<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
AMENDMENT NO. 1
TO
SCHEDULE 13D
---------------
OZEMAIL LIMITED
(ACN # 066 387 157)
(NAME OF SUBJECT COMPANY)
UUNET HOLDINGS AUSTRALIA PTY LIMITED
UUNET TECHNOLOGIES, INC.
MCI WORLDCOM, INC.
(BIDDER)
---------------
ORDINARY SHARES AND
AMERICAN DEPOSITARY SHARES, EACH REPRESENTING 10 ORDINARY SHARES
(TITLE OF CLASS OF SECURITIES)
---------------
[NONE] (ORDINARY SHARES)
[692674104] (AMERICAN DEPOSITARY SHARES)
(CUSIP NUMBER OF CLASS OF SECURITIES)
---------------
CHARLES T. CANNADA
SENIOR VICE PRESIDENT, CORPORATE DEVELOPMENT
MCI WORLDCOM INC.
515 EAST AMITE STREET
JACKSON, MISSISSIPPI 39201
(601) 360-8600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
---------------
WITH COPIES TO:
R. RANDALL WANG, ESQ. MARTINA W. KNEE, ESQ.
BRYAN CAVE LLP UUNET TECHNOLOGIES, INC.
ONE METROPOLITAN SQUARE 3060 WILLIAMS DRIVE
SUITE 3600 FAIRFAX, VIRGINIA 22031
ST. LOUIS, MISSOURI 63102 (703) 206-5600
(314) 259-2000
CALCULATION OF FILING FEE
===============================================================================
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
- -------------------------------------------------------------------------------
$296,620,786 $59,325
================================================================================
* For purposes of calculating the filing fee only. This calculation assumes
the purchase of 134,827,630 ordinary shares of OzEmail Limited, including
ordinary shares represented by American Depositary Shares (the "Shares"), at
US$2.20 net per ordinary share in cash. Such number of Shares represents the
Shares outstanding as of December 21, 1998 (excluding shares owned by the
Bidder) plus the number of Shares issuable upon the exercise of all
outstanding options as of December 21, 1998.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d)
of the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate value of cash offered by UUNET Holdings Australia
Pty Limited for such number of shares.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form of Registration No.: Not applicable. Date filed: Not applicable.
(Continued on following pages)
Page 1 of 11 pages
Exhibit Index is located on page 7.
================================================================================
<PAGE>
14D-1
CUSIP NO. 692674104 Page 2 of 11 Pages
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
UUNET HOLDINGS AUSTRALIA PTY LIMITED (00-00000000)
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [_]
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS*
WC & BK
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) OR 2(f)
NOT APPLICABLE [_]
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
NEW SOUTH WALES, AUSTRALIA
- -------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,863,174
- -------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES*
NOT APPLICABLE [_]
- -------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
14.9%
- -------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
14D-1
CUSIP NO. 692674104 Page 3 of 11 Pages
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
UUNET TECHNOLOGIES, INC. 54-1543611
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [_]
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS*
WC & BK
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) OR 2(f)
NOT APPLICABLE [_]
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,863,174
- -------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES*
NOT APPLICABLE [_]
- -------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
14.9%
- -------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
14D-1
CUSIP NO. 692674104 Page 4 of 11 Pages
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
MCI WORLDCOM, INC. 58-1521612
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS*
WC & BK
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) OR 2(f)
NOT APPLICABLE [_]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
GEORGIA
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,863,174
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES*
NOT APPLICABLE [_]
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
14.9%
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
4
<PAGE>
14D-1
CUSIP NO. 692674104 Page 5 of 11 Pages
This Statement on Schedule 14D-1 also constitutes Amendment No. 1 to
Schedule 13D and relates to the offer by UUNET Holdings Australia Pty Limited, a
company incorporated in New South Wales, Australia ("Purchaser") and a wholly
owned subsidiary of UUNET Technologies, Inc., a Delaware corporation
("Intermediate"), which is, in turn, a wholly-owned subsidiary of MCI WORLDCOM,
Inc. a Georgia corporation ("Parent"), to purchase all outstanding: (a) ordinary
shares (the "Shares") of OzEmail Limited, a corporation incorporated under the
laws of the State of New South Wales, Australia (the "Company"), and (b)
American Depositary Shares (ADSs"), each representing 10 Ordinary Shares (the
Shares and the ADSs collectively, the "Securities"), of the Company, at a price
of US$2.20 per Share and 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 the Offer to Purchase dated January 8, 1999 (Sydney
time (January 7, 1999, New York time)), a copy of which is attached hereto as
Exhibit (a)(1) and (i) in the case of Shares, in the related Acceptance and
Transfer Form, a copy of which is attached hereto as Exhibit (a)(2) and (ii) in
the case of ADSs, in the related Letter of Transmittal, a copy of which is
attached hereto as Exhibit (a)(3) (which Offer to Purchase, Acceptance and
Transfer Form and Letter of Transmittal, as amended from time to time, together
constitute the "Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is OzEmail Limited, a corporation
incorporated under the laws of the State of New South Wales, Australia. The
address of the Company's principal executive offices is Ground Floor, Building
B, 39 Herbert Street, St. Leonards, New South Wales, Australia.
(b) The information concerning the title, number of shares outstanding, and
number of shares being sought set forth in the Introduction and Offer of the
Offer to Purchase is incorporated herein by reference.
(c) The information concerning the markets for, and the price of, the
Shares and ADSs, set forth in Section 6 ("Price Range of Shares; Dividends;
Exchange Rate") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) The information contained in the Introduction and Offer and Section
8 ("Certain Information Concerning Purchaser, Intermediate and MCI WorldCom") of
the Offer to Purchase and in Schedule A thereto is incorporated herein by
reference. The name, business address, present principal occupation or
employment and the name, present principal occupation or employment and the
name, principal business and address of any corporation or other organization in
which such employment or occupation is conducted, of each director and executive
officer of Purchaser, Intermediate and Parent are set forth in Schedule A to the
Offer to Purchase and are incorporated by reference herein.
(d) The material occupations, positions, offices or employments during the
last five years (including starting and ending dates of each) and the name,
principal business and address of any business corporation or other organization
in which such occupation, position, office or employment was carried on, of each
director and executive officer of Purchaser, Intermediate and Parent are set
forth in Schedule A to the Offer to Purchase and are incorporated herein by
reference.
(e) and (f) During the last five years, neither Purchaser, Intermediate
nor Parent, nor any persons controlling Purchaser, Intermediate or Parent, nor,
to the best knowledge of Purchaser, Intermediate and Parent, any of the persons
listed on Schedule A to the Offer to Purchase, (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which any such person was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
(g) The citizenship of each of the directors and executive officers of the
Purchaser, Intermediate and Parent is set forth in Schedule A to the Offer to
Purchase and is incorporated herein by reference.
5
<PAGE>
14D-1
CUSIP NO. 692674104 Page 6 of 11 Pages
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction and Offer,
Section 8 ("Certain Information Concerning the Purchaser, Intermediate and MCI
WorldCom"), Section 10 ("Background of the Offer; Contacts with OzEmail") and
Section 11 ("Purpose of the Offer; Plans for OzEmail") of the Offer to Purchase
is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in Section 11 ("Purpose of the Offer;
Plans for OzEmail") of the Offer to Purchase is incorporated herein by
reference.
(f) and (g) The information set forth in Section 11 ("Purpose of the
Offer; Plans for OzEmail") and Section 13 ("Effect of the Offer on the Market
for the Securities; The Nasdaq National Market and Australian Stock Exchange
Quotation and Exchange Act Registration") of the Offer to Purchase is
incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction and Offer of the Offer to
Purchase and Schedule B thereto is incorporated herein by reference.
(b) The information set forth in the Introduction and Offer of the Offer to
Purchase and Schedule B thereto is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in Section 8 ("Certain Information Concerning
Purchaser, Intermediate and MCI WorldCom"), Section 10 ("Background of the
Offer; Contacts with OzEmail"), and Section 11 ("Purpose of the Offer; Plans for
OzEmail") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Offer and Section 16
("Fees and Expenses") of the Offer to Purchase is incorporated herein by
reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Purchaser is a newly formed corporation which has engaged in no activities
other than in connection with the purchase of Shares and the Offer (as defined
in the Offer to Purchase). Accordingly, the financial statements of Purchaser
are not material to a decision by a security holder of the Company to sell,
tender or hold shares. Intermediate is a wholly owned subsidiary of MCI
WorldCom and therefore the financial statements of Intermediate's activities are
not provided, but Intermediate's financial results are included in the
consolidated financial statements of MCI WorldCom. The information set forth in
Section 8 ("Certain Information Concerning Purchaser, Intermediate and MCI
WorldCom") of the Offer to Purchase and the audited financial statements
presented in Parent's Current Report on Form 8-K dated May 28, 1998 (filed May
28, 1998) and the unaudited financial statements contained in MCI WorldCom's
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1998
filed by Parent under File No. 0-11258 with the Securities and Exchange
Commission are incorporated herein by reference. The incorporation herein by
reference of the above referenced financial information does not constitute an
admission that such information is material to a decision by a shareholder of
the Company whether to sell, tender or hold shares being sought in the Offer.
6
<PAGE>
14D-1
CUSIP NO. 692674104 Page 7 of 11 Pages
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 8 ("Certain Information Concerning
Purchaser, Intermediate and MCI WorldCom") of the Offer to Purchase is
incorporated herein by reference.
(b) and (c) The information set forth in the Introduction and Offer and
Sections 11 ("Purpose of the Offer; Plans for OzEmail") and 15 ("Certain Legal
Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein
by reference.
(d) The information set forth in Section 13 ("Effect of the Offer on the
Market for Shares; The Nasdaq National Market and Australian Stock Exchange
Quotation and Exchange Act Registration") of the Offer to Purchase is
incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase, the Acceptance and
Transfer Form and the Letter of Transmittal, copies of which are attached hereto
as Exhibits (a)(1), (a)(2), and (a)(3), respectively, is incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated January 8, 1999 (Sydney, Australia time)
(January 7, 1999, New York time).
(a)(2) Acceptance and Transfer Form.
(a)(3) Letter of Transmittal.
(a)(4) Notice of Guaranteed Delivery.
(a)(5) Letter from Merrill Lynch to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees holding OzEmail ADSs.
(a)(6) Letter to ADS Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees holding OzEmail ADSs.
(a)(7) Form of Summary Advertisement as published in the Wall Street
Journal on January 7, 1999 (New York City time).
(a)(8) News Release dated January 7, 1999 (Jackson, MS time),
issued by Parent.
(a)(9) News Release dated December 13, 1998 (Jackson, MS time) and
December 14, 1998 (Sydney, Australia time), issued by Parent
(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 OzEmail).
(a)(10) News Release dated December 14, 1998 (Sydney, Australia time),
issued by the Company (incorporated by reference to Schedule 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 OzEmail).
(b)(1) Amended and Restated Facility A Revolving Credit Agreement among
MCI WorldCom (borrower), NationsBank, N.A. (Arranging Agent and
Administrative Agent), NationsBanc
7
<PAGE>
14D-1
CUSIP NO. 692674104 Page 8 of 11 Pages
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)).
(b)(2) 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)).
(c) Subscription Agreement, dated December 11, 1998, by and between the
Purchaser and the Company. (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).
(d) [Not applicable.]
(e) [Not applicable.]
(f) [Not applicable.]
The undersigned hereby agree to jointly file a statement on
Schedule 14D-1 and Schedule 13D, together with any amendments thereto, with
the SEC pursuant to the requirements of Rule 14d-1 and Rule 13d-1 under the
Securities Exchange Act of 1934, as amended.
8
<PAGE>
14D-1
CUSIP NO. 692674104 Page 9 of 11 Pages
SIGNATURE AND POWER OF ATTORNEY
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
UUNET Holdings Australia Pty Limited ("Purchaser") hereby constitutes
and appoints John W. Sidgmore, Scott D. Sullivan and Charles T. Cannada, and
each of them (with full power to each of them to act alone), the true and lawful
attorney-in-fact and agent for Purchaser, to act on behalf of and in the name of
Purchaser in connection with this Schedule 14D-1 and Schedule 13D, including the
authority to sign any amendments hereto, and to file the same, with exhibits and
any and all other documents filed with respect thereto, with the Securities and
Exchange Commission (or any other governmental or regulatory authority), and
Purchaser ratifies and confirms all that said attorneys in fact and agents may
lawfully do or cause to be done by virtue hereof.
Dated: January 7, 1999
UUNET HOLDINGS AUSTRALIA PTY LIMITED
By: /s/ Charles T. Cannada
------------------------------
Name: Charles T. Cannada
Title: Director
9
<PAGE>
14D-1
CUSIP NO. 692674104 Page 10 of 11 Pages
SIGNATURE AND POWER OF ATTORNEY
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
UUNET Technologies, Inc. ("Intermediate") hereby constitutes and
appoints John W. Sidgmore, Scott D. Sullivan and Charles T. Cannada, and each of
them (with full power to each of them to act alone), the true and lawful
attorney-in-fact and agent for Intermediate, to act on behalf of and in the name
of Intermediate in connection with this Schedule 14D-1 and Schedule 13D,
including the authority to sign any amendments hereto, and to file the same,
with exhibits and any and all other documents filed with respect thereto, with
the Securities and Exchange Commission (or any other governmental or regulatory
authority), and Intermediate ratifies and confirms all that said attorneys in
fact and agents may lawfully do or cause to be done by virtue hereof.
Dated: January 7, 1999
UUNET TECHNOLOGIES, INC.
By: /s/ Mark F. Spagnolo
--------------------------
Name: Mark F. Spagnolo
Title: President and Chief
Executive Officer
10
<PAGE>
14D-1
CUSIP NO. 692674104 Page 11 of 11 Pages
SIGNATURE AND POWER OF ATTORNEY
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
MCI WORLDCOM, Inc. ("Parent") hereby constitutes and appoints John W.
Sidgmore, Scott D. Sullivan and Charles T. Cannada, and each of them (with full
power to each of them to act alone), the true and lawful attorney-in-fact and
agent for Parent, to act on behalf of and in the name of Parent in connection
with this Schedule 14D-1 and Schedule 13D, including the authority to sign any
amendments hereto, and to file the same, with exhibits and any and all other
documents filed with respect thereto, with the Securities and Exchange
Commission (or any other governmental or regulatory authority), and Parent
ratifies and confirms all that said attorneys in fact and agents may lawfully do
or cause to be done by virtue hereof.
Dated: January 7, 1999
MCI WORLDCOM, Inc.
By: /s/ Scott D. Sullivan
----------------------------
Name: Scott D. Sullivan
Title: Chief Financial
Officer and Secretary
11
<PAGE>
EXHIBIT (A)(1)
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 TUESDAY,
FEBRUARY 9, 1999 AND AT 5:00 P.M., SYDNEY TIME ON TUESDAY, FEBRUARY
9, 1999, UNLESS THE OFFER IS EXTENDED.
FINANCIAL ADVISOR TO MCI WORLDCOM, INC.
MERRILL LYNCH
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
LOGO MCI WORLDCOM
January 8, 1999
(Sydney time)
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. Also, on
January 4, 1999, the Board of Directors of OzEmail unanimously recommended
shareholders to accept the offer in the absence of a higher offer and
indicated that they intend to accept the offer for their own shareholdings in
the absence of a higher 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:
. Ordinary Shareholders should follow the instructions on the enclosed
Acceptance and Transfer Form (blue form); and
. 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 Tuesday, February 9, 1999, unless extended.
Yours sincerely
/s/ John W Sidgmore
John W Sidgmore
Vice Chairman
515 East Amite Street
Jackson, MS 39201
601 360 8600
<PAGE>
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 ORDINARY 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 TUESDAY,
FEBRUARY 9, 1999, AND AT 5:00 P.M., SYDNEY TIME, ON TUESDAY, FEBRUARY 9,
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.
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 LOGO
January 8, 1999 (Sydney, Australia time)
(January 7, 1999, New York time)
<PAGE>
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 the Offer, or if such holder is a Broker or Non-
Broker Participant by accepting the 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 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.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF OFFER..................................................... 4
INTRODUCTION AND OFFER............................................... 6
THE TENDER OFFER..................................................... 8
1.TERMS OF THE OFFER................................................. 8
2.PROCEDURES FOR TENDERING SHARES AND ADSs........................... 11
3.ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES AND ADSs............. 16
4.WITHDRAWAL RIGHTS.................................................. 18
5.CERTAIN TAX CONSEQUENCES........................................... 20
6.PRICE RANGE OF SHARES; DIVIDENDS; EXCHANGE RATE.................... 22
7.CERTAIN INFORMATION CONCERNING OZEMAIL............................. 23
8. CERTAIN INFORMATION CONCERNING PURCHASER, INTERMEDIATE, AND MCI
WORLDCOM.......................................................... 25
9.SOURCE AND AMOUNT OF FUNDS......................................... 32
10.BACKGROUND OF THE OFFER; CONTACTS WITH OZEMAIL.................... 33
11.PURPOSE OF THE OFFER; PLANS FOR OZEMAIL........................... 35
12.DIVIDENDS AND DISTRIBUTIONS....................................... 38
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SECURITIES; THE NASDAQ
NATIONAL MARKET AND AUSTRALIAN STOCK EXCHANGE QUOTATION AND
EXCHANGE ACT REGISTRATION........................................ 38
14.CERTAIN CONDITIONS OF THE OFFER................................... 40
15.CERTAIN LEGAL MATTERS; REGULATORY APPROVALS....................... 43
16.FEES AND EXPENSES................................................. 44
17.MISCELLANEOUS..................................................... 45
18.CERTAIN DEFINITIONS............................................... 45
SCHEDULE A--INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF MCI WORLDCOM, INTERMEDIATE AND PURCHASER................ 49
SCHEDULE B--TRANSACTION IN SHARES AND ADSs DURING THE PAST FOUR
MONTHS BY MCI WORLDCOM, INTERMEDIATE AND PURCHASER.................. 55
ANNEXURE A--PART A STATEMENT......................................... PART A-1
APPENDIX A HALF-YEARLY REPORT FOR THE HALF YEAR ENDED
30 JUNE 1998................................................................ A-1
APPENDIX B FORM 8-K CURRENT REPORT DATED JUNE 19, 1998................................. B-1
APPENDIX C FORM 6-K FOR QUARTER ENDED JUNE 30, 1998.................................... C-1
APPENDIX D NEWS RELEASE DATED SEPTEMBER 14, 1998....................................... D-1
APPENDIX E NEWS RELEASE DATED NOVEMBER 6, 1998......................................... E-1
APPENDIX F EXEMPTIONS FROM AND MODIFICATIONS TO THE CORPORATIONS LAW GRANTED BY THE
ASIC........................................................................ F-1
</TABLE>
3
<PAGE>
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 Tuesday, February 9, 1999,
and 5:00 p.m., Sydney time, on Tuesday, February 9, 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,
Conditions 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.
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,
4
<PAGE>
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. During the
Offer Period, the manner in which paragraphs (a) and (b)
above will apply to the Offer will be resolved by Purchaser
together with the ASIC, and may require a modification to
the Corporations Law (which the ASIC has the power to grant
within the Offer Period), and a public announcement will be
made.
As at January 8, 1999 (Sydney time), Purchaser was entitled
to 21,863,174 Securities or approximately 14.9% 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 Tax The sale of Securities pursuant to the Offer will be a
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
Tax Consequences The sale of Securities pursuant to the Offer will be a
taxable event to the holder for Australian income tax
purposes. See Section 5 "Certain Tax Consequences--Certain
Australian Tax Consequences".
5
<PAGE>
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 SUBSTITUTE 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 "U.S. Depositary"),
National Registry Services Pty Limited 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
6
<PAGE>
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.
7
<PAGE>
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 Tuesday,
February 9, 1999 and 5:00 p.m., Sydney time, Tuesday, on February 9, 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. During the Offer Period, the manner in
which paragraphs (A) and (B) above will apply to the Offer will be resolved by
Purchaser together with the ASIC, and may require a modification to the
Corporations Law (which the ASIC has the power to grant within the Offer
Period), and a public announcement will be made.
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 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
8
<PAGE>
(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 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.,
9
<PAGE>
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 in the United States.
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 8, 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
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
Pursuant to the Subscription Agreement entered into between OzEmail and
Purchaser on December 12, 1998 (the "Subscription Agreement"), OzEmail has
provided to Purchaser a list of holders of the Shares (including a list of
holders of ADSs) and security position listings. 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.
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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
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.
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.
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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.
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.
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.
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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 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 the Book-Entry Transfer Facility's
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
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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:
(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.
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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
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
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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 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 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 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 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.
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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.
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.
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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 Advisor, 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.
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 and,
unless previously accepted for payment by Purchaser pursuant to the Offer, may
also be withdrawn at any time after March 8, 1999. 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
18
<PAGE>
(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 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 one of the addresses 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
19
<PAGE>
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, 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
20
<PAGE>
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 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.
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.
21
<PAGE>
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, from
May 29)..................... 28.875 15.500 3.657 2.800
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.
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$22 1/16 per ADS
and the last reported sales price of the Shares on the ASX was A$3.64 per
Share. HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES
AND ADSS.
22
<PAGE>
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$0.6123:A$. 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 (File No. 0-28476) 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 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. See Appendix B to Annexure A for additional
information regarding Access One.
23
<PAGE>
OZEMAIL LIMITED
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FROM INCEPTION TO YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
----------------- ---------------------------- ------------------------------
1994(1) 1995 1996 1997 1997 1998 1998(2)
----------------- ------- -------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data
Net Revenues........... A$692 A$8,868 A$27,784 A$55,767 A$38,557 A$78,644 US$46,636
------ ------- -------- --------- -------- --------- ---------
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
operations............. 40 824 (1,999) (15,919) (7,844) (12,068) (7,156)
Other Income (Expense)
Net.................... (7) (50) 2,972 1,934 2,635 575 341
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>
<CAPTION>
AS OF
AS OF DECEMBER 31, 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$0.5930.
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.
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.
24
<PAGE>
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
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's 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.
25
<PAGE>
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 WorldCom's directors and
executive officers, their remuneration, stock options granted to them, the
principal 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 WorldCom'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 Advisor 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.
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<PAGE>
MCI WORLDCOM, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED AND AT NINE MONTHS ENDED
DECEMBER 31, AND AT SEPTEMBER 30,
----------------------------- ---------------------
1995 1996 1997 1997 1998
-------- --------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
REVENUES:
Voice................. US$2,509 US$ 3,067 US$4,062 US$ 2,972 US$ 4,247
Data.................. 738 956 1,618 1,160 1,768
International......... 130 225 726 515 976
Internet.............. -- -- 566 384 1,507
-------- --------- -------- --------- ----------
Communications
Services............. 3,377 4,248 6,972 5,031 8,498
-------- --------- -------- --------- ----------
Other................. 259 201 411 333 163
-------- --------- -------- --------- ----------
Total revenues........ 3,636 4,449 7,383 5,364 8,661
Operating expenses:
Line costs............ 1,963 2,397 3,764 2,783 4,141
Selling, general and
administrative....... 689 867 1,626 1,200 1,904
Depreciation and
amortization......... 317 320 976 719 1,099
In-process research
and development and
other charges........ -- 2,740 -- -- 3,725
-------- --------- -------- --------- ----------
Total................. 2,969 6,324 6,366 4,702 10,869
-------- --------- -------- --------- ----------
Operating income
(loss)............... 667 (1,875) 1,017 662 (2,208)
Other income (expense):
Interest expense...... (253) (253) (395) (289) (351)
Miscellaneous......... 14 25 41 33 36
-------- --------- -------- --------- ----------
Income (loss) before
income taxes, minority
interests and
extraordinary items.... 428 (2,103) 663 406 (2,523)
Provision for income
taxes.................. 171 130 416 261 462
-------- --------- -------- --------- ----------
Net income (loss) before
minority interests and
extraordinary items.... 257 (2,233) 247 145 (2,985)
Minority interests...... -- -- -- -- 11
Extraordinary items (net
of income taxes of
US$16 in 1996, US$0 in
1997 and US$78 in
1998).................. -- (24) (3) (3) (129)
Distributions on
subsidiary trust
manditorily redeemable
preferred securities... -- -- -- -- 3
Preferred dividend
requirements........... 18 1 26 20 13
Special dividend payment
to Series 1 preferred
shareholder............ 15 -- -- -- --
-------- --------- -------- --------- ----------
Net income (loss)
applicable to common
shareholders........... US$ 224 US$(2,258) US$ 218 US$ 122 US$( 3,141)
======== ========= ======== ========= ==========
Per common share before
extraordinary items:
Basic................. .58 (5.02) .23 0.13 (2.77)
Diluted............... .56 (5.02) .22 0.13 (2.77)
Extraordinary items... -- (0.05) -- (0.00) (0.12)
Dividends per common
share.................. -- -- -- -- --
Working capital......... (1,273) 712 (200) N/A (5,483)
Total assets............ 6,803 20,843 23,596 N/A 82,278
Goodwill and other
intangible assets...... 4,323 13,202 13,882 N/A 46,908
Long-term debt.......... 2,324 5,356 7,413 N/A 16,032
Shareholders'
investment............. 2,281 13,252 13,801 N/A 44,264
</TABLE>
- --------
(1) On September 14, 1998, MCI WorldCom acquired MCI Communications
Corporation, a Delaware corporation ("MCI"), pursuant to the merger
(the "MCI Merger") of MCI with and into TC Investments Corp.
("Acquisition Subsidiary"), a wholly owned subsidiary of MCI WorldCom.
Upon consummation of the MCI Merger, Acquisition Subsidiary was renamed
MCI Communications Corporation. Through the MCI Merger, MCI WorldCom
acquired one of the world's largest and most
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advanced digital networks, connecting local markets in the United States
to more than 280 countries and locations worldwide.
As a result of the MCI Merger, each outstanding share of MCI common
stock was converted into the right to receive 1.2439 shares of MCI
WorldCom common stock, par value US$.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.
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
28
<PAGE>
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.
29
<PAGE>
(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, 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 MCI 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
30
<PAGE>
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
amount of assets.
The Subscription Agreement
The following is a summary of certain provisions of the Subscription
Agreement, a copy of which is 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 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
ASX 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.
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<PAGE>
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.
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
32
<PAGE>
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 MCI WorldCom's 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.
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 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 are 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.
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<PAGE>
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.
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.
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.
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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 8, 1999 (Sydney time) 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.
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.
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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;
(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
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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;
(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.
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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 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 13 "Effect of the
Offer on the Market for the Securities: The Nasdaq National Market 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
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.
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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. 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
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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 U.S.
Securities Act of 1933, as amended. 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."
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:
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(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 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;
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(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 or any
action by the Board of Directors of OzEmail to accelerate the
vesting of employee options or to have OzEmail purchase the
options at a price, in the case of each option, not exceeding
the difference between the Offer Price and the option exercise
price;
(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;
(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
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<PAGE>
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
Monday, February 1, 1999 and 5:00 p.m, Sydney time, on Monday, February 1,
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, 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 Offer.
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
43
<PAGE>
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 "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
44
<PAGE>
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.
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 the 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 the Book-Entry
Transfer Facility has received an express acknowledgment from the participant
in the 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.
"American Depositary Receipt" or "ADR" means an American Depositary Receipt
evidencing an American Depositary Share.
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<PAGE>
"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 Depository 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 Monday,
February 1, 1999 and 5:00 p.m., Sydney time, on Monday, February 1, 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.
"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 correspondent 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 Tuesday, February
9, 1999 and 5:00 p.m., Sydney time, on Tuesday, February 9, 1999 unless and
until Purchaser, in its sole discretion, shall have extended
46
<PAGE>
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 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.
"Offer to Purchase" means this Offer to Purchase including the Schedules and
Annexures hereto.
"Offer Period" means the period commencing on the date of this Offer and
ending at 5:00 p.m. Sydney time on Tuesday, February 9, 1999 (1:00 a.m. New
York City time on Tuesday, February 9, 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 or ADSs at a
particular time, all of the issued Shares or Options or ADSs, 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 Limited 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.
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<PAGE>
"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.
"Subscription Agreement" means the Subscription Agreement entered into
between OzEmail and Purchaser on December 12, 1998 (Sydney time).
"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, as calculated under Rule 14d-1
under the Exchange Act.
"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.
"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 8, 1999 (Sydney time)
(January 7, 1999, New York time)
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.
Leigh Robert Brown
_______________________________________
DIRECTOR
48
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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.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND CURRENT EMPLOYMENT; MATERIAL POSITIONS
BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
Clifford L. Alexander, Jr. Mr. Alexander has been a director of MCI
Alexander & Associates, Inc. WorldCom since its merger with MCI
400 C. Street, N.E. Communications Corporation ("MCI") in
Washington, D.C. 20002 September 1998. He has been President of
U.S.A. 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 WorldCom
3023 Club Drive since March 1998. Mr. Allen is the former
Destin, FL 32541 Vice Chairman and Chief Executive Officer and
U.S.A. 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.
Judith Areen Ms. Areen has been a director of MCI WorldCom
Georgetown University Law Center since its merger with MCI in September 1998.
600 New Jersey Avenue, N.W. She has been Executive Vice President for Law
Washington, D.C. 20001 Center Affairs and Dean of the Law Center,
U.S.A. 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 served as
Brookhaven, MS 39601 Secretary of MCI WorldCom from 1987 to 1995
U.S.A. 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 MCI
62 Carmel Drive WorldCom since 1992. Mr. Bobbitt was a
Little Rock, AR 72112 director of Advanced Telecommunications
U.S.A. 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.
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND CURRENT EMPLOYMENT; MATERIAL POSITIONS
BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
Stephen M. Case Mr. Case has been a director of MCI WorldCom
America Online, Inc. since March 1998. Mr. Case, a co-founder of
22000 AOL Way America Online, Inc. ("AOL"), has been
Dulles, VA 20166-9323 Chairman of the Board of Directors of AOL
U.S.A. 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 a
435 East 52nd Street director of ATC until the ATC Merger. Mr.
New York, NY 10022 Galesi is the Chairman and Chief Executive
U.S.A. 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 of MCI
Kellett Investment Corporation WorldCom since 1981. Mr. Kellett has been
200 Galleria Parkway, Suite 1800 Chairman of Kellett Investment Corporation
Atlanta, GA 30339 since 1995. From 1978 to 1995, Mr. Kellett
U.S.A. 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.
Gordon S. Macklin Mr. Macklin has been a director of MCI
8212 Burning Tree Road WorldCom since its merger with MCI in
Bethesda, MD 20817 September 1998. Mr. Macklin is a director of
U.S.A. Martek Biosciences 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.
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND CURRENT EMPLOYMENT; MATERIAL POSITIONS
BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
John A. Porter Mr. Porter has been a director of MCI WorldCom since
Integra Funding 1988. Mr. Porter served as Vice Chairman of the
295 Bay Street, Suite 2 Board of MCI WorldCom from September 1993 until MCI
Easton, MD 21601 WorldCom's merger with MFS Communications Company,
U.S.A. 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.
Timothy F. Price Mr. Price has been a director of MCI WorldCom since
MCI WORLDCOM, Inc. its merger with MCI in September 1998. He has served
1801 Pennsylvania Avenue as President and Chief Executive Officer of the MCI
Washington, D.C. 20006 WorldCom communications unit since the merger. Mr.
U.S.A. 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 Chairman of the
MCI WORLDCOM, Inc. Board of MCI WorldCom since its merger with MCI in
1801 Pennsylvania Avenue, September 1998. He was Chairman of the Board of MCI
Washington, D.C. 20006 from June 1992 to September 1998, when it merged
U.S.A. 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.
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND CURRENT EMPLOYMENT; MATERIAL POSITIONS
BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
John W. Sidgmore Mr. Sidgmore serves as Vice Chairman of the
MCI WORLDCOM, Inc. Board of MCI WorldCom. Mr. Sidgmore has been a
3060 Williams Drive director of MCI WorldCom since the MFS Merger
Fairfax, VA 22031 and has served as a director of MFS since
U.S.A. 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 WorldCom
MCI WORLDCOM, Inc. since its merger with MCI in September 1998. He
1801 Pennsylvania Avenue, N.W. was Chief Executive Officer of MCI from
Washington, D.C. 20006 November 1996 to September 1998 and Vice
U.S.A. 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.
Lawrence C. Tucker Mr. Tucker is a general partner of Brown
Brown Brothers Harriman & Co. Brothers Harriman & Co., which is the general
59 Wall Street and managing partner of The 1818 Funds. He is
New York, NY 10005 also a director of The WellCare Management
U.S.A. 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 Chairman and
(citizen of Spain) Chief Executive Officer of Telefonica de
Telefonica de Espana, S.A. Espana, S.A. ("Telefonica"), a provider of
28 Gran Via telecommunications services in Spain, since
28013 Madrid 1996. He has been a director of MCI WorldCom
Spain 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.
</TABLE>
52
<PAGE>
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. 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.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND CURRENT EMPLOYMENT; MATERIAL POSITIONS
BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
John W. Sidgmore Chairman (see above)
MCI WORLDCOM, Inc.
3060 Williams Drive
Fairfax, VA 22031
U.S.A.
Scott D. Sullivan Director (see above)
MCI WORLDCOM, Inc.
515 East Amite Street
Jackson, MS 39201-2702
U.S.A.
Charles T. Cannada Director. Mr. Cannada serves as Senior Vice President,
MCI WORLDCOM, Inc. Corporate Development of MCI WorldCom. Prior to
515 East Amite Street assuming this position in January 1995, Mr. Cannada
Jackson, MS 39201-2702 served as Treasurer and Chief Financial Officer of MCI
U.S.A. 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.
</TABLE>
53
<PAGE>
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.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND CURRENT EMPLOYMENT; MATERIAL POSITIONS
BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
John W. Sidgmore Director (see above)
MCI WORLDCOM, Inc.
3060 Williams Drive
Fairfax, VA 22031
U.S.A.
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 corporate and
(citizen of Australia) 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.
</TABLE>
54
<PAGE>
SCHEDULE B
TRANSACTION IN SHARES AND ADSS DURING THE PAST FOUR MONTHS
BY MCI WORLDCOM, INTERMEDIATE AND PURCHASER
<TABLE>
<CAPTION>
SHARES/ADSS(1) PRICE PER
TRANSACTION DATE ACQUIRED SHARE/ADS(2)
- ---------------- -------------- ------------
<S> <C> <C>
December 12, 1998 (Sydney, Australia time).......... 21,863,174 US$2.00
</TABLE>
- --------
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.
55
<PAGE>
A copy of this Part A Statement was registered by the Australian Securities
and Investments Commission ("ASIC') on 23 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.
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.
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.
Part A-1
<PAGE>
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.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'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.
4.5 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.
Part A-2
<PAGE>
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>
NO. OF PRICE PER
PERSON DATE ACQUISITION/DISPOSAL SHARES SHARE FROM
------ -------- -------------------- ---------- ----------------- ---------
<S> <C> <C> <C> <C> <C>
Purchaser............... 12/12/98 Acquisition by issue 21,863,174 US$2.00 per share OzEmail
of new shares
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.
<CAPTION>
NO. OF
PERSON DATE ACQUISITION/DISPOSAL SHARES PRICE PER SHARE FROM
------ -------- -------------------- ---------- ----------------- ---------
<S> <C> <C> <C> <C> <C>
UUNET International,
Ltd. (a wholly-owned 10/12/98 2 A$1.00 Purchaser
subsidiary of Acquisition by issue
Intermediate).......... of new shares
</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.
Part A-3
<PAGE>
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.
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
(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
Part A-4
<PAGE>
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.
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.
Part A-5
<PAGE>
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
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 sections 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.
(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
Part A-6
<PAGE>
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 despatch.
The Part A Statement, which must also contain certain material
information, must be served at least 14 days prior to the despatch of
the Offer. Prior to the despatch of the Offer, Purchaser will apply to
the ASIC for relief from sections 637 and 639 of the Corporations Law
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 despatch of the
Offer; and
(ii) the copies of the Offer as despatched 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
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
Part A-7
<PAGE>
(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 sections 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.
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
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.
Part A-8
<PAGE>
ACQUISITION BY OZEMAIL IN SOUTH AUSTRALIA
15.8 On 4 January 1999 OzEmail announced the purchase of a 60% share in SE Net
for approximately A$1.5 million with the option to acquire the balance
within the next 2 1/2 years. SE Net is South Australia's largest regional
Internet service provider with approximately 16,000 customers.
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. During the Offer
Period, the manner in which paragraphs (a) and (b) above will apply to the
Offer will be resolved by Purchaser together with the ASIC, and may
require a modification to the Corporations Law (which the ASIC has the
power to grant within the Offer Period), and a public announcement will be
made.
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.
Part A-9
<PAGE>
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
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 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.
Part A-10
<PAGE>
(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
(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
sections 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
Part A-11
<PAGE>
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 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 13 "Effect of
the Offer on the Market for the Securities: The Nasdaq National Market 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.
"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.
Part A-12
<PAGE>
"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.
"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, as
calculated under Rule 14d-1 under the Exchange Act.
"US$" means U.S. Dollars.
Part A-13
<PAGE>
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.
/s/ Leigh R Brown /s/ Leigh R Brown
______________________________________ _____________________________________
John W Sidgmore Charles T Cannada
Part A-14
<PAGE>
APPENDIX A
HALF-YEARLY REPORT FOR THE HALF-YEAR ENDED 30 JUNE 1998
(SECTION 12.2)
A-1
<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%.
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.
A-2
<PAGE>
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 IN SHARES
AND OPTIONS OF
OZEMAIL LIMITED
QUALIFICATIONS AND SPECIAL -------------------------
DIRECTOR EXPERIENCE RESPONSIBILITIES ORDINARY SHARES OPTIONS
- -------- ------------------ ---------------- --------------- ---------
<S> <C> <C> <C> <C>
S Howard................ Director Founding shareholder and 33,500,000 --
Chief Executive Officer
M Turnbull.............. Chairman, BA, LLB Chairman of the Board of 16,750,000 --
(Sydney), BCL (Oxon) Directors, Member of
Executive Committee
D Spence................ B.Com, Dip.Fin.Acc.CA(SA) Chief Operating Officer 3,083,000 2,042,600
Managing Director
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.
A-3
<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:
<TABLE>
<CAPTION>
AUDIT
DIRECTORS' COMMITTEE
MEETINGS MEETINGS
----------- ---------
DIRECTOR A B A B
- -------- ----- ----- ---- ----
<S> <C> <C> <C> <C>
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 --
</TABLE>
This report is made in accordance with a resolution of the directors.
A: Represents meetings held. B: Represents meetings attended.
[Signed]
S Howard
Chief Executive Officer
[Signed]
D Spence
Director
Sydney
31 August 1998
A-4
<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.
[SIGNED]
S Howard
Chief Executive Officer
[SIGNED]
D Spence
Director
Sydney
31 August 1998
A-5
<PAGE>
LOGO PRICEWATERHOUSECOOPERS
PricewaterhouseCoopers
580 George Street
GPO Box 2650
Sydney NSW 1171
Telephone (02)
8266 0000
Facsimile (02)
8266 9999
DX 77 Sydney
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.
A-6
<PAGE>
LOGO PRICEWATERHOUSECOOPERS
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/ [Signed] Sydney
_____________________________________ 31 August 1998
MJ Mitchell
Partner
A-7
<PAGE>
APPENDIX 4B (EQUITY ACCOUNTED)
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
<TABLE>
<CAPTION>
HALF
PRELIMINARY YEAR/FINANCIAL
HALF YEARLY FINAL YEAR ENDED
ACN OR ARBN (TICK) (TICK) ("CURRENT PERIOD")
- ----------- ----------- ----------- ------------------
<S> <C> <C> <C>
066 387 157.......................... X 30 June 1998
</TABLE>
EQUITY ACCOUNTED RESULTS FOR ANNOUNCEMENT TO THE MARKET
<TABLE>
<CAPTION>
EXTRACTS FROM THIS REPORT FOR ANNOUNCEMENT TO THE MARKET (SEE NOTE
1). $A'000
- ------------------------------------------------------------------ ------
<S> <C> <C>
Sales (or equivalent operating) revenue (item 1.1)................ to 49,224
Abnormal items after tax attributable to members (item 2.5)....... --
+Operating profit (loss) after tax (before amortisation of
goodwill) attributable to members (item 1.26) ................... to (4,191)
+Operating profit (loss) after tax attributable to members (item
1.10) ........................................................... to (7,598)
Extraordinary items after tax attributable to members (item 1.13)
................................................................. --
+Operating profit (loss) and extraordinary items after tax attrib-
utable to members (item 1.16).................................... to (7,598)
</TABLE>
<TABLE>
<CAPTION>
FRANKED
AMOUNT
AMOUNT PER SECURITY
DIVIDENDS (DISTRIBUTIONS) PER SECURITY AT 36% TAX
- ------------------------- ------------ ------------
<S> <C> <C>
Final dividend (Preliminary final report only--item
15.4) Interim dividend (Half yearly report only--
item 15.6)......................................... -- cents -- cents
Previous corresponding period (Preliminary final
report--item 15.5; half yearly report--item 15.7).. -- cents -- cents
+Record date for determining entitlements to the
dividend, (in the case of a trust, distribution)
(see item 15.2).................................... N/A
</TABLE>
Brief explanation of omission of directional and percentage changes to profit
in accordance with Note 1 and short details of any bonus or cash issue or other
item(s) of importance not previously released to the market:
Directional and percentage changes to profit have not been included as this is
the first time that the ecomonic entity has been required to prepared half
yearly results.
A-8
<PAGE>
CONSOLIDATED PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
CURRENT PERIOD-- PREVIOUS CORRESPONDING
A'000 PERIOD--$A'000
---------------- ----------------------
<C> <S> <C> <C>
1.1 Sales (or equivalent operating) 49,224 --
revenue........................
====== ===
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 (7,699) --
abnormal items and tax.........
1.5 Abnormal items before tax -- --
(detail in item 2.4)...........
1.6 +Operating profit (loss) before (7,699) --
tax (items 1.4 + 1.5)..........
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 (7,598) --
tax attributable to members....
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 (6,658) --
appropriation (carried
forward).......................
Total available for
appropriation (brought
1.20 forward)....................... (6,658) --
Dividends provided for or
1.21 paid........................... -- --
Aggregate of amounts
1.22 transferred to reserves........ -- --
Retained profits (accumulated
losses) at end of financial
1.23 period......................... (6,658) --
====== ===
PROFIT RESTATED TO EXCLUDE AMORTISATION OF GOODWILL
<CAPTION>
CURRENT PERIOD PREVIOUS CORRESPONDING
$A'000 PERIOD--$A'000
---------------- ----------------------
<C> <S> <C> <C>
1.24 +Operating profit (loss) after
tax before outside equity
interests (items 1.8) and
amortisation of goodwill...... (7,598) --
1.25 Less (plus) outside +equity
interests...................... -- --
1.26 +Operating profit (loss) after
tax (before amortisation of
goodwill) attributable to
members....................... (4,191) --
</TABLE>
A-9
<PAGE>
INTANGIBLE, ABNORMAL AND EXTRAORDINARY ITEMS
<TABLE>
<CAPTION>
CONSOLIDATED--CURRENT
PERIOD RELATED AMOUNT (AFTER TAX)
---------------------- OUTSIDE +EQUITY ATTRIBUTABLE TO
BEFORE TAX RELATED TAX INTERESTS MEMBERS
$A'000 $A'000 $A'000 $A'000
---------- ----------- --------------- ------------------
<C> <S> <C> <C> <C> <C>
Amortisation of
2.1 goodwill................ 3,407 -- -- 3,407
Amortisation of other
2.2 intangibles............. -- -- --
Total amortisation of
2.3 intangibles............. 3,407 -- -- 3,407
2.4 Abnormal items.......... -- -- -- --
2.5 Total abnormal items.... -- -- -- --
2.6 Extraordinary items..... -- -- -- --
Total extraordinary
2.7 items................... -- -- -- --
</TABLE>
COMPARISON OF HALF YEAR PROFITS
(PRELIMINARY FINAL REPORT ONLY)
<TABLE>
<CAPTION>
CURRENT YEAR -- PREVIOUS YEAR --
$A'000 $A'000
--------------- ----------------
<C> <S> <C> <C>
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>
CONSOLIDATED BALANCE SHEET
(SEE NOTE 5)
<TABLE>
<CAPTION>
AT END OF AS SHOWN IN LAST AS IN LAST HALF
CURRENT PERIOD ANNUAL REPORT YEARLY REPORT
$A'000 $A'000 $A'000
-------------- ---------------- ---------------
<C> <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 7,468 1,400 --
if material)............
------- ------- ---
4.6 Total current assets.... 38,784 61,288 --
------- ------- ---
NON-CURRENT ASSETS
4.7 Receivables............. -- 4,256 --
4.8 Investments in -- 24 --
associates..............
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 27,413 22,494 --
and equipment (net).....
4.14 Intangibles (net)....... 39,996 20,164 --
4.15 Other (provide details 10,257 1,415 --
if material)............
------- ------- ---
4.16 Total non-current 79,201 50,912 --
assets..................
------- ------- ---
4.17 Total assets............ 117,985 112,200 --
------- ------- ---
</TABLE>
A-10
<PAGE>
CONSOLIDATED BALANCE SHEET--(CONTINUED)
<TABLE>
<CAPTION>
AT END OF AS SHOWN IN LAST AS IN LAST HALF
CURRENT PERIOD ANNUAL REPORT YEARLY REPORT
$A'000 $A'000 $A'000
-------------- ---------------- ---------------
<C> <S> <C> <C> <C>
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 4,407 -- --
if material)............
------- ------ ---
4.22 Total current 33,271 40,926 --
liabilities.............
------- ------ ---
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 2,689 5,251 --
liabilities.............
------- ------ ---
4.28 Total liabilities....... 35,960 46,177 --
------- ------ ---
4.29 Net assets.............. 82,025 66,023 --
------- ------ ---
EQUITY
4.30 Capital................. 486 444 --
4.31 Reserves................ 88,197 64,639 --
4.32 Retained profits (6,658) 940 --
(accumulated losses)....
------- ------ ---
4.33 Equity attributable to 82,025 66,023 --
members of the parent
entity..................
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................ -- -- --
</TABLE>
DETAILS OF OTHER CURRENT AND NON-CURRENT ASSETS
<TABLE>
<S> <C>
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.
A-11
<PAGE>
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>
<CAPTION>
CURRENT PERIOD PREVIOUS CORRESPONDING
$A'000 PERIOD--$A'000
-------------- ----------------------
<C> <S> <C> <C>
5.1 Opening balance................... -- --
5.2 Expenditure incurred during -- --
current period....................
5.3 Expenditure written off during -- --
current period....................
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)...................... -- --
DEVELOPMENT PROPERTIES
(To be completed only by entities with mining interests if amounts are
material)
<CAPTION>
CURRENT PERIOD PREVIOUS CORRESPONDING
$A'000 PERIOD--$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>
A-12
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(SEE NOTE 6)
<TABLE>
<CAPTION>
CURRENT PERIOD PREVIOUS CORRESPONDING
$A'000 PERIOD--$A'000
-------------- ----------------------
<C> <S> <C> <C>
CASH FLOWS RELATED TO OPERATING
ACTIVITIES
7.1 Receipts from customers.......... 43,665 --
Payments to suppliers and
7.2 employees........................ (50,651) --
Dividends received from
7.3 associates....................... -- --
7.4 Other dividends received......... -- --
Interest and other items of
7.5 similar nature received.......... 783 --
Interest and other costs of
7.6 finance paid..................... (326) --
7.7 Income taxes paid................ (6,012) --
Other (provide details if
7.8 material)........................ -- --
------- ---
7.9 Net operating cash flows ........ (12,541) --
------- ---
CASH FLOWS RELATED TO INVESTING
ACTIVITIES
Payment for purchases of
7.10 property, plant and equipment.... (6,517) --
Proceeds from sale of property,
7.11 plant and equipment.............. 24 --
------- ---
Payment for purchases of equity
7.12 investments...................... -- --
Proceeds from sale of equity
7.13 investments...................... -- --
7.14 Loans to other entities.......... -- --
7.15 Loans repaid by other entities... -- --
Other (provide details if
7.16 material)........................ (9,186) --
------- ---
7.17 Net investing cash flows......... (15,679) --
------- ---
CASH FLOWS RELATED TO FINANCING
ACTIVITIES
Proceeds from issues of
+securities (shares, options,
7.18 etc.)............................ 2,315 --
7.19 Proceeds from borrowings......... -- --
7.20 Repayment of borrowings.......... (2,188) --
7.21 Dividends paid................... (2,858) --
Other (provide details if
7.22 material)........................ (2,220) --
------- ---
7.23 Net financing cash flows......... (4,951) --
------- ---
Net increase (decrease) in cash
7.24 held............................. (33,171) --
Cash at beginning of period (see
7.25 Reconciliation of cash).......... 49,166 --
Exchange rate adjustments to item
7.26 7.25............................. (12) --
------- ---
Cash at end of period (see
Reconciliation of cash) ......... 15,983 --
------- ---
</TABLE>
<TABLE>
<S> <C>
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)
------
</TABLE>
A-13
<PAGE>
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
Reconciliation of cash at the end of the period (as shown in the consolidated
statement of cash flows) to the related items in the accounts is as follows:
<TABLE>
<CAPTION>
PREVIOUS
CURRENT PERIOD CORRESPONDING
$A'000 PERIOD--$A'000
-------------- ----------------------
<C> <S> <C> <C>
8.1 Cash on hand and at bank......... 15,983 --
8.2 Deposits at call................. -- --
8.3 Bank overdraft................... -- --
8.4 Other (provide details).......... -- --
8.5 Total cash at end of period (item 15,983 --
7.26)............................
<CAPTION>
PREVIOUS CORRESPONDING
CURRENT PERIOD PERIOD
RATIOS -------------- ----------------------
<C> <S> <C> <C>
PROFIT BEFORE ABNORMALS AND TAX /
SALES
9.1 Consolidated +operating profit (15.64) --
(loss) before abnormal items and
tax (item 1.4) as a percentage of
sales revenue (item 1.1).........
PROFIT AFTER TAX / +EQUITY
INTERESTS
9.2 Consolidated +operating profit (9.26) --
(loss) after tax attributable to
members (item 1.10) as a
percentage of equity (similarly
attributable) at the end of the
period (item 4.33)...............
<CAPTION>
PREVIOUS CORRESPONDING
CURRENT PERIOD PERIOD
EARNINGS PER SECURITY (EPS) -------------- ----------------------
<C> <S> <C> <C>
10.1 Calculation of the following in
accordance with AASB 1027:
Earnings per Share
(a) Basic EPS ................... (0.064) --
(b) Diluted EPS (if materially (0.064) --
different from (a)...............
(c) Weighted average number of
ordinary shares outstanding
during the period used in the
calculation of the Basic EPS... 118,458,508 --
<CAPTION>
PREVIOUS
NTA BACKING PERIOD CORRESPONDING
(SEE NOTE 7) -------------- ----------------------
<C> <S> <C> <C>
Net tangible asset backing per
11.1 +ordinary security............... .32 --
</TABLE>
A-14
<PAGE>
<TABLE>
<CAPTION>
PREVIOUS
CORRESPONDING
CURRENT PERIOD PERIOD--
DETAILS OF SPECIFIC RECEIPTS/OUTLAYS, REVENUES/ $A'000 $A'000
EXPENSES -------------- -------------
<C> <S> <C> <C>
12.1 Interest revenue included in determining
item 1.4................................... 783 --
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 all forms of interest, lease
finance charges, etc.)..................... 326 --
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
amortisation of intangibles)............... 6,655 --
</TABLE>
CONTROL GAINED OVER ENTITIES HAVING MATERIAL EFFECT
(SEE NOTE 8)
<TABLE>
<C> <S> <C>
13.1 Name of entity (or group of entities)............. OzEmail Interline Pty
Limited
13.2 Consolidated +operating profit (loss) and
extraordinary items after tax of the entity (or
group of entities) since the date in the current
period on which control was +acquired............ $(2,174)
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>
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.
A-15
<PAGE>
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).......... --
If it is a final dividend, has it been declared? (Preliminary final
15.3 report only) ........................................................ --
</TABLE>
<TABLE>
<CAPTION>
FRANKED AMOUNT PER
AMOUNT PER SECURITY SECURITY AT 36% TAX
AMOUNT PER SECURITY ------------------- ----------------------
(PRELIMINARY FINAL REPORT ONLY)
<C> <S> <C> <C>
Final dividend:Current
15.4 year....................... -- cents -- cents
15.5 Previous year.............. -- cents -- cents
(HALF YEARLY AND PRELIMINARY FINAL REPORTS)
Interim dividend:Current
15.6 year....................... -- cents -- cents
15.7 Previous year.............. -- cents -- cents
TOTAL DIVIDEND (DISTRIBUTION) PER SECURITY (INTERIM PLUS FINAL)
(PRELIMINARY FINAL REPORT ONLY)
<CAPTION>
CURRENT YEAR PREVIOUS YEAR
------------------- ----------------------
<C> <S> <C> <C>
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
<CAPTION>
CURRENT PERIOD PREVIOUS CORRESPONDING
$A'000 PERIOD--$A'000
------------------- ----------------------
<C> <S> <C> <C>
15.10 +Ordinary securities....... -- --
15.11 Preference +securities..... -- --
15.12 Total...................... -- --
</TABLE>
The +dividend or distribution plans shown below are in operation.
<TABLE>
<S> <C>
The last date(s) for receipt of election notices for the +dividend or dis-
tribution plans.......................................................... --
</TABLE>
Any other disclosures in relation to dividends (distributions)
DETAILS OF AGGREGATE SHARE OF PROFITS (LOSSES) OF ASSOCIATES
<TABLE>
<CAPTION>
CURRENT PERIOD PREVIOUS CORRESPONDING
ENTITY'S SHARE OF ASSOCIATES' $A'000 PERIOD--$A'000
----------------------------- -------------- ----------------------
<C> <S> <C> <C>
16.1 Operating profit (loss) before
income tax....................... (2,703) --
16.2 Income tax expense............... -- --
16.3 Operating profit (loss) after
income tax....................... (2,703) --
16.4 Extraordinary items net of tax... -- --
16.5 Net profit (loss)................ (2,703) --
16.6 Outside equity interests......... (1,406) --
16.7 Net profit (loss) attributable to
members.......................... (1,297) --
</TABLE>
A-16
<PAGE>
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").
NAME OF ENTITY
<TABLE>
<CAPTION>
PERCENTAGE OF OWNERSHIP CONTRIBUTION TO +OPERATING
INTEREST HELD AT END OF PERIOD PROFIT (LOSS) AND EXTRAORDINARY
OR DATE OF DISPOSAL ITEMS AFTER TAX (ITEM 1.14)
------------------------------- --------------------------------------
PREVIOUS CURRENT PREVIOUS
EQUITY ACCOUNTED CORRESPONDING PERIOD-- CORRESPONDING
ASSOCIATES CURRENT PERIOD PERIOD $A'000 PERIOD--$A'000
---------------- ----------------- ------------- ----------------- ------------------
<C> <S> <C> <C> <C> <C>
17.1 OzEmail Interline Pty
Limited to April 1998
(An additional interest
was acquired in April
1998 and the results
consolidated from that
date.)................. 48% to April 1998 -- (1,297) --
17.2 Total................... -- -- (1,297) --
17.3 Other material
interests............... -- -- -- --
17.4 Total................... -- -- -- --
</TABLE>
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>
<CAPTION>
PAID-UP
NUMBER NUMBER PAR VALUE VALUE
CATEGORY OF +SECURITIES ISSUED QUOTED (CENTS) (CENTS)
----------------------- ---------- ---------- --------- ----------
<C> <S> <C> <C> <C> <C>
Preference +securities
18.1 (description).............. -- -- -- --
Issued during current
18.2 period..................... -- -- -- --
18.3 +Ordinary securities.......
Issued during current
18.4 period.................... 10,448,240 10,448,240 .004 --
18.5 +Convertible debt
securities (description
and conversion factor).... -- -- -- --
Issued during current
18.6 period..................... -- -- -- --.
<CAPTION>
EXPIRY
EXERCISE DATE (IF
PRICE ANY)
--------- ----------
<C> <S> <C> <C> <C> <C>
Options (description and
18.7 conversion factor).........
Issued during current
18.8 period..................... 1,080,000 1,080,000 1.20 1/1/2003
500,000 500,000 2.52 17/6/2003
Exercised during current
18.9 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
Expired during current
18.10 period..................... -- -- -- --
18.11 Debentures (totals only)... -- -- -- --
Unsecured notes (totals
18.12 only)...................... -- -- -- --
</TABLE>
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.
A-17
<PAGE>
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.
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.......................................................
</TABLE>
ANNUAL MEETING
(PRELIMINARY FINAL REPORT ONLY)
<TABLE>
<S> <C> <C>
The annual meeting will be held as follows:
Place................................................................... --
Date.................................................................... --
Approximate date the annual report will be available.................... --
</TABLE>
A-18
<PAGE>
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).
4 This report is based on financial statements to which one of the following
applies.
(Tick one)
The financial statements have The financial statements have been
been audited. subject to review.
XThe financial statements are in The financial statements have not
the process of being audited yet been audited or reviewed.
or subject to review.
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.
(Signed) 11 August, 1998
Sign here: _______________________________ Date: ___________________
(Michael Hughes--Company Secretary)
Michael Hughes
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.
A-19
<PAGE>
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
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.
A-20
<PAGE>
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.
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.
A-21
<PAGE>
APPENDIX B
FORM 8-K CURRENT REPORT
DATED JUNE 19, 1998
(SECTION 12.3)
B-1
<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
Date of Report (Date of earliest event reported) NOVEMBER 25, 1997
OZEMAIL LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
AUSTRALIA 0-28476 NOT APPLICABLE
(COMMISSION FILE NUMBER)
(STATE OR OTHER (IRS EMPLOYER
JURISDICTION IDENTIFICATION NO.)
OF INCORPORATION)
OZEMAIL CENTRE, 39 HERBERT STREET, ST. LEONARDS 2065, SYDNEY, AUSTRALIA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
NONE
(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)
B-2
<PAGE>
ITEM 2. ACQUISITION OF 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.
(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).
B-3
<PAGE>
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
B-4
<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 /s/ Trevor Kennedy
By: _________________________________
NAME: TREVOR KENNEDY
TITLE: DIRECTOR
B-5
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 1997
<TABLE>
<CAPTION>
11 MONTH
YEAR ENDED PERIOD ENDED
30 JUNE 1996 30 JUNE 1996
NOTE $ $
---- ------------ ------------
<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
B-6
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
BALANCE SHEET
AS AT 30 JUNE 1997
<TABLE>
<CAPTION>
30 JUNE 1997 30 JUNE 1996
NOTE $ $
---- ------------ ------------
<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
B-7
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 1997
<TABLE>
<CAPTION>
30 JUNE 30 JUNE 1996
NOTE 1997 $ $
---- ----------- ------------
<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
B-8
<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.
B-9
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997--(CONTINUED)
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.
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.
B-10
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997--(CONTINUED)
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.
. 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.
. A financing facility for at least $1 million has been offered by M.J.
Capital Corporation on appropriate commercial terms.
. Opportunities to raise further debt and/or equity capital are being
actively pursued by the Board.
. 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.
. The sale of operations considered to be non-core is being contemplated
by the Board.
. A review of all operating costs and infrastructure has been commenced
with a view to reducing overall levels of expenditure.
. 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.
. The business of CABS has recently been acquired and the directors
anticipate that this will generate significant profitable revenue during
the 1998 financial year.
B-11
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997--(CONTINUED)
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.
2. OPERATING LOSS
<TABLE>
<CAPTION>
1997 1996
$ $
---------- ---------
<S> <C> <C>
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>
B-12
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997--(CONTINUED)
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>
1997 1996
$ $
---------- ----------
<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>
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
========= =========
</TABLE>
B-13
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997--(CONTINUED)
6. OTHER CURRENT ASSETS
<TABLE>
<CAPTION>
1997 1996
$ $
----------- ----------
<S> <C> <C>
Prepayments............................................ 141,658 143,014
----------- ----------
141,658 143,014
=========== ==========
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
=========== ==========
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
=========== ==========
</TABLE>
B-14
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997--(CONTINUED)
11. BORROWINGS (CURRENT)
<TABLE>
<CAPTION>
1997 1996
$ $
----------- ----------
<S> <C> <C>
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
=========== ==========
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)
=========== ==========
</TABLE>
B-15
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997--(CONTINUED)
16. SHARE CAPITAL
<TABLE>
<CAPTION>
1997 1996
$ $
--------- ---------
<S> <C> <C> <C>
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
========= =========
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
========= =========
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
========= ========= ===
</TABLE>
B-16
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997--(CONTINUED)
20. REMUNERATION OF DIRECTORS
<TABLE>
<CAPTION>
1997 1996
--------- -------
$ $
<S> <C> <C>
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
========= =======
</TABLE>
The number of directors of the company whose remuneration falls within the
following bands:
<TABLE>
<S> <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)
(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:
<TABLE>
<CAPTION>
1997 1996
---------- ---------
$ $
<S> <C> <C>
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
</TABLE>
The terms of these borrowings were:
Solution 6 Holdings Limited--interest free loan payable at call;
B-17
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997--(CONTINUED)
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.
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 are 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. 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
B-18
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997--(CONTINUED)
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.
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.
B-19
<PAGE>
ACCESS ONE PTY LTD A.C.N. 070 546 977
NOTES TO AND FORMING PART OF THE ACCOUNTS AS AT 30 JUNE 1997--(CONTINUED)
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)
============ ===========
<CAPTION>
AT 30 JUNE
-------------------------
1997 1996
------------ -----------
<S> <C> <C>
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.
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.
B-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.
B-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 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.
B-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
SHAREHOLDERS' EQUITY........... 88,155 8,157 13,631 109,943
====== ======= ======= =======
</TABLE>
See accompanying notes to unaudited pro forma condensed financial information
B-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
B-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
B-25
<PAGE>
NOTES TO PRO FORMA 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 accompanying 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 accompanying 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.
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.
B-26
<PAGE>
NOTES TO PRO FORMA CONDENSED FINANCIAL INFORMATION--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
(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 of Access One financial statements, to be
properly stated in accordance with US GAAP:
<TABLE>
<CAPTION>
12 MONTHS ENDED 9 MONTHS ENDED
DECEMBER 31, 1996 SEPTEMBER 30, 1997
----------------- ------------------
INC (DEC) INC (DEC)
<S> <C> <C>
Revenue................................ (A$357) A$94
Product Development Costs.............. A$531 (A$531)
</TABLE>
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 $752 at
September 30, 1997 to comply with US GAAP.
B-27
<PAGE>
APPENDIX C
FORM 6-K FOR QUARTER ENDED JUNE 30, 1998
(SECTION 12.4)
C-1
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDING JUNE 30, 1998
OZEMAIL LIMITED
ACN 066 387 157
OZEMAIL CENTRE, 39 HERBERT STREET, ST. LEONARDS NEW SOUTH WALES 2065 AUSTRALIA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
FORM 20-F [X] FORM 40-F [_]
(Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of
1934.)
YES [_] NO [X]
C-2
<PAGE>
FORM 6-K
FOR THE QUARTER ENDED JUNE 30, 1998
INDEX
PART I.FINANCIAL INFORMATION
ITEM 1
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet as of December 31, 1997 and June
30, 1998.
Condensed Consolidated Statement of Operations for the Three Months
Ended June 30, 1997 and 1998 and for the Six Months Ended June 30,
1997 and 1998.
Condensed Consolidated Statement of Cash Flows for the Six Months
Ended June 30, 1997 and 1998.
Notes to Condensed Consolidated Interim Financial Statements
ITEM 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations
SIGNATURES
C-3
<PAGE>
OZEMAIL LIMITED
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. A$ 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.
C-4
<PAGE>
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
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.
C-5
<PAGE>
OZEMAIL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
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.
C-6
<PAGE>
OZEMAIL LIMITED
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
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.
C-7
<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.
C-8
<PAGE>
OZEMAIL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)--
(CONTINUED)
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.
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.
C-9
<PAGE>
OZEMAIL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)--
(CONTINUED)
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
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Numerator
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
========= ========= ========= =========
Effect of dilutive securities..... -- -- -- --
--------- --------- --------- ---------
Denominator for diluted earnings
per ordinary share............... 103,500 122,797 103,500 118,459
========= ========= ========= =========
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
C-10
<PAGE>
OZEMAIL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)--
(CONTINUED)
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 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
C-11
<PAGE>
OZEMAIL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)--
(CONTINUED)
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
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.
C-12
<PAGE>
OZEMAIL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)--
(CONTINUED)
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%.
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
C-13
<PAGE>
OZEMAIL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)--
(CONTINUED)
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.
C-14
<PAGE>
OZEMAIL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)--
(CONTINUED)
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.
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.
C-15
<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:
. acquisition of the Internet service business of Camtech (SA) Pty Limited
("Camtech"), a leading regional Internet service provider in South
Australia;
. 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
. 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:
. 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%;
C-16
<PAGE>
. 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;
. an agreement with Bay Networks Inc. to collaborate on the integration and
promotion of their respective Internet telephony technology, services and
capabilities;
. an agreement with 13 worldwide affiliates to exclusively market and sub-
license OzEmail Interline's Internet telephony gateways; and
. 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.
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.
C-17
<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)).
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
C-18
<PAGE>
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
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.
C-19
<PAGE>
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 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
C-20
<PAGE>
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.
C-21
<PAGE>
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.
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.
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
C-22
<PAGE>
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.
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
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<PAGE>
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.
C-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
By: _________________________________
IAN MCGREGOR
CHIEF FINANCIAL OFFICER
Date: August 14, 1998
C-25
<PAGE>
APPENDIX D
LOGO OZEMAIL
-------------------------
N E W S R E L E A S E
-------------------------
OZEMAIL ANNOUNCES FURTHER INFRASTRUCTURE INVESTMENT
CONFIRMS PURCHASE OF POWERUP PTY LIMITED
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 3300
corporate sites.
OzEmail Limited (ACN 066 387 157), Level I, 39 Herbert Street, St. Leonards
NSW 2065, Australia
D-1
<PAGE>
APPENDIX E
LOGO OZEMAIL
------------------------
N E W S R E L E A S E
------------------------
OZEMAIL REPORTS THIRD QUARTER RESULTS
FOR MORE INFORMATION CONTACT:
Sean Howard Michael Ward--Sydney, Australia--(+612) 9433 2400
Todd Friedman--San Francisco--(415) 296-7383
Sydney, Australia, November 6, 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$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). The record revenues in the quarter, representing the 15th
straight quarter of sequential revenue growth, were primarily attributable to
increased dial-up and permanent connections from OzEmail's Australian Internet
connectivity business and the acquisition of Access One, Camtech 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$0.176 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).
"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$9,003,000 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
E-1
<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
E-2
<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, $0.5500 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 growth; 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 26, 1998, August 25, 1998 and May 28, 1998, its 1997 Form 10-K
dated May 15, 1998, 1996 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
E-3
<PAGE>
News Release November 6, 1998
OzEmail Reports Third Quarter 1998 Results
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)(UNAUDITED)
<S> <C> <C>
ASSETS
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).............. -- --
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$101,851
========= =========
</TABLE>
OzEmail Limited (ACN 066 387 157), Ground Flr, Building B, 39 Herbert Street,
St. Leonards NSW 2065, Australia
Telephone: (+612) 9433 2400 Facsimile: (+612) 9906 4155
E-4
<PAGE>
News Release November 6, 1998
OzEmail Reports Third Quarter 1998 Results
OZEMAIL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1997 1998 1997 1998
--------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues...................... A$ 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) 612 (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
E-5
<PAGE>
APPENDIX F
EXEMPTIONS FROM AND MODIFICATIONS TO THE CORPORATIONS LAW
GRANTED BY THE ASIC
(SECTION 15.3)
F-1
<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 "(1)" 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
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
F-2
<PAGE>
(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))".
F-3
<PAGE>
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]
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
F-4
<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]
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
F-5
<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]
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
F-6
<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]
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
F-7
<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]
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
F-8
<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]
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
F-9
<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]
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
F-10
<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 (AUD) 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 ADS's 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 ADSs 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]
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
F-11
<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]
Signed by Neil Johnson
a delegate of the Australian Securities and Investments Commission
F-12
<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, 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]
Signed by Neil Johnson
a delegate of the Commission
F-13
<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]
Signed by Neil Johnson
a delegate of the Commission
F-14
<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]
Signed by Neil Johnson
a delegate of the Commission
F-15
<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]
Signed by Neil Johnson
a delegate of the Commission
F-16
<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]
Signed by Neil Johnson
a delegate of the Commission
F-17
<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]
Signed by Neil Johnson
a delegate of the Commission
F-18
<PAGE>
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 Facsimile By Hand or Overnight
By Mail: Transmission: Delivery:
Tender & Exchange (for Eligible Tender & Exchange
Department Institutions Only) Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver
New York, New York Window
10286-1248 New York, New York 10286
For Confirmation
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 By Hand:
Reply Paid 85 Transmission: Level 1, Grosvenor Place
PO Box N460 (02) 9372 6011 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:
LOGO 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
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 (A)(2)
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
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
(If your name, address or shareholding is incorrect please amend and initial)
(/1/) Unless you amend the number of
Shares in Box 3 above, you
will be deemed, on acceptance,
to have accepted for your
entire shareholding.
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 TUESDAY,
FEBRUARY 9, 1999 AND AT 5:00 PM, SYDNEY TIME, ON TUESDAY, FEBRUARY 9, 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>
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
2
<PAGE>
(h) 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 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
contract 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.
3
<PAGE>
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:
By Hand or Overnight Delivery: Postal Address:
Reply Paid 85
National Registry Services Pty National Registry Services Pty
Limited Limited
Level 1 PO Box N460
Grosvenor Place Grosvenor Place
225 George Street NSW 1219
Sydney NSW 2000
TO BE RECEIVED OR DELIVERED NO LATER THAN 5:00 PM 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:
By Hand or Overnight Delivery: Postal Address:
The Bank of New York
The Bank of New York 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
New York, New York 10286 Attention: Steve Gilbert
Attention: Steve Gilbert
TO BE RECEIVED OR DELIVERED NO LATER THAN 1:00 AM 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.
4
<PAGE>
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: ( )
5
<PAGE>
ONCE YOU HAVE COMPLETED THIS FORM, DELIVER IT OR SEND IT IN THE ENVELOPE
PROVIDED TO THE REGISTRY AT:
By Hand or Overnight Delivery: Postal Address:
Reply Paid 85
National Registry Services Pty National Registry Services Pty
Limited Limited
Level 1 PO Box N460
Grosvenor Place Grosvenor Place
225 George Street NSW 1219
Sydney NSW 2000
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.
6
<PAGE>
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 5:00 pm 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
(if known): Name: __________________________________
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:
By Hand or Overnight Delivery: Postal Address:
Reply Paid 85
National Registry Services Pty National Registry Services Pty
Limited Limited
Level 1 PO Box N460 Grosvenor Place
Grosvenor Place NSW 1219
225 George Street
Sydney NSW 2000
7
<PAGE>
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.
8
<PAGE>
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:
By Hand or Overnight Delivery: Postal Address:
Reply Paid 85
National Registry Services Pty National Registry Services Pty
Limited Limited
Level 1 PO Box N460
Grosvenor Place Grosvenor Place
225 George Street NSW 1219
Sydney NSW 2000
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.
9
<PAGE>
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.
10
<PAGE>
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.
CERTIFICATE OF FOREIGN STATUS
Substitute Form W-8
Department of the Treasury
Internal Revenue Service
Certificate of Foreign Status
- -------------------------------------------------------------------------------
Name of owner (if joint account, also give joint owner's name)
----------------------------------------------------------------------------
Permanent address (including apartment or suite no.)
----------------------------------------------------------------------------
City, Province or State, postal code and country
- -------------------------------------------------------------------------------
PLEASE SIGN HERE
CERTIFICATION--Under the 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 Shares are effectively
connected.
---------------------------------------------------------------------
Signature Date
- -------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN FORM W-9 OR W-8 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.
11
<PAGE>
UNITED STATES HOLDERS
PART 1--PLEASE PROVIDE YOUR
SUBSTITUTE TIN IN THE BOX AT RIGHT AND ______________________
FORM W-9 CERTIFY BY SIGNING AND Social security number
DATING BELOW. OR
DEPARTMENT OF ----------------------
THE TREASURY
INTERNAL REVENUE Employer identification
SERVICE 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 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
PAYER'S REQUEST FOR Service (IRS) that I am subject to backup
TAXPAYER withholding as a result of a failure to report
IDENTIFICATION all interest or dividends, or (c) the IRS has
NUMBER (TIN) AND notified me that I am no longer subject to backup
CERTIFICATION 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 _______
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 of 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.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
WROTE "APPLIED FOR" IN PART 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 _______
--------------------------------------------------------
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.
12
<PAGE>
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.
13
<PAGE>
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 or her
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 (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 (also 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.
14
<PAGE>
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 GIVE THE NAME AND SOCIAL SECURITY NUMBER OR EMPLOYER
ACCOUNT: IDENTIFICATION NUMBER OF
- ---------------- ------------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more
individuals (joint The actual owner of the account or, if combined funds,
account) the first individual on the account (1)
3. Custodian account of The minor (2)
a minor (Uniform Gift
to Minors Act)
4. a. The usual The grantor-trustee (1)
revocable savings
trust (grantor is
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, The organization
religious,
charitable, education
or other tax-exempt
organization
9. Partnership The partnership
10. A broker or
registered nominee The broker or nominee
11. Account with the The public entity
Department of
Agriculture in the
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 an 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
15
<PAGE>
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.
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 or 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).
16
<PAGE>
(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).
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 willful neglect.
17
<PAGE>
(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
18
<PAGE>
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
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
The U.S. Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission: By Hand or Overnight
Tender & Exchange (for Eligible Institutions Only) Delivery:
Department (212) 815-6213 Tender & Exchange
P.O. Box 11248 Department
Church Street Station For Confirmation Telephone: 101 Barclay Street
New York, New York (800) 507-9357 Receive And Deliver
10286-1248 Window
New York, New York 10286
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:
LOGO 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
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 (A)(3)
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 ORDINARY 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 TUESDAY,
FEBRUARY 9, 1999, AND AT 5:00 P.M. SYDNEY TIME, ON TUESDAY, FEBRUARY 9,
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
By Mail: By Facsimile By Hand or Overnight
Transmission: Courier:
Tender & Exchange
Tender & Exchange (for Eligible Department
Department Institutions Only) 101 Barclay Street
P.O. Box 11248 (212) 815-6213 Receive and Deliver
Church Street Station Window
New York, New York 10286- For Confirmation New York, New York 10286
1248 Telephone:
(800) 507-9357
<PAGE>
DESCRIPTION OF ADSS TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK,
EXACTLY AS NAME(S) APPEAR(S) ADS(S) TENDERED
ON ADR(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- --------------------------------------------------------------------------------
TOTAL NUMBER OF
ADS(S) NUMBER
TENDERED ADR EVIDENCED BY OF ADS(S)
SERIAL NUMBER(S)* ADR(S) TENDERED**
-------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
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.
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 dated January 8,
1999 (Sydney time) (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 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.
2
<PAGE>
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):
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: __________________________________________________
3
<PAGE>
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.
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
4
<PAGE>
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 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
5
<PAGE>
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 the 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.
6
<PAGE>
[_]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: _________
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7 (SEE INSTRUCTIONS 1 AND 7 OF
OF THIS LETTER OF TRANSMITTAL) THIS LETTER OF TRANSMITTAL)
To be completed ONLY if ADRs To be completed ONLY if ADRs
evidencing ADSs not tendered or evidencing ADSs not tendered or
not purchased and/or the check not purchased and/or the check
for the purchase price of ADRs for the purchase price of ADRs
evidencing ADSs purchased are to evidencing ADSs purchased are to
be issued in the name of someone be sent to someone other than
other than the undersigned, or the undersigned, or to the un-
if ADRs evidencing ADSs deliv- dersigned at an address other
ered by book-entry transfer than that shown above.
which are not purchased are to
be returned by credit to an ac- Mail check and/or certificate
count maintained at a Book-Entry to:
Transfer Facility other than
that designated above. Name_____________________________
(PLEASE PRINT)
Issue check and/or ADR certifi-
cate to: Address _________________________
Name ____________________________ _________________________________
(PLEASE PRINT) (ZIP CODE)
Address _________________________
_________________________________
(ZIP CODE)
_________________________________
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
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.
7
<PAGE>
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: _____________________________________________________________________
8
<PAGE>
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, 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.
9
<PAGE>
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 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
10
<PAGE>
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.
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
Advisor 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 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 Substitute 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
11
<PAGE>
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.
12
<PAGE>
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 (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 plans 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 Income Tax Return"). Such form
may be obtained from the Internal Revenue Service Center, Philadelphia, PA
19255.
13
<PAGE>
PAYOR'S NAME: THE BANK OF NEW YORK, AS U.S. DEPOSITARY
PART 1--PLEASE PROVIDE YOUR
SUBSTITUTE TIN IN THE BOX AT RIGHT AND ______________________
FORM W-9 CERTIFY BY SIGNING AND Social security number
DATING BELOW. OR
----------------------
Employer identification
number
(If Awaiting TIN, Write
Applied For)
--------------------------------------------------------
PART 2--For Payees Exempt From Backup Withholding
DEPARTMENT OF Please Write "Exempt" Here. (See Instructions)
THE TREASURY --------------------------------------------------------
INTERNAL REVENUE PART 3--Certification, Under penalties of perjury, I
SERVICE 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 (IRS) that I am subject to backup
PAYER'S REQUEST FOR withholding as a result of a failure to report
TAXPAYER all interest or dividends, or (c) the IRS has
IDENTIFICATION notified me that I am no longer subject to backup
NUMBER (TIN) AND withholding.
CERTIFICATION
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 _______
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 of 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.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
WROTE "APPLIED FOR" IN PART 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 _______
--------------------------------------------------------
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.
14
<PAGE>
CERTIFICATE OF FOREIGN STATUS
(SUBSTITUTE)
Form W-8
Department of the Treasury
Internal Revenue Service
PLEASE PRINT OR TYPE
- -------------------------------------------------------------------------------
Name of owner (if joint account, also give joint owner's name)
----------------------------------------------------------------------------
Permanent address (include apartment or suite no.)
----------------------------------------------------------------------------
City, province or state, postal code and country
- -------------------------------------------------------------------------------
CERTIFICATION.--Under the 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 Shares 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.
15
<PAGE>
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>
<S> <C>
GIVE THE NAME AND
SOCIAL SECURITY
NUMBER OR EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: 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 Minors The minor(2)
Act)
4.a. The usual revocable savings trust (grantor is also The grantor-
trustee) trustee(1)
b. The so-called trust account that is not a legal or valid The actual
trust under State law 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, education or The organization
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 name The public entity
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 an 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.
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 or instrumentalities.
16
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ("TIN") ON SUBSTITUTE FORM W-9
PAGE 2
(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).
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
17
<PAGE>
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.
The U.S. Depositary for the Offer is:
THE BANK OF NEW YORK
By Facsimile Transmission By Hand or Overnight
By Mail: Delivery:
(for Eligible Institutions Only)
Tender & Exchange (212) 815-6213 Tender & Exchange
Department Department
P.O. Box 11248 For Confirmation Telephone: 101 Barclay Street
Church Street Station (800) 507-9357 Receive and Deliver
New York, New York Window
10286-1248 New York, New York 10286
The Registry for the Offer in Australia is:
NATIONAL REGISTRY SERVICES PTY LIMITED
By Mail: By Facsimile Transmission: By Hand:
Reply Paid (02) 9372 6011 Level 1, Grosvenor Place
P O Box N460 225 George Street
Grosvenor Place Sydney NSW 2000
NSW 1219 Tel: (02) 9372 6060
Fax: (02) 9372 6011
The Information Agent for the Offer in the United States is:
LOGO 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
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)
18
<PAGE>
EXHIBIT (A)(4)
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 ORDINARY 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.
The U.S. Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission: By Hand or Overnight
Courier:
(for Eligible Institutions Only)
Tender & Exchange (212) 815-6213
Department Tender & Exchange
P.O. Box 11248 Department
Church Street Station For Confirmation Telephone: 101 Barclay Street
New York, New York 10286- (800) 507-9357 Receive and Deliver Window
1248 New York, New York 10286
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 8, 1999 (Sydney time) (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 the Offer, as indicated below.
Signature(s): _______________________ Address(es): ________________________
_____________________________________ _____________________________________
(Include Zip Code)
Name of Record Holder(s): ___________
Area Code(s) and Tel. No(s): ________
_____________________________________
If ADSs will be tendered by book-
_____________________________________ entry transfer check the box: [_]
(Please Type or Print)
Account Number: _____________________
_____________________________________
Number of ADSs: _____________________
ADR No.(s) (if available) ___________
_____________________________________
Dated: ______________________________
2
<PAGE>
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 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 this
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: ______________________________
_____________________________________ Date: _______________________________
(Zip Code)
Area Code and Tel. No.: _____________
NOTE: DO NOT SEND ADRS WITH THIS FORM; ADRS SHOULD BE SENT WITH YOUR LETTER
OF TRANSMITTAL.
3
<PAGE>
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 (as defined in the Offer to
Purchase). 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.
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.
4
<PAGE>
EXHIBIT (A)(5)
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 ORDINARY 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 9,
1999, AND AT 5:00 P.M., SYDNEY TIME, ON FEBRUARY 9, 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.
January 8, 1999 (Sydney time)
To: Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
holding OzEmail ADSs:
Merrill Lynch & Co. ("Merrill Lynch") has been appointed by UUNET Holdings
Australia Pty Limited ("Purchaser") to act as dealer manager (the "Dealer
Manager") in connection with an offer by the Purchaser to purchase, upon the
terms and subject to the conditions set forth in the offer dated January 8,
1999 (Sydney time) (the "Offer to Purchase") and the accompanying Letter of
Transmittal and Acceptance and Transfer Form (collectively, the "Offer"), all
outstanding ordinary shares ("OzEmail Ordinary Shares") of OzEmail Limited
("OzEmail") for US$2.20 in cash per OzEmail Ordinary Share, including all
OzEmail Ordinary Shares represented by American Depositary Shares ("OzEmail
ADSs") of OzEmail, each representing ten OzEmail Ordinary Shares and evidenced
by American Depositary Receipts ("OzEmail ADRs") for US$22.00 in cash per
OzEmail ADS.
For your information and for forwarding to those of your clients for whom
you hold OzEmail ADSs registered in your name or in the name of your nominee,
we are enclosing the following documents:
1. The Offer to Purchase dated January 8, 1999 (Sydney time);
2. A printed form of letter that may be sent to your clients for whose
account you hold OzEmail ADSs registered in your name or in the name
of a nominee, with space provided for obtaining such clients'
instructions with regard to the Offer;
3. The Letter of Transmittal to be used by holders of OzEmail ADSs to
accept the Offer;
4. The Notice of Guaranteed Delivery which may be used by holders of
OzEmail ADSs if ADR certificates for OzEmail ADSs are not immediately
available, or if such certificates cannot be delivered to The Bank of
New York (the "U.S. Depositary") by the Expiration Date, or if the
procedure for book-entry transfer cannot be completed by the
Expiration Date;
<PAGE>
5. The Acceptance and Transfer Form to be used by a holder of OzEmail
Ordinary Shares to accept the Offer which includes Guidelines for
Certification of Taxpayer Identification Number of Substitute Form W-
9;
6. A return envelope addressed to the U.S. Depositary; and
7. The Part B Statement of the Company, accompanied by the
Solicitation/Recommendation Statement on Schedule 14D-9 issued by
OzEmail.
The Offer is conditional upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer, at least 90%
of OzEmail Ordinary Shares (including those shares represented by OzEmail
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 OzEmail Ordinary Shares or OzEmail Ordinary Shares represented by OzEmail
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 OzEmail Ordinary
Shares or OzEmail Ordinary Shares represented by OzEmail 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. The
Offer is also subject to other terms and conditions set forth in the Offer to
Purchase, which may be waived by Purchaser in whole or in part at any time and
from time to time in its sole discretion.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, all OzEmail ADSs validly tendered and not
properly withdrawn by the Expiration Date (as defined in the Offer to
Purchase) if and when Purchaser gives oral or written notice to the U.S.
Depositary (as defined in the Offer to Purchase) of Purchaser's acceptance of
such OzEmail ADSs for payment pursuant to the Offer. Payment for OzEmail ADSs
purchased pursuant to the Offer will be made only after timely receipt by the
U.S. Depositary of (i) (A) the OzEmail ADRs evidencing such OzEmail ADSs, or
(B) timely confirmation of a book-entry transfer (a "Book-Entry Confirmation")
of such OzEmail ADRs into the U.S. Depositary's account at the Book Entry
Transfer Facility (as defined in Section 2 of the Offer to Purchase) pursuant
to the procedures set forth in Section 2 of the Offer to Purchase, (ii) (A)
the Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or (B) an Agent's
Message in connection with a book-entry transfer, and (iii) any other
documents required by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker, dealer, or
other person (other than the Dealer Manager, the US Depositary and the
Registry in Australia and the Information Agent, as described in the Offer to
Purchase) in connection with the solicitation of acceptances of the Offer with
respect to OzEmail ADSs. You will, however, be reimbursed for customary
mailing and handling expenses incurred by you in forwarding the enclosed
materials to your client.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holder of OzEmail ADSs in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of OzEmail ADSs in
such jurisdiction. In those jurisdictions where securities, blue sky 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 Merrill Lynch or one or
more registered brokers or dealers that are licensed under the laws of such
jurisdiction.
Additional copies of the enclosed materials may be obtained from the Dealer
Manager or the Information Agent at their respective addresses and telephone
numbers set forth in the Offer to Purchase.
2
<PAGE>
Terms defined in the Offer to Purchase shall have the same meanings in this
letter.
Very truly yours,
Merrill Lynch & Co.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF MERRILL LYNCH, PURCHASER, UUNET TECHNOLOGIES,
INC., MCI WORLDCOM, INC., THE U.S. DEPOSITARY, THE DEALER MANAGER, OR THE
REGISTRY IN AUSTRALIA OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT
TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF
TRANSMITTAL.
3
<PAGE>
EXHIBIT (A)(6)
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 ORDINARY 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 9,
1999, AND AT 5:00 P.M., SYDNEY TIME, ON FEBRUARY 9, 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.
January 8, 1999 (Sydney time)
To Our ADS Clients:
Enclosed for your consideration is the Offer to Purchase dated January 8,
1999 (Sydney time) (the "Offer to Purchase"), the Letter of Transmittal and
Notice of Guaranteed Delivery, and the Acceptance and Transfer Form, relating
to an offer by UUNET Holdings Australia Pty Limited ("Purchaser"), to
purchase, upon the terms and subject to the conditions set forth in the Offer
to Purchase and the accompanying Letter of Transmittal and Acceptance and
Transfer Form (as defined in the Offer to Purchase) (collectively, the
"Offer"), all outstanding ordinary shares ("OzEmail Ordinary Shares") of
OzEmail Limited ("OzEmail") for US$2.20 in cash per OzEmail Ordinary Share,
including all OzEmail Ordinary Shares represented by American Depositary
Shares ("OzEmail ADSs") of OzEmail, each representing ten OzEmail Ordinary
Shares and evidenced by American Depositary Receipts ("OzEmail ADR"), for
US$22.00 in cash per OzEmail ADS. Also enclosed is the Part B Statement of
OzEmail accompanied by OzEmail's Solicitation/Recommendation Statement on
Schedule 14D-9.
We are the holder of record of OzEmail ADSs held by us for your account. An
acceptance of the Offer in respect of such OzEmail ADSs can be made only by us
as the holder of record and pursuant to your instructions. Accordingly, we
request instructions as to whether you wish to have us accept the Offer on
your behalf in respect of any or all OzEmail ADSs held by us for your account
pursuant to the terms and subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The Offer is being made for all OzEmail Ordinary Shares and OzEmail
ADSs evidenced by OzEmail ADRs.
2. The Offer is on the terms and subject to the conditions set forth in
the Offer to Purchase.
<PAGE>
3. The initial Offer Period of the Offer will expire at 5:00 p.m.
(Sydney time), 1:00 a.m. (New York City time) on Tuesday, February 9,
1999, unless extended (in accordance with the terms thereof).
4. The Offer is conditional upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the
Offer, at least 90% of OzEmail Ordinary Shares (including those
shares represented by OzEmail 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 OzEmail Ordinary
Shares or OzEmail Ordinary Shares represented by OzEmail 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 OzEmail Ordinary
Shares or OzEmail Ordinary Shares represented by OzEmail 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. The Offer is also subject to other terms and
conditions set forth in the Offer to Purchase, which may be waived by
Purchaser in whole or in part at any time and from time to time in
its sole discretion.
5. Holders of OzEmail ADSs will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of
the Letter of Transmittal, stock transfer taxes applicable to a sale
of OzEmail ADSs to the Purchaser.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, all OzEmail ADSs validly tendered and not
properly withdrawn by the Expiration Date (as defined in the Offer to
Purchase) if and when Purchaser gives oral or written notice to the U.S.
Depositary (as defined in the Offer to Purchase) of Purchaser's acceptance of
such OzEmail ADSs for payment pursuant to the Offer. Payment for OzEmail ADSs
purchased pursuant to the Offer will be made only after timely receipt by the
U.S. Depositary of (i) (A) the OzEmail ADRs evidencing such OzEmail ADSs, or
(B) timely confirmation of a book-entry transfer (a "Book-Entry Confirmation")
of such OzEmail ADRs into the U.S. Depositary's account at the Book Entry
Transfer Facility (as defined in Section 2 of the Offer to Purchase) pursuant
to the procedures set forth in Section 2 of the Offer to Purchase, (ii) (A)
the Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or (B) an Agent's
Message in connection with a book-entry transfer, and (iii) any other
documents required by the Letter of Transmittal.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of OzEmail ADSs in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of OzEmail ADSs in
such jurisdiction. In those jurisdictions where securities, blue sky 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 Merrill Lynch or one or
more registered brokers or dealers that are licensed under the laws of such
jurisdiction.
If you wish to have us accept the Offer in respect of any or all of the
OzEmail ADSs evidenced by OzEmail ADRs held by us for your account, please so
instruct us by completing, executing and returning to us the instruction form
contained in this letter. If you authorize us to accept the Offer in respect
of your OzEmail ADSs, the Offer will be accepted in respect of all such
OzEmail ADSs unless otherwise indicated in such instruction form. Please
forward your instruction form to us in ample time to permit us to accept the
Offer on your behalf prior to the expiration of the Offer. The specimen Letter
of Transmittal and specimen Acceptance and Transfer Form are furnished to you
for your information only and cannot be used by you to accept the Offer in
respect of OzEmail ADSs held by us for your account.
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 event you do not make such an election, you will receive
U.S. 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 you
would otherwise be entitled pursuant to the terms of the Offer will be
converted, without charge, from U.S. dollars to Australian dollars at
2
<PAGE>
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 cash consideration
is made available by Purchaser to the U.S. Depositary for delivery in respect
of the relevant OzEmail ADSs. You will receive such amount on the basis set
out above in respect of the whole of your holding of OzEmail ADSs in respect
of which you accept the Offer.
3
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER
FOR ALL OZEMAIL ADSS EVIDENCED BY OZEMAIL ADRS
The undersigned acknowledge(s) receipt of your letter and the Offer to
Purchase dated January 8, 1999 (Sydney time) (the "Offer to Purchase"), and
the related Letter of Transmittal and Acceptance and Transfer Form, relating
to an offer by Purchaser to purchase, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the accompanying Letter of
Transmittal and Acceptance and Transfer Form (collectively, the "Offer") all
outstanding ordinary shares ("OzEmail Ordinary Shares") of OzEmail Limited
("OzEmail") for US$2.20 in cash per OzEmail Ordinary Share, including all
OzEmail Shares represented by American Depositary Shares ("OzEmail ADSs") of
OzEmail, each representing ten OzEmail Ordinary Shares and evidenced by
American Depositary Receipts, for US$22.00 in cash per OzEmail ADS.
This will instruct you to accept the Offer in respect of the number of
OzEmail ADSs indicated below (or, if no number is indicated below, all OzEmail
ADSs) held by you for the account of the undersigned, upon the terms and
subject to the conditions set forth in the Offer. This will also instruct you
as to the election of which currency I would like to receive as payment for my
OzEmail ADS.
Dated:
, 1999
Number of OzEmail ADSs to be tendered: OzEmail ADSs
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 CITY TIME)
ON THE DATE THE CASH CONSIDERATION IS MADE AVAILABLE BY 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.
4
<PAGE>
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
U.S. Depositary by Purchaser. The undersigned understands 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 U.S. Depositary, by Purchaser. In all cases,
fluctuations in the U.S. dollar/Australian dollar exchange rate are at the
risk of holders who elect 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.
Signature(s):
------------------------------------------
Please print name(s) _____________________
Account Number: __________________________
Address(es):
------------------------------------------
------------------------------------------
------------------------------------------
Area Code and Telephone No. ______________
------------------------------------------
Employer Identification or Social
Security No.
Unless otherwise indicated, it will be assumed that the Offer is to be
accepted in respect of all OzEmail ADSs held by us for your account.
5
<PAGE>
Exhibit (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Securities (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase dated January 8, 1999 (Sydney time (January 7,
1999, New York time)) and the related Letter of Transmittal and Acceptance and
Transfer Form, as applicable, and is being made to all holders of Securities.
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 the making of the Offer
or the acceptance thereof would not be in compliance with the securities, blue
sky or other laws of such jurisdiction. However, Purchaser (as defined below)
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Securities in such
jurisdiction. In those jurisdictions where securities, blue sky 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 Merrill Lynch & Co. (the "Dealer
Manager") or one or more registered brokers or dealers that are licensed under
the laws of such jurisdiction.
Notice of 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 Ordinary Share or
US$22.00 Net Per American Depositary Share
UUNET Holdings Australia Pty Limited (ACN 085 531 684), a company
incorporated in New South Wales, Australia ("Purchaser") 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"), is offering 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
accretions and rights attaching to or arising from Shares after the date of
service of the Part A Statement on OzEmail Limited (ACN 066 387 157), a
corporation incorporated under the laws of the State of New South Wales,
Australia ("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), 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 the Offer to Purchase, dated January
8, 1999 (Sydney time (January 7, New York time)) (the "Offer to Purchase"), and
(i) in the case of Shares, in the related Acceptance and Transfer Form, and
(ii) in the case of the ADSs, in the related Letter of Transmittal (which Offer
to Purchase, Acceptance and Transfer Form and Letter of Transmittal, as amended
or supplemented from
<PAGE>
time to time, together constitute the "Offer"). A holder may accept the Offer in
respect of some or all of such holder's Securities.
The 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 of the Offer to Purchase. Securities
resulting from the exercise of Options must be obtained and tendered into the
Offer by the holder prior to the Expiration Date (defined below). Purchaser is
not offering to purchase (nor will tenders be accepted of) Options pursuant to
the Offer.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 1:00 A.M., NEW YORK
CITY TIME, ON TUESDAY, FEBRUARY 9, 1999 AND AT 5:00 P.M., SYDNEY
TIME, ON TUESDAY, FEBRUARY 9, 1999 (THE "EXPIRATION
DATE"), UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The consideration payable under the Offer is denominated in United
States dollars. However, all tendering holders will have the right to elect to
receive all (but not part) of the payment in Australian dollars. In the event a
holder does not make 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 basis described in Section 3 of the Offer to
Purchase.
The Offer is conditional upon, among other things, 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,
(collectively, the "Minimum Condition"). 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. During the
Offer period, the manner in which paragraphs (a) and (b) above will apply to the
Offer will be resolved by the Purchaser together with the Australlian Securities
and Investments Commission (the "ASIC"), and may require a modification to the
Australian Corporations Law (which the ASIC has the power to grant within the
Offer period), and a public announcement will be made. OzEmail has informed
Purchaser that as of December 21, 1998, there were 146,732,714 Shares
outstanding, of which approximately 42,855,100 Shares were represented by ADSs,
and the total number of Options outstanding, each exercisable for one share, was
9,958,090. As at January 8, 1999 (Sydney time), Purchaser was entitled to
21,863,174 Shares. The Offer is also subject to a number of other conditions.
See "Introduction and Offer" and Sections 1, 2, 3, 4 and 14 in the Offer to
Purchase. Subject to the provisions of the Australian Corporations Law and
except as otherwise described in the Offer to Purchase, Purchaser may at any
time and from time to time at its sole discretion waive the breach or non-
fulfillment of any condition.
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
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<PAGE>
prior to the Expiration Date and in accordance with the Australian Corporations
Law, all of those Shares.
Purchaser shall be taken to have accepted the Shares (other than ADSs)
for payment when the 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. 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 (as defined in the Offer to Purchase), 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.
Depository, which pursuant to the Letter of Transmittal will be appointed and
act as agent for tendering holders of ADSs for the purpose of receiving payment
from Purchaser and transmitting payment to such tendering holders of ADSs.
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. 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 American Depositary Receipts ("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 (as defined in Section 2 of the Offer to
Purchase) pursuant to the procedure set forth in Section 2 of the Offer to
Purchase, (ii) (A) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, or (B) an Agent's Message (as defined in Section 2
of the Offer to Purchase) in connection with a book-entry transfer and (iii) any
other documents required by the Letter of Transmittal.
Purchaser expressly reserves the right, in its sole discretion, but
subject to applicable laws and compliance with the procedures specified in
Section 1.5 of the Offer to Purchase, at any time or 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 of the Offer to Purchase, 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 Australian Corporations Law, as described in
Section 1.5 of the Offer to Purchase. 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. Under no circumstance
will interest be paid on the purchase price for tendered Securities, whether or
not the Offer is extended. 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 Securities Exchange Act of 1934), 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 in the United States.
Tenders of Securities made pursuant to the Offer are irrevocable except
that holders of Securities will be able to withdraw their acceptances at any
time prior to 1:00 a.m., New York City time, or 5:00 p.m., Sydney time, on
Tuesday, February 9, 1999 (or, if Purchaser shall have extended the period of
time for which the Offer is open, the latest time and date at which the Offer,
as extended by Purchaser, shall expire) and, unless previously accepted for
payment by Purchaser
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<PAGE>
pursuant to the Offer, may also be withdrawn at any time after March 8, 1999.
For a withdrawal of certificated Shares (or ADSs) or Shares in an Issuer
Sponsored Holding (as defined in the Offer to Purchase) to be effective, a
written or facsimile transmission notice of withdrawal must be timely received
by the Registry (as defined in the Offer to Purchase), in the case of holders of
Shares in an Issuer Sponsored Holding or of certificated Shares located outside
the United States, or the U.S. Depositary, in the case of holders of
certificated Shares located in the United States or of ADSs, at one of their
respective addresses set forth on the back cover of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Securities to be withdrawn, the number of Shares or ADSs to be withdrawn and the
name of the registered holder of such Shares or ADSs, if different from that of
the person who tendered such Shares or ADSs, respectively. 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 must be submitted to the U.S. Depositary, and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in Section 2 of the Offer to Purchase), 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 of the Offer to Purchase, 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 at the beginning of this paragraph. All questions as to the validity,
form, eligibility (including time of receipt) and acceptance for payment of any
tendered Securities or of any notice of withdrawal pursuant to any of the
procedures described in Section 2 or 4 of the Offer to Purchase will be
determined by Purchaser, in the reasonable exercise of its discretion, whose
determination will be final and binding. Any withdrawal of Shares held through a
CHESS Holding (as defined in the Offer to Purchase) must be made in accordance
with Rule 16.5 of the SCH Business Rules (as defined in the Offer to Purchase).
Any holder of Shares held in CHESS (as defined in the Offer to Purchase) who
wishes to withdraw those Shares from the Offer in accordance with the foregoing
must instruct such holder's Controlling Participant (as defined in the Offer to
Purchase) to initiate that withdrawal prior to the Expiration Date. If the Offer
becomes or is declared free of all conditions, and payment has been made prior
to the Expiration Date in respect of tendered Securities, then if such holder
subsequently wishes to withdraw those Securities prior to the Expiration Date in
respect of tendered Securities, such holder will be required to repay the
purchase price in the manner described in Section 4 of the Offer to Purchase.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
Pursuant to the Subscription Agreement entered into between OzEmail and
Purchaser on December 12, 1998, OzEmail has provided to Purchaser a list of
holders of the Shares (including a list of holders of ADSs) and security
position listings. 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 information
provided pursuant to such requests, the 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 whose names appear on OzEmail's shareholder list and will be
furnished to brokers, dealers, commercial banks,
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<PAGE>
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.
The Offer to Purchase, the Part A Statement attached thereto and the
related Acceptance and Transfer Form and Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
Questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers as set forth below. Purchaser will not pay any fees or
commissions to any broker or dealer or to any other person (other than the
Information Agent and the Dealer Manager) for soliciting tenders of Securities
pursuant to the Offer. Additional copies of the Offer to Purchase, the
Acceptance and Transfer Form and Letter of Transmittal and all other tender
offer materials may be obtained from the Information Agent or the Dealer Manager
or from brokers, dealers, commercial banks and trust companies, and will be
furnished promptly at Purchaser's expense.
The Information Agent for the Offer 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 Dealer Manager for the Offer in the United States is:
MERRILL LYNCH & CO.
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
(212) 449-8971 (Call Collect)
January 8, 1999 (Sydney, Australia time)
January 7, 1999 (New York City time)
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<PAGE>
Exhibit (a)(8)
MCI WORLDCOM, INC.
CONTACT:
For Media: For Investors:
Jim Monroe Gary Brandt
MCI WorldCom MCI WorldCom
+1 202 887 2241 +1 601 360 8544
PRESS RELEASE
________________________________
MCI WORLDCOM, INC.
COMMENCES CASH TENDER OFFER
FOR ALL OUTSTANDING ORDINARY SHARES AND
AMERICAN DEPOSITARY SHARES OF OZEMAIL LIMITED
AT US$2.20 PER ORDINARY SHARE (US$22.00 PER AMERICAN
DEPOSITARY SHARE)
JACKSON, Miss., January 7, 1999--MCI WORLDCOM, Inc. (Nasdaq:WCOM), today
announced that UUNET Holdings Australia Pty Limited ("UUNET Australia"), MCI
WorldCom's newly formed wholly owned subsidiary, has commenced a cash tender
offer for all ordinary shares (the "Shares") of OzEmail Limited ("OzEmail"), an
Australian corporation, including all outstanding American Depositary Shares
representing Shares ("ADSs") represented by American Depositary Receipts
("ADRs") at US $2.20 per Share (US$22.00 per ADS).
The offer follows a recent purchase by UUNET Australia of 21,863,174
Shares. The offer is conditional upon, among other things, all Australian and
other necessary governmental and regulatory approvals being received and UUNET
Australia being entitled at the date and time the offer expires to not less than
90% of all Shares (including Shares represented by ADSs).
The tender offer and withdrawal rights are scheduled to expire at 1:00
A.M., New York City time, on Tuesday, February 9, 1999 and at 5:00 P.M., Sydney
time on Tuesday, February 9, 1999, unless the offer is extended.
Merrill Lynch is acting as the Dealer Manager and MacKenzie Partners, Inc.
is acting as the Information Agent in connection with the offer. The information
filed with the Securities and Exchange Commission in connection with the tender
offer may be obtained by calling MacKenzie Partners, Inc. collect at (212) 929-
5500 or toll free at (800) 322-2885.
MCI WorldCom is a global communications company with revenue of more than
US$30
<PAGE>
billion and established operations in over 65 countries encompassing the
Americas, Europe and the Asia-Pacific regions. MCI WorldCom is a premier
provider of facilities-based and fully integrated local, long distance,
international and Internet services. MCI WorldCom's global networks, including
its state-of-the-art pan-European network and transoceanic cable systems,
provide end-to-end high-capacity connectivity to more than 38,000 buildings
worldwide. For more information on MCI WorldCom, visit the World Wide Web at
http://www.mciworldcom.com or http://www.wcom.com.
