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PROSPECTUS
CENTURY COMMUNICATIONS CORP.
OFFER TO EXCHANGE UP TO $605,000,000 AGGREGATE
PRINCIPAL AMOUNT AT MATURITY OF ITS
SENIOR DISCOUNT NOTES DUE JANUARY 15, 2008, SERIES B
FOR ANY AND ALL OF ITS OUTSTANDING
SENIOR DISCOUNT NOTES DUE JANUARY 15, 2008, SERIES A
[LOGO]
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THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
APRIL 24, 1998, UNLESS EXTENDED.
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Century Communications Corp., a New Jersey corporation (the 'Company'),
hereby offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (as defined herein, which
together with this Prospectus constitute the 'Exchange Offer'), to exchange
$1,000 principal amount at maturity of Senior Discount Notes due January 15,
2008, Series B (the 'New Notes') of the Company for each $1,000 principal amount
at maturity of the issued and outstanding Senior Discount Notes due January 15,
2008, Series A (the 'Existing Notes') of the Company from the Registered Holders
(as defined herein) thereof. As of the date of this Prospectus, there is
$605,000,000 aggregate principal amount at maturity of the Existing Notes
outstanding. The terms of the New Notes are identical in all material respects
to the Existing Notes, except that the New Notes have been registered under the
Securities Act of 1933, as amended (the 'Securities Act'), and therefore will
not bear legends restricting their transfer. Certain provisions of the
Registration Rights Agreement (as defined herein) providing for payment of
liquidated damages under certain circumstances relating to such Registration
Rights Agreement will terminate upon the issuance of the New Notes. The New
Notes will evidence the same debt as the Existing Notes and will be issued
pursuant to, and entitled to the benefits of, the Indenture, dated January 15,
1998, between the Company and First Trust of California, National Association,
as trustee (the 'Trustee'), pursuant to which the Existing Notes were issued. As
used herein, the term 'Notes' means the Existing Notes and the New Notes treated
as a single class. See 'The Exchange Offer' and 'Description of the Notes.'
The Notes, which mature on January 15, 2008, are limited to $605,000,000 in
aggregate principal amount at maturity. The Existing Notes were sold at a
substantial discount from the principal amount payable at their maturity. There
will be no periodic payments of interest on the Notes. Original issue discount
(the difference between the issue price and the stated redemption price at
maturity of a Note), accrues from January 15, 1998 and continuing during the
period in which a Note remains outstanding, at 9.05% per annum (the 'Yield to
Maturity'), calculated on a semi-annual bond equivalent basis using a 360-day
year composed of twelve 30-day months. Original issue discount will cease to
accrue with respect to any Note on the date the principal thereof shall become
due (whether at maturity or upon acceleration) or on the date fixed for purchase
thereof. If the Company shall fail to deposit with the Trustee or any paying
agent an amount of money sufficient to discharge the principal of any Note when
due or to purchase any Note when so required, then interest on the overdue
amount shall thereupon accrue at the Yield to Maturity. For information as to
the federal income tax consequences of original issue discount on the holder of
a Note, see 'Certain Federal Income Tax Considerations.' The Notes will not be
entitled to the benefit of any sinking fund.
Following the occurrence of a Triggering Event (as defined herein), each
holder of Notes will have the right to require the Company to purchase all or a
portion of such holder's Notes at a purchase price equal to 101% of the Accreted
Value (as defined herein) of the Notes on the date of purchase. See 'Description
of the Notes.'
The New Notes will be senior unsecured obligations of the Company and will
rank pari passu in right of payment with all existing and future unsecured and
unsubordinated indebtedness of the Company and senior in right of
(Continued on next page)
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SEE 'RISK FACTORS' BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY REGISTERED HOLDERS PRIOR TO TENDERING
EXISTING NOTES IN THE EXCHANGE OFFER.
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THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MARCH 17, 1998.
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(Continued from cover)
payment to all future subordinated indebtedness of the Company. The New Notes
will be effectively subordinated to all secured indebtedness of the Company to
the extent of the assets securing such indebtedness and to all existing and
future indebtedness of the Company's subsidiaries. As of November 30, 1997, the
Company and its subsidiaries would have had, on a pro-forma basis, an aggregate
of approximately $2.381 billion of indebtedness outstanding, including the
Notes, of which approximately $667.1 million would have been indebtedness of
subsidiaries which would have been effectively senior to the Notes and the
balance of which is pari passu in right of payment with the Notes. See 'Use of
Proceeds' and 'Description of the Notes.'
The Company will accept for exchange any and all Existing Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on the
Expiration Date (as defined herein). See 'The Exchange Offer -- Expiration Date;
Extensions; Amendments.' Tenders of Existing Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date. See 'Procedures
for Tendering Existing Notes -- Withdrawal Rights.' The Exchange Offer is
subject to certain customary conditions. See 'The Exchange Offer -- Conditions
to the Exchange Offer.'
Existing Notes initially sold to Qualified Institutional Buyers (as defined
in Rule 144A under the Securities Act) and pursuant to Regulation S under the
Securities Act were represented by global Note certificates in definitive fully
registered form, registered in the name of a nominee of The Depository Trust
Company ('DTC'), as depositary. The New Notes exchanged for Existing Notes
represented by the global Note certificates will be represented by global Note
certificates in definitive fully registered form, registered in the name of the
nominee of DTC, as depositary, unless the beneficial holders thereof request
otherwise. The global Note certificates will be exchangeable, upon ten days'
prior written notice, for New Notes in definitive fully registered form, in
denominations of $1,000 and integral multiples thereof. See 'Description of
Notes -- Book-Entry Delivery and Form.'
Based on interpretations by the staff of the Securities and Exchange
Commission (the 'Commission') set forth in no-action letters issued to third
parties with respect to similar transactions, including Exxon Capital Holding
Corp. (available May 13, 1988) ('Exxon Capital'), Morgan Stanley & Co. Inc.
(available June 5, 1991) ('Morgan Stanley') and similar no-action letters, the
Company believes that the New Notes issued pursuant to the Exchange Offer in
exchange for Existing Notes may be offered for resale, resold or otherwise
transferred by any holder thereof (other than any such holder that is an
'affiliate' of the Company within the meaning of Rule 405 promulgated under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holder's business, such holder has no arrangement
with any person to participate in the distribution of such New Notes and neither
such holder nor any such other person is engaging in or intends to engage in a
distribution of such New Notes. However, the Company has not sought a no-action
letter with respect to the Exchange Offer and there can be no assurance that the
Staff of the Commission would make a similar determination with respect to the
Exchange Offer. Each Registered Holder of Existing Notes, other than a
broker-dealer, must acknowledge that it is not engaged in, has no arrangement or
understanding with any person to participate in and does not intend to engage in
a distribution of New Notes. Any Registered Holder who tenders in the Exchange
Offer for the purpose of participating in a distribution of New Notes (i) cannot
rely on such an interpretation by the Staff of the Commission, (ii) will not be
able to validly tender Existing Notes in the Exchange Offer and (iii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any secondary resale transactions. In
addition, each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal accompanying this Prospectus states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an 'underwriter' within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Existing Notes where such Existing Notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities. Pursuant to
the Registration Rights Agreement, the Company has agreed that it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See 'Plan of Distribution.'
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AVAILABLE INFORMATION
The Company has filed with the Commission a registration statement on Form
S-4 (together with all amendments, exhibits, schedules and supplements thereto,
the 'Registration Statement') under the Securities Act with respect to the New
Notes being offered hereby. This Prospectus, which forms a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain portions of which have been omitted pursuant to
the rules and regulations promulgated by the Commission. For further information
with respect to the Company, reference is made to the Registration Statement.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document are not necessarily complete. With respect to each such
contract, agreement or other document filed or incorporated by reference as an
exhibit to the Registration Statement, reference is made to such exhibit for a
more complete description of the matter involved, and each such statement is
qualified in its entirety by such reference.
The Company is subject to the information reporting requirements of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such material filed by the Company with the
Commission may be inspected and copied at the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at 7 World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may
also be obtained at the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Commission also maintains a website that contains reports, proxy and
information statements and other information. The website address is
http://www.sec.gov. The Company's Class A Common Stock is listed on The Nasdaq
Stock Market and the Company therefore also files reports, proxy and information
statements and other information with the National Association of Securities
Dealers, Inc. ('NASD'). The above material can be inspected at the Nasdaq
Reports Section, 1735 K Street, N.W., Washington, D.C. 20006. In the event that
the Company is not required to be subject to the reporting requirements of the
Exchange Act in the future, the Company will be required under the Indenture to
file with the Commission the reports, proxy and information statements and other
documents and information specified in Sections 13 and 15(d) of the Exchange
Act.
INFORMATION INCORPORATED BY REFERENCE
The following reports filed by the Company with the Commission pursuant to
the Exchange Act are incorporated herein by reference: the Annual Report on Form
10-K for the fiscal year ended May 31, 1997, the Quarterly Reports on Form 10-Q
for the quarterly periods ended August 31, 1997 and November 30, 1997 and the
Current Report on Form 8-K filed on December 10, 1997.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering
of the New Notes shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the respective date of filing of each
such document. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is, or is deemed to be,
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents incorporated by reference herein, other than certain exhibits to
such documents. Requests for such documents should be directed to Scott N.
Schneider, Chief Financial Officer, Senior Vice President and Treasurer, Century
Communications Corp., 50 Locust Avenue, New Canaan, Connecticut 06840. The
Company's telephone number is (203) 972-2000. In order to ensure timely delivery
of the documents, any request should be made no later than five days prior to
the expiration date.
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FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. THESE STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS PROSPECTUS AND
INCLUDE STATEMENTS REGARDING THE INTENTS, BELIEF OR CURRENT EXPECTATIONS OF THE
COMPANY WITH RESPECT TO TRENDS AFFECTING THE COMPANY'S FINANCIAL CONDITION OR
RESULTS OF OPERATIONS; THE CONSEQUENCES OF FAILURE TO EXCHANGE; THE NECESSITY TO
COMPLY WITH EXCHANGE OFFER PROCEDURES; THE COMPANY'S NET LOSSES AND
STOCKHOLDERS' DEFICIENCY; THE COMPANY'S DEBT STRUCTURE; THE COMPETITIVE NATURE
OF THE CABLE TELEVISION AND WIRELESS TELEPHONE INDUSTRIES; RISK ASSOCIATED WITH
YEAR 2000; REGULATION; THE ABSENCE OF A PUBLIC MARKET FOR THE NOTES; RESTRICTIVE
COVENANTS AND CONSEQUENCES OF DEFAULT CONTAINED IN THE COMPANY'S FINANCING
ARRANGEMENTS; CONTROL BY CERTAIN OF THE COMPANY'S STOCKHOLDERS; THE RECOVERY OF
THE COMPANY'S AUSTRALIAN INVESTMENT; OPERATING HAZARDS AND UNINSURED RISKS;
REFINANCING AND INTEREST RATE EXPOSURE RISKS; AND POTENTIAL FOR CHANGES IN
ACCOUNTING STANDARDS.
PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND
UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. THE ACCOMPANYING
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS,
INCLUDING, WITHOUT LIMITATION, THE INFORMATION UNDER 'RISK FACTORS,'
'MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS,' AND 'BUSINESS' IDENTIFIES IMPORTANT FACTORS THAT COULD CAUSE SUCH
DIFFERENCES.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES. SPECIFICALLY,
THE INITIAL PURCHASER MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING, MAY BID
FOR AND PURCHASE NOTES IN THE OPEN MARKET AND MAY IMPOSE PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE 'PLAN OF DISTRIBUTION.'
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IMPORTANT
To properly tender Existing Notes, the following procedures must be
followed:
Each beneficial owner owning interests in the Existing Notes ('Beneficial
Owner') through a DTC Participant (as defined below) must instruct such
DTC Participant to cause Existing Notes to be tendered in accordance with
the procedures set forth in this Prospectus.
Each participant (a 'DTC Participant') in the Depository Trust Company
('DTC') holding Existing Notes through DTC must (i) electronically
transmit its acceptance to DTC through the DTC Automated Tender Offer
Program ('ATOP'), for which the transaction will be eligible, and DTC will
then edit and verify the acceptance, execute a book-entry delivery to the
Exchange Agent's account at DTC and send an Agent's Message (as defined
herein) to the Exchange Agent for its acceptance, or (ii) comply with the
guaranteed delivery procedures set forth under 'Procedures for Tendering
Existing Notes -- Guaranteed Delivery Procedures -- Notes held through
DTC.' By tendering through ATOP, DTC Participants will expressly
acknowledge receipt of the accompanying Letter of Transmittal and agree to
be bound by its terms and the Company will be able to enforce such
agreement against such DTC Participants.
Each registered owner of a registered certificated Existing Note (a
'Registered Holder') must (i) complete and sign the accompanying Letter of
Transmittal, and mail or deliver such Letter of Transmittal, and all other
documents required by the Letter of Transmittal, together with
certificate(s) representing all tendered Existing Notes, to the Exchange
Agent at its address set forth under 'Procedures for Tendering Existing
Notes -- Exchange Agent,' or (ii) comply with the guaranteed delivery
procedures set forth under 'Procedures for Tendering Existing Notes --
Guaranteed Delivery Procedures -- Notes held by Registered Holders.'
For purposes of this Prospectus, 'Tendering Holder' shall mean (i) each DTC
Participant that has properly transmitted (and not properly withdrawn) its
acceptance through ATOP and in respect of which DTC has sent an Agent's Message,
(ii) each Registered Holder that has timely delivered to the Exchange Agent (and
not properly withdrawn) a properly completed and duly executed Letter of
Transmittal, and any other documents required by the Letter of Transmittal,
together with certificate(s) representing all tendered Existing Notes, or (iii)
each DTC Participant or Registered Holder that has complied with the guaranteed
delivery procedures set forth herein.
The information in this Prospectus concerning DTC and their book-entry
systems has been obtained from sources that the Company believes to be reliable,
but the Company takes no responsibility for the accuracy thereof.
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SUMMARY
The following summary is qualified in its entirety by, and is subject to,
the more detailed information and consolidated financial statements (including
the notes thereto) appearing elsewhere in this Prospectus and in the documents
incorporated herein by reference. This Prospectus contains forward-looking
statements which involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in 'Risk Factors.' See 'Forward-Looking Statements.'
THE COMPANY
The Company was incorporated in New Jersey on December 5, 1985 as the
holding company for a corporation of the same name incorporated in Texas on June
12, 1973. The Company is engaged primarily in the ownership and operation of
cable television systems and wireless telephone systems. The Company's principal
executive offices are located at 50 Locust Avenue, New Canaan, Connecticut
06840, and its telephone number is (203) 972-2000.
THE EXCHANGE OFFER
The Existing Notes were issued and sold on January 15, 1998 in a
transaction (the 'Initial Offering') exempt from the registration requirements
of the Securities Act and applicable state securities laws and may not be
offered or sold in the United States unless so registered or pursuant to an
applicable exemption under the Securities Act and applicable state securities
laws. The Exchange Offer is being made with respect to all outstanding Existing
Notes. See 'The Exchange Offer.' The New Notes will be entitled to the benefits
of the same Indenture under which the Existing Notes were issued. See
'Description of the Notes.'
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The Exchange Offer.................. The Company is offering to exchange pursuant to the Exchange Offer $1,000
principal amount at maturity of New Notes in exchange for each outstanding
$1,000 principal amount at maturity of Existing Notes. As of the date
hereof, $605,000,000 aggregate principal amount at maturity of the Existing
Notes are outstanding. The terms of the New Notes are identical in all
material respects to the terms of the Existing Notes except that the New
Notes have been registered under the Securities Act, and therefore will not
bear legends restricting their transfer. Certain provisions of the
Registration Rights Agreement providing for the payment of liquidated
damages under certain circumstances relating to such Registration Rights
Agreement (as defined below) will terminate upon the issuance of the New
Notes. See 'The Exchange Offer -- Purpose and Effect of the Exchange
Offer.'
Based on no-action letters issued by the Staff of the Commission to third
parties with respect to similar transactions, including Exxon Capital,
Morgan Stanley and similar no-action letters, the Company believes that the
New Notes issued pursuant to the Exchange Offer in exchange for Existing
Notes may be offered for resale, resold and otherwise transferred by
Registered Holders thereof (other than any such Registered Holder that is
an affiliate of the Company) without compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such Registered Holders'
business and such Registered Holders are not engaged in, have no
arrangement or understanding with any person to participate in, and do not
intend to engage in, any distribution of the New Notes.
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However, the Company has not sought a no-action letter with respect to the
Exchange Offer and there can be no assurance that the Staff of the
Commission would make a similar determination with respect to the Exchange
Offer. Each Registered Holder of Existing Notes, other than a
broker-dealer, must acknowledge that it is not engaged in, has no
arrangement or understanding with any person to participate in, and does
not intend to engage in a distribution of, New Notes. Any Registered Holder
who tenders in the Exchange Offer for the purpose of participating in a
distribution of New Notes (i) will not be able to rely on the
interpretations of the Staff of the Commission set forth in the
above-referenced no-action letters, (ii) will not be able to validly tender
Existing Notes in the Exchange Offer, and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transactions. In addition, each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal
accompanying this Prospectus states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an 'underwriter' within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Existing Notes where such Existing Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. Pursuant to the Registration Rights Agreement, the Company has
agreed that it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See 'The Exchange Offer -- Purpose
and Effect of the Exchange Offer -- Transferability' and 'Plan of
Distribution.'
Purpose and Effect of the Exchange
Offer............................. In connection with the Initial Offering, the Company entered into the
Registration Rights Agreement dated January 15, 1998 (the 'Registration
Rights Agreement') with Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the 'Initial Purchaser') providing for the Exchange Offer. Pursuant to the
Registration Rights Agreement, the Company agreed to file with the
Commission and use its best efforts to cause to become effective the
Registration Statement with respect to the Exchange Offer for the New Notes
registered under the Securities Act, with terms identical in all material
respects to the terms of the Existing Notes except that the New Notes will
be registered under the Securities Act, and therefore will not bear legends
restricting their transfer. The New Notes will not receive the benefits of
certain provisions of the Registration Rights Agreement which provide for
payment of liquidated damages relating to the Company's failure to meet
specified milestones with respect to certain registration rights (as
described therein) which provisions will terminate upon the issuance of the
New Notes. See 'The Exchange Offer -- Purpose and Effect of the Exchange
Offer.' In addition, if the Exchange Offer cannot be consummated within 210
days after the Initial Issue Date for any
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reason, or if the Initial Purchaser so requests with respect to (i)
Existing Notes not eligible or permitted to be exchanged or (ii) New Notes
received that are not fully tradeable, the Company will be required to file
a Shelf Registration Statement (the 'Shelf Registration Statement') for an
offering to be made on continuous basis pursuant to Rule 415 under the
Securities Act. See 'The Exchange Offer -- Purpose and Effect of the
Exchange Offer -- Shelf Registration Statement.'
Expiration Date..................... The Exchange Offer will expire at 5:00 p.m., New York City time, on the
Expiration Date (as defined herein), unless the Exchange Offer is extended
as provided herein, in which case the term 'Expiration Date' means the
latest date and time to which the Exchange Offer is extended. Any Existing
Notes not accepted for exchange for any reason will be returned without
expense to the Tendering Holder thereof as promptly as practicable after
the expiration or termination of the Exchange Offer. See ' -- Terms of the
Exchange Offer.'
Exchange Date....................... As soon as practicable after the close of the Exchange Offer, the Company
will accept for exchange all Existing Notes properly tendered and not
validly withdrawn prior to 5:00 p.m., New York City time, on the Expiration
Date. See 'The Exchange Offer -- Exchange Date.'
Conditions to the Exchange Offer.... The Exchange Offer is subject to certain customary conditions, which may be
waived by the Company. The Company reserves the right to amend, terminate
or extend the Exchange Offer at any time prior to the Expiration Date upon
the occurrence of any such condition. The Exchange Offer is not conditioned
on any minimum aggregate principal amount at maturity of Existing Notes
being tendered for exchange. See 'The Exchange Offer -- Conditions.'
Consequences of Failure to
Exchange.......................... Registered Holders of Existing Notes who do not exchange their Existing
Notes for New Notes pursuant to the Exchange Offer will continue to be
subject to the restrictions on transfer of such Existing Notes as set forth
in the legend thereon as a consequence of the issuance of the Existing
Notes pursuant to exemptions from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable state
securities laws. In general, Existing Notes may not be offered or sold
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws.
PROCEDURES FOR TENDERING EXISTING NOTES
Tendering Existing Notes............ Each Beneficial Owner of Existing Notes held through a DTC Participant must
instruct such DTC Participant to cause its Existing Notes to be tendered in
accordance with the procedures set forth under 'Procedures for Tendering
Existing Notes -- Tendering Existing Notes -- Notes held through a
Custodian.'
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Each DTC Participant holding Existing Notes through DTC must (i)
electronically transmit its acceptance through ATOP, and DTC will then edit
and verify the acceptance, execute a book-entry delivery to the Exchange
Agent's account at DTC and send an Agent's Message to the Exchange Agent
for its acceptance, or (ii) comply with the guaranteed delivery procedures
set forth in this Prospectus and in the Notice of Guaranteed Delivery. See
'Procedures for Tendering Existing Notes -- Tendering Existing
Notes -- Notes held through DTC' and ' -- Guaranteed Delivery
Procedures -- Notes held through DTC.'
Each Registered Holder must (i) complete and sign a Letter of Transmittal,
and mail or deliver such Letter of Transmittal, and all other documents
required by the Letter of Transmittal, together with certificate(s)
representing all tendered Existing Notes, to the Exchange Agent at its
address set forth under 'Procedures for Tendering Existing
Notes -- Exchange Agent,' or (ii) comply with the guaranteed delivery
procedures set forth in this Prospectus. See 'Procedures for Tendering
Existing Notes -- Tendering Existing Notes -- Notes held by Registered
Holders' and ' -- Guaranteed Delivery Procedures -- Notes held by
Registered Holders.'
By tendering, each Registered Holder and each DTC Participant will
represent to the Company that, among other things, (i) it is not an
Affiliate of the Company, (ii) it is not a broker-dealer tendering Existing
Notes acquired directly from the Company for its own account, (iii) the New
Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of such Registered Holder and (iv) it has no
arrangements or understandings with any person to participate in the
Exchange Offer for the purpose of distributing the New Notes. See
'Procedures for Tendering Existing Notes -- Tendering Existing Notes.'
Guaranteed Delivery
Procedures........................ DTC Participants holding Existing Notes through DTC who wish to cause their
Existing Notes to be tendered, but who cannot transmit their acceptances
through ATOP prior to the Expiration Date, may effect a tender in
accordance with the procedures set forth in this Prospectus. See
'Procedures for Tendering Existing Notes -- Guaranteed Delivery
Procedures -- Notes held through DTC.'
Registered Holders who wish to tender their Existing Notes but (i) whose
Existing Notes are not immediately available and will not be available for
tendering prior to the Expiration Date, or (ii) who cannot deliver their
Existing Notes, the Letter of Transmittal, or any other required documents
to the Exchange Agent prior to the Expiration Date, may effect a tender in
accordance with the procedures set forth in this Prospectus. See
'Procedures for Tendering Existing Notes -- Guaranteed Delivery
Procedures -- Notes held by Registered Holders.'
Withdrawal Rights................... Tenders of Existing Notes pursuant to the Exchange Offer may be withdrawn
as provided herein at any time prior to 5:00 p.m., New York City time, on
the Expiration Date. See 'The Exchange Offer -- Withdrawal of Tenders.'
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Exchange Agent...................... First Trust of California, National Asociation is serving as Exchange Agent
in connection with the Exchange Offer. See 'The Exchange Offer -- Exchange
Agent.'
Use of Proceeds..................... There will be no cash proceeds to the Company from the exchange pursuant to
the Exchange Offer. Net proceeds received by the Company from the sale of
the Existing Notes were applied to repay temporarily borrowings under the
Company's Cable Operations' Credit Agreements (as defined herein) and for
capital expenditures, operations, acquisitions and other investments that
would have otherwise been paid for under the Cable Operations' Credit
Agreements.
Certain Federal Income Tax
Consequences...................... The exchange of Existing Notes for New Notes will not be a taxable exchange
for Federal income tax purposes. See 'Certain Federal Income Tax
Considerations.'
</TABLE>
THE NEW NOTES
The Exchange Offer applies to $605,000,000 aggregate principal amount at
maturity of Existing Notes. The terms of the New Notes are identical in all
material respects to the Existing Notes, except that the New Notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting their transfer. Certain provisions of the Registration Rights
Agreement providing for the payment of liquidated damages under certain
circumstances relating to such Registration Rights Agreement will terminate upon
the issuance of the Existing Notes. The New Notes will evidence the same debt as
the Existing Notes and, except as set forth in the immediately preceding
sentence, will be entitled to the benefits of the Indenture, under which both
the Existing Notes were, and the New Notes will be, issued. See 'Description of
Notes.'
<TABLE>
<S> <C>
The New Notes....................... $605,000,000 aggregate principal amount at maturity of Senior Discount
Notes due January 15, 2008, Series B. The Existing Notes were issued at a
substantial discount to their aggregate principal amount at maturity.
Original issue discount accrues on the Notes from January 15, 1998 and
continuing during the period in which the Notes remain outstanding. See
'Certain Federal Income Tax Considerations' for a discussion of the federal
income tax consequences of original issue discount. Such original issue
discount represents an annual yield to maturity based on the issue price of
9.05% (calculated on a semi-annual bond equivalent basis). There will be no
periodic payments of interest on the New Notes. The New Notes may not be
redeemed prior to maturity and will not be entitled to the benefit of any
sinking fund.
Maturity Date....................... January 15, 2008.
Ranking............................. The New Notes will be senior unsecured obligations of the Company and will
rank pari passu in right of payment with all existing and future unsecured
and unsubordinated indebtedness of the Company and senior in right of
payment to all future subordinated indebtedness of the Company. The New
Notes will be effectively subordinated to all secured indebtedness of the
Company to the extent of the assets securing such indebtedness and all
existing and future indebtedness of the subsidiaries of the Company. As of
November 30, 1997, on a pro-forma basis, including the net proceeds from
the issuance of the Existing Notes and the use of a
</TABLE>
10
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<PAGE>
<TABLE>
<S> <C>
portion of the proceeds therefrom to repay $185 million outstanding under
the Cable Operations' Credit Agreements, the Company and its subsidiaries
would have had an aggregate of approximately $2.381 billion of indebtedness
outstanding, of which $667.1 million would have been indebtedness of
subsidiaries effectively senior to the New Notes and the balance of which
is pari passu in right of payment with the Notes. See 'Use of Proceeds' and
'Description of the Notes.'
Right to Require Repurchase......... Following the occurrence of a Triggering Event (as defined in 'Description
of the Notes') each holder of New Notes will have the right to require the
Company to purchase all or a portion of such holder's New Notes at a
purchase price equal to 101% of the Accreted Value (as defined in
'Description of the Notes') of such New Notes on the date of purchase. See
'Description of the Notes -- Certain Rights to Require Repurchase of
Notes.'
Certain Covenants................... The Indenture (as defined in 'Description of the Notes') will contain
certain covenants, including (i) limitations on indebtedness incurred by
the Company and the Restricted Subsidiaries (as defined in 'Description of
the Notes'), (ii) limitations on dividend and stock purchases (as defined
in 'Description of the Notes'), (iii) restrictions on any investment by the
Company and the Restricted Subsidiaries in any Affiliate or any
Unrestricted Subsidiary (each as defined in 'Description of the Notes'),
and (iv) limitations on transactions with Affiliates. In addition, the
Indenture will limit the ability of the Company to consolidate, merge or
sell all or substantially all of its assets. These covenants are subject to
important exceptions and qualifications. See 'Description of the
Notes -- Certain Covenants.'
</TABLE>
For additional information regarding the Notes, see 'Use of Proceeds',
'Description of Notes' and 'Certain Federal Income Tax Considerations.'
RISK FACTORS
Potential investors in the New Notes should carefully consider the
information set forth in this Prospectus and, in particular, should evaluate the
specific factors set forth under the caption 'Risk Factors' prior to tendering
Existing Notes in exchange for New Notes, including (i) the consequences of a
failure to participate in the Exchange Offer, (ii) the degree of leverage of the
Company, and (iii) the lack of a public market for the New Notes. See 'Risk
Factors' beginning on page 12.
11
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<PAGE>
RISK FACTORS
Registered Holders should carefully consider the following risk factors, as
well as the other information included or incorporated by reference in this
Prospectus, prior to making a decision to tender their Existing Notes in the
Exchange Offer. This Prospectus contains forward-looking statements that involve
risks and uncertainties. Such statements are based on management's current
expectations and are subject to a number of factors and uncertainties which
could cause the Company's performance and the other matters discussed in the
forward-looking statements to differ significantly from that discussed in the
forward-looking statements. Factors that could cause such differences include,
but are not limited to, those discussed as risk factors below and other factors
discussed elsewhere in this Prospectus. The Company assumes no obligation to
update its forward-looking statements or to advise of changes in the assumptions
and factors on which they are based.
CONSEQUENCES OF FAILURE TO EXCHANGE
Any Existing Notes not tendered pursuant to the Exchange Offer will remain
outstanding. Such Existing Notes will remain 'restricted securities' (within the
meaning of the Securities Act). Accordingly, prior to the date that is two years
after the later of the initial issue date thereof (the 'Initial Issue Date') and
the last date on which the Company or any Affiliate of the Company was the owner
of such Existing Notes (the 'Resale Restriction Termination Date'), such
Existing Notes may be resold only (i) to the Company, (ii) to a person whom the
seller reasonably believes is a 'qualified institutional buyer' purchasing for
its own account or for the account of another 'qualified institutional buyer' in
compliance with the resale limitations of Rule 144A, (iii) to an Institutional
Accredited Investor that, prior to such transfer, furnishes to the Trustee a
written certification containing certain representations and agreements relating
to the restrictions on transfer of the Notes (the form of which letter can be
obtained from the Trustee), (iv) pursuant to the limitations on resale provided
by Rule 144 under the Securities Act (if available), (v) pursuant to the resale
provisions of Rule 904 of Regulation S under the Securities Act, (vi) pursuant
to an effective registration statement under the Securities Act, or (vii)
pursuant to any other available exemption from the registration requirements of
the Securities Act, subject in each of the foregoing cases to compliance with
applicable state securities laws. As a result, the liquidity of the market for
such non-tendered Existing Notes could be adversely affected upon completion of
the Exchange Offer. The foregoing restrictions on resale will not apply
subsequent to the Resale Restriction Termination Date.
NECESSITY TO COMPLY WITH EXCHANGE OFFER PROCEDURES
To participate in the Exchange Offer, and to avoid the restrictions on
transfer of the Existing Notes, Registered Holders of Existing Notes must
transmit a properly completed Letter of Transmittal or an Agent's Message,
including all other documents required by such Letter of Transmittal, to the
Exchange Agent at one of the addresses set forth below under 'The Exchange
Offer -- Exchange Agent' on or prior to the Expiration Date. In addition, either
(i) certificates for such Existing Notes must be received by the Exchange Agent
along with the Letter of Transmittal or (ii) a timely confirmation of a
book-entry transfer of such Existing Notes, if such procedure is available, into
the Exchange Agent's account at The Depository Trust Company pursuant to the
procedure for book-entry transfer described herein, must be received by the
Exchange Agent prior to the Expiration Date or (iii) the Registered Holder must
comply with the guaranteed delivery procedures described herein. See 'The
Exchange Offer.'
NET LOSSES; STOCKHOLDERS' DEFICIENCY
The Company has reported net losses of $141,875,000, $102,117,000,
$82,625,000, $68,181,000 and $78,469,000 for the fiscal years ended May 31,
1997, 1996 and 1995, and the six months ended November 30, 1997 and 1996,
respectively. The Company expects net losses to continue for the foreseeable
future, at least until such time as the operations of its cable television
systems and wireless telephone systems can generate sufficient earnings to
offset the charges, including depreciation and amortization and interest
expense, incurred in connection with such operations and its investments in
plant associated
12
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<PAGE>
with rebuilds and extensions of its cable television systems and expansion of
the wireless telephone system infrastructure.
Reflecting net losses in prior periods, the common stockholders' deficiency
as stated on the Company's unaudited consolidated balance sheet at November 30,
1997 was $676,768,000. The Company's assets, including its cable television
franchises and wireless telephone licenses, are recorded on its balance sheet at
historical cost. The Company believes that the current fair value of such assets
is significantly in excess of their historical cost.
LEVERAGE; CAPITAL REQUIREMENTS
In recent years, the Company and its subsidiaries have incurred substantial
indebtedness in connection with the acquisition, construction and start-up
expenses of wireless telephone systems as well as the acquisition, upgrade and
extension of cable television systems. At November 30, 1997, the Company and its
subsidiaries had long-term debt (exclusive of current maturities of $31,526,000)
of $2,284,405,000, including indebtedness under five credit agreements executed
by subsidiaries of the Company and various banks (the 'Credit Agreements') and
under a note agreement executed by a subsidiary of the Company in December 1992
(the 'Note Agreement'). At November 30, 1997, Centennial Cellular Corp., the
Company's approximately 33% owned subsidiary ('Centennial Cellular'), had an
aggregate of $475,500,000 outstanding principal amount of debt securities.
The cable television and wireless telephone businesses are capital
intensive. While cash generated from operations is expected to fund an
increasing portion of the working capital requirements, capital expenditures and
debt service obligations of the Company and its subsidiaries, the Company will
require additional funds from bank borrowings and other sources. In the past,
the Company has funded the principal obligations on its long-term debt by
refinancing the principal with expanded bank lines of credit. Although to date
the Company has been able to obtain financing on satisfactory terms, there can
be no assurance that this will continue to be the case in the future. The
Company has met and believes, based on current market conditions, that it will
continue to meet its cash obligations with internally generated cash from
operations, along with third party financing, primarily bank borrowings and the
issuance of debt securities to the public, and anticipates that its cable
television operations will continue to meet the debt service obligations under
debt instruments applicable to the cable television operations. Principal
payments are due under the Company's cable operations' and Centennial Cellular's
debt instruments beginning in the fiscal year ending May 31, 2000, except for
principal obligations of approximately $20,000,000 which are due in the fiscal
year ending May 31, 1999 by a joint venture which has cable operations, for
which such joint venture currently has adequate reserves. The Company will need
to refinance certain of such obligations on or before such time and believes,
based on current market conditions, that it will be able to do so. However,
there can be no assurance that the Company will be successful in any such
refinancing or that the terms of any such financing will be favorable to the
Company. The indentures for the Company's outstanding issues of publicly-held
debt (the 'Public Indentures') impose certain restrictions on the incurrence of
additional indebtedness. See 'Restrictive Covenants; Consequences of Default'
below.
On January 7, 1998, the Company filed a registration statement with the
Commission relating to the shelf registration of $500,000,000 of the Company's
debt securities, which registration statement was declared effective by the
Commission on January 28, 1998. This registration statement augments the
remaining $77,000,000 in debt securities available for issuance under a
previously filed registration statement.
For the fiscal year ended May 31, 1997 and the six months ended November
30, 1997, earnings were less than fixed charges by $188,004,000 and $81,284,000,
respectively. See 'Ratio of Earnings to Fixed Charges.' Such amounts reflect
non-cash charges totaling $266,628,000 and $141,072,000 consisting of
depreciation and amortization and subsidiary preferred stock dividends,
respectively.
RESTRICTIVE COVENANTS; CONSEQUENCES OF DEFAULT
The Credit Agreements limit the ability of certain subsidiaries of the
Company to incur additional indebtedness, including intercompany indebtedness,
or liens, to pay dividends to the Company and
13
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<PAGE>
require that certain operating and financial tests be met, including the
maintenance of the ratio of earnings before interest, depreciation and taxes (as
defined in the Credit Agreements, 'EBIDT') to debt service for the Total Debt
(as defined therein) of such subsidiaries, the ratio of Total Debt to EBIDT and
the ratio of EBIDT to interest expense for the Total Debt of such subsidiaries
at certain prescribed levels. Each of these requirements is currently being met.
The Note Agreement imposes similar restrictions and requirements, including the
maintenance of the ratio of Indebtedness to Operating Cash Flow (each as defined
in the Note Agreement) at 4.50 to 1.00 and the ratio of Operating Cash Flow to
Adjusted Debt Service (each as defined in the Note Agreement) at not less than
1.35 to 1.00, with which the Company is presently in compliance. The indentures
governing the Company's public debt also contain various covenants including,
but not limited to, the following: (i) restrictions on mergers, sales and
consolidations, (ii) restrictions on dividends, redemptions or repurchase of the
Company's capital stock or the capital stock of any of its affiliates, (iii)
limitations on transactions with, or investments in, affiliates, (iv)
restrictions on the ability to make loans to, or act as guarantor for, certain
of its subsidiaries and affiliates, which presently consist of those
subsidiaries and affiliates engaged in the wireless telephone and related
businesses, and (v) the maintenance of various financial ratios. The Company is
presently in compliance with each of the foregoing; however, the ability of the
Company and its subsidiaries to comply with such provisions may be affected by
events beyond their control.
In the event of a default under the agreements pursuant to which the
outstanding debt securities of the Company and its subsidiaries are issued, the
holders of such debt or the trustee acting on their behalf could elect to
declare all of such debt securities, together with accrued interest, to be due
and payable. Under certain of such agreements, the creditors would also have
other remedies available, including foreclosure on the capital stock of the
Company's subsidiaries which is pledged to secure such debt. In addition, in the
event of a default under the indentures governing the Company's public debt, the
Company would be prohibited from making any payments on any Senior Subordinated
Debt Securities (as defined herein) or Subordinated Debt Securities (as defined
herein) until all debt senior thereto was paid in full. There can be no
assurance that the assets of the Company would be sufficient to repay all such
senior debt and any Senior Subordinated Debt Securities and Subordinated Debt
Securities then outstanding.
Management believes that the Company is not presently at risk of
noncompliance with any of the covenants described above. However, there can be
no assurance that this will continue to be the case.
CONTROL BY CERTAIN STOCKHOLDERS
The ownership interest in the Company of Leonard Tow and certain trusts for
the benefit of members of his family (the 'Tow Trusts'), constituting
approximately 90.61% of the combined voting power of both the Class A Common
Stock and the Class B Common Stock of the Company at February 27, 1998, gives
them the power to elect all but one member of the Board of Directors of the
Company and to control the vote on all other matters submitted to a vote of the
Company's stockholders.
Under certain of the Credit Agreements, an event of default occurs if
Leonard Tow and/or members of his immediate family or the Tow Trusts cease to
own, in the aggregate, stock of the Company having at least a majority of the
combined voting power of both classes of Common Stock of the Company.
RECOVERY OF AUSTRALIAN INVESTMENT
Since fiscal 1994, the Company has invested, through a wholly-owned
subsidiary, approximately $151,000,000 in the Australian Pay TV industry,
including approximately $126,000,000 in East Coast Pay Television Pty Limited,
an Australian company ('ECT'). ECT has certain distribution, infrastructure
utilization and franchise agreements with Australis Media Limited ('Australis'),
another pay television company in Australia. As of the fiscal year ended May 31,
1997, the Company had written down $50,000,000 of its Australian investment.
Additionally, in light of recent announcements by Australis relating to
Australis' deteriorating financial condition and Australis' aborted business
combination with
14
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Foxtel (a competitive pay television provider in Australia), ECT wrote down the
remaining net book value of certain of its intangible assets during the six
months ended November 30, 1997. As a result, the Company's consolidated
financial statements reflect a writedown of approximately $17,100,000 relating
to these intangible assets, net of a gain of approximately $4,300,000 related to
the sale of certain of ECT's assets during the quarter ended November 30, 1997.
The Company is pursuing a strategy to sell its investments in its
Australian interests and has retained an investment banker with respect thereto.
Once the Company has developed its formal plan for disposition, including the
means to complete that plan and the period expected to be required for
completion of the disposition, the Company anticipates accounting for its
Australian operations as discontinued operations.
The Company is currently unable to predict the ultimate resolution of these
matters. At November 30, 1997, the Company's investments in the various aspects
of the Australian pay television industry have been fully written-down as a
result of the aforementioned write-downs of Australian assets and the Company's
percentage of cumulative losses of ECT and XYZ Entertainment Pty Limited, an
Australian programming company.
FOREIGN CURRENCY EXCHANGE RATE RISKS: HEDGING
The Company's monetary assets and liabilities are subject to foreign
currency exchange risk as certain equipment purchases and payments for certain
operating expenses, such as programming expenses, are denominated in currencies
other than their own functional currency. In addition, certain of the Company's
Australian subsidiaries have notes payable and notes receivable which are
denominated in a currency other than their own functional currency or
intercompany loans payable linked to the U.S. dollar.
In general, the Company does not execute hedge transactions to reduce its
exposure to foreign currency exchange rate risks. Accordingly, the Company may
experience economic loss and a negative impact on earnings with respect to its
holdings solely as a result of foreign currency exchange rate fluctuations,
which include foreign currency devaluations against the dollar. The Company may
also experience economic loss and a negative impact on earnings related to these
monetary assets and liabilities. In general, exchange rate risk to the Company's
commitments for equipment purchases and operating expenses is generally limited
due to the insignificance of the related monetary asset and liability balances;
however, exchange rate risk to the Company of these notes payable and notes
receivable and debt linked to the U.S. dollar have and will continue to impact
its reported earnings.
STOCK PURCHASE
In October 1992, the Company's Board of Directors authorized the purchase
of up to 2,000,000 shares of its Class A Common Stock in the open market and in
privately negotiated transactions, depending on prevailing market conditions.
During August 1997, the Company announced that its Board of Directors authorized
the purchase in the open market and in privately negotiated transactions, from
time to time, of up to 5,000,000 additional shares of Class A Common Stock,
depending on prevailing market conditions. The Company purchased 171,500 shares
of its Class A Common Stock in the open market for a purchase price of $660,000
during the fourth quarter of fiscal 1997. During the six months ended November
30, 1997, the Company purchased 1,929,500 additional shares of Class A Common
Stock in the open market for an aggregate purchase price of $11,913,000.
Subsequent to November 30, 1997, the Company purchased 30,000 shares of Class A
Common Stock in the open market for an aggregate purchase price of $238,000.
These shares purchased in fiscal 1997 and 1998 have been accounted for as
treasury shares during the respective fiscal years. As of February 27, 1998, the
Company is authorized to purchase 4,869,000 shares of Class A Common Stock after
giving effect to the shares purchased to date.
RISK ASSOCIATED WITH YEAR 2000
The Company is currently in the process of evaluating its computer software
and data bases to determine whether modifications will be required to prevent
problems related to the Year 2000,
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including its billing and collection activities. These problems, which have been
widely reported in the media, could cause malfunctions in certain software and
data bases with respect to dates on or about 2000. Most of the Company's
customer related computer systems and data bases are managed by third parties
under contractual arrangements. The Company has requested that such third
parties advise the Company as to whether or not they anticipate any difficulties
for clients in addressing Year 2000 problems and, if so, whether or not the
Company would be adversely affected by any of such problems. Until such time as
its service providers respond to the Company, the impact of Year 2000 on the
Company's future operations and financial condition cannot be assessed. The
Company will continue to monitor the impact on the Company of problems related
to the Year 2000 and will work with its service providers to remedy problems
that arise.
REGULATION
The Telecommunications Act of 1996 (the '1996 Act') alters federal, state
and local laws and regulations regarding telecommunications providers and
services, including the cable television industry. The 1996 Act deregulates
(except for basic services) cable service rates over a three-year period.
Implementing regulations of the 1996 Act are currently being written. The effect
that the 1996 Act will have on the Company's cable television business cannot be
determined at this time.
ORIGINAL ISSUE DISCOUNT CONSEQUENCES
The Existing Notes were issued at a substantial discount from their
principal amount at maturity. Although cash interest will not be paid on the
Notes, original issue discount (generally the difference between the 'stated
redemption price at maturity' and the 'issue price' of the Notes, as such terms
are defined in the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations thereunder) will accrete on the Notes from the issue date of the
Notes up to the maturity date. Consequently, holders of the Notes may be
required to include amounts attributable to such original issue discount in
gross income for United States federal income tax purposes in advance of their
receipt of the cash payments to which the income is attributable. See 'Certain
Federal Income Tax Considerations' for a more detailed discussion of the federal
income tax consequences of the purchase, ownership and disposition of the Notes.
ABSENCE OF PUBLIC MARKET FOR NOTES
The Notes are a new issue of securities for which there is currently no
trading market. The Company does not intend to apply for listing of the Notes on
a national securities exchange or quotation of the Notes on the Nasdaq National
Market. The Initial Purchaser had advised the Company that it intended to make a
market in the Existing Notes, although the Initial Purchaser was not obligated
to do so, and any such market making with respect to the Notes may be
discontinued at any time without notice. Accordingly, there can be no assurance
as to the development or liquidity of any market that may develop for the Notes,
the ability of the holders of the Notes to sell their Notes or the price at
which such holders would be able to sell their Notes. If a market were to exist,
the Notes could trade at prices that may be lower than the initial offering
price of the Existing Notes, depending on many factors, including prevailing
interest rates and the markets for similar securities, general economic
conditions and the financial condition and performance of, and prospects for,
the Company. See 'Plan of Distribution.'
RATIO OF EARNINGS TO FIXED CHARGES
For the purposes of calculating the ratio of earnings to fixed charges,
earnings consist of the amount of fixed charges plus earnings before income
taxes and extraordinary items. Fixed charges consist of interest, including
amortization of debt issue costs and capitalized interest, subsidiary preferred
stock dividends, and the portion of rent deemed representative of the interest
factor. For the fiscal years ended May 31, 1993, 1994, 1995, 1996 and 1997 and
the six months ended November 30, 1997, earnings as defined were less than fixed
charges by approximately $68,553,000, $66,088,000, $114,448,000, $154,316,000,
$188,004,000 and $81,284,000, respectively. The increased deficiency of
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earnings to fixed charges reflects higher levels of interest expense as a result
of increased borrowings incurred to finance acquisitions, capital expenditures,
working capital requirements, debt service and increases in non-cash
depreciation and amortization expense related to acquisitions and capital
expenditures. See 'Risk Factors -- Leverage; Capital Requirements.'
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
Obligations under the Registration Rights Agreement. The Company will not
receive any cash proceeds from the issuance of the New Notes offered hereby. In
consideration for issuing the New Notes as contemplated in this Prospectus, the
Company will receive in exchange Existing Notes in like principal amount at
maturity, the terms of which are the same in all material respects as the form
and terms of the New Notes, except that the New Notes have been registered under
the Securities Act and will not contain terms restricting the transfer thereof
and will not contain certain provisions providing for payment of liquidated
damages on the Existing Notes under certain circumstances relating to the
Registration Rights Agreement. The net proceeds received by the Company from the
sale of the Existing Notes were $245,605,712, after deducting expenses payable
by the Company of approximately $500,000. The Company applied $96,000,000 of the
net proceeds from the sale of the Existing Notes to repay temporarily a portion
of the long-term debt outstanding under two credit agreements executed by
subsidiaries of the Company and various banks (the 'Cable Operations' Credit
Agreements'). The remainder of the net proceeds are to be used for capital
expenditures, operations, acquisitions and other investments that would
otherwise have been paid for under the Cable Operations' Credit Agreements.
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SELECTED FINANCIAL INFORMATION
The selected Statement of Operations Data and Balance Sheet Data set forth
below as of and for the five years ended May 31, 1997 has been derived from the
Company's audited consolidated financial statements. Such information should be
read in conjunction with, and is qualified in its entirety by, the consolidated
financial statements and notes thereto incorporated into the accompanying
Prospectus by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997. The selected consolidated financial information
set forth below for the six months ended November 30, 1997 and 1996,
respectively, has been derived from the Company's unaudited consolidated
financial statements which, in the opinion of management, reflect all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of interim data.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS ENDED MAY 31, NOVEMBER 30,
---------------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1997 1996
-------- -------- -------- --------- --------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue............ $345,131 $374,599 $416,687 $ 495,274 $ 643,490 $372,117 $312,000
-------- -------- -------- --------- --------- -------- --------
Cost of services,
selling, general
and
administrative
expenses......... 151,742 165,500 214,054 228,182 305,379 181,639 141,003
Regulatory
restructuring
charge........... -- -- 4,000 -- -- -- --
Depreciation and
amortization..... 138,547 151,296 171,931 216,777 261,778 138,554 125,632
Australian
operations....... -- -- -- 24,067 30,562 18,689 14,564
Write-down of
Australian
assets........... -- -- -- 10,000 40,000 12,814 40,000
-------- -------- -------- --------- --------- -------- --------
Operating income
(loss)........... 54,842 57,803 26,702 16,248 5,771 20,421 (9,199)
Interest expense... 112,294 121,698 139,001 172,215 200,743 106,916 97,527
Other(1)........... (19,661) (21,968) (29,674) (53,850) (60,679) (18,314) (28,257)
Extraordinary
item -- loss on
early retirement
of debt(4)....... -- -- -- -- 7,582 -- --
-------- -------- -------- --------- --------- -------- --------
Net loss........... $(37,791) $(41,927) $(82,625) $(102,117) $(141,875) $(68,181) $(78,469)
-------- -------- -------- --------- --------- -------- --------
-------- -------- -------- --------- --------- -------- --------
Net loss per common
share............ $ (.49) $ (.53) $ (1.01) $ (1.44) $ (1.96) $ (.94) $ (1.09)
-------- -------- -------- --------- --------- -------- --------
-------- -------- -------- --------- --------- -------- --------
Dividend on
subsidiary
convertible
redeemable
preferred
stock............ $ 5,883 $ 5,838 $ 4,419 $ 4,256 $ 4,850 $ 2,518 $ 2,349
-------- -------- -------- --------- --------- -------- --------
-------- -------- -------- --------- --------- -------- --------
Loss applicable to
common shares.... $(43,674) $(47,765) $(87,044) $(106,373) $(146,725) $(70,699) $(80,818)
-------- -------- -------- --------- --------- -------- --------
-------- -------- -------- --------- --------- -------- --------
Ratio of Earnings
to Fixed
Charges(5)....... $ -- $ -- $ -- $ -- $ -- $ -- $ --
-------- -------- -------- --------- --------- -------- --------
-------- -------- -------- --------- --------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
AS OF MAY 31, AS OF NOVEMBER 30,
------------------------------------------------------------------ ------------------------
1993 1994 1995 1996 1997 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets....... $1,303,484 $1,350,426 $2,004,417 $2,234,909 $2,154,231 $2,175,101 $2,173,121
Long-term debt..... 1,167,423 1,270,989 1,741,143 2,081,611 2,186,981 2,284,405 2,104,524
Common
stockholders'
deficiency....... (215,238) (243,628) (351,645) (448,013) (598,643) (676,768) (521,124)
</TABLE>
- ------------
(1) Other is comprised primarily of provision (benefit) for income taxes
computed in accordance with Financial Accounting Standards Board Statement
('SFAS') No. 96 'Accounting for Income Taxes' effective May 31, 1993, SFAS
No. 109 'Accounting for Income Taxes', the loss attributable to minority
partners, gain on sale of assets, the early termination of certain interest
rate hedge agreements in 1993 related to the refinancing of one of the
Company's bank credit agreements and the subsequent reduction of floating
rate debt to which such agreements were matched.
(2) 'Net pops' means the population of a wireless telephone market, based upon
the 1990 Census Report of the Bureau of the Census, United States Department
of Commerce, multiplied by Centennial Cellular's percentage ownership
interest in an entity licensed by the Federal Communications Commission to
construct or operate a wireless telephone system in that market.
(3) Net pops and subscribers of Domestic Wireless Telephone Systems have been
adjusted to reflect, retroactive to 1992, systems exchanged and disposed of.
(4) Net of income tax benefit of $5,379.
(5) The ratio of earnings to fixed charges is less than one-to-one and,
therefore, earnings are inadequate to cover fixed charges.
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<PAGE>
<TABLE>
<CAPTION>
AS OF MAY 31,
--------------------------------------------------------------
1993 1994 1995 1996 1997
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
CABLE SUBSCRIBER DATA:
Homes passed............................... 1,650,900 1,675,000 1,790,000 2,060,000 2,245,000
Basic subscribers.......................... 934,000 945,000 1,100,000 1,250,000 1,273,000
Penetration................................ 56.6% 56.4% 61.5% 60.7% 56.7%
WIRELESS POPS AND SUBSCRIBER DATA(2)(3):
Net pops of Domestic Wireless Telephone
Systems and Puerto Rico Wireless
Telephone System......................... 2,465,247 3,310,100 8,290,600 8,880,900 9,019,300
Net pops of minority owned systems......... 1,052,200 1,079,400 1,079,400 1,100,800 1,100,800
--------- --------- --------- --------- ----------
Total Net Pops........................ 3,517,447 4,389,500 9,370,000 9,981,700 10,120,100
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
Subscribers of Domestic Wireless Telephone
Systems and Puerto Rico Wireless
Telephone System......................... 33,600 49,040 85,920 135,000 203,900
Pro rata share of subscribers of minority
owned systems............................ 30,520 42,000 57,900 83,000 105,000
--------- --------- --------- --------- ----------
Total subscribers.......................... 64,120 91,040 143,820 218,000 308,900
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
</TABLE>
19
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Exchange Offer Registration Statement. Pursuant to the Initial Offering,
the Company sold the Existing Notes to the Initial Purchaser on January 15,
1998. The Initial Purchaser has advised the Company that it subsequently resold
the Existing Notes to 'qualified institutional buyers' in reliance on Rule 144A
under the Securities Act and pursuant to Regulation S under the Securities Act.
As a condition to the Initial Offering, the Company entered into the
Registration Rights Agreement, pursuant to which the Company agreed, for the
benefit of all Registered Holders of the Existing Notes, at the Company's
expense, (i) to file the Registration Statement with the Commission within 90
days after the Initial Issue Date with respect to the Exchange Offer of the
Existing Notes for the New Notes, (ii) to use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act within
180 days after the Initial Issue Date, (iii) to use its best efforts to keep the
Registration Statement effective until the closing of the Exchange Offer and
(iv) to use its best efforts to cause the Exchange Offer to be consummated
within 210 days after the Initial Issue Date. The Company also agreed that
promptly upon the Registration Statement being declared effective, the Company
would offer to all Registered Holders of the Existing Notes an opportunity to
exchange the Existing Notes for the New Notes. Further, the Company agreed that
the Company would keep the Exchange Offer open for acceptance for not less than
30 calendar days, as such term is defined in Section 14(d) under the Exchange
Act (or longer if required by applicable law), after the date notice of the
Exchange Offer is mailed to the Registered Holders of Existing Notes. For each
Existing Note validly tendered to the Company pursuant to the Exchange Offer and
not withdrawn by the Registered Holder thereof, the Registered Holder of such
Existing Note will receive a New Note having a principal amount at maturity
equal to that of the tendered Existing Note.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Exchange Offer is intended to
satisfy certain of the Company's obligations under the Registration Rights
Agreement.
Transferability. The Existing Notes were issued and sold on January 15,
1998 in a transaction exempt from the registration requirements of the
Securities Act and applicable state securities laws and may not be offered or
sold in the United States unless so registered or pursuant to an applicable
exemption under the Securities Act and applicable state securities laws. The New
Notes are being offered hereunder in order to satisfy certain obligations of the
Company contained in the Registration Rights Agreement. Based on no-action
letters issued by the Staff of the Commission to third parties with respect to
similar transactions, including Exxon Capital, Morgan Stanley and similar
letters, the Company believes that the New Notes issued pursuant to the Exchange
Offer in exchange for Existing Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder that is an
Affiliate of the Company) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders are not engaged in, have no arrangement or understanding with any person
to participate in, and do not intend to engage in, any distribution of the New
Notes. However, the Company has not sought a no-action letter with respect to
the Exchange Offer and there can be no assurance that the Staff of the
Commission would make a similar determination with respect to the Exchange
Offer. Each holder of Existing Notes, other than a broker-dealer, must
acknowledge that it is not engaged in, has no arrangement or understanding with
any person to participate in and does not intend to engage in a distribution of
New Notes. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of New Notes (i) cannot rely on such an
interpretation by the Staff of the Commission, (ii) will not be able to validly
tender Existing Notes in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transactions.
In addition, each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal accompanying this Prospectus states that by so acknowledging
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and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is acting in the capacity of an 'underwriter' within the meaning of Section
2(11) of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Existing Notes where such
Existing Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. Pursuant to the Registration Rights
Agreement, the Company has agreed that it will make this Prospectus available to
any broker-dealer for use in connection with any such resale.
Shelf Registration Statement. If any changes in law or the applicable
interpretations of the Staff of the Commission do not permit the Company to
effect the Exchange Offer, if for any other reason the Exchange Offer is not
consummated within 210 days after the Initial Issue Date, or if the Initial
Purchaser so requests with respect to Existing Notes not eligible to be
exchanged for New Notes in the Exchange Offer or upon the request of a
Registered Holder that is not permitted by applicable law to participate in the
Exchange Offer or elects to participate in the Exchange Offer but does not
receive fully tradeable New Notes pursuant to the Exchange Offer, the Company
will use its best efforts to file prior to the later of, at the Company's cost,
(a) 60 days after the Initial Issue Date or (b) 30 days after such filing
obligation arises and use its best efforts to cause the Shelf Registration
Statement to be declared effective by the Commission on or prior to 60 days
after such obligation arises; provided, however, that if the Company has not
consummated the Exchange Offer within 210 days of the Initial Issue Date, then
the Company will file the Shelf Registration Statement with the Commission on or
prior to the 240th day after the Initial Issue Date. The Company shall use its
best efforts to keep the Shelf Registration Statement effective until the second
anniversary of the effective date of the Shelf Registration Statement (or, for
such shorter period, when all of the Notes covered by the Shelf Registration
Statement have been sold pursuant thereto). The Company will, in the event of
the filing of the Shelf Registration Statement, provide to each holder of the
Notes copies of the prospectus which is a part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement for the
Existing Notes has become effective and take certain other actions as are
required to permit unrestricted resales of the Existing Notes. A Registered
Holder of Existing Notes who sells such Existing Notes pursuant to the Shelf
Registration Statement generally will be required to be named as a selling
security-holder in the related prospectus and to deliver the prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement which are applicable to such a
Registered Holder (including certain indemnification obligations).
Liquidated Damages. If (i) the Company fails to file any of the
registration statements required by the Registration Rights Agreement on or
before the date specified for such filing, (ii) any of such registration
statement is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the 'Effectiveness Target Date'), (iii) the
Exchange Offer is required to be consummated under the Registration Rights
Agreement and the Company fails to issue New Notes in exchange for all Existing
Notes properly tendered and not withdrawn in the Exchange Offer within 45 days
of the Effectiveness Target Date with respect to this Registration Statement, or
(iv) the Shelf Registration Statement or the Registration Statement is declared
effective but thereafter ceases to be effective or usable in connection with the
Exchange Offer or resales of Transfer Notes, as the case may be, during the
periods specified in the Registration Rights Agreement (each such event referred
to in clauses (i) through (iv) above, a 'Registration Default'), then the
Company must pay as liquidated damages interest on the Notes as to which the
Registration Default exists as set forth herein. If a Registration Default
exists with respect to the Notes the Company will, with respect to the first
90-day period (or portion thereof) while a Registration Default is continuing
immediately following the occurrence of such Registration Default, make such
cash payments at a rate of .25% multiplied by the Accreted Value of such Notes
as of the date such payment is required to be made. The rate of such cash
payment set forth in the preceding sentence shall increase by an additional .25%
per annum at the beginning of each subsequent 90-day period (or portion thereof)
while a Registration Default is continuing until all Registration Defaults have
been cured, up to a maximum rate of 1.00% per annum. Upon (w) the filing of the
applicable registration statement (in the case of clause (i) of the preceding
sentence), (x) the effectiveness of the applicable registration statement (in
the case of clause (ii) of the preceding sentence), (y) the issuance of New
Notes in exchange for all Notes properly tendered and
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<PAGE>
now withdrawn in the Exchange Offer (in the case of clause (iii) of the
preceding sentence) or (z) the effectiveness of the Registration Statement or
the Shelf Registration Statement, as the case may be, which had ceased to be
effective (in the case of clause (iv) of the preceding sentence), liquidated
damages as a result of the Registration Default described in such clause shall
cease to accrue (but any accrued amount shall be payable) and the interest rate
on the Notes will revert to zero if no other Registration Default has occurred
and is continuing.
TERMS OF THE EXCHANGE OFFER
Upon satisfaction or waiver of all of the conditions of the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Existing Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Existing Notes. See ' -- Conditions to the Exchange Offer' and 'Procedures for
Tendering Existing Notes.' The Company will issue $1,000 principal amount at
maturity of New Notes in exchange for each $1,000 principal amount at maturity
of outstanding Existing Notes accepted in the Exchange Offer. As of the date of
this Prospectus, $605,000,000 aggregate principal amount at maturity of the
Existing Notes are outstanding. Registered Holders may tender some or all of
their Existing Notes pursuant to the Exchange Offer. However, Existing Notes may
be tendered only in integral multiples of $1,000.
The form and terms of the New Notes are the same as the form and terms of
the Existing Notes except that the New Notes will not contain certain terms with
respect to transfer restrictions (which related to the status of the Existing
Notes as unregistered securities), registration rights or payment of liquidated
damages relating to the Company's failure to meet specified milestones with
respect to such registration rights, all as described in the Registration Rights
Agreement. See ' -- Purpose and Effect of the Exchange Offer.' The New Notes
will evidence the same debt as the Existing Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture pursuant to which the
Existing Notes were issued and will be deemed one issue of Notes, together with
the Existing Notes.
This Prospectus, together with the Letter of Transmittal, is being sent to
all Registered Holders and to others believed to have beneficial interests in
the Existing Notes. Registered Holders of Existing Notes do not have any
appraisal or dissenters' rights under the Business Corporations Act of the State
of New Jersey in connection with the Exchange Offer. The Company intends to
conduct the Exchange Offer in accordance with the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations of the Commission
promulgated thereunder.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Existing Notes when, as and if the Company has given
oral or written notice thereof to the Exchange Agent. The Exchange Agent will
act as agent for the tendering Registered Holders for the purpose of receiving
the New Notes from the Company. If any tendered Existing Notes are not accepted
for exchange because of an invalid tender, the occurrence of certain other
events set forth herein or otherwise, such unaccepted Existing Notes will be
returned, without expense, to the Tendering Holder thereof as promptly as
practicable after the Expiration Date.
Registered Holders who tender Existing Notes in the Exchange Offer will not
be required to pay brokerage commissions or fees or, except as set forth below
under ' -- Transfer Taxes,' transfer taxes with respect to the exchange of
Existing Notes pursuant to the Exchange Offer. The Company will pay all charges
and expenses, other than certain applicable taxes, in connection with the
Exchange Offer. See ' -- Fees and Expenses' below.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term 'Expiration Date' shall mean 5:00 p.m., New York City time, on
April 24, 1998, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term 'Expiration Date' shall mean the latest date and
time to which the Exchange Offer is extended. In order to extend the Exchange
Offer, the Company will notify the Exchange Agent by oral or written notice and
each registered holder by means of press release or other public announcement of
any extension, in each case, prior to 9:00 a.m., New York City time, on the next
Business Day after the previously scheduled Expiration Date. The Company
reserves the right, in its sole discretion, (i) to delay accepting any
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Existing Notes, to extend the Exchange Offer or, if any of the conditions set
forth below under ' -- Conditions' shall not have been satisfied, to terminate
the Exchange Offer, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (ii) to amend the terms of the Exchange
Offer in any manner. The Company will notify the Exchange Agent and each
registered holder of any amendment by oral or written notice. The Company will
give to the Exchange Agent written confirmation of any oral notice.
EXCHANGE DATE
As soon as practicable after the close of the Exchange Offer (the 'Exchange
Date'), the Company will accept for exchange all Existing Notes properly
tendered and not validly withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date pursuant to the Exchange Offer in accordance with the terms
of the Registration Statement and the Letters of Transmittal.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, and subject to
its obligations pursuant to the Registration Rights Agreement, the Company shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Existing Notes and may terminate or amend the Exchange Offer, if at any time
before the acceptance of such New Notes for exchange, any of the following
events shall occur:
(i) any injunction, order or decree shall have been issued by any
court or any governmental agency that would prohibit, prevent or otherwise
materially impair the ability of the Company to proceed with the Exchange
Offer; or
(ii) the Exchange Offer shall violate any applicable law or any
applicable interpretation of the staff of the Commission.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and such right shall be deemed an ongoing right which may be asserted at
any time and from time to time.
In addition, the Company will not accept for exchange any Existing Notes
tendered, and no New Notes will be issued in exchange for any such Existing
Notes, if at such time any stop order shall be threatened by the Commission or
be in effect with respect to the Registration Statement of which this Prospectus
is a part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended.
The Exchange Offer is not conditioned on any minimum aggregate principal
amount of Existing Notes being tendered for exchange.
CONSEQUENCES OF FAILURE TO EXCHANGE
Any Existing Notes not tendered pursuant to the Exchange Offer will remain
outstanding. Such Existing Notes will remain 'restricted securities' (within the
meaning of the Securities Act). Accordingly, prior to the date that is two years
after the later of the Initial Issue Date thereof and the last date on which the
Company or any Affiliate of the Company was the owner of such Existing Notes
(the 'Resale Restriction Termination Date'), such Existing Notes may be resold
only (i) to the Company, (ii) to a person whom the seller reasonably believes is
a 'qualified institutional buyer' purchasing for its own account or for the
account of another 'qualified institutional buyer' in compliance with the resale
limitations of Rule 144A, (iii) to an 'institutional accredited investor' that,
prior to such transfer, furnishes to the Trustee a written certification
containing certain representations and agreements relating to the restrictions
on transfer of the Notes (the form of which letter can be obtained from the
Trustee), (iv) pursuant to the limitations on resale provided by Rule 144 under
the Securities Act (if available), (v) pursuant to the resale provisions of Rule
904 of Regulation S under the
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Securities Act, (vi) pursuant to an effective registration statement under the
Securities Act, or (vii) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to compliance with applicable state securities laws. As a
result, the liquidity of the market for such non-tendered Existing Notes could
be adversely affected upon completion of the Exchange Offer. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date.
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The expenses of the Company to be incurred in connection with the Exchange
Offer, including the registration fee, will be paid by the Company and are
estimated in the aggregate to be approximately $150,000 which includes the fees
and expenses of the Trustee and the Exchange Agent, accounting and legal fees
and other miscellaneous fees and expenses.
ACCOUNTING TREATMENT
The Company will not recognize any gain or loss for accounting purposes
upon the consummation of the Exchange Offer. The expenses of the Exchange Offer
will be amortized by the Company over the term of the New Notes.
PROCEDURES FOR TENDERING EXISTING NOTES
TENDERING EXISTING NOTES
The tender of Existing Notes pursuant to any of the procedures set forth in
this Prospectus and in the Letter of Transmittal will constitute a binding
agreement between the Tendering Holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal. The tender of Existing Notes will constitute an agreement to
deliver good and marketable title to all tendered Existing Notes prior to the
Expiration Date free and clear of all liens, charges, claims, encumbrances,
interests and restrictions of any kind.
EXCEPT AS PROVIDED IN ' -- GUARANTEED DELIVERY PROCEDURES,' UNLESS THE
EXISTING NOTES BEING TENDERED ARE DEPOSITED BY THE REGISTERED HOLDER WITH THE
EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE (ACCOMPANIED BY A PROPERLY COMPLETED
AND DULY EXECUTED LETTER OF TRANSMITTAL), THE COMPANY MAY, AT ITS OPTION, REJECT
SUCH TENDER. ISSUANCE OF NEW NOTES WILL BE MADE ONLY AGAINST DEPOSIT OF TENDERED
EXISTING NOTES AND DELIVERY OF ALL OTHER REQUIRED DOCUMENTS. NOTWITHSTANDING THE
FOREGOING, DTC PARTICIPANTS TENDERING THROUGH ATOP WILL BE DEEMED TO HAVE MADE
VALID DELIVERY WHERE THE EXCHANGE AGENT RECEIVES AN AGENT'S MESSAGE (DEFINED
BELOW) PRIOR TO THE EXPIRATION DATE.
Accordingly, to properly tender Existing Notes, the following procedures
must be followed:
Notes held through a Custodian. Each Beneficial Owner holding Existing
Notes through a DTC Participant must instruct such DTC Participant to cause
its Existing Notes to be tendered in accordance with the procedures set
forth in this Prospectus.
Notes held through DTC. Pursuant to an authorization given by DTC to
the DTC Participants, each DTC Participant holding Existing Notes through
DTC must (i) electronically transmit its acceptance through ATOP, and DTC
will then edit and verify the acceptance, execute a book-entry delivery to
the Exchange Agent's account at DTC and send an Agent's Message to the
Exchange Agent for its acceptance, or (ii) comply with the guaranteed
delivery procedures set forth below and in the Notice of Guaranteed
Delivery. See ' -- Guaranteed Delivery Procedures -- Notes held through
DTC.'
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The Exchange Agent will (promptly after the date of this Prospectus)
establish accounts at DTC for purposes of the Exchange Offer with respect to
Existing Notes held through DTC, and any financial institution that is a DTC
Participant may make book-entry delivery of interests in Existing Notes into the
Exchange Agent's account through ATOP. However, although delivery of interests
in the Existing Notes may be effected through book-entry transfer into the
Exchange Agent's account through ATOP, an Agent's Message in connection with
such book-entry transfer, and any other required documents, must be, in any
case, transmitted to and received by the Exchange Agent at its address set forth
under ' -- Exchange Agent', or the guaranteed delivery procedures set forth
below must be complied with, in each case, prior to the Expiration Date.
Delivery of documents to DTC does not constitute delivery to the Exchange Agent.
The confirmation of a book-entry transfer into the Exchange Agent's account at
DTC as described above is referred to herein as a 'Book-Entry Confirmation.'
The term 'Agent's Message' means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of the Book-Entry
Confirmation, which states that DTC has received an express acknowledgment from
each DTC Participant tendering through ATOP that such DTC Participants have
received a Letter of Transmittal and agree to be bound by the terms of the
Letter of Transmittal and that the Company may enforce such agreement against
such DTC Participants.
Cede & Co., as the holder of the Rule 144A Global Note, will tender a
portion of the Rule 144A Global Note equal to the aggregate principal amount due
at the stated maturity for which instructions to tender are given by DTC
Participants.
Notes held by Registered Holders. Each Registered Holder must (i) complete
and sign the accompanying Letter of Transmittal, and mail or deliver such Letter
of Transmittal, and any other documents required by the Letter of Transmittal,
together with certificate(s) representing all tendered Existing Notes, to the
Exchange Agent at its address set forth under ' -- Exchange Agent,' or (ii)
comply with the guaranteed delivery procedures set forth below and in the Notice
of Guaranteed Delivery. See ' -- Guaranteed Delivery Procedures -- Notes held by
Registered Holders.'
All signatures on a Letter of Transmittal must be guaranteed by a
recognized participant in the Securities Transfer Agents Medallion Program, the
New York Stock Exchange ('NYSE') Medallion Signature Program or the Stock
Exchange Medallion Program; provided, however, that signatures on a Letter of
Transmittal need not be guaranteed if such Existing Notes are tendered for the
account of an Eligible Institution (as defined herein).
If a Letter of Transmittal or any Existing Note is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, agent, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person must so indicate when signing, and proper evidence satisfactory to
the Company of the authority of such person so to act must be submitted.
Registered Holders should indicate in the applicable box in the Letter of
Transmittal the name and address to which substitute certificates evidencing
Existing Notes for amounts not tendered are to be issued or sent, if different
from the name and address of the person signing the Letter of Transmittal. In
the case of issuance in a different name, the employer identification or social
security number of the person named must also be indicated. If no instructions
are given, such Existing Notes not tendered, as the case may be, will be
returned to the person signing the Letter of Transmittal.
By tendering, each Registered Holder and each DTC Participant will
represent to the Company that, among other things, (i) it is not an Affiliate of
the Company, (ii) it is not a broker-dealer tendering Existing Notes acquired
directly from the Company for its own account, (iii) the New Notes acquired
pursuant to the Exchange Offer are being obtained in the ordinary course of
business of such Registered Holder and (iv) it has no arrangements or
understandings with any person to participate in the Exchange Offer for the
purpose of distributing the New Notes.
No alternative, conditional, irregular or contingent tenders will be
accepted (unless waived). By executing a Letter of Transmittal or transmitting
an acceptance through ATOP, as the case may be, each Tendering Holder waives any
right to receive any notice of the acceptance for purchase of its Existing
Notes.
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All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Existing Notes will be resolved by the
Company, whose determination will be final and binding. The Company reserves the
absolute right to reject any or all tenders that are not in proper form or the
acceptance of which may, in the opinion of counsel for the Company, be unlawful.
The Company also reserves the absolute right to waive any condition to the
Exchange Offer and any irregularities or conditions of tender as to particular
Existing Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in the Letter of Transmittal) will be
final and binding. Unless waived, any irregularities in connection with tenders
must be cured within such time as the Company shall determine. The Company and
the Exchange Agent shall not be under any duty to give notification of defects
in such tenders and shall not incur liabilities for failure to give such
notification. Tenders of Existing Notes will not be deemed to have been made
until such irregularities have been cured or waived. Any Existing Notes received
by the Exchange Agent that are not properly tendered and as to which the
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holder, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
LETTERS OF TRANSMITTAL AND EXISTING NOTES MUST BE SENT ONLY TO THE EXCHANGE
AGENT. DO NOT SEND LETTERS OF TRANSMITTAL OR EXISTING NOTES TO THE COMPANY OR
DTC.
The method of delivery of Existing Notes and Letters of Transmittal, any
required signature guaranties and all other required documents, including
delivery through DTC and any acceptance through ATOP, is at the election and
risk of the persons tendering and delivering acceptances or Letters of
Transmittal and, except as otherwise provided in the applicable Letter of
Transmittal, delivery will be deemed made only when actually received by the
Exchange Agent. If delivery is by mail, it is suggested that the Registered
Holder use properly insured, registered mail with return receipt requested, and
that the mailing be made sufficiently in advance of the Expiration Date to
permit delivery to the Exchange Agent prior to the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Notes held through DTC. DTC Participants holding Existing Notes through DTC
who wish to cause their Existing Notes to be tendered, but who cannot transmit
their acceptances through ATOP prior to the Expiration Date, may cause a tender
to be effected if:
(a) guaranteed delivery is made by or through a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act (an 'Eligible
Institution'), including (as such terms are defined therein): (i) a bank;
(ii) a broker, dealer, municipal securities dealer, municipal securities
broker, government securities dealer or government securities broker; (iii)
a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings institution that is a
participant in a Securities Transfer Association recognized program;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by mail, hand delivery, facsimile transmission or
overnight courier) substantially in the form provided by the Company
herewith; and
(c) Book-Entry Confirmation and an Agent's Message in connection
therewith (as described above) are received by the Exchange Agent within
three NYSE trading days after the date of the execution of the Notice of
Guaranteed Delivery.
Notes held by Registered Holders. Registered Holders who wish to tender
their Existing Notes but (i) whose Existing Notes are not immediately available
and will not be available for tendering prior to the Expiration Date, or (ii)
who cannot deliver their Existing Notes, the Letter of Transmittal, or any other
required documents to the Exchange Agent prior to the Expiration Date, may
effect a tender if:
(a) the tender is made by or through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by mail, hand delivery,
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facsimile transmission or overnight courier) substantially in the form
provided by the Company herewith; and
(c) a properly completed and executed Letter of Transmittal, as well
as the certificate(s) representing all tendered Existing Notes in proper
form for transfer, and all other documents required by the Letter of
Transmittal, are received by the Exchange Agent within three NYSE trading
days after the date of the execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Existing Notes (or any portion of such Existing Notes in
integral multiples of $1,000 principal amount at maturity due at the stated
maturity) may be withdrawn at any time prior to 5:00 p.m., New York City time,
on the Expiration Date. Any Existing Notes properly withdrawn will be deemed to
be not validly tendered for purposes of the Exchange Offer.
Notes held through DTC. DTC Participants holding Existing Notes who have
transmitted their acceptances through ATOP may, prior to 5:00 p.m., New York
City time, on the Expiration Date, withdraw the instruction given thereby by
delivering to the Exchange Agent, at its address set forth under ' -- Exchange
Agent,' a written, telegraphic or facsimile notice of withdrawal of such
instruction. Such notice of withdrawal must contain the name and number of the
DTC Participant, the principal amount due at the stated maturity of Existing
Notes to which such withdrawal related and the signature of the DTC Participant.
Withdrawal of such an instruction will be effective upon receipt of such written
notice of withdrawal by the Exchange Agent.
Notes held by Registered Holders. Registered Holders may withdraw their
tender of Existing Notes, prior to 5:00 p.m., New York City time, on the
Expiration Date, by delivering to the Exchange Agent, at its address set forth
under ' -- Exchange Agent,' a written, telegraphic or facsimile notice of
withdrawal. Any such notice of withdrawal must (i) specify the name of the
person who tendered the Existing Notes to be withdrawn, (ii) contain a
description of the Existing Notes to be withdrawn and identify the certificate
number or numbers shown on the particular certificates evidencing such Existing
Notes and the aggregate principal amount due at the stated maturity represented
by such Existing Notes and (iii) be signed by the Registered Holder of such
Existing Notes in the same manner as the original signature on the Letter of
Transmittal by which such Existing Notes were tendered (including any required
signature guaranties), or be accompanied by (x) documents of transfer in a form
acceptable to the Company, in its sole discretion and (y) a properly completed
irrevocable proxy that authorized such person to effect such revocation on
behalf of such Registered Holder. If the Existing Notes to be withdrawn have
been delivered or otherwise identified to the Exchange Agent, a signed notice of
withdrawal is effective immediately upon written, telegraphic or facsimile
notice of withdrawal even if physical release is not yet effected.
------------------------
All signatures on a notice of withdrawal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the NYSE
Medallion Signature Program or the Stock Exchange Medallion Program; provided,
however, that signatures on the notice of withdrawal need not be guaranteed if
the Existing Notes being withdrawn are held for the account of an Eligible
Institution.
A withdrawal of an instruction or a withdrawal of a tender must be executed
by a DTC Participant or a Registered Holder, as the case may be, in the same
manner as the person's name appears on its transmission through ATOP or Letter
of Transmittal, as the case may be, to which such withdrawal relates. If a
notice of withdrawal is signed by a trustee, partner, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, such person must so indicate
when signing and must submit with the revocation appropriate evidence of
authority to execute the notice of withdrawal. A DTC Participant or a Registered
Holder may withdraw an instruction or a tender, as the case may be, only if such
withdrawal complies with the provisions of this Prospectus.
A withdrawal of a tender of Existing Notes by a DTC Participant or a
Registered Holder, as the case may be, may be rescinded only by a new
transmission of an acceptance through ATOP or
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execution and delivery of a new Letter of Transmittal, as the case may be, in
accordance with the procedures described herein.
EXCHANGE AGENT
First Trust of California, National Association has been appointed as
Exchange Agent for the Offer. Questions and requests for assistance, requests
for additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
<TABLE>
<CAPTION>
To: First Trust of California,
National Association
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT MAIL OR COURIER:
First Trust of California, First Trust of California, First Trust of California,
National Association National Association National Association
P.O. Box 64485 180 East Fifth Street 180 East Fifth Street
St. Paul, MN 55164-9549 Specialized Finance Specialized Finance
St. Paul, MN 55101 St. Paul, MN 55101
FACSIMILE TRANSMISSION NUMBER:
(For Eligible Instructions Only)
(612) 244-1537
Confirm by Telephone
Melina Black
(612) 244-8161
</TABLE>
TRANSFER TAXES
The Company will pay all transfer taxes, if any, applicable to the exchange
of Existing Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Existing Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the Registered Holder of the Existing Notes tendered,
or if tendered Existing Notes are registered in the name of any person other
than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Existing Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the Registered Holder or any other person) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.
DESCRIPTION OF THE NOTES
The New Notes will be issued under an Indenture (the 'Indenture'), dated as
of January 15, 1998 between the Company and First Trust of California, National
Association, as trustee (the 'Trustee'), pursuant to which the Existing Notes
were issued. The terms of the New Notes are identical in all material respects
to the Existing Notes, except that the New Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting their transfer
and will not receive the benefits of certain provisions of the Registration
Rights Agreement providing for the payment of liquidated damages under certain
circumstances relating to such Registration Rights Agreement, which provisions
will terminate upon the issuance of the New Notes. For purposes of the following
summary, the term 'Notes' collectively refers to the Existing Notes and the New
Notes. The Indenture will be qualified under the Trust Indenture Act of 1939, as
amended (the 'Trust Indenture Act'), upon effectiveness of the Registration
Statement of which this Prospectus forms a part.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act as in effect on
the date of the qualification of the Indenture under the Trust Indenture Act.
The Notes are subject to all such terms, and holders are referred to the
Indenture and the Trust Indenture Act for a statement thereof. The following
summary of certain
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provisions of the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the Indenture, including the
definitions therein of certain terms used below. The definitions of certain
terms used in the following summary are set forth below under 'Certain
Definitions.' As used in this section, the term 'Company' refers only to Century
Communications, Corp. and not to its subsidiaries and the term 'Registered
Holder' refers to a holder of a Note.
GENERAL
The Notes, which mature on January 15, 2008, will be limited to
$605,000,000 in aggregate principal amount at maturity. The Existing Notes were
sold at a substantial discount from the aggregate principal amount payable at
maturity and generated gross proceeds to the Company of $249,659,300. The
Existing Notes were sold at an issue price (the 'Issue Price') of $412.66 per
$1,000 principal amount at maturity of the Notes (41.266% of the principal
amount thereof at maturity). The New Notes will be treated as having an
equivalent Issue Price and an equivalent original issue discount. Original issue
discount (the difference between the Issue Price and the stated redemption price
at maturity of a Note) accrues from January 15, 1998 and continuing during the
period in which the Notes remain outstanding. Such original issue discount
represents an annual yield to maturity based on the Issue Price of 9.05% per
annum (the 'Yield to Maturity'), calculated on a semi-annual bond equivalent
basis using a 360-day year composed of twelve 30-day months. Original issue
discount will cease to accrue with respect to any Note on the date the principal
thereof shall become due (whether at maturity or upon acceleration) or on the
date fixed for purchase thereof. If the Company shall fail to deposit with the
Trustee or any paying agent an amount of money sufficient to discharge the
principal of any Note when due or to purchase any Note when so required, then
interest on the overdue amount shall thereupon accrue at the Yield to Maturity.
For information as to the federal income tax consequences of original issue
discount on the holder of a Note, see 'Certain Federal Income Tax
Considerations.' There will be no periodic payments of interest on the Notes.
The Notes will not be entitled to the benefit of any sinking fund.
The principal operations of the Company are and will be conducted through
its subsidiaries. The Company's ability to service its indebtedness, including
the Notes, is dependent primarily upon the receipt of funds from its
subsidiaries. The subsidiaries are separate legal entities and have no
obligation to pay any amounts due pursuant to the Notes. The provisions of the
Credit Agreements limit the Company's ability to receive funds from certain of
its subsidiaries in the form of loans, advances, dividends, management fees or
otherwise to the amounts necessary to pay normal operating expenses and Federal
and state income and franchise taxes. Except to the extent that the Company may
itself be a creditor with recognized claims against its subsidiaries, claims of
creditors of such subsidiaries, including trade creditors and the lending banks
under the Credit Agreements, will have priority with respect to the assets and
earnings of such subsidiaries over the claims of creditors of the Company,
including holders of the Notes, even though such subsidiary obligations do not
constitute Senior Indebtedness (as such term is defined in the indentures
governing the Company's public debt). The amount of such subsidiary indebtedness
as of November 30, 1997 (excluding $11,476,000 of Australian debt and including
the debt securities of Centennial Cellular which aggregated $475,500,000 in
outstanding principal amount at November 30, 1997) was $852,100,000.
RANKING
The Notes will be senior to all subordinated indebtedness of the Company,
including any outstanding senior subordinated debt securities ('Senior
Subordinated Debt Securities') and subordinated debt securities ('Subordinated
Debt Securities'), and pari passu with other unsecured, unsubordinated
indebtedness of the Company. The Notes will rank pari passu with the
$200,000,000 aggregate principal amount of 9 3/4% Senior Notes due 2002 issued
by the Company in February 1992 (the '9 3/4% Notes'), $150,000,000 aggregate
principal amount of 9 1/2% Senior Notes due 2000 issued by the Company in August
1992 (the '1992 Notes'), $250,000,000 aggregate principal amount of 9 1/2%
Senior Notes due 2005 issued by the Company in March 1995 (the '1995 Notes'; the
1992 Notes and the 1995 Notes are hereinafter collectively referred to as the
'9 1/2% Notes'), $250,000,000 aggregate principal amount of 8 7/8% Senior Notes
due 2007 issued by the Company in January 1997 (the '8 7/8% Notes'),
$225,000,000 aggregate principal amount of 8 3/4% Senior Notes due 2007 issued
by the
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Company in September 1997 (the '8 3/4% Notes'), $100,000,000 aggregate principal
amount of 8 3/8% Senior Notes due 2017 issued by the Company in November 1997
(the 'November 1997 Notes') and $100,000,000 aggregate principal amount of
8 3/8% Senior Notes due 2007 issued by the Company in December 1997 (the
'December 1997 Notes'; the November 1997 Notes and the December 1997 Notes are
hereinafter collectively referred to as the '8 3/8% Notes') and $444,000,000
aggregate principal amount at maturity of Senior Discount Notes due 2003 issued
by the Company in April 1993 (the 'Discount Notes').
REDEMPTION
The Notes may not be redeemed prior to maturity on January 15, 2008. See
'Certain Rights to Require Purchase of Notes.'
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the Notes will initially be represented by one
or more permanent global certificates in definitive, fully registered form (each
a 'Global Note'). Each Global Note will be deposited on the Exchange Date with,
or on behalf of, DTC and registered in the name of Cede & Co., as nominee of
DTC.
Holders of Notes who elect to take physical delivery of their certificates
instead of holding their interests through the Global Note (collectively
referred to herein as the 'Non-Global Holders') will be issued in registered
form (a 'Certificated Note'). Upon the transfer of any Certificated Note
initially issued to a Non-Global Holder, such Certificated Note will, unless the
transferee requests otherwise or a Global Note has previously been exchanged in
whole for Certificated Notes, be exchanged for an interest in such Global Note.
DTC has advised the Company that it is (i) a limited purpose trust company
organized under the laws of the State of New York, (ii) a member of the Federal
Reserve System, (iii) a 'clearing corporation' within the meaning of the Uniform
Commercial Code, as amended and (iv) a 'clearing agency' registered pursuant to
Rule 17A of the Exchange Act. DTC was created to hold securities for DTC
Participants and facilitates the clearance and settlement of securities
transactions between DTC Participants through electronic book-entry changes to
the accounts of DTC Participants, thereby eliminating the need for physical
transfer and delivery of certificates. DTC Participants include securities
brokers and dealers (including the Initial Purchaser), banks and trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies (collectively, the 'Indirect Participants') that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Holders of Notes who are not Participants may beneficially own
securities held by or on behalf of DTC only through DTC Participants or Indirect
Participants.
Global Note. The Company expects that pursuant to procedures established by
DTC (i) upon the issuance of the Global Note, DTC or its custodian will credit
the accounts of DTC Participants designated by the Initial Purchaser with an
interest in the Global Note and (ii) ownership of beneficial interests in the
Global Note will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC or its nominee (with respect to
the interests of DTC Participants) and the records of DTC Participants and the
Indirect Participants (with respect to interests of persons other than DTC
Participants).
So long as DTC or its nominee is the registered owner of the Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the Notes represented by the Global Note for all purposes under the
Indenture. No beneficial owner of an interest in the Global Note will be able to
transfer that interest except in accordance with DTC's procedures, in addition
to those provided for under the Indenture with respect to the Notes.
Payments with respect to the principal of, premium, if any, and interest on
any Notes represented by the Global Note on the applicable record date will be
payable by the Trustee to or at the direction of DTC or its nominee in its
capacity as the registered holder of the Global Note representing such Notes
under the Indenture. None of the Company, the Trustee or any paying agent will
have any responsibility
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or liability for any aspect of the records relating to or payments made on
account of Notes by DTC, or for maintaining, supervising or reviewing any
records of DTC relating to such Notes. The Company expects that DTC or its
nominee, upon receipt of any payment of principal, premium, if any, or interest
in respect of the Global Note will credit DTC Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of the Global Note as shown on the records of DTC or its
nominee. Payments by the DTC Participants and the Indirect Participants to the
beneficial owners of the Notes will be governed by standing instructions and
customary practice, as is now the case with securities held for the account of
customers registered in the names of nominees for such customers, and will be
the responsibility of the DTC Participants or the Indirect Participants, as the
case may be.
Transfers between DTC Participants will be effected in the ordinary way
through DTC's funds system in accordance with DTC's rules and will be settled in
federal funds. If a holder requires physical delivery of a Certificated Note for
any reason, including to sell Notes to persons in states that require physical
delivery of the Notes, or to pledge such securities, such holder must transfer
its interest in the Global Note in accordance with the normal procedures of DTC
and the procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more DTC Participants to whose
account DTC's interests in the Global Note are credited and only in respect of
such portion of the aggregate principal amount of Notes as to which such DTC
Participant or DTC Participants has or have given such direction. However, if
there is an Event of Default under the Indenture, DTC will exchange the Global
Note for Certificated Notes, which it will distribute to DTC Participants.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among DTC Participants, it is under no
obligation to perform such procedures, and such procedures may be discontinued
at any time. Neither the Company nor the Trustee nor any paying agent will have
any responsibility for the performance by DTC or DTC Participants or Indirect
Participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Notes. If (i) the Company notifies the Trustee in writing that
DTC is no longer willing or able to act as a depository and the Company is
unable to locate a qualified successor depository within 90 days or (ii) the
Company, at is option, notifies the Trustee in writing that it elects to cause
the issuance of Notes in definitive form under the Indenture, then, upon
surrender by DTC of the Global Note, Certificated Notes will be issued to each
person that DTC identifies as the beneficial owner of the Notes represented by
the Global Note.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made in immediately available funds. All
payments of principal and premium, if any, will be made by the Company in
immediately available funds. The Notes will trade in the Same-Day Settlement
System of DTC until maturity and, to the extent that secondary market trading
activity in the Notes is effected through the facilities of DTC, such trades
will be settled in immediately available funds.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes or the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such waiver is against public policy.
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CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms as well as any other capitalized terms used herein for which no
definition is provided.
'Accreted Value' of a Note, as of any date, will be the sum of (i) the
Issue Price of such Note and (ii) the portion of the accrued OID through the
date of determination, such portion to be determined on a semi-annual bond
equivalent basis.
'Advance' means any direct or indirect advance, loan, guarantee, transfer
(pursuant to contract or otherwise) or other extension of credit or capital
contribution (in cash or other property) by the Company or any Subsidiary, as
the case may be, to, or any purchase or other acquisition by such person of any
Capital Stock, equity or other ownership interests, bonds, notes, debentures or
other securities of, any Subsidiary or any other Affiliate of the Company, as
the case may be, but not including: (i) any Advance from the Company or any
Subsidiary to any Affiliate for use by such Affiliate in the ordinary course of
its business on terms that are no less favorable to the Company or such
Subsidiary than those that could have been obtained in a comparable transaction
by the Company or such Subsidiary from a Person who is not an Affiliate, or (ii)
any Advance from the Company or any directly or indirectly 90%-owned Subsidiary
to any other directly or indirectly 90%-owned Subsidiary or the Company. For
purposes of subclause (i) of this definition, expenditures in the ordinary
course of business shall mean and include expenditures for working capital,
capital improvements and acquisitions in the communications and media fields
whether by purchase of assets, capital stock or partnership or other equity
interests or by the formation of joint ventures, partnerships or other entities.
'Affiliate' of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
'control' (including, with correlative meanings, the terms 'controlled by' and
'under common control with'), when used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise.
'Asset Sale' means the sale, transfer, or other disposition (other than to
the Company or any of its Subsidiaries) in any single transaction or series of
related transactions of (a) any Capital Stock of any Subsidiary, (b) all or
substantially all of the assets of the Company or any Subsidiary or (c) all or
substantially all of the assets of a division, line of business, or comparable
business segment of the Company or any Subsidiary.
'Capital Stock' means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) corporate stock and any and all equity, beneficial or
ownership interests in, or participations or other equivalents in, any
partnership, association, joint venture or other business entity.
'Capitalized Lease Obligation' means, as applied to any Person, any lease
of any property (whether real, personal or mixed) by that Person or lessee
which, in conformity with GAAP, is required to be accounted for as a capital
lease on the balance sheet of that Person.
'Cash Flow Available for Interest Expense' means, for any Person, for any
period, (A) the sum of the amount for such period of (i) Net Income, (ii)
Interest Expense, (iii) provisions for taxes based on income (excluding taxes
related to gains and losses excluded from the definition of Net Income), (iv)
depreciation expense, (v) amortization expense, and (vi) any other non-cash
items reducing the Net Income of such Person for such period, minus (B) all
non-cash items increasing Net Income of such Person, all as determined in
accordance with GAAP; provided that if, during such period, such Person shall
have made any Asset Sale, Cash Flow Available for Interest Expense of such
Person for such period shall be reduced by an amount equal to the Cash Flow
Available for Interest Expense (if positive) directly attributable to the assets
which are the subject of such Asset Sale for the period subsequent to such sale
or increased by an amount equal to the Cash Flow Available for Interest Expense
(if negative) directly attributable thereto for such period.
'Consolidated Cash Flow Available for Interest Expense' means, for any
Person, for any period, (A) the sum of the amount for such period of (i)
Consolidated Net Income, (ii) Consolidated Interest
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Expense, (iii) provisions for taxes based on income (excluding taxes related to
gains and losses excluded from the definition of Consolidated Net Income or Net
Income), (iv) depreciation expense, (v) amortization expense, and (vi) any other
non-cash items reducing the Consolidated Net Income of such Person for such
period, minus (B) all non-cash items increasing Consolidated Net Income of such
Person for such period, all as determined on a consolidated basis for such
Person and its Subsidiaries in accordance with GAAP; provided that if, during
such period, the Company or any of its Subsidiaries shall have made any Asset
Sale, Consolidated Cash Flow Available for Interest Expense of the Company for
such period shall be reduced by an amount equal to the Consolidated Cash Flow
Available for Interest Expense (if positive) directly attributable to the assets
which are the subject of such Asset Sale for the period subsequent to such sale
or increased by an amount equal to the Consolidated Cash Flow Available for
Interest Expense (if negative) directly attributable thereto for such period.
'Consolidated Interest Expense' of any Person means, with respect to any
period, the aggregate Interest Expense of such Person and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP; provided, however,
that Consolidated Interest Expense of the Company shall only include the
Interest Expense of any Subsidiary of the Company which, at the date of
determination of the Interest Expense Ratio of the Company, has an Interest
Expense Ratio of less than 1.50 to 1.0.
'Consolidated Net Income' with respect to any specified Person means, for
any period, the aggregate of the Net Income of such specified Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income of any other Person which is not a
Subsidiary or is accounted for by such specified Person by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid to such specified Person or a Subsidiary, and (ii) the Net
Income of any other Person acquired by such specified Person or a Subsidiary of
such Person in a pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded and (iii) the Net Income (if
positive) of any Subsidiary that is subject to restrictions, direct or indirect,
on the payment of dividends or the making of distributions to such specified
Person shall be excluded to the extent of such restrictions.
'Currency Agreement' means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect against
fluctuations in currency values.
'Debt' of any Person means (without duplication) any indebtedness,
contingent or otherwise, in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (except any such balance that constitutes a trade payable
or an accrued liability arising in the ordinary course of business that is not
overdue by more than 120 days or that is being contested in good faith), if and
to the extent any of the foregoing indebtedness would appear as a liability upon
a balance sheet of the Company in accordance with GAAP.
'GAAP' means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession as in effect on the date of the Indenture.
'Indebtedness' of any Person shall mean the Debt of such Person and shall
also include, to the extent not otherwise included, any Capitalized Lease
Obligation, the maximum fixed repurchase price of any Redeemable Stock,
Indebtedness secured by a Lien to which the property or assets owned or held by
the Company are subject (whether or not the obligations secured thereby shall
have been assumed), guarantees of items that would constitute Indebtedness under
this definition (whether or not such items would appear upon the balance sheet
of such Person), letters of credit and letter of credit reimbursement
obligations (whether or not such items would appear on such balance sheet), and
obligations in respect of Currency Agreements and Interest Swap Obligations, and
any renewal, extension, refunding or amendment of any of the foregoing. For
purposes of the preceding sentence, the maximum fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Stock as if such
Redeemable Stock were repurchased on any date on which Indebtedness shall be
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required to be determined pursuant to the Indenture, and if such price is based
upon or measured by the fair market value of such Redeemable Stock (or any
equity security for which it may be exchanged or converted) such fair market
value shall be determined in good faith by the Board of Directors. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability of any such contingent obligations at such date.
'Interest Expense' of any Person means, for any period, the aggregate
amount of (i) interest in respect of Indebtedness of such Person (including
amortization of original issue discount on any such Indebtedness and the
interest portion of any deferred payment obligation, calculated in accordance
with the effective interest method of accounting, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and the net costs associated with Interest Swap Obligations
and Currency Agreements), (ii) all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or accrued by such Person during such period, and (iii) any dividends or
distributions paid on any Redeemable Stock of such Person, all as determined in
accordance with GAAP.
'Interest Expense Ratio' means, for the Company, the ratio of (i) the
aggregate amount of Consolidated Cash Flow Available for Interest Expense of the
Company for the four fiscal quarters for which financial information in respect
thereof is available immediately prior to the date of the transaction giving
rise to the need to calculate the Interest Expense Ratio (the 'Transaction
Date') to (ii) the aggregate Consolidated Interest Expense which the Company
will accrue during the fiscal quarter in which the Transaction Date occurs and
the three fiscal quarters immediately subsequent to such fiscal quarter,
assuming the Consolidated Interest Expense accruing on the amount of the
Company's Indebtedness on the Transaction Date and reasonably anticipated by the
Company in good faith to be outstanding from time to time during such period
(assuming the continuation of market interest rate levels prevailing on the
Transaction Date in any calculation of Interest Expense relating to Indebtedness
the interest on which is a function of such market interest rate levels).
'Interest Expense Ratio' means, for any other Person, the ratio of (i) the
aggregate amount of Cash Flow Available for Interest Expense of such other
Person for the four fiscal quarters for which financial information in respect
thereof is available immediately prior to the relevant Transaction Date to (ii)
the aggregate Interest Expense which such other Person will accrue during the
fiscal quarter in which the Transaction Date occurs and the three fiscal
quarters immediately subsequent to such fiscal quarter, assuming the Interest
Expense accruing on the amount of such other Person's Indebtedness on the
Transaction Date and reasonably anticipated by such other Person in good faith
to be outstanding from time to time during such period (assuming the
continuation of market interest rate levels prevailing on the Transaction Date
in any calculation of Interest Expense relating to Indebtedness the interest on
which is a function of such market interest rate levels).
'Interest Swap Obligations' shall mean the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payment made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount.
'Lien' means any lien, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, and any agreement to give any security interest).
'Net Income' of any Person shall mean the net income (loss) of such Person,
determined in accordance with GAAP, excluding, however, any gain (but not loss)
realized upon the sale or other disposition (including, without limitation,
dispositions pursuant to sale and leaseback transactions) of any real property
or equipment of such Person which is not sold or otherwise disposed of in the
ordinary course of business and any gain (but not loss) realized upon the sale
or other disposition of any Capital Stock of such Person or a Subsidiary of such
Person.
'OID' or 'Original Issue Discount' of any Note means the excess of the
'stated redemption price at maturity' of such Note, as defined in Section 1273
of the Internal Revenue Code of 1986, as
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amended, or any successor provisions, and the applicable Treasury Regulations
thereunder, whether denominated as principal or interest, over the Issue Price
thereof.
'Permitted Investment' means any investment after November 10, 1988 (a)
which when aggregated with all other outstanding Permitted Investments does not
exceed the aggregate of $50 million (excluding amounts which may be used to
acquire the remaining interests in the non-wireline cellular telephone systems
in Elkhart, Indiana, Lincoln, Nebraska and Charlottesville and Lynchburg,
Virginia) plus (i) the amount of Proceeds from the issuance or sale of Capital
Stock of the Company after November 15, 1988, (ii) the amount of Proceeds from
the issuance of indebtedness which is converted or exchanged for Capital Stock
of the Company after November 15, 1988, and (iii) amounts from dividends or
distributions made to the Company or any Restricted Subsidiary from an
Unrestricted Subsidiary after November 15, 1988, and (b) which is (i) loaned or
contributed to any Affiliate controlled, directly or indirectly, by the Company
in the ordinary course of business on terms that are no less favorable to the
Company or the Restricted Subsidiary than those that could have been obtained in
a comparable transaction by the Company or such Restricted Subsidiary from a
Person who is not an Affiliate, or (ii)(A) loaned or contributed to any
Unrestricted Subsidiary or (B) made by way of a guarantee by the Company or a
Restricted Subsidiary of Indebtedness of an Unrestricted Subsidiary. A Permitted
Investment in an Unrestricted Subsidiary will be deemed to be no longer
outstanding if such Unrestricted Subsidiary has been classified a Restricted
Subsidiary.
'Proceeds' means, with respect to any issuance or sale of securities, cash
or the fair market value of property other than cash (as determined by the Board
of Directors whose determination shall be evidenced by a resolution of the Board
of Directors filed with the Trustee) received in connection therewith.
'Pro Forma Operating Cash Flow' means, for any period, (A) the sum of the
amount for such period of (i) Net Income, (ii) Interest Expense, (iii)
provisions for taxes based on income (excluding taxes related to gains and
losses excluded from the definition of Consolidated Net Income or Net Income),
(iv) depreciation expense, (v) amortization expense, and (vi) any other non-cash
items reducing the Net Income of such Person for such period, minus (B) all
non-cash items increasing Net Income of such Person for such period, all as
determined on a consolidated basis for the Company and its Restricted
Subsidiaries in accordance with GAAP after giving effect to the following: (i)
if, during such period, the Company or any of its Restricted Subsidiaries shall
have made any Asset Sale, Pro Forma Operating Cash Flow of the Company for such
period shall be reduced by an amount equal to the Pro Forma Operating Cash Flow
(if positive) directly attributable to the assets which are the subject of such
Asset Sale for the period subsequent to such sale or increased by an amount
equal to the Pro Forma Operating Cash Flow (if negative) directly attributable
thereto for such period and (ii) if, during such period, Indebtedness is
incurred by the Company or any of its Restricted Subsidiaries for or in
connection with the acquisition of any Person or business which immediately
after acquisition is a Subsidiary or whose assets are held directly by the
Company or a Subsidiary, Pro Forma Operating Cash Flow shall be computed so as
to give pro forma effect to the acquisition of such Person or business.
'Redeemable Stock' means any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the
Maturity Date (as defined in the Indenture) of the Notes.
'Restricted Subsidiary' means (a) any Subsidiary of the Company, whether
existing on or after the date of the Indenture, unless such Subsidiary is an
Unrestricted Subsidiary or shall have been classified as an Unrestricted
Subsidiary by a resolution adopted by the Board of Directors of the Company and
(b) an Unrestricted Subsidiary which is reclassified as a Restricted Subsidiary
by a resolution adopted by the Board of Directors of the Company, provided that
on and after the date of such reclassification such Unrestricted Subsidiary
shall not incur Indebtedness other than that permitted to be incurred by a
Restricted Subsidiary under the provisions of the Indenture. Notwithstanding the
foregoing, Century-ML Cable Venture and its Subsidiaries and Century Venture
Corp. and its Subsidiaries shall be
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Restricted Subsidiaries unless any of the foregoing shall be reclassified as an
Unrestricted Subsidiary pursuant to clause (d) of the definition of an
Unrestricted Subsidiary.
'Subsidiary' of any specified Person means (i) a corporation a majority of
whose Capital Stock with voting power, under ordinary circumstances, to elect
directors is at any time, directly or indirectly, owned by such Person or by
such Person and a Subsidiary or Subsidiaries of such Person or by a Subsidiary
or Subsidiaries of such Person or (ii) any other Person (other than a
corporation) in which such Person or such Person and a Subsidiary or
Subsidiaries of such Person or a Subsidiary or Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has at least
majority ownership interest.
'Unrestricted Subsidiary' means (a) Century Cellular Holding Corp.,
provided that Century Cellular Holding Corp. may be reclassified as a Restricted
Subsidiary pursuant to clause (b) of the definition of Restricted Subsidiary,
(b) any Subsidiary as of the date of the Indenture which is not a Restricted
Subsidiary, (c) any Subsidiary of an Unrestricted Subsidiary and (d) any
Subsidiary organized or acquired after the date of the Indenture which is
classified as an Unrestricted Subsidiary by a resolution adopted by the Board of
Directors of the Company; provided that a Subsidiary may be so classified as an
Unrestricted Subsidiary only if immediately after the date of such
classification, the Company and its Restricted Subsidiaries would have
investments in such Subsidiary which would be Permitted Investments; and
provided further, that, notwithstanding the foregoing, no Subsidiary which is a
Restricted Subsidiary as of the date of the Indenture shall be reclassified as
an Unrestricted Subsidiary or be a Subsidiary of an Unrestricted Subsidiary.
Centennial Cellular is a subsidiary of Century Cellular Holding Corp. The
Trustee shall be given prompt notice by the Company of each resolution adopted
by the Board of Directors under this provision, together with a copy of each
such resolution adopted.
'U.S. Government Obligations' means securities that are (i) direct
obligations of the United States of America for payment of which its full faith
and credit is pledged or (ii) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of America
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation of the United States of America, which, in either case under
clause (i) or (ii), are not callable or redeemable at the option of the issuer
thereof, and will also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specified payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
CERTAIN COVENANTS
Dividend and Stock Purchase Restrictions. The Indenture provides that,
notwithstanding the restrictions on dividends and Capital Stock purchases by the
Company and its Subsidiaries, certain of which are referred to below, such
restrictions will not prevent (A) the payment of an amount not to exceed
$150,000,000 in the aggregate to repurchase shares of the common stock of the
Company, (B) the payment of any dividend within 60 days after the date of
declaration when the payment would have complied with the dividend restrictions
set forth below on the date of declaration or (C) the purchase, redemption,
acquisition or other retirement of any shares of the Company's Capital Stock by
exchange for, or out of the proceeds of the substantially concurrent sale of,
other shares of its Capital Stock (other than Redeemable Stock).
The Indenture provides that the Company will not, directly or indirectly,
(i) declare or pay any dividend on, or make any distribution to the holders (as
such) of, any shares of its Capital Stock (other than dividends or distributions
payable in Capital Stock (other than Redeemable Stock) of the Company); or (ii)
purchase, redeem or otherwise acquire or retire for value any Capital Stock of
the Company, any Subsidiary or other Affiliate (other than any such Capital
Stock owned by the Company or any directly or indirectly wholly-owned Subsidiary
of the Company); or (iii) permit any Subsidiary to declare or pay any dividend
on, or make any distribution to the holders (as such) of, any shares of its
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Capital Stock except to the Company or a directly or indirectly wholly-owned
Subsidiary of the Company (other than dividends or distributions payable in
Capital Stock (other than Redeemable Stock) of such Subsidiary or the Company);
or (iv) permit any Subsidiary to purchase, redeem or otherwise acquire or retire
for value any Capital Stock of such Subsidiary, the Company or any Affiliate of
either of them (other than any such Capital Stock owned by the Company or any
directly or indirectly wholly-owned Subsidiary of the Company); or (v) make, or
permit any Subsidiary to make, an Advance (all of the foregoing, 'Restricted
Payments'; provided, however, that Restricted Payments shall not include any
amounts paid for the acquisition from a non-Affiliate of any Capital Stock of a
Subsidiary or other Affiliate) if at the time of such action (a) an Event of
Default (as defined in the Indenture) shall have occurred and be continuing, or
shall occur as a consequence thereof, or (b) if upon giving effect to such
payment the aggregate amount expended for all such Restricted Payments
subsequent to November 21, 1988 shall exceed the sum of (i) the excess of (X)
the aggregate of Consolidated Cash Flow Available for Interest Expense of the
Company accrued during all fiscal quarters ended subsequent to May 31, 1988 over
(Y) the product of (1) 1.2 and (2) the aggregate of Consolidated Interest
Expense of the Company accrued during all fiscal quarters ended subsequent to
May 31, 1988, (ii) the aggregate net proceeds, including cash and the fair
market value of property other than cash, received by the Company from the issue
or sale, after November 21, 1988, of Capital Stock of the Company (other than
Redeemable Stock), including upon the exercise of any warrant, other than in
connection with the conversion or exchange of any Indebtedness or Capital Stock,
and (iii) the aggregate net proceeds received by the Company, subsequent to
November 21, 1988, from the issue or sale of any debt securities or Redeemable
Stock of the Company, if, at the time the determination is made, such debt
securities or Redeemable Stock, as the case may be, have been converted into or
exchanged for Capital Stock of the Company (other than Redeemable Stock).
Limitation on Indebtedness. The Indenture provides that the Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
create, incur, issue, assume or become liable for, contingently or otherwise
(collectively an 'incurrence'), any Indebtedness (other than the Notes) unless,
after giving effect to such incurrence on a pro forma basis, Indebtedness of the
Company and its Restricted Subsidiaries, on a consolidated basis, shall not be
more than nine times Pro Forma Operating Cash Flow for the four fiscal quarters
immediately preceding such incurrence. For purposes of the above, an incurrence
will not be deemed to occur when any Person becomes a Subsidiary by merger,
consolidation, acquisition or otherwise. Notwithstanding the above, the
Indenture does not limit (i) Indebtedness incurred in connection with Currency
Agreements or Interest Swap Obligations, (ii) Indebtedness which is subordinated
in right of payment to the Notes and which has an average life to maturity
longer than that of the Notes and (iii) Indebtedness resulting in the extension,
refunding or renewal of any Indebtedness existing prior to such extension,
renewal or refunding which does not result in an increase in the principal
amount of such existing Indebtedness then outstanding.
Investments in Affiliates and Subsidiaries. After the date of this
Prospectus, the Company may not, nor will the Company allow any Restricted
Subsidiary to, invest in any Affiliate (other than the Company or a Restricted
Subsidiary) or in any Unrestricted Subsidiary other than by way of Permitted
Investments.
After the date of this Prospectus, neither the Company nor any Restricted
Subsidiary will guarantee or secure, pledge, encumber or otherwise become
directly or indirectly liable for investments in or borrowings by Unrestricted
Subsidiaries, except for Permitted Investments and except that the Capital Stock
of an Unrestricted Subsidiary may be pledged to secure borrowings by such
Unrestricted Subsidiary or other Unrestricted Subsidiaries.
Limitation on Transactions with Affiliates. The Indenture provides that
neither the Company nor any Subsidiary may engage in any transaction with an
Affiliate of the Company (other than a Restricted Subsidiary), or any director,
officer or employee of the Company or any Subsidiary, on terms less favorable to
the Company or such Subsidiary than would be obtainable at the time in
comparable transactions of the Company or such Subsidiary with Persons which are
not Affiliates. The provision described above does not apply to (i) any
Restricted Payment which is made in compliance with the 'Dividend and Stock
Purchase Restrictions' covenant described above or (ii) any transaction which
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complies with the provisions described under 'Investments in Affiliates and
Subsidiaries' and 'Merger, Consolidation or Sale of Assets.'
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company may not consolidate or merge with or into, or sell, lease,
convey or otherwise dispose of all or substantially all of its assets to,
another corporation, Person or entity unless (i) the Company is the surviving
Person or the successor or transferee is a corporation organized and existing
under the laws of the United States, any state thereof or the District of
Columbia, (ii) the successor assumes all the obligations of the Company under
the Notes and the Indenture, (iii) after such transaction no Event of Default
exists and (iv) the Interest Expense Ratio of the surviving or successor entity
immediately following the transaction, determined on a pro forma basis, would be
at least 1 to 1; provided that, if the Interest Expense Ratio of the Company
immediately prior to any such transaction is within the range set forth in
Column A below, then the pro forma Interest Expense Ratio of the surviving or
successor entity shall be at least equal to the percentage of the Interest
Expense Ratio of the Company set forth in Column B below:
<TABLE>
<CAPTION>
(A) (B)
- -------------------------------------------------------------------------------------- ----
<S> <C>
1.1111:1 to 1.4999:1.................................................................. 90%
1.5:1 and higher...................................................................... 75%
</TABLE>
and provided further, that, if the pro forma Interest Expense Ratio of the
surviving or successor entity is 2.0:1 or more, the calculation in the preceding
provision shall be inapplicable and such transaction shall be deemed to have
complied with the requirements of such provision.
DEFEASANCE
Under the terms of the Indenture, the Company, at its option, (a) will be
deemed to be discharged from any and all obligations in respect of the Notes
(except in each case for certain obligations to register the transfer or
exchange of the Notes, replace stolen, lost or mutilated Notes and maintain
paying agencies) or (b) need not comply with certain covenants of the Indenture
described under 'Certain Covenants,' in each case, if the Company irrevocably
deposits with the Trustee, in trust, money or U.S. Government Obligations which
through the payment of interest thereon and principal thereof in accordance with
their terms will provide money in an amount sufficient to pay all the principal
of the Notes on the date such payment is due in accordance with the terms of the
Notes. To exercise any such option, the Company is required to deliver to the
Trustee an opinion of counsel, or a ruling received from or published by the
Internal Revenue Service, to the effect that the deposit and related defeasance
would not cause the holders of the Notes being defeased to recognize income,
gain or loss for federal income tax purposes and that the holders of the Notes
will be subject to federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such option had not been
exercised. Because under current federal income tax law a discharge from all
obligations in respect of the Notes may cause the holders thereof to recognize
income, the Company may not be able to be discharged from its obligations in
respect of the Notes, but could exercise its option in order that it not be
required to comply with certain covenants.
CERTAIN RIGHTS TO REQUIRE REPURCHASE OF NOTES
The Indenture provides that in the event of the occurrence of a Triggering
Event (as hereinafter defined) with respect to the Company, then each holder of
Notes shall have the right, at the holder's option, to require the Company to
buy all or any part of such holder's Notes on the date (the 'Repurchase Date')
that is 115 days after the occurrence of such Triggering Event for an amount
equal to 101% of their Accreted Value as of the date of purchase.
The Company is obligated to mail to all holders of record of the Notes,
within 30 days after occurrence of a Triggering Event, a notice of the
occurrence of such Triggering Event, specifying the date by which a holder must
notify the Trustee of such holder's intention to exercise the repurchase right
and describing the procedure which such holder must follow to exercise such
right. The Company
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shall deliver a copy of such notice to the Trustee and shall cause a copy of
such notice to be published in The Wall Street Journal (National Edition). To
exercise the repurchase right, the holder of a Note must deliver, on or before
the 90th day after the occurrence of the Triggering Event, written notice (which
shall be irrevocable) to the Trustee of the holder's exercise of such right,
together with the Note or Notes with respect to which the right is being
exercised, duly endorsed for transfer.
The terms below are defined in the Indenture as follows:
(i) 'Triggering Event' means the occurrence of any transaction or
event or series of transactions or events which results in (a) the Class A
Common Stock of the Company being held of record by less than 300 holders
and (b) a Designated Downgrading (as hereinafter defined). For purposes of
clause (a) above, 'held of record' has the meaning set forth in Rule 12g5-1
promulgated by the Commission under the Exchange Act;
(ii) In the event that the rating of the Notes by both Rating Agencies
on the date 60 days prior to the occurrence of a Triggering Event (a 'Base
Date') is equal to or higher than B Plus (as hereinafter defined), then a
'Designated Downgrading' means the reduction of the rating of the Notes by
either or both Rating Agencies on the date of the relevant event or
transaction resulting in the Class A Common Stock of the Company being held
of record by less than 300 holders (or, if the rating on such date does not
reflect the effect of such event or transaction, then on the earliest date
on which such rating shall reflect the effect of such event or transaction)
(as applicable, the 'Triggering Event Date') to a rating equal to or lower
than B minus (as hereinafter defined); in the event that the rating of the
Notes by either or both Rating Agencies on any Base Date is lower than B
Plus, then a 'Designated Downgrading' means the reduction of the rating of
the Notes by either or both Rating Agencies to a lower rating. In
determining whether the rating of the Notes has been reduced, a reduction
of a gradation (+ and - for S&P and l, 2 and 3 for Moody's or the
equivalent thereof by any substitute rating agency referred to below) shall
be taken into account;
(iii) 'Rating Agency' means either Standard & Poor's Corporation or
its successor ('S&P') or Moody's Investors Service, Inc. or its successor
('Moody's');
(iv) 'B Plus' means, with respect to ratings by S&P, a rating of B+
and, with respect to ratings by Moody's, a rating of B1, or the equivalent
thereof by any substitute agency referred to below;
(v) 'B Minus' means, with respect to ratings by S&P, a rating of B -
and, with respect to ratings by Moody's, a rating of B3, or the equivalent
thereof by any substitute agency referred to below.
The Company shall take all reasonable action necessary to enable each of
the Rating Agencies to provide a rating for the Notes, but, if either or both of
the Rating Agencies shall not make such a rating available, a nationally
recognized investment banking firm selected by the Company shall select a
nationally recognized securities rating agency or two nationally recognized
securities rating agencies to act as substitute rating agency or substitute
rating agencies, as the case may be.
DEFAULTS, NOTICE AND WAIVER
The following are Events of Default under the Indenture: (i) default in the
payment of the principal of any Note when due, (ii) default in the performance,
or breach, of any covenant or warranty of the Company in the Indenture or any
Note, which continues for 90 days after written notice from the Trustee or the
holders of 25% or more in principal amount of the Notes outstanding, and (iii)
certain events of bankruptcy, insolvency or reorganization of the Company.
If an Event of Default occurs and is continuing, the Trustee or the holders
of not less than 25% in aggregate principal amount of the Notes then outstanding
may declare the Accreted Value of the Notes as of the date of such Event of
Default due and payable.
The Company must file annually with the Trustee an Officers' certificate
stating whether or not the Company is in default in the performance and
observance of any of the terms, provisions and conditions of the Indenture and,
if so, specifying the nature and status of the default.
The Indenture provides that the Trustee, within 90 days after the
occurrence of an Event of Default, will give to holders of Notes notice of all
uncured or unwaived defaults known to it; but, except
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in the case of a default in the payment of the principal of any of the Notes,
the Trustee shall be protected in withholding such notice if the board of
directors of the Company or the executive or trust committee thereof or a
Responsible Officer of the Trustee in good faith determines that the withholding
of such notice is in the interest of such holders.
The Indenture contains a provision entitling the Trustee to be indemnified
by holders of Notes before proceeding to exercise any right or power under the
Indenture at the request of any such holders. The Indenture provides that the
holders of a majority in principal amount of the outstanding Notes may, subject
to certain exceptions, direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred upon the Trustee with respect to the Notes. The right of a
holder to institute a proceeding with respect to the Indenture is subject to
certain conditions precedent including notice and indemnity to the Trustee, but
the holder has an absolute right to receipt of principal when due and to
institute suit for the enforcement thereof.
MODIFICATION AND WAIVER
Modification and amendment of the Indenture may be made by the Company and
the Trustee with the consent of the holders of a majority in principal amount of
the outstanding Notes and outstanding Exchange Notes taken together as one class
(collectively, the 'Outstanding Notes'); provided, however, that no such
modification or amendment may, without the consent of the holder of each
Outstanding Note: (a) change the Stated Maturity of the principal of any
Outstanding Note; (b) reduce the principal amount of any Outstanding Note; (c)
reduce the amount of principal of an Outstanding Note payable upon acceleration
of the maturity thereof; (d) adversely affect any right of repayment at the
option of the holder of any Outstanding Note or (e) reduce the percentage in
principal amount of Outstanding Notes, the consent of the holders of which is
required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults.
Without the consent of any holder of Outstanding Notes, the Company may
amend or supplement the Indenture and the Outstanding Notes to cure any
ambiguity or inconsistency or to provide for Outstanding Notes in bearer form in
addition to or in place of registered Outstanding Notes or to make any other
provisions that do not adversely affect the rights of any holder of Outstanding
Notes.
The holders of a majority in principal amount of the Outstanding Notes may,
on behalf of the holders of all of the Outstanding Notes, waive any past default
under the Indenture, except a default in the payment of the principal of any
Outstanding Note or in respect of a provision which under such Indenture cannot
be modified or amended without the consent of the holder of each Outstanding
Note.
CONCERNING THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. If an Event of Default has occurred and is continuing, the
Trustee will exercise such rights and powers vested in it under the Indenture
and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases
or to realize on certain property received by it in respect of any such claims
as security or otherwise.
The Trustee is also the trustee with respect to the 9 3/4% Notes, the
9 1/2% Notes, the 8 7/8% Notes, the 8 3/4% Notes, the 8 3/8% Notes and the
Discount Notes which were issued under an indenture, as amended, dated as of
February 15, 1992, between the Company and the Trustee, successor trustee to
Bank of America National Trust and Savings Association. The Trustee may perform
certain services for and transact other banking business with the Company from
time to time in the ordinary course of business.
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REPORTS TO HOLDERS OF NOTES
Notwithstanding any Triggering Event (see 'Certain Rights to Require
Repurchase of Notes') or any other event, the Indenture provides that the
Company must file with the Commission and provide the Trustee and the holders of
the Notes with copies of the quarterly and annual reports and other information,
documents and reports specified in Sections 13 and 15(d) of the Exchange Act as
long as any Notes are outstanding.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal income tax
matters that may be relevant to (i) the exchange of the Existing Notes for New
Notes pursuant to the Exchange Offer and (ii) the acquisition, ownership and
disposition of the New Notes by the initial exchangers of the Existing Notes,
and, to the limited extent discussed below under ' -- Market Discount' and
' -- Acquisition Premium', to subsequent holders of the New Notes. Except to the
limited extent discussed below under ' -- Non-U.S. Holders', this summary is
limited to United States Persons (as defined below) who hold the Notes as
'capital assets' within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the 'Code'), and whose 'functional currency' as defined in
the Code is the U.S. dollar ('United States Holders'). This discussion does not
address the U.S. federal income tax consequences to certain persons subject to
special treatment under the federal income tax law, including, but not limited
to, tax-exempt organizations, dealers in securities or currencies, regulated
investment companies, real estate investment trusts, real estate mortgage
investment conduits, financial asset securitization investment trusts, financial
institutions, persons subject to alternative minimum tax, insurance companies,
or persons holding Notes as a part of a hedging, conversion, short sale or
integrated transaction or a straddle.
As used herein, the term 'United States Person' means (i) a citizen or
resident of the United States, (ii) a corporation or partnership created or
organized in or under the laws of the United States or any state thereof, or
(iii) an estate or trust that is subject to United States federal income
taxation without regard to the source of its income.
This summary is based upon the provisions of law and the regulations,
administrative rulings and judicial decisions thereunder now in effect, all of
which are subject to change (possibly with retroactive effect) or different
interpretations. This summary does not purport to be a comprehensive description
of all of the tax considerations that may be relevant to a decision to acquire,
hold or dispose of the Notes. This summary is provided for general information
purposes only, and does not constitute, and should not be considered as, legal
or tax advice to any purchaser or other holders of the Notes. PERSONS
CONSIDERING AN EXCHANGE OF EXISTING NOTES FOR NEW NOTES PURSUANT TO THE EXCHANGE
OFFER OR THE PURCHASE, OWNERSHIP OR DISPOSITION OF THE NEW NOTES SHOULD CONSULT
THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES THEREOF IN LIGHT OF THEIR PARTICULAR SITUATIONS, AS WELL AS
CONCERNING ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING
JURISDICTION, INCLUDING ANY STATE, LOCAL OR OTHER FOREIGN JURISDICTION, AS WELL
AS ANY ESTATE OR GIFT TAX CONSIDERATIONS.
Exchange of Existing Notes for New Notes. The exchange of an Existing Note
for a New Note pursuant to the Exchange Offer should not be treated as a taxable
exchange or otherwise as a taxable event for United States federal income tax
purposes. Consequently, no gain or loss should be recognized by a holder upon
exchange of an Existing Note for a New Note. The New Notes should have the same
issue price as the Existing Notes and each United States Holder should have the
same adjusted basis and holding period in the New Notes as it had in the
Existing Notes immediately before the Exchange Offer.
In any event, persons considering the exchange of Existing Notes for New
Notes should consult their own tax advisors concerning the United States federal
income tax consequences of such exchange in light of their particular
situations, as well as any consequences arising under the laws of any other
taxing jurisdiction.
Original Issue Discount. For federal income tax purposes, when a debt
instrument is issued at a discount, the amount of such discount ('original issue
discount' or 'OID') is treated as interest income, and the holder of such
instrument must include such OID in his income for the period during which the
OID accrues even if no cash attributable to such OID income is received until
maturity, redemption or other disposition of the debt instrument.
The amount of OID, if any, on a debt instrument, such as the Notes, is the
difference between its 'issue price' and its 'stated redemption price at
maturity' (subject, generally, to a de minimis exception not applicable to the
Notes). The portion of any such OID that is to be accrued (and included in
income) with respect to a debt instrument with a maturity of more than one year
generally will be determined for each accrual period during the term of such
debt instrument under the constant yield method, applied by (i) multiplying the
adjusted issue price of the debt instrument at the beginning of
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the accrual period by its yield to maturity, and (ii) subtracting from that
product the amount of any interest payments made during that accrual period that
are based on a single fixed rate and are payable unconditionally in cash or in
property (other than debt instruments of the issuer) at intervals of one year or
less during the entire term of the debt instrument ('qualified stated
interest'). The resulting amount is allocated ratably to each day in the accrual
period, and the amount includible in a holder's income (whether on the cash or
accrual method of accounting) with respect to the debt instrument is the sum of
the resulting daily portions of OID for each day of the taxable year during
which the holder held the debt instrument. Under these rules, a United States
Holder will generally have to include in income increasingly greater amounts of
OID in successive accrual periods.
The 'issue price' of each note in a particular offering will generally be
the first price at which a substantial amount of that particular offering is
sold (other than to an underwriter, placement agent or wholesaler). The 'stated
redemption price at maturity' of a Note equals the sum of all payments to be
made on such Note other than qualified stated interest. The 'adjusted issue
price' of a debt instrument at the beginning of any accrual period is equal to
its issue price increased by all previously accrued OID and reduced by the
amount of all previous payments made on such debt instrument (other than
payments of qualified stated interest). Generally, the tax basis of the debt
instrument in the hands of the holder will be increased and decreased,
respectively, by the same amounts.
The Existing Notes were issued with OID for federal income tax purposes
equal to the amount of the excess of the stated redemption price at maturity for
the Notes over the issue price for the Existing Notes. Each Existing Note was
issued at a price of $412.66 per $1,000 principal amount, which translates into
aggregate OID for the Notes of $587.34 per $1,000 principal amount. The New
Notes will be treated as having an equivalent issue price and equivalent OID.
This OID will generally be required to be recognized by the Holders of the Notes
under the constant yield method described above. Because the Notes do not
provide for the payment of any interest currently, there will be no 'qualified
stated interest' on the Notes.
The Company is required to furnish to the Internal Revenue Service, and
will furnish annually to the record Holders of the Notes (other than
corporations and other exempt recipients), certain information returns with
respect to OID accruing during the calendar year. Because this information will
be based upon the adjusted issue price of the Notes as if the Holder were the
original Holder of the Notes, subsequent Holders who purchase Notes for an
amount other than the adjusted issue price for such Notes or on a date other
than the end of an accrual period for the Notes will be required to determine
for themselves the amount of OID, if any, that they are required to report.
Market Discount. The income which an investor who acquires a Note from an
original Holder at a 'market discount' must recognize may be affected by the
market discount provisions of the Code. Debt instruments such as the Notes are
considered to have been purchased at a market discount if, subsequent to their
original issuance, they are purchased at a price below their adjusted issue
price.
Under the market discount rules, if such an investor purchases a Note at a
market discount in excess of a statutorily-defined de minimis amount and
thereafter recognizes gain upon a disposition or retirement of the Note, then
the lesser of the gain so recognized and the portion of the market discount that
accrued while the Note was held by such investor generally will be treated as
ordinary income at such time. Moreover, any such market discount on a Note may
be taxable to such an investor at the time of certain otherwise non-taxable
transactions (e.g., gifts). In addition, a Holder of a market discount Note may
be required to defer a portion of any interest expense that otherwise may be
deductible on any indebtedness incurred or maintained to purchase or carry such
Note until the Holder disposes of the Note in a taxable transaction.
Neither the rule treating accrued market discount as ordinary income on
disposition nor the rule deferring interest deductions applies if the holder of
the market discount Note elects to include the accrued market discount in income
currently. This election to include market discount in income currently, once
made, applies to all market discount obligations acquired during or after the
first taxable year to which the election applies and may not be revoked without
the consent of the Internal Revenue Service. United States Holders should
consult with their own tax advisors in deciding whether to elect to include
market discount in income currently.
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Acquisition Premium. A United States Holder that purchases a Note for an
amount (excluding any amount paid for accrued interest) that is greater than its
adjusted issue price but equal to or less than the Note's remaining stated
redemption price at maturity will be considered to have purchased such Note at
an 'acquisition premium.' The amount of OID which such Holder must include in
its gross income with respect to such Note for any taxable year will be reduced
by the portion of such acquisition premium properly allocated to such year.
Sale, Exchange, Redemption or Repayment of the Notes. Upon the disposition
of a Note by sale, exchange, redemption, or repayment, a United States Holder
will generally recognize gain or loss equal to the difference between (i) the
amount realized on the disposition (other than amounts attributable to accrued
interest not previously included in income, which amounts will be taxable as
ordinary income) and (ii) the United States Holder's tax basis in the Note.
A United States Holder's tax basis in a Note generally will equal the cost
of the Note (net of accrued interest) to the United States Holder increased by
amounts includible in income as OID and market discount (if the Holder elects to
include market discount on a current basis), and reduced by any payment other
than payments of qualified stated interest made on such Note.
Such gain or loss (except to the extent that the market discount rules
discussed above otherwise provide) generally will constitute capital gain or
loss and will be long-term capital gain or loss if the United States Holder has
held such Note for longer than one year. Recently enacted legislation generally
provides that noncorporate taxpayers with net long-term capital gains will be
subject to reduced rates of taxation on such gains, which may vary depending
upon the periods which the assets giving rise to such gain were held. United
States Holders should consult their own tax advisors about these new capital
gain provisions.
Non-U.S. Holders. The following is a summary of certain United States
federal income tax consequences that may be relevant to a beneficial owner of
the Notes that is not a United States Person (a 'Non-U.S. Holder'). This summary
deals only with Non-U.S. Holders that are initial holders of the Notes and that
will hold the Notes as capital assets. It does not address the tax
considerations applicable to Non-U.S. Holders if income or gain in respect of
the Notes is effectively connected with the conduct of a trade or business in
the United States.
Generally, payments of interest (which for purposes of this discussion
includes OID) made with respect to the Notes to a Non-U.S. Holder will not be
subject to United States federal income or withholding tax, provided that (i)
the Non-U.S. Holder does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote, (ii) the Non-U.S. Holder is not a controlled foreign corporation for
United States tax purposes that is directly or indirectly related to the Company
through stock ownership and (iii) the Non-U.S. Holder complies with applicable
certification requirements.
Any capital gain realized on the sale, exchange, retirement or other
disposition of a Note by a Non-U.S. Holder will not be subject to United States
federal income or withholding taxes unless such Non-U.S. Holder is an individual
who is present in the United States for 183 days or more in the taxable year of
such sale, exchange, retirement or other disposition and meets certain
additional requirements.
Non-U.S. Holders to whom the above exemptions do not apply may nonetheless
be able to avail themselves of an applicable income tax treaty exemption from
United States federal income and withholding tax. Such persons should consult
with their tax advisors regarding the potential applicability to them of an
income tax treaty exemption.
Back-up Withholding. A United States Holder of a Note may be subject to
'back-up withholding' at the rate of 31% with respect to certain 'reportable
payments,' which generally include interest (including certain OID) payments.
These back-up withholding rules apply if such holder, among other things, (i)
fails to furnish a social security number or other taxpayer identification
number ('TIN') certified under penalties of perjury within a reasonable time
after the request therefor, (ii) furnishes an incorrect TIN, (iii) fails to
report properly interest or dividends, or (iv) under certain circumstances,
fails to provide a certified statement, signed under penalties of perjury, that
the TIN furnished is the correct number and that such holder is not subject to
back-up withholding. Any amount withheld from a payment to an investor under the
back-up withholding rules is creditable against such investor's U.S.
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federal income tax liability, provided the required information is furnished to
the IRS. Back-up withholding will not apply, however, with respect to payments
made to certain holders of the Notes, including corporations, tax-exempt
organizations and certain foreign persons, provided their exemption from back-up
withholding is properly established. Holders of Notes should consult their tax
advisors as to their qualification for exemption from U.S. backup withholding
and the procedure for obtaining such an exemption.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL
U.S. INCOME TAX CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP OR RETIREMENT
OF THE NOTES. PERSONS CONSIDERING AN EXCHANGE OF EXISTING NOTES FOR NEW NOTES
PURSUANT TO THE EXCHANGE OFFER OR THE PURCHASE, OWNERSHIP, OR DISPOSITION OF THE
NEW NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE TAX CONSEQUENCES
OF THEIR PARTICULAR SITUATIONS.
PLAN OF DISTRIBUTION
The Existing Notes were issued and sold on January 15, 1998 in a
transaction exempt from the registration requirements of the Securities Act and
applicable state securities laws and may not be offered or sold in the United
States unless so registered or pursuant to an applicable exemption under the
Securities Act and applicable state securities laws. The New Notes are being
offered hereunder in order to satisfy certain obligations of the Company
contained in the Registration Rights Agreement. Based on an interpretation of
the Securities Act by the staff of the Commission set forth in several no-action
letters to third parties, including Exxon Capital, Morgan Stanley and similar
letters, the Company believes that the New Notes issued pursuant to the Exchange
Offer in exchange for Existing Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder that is an
Affiliate of the Company), without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders are not engaged in, have no arrangement or understanding with any person
to participate in, and do not intend to engage in any distribution of, the New
Notes. However, the Company has not sought a no-action letter with respect to
the Exchange Offer and there can be no assurance that the Staff of the
Commission would make a similar determination with respect to the Exchange
Offer. Each holder of Existing Notes, other than a broker-dealer, must
acknowledge that it is not engaged in, has no arrangement or understanding with
any person to participate in, and does not intend to engage in a distribution of
New Notes. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of New Notes (i) will not be able to rely on the
interpretations of the staff of the Commission set forth in the above-referenced
no-action letters, (ii) will not be able to validly tender Existing Notes in the
Exchange Offer and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
transfer of the New Notes, unless such sale or transfer is made pursuant to an
exemption from, or in a transaction not subject to, such requirements.
In addition, each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal accompanying this Prospectus states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
acting in the capacity of an 'underwriter' within the meaning of Section 2(11)
of the Securities Act. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
New Notes received in exchange for Existing Notes where such Existing Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. Pursuant to the Registration Rights Agreement, the Company
has agreed that it will make this Prospectus available to any broker-dealer for
use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
Participating Broker-Dealers. New Notes received by Participating Broker-Dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Notes or a combination
of
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such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
Participating Broker-Dealer and/or the purchasers of any such New Notes. Any
Participating Broker-Dealer that resells New Notes that were received by it for
its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
'underwriter' within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an 'underwriter' within the meaning of the Securities Act.
The Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer other than commissions or concessions of
any broker-dealers and will indemnify holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The legality of the New Notes offered will be passed upon for the Company
by Leavy Rosensweig & Hyman, New York, New York. David Z. Rosensweig, a partner
in the firm of Leavy Rosensweig & Hyman, is the Secretary and a director of the
Company. Certain legal matters concerning the offering of the New Notes will be
passed upon for the Company by its securities counsel, Whitman Breed Abbott &
Morgan LLP, New York, New York. Certain legal matters will be passed upon for
the holders of Notes by Simpson Thacher & Bartlett (a partnership which includes
professional corporations), New York, New York.
EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this Prospectus by reference from Century
Communications Corp.'s Annual Report on Form 10-K for the fiscal year ended May
31, 1997 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report which is incorporated herein by reference and has been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
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_____________________________ _____________________________
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES BY ANY PERSON IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................................................................... 3
Information Incorporated by
Reference................................................................................................................ 3
Forward-Looking Statements................................................................................................. 4
Summary.................................................................................................................... 6
The Company................................................................................................................ 6
Risk Factors............................................................................................................... 12
Ratio of Earnings to Fixed Charges......................................................................................... 16
Use of Proceeds............................................................................................................ 17
The Exchange Offer......................................................................................................... 20
Description of the Notes................................................................................................... 28
Certain Federal Income Tax Considerations.................................................................................. 42
Plan of Distribution....................................................................................................... 45
Legal Matters.............................................................................................................. 46
Experts.................................................................................................................... 46
</TABLE>
$605,000,000
[Logo] CENTURY
COMMUNICATIONS
CORP.
OFFER TO EXCHANGE
$605,000,000 OF THE COMPANY'S
SENIOR DISCOUNT NOTES DUE 2008, SERIES B, WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT,
FOR $605,000,000 OF ITS
OUTSTANDING SENIOR DISCOUNT NOTES
DUE 2008, SERIES A
-------------------------
PROSPECTUS
-------------------------
MARCH 17, 1998
_____________________________ _____________________________
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