informed Purchaser that as of that date, there were
146,732,714 Shares issued and outstanding, of which approximately 42,855,100
were represented by ADSs.
The Shares are listed on the ASX. According to the ASX rules, to
maintain a listing, a sufficient spread of shareholders is required, which is
generally interpreted by ASX to mean 300 holders of marketable parcels (which
term is defined in the ASX Listing Rules and is dependent on the value of the
securities and in the case of OzEmail would mean 50 Shares). If that threshold
is not met, the ASX may request OzEmail to take steps to increase the number of
holders of marketable parcels and could eventually seek to have OzEmail apply
for the delisting of the Shares. In circumstances where Purchaser has acquired
Shares pursuant to the Offer, but is not in a position to compulsorily acquire
any Shares not then held by Purchaser, Purchaser considers that delisting of the
Shares on ASX is unlikely. Accordingly, Purchaser's present intention is only
to seek to have the Shares delisted from the ASX in circumstances where
Purchaser acquires 100% of the Shares. However, in circumstances where
Purchaser has acquired Securities pursuant to the Offer and is in a position to
compulsorily acquire the Shares not then held by Purchaser, Purchaser will
proceed to compulsorily acquire those Shares and, as a result, delisting of the
Shares will occur.
Although Purchaser considers that delisting of the Shares and ADSs by
the ASX and the NNM respectively, is unlikely in circumstances where Purchaser
is not in a position to compulsorily acquire any Shares not then held by
Purchaser, the following information may be relevant to investors should the NNM
and the ASX delist the ADSs and Shares respectively:
(i) If the NNM and the ASX were to delist the ADSs and the Shares
respectively, the market therefor could be adversely affected.
It is possible that the ADSs and the Shares would be traded on
other securities exchanges or in the over-the-counter market,
and that the price quotations would be reported by such
exchanges or through other sources. For example, the ADSs may
nevertheless continue to be included in The Nasdaq SmallCap
Market unless, among other things, there were fewer than 300
round lot holders of ADSs in total.
<PAGE>
47
If the ADSs are no longer eligible for inclusion in the NNM or
The Nasdaq SmallCap Market, the ADSs might still be quoted on
the OTC Bulletin Board. The extent of the public market for such
and the availability of such quotations would depend, however,
upon such factors as the number of holders and/or the aggregate
market value of such securities remaining at such time, the
interest in maintaining a market in the Securities on the part
of securities firms, the possible termination of registration
under the Exchange Act as described below and other factors.
Purchaser cannot predict whether the reduction in the number of
Securities that might otherwise trade publicly would have an
adverse or beneficial effect on the market price for, or
marketability of, Securities or whether it would cause future
market prices to be greater or lesser than the Offer price.
(ii) The ADSs are currently "margin securities" under the regulations
of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other
things, of allowing brokers to extend credit on the collateral
of the ADSs. Depending upon factors similar to those described
above regarding listing and market quotations, following the
Offer, it is possible that the ADSs might no longer constitute
"margin securities" for purposes of the margin regulations of
the Federal Reserve Board, in which event such ADSs could no
longer be used as collateral for loans made by brokers.
(iii) The Shares and/or ADSs, as applicable, are currently registered
under the Exchange Act. Such registration may be terminated upon
application by OzEmail to the SEC under certain circumstances if
the Shares and/or ADSs, as applicable, are not listed on a
national securities exchange and there are fewer than 300 record
holders of the Shares and/or ADSs in the United States. The
termination of registration of the Shares and/or ADSs under the
Exchange Act would substantially reduce the information required
to be furnished by OzEmail to holders of Shares and ADSs and to
the SEC and would make certain provisions of the Exchange Act,
such as the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer
applicable to OzEmail. See Section 11 "Purpose of the Offer;
Plans for OzEmail-- 'Going Private' Transactions". In addition,
"affiliates" of OzEmail and persons holding "restricted
securities" of OzEmail may be deprived of the ability to dispose
of such securities pursuant to Rule 144 promulgated under the
Securities Act. If registration of the Shares and/or ADSs, as
applicable, under the Exchange Act were terminated, the Shares
and ADSs would no longer be "margin securities" or be eligible
for NNM reporting.
(iv) If OzEmail is no longer listed on the ASX, the reporting and
filing requirements of the ASX will no longer need to be
complied with. OzEmail will, however, continue to be subject to
requirements relating to continuous disclosure of all material
information that a reasonable person would expect to have a
material effect on the price or value of the Securities under
the continuous disclosure requirements of the Corporations Law,
as long as OzEmail continues to have 100 or more holders of its
Shares and is therefore a disclosing entity under the
Corporations Law. OzEmail will also continue to be subject to
other provisions of the Corporations Law, such as provisions
governing related party transactions and takeovers, until such
time (if any) as OzEmail becomes a wholly-owned subsidiary of
Purchaser pursuant to the compulsory acquisition provisions of
the Corporations Law or otherwise. See Section 11.1 "Purpose of
the Offer; Plans For OzEmail - Intention to Compulsorily
Acquire."
<PAGE>
48
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC and the ASIC, pay for any Securities, and may, subject to
obtaining the consent of the ASIC, withdraw the Offer:
(i) if at the Expiration Date, the Minimum Condition as described in
Section 1.2(i) "Conditions; Waiver" has not been satisfied;
(ii) unless prior to the Expiration Date in respect of the
Australian Government's foreign investment policy:
(A) Purchaser receives written notice from the Australian
Treasurer or his agent under the Foreign Acquisitions
and Takeovers Act 1975 to the effect that the Australian
Government has no objection to the acquisition by way of
takeover by Purchaser of Securities or any transaction
contemplated by that takeover under the Australian
Government's foreign investment policy;
(B) the period provided under the Foreign Acquisitions and
Takeovers Act 1975 during which the Australian Treasurer
may make an order under that Act (including an interim
order under section 22) prohibiting the acquisition has
elapsed, without such an order being made; or
(C) if an interim order under section 22 is made, the
subsequent period for making a final order prohibiting
the acquisition has elapsed, without such an order being
made.
(iii) if at any time on or after December 22, 1998 (the date of
lodgment of the Part A Statement with the ASIC) and before the
Expiration Date any of the following events shall occur:
(A) there shall be any statute, rule, regulation,
interpretation, proceeding, judgment, order or
injunction, enacted, enforced, promulgated, amended,
issued, instituted or deemed applicable in relation to:
(1) Purchaser, Intermediate, MCI WorldCom or any
other affiliate of MCI WorldCom (the "Purchaser
Group"); or
(2) the Offer or any business combination by any
member of the Purchaser Group with OzEmail,
by or before any court, government or governmental,
administrative or regulatory authority or agency of any
jurisdiction or any other person:
(a) challenging or seeking to make illegal, to delay
or otherwise directly or indirectly to restrain
or prohibit the making of the Offer, the
acquisition or the acceptance for payment of, or
payment for, some or all of the Securities by
any member of the Purchaser Group, or the
consummation by any member of the
<PAGE>
49
Purchaser Group of any business combination with
OzEmail;
(b) seeking to prohibit the direct or indirect
ownership or operation by any member of the
Purchaser Group of all or any portion of the
Securities or the business or assets of OzEmail
and its subsidiaries or of Purchaser, or to
compel any member of the Purchaser Group to
dispose of or hold separately all or any portion
of the Securities or the business or assets of
Purchaser or OzEmail or any of its subsidiaries
or seeking to impose any limitation on the
ability of any member of the Purchaser Group to
conduct their respective businesses or own such
assets in connection with the acquisition of the
Securities;
(c) seeking to impose or confirm limitations on the
ability of any member of the Purchaser Group
effectively to exercise full rights of ownership
of the Securities, including, without
limitation, the right to vote any Securities
acquired by any such person on all matters
properly presented to OzEmail's shareholders;
(d) seeking to require divestiture by any member of
the Purchaser Group of any Securities;
(e) which otherwise materially adversely affects, or
if adversely determined, would affect, the value
of the Securities; or
(f) which materially adversely affects, or if
adversely determined, would materially adversely
affect, the business, properties, assets,
liabilities, capitalization, shareholders'
equity, condition (financial or other),
operations, licences, results of operations or
prospects of OzEmail or any of its subsidiaries,
joint ventures or partnerships;
provided that the condition specified in this paragraph
(iii)(A) shall not be deemed to exist by reason of any
court proceeding instituted prior to December 22, 1998
and known to Purchaser, unless there is any adverse
development in any such proceeding after the date
hereof, or adverse development in any such proceeding
after the date hereof, or before the date hereof if not
known to Purchaser on the date hereof, in either case
which directly or indirectly, results in any of the
consequences referred to in paragraphs (a) -(f) above;
(B) OzEmail or any of its subsidiaries, joint ventures or
partnerships or other affiliates shall have:
(1) declared, paid or authorized declaration or
payment of any cash dividend or other
distribution on any shares of OzEmail (other
than periodic dividends not exceeding amounts
previously declared by OzEmail);
(2) altered or authorized the alteration of any
material term of any outstanding security or
material contract, permit or license;
<PAGE>
50
(3) authorized or entered into an agreement with
respect to any merger, consolidation, takeover
scheme, takeover announcement, recapitalization,
liquidation, dissolution, business combination,
acquisition of assets, disposition of assets,
release or relinquishment of any material
contractual or other right of OzEmail or any of
its subsidiaries or any comparable event not in
the ordinary course of business; or
(4) entered into any employment, change in control,
severance, executive compensation or similar
agreement, arrangement or plan with or for one
or more of its employees consultants or
directors, or entered into or amended, or made
grants or awards pursuant to, any agreements,
arrangements or plans so as to provide for
increased benefits to one or more employees,
consultants or directors, or taken any action to
fund, secure or accelerate the funding of
compensation or benefits provided for one or
more employees, consultants or directors,
whether or not as a result of or in connection
with the transactions contemplated by the Offer,
other than in the ordinary course of OzEmail's
business consistent with past practice;
(C) Any member of the Purchaser Group shall not have
obtained any waiver, consent, extension, approval,
action or non-action from any governmental authority or
agency which is necessary to consummate the Offer,
subject to the Purchaser Group taking all reasonable
steps to obtain any such approvals;
(D) (1) any one or more of the provisions of the
constitution of OzEmail or of a subsidiary of
OzEmail being altered in any of the ways
mentioned in section 254H of the Corporations
Law;
(2) OzEmail or a subsidiary of OzEmail resolving to
reduce its share capital in any way;
(3) OzEmail or a subsidiary of OzEmail entering into
a buy-back agreement or resolving to approve the
terms of a buy-back agreement;
(4) OzEmail or a subsidiary of OzEmail making an
allotment of, or granting an option to subscribe
for, any of its shares (of any class), or
agreeing to make such an allotment or to grant
such an option (except Shares issued during the
term of the Offer pursuant to the exercise of
any Options);
(5) OzEmail or a subsidiary of OzEmail issuing, or
agreeing to issue, convertible notes or other
debt securities;
(6) OzEmail or a subsidiary of OzEmail disposing, or
agreeing to dispose, of the whole, or a
substantial part, of its business or property;
(7) OzEmail or a subsidiary of OzEmail charging, or
agreeing to charge, the whole, or substantial
part, of its business or property;
(8) OzEmail or a subsidiary of OzEmail resolving
that it be wound up;
<PAGE>
51
(9) the appointment of a provisional liquidator to
OzEmail or of a subsidiary of OzEmail;
(10) the making of an order by a court for the
winding up of OzEmail or of a subsidiary of
OzEmail;
(11) OzEmail or a subsidiary of OzEmail executing a
deed of company arrangement;
(12) the appointment of a receiver, or a receiver and
manager, in relation to the whole, or a
substantial part, of the property of OzEmail or
of a subsidiary of OzEmail; or
(13) an administrator of OzEmail or a subsidiary of
OzEmail being appointed.
The foregoing conditions (except for the condition set forth in
paragraph (ii) which is a condition precedent) are conditions subsequent and
shall not prevent a contract to sell the Securities resulting from acceptance of
this Offer, but any breach or non fulfilment of them shall entitle Purchaser by
notice in writing to an accepting holder to rescind ab initio a contract that
results from acceptance of such Offer. Subject to the provisions of the
Corporations Law, Purchaser alone shall be entitled to the benefit of the
foregoing conditions (except the condition set forth in paragraph (ii)) and any
breach or non-fulfilment of such condition may be relied on only by Purchaser
which may at any time and from time to time at its sole discretion waive the
breach or non-fulfilment of any such condition. The foregoing shall not limit a
holder's rights of withdrawal, if any, as described in Section 4.
Purchaser may at any time declare the Offer to be free from the
foregoing conditions. If, at the Expiration Date, the foregoing conditions have
been breached and not waived or have not been fulfilled and Purchaser has not
declared the Offer (or the Offer has not become) free from those conditions, all
contracts resulting from the acceptance of the Offer will be automatically void.
The date for publication of the notice (the "Condition Publication
Date") required by sub-section 663(4) of the Corporations Law (which provides
for publication of a notice by the offeror as to whether the offer has been
declared or become free from a condition or to the knowledge of he offeror, a
condition has been fulfilled) will be 1:00 a.m., New York City time, on February
[ ], 999 and 5:00 p.m, Sydney time, on February [ ], 1999 unless and until
Purchaser, in its sole discretion, shall have extended the period of time during
which the Offer is open, in which event the "Condition Publication Date" shall
be the date that is later than the previously scheduled Condition Publication
Date by a period equal to the period of such extension.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
General. Except as otherwise disclosed herein, based on a review of
publicly available filings by OzEmail with the SEC and the ASIC, Purchaser is
not aware of (i) any license or regulatory permit that appears to be material to
the business of OzEmail and its subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Securities by Purchaser pursuant to the
Offer or (ii) any approval or other action by any governmental, administrative
or regulatory agency or authority,
<PAGE>
52
domestic or foreign that would be required for the acquisition or ownership of
Securities by Purchaser as contemplated herein. Should any such approval or
other action be required, Purchaser currently contemplates that such approval or
action would be sought. There can be no assurance that any such approval or
action, if needed, would be obtained or would be obtained without substantial
conditions or that adverse consequences might not result to the business of
OzEmail or Purchaser or that certain parts of the businesses of OzEmail or
Purchaser might not have to be disposed of in the event that such approvals were
not obtained or any other actions were not taken. Purchaser's obligation under
the Offer to accept for payment and pay for Securities is subject to certain
conditions. Those conditions are specified in the "Introduction and Offer" and
Section 14.
Foreign Acquisitions and Takeovers Act. The Offer is conditional upon
the Treasurer of the Commonwealth of Australia ("Treasurer") consenting to or
stating prior to the Expiration Date that he has no objection to the purchases
contemplated by the Offer under the Australian Government's Foreign Investment
policy or to similar effect, or the Treasurer ceases to be entitled to make an
order under section 22 of the Foreign Acquisitions and Takeovers Act 1975
("FATA") in respect of those purchases. The Treasurer normally ceases to be
entitled to make an order under section 22 of FATA 30 days after Purchaser
lodged an application for approval. However, the Australian Foreign Investment
Review Board ("FIRB"), which is the body responsible for administering
applications under FATA, may extend the normal 30 day period in which it may
consider Purchaser's application by a further 90 days. If FIRB fails to make a
favorable determination by the expiration of the Offer Period, Purchaser will
not be permitted to acquire the Securities the subject of the Offers.
The Australian Competition and Consumer Commission ("ACCC") may review
the proposed acquisition, of its own volition or at the request of any
interested party including Purchaser or OzEmail. In any review, the ACCC would
assess whether the proposed acquisition would have or be likely to have the
effect of substantially lessening competition in a market, in contravention of
section 50 of the Australian Trade Practices Act. Purchaser is not required to
lodge any formal notification with the ACCC. If the ACCC forms the view that the
proposed acquisition may contravene section 50, it may seek binding undertakings
from Purchaser to address specific competition concerns or the ACCC may apply to
the Federal Court of Australia to injunct the proposed acquisition. Private
parties have no standing to apply for an injunction for contravention of section
50.
Based upon an examination of information available to Purchaser
relating to the businesses in which Purchaser, OzEmail and their respective
subsidiaries are engaged, Purchaser believes that the proposed acquisition will
not contravene section 50 of the Australian Trade Practices Act. If the ACCC
were to institute proceedings in respect of the Offer, such actions would breach
the condition in Section 14(iii)(A) of the Offer and could be relied on by
Purchaser to avoid contracts arising from acceptance of the Offer. See Section
14 "Certain Conditions of the Offer".
16. FEES AND EXPENSES
Except as set forth below, Purchaser will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
Securities pursuant to the Offer.
Merrill Lynch is acting as Dealer Manager in the United States and
exclusive financial advisor in connection with the Offer and has provided
certain services to MCI WorldCom in connection with the Offer pursuant to a
letter agreement between MCI WorldCom and Merrill Lynch (the
<PAGE>
53
"Letter Agreement"). The Letter Agreement provides that Merrill Lynch will
provide financial advisory services to MCI WorldCom (including acting as Dealer
Manager) in connection with a transaction or series of transactions which result
in: (i) any merger, consolidation, reorganization or other business combination
pursuant to which the business of OzEmail is combined with MCI WorldCom or one
or more persons formed by or affiliated with MCI WorldCom, including, without
limitation, any joint venture (each a "MCI WorldCom Affiliate"); (ii) the
acquisition by MCI WorldCom or a MCI WorldCom Affiliate of at least 50% of the
outstanding capital stock of OzEmail; (iii) the acquisition by MCI WorldCom or a
MCI WorldCom Affiliate of substantially all of the assets of, or of any right to
substantially all of the revenues or income of, OzEmail; or (iv) the acquisition
by MCI WorldCom or a MCI WorldCom Affiliate of control of OzEmail through a
proxy contest or otherwise than through the acquisition of OzEmail's capital
stock (each, an "Acquisition Transaction"). MCI WorldCom has agreed to pay to
Merrill Lynch, (A) a fee of 0.15% of the purchase price to be paid by MCI
WorldCom or a MCI WorldCom Affiliate for OzEmail based on the Offer price
included in the announcement of the Acquisition Transaction (payable after the
public announcement of the Acquisition Transaction), and (B) if an Acquisition
Transaction is consummated (or MCI WorldCom or a MCI WorldCom affiliate enters
into an agreement with OzEmail which subsequently results in an Acquisition
Transaction) a fee in an amount equal to 0.60% of the aggregate purchase price
paid by MCI WorldCom or a MCI WorldCom Affiliate in such Acquisition Transaction
(but in no event less than US$1,000,000) less any amounts paid under clause (A)
above (payable on, in the case of a takeover offer, the close of the offer). In
addition, MCI WorldCom has agreed to indemnify Merrill Lynch and certain related
persons against certain liabilities and expenses, including certain liabilities
under securities laws.
Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Securities by mail, telephone, facsimile, telegraph and
personal interviews and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Offer to beneficial owners of
Securities. The Information Agent will receive reasonable and customary
compensation for its services, will be reimbursed for certain reasonable out-of-
pocket expenses and will be indemnified against certain liabilities and expenses
in connection therewith, including certain liabilities under the United States
federal securities laws.
The Bank of New York has been retained as the U.S. Depositary in
relation to the tender of ADSs and the tender of certificated Shares by holders
located in the United States. The U.S. Depositary has not been retained to make
solicitations or recommendations in its role as U.S. Depositary. The U.S.
Depositary will receive reasonable and customary compensation for its services,
will be reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the United States federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering material to their customers.
National Registry Services Pty Limited has been retained to provide
registry services in Australia. The Registry will administer acceptances of the
Offer from tendering holders located outside the United States and for Shares
held through CHESS or Issuer Sponsored Holdings or in certificated form and make
payments for any such Shares which are accepted pursuant to the Offer. The
Registry will receive reasonable and customary compensation for its services and
will be reimbursed for certain reasonable out-of-pocket expenses.
<PAGE>
54
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or
on behalf of) holders of Securities in any jurisdiction in which making the
Offer or the acceptance thereof would not be in compliance with the securities
or other laws of such jurisdiction. If Purchaser becomes aware of any valid U.S.
state statute prohibiting the making of the Offer or the acceptance of the
Securities pursuant thereto, Purchaser will make a good faith effort to comply
with such U.S. state statute. If, after such good faith effort, Purchaser cannot
comply with any such U.S. state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Securities in such
state. In any jurisdiction where the Securities, United States state securities
laws or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of Purchaser by the Dealer
Manager or one or more registered brokers or dealers which are licensed under
the laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Purchaser not contained in this Offer to Purchase,
the Part A Statement, the Acceptance and Transfer Form or the Letter of
Transmittal and if given or made, such information or representation must not be
relied upon as having been authorized.
MCI WorldCom and Purchaser will file with the SEC a Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1"), together with exhibits,
pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange
Act, furnishing certain additional information with respect to the Offer and may
file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, may be inspected at, and copies may be obtained from the SEC
in the same manner as set forth in Section 7 "Certain Information Concerning
OzEmail" (except that they will not be available at the regional offices of the
SEC).
Purchaser has also lodged a statement with the ASIC pursuant to Parts
6.3 and 6.12 of the Corporations Law (the "Part A Statement"). The Part A
Statement is annexed to this Offer to Purchase as Annexure A.
18. CERTAIN DEFINITIONS
Unless the context otherwise requires, terms used in this Offer to
Purchase have the meanings given to them in this Section 18. A term defined
anywhere in this Offer to Purchase has the same meaning throughout. A term not
specifically defined in this Offer to Purchase has the meaning given to it, if
any, in the Corporations Law.
"affiliate" of a specified person, means a person that directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with, the person specified.
"Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility (as defined below) to, and received by, the U.S. Depositary
and forming a part of a Book-Entry Confirmation, which states that such Book-
Entry Transfer Facility has received an express acknowledgment from the
participant in such Book-Entry Transfer Facility tendering an interest in the
ADSs, that such participant has received and agrees to be bound by the terms of
the Letter of Transmittal and that Purchaser may enforce such agreement against
the participant.
<PAGE>
55
"American Depositary Receipt" or "ADR" means an American Depositary
Receipt evidencing an American Depositary Share.
"American Depositary Share" or "ADS" means an American Depositary
Share representing ten (10) Shares.
"ASIC" means the Australian Securities and Investments Commission.
"ASX" means Australian Stock Exchange Limited.
"Book Entry Confirmation" means timely receipt by the U.S. Depositary
of confirmation of a book-entry transfer of an ADR into a Book-Entry Transfer
Facility.
"Book-Entry Transfer Facility" means the Depositary Trust Company.
"Broker" means a person who is a share broker and a participant in
CHESS.
"CHESS" means Clearing House Electronic Subregister System, which
provides for electronic share transfers in Australia.
"CHESS Holding" means a holding of shares on the CHESS subregister
of OzEmail.
"condition" means:
(i) a condition that will, in circumstances referred to in the
condition, result in the rescission of, or entitle Purchaser to
rescind, a contract that results from an acceptance of the
Offer; or
(ii) a condition that prevents a binding contract from arising on
acceptance of the Offer unless or until the condition is
fulfilled.
"Condition Publication Date" means 1:00 a.m., New York City time, on
February [ ], 1999 and 5:00 p.m., Sydney time, on February [ ], 1999,
unless and until Purchaser, in its sole discretion, shall have extended the
period of time during which the Offer is open in which event the "Condition
Publication Date" shall be the date that is later than the previously scheduled
Condition Publication Date by a period equal to the period of the extension.
"Condition Waiver Date" means the date and time on which the Offer
becomes or is declared free of all conditions.
"Controlling Participant" means the Broker or Non-Broker Participant
who is designated as the controlling participant for shares in a CHESS Holding
in accordance with the SCH Business Rules.
"Corporations Law" means the Australian Corporations Law.
"Dealer Manager" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") as dealer manager in the United States.
<PAGE>
56
"Eligible Institution" means a member firm of a registered national
securities exchange, a member of the NASD or a commercial bank or trust company
having an office or corresponding in the United States.
"entitled" has the meaning given to that term in the Corporations Law
under which, in summary, a person is entitled to a Share where the person, or an
associate of the person, has the power to control disposal of the Share.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"Expiration Date" means 1:00 a.m., New York City time, on [ ],
February [ ], 1999 and 5:00 p.m., Sydney time, on [ ], February [
], 1999 unless and until Purchaser, in its sole discretion, shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire.
"Financial Advisor" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") as exclusive financial advisor to MCI WorldCom in
connection with the Offer in Australia.
"Information Agent" means MacKenzie Partners Inc. as Information
Agent.
"Intermediate" means UUNET Technologies, Inc., a Delaware
corporation.
"Issuer Sponsored Holding" means a holding of Shares on OzEmail's
issuer sponsored sub-register.
"MCI WorldCom" means MCI WORLDCOM, Inc., a Georgia corporation.
"Minimum Condition" has the meaning given in section 1.2(i).
"NASD" means the National Association of Securities Dealers, Inc.
"NNM" means The Nasdaq National Market.
"Non-Broker Participant" means a non-broker participant under the
SCH Business Rules.
"Offer" means the offer by Purchaser to purchase all Shares (including
ADSs representing Shares) of OzEmail at a price of US$2.20 per Share or US$22.00
per ADS, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase and (i) in the case
of Shares, in the related Acceptance and Transfer Form; and (ii) in the case of
ADSs, in the related Letter of Transmittal.
"Offer to Purchase" means this Offer to Purchase including the
Schedules and Annexures hereto.
<PAGE>
57
"Offer Period" means the period commencing on the date of this Offer
and ending at 5:00 p.m. Sydney time on February [ ], 1999 (1:00 a.m. New
York City time on February [ ], 1999) or such later date to which the Offer is
extended pursuant to Section 1.4 ("Extension of Offer").
"Options" means options exercisable for fully paid Shares.
"outstanding" means, in relation to Shares or Options at a particular
time, all of the issued Shares or Options, as the case may be, at that time.
"OzEmail" means OzEmail Limited (ACN 066 387 157), a corporation
incorporated under the laws of the State of New South Wales, Australia.
"Purchaser" means UUNET Holdings Australia Pty Limited (ACN 085 531
684), a company incorporated in New South Wales, Australia.
"Purchaser Group" means the group of companies of which MCI WorldCom
is the ultimate holding company, which includes Intermediate and Purchaser.
"Registry" means National Registry Services Pty Ltd as Registry.
"Rights" means all accretions and rights attaching to or arising from
Shares after the date of service of the Part A Statement on OzEmail (including,
without limitation, all rights to receive dividends and to receive or subscribe
for shares, stock, units, notes or options and all other distributions or
entitlements declared, paid or issued by OzEmail after that date).
"SCH Business Rules" means the business rules of SCH.
"SCH" means Securities Clearing House, the body which administers
the CHESS system in Australia.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities" means Shares and ADSs.
"Shares" means all outstanding ordinary shares issued by OzEmail.
"U.S. business day" means any day other than a Saturday, Sunday,
federal holiday in the United States and consists of the time period from 12.01
a.m. through 12.00 midnight, New York City time.
"U.S. Depositary" means The Bank of New York as U.S. Depositary.
"U.S. holder" means a beneficial holder of the Securities who, for
United States federal income tax purposes, is (i) a citizen or resident of the
United States, (ii) a corporation, partnership, or other entity created or
organized in the United States or under the laws of the United States or of any
political subdivision thereof, (iii) an estate whose income is includible in
gross income for United States federal income tax purposes regardless of its
source, or (iv) a trust whose administration is subject to the primary
supervision of a United States court and which has one or more United States
persons who have the authority to control all substantial decisions of the
trust.
<PAGE>
58
"waiver" means:
(i) in respect of a condition, declaring this Offer free from the
condition; and
(ii) in respect of any breach or non-fulfilment of a condition
(otherwise than the Minimum Condition) means waiving the act,
matter or thing resulting in that breach or non-fulfilment so
that the condition will not be taken to have been breached or
not fulfilled.
DATED January [ ], 1999
- -----
SIGNED on behalf of UUNET Holdings Australia Pty Limited by
- ------
Leigh Robert Brown, being a director of UUNET Holdings Australia
Pty Limited authorized to sign this Offer to Purchase by a resolution
passed by the directors of UUNET Holdings Australia Pty Limited.
________________________
DIRECTOR
<PAGE>
59
SCHEDULE A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF MCI WORLDCOM, INTERMEDIATE AND PURCHASER
1. Directors and Executive Officers of MCI WorldCom. Set forth below
are the name, current business address, citizenship and the present principal
occupation or employment and material occupations, positions, offices or
employments for the past five years of each director and executive officer of
MCI WorldCom. The principal address of MCI WorldCom and, unless otherwise
indicated below, the current business address for each individual listed below
is 515 East Amite Street, Jackson, Mississippi 39201-2702, U.S.A. Unless
otherwise indicated, each such person is a citizen of the United States. Unless
otherwise indicated, each occupation set forth opposite the individual's name
refers to employment with MCI WorldCom.
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT;
NAME AND CURRENT MATERIAL POSITIONS HELD DURING THE
BUSINESS ADDRESS PAST FIVE YEARS
---------------- ----------------------------------
CLIFFORD L. ALEXANDER, JR. Mr. Alexander has been a director of
Alexander & Associates, Inc. MCI WorldCom since its merger with
400 C. Street, N.E. MCI Communications Corporation
Washington, D.C. 20002 ("MCI") in September 1998. He has
U.S.A. been President of Alexander &
Associates, Inc., management
consultants, since 1981. Mr.
Alexander is also a director of
Dreyfus 3rd Century Fund, Dreyfus
General Family of Funds, Mutual of
America Life Insurance Company, Dun &
Bradstreet Corporation, American Home
Products Corporation, and IMS Health,
Inc.
JAMES C. ALLEN Mr. Allen has been a director of MCI
3023 Club Drive WorldCom since March 1998. Mr. Allen
Destin, FL 32541 is the former Vice Chairman and Chief
U.S.A. Executive Officer and a former
director of Brooks Fiber Properties,
Inc. ("BFP"), where he served in such
capacities from 1993 until February
1998. Mr. Allen served as President
and Chief Operating Officer of Brooks
Telecommunications Corporation, a
founder of BFP, from April 1993 until
it was merged with BFP in January
1996. Mr. Allen serves as a director
of Metronet Communications Corp. and
Verio Inc.
<PAGE>
60
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT;
NAME AND CURRENT MATERIAL POSITIONS HELD DURING THE
BUSINESS ADDRESS PAST FIVE YEARS
---------------- ----------------------------------
JUDITH AREEN Ms. Areen has been a director of MCI
Georgetown University Law Center WorldCom since its merger with MCI in
600 New Jersey Avenue, N.W. September 1998. She has been
Washington, D.C. 20001 Executive Vice President for Law
U.S.A. Center Affairs and Dean of the Law
Center, Georgetown University since
1989. She has been a Professor of
Law, Georgetown University, since
1976.
CARL J. AYCOCK Mr. Aycock has been a director of MCI
123 South Railroad Avenue WorldCom since 1983. Mr. Aycock
Brookhaven, MA 39601 served as Secretary of MCI WorldCom
U.S.A. from 1987 to 1995 and was the
Secretary and Chief Financial Officer
of Master Corporation, a motel
management and ownership company,
from 1989 until 1992. Subsequent to
1992, Mr. Aycock has been self
employed as a financial administrator.
MAX E. BOBBITT Mr. Bobbitt has been a director of
62 Carmel Drive MCI WorldCom since 1992. Mr. Bobbitt
Little Rock, AR 72112 was a director of Advanced
U.S.A. Telecommunications Corporation
("ATC") until its merger with MCI
WorldCom in December 1992 (the "ATC
Merger"). He is currently a
consultant and was previously
President and Chief Executive Officer
of Metromedia China Corporation, a
telecommunications company, from 1997
until June 1998. From 1996 until
February 1997, Mr. Bobbitt was
President of Asian American
Telecommunications Corporation.
Prior to 1996, Mr. Bobbitt held
various positions including President
and Chief Operating Officer and
director of ALLTEL Corporation, a
telecommunications company, from 1970
until January 1995.
<PAGE>
61
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT;
NAME AND CURRENT MATERIAL POSITIONS HELD DURING THE
BUSINESS ADDRESS PAST FIVE YEARS
---------------- ----------------------------------
STEPHEN M. CASE Mr. Case has been a director of MCI
America Online, Inc. WorldCom since March 1998. Mr. Case,
22000 AOL Way a co-founder of America Online, Inc.
Dulles, VA 20166-9323 ("AOL"), has been Chairman of the
U.S.A. Board of Directors of AOL since
October 1995, Chief Executive Officer
of AOL since April 1993 and a
director of AOL since September 1992.
Mr. Case served as President of AOL
from July 1996 until February 1998
and from January 1991 to February
1996. Previously, he served as
Executive Vice President of AOL from
September 1987 to January 1991 and
Vice President, Marketing, from 1985
to September 1987. Since June 1998,
Mr. Case serves as a member of the
Board of Directors of the New York
Stock Exchange.
BERNARD J. EBBERS Mr. Ebbers has been President and
Chief Executive Officer of MCI
WorldCom since April 1985. Mr.
Ebbers has served as a director of
MCI WorldCom since 1983.
FRANCESCO GALESI Mr. Galesi has been a director of MCI
The Galesi Group WorldCom since 1992. Mr. Galesi was
435 East 52nd Street a director of ATC until the ATC
New York, NY 10022 Merger. Mr. Galesi is the Chairman
U.S.A. and Chief Executive Officer of the
Galesi Group, which includes
companies engaged in distribution,
manufacturing, real estate and
telecommunications. Mr. Galesi
serves as a director of Amnex, Inc.
and Walden Residential Properties,
Inc.
STILES A. KELLETT, JR. Mr. Kellett has served as a director
Kellett Investment Corporation of MCI WorldCom since 1981. Mr.
200 Galleria Parkway, Suite 1800 Kellett has been Chairman of Kellett
Atlanta, GA 30339 Investment Corporation since 1995.
U.S.A. From 1978 to 1995, Mr. Kellett served
as Chairman of the Board of Directors
of Convalescent Services, Inc., a
long-term health care company in
Atlanta, Georgia. Mr. Kellett serves
as a director of Frederica Bank &
Trust Company, St. Simons Island,
Georgia.
<PAGE>
62
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT;
NAME AND CURRENT MATERIAL POSITIONS HELD DURING THE
BUSINESS ADDRESS PAST FIVE YEARS
---------------- ----------------------------------
GORDON S. MACKLIN Mr. Macklin has been a director of
8212 Burning Tree Road MCI WorldCom since its merger with
Bethesda, MD 20817 MCI in September 1998. Mr. Macklin is
U.S.A. a director of Martek Bioscience
Corporation, Fund American
Enterprises Holdings, Inc.; CCC
Information Services Group, Inc.;
MedImmune, Inc.; Real 3-D; Spacehab,
Inc.; and director, trustee or
managing general partner, as the case
may be, of 49 of the investment
companies in the Franklin Templeton
Group of Funds. Mr. Macklin was
formerly Chairman, White River
Corporation, an information services
company, from 1993 until June 1998;
Chairman, Hambrecht and Quist Group;
director, H&Q Healthcare Investors;
director, CCC Information Services
Group, Inc., and President, National
Association of Securities Dealers,
Inc.
JOHN A. PORTER Mr. Porter has been a director of MCI
Integra Funding WorldCom since 1988. Mr. Porter
295 Bay Street, Suite 2 served as Vice Chairman of the Board
Easton, MD 21601 of MCI WorldCom from September 1993
U.S.A. until MCI WorldCom's merger with MFS
Communications Company, Inc. ("MFS")
in December 1996 (the "MFS Merger")
and served as Chairman of the Board
of Directors of MCI WorldCom from
1988 until September 1993. From May
1995 to the present, Mr. Porter has
served as Chairman of the Board of
Directors and Chief Executive Officer
of Industrial Electric Manufacturing,
Inc., a manufacturer of electrical
power distribution products. Mr.
Porter also serves as Chairman of
Phillips & Brooks/Gladwin, Inc., a
manufacturer of pay telephone
enclosures and equipment. Mr. Porter
was previously President and sole
shareholder of P.M. Restaurant Group,
Inc. which filed for protection under
Chapter 11 of the United States
Bankruptcy Code in March 1995.
Subsequent to March 1995, Mr. Porter
sold all of his shares in P.M.
Restaurant Group, Inc. Mr. Porter is
also a director of Uniroyal
Technology Corporation and XL
Connect, Inc.
<PAGE>
63
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT;
NAME AND CURRENT MATERIAL POSITIONS HELD DURING THE
BUSINESS ADDRESS PAST FIVE YEARS
---------------- ----------------------------------
TIMOTHY F. PRICE Mr. Price has been a director of MCI
MCI WORLDCOM, Inc. WorldCom since its merger with MCI in
1801 Pennsylvania Avenue September 1998. He has served as
Washington, D.C. 20006 President and Chief Executive Officer
U.S.A. of the MCI WorldCom communications
unit since the merger. Mr. Price was
President and Chief Operating Officer
of MCI from November 1996 to
September 1998, when it merged with
MCI WorldCom. He was President and
Chief Operating officer of MCI
Telecommunications Corporation
("MCIT") from July 1995 to September
1998. He was an Executive Vice
President and Group President of
MCIT, serving as Group President,
Communication Services, from December
1994 to July 1995. He was an
Executive Vice President of MCIT,
serving as President, Business
Markets, from June 1993 to December
1994. He was a Senior Vice President
of MCIT from November 1990 to June
1993, serving as President, Business
Services, from July 1992 to June 1993
and as Senior Vice President,
Consumer Markets, from November 1990
to July 1992.
BERT C. ROBERTS, JR. Mr. Roberts has been a director and
MCI WORLDCOM, Inc. Chairman of the Board of MCI WorldCom
1801 Pennsylvania Avenue, since its merger with MCI in
Washington, D.C. 20006 September 1998. He was Chairman of
U.S.A. the Board of MCI from June 1992 to
September 1998, when it merged with
MCI WorldCom. He was Chief Executive
Officer of MCI from December 1991 to
November 1996. He was President and
Chief Operating Officer of MCI from
October 1985 to June 1992 and
President of MCIT from May 1983 to
June 1992. Mr. Roberts was a director
of MCI from 1985 to September 1998
and a non-executive director of
British Telecommunications plc ("BT")
from October 1994 to March 1998. He
has been a non-executive director of
The News Corporation Limited, a
global multi-media company located in
Australia, since 1995; a
non-executive director of Telefonica
de Espana, S.A., since March 1998;
and a non-executive director of
Valence Technology, Inc.
<PAGE>
64
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT;
NAME AND CURRENT MATERIAL POSITIONS HELD DURING THE
BUSINESS ADDRESS PAST FIVE YEARS
---------------- ----------------------------------
JOHN W. SIDGMORE Mr. Sidgmore serves as Vice Chairman
MCI WORLDCOM, Inc. of the Board of MCI WorldCom. Mr.
3060 Williams Drive Sidgmore has been a director of MCI
Fairfax, VA 22031 WorldCom since the MFS Merger and has
U.S.A. served as a director of MFS since
August 1996. Mr. Sidgmore was
President and Chief Operating Officer
of MFS from August 1996 until the MFS
Merger and has been Chief Executive
Officer and a director of
Intermediate from June 1994 to
October 1998, and also held the
position of President of Intermediate
from June 1994 to August 1996 and
from January 1997 to September 1997.
From 1989 to 1994, he was President
and Chief Executive Officer of CSC
Intelicom, a telecommunications
software company. Mr. Sidgmore is a
director of Saville Systems PLC.
SCOTT D. SULLIVAN Mr. Sullivan serves as Chief
Financial Officer, Treasurer and
Secretary of MCI WorldCom. From the
ATC Merger until December 1994, Mr.
Sullivan served as Vice President and
Assistant Treasurer of MCI WorldCom.
From 1989 until 1992, Mr. Sullivan
served as an executive officer of two
long-distance companies, including
ATC. From 1983 to 1989, Mr. Sullivan
served in various capacities with
KPMG Peat Marwick LLP. Mr. Sullivan
has served as a director of MCI
WorldCom since March 1996.
GERALD H. TAYLOR Mr. Taylor has been a director of MCI
MCI WORLDCOM, Inc. WorldCom since its merger with MCI in
1801 Pennsylvania Avenue, N.W. September 1998. He was Chief
Washington, D.C. 20006 Executive Officer of MCI from
U.S.A. November 1996 to September 1998 and
Vice Chairman of MCIT from July 1995
to September 1998. He was President
and Chief Operating Officer of MCI
from July 1994 to November 1996 and
President and Chief Operating Officer
of MCIT from April 1994 to July 1995.
He was an Executive Vice President
and Group Executive of MCIT from
September 1993 to April 1994. He was
an Executive Vice President of MCIT,
serving as President, Consumer
Markets, from November 1990 to
September 1993. Mr. Taylor has been
a director of MCI since September
1994 and was a non-executive director
of BT from November 1996 to November
1997.
<PAGE>
65
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT;
NAME AND CURRENT MATERIAL POSITIONS HELD DURING THE
BUSINESS ADDRESS PAST FIVE YEARS
---------------- ----------------------------------
LAWRENCE C. TUCKER Mr. Tucker is a general partner of
Brown Brothers Harriman & Co. Brown Brothers Harriman & Co., which
59 Wall Street is the general and managing partner
New York, NY 10005 of The 1818 Funds. He is also a
U.S.A. director of The WellCare Management
Group, Inc., Riverwood International
Corporation and National HealthCare
Corporation. He has served as a
director of MCI WorldCom since May
1995, and previously served as a
director of MCI WorldCom from May
1992 until the ATC Merger.
JUAN VILLALONGA Mr. Villalonga has served as the
(citizen of Spain) Chairman and Chief Executive Officer
Telefonica de Espana, S.A. of Telefonica de Espana, S.A.
28 Gran Via ("Telefonica"), a provider of
28013 Madrid telecommunications services in Spain,
Spain since 1996. He has been a director
of MCI WorldCom since November 1998
pursuant to a Strategic Alliance
Agreement among Telefonica, MCI and
MCI WorldCom. Mr. Villalonga was
previously the Chief Executive
Officer of Bankers Trust in Spain and
Portugal, the Chief Executive Officer
of CS First Boston in Spain and a
Partner at Kinsey & Co., a consulting
firm, for nine years.
2. Directors and Executive Officers of Intermediate. Set forth
below are the name, current business address, citizenship and the present
principal occupation or employment and material occupations, positions, offices
or employments for the past five years of each director and executive officer of
Intermediate. The principal address of Intermediate and, unless otherwise
indicated below, the current business address for each individual listed below
is 3060 Williams Drive, Fairfax, Virginia 22031, U.S.A. Unless otherwise
indicated, each such person is a citizen of the United States. Unless otherwise
indicated, each occupation set forth opposite the individual's name refers to
employment with Intermediate.
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT;
NAME AND CURRENT MATERIAL POSITIONS HELD DURING THE
BUSINESS ADDRESS PAST FIVE YEARS
---------------- ----------------------------------
JOHN W. SIDGMORE Chairman (see above)
MCI WORLDCOM, Inc.
3060 Williams Drive
Fairfax, VA 22031
U.S.A.
<PAGE>
66
SCOTT D. SULLIVAN Director (see above)
MCI WORLDCOM, Inc.
515 East Amite Street
Jackson, M.S. 39201-2702
U.S.A.
CHARLES T. CANNADA Director. Mr. Cannada serves as
MCI WORLDCOM, Inc. Senior Vice President, Corporate
515 East Amite Street Development of MCI WorldCom. Prior
Jackson, MS 39201-2702 to assuming this position in January
U.S.A. 1995, Mr. Cannada served as Treasurer
and Chief Financial Officer of MCI
WorldCom. He joined MCI WorldCom in
1989. He is also a director of Nova
Corporation, since May 1998, and of
WAM/NET, Inc., since September 1998.
MARK F. SPAGNOLO Mr. Spagnolo is a director and has
been President and Chief Executive
Officer of Intermediate since October
1998. He was President and Chief
Operating Officer from August 1997
until October 1998. He was a
division officer of Electronic Data
Systems from 1973 until August 1997,
most recently as Division President.
From June 1995 to April 1996, he was
a director and the acting Chief
Executive Officer of Video Lottery
Technologies.
JEFFREY G. HILBER Mr. Hilber has served as Chief
Financial Officer of Intermediate
since September 1993.
3. Directors and Executive Officers of Purchaser. Set forth below
are the name, address, positions, offices or employments for the past five years
of each director and current business address, citizenship and the present
occupation or employment and material occupations, positions, offices or
employments for the past five years of each director and executive officer of
Purchaser. The principal address of Purchaser and, unless otherwise indicated
below, the current business address for each individual listed below is 44
Martin Place, Sydney, NSW, 2000, Australia. Unless otherwise indicated, each
such person is a citizen of the United States. Unless otherwise indicated, each
occupation set forth opposite the individual's name refers to employment with
Purchaser.
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT;
NAME AND CURRENT MATERIAL POSITIONS HELD DURING THE
BUSINESS ADDRESS PAST FIVE YEARS
---------------- ----------------------------------
JOHN W. SIDGMORE Director (see above)
MCI WORLDCOM, Inc.
3060 Williams Drive
Fairfax, VA 22031
U.S.A.
<PAGE>
67
CHARLES T. CANNADA Director (see above)
MCI WORLDCOM, Inc.
515 East Amite Street
Jackson, MS 39201-2702
U.S.A.
LEIGH R. BROWN Director. Mr. Brown is a senior
(citizen of Australia) corporate and securities partner with
the national Australian law firm,
Minter Ellison. He is admitted to
practice in New South Wales,
Queensland, Victoria and the
Australian Capital Territory. He has
been a partner of Minter Ellison
since 1979. He is a member of the
firm's Partnership Board.
<PAGE>
68
SCHEDULE B
TRANSACTION IN SHARES AND ADSs DURING THE PAST FOUR MONTHS
BY MCI WORLDCOM, INTERMEDIATE AND PURCHASER
Shares/ADSs(1) Price per
Transaction Date Acquired Share/ADS(2)
- ---------------- -------------- ------------
December 12, 1998 (Sydney, Australia time) 21,863,174 US$2.00
- ------------------
Notes
(1) Pursuant to a subscription agreement (the "Subscription
Agreement"), dated December 12, 1998 (Sydney time) by and between OzEmail and
Purchaser, Purchaser purchased 21,863,174 ordinary shares in the capital of
OzEmail, which at that time represented no more than 14.9% of the ordinary share
capital of OzEmail, after the issuance of the Shares. The Subscription
Agreement is hereby incorporated by reference herein and will be filed as an
Exhibit to the Tender Offer Statement on Schedule 14D-1. See Section 8 for a
description of the Subscription Agreement.
(2) Pursuant to the Subscription Agreement, the subscription price was
US$43,726,348, or US$2.00 per share.
<PAGE>
69
Facsimile copies of the Letter of Transmittal, properly completed and
duly signed, will be accepted. The Letter of Transmittal, ADRs evidencing ADSs
and any other required documents should be sent by each tendering holder of ADSs
of OzEmail or such holder's broker, dealer, commercial bank, trust company or
other nominee to the U.S. Depositary as follows:
The U.S. Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission: By Hand or Overnight
(for Eligible Institutions Only) Delivery:
(212) 815-6213
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 For Confirmation New York, New York 10286
Telephone: (800) 507-9357
Facsimile copies of the Acceptance and Transfer Form, properly
completed and duly signed, will be accepted. The Acceptance and Transfer Form,
Share certificate(s) (in the case of a holder tendering certificated Shares) and
any other dealer required documents should be sent by each tendering holder of
Shares of OzEmail or his broker, dealer, commercial bank, trust company or other
nominee to the Registry, or if such holder is in the United States, the U.S.
Depositary.
The Registry for the Offer in Australia is:
NATIONAL REGISTRY SERVICES PTY LIMITED
By Mail: By Facsimile Transmission: By Hand:
Reply Paid 85 (02) 9372 6011 Level 1, Grosvenor Place
PO Box N460 225 George Street
Grosvenor Place Sydney NSW 2000
NSW 1219 Tel: (02) 9372 6060
Any questions or requests for assistance or additional copies of the
Offer, the Acceptance and Transfer form, the Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Information Agent or the
Dealer Manager at their respective telephone numbers and locations listed below.
Holders may also contact their broker, dealer, commercial bank or trust company
or other nominee for assistance concerning the Offer.
The Information Agent for the Offer in the United States is:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
From the United States Call Toll-Free (800) 322-2885
<PAGE>
70
The Financial Advisor to MCI WORLDCOM, Inc. is:
MERRILL LYNCH
Level 49, MLC Centre Merrill Lynch World Headquarters
19-29 Martin Place North Tower
Sydney NSW 2000 World Financial Center
(02) 9226 5342 (call collect) New York, New York 10281-1305
(212) 449-8971 (call collect)
The Dealer Manager for the Offer in the United States is:
MERRILL LYNCH
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
(212) 449-8971 (call collect)
<PAGE>
EXHIBIT 2.3
A copy of this Part A Statement was registered by the Australian Securities and
Investments Commission (`ASIC') on [ ] December, 1998. The ASIC takes no
responsibility as to its contents.
PART A STATEMENT
STATEMENT BY UUNET HOLDINGS AUSTRALIA PTY LIMITED (ACN 085 531 684)
PURSUANT TO PARTS 6.3 AND 6.12 OF THE CORPORATIONS LAW
Certain terms used in this Part A Statement are defined in the glossary in
section 17.1.
1. PROPOSED TAKEOVER OFFERS
1.1 UUNET Holdings Australia Pty Limited (`PURCHASER'), a company incorporated
in New South Wales and whose ultimate holding company is MCI WORLDCOM,
Inc. (`MCI WORLDCOM'), proposes to make takeover offers under a Takeover
Scheme in respect of all of the fully paid ordinary shares (`SHARES') in
the capital of OzEmail Limited (ACN 066 387 157) (`OZEMAIL'), including:
(a) American Depositary Shares representing Shares issued by The Bank
of New York as depositary (`ADSS'); and
(b) those Shares issued during the Offer Period pursuant to the
exercise of any Options.
1.2 Accompanying this Part A Statement is a copy of the proposed Offer. [The
Form of Offer to Purchase is included as Exhibit 2.2 of this Form 8K]
1.3 The Offer will extend to all persons registered as holders of Shares and
ADSs at 9.00 am Sydney time (which will be 5.00 pm New York City time the
previous day) on the date of the Offer and to persons who become
registered as holders of Shares and ADSs prior to the expiry of the Offer
Period, including those who become registered as a result of the exercise
of the Options.
1.4 The consideration to be offered for each Share is US$2.20 and for each ADS
is US$22.00 cash.
1.5 Also, the Offer will extend to Shares issued by OzEmail during the Offer
Period pursuant to the exercise of Options and, for that purpose, a copy
of the Offer will be sent to each holder of the Options registered in the
register of option holders of OzEmail at 9.00 am Sydney time (which will
be 5.00 pm New York City time the previous day) on the date of the Offer.
By letter dated 21 December, 1998, OzEmail has informed Purchaser that as
at the date of that letter there were Options outstanding to acquire an
aggregate of 9,958,090 Shares. Purchaser will provide a copy of the Offer
to any person to whom an Offer has not already been sent and who becomes
registered as a holder of Shares, ADSs or Options within 2 business days
of becoming aware of the name and address of that person.
<PAGE>
2
1.6 Where a Share is represented by an ADS, the Offer may be accepted in
accordance with its terms in respect of the ADS and such an acceptance in
respect of an ADS constitutes acceptance in respect of the Share which it
represents.
1.7 All persons to whom the Offer is made and who accept the Offer will be
permitted to withdraw their acceptances at any time until the expiry of
the Offer Period. The right to withdraw an acceptance of the Offer is
derived from the Exchange Act (see section 4 of the Offer for details).
1.8 An Offer may be accepted in respect of all or some of a holder's Shares or
ADSs.
2. OFFER PERIOD
The Offer is intended to remain open for the period commencing on the date
of the Offer and ending at 5.00 pm Sydney time (which will be 1.00 am New
York City time) on 9 February, 1999, unless the period is extended or the
Offer is withdrawn as permitted by the Corporations Law and the Exchange
Act. The purpose of the additional business day is to accommodate the
different time zones of the two jurisdictions in which the Offer will be
made.
3. DIRECTORS OF PURCHASER
The names, occupations and business addresses of the directors of
Purchaser are as follows:
<TABLE>
<CAPTION>
NAME OCCUPATION BUSINESS ADDRESS
<S> <C> <C>
Leigh R. Brown Solicitor 44 Martin Place, Sydney, NSW, Australia
Charles T. Cannada Director 515 East Amite Street, Jackson, MS 39201-2702, U.S.
John W. Sidgmore Director 3060 Williams Drive, Fairfax, VA 22031-4648 U.S.
</TABLE>
4. SUMMARY OF PRINCIPAL ACTIVITIES OF PURCHASER
4.1 Purchaser was formed on 10 December, 1998 to make the Offer, and to
acquire Shares and ADSs. Purchaser is incorporated in New South Wales,
Australia. It has an issued share capital of A$2, consisting of two fully
paid ordinary shares issued for A$1 each.
4.2 Apart from acquiring Shares pursuant to the Subscription Agreement and
making the Offer:
(a) Purchaser has not carried on any other activity; and
(b) it is not expected that Purchaser will, before the expiry of the
Offer Period, engage in any activities other than holding the Shares
and ADSs acquired under the Subscription Agreement and the Offer, and
any other transactions contemplated by the Offer.
4.3 Intermediate, the parent company of Purchaser, is a Delaware corporation
which is a wholly-owned subsidiary of MCI WorldCom. The principal
executive offices of Intermediate are located at 3060 Williams Drive,
Fairfax, Virginia 22031, U.S. Intermediate
<PAGE>
3
is a leading worldwide provider of a comprehensive range of Internet
access options, applications, and consulting services to businesses,
professionals and on-line service providers. Intermediate's activities are
controlled by MCI WorldCom, and therefore the financial results of
Intermediate's activities are included in the consolidated financial
statements of MCI WorldCom.
4.4 The ultimate holding company of Intermediate and Purchaser is MCI
WorldCom, a Georgia corporation, the securities of which are traded on The
Nasdaq National Market. As at 30 September, 1998, MCI WorldCom and its
subsidiaries had:
(a) total assets of US$82.3 billion on a consolidated basis; and
(b) net shareholders' investment of US$44.3 billion on a consolidated
basis.
MCI WorldCom is a holding company which, through its subsidiaries, is a
global provider of telecommunications services. MCI WorldCom provides
telecommunications services to business, governments, telecommunications
companies and other consumer customers through its network of fibre optic
cables, digital microwave, and fixed and transportable satellite earth
stations. MCI WorldCom was one of the first major facilities-based
telecommunications companies with the capability to provide businesses
with high quality local, long distance, Internet, data and international
communications services over its global networks.
4.6 Further details on MCI WorldCom, including summary financial information,
are contained in the Offer.
5. PURCHASER'S ENTITLEMENT IN OZEMAIL
As at the date of this Part A Statement, Purchaser is entitled (within the
meaning of the Corporations Law) to 21,863,174 Shares, being approximately
14.9% of the total number of Shares on issue at 14 December, 1998.
6. TRANSACTIONS IN OZEMAIL BY PURCHASER OR ITS ASSOCIATES DURING PREVIOUS
FOUR MONTHS
In the four months ending on the day immediately before the day on which
this Part A Statement was lodged for registration with the ASIC, there
have been no acquisitions or disposals of Shares or ADSs by Purchaser or
any of its associates, except as set out below.
<TABLE>
<CAPTION>
PERSON DATE ACQUISITION/DISPOSAL NO. OF SHARES PRICE PER FROM
SHARE
<S> <C> <C> <C> <C> <C>
Purchaser 12/12/98 Acquisition by 21,863,174 US$2.00 OzEmail
issue of new shares per share
</TABLE>
<PAGE>
4
7. TRANSACTIONS IN PURCHASER BY PURCHASER OR ASSOCIATES DURING PREVIOUS FOUR
MONTHS
In the four months ending on the day immediately before the day on which
this Part A Statement was lodged for registration with the ASIC, there
have been no acquisitions or disposals of shares in Purchaser by Purchaser
or any of its associates, except as set out below.
<TABLE>
<CAPTION>
PERSON DATE ACQUISITION/DISPOSAL NO. OF PRICE PER FROM
SHARES SHARE
<S> <C> <C> <C> <C> <C>
UUNET International, Ltd. 10/12/98 Acquisition by 2 A$1.00 Purchaser
(a wholly-owned subsidiary issue of new shares
of Intermediate)
</TABLE>
8. PRE-EMPTION CLAUSES IN OZEMAIL'S CONSTITUTION
The constitution of OzEmail contains no restriction on the right to
transfer Shares that has the effect of requiring the holders of those
Shares, before transferring them, to offer them for purchase to members of
OzEmail or to any other person.
9. HOW CASH CONSIDERATION WILL BE PROVIDED
The consideration for the acquisition of the Shares and ADSs to which the
Offer relates will be satisfied wholly by payment of cash. None of the
funds for the consideration will be sourced from Purchaser's own
resources.
The maximum amount payable by Purchaser under the Offer for the Shares and
ADSs to which it is not entitled will be approximately US$297 million if:
(a) all the holders of Shares accept the Offer in respect of all Shares
(other than those represented by ADSs for which the Offer is
accepted);
(b) all the holders of ADSs accept the Offer in respect of all ADSs
(other than those representing Shares for which the Offer is
accepted);
(c) all the holders of Options exercise their options and accept the
Offer in respect of all Shares issued upon that exercise; and
(d) except the Shares issued upon the exercise of the Options, no other
Shares are issued before the expiry of the Offer Period.
MCI WorldCom has agreed to make available, or procure the availability of,
the amount required by Purchaser to fund the acquisition. There are no
conditions precedent to MCI WorldCom's obligation to make available, or
procure the availability of, the amount required to fund the acquisition,
except that Purchaser cannot issue a draw down notice
<PAGE>
5
unless and until the Offer is declared or becomes free of conditions.
MCI WorldCom will obtain the amount required from cash on hand and from
its existing credit facilities. These facilities were not established
specifically to fund the acquisition of the Shares and ADSs. These
facilities comprise US$10.75 billion in credit facilities consisting of a
US$3.75 billion Amended and Restated Facility A Revolving Credit Agreement
("Facility A Loans") and a US$7 billion 364-Day Revolving Credit and Term
Loan Agreement (the "Facility C Loans") (together, "Credit Facilities").
There are no unusual or material conditions to be satisfied prior to draw
down under the Credit Facilities. The parties to the Credit Facilities
are MCI WorldCom and NationsBank, N.A. (Arranging Agent and Administrative
Agent), NationsBanc Montgomery Securities LLC (Lead Arranger), Bank of
America NT & SA, Barclays Bank PLC, The Chase Manhattan Bank, Citibank,
N.A., Morgan Guaranty Trust Company of New York, and Royal Bank of Canada
(Co-Syndication Agents) and the lenders named in the Restated Facility A
Revolving Credit Agreement dated as of August 6, 1998 and the 364-Day
Revolving Credit and Term Loan Agreement dated August 6, 1998.
The Credit Facilities provide liquidity support for MCI WorldCom's
commercial paper program and are used for other general corporate
purposes. The Facility A Loans mature on June 30, 2002. The Facility C
Loans have a 364-day term, which may be extended for up to two successive
364-day terms thereafter to the extent of the committed amounts from those
lenders consenting thereto, with a requirement that lenders holding at
least 51% of the committed amounts consent. Also, effective as of the end
of the end of such 364 - day term, MCI WorldCom may elect to convert up to
US$4 billion of the principal debt under the Facility C Loans from
revolving loans to term loans with a maturity date no later than one year
after the conversion.
The amounts available under the Credit Facilities will exceed the maximum
amount payable under the Offer. MCI WorldCom has undertaken to Purchaser
that the funds available to it under the Credit Facilities, and which it
will make available to Purchaser, will be sufficient to satisfy that
maximum amount. Because the Offer is made in U.S. dollars, there is no
need to engage in, and neither Purchaser nor MCI WorldCom has engaged in,
hedging activities to account for exchange rate fluctuations in connection
with the Offer.
See section 8 of the Offer for financial and other information about MCI
WorldCom.
10. NO PROPOSED BENEFITS TO OFFICERS OF OZEMAIL
In connection with the Offer:
(a) no prescribed benefit (as defined in the Corporations Law), other
than an excluded benefit (as defined in the Corporations Law), will
or may be given to a person in connection with the retirement of a
person from a prescribed office (as defined in the Corporations Law)
in relation to OzEmail; and
<PAGE>
6
(b) no prescribed benefit will or may be given to a prescribed person (as
defined in the Corporations Law) in relation to OzEmail in
connection with the transfer of the whole or any part of the
undertaking or property of OzEmail.
11. NO OTHER AGREEMENTS WITH DIRECTORS OF OZEMAIL
There is no other agreement made between Purchaser and any of the
directors of OzEmail in connection with, or conditional upon, the outcome
of the Offer.
12. CHANGES IN OZEMAIL'S FINANCIAL POSITION
12.1 So far as is known to Purchaser, the financial position of OzEmail has not
materially changed since OzEmail's listing on ASX on 28 May, 1998 other
than as described in this Part A Statement and the disclosures by OzEmail
to ASX since that date. Purchaser considers the information summarised in
this section to be material in the context of those disclosures. However,
this is merely a summary and holders of Shares and ADSs should read
Appendices A, B, C, D and E in their entirety.
12.2 On 8 September, 1998, OzEmail lodged with the ASX its Half-Yearly Report
for the half-year ended 30 June 1998 in the form of Appendix A. Items
arising from that report are:
(a) the consolidated net loss for that period was A$(7,598,123), after
including an income tax benefit of A$101,171;
(b) the amount of consolidated operating revenue for the period of
operation was A$49,223,770;
(c) OzEmail acquired an 80% interest in OzEmail Interline. OzEmail
subsequently sold 32% of its interest and recorded a profit on the
sale of A$4,791,885;
(d) on 31 March, 1998, OzEmail acquired from Camtech (SA) Pty Limited its
internet access business in South Australia.
12.3 On 19 June, 1998, OzEmail lodged with the SEC Form 8-K in the form of
Appendix B. That report indicates that on 25 November, 1997 OzEmail
purchased all of the outstanding ordinary shares of Access One Pty
Limited, which is in the business of providing internet service in
Australia.
12.4 On 14 August, 1998, OzEmail lodged with the SEC Form 6-K for the quarter
ending 30 June 1998, in the form of Appendix C.
12.5 On 14 September, 1998, OzEmail announced a requirement to make a one-off
payment of US$35.3 million covering the use of the Southern Cross Cable.
A copy of this announcement is contained in Appendix D.
<PAGE>
7
12.6 On 6 November, 1998, OzEmail lodged with the ASX its Quarterly Report for
the quarter ended 30 September, 1998. Items arising from that report are:
(a) revenues for the third quarter of 1998 were A$29,210,000
(US$17,400,000), an increase of 98.3% over 1997 third quarter
revenues of A$14,728,000 (US$10,520,000);
(b) the operating loss for the quarter was A$3,517,000, compared to an
operating loss of A$805,000 in the 1997 third quarter;
(c) the net loss for the quarter was A$3,677,000, or a A$0.30 per ADS
(US$2,190,000 or US$0.176 per ADS) compared to a net loss for the
third quarter of 1997 of A$398,000 or A$0.04 per ADS (US$284,000 or
US$0.03 per ADS); and
(d) for the nine months ended 30 September, 1998, total revenue grew by
103% to A$78,644,000 from A$38,557,000 in the nine months ended 30
September, 1997. The net loss for the nine months to 30 September,
1998 was A$11, 210,000 compared with a net loss of A$9,003,000 in the
comparable 1997 period.
A full copy of this announcement is contained in Appendix E to this Part A
Statement.
12.7 On 12 December, 1998, OzEmail entered into the Subscription Agreement
pursuant to which OzEmail issued 21,863,174 Shares to Purchaser and
Purchaser paid US$43,726,348 to OzEmail.
12.8 Further details on OzEmail, including summary financial information, are
contained in the Offer.
13. NO AGREEMENT BY PURCHASER TO TRANSFER SHARES UNDER OFFERS
There is no agreement whereby any Share (including ADSs representing those
Shares) acquired by Purchaser pursuant to the Offer will or may be
transferred to any other person.
14. NO ESCALATION CLAUSES
There is no agreement for the acquisition of Shares (including ADSs
representing those Shares) by Purchaser or by an associate of Purchaser,
under which the person, or either or any of the persons, from whom Shares
have been or are to be acquired, or an associate of that person or either
or any of those persons, may, at any time after an Offer is sent, become
entitled to any benefit, whether by way of receiving an increased price
for those Shares or by payment of cash or otherwise, that is related to,
dependent upon, or calculated in any way by reference to, the
consideration payable for Shares acquired after the agreement was entered
into.
15. OTHER MATERIAL INFORMATION
<PAGE>
8
15.1 There is no other information material to the making of a decision by an
offeree whether or not to accept the Offer (being information that is
known to Purchaser and has not previously been disclosed to the holders of
Shares or ADSs) other than:
(a) as disclosed in this Part A Statement;
(b) as contained in the Offer; or
(c) as set out in the Appendices to this Part A Statement.
Cross-border issues: ASIC exemptions and modifications
15.2 Although OzEmail is incorporated in New South Wales, Shares and ADSs are
registered under the Exchange Act. By reason of that registration, the
Takeover Scheme is required to comply with the requirements of the
Exchange Act and the Corporations Law. The requirements of the Exchange
Act and the Corporations Law conflict in several respects, and Purchaser
has obtained from the ASIC certain modifications to, or exemptions from,
Chapter 6 of the Corporations Law and certain relief from the SEC to
permit the Offer to be made in accordance with the requirements (as varied
by those modifications, exemptions and relief) of both jurisdictions.
Therefore, the Takeover Scheme differs in several respects from usual
takeover schemes in Australia:
(a) Extension of Offer following variation: The Exchange Act permits an
offer to be extended at a time when it is still subject to defeating
conditions. Also, the Exchange Act requires that an offer remain open
for at least 10 U.S. business days after notice of an increase in the
consideration being offered is first published or sent to security
holders.
The ASIC has granted Purchaser relief from section 634(1) and 656(1)
of the Corporations Law to permit the Offer to be extended at any
time before the end of the Offer Period without the Offer at the time
of extension being free of defeating conditions. The relief requires
that a notice of extension be given by press release by generally
accepted media channels, by public announcement to the ASX and that
the requirements of section 657(1) of the Corporations Law be
observed, which require signing (in the same manner as a Part A
Statement is required to be signed), registration by the ASIC,
service upon OzEmail and dispatch to each holder of Shares and ADSs
of a notice of variation. Also, any extension must, if effected less
than 7 days before the last day (but for such extension) of the Offer
Period, be for a minimum of 5 business days.
<PAGE>
9
(b) Declaring free from conditions in last 7 days/extension: In
Australia, an offeror can only declare a takeover offer free from
defeating conditions if it is a term of the offer that the offeror
may do so not less than 7 days before the end of the offer period,
and if the offeror does so in accordance with that term. There is no
similar restriction in the U.S.
The ASIC has granted Purchaser relief from section 663(2) of the
Corporations Law to permit that declaration to be made at any time
before the end of the Offer Period. The relief requires that a
notice of the declaration be given by press release by generally
accepted media channels, by public announcement to the ASX and that
the requirements of subsections 663(3) and 663(4) of the
Corporations Law be observed, which will require that a notice be
given stating that the Offer is free from defeating conditions and
specifying Purchaser's level of entitlement in Shares (including
ADSs representing those Shares).
SEC policy requires that an offer be extended, if necessary, so that
it remains open for at least 5 U.S. business days following waiver
of material conditions. Accordingly, if Purchaser declares the Offer
free from all defeating conditions less than 7 days before the last
day of the Offer Period, Purchaser must also extend the Offer Period
for a minimum of 5 business days.
(c) Updating Part A Statement and Offer for material information: The
Exchange Act requires that the Offer contain certain material
information and that the Offer be dated as at the date of dispatch.
The Part A Statement, which must also contain certain material
information, must be served at least 14 days prior to the dispatch
of the Offer. The ASIC has granted relief from section 637(1)(b) of
the Corporations Law to Purchaser to enable:
(i) the Part A Statement to be updated with material and other
changes in that information which occurred between the date of
service of the Part A Statement on OzEmail and the date of
dispatch of the Offer; and
(ii) the copies of the Offer as dispatched to differ from the
draft Offer accompanying the Part A Statement registered by
ASIC and served on OzEmail.
(d) Content of draft Offer: The ASIC has modified section 637(1)
(b) of the Corporations Law so as to permit a copy of the
proposed Offer accompanying the Part A Statement registered by
the ASIC and served on OzEmail to omit any date or information
required to be contained in the Offer under the Exchange Act
which is unknown as at the date of this Part A Statement.
(e) Currency of consideration offered (election and default
election): The ASIC has granted relief to the application of
section 636 of the Corporations Law to allow the Offer, which
will be made in U.S. dollars, to give every holder of Shares or
ADSs (wherever situated) the right to elect to receive
Australian dollars on the basis of the US$:A$ exchange rate
prevailing on the day Purchaser makes funds
<PAGE>
10
available for payment under the Offer. If no election is made,
holders of ADSs will be paid in U.S. dollars and holders of
Shares will be paid in Australian dollars. Further details of
the operation of this mechanism is contained in section 3.2 of
the Offer. That exemption allows the Offer to stipulate that
U.S. offerees who accept the Offer in respect of certificated
Shares must do so by delivering a form of acceptance and
transfer to an agent of Purchaser in the U.S.
(f) Offer for Shares resulting from options/new issues: The ASIC
has granted Purchaser relief to permit the Offer to extend to
Shares which are issued during the Offer Period, by reason of
the exercise of the Options. Under this relief, and the terms
of the proposed Offer, the issue of Shares before expiry of the
Offer Period, other than pursuant to the exercise of Options,
will constitute a prescribed occurrence and the Offer will be
conditional upon no prescribed occurrence occurring.
(g) Compulsory acquisition of later issued Shares: If Purchaser:
(i) is able to acquire compulsorily Shares and ADSs under
section 701 of the Corporations Law; and
(ii) following that compulsory acquisition, becomes entitled to
more than 90% of Shares,
Purchaser will seek a modification to the Corporations Law
pursuant to ASIC's Policy Statement 126 to permit Purchaser to
compulsorily acquire Shares issued after the expiry of the
Offer Period following the exercise of Options. Details of
Purchaser's intentions regarding, and the meaning and operation
of, compulsory acquisition are contained in section 11.1 of the
Offer.
(h) Withdrawal rights/disposal of shares during Offer Period: ASIC
has granted Purchaser relief from the application of section
686 of the Corporations Law to permit disposals of Shares by
Purchaser to the extent that the exercise of the withdrawal
rights referred to in section 1.7 of this Part A Statement (and
section 4 of the Offer), by holders of Shares or ADSs
constitutes a disposal under section 686 of the Corporations
Law.
(i) U.S. backup withholding tax: ASIC has granted Purchaser an
exemption from the operation of section 636 and 638(7) of the
Corporations Law to permit Purchaser, if required by the U.S.
Internal Revenue Code of 1986, as amended, to withhold amounts
from the consideration payable to holders of Shares and ADSs
accepting the Offer. Details of the operation of U.S. federal
backup withholding tax are contained in section 5.1 of the
Offer.
(j) Single class of securities: Purchaser has obtained a
modification from ASIC to various provisions of Chapter 6 of
the Corporations Law to permit a single Offer to relate to both
Shares and ADSs.
<PAGE>
11
15.3 Also, Purchaser has obtained the following relief from the ASIC:
(a) Signature by agent: Relief to permit the signature of this Part
A Statement by an agent of two directors of Purchaser.
(b) Business address of Purchaser's directors: Relief to allow only
the business addresses of Purchaser's directors to appear in
this Part A Statement.
(c) Registration and service on same day: Purchaser has obtained a
modification to section 644 of the Corporations Law to permit
this Part A Statement and a copy of the Offer to be served on
OzEmail on the day they are registered by the ASIC.
(d) Base date for analysis of material financial changes: Relief to
permit Purchaser to disclose only those material changes to the
financial position of OzEmail since OzEmail's listing on the
ASX on 28 May, 1998.
The exemptions and modifications of the application of the Corporations
Law granted by ASIC and outlined above are set out in full in Appendix F
to this Part A Statement.
Certain features of the Offer arising under U.S. law
15.4 In addition to the differences between Australian and U.S. law referred to
in section 15.2, the Offer differs from the usual kind of Australian
takeover offer because of the right of withdrawal given to offerees, as
described in section 1.7 of this Part A Statement and section 4 of the
Offer.
U.S. backup withholding tax
15.5 Payments made to a holder of Shares or ADSs pursuant to the Offer may be
subject to information reporting to the U.S. Internal Revenue Service and
to U.S. federal backup withholding tax at the rate of 31% on the gross
amount of such payments. Backup withholding will generally not apply to a
holder who furnishes a correct taxpayer identification number or a
certificate of foreign status and makes certain other required
certifications, or who is otherwise exempt from backup withholding (e.g.,
a U.S. corporation). To avoid information reporting and backup
withholding, holders of Shares and/or ADSs are referred to the section
entitled `Information Reporting and Backup Withholding' in section 5.1 of
the Offer.
Taxation Issues
15.6 Tax considerations may be relevant to the decision by an offeree whether
or not to accept the Offer. Details of taxation implications for offerees
are contained in section 5 (Certain Tax Consequences) of the Offer.
Purchaser will seek satisfaction of regulatory conditions
<PAGE>
12
15.7 To the extent that the Offer is conditional upon certain regulatory
approvals, Purchaser will take all reasonable steps to ensure that the
approvals are granted as promptly as possible. On 17 December, 1998,
Purchaser lodged with the Foreign Investment Review Board an application
for approval of the Offer under the Foreign Acquisitions and Takeovers Act
1975.
16. PURCHASER'S INTENTIONS ABOUT BUSINESS, ASSETS AND EMPLOYEES OF OZEMAIL
16.1 Intention to Compulsorily Acquire
It is Purchaser's present intention that if, following the close of the
Offer, Purchaser becomes entitled to compulsorily acquire the Shares
(including Shares represented by ADSs) which were subject to the Offer but
which were not acquired under the Offer, Purchaser will proceed to
compulsorily acquire those Shares. In essence, compulsory acquisition
allows Purchaser to compel any remaining holders of Shares to sell those
Shares to Purchaser in the manner set forth below.
Under the Corporations Law, the compulsory acquisition test requires
Purchaser to be entitled at the close of the Offer Period to not less than
90% of all Shares (including Shares represented by ADSs) and either:
(a) three-quarters of the offerees have at the close of the Offer
Period disposed of to Purchaser (whether by accepting the Offer
or otherwise) the Shares or Shares represented by ADSs subject
to acquisition that were held by them; or
(b) at least three-quarters of the persons who were registered as
the holders of Shares or Shares represented by ADSs immediately
before the day on which this Part A Statement was served on
OzEmail are not so registered at the end of one month after the
end of the Offer Period.
Under the Corporations Law, the method of application of this compulsory
acquisition test to Shares represented by ADSs is unclear and untested.
This is because, in the U.S., owners of Shares represented by ADSs often
hold through a nominee, and it is neither customary nor a requirement of
U.S. law for a nominee, when lodging an acceptance, to identify either the
names of the persons on whose behalf the offer is accepted, or even the
number of persons on whose behalf the offer is accepted. For these reasons
Purchaser's ability to proceed to compulsory acquisition will require
consultation with the ASIC and may require modifications of the
Corporations Law. The method of application will be resolved during the
Offer Period, and an announcement made about this method.
If Purchaser Becomes Entitled to Compulsory Acquisition. If Purchaser
becomes entitled to compulsorily acquire Shares (including Shares
represented by ADSs), Purchaser may, before the end of two months after
the end of the Offer Period, give notice to an offeree who did not accept
the Offer to the effect that Purchaser desires to acquire the outstanding
Shares held by that offeree. Purchaser is then entitled and bound to
acquire the Shares to which the notice relates on the terms applying to
the Offer immediately before the end of the Offer Period, unless a court
orders otherwise. Provided that a court does not order otherwise,
Purchaser must, within the prescribed period under the Corporations Law,
acquire the Shares by serving a copy of a compulsory acquisition notice on
OzEmail, together with a transfer of the Shares signed on behalf of the
holder by a person appointed by Purchaser. Purchaser also must pay the
consideration for the transfer of the Shares to OzEmail, to be held by
OzEmail on trust for such offerees.
Also, Purchaser will be seeking relief from the ASIC after the close of
the Offer Period pursuant to the ASIC's Policy Statement 126 to permit the
compulsory acquisition of Shares that may be issued after the close of the
Offer Period, including at a later date of Shares issued following
exercise by employees of the Options, assuming the conditions necessary
for compulsory acquisition are satisfied under the Offer. Purchaser will
also apply to ASIC for a modification of section 701(2)(c) of the
Corporations Law so as to discount untraceable shareholders in determining
whether the compulsory acquisition requirements of section 701(2)(c) have
been satisfied by Purchaser.
If Purchaser does not Become Entitled to Compulsory Acquisition. If
Purchaser is not entitled to compulsorily acquire any outstanding shares
within two months of the expiry of the Offer Period, it will thereafter
only be able to compulsorily acquire those Shares pursuant to statutory
procedure which authorises compulsory acquisition, such as a further
takeover bid or a scheme of arrangement. A scheme of arrangement between
OzEmail and its shareholders propounded by Purchaser will bind
shareholders and permit compulsory acquisition or cancellation of the
Shares held by a person other than Purchaser, if it is approved by
shareholders (other than Purchaser) who are more than 50% in number of
<PAGE>
13
shareholders present and voting at a meeting held to approve the scheme,
being shareholders holding at least 75% of the shares held by all
shareholders present and voting at that meeting and if it is approved by
the court.
16.2 Intentions if Purchaser acquires 100% of Shares
If, under the Offer and the operation of the compulsory acquisition
provisions of the Corporations Law, Purchaser obtains ownership of all the
issued Shares (including those Shares represented by ADSs), Purchaser
presently intends to do the following:
(a) Purchaser will in the ordinary course of its management, review the
lines of business, assets and employees of OzEmail to evaluate
performance, profitability, prospects and overall fit in MCI
WorldCom's Internet-related businesses in the light of the
information that is then available to it. Given MCI WorldCom's plans
to enter the facilities-based telecommunications business in
Australia, MCI WorldCom, together with OzEmail, will be able to
provide comprehensive and competitive telecommunications services in
Australia. This operational review will focus on identifying
opportunities to improve productivity and competitiveness consistent
with this plan.
(b) Subject to the operational review referred to in paragraph (a),
Purchaser presently intends to:
(i) preserve and grow the existing core Internet services provider
business activities of OzEmail and integrate them into the MCI
WorldCom Internet-related businesses;
(ii) have OzEmail be the Internet service provider operating company
in Australia for the MCI WorldCom Group;
(iii) remove all of the Board of Directors of OzEmail and seek the
appointment of nominees of Purchaser, some of whom may include
existing OzEmail directors (although no arrangement, or
understanding exists in relation to this possible appointment);
(iv) perform a review of all existing telecommunications capacity
requirements of OzEmail and to the extent practicable and in
accordance with OzEmail's existing contractual arrangements
migrate those requirements to facilities owned or leased by MCI
WorldCom;
(v) achieve synergies by the elimination of any duplicate functions
arising as a result of the acquisition of OzEmail;
(vi) combine MCI WorldCom Group's and OzEmail's technical, managerial
and sales skills and resources for the benefit of their combined
businesses;
(vii) review the capital funding requirements of OzEmail with a view to
utilizing the larger balance sheet of the MCI WorldCom Group, and
<PAGE>
14
seeking more favourable financing terms which Purchaser expects
would be available to OzEmail;
(viii) have OzEmail removed from official listing on the ASX and The
Nasdaq National Market;
(ix) terminate the registration of the Shares and/or ADSs, as
applicable, under the Exchange Act; and
(x) as part of the operational review referred to in paragraph (a),
review the contractual and regulatory framework within which the
combined OzEmail/MCI WorldCom Group would operate in Australia
and New Zealand.
(c) If the steps referred to in paragraph (b) are implemented, some
employees of OzEmail may be redundant. If suitable alternative
employment within the MCI WorldCom Group is not available and OzEmail
employees are made redundant, they will receive their statutory and
contractual entitlements.
Apart from the matters listed above, Purchaser does not presently intend
to make other changes to OzEmail, OzEmail's business (including
redeployment of fixed assets) or OzEmail's employees.
16.3 Intentions if Purchaser acquires less than 100% of Shares
If, prior to close of the Offer, Purchaser has waived the Minimum
Condition (as defined in the Offer) and if, at the close of the Offer,
Purchaser is entitled to more than 50% but less than 90% of the issued
Shares (including those Shares represented by ADSs), Purchaser presently
intends to do the following, subject to OzEmail's constitution and
applicable laws and regulations:
(a) conduct a review of the kind detailed in section 16.2(a) above;
(b) subject to that review, attempt to procure that the Board of
Directors of OzEmail:
(i) seeks the appointment of nominees of Purchaser to the Board of
Directors of OzEmail in such a proportion as at least equates to
Purchaser's shareholding interest in OzEmail;
(ii) continues to operate the businesses of OzEmail and not make any
major changes to the businesses of OzEmail or make any
redeployment of the fixed assets of OzEmail; and
<PAGE>
15
(iii) co-ordinate MCI WorldCom Group's and OzEmail's technical,
managerial and sales skills and resources for the benefit of
their combined businesses, with the provision of such resources
by one to the other being on arm's length terms;
(c) if the steps referred to in paragraph (b) are implemented, some
employees of OzEmail may be redundant. However, it is likely that
there will be fewer redundancies than if OzEmail becomes a wholly-
owned subsidiary of Purchaser since it will not be possible to
eliminate to the same extent duplicate functions in relation to, for
example, certain public company reporting functions; and
(d) have OzEmail removed from the official listing on the ASX and The
Nasdaq National Market when and to the extent permitted by the ASX
and The Nasdaq National Market and when and to the extent permitted
by the Exchange Act, to seek to terminate the registration of the
Shares and/or the ADSs, as applicable, under the Exchange Act.
Apart from the matters listed above, Purchaser does not presently intend
to make other changes to OzEmail, OzEmail's business (including
redeployment of fixed assets) or OzEmail employees.
If, at the close of the Offer, Purchaser is entitled to less than 50% of
the issued Shares (including those Shares represented by ADSs), then
Purchaser will consider the options available to it as a holder of less
than 50%.
16.4 The intentions of Purchaser referred to in sections 16.2 and 16.3 have
been formed with reference to publicly available information and without
the benefit of any detailed review of OzEmail's businesses. In particular,
Purchaser has not had access to all of the instruments and agreements
under which OzEmail has financed its operations or engaged in business
ventures with other parties. For example, Purchaser has not had access to
all the terms of OzEmail's contracts.
16.5 Following the implementation of the operational review described in
section 16.2(a) or 16.3(a), it will be a matter for the Board of Directors
of OzEmail to determine the extent to which the steps referred to in
sections 16.2 and 16.3 are to be implemented (if at all). Final decisions
will only be reached after the review referred to in sections 16.2 and
16.3 above, and will only be reached in the light of all material facts
and circumstances which then exist. Accordingly, the statements contained
in this section 16 are statements of current intention only which may vary
as circumstances require depending, among other matters, on the outcome of
the Offer. The Board of Directors of OzEmail may only implement the steps
in accordance with all applicable, legal, regulatory, contractual, SEC,
ASIC, ASX and The Nasdaq National Market requirements and their fiduciary,
statutory and contractual obligations generally.
16.6 Except as indicated in the Offer, none of MCI WorldCom, Intermediate or
Purchaser has any present plans or proposals which relate, to or would
result in, an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving OzEmail or
<PAGE>
16
any of its subsidiaries, a sale or transfer of a material amount of assets
of OzEmail or any of its subsidiaries, any material change in OzEmail's
capitalization or dividend policy, or any other material change in
OzEmail's corporate structure or business, or the composition of the board
or management.
16.7 "Going Private" Transactions. The SEC has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going-private" transactions
and which may be applicable as a consequence of the Offer. Rule 13e-3 may
apply if Purchaser acquires less than 90% of the outstanding Shares and
ADSs in the Offer (and consequently is unable to compulsorily acquire all
of the Shares, including Shares represented by ADSs in accordance with the
Corporations Law), and Purchaser subsequently enters into certain business
combinations with OzEmail or makes certain acquisitions of Shares
including Shares represented by ADSs. Rule 13e-3 would be inapplicable if
the Shares and/or ADSs were deregistered under the Exchange Act prior to
any such business combination or acquisition of Shares and ADSs. If
applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning OzEmail and certain information relating
to the fairness of the consideration offered to minority shareholders be
filed with the SEC and distributed to minority shareholders before the
consummation of any such transaction.
The purchase of a substantial number of Shares and ADSs pursuant to the
Offer may result in the termination, upon application of OzEmail to the
SEC, of OzEmail's registration under the Exchange Act. See Section 1.3
"Effect of the Offer on the Market for Securities: National Association
of Securities Dealers and Australian Stock Exchange Quotation and Exchange
Act Registration." If such registration were terminated, Rule 13e-3 would
be inapplicable to any such business combination or acquisition of
Securities.
17. INTERPRETATION
17.1 In this Part A Statement, the following words have these meanings, unless
the contrary intention appears or the context otherwise requires.
"ADS" means an American Depositary Share issued by The Bank of New York as
depositary (or any successor to The Bank of New York) representing 10
Shares, and `ADSS' is the plural form of an ADS.
"A$" means Australian Dollars.
"ASIC" means the Australian Securities and Investments Commission.
"ASX" means the Australian Stock Exchange Limited.
"CORPORATIONS LAW" means the Australian Corporations Law.
"EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as amended,
and the rules made thereunder.
<PAGE>
17
"INTERMEDIATE" means UUNET Technologies, Inc., a Delaware corporation
having its principal executive offices at 3060 Williams Drive, Fairfax,
Virginia 22031, U.S.
"MCI WORLDCOM" means MCI WORLDCOM, Inc., a Georgia corporation having its
principal executive offices at 515 East Amite Street, Jackson, Mississippi
39201, U.S..
"MCI WORLDCOM GROUP" means the group of companies of which MCI WorldCom is
the ultimate holding company, which includes Intermediate and Purchaser.
"OFFER" means the Offer to Purchase referred to in Section 1 of this Part A
Statement and, if the context so requires, the offer document accompanying
this Part A Statement and to which this Part A Statement relates.
"OFFER PERIOD" means the period (or extended period) during which the Offer
is to remain open in accordance with Section 2 of this Part A Statement.
"OPTIONS" means the options to acquire unissued fully paid ordinary shares
in the capital of OzEmail issued to employees of OzEmail and all Rights
attaching to them.
"OZEMAIL" means OzEmail Limited (ACN 066 387 157), a company incorporated
in New South Wales, Australia, and having its registered office at Ground
Floor, Building B, 39 Herbert Street, St Leonards, New South Wales,
Australia.
"PART A STATEMENT" means this statement of Purchaser pursuant to Parts 6.3
and 6.12 of the Corporations Law.
"PURCHASER" means UUNET Holdings Australia Pty Limited (ACN 085 531 684), a
company incorporated in New South Wales, Australia and having its
registered office at 44 Martin Place, Sydney, New South Wales, Australia.
"RIGHTS" means all accretions and rights attaching to or arising from
Shares after the date of service of this Part A Statement on OzEmail
(including, without limitation, all rights to receive dividends and to
receive or subscribe for shares, stock units, notes or options and all
other distributions or entitlements declared, paid or issued by OzEmail
after that date).
"SEC" means the U.S. Securities and Exchange Commission.
"SHARES" means the fully paid ordinary shares in the capital of OzEmail and
all Rights attaching to them.
"SUBSCRIPTION AGREEMENT" means the Subscription Agreement described in
Section 8 of the Offer.
"SYDNEY TIME" means Australian Eastern Standard Time or, if applicable,
Australian Eastern Summer Time.
<PAGE>
18
"TAKEOVER SCHEME" means the takeover scheme constituted in accordance with
Division 1 of Part 6.3 of the Corporations Law pursuant to which Purchaser
proposes to make offers to acquire all the Shares and ADSs.
"U.S." means the United States of America.
"U.S. BUSINESS DAY" means any day other than a Saturday, Sunday, U.S.
Federal holiday and consists of the time period from 12.01 am through 12.00
midnight, New York City time, as the case may be on that day.
"US$" means U.S. Dollars.
17.2 Headings are for convenience only and do not affect interpretation. The
following rules of interpretation apply unless the context requires
otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) Where a word or phrase is defined, its other grammatical forms have a
corresponding meaning.
(d) A reference to a person includes a body corporate, an unincorporated
body or other entity and conversely.
(e) A reference to any legislation or to any provision of any legislation
includes any modification or re-enactment of it, any legislative
provision substituted for it, and all regulations and statutory
instruments issued under it.
(f) A term not specifically defined in this Part A Statement has the
meaning (if any) given to it in the Corporations Law.
DATED: 22 December, 1998
SIGNED by John W Sidgmore and Charles T Cannada (by their agent authorised in
writing, Leigh R Brown) being two directors of Purchaser authorised to sign this
Part A Statement by a resolution passed at a meeting of directors.
- ------------------ ------------------
John W Sidgmore Charles T Cannada
<PAGE>
APPENDIX A
HALF-YEARLY REPORT FOR THE HALF-YEAR ENDED 30 JUNE 1998
(SECTION 12.2)
<PAGE>
OzEmail Limited and Controlled Entities
ACN 066 387 157
Directors' Report
Your directors present their report on the consolidated accounts for the half-
year ended 30 June 1998.
DIRECTORS
The following persons held office as directors of OzEmail Limited at the date of
this report:
S Howard (Chief Executive Officer)
M Turnbull (Chairman)
D Spence
T Kennedy
S Ezzes
C Tyler resigned as a director of the Company during the period.
TRADING RESULTS
The consolidated net loss of the economic entity for the period was
$(7,598,123), after including an income tax benefit of $101,171.
REVIEW OF OPERATIONS
The amount of consolidated operating revenue for the period of operation was
$49,223,770.
The amount of operating revenue for the period represents Internet usage.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Interest in OzEmail Interline
OzEmail originally acquired an 80% interest in OzEmail Interline when it
transferred assets from an 80% owned partnership to OzEmail Interline in June
1997. OzEmail subsequently sold 32% of its interest to Metro and recorded a
profit on the sale of $4,791,885.
OzEmail equity accounted its interest in OzEmail Interline in its consolidated
accounts during the 31 December 1997 year.
During April 1998, OzEmail bought out Metro's 40% interest in OzEmail Interline
to regain control of the company and give it the flexibility required to more
effectively manage and develop the European market potential. OzEmail issued
540,000 ADSs with a market value of US$22.125 per ADS at close of business on
that date in consideration for the 40% of shares acquired in OzEmail Interline
giving rise to total consideration of $18,520,384. Metro also agreed to forgive
a debt of $2,043,000 currently owed by OzEmail Interline. This debt forgiveness
was in respect of its obligation to contribute to running costs under Clause 6
of the shareholders' deed. OzEmail has therefore consolidated OzEmail Interline
from April 1998, being the time it increased its equity interest to 88%.
<PAGE>
At the same time OzEmail and Metro agreed to terminate the Metro license
agreement for no consideration due to a number of factors including the fact
that no material sub-licenses had been issued in Europe and no network rollout
had been undertaken.
Acquisition of Camtech (SA) Pty Limited
On March 31 1998, the Company acquired from Camtech (SA) Pty Limited ("Camtech")
its internet access business in South Australia. The consideration for the
acquisition will be equal to two thirds of Camtech's revenues over the next
twelve months. The immediate payment to Camtech was 1,103,240 Ordinary Shares
(equivalent to 110,324 ADSs) which is equal to two thirds of Camtech's revenue
run rate of approximately $4,000,000 at the time of acquisition. Any balance
payment will be made at the end of the first quarter 1999. Secondly as an
incentive to assist in this development of the business, the principals of
Camtech will receive from OzEmail a payment of 5% of the Internet access
revenues arising from the business over the next two years.
Listing on the Australian Stock Exchange ("ASX")
On May 29, 1998, approximately 3,000,000 of OzEmail's Ordinary Shares held by
the founders of the Company were listed and sold on the ASX. The Company did not
receive any proceeds from this listing.
DIRECTORS' BENEFITS
Information on directors' benefits will be set out in the notes to the
consolidated accounts for the financial year ending 31 December 1998.
INFORMATION ON DIRECTORS
<TABLE>
<CAPTION>
Particulars of directors' interests
QUALIFICATIONS AND SPECIAL in shares and options of OzEmail
DIRECTOR EXPERIENCE RESPONSIBILITIES Limited
Ordinary shares Options
<S> <C> <C> <C> <C>
S Howard Director Founding shareholder and
Chief Executive Officer 33,500,000 -
M Turnbull Chairman, BA, LLB Chairman of the Board of
(Sydney), BCL (Oxon) Directors, Member of
Executive Committee 16,750,000 -
D Spence B.Com,Dip.Fin.Acc.CA(SA) Chief Operating Officer
Managing Director
3,083,000 2,042,600
T Kennedy Director Non-executive Director 16,750,000 -
S Ezzes Director, BA, MBA (UCLA) Authorised U.S representative
100,000 100,000
</TABLE>
The particulars of directors' interests in shares and options are as at the date
of this directors' report.
<PAGE>
DIRECTORS' MEETINGS
The numbers of meetings of the company's directors, (including meetings of
committees of directors) held during the half-year ended 30 June 1998, and the
numbers of meetings attended by each director were:
Audit
Director Directors' Committee
Meetings Meetings
A B A B
M Turnbull 7 7 1 1
D Spence 7 7 1 -
S Howard 7 7 1 -
T Kennedy 7 7 1 1
S Ezzes 7 4 1 -
C Tyler 7 1 1 -
This report is made in accordance with a resolution of the directors.
A: Represents meetings held. B: Represents meetings attended.
S Howard
Chief Executive Officer
D Spence
Director
Sydney
31 August 1998
<PAGE>
OzEmail Limited and Controlled Entities
ACN 066 387 157
Directors' Statement
In the opinion of the directors the financial statements set out on pages 1 to
14 are drawn up in accordance with Divisions 4, 4A and 4B of Part 3.6 of the
Corporations Law and so as to give a true and fair view of:
(a) the economic entity's state of affairs as at 30 June 1998 and its profit
for the half year ended on that date; and
(b) the other matters with which they deal.
The financial statements are drawn up in accordance with Accounting Standard
AASB 1029: Half-Year Accounts and Consolidated Accounts and other mandatory
professional reporting requirements.
This statement is made in accordance with a resolution of the directors.
S HOWARD
CHIEF EXECUTIVE OFFICER
SYDNEY
31 AUGUST 1998 D SPENCE
DIRECTOR
<PAGE>
PricewaterhouseCoopers [a]
- -------------------------------------------------------------------------------
PricewaterhouseCoopers
address to_come
Independent Review Report to the Members of
OzEmail Limited and Controlled Entities
Scope
We have reviewed the financial statements of OzEmail Limited (the Company) for
the half-year ended 30 June 1998. The financial statements comprise pages 1 to
15 of the half-yearly report included in the attached Appendix 4B of the
Australian Stock Exchange (ASX) Listing Rules and the directors' statement and
directors' report attached thereto. The financial statements are the
consolidated accounts of the economic entity comprising the Company and the
entities it controlled at the end of, or during, the half-year. The Company's
directors are responsible for the financial statements. We have performed a
review of the financial statements to report whether, on the basis of the
procedures described, anything has come to our attention that would indicate
they are not presented fairly in accordance with applicable accounting standard
AASB 1029: Half-Year Accounts and Consolidated Accounts, other mandatory
professional reporting requirements, the Corporations Law and ASX Listing Rules
relating to half-yearly financial statements, and in order for the Company to
lodge them with the Australian Securities Commission and the ASX.
Our review has been conducted in accordance with Australian Auditing Standards
applicable to review engagements. A review is limited primarily to inquiries of
company personnel and analytical procedures applied to the financial data. These
procedures do not provide all the evidence that would be required in an audit,
thus the level of assurance provided is less than that given in an audit. We
have not performed an audit and, accordingly, we do not express an audit
opinion.
<PAGE>
PricewaterhouseCoopers [LOGO]
Statement
Based on our review, which is not an audit, nothing has come to our attention
that causes us to believe that the financial statements of the Company are not
properly drawn up:
(a) so as to give a true and fair view of:
(i) the state of affairs of the economic entity as at 30 June 1998
and its results and cash flows for the half-year ended on that
date; and
(ii) the other matters required by Divisions 4, 4A and 4B of Part 3.6
of the Corporations Law to be dealt with in the financial
statements;
(b) in accordance with the provisions of the Corporations Law; and
(c) in accordance with applicable accounting standard AASB 1029: Half-Year
Accounts and Consolidated Accounting, other mandatory professional
reporting requirements and ASX Listing Rules relating to half-yearly
financial statements.
/s/ PricewaterhouseCoopers
PricewaterhouseCoopers
Chartered Accountants
/s/ MJ Mitchell
MJ Mitchell Sydney
Partner 31 August 1998
<PAGE>
Half yearly/preliminary final report
- -----------------------------------------------------------------------------
Rules 4.1, 4.3
APPENDIX 4B (EQUITY ACCOUNTED)
HALF YEARLY/PRELIMINARY FINAL REPORT
Introduced 1/12/97. Origin: Appendices 3, 4. Amended 1/7/98.
Name of entity
- ----------------------------------------------------------------------------
OzEmail Limited
- ----------------------------------------------------------------------------
ACN or ARBN Half yearly Preliminary Half year/financial
(tick) final (tick) year ended ("current period")
- ------------------ -------- -------- --------------------------
066 387 157 x 30 June 1998
- ------------------ -------- -------- --------------------------
EQUITY ACCOUNTED RESULTS FOR ANNOUNCEMENT TO THE MARKET
<TABLE>
Extracts from this report for announcement to the market (see note 1). $A'000
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sales (or equivalent operating) revenue (item 1.1) to 49,224
Abnormal items after tax attributable to members (item 2.5) -
+Operating profit (loss) after tax (before amortisation of to (4,191)
goodwill) attributable to members (item 1.26)
+Operating profit (loss) after tax attributable to members to (7,598)
(item 1.10)
Extraordinary items after tax attributable to members (item -
1.13)
+Operating profit (loss) and extraordinary items after tax to (7,598)
attributable to members (item 1.16)
- --------------------------------------------------------------- ----------------------- ------------------------------
Dividends (distributions) Amount per security Franked amount per security
at 36% tax
- --------------------------------------------------------------- ----------------------- ------------------------------
Final dividend (Preliminary final report only - item 15.4)
Interim dividend (Half yearly report only - item 15.6) - cents - cents
- --------------------------------------------------------------- ----------------------- ------------------------------
Previous corresponding period (Preliminary final report -
item 15.5; half yearly report - item 15.7) - cents - cents
- --------------------------------------------------------------- ----------------------- ------------------------------
+Record date for determining entitlements to the N/A
dividend, (in the case of a trust, distribution) (see item 15.2)
- ----------------------------------------------------------------------------------------------------------------------
Brief explanation of omission of directional and percentage changes to profit in accordance with Note 1 and short
details of any bonus or cash issue or other item(s) of importance not previously released to the market:
Directional and percentage changes to profit have not been included as this is the first time that the ecomonic
entity has been required to prepared half yearly results.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Consolidated profit and loss account
<TABLE>
<CAPTION>
Current period - $A'000 Previous corresponding
period - $A'000
<S> <C> <C>
-
1.1 Sales (or equivalent operating) revenue 49,224
========================= =========================
1.2 Share of associates' "net profit (loss)
attributable to members" (equal to item 16.7) - -
1.3 Other revenue 1,313 -
1.4 +Operating profit (loss) before abnormal
items and tax (7,699) -
1.5 Abnormal items before tax (detail in item 2.4) - -
1.6 +Operating profit (loss) before tax (items 1.4 + 1.5) (7,699) -
1.7 Less tax (101) -
1.8 +Operating profit (loss) after tax but before
outside +equity interests (7,598) -
1.9 Less outside +equity interests - -
1.10 +Operating profit (loss) after tax
attributable to members (7,598) -
1.11 Extraordinary items after tax (detail in item 2.6) - -
1.12 Less outside +equity interests - -
1.13 Extraordinary items after tax attributable to
members - -
1.14 Total +operating profit (loss) and
extraordinary items after tax (items 1.8 +
1.11) (7,598) -
1.15 +Operating profit (loss) and extraordinary
items after tax attributable to outside
+equity interests (items 1.9 + 1.12) - -
1.16 +Operating profit (loss) and extraordinary
items after tax attributable to members (items
1.10 + 1.13) (7,598) -
1.17 Retained profits (accumulated losses) at
beginning of financial period 940 -
1.18 If change in accounting policy as set out in
clause 11 of AASB 1018 Profit and Loss
Accounts, adjustments as required by that
clause (include brief description) - -
1.19 Aggregate of amounts transferred from reserves - -
1.20 Total available for appropriation (carried forward) (6,658) -
</TABLE>
<PAGE>
Consolidated profit and loss account continued
<TABLE>
<S> <C> <C>
(6,658) -
1.20 Total available for appropriation (brought
forward)
- -
1.21 Dividends provided for or paid
- -
1.22 Aggregate of amounts transferred to reserves
1.23 Retained profits (accumulated losses) at end (6,658) -
of financial period
========================= =========================
Profit restated to exclude Current period Previous corresponding
amortisation of goodwill $A'000 period $A'000
1.24 +Operating profit (loss) after tax before
outside equity interests (items 1.8) and (7,598) -
amortisation of goodwill
1.25 Less (plus) outside +equity interests - -
1.26 +Operating profit (loss) after tax (before (4,191) -
amortisation of goodwill) attributable to
members
Intangible, abnormal Consolidated -- current period
and extraordinary items Before tax Related tax Related Amount (after tax)
$A'000 $A'000 outside +equity attributable to
interests members
$A'000 $A'000
2.1 Amortisation of goodwill 3,407 - - 3,407
2.2 Amortisation of other - - -
intangibles
2.3 Total amortisation of 3,407 - - 3,407
intangibles
2.4 Abnormal items - - - -
2.5 Total abnormal items - - - -
2.6 Extraordinary items - - - -
2.7 Total extraordinary items - - - -
Comparison of half year profits Current year - $A'000 Previous year - $A'000
(Preliminary final report only)
3.1 Consolidated +operating profit (loss) after
tax attributable to members reported for the - -
1st half year (item 1.10 in the half yearly
report)
3.2 Consolidated +operating profit (loss) after
tax attributable to members for the 2nd half - -
year
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated balance sheet At end of As shown in last As in last half
(See note 5) current period annual report yearly report
$A'000 $A'000 $A'000
<S> <C> <C> <C>
Current assets
4.1 Cash 15,983 49,166 -
4.2 Receivables 15,242 10,679 -
4.3 Investments - - -
4.4 Inventories 91 43 -
4.5 Other (provide details if material) 7,468 1,400 -
---------------- ------------------- ------------------
4.6 Total current assets 38,784 61,288 -
---------------- ------------------- ------------------
Non-current assets
4.7 Receivables - 4,256 -
4.8 Investments in associates - 24 -
4.9 Other investments 1,535 2,559 -
4.10 Inventories - - -
4.11 Exploration and evaluation expenditure - - -
capitalised (see para .71 of AASB 1022)
4.12 Development properties (+mining - - -
entities)
4.13 Other property, plant and equipment 27,413 22,494 -
(net)
4.14 Intangibles (net) 39,996 20,164 -
4.15 Other (provide details if material) 10,257 1,415 -
---------------- ------------------- ------------------
4.16 Total non-current assets 79,201 50,912 -
---------------- ------------------- ------------------
4.17 Total assets 117,985 112,200 -
---------------- ------------------- ------------------
Current liabilities
4.18 Accounts payable 21,228 26,664 -
4.19 Borrowings 4,685 3,673 -
4.20 Provisions 2,951 10,589 -
4.21 Other (provide details if material) 4,407 -
---------------- ------------------- ------------------
4.22 Total current liabilities 33,271 40,926 -
---------------- ------------------- ------------------
Non-current liabilities
4.23 Accounts payable - - -
4.24 Borrowings 2,689 4,145 -
4.25 Provisions - 1,106 -
4.26 Other (provide details if material) - -
---------------- ------------------- ------------------
4.27 Total non-current liabilities 2,689 5,251 -
---------------- ------------------- ------------------
4.28 Total liabilities 35,960 46,177 -
---------------- ------------------- ------------------
4.29 Net assets 82,025 66,023 -
-------- ----------------------------------------- ---------------- ------------------- ------------------
</TABLE>
<PAGE>
Consolidated balance sheet continued
<TABLE>
<S> <C> <C> <C>
Equity
4.30 Capital 486 444 -
4.31 Reserves 88,197 64,639 -
4.32 Retained profits (accumulated losses) (6,658) 940 -
---------------- ------------------- ------------------
4.33 Equity attributable to members of the
parent entity 82,025 66,023 -
4.34 Outside +equity interests in controlled
entities - - -
---------------- ------------------- ------------------
4.35 Total equity 82,025 66,023 -
---------------- ------------------- ------------------
4.36 Preference capital and related premium
included as part of 4.33 - - -
Details of other current and non - current assets
- --------------------------------------------------
Other current assets
Restricted cash * 3,720
Prepayments 2,724
Call options 1,024
-----
Total 7,468
-----
Other non-current assets
Restricted cash * 4,585
Future income tax benefit 2,114
Purchase of rights in Southern Cross Cable 3,558
-----
Total 10,257
-----
Other current liabilities
Deferred consideration 4,407
-----
Comments
</TABLE>
* As at June 30, 1998, the Company had A$3,720,000 and A$4,585,000 of cash held
in current and non-current restricted term deposits, respectively, as a
condition of various telecommunication related agreements. The term deposits
classified as a non-current asset are denominated in US dollars totaling
US$2,770,000 and will not be available for use by the Company for at least
twelve months.
Exploration and evaluation expenditure capitalised
To be completed only by entities with mining interests if amounts are material.
Include all expenditure incurred regardless of whether written off directly
against profit.
<TABLE>
Current period Previous corresponding
$A'000 period - $A'000
<S> <C> <C>
5.1 Opening balance - -
5.2 Expenditure incurred during current period - -
5.3 Expenditure written off during current period - -
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
5.4 Acquisitions, disposals, revaluation - -
increments, etc.
5.5 Expenditure transferred to Development - -
Properties
5.6 Closing balance as shown in the consolidated - -
balance sheet (item 4.11)
</TABLE>
Development properties
(To be completed only by entities with mining interests if amounts are material)
<TABLE>
Current period $A'000 Previous corresponding
period - $A'000
<C> <S> <C> <C>
6.1 Opening balance - -
6.2 Expenditure incurred during current period - -
6.3 Expenditure transferred from exploration and - -
evaluation
6.4 Expenditure written off during current period - -
6.5 Acquisitions, disposals, revaluation - -
increments, etc.
6.6 Expenditure transferred to mine properties - -
6.7 Closing balance as shown in the consolidated - -
balance sheet (item 4.12)
</TABLE>
<PAGE>
Consolidated statement of cash flows
(See note 6)
<TABLE>
<CAPTION>
----------------------- ------------------------
Current period $A'000 Previous corresponding
period - $A'000
----------------------- ------------------------
<C> <S> <C> <C>
------------------------------------------------- ------------------------ -----------------------
Cash flows related to operating activities
7.1 Receipts from customers 43,665 -
7.2 Payments to suppliers and employees (50,651) -
7.3 Dividends received from associates - -
7.4 Other dividends received - -
7.5 Interest and other items of similar nature 783 -
received
7.6 Interest and other costs of finance paid (326) -
7.7 Income taxes paid (6,012) -
7.8 Other (provide details if material) - -
--------- ------------------------------------------------- ------------------------ -----------------------
7.9 Net operating cash flows (12,541) -
--------- ------------------------------------------------- ------------------------ -----------------------
CASH FLOWS RELATED TO INVESTING ACTIVITIES
--------- -------------------------------------------------
7.10 Payment for purchases of property, plant and (6,517) -
equipment
--------- -------------------------------------------------
7.11 Proceeds from sale of property, plant and 24 -
equipment
--------- ------------------------------------------------- ------------------------ -----------------------
7.12 Payment for purchases of equity investments - -
7.13 Proceeds from sale of equity investments - -
7.14 Loans to other entities - -
7.15 Loans repaid by other entities - -
7.16 Other (provide details if material) (9,186) -
--------- ------------------------------------------------- ------------------------ -----------------------
-
7.17 Net investing cash flows (15,679)
--------- ------------------------------------------------- ------------------------ -----------------------
-
Cash flows related to financing activities
7.18 Proceeds from issues of +securities (shares, 2,315 -
options, etc.)
7.19 Proceeds from borrowings - -
7.20 Repayment of borrowings (2,188) -
7.21 Dividends paid (2,858) -
7.22 Other (provide details if material) (2,220) -
--------- ------------------------------------------------- ------------------------ -----------------------
7.23 Net financing cash flows (4,951) -
--------- ------------------------------------------------- ------------------------ -----------------------
7.24 Net increase (decrease) in cash held (33,171) -
7.25 Cash at beginning of period 49,166 -
(see Reconciliation of cash)
7.26 Exchange rate adjustments to item 7.25. (12) -
--------- ------------------------------------------------- ------------------------ -----------------------
Cash at end of period 15,983 -
(see Reconciliation of cash)
--------- ------------------------------------------------- ------------------------ -----------------------
</TABLE>
<PAGE>
Other investing activities
Cash placed on restricted term deposits (6,085)
Purchase of trade name (76)
Purchase of rights to Southern Cross Cable (3,559)
Cash acquired on acquisition of Interline 534
-------
Total (9,186)
-------
Other financing activities
Cash placed on restricted term deposits (2,220)
-------
Non-cash financing and investing activities
Details of financing and investing transactions which have had a material effect
on consolidated assets and liabilities but did not involve cash flows are as
follows. If an amount is quantified, show comparative amount.
- --------------------------------------------------------------------------------
In April 1998, OzEmail bought out Metro Holdings' AG ("Metro") equity interest
in OzEmail Interline, thereby increasing its equity interest to 88%. The
consideration for the transaction was $17,322,000 and included the issue of
5,400,000 Ordinary Shares with a market value per Ordinary Share of US$2.2125,
valued at A$18,520,000; and the loan forgiveness by Metro of A$2,043,000 owed by
OzEmail Interline. At the same time, OzEmail and Metro agreed to terminate the
Metro exclusive license agreement for no consideration. Neither of these
transactions had a cash impact.
On March 31, 1998, the Company acquired the Internet access business assets and
liabilities from Camtech SA Pty Limited ("Camtech"), situated in South
Australia. The consideration for the acquisition will be equal to two thirds of
Camtech's revenues over the twelve months from March 31, 1998. The immediate
payment to Camtech was 1,103,240 Ordinary Shares valued at approximately
A$2,777,000 at US$16.525 per ADS (1 ADS representing 10 Ordinary Shares).
- --------------------------------------------------------------------------------
Reconciliation of cash
<TABLE>
<S> <C> <C>
------------------------------- ------------------------
Reconciliation of cash at the end of the period (as Current period Previous
shown in the consolidated statement of cash flows) $A'000 Corresponding
to the related items in the accounts is as follows. period - $A'000
------------------------------- ------------------------
----- ------------------------------------------------ ------------------------------- ------------------------
15,983 -
8.1 Cash on hand and at bank
-
8.2 Deposits at call
-
8.3 Bank overdraft
------------------------------- ------------------------
-
8.4 Other (provide details)
------------------------------- ------------------------
----- ------------------------------------------------ ------------------------------- ------------------------
15,983 -
8.5 Total cash at end of period (item 7.26)
----- ------------------------------------------------ ------------------------------- ------------------------
------------------------- ------------------------
Ratios Current period Previous corresponding
Period
------------------------- ------------------------
------------------------- ------------------------
Profit before abnormals and tax / sales (15.64) -
9.1 Consolidated +operating profit (loss) before
abnormal items and tax (item 1.4) as a
percentage of sales revenue (item 1.1)
- -------- ------------------------------------------------ ------------------------- ------------------------
(9.26) -
Profit after tax / +equity interests
9.2 Consolidated +operating profit (loss) after
tax attributable to members (item 1.10) as a
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C> <C>
- -------- ------------------------------------------------ ------------------------- ------------------------
percentage of equity (similarly attributable)
at the end of the period (item 4.33)
- -------- ------------------------------------------------ ------------------------- ------------------------
------------------------------------------------------ ------------------------- ------------------------
Earnings per security (EPS) Current period Previous corresponding
period
------------------------------------------------------ ------------------------- ------------------------
------ ----------------------------------------------- ------------------------- ------------------------
10.1 Calculation of the following in accordance (0.064)
with AASB 1027: Earnings per Share -
(a) Basic EPS
(b) Diluted EPS (if materially different (0.064) -
from (a))
(c) Weighted average number of ordinary 118,458,508 -
shares outstanding during the period
used in the calculation of the Basic EPS
------ ----------------------------------------------- ------------------------- ------------------------
--------------------------- -------------------------- ------------------------- ------------------------
NTA backing Current period Previous corresponding
(see note 7) period
--------------------------- -------------------------- ------------------------- ------------------------
------ ----------------------------------------------- ------------------------- ------------------------
11.1 Net tangible asset backing per +ordinary .32 -
security
------ ----------------------------------------------- ------------------------- ------------------------
</TABLE>
<PAGE>
Details of specific receipts/outlays, revenues/ expenses
<TABLE>
-------------------------- ------------------------
Current period Previous corresponding
$A'000 period - $A'000
-------------------------- ------------------------
<C> <S> <C> <C>
------------------------------------------------ -------------------------- ------------------------
783 -
12.1 Interest revenue included in determining item
1.4
-------------------------- ------------------------
-------------------------- ------------------------
12.2 Interest revenue included in item 12.1 but not - -
yet received (if material)
-------------------------- ------------------------
12.3 Interest expense included in item 1.4 (include 326 -
all forms of interest, lease finance charges,
etc.)
-------------------------- ------------------------
12.4 Interest costs excluded from item 12.3 and - -
capitalised in asset values (if material)
-------------------------- ------------------------
12.5 Outlays (except those arising from the
+acquisition of an existing business) - -
capitalised in intangibles (if material)
- -------- ------------------------------------------------ -------------------------- ------------------------
12.6 Depreciation and amortisation (excluding 6,655 -
amortisation of intangibles)
- -------- ------------------------------------------------ -------------------------- ------------------------
</TABLE>
<TABLE>
Control gained over entities having material effect
(See note 8)
<C> <S> <C>
---------------------------------------------------------------
13.1 Name of entity (or group of OzEmail Interline Pty Limited
entities)
---------------------------------------------------------------
-------------------------------------
-------------------------------------
13.2 Consolidated +operating profit (loss) and extraordinary
items after tax of the entity (or group of entities) since $(2,174)
the date in the current period on which control was
+acquired
-------------------------------------
13.3 Date from which such profit has been calculated April 1998
-------------------------------------
13.4 +Operating profit (loss) and extraordinary items after tax
of the entity (or group of entities) for the whole of the -
previous corresponding period
-------------------------------------
</TABLE>
<PAGE>
Loss of control of entities having material effect
(See note 8)
<TABLE>
<C> <S> <C>
-----------------------------------------------------------
14.1 Name of entity (or group of entities) N/A
-----------------------------------------------------------
----------------------------------
----------------------------------
14.2 Consolidated +operating profit (loss) and extraordinary items
after tax of the entity (or group of entities) for the $-
current period to the date of loss of control
----------------------------------
14.3 Date to which the profit (loss) in item 14.2 has been
calculated
----------------------------------
14.4 Consolidated +operating profit (loss) and extraordinary items
after tax of the entity (or group of entities) while $-
controlled during the whole of the previous corresponding
period
----------------------------------
14.5 Contribution to consolidated +operating profit (loss) and
extraordinary items from sale of interest leading to loss of $-
control
----------------------------------
</TABLE>
Reports for industry and geographical segments
Information on the industry and geographical segments of the entity must be
reported for the current period in accordance with AASB 1005: Financial
Reporting by Segments. Because of the different structures employed by entities,
a pro forma is not provided. Segment information should be completed separately
and attached to this report. However, the following is the presentation adopted
in the Appendices to AASB 1005 and indicates which amounts should agree with
items included elsewhere in this report.
Segments
The group operates predominantly in Australasia and predominantly in the
Internet service industry.
Dividends (in the case of a trust, distributions)
<TABLE>
<C> <S> <C>
-----------------------------
-
15.1 Date the dividend (distribution) is payable
-----------------------------
-----------------------------
15.2 +Record date to determine entitlements to the dividend -
(distribution) (ie, on the basis of registrable transfers
received up to 5.00 pm if paper based, or by "End of Day" if a
proper +SCH transfer)
-----------------------------
-----------------------------
15.3 If it is a final dividend, has it been declared? -
(Preliminary final report only)
-----------------------------
</TABLE>
<PAGE>
Amount per security
<TABLE>
<CAPTION>
- -------- --------------------------------------------------- ---------------------- --------------------------
Amount per security Franked amount per
security at 36% tax
- -------- --------------------------------------------------- ---------------------- --------------------------
<C> <S> <C> <C>
(Preliminary final report only)
15.4 Final dividend: Current year - cents - cents
15.5 Previous year - cents - cents
- -------- --------------------------------------------------- ---------------------- --------------------------
(Half yearly and preliminary final reports)
15.6 Interim dividend: Current year - cents - cents
- -------- --------------------------------------------------- ---------------------- --------------------------
15.7 Previous year - cents - cents
- -------- --------------------------------------------------- ---------------------- --------------------------
Total dividend (distribution) per security (interim plus final)
(Preliminary final report only)
--------------------------- ---------------------------
Current year Previous year
--------------------------- ---------------------------
15.8 +Ordinary securities - cents - cents
--------------------------- ---------------------------
15.9 Preference +securities - cents - cents
--------------------------- ---------------------------
Half yearly report - interim dividend (distribution) on all securities or
Preliminary final report - final dividend (distribution) on all securities
-------------------------- ---------------------------
Current period Previous corresponding
$A'000 Period - $A'000
-------------------------- ---------------------------
- -
15.10 +Ordinary securities
-------------------------- ---------------------------
- -
15.11 Preference +securities
-------------------------- ---------------------------
- -
15.12 Total
-------------------------- ---------------------------
The +dividend or distribution plans shown below are in operation.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------
----------------------------------------------
The last date(s) for receipt of election notices for the -
+dividend or distribution plans
----------------------------------------------
Any other disclosures in relation to dividends (distributions)
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Details of aggregate share of profits (losses) of associates
----------------------- -----------------------
Current period Previous
Entity's share of associates' $A'000 corresponding period
- $A'000
----------------------- -----------------------
<C> <S> <C> <C>
------------------------------------------------ ----------------------- -----------------------
(2,703) -
16.1 Operating profit (loss) before income tax
- -
16.2 Income tax expense
----------------------- -----------------------
(2,703) -
16.3 Operating profit (loss) after income tax
- -
16.4 Extraordinary items net of tax
----------------------- -----------------------
(2,703) -
16.5 Net profit (loss)
----------------------- -----------------------
(1,406) -
16.6 Outside equity interests
----- ------------------------------------------------ ----------------------- -----------------------
(1,297) -
16.7 Net profit (loss) attributable to members
----- ------------------------------------------------ ----------------------- -----------------------
</TABLE>
Material interests in entities which are not controlled entities
The economic entity has an interest (that is material to it) in the following
entities. If the interest was acquired or disposed of during either the current
or previous corresponding period, indicate date of acquisition ("from xx/xx/xx")
or disposal ("to xx/xx/xx").
<TABLE>
<S> <C> <C>
--------------------------------- ---------------------------------------------
Name of entity Percentage of ownership Contribution to +operating profit (loss)
interest held at end of period and extraordinary items after tax (item
or date of disposal 1.14)
--------------------------------- ---------------------------------------------
</TABLE>
<TABLE>
--------------------------- --------------- ----------------- --------------------- ----------------
Current Previous Current period - Previous
17.1 Equity Period corresponding $A'000 corresponding
accounted period period- $A'000
associates --------------- ----------------- --------------------- ----------------
<S> <C> <C> <C> <C>
OzEmail Interline Pty 48% to April - (1,297) -
Limited to April 1998 (An 1998
additional interest was
acquired in April 1998
and the results
consolidated from that
date.)
--------------------------- --------------- ----------------- --------------------- ----------------
- - (1,297) -
17.2 Total
--------------------------- --------------- ----------------- --------------------- ----------------
--------------------------- --------------- ----------------- --------------------- ----------------
17.3 Other material
interests
--------------------------- --------------- ----------------- --------------------- ----------------
N/A - - - -
--------------------------- --------------- ----------------- --------------------- ----------------
- - - -
17.4 Total
--------------------------- --------------- ----------------- --------------------- ----------------
</TABLE>
<PAGE>
Issued and quoted securities at end of current period
Description includes rate of interest and any redemption or conversion rights
together with prices and dates.
<TABLE>
------------------- -------------------- -------------- -------------
Paid-up
Category of +securities Number issued Number quoted Par value value
(cents) (cents)
-------------------------------- ------------------- -------------------- -------------- -------------
<C> <S> <C> <C> <C> <C>
18.1 Preference +securities - - - -
(description)
------------------- -------------------- -------------- -------------
18.2 Issued during current period - - - -
- ---------- -------------------------------- ------------------- -------------------- -------------- -------------
18.3 +Ordinary securities
------------------- -------------------- -------------- -------------
18.4 Issued during current period 10,448,240 10,448,240 .004 -
- ---------- -------------------------------- ------------------- -------------------- -------------- -------------
- - - -
18.5 +Convertible debt securities
(description and conversion
factor)
------------------- -------------------- -------------- -------------
18.6 Issued during current period - - - -.
- ---------- -------------------------------- ------------------- -------------------- -------------- -------------
18.7 Options (description and Exercise Expiry
conversion factor) Price Date
(if any)
------------------- -------------------- -------------- -------------
------------------- -------------------- -------------- -------------
18.8 Issued during current period 1,080,000 1,080,000 1.20 1/1/2003
500,000 500,000 2.52 17/6/2003
------------------- -------------------- -------------- -------------
18.9 Exercised during current period 3,333,000 3,333,000 0.33 31/7/2000
492,000 492,000 1.40 USD 31/7/2000
120,000 120,000 0.75 USD 30/11/2001
------------------- -------------------- -------------- -------------
18.10 Expired during current period - - - -
- ---------- -------------------------------- ------------------- -------------------- -------------- -------------
- - - -
18.11 Debentures (totals only)
- ---------- -------------------------------- ------------------- -------------------- -------------- -------------
- - - -
18.12 Unsecured notes (totals only)
- ---------- -------------------------------- ------------------- -------------------- -------------- -------------
</TABLE>
<PAGE>
Comments by directors
Comments on the following matters are required by ASX or, in relation to the
half yearly report, by AASB 1029: Half-Year Accounts and Consolidated Accounts.
The comments do not take the place of the directors' report and statement (as
required by the Corporations Law) and may be incorporated into the directors'
report and statement. For both half yearly and preliminary final reports, if
there are no comments in a section, state NIL. If there is insufficient space to
comment, attach notes to this report.
Basis of accounts preparation
If this report is a half yearly report, it is a general purpose financial report
prepared in accordance with the listing rules and AASB 1029: Half-Year Accounts
and Consolidated Accounts. It should be read in conjunction with the last annual
report and any announcements to the market made by the entity during the period.
[Delete if preliminary final statement.]
Material factors affecting the revenues and expenses of the economic entity for
the current period
- --------------------------------------------------------------------------------
In April 1998, OzEmail bought out Metro Holdings' AG ("Metro") equity
interest in OzEmail Interline, thereby increasing its equity interest to 88%.
The consideration for the transaction was $17,322,000 and included the issue of
5,400,000 Ordinary Shares with a market value per Ordinary Share of US$2.2125,
valued at A$18,520,000; and the loan forgiveness by Metro of A$2,043,000 owed by
OzEmail Interline. At the same time, OzEmail and Metro agreed to terminate the
Metro exclusive license agreement for no consideration. Goodwill recorded on
acquisition of the additional interest was $18,791,000. Amortisation expense of
$940,000 was recorded on the acquisition to 30 June 1998.
- --------------------------------------------------------------------------------
A description of each event since the end of the current period which has had a
material effect and is not related to matters already reported, with financial
effect quantified (if possible)
- --------------------------------------------------------------------------------
Nil.
- --------------------------------------------------------------------------------
Franking credits available and prospects for paying fully or partly franked
dividends for at least the next year
- --------------------------------------------------------------------------------
As at June 30, 1998 the economic entity had $7,293,506 of available franking
credits. The directors believe that there are little prospects for paying
dividends for at least the next year.
- --------------------------------------------------------------------------------
Changes in accounting policies since the last annual report are disclosed as
follows. (Disclose changes in the half yearly report in accordance with
paragraph 15(c) of AASB 1029: Half-Year Accounts and Consolidated Accounts.
Disclose changes in the preliminary final report in accordance with AASB 1001:
Accounting Policies-Disclosure.)
- --------------------------------------------------------------------------------
Nil.
- --------------------------------------------------------------------------------
<PAGE>
Additional disclosure for trusts
<TABLE>
<C> <S> <C>
---------------------------------------------------
19.1 Number of units held by the management -
company or a related party of it
---------------------------------------------------
---------------------------------------------------
19.2 A statement of the fees and commissions -
payable to the management company.
Identify:
. initial service charges
. management fees
. other fees
---------------------------------------------------
Annual meeting
(Preliminary final report only)
The annual meeting will be held as follows:
----------------------------------------------------
-
Place
----------------------------------------------------
-
Date
----------------------------------------------------
-
Time
----------------------------------------------------
-
Approximate date the annual report will be available
----------------------------------------------------
</TABLE>
Compliance statement
1 This report has been prepared under accounting policies which comply
with accounting standards as defined in the Corporations Law or other
standards acceptable to ASX (see note 13).
-------------------------------
Identify other standards used
-------------------------------
2 This report, and the financial statements prepared under the
Corporations Law (if separate), use the same accounting policies.
3 This report does give a true and fair view of the matters disclosed
(see note 2).
<PAGE>
4 This report is based on financial statements to which one of the
following applies.
(Tick one)
<TABLE>
<C> <S> <C>
The financial statements have The financial statements have
been audited. been subject to review.
x The financial statements are in The financial statements have not
the process of being audited or yet been audited or reviewed.
subject to review.
</TABLE>
5 If the audit report or review by the auditor is not attached, details
of any qualifications are attached/. (Half yearly report only - the
audit report or review by the auditor must be attached to this report
if this report is to satisfy the requirements of the Corporations Law.)
6 The entity has a formally constituted audit committee.
Sign here: ..................................... Date: .................
(Michael Hughes -- Company Secretary)
Print name: .....................................
Notes
1. For announcement to the market The percentage changes referred to in
this section are the percentage changes calculated by comparing the
current period's figures with those for the previous corresponding
period. Do not show percentage changes if the change is from profit to
loss or loss to profit, but still show whether the change was up or
down. If changes in accounting policies or procedures have had a
material effect on reported figures, do not show either directional or
percentage changes in profits. Explain the reason for the omissions in
the note at the end of the announcement section.
2. True and fair view If this report does not give a true and fair view of
a matter (for example, because compliance with an Accounting Standard
is required) the entity must attach a note providing additional
information and explanations to give a true and fair view.
3. Consolidated profit and loss account
Item 1.1 The definition of "operating revenue" and an
explanation of "sales revenue" (or its equivalent) and
"other revenue" are set out in AASB 1004: Disclosure
of Operating Revenue.
Item 1.2 'Share of associates' "net profit (loss) attributable
to members"' would form part of "other revenue" in
AASB 1004 to the extent that a profit is to be
reported. ASX has elected to require disclosure of a
share of a loss in the same location for consistency
of presentation.
Item 1.4 "+operating profit (loss) before abnormal items and
tax" is calculated before dealing with outside +equity
interests and extraordinary items, but after deducting
interest on borrowings, depreciation and amortisation.
Item 1.7 This item refers to the total tax attributable to the
amount shown in item 1.6. Tax includes income tax and
capital gains tax (if any) but excludes taxes treated
as operating expenses (eg, fringe benefits tax).
4. Income tax If the amount provided for income tax in this report differs
(or would differ but for compensatory items) by more than 15% from the
amount of income tax prima facie payable on the profit before tax, the
entity must explain in a note the major items responsible for the
difference and their amounts.
5. Consolidated balance sheet
<PAGE>
Format The format of the consolidated balance sheet should be followed
as closely as possible. However, additional items may be added if
greater clarity of exposition will be achieved, provided the disclosure
still meets the requirements of AASB 1029 and AASB 1034. Banking
institutions, trusts and financial institutions identified in an ASC
Class Order dated 2 September 1997 may substitute a clear liquidity
ranking for the Current/Non-Current classification.
Basis of revaluation If there has been a material revaluation of non-
current assets (including investments) since the last annual report,
the entity must describe the basis of revaluation adopted. The
description must meet the requirements of paragraphs 9.1 - 9.4 of AASB
1010: Accounting for the Revaluation of Non-Current Assets. If the
entity has adopted a procedure of regular revaluation, the basis for
which has been disclosed and has not changed, no additional disclosure
is required. Trusts should also note paragraph 10 of AASB 1029 and
paragraph 11 of AASB 1030.
6. Statement of cash flows For definitions of "cash" and other terms used
in this report see AASB 1026: Statement of Cash Flows. Entities should
follow the form as closely as possible, but variations are permitted if
the directors (in the case of a trust, the management company) believe
that this presentation is inappropriate. However, the presentation
adopted must meet the requirements of AASB 1026. +Mining exploration
entities may use the form of cash flow statement in Appendix 5B.
7. Net tangible asset backing Net tangible assets are determined by
deducting from total tangible assets all claims on those assets ranking
ahead of the +ordinary securities (ie, all liabilities, preference
shares, outside +equity interests etc). +Mining entities are not
required to state a net tangible asset backing per +ordinary security.
8. Gain and loss of control over entities The gain or loss must be
disclosed if it has a material effect on the consolidated financial
statements. Details must include the contribution for each gain or loss
that increased or decreased the entity's consolidated +operating profit
(loss) and extraordinary items after tax by more than 5% compared to
the previous corresponding period.
9. Rounding of figures This report anticipates that the information
required is given to the nearest $1,000. However, an entity may report
exact figures, if the $A'000 headings are amended. If an entity
qualifies under an ASC Class Order dated 9 July 1997, it may report to
the nearest million dollars, or to the nearest $100,000, if the $A'000
headings are amended.
10. Comparative figures Comparative figures are the unadjusted figures from
the previous corresponding period. However, if there is a lack of
comparability, a note explaining the position should be attached.
11. Comparative figures when equity accounted information first included in
the accounts There will be a lack of comparability in the figures for
the previous corresponding period when equity accounted information is
first included if this information has a material effect on the
consolidated accounts. If it does have a material effect, attach a note
providing a better comparison by restating "Operating profit (loss)
after tax attributable to members" (item 1.10) and "Investments in
associates" (item 4.8) for the previous corresponding period to
incorporate equity accounted information. In addition, as required by
Note 1, no directional or percentage changes in profit are to be
reported in the "For announcement to the market" section. Where the
disclosures were not previously required in Appendix 4B, no
comparatives need be shown.
12. Additional information An entity may disclose additional information
about any matter, and must do so if the information is material to an
understanding of the reports. The information may be an expansion of
the material contained in this report, or contained in a note attached
to the report. The requirement under the listing rules for an entity to
complete this report does not prevent the entity issuing reports more
frequently.
<PAGE>
Additional material lodged with the +ASC under the Corporations Law
must also be given to ASX. For example, a directors' report and
statement, if lodged with the +ASC, must be given to ASX.
13. Accounting Standards ASX will accept, for example, the use of
International Accounting Standards for foreign entities. If the
standards used do not address a topic, the Australian standard on that
topic (if one) must be complied with.
14. Corporations Law accounts As at 1/7/96, this report may be able to be
used by an entity required to comply with the Corporations Law as part
of its half yearly financial statements if prepared in accordance with
Australian Accounting Standards.
<PAGE>
APPENDIX B
FORM 8-K
(SECTION 12.3)
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<CAPTION>
Date of Report (Date of earliest event reported) NOVEMBER 25, 1997
------------------------------
OZEMAIL LIMITED
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
<S> <C> <C>
AUSTRALIA 0-28476 NOT APPLICABLE
- - --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
OZEMAIL CENTRE, 39 HERBERT STREET, ST. LEONARDS 2065, SYDNEY, AUSTRALIA NONE
- ----------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 011-61-2-391-0400
----------------------------
NOT APPLICABLE
- - --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
</TABLE>
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
- - ------ ------------------------------------
(a) On November 25, 1997, OzEmail Limited, an Australian corporation
("OzEmail"), purchased all of the outstanding ordinary shares of Access One Pty
Limited, an Australian Corporation ("Access One"), together with certain related
assets, from Solution 6 Holdings Limited, an Australian corporation ("Solution
6"), pursuant to an Agreement for Sale and Purchase of the Internet Business of
Solution 6, by and between OzEmail and Solution 6.
The consideration for the purchase consisted of a payment of five million
Australian dollars (A$5,000,000 or US$3,500,000) and the issue of ten million
(10,000,000) ordinary shares par value A$0.004 per share of OzEmail with a fair
value at the time of issuance of A$15,740,000. Of such shares, 7,200,000 were
issued on November 25, 1997, with the balance of 2,800,000 shares to be issued
on satisfaction of determining a working capital adjustment representing the
adjustment to the fair value of net assets acquired as determined in accordance
with the terms of the agreement for the sale and purchase of the assets of
Solution 6. The source of the cash consideration was working capital. The
amount of consideration was determined by arms-length negotiation among the
parties. A copy of such agreement is filed as Exhibit 7(c)(2.1) to this report
and is incorporated herein by reference. The description of the agreements set
forth herein does not purport to be complete and is qualified in its entirety
by reference to the provisions of the definitive agreement, incorporated by
reference as an exhibit hereto.
(b) Access One is in the business of providing Internet service in
Australia. OzEmail intends to continue these operations.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS:
- - ------ ------------------------------------------------------------------
The following financial statements and pro forma financial information are filed
as a part of this report:
(a) Financial Statements of Business Acquired. Access One Pty Limited
(Exhibit 99.4).
------------------------------------------------------------------
The financial statements of Access One filed as part of this report
were prepared on the basis of historical accounting principles
consistent with the view of management incumbent at such time,
prior to the acquisition of Access One by OzEmail. With respect
to the treatment of revenue received in advance on long-term
contracts, OzEmail believes however, that certain amounts should be
treated as deferred revenue in accordance with OzEmail accounting
policies and generally accepted accounting principles. The U.S.
GAAP reconciliations within the Access One accounts fully reflect
the deferred revenue in accordance with U.S. generally accepted
accounting principles.
In connection with the acquisition of Access One by OzEmail, the
purchase and sale agreement provided for a working capital adjustment
to be determined within six months of the acquisition (i.e., May 25,
1997). Solution 6 Holdings Limited, the vendor of Access One, and
OzEmail have yet to reach an agreement as to the working capital
adjustment. The Company does not believe that this will have a
material adverse effect on the Company's business, results of
operations or financial position.
<PAGE>
(b) Pro Forma Financial Information. OzEmail Limited and Access One
Pty Limited (Exhibit 99.5)
----------------------------------------------------------------
(c) Exhibits. The following documents are filed as exhibits to this
--------
report:
1. Exhibit 7(c)(2.1) - Agreement for Sale and Purchase of the
Internet Business of Solution 6, dated November 8, 1997, by and
between OzEmail and Solution 6
(Incorporated by reference to
Exhibit 10.2 of OzEmail's Quarterly Report on Form 10-Q filed
with the Securities and Exchange Commission on November 14,
1998).
2. Exhibit 7(c)(99.1) - Press Release, dated November 10, 1997,
issued by OzEmail announcing the signing of the Agreement for
Sale and Purchase of the Internet Business of Solution 6
(Incorporated by reference to Exhibit 99.1 of OzEmail's Form 10-Q
filed with the Securities and Exchange Commission on November 14,
1998).
3. Exhibit 7(c)(99.2) - Press Release, dated November 10, 1997,
announcing third quarter 1997 results and the acquisition of
Access One (Incorporated by reference to Exhibit 99.2 of
OzEmail's Form 10-Q filed with the Securities and Exchange
Commission on November 14, 1998).
4. Exhibit 7(c)(99.3) - Press Release, dated November 25, 1997,
announcing the completion of OzEmail's acquisition of Access One
(Incorporated by reference to the exhibit attached to OzEmail's
Form 6-K filed with the Securities and Exchange Commission on
April 2, 1998).
5. Exhibit 99.4 - Financial Statements of Business Acquired.
Access One Pty Limited
6. Exhibit 99.5 - Pro Forma Financial Information. OzEmail Limited
and Access One Pty Limited
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
OzEmail Limited
---------------
(Registrant)
Date: June 19, 1998 By:/s/ Trevor Kennedy
-----------------------------
Name: Trevor Kennedy
Title: Director
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 1997
<TABLE>
<CAPTION>
YEAR ENDED 11 MONTH PERIOD ENDED
30 JUNE 1996 30 JUNE 1996
$ $
<S> <C> <C> <C>
OPERATING REVENUE 2 21,257,387 7,416,356
========== ==========
OPERATING LOSS 2 (10,961,163) (3,899,233)
========== ==========
INCOME TAX ATTRIBUTABLE TO OPERATING LOSS 3 - -
========== ==========
OPERATING LOSS AFTER INCOME TAX (10,961,163) (3,899,233)
(ACCUMULATED LOSSES) AT BEGINNING OF THE FINANCIAL YEAR (3,899,233) -
========== =========
(ACCUMULATED LOSSES) AT THE END OF THE FINANCIAL YEAR (14,860,396)
(3,899,233)
</TABLE>
The accompanying notes form part of these financial statements
1
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
BALANCE SHEET
AS AT 30 JUNE 1997
<TABLE>
<CAPTION>
NOTE 30 JUNE 1997 30 JUNE 1996
$ $
<S> <C> <C> <C>
Cash 252,259 20,787
Receivables 4 2,538,334 2,656,295
Inventories 5 116,856 332,052
Other 6 141,658 143,014
----------- ----------
TOTAL CURRENT ASSETS
3,049,107 3,152,148
----------- ----------
NON-CURRENT ASSETS
Plant and equipment 7 2,079,599 1,804,826
Intangibles 8 2,166,899 2,422,199
Other 9 - 530,134
----------- ----------
TOTAL NON-CURRENT ASSETS
4,246,498 4,757,159
----------- ----------
TOTAL ASSETS 7,295,605 7,909,307
----------- ----------
CURRENT LIABILITIES
Accounts payable 10 5,694,263 3,139,817
Borrowings 11 16,041,615 8,220,323
Provisions 12 258,726 225,513
----------- ----------
TOTAL CURRENT LIABILITIES
21,994,604 11,585,653
----------- ----------
NON-CURRENT LIABILITIES
Borrowings 13 52,568
104,890
Provisions 14 108,827 117,995
----------- ----------
TOTAL NON-CURRENT LIABILITIES
161,395 222,885
TOTAL LIABILITIES
22,155,999
11,808,538
----------- ----------
NET ASSETS (14,860,394) (3,899,231)
=========== ==========
SHAREHOLDERS' EQUITY
Share capital 16 2
2
Accumulated losses (14,860,396) (3,899,233)
----------- ----------
TOTAL SHAREHOLDERS' EQUITY
(14,860,394) (3,899,231)
=========== ==========
</TABLE>
The accompanying notes form part of these financial statements
2
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 1997
<TABLE>
<CAPTION>
NOTE 30 JUNE 1997 30 JUNE 1996
$ $
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
21,526,468 4,647,079
Interest received - other parties
- 1,638
Other receipts -
5,615
Interest and other costs of finance paid - related
entities
(1,520,649)
(440,923)
Interest and other costs of finance paid - other parties
(8,623) (42,348)
Management fees paid (1,373,245) (1,516,091)
Payments to suppliers and employees
(25,411,363) (6,702,430)
----------- ----------
NET CASH FLOW FROM OPERATING ACTIVITIES
15 (6,787,412)
(4,047,460)
=========== ==========
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of plant and equipment
(771,549) (1,164,534)
Proceeds from sale of plant and equipment
18,500 15,500
Cash paid for purchase of Access One business
- (2,551,769)
----------- ----------
NET CASH FLOW FROM INVESTING ACTIVITIES
(753,049)
(3,700,803)
=========== ==========
CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from issue of shares - shares issued on
incorporation
- 2
Borrowings from related entities
6,165,979 7,975,590
Borrowings from ultimate controlling entity
1,661,166 198,433
Finance Lease Principal
(6,091) (22,460)
Hire Purchase Principal
(52,084) (374,352)
----------- ----------
NET CASH FLOW FROM FINANCING ACTIVITIES
7,768,970
7,777,213
=========== ==========
NET INCREASE/(DECREASE) IN CASH HELD
228,509 28,950
Add opening cash brought forward
28,950 -
----------- ----------
CLOSING CASH CARRIED FORWARD
15 257,459 28,950
=========== ==========
</TABLE>
The accompanying notes form part of these financial statements
3
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared in accordance with the
historical cost convention. Cost in relation to assets represents the cash
amount paid or the fair value of the asset given in exchange. These
general purpose financial statements have been made out in accordance with
the requirements of the Corporations Law and applicable accounting
standards and in accordance with other mandatory professional reporting
requirements.
The accounting policies adopted were applied consistently throughout the
financial year.
CASH
For the purposes of the Statement of Cash Flows, cash includes cash on hand
and in banks, and money market, investments readily convertible to cash
within two working days net of outstanding bank overdrafts.
INCOME TAX
Tax effect accounting is applied using the liability method whereby income
tax is regarded as an expense, and is calculated on the accounting profit
after allowing for permanent differences. To the extent timing differences
occur between the time items are recognised in the accounts and when items
are taken into account in determining taxable income, the net related
taxation benefit or liability, calculated at current rates, is disclosed as
a future income tax benefit or a provision for deferred income tax. The
net future income tax benefit relating to tax losses and timing differences
is not carried forward as an asset unless the benefit is virtually certain
of being realised.
PLANT AND EQUIPMENT
Plant and equipment are carried at cost. Any gain or loss on the disposal
of assets is determined as the difference between the carrying value of the
asset at the time of disposal and the proceeds from disposal, and is
included in the results of the company in the year of disposal.
Depreciation is provided on a straight line basis on all plant and
equipment, at rates calculated to allocate the cost of valuation less
estimated residual value at the end of the useful lives of the assets
against revenue over those estimated useful lives.
Major depreciation periods are: Plant and equipment - 3 to 5 years.
RECOVERABLE AMOUNT
Non-current assets are not revalued at an amount above their recoverable
amount and, where carrying values exceed this recoverable amount, assets
are written down. In determining this recoverable amount, the expected net
cash flows have not been discounted to their present value using a market
determined risk adjusted discount rate.
RESEARCH AND DEVELOPMENT
Research and development costs are charged as incurred, except where future
benefits are expected, beyond any reasonable doubt, to exceed those costs.
Where research and development costs are deferred, they are amortised over
future periods on a basis related to expected future benefits.
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
INVENTORIES
Inventories are valued at the lower of cost and net realisable value.
Costs
incurred in bringing each product to its present location and condition are
accounted for as follows:
Acquisition costs are calculated on a first-in first-out basis.
LEASES
Finance leases, which effectively transfer to the economic entity
substantially all of the risks and benefits incidental to ownership of the
leased item, are capitalised at the present value of the minimum lease
payments, disclosed as leased plant and equipment, and amortised over the
period the economic entity is expected to benefit from the use of the
leased assets.
Operating lease payments, where the lessor effectively retains
substantially all of the risks and benefits of ownership of the leased
items, are included in the determination of the operating profit in equal
instalments over the lease term.
The cost of improvements to or on leasehold property is capitalised and
disclosed as leasehold improvements.
EMPLOYEE ENTITLEMENTS
Provision is made for employee entitlement benefits accumulated as a result
of employees rendering services up to the reporting date. These benefits
include wages and salaries, annual leave and a long service leave.
Liabilities arising in respect of wages and salaries, annual leave and any
other entitlements expected to be settled within twelve months of the
reporting date are measured at their nominal amounts. All other employee
entitlement liabilities are measured at the present value of the estimated
future cash outflows to be made in respect of services provided by
employees up to the reporting date. In determining the present value of
future cash outflows, the interest rates attaching to government guaranteed
securities which have terms to maturity approximating the terms of the
related liability are used.
Employee entitlement expenses and revenues arising in respect of the
following categories:
- wages and salaries, non-monetary benefits, annual leave, long
service leave, sick leave and other leave entitlements; and
- other types of employee entitlements
are charged against profits on a net basis in their respective categories.
The contributions made to superannuation funds are charged against profits when
due.
GOODWILL
Goodwill represents the purchase consideration over the fair value of
identifiable net assets acquired at the time of acquisition of a business
or shares in a controlled entity. Goodwill is amortised by the straight
line method over the period during which the benefits are expected to be
received. This is taken as being 10 years.
5
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
GOING CONCERN
The accounts have been prepared on a going concern basis which contemplates
the continuity of the economic entity's business activities and the
realisation of assets and the payment of liabilities in the normal course
of business.
Access One Pty Ltd has experienced significant losses and negative cash
flows in the current year and as at 30 June 1997, the current liabilities
exceed current assets by $18,945,497.
The financial statements have been prepared on a going concern basis as the
ultimate holding company, Solution 6 Holdings Limited, has indicated that
it will provide support to the company to ensure it can pay its debts as
and when they fall due.
The ability of Solution 6 Holdings Limited to provide continuing financial
support to Access One Pty Ltd will be determined by those matters which
have been disclosed in the financial statements of Solution 6 Holdings
Limited at 30 June 1997 which are as follows:
The directors of Solution 6 Holdings Limited believe that the Solution 6
group will not incur operating losses for the 1998 financial year and will
be able to meet its commitments as and when they fall due, and it is
therefore appropriate to prepare the financial statements on a going
concern basis.
o A $7 million financing facility was obtained on 1 July 1997 from
Integral Business Finance Pty Limited. This facility is secured by
trade receivables and the value of real property owned by the group.
the term of this facility is nine months. The proceeds of this
facility have been used to repay the bank borrowings that existed at
30 June 1997.
o A financing facility for at least $1 million has been offered by M.J.
Capital Corporation on appropriate commercial terms.
o Opportunities to raise further debt and/or equity capital are being
actively pursued by the Board.
o The sale of certain real property assets is currently being
negotiated. These sales are expected to be finalised in the first half of
the 1998 financial year and to realise at least the recorded amount.
o The sale of operations considered to be non-core is being contemplated
by the Board.
o A review of all operating costs and infrastructure has been commenced
with a view to reducing overall levels of expenditure.
o The operations of Access One Pty Ltd have been restructured and the
directors anticipate that this will lead to a turnaround in that
entity's operations and improved cash outflows during the coming
financial year.
o The business of CABS has recently been acquired and the directors
anticipate that this will generate significant profitable revenue
during the 1998 financial year.
6
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
As noted in these amounts, the appropriateness of the going concern basis
for the preparation of the accounts depends upon the successful outcome of
some or all of the above initiatives which, as they relate to future
events, must be viewed conservatively.
<TABLE>
<CAPTION>
1997
1996
$
$
<S> <C> <C>
2. OPERATING LOSS
Depreciation of plant and equipment 482,008
145,272
Amortisation of goodwill 255,300
130,770
Bad and doubtful debts - trade debtors 424,135
39,755
Interest - related entities
1,520,649
440,923
Interest - other corporations 8,623
42,348
Loss on sale of non-current assets -
27,247
Rentals - operating leases 471,100
103,492
Provisions for employee entitlements - current 33,213
107,274
Provisions for employee entitlements - non-current (9,168)
39,755
Provision for diminution in inventory 250,000
-
Research and development costs 2,063,555
266,786
Foreign exchange (gain) -
165
Management fees - related entities 1,373,245
1,516,091
Profit on sale of non-current assets
(3,732)
(17,704)
Interest - other corporations -
(1,638)
Included in the operating loss are the following
items of operating revenue:
Sales revenue 21,238,887
7,393,603
Interest - other corporations -
1,638
Proceeds from sale of non-current assets 18,500
15,500
Other -
5,615
---------- ----------
OPERATING REVENUE 21,257,387
7,416,356
========== ==========
</TABLE>
7
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
1997
1996
$
$
3. INCOME TAX
The prima facie income tax using applicable tax rates
differs from the income tax provided in the accounts
as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Prima facie tax on operating loss
(3,946,019) (1,403,724)
Amortisation of goodwill
91,908 47,077
Other non-deductible items 29,067 -
Tax effect of timing differences not tax effected:
- - - Employee entitlements (non-current) (3,300) 42,478
- - - Employee entitlements (current) 11,957 81,185
- - - Provision for doubtful debts 28,830 36,000
- - - Unearned maintenance 137,820 98,546
- - - Deferred research and development written off/
(capitalised)
190,848 (190,848)
- - - Provision for diminution in inventory 28,687 -
- - - Prepayments 488 -
- - - Other Employment provisions 88,920 -
Tax effect of tax losses not recognised
3,221,398 975,811
Tax effect of tax losses utilised by related entities
119,396 313,475
</TABLE>
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
This future income tax benefit will only be obtained if:
(a) future assessable income is derived of a nature and
of an amount sufficient to enable the benefit to be
realised;
(b) the conditions of deductibility imposed by tax
legislation continue to be complied with; and
(c) no changes in tax legislation adversely affect the
economic entity in realising the benefit.
4. RECEIVABLES (CURRENT)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
$ $
Trade Debtors 2,458,943 2,746,524
Provision for doubtful debts (180,085) (100,000)
---------- ----------
2,278,858 2,646,524
Money on deposit 5,200 8,163
Other debtors 254,276 1,608
---------- ----------
TOTAL RECEIVABLES (CURRENT) 2,538,334 2,656,295
========== ==========
Movement in provision for doubtful debts:
Balance at beginning of year 100,000 -
Provision balance recognised on acquisition of
internet business - 100,000
Bad debts written off (47,915) -
Bad and doubtful debts provided for during the year 128,000 -
---------- ----------
BALANCE AT END OF YEAR 180,085 100,000
========== ==========
5. INVENTORIES (CURRENT)
Finished goods at cost 336,528 472,039
Provision for diminution in value (219,672) (139,987)
---------- ----------
Total inventories at lower of cost and net realisable
value 116,856 332,052
========== ==========
6. OTHER CURRENT ASSETS
Prepayments 141,658 143,014
---------- ----------
141,658 143,014
========== ==========
</TABLE>
9
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
7. PLANT AND EQUIPMENT
Fixtures and fittings - at cost $ 175,558 $ 40,235
Accumulated depreciation (28,841) -
---------- ----------
146,717 40,235
========== ==========
Plant and equipment at cost 2,527,357 1,903,050
Accumulated depreciation (616,670) (168,713)
---------- ----------
1,910,687 1,734,337
========== ==========
Plant and equipment under lease:
At cost 38,312 38,312
Accumulated amortisation (16,117) (8,058)
---------- ----------
22,195 30,254
========== ==========
Total plant and equipment:
At cost 2,741,227 1,981,597
Accumulated depreciation and amortisation (661,628) (176,771)
---------- ----------
2,079,599 1,804,826
========== ==========
8. INTANGIBLES
Goodwill 2,552,969 2,552,969
Provision for amortisation (386,070) (130,770)
---------- ----------
2,166,899 2,422,199
========== ==========
9. OTHER NON-CURRENT ASSETS
Deferred research and development - 530,134
---------- ----------
- 530,134
========== ==========
Movements in deferred research and development:
Balance at beginning of year 530,134 -
Deferral 1,533,421 769,920
Amortisation (2,063,555) (266,786)
---------- ----------
BALANCE AT END OF YEAR - 530,134
========== ==========
</TABLE>
10
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
10. ACCOUNTS PAYABLE (CURRENT)
Trade creditors 4,399,908 2,171,201
Other creditors and accruals 911,523 694,878
Unearned maintenance income 382,832 273,738
---------- ----------
5,694,263 3,139,817
========== ==========
11. BORROWINGS (CURRENT)
Related parties 14,141,569 7,975,590
Ultimate controlling entity 1,859,599 198,433
Hire purchase liability (note 18) 35,986 38,923
Lease liability (note 17) 4,461 7,377
---------- ----------
16,041,615 8,220,323
========== ==========
12. PROVISIONS (CURRENT)
Employee entitlements 258,726 225,513
---------- ----------
258,726 225,513
========== ==========
13. BORROWINGS (NON-CURRENT)
Hire purchase liability (note 18) 48,196 97,343
Lease Liability (note 17) 4,372 7,547
---------- ----------
52,568 104,890
========== ==========
14. PROVISIONS (NON-CURRENT)
Employee entitlements 108,827 117,995
---------- ----------
108,827 117,995
========== ==========
</TABLE>
11
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
15. STATEMENT OF CASH FLOWS
(a) Reconciliation of cash -
Cash at bank and on hand 252,259 20,787
Cash on deposit 5,200 8,163
---------- ----------
CLOSING CASH BALANCE 257,459 28,950
========== ==========
(b) Reconciliation of the operating (loss) after tax to
the net cash flow from operations -
Operating (loss) after tax (10,961,163) (3,899,233)
Depreciation : Plant and equipment 482,008 145,272
Amortisation : Goodwill 255,300 130,770
Writedown of deferred research and development 530,134 -
Proceeds from the sale of non-current assets (18,500) (15,500)
Book value of non-current assets sold 14,768 25,043
Changes in assets and liabilities:
Provision for doubtful debts 128,000 100,000
Provision for employee entitlements - current 33,213 107,274
Provision for employee entitlements - non-current (9,168) 39,755
Provision for diminution in value of inventories 250,000 -
Trade debtors 239,666 (2,528,362)
Other debtors (252,668) 1,621
Inventories (34,804) (4,172)
Inventory provision - (100,000)
Prepayments 1,356 (106,881)
Research and development - (503,844)
Goodwill - 52,080
Trade creditors 2,228,707 1,623,303
Other creditors and accruals 216,645 612,379
Unearned maintenance 109,094 273,035
---------- ----------
NET CASH FROM OPERATING ACTIVITIES (6,787,412) (4,047,460)
========== ==========
16. SHARE CAPITAL
Authorised
1,000,000 ordinary shares of $1.00 each 1,000,000 1,000,000
========== ==========
Issued and paid up
2 ordinary shares of $1.00 each fully paid 2 2
========== ==========
</TABLE>
12
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
$ $
17. LEASING EXPENDITURE COMMITMENTS
(a) FINANCE LEASE COMMITMENTS
PAYABLE -
Not later than 1 year 5,260 8,716
Later than 1 year but not later than 2 years 4,574 3,959
Later than 2 years and not later than 5 years - 4,575
========== ==========
Minimum lease payments 9,834 17,250
Less future finance charges (1,001) (2,326)
========== ==========
TOTAL LEASE LIABILITY 8,833 14,924
========== ==========
Current Liability (Note 11) 4,461 7,377
Non-current liability (Note 13) 4,372 7,547
========== ==========
8,833 14,924
========== ==========
(b) OPERATING LEASE COMMITMENTS
PAYABLE -
Not later than 1 year 148,963 113,320
Later than 1 year but not later than 2 years 76,259 118,320
Later than 2 years and not later than 5 years 21,887 51,520
---------- ----------
247,109 283,160
========== ==========
18. HIRE PURCHASE EXPENDITURE COMMITMENTS
Payable:
Not later than 1 year 42,818 52,447
Later than 1 year but not later than 2 years 38,442 52,447
Later than 2 years and not later than 5 years 12,882 68,305
========== ==========
Minimum hire purchase payments 94,142 173,199
Less future finance charges (9,960) (36,933)
========== ==========
TOTAL HIRE PURCHASE LIABILITY 84,182 136,266
========== ==========
Current Liability (Note 10) 36,986 38,923
Non-Current Liability (Note 13) 48,196 97,343
---------- ----------
84,182 136,266
========== ==========
</TABLE>
13
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
$ $
19. FRANKING ACCOUNT
The amount of unappropriated profits and reserves that
could be distributed out of existing franking credits or
out of franking credits arising from the payment of
income tax in the forthcoming period NIL NIL
========== ==========
20. REMUNERATION OF DIRECTORS
Directors' remuneration:
Income paid, payable or otherwise made available by the
company and any related bodies corporate or entities
controlled by the ultimate controlling entity. 1,201,035 388,108
========== ==========
The number of directors of the company whose
remuneration falls within the
following bands:
<S> <C> <C> <C>
$ $ 1997 1996
0 - 999 - 2
60,000 - 69,999 - 1
110,000 - 119,999 1 -
120,000 - 129,999 - 1
180,000 - 189,999 1 -
200,000 - 209,999 - 1
260,000 - 269,999 1 -
630,000 - 639,999 1 -
</TABLE>
21. SEGMENT INFORMATION
The company operates in the internet service industry and in the geographic
segment of Australia.
22. RELATED PARTY DISCLOSURES
(a) The Directors of Access One Pty Ltd during the financial year were:
B.M. Redden (appointed 24. 3.97)
T.J. Ashman (resigned 4. 4.97)
D.D. Stewart (resigned 21. 3.97)
C.S. Tyler (appointed 24. 3.97)
14
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
22. RELATED PARTY DISCLOSURES (CONTD.)
(b) The following related party transactions occurred during the financial
year:
(i) Borrowings from Solution 6 Holdings Limited (ultimate controlling
entity) during the year of $1,661,166 (1996 - $198,433).
Borrowings from Solution 6 Pty Ltd (related entity) during the
year of $6,146,900 (1996 - $7,951,609).
Borrowings from ISIS International Limited (related entity) of
$19,079 (1996 - $23,981).
At 30 June 1997 the balance of outstanding loans were:
1997 1996
$ $
Solution 6 Holdings Limited 1,859,599 198,433
Solution 6 Pty Ltd 14,098,509 7,951,609
ISIS International Limited 43,060 23,981
The terms of these borrowings were:
Solution 6 Holdings Limited - interest free loan payable at call;
Solution 6 Pty Ltd - interest loan payable at call;
ISIS International Limited - interest free trading account payable
at call.
(ii) During the year, management fees of $1,373,245 (1996 - $1,516,091)
and interest of $1,520,649 (1996 - $440,923) were charged by
Solution 6 Pty Ltd.
(iii) Tax losses of $331,657 (1996 - $870,763) were transferred to the
following related companies at Nil consideration:
<TABLE>
<CAPTION>
1997 1997 1996 1996
Tax Losses Tax Benefit Tax Losses Tax Benefit
$ $ $ $
<S> <C> <C> <C> <C>
Solution 6 Pty Ltd 131,109 47,199 -
Solution 6 Holdings Limited - - 758,759 273,153
Direct Connect Teleservice Pty Ltd 200,548 72,197 112,184 40,387
------- ------- ------- -------
331,657 119,396 870,943 313,540
======= ======= ======= =======
</TABLE>
(c) Solution 6 Holdings Limited is the ultimate controlling entity.
15
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
23. AUDITORS' REMUNERATION
Fees in relation to this company are borne by the chief entity as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
$ $
Auditing accounts 36,000 36,038
Other services - - -
------ ------
36,000 36,038
====== ======
</TABLE>
24. SUBSEQUENT EVENTS
On 1 July 1997, Solution 6 Holdings Limited, the ultimate controlling entity,
executed a loan agreement with Integral Business Finance Pty Ltd to provide a
facility to borrow $7 million. That facility is supported by a specific and
floating charge over the assets of Access One Pty Ltd and other Solution 6
Holdings Limited group entities.
On 6 November 1997, the company concluded a settlement of its dispute with the
vendor of the internet business over the royalty calculation method and the
claims of related parties of the vendor for wrongful dismissal. An amount of
$1,300,000 has been agreed to be paid in full and final settlement of any past
or current disputes via 18 equal instalments over the next 18 months from
6 November 1997. Solution 6 Holdings Limited has issued promissory notes which
fall due on the dates the instalments re to be paid to Labtam Pty Ltd in
settlement of the amount owed.
On 9 November 1997. Solution 6 Holdings Limited, the ultimate holding company,
entered into a conditional agreement for the sale of its internet business and
its shares in Access One Pty Ltd.
16
<PAGE>
its shares in Access One Pty Ltd.
25. RECONCILIATION TO US GAAP
Australian GAAP varies in certain respects from generally accepted accounting
principles in the United States (US GAAP). Application of US GAAP would have
affected shareholders' equity as at 30 June 1997 and 1996 and net income (loss)
for each of the year ended 30 June 1997 and the 11 months ended 30 June 1996 to
the extent quantified below. A description of the material differences between
Australian GAAP, as followed by Access One Pty Ltd (the Company), and US GAAP
are as follows:
(a) REVENUE RECOGNITION/DEFERRED REVENUE
The Company's revenues are derived primarily from quarterly and annual usage
fees and hourly connect and monthly user charges for access to the Internet.
Prior to 25 November 1997, the Company recognised revenue upon invoicing for
annual contracts. Prior to 30 June 1996 the Company recognised revenue upon
invoicing for quarterly contracts.
17
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
25. RECONCILIATION TO US GAAP (CONTD.)
US GAAP requires that revenue for internet usage be recognised over the term
of the usage period. Revenue recognition in accordance with US GAAP would
result in an increase in deferred revenue for the year ended 30 June 1997 and
eleven months ended 30 June 1996 of $137,626 and $728,794, respectively.
(b) PRODUCT DEVELOPMENT COSTS
The Company capitalised product development costs with an expected recoverable
value equal to or greater than costs during the year ended 30 June 1996. The
recoverability of the deferred costs was reassessed during the year ended
30 June 1997. The recoverable value of the costs at 30 June 1997 was assessed
to be zero.
US GAAP requires that all research and development costs be expensed when
incurred except in very limited circumstances. The deferred research and
development costs in Note 9 consist principally of salaries and certain
other expenses directly related to development and modification of software
product capitalised in accordance with the provisions of US Statement of
Financial Accounting Standards (SFAS) No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed". Capitalisation
begins when technological feasibility has been established and ends when the
product is available for license to customers. Capitalised costs are amortised
on a straight line basis over the estimated product life, or on the ratio of
current revenues to total project revenues, whichever is greater.
The product development costs capitalised for Australian generally accepted
accounting principles did not meet the requirements of SFAS 86. This
difference from US GAAP is include in the reconciliation of net income
(loss) and shareholder's equity below.
(c) CASH
The definition of cash included in Note 1 Summary of Significant Accounting
Policy, describes cash as "cash on hand and in banks, and money market
investments readily convertible to cash within 2 working days net of
outstanding bank overdrafts" for the purposes of the Statement of Cash
Flows. The inclusion of overdrafts in the definition of cash is not
consistent with US GAAP, however as the company did not have an overdraft,
no adjustment is required in the reconciliation to US GAAP.
18
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
RECONCILIATION OF NET INCOME (LOSS) AND SHAREHOLDERS' EQUITY TO US GAAP
The following is a reconciliation of the significant adjustments necessary
to reconcile net income (loss) and shareholders' equity in accordance with
US GAAP to the amounts determined under Australian GAAP for the year ended
30 June 1997 and the 11 months ended 30 June 1996.
<TABLE>
<CAPTION>
Year ended 30 June
------------------------------
1997 1996
------------ -----------
<S> <C> <C>
Net loss as reported in the profit and loss
statements according to Australian GAAP $(10,961,163) $(3,899,233)
Adjustments to accord with US GAAP:
Deferred Revenue (a) (137,626) (728,794)
Product Development Costs (b) 530,134 (530,134)
----------- ----------
Net loss according to US GAAP $(10,568,655) $(5,158,161)
----------- ----------
At 30 June
------------------------------
1997 1996
------------ ----------
Shareholder's equity as reported in the profit
and loss statements according to Australian
GAAP ($14,860,396) ($3,899,233)
Cumulative adjustments required to accord with
US GAAP
Deferred Revenue (a) (866,420) (728,794)
Product Development Costs (b) 0 (530,134)
------------ ----------
Shareholder's equity according to US GAAP $(15,726,816) $(5,158,161)
----------- ----------
</TABLE>
26. RESTATEMENT OF 1996 FINANCIAL STATEMENTS
The financial statements of Access One Pty Ltd dated 11 February 1997 were
qualified for the 11 months ended 30 June 1996.
The qualification was in respect of the company not amortising goodwill on
the acquisition of the Access One business. Based on a cost of $2,522,969
and an estimated useful life of 10 years, the amortisation charged for the
11 months ended 30 June 1996 should have been $130,770.
The amount of $130,770 was subsequently expensed as amortisation of
goodwill in the financial statements for the year ended 30 June 1997, dated
14 November 1997.
The results of Access One Pty Ltd have been restated in this report to
recognise the amortisation of goodwill of $130,770 for the 11 months ended
30 June 1996.
19
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
26. RESTATEMENT OF 1996 FINANCIAL STATEMENTS (CONTD.)
The impact of this restatement is as follows:
a) increase the loss for the 11 months ended 30 June 1996 by $130,770 to
$3,899,233;
b) decrease the loss for the year ended 30 June 1997 by $130,770 to
$10,961,163;
c) decrease the amount recorded for goodwill in Note 8 by $130,770 to
$2,422,199 as at 30 June 1996.
20
<PAGE>
REPORT OF INDEPENDENT AUDITORS
TO THE BOARD OF DIRECTORS OF ACCESS ONE PTY LIMITED
We have audited the accompanying balance sheet of Access One Pty Limited as of
June 30, 1996 and June 30, 1997, and the related statements of profit and loss
and cash flows for the year ended June 30, 1997 and the 11 months ended 30 June
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above, present fairly, in
all material respects, the financial position of Access One Pty Limited at
June 30, 1996 and 1997 and the results of their operations and their cash flows
for the 11 months ended June 30, 1996 and the year ended 1997 in conformity with
Australian Accounting Standards.
Accounting principles generally accepted in Australia vary in certain
significant respects from accounting principles generally accepted in the United
States. The application of the generally accepted accounting principles in the
United States would have affected the determination of consolidated operating
loss for the 11 months ended June 30, 1996 and the year ended 1997 and the
determination of the shareholders' equity at June 30, 1996 and 1997 to the
extent summarised in Note 25 to the financial statements.
The accompanying financial statements have been prepared assuming that Access
One Pty Limited will continue as a going concern. As more fully described in
Note 1, Access One has incurred recurring operating losses and has a working
capital deficiency. These conditions raise substantial doubt about the
company's ability to continue as a going concern. The financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification
of liabilities that may result form the outcome of this uncertainty.
ERNST & YOUNG
Chartered Accountants
Sydney, Australia
November 21, 1997, except for Notes 25 and 26 for which the date is June 5,
1998.
21
<PAGE>
PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma financial information gives effect to the
acquisition by OzEmail Limited (the Company) of Access One Pty Ltd (Access One)
in a transaction to be accounted for using the purchase method of accounting in
accordance with APB Opinion No. 16 (the Acquisition). The unaudited pro forma
information presents, on a U.S. GAAP basis, condensed pro forma financial
information of the Company for the periods ended as of the dates indicated. The
unaudited pro forma condensed statement of operations data is based on the
historical financial statements of the Company and Access One and give effect to
the transaction as if they had occurred on January 1, 1996 for the year ended
December 31, 1996 and for the nine months ended September 30, 1997. The
unaudited pro forma condensed balance sheet information is based on the
individual balances sheets of the Company and Access One and gives effect to the
transaction as if it occurred on September 30, 1997.
The pro forma condensed financial information set forth below reflects pro forma
adjustments that are based on upon available information and certain assumptions
that the Company believes are reasonable. Under the purchase method of
accounting, the purchase price is allocated to the assets acquired and
liabilities assumed based on their estimated fair values at the time of the
transaction. Any changes to adjustments included in the unaudited pro forma
condensed financial information , arising as a result of additional information
becoming available are expected to be immaterial. The Company's consideration is
subject to a working capital adjustment representing the adjustment to the fair
value of net assets acquired as further detailed in Note (b) to the pro forma
financial information. The goodwill as calculated as if the transaction occurred
on September 30, 1997 does not include the operating losses which occurred for
the period from September 30, 1997 through to the acquisition date of November
25, 1997 of approximately A$3,531,000. The Company does not expect, other than
the matter discussed herein, significant adjustments to the purchase price.
Accordingly, actual amounts will differ from those in the unaudited pro forma
condensed financial information. The Company expects to finalize the working
capital adjustment prior to December 31, 1998.
The unaudited pro forma condensed financial information is not necessarily an
indication of the results that would have been achieved had such transaction
been consummated as of the dates indicated or that may be achieved in the
future. The unaudited pro forma financial information should be read in
conjunction with the historical financial statements and notes thereto of the
Company and Access One.
22
<PAGE>
PRO FORMA CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
OZEMAIL ACCESS ONE ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents 55,343 1,170 (5,000)(a) 51,513
Accounts Receivable 6,203 2,121 8,324
Other 1,498 595 3,235 (b) 5,328
------------------------------------------------
TOTAL CURRENT ASSETS 63,044 3,886 (1,765) 65,165
Property and equipment, net 21,918 1,906 - 23,824
Goodwill 88 2,103 15,396(c) 17,587
Other 3,105 262 - 3,367
------------------------------------------------
TOTAL ASSETS 88,155 8,157 13,631 109,943
================================================
LIABILITIES
Accounts payable and accrued expenses 12,583 4,912 (1,500)(b) 15,995
Other current liabilities 25,853 1,065 5,978(a)(b) 32,896
------------------------------------------------
TOTAL CURRENT LIABILITIES 38,436 5,977 4,478 48,891
Long term debt 4,120 17,560 (17,560)(b) 4,120
Related party debt
------------------------------------------------
TOTAL LIABILITIES 42,556 23,537 (13,082) 53,011
------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock 415 2 27(a)(c) 444
Additional paid in capital 53,331 - 11,304(a)(c) 64,635
Retained earnings/(accumulated deficit) (8,151) (15,382) 15,382(c) (8,151)
Reserves 4 - - 4
------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 45,599 (15,380) 26,713 56,932
------------------------------------------------
TOTAL LIABILITY AND SE 88,155 8,157 13,631 109,943
================================================
</TABLE>
See accompanying notes to unaudited pro forma condensed financial information
23
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
OZEMAIL ACCESS ONE ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
NET REVENUES 27,784 14,843 - 42,627
Cost of revenues 15,725 13,047 - 28,772
Sales and marketing 7,617 5,348 - 12,965
Product development 2,284 530 - 2,814
General and administrative 4,157 2,621 - 6,778
Amortization of Goodwill - 227 3,273(d) 3,500
------------------------------------------------
Income (loss) from operations (1,999) (6,930) (3,273) (12,202)
Interest income(expense) net 2,090 (830) - 1,260
Other income 882 - - 882
------------------------------------------------
Income (loss) before income taxes 973 (7,760) (3,273) (10,060)
(Provision) benefit for income taxes (556) - - (556)
Minority equity interest 17 - - 17
------------------------------------------------
Net income (loss) 434 (7,760) (3,273) (10,599)
================================================
Basic net income (loss) per share 0.01 N/A N/A (0.11)
Diluted net income (loss) per share 0.01 N/A N/A (0.11)
================================================
Basic weighted average shares outstanding (thousands) 89,286 N/A 10,000(e) 99,286
Diluted weighted average shares outstanding (thousands) 94,986 N/A 4,300(e) 99,286
================================================
</TABLE>
See accompanying notes to unaudited pro forma condensed financial information
24
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED 30 SEPTEMBER, 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
OZEMAIL ACCESS ONE ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
NET REVENUES 38,557 18,610 - 57,167
Cost of revenues 23,466 16,054 - 39,520
Sales and marketing 9,617 3,457 - 13,074
Product development 6,945 - - 6,945
General and administrative 6,373 3,078 - 9,451
Amortization of Goodwill - 193 2,432 (d) 2,625
------------------------------------------------
Income (loss) from operations (7,844) (4,172) (2,432) (14.448)
Interest income(expense) net 2,747 (992) - 1,755
Other income (expense) (112) 4 - (108)
Income (loss) before income taxes (5,209) (5,160) (2,432) (12,801)
(Provision) benefit for income taxes (3,794) - - (3,794)
Net income (loss) (9,003) (5,160) (2,432) (16,595)
Basic net income (loss) per share (0.09) N/A N/A (0.15)
Diluted net income (loss) per share (0.09) N/A N/A (0.15)
Basic weighted average shares outstanding (thousands) 103,555 N/A 10,000 (e) 113,555
Diluted weighted average shares outstanding (thousands) 103,555 N/A 10,000 (e) 113,555
</TABLE>
See accompanying notes to unaudited pro forma condensed financial information
25
<PAGE>
NOTES TO PROFORMA CONDENSED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
(a) To reflect consideration issued in connection with the Acquisition.
Such consideration consisted of (i) A$5,000 of cash paid by the Company
from existing cash balances and (ii) the issuance of 10,000 ordinary shares
valued at A$15,740. Under the terms of the Agreement, 7,200 ordinary shares
(valued at A$11,333) were issued at closing and 2,880 ordinary shares
(valued at A$4,407) will be issued upon determination of a working capital
adjustment calculated in accordance with the Agreement. The value of the
unissued 2,800 shares has been included as a liability in the pro forma
financial information. Management expects the unissued shares to be issued
and the working capital adjustment to be resolved prior to December 31,
1998. There are no contingencies noted in connection with the unissued
shares.
(b) To record adjustments required to reflect the tangible assets
acquired and liabilities assumed in connection with the acquisition. For
purposes of this pro forma financial information, the carrying values of
tangible assets acquired and liabilities assumed are assumed to approximate
fair value on the date of the acquisition. In addition, the Company has
recorded the following adjustments to reflect the fair value of tangible
assets acquired and liabilities assumed:
1. In connection with the acquisition the Company received
options to acquire 4,160 unlisted ordinary shares of Solution 6
(the parent of Access One) at an exercise price of A$0.75. The
options have been valued at the fair market value of A$1,023 as
determined on November, 25 1997, using the Black Scholes option
pricing model, and have been included within other current assets
in the accompany pro forma financial information. The options
expire November 25, 2000.
2. The Company estimates that resolution of the working
capital adjustment, calculated in accordance with the Agreement,
will result in the Company receiving $2,212 from Solution 6. Such
amount has been recorded as an other current assets in the
accompany pro forma financial information. The Company expects
the working capital adjustment to be resolved prior to December
31, 1998
3. The Company has developed plans to integrate and
rationalize the operations of Access One subsequent to the
Acquisition. The Company has recorded liabilities of A$1,000 to
reflect costs expected to be incurred in the near term in
connection with the integration and rationalization.
4. In connection with the Acquisition, the Company has
agreed to assume capital lease obligations totaling A$571
previously recorded by Solution 6.
26
<PAGE>
5. In connection with the Acquisition, Solution 6 has agreed
(i) repay accounts payable and accrued expenses of Access One
totaling approximately A$1,500, and (ii) transfer the
intercompany borrowings by Access One from Solution 6 of A$17,560
to the Company. The intercompany borrowing is recognized in the
Company, where provision for recoverability is made before the
amount is eliminated on consolidation of the Access One
financials in the accompanying pro forma financial information.
(c) To eliminate historical pre acquisition losses and share capital of
Access One and the historical net intangible asset balances of Access One
of A$2,103 and to record the excess value of the acquisition price over the
fair value of assets and liabilities as goodwill. Goodwill will be
amortized on a straight-line basis over its estimated life of five years.
No amount has been allocated to other intangible assets as (i) such
balances are considered to be immaterial, and (ii) the useful lives of
other intangible assets are assumed to be similar to the life assigned to
Goodwill.
(d) To record the amortization of Goodwill acquired in the transaction and
reverse goodwill amortization in the Access One historical financial
statements.
(e) To adjust weighted average shares for (i) shares issued as part of
the consideration give to Solution 6 in acquiring Access One and (ii) to
adjust for the dilutive shares taken into consideration under reported
profits when the combined results reflect a loss.
(f) The Access One AGAAP historical financial statements have been adjusted
for the items noted in note 25 o f Access One financial statements, to be
properly stated in accordance with US GAAP:
12 months ended 9 months ended
December 31, 1996 September 30, 1997
------------------------------------------
Inc (dec) Inc (dec)
Revenue (A$357) A$94
Product Development Costs A$531 (A$531)
An adjustment to reduce revenues of A$489 would also be required to be made
to the Access One AGAAP financial statements for the period prior to
January 1, 1996 to adjust for the deferral of revenues.
The AGAAP liability for deferred revenue has been increased by $752
at September 30, 1997 to comply with US GAAP.
27
<PAGE>
APPENDIX C
FORM 6-K FOR QUARTER ENDED 30 JUNE, 1998
(Section 12.4)
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ending June 30,1998
OZEMAIL LIMITED
ACN 066 387 157
OZEMAIL CENTRE, 39 HERBERT STREET, ST. LEONARDS NEW SOUTH WALES 2065 AUSTRALIA
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.)
FORM 20-F X FORM 40-F
------- ------
(Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of
1934.)
YES NO X
------- ------
Page 1
<PAGE>
FORM 6-K
FOR THE QUARTER ENDED JUNE 30, 1998
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet as of December 31, 1997 and
June 30, 1998.
Condensed Consolidated Statement of Operations for the Three
Months Ended June 30, 1997 and 1998 and for the Six Months Ended
June 30, 1997 and 1998.
Condensed Consolidated Statement of Cash Flows for the Six Months
Ended June 30, 1997 and 1998.
Notes to Condensed Consolidated Interim Financial Statements
ITEM 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations
SIGNATURES
Page 2
<PAGE>
<TABLE>
<CAPTION>
OZEMAIL LIMITED
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
DECEMBER 31, JUNE 30,
ASSETS 1997 1998
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents A$ 51,614 A$ 15,984
Restricted term deposits -- 3,720
Accounts receivable - trade, net of allowances of A$889 and
A$2,417, respectively 8,427 13,026
Receivable from shareholder 32 --
Other receivables 2,331 1,707
Income tax receivable -- 509
Other current assets 2,520 3,838
---------- ---------
TOTAL CURRENT ASSETS 64,924 38,784
Plant and equipment, net 27,179 27,413
Non-current investments 1,559 1,535
Goodwill and other intangibles 19,839 21,945
Restricted term deposits -- 4,585
Net deferred tax assets 285 2,114
Other non-current assets -- 3,558
---------- ---------
TOTAL ASSETS A$ 113,786 A$ 99,934
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable A$ 19,936 A$ 20,015
Deferred consideration 4,407 4,407
Current portion of financing - lease liability 3,836 4,684
Short term loan - due to Metro 2,043 --
Accrued expenses and other liabilities 7,513 4,399
Deposits under agreements with Metro 18,686 --
Income taxes payable 3,776 --
---------- ---------
TOTAL CURRENT LIABILITIES 60,197 33,505
Non-current portion of financing - lease liability 4,423 2,690
---------- ---------
TOTAL LIABILITIES 64,620 36,195
---------- ---------
Commitments and contingencies (Note 8) -- --
SHAREHOLDERS' EQUITY:
Ordinary Shares, A$0.004 par value; 1,250,000,000 shares
authorized; 111,000,010 and 121,448,250 shares issued and
outstanding, respectively 444 486
Additional paid-in capital 64,636 89,570
Accumulated deficit (15,916) (23,449)
Dividends -- (2,858)
Other comprehensive income (loss), net 2 (10)
---------- ---------
TOTAL SHAREHOLDERS' EQUITY 49,166 63,739
---------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY A$ 113,786 A$ 99,934
========== =========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
OZEMAIL LIMITED
Page 3
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1998 1997 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net revenues A$ 13,077 A$ 27,402 A$ 23,829 A$ 49,434
Costs and expenses:
Cost of revenues - network operations and support 3,842 6,606 7,008 12,540
Cost of revenues - communications and other 4,604 9,686 8,050 19,252
Sales and marketing 3,013 5,716 5,772 10,473
Product development 3,423 1,737 5,095 3,253
General and administrative 3,502 5,718 4,944 9,977
Amortization of goodwill and other intangibles - 1,359 - 2,490
-------------- -------------- -------------- --------------
Total costs and expenses 18,384 30,822 30,869 57,985
-------------- -------------- -------------- --------------
Loss from operations (5,307) (3,420) (7,040) (8,551)
Other income (expense):
Foreign exchange gain, net - 321 4 235
Interest income 552 288 1,107 786
Other income (expense), net - 63 941 225
Interest expense (112) (153) (123) (329)
-------------- -------------- -------------- --------------
Loss before provision for income taxes (4,867) (2,901) (5,111) (7,634)
Income tax (expense) benefit (3,423) (362) (3,495) 101
-------------- -------------- -------------- --------------
Net loss A$ (8,290) A$ (3,263) A$ (8,606) A$ (7,533)
============== ============== ============== ==============
Basic loss per ordinary share A$ (0.08) A$ (0.027) A$ (0.083) A$ (0.064)
============== ============== ============== ==============
Diluted loss per ordinary share A$ (0.08) A$ (0.027) A$ (0.083) A$ (0.064)
============== ============== ============== ==============
Weighted average ordinary shares and share
equivalents
- - - Basic 103,500 122,797 103,500 118,459
============== ============== ============== ==============
- - - Diluted 103,500 122,797 103,500 118,459
============== ============== ============== ==============
Basic loss per ADS A$ (0.80) A$ (0.27) A$ (0.83) A$ (0.64)
============== ============== ============== ==============
Diluted loss per ADS A$ (0.80) A$ (0.27) A$ (0.83) A$ (0.64)
============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Page 4
<PAGE>
<TABLE>
<CAPTION>
OZEMAIL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------------------------------
1997 1998
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss A$(8,606) A$ (7,533)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 3,280 9,313
Allowance for bad and doubtful accounts 1,064 1,296
Writeback of provisions and expenses incurred (556) -
Loss/(gain) on disposal of plant and equipment 5 (5)
Gain on sale of investment in Softbank (775) -
Changes in assets and liabilities net of effects from purchase of
Camtech:
Accounts receivable (1,203) (6,127)
Receivable from shareholder - 32
Other current assets (1,484) (1,310)
Accounts payable 1,026 (1,211)
Accrued expenses and other current
liabilities 2,347 (2,616)
Increase/(decrease) in income taxes payable/receivable, net 3,870 (4,285)
Increase in deferred income taxes (451) (1,829)
--------------- ---------------
NET CASH USED IN OPERATING ACTIVITIES (1,483) (14,275)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of plant and equipment 38 20
Sale of non current investment - 24
Purchase of plant and equipment (7,560) (6,716)
Purchase of trade name - (77)
Deposit payment for Southern Cross Cable (Note 6) - (3,558)
Payments for restricted term deposits related to
infrastructure purchases (Note 4) - (6,085)
Distribution to minority shareholders (896) -
--------------- ---------------
NET CASH USED IN INVESTING ACTIVITIES (8,418) (16,392)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale and leaseback transactions 5,000 -
Payments under finance lease obligations (980) (2,187)
Payment of dividends - (2,858)
Payments for restricted term deposits under finance lease
obligations (Note 4) - (2,220)
Proceeds from common stock issued upon exercise of options - 2,314
Proceeds from bank overdraft 120 -
--------------- ---------------
NET CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES 4,140 (4,951)
Effect of exchange rate changes (5) (12)
--------------- ---------------
Decrease in cash (5,766) (35,630)
Cash and cash equivalents at the beginning of the period 44,615 51,614
--------------- ---------------
Cash at the end of the period A$38,849 A $15,984
=============== ===============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Page 5
<PAGE>
<TABLE>
<CAPTION>
OZEMAIL LIMITED
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS AND SHARES IN THOUSANDS)
RETAINED
ADDITIONAL EARNINGS OTHER TOTAL
PAID-IN (ACCUMULATED COMPREHENSIVE SHAREHOLDERS'
SHARES DOLLARS CAPITAL DEFICIT) DIVIDENDS INCOME EQUITY
------ ------- ---------- ------------ --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 111,000 A$444 A$64,636 A$(15,916) A$- A$ 2 A$49,166
Issuance of Ordinary
Shares as part of
Purchase of OzEmail
Interline (Note 1) 5,400 22 19,863 -- -- -- 19,885
Issuance of Ordinary
Shares as part of
Purchase of
Camtech SA Pty Limited 1,103 4 2,773 -- -- -- 2,777
Common stock issued
upon exercise of
options 3,945 16 2,298 -- -- -- 2,314
Payment of dividends -- -- -- -- (2,858) -- (2,858)
Other comprehensive
income -- -- -- -- -- (12) (12)
Net (loss) -- -- -- (7,533) -- -- (7,533)
------- ------- -------- --------- --------- --------- ---------
BALANCE AT JUNE 30, 1998 121,448 A$486 A$89,570 A$(23,449) A$(2,858) A$(10) A$63,739
======= ======= ======== ========== ========= ======= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Page 6
<PAGE>
OZEMAIL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - THE COMPANY
The Company
OzEmail Limited (the "Company" or "OzEmail") and its subsidiaries
provide Internet access and other value added services in Australia and New
Zealand.
In April 1998, OzEmail bought out Metro Holdings' AG ("Metro") equity
interest in OzEmail Interline, thereby increasing its equity interest to 88%.
OzEmail issued 5,400,000 Ordinary Shares with a market value per Ordinary Share
of US$2.2125, giving rise to a total consideration of A$18,520,000. Metro also
agreed to forgive a debt of A$2,043,000 owed by OzEmail Interline. At the same
time, OzEmail and Metro agreed to terminate the Metro exclusive license
agreement for no consideration.
On May 29, 1998, approximately 3,000,000 of OzEmail's Ordinary Shares
held by the founders of the Company were listed and sold on the Australian
Securities Exchange (ASX). The Company did not receive any proceeds from this
listing.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited financial statements of the Company have
been prepared in accordance with generally accepted accounting principles in the
United States for interim financial information and in accordance with Article
10 of Regulation S-X. The condensed balance sheet as of December 31, 1997 and
June 30, 1998, the condensed statement of operations for the three and six
months ended June 30, 1997 and 1998, and the condensed statement of cash flows
for the six months ended June 30, 1997 and 1998 have been prepared by the
Company, and have not been audited. In the opinion of management, these interim
financial statements reflect all adjustments, consisting of normal recurring
adjustments necessary to present fairly the financial position, results of
operations, and cash flows of the Company at June 30, 1998, and for all periods
presented. Although the Company believes that the disclosures in these financial
statements are adequate to make the information presented not misleading,
certain information normally included in financial statements and related
footnotes prepared in accordance with generally accepted accounting principles
has been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. The accompanying financial statements should
be reviewed in conjunction with the audited financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
The results for the three and six month period ended June 30, 1998,
are not necessarily indicative of the results that may be expected for the
fiscal year ended December 31, 1998, or any future period.
The Company conducts most of its business in Australian dollars.
Amounts included in the financial statements and in notes herein are in
Australian dollars and referenced as "A$." References to "US$" are to United
States dollars and references to "NZ$" are to New Zealand dollars.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Principles of consolidation
The Consolidated Financial Statements include the accounts of OzEmail
and its controlled subsidiaries: Voyager; Access One; OzEmail Interline; OzEmail
Fax Investments; OzEmail West; OzEmail Technologies; Web Wide Media; and Cyber
Publications. All intercompany accounts and transactions have been eliminated.
Page 7
<PAGE>
Losses in excess of minority interest in consolidated subsidiaries are
fully provided for by the Company.
Business Combinations
Business combinations which have been accounted for under the purchase
method of accounting include the results of operations of the acquired business
from the date of acquisition. Net assets of the companies acquired are recorded
at their estimated fair value at the date of acquisition.
Revenue recognition
The Company's net revenues consist primarily of hourly connect time
and monthly user charges for access to the Internet and are recognized over the
period such services are rendered, if collection of the resulting receivable is
deemed probable and provided no significant obligations remain outstanding. Net
revenues also include charges for one-time Internet registration; sales of the
Company's value added services; set-up and establishment fees; and advertising
revenues received from the provision of online content. Revenues from
registration, set-up and establishment fees are recognized at the time
registration, set-up and establishment services are completed and related
software, hardware and other services are delivered or provided. Revenues for
product sales and related Internet services are recognized as products and
services are delivered or rendered.
The Company has also derived revenues from: license fees for licensing
of the Internet telephony service offering network affiliates and in respect to
the timed charges for the provision of the OzEmail Phone Internet telephony
service in Australia.
In conjunction with providing hourly and monthly Internet access, the
Company provides free telephone technical support to its customers. Costs of
these services are expensed in the period incurred to match the related revenues
recognized from access to the Internet.
Cost of revenues
The Company segregates its cost of revenues into two categories:
"network operations and support" and "communications and other."
Cost of revenues - network operations and support includes: technical
and customer support staff; network and equipment maintenance and support;
depreciation expense on network equipment; amortization of capitalized
telecommunication installation costs and applicable overhead costs.
Cost of revenues - communications and other includes: monthly
telecommunications expenses; a fee payable as a percentage of revenue to the New
South Wales government for revenues sourced from government customers; merchant
commissions on credit card sales; cost of domain name registrations; and cost of
other products sold by the Company.
Cost of revenues in respect to license revenue is considered negligible.
Earnings per share
Following is a reconciliation of the numerators and denominators of the
Basic and Diluted EPS computations for the periods presented below (information
has also been provided for Basic and Diluted earnings per ADS) (dollars and
shares in thousands, except earnings per share data):
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1997 1998 1997 1998
Numerator
<S> <C> <C> <C> <C>
Net loss A$(8,290) A$(3,263) A$(8,606) A$(7,533)
========= ========= ========= =========
Denominator for basic earnings per ordinary share
Weighted ordinary shares 103,500 119,997 103,500 115,659
Weighted contingently issuable ordinary shares - 2,800 - 2,800
--------- --------- --------- ---------
103,500 122,797 103,500 118,459
========= ========= ========= =========
</TABLE>
Page 8
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Effect of dilutive securities - - - -
-------- --------- --------- ---------
Denominator for diluted earnings per 103,500 122,797 103,500 118,459
ordinary share ======== ========= ========= =========
Loss per ordinary share
Basic A$(0.08) A$(0.027) A$(0.083) A$(0.064)
======== ========= ========= =========
Diluted A$(0.08) A$(0.027) A$(0.083) A$(0.064)
======== ========= ========= =========
Loss per ADS (1 ADS is equivalent to 10 ordinary
shares):
Basic A$(0.80) A$(0.27) A$(0.83) A$(0.64)
======== ========= ========= =========
Diluted A$(0.80) A$(0.27) A$(0.83) A$(0.64)
======== ========= ========= =========
</TABLE>
Net loss used in the computation of basic and diluted earnings per
share is not affected by the assumed issuance of stock under the Company's stock
plans and is therefore the same under both calculations.
Contingently issued ADS's represent shares to be issued in connection
with the acquisition of Access One for which all conditions have been met for
issuance as of December 31, 1997 and such shares have therefore been included
within the calculation of basic earnings per ADS.
Options to purchase approximately 8,896,000 and 5,833,000 Ordinary
Shares were outstanding for the three months ended June 30, 1997 and 1998,
respectively, but were excluded from the respective computation of diluted
earnings per share because the Company was in a net loss position during this
period and to include these options would be anti-dilutive.
Goodwill and other intangibles
Goodwill consists of the excess of cost over estimated fair value of net
assets acquired and certain other intangibles relating to purchase transactions.
Goodwill and intangibles are primarily amortized over 5 years. In the second
quarter of 1998, amortization costs associated with goodwill and intangibles was
A$1,359,000. The Company periodically evaluates the carrying value of goodwill
and other intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. If such circumstances
arise, the Company would use an estimate of the undiscounted value of expected
future operating cash flows to determine whether goodwill and intangibles are
recoverable. If the review indicates that goodwill or intangibles will not be
recoverable, the associated asset will be reduced to its estimated recoverable
value in the respective period.
Dividends
Any dividend payments made by the Company would, under the Australian
Corporations Law, be limited to the Company's aggregate of amounts available for
distribution, which aggregated A$3,840,000 at December 31, 1997 as determined
under the Australian Corporations Law. The Directors of the Company declared a
fully franked dividend of A$0.025 per share (A$0.25 per ADS) with an Australian
ex-dividend date of March 26, 1998 and an Australian dividend payable date of
March 27, 1998. The dividend was payable in Australian dollars to those holders
of Ordinary Shares. The Bank of New York is responsible for distributing the
dividend holders of ADSs in the US dollar equivalent of the Australian dollar
payment. The Bank of New York, as depositary of the ADSs, set the ex-dividend
date for holders of ADSs as March 21, 1998 American Eastern Standard time, with
a dividend payable date of April 6, 1998 American Eastern Standard time.
Recent accounting pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income" (SFAS 130), and SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information" (SFAS 131). The Company
will be required to adopt both statements for the year ended December 31, 1998.
Under SFAS No. 130, companies are required to report in the financial
statements, in addition to net income, comprehensive income including, as
applicable, foreign currency items, minimum pension liability adjustments and
Page 9
<PAGE>
unrealized gains and losses on certain investments in debt and equity
securities. The Company has adopted SFAS 130 for the purposes of these financial
statements in this Form 6-K. Such adoption did not have a material impact.
Currently, net income and comprehensive income of the Company is not materially
different. SFAS No. 131 requires that companies report separately, in the
financial statements, certain financial and descriptive information about
operating segments, if applicable. The Company is currently assessing its
disclosure requirements under SFAS No. 131.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". This Statement of Position
(SOP) provides guidance on accounting for the costs of computer software
developed or obtained for internal use and requires that computer software costs
that are incurred in the preliminary project stage, as defined by the standard,
should be expensed as incurred. Once the capitalization criteria of the SOP have
been met, external direct costs of materials and services consumed in developing
or obtaining internal-use computer software; payroll and payroll-related costs
for employees who are directly associated with and who devote time to the
internal-use computer software project (to the extent of the time spent directly
on the project) and certain other costs incurred when developing computer
software for internal use should be capitalized. The standard is effective for
fiscal years beginning after December 15, 1997. The Company has adopted this
standard in the first quarter of 1998 the impact of which was not material.
On June 15, 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1,
2000 for the Company). SFAS 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. From time to time the
Company has, and may in the future, enter into foreign currency contracts solely
for hedging purposes. As of December 31, 1997 and June 30, 1998 there were no
outstanding derivative instruments. As the Company's hedging activities are
currently limited, management anticipates that the adoption of SFAS 133 will not
have a significant effect on the Company's results of operations or its
financial position.
NOTE 3 - PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
(IN THOUSANDS)
<S> <C> <C>
Plant and equipment consisted of the following:
Telecommunications plant and equipment A$ 11,619 A$ 13,379
Telecommunications plant and equipment under
finance lease 6,522 6,702
Computer equipment 13,112 16,476
Computer equipment under finance lease 3,739 4,851
Furniture and fittings 1,746 2,121
Leasehold improvements 1,917 2,044
--------- ---------
38,655 45,573
Accumulated depreciation and amortization (11,476) (18,160)
--------- ---------
Net plant and equipment A$ 27,179 A$27,413
========= =========
</TABLE>
NOTE 4 - RESTRICTED TERM DEPOSITS
As at June 30, 1998, the Company had A$3,720,000 and A$4,585,000 of
cash held in current and non-current restricted term deposits, respectively, as
a condition of various telecommunication related agreements. The term deposits
classified as a non-current asset are denominated in US dollars totaling
US$2,770,000 and will not be available for use by the Company for at least
twelve months.
NOTE 5 - ACQUISITIONS
On May 8, 1998, the Company signed binding heads of agreement to
acquire 55% of the share capital of PowerUp Pty Limited ("PowerUp"), an Internet
service provider business based in the state of Queensland, after PowerUp
acquires the business of Web Central Pty Limited ("Web Central"), a web hosting
business based in Queensland which is controlled by the directors of PowerUp.
Completion of the acquisition is contemplated to be during the third quarter of
1998, for a purchase consideration of 55% of 80% of annualized March 1998
Page 10
<PAGE>
WebCentral revenues and 55% of 60% of annualized March 1998 PowerUp revenues,
less A$300,000 and less any amount by which the total current liabilities of
PowerUp and WebCentral exceed A$380,000. The consideration is payable by
allotting an amount of OzEmail Ordinary Shares which is calculated by dividing
the purchase consideration by the OzEmail ADS price that was current on May 8,
1998.
On March 31, 1998, the Company acquired the Internet access business
assets and liabilities from Camtech SA Pty Limited ("Camtech"), situated in
South Australia. The consideration for the acquisition will be equal to two
thirds of Camtech's revenues over the twelve months from March 31, 1998. The
immediate payment to Camtech was 1,103,240 Ordinary Shares valued at
approximately A$2,777,000 at US$16.525 per ADS (1 ADS representing 10 Ordinary
Shares). Goodwill of A$3,270,000 has been recognised after allowing for the
estimated fair value of net assets at the date of acquisition and is to be
amortised over five years. Any balance payment will be made at the end of the
first quarter of 1999. Second, as an incentive to assist in the development of
the business, the principals of Camtech will receive from Camtech a payment of
5% of the Internet access revenues arising from the business over the next two
years. These payments will be expensed as incurred. The pro-forma effect on the
six-month period ended June 30, 1998 is considered immaterial.
Page 11
<PAGE>
NOTE 6 - INTERNATIONAL TRANSMISSION CAPACITY
In May 1998 the Company, by a wholly owned subsidiary, entered into a
partly oral, partly written agreement with Southern Cross Cables Limited ("SX")
to obtain capacity through an indefeasible right of use ("IRU") of a fibre optic
submarine cable network linking Australia, New Zealand and the United States
(the "Cable") for consideration totaling US$12,600,000. This agreement will be
finalized by August 31, 1998. The Company's IRU of bandwidth capacity in the
Southern Cross Cable is anticipated to provide increased service to its
customers at reduced telecommunication costs to the Company. Pursuant to the
agreement, the Company was required to pay a discounted part prepayment of
US$2,217,000 that has been included in Other non-current assets in the
accompanying June 30, 1998 Condensed Consolidated Balance Sheet. As of June 30,
1998, the open commitments relating to this agreement were US$10,080,000 that
will be due upon the Cable's ready for service date ("RFS") anticipated in the
first quarter of 2000. As required by the underlying agreement, US$2,520,000 of
the open commitment is held in a restricted term deposit as of June 30, 1998
(Note 4). The term of the agreement expires on the 15th anniversary of the RFS
date, however, it may be extended for a maximum of an additional five years at
the option of the Company.
Additionally, the Company entered into a three-year agreement,
commencing April 8, 1998, to lease trans-Pacific satellite services for the
provision of data transmission from the United States to Australia. During April
1998, the Company completed testing the satellite link from the West Coast of
the United States to its own earth stations in Sydney, Melbourne and Brisbane.
Under the terms of the agreement, the Company was required to pay approximately
A$789,000 plus associated taxes, fees and duties for the hardware necessary to
transmit and receive the satellite signal. Monthly services fees of
approximately US$233,000 are payable under the agreement, of which, US$1,306,000
were payable in advance. As of June 30, 1998, the remaining amounts payable
under the service agreement approximate US$7,172,000.
NOTE 7 - INCOME TAXES
Income before provision for income taxes in the second quarter of 1998
includes A$2,117,000 of losses relating to OzEmail Interline and A$368,000 of
losses relating to the New Zealand operations of the Company's majority owned
subsidiary Voyager.
Both OzEmail Interline and Voyager (neither of which is a 100%-owned
subsidiary of OzEmail), have incurred losses since their formation. As of June
30, 1998, the Company had A$8,962,000 and A$3,233,000 of net operating loss
carryforwards associated with the OzEmail Interline and Voyager operations,
respectively. These loss carryforwards are available to reduce future taxable
income of either entity without any time limitation. However, the loss
carryforwards will expire in the event of a change of ownership in these
entities of greater than 51%. Management believes that the weight of available
evidence indicates that it is more likely than not that these operations will
not be able to utilize the net operating loss carryforwards, and thus a full
valuation allowance of A$3,226,000 and A$1,164,000 has been recorded at June 30,
1998 with respect to OzEmail Interline and Voyager losses, respectively. If
future evidence indicates that the Company will be likely to be able to utilize
these operations' net operating loss carryforwards in future years, the
valuation allowance will be reduced with a corresponding credit to the Company's
tax expense. The Australian corporate tax rate is a flat rate of 36%.
Page 12
<PAGE>
NOTE 8 - CONTINGENCIES
Litigation
On March 18, 1997, the Australasian Performing Rights Association
("APRA") filed a statement of claim against the Company. APRA claimed that the
Company infringed copyright in a variety of musical works owned and controlled
by APRA by permitting the Company's customers to download those works. APRA
sought injunctive relief and damages against the Company. On June 5, 1998 the
Company settled this claim. Under the terms of the settlement, the Company will
make a payment to APRA but makes no admission of liability and APRA has
undertaken not to institute further proceedings against the Company or any other
ISP until June 30, 1999 or until new Australian Commonwealth legislation is
enacted, whichever is earlier. The payment to APRA is not material to the
Company's financial position or results of operations
OzEmail owns an 80% equity interest in Voyager, with the remaining 20%
equity interest held by two former directors of Voyager (the "Minority
Shareholders"). OzEmail and the Minority Shareholders are parties to a
Shareholders' Agreement setting out certain rights and restrictions on the
employment and stock ownership of the Minority Shareholders. On January 2, 1997
the Minority Shareholders provided formal notice to OzEmail that they wished to
exercise their option under the Shareholders Agreement to sell their shares in
Voyager to OzEmail at fair value. The parties could not reach a consensus on the
price at which such sale of shares would take place and the Minority
Shareholders commenced proceedings in September, 1997, in the High Court of New
Zealand for recovery of the share sale price. OzEmail has sought legal advice
from legal counsel and is defending the matter. The Company has provided for an
amount that it believes adequately covers the estimated fair value of the shares
and all other costs associated with this claim. The matter has been set down for
hearing in August 1998.
In connection with the acquisition of Access One Pty Limited, as of
June 1998, Solution 6 Holdings Limited ("Solution 6") and the Company have yet
to reach an agreement as to the working capital adjustment. The Company does not
believe that this matter will give rise to any material liability. However,
there can be no assurance that the ultimate disposition of this matter will not
have a material adverse impact on the business, results of operations or
financial condition of the Company
From time to time, the Company has received, and may in the future
receive, notice of claims by other parties against the Company. As of the date
of this Form 6-K, the Company is not a party to any other legal proceedings, and
is not aware of any other pending or threatened proceedings the outcome of
which, in the opinion of management, would have a material adverse impact on the
Company's business, results of operations or financial condition.
NOTE 9 - STOCK OPTIONS
In June 1998, the Directors approved a grant of 500,000 options to an
employee to acquire 500,000 Ordinary Shares (equivalent to 50,000 ADSs) under
the 1996 Stock Option Plan ("1996 Plan") at an exercise price approximately 12%
below the fair market value of the Company's common stock at date of grant. Of
these options, 50% vest in the option holder on March 31, 1999 and 50% vest on
March 31, 2000. The charge to compensation expense during the second quarter of
1998 was diminimus.
In January 1998, a total of 1,080,000 options to acquire 1,080,000
Ordinary Shares under the 1996 Plan were granted to employees at an exercise
price equal to the fair market value of the Company's common stock at the date
of grant. Of these options, 50% vest in the option holders on December 31, 1998,
and 50% vest on December 31, 1999.
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION
The Company entered into a sale and lease-back transaction in December
1997 to the value of A$1,303,000. The sale proceeds were received in the fourth
quarter of 1997 and disclosed within accrued expenses and other liabilities in
the Balance Sheet as of December 31, 1997. The lease commencement date was
January 1, 1998, and the liability was reclassified as a lease liability on this
date.
As part of the consideration of the acquisition from Camtech of its
Internet service business, the Company issued 1,103,240 Ordinary Shares for
which no cash was received.
Page 13
<PAGE>
As discussed in Note 1, during April 1998, the Company agreed to
repurchase the equity interest in OzEmail Interline held by Metro and rescind
the license agreement in exchange for issuing to Metro 5,400,000 of the
Company's Ordinary Shares valued at A$18,520,000 on April 15, 1998. Metro also
agreed to forgive a debt of A$2,043,000 currently owned by OzEmail Interline.
Neither of these transactions had a cash impact.
NOTE 11 - SUBSEQUENT EVENT
In a press release issued on August 10, 1998, filed with the SEC on a
separate Form 6K, the Company announced a planned offering of public debt and
equity to raise US$250 million in capital for infrastructure to be deployed for
the purpose of acquiring or building communications infrastructure including
significant additional dedicated capacity in the Southern Cross Trans Pacific
Cable, and long distance, inter- and intra-city, fibre optic cable. See
"Management's Discussion and Analysis of Financial Condition and Result of
Operations - Liquidity and Capital Resources". This report does not constitute
an offer of securities. Any offering of securities will be made by means of a
prospectus. The debt securities will neither be offered nor sold in Australia.
Page 14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Except for historical information contained herein, the matters
discussed in this report contain forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated by these forward-looking statements as a result of various
factors, including those set forth in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997. Factors that could cause or contribute to
such differences include those discussed herein as well as those included in the
documents that the Company files from time to time with the Securities and
Exchange Commission. The Company disclaims any obligation to update its
forward-looking statements.
OVERVIEW
In the 1998 year to date, the Company has taken a number of steps in
order to enhance its position in the Australian, Internet service market and in
the Internet telephony sector. Such steps have included:
o acquisition of the Internet service business of Camtech (SA) Pty Limited
("Camtech"), a leading regional Internet service provider in South
Australia;
o as part of its ongoing commitment to build the Internet market in
Australia, OzEmail is now offering a flat rate pricing plan marketed as
OzMegaSaver; to residents in Sydney, Melbourne and Brisbane for $44.95 per
month; and
o the introduction of prepaid phone cards by OzEmail to allow users to place
telephone calls over the Internet from existing tone dial telephones.
In April 1998 OzEmail Limited announced two infrastructure
initiatives. The Company has completed testing a T3 satellite link from the West
Coast of the United States to its own Earth stations in Sydney, Melbourne and
Brisbane. The Company also announced it is purchasing IRU's to acquire dedicated
fibre capacity between the United States, New Zealand and Australia.
On May 8, 1998, the Company signed binding heads of agreement to
acquire 55% of the share capital of PowerUp Pty Limited ("PowerUp"), an Internet
service provider business based in the state of Queensland, after PowerUp
acquires the business of Web Central Pty Limited ("WebCentral"), a web hosting
business based in Queensland which is controlled by the directors of PowerUp.
On May 29, 1998, approximately 3,000,000 of OzEmail's Ordinary Shares
held by the founders of the Company were listed and sold on the Australian Stock
Exchange (ASX). The Company did not receive any proceeds from this listing.
Pursuant to an agreement dated June 22, 1998, Telstra Corporation
Limited ("Telstra") has agreed to supply the Company an accessible Telstra
Accelerate ATM Network service ("ATM Network") to allow for the rationalization
of the network requirements of the Company. The agreement term is for two years,
commencing the effective date of the agreement, and may be continually renewed
for two month periods at the option of both the Company and Telstra. The ATM
Network is anticipated to be available to the Company during the third quarter
of 1998.
During the second quarter of 1998, the Company has entered into a two
year contract with the Vocation Education and Training Corporation to provide
Internet services, including an intranet and remote dial-up access services, to
the Queensland Technical and Further Education ("TAFE") schools.
Steps taken to enhance the International Interline Internet Telephony
business include:
o a strengthened presence by OzEmail in OzEmail Interline through an
agreement in April 1998 to exchange 5,400,000 OzEmail Ordinary Shares for
Metro Holdings' 40% equity interest in OzEmail Interline, thereby
increasing OzEmail's equity position in OzEmail Interline to 88%;
o an agreement with Cisco Systems Inc. to facilitate the deployment of
Internet telephony gateways, roaming authentication and settlement services
as part of the OzEmail Interline strategy of being a service provider to
providers of Internet telephony services;
o an agreement with Bay Networks Inc. to collaborate on the integration and
promotion of their respective Internet telephony technology, services and
capabilities;
o an agreement with 13 worldwide affiliates to exclusively market and
sub-license OzEmail Interline's Internet telephony gateways; and
o a decision to relocate the headquarters of OzEmail Interline to Silicon
Valley in the United States in order to leverage off the intellectual
capital to be found in this region.
Page 15
<PAGE>
POTENTIAL FLUCTUATIONS IN OPERATING RESULTS
The Company's prospects should be considered in the light of the
risks, expenses and difficulties frequently encountered by companies in the
early stage of development, particularly companies in new and evolving markets.
The Company's operating results may fluctuate significantly in the future as a
result of a variety of factors, including user demand for Internet access and
services, capital expenditures and other costs relating to the maintenance and
expansion of operations, the number and mix of dial up and permanent customers,
customer retention rates, pricing changes by the Company and its competitors,
new service introductions by the Company and its competitors, delays or expense
in obtaining necessary equipment, access to telecommunications transmission
capacity supplied by telecommunication carriers, economic conditions in the
Internet access and services industry, and general economic conditions. There
can be no assurance that the Company will be able to offset the effects of any
future price reductions or cost increases with increased numbers of customers,
higher revenue from enhanced services, cost reductions or otherwise. There can
be no assurance that revenue growth will continue or that the Company will in
the future sustain profitability on either a quarterly or annual basis.
The Company's expense levels are based in part on its expectations
regarding future revenues and are fixed to a large extent in the short term. As
a result, the Company may be unable to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall. Any significant revenue
shortfall would therefore have a material adverse impact on the Company's
results of operations.
The Company has historically experienced a decrease in demand during
Australia and New Zealand's summer months in December, January and February of
each year. There can be no assurance that the Company's results in any future
quarter will not be negatively affected by such trends.
Page 16
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth consolidated operating results of the
Company as a percentage of net revenues for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1997 1998 1997 1998
<S> <C> <C> <C> <C>
Net revenues 100% 100% 100% 100%
Costs and expenses:
Cost of revenues - network
operations and support 29.4 24.1 29.4 25.4
Cost of revenues -
communications and other 35.2 35.3 33.8 38.9
Sales and marketing 23.0 20.9 24.2 21.2
Product development 26.2 6.3 21.4 6.6
General and administrative 26.8 20.9 20.7 20.2
Amortization of goodwill and
other intangibles 0.0 5.0 0.0 5.0
-----------------------------------------------
Total costs and expenses 140.6 112.5 129.5 117.3
-----------------------------------------------
Loss from operations (40.6) (12.5) (29.5) (17.3)
Foreign exchange gain, net 0.0 1.2 0.0 0.5
Interest income (expense), net 3.4 0.5 4.1 0.9
Other income (expense), net 0.0 0.2 3.9 0.5
------------------------------------------------
Loss before provision for income taxes (37.2) (10.6) (21.5) (15.4)
------------------------------------------------
Net loss (63.4)% (11.9)% (36.1)% (15.2)%
================================================
</TABLE>
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Net revenues consist primarily of hourly connect-time and monthly user
charges for Internet access. Net revenues also include charges for one-time
Internet registration; sales of the Company's value added services; set-up and
establishment fees; and advertising revenues received from the provision of
online content. The Company's revenues are recorded net of discounts and
chargebacks. Revenues from access fees are recognized over the period services
are provided. Revenues for product sales and related Internet services are
recognized as products and services are delivered or rendered. The Company also
derives license fee revenues from license fees for licensing of the Internet
telephony service offering to network affiliates, and in respect to the time
charges for the provision of the OzEmail Phone Internet telephony service
offering in Australia. (See Note 2 of Notes to Consolidated Interim Financial
Statements (Unaudited)).
Page 17
<PAGE>
Net Revenues: Total net revenues grew by 109.5% to A$27,402,000 in the
second quarter of 1998 from A$13,077,000 in the second quarter of 1997. The
increase in revenues was attributable primarily to the inclusion of Access One
sales revenue following its acquisition in November 1997; and the inclusion of
Camtech sales revenue which was acquired on March 31, 1998. Second quarter 1998
revenues as compared to second quarter 1997 revenues on a pro forma basis,
assuming the Access One acquisition had occurred on January 1, 1997, of
A$19,785,000 increased 38.5%, attributable principally to: growth in the number
of active enterprise and residential customers using the Company's services and
increases in billable hours; and increased revenue from the usage of ISDN
connections and permanent modems. As of June 30, 1998, the Company's active
customer base consisted of approximately 202,700 active customer accounts as
compared to approximately 121,000 active customer accounts as at June 30, 1997.
Cost of Revenues - Network Operations and Support. Cost of revenues -
network operations and support includes: technical and customer support staff;
network and equipment maintenance and support; depreciation, amortization and
operating lease rental expense on network equipment; amortization of capitalized
telecommunication installation costs and applicable overhead costs. Cost of
revenues - network operations and support increased 71.9% to A$6,606,000 in the
second quarter of 1998 from A$3,842,000 in the second quarter of 1997, but
decreased as a percentage of net revenues to 24.1% from 29.4%, respectively. The
increase in cost of revenues in absolute terms was primarily attributable to:
inclusion of Access One network operations and support costs following the
Company's acquisition of Access One in November 1997; and increased staffing
costs as a result of expansion of the Company's customer support staff in order
to enhance the level of customer service. The decrease in cost of revenues -
network operations and support as a percentage of net revenues was primarily
attributable to lower network operations and support costs as a percentage of
revenues recorded by subsidiaries that have been acquired or have commenced
accruing revenue since the second quarter of 1997, particularly Access One,
which has lower technical support and customer support staffing levels than
OzEmail.
Cost of Revenues - Communications and Other. Cost of revenues -
communications and other includes: monthly telecommunications expenses; a fee
payable as a percentage of revenue to the New South Wales government for
revenues sourced from government customers; merchant commissions on credit card
sales; cost of domain name registrations; and cost of other products sold by the
Company. Cost of revenues - communications and other increased 110.4% to
A$9,686,000 in the second quarter of 1998 from A$4,604,000 in the second quarter
of 1997, and increased marginally as a percentage of net revenues to 35.3% from
35.2%, respectively. The increase in cost of revenues in absolute terms was
primarily attributable to: increased usage of the Internet by active customer
accounts; increased megabyte usage due to the adoption of higher-speed modems by
the Company's active customer accounts and increases in permanent modem
connections; and inclusion of Access One communications costs that include
dedicated leased bandwidth capacity to the United States that was in excess of
usage requirements. This bandwidth capacity was reduced in February 1998 and the
results reflect the first full quarter impact of this reduction.
Sales and Marketing. Sales and marketing expenses include: sales and
marketing personnel; promotional expenses; expenses related to the provision of
the Company's online content services; and allocable overheads. Specific
marketing costs include advertising, co-operative disk bundling with computer
hardware and modem manufacturers and retailers, computer fairs and registration
starter disks. Sales and marketing expenses increased 89.7% to A$5,716,000 in
the second quarter of 1998 from A$3,013,000 in the second quarter of 1997, but
decreased as a percentage of net revenues to 20.9% from 23.0%, respectively. The
increase in sales and marketing expenses in absolute terms was primarily
attributable to: an increase in the cost of salaries and wages related to the
hiring of additional sales staff.
Product Development. Product development expenses include: development
of the OzEmail Interline Internet telephony related products/software; research
and development costs; salaries of engineering staff; and allocable overheads.
Product development expenses decreased to A$1,737,000 in the second quarter of
1998 from A$3,423,000 in the second quarter of 1997, and decreased as a
percentage of net revenues to 6.3% from 26.2%. A one time adjustment was made
for the Metro transaction in the second quarter of 1997. Apart from such
adjustment, the decrease in product development costs was primarily attributable
to significant amounts spent on the development of OzEmail Interline
technologies in the second quarter of 1997.
General and Administrative. General and administrative expenses
include: expenses related to administrative staff; depreciation of non-network
Page 18
<PAGE>
equipment; travel expenses of management; allocable overheads; and allowance for
bad and doubtful accounts and bank charges. General and administrative expenses
increased 63.3% to A$5,718,000 in the second quarter of 1998 from A$3,502,000 in
the second quarter of 1997, and decreased as a percentage of net revenues to
20.9% from 26.8%. The increase in general and administrative expenses in
absolute terms was primarily attributable to: hiring of additional staff;
listing costs associated with completing a compliance listing on the Australian
Stock Exchange; ("ASX") and inclusion of Access One and Camtech general and
administrative expenses following their acquisitions in November 1997 and March
1998 respectively. The decrease as a percentage of net revenues is due to
amounts provided for legal contingencies in second quarter 1997, which resulted
in total general and administrative expenses comprising a higher proportion of
revenues as compared to second quarter 1998.
Amortization of Goodwill and Other Intangibles. Amortization of
goodwill and other intangibles relates to the excess of cost over estimated fair
value of net assets acquired and certain other intangibles relating to purchase
transactions. Goodwill and intangibles are amortized over periods ranging from
two to five years. Amortization of goodwill and other intangibles of A$1,359,000
was recorded in the second quarter of 1998 primarily related to the acquisition
of Access One and Camtech.
Foreign exchange gain, net. Foreign exchange gains increased to
A$321,000 in the second quarter of 1998 from A$0 in the second quarter of 1997.
The increase is a result of the conversion to Australian dollars of monies held
in US dollar bank accounts.
Interest Income (Expense), Net. Interest income decreased to A$288,000
in the second quarter of 1998 from A$552,000 in the second quarter of 1997. The
decrease was primarily attributable to a decrease in short-term Australian
interest rates and a reduction in cash balances in the second quarter of 1998 as
compared to the second quarter of 1997. Interest expense, increased to A$153,000
in the second quarter of 1998 from A$112,000, in the second quarter of 1997
primarily due to the outstanding capital leases during each respective period.
Other Income (Expense), Net. Other income of A$63,000 in 1998 related
primarily to the recognition of a deferred profit from the sale and lease-back
of assets in the year ended December 31, 1997.
Income Taxes. The Company recorded tax expense of A$362,000 in the
second quarter of 1998 compared to A$3,423,000 in the second quarter of 1997.
The reduction is due to the sale of the licence to Metro in second quarter 1997
which was taxable under Australian Taxation law.
Net loss. The net loss for the second quarter of 1998 decreased to
A$3,263,000 from A$8,290,000 in the second quarter of 1997. This represents a
decrease of $5,027,000 over the 1997 quarter attributable primarily to a
reduction in income tax expense due to the sale of the licence to Metro in
second quarter 1997 which was taxable under Australian Taxation law in the
second quarter of 1997. Net loss before provision for income taxes on a
pro-forma basis (assuming the Access One acquisition had occurred on January 1,
1997) decreased 61% from A$7,438,000 for the three months ended June 30, 1997 to
A$ 3,420,000 for the three months ended June 30, 1998. This is primarily
attributable to considerable savings in communication costs and greater
economies of scale in the network and operations support area.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Net Revenues: Total net revenues grew by 107.5% to A$49,434,000 in the
first half of 1998 from A$23,829,000 in the first half of 1997. The increase in
revenues was attributable primarily to the inclusion of Access One sales revenue
following its acquisition in November 1997; and the inclusion of Camtech sales
revenue; which was acquired on March 31, 1998. Revenues for the six months to
June 30, 1998 as compared to the six months to June 30, 1997 revenues on a pro
forma basis, assuming the Access One acquisition had occurred on January 1,
1997, of A$35,846,000 increased 38.0%, attributable principally to: growth in
the number of active enterprise and residential customers using the Company's
services and increases in billable hours; and increased revenue from the usage
of ISDN connections and permanent modems. As of June 30, 1998, the Company's
active customer base consisted of approximately 202,700 active customer accounts
as compared to approximately 121,000 active customer accounts as at June 30,
1997.
Cost of Revenues - Network Operations and Support. Cost of revenues -
network operations and support increased 78.9% to A$12,540,000 in the six months
to June 30, 1998 from A$7,008,000 in the six months to June 30, 1997, but
decreased as a percentage of net revenues to 25.4% from 29.4%, respectively. The
increase in cost of revenues in absolute terms was primarily attributable to:
inclusion of Access One network operations and support costs following the
Company's acquisition of Access One in November 1997; and increased staffing
costs as a result of expansion of the Company's customer support staff in order
Page 19
<PAGE>
to enhance the level of customer service. The decrease in cost of revenues -
network operations and support as a percentage of net revenues was primarily
attributable to lower network operations and support costs as a percentage of
revenues recorded by subsidiaries that have been acquired or have commenced
accruing revenue since June 30, 1997, particularly Access One, which has lower
technical support and customer support staffing levels than OzEmail.
Cost of Revenues - Communications and Other. Cost of revenues -
communications and other increased 139.2% to A$19,252,000 in the six months to
June 30, 1998 from A$8,050,000 in the six months to June 30, 1997, and increased
as a percentage of net revenues to 38.9% from 33.8%, respectively. The increase
in cost of revenues in absolute terms was primarily attributable to: increased
usage of the Internet by active customer accounts; increased megabyte usage due
to the adoption of higher-speed modems by the Company's active customer accounts
and increases in permanent modem connections; and inclusion of Access One
communications costs that include dedicated leased bandwidth capacity to the
United States that was in excess of usage requirements. This bandwidth capacity
was reduced in February 1998. The increase in cost of revenues - communications
and other as a percentage of net revenues was primarily attributable to: higher
Access One communications cost structure because of excess bandwidth capacity to
the United States to February 1998.
Sales and Marketing. Sales and marketing expenses increased 81.4% to
A$10,473,000 in the six months to June 30, 1998 from A$5,772,000 in the six
months to June 30, 1997, but decreased as a percentage of net revenues to 21.2%
from 24.2%, respectively. The increase in sales and marketing expenses in
absolute terms was primarily attributable to: an increase in the cost of
salaries and wages related to the hiring of additional sales staff.
Product Development. Product development expenses decreased to
A$3,253,000 in the six months to June 30, 1998 from A$5,095,000 in the six
months to June 30, 1997, and decreased as a percentage of net revenues to 6.6%
from 21.4%, respectively. A one time adjustment was made for the Metro
transaction in the second quarter of 1997. Apart from such adjustment, the
decrease in product development costs was primarily attributable to significant
amounts spent on the development of OzEmail Interline technologies in the second
quarter of 1997.
General and Administrative. General and administrative expenses
increased 101.8% to A$9,977,000 in the six months to June 30, 1998 from
A$4,944,000 in the six months to June 30, 1997, and decreased marginally as a
percentage of net revenues to 20.2% from 20.7%, respectively. The increase in
general and administrative expenses in absolute terms was primarily attributable
to: hiring of additional staff; listing costs associated with completing a
compliance listing on the Australian Stock Exchange; ("ASX") and inclusion of
Access One and Camtech general and administrative expenses following their
acquisitions in November 1997 and March 1998 respectively.
Amortization of Goodwill and Other Intangibles. Amortization of
goodwill and other intangibles of A$2,490,000 was recorded in the six months to
June 30, 1998 primarily related to the acquisition of Access One and the
internet business of Camtech.
Foreign exchange gain, net. Foreign exchange gains increased to
A$235,000 in the six months to June 30, 1998 from A$4,000 in the six months to
June 30, 1998. The increase is a result of the conversion to Australian dollars
of monies held in US dollar bank accounts.
Interest Income (Expense), Net. Interest income decreased to A$786,000
in the six months to June 30, 1998 from A$1,107,000 in the six months to June
30, 1997. The decrease was primarily attributable to a decrease in short-term
Australian interest rates and a reduction in cash balances in the first half of
1998 as compared to the first half of 1997. Interest expense, increased to
A$329,000 in the first half of 1998 from A$123,000, in the first half of 1997
primarily related to the outstanding capital leases during each respective
period.
Other Income (Expense), Net. Other income decreased to A$225,000 in the
six months to June 30, 1998 from A$941,000 in the six months to June 30, 1997 as
the previous period included a profit of A$775,000 from the sale of the
Company's Web Wide Media business.
Income Taxes. The Company recorded a tax benefit of A$101,000 in the
six months to June 30, 1998 compared to tax expense of A$3,495,000 in the six
months to June 30, 1997. The reduction is primarily due to the sale of the
licence to Metro in the second quarter of 1997 which was taxable under
Australian Taxation law.
Page 20
<PAGE>
Net loss. Net loss decreased to A$7,533,000 in the six months to June
30, 1998 from A$8,606,000 in the six months to June 30, 1997. Net loss before
provision for income taxes on a pro-forma basis (assuming the Access One
acquisition had occurred on January 1, 1997) decreased 24.5% from A$10,112,000
for the six months ended June 30, 1997 to A$ 8,551,000 for the six months ended
June 30, 1998. This is primarily attributable to the Company creating
efficiencies from the acquisition through the elimination of duplicated
infrastructure and the rationalization of excess bandwidth capacity used for
transmission of data from the United States commencing in the second quarter of
1998.
Page 21
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations to date through
cash flow from operations, shareholder loans, capital leases and the issuance of
equity securities. During the six-month period ended June 30, 1998, the
Company's Internet access business partially funded the continued development of
OzEmail Interline and the on-going rationalization of the operations of Access
One and OzEmail.
Net cash flows used in operating activities in the six months to June
30, 1998 totaled A$14,275,000 as compared to net cash flows used in operating
activities of A$1,483,000 in the six months to June 30, 1997. The increase in
net cash flows used in operating activities in the first half of 1998 as
compared to the first half of 1997 is primarily attributable to: tax payments of
A$6,012,000 relating to the tax year ended December 31, 1997; and A$10,000,000
utilized to reduce an accrual for communications costs
Net cash flows used in investing activities in the six months to June
30, 1998 totaled A$16,392,000 as compared to net cash flows used in investing
activities of A$8,418,000 in the six months to June 30, 1997. The increase in
net cash flows used in investing activities in the six months to June 30, 1998
as compared to the six months to June 30, 1997 is primarily attributable to a
deposit of A$3,558,000 in connection with the purchase of IRU bandwidth capacity
in the Southern Cross Cable and A$6,085,000 of investments in restricted term
deposits related to infrastructure acquisitions. This has been offset to some
extent by lower acquisition amounts outlaid on capital equipment as the
Company's network was expanded considerably in the prior year; and the absence
of a distribution to minority shareholders in the six months ended June 30, 1998
compared to the same period in 1997. As described in Note 6 to the Interim
Financial Statements, the Company has open commitments of approximately
US$10,080,000 and US$7,172,000 associated with obtaining capacity in the
Southern Cross Cable and a trans-Pacific satellite link, respectively.
Net cash flows used in financing activities totaled A$4,951,000 in the
six months to June 30, 1998, as compared to net cash flows provided by financing
activities of A$4,140,000 in the six months to June 30, 1997. The increase in
net cash flows used in financing activities in the six months to June 30, 1998
was primarily attributable to the payment of dividends; and payments and
restricted term deposits entered into under capital lease obligations; offset by
proceeds received from the exercise of options by a director of the Company.
Proceeds from a sale and leaseback transaction totaling A$5,000,000 were
received in the six months ended June 30, 1997. No such transaction was entered
into in the year to date period of 1998.
The Company believes that its cash and cash equivalents of A$15,984,000
as at June 30, 1998 will be sufficient to meet its presently anticipated working
capital requirements. However, in a press release issued on August 10, 1998,
filed with the SEC on a separate Form 6K, the Company announced a planned
offering of public debt and equity to raise US$250 million in capital for
infrastructure to be deployed for the purpose of acquiring or building
communications infrastructure including significant dedicated capacity in the
Southern Cross Trans Pacific Cable, and long distance, inter- and intra-city,
fibre optic cable. In the future, the Company may also seek to expand its
operations by making acquisitions or entering into joint ventures or licensing
agreements in domestic or international markets, which may require additional
capital. Entrance into certain countries or markets could require a significant
commitment of resources, which could in turn require the Company to obtain
additional financing earlier than otherwise expected. There can be no assurance
that the Company will be able to successfully raise US$250 million through its
planned offering of public debt and equity or obtain additional financing in a
timely fashion, and limitations imposed on the foreign ownership of stock under
the Australian Foreign Takeovers and Acquisitions Act could frustrate such
efforts. The Company may from time to time consider the acquisition of
complementary businesses, products or technologies which may require additional
financing, although it has no present legal commitments or agreements, with
respect to any such transaction.
Page 22
<PAGE>
OTHER
Under Australian law, foreign persons are prohibited from acquiring
more than a limited percentage of the shares in an Australian company without
approval from the Australian Treasurer, or in certain other limited
circumstances. These limitations are set out in the Australian Foreign Takeovers
and Acquisitions Act. At this time, any foreign person, together with
associates, is prohibited from acquiring 15% or more of the outstanding shares
in the Company, and the total holdings of all foreign persons must be less than
40% in the aggregate unless approval is granted by the Australian Treasurer.
Such investment restrictions could have a material adverse effect on the
Company's ability to raise capital as needed and could make difficult or render
impossible attempts by foreign entities to acquire the Company, including
attempts that might result in a premium over market prices to holders of the
Company's American Depositary Shares.
YEAR 2000 COMPLIANCE
The Company has established a Year 2000 Project Task Force to review
all the Company's services with a view to ensuring they remain operational
before, during and after the transition to the year 2000. In addition, the
Company has retained an external consultant to undertake a complete year 2000
business risk analysis of the Company. The Company is assessing the internal
readiness of its existing computer systems to handle the advent of the year
2000. The Company expects to implement any systems and programming changes
necessary to address the year 2000 issues. Most of the Company's technology and
systems are relatively new, and often were designed with regard for year 2000
concerns. In addition, the Company is engaged in a review of its major suppliers
to assess the extent of their preparations for the year 2000. However, there can
be no assurance that the systems operated by third parties that interface with
the Company's systems will achieve year 2000 compliance in a timely manner. Upon
completion of the external consultant's findings, the Company will finalize a
budget for year 2000 compliance procedures. Currently the Company estimates that
total direct year 2000 project management costs will not exceed A$500,000. It is
expected that the external consultant will finalize its analysis by the end of
the third quarter 1998. The Company does not anticipate any additional
significant expenses to be incurred with respect to its year 2000 compliance
program.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income" (SFAS 130), and SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information" (SFAS 131). The Company
will be required to adopt both statements for the year ended December 31, 1998.
Under SFAS No. 130, companies are required to report in the financial
statements, in addition to net income, comprehensive income including, as
applicable, foreign currency items, minimum pension liability adjustments and
unrealized gains and losses on certain investments in debt and equity
securities. The Company has adopted SFAS 130 for the purposes of these financial
statements in this Form 6-K. Such adoption did not have a material impact.
Currently, net income and comprehensive income of the Company is not materially
different. SFAS No. 131 requires that companies report separately, in the
financial statements, certain financial and descriptive information about
operating segments, if applicable. The Company is currently assessing its
disclosure requirements under SFAS No. 131.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". This Statement of Position
(SOP) provides guidance on accounting for the costs of computer software
developed or obtained for internal use and requires that computer software costs
that are incurred in the preliminary project stage, as defined by the standard,
should be expensed as incurred. Once the capitalization criteria of the SOP have
been met, external direct costs of materials and services consumed in developing
or obtaining internal-use computer software; payroll and payroll-related costs
for employees who are directly associated with and who devote time to the
internal-use computer software project (to the extent of the time spent directly
on the project) and certain other costs incurred when developing computer
software for internal use should be capitalized. The standard is effective for
fiscal years beginning after December 15, 1997. The Company has adopted this
standard in the first quarter of 1998 the impact of which was not material.
Page 23
<PAGE>
On June 15, 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1,
2000 for the Company). SFAS 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. From time to time the
Company has, and may in the future, enter into foreign currency contracts solely
for hedging purposes. As of December 31, 1997 and June 30, 1998 there were no
outstanding derivative instruments. As the Company's hedging activities are
currently limited, management anticipates that the adoption of SFAS 133 will not
have a significant effect on the Company's results of operations or its
financial position.
Page 24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
OZEMAIL LIMITED
/s/ Ian McGregor
---------------------------------------
Date: August 14, 1998 Ian McGregor
Chief Financial Officer
Page 25
<PAGE>
APPENDIX D
----------
----------------------------------
N E W S R E L E A S E
----------------------------------
[LOGO] OZEMAIL ANNOUNCES FURTHER INFRASTRUCTURE INVESTMENT
- --------
OZEMAIL CONFIRMS PURCHASE OF POWERUP PTY LIMITED
INTERNET
- --------
FOR MORE INFORMATION CONTACT:
Michael Ward - Sydney, Australia - (+612) 9433 2498
Todd Friedman - San Francisco, United States - (415) 439 4514
SYDNEY, AUSTRALIA, SEPTEMBER 14, 1998 - OzEmail Limited ("the Company", Nasdaq:
OZEMY, ASX; OZM), the leading provider of comprehensive Internet services in
Australasia, announced an additional investment in the Southern Cross Cable
Consortium to acquire fibre capacity between the United States, New Zealand and
Australia.
Trans-Pacific capacity is a major cost for Internet service providers in
Australia with most paying at least 16 cents per megabyte for their
international traffic. "The acquisition of this additional capacity we are
announcing today is in order to meet our projections for significant growth in
the Australian market over the next decade," said Sean Howard, Chief Executive
Officer of OzEmail.
The Southern Cross Cable agreement provides for capacity of 3.5 T3s (approx
150Mbps) in the first four years following the ready-for-service date, growing
to 10.5 T3s (approx 450Mbps) thereafter. Southern Cross ("SC"), a wholly-owned
New Zealand subsidiary of Southern Cross Bermuda, is entering into agreements
for the supply of a cable link between Australia and the United States via New
Zealand. SC is a consortium of telecommunications companies including Worldcom,
Optus and Telecom NZ.
This announcement is additional to last April's agreement to acquire 45Mbps of
capacity and the pre-payment of US$2.217m. The Company will make an additional
payment of US$3.78m prior to 28 February 1999 as part of the new agreement, and
at the ready-for-service date, anticipated to be during the year 2000, will make
a one-off payment of US$35.3m covering the use of the cable for a period of 15
years.
"This represents a commitment to the future growth of our business and the
Internet in Australia, said Mr. Howard. "One of our business' greatest assets
will be our ability to manage rapid growth and to guarantee supply to our
customers: Southern Cross Cable allows us to plan with confidence."
The Company today also advised of the completion of the purchase of 55% of the
issued capital of Powerup Pty Ltd, the leading Queensland ISP with 19,200 active
subscribers, announced on May 13 this year. The purchase consideration was
378,790 ordinary shares and cash of A$666,666. The business also includes the
web-hosting service Web Central, which currently houses over 33000 corporate
sites.
OzEmail Limited (ACN 066 387 157), Level I, 39 Herbert Street,
St. Leonards NSW 2065, Australia
<PAGE>
APPENDIX E
----------
----------------------------------
N E W S R E L E A S E
----------------------------------
[LOGO] OZEMAIL REPORTS THIRD QUARTER RESULTS
- --------
OZEMAIL
INTERNET
- --------
FOR MORE INFORMATION CONTACT:
Sean Howard Michael Ward - Sydney, Australia - (+612) 9433 2400
Todd Friedman - Sean Francisco - (415) 296-7383
Sydney, Australia, November 5, 1998. OzEmail Limited (Nasdaq: OZEMY), the
leading provider of comprehensive internet services in Australasia, today
released its results for the third quarter ended September 30, 1998.
Revenues for the third quarter of 1998 were A$28,210 000 (US$17,400,000), an
increase of 98.3% over 1997 third quarter revenues of A$14,728,000
(US$10,520,000). The record revenues in the quarter, representing the 15th
straight quarter of sequential revenue growth, were primarily attributable to
increased dial-Up and permanent connection from OzEmail's Australian Internet
connectivity business and the acquisition of Access One, Carntech and PowerUp
Internet services over the last year. The operating loss for the quarter of
A$3,517,000, compared to an operating loss of A$805,000 in the 1997 third
quarter, was primarily due to costs associated with the further development of
the Company's interline internet telephony business and expenses related to the
acquisition of Access One. The net loss for the quarter was A$3,677,000, or
A$0.30 per American Depositary Share ("ADS") (US$2,190,000 or US$0.178 per ADS)
compared to a net loss for the third quarter of 1997 of A$398,000 or A$0.04 per
ADS (US$284,000 or US$0.03 per ADS).
"We continue to lead the Australian market in subscribers, services and
innovation, "said Sean Howard, Chief Executive Officer of OzEmail. Our market
has seen dramatic change in the past year with the effects of deregulation of
the telecommunications industry being felt and the entry of new players into our
market. Through it all, we have maintained our position as number one in the
minds of Australians as they log onto the Internet each day."
For the nine months ended September 30, 1998, total net revenues grew by 103% to
A$78,644,000 from A$38,557,000 in the nine months ended September 30, 1997. The
net loss for the nine months to September 30, 1998 was A$11,210,000 compared
with a net loss of A$8,003,000 in the comparable 1997 period.
Operating highlights from the third quarter of 1998 include:
* The Company's active customer base increased 95% over the 1997 third
quarter to approximately 247,700.
OzEmail Limited (ACN 066 387 157), OzEmail House, 39 Herbert Street,
St Leonards NSW 2065, Australia
Telephone: (+612)9433 2400 Facsimile: (+612)9906 4155
<PAGE>
News Release November 6, 1998
OzEmail Reports Third Quarter 1998 Results
- --------------------------------------------------------------------------------
* Positive earnings before interest, taxation, depreciation and amortization
(EBITDA) of A$1,208,000 in the third quarter resulting in a year to date
EBITDA of A$2,430,000.
* The number of affiliates in the interline VoIP consortium reached 15 and
new operations started in the following countries: France. The United
Kingdom, Ireland and Norway. In September the Interline network managed
1.9 million minutes of internet voice traffic.
* OzEmail signed an additional infrastructure contract with Southeren Cross
Cable Consortium to assist in lowering communications costs into the next
century.
* The Company continued the rationalization of its infrastructure
contributing to lower communications costs per subscriber.
"During the quarter, OzEmail continued to aggressively defend its market share,"
said Mr. Howard. "Our flat rate pricing plan has opened the door to the
internet for new users across the country and it remains the only national flat
rate pricing plan on offer. The agreements we signed to acquire dedicated cable
capacity linking Australia, New Zealand and the United States will significantly
reduce our Internet traffic costs once the cable is available for service,
currently scheduled for late next year."
OzEmail's Internet telephony business - Interline - today announced that it has
added Teltran as an affiliate in New York. Interline also announced it signed a
multi-year refile agreement with Teltran and established a new refile hub in Los
Angeles, California with two new refile providers, Pacific Gateway Exchange Inc.
(Nasdaq: PGEX) and Telecom New Zealand (TNZ).
Mr. Jean-Baptiste Rousselot, Chief Executive Officer of Interline, commented,
"We have been expanding our affiliate consortium which now includes 15 members
around the world. While our development efforts continue in full swing, we are
looking forward to working with our partners as they begin delivering full
international internet long distance service in the coming quarters."
Other highlights in the quarter included:
* The release of MyMail, a web-based email service available from anywhere on
the Internet;
* The release of SouthernX - an Australian and New Zealand email address
directory;
* Chaos Music Market, an on-line music service supported by OzEmail,
announced an additional 230,000 titles from all major catalogue would be
available online, enabling secure preview and purchase of music from around
the world;
* Itravel, a Web-based travel service, which enables internet users to
research, plan, book and pay for all their travel arrangements online was
launched in August; and
* Apple Computer Australia chose the Company as the only pre-installed
Internet service provider for the Australia release of IMac.
OzEmail Limited (ACN 066 387 157), OzEmail House, 39 Herbert Street,
St Leonards NSW 2065, Australia
Telephone: (+612)9433 2400 Facsimile: (+612)9906 4155
<PAGE>
News Release November 6, 1998
OzEmail Reports Third Quarter 1998 Results
- --------------------------------------------------------------------------------
In this news release, references to "US$" are to United States dollars and
references to "A$" are to Australian dollars. Amounts for quarterly results and
full year results are translated into US$ for convenience at the exchange rate
prevailing at the end of each quarter and at the end of each full year,
respectively. The exchange rates between the U.S. dollar and the Australian
dollar were $0.7143, $06500 and $0.5957 (expressed in U.S. dollar/Australian
dollars) at September 30, 1997. December 31, 1997 and September 30, 1998,
respectively.
ABOUT OZEMAIL
OzEmail is the leading provider of comprehensive internet services in Australia.
The Company's Internet services are designed to meet the different needs of its
residential and enterprise customers ranging from low cost dial up to high
performance, continuous access services integrating the Company's ISDN offering
and consulting expertise. OzEmail's Internet telephony business - Interline -
is a partnership between OzEmail Ltd. (88%) and Ideata Pty Ltd (12%), an
Australian manufacturer of telecommunications equipment. Interline has
developed and is operating technology that allows the placement, routing and
billing of high quality voice services over the internet, using existing tone
dial phones.
Certain statements made herein that are not historical are forward-looking
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements may differ materially from actual future events or results.
The future performance of the Company involves risks and uncertainties that
could cause actual results to differ markedly from those anticipated by such
forward-looking statements. Such risks include but are not limited to the
following: a limited operating history for the Company; potential fluctuations
in operating results; competition; pricing pressure; dependence on third-party
suppliers of hardware and software; shortage of modems; dependence on
telecommunications carriers; management of limited market; a need for and risks
of international expansion; the existence of a new and uncertain market;
customer retention issues; rapid technological change; security risks; the risk
of system failure; formal licensing and joint marketing agreements; patents and
proprietary rights; infringement claims; changes in government regulation; risks
associated with providing content including potential liability; dependence on
key personnel and need to hire additional qualified personnel; uncertainty of
currency exchange rates; need for additional capital; enforceability of civil
liabilities; antitakeover impact of Australian foreign investment restrictions;
control of the Company by the Board of Directors; and possible volatility of ADS
price. For a more complete description of certain of such risks and
uncertainties, we refer you to the documents that the Company has filed from
time to time with the Securities and Exchange Commission ("SEC") including its
registration statements on Form F-1 dated August 25, 1998 and May 28, 1998, its
1997 Form 10-K dated May 15, 1998, Form 10-K dated March 31, 1997, its quarterly
reports on Form 6-K dated August 14, 1998, and May 15, 1998, its Amendment No. 1
to Form 10-Q for the period to September 30, 1997, dated May 21, 1998. Its
Amendment No. 1 to Form 10-Q for the period to June 30, 1997, dated May 21,
1998, and its Form 10-Qs dated August 13, 1996, November 14, 1998, and May 8,
1997.
OzEmail Limited (ACN 066 387 157), OzEmail House, 39 Herbert Street,
St Leonards NSW 2065, Australia
Telephone: (+612)9433 2400 Facsimile: (+612)9906 4155
<PAGE>
News Release November 6, 1998
OzEmail Reports Third Quarter 1998 Results
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
ASSETS 1997 1998
------------ -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents A$ 51,614 A$ 14,732
Restricted term deposits - 2,797
Accounts receivable - trade, net of allowances of A$889
and A$3,524, respectively 8,427 15,653
Other receivables 2,363 21
Current investments - 305
Income tax receivable - 1,679
Other current assets 2,520 1,884
---------- -----------
Total current assets 64,924 37,071
Plant and equipment, net 27,179 31,255
Non-current investments 1,559 535
Goodwill and other intangibles 19,839 23,484
Non-current restricted term deposits - 4,230
Net deferred tax assets 285 1,717
Other non-current assets - 3,559
---------- -----------
Total assets A$113,786 A$101,851
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable A$ 19,936 A$ 22,010
Deferred consideration 4,407 -
Current portion of financing - lease liability 3,836 4,393
Short term loan - due to Metro 2,043 -
Accrued expenses and other liabilities 7,513 6,674
Deposits under agreements with Metro 18,686 -
Income taxes payable 3,776 -
---------- -----------
Total current liabilities 60,197 33,077
Non-current portion of financing - lease liability 4,423 2,198
---------- -----------
Total liabilities 64,620 33,275
---------- -----------
Minority equity interest - 808
Commitments and contingencies (Note 9) - -
</TABLE>
OzEmail Limited (ACN 066 387 157), Ground Flr, Building B, 39 Herbert Street,
St Leonards NSW 2065, Australia
Telephone: (+612)9433 2400 Facsimile: (+612)9906 4155
<PAGE>
News Release November 6, 1998
OzEmail Reports Third Quarter 1998 Results
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET (continued)
(In thousands, except per share data)
(Unaudited)
December 31, September 30,
1997 1998
----------- ------------
Shareholders' equity:
Ordinary Shares, 1,250,000,000 shares authorized;
111,000,010 and 124,819,500 shares issued and
outstanding, respectively 444 499
Additional paid-in capital 64,636 95,257
Accumulated deficit (15,916) (27,126)
Dividends - (2,858)
Other comprehensive income (loss), net 2 (4)
----------- ------------
Total shareholders' equity 49,166 65,768
----------- ------------
Total liabilities and shareholders' equity A$113,786 A$101,851
=========== ============
OzEmail Limited (ACN 066 387 157), Ground Flr, Building B, 39 Herbert Street,
St Leonards NSW 2065, Australia
Telephone: (+612)9433 2400 Facsimile: (+612)9906 4155
<PAGE>
News Release November 6, 1998
OzEmail Reports Third Quarter 1998 Results
- --------------------------------------------------------------------------------
OZEMAIL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1998 1997 1998
------------ ------------ -------------- --------------
<S> <C> <C> <C> <C>
Net revenues A$14,728 A$29,210 A$38,557 A$78,644
Costs and expenses:
Cost of revenues - network operations and
support 3,967 7,350 10,976 19,890
Cost of revenues - communications and
other 4,440 11,363 12,490 30,615
Sales and marketing 3,845 5,959 9,617 16,432
Product development 1,852 1,875 6,945 5,128
General and administrative 1,429 4,898 6,373 14,875
Amortization of goodwill and other
intangibles - 1,282 - 3,772
------------ ------------ -------------- --------------
Total costs and expenses 15,533 32,727 46,401 90,712
------------ ------------ -------------- --------------
Loss from operations (805) (3,517) (7,844) (12,068)
Other income (expense):
Foreign exchange gain (loss), net (116) 62 (112) 297
Interest income 859 239 2,354 1,025
Other income (expense), net 59 (508) 12 (283)
Interest expense (96) (135) (219) (464)
------------ ------------ -------------- --------------
Loss before provision for income taxes
and minority equity interest (99) (3,859) (5,209) (11,493)
Income tax (expense) benefit (299) 169 (3,794) 270
Minority equity interest - 13 - 13
------------ ------------ -------------- --------------
Net loss A$(398) A$(3,677) A$(9,003) A$(11,210)
============ ============ ============== ==============
Basic loss per ordinary share A$(0.004) A$(0.030) A$(0.087) A$(0.093)
============ ============ ============== ==============
Diluted loss per ordinary share A$(0.004) A$(0.030) A$(0.087) A$(0.093)
============ ============ ============== ==============
Weighted average ordinary shares and
share equivalents
- - Basic 103,663 124,509 103,555 120,497
============ ============ ============== ==============
- - Diluted 103,663 124,509 103,555 120,497
============ ============ ============== ==============
Basic loss per ADS A$(0.042) A$(0.295) A$(0.870) A$(0.930)
============ ============ ============== ==============
Diluted loss per ADS A$(0.042) A$(0.295) A$(0.870) A$(0.930)
Basic loss per ADS US$(0.030) US$(0.176) US$(0.593) US$(0.554)
============ ============ ============== ==============
Diluted loss per ADS US$(0.030) US$(0.176) US$(0.593) US$(0.554)
</TABLE>
OzEmail Limited (ACN 066 387 157), Ground Flr, Building B, 39 Herbert Street,
St Leonards NSW 2065, Australia
Telephone: (+612)9433 2400 Facsimile: (+612)9906 4155
<PAGE>
APPENDIX F
EXEMPTIONS FROM AND MODIFICATIONS TO THE CORPORATIONS LAW
GRANTED BY THE ASIC
(Section 15.3)
<PAGE>
Australian Securities & Investments Commission
Corporations Law - Section 730 - Declaration
Pursuant to section 730(1) of the Corporations Law ("Law"), the Australian
Securities and Investments Commission ("Commission") declares that Chapter 6 of
the Law applies to the person named in Schedule A in the case referred to in
Schedule B as if:
1. Section 603 were modified by:
(a) inserting the following definitions:
"additional shares", in relation to a takeover scheme, means shares:
(a) issued during the takeover period;
(b) which, on issue are of the same class as the shares to which the
takeover scheme relates; and
(c) specified in the Part A statement as being shares to which the
takeover scheme relates.
"convert" includes exercise;
"convertible securities", in relation to a company, comprise:
(a) securities to which are attached rights granted by the company to
be allotted shares in the company; and
(b) any other rights granted by the company (whether or not
securities as defined in section 92) to subscribe for shares in
the company,"; and
(b) adding the following words to the end of paragraph (c) of the
definition of "prescribed occurrence":
"(other than an allotment of additional shares by the target company
pursuant to the conversion or convertible securities issued before the
date of the offers)".
2. section 634 were modified by:
(a) inserting "(l)" at the beginning of the section:
(b) inserting the following subsection after subsection (1):
"(2) So far as practicable apply this Division and Division 2 to a takeover
scheme as if:
(a) additional shares form part of the relevant class; and
(b) holders of convertible securities were holders of the additional
shares which may be issued on conversion of those convertible
securities."
3. section 636 were modified by inserting the following word and paragraph
<PAGE>
after paragraph 636(1)(b):
"; and
(c) any differences in the manner or time prescribed for acceptance of the
offers attributable only to the fact that at the time the offers for
shares in the relevant class were first made, or at any time during
the offer period, the offeree held an additional share or a
convertible security.";
4. subsection 636(2) were modified by inserting after the words "relevant
class" the words:
"and to each holder of convertible securities who does not hold other
shares in the relevant class.";
5. Subsection 638(4) were modified by inserting the following paragraphs after
paragraph (b):
"(c) the maximum number of shares which may become part of the relevant
class; and
(d) the maximum number of shares in the relevant class to which the
offeror may become entitled upon exercise of convertible securities
held by the offeror or its associates.";
6. section 639 were modified by adding the following subsections at the end of
the section:
"(3) The offeror must, not later than two business days after becoming
aware of the name and address of a person to whom additional shares
are issued during the offer period and to whom an offer has not
already been sent, send in an approved manner to that person
(a) an offer dated the same day as offers already sent under the
takeover scheme;
(b) a copy of each document or notice which has been published or
given under Divisions 3, 5, or 6 of this Part during the offer
period: and
(c) a covering letter explaining the effect of those documents and
notices.
(4) Subsections 637(1), 638(2) and 646(1) do not apply to an offer sent
under this section.";
7. subparagraph 647(1)(b)(ii) were modified to read:
"give a copy of that statement to each person:
(A) registered at the date of the Part B Statement as the holder of shares
to which the Part A statement relates; and
(B) to whom an offer to which that Part A statement relates was made.";
8. section 647 were modified by inserting the following subsection after
subsection (1):
"(1A)The offeror must, within 2 business days of the target giving a Part B
statement in accordance with subparagraphs (1)(b)(i) and (ii), give a
copy of the Part B statement to each person to whom an offer was made
under the takeover scheme only because the person was the holder of
convertible securities and to whom the target company has not sent a
copy of the Part B statement.";
9. subsection 662(4) were modified to read as follows:
"(4) The number of shares specified in accordance with subsection (3) may
be expressed as a number of shares, or as a percentage of the total
number of shares which are at the end of the offer period included in
that class to which the offer relates.";
10. paragraph 701(1)(a) were modified to read as follows:
"where takeover offers have been made under a full takeover scheme in
respect of shares in a class of shares (including additional shares), the
shares in respect of which the offers were made (including the additional
shares) are shares subject to acquisition. Shares to which the offeror was
entitled when the first of the offers was made and additional shares to
which the offeror became entitled upon their issue, however, are not shares
subject to acquisition;"
11. paragraph 701(2)(a) were modified by inserting after the words "class of
shares" the following words:
", including additional shares,";
12. clause 11 in Part A in section 750 were modified by inserting after the
words "offers relate" the following:
"(including any shares referred to in paragraph 638(4)(c))".
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684
Schedule B
This modification applies to the takeover scheme by the person named in Schedule
A for fully paid ordinary shares and American Depositary Shares representing
fully paid ordinary shares in the company named in Schedule C in respect of
which a Part A statement is registered by the Commission at or about the date of
this instrument.
It does not apply if the offers made under the scheme are subject to a defeating
condition which would operate if the target company issued additional shares (as
defined above) during the offer period.
Schedule C
OzEmail Limited ACN 066 387 157
Dated 22 December 1998.
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
<PAGE>
Australian Securities & Investments Commission
Corporations Law - Section 728 - Exemption
Pursuant to section 728 of the Corporations Law ("Law") the Australian
Securities and Investments Commission ("Commission") exempts the person named in
Schedule A ("applicant") from compliance with the section or sections listed in
Schedule B in the case referred to in Schedule C to the extent that the section
or sections require the document to be signed by a director of the applicant on
condition that:
(a) the document is signed by an agent of the director, authorised in writing,
in his or her place; and
(b) an original or verified copy authorization is lodged with the Commission
with the signed document referred to in paragraph (a).
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684
Schedule B
s637(1)(a) - Part A Statement
s657(1)(a) - Notice of Variation
s657(2)(a) - Notice of Variation - offer period to exceed 6 months
Schedule C
The takeover scheme by UUNET Holdings Australia Pty Limited ACN 085 531 684 in
relation to fully paid ordinary shares and American Depositary Shares
representing fully paid ordinary shares in OzEmail Limited ACN 066 387 157 in
respect of which a Part A statement is registered by the Commission on or about
the date of this instrument.
Dated 22 December 1998.
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
<PAGE>
Australian Securities & Investments Commission
Corporations Law - Section 728 - Exemption
Pursuant to section 728 of the Corporations Law ("Law"), the Australian
Securities and Investments Commission ("Commission") hereby exempts the person
named in Schedule A (offeror) from compliance with sections 654(1) and 656(1) of
the Law in the case referred to in Schedule B so that each of the takeover
offers referred to in Schedule B may, subject to the conditions listed in
Schedule C (conditions), be varied by extending the period of the offer at any
time before the end of the offer period without the offer at the time of the
extension being free of defeating conditions.
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684
Schedule B
A takeover scheme by the offeror in relation to fully paid ordinary shares and
American Depositary Shares representing fully paid ordinary shares in OzEmail
Limited ACN 066 387 157 in respect of which a Part A statement was registered by
the Commission on or about the date of this instrument.
Schedule C
1. The offeror must no later than 5pm (Sydney time) on the day on which the
offer period would, but for the extension, have ended:
(a) make an announcement of the declaration to the Australian Stock
Exchange Limited, Company Announcements Platform; and
(b) issue a press release via generally accepted media channels of the
declaration.
2. The offeror must also comply with the requirements of section 657 of the
Law in respect of the proposed variation.
3. The proposed extension must, if it is effected less than 7 days before the
day which would have been the last day of the offer period but for such
extension, not be for a period less than 5 business days.
Dated 22 December 1998.
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
<PAGE>
Australian Securities & Investments Commission
Corporations Law - Section 730 - Declaration
Pursuant to section 730(1) of the Corporations Law ("Law"), the Australian
Securities and Investments Commission ("Commission") hereby declares that
Chapter 6 of the Law applies in relation to the person named in Schedule A
("offeror") in the case referred to in Schedule B as if sub-paragraph 637(1)(b)
was modified or varied by inserting after the words "particulars referred to in
subsection 638(4)" the words `or any other date or information required to be
contained in the offer under the Securities Exchange Act of 1934 (USA) which is
unknown as at the date of the Part A statement".
Schedule A
UUNET Holdings Australia Pty Limited (ACN 085 531 684)
Schedule B
A takeover scheme by the offeror in relation to fully paid ordinary shares and
American Depositary Shares representing fully paid ordinary shares in OzEmail
Limited (ACN 066 387 157) in respect of which a Part A statement was registered
by the Commission on or about the date of this instrument.
Dated 22 December 1998.
.......................................................
Signed by Neil Johnson
as a delegate of the Australian Securities and Investments Commission
<PAGE>
Australian Securities and Investments Commission
Corporations Law - Section 728 Exemption
Pursuant to section 728 of the Corporations Law ("Law"), the Australian
Securities and Investments Commission (Commission) hereby exempts the person
named in Schedule A (offeror) from compliance with section 663(2) of the Law in
the case referred to in Schedule B, subject to the conditions in Schedule C to
permit the offers referred to in Schedule B to be declared free from a defeating
condition at any time before the end of the offer period.
Schedule A
UUNET Holdings Australia Pty Limited (ACN 085 531 684)
Schedule B
A takeover scheme or any contracts resulting from the acceptance of takeover
scheme offers by the offeror in relation to fully paid ordinary shares and
American Depositary Shares representing fully paid ordinary shares in OzEmail
Limited ACN 066 387 157 in respect of which a Part A statement was registered by
the Commission on or about the date of this instrument.
Schedule C
1. The offeror must no later than 5 pm (Sydney time) on the day on which the
offer period ends:
(a) make an announcement of the declaration to the Australian Stock
Exchange Limited, Company Announcements Platform; and
(b) issue a press release via generally accepted media channels of the
declaration.
2. The offeror must also comply with the requirements of sections 663(3) and
663(4) of the Law in respect of the declaration.
3. If the proposed declaration is effected less than 7 days before the day
which would have been the last day of the offer period (but for the
extension referred to in this condition), the offeror must extend the offer
period by a period of not less than 5 business days.
Dated 22 December 1998.
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
<PAGE>
Australian Securities and Investment Commission
Corporations Law Section 730 - Declaration
Pursuant to section 730(1) of the Corporations Law ("Law"), the Australian
Securities and Investments Commission ("Commission") hereby declares that
Chapter 6 of the Law applies in relation to the person named in Schedule A
(offeror) in the case referred to in Schedule B as if:
1. section 603 of the Law were modified or varied by:
(a) adding in the definition of `takeover offer' after the words "to
acquire shares" the words "or American Depositary Shares representing
shares"; and
(b) adding in the definition of "takeover scheme" after the words "shares
in a company" the words "or American Depositary shares representing
shares in that company";
2. in Divisions 1, 4, 5, 6 and 7 of Part 6.3 of Chapter 6 of the Law and
Divisions 4 and 5 of Chapter 6 of the Law (with the exception of sections
642 and 644 of the Law and subsections 638(4), 662(3), 662(4), 663(3) and
663(6) of the Law):
(a) a reference to share or shares includes a reference to an American
Depositary Share representing 10 fully paid ordinary shares or
American Depositary Shares representing 10 fully paid ordinary shares;
and
(b) a reference to `member' or `holder' includes a reference to the holder
of an American Depositary Share representing 10 fully paid ordinary
shares;
3. In Section 701 of the Law, a reference to "Shares" includes shares that are
represented by American Depository Shares
4. subsection 646(1) of the Law were modified or varied by inserting at the
end of that subsection the words "and a list of the names and addresses of
all of the holders of American Depositary Shares representing shares to
whom the offeror sent offers": and:
5. subsection 642(2) of the Law were modified or varied by inserting at the
end of that subsection the words:
"except to the extent to which that condition provides that:
(a) a person who accepts the offer in respect of American Depositary
Shares representing shares may not also accept the offer in respect of
the shares represented by those American Depositary Shares; or
(b) a person who accepts the offer in respect of shares may not also
accept the offer in respect of the American Depositary Shares
representing those shares".
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684
Schedule B
A takeover scheme by the offeror in relation to fully paid ordinary shares and
American Depositary Shares representing fully paid ordinary shares in OzEmail
Limited ACN 066 387 157 in respect of which a Part A statement was registered by
the Commission on or about the date of this instrument.
Dated 22 December 1998.
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
<PAGE>
Australian Securities and Investments Commission
Corporations Law - Section 728 - Exemption
Pursuant to section 728 of the Corporations Law ("Law"), the Australian
Securities and Investments Commissions ("Commission") hereby exempts the person
named in Schedule A (offeror) from compliance with sections 636 and 638(7) of
the Law in the case referred to in Schedule B (takeover offer), to the extent
necessary to permit the offeror to withhold amounts from consideration payable
under the takeover offer, if and to the extent required by, and in accordance
with, applicable United States of America federal backup withholding tax
legislation.
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684
Schedule B
A takeover scheme by the offeror in relation to fully paid ordinary shares and
American Depositary Shares representing fully paid ordinary shares in OzEmail
Limited ACN 066 387 157 in respect of which a Part A statement was registered by
the Commission on or about the date of this instrument.
Dated 22 December 1998
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
<PAGE>
Australian Securities and Investments Commission
Corporations Law - Section 728 Exemption
Pursuant to section 728 of the Corporations Law ("Law"), the Australian
Securities and Investments Commission (Commission) hereby exempts the person
named in Schedule A (offeror) from compliance with section 636(1) of the Law in
the case of each of the takeover offers referred to in Schedule B, (takeover
offers"), insofar, subject (in the case of paragraph (a) below only) to the
conditions listed in Schedule C, as it is necessary:
(a) to permit payment of the consideration by the offeror under the takeover
offers to be paid either in Australian dollars (ACD) or United States of
America dollars (USD); and
(b) to permit the takeover offers to stipulate that each offeree in the United
States of America who accepts the offer in respect of certificated shares
must do so by delivering a form of acceptance and transfer to an agent of
offeror in the United States of America.
Schedule A
UUNET Holdings Australia Pty Limited (ACN 085 531 684)
Schedule B
A takeover scheme by the offeror in relation to fully paid ordinary shares
("Shares") and American Depositary Shares ("ADS") representing fully paid
ordinary shares in OzEmail Limited (ACN 066 387 157) in respect of which a Part
A statement was registered by the Commission on or about the date of this
instrument.
Schedule C
1. Subject to the following provisions, the consideration payable under the
offer will be made in USD.:
2. All holders of Shares and/or ADS's who accept the offer (including those
whose shares and/or shares represented by ADSs' are the subject of
compulsory acquisition under Division 6 of Part 6.5 of the Law) will have
the right to elect to receive payment in AUD in lieu of USD determined in
accordance with clause 4. That election can be made by the holder of shares
and/or ADS's completing provisions in the Letter of Transmittal (in the
case of shares represented by ADS's) and the Acceptance and Transfer form
(in the case of Shares).
3. However, if an election under clause 2 is not made:
(a) the holder of ADS will receive USD; and
(b) the holder of Shares will receive AUD determined in accordance with
clause 4.
4. Conversion of USD into AUD will be made on the basis that the cash amount
payable in USD will be converted, without charge, from USD to AUD at the
exchange rate obtainable by the registry for the offeror in Australia, in
the case of Shares, and the Bank of New York in the case of Shares or
shares represented by ADS's on the spot market in Sydney or New York,
respectively, at approximately noon (local time) on the date that the
offeror makes the cash consideration available to its registry in Australia
or the Bank of New York (as the case may be) for forwarding to accepting
holders of ADS's or Shares.
5. All payments of consideration to holders of Shares and ADSs who have been
deemed to have elected, or who in fact have elected, to receive the
consideration in AUD must be made by a cheque drawn against a bank holding
a banking license under the Banking Act 1959 (Cth).
Dated 22 December 1998.
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
<PAGE>
Australian Securities & Investments Commission
Corporations Law - Section 607 - Approval
Pursuant to section 607(1) and for the purposes of paragraph 607(2)(c) of the
Corporations Law ("Law"), the Australian Securities and Investments Commission
("Commission") approves the person named in Schedule A sending specified
documents that the person proposes to send under Chapter 6:
(a) to holders of fully paid ordinary shares in OzEmail Limited ACN 066 387 157
("Shares") by pre-paid airmail post or by courier originating in Australia
where the addressee is located in an external territory or outside of
Australia;
(b) to holders of American Depository Shares representing Shares ("ADSs") by
pre-paid ordinary post, pre-paid airmail post or by courier originating in
the United States of America;
(c) to holders of options over Shares by pre-paid ordinary post, pre-paid
airmail post or by courier originating:
(i) in Australia where the addressee is located in an external territory
or outside of Australia, other than the United States of America; and
(ii) in the United States of America where the addressee is located in that
country.
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684
Dated 22 December 1998.
.......................................................
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
<PAGE>
Australian Securities & Investments Commission
Corporations Law - - Section 728 - Exemption
Pursuant to section 728 of the Corporations Law ("Law"), the Australian
Securities and Investments Commission ("Commission") hereby exempts the person
named in Schedule A ("Offeror") from compliance with section 641(1) and clause 4
of Part A in section 750 of the Law, in the case referred to in Schedule B
("Takeover Scheme") to the extent that those provisions require the Part A
statement to disclose any acquisitions or disposals in the target company within
4 months of the day specified in clause 4 of Part A in section 750 of the Law by
any persons referred to in Schedule C, in the circumstances referred to in
Schedule C.
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684
Schedule B
A takeover scheme by the Offeror in relation to fully paid ordinary shares and
American Depositary Shares representing fully paid ordinary shares in OzEmail
Limited ACN 066 387 157 ("Target") in respect of which a Part A statement was
registered on or about the date of this instrument.
Schedule C
1. Any related body corporate of the Offeror and any director or secretary of
the Offeror or any related body corporate of the Offeror:
(a) acting in the capacity of trustee of a superannuation fund established
for the benefit of employees of the Offeror or of any of its related
bodies corporate who has, who acquires or disposes of a relevant
interest in shares solely in that capacity without the actual
knowledge of the Offeror by reason of a decision made and implemented
by a fund manager which is not related to the Offeror and which acted
independently of and without direction from the trustee, the Offeror
or any of its related bodies corporate;
(b) where the aggregate number of voting shares of the Target in each
superannuation fund in which each of the trustees has a relevant
interest does not exceed five per cent of the ordinary shares in the
Target.
2. Any:
(a) related bodies corporate of the Offeror:
(i) the operations and management of which are conducted outside
Australia;
(ii) which are associates of the Offeror by reason only of section 11
of the Law;
(iii)which are not involved in the planning or progress of the
Takeover Scheme; and
(iv) which are not investment companies; and
(b) directors and secretaries of such related bodies corporate who are:
(i) resident outside Australia;
(ii) not involved in the planning or progress of the Takeover Scheme;
and
(iii)associates of the Offeror by reason only of section 11 of the
Law;
who has or commences to have or ceases to have a relevant interest in
shares, where the Offeror does not have actual knowledge of the
interest, acquisition or disposal, and where the aggregate of the
relevant interests in the voting shares of the Target acquired,
disposed of or held, which are not disclosed in the Part A statement
registered by the Commission, does not exceed five per cent of
ordinary shares in the Target.
Dated this 22th day of December 1998.
Signed by .......................................................
Neil Johnson, a delegate of the Commission
<PAGE>
Australian Securities & Investments Commission
Corporations Law - Section 730 - Declaration
Pursuant to section 730(1) of the Corporations Law ("Law"), the Australian
Securities and Investments Commission ("Commission") hereby declares that
Chapter 6 of the Law applies in relation to the person named in Schedule A
("Offeror") in the case referred to in Schedule B as if sub-paragraph 2(a) in
Part A in Section 750 of the Law was modified or varied by inserting "business"
before "addresses of all the directors."
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684
Schedule B
A takeover scheme by the Offeror in relation to fully paid ordinary shares and
American Depositary Shares representing fully paid ordinary shares in OzEmail
Limited ACN 066 387 157 in respect of which a Part A statement was registered by
the Commission on or about the date of this instrument.
Dated this 22th day of December 1998.
Signed by ........................................
Neil Johnson, a delegate of the Commission
<PAGE>
Australian Securities & Investments Commission
Corporations Law - Section 730 - Declaration
Pursuant to section 730(1) of the Corporations Law ("Law"), the Australian
Securities and Investments Commission ("Commission") hereby declares that
Chapter 6 of the Law applies in relation to the person named in Schedule A
("Offeror") in the case referred to in Schedule B as if clause 14 of Part A of
section 750 of the Law was modified or varied by deleting the words "the date of
the last balance sheet laid before the company in general meeting" and inserting
instead the words "the shares of the company were listed on the Australian Stock
Exchange."
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684
Schedule B
A takeover scheme by the Offeror in relation to fully paid ordinary shares and
American Depositary Shares representing fully paid ordinary shares in OzEmail
Limited ACN 066 387 157 in respect of which a Part A statement was registered by
the Commission on or about the date of this instrument.
Dated this 22th day of December 1998.
Signed by .......................................................
Neil Johnson, a delegate of the Commission
<PAGE>
Australian Securities & Investments Commission
Corporations Law - Section 728 - Exemption
Pursuant to section 728 of the Corporations Law ("Law"), the Australian
Securities and Investments Commission ("Commission") hereby exempts the person
named in Schedule A ("Offeror") in the case referred to in Schedule B ("takeover
offer") from compliance with section 686 of the Law, to the extent that section
686 prohibits a disposal of shares by the Offeror constituted by the withdrawal
by a person to whom the takeover offer is made of that person's acceptance of
the takeover offer.
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684
Schedule B
A takeover scheme by the Offeror in relation to fully paid ordinary shares and
American Depositary Shares representing fully paid ordinary shares in OzEmail
Limited ACN 066 387 157 in respect of which a Part A statement was registered by
the Commission on or about the date of this instrument.
Dated this 22th day of December 1998.
Signed by ...........................................
Neil Johnson, a delegate of the Commission
<PAGE>
Australian Securities & Investments Commission
Corporations Law - Section 730 - Declaration
Pursuant to section 730(1) of the Corporations Law ("Law"), the Australian
Securities and Investments Commission ("Commission") declares that Chapter 6 of
the Law applies in relation to the person named in Schedule A in the case
referred to in Schedule B as if section 644(1) were modified by deleting the
words "the day immediately before".
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684 ("Offeror")
Schedule B
The service by the Offeror on OzEmail Limited ACN 066 387 157 of its Part A
statement, a copy of which has been registered by the Commission on or about the
date of this instrument
Dated this 22th day of December 1998.
Signed by .........................................
Neil Johnson, a delegate of the Commission
<PAGE>
Australian Securities & Investments Commission
Corporations Law - Section 730 - Declaration
Pursuant to section 730(1) of the Corporations Law ("Law"), the Australian
Securities and Investments Commission ("Commission") declares that Chapter 6 of
the Law applies to the person named in Schedule A ("Offeror") in the case
referred to in Section B as if subsections 650(3) and 650(3A) were deleted.
Schedule A
UUNET Holdings Australia Pty Limited ACN 085 531 684
Schedule B
A takeover scheme by the Offeror in relation to fully paid ordinary shares and
American Depositary Shares representing fully paid ordinary shares in OzEmail
Limited ACN 066 387 157 in respect of which a Part A statement was registered on
or about the date of this instrument.
Dated this 22th December 1998
Signed by ............................................
Neil Johnson, a delegate of the Commission
<PAGE>
Exhibit 2.4
- --------------------------------------------------------------------------------
THIS LETTER OF TRANSMITTAL MAY ONLY BE USED TO TENDER AMERICAN DEPOSITARY
SHARES. IT CANNOT BE USED TO TENDER SHARES. TO TENDER SHARES, USE THE ACCEPTANCE
AND TRANSFER FORM.
- --------------------------------------------------------------------------------
LETTER OF TRANSMITTAL
To Tender for American Depositary Shares
of
OZEMAIL LIMITED
by
UUNET HOLDINGS AUSTRALIA PTY LIMITED
a wholly owned subsidiary of
UUNET TECHNOLOGIES, INC.
a wholly-owned subsidiary of
MCI WORLDCOM, INC.
AT
US$2.20 NET PER SHARE OR
US$22.00 PER AMERICAN DEPOSITARY SHARE IN CASH
- --------------------------------------------------------------------------------
THE OFFER, WILL EXPIRE AT 1:00 A.M., NEW YORK CITY TIME, ON FEBRUARY [ ],
1999, AND AT 5:00 P.M. SYDNEY TIME, ON FEBRUARY [ ], 1999, UNLESS THE OFFER IS
EXTENDED. TENDERING HOLDERS OF SECURITIES WILL BE PERMITTED TO WITHDRAW THEIR
TENDERED SECURITIES AT ANY TIME PRIOR TO THE EXPIRATION DATE. SEE "WITHDRAWAL
RIGHTS" IN SECTION 4 OF THE OFFER TO PURCHASE.
- --------------------------------------------------------------------------------
The U.S. Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 For Confirmation Telephone: New York, New York 10286
(800) 507-9357
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF ADSS TENDERED
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) ADS(S) TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS (ATTACH ADDITIONAL LIST IF NECESSARY)
NAME(S)
APPEAR(S) ON ADR(S))
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TENDERED ADR TOTAL NUMBER OF NUMBER OF ADSS
SERIAL NUMBER(S)* ADSS EVIDENCED BY TENDERED**
ADR(S)
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
TOTAL SHARES
- -------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by holders tendering book-entry transfer.
** Unless otherwise indicated, it will be assumed that all ADSs being delivered
to the U.S. Depositary are being tendered. See Instruction 4.
<PAGE>
2
------------------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if American Depositary
Receipts ("ADRs") of OzEmail Limited (ACN 066 387 157), a corporation
incorporated under the laws of the State of New South Wales, Australia
("OzEmail"), evidencing American Depositary Shares ("ADSs") are to be forwarded
herewith or if delivery of ADSs is to be made by book-entry transfer to an
account maintained by the U.S. Depositary at the Book-Entry Transfer Facility as
defined in and pursuant to the procedures for book-entry transfer set forth in
"Procedures for Tendering Shares and ADSs___Valid Tender of ADSs___Book-Entry
Transfer" in Section 2 of the Offer to Purchase.
ACCEPTANCE OF THE OFFER IN RESPECT OF ORDINARY SHARES OF OZEMAIL ("SHARES")
(EXCEPT INSOFAR AS THEY ARE REPRESENTED BY ADSS EVIDENCED BY ADRS) CANNOT BE
MADE BY MEANS OF THIS LETTER OF TRANSMITTAL. Acceptance of the Offer in respect
of Shares that are not represented by ADSs may only be made by means of an
Acceptance and Transfer Form or, in the case of uncertificated Shares held
through the Clearing House Electronic Subregister System, compliance with the
Securities Clearing House Business Rules, additional copies of which are
available in the United States from the Information Agent, or in Australia from
the Registry or the Financial Advisor. See Instruction 13 of this Letter of
Transmittal.
Delivery of a Letter of Transmittal, ADRs (or book-entry transfer of
interests in such ADSs evidenced by ADRs) and any other required documents to
the U.S. Depositary by ADS holders will be deemed without any further action by
the U.S. Depositary to constitute an acceptance of the Offer by such holder with
respect to such ADSs evidenced by ADRs subject to the terms and conditions set
out in the Offer to Purchase dated January ____, 1999 (the "Offer to Purchase")
and this Letter of Transmittal. Capitalized terms and certain other terms used
in this Letter of Transmittal and not otherwise defined herein shall have the
respective meanings assigned to them in the Offer to Purchase.
Tendering holders of ADSs may elect to receive payment in Australian
dollars. To make an election, a tendering holder must place an "X" in the box
entitled "Australian Dollar Payment Election." If a tendering holder of ADSs
does not make an election, such tendering holder will receive payment in United
States dollars.
CHECK BOX IF TENDERED ADSS ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO
AN ACCOUNT MAINTAINED BY THE U.S. DEPOSITARY WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER ADSS EVIDENCED BY ADRS BY BOOK-ENTRY TRANSFER):
<PAGE>
3
Name of Tendering Institution:_________________________________
Account Number:________________________________________________
Transaction Code Number:_______________________________________
If a holder of ADSs wishes to accept the Offer and ADRs evidencing such
ADSs are not immediately available or the procedures for book-entry transfer
cannot be completed on a timely basis, or if time will not permit all required
documents to reach the U.S. Depositary prior to the Expiration Date, such
holder's acceptance of the Offer may nevertheless be effected using the
guaranteed delivery procedure set out under "Valid Tender of Shares and
ADSs___Valid Tender of ADSs___Guaranteed Delivery" in Section 2 to the Offer.
See Instruction 2 of this Letter of Transmittal.
CHECK BOX ONLY IF TENDERED ADSS ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE U.S. DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):________________________________________________
Date of Execution of Notice of Guaranteed Delivery:____________________________
Name of Institution that Guaranteed Delivery:__________________________________
Name of Tendering Institution:_________________________________________________
If delivered by book-entry transfer:
Account Number:_________________________________________________________
Transaction Code Number:_______________________________________________________
<PAGE>
4
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
Ladies and Gentlemen:
The undersigned hereby instructs the U.S. Depositary to accept the Offer on
behalf of the undersigned with respect to the ADSs evidenced by ADRs (which
expression in this Letter of Transmittal shall, except where the context
otherwise requires, be deemed to include, without limitation, the Shares
represented thereby) specified in the box entitled "Description of ADSs
Tendered" subject to the terms and conditions set forth in the Offer and this
Letter of Transmittal, by informing UUNET Holdings Australia Pty Limited (the
"Purchaser") in writing that the Offer has been so accepted. The undersigned
hereby acknowledges that delivery of this Letter of Transmittal, the ADRs
evidencing tendered ADSs (or book-entry transfer of such ADSs evidenced by ADRs)
and any other required documents to the U.S. Depositary by a holder of ADSs will
be deemed (without any further action by the U.S. Depositary) to constitute
acceptance of the Offer by such holder in respect of such holder's ADSs, subject
to the terms and conditions set out in the Offer and this Letter of Transmittal.
The undersigned understands that acceptance of the Offer by the undersigned
pursuant to the procedures described herein and in the instructions hereto,
subject to the withdrawal rights described in the Offer to Purchase, will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. IF ACCEPTANCE HAS BEEN
MADE IN RESPECT OF THE ADSS THEN A SEPARATE ACCEPTANCE IN RESPECT OF THE SHARES
REPRESENTED BY SUCH ADSS MAY NOT BE MADE OR IF SHARES HAVE BEEN TENDERED THEN NO
ADSS REPRESENTING SUCH SHARES MAY BE TENDERED INDEPENDENTLY.
The undersigned hereby delivers to the U.S. Depositary the above-described
ADSs evidenced by ADRs for which the Offer is being accepted, in accordance with
the terms and conditions of the Offer and this Letter of Transmittal, receipt of
which is hereby acknowledged.
Upon the terms of the Offer (including, if the Offer is extended, varied or
amended, the terms or conditions of any such extension, variation of amendment),
and effective at the time that the contract resulting from the acceptance of the
Offer becomes free from its conditions or such conditions are satisfied or
waived, and if the undersigned has not validly withdrawn the tender of such
holder's ADSs, the undersigned hereby sells, assigns and transfers to, or upon
the order of, the Purchaser all right, title and interest in and to all ADSs
evidenced by ADRs with respect to which the Offer is being accepted (and any and
all ADSs or other securities or rights issuable in respect of such ADS,
including all Rights (as defined in the Offer to Purchase) attached to such
ADSs) and irrevocably constitutes and appoints the U.S. Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to ADSs (and
any such other ADSs, securities or rights), with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) deliver ADRs for such ADSs (and any such other ADSs,
securities or rights) or accept transfer of ownership of such ADSs (and any such
other ADSs, securities or rights) on the account books maintained by the Book-
Entry Transfer Facility together, in any case, with all accompanying evidences
of transfer and authenticity to, or upon the order of, OzEmail, (b) present such
ADRs for such ADSs (and any such other ADSs, securities or rights) for transfer,
and (c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such ADSs (and any such other ADSs, securities or rights), all in
accordance with the terms of the Offer.
<PAGE>
5
By tendering ADSs, the undersigned hereby irrevocably appoints the
Purchaser and each of its directors, secretaries and officers from time to time
jointly and each of them severally as such holder's true and lawful attorney-in-
fact and proxy, with effect from the date on which such holder's tendered ADSs
are accepted for payment, with power to do all things which such holder could
lawfully do in relation to the Shares represented by such holder's ADSs or in
exercise of any right derived from the holding of the Shares represented by such
holder's ADSs, including (without limiting the generality of the foregoing), (i)
attending and voting at any meeting of OzEmail, (ii) demanding a poll for any
vote to be taken at any meeting of OzEmail, (iii) proposing or seconding any
resolution to be considered at any meeting of OzEmail, (iv) requisitioning the
convening of any meeting of OzEmail and convening a meeting pursuant to any such
requisition; (v) notifying OzEmail that such holder's address in the records of
OzEmail for all purposes, including the dispatch of notices of meeting, annual
reports and dividends, should be altered to an address nominated by the
Purchaser; (vi) receiving from OzEmail, or any other party, and retaining any
Share certificates which were held by OzEmail, or any other party; (vii)
executing all forms, notices, instruments (including any instrument appointing a
director of the Purchaser as a proxy) in respect of any or all of the Shares
represented by such holder's ADSs and resolutions relating to the Shares
represented by such holder's ADSs and generally to exercise all powers and
rights which a person may have as a shareholder and performing such action as
may be appropriate in order to vest good title in the Shares represented by such
holder's ADSs in the Purchasers; and (viii) doing all things incidental and
ancillary to any of the foregoing, and to have agreed that in exercising the
powers conferred by that power of attorney, the attorney may act in the interest
of the Purchaser as the intended registered holder and beneficial holder of such
holder's Shares represented by such holder's ADSs. Such appointment, being given
for valuable consideration to secure the interest acquired in the Shares
represented by such holder's ADSs, when effective, will revoke all prior proxies
given by such holder with respect to the Shares represented by such holder's
ADSs without further action and the undersigned hereby covenants that no
subsequent proxies will be given by such holder with respect to the Shares
represented by such holder's ADSs. Such appointment is irrevocable, and
terminates upon registration of a transfer to the Purchaser of the Shares
represented by such holder's ADSs. The Purchaser reserves the right to require
that, in order for ADSs to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment for such ADSs, the Purchaser must be able to
exercise full voting rights with respect to the Shares represented by such
holder's ADSs.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to accept the Offer and to sell, assign and transfer
the ADSs evidenced by the ADRs (and the Shares represented by the ADSs) in
respect of which the Offer is being accepted or deemed to be accepted (and any
and all other ADSs, securities or rights issued or issuable in respect of such
ADSs, including all Rights attached to such ADSs) and, when the same are
purchased by the Purchaser, the Purchaser will acquire good title thereto, free
from all liens, equitable interests, charges, encumbrances and together with all
rights attaching thereto, including voting rights and the right to receive all
dividends, distributions or other rights declared, made, paid or issued on or
after December 22, 1998 with respect to the Shares represented by the ADSs. The
undersigned will, upon request, execute any additional documents deemed by the
U.S. Depositary or the Purchaser to be necessary or desirable to complete the
sale assignment and transfer of the ADSs evidenced by ADRs in respect of which
the Offer is being accepted (and any and all such other ADSs, securities or
rights).
All authority herein conferred or agreed to be conferred pursuant to this
Letter of Transmittal shall be binding upon the successors, assigns, heirs,
executors, administrators and legal
<PAGE>
6
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned except as stated in the
Offer to Purchase, this acceptance is irrevocable.
Unless otherwise indicated herein under "Special Payment Instructions," the
undersigned hereby instructs the U.S. Depositary to issue, or cause to be
issued, the check for the purchase price in the name(s) of the registered
holder(s) appearing under "Description of ADSs Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," the undersigned
hereby instructs the U.S. Depositary to mail, or cause to be mailed, the check
for the purchase price and/or return, or cause to be returned, any ADRs
evidencing ADSs in respect of which the Offer is not being accepted or which are
not purchased (and accompanying documents, as appropriate) to the address(es) of
the registered holder(s) appearing under "Description of ADSs Tendered." In the
event that the "Special Payment Instructions" and/or the "Special Delivery
Instructions" are completed, the undersigned hereby instructs the U.S.
Depositary to (i) issue and/or mail, the check for the purchase price, if any,
in the name of, and/or to the address of, the person or persons so indicated,
and/or (ii) return, or cause to be returned, any ADRs evidencing ADSs in respect
of which the Offer is not being accepted or which are not purchased, if any, to
the person at the address so indicated. In the case of a book-entry delivery of
ADSs evidenced by ADRs, the undersigned hereby instructs the U.S. Depositary to
credit the account maintained at the Book-Entry Transfer Facility indicated
above with any ADSs in respect of which the Offer is not being accepted or which
are not purchased. The undersigned recognizes that the U.S. Depositary will not
transfer any ADSs which are not purchased pursuant to the Offer from the name of
registered holder thereof to any other person.
The undersigned may elect to receive payment for tendered ADSs in
Australian dollars. If the box headed "Australian Dollar Payment Election" is
checked, the undersigned hereby instructs the U.S. Depositary to convert all
amounts payable pursuant to the Offer from US dollars to Australian dollars at
the exchange rate obtainable by the U.S. Depositary on the spot market in New
York at approximately noon (New York City time) on the date the cash
consideration is made available by the Purchaser to the U.S. Depositary for
delivery to the relevant holder of ADSs and to pay such amounts by check payable
in Australian dollars. The actual amount of Australian dollars received will
depend upon the exchange rate prevailing on the day funds are made available to
the U.S. Depositary by the Purchaser. If no election is made, all amounts
payable under the Offer to the undersigned will be paid in U.S. dollars. ADS
holders should also be aware that the US dollar/Australian dollar exchange rate
which is prevailing at the date on which the undersigned executes this Letter of
Transmittal and on the date of dispatch of payment may be different from that
prevailing on the day funds are made available to the U.S. Depositary by the
Purchaser. In all cases, fluctuations in the US dollar/Australian dollar
exchange rate are at the risk of accepting ADS holders who elect to receive
their consideration in Australian dollars. Such currency exchange will be
effected by the U.S. Depositary on behalf of the requesting ADS holder and the
Purchaser shall have no responsibility or obligation with respect thereto.
SUBJECT TO THE TERMS OF THE OFFER TO PURCHASE, THIS LETTER OF TRANSMITTAL
SHALL NOT BE CONSIDERED COMPLETE AND VALID, AND PAYMENT OF CONSIDERATION
PURSUANT TO THE OFFER SHALL NOT BE MADE, UNTIL ADRs EVIDENCING THE ADSs IN
RESPECT OF WHICH THE OFFER IS BEING ACCEPTED AND ALL OTHER REQUIRED
DOCUMENTATION HAVE BEEN RECEIVED BY THE U.S. DEPOSITARY AS PROVIDED IN THE OFFER
TO PURCHASE AND THIS LETTER OF TRANSMITTAL.
<PAGE>
7
CHECK HERE IF ANY OF THE ADRS EVIDENCING ADSS THAT YOU OWN HAVE BEEN LOST,
STOLEN OR DESTROYED AND SEE INSTRUCTION 12.
Number of ADSs represented by the lost, stolen or destroyed ADRs:_______________
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7 OF THIS (SEE INSTRUCTIONS 1 AND 7 OF THIS
LETTER OF TRANSMITTAL) LETTER OF TRANSMITTAL)
To be completed ONLY if ADRs evidencing ADSs To be completed ONLY if ADRs evidencing ADSs not
not tendered or not purchased and/or the tendered or not purchased and/or the check for the
check for the purchase price of ADRs purchase price of ADRs evidencing ADSs purchased
evidencing ADSs purchased are to be issued in are to be sent to someone other than the
the name of someone other than the undersigned, or to the undersigned at an address
undersigned, or if ADRs evidencing ADSs other than that shown above.
delivered by book-entry transfer which are
not purchased are to be returned by credit to
an account maintained at a Book-Entry
Transfer Facility other than that designated
above.
Issue check and/or ADR certificate to: Mail check and/or certificate to:
Name__________________________________________ Name_______________________________________________
(Please Print) (Please Print)
Address_______________________________________ Address____________________________________________
______________________________________________ ____________________________________________________
(Zip Code) (Zip Code)
______________________________________________
(Tax Identification or Social Security Number)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
PAYMENT ELECTION
AUSTRALIAN DOLLAR PAYMENT ELECTION. CHECK BOX ONLY IF YOU WISH TO RECEIVE ALL
(BUT NOT PART) OF THE AMOUNT OF CASH CONSIDERATION TO BE PAID BY A CHECK IN
AUSTRALIAN DOLLARS. IF YOU DO CHECK THIS BOX YOU WILL RECEIVE PAYMENT BY A
CHECK IN AUSTRALIAN DOLLARS AND THE U.S. DEPOSITARY WILL ARRANGE FOR THE
CONVERSION OF THE U.S. DOLLARS AMOUNTS PAYABLE TO YOU TO AUSTRALIAN DOLLARS
AT THE EXCHANGE RATE OBTAINABLE BY THE U.S. DEPOSITARY ON THE SPOT MARKET IN
NEW YORK AT APPROXIMATELY NOON (NEW YORK TIME) ON THE DATE THE CASH
CONSIDERATION IS MADE AVAILABLE BY THE PURCHASER TO THE U.S. DEPOSITARY FOR
DELIVERY TO THE RELEVANT HOLDER OF ADSS. IF YOU DO NOT MAKE ANY PAYMENT
ELECTION AND THE BOX ABOVE IS LEFT BLANK, YOU WILL RECEIVE ALL (BUT NOT PART)
OF THE AMOUNT OF CASH CONSIDERATION TO BE PAID BY CHECK IN UNITED STATES
DOLLARS.
<PAGE>
8
- -------------------------------------------------------------------------------
SIGN HERE
AND COMPLETE SUBSTITUTE FORM W-9 OR W-8,
AS APPROPRIATE, INCLUDED HEREIN
________________________________________________________________
________________________________________________________________
(Signature(s) of owner(s))
Date:_________________________ , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on ADR(s)
evidencing the ADS(s) or by person(s) to whom ADR(s) surrendered have been
assigned and transferred, as evidenced by endorsement, stock powers and other
documents transmitted herewith. If signature is by any trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or others
acting in a fiduciary or representative capacity, please set forth the
following and see Instruction 5.)
Name(s)______________________________________________________________
(Please Type or Print)
Capacity (full title)________________________________________________
Address______________________________________________________________
______________________________________________________________
(Include Zip Code)
Area Code and Telephone Number_______________________________________
Tax Identification or
Social Security No.__________________________________________________
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature_________________________________________________
Name_________________________________________________________________
(Please Type or Print)
Title________________________________________________________________
Name of Firm_________________________________________________________
Address______________________________________________________________
Area Code and Telephone Number_______________________________________
Dated:_______________________________________________________________
- --------------------------------------------------------------------------------
<PAGE>
9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder of the ADSs evidenced by ADRs (which term, for purposes of
this document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of ADSs evidenced
by ADRs) tendered herewith, unless such holder has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" included herein or (ii) if such ADSs evidenced by ADRs are
tendered for the account of a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the United
States (each of the foregoing being referred to as an "Eligible Institution").
In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 5 of this Letter of
Transmittal.
2. DELIVERY OF LETTER OF TRANSMITTAL AND ADRS. This Letter of Transmittal
is to be completed either if ADRs evidencing ADSs are to be forwarded herewith
or if tenders are to be made pursuant to the procedures for delivery by book-
entry transfer set forth in Section 2 of the Offer to Purchase. ADRs evidencing
ADSs or confirmation of a book-entry transfer of such ADSs into the U.S.
Depositary's account at the Book-Entry Transfer Facility, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
together with any required signature guarantees and any other documents required
by this Letter of Transmittal, must be delivered to the U.S. Depositary at one
of its addresses set forth herein.
ADS holders whose ADRs are not immediately available or who cannot deliver
their ADRs and all other required documents to the U.S. Depositary or complete
the procedure for book-entry transfer prior to the Expiration Date may accept
the Offer with respect to their ADSs by properly completing and duly executing
the Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures
set out in "Procedures for Tendering Shares and ADSs___Valid Tender of
ADSs___Guaranteed Delivery" in Section 2 to the Offer to Purchase. Pursuant to
the guaranteed delivery procedure: (a) acceptance must be made by or through an
Eligible Institution; (b) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Purchaser must be
received by the U.S. Depositary prior to the Expiration Date; and (c) the ADRs
evidencing the ADSs in respect of which the Offer is being accepted (or, in the
case of ADSs held in book-entry form, timely confirmation of the book-entry
transfer of such ADSs into the U.S. Depositary's account at a Book-Entry
Transfer Facility as described in the Offer to Purchase) together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantee any other documents required by
this Letter of Transmittal, are received by the U.S. Depositary within three
business days after the date of execution of such Notice of Guaranteed Delivery.
For these purposes, a "business day" is any day on which the New York Stock
Exchange is open for business.
HOLDERS OF ADSS ARE ADVISED THAT THE METHOD CHOSEN TO SEND ADR
CERTIFICATES, IF ANY, AND THE PROPER COMPLETION OF ANY DELIVERY OF THE LETTERS
OF TRANSMITTAL AND OTHER DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF EACH TENDERING HOLDER, AND THE
DELIVERY THEREBY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE U.S.
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED,
<PAGE>
10
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE DELIVERY PRIOR TO THE EXPIRATION DATE.
No alternative, conditional or contingent tenders will be accepted and no
fractional ADR certificates will be purchased. All tendering holders of ADSs, by
execution of this Letter of Transmittal (or a manually signed facsimile
thereof), waive any right to receive any notice of the acceptance of their ADR
certificates for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of ADSs should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to book-entry transfers.) If the
Offer is to be accepted in respect of less than all of the ADSs evidenced by any
ADRs delivered to the U.S. Depositary herewith, fill in the number of ADSs which
are to be tendered in the box entitled "Description of ADSs to be Tendered." In
such case, new certificate(s) for the remainder of the ADSs that were evidenced
by your old certificate(s) will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
date on which the ADSs in respect of which the Offer has been made are
purchased. All ADSs delivered to the U.S. Depositary will be deemed to have been
tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the ADSs
tendered hereby, the signature(s) must correspond exactly to the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the ADSs evidenced by ADRs tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered ADSs evidenced by ADRs are registered in different names on
several certificates, it will be necessary to complete, sign and submit as may
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority so to act must be
submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
ADSs evidenced by ADRs listed and transmitted hereby, no endorsement of
certificates or separate stock powers is required unless payment or certificates
for ADSs evidenced by ADRs not tendered or purchased are to be issued to a
person other than the registered owner(s). Signatures on such certificates or
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the ADSs evidenced by ADRs listed, the certificates must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6 of this
Letter of Transmittal, the Purchaser will pay or cause to be paid any stock
transfer taxes and stamp duty with respect to the transfer and sale of purchased
ADSs evidenced by ADRs to it or its order pursuant to
<PAGE>
11
the Offer. If payment of the purchase price is to be made, or if certificates
for ADSs evidenced by ADRs not tendered or purchased are to be registered in the
name of any person other than the registered holder, or if tendered certificates
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder or such person) and stamp duty payable on account of
the transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6 OF THIS LETTER OF TRANSMITTAL, IT
WILL NOT BE NECESSARY FOR THE TRANSFER TAX STAMPS AND STAMP DUTY TO BE AFFIXED
TO THE ADRS LISTED IN THIS LETTER OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or
certificates for unpurchased ADSs evidenced by ADRs are to be issued in the name
of a person other than the signer of this Letter of Transmittal or if a check is
to be sent and/or such certificates are to be returned to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Holders of ADSs evidenced by ADRs tendering certificates by book-entry transfer
may request that ADSs evidenced by ADRs not purchased be credited to such
account maintained at a Book-Entry Transfer Facility as such holder may
designate hereon. If no such instructions are given, such ADSs evidenced by ADRs
not purchased will be returned by crediting the account at the Book-Entry
Transfer Facility designated above.
8. AUSTRALIAN DOLLAR PAYMENT ELECTION. If the check for the purchase price
is to be issued in Australian dollars, please check the box marked "Australian
Dollars Payment Election." If an election is not made, a tendering holder of
ADSs will receive payment in United States dollars. If an election to receive
Australian dollars is made, all U.S. dollars amounts payable pursuant to the
Offer will be converted by the U.S. Depositary into Australian dollars at the
exchange rate obtainable by the relevant payment agent on the spot market in New
York at approximately noon (New York City time) on the date the cash
consideration is made available by the Purchaser to the U.S. Depositary for
delivery to the relevant holder of ADSs.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed in the United States to the Dealer Manager or the Information
Agent or in Australia to the Financial Advisors. Additional copies of the Offer
to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and
the Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 may be obtained in the United States from the Dealer Manager or the
Information Agent or in Australia from the Financial Advisors or from your
broker, dealer, commercial bank or trust company.
10. WAIVER OF CONDITIONS. Subject to compliance with applicable law, the
Purchaser reserves the right (but shall not be obligated) to waive any or all
conditions of the Offer. See Sections 1 and 14 of the Offer to Purchase.
11. SUBSTITUTE FORMS W-9 AND W-8. Each tendering holder of ADSs evidenced
by ADRs is required to provide the U.S. Depositary with a correct Taxpayer
Identification Number ("TIN") on the Substitute Form W-9, which is provided
under "Tax Identification Number and Backup Withholding" below, and to certify
under penalties of perjury, that such number is correct and that such holder is
not subject to backup withholding of federal income tax. If a tendering holder
of ADSs evidenced by ADRs has been notified by the Internal Revenue Service that
such holder is
<PAGE>
12
subject to backup withholding, such holder must cross out item (2) of the
Certification box of the Substitute Form W-9, unless such holder has since been
notified by the Internal Revenue Service that such holder is no longer subject
to backup withholding. Failure to provide the information on the Substitute Form
W-9 may subject the tendering holder to a US$50 penalty imposed by the Internal
Revenue Service and backup withholding of federal income tax at the rate of 31%
with respect to any payments received pursuant to the Offer. If the tendering
holder has not been issued a TIN and has applied for one or intends to apply for
one in the near future, such holder should write "Applied For" in the space
provided for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the U.S.
Depositary is not provided with a TIN within 60 days it will withhold 31% on all
payments of the purchase price to such holder until a TIN is provided to the
U.S. Depositary.
Certain exempt holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, such individual must complete the Form W-8 below.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing ADSs evidenced by ADRs has been lost, destroyed or stolen, the
holder should promptly notify the U.S. Depositary. The holder will then be
instructed as to the steps that must be taken in order to replace the
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
13. HOLDERS OF SHARES NOT REPRESENTED BY ADSS. Holders of Shares have been
sent an Acceptance and Transfer Form with the Offer to Purchase and may not
accept the Offer in respect of Shares pursuant to this Letter of Transmittal
except insofar as those Shares are represented by ADSs. If any holder of Shares
which are not represented by ADSs needs to obtain additional copies of the
Acceptance and Transfer Form, such holder should contact, in the United States,
the Dealer Manager or the Information Agent or, in Australia, the Registry or
the Financial Advisor at their respective addresses set forth in the Offer to
Purchase. See Section 2 of the Offer to Purchase "Procedure for Tendering Shares
and ADSs___Valid Tender of Shares."
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-
ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY, MUST BE RECEIVED BY THE U.S. DEPOSITARY AT ONE OF ITS ADDRESSES SET
FORTH HEREIN PRIOR TO THE EXPIRATION DATE.
<PAGE>
13
IMPORTANT TAX INFORMATION
TAX INDEMNIFICATION NUMBER AND BACKUP WITHHOLDING
U.S. HOLDERS. United States federal income tax law generally requires that
a holder that is a United States person (generally, a citizen or resident of the
United States) whose tendered ADSs are accepted for purchase pursuant to the
Offer provide the U.S. Depositary with his correct Taxpayer Identification
Number ("TIN"), which, in the case of a holder who is an individual, is his
social security number. If the U.S. Depositary is not provided with the correct
TIN or an adequate basis for an exemption, such holder may be subject to a $50
penalty imposed by the Internal Revenue Service and backup withholding in an
amount equal to 31% of the gross proceeds resulting from the Offer. If
withholding results in an overpayment of taxes, a refund may be obtained.
To prevent backup withholding, each tendering holder must provide his
correct TIN by completing the "Substitute Form W-9" set forth herein, certifying
that the TIN provided is correct (or that such holder is awaiting a TIN) and
that (i) the holder is exempt from backup withholding, (ii) the holder has not
been notified by the Internal Revenue Service that he is subject to backup
withholding as a result of a failure to report all interest or dividends, or
(iii) the Internal Revenue Service has notified the holder that he is no longer
subject to backup withholding.
If you do not have a TIN, consult the enclosed Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines")
for instructions on applying for a TIN, write "Applied For" in the space for the
TIN in Part 1 of the Substitute Form W-9, and sign and date the Substitute Form
W-9 and the Certificate of Awaiting Taxpayer Identification Number set forth
herein. If you do not provide your TIN to the U.S. Depositary within 60 days,
backup withholding will begin and continue until you furnish your TIN to the
Payor. Note: Writing "Applied For" on the form means that you have already
applied for a TIN or that you intend to apply for one in the near future.
If the ADS is held in more than one name or is not in the name of the
actual owner, consult the W-9 Guidelines for information on which TIN to report.
Exempt holders (including, among others, all corporations) are not subject
to these backup withholding and reporting requirements. To prevent possible
erroneous backup withholding, an exempt Registered Holder should write "Exempt"
in part 2 of Substitute Form W-9. See the W-9 Guidelines for additional
instructions.
Foreign Holders. In order for a holder that is not a United States person
to qualify for exemption from backup withholding, such holder must complete and
submit to the U.S. Depositary the "Substitute Form W-8" set forth herein,
certifying that the holder is not (i) a United States citizen or resident,
corporation, partnership, estate, or trust; (ii) an individual who has been, or
plans to be, present in the United States for a total of 183 days or more during
the calendar year, or (iii) engaged, nor plan to be engaged during the year, in
a trade or business in the United States with which gains from the sale of the
Securities are effectively connected.
If backup withholding occurs as a result of a foreign holder's failure to
provide the U.S. Depositary with a properly executed Substitute Form W-8, such
holder may get a refund of the amount withheld by filing Internal Revenue
Service Form 1040NR ("U.S. Non-resident Alien
<PAGE>
14
Income Tax Return"). Such form may be obtained from the Internal Revenue Service
Center, Philadelphia, PA 19255.
<PAGE>
15
<TABLE>
<CAPTION>
PAYOR'S NAME
THE BANK OF NEW YORK, AS U.S. DEPOSITARY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
PART 1--PLEASE PROVIDE YOUR TIN IN THE TIN__________________________
BOX AT RIGHT AND CERTIFY BY SIGNING SOCIAL SECURITY NUMBER
SUBSTITUTE AND DATING BELOW. OR
FORM W-9 ____________________________________
EMPLOYER IDENTIFICATION NUMBER
(IF AWAITING TIN, WRITE APPLIED FOR)
--------------------------------------------------------------------------------------------------
PART 2--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING PLEASE WRITE "EXEMPT" HERE.
(SEE INSTRUCTIONS)
- ------------------------------------------------------------------------------------------------------------------------------------
PART 3--CERTIFICATION, UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct TIN (or I am waiting for a
number to be issued to me), and
(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as a result of a failure to
report all interest or dividends or (c) the IRS has notified me that I am no
longer subject to backup withholding.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THE DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
SIGNATURE_____________________ DATE_________________
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE You must cross out item (2) of part 3 above if you have been notified by the
IRS that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return and you have not been
PAYER'S REQUEST FOR TAXPAYER notified by the IRS that you are no longer subject to backup withholding.
IDENTIFICATION NUMBER ("TIN")
AND CERTIFICATION YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART
1 OF THE SUBSTITUTE FORM W-9
___________________________________________________________________________________________________________________
</TABLE>
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and that I mailed or delivered an application to receive
a taxpayer identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office (or I intend to mail or deliver
an application in the near future). I understand that if I do not provide a
taxpayer identification number to the payor within 60 days, the Payor is
required to withhold 31 percent of all cash payments made to me thereafter until
I provide a number.
SIGNATURE_________________ DATE____________________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31 PERCENT OF ANY CASH PAYMENTS. PLEASE REVIEW THE ENCLOSED GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-
9 FOR ADDITIONAL DETAILS.
<PAGE>
16
________________________________________________________________________________
SUBSTITUTE
FORM W-8 CERTIFICATE OF FOREIGN STATUS
________________________________________________________________________________
Department of
the Treasury
INTERNAL
REVENUE SERVICE
- --------------------------------------------------------------------------------
NAME OF OWNER (IF JOINT ACCOUNT, ALSO GIVE JOINT U.S. TAXPAYERS
OWNER'S NAME) IDENTIFICATION NUMBER
- --------------------------------------------------------------------------------
PERMANENT ADDRESS (__________) (INCLUDE APARTMENT OR SUITE NO.)
- --------------------------------------------------------------------------------
CITY, PROVINCE OR STATE, POSTAL CODE AND COUNTRY
- --------------------------------------------------------------------------------
CERTIFICATION--Under penalties of perjury, I certify that:
- --------------------------------------------------------------------------------
I am not (i) a United States citizen or resident, corporation, partnership,
estate, or trust; (ii) an individual who has been, or plans to be, present in
the United States for a total of 183 days or more during the calendar year, or
(iii) engaged, nor plan to be engaged during the year, in a trade or business in
the United States with which gains from the sale of the Securities are
effectively connected.
Please Sign Here____________________________________________
Signature
Date
- ------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN FORM W-9 OR W-8 ABOVE MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR ADDITIONAL INFORMATION.
<PAGE>
17
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER (`TIN') ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER--
Social Security Numbers ("SSNs") have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer Identification Numbers ("EINs") have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer.
[CAPTION]
<TABLE>
<S> <C>
FOR THIS TYPE OF ACCOUNT: GIVE THE NAME AND SOCIAL SECURITY NUMBER OR EMPLOYER
IDENTIFICATION NUMBER OF
1. Individual The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined funds,
the first individual on the account (1)
3. Custodian account of a minor (Uniform Gift to The minor (2)
Minors Act)
4. a. The usual revocable savings trust (grantor is The grantor-trustee (1)
also trustee)
b.The so-called trust account that is not a legal
or valid trust under State law
The actual owner (1)
5. Sole proprietorship The owner (3)
6. A valid trust, estate, or pension trust Legal entity (4)
7. Corporation The corporation
8. Association, club, religious, charitable, The organization
education or other tax-exempt organization
9. Partnership The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department of Agriculture in the The public entity
name of a public entity (such as State or local
government, school district, or prison) that receives
agricultural program payments.
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's SSN.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your SSN or EIN (if you have
one).
(4) List first and circle the name of the legal trust, estate or pension trust
(Do not furnish the TIN of the personal representative or trustee unless
the legal entity itself is not designated in the account title).
NOTE: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
How to Get a TIN
If you do not have a TIN, apply for one immediately. To apply for an SSN, obtain
Form SS-5, Application for a Social Security Number Card, at the local office of
the Social Security Administration. Get Form W-7, Application for IRS Individual
Taxpayer Information Number, to apply for an Individual TIN or Form SS-4,
Application for Employer Identification Number, to apply for an EIN. You can get
Forms W-7 and SS-4 from the IRS by calling 1-800-TAX-FORM (1-800-829-3676).
If you do not have a TIN, write, "Applied For" in the space for the TIN, sign
and date the form, and give it to the payer. For interest and dividend payments
and certain payments made with respect to readily tradable instruments, you
will, generally have 60 days to get a TIN and give it to the payer. If the
payer does not receive your TIN within 60 days, backup withholding, of
applicable, will begin and continue until you furnish your TIN.
<PAGE>
18
NOTE: Writing, "Applied For" on the form means that you have already applied
for a TIN OR that you intend to apply for one soon.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date the form, and give it to the payer.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Individuals (including sole proprietors) are NOT exempt from backup withholding.
Corporations are exempt from backup withholding for certain payments, such as
interest and dividends.
If you are exempt from backup withholding, you should still complete Substitute
Form W-9 to avoid possible erroneous backup withholding. Enter your correct TIN
in Part 1, write "Exempt" in Part 2, and sign and date the form. If you are a
nonresident alien or a foreign entity not subject to backup withholding, give
the requester a completed Form W-8, Certificate of Foreign Status.
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
(1) through (13) and a person registered under the Investment Advisers Act of
1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions and patronage dividends.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under section 403(b)(7), if
the account satisfies the requirements of section 401(f)(2).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their subdivisions or instrumentalities.
(5) A foreign government, a political subdivision of a foreign government, or
any of their agencies instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities registered in the United States, the
District of Columbia, or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
<PAGE>
19
(16) Payment of dividends and patronage dividends not generally subject to
backup withholding include the following:
. Payments to non-resident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one non-resident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include
the following:
. Payments of interest or obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
current TIN to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852)
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE
THE FORM AND RETURN IT TO THE PAYER.
Certain payments that are not subject to information reporting are also not
subject to backup withholding. For details, see sections 6041, 6041A, 6042,
6044, 6045, 6049, 6050A and 6060N, and their regulations.
PRIVACY ACT NOTICE. Section 6109 requires you to give your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. The IRS may also
provide this information to the Department of Justice for civil and criminal
litigation and to cities, states, and the District of Columbia to carry out
their tax laws.
You must provide your TIN whether or not you are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not give a TIN to a payer. Certain penalties
may also apply.
PENALTIES
(1) FAILURE TO FURNISH TIN. If you fail to furnish your TIN to a payer, you
are subject to a penalty of $50 for each such failure unless your failure
is due to reasonable cause and not to wilful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
(4) MISUSE OF TINS. If the payer discloses or uses TINs in violation of
Federal law, the payer may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT
OR THE INTERNAL REVENUE SERVICE
<PAGE>
20
THIS IS A VERY IMPORTANT DOCUMENT. If you are in doubt as to how to deal
with it, consult your Stockbroker or Financial Advisor without delay. Questions
and request for assistance or additional copies of the Offer to Purchase, Letter
of Transmittal and other tender offers materials may be directed to the
Information Agent or the Dealer Manager as set forth below.
<TABLE>
<CAPTION>
The U.S. Depositary for the Offer is:
THE BANK OF NEW YORK
<S> <C> <C>
By Mail: By Facsimile Transmission By Hand or Overnight Delivery:
(for Eligible Institutions Only)
Tender & Exchange Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station For Confirmation Telephone: Receive and Deliver Window
New York, New York 10286-1248 (800) 507-9357 New York, New York 10286
</TABLE>
The Registry for the Offer in Australia is:
NATIONAL REGISTRY SERVICES PTY LIMITED
By Mail: By Hand:
Reply Paid Level 1
P O Box N460 Grosvenor Place
Grosvenor Place 225 George Street
NSW 1219 Sydney NSW 2000
Tel: (02) 9372 6060
Fax: (02) 9372 6011
The Information Agent for the Offer in the United States is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
The Financial Advisor is:
MERRILL LYNCH
Level 49, MLC Centre Merrill Lynch World Headquarters
19-29 Martin Place North Tower
Sydney NSW 2000 World Financial Center
(02) 9226 5342 (call collect) New York, New York 10281-1305
(212) 449-8971 (call collect)
The Dealer Manager for the Offer in the United States is:
MERRILL LYNCH
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
(212) 449-8971 (call collect)
<PAGE>
Exhibit 2.5
- --------------------------------------------------------------------------------
THIS NOTICE OF GUARANTEED DELIVERY MAY ONLY BE USED FOR TENDER OF
AMERICAN DEPOSITARY SHARES
- --------------------------------------------------------------------------------
Notice of Guaranteed Delivery
FOR
TENDER OF AMERICAN DEPOSITARY SHARES
OF
OzEmail Limited
to
UUNET Holdings Australia Pty Limited
a wholly owned subsidiary
of
UUNET Technologies, Inc.
a wholly owned subsidiary
of
MCI WORLDCOM, Inc.
AT
US$2.20 Net Per Share or
US$22.00 PER AMERICAN DEPOSITARY SHARE IN CASH
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
As set forth in "Procedures for Tendering Shares and ADSs--Valid Tender of
ADSs" in Section 2 to the Offer to Purchase (as defined below), this form or one
substantially equivalent hereto must be used for acceptance of the Offer (as
defined below) in respect of American Depositary Shares ("ADSs") each
representing ten ordinary shares of OzEmail Limited (ACN 066 387 157), a
corporation incorporated under the laws of the State of New South Wales,
Australia, if American Depositary Receipts evidencing ADSs ("ADRs") are not
immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or if time will not permit all required documents to
reach the U.S. Depositary prior to the Expiration Date (as defined in Section 1
to the Offer to Purchase). Such form may be delivered by hand or mailed to The
Bank of New York (the "U.S. Depositary") and must include a signature guarantee
by an Eligible Institution in the form set out herein. See "Procedures for
Tendering Shares and ADSs--Valid Tender of ADSs--Guaranteed Delivery" in Section
2 to the Offer to Purchase.
<TABLE>
<CAPTION>
The U.S. Depositary for the Offer is:
THE BANK OF NEW YORK
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
(for Eligible Institutions Only)
Tender & Exchange Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station For Confirmation Telephone: Receive and Deliver Window
New York, New York 10286-1248 (800) 507-9357 New York, New York 10286
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
ACCEPTANCE OF THE OFFER IN RESPECT OF SHARES (EXCEPT INSOFAR AS THEY ARE
REPRESENTED BY ADSS) MAY NOT BE MADE WITH THIS FORM OR PURSUANT TO THE
GUARANTEED DELIVERY PROCEDURES.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby accepts the Offer in respect of ADSs by UUNET
Holdings Australia Pty Limited, a corporation incorporated under the laws of New
South Wales, Australia ("Purchaser") and a wholly owned subsidiary of UUNET
Technologies, Inc, a Delaware corporation ("Intermediate") and a wholly owned
subsidiary of MCI WORLDCOM, Inc., a Georgia corporation ("MCI WorldCom"), upon
the terms and subject to the conditions set forth in its Offer to Purchase dated
January [ ], 1999 (the "Offer to Purchase") and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of which is hereby
acknowledged, in respect of the number of ADSs indicated below pursuant to the
guaranteed delivery procedure set out in "Procedures for Tendering Shares and
ADSs--Valid Tender of ADSs--Guaranteed Delivery" in Section 2 to the Offer to
Purchase.
The undersigned authorizes the U.S. Depositary to deliver this Notice of
Guaranteed Delivery to Purchaser as evidence of the undersigned's acceptance of
the terms and conditions of the Offer, including the terms and conditions of the
Letter of Transmittal, and understands that the acceptance given hereby will be
effective upon receipt of the Notice of Guaranteed Delivery by the U.S.
Depositary, regardless of whether or when the certificate(s) for the tendered
ADSs (or confirmation of book entry transfer of the ADSs into the U.S.
Depositary's account at a Book-Entry Transfer Facility), the executed Letter of
Transmittal (or, in the case of a book entry transfer, an Agent's Message), and
any other required documents are received by the U.S. Depositary.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to accept the Offer. The undersigned will, upon
request, execute and deliver any additional documents deemed by the U.S.
Depositary, Purchaser, Intermediate or MCI WorldCom to be necessary or desirable
to perfect the undersigned's acceptance of Offer, as indicated below.
Signature(s):______________________ Address(es):__________________________
___________________________________ ______________________________________
(Include Zip Code)
Area Code(s) and Tel. No(s):
Name of Record Holder(s):__________ If ADSs will be tendered by book-entry
transfer check the box:[]
Account Number:_______________________
- -----------------------------------
- -----------------------------------
(Please Type or Print)
- -----------------------------------
Number of ADSs:____________________
ADR No.(s) (if available)----------
- -----------------------------------
Dated:_____________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or of the National Association of Securities Dealers Inc. or
which is a commercial bank or trust company having an office or correspondent in
the United States (each, an "Eligible Institution"), hereby (a) represents that
the tender of ADSs
<PAGE>
effected hereby complies with Rule 14e-4 under the Securities Exchange Act of
1934, as amended and (b) guarantees delivery to the U.S. Depositary, at one of
its addresses set forth above, of certificates representing the ADSs evidenced
by ADRs tendered hereby in proper form for transfer, or confirmation of book-
entry transfer of such ADSs evidenced by ADRs into the U.S. Depositary's
accounts at The Depository Trust Company (the "Book-Entry Transfer Facility"),
in each case with delivery of a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), and any other required documents, within
three New York Stock Exchange trading days after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the U.S. Depositary and must deliver the Letter of Transmittal and
the certificates for ADSs evidenced by ADRs to the U.S. Depositary within the
time period shown herein. Failure to do so could result in a financial loss to
such Eligible Institution.
___________________________________ ______________________________________
Name of Firm, Agent or Trustee (Authorized Signature)
___________________________________ Name:_________________________________
(Please type or print)
___________________________________
Address
___________________________________ Title:________________________________
(Zip Code)
Area Code and Tel. No.:____________ Date:_________________________________
NOTE: DO NOT SEND ADRS WITH THIS FORM; ADRS SHOULD BE SENT WITH YOUR LETTER
OF TRANSMITTAL.
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery (or facsimile
thereof) and any other documents required by this Notice of Guaranteed Delivery
must be received by the U.S. Depositary at its address set forth herein on or
prior to the Expiration Date. The method of delivery of this Notice of
Guaranteed Delivery and any other required documents to the U.S. Depositary is
at the election and risk of the holder, and the delivery will be deemed made
only when actually received by the U.S. Depositary. Instead of delivery by
mail, it is recommended that the holder use an overnight or hand-delivery
service, properly insured. If delivery is by mail, it is recommended that such
certificates and documents be sent by registered mail, properly insured, with
return receipt requested. In all cases sufficient time should be allowed to
assure timely delivery.
2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this Notice of
Guaranteed Delivery is signed by the holder(s) of the ADSs specified herein, the
signature(s) must correspond with exactly the name(s) as written on the face of
the ADR or on a security position listing with respect thereto without any
alteration, enlargement or change whatsoever. If any of the tendered ADSs are
held by two or more persons, all such persons must sign this Notice of
Guaranteed Delivery. If any of the tendered ADSs are registered in different
names, it will be necessary to complete, sign and submit as many separate
Notices of Guaranteed Delivery as there are different registrations.
If this Notice of Guaranteed Delivery is signed by a person other than the
holder(s) of any ADSs specified herein or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate stock powers, signed as the name of the holder(s) appears on the
ADRs or signed as the name of the participant shown on the Book-Entry Transfer
Facility's security position listing.
If this Notice of Guaranteed Delivery or any other instruments of transfer
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
agent, officer of a corporation, or other person(s) acting in a fiduciary or
representative capacity, such person(s) should so indicate when signing and must
submit proper evidence satisfactory to the U.S. Depositary and Purchaser of
their authority so to act.
<PAGE>
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
or additional copies of the Offer to Purchase or the Letter of Transmittal or
this Notice of Guaranteed Delivery should be directed to the Information Agent
or the Dealer Manager at the addresses and telephone numbers set forth on the
back cover page of the Letter of Transmittal and on the back cover page of the
Offer to Purchase.
<PAGE>
EXHIBIT 2.6
ACCEPTANCE AND TRANSFER FORM
for the Offer by UUNET Holdings Australia Pty Limited (ACN 085 531 684)
(`Purchaser') to acquire all your fully paid ordinary shares in OzEmail Limited
(ACN 066 387 157) (`OzEmail') at US$2.20 Per Share in Cash
ALL HOLDERS OF SHARES (INCLUDING SHARES HELD THROUGH CHESS) SHOULD COMPLETE,
SIGN AND RETURN THIS ACCEPTANCE AND TRANSFER FORM
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
1. Holder Identification Number (HIN)/
Securityholder Reference Number
-------------------------------------------------------------------
2. Securities Subregister
-------------------------------------------------------------------
3. Number of Shares Held/Tendered(1)
-------------------------------------------------------------------
4. Consideration (US$2.20 per share).
See Section II - Payment Election
-------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
(If your name, address or (1) Unless you amend the number of Shares in Box 3 above, you will be deemed, on
shareholding is incorrect acceptance, to have accepted for your entire shareholding.
please amend and initial)
</TABLE>
THIS ACCEPTANCE AND TRANSFER FORM MAY ONLY BE USED TO ACCEPT THE OFFER BY
HOLDERS OF SHARES. IT CANNOT BE USED TO TENDER AMERICAN DEPOSITARY SHARES. TO
TENDER AMERICAN DEPOSITARY SHARES USE THE LETTER OF TRANSMITTAL (YELLOW FORM).
- --------------------------------------------------------------------------------
THE OFFER WILL EXPIRE AT 1:00AM, NEW YORK CITY TIME, ON FEBRUARY [ ] , 1999 AND
AT 5:00PM, SYDNEY TIME, ON FEBRUARY [ ], 1999, UNLESS THE OFFER IS EXTENDED.
PRIOR TO THE EXPIRATION DATE, TENDERING HOLDERS OF SHARES WILL BE PERMITTED
TO WITHDRAW THEIR TENDERED SHARES AT ANY TIME PRIOR TO THE EXPIRATION DATE.
SEE `WITHDRAWAL RIGHTS' IN SECTION 4 OF THE OFFER TO PURCHASE.
- --------------------------------------------------------------------------------
ALL HOLDERS OF CERTIFICATED SHARES MUST COMPLETE SECTIONS I, II AND III OF THIS
FORM. ALL HOLDERS OF SHARES HELD THROUGH CHESS SHOULD COMPLETE SECTIONS I AND
III OF THIS FORM. ALL HOLDERS OF SHARES HELD THROUGH AN ISSUER SPONSORED
HOLDING SHOULD COMPLETE SECTIONS I, II AND III OF THIS FORM.
THIS IS AN IMPORTANT DOCUMENT. IF YOU ARE IN ANY DOUBT AS TO HOW TO DEAL WITH
IT, PLEASE CONSULT YOUR FINANCIAL, LEGAL OR OTHER PROFESSIONAL ADVISORS
IMMEDIATELY.
DETAILED INSTRUCTIONS FOR ACCEPTING THE OFFER ARE SET FORTH ON THE FOLLOWING
PAGES AND SHOULD BE READ CAREFULLY BEFORE THIS ACCEPTANCE AND TRANSFER FORM IS
COMPLETED.
IN THIS ACCEPTANCE AND TRANSFER FORM ALL REFERENCES TO "TENDERED SHARES" MEANS
THE NUMBER OF SHARES SET OUT IN BOX 3 ABOVE, AS MAY BE AMENDED BY YOU.
<PAGE>
2
SECTION I - ACCEPTANCE AND TRANSFER
Section 1 of this Acceptance and Transfer Form is divided into four parts:
PART A IF AT THE TIME OF ACCEPTANCE YOUR SHARES ARE CERTIFICATED, you must
complete Part A in respect of those Shares (see Section 2 of the Offer
to Purchase - Procedures for Tendering Shares and ADSs - Valid Tender of
Shares) as well as Sections II and III of this Form.
PART B IF AT THE TIME OF ACCEPTANCE YOUR SHARES ARE IN A CHESS HOLDING, you are
requested, but are not bound, to complete Part B in respect of those
Shares (see Section 2 of the Offer to Purchase - Procedures for
Tendering Shares and ADSs - Valid Tender of Shares). You must however
complete Section III of this Form and return it to the Registry at the
address given on the last page of this Form to avoid U.S. withholding
tax.
PART C IF AT THE TIME OF ACCEPTANCE YOU ARE ENTITLED TO BE REGISTERED AS THE
HOLDER OF CERTIFICATED SHARES THE SUBJECT OF ACCEPTANCE, but you are not
registered as the holder of those Shares, you must complete Part C in
respect of those Shares (see Section 2 of the Offer to Purchase -
Procedures for Tendering Shares and ADSs - Valid Tender of Shares ) as
well as Sections II and III of this Form.
PART D IF AT THE TIME OF ACCEPTANCE YOUR SHARES ARE IN AN ISSUER SPONSORED
HOLDING, you must complete Part D in respect of those Shares (see
Section 2 of the Offer to Purchase - Procedures for Tendering Shares and
ADSs - Valid Tender of Shares) as well as Sections II and III of this
Form.
Instructions on how to complete Section I of this Form are set forth on the
following pages.
PROXY AND POWER OF ATTORNEY
By tendering Shares, a holder irrevocably appoints Purchaser and each of its
directors, secretaries and officers from time to time jointly and each of them
severally as such holder's true and lawful attorney-in-fact and proxy with
effect from the date that the Offer, or the date any contract resulting from
acceptance of the Offer, becomes free from its conditions or such conditions are
satisfied or waived, with power to do all things which such holder could
lawfully do in relation to the Tendered Shares or in exercise of any right
derived from the holding of the Tendered Shares including (without limiting the
generality of the foregoing):
(a) attending and voting at any meeting of OzEmail;
(b) demanding a poll for any vote to be taken at any meeting of OzEmail;
(c) proposing or seconding any resolution to be considered at any meeting of
OzEmail;
(d) requisitioning the convening of any meeting of OzEmail and convening a
meeting pursuant to any such requisition;
(e) notifying OzEmail that such holder's address in the records of OzEmail for
all purposes including the despatch of notices of meeting, annual reports
and dividends, should be altered to an address nominated by Purchaser;
(f) receiving from OzEmail, or any other party, and retaining any Share
certificates which were held by OzEmail or any other party;
(g) executing all forms, notices, instruments (including an instrument
appointing a director of Purchaser as a proxy) in respect of any or all of
the Tendered Shares and resolutions relating to the Tendered Shares and
generally to exercise all powers and rights which a person may have as a
shareholder and performing such action as may be appropriate in order to
vest good title in the Tendered Shares in Purchaser; and
(h) doing all things incidental and ancillary to any of the foregoing,
<PAGE>
3
and to have agreed that in exercising the powers conferred by that power of
attorney, the attorney may act in the interest of Purchaser as the intended
registered holder and beneficial holder of the Tendered Shares. Such
appointment, being given for valuable consideration to secure the interest
acquired in such holder's Tendered Shares, when effective, will revoke all prior
proxies given by such holder with respect to the Tendered Shares without further
action and no subsequent proxies will be given by such holder with respect to
such Tendered Shares. Such appointment is irrevocable, and terminates upon
registration of a transfer to Purchaser of such holder's Tendered Shares.
Purchaser reserves the right to require that, in order for Tendered Shares to be
deemed validly tendered, immediately upon Purchaser's acceptance of payment for
such Tendered Shares, Purchaser must be able to exercise full voting rights with
respect to such Tendered Shares.
REPRESENTATIONS AND WARRANTIES
By signing and returning this Acceptance and Transfer Form you will be deemed to
have represented and warranted to Purchaser, as a condition of the contact
resulting from your acceptance, that at the time of acceptance and at the time
of transfer to Purchaser:
(a) you have paid to OzEmail all amounts which at the time of acceptance have
fallen due for payment in respect of the Tendered Shares; and
(b) all of your Tendered Shares are free from all mortgages, charges, liens
and other encumbrances of any nature.
<PAGE>
4
PART A - IF YOU HOLD SHARE CERTIFICATES
IN ADDITION TO THIS SECTION I - PART A, YOU MUST COMPLETE SECTIONS II AND III OF
THIS FORM.
I/We, the person(s) named above being the holder(s) of the Shares shown above:
1. accept the Offer in respect of the Tendered Shares and transfer to
Purchaser all of those Tendered Shares for the consideration specified in
the Offer;
2. agree to be bound by the terms and conditions of the Offer;
3. ATTACH MY/OUR SHARE CERTIFICATE(S); and
4. acknowledge that all documents and remittances sent by post will be sent
at my/our risk.
If this form is signed under Power of Attorney, the donee of the Power declares
that he or she has no notice of the revocation thereof.
__________________________________________ Date:
_____________________________
__________________________________________ Date:
Signature of Transferor(s) _____________________________
(In the case of joint holders, all must sign. A corporation must sign by duly
authorised officers and, if in Australia, affix its common seal or execute this
Form as permitted by paragraph 2(b) in "Instructions For Section I How To Accept
This Offer" below.)
Telephone number where we may contact you during business hours: ( )
________________
TO ACCEPT THE OFFER, SEND IN THE ENVELOPE PROVIDED OR DELIVER THIS FORM TOGETHER
WITH YOUR SHARE CERTIFICATES:
In the case of persons located outside the United States, to the Registry at:
<TABLE>
<CAPTION>
<S> <C>
BY HAND OR OVERNIGHT DELIVERY: POSTAL ADDRESS:
National Registry Services Pty Ltd Reply Paid 85
Level 1 National Registry Services Pty Ltd
Grosvenor Place PO Box N460
225 George Street Grosvenor Place
Sydney NSW 2000 NSW 1219
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
TO BE RECEIVED OR DELIVERED NO LATER THAN 5:00PM SYDNEY TIME ON THE EXPIRATION
DATE OF THE OFFER.
In the case of persons located in the United States, to the U.S. Depositary at:
<TABLE>
<CAPTION>
<S> <C>
BY HAND OR OVERNIGHT DELIVERY: POSTAL ADDRESS:
The Bank of New York The Bank of New York
Tender & Exchange Department Tender & Exchange Department
101 Barclay Street P.O. Box 11248
Receive and Deliver Window Church Street Station
New York, New York 10286 New York, New York, 10286-1248
Attention: Steve Gilbert Attention: Steve Gilbert
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
TO BE RECEIVED OR DELIVERED NO LATER THAN 1:00AM NEW YORK CITY TIME ON THE
EXPIRATION DATE OF THE OFFER.
IF YOU HAVE ANY ENQUIRIES CONCERNING THE COMPLETION OF THIS ACCEPTANCE AND
TRANSFER FORM, PLEASE CONTACT THE REGISTRY OR THE FINANCIAL ADVISOR IN AUSTRALIA
OR THE DEALER MANAGER OR THE INFORMATION AGENT IN THE UNITED STATES.
<PAGE>
5
PART B - INSTRUCTIONS FOR CHESS HOLDINGS
In addition to this Section 1 - Part B, you must complete Section III of this
Form.
1. If you are in doubt as to how to deal with your CHESS Holding, please
contact your Controlling Participant unless you are a Broker or Non-Broker
Participant.
To accept the Offer, instruct your Controlling Participant to initiate the
acceptance on CHESS. This acceptance must be initiated before 5:00pm
(Sydney time) on the last day of the Offer Period and otherwise be made in
accordance with the SCH Business Rules. You must also notify your
Controlling Participant whether you wish to receive the consideration in
U.S. or Australian dollars.
2. Please enter details of your Controlling Participant and, if not shown or
shown incorrectly on the front of this Form, your HIN.
My Controlling Participant is:
______________________________________________
Name:_______________________________________________________________________
Address:____________________________________________________________________
My HIN is:
__________________________________________________________________
Number of Shares in CHESS Holding:
__________________________________________
3. Please sign this authority.
Note: By signing and returning this authority, you have not accepted this
Offer in relation to shares in a CHESS Holding. To ensure acceptance, you
must follow the procedure set out in paragraph 1 above. This authority will
only be used in the event you have not followed the procedure set out in
paragraph 1 above.
I request and irrevocably authorise Purchaser and its agents, namely the
Registry and the U.S. Depositary, to instruct my Controlling Participant or
another CHESS sponsor to accept the Offer for all of my Tendered Shares and
to notify any Controlling Participant or another CHESS Sponsor that I wish
to receive US$ or A$ as indicated in Section II or, in default of any
indication in Section II, in Australian dollars.
If this form is signed under Power of Attorney, the donee of the Power
declares that he or she has no notice of the revocation thereof.
__________________________________________ Date:
___________________________
__________________________________________ Date:
Signature of Transferor(s) ___________________________
(In the case of joint holders all must sign. A corporation must sign by
duly authorised officers and, if in Australia, affix its common seal or
execute this Form as permitted by paragraph 2(b) in "Instructions For
Section I How To Accept This Offer" below.)
Telephone number where we may contact you during business hours: ( )
____________
<PAGE>
6
ONCE YOU HAVE COMPLETED THIS FORM, DELIVER IT OR SEND IT IN THE ENVELOPE
PROVIDED TO THE REGISTRY AT:
<TABLE>
<CAPTION>
<S> <C>
BY HAND OR OVERNIGHT DELIVERY: POSTAL ADDRESS:
National Registry Services Pty Ltd Reply Paid 85
Level 1 National Registry Services Pty Ltd
Grosvenor Place PO Box N460
225 George Street Grosvenor Place
Sydney NSW 2000 NSW 1219
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
TO BE RECEIVED OR DELIVERED NO LATER THAN 5:00PM SYDNEY TIME ON THE EXPIRATION
DATE OF THE OFFER.
IF YOU HAVE ANY ENQUIRIES CONCERNING THE COMPLETION OF THIS ACCEPTANCE AND
TRANSFER FORM, PLEASE CONTACT THE REGISTRY OR THE FINANCIAL ADVISOR IN AUSTRALIA
OR THE DEALER MANAGER OR THE INFORMATION AGENT IN THE UNITED STATES.
<PAGE>
7
PART C - INSTRUCTIONS FOR PERSONS ENTITLED TO BE REGISTERED BUT NOT REGISTERED
AS A HOLDER OF CERTIFICATED SHARES AT THE TIME OF ACCEPTANCE
In addition to this Section I - Part C, you must complete Sections II and III of
this Form.
If you are entitled to be registered in respect of Certificated Shares but, at
the time you accept the Offer you are not registered as the holder of such
Shares, you must accept the Offer in respect of any such Shares by completing
this Form and returning it together with evidence which establishes your
entitlement to be registered in respect of such Shares (eg. a copy of a contract
note in respect of your purchase of those Shares) to the address set out below
so that it is received no later than 5:00pm Sydney time on the expiration date
of the Offer.
I/We, the person(s) named below, being at the time of this acceptance entitled
to be registered as the holder(s) of certain Shares:
1. accept the Offer in relation to the Tendered Shares (being some or all of
the Shares in respect of which I/we are entitled to be registered as
holder(s)) and agree to transfer to Purchaser the Tendered Shares for the
consideration specified in the Offer;
2. agree to be bound by the terms and conditions of the Offer;
3. attach evidence which establishes my/our entitlement to be registered in
respect of the Tendered Shares; and
4. acknowledge that all documents and remittances sent by post will be sent at
my/our risk.
Name and address in which your Shares are registered Name:
(if known): ____________________
Address:___________________________________
If this Form is signed under Power of Attorney, the donee of the Power declares
that he or she has no notice of the revocation thereof.
__________________________________________ Date:
____________________________
__________________________________________ Date:
Signature of Transferor(s) ____________________________
(In the case of joint holders, all must sign. A corporation must sign by duly
authorised officers and, if in Australia, affix its common seal or execute this
Form as permitted by paragraph 2(b) in "Instructions For Section I How To Accept
This Offer" below.)
Telephone number where we may contact you during business hours: ( )
________________
TO ACCEPT THE OFFER, SEND IN THE ENVELOPE PROVIDED OR DELIVER THIS FORM TOGETHER
WITH EVIDENCE OF YOUR ENTITLEMENT TO THE REGISTRY AT:
<TABLE>
<CAPTION>
<S> <C>
BY HAND OR OVERNIGHT DELIVERY: POSTAL ADDRESS:
National Registry Services Pty Ltd Reply Paid 85
Level 1 National Registry Services Pty Ltd
Grosvenor Place PO Box N460
225 George Street Grosvenor Place
Sydney NSW 2000 NSW 1219
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
TO BE RECEIVED OR DELIVERED NO LATER THAN 5:00 PM SYDNEY TIME ON THE EXPIRATION
DATE OF THE OFFER.
IF YOU HAVE ANY ENQUIRIES CONCERNING THE COMPLETION OF THIS ACCEPTANCE AND
TRANSFER FORM, PLEASE CONTACT THE REGISTRY OR THE FINANCIAL ADVISOR IN AUSTRALIA
OR THE DEALER MANAGER OR THE INFORMATION AGENT IN THE UNITED STATES.
<PAGE>
8
PART D - INSTRUCTIONS FOR ISSUER SPONSORED HOLDINGS
IN ADDITION TO THIS SECTION I - PART D, YOU MUST COMPLETE SECTIONS II AND III OF
THIS FORM.
I/We, the person(s) named above being the holder(s) of the Shares shown above:
1. accept the Offer in respect of the Tendered Shares and transfer to
Purchaser all of those Tendered Shares for the consideration specified in
the Offer;
2. agree to be bound by the terms and conditions of the Offer; and
3. acknowledge that all documents and remittances sent by post will be sent
at my/our risk.
If this form is signed under Power of Attorney, the donee of the Power declares
that he or she has no notice of the revocation thereof.
__________________________________________ Date:
_____________________________
__________________________________________ Date:
Signature of Transferor(s) _____________________________
(In the case of joint holders, all must sign. A corporation must sign by duly
authorised officers and, if in Australia, affix its common seal or execute this
Form as permitted by paragraph 2(b) in "Instructions For Section I How To Accept
This Offer" below.)
Telephone number where we may contact you during business hours: ( )
________________
TO ACCEPT THE OFFER, SEND IN THE ENVELOPE PROVIDED OR DELIVER THIS FORM TO THE
REGISTRY AT:
<TABLE>
<CAPTION>
<S> <C>
BY HAND OR OVERNIGHT DELIVERY: POSTAL ADDRESS:
National Registry Services Pty Ltd Reply Paid 85
Level 1 National Registry Services Pty Ltd
Grosvenor Place PO Box N460
225 George Street Grosvenor Place
Sydney NSW 2000 NSW 1219
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
TO BE RECEIVED OR DELIVERED NO LATER THAN 5:00PM SYDNEY TIME ON THE EXPIRATION
DATE OF THE OFFER.
IF YOU HAVE ANY ENQUIRIES CONCERNING THE COMPLETION OF THIS ACCEPTANCE AND
TRANSFER FORM, PLEASE CONTACT THE REGISTRY OR THE FINANCIAL ADVISOR IN AUSTRALIA
OR THE DEALER MANAGER OR THE INFORMATION AGENT IN THE UNITED STATES.
<PAGE>
9
SECTION II
PAYMENT ELECTION
THE CONSIDERATION PAYABLE UNDER THE OFFER IS DENOMINATED IN U.S. DOLLARS.
HOWEVER, ALL HOLDERS HAVE THE RIGHT TO ELECT TO RECEIVE PAYMENT IN AUSTRALIAN
DOLLARS.
AUSTRALIAN DOLLAR PAYMENT ELECTION. Check/tick box only if you wish
to receive all (but not part) of the amount of consideration to be
-------------------
paid in Australian dollars. If you check/tick this box you will
receive payment by cheque in Australian dollars, in which case the
Registry or the U.S. Depositary will arrange for the conversion of
the U.S. dollars amounts payable to you to Australian dollars at the
exchange rate obtainable by the Registry or the U.S. Depositary, as
applicable, on the spot market in Sydney or New York, as applicable,
at approximately noon (Sydney time or New York City time) on the
date the cash consideration is made available by Purchaser to the
Registry or the U.S. Depositary for delivery to holders of Shares.
UNITED STATES DOLLAR PAYMENT ELECTION. Check/tick box only if you
wish to receive all (but not part) of the amount of consideration to
-------------------
be paid in United States dollars. If you check/tick this box you
will receive payment by cheque in United States dollars.
IF YOU DO NOT MAKE ANY PAYMENT ELECTION AND BOTH BOXES ABOVE ARE BLANK, YOU WILL
BE DEEMED TO HAVE ELECTED TO RECEIVE ALL (BUT NOT PART) OF THE AMOUNT OF CASH
------------------------------
CONSIDERATION TO BE PAID IN AUSTRALIAN DOLLARS. IF YOUR SHARES ARE IN A CHESS
--------------------------------
HOLDING, YOU MUST GIVE INSTRUCTIONS TO YOUR CONTROLLING PARTICIPANT WITH REGARD
TO THE PAYMENT ELECTION.
The actual amount of Australian dollars received will depend upon the exchange
rate prevailing on the business day on which funds are made available by
Purchaser. Holders should be aware that the U.S. dollar/Australian dollar
exchange rate which is prevailing at the date on which an election is made to
receive Australian dollars and on the date of payment may be different from that
prevailing on the business day on which funds are made available to the Registry
or the U.S. Depositary, as the case may be, by Purchaser. In all cases,
fluctuations in the U.S. dollar/Australian dollar exchange rate are at the risk
of holders who elect, or who in default of such election are deemed to have
elected, to receive their consideration in Australian dollars. Purchaser shall
have no responsibility with respect to the cash consideration payable other than
to make payment in accordance with the foregoing.
<PAGE>
10
SECTION III -- UNITED STATES BACKUP FEDERAL WITHHOLDING TAX
Payments made to holders of the Shares pursuant to the Offer may be subject to
information reporting to the United States Internal Revenue Service and to
United States federal backup withholding tax at the rate of 31% on the gross
amount of such payments. To avoid information reporting and backup withholding,
--------- -------------------
holders of the Shares must provide the Registry or the U.S. Depositary with a
- ------------------------------------------------ ------
properly executed Substitute Form W-8 (in the case of a non-United States
- --------------------------------------
holder) or a properly executed Substitute Form W-9 (in the case of a United
States holder). For the definition of a "United States holder" refer to the
Offer to Purchase.
ACCORDINGLY, YOU MUST COMPLETE AND SIGN ONE OF THE TWO SECTIONS SET FORTH BELOW.
Instructions on completing the Substitute Form W-8 or Substitute Form W-9 are
set forth on the following pages.
NON-UNITED STATES HOLDERS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Name of owner (if joint account, also give joint owner's name)
-------------------------------------------------------------------------------
SUBSTITUTE Permanent address
FORM W-8
-------------------------------------------------------------------------------
City, Province or State, postal code and country
-------------------------------------------------------------------------------
DEPARTMENT OF Certification -- Under penalties of perjury, I certify that:
THE TREASURY
INTERNAL I am not (i) a United States citizen or resident, corporation,
REVENUE SERVICE partnership, estate or trust; (ii) an individual who has been, or plans
to be, present in the United States for a total of 183 days or more
during the calendar year, or (iii) engaged, nor plan to be engaged
during the year, in a trade or business in the United States with which
CERTIFICATE OF gains on the sale of the Shares are effectively connected.
FOREIGN STATUS
Signature_______________________ Date:________________
------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
11
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
UNITED STATES HOLDERS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART 1--PLEASE PROVIDE YOUR TIN IN THE TIN
BOX AT RIGHT AND CERTIFY BY SIGNING SOCIAL SECURITY NUMBER
SUBSTITUTE AND DATING BELOW. OR
FORM W-9 -------------------------------
EMPLOYER IDENTIFICATION NUMBER
(IF AWAITING TIN, WRITE APPLIED FOR)
----------------------------------------------------------------------------------
PART 2--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING PLEASE WRITE "EXEMPT" HERE.
(SEE INSTRUCTIONS)
- --------------------------------------------------------------------------------------------------------------------
PART 3--CERTIFICATION, UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct TIN (or I am waiting for a
number to be issued to me), and
(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as a result of a failure to
report all interest or dividends or (c) the IRS has notified me that I am no
longer subject to backup withholding.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THE DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
SIGNATURE DATE
----------------------------------- -----------------------
DEPARTMENT OF THE TREASURY You must cross out item (2) of part 3 above if you have been notified by the
INTERNAL REVENUE SERVICE IRS that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return and you have not been
notified by the IRS that you are no longer subject to backup withholding.
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER ("TIN") YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART
AND CERTIFICATION 1 OF THE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and that I
mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal
Revenue Service Center or Social Security Administration Office (or I intend to mail or deliver an application
in the near future). I understand that if I do not provide a taxpayer identification number to the payor within
60 days, the Payor is required to withhold 31 percent of all cash payments made to me thereafter until I provide
a number.
SIGNATURE DATE
---------------------------------------------------------------- ----------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
12
INSTRUCTIONS FOR SECTION I
HOW TO ACCEPT THIS OFFER
1. The number of Shares which you are presently recorded as holding is shown on
this Acceptance and Transfer Form. If you have recently bought or sold any
Shares, your holding may differ from that shown and you may alter the number
of shares shown on this form and the amount payable. Note that if you fail
to do so, Purchaser will do so on your behalf.
2. To accept the Offer, please sign and date the Acceptance and Transfer Form
where indicated. Unless you amend the number of Shares in Box 3 on the first
page of this Acceptance and Transfer Form, you will be deemed, on acceptance,
to have accepted for your entire shareholding. In addition, the following
should be noted:
(a) if the Tendered Shares are registered in the names of joint holders, all
joint holders must sign the Acceptance and Transfer Form:
(b) a corporation must execute the Acceptance and Transfer Form under its
seal witnessed by 2 directors or witnessed by a director and the company
secretary or without a seal signed by 2 directors or without a seal
signed by a director and the company secretary or without a seal by a
sole director of a proprietary company that has a sole director or by
attorney; and
(c) if the Acceptance and Transfer Form is signed under Power of Attorney,
the relevant Power of Attorney must be submitted to the Registry or the
United States Depository for noting.
3. If you hold Options on the date of the Offer and if you are entitled to and
wish to exercise Options during the Offer Period and accept the Offer, you
may do so by exercising those Options and tendering the resulting Shares to
the Offer in accordance with this Acceptance and Transfer Form. You may not
tender your Options, only the Shares resulting from the exercise of the
Options. For details on how to exercise your Options, contact OzEmail.
4. If Shares stand in the books of OzEmail in the name of a person deceased,
this Offer may be accepted by executors or administrators. Probate (or
Letters of Administration, if applicable) must be produced to the Registry or
the U.S. Depositary for noting. Any other requirements of OzEmail as to
transfer or registration of these Shares must be satisfied.
5. If you have sold all your Shares, please send the Acceptance and Transfer
Form to the sharebroker who acted on your behalf.
6. If you have sold part of your Shares or purchased additional Shares, please
alter the number of Shares shown beside your name on the front of the
Acceptance and Transfer Form to show the number of Shares now held by you in
a certificated holding or Issuer Sponsored Holding and instruct your
Controlling Participant in respect of Shares held through CHESS.
7. If you hold share certificates:
(a) Complete all three sections of the Acceptance and Transfer Form and place
the completed Acceptance and Transfer Form AND YOUR RELEVANT SHARE
CERTIFICATE(S) in the enclosed envelope.
(b) Holders located in the United States should forward their acceptances to
the U.S. Depositary. Holders located outside the United States should
forward their acceptances to the Registry. Holders located outside
Australia and the United States are urged to forward their acceptances by
AIRMAIL. The enclosed envelopes are not available for use by holders
resident outside Australia and the United States. Acceptances should be
posted to the address shown on the back page of this form.
(c) Should your share certificate(s) not be readily available, please
complete and post the Acceptance and Transfer Form immediately and forward
the certificate(s) as soon as possible. If any certificate has been lost
or destroyed, please include with your Acceptance and Transfer Form a
letter to this effect and contact the Registry or the U.S. Depositary, as
applicable.
<PAGE>
13
INSTRUCTIONS FOR SECTION III
UNITED STATES BACKUP WITHHOLDING TAX
UNITED STATES HOLDERS
United States federal income tax law generally requires that a holder that is a
United States person (generally, a citizen or resident of the United States)
whose tendered Shares are accepted for purchase pursuant to the Offer provide
the Registry with their correct Taxpayer Identification Number ("TIN"), which,
in the case of a holder who is an individual, is his or her social security
number. If the Payor is not provided with the correct TIN or an adequate basis
for an exemption, such holder may be subject to a $50 penalty imposed by the
Internal Revenue Service and backup withholding in an amount equal to 31% of the
gross proceeds resulting from the Offer. If withholding results in an
overpayment of taxes a refund may be obtained.
To prevent backup withholding: each tendering holder must provide his correct
TIN by completing the "Substitute Form W-9" set forth herein, certifying that
the TIN provided is correct (or that such holder is awaiting a TIN) and that (i)
the holder is exempt from backup withholding, (ii) the holder has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of a failure to report all interest or dividends, or
(iii) the Internal Revenue Service has notified the holder that he or she is no
longer subject to backup withholding.
If you do not have a TIN, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
instructions on applying for a TIN, write "Applied For" in the space for the TIN
in Part 1 of the Substitute Form W-9, and sign and date the Substitute Form W-9
and the Certificate of Awaiting Taxpayer Identification Number set forth herein.
If you do not provide your TIN to the Payor within 60 days, backup withholding
will begin and continue until you furnish your TIN to the Payor. Note: Writing
"Applied For" on the form means that you have already applied for a TIN or that
you intend to apply for one in the near future.
If the Shares are held in more than one name or are not in the name of the
actual owner, consult the W-9 Guidelines for information on which TIN to report.
Exempt holders (including, among others, United States corporations and tax-
exempt organizations) are not subject to these backup withholding and reporting
requirements. To prevent possible erroneous backup withholding, an exempt
holder should write "Exempt" in Part 2 of Substitute Form W-9. See the W-9
Guidelines for additional instructions.
NON-UNITED STATES HOLDERS
In order for a holder that is not a United States person to qualify for
exemption from backup withholding, such holder must complete and submit to the
Registry or the U.S. Depositary, as applicable (referred to herein as the
"Payor"), the "Substitute Form W-8" set forth herein, certifying that the holder
is not (i) a United States citizen or resident, corporation, partnership,
estate, or trust, (ii) an individual who has been, or plans to be, present in
the United States for a total of 183 days or more during the calendar year, or
(iii) engaged, nor plans to be engaged during the year, in a trade or business
in the United States with which gains from the sale of the Shares are
effectively connected.
If backup withholding occurs as a result of a foreign holder's failure to
provide the Payor with a properly executed Substitute Form W-8, such holder may
get a refund of the amount withheld by filing Internal Revenue Service Form
1040NR ("United States Nonresident Alien Income Tax Return").
Note: All references herein to sections are to the indicated sections of the
Internal Revenue Code of 1986, as amended.
<PAGE>
14
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER (`TIN') ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER--
Social Security Numbers ("SSNs") have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer Identification Numbers ("EINs") have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer.
<TABLE>
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE NAME AND SOCIAL SECURITY NUMBER OR EMPLOYER
IDENTIFICATION NUMBER OF
<S> <C>
1. Individual The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined funds,
the first individual on the account (1)
3. Custodian account of a minor (Uniform Gift to The minor (2)
Minors Act)
4. a. The usual revocable savings trust (grantor is The grantor-trustee (1)
also trustee)
b. The so-called trust account that is not a legal
or valid trust under State law The actual owner (1)
5. Sole proprietorship The owner (3)
6. A valid trust, estate, or pension trust Legal entity (4)
7. Corporation The corporation
8. Association, club, religious, charitable, The organization
education or other tax-exempt organization
9. Partnership The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department of Agriculture in the The public entity
name of a public entity (such as State or local
government, school district, or prison) that receives
agricultural program payments.
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's SSN.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your SSN or EIN (if you have
one).
(4) List first and circle the name of the legal trust, estate or pension trust
(Do not furnish the TIN of the personal representative or trustee unless
the legal entity itself is not designated in the account title).
NOTE: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
How to Get a TIN
If you do not have a TIN, apply for one immediately. To apply for an SSN, obtain
Form SS-5, Application for a Social Security Number Card, at the local office of
the Social Security Administration. Get Form W-7, Application for IRS Individual
Taxpayer Information Number, to apply for an Individual TIN or Form SS-4,
Application for Employer Identification Number, to apply for an EIN. You can get
Forms W-7 and SS-4 from the IRS by calling 1-800-TAX-FORM (1-800-829-3676).
If you do not have a TIN, write, "Applied For" in the space for the TIN, sign
and date the form, and give it to the payer. For interest and dividend payments
and certain payments made with respect to readily tradable instruments, you
will, generally have 60 days to get a TIN and give it to the payer. If the
payer does not receive your TIN within 60 days, backup withholding, if
applicable, will begin and continue until you furnish your TIN.
<PAGE>
15
NOTE: Writing, "Applied For" on the form means that you have already applied
for a TIN OR that you intend to apply for one soon.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date the form, and give it to the payer.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Individuals (including sole proprietors) are NOT exempt from backup withholding.
Corporations are exempt from backup withholding for certain payments, such as
interest and dividends.
If you are exempt from backup withholding, you should still complete Substitute
Form W-9 to avoid possible erroneous backup withholding. Enter your correct TIN
in Part 1, write "Exempt" in Part 2, and sign and date the form. If you are a
nonresident alien or a foreign entity not subject to backup withholding, give
the requester a completed Form W-8, Certificate of Foreign Status.
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
(1) through (13) and a person registered under the Investment Advisers Act of
1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions and patronage dividends.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under section 403(b)(7), if
the account satisfies the requirements of section 401(f)(2).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their subdivisions or instrumentalities.
(5) A foreign government, a political subdivision of a foreign government, or
any of their agencies instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities registered in the United States, the
District of Columbia, or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
<PAGE>
16
(16) Payment of dividends and patronage dividends not generally subject to
backup withholding include the following:
o Payments to non-resident aliens subject to withholding under section 1441.
o Payments to partnerships not engaged in a trade or business in the United
States and which have at least one non-resident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest or obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
current TIN to the payer.
o Payments of tax-exempt interest (including exempt-interest dividends under
section 852)
o Payments described in section 6049(b)(5) to non-resident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE
THE FORM AND RETURN IT TO THE PAYER.
Certain payments that are not subject to information reporting are also not
subject to backup withholding. For details, see sections 6041, 6041A, 6042,
6044, 6045, 6049, 6050A and 6060N, and their regulations. PRIVACY ACT NOTICE.
Section 6109 requires you to give your correct TIN to persons who must file
information returns with the IRS to report interest, dividends, and certain
other income paid to you, mortgage interest you paid, the acquisition or
abandonment of secured property, cancellation of debt, or contributions you made
to an IRA. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. The IRS may also provide this
information to the Department of Justice for civil and criminal litigation and
to cities, states, and the District of Columbia to carry out their tax laws.
You must provide your TIN whether or not you are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not give a TIN to a payer. Certain penalties
may also apply.
PENALTIES
(1) FAILURE TO FURNISH TIN. If you fail to furnish your TIN to a payer, you
are subject to a penalty of $50 for each such failure unless your failure
is due to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
(4) MISUSE OF TINS. If the payer discloses or uses TINs in violation of
Federal law, the payer may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT
OR THE INTERNAL REVENUE SERVICE
<PAGE>
17
THIS IS A VERY IMPORTANT DOCUMENT. IF YOU ARE IN DOUBT AS TO HOW TO DEAL WITH
IT, CONSULT YOUR STOCKBROKER OR FINANCIAL ADVISER WITHOUT DELAY.
The Registry for the Offer in Australia is:
NATIONAL REGISTRY SERVICES PTY LIMITED
<TABLE>
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<S> <C> <C>
By Mail: By Facsimile By Hand:
REPLY PAID 85 FAX: (02) 9372 6011 LEVEL 1, GROSVENOR PLACE
PO Box N460 225 GEORGE STREET
Grosvenor Place SYDNEY NSW 2000
NSW 1219 TEL: (02) 9372 6060
</TABLE>
The U.S. Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
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<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
(FOR ELIGIBLE INSTITUTIONS ONLY)
TENDER & EXCHANGE DEPARTMENT (212) 815-6213 TENDER & EXCHANGE DEPARTMENT
P.O. Box 11248 101 BARCLAY STREET
Church Street Station RECEIVE AND DELIVER WINDOW
New York, New York 10286-1248 FOR CONFIRMATION TELEPHONE: NEW YORK, NEW YORK 10286
(800) 507-9357
</TABLE>
Any questions or requests for assistance or additional copies of the Offer to
Purchase, the Acceptance and Transfer form, the Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Information Agent or the
Dealer Manager at their respective telephone numbers and locations listed below.
Holders may also contact their broker, dealer, commercial bank or trust company
or other nominee for assistance concerning the Offer.
The Information Agent for the Offer in the United States is:
MACKENZIE
PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
OR
FROM THE UNITED STATES CALL TOLL-FREE (800) 322-2885
<TABLE>
<CAPTION>
<S> <C> <C>
The Financial Advisor to MCI WORLDCOM, Inc. is:
MERRILL LYNCH
Level 49, MLC Centre MERRILL LYNCH WORLD HEADQUARTERS
19-29 MARTIN PLACE NORTH TOWER
SYDNEY NSW 2000 WORLD FINANCIAL CENTER
(02) 9226 5342 (CALL COLLECT) NEW YORK, NEW YORK 10281-1305
(212) 449-8971 (CALL COLLECT)
</TABLE>
The Dealer Manager for the Offer in the United States is:
MERRILL LYNCH
MERRILL LYNCH WORLD HEADQUARTERS
NORTH TOWER
WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10281-1305
(212) 449-8971 (CALL COLLECT)
