SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO
FILED PURSUANT TO RULE 13d-2(a)
Telewest Communications plc
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(Name of Issuer)
Ordinary Shares of 10p each
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(Title of Class of Securities)
*
--------------------------------------------------------------------------------
(CUSIP Number)
Limited Voting Shares of 10p each
--------------------------------------------------------------------------------
(Title of Class of Securities)
G8742C 10 2
--------------------------------------------------------------------------------
(CUSIP Number)
Robert A. Eshelman
General Counsel,
Finance and Operations
One Microsoft Way
Redmond, Washington 98052-6399
(425) 882-8080
--------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 7, 2000
--------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
----------
* CUSIP number for the American Depository Shares, each representing 10
Ordinary Shares of 10p each of Telewest Communications plc, is 879956P 10
5.
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CUSIP NO. G87956P 105 Page 2 of 22 Pages
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--------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
MICROSOFT CORPORATION
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
91-1144442
--------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(A) [ ]
(B) [x]
--------------------------------------------------------------------------------
3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC, 00
--------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
NOT APPLICABLE
--------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
WASHINGTON STATE
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7. SOLE VOTING POWER
NUMBER OF 636,056,024 Ordinary Shares
SHARES 60,322,654 Limited Voting Shares
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 1,358,261,246 Ordinary Shares*
REPORTING 62,507,747 Limited Voting Shares*
PERSON ------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
636,056,024 Ordinary Shares
60,322,654 Limited Voting Shares
------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
1,358,261,246 Ordinary Shares*
62,507,747 Limited Voting Shares*
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,358,261,246 Ordinary Shares*
62,507,747 Limited Voting Shares*
--------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES
[ ]
--------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
47.1% Ordinary Shares
100% Limited Voting Shares
--------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
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* All of the subject shares, including such shares beneficially owned by
Liberty Media International Inc. and Liberty U.K., Inc., may be deemed to
be beneficially owned, for the purposes of Section 13(d) of the Securities
Exchange Act 1934, as amended (the "Exchange Act"), by Microsoft
Corporation ("Microsoft") by virtue of the Revised New Relationship
Agreement (as defined herein) and Operating Agreement (as defined herein)
referred to in this statement on Schedule 13D. The filing of this statement
on Schedule 13D shall not be construed as an admission by Microsoft that it
is, for the purposes of Section 13(d) of the Exchange Act, the beneficial
owner of the subject shares as to which it does not have sole voting and
dispositive power.
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CUSIP NO. G87956P 105 Page 3 of 22 Pages
-----------------------
--------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
MICROSOFT CABLE PARTNERSHIP HOLDINGS, INC.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
84-1126521
--------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(A) [ ]
(B) [x]
--------------------------------------------------------------------------------
3. SEC USE ONLY
--------------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF
--------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
NOT APPLICABLE
--------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
COLORADO
--------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 40,385,202 Ordinary Shares
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 1,358,261,246 Ordinary Shares*
REPORTING 62,507,747 Limited Voting Shares*
PERSON ------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
40,385,202 Ordinary Shares
------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
1,358,261,246 Ordinary Shares*
62,507,747 Limited Voting Shares*
--------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,358,261,246 Ordinary Shares*
62,507,747 Limited Voting Shares*
--------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES
[ ]
--------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
47.1% of Ordinary Shares
100% of Limited Voting Shares
--------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
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* All of the subject shares, including such shares beneficially owned by
Liberty Media International Inc. and Liberty U.K., Inc., may be deemed to
be beneficially owned, for the purposes of Section 13(d) of the Securities
Exchange Act 1934, as amended (the "Exchange Act"), by Microsoft Cable
Partnership Holdings, Inc., by virtue of the Revised New Relationship
Agreement (as defined herein) and Operating Agreement (as defined herein)
referred to in this statement on Schedule 13D. The filing of this statement
on Schedule 13D shall not be construed as an admission by Microsoft that it
is, for the purposes of Section 13(d) of the Exchange Act, the beneficial
owner of the subject shares as to which it does not have sole voting and
dispositive power.
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CUSIP NO. G87956P 105 Page 4 of 22 Pages
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--------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
MICROSOFT U.K. CABLE, INC.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
81-1145944
--------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(A) [ ]
(B) [x]
--------------------------------------------------------------------------------
3. SEC USE ONLY
--------------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF
--------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
NOT APPLICABLE
--------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
COLORADO
--------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF 540,648,982 Ordinary Shares*
SHARES 57,312,938 Limited Votin Shares*
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 1,358,261,246 Ordinary Shares*
REPORTING 62,507,747 Limited Voting Shares*
PERSON ------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
540, 648,982 Ordinary Shares*
57,312,938 Limited Voting Shares
------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
1,358,261,246 Ordinary Shares*
62,507,747 Limited Voting Shares*
--------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,358,261,246 Ordinary Shares*
62,507,747 Limited Voting Shares*
--------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES
[ ]
--------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
47.1% Ordinary Shares
100% Limited Voting Shares
--------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
--------------------------------------------------------------------------------
* All of the subject shares, including such shares beneficially owned by
Liberty Media International Inc. and Liberty U.K., Inc., may be deemed to
be beneficially owned, for the purposes of Section 13(d) of the Securities
Exchange Act 1934, as amended (the "Exchange Act"), by Microsoft U.K.
Cable, Inc., by virtue of the Revised New Relationship Agreement (as
defined herein) and Operating Agreement (as defined herein) referred to in
this statement on Schedule 13D. The filing of this statement on Schedule
13D shall not be construed as an admission by Microsoft that it is, for the
purposes of Section 13(d) of the Exchange Act, the beneficial owner of the
subject shares as to which it does not have sole voting and dispositive
power.
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CUSIP NO. G87956P 105 Page 5 of 22 Pages
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Item 1. Security and Issuer
This statement relates to the ordinary shares, par value 10 pence per share
(the "Ordinary Shares"), and the Limited Voting Shares, par value 10 pence
per share (the "Limited Voting Shares"),* of Telewest Communications plc, a
public limited company incorporated under the laws of England and Wales
("Telewest"). The address of the principal executive offices of Telewest is
Genesis Business Park, Albert Drive, Woking, Surrey, GU21 5RW, United
Kingdom.
Item 2. Identity and Background.
This statement is filed on behalf of Microsoft Corporation, a Washington
corporation ("Microsoft"), Microsoft U.K. Cable, Inc., a Colorado
corporation ("UK Cable"), and Microsoft Cable Partnership Holdings, Inc., a
Colorado corporation ("Cable Partnership", and together with Microsoft and
UK Cable, the "Reporting Persons"). UK Cable and Cable Partnership are
wholly-owned subsidiaries of Microsoft.
Microsoft develops, manufactures, licenses and supports a range of software
products, including scalable operating systems, server applications,
business/consumer productivity applications, software development tools and
Internet software and technologies.
UK Cable and Cable Partnership hold a 50% interest in TW Holdings L.L.C., a
Colorado limited liability company ("TW Holdings"). TW Holdings is the
beneficial owner of 869,564,983 Ordinary Shares and 57,312,938 Limited
Voting Shares representing 30.1% of the outstanding Ordinary Shares and
91.7% of the outstanding Limited Voting Shares. The other 50% of TW
Holdings is held by Liberty
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* The Ordinary Shares and the Limited Voting Shares have the same rights
except that the Limited Voting Shares do not confer the right to vote on
resolutions to appoint, re-appoint, elect or remove directors of Telewest.
The Limited Voting shares are not listed or dealt in on any stock exchange.
The Limited Voting Share maybe invested into Ordinary Shares on a one to
one basis provided such conversion does not amount to a Debenture change of
control of Telewest as provided in its Articles of Association a copy of
which is filed as Exhibit 1 to this Schedule 13D.
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CUSIP NO. G87956P 105 Page 6 of 22 Pages
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UK, Inc. ("Liberty UK", an affiliate of Liberty Media Group, Inc.,
"Liberty"). In addition Microsoft directly owns 55,021,840 Ordinary Shares
and 3,009,716 Limited Voting Shares, representing 1.9% of the outstanding
Ordinary Shares and 4.8% of the outstanding Limited Voting Shares.
The principal business address of Microsoft, UK Cable and Cable Partnership
is Microsoft Corporation, One Microsoft Way, Redmond, Washington 98052.
(a)-(c);(f) The name, business address, present principal occupation
or employment, and the name and principal business of any corporation or
other organization in which such employment is conducted of each of the
directors and executive officers of the Reporting Persons is set forth in
Schedule I hereto, which is incorporated herein by reference. Except as
otherwise indicated in Schedule I, each person listed in Schedule I hereto
is a citizen of the United States.
(d)-(e) During the last five years, neither the Reporting Persons nor,
to the Reporting Persons' knowledge, any current director or executive
officer of the Reporting Persons listed on Schedule I hereto (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, Federal or
State securities laws or finding any violation of such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On October 4, 1999, Telewest announced a rights issue on the basis of 1 new
Ordinary Share (or Limited Voting Share in certain circumstances) for every
11 Ordinary Shares to Telewest shareholders (except for certain non-US
overseas shareholders) at 213 pence per share to raise approximately
(pound)410 million (net of expenses).
Under the agreement dated October 4, 1999, between Telewest, Liberty Media,
Microsoft and Kleinwort Benson Securities Limited relating to the rights
issue (the "Subscription Agreement"), Microsoft undertook to subscribe
(whether directly or through TW Holdings) for
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CUSIP NO. G87956P 105 Page 7 of 22 Pages
-----------------------
58,031,556 new Ordinary Shares and Limited Voting Shares at a purchase
price of (pound)123,607,214.28. Microsoft used readily available funds from
its working capital to make this acquisition.
In a separate transaction, Microsoft, MediaOne U.K. Cable ("MOUK"),
MediaOne Cable Partnership Holdings, Inc. ("MOCP"), MediaOne International
Holdings, Inc. ("International") and MediaOne Group, Inc. ("MediaOne"),
entered into a Merger Agreement, dated October 4, 1999 and amended pursuant
to Amendment No. 1 thereto dated as of July 7, 2000 (as amended, the
"Merger Agreement"). Pursuant to the Merger Agreement, Cable One Merger,
Inc. was merged with and into MOUK and Cable Two Merger, Inc. was merged
with and into MOCP with MOUK and MOCP surviving as wholly-owned
subsidiaries of Microsoft and being renamed UK Cable and Cable Partnership,
respectively (together, the "Mergers").
Pursuant to the Merger Agreement and in consideration for the Mergers,
Microsoft exchanged 31,917,356 shares of common stock, par value
$0.0000125, of Microsoft ("Microsoft Common Stock") and $8.09 for all of
the Shares beneficially owned by MOUK and MOCP, respectively. Such shares
of Microsoft Common Stock had a fair market value of $2,617,223,192 on the
effective date of the Mergers.
Except as set forth in Schedule II hereto, none of the persons listed on
Schedule I hereto has contributed any funds or other consideration towards
the purchase of the securities reported in this Schedule 13D.
Item 4. Purpose of the Transaction.
The Reporting Persons currently hold their interest in Telewest's Ordinary
Shares and Limited Voting Shares for investment purposes.
Each Reporting Person expects to evaluate on an ongoing basis Telewest's
financial condition, business operations and prospects, market price of the
Ordinary Shares, conditions in securities markets generally, general
economic and industry conditions and other factors. Accordingly, each
Reporting Person reserves the right to change its plans and intentions at
any time, as it deems appropriate. In particular, each Reporting Person may
at any time and from time to time determine to acquire or
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CUSIP NO. G87956P 105 Page 8 of 22 Pages
-----------------------
acquire additional Ordinary Shares or securities convertible or
exchangeable for Ordinary Shares or Limited Voting Shares; may determine to
dispose of or dispose of Ordinary Shares or Limited Voting Shares; and/or
may determine to enter into or enter into privately negotiated derivative
transactions with institutional counterparties to hedge the market risk of
some or all of its positions in such shares. Any such transactions may be
effected at any time and from time to time subject to any applicable
limitations of the securities laws and the contractual restrictions
described in this Item 4. To the knowledge of each Reporting Person, each
of the persons listed on Schedule I hereto may make the same evaluation and
reserves the same rights.
In connection with the Merger Agreement, Microsoft, Liberty Media, Liberty
UK and Telewest entered into a relationship agreement, dated March 3, 2000
(the "Revised New Relationship Agreement"), which became effective on July
10, 2000, a copy of which is filed as Exhibit (2) to this Schedule 13D.
In connection with the Revised New Relationship Agreement, UK Cable, Cable
Partnership and Liberty UK agreed to enter into an amended and restated
Operating Agreement for TW Holdings, as of July 7, 2000 (the "Operating
Agreement"), a copy of which is filed as Exhibit (3) to this Schedule 13D.
Pursuant to the terms of the Operating Agreement, the managing directors of
TW Holdings will consist of four persons, two appointed by the Microsoft
Shareholder Group (as defined therein) and two appointed by the Liberty
Shareholder Group (as defined therein), and the managing directors will act
by majority vote subject to certain exceptions requiring unanimous vote. In
addition, TW Holdings is not permitted to transfer its Telewest shares,
subject to certain exceptions, without the unanimous vote of the managing
directors. Furthermore, all the Telewest shares held by TW Holdings will be
voted in favor of any candidate for director of Telewest which either the
Microsoft Shareholder Group or the Liberty Shareholder Group is entitled to
nominate in accordance with Telewest's Articles of Association or the
Revised New Relationship Agreement.
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CUSIP NO. G87956P 105 Page 9 of 22 Pages
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Pursuant to the Revised New Relationship Agreement and the Operating
Agreement, the Microsoft Shareholders (as defined in the Revised New
Relationship Agreement) and the Liberty Shareholders (as defined in the
Revised New Relationship Agreement) have agreed that, on any matter
requiring shareholder approval, they will vote their Telewest shares
together in such manner as may be agreed by them or, in the absence of such
agreement, will vote their Telewest shares together in the manner that
would most likely continue the status quo without materially increasing
Telewest's financial obligations or materially deviating from its approved
budget and business plan. If the Liberty Shareholders or the Microsoft
Shareholders, as the case may be, have a conflict of interest in any
matter, they have agreed to abstain from voting (or the Telewest shares
owned by TW Holdings and attributable to them will not be voted) and the
members of the other affiliate group may vote the Telewest shares
attributable to them on such matter as they deem appropriate. These voting
restrictions will lapse if the Liberty Group (as defined in the Revised New
Relationship Agreement) or the Microsoft Group (as defined in the Revised
New Relationship Agreement) so notifies the other party following the
disposal by such other party of more than 59,000,000 of its Ordinary Shares
other than to an affiliate or pursuant to a Permitted Demerger (as defined
in the Revised New Relationship Agreement) or with the other party's
consent. Microsoft has agreed by way of a deed poll not to exercise certain
of these rights, as described in more detail below.
The Liberty Shareholders and Microsoft Shareholders (as defined therein)
have agreed that, on any matter requiring board approval, they will cause
the directors designated by them to vote together as agreed by them
(subject to each director's fiduciary duties to Telewest) or, in the
absence of such agreement, to vote together in the manner that would be
most likely to maintain the status quo without materially increasing
Telewest's financial obligations or materially deviating from its approved
budget and business plan.
Pursuant to Telewest's Articles of Association, for so long as the Liberty
Group and/or Microsoft Group (as defined in the Articles of Association),
as the case may be, owns 15% or more of the Ordinary Shares (or 12.5% or
more following a Dilutive Issue (as defined in the
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CUSIP NO. G87956P 105 Page 10 of 22 Pages
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Articles of Association) provided that the relevant party owned 15% prior
to such issue, a "Qualifying Interest"), it (or they) will be entitled to
appoint three directors to the board of Telewest. Similar provisions allow
the Microsoft Group and/or the Liberty Media Group to appoint two directors
to the board for so long as Microsoft or Liberty Media, as the case may be,
owns 7.5% or more (or 5% or more following a Dilutive Issue (as defined in
the Articles of Association) provided that the relevant party owned 7.5%
prior to such issue, a "Lesser Qualifying Interest") of the Ordinary
Shares.
In addition, for so long as the Liberty Group and/or Microsoft Group, as
the case may be, owns a Qualifying Interest, such parties will ensure that,
to the extent they are able to do so through the exercise of their votes,
the majority of directors are independent of Liberty and Microsoft. The
quorum for a meeting of the board consists of the majority of the
directors. Any committee appointed by the board shall include one Liberty
director, one Microsoft director and one independent non-executive director
(unless Liberty and Microsoft consent otherwise).
The Revised New Relationship Agreement also provides that for so long as
either the Liberty Group or the Microsoft Group (as defined therein) holds
15% or more of the Telewest shares (limited to Ordinary Shares in the case
of (e) below), the consent of the Liberty Group and/or the Microsoft Group
(as appropriate) must be obtained by Telewest before: (a) making any
material acquisition or disposal out of the ordinary course of business;
(b) incurring any borrowings or indebtedness in the nature of borrowings
that exceed (pound)50 million in aggregate or granting any security
interests in respect of assets valued at (pound)50 million or more in
aggregate (excluding borrowings under facilities in place at the date the
Revised New Relationship Agreement became effective and any borrowings or
security interests consented to after that date); (c) allotting or issuing
shares or securities convertible into shares or granting options; (d)
appointing or removing the chief executive officer of Telewest; or (e)
increasing the number of directors holding office beyond 16. Microsoft has
agreed by way of a deed poll not to exercise its rights with respect to the
appointment or removal of the chief executive officer of Telewest as
described in more detail below.
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CUSIP NO. G87956P 105 Page 11 of 22 Pages
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Any proposed transfers by a Microsoft Shareholder or a Liberty Shareholder
(other than intra-group transfers) will be subject to rights of first
refusal in favor of the other. The Revised New Relationship Agreement also
contains provisions for rights of first offer as between Microsoft and
Liberty in the event of certain changes of control of Microsoft or Liberty.
The Operating Agreement contains similar provisions concerning rights of
first refusal and first offer. Each party to the Operating Agreement also
agrees that if such party acquires additional shares of Telewest, the
beneficial interest in such shares will be contributed to TW Holdings with
a corresponding increase in such party's ownership interest in TW Holdings.
Pursuant to the Revised New Relationship Agreement, the Microsoft Group and
the Liberty Group (as defined in the Revised New Relationship Agreement)
have the right, on a dilutive issue of shares or convertible securities (a
"Dilutive Issue"), to require Telewest to issue sufficient shares to them
to enable them to maintain their current ownership interest on a fully
diluted basis (the "Anti-Dilution Rights"). Such right will be a right to
subscribe for Ordinary Shares or the relevant convertible securities to the
extent such subscription does not result in a Debenture Change of Control
(as defined in Telewest's Articles of Association), and the balance being a
right to subscribe for Limited Voting Shares or convertible securities that
convert into Limited Voting Shares, as applicable. To the extent that the
Liberty Group or Microsoft Group does not take up their Anti-Dilution
Rights, the other party would have the right to subscribe for the balance
of the Telewest shares or other relevant securities not so taken up under
that option.
For so long as the Microsoft Group or the Liberty Group individually holds
15 percent or more of the Ordinary Shares (ignoring shares issued pursuant
to or for the purposes of employee share options), they will have the right
(other than in the case of a rights issue) to increase their holdings in
Telewest to maintain their percentage ownership or to enable them to
maintain their interest at 15 percent of the fully diluted ordinary share
capital. Each of the Microsoft Group and the Liberty Group has the right,
if their respective
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CUSIP NO. G87956P 105 Page 12 of 22 Pages
-----------------------
shareholdings fall below 15 percent, to maintain its interest at 7.5
percent of Telewest's fully diluted ordinary share capital for so long as
it holds at least 7.5 percent of Telewest's Ordinary Shares in issue
(assuming conversion of any Limited Voting Shares then in issue and
ignoring shares issued pursuant to or for the purpose of share options).
These rights entitle the relevant shareholder group to subscribe (at the
time of the dilutive issue) for additional newly issued shares for cash at
a subscription price per share based on the average of the prices quoted on
the London Stock Exchange for the ten days ending on the day preceding the
day on which the right is exercised. Such right will be a right to
subscribe for Ordinary Shares to the extent such subscription does not
result in a Debenture Change of Control (as defined in Telewest's Articles
of Association), and the balance being a right to subscribe for Limited
Voting Shares.
Telewest also has a general obligation to use its best efforts to ensure
that any issue of shares is conducted in a manner that provides each
shareholder, regardless of its then current shareholding in Telewest, with
an opportunity to acquire additional shares to enable it to maintain its
percentage of ownership.
Each of Liberty Media and Microsoft has agreed that, prior to each of them
or their respective affiliates purchasing any Ordinary Shares from any
third party, they shall notify Telewest and, prior to such purchase,
redesignate a sufficient number of their existing Ordinary Shares into
Limited Voting Shares. Any such notice shall be accompanied by an opinion
from leading New York counsel stating that such purchase, when coupled with
such redesignation, will not amount to a Debenture Change of Control (as
defined in Telewest's Articles of Association).
Upon completion of the Mergers, the Registration Rights Agreement between
MediaOne, Liberty Media and Telewest dated October 3, 1995 (the
"Registration Rights Agreement") was amended ("Amendment No. 2 of the
Registration Rights Agreement", a copy of which is filed as Exhibit (4) to
this Schedule 13D), so that rights broadly equivalent to the rights of
MediaOne under the Registration Rights Agreement are conferred on
Microsoft, with the result that:
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CUSIP NO. G87956P 105 Page 13 of 22 Pages
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(i) subject to certain limited exceptions, each of Microsoft and
Liberty may require Telewest to include all or some of their Ordinary
Shares in any public offering by Telewest; and
(ii) Microsoft and Liberty Media may require Telewest on up to four
separate occasions (two exercisable by each of Microsoft and Liberty) to
offer all or some of their Ordinary Shares in a public offering.
On July 7, 2000, Microsoft, notwithstanding any rights it has pursuant to
the Revised New Relationship Agreement and the Operating Agreement, on
behalf of itself and its subsidiaries, entered into the following legally
binding obligations by way of deed poll, a copy of which is filed as
Exhibit (5):
(i) to procure that the Microsoft directors do not withhold consent to
any appointee to the board of directors of Telewest;
(ii) to procure that the Microsoft directors do not withhold consent
to the appointment or removal of the Chief Executive Officer of Telewest;
(iii) to procure that for as long as the voting agreement referred to
in the Revised New Relationship Agreement exists, the Microsoft Directors
will vote their shares in accordance with the recommendation of the
Independent Directors (as such term is defined in the Revised New
Relationship Agreement) of Telewest where possible, or abstain from voting,
or in cases of conflict with Liberty Media to vote their shares to maintain
the status quo; and;
(iv) notwithstanding any provision of the Revised New Relationship
Agreement to the contrary, in the event of a deadlock with Liberty Media,
Microsoft will allow Liberty Media to vote Liberty Media shares as Liberty
Media wishes.
Except as set forth in this Item 4 of this Schedule 13D and the exhibits
hereto, neither the Reporting Persons, nor, to the best of the Reporting
Persons' knowledge, any of the individuals named in Schedule I hereto, has
any plans or proposals which relate to or which would result
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CUSIP NO. G87956P 105 Page 14 of 22 Pages
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in or relate to any of the actions specified in subparagraphs (a) through
(j) of Item 4 of Schedule 13D.
All references to the agreements described in this Item 4 are summaries
thereof and do not purport to be complete and are qualified in their
entirety to the full text of the respective agreements which have been
attached hereto as exhibits and which are incorporated herein by reference.
Item 5. Interest in Securities of the Issuer.
(a)-(b) The percentage interest held by each Reporting Person presented
below and by each person set forth in Schedule II is based on the number of
Ordinary and Limited Voting Shares that Telewest reported to be issued and
outstanding on July 5, 2000 (the "Outstanding Shares"):
Microsoft beneficially owns 636,056,024 Ordinary Shares representing
approximately 22.0% of the outstanding Ordinary Shares. In addition Microsoft
beneficially owns 60,322,654 Limited Voting Shares representing 96.5% of the
outstanding Limited Voting Shares. Upon conversion of the Limited Voting Shares
into Ordinary Shares, Microsoft would own 696,378,678 Ordinary Shares
representing 23.6% of the Outstanding Shares (diluted only for such conversion).
UK Cable beneficially owns 540,648,982 Ordinary Shares representing
approximately 18.7% of the Outstanding Shares. In addition UK Cable beneficially
owns 57,312,938 Limited Voting Shares representing 91.7% of the Limited Voting
Shares. Upon conversion of the Limited Voting Shares into Ordinary Shares, UK
Cable would own 597,961,920 Ordinary Shares representing 20.3% of the
Outstanding Shares (diluted only for such conversion).
Cable Partnership beneficially owns 40,385,202 Ordinary Shares representing
approximately 1.4% of the outstanding Ordinary Shares.
Except as set forth in Schedule II, none of the Reporting Persons and to the
knowledge of the Reporting Persons, none of the persons listed in Schedules I
and II hereto, beneficially owns any Telewest securities except as set forth
herein.
Liberty and its affiliates beneficially own 722,205,222 Ordinary Shares
representing approximately 25.0% of the outstanding Ordinary Shares. In addition
Liberty and its
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CUSIP NO. G87956P 105 Page 15 of 22 Pages
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affiliates own 2,185,093 Limited Voting Shares representing approximately 3.5%
of the outstanding Limited Shares. Upon conversion of the Limited Voting Shares
into Ordinary Shares, Liberty and its affiliates would own 24.6% of the
Outstanding Shares (diluted only for such conversion).
The filing of this 13D shall not be construed as an admission by Microsoft that
it is, for purposes of Section 13(d) of the Exchange Act, the beneficial owner
of the Ordinary Shares owned by Liberty and its affiliates.
(c) Other than as described in Item 4 above, neither the Reporting Persons,
nor to the best knowledge of the Reporting Persons, any person set forth
Schedule I, has effected any transaction in Ordinary Shares or Limited Voting
Shares during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer.
Other than as described in Items 4 and 5, above, to the best knowledge of
each of the Reporting Persons, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons
named in Item 2 and between such persons and any person with respect to any
securities of Telewest, including, but not limited to, transfer or voting
of any securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 -- Articles of Association of Telewest Communications plc
Exhibit 2 -- Revised New Relationship Agreement, dated March 3, 2000,
between Microsoft Corporation, Liberty Media
International, Inc., Liberty UK, Inc. and Telewest
Communications plc
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CUSIP NO. G87956P 105 Page 16 of 22 Pages
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Exhibit 3 -- Amended and Restated Operating Agreement of TW Holdings,
L.L.C., as of July 7, 2000, among Liberty UK, Inc.,
Microsoft U.K. Cable, Inc. and Microsoft Cable
Partnership Holdings, Inc.
Exhibit 4 -- Amendment No. 2, made as of October 4, 1999, by and among
Microsoft Corporation, Telewest Communications plc,
Liberty UK, Inc., MediaOne U.K. Cable, Inc. and MediaOne
Cable Partnership Holdings, Inc. to the Registration
Rights Agreement, dated October 3, 1995, by and among the
above mentioned parties (with the exception of Microsoft
Corporation)
Exhibit 5 -- Deed Poll by Microsoft Corporation, dated July 7, 2000.
Exhibit 6 -- Filing Agreement among Microsoft Corporation, Microsoft
U.K. Cable, Inc. and Microsoft Cable Partnership
Holdings, Inc., dated July 17, 2000
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SIGNATURE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: July 17, 2000
MICROSOFT CORPORATION
By: /s/ Robert A. Eshelman
---------------------------------
Name: Robert A. Eshelman
Title: General Counsel,
Finance and Operations;
Assistant Secretary
MICROSOFT UK CABLE, INC.
By: /s/ Robert A. Eshelman
---------------------------------
Name: Robert A. Eshelman
Title: Secretary
MICROSOFT CABLE PARTNERSHIP
HOLDINGS, INC.
By: /s/ Robert A. Eshelman
---------------------------------
Name: Robert A. Eshelman
Title: Secretary
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
THE REPORTING PERSONS
The name, present principal occupation or employment, and the name of any
corporation or other organization in which such employment is conducted, of each
of the directors and executive officers of each of the Reporting Persons is set
forth below. With the exception of (i) Jean-Philippe Courtois, Michel Lacombe
and Jean-Francois Heitz, who are citizens of France and (ii) Joachim Kempin, who
is a citizen of Germany, each person listed in Schedule I hereto is a citizen of
the United States. The business address of each executive officer and director
is Microsoft Corporation, One Microsoft Way, Redmond, Washington 98052.
MICROSOFT CORPORATION
Directors Title/Occupation
--------- ----------------
Steve Ballmer President; Chief Executive Officer, Microsoft
Corporation
Paul G. Allen Founder, Asymetrix Corp.; Owner, Interval Research
Corp., Vulcan Ventures Inc.
Richard A. Hackborn Chairman of Board, Hewlett-Packard Company
David F. Marquardt General Partner, Technology Venture Investors and
August Capital
Wm. G. Reed, Jr. Chairman, Simpson Investment Company (retired)
Jon A. Shirley President and Chief Operating Officer, Microsoft
Corporation (Retired)
Ann McLaughlin Chairman, Aspen Institute & Former U.S. Secretary of
Labor
Executive Officer Title
----------------- -----
William H. Gates Chairman of the Board; Chief Software Architect,
Microsoft Corp.
Steven A. Ballmer President & CEO, Microsoft Corp.
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CUSIP NO. G87956P 105 Page 19 of 22 Pages
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Executive Officer Title
----------------- -----
Robert J. Herbold Executive Vice President; Chief Operating Officer
Paul A. Maritz Group Vice President, Platforms Strategy and Developer
Group
Jeffery S. Raikes Group Vice President, Worldwide Sales and Support
James E. Allchin Group Vice President, Platforms Product Group
Orlando Ayala Lozano Senior Vice President, South Pacific and Americas
Region
Joachim Kempin Senior Vice President, OEM Division
Robert L. Muglia Group Vice President, Business Productivity Group
Craig Mundie Senior Vice President, Consumer Strategy
William H. Neukom Executive Vice President, Law and Corporate Affairs
Robert J. Bach Senior Vice President, Home & Retail
Rick Belluzzo Group Vice President, Consumer Group
Brad Chase Senior Vice President, MSN.com
David Cole Senior Vice President, Consumer Services Division,
Consumer Group
John Connors Senior Vice President, Finance & Administration; Chief
Financial Officer
Jean-Philippe Courtois President, Europe, Middle East, Africa (EMEA)
Jon DeVaan Senior Vice President, TV Service and Platform Business
Paul Gross Senior Vice President, Collaboration & Mobility Group
Michel Lacombe President, Microsoft Europe
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CUSIP NO. G87956P 105 Page 20 of 22 Pages
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Executive Officer Title
----------------- -----
Steven Sinofsky Senior Vice President, Microsoft Office
Rick Raschid Senior Vice President, Research
Brian Valentine Senior Vice President, Windows Division
David Vaskevitch Senior Vice President, Distributed Applications
Platform Division
MICROSOFT U.K. CABLE INC. AND MICROSOFT CABLE PARTNERSHIP
HOLDINGS, INC.
Directors Title/Occupation
--------- ----------------
Jean-Francois Heitz Controller
Robert A. Eshelman General Counsel, Finance and Operations, and Assistant
Secretary, Microsoft Corporation
Executive Officer Title
----------------- -----
Robert A. Eshelman President and Secretary
Jean-Francois Heitz Vice President and Treasurer
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CUSIP NO. G87956P 105 Page 21 of 22 Pages
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SCHEDULE II
Between April 17 and April 19 of 1996, William H. Gates III, Chief Software
Architect of Microsoft, purchased 60,000 ADSs of Telewest at a price between
$23.88 and $24.38 per ADS. On September 10, 1998, Mr. Gates purchased an
additional 10,985 ADSs at a price of $15.55 per ADS. On November 15, 1999 Mr.
Gates purchased a further 6,453 ADSs at a price of $34.63. Mr. Gates' total
investment in 79,438 ADSs represents less than .1% of the Outstanding Shares.
Mr. Gates made these purchases for his personal account with his personal funds
for investment purposes only. Mr. Gates retains the sole power to vote or direct
the vote of, dispose or direct the disposition of, and receive or direct the
receipt of dividends of or proceeds from the sale of these Ordinary Shares.
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CUSIP NO. G87956P 105 Page 22 of 22 Pages
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EXHIBIT INDEX
Exhibit 1 -- Articles of Association of Telewest Communications plc*
Exhibit 2 -- Revised New Relationship Agreement, dated July 7, 2000, between
Microsoft Corporation, Liberty Media International, Inc., Liberty
UK, Inc. and Telewest Communications plc*
Exhibit 3 -- Amended and Restated Operating Agreement of TW Holdings, L.L.C.,
dated July 7, 2000, among Liberty UK, Inc., Microsoft U.K. Cable,
Inc. and Microsoft Cable Partnership Holdings, Inc.*
Exhibit 4 -- Amendment No. 2, made as of October 4, 1996, by and among
Microsoft Corporation, Telewest Communications plc, Liberty UK,
Inc., MediaOne U.K. Cable, Inc. and MediaOne Cable Partnership
Holdings, Inc. to the Registration Rights Agreement, dated October
3, 1995, by and among the above mentioned parties (with the
exception of Microsoft Corporation)*
Exhibit 5 -- Deed Poll by Microsoft Corporation, dated July 7, 2000.
Exhibit 6 -- Filing Agreement among Microsoft Corporation, Microsoft U.K.
Cable, Inc. and Microsoft Cable Partnership Holdings, Inc., dated
July 7, 2000
----------
* To be filed by amendment.
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