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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-3/A
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RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934 and Rule 13e-3
(Section 240.13e-3) thereunder)
CABLEVISION INVESTMENT OF DETROIT, INC.
(Name of the Issuer)
COMCAST CABLEVISION OF TAYLOR, INC.
CID TRANSACTION CO.
(Name of Person(s) Filing Statement)
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Common Stock, Par Value $.01 Per Share 12686100
(Title of Class of Securities) (CUSIP Number of Class of Securities)
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STANLEY WANG, SENIOR VICE PRESIDENT
COMCAST CORPORATION
1500 MARKET STREET
PHILADELPHIA, PA 19102-2148
(215) 665-1700
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of Person(s) Filing Statement)
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THIS STATEMENT IS FILED IN CONNECTION WITH (CHECK THE APPROPRIATE BOX):
a. /x/ The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. / / The filing of a registration statement under the Securities Act of 1933.
c. / / A tender offer.
d. / / None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: /x/
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TABLE OF CONTENTS
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CROSS-REFERENCE SHEET...................................................................................... ii
INTRODUCTION............................................................................................... 2
SPECIAL FACTORS............................................................................................ 4
Background of the Transaction............................................................................ 4
Business of the Company............................................................................... 4
General Developments of the Business.................................................................. 4
Principal Shareholders of the Company................................................................. 5
Relationship of the Company and the Partnership with Parent........................................... 5
Fairness of the Transaction........................................................................... 6
Fair Value Report of Kane Reece Associates, Inc....................................................... 8
Terms, Purpose and Structure of the Transaction.......................................................... 12
Plan of Merger........................................................................................... 13
Interest of Certain Persons in Securities
of the Issuer and the Transaction..................................................................... 14
Certain Effects of the Transaction....................................................................... 14
Certain Information Concerning the Company/Financial Information......................................... 16
Certain Information Concerning Parent and Merging Company................................................ 18
Fees and Expenses/Financing of the Transaction........................................................... 19
Procedures for Surrendering Shares in Exchange
for Payment of Merger Consideration or Pursuant
to the Exercise of Dissenters Rights.................................................................. 20
Dissenting Shares/Dissenters Rights...................................................................... 21
Summary of Procedure to Exercise Dissenters Rights....................................................... 22
Certain Federal Income Tax Consequences.................................................................. 23
Annex 1 -- Plan of Merger................................................................................ A-1-1
Annex 2 -- Directors and Executive Officers.............................................................. A-2-1
Annex 3 -- Dissenters Rights Provisions of Michigan Business Corporation Act............................. A-3-1
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CROSS-REFERENCE SHEET
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ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a)-(d) The information set forth in 'INTRODUCTION'; 'SPECIAL FACTORS -- Background of the Transaction'
and 'SPECIAL FACTORS -- Certain Information Concerning the Company/Financial Information' is
incorporated herein by reference.
(e) Not applicable.
(f) The information set forth in 'SPECIAL FACTORS -- Certain Information Concerning Parent and Merging
Company' is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) This Statement is being filed by Parent and Merging Company. The information set forth in
and (g) 'INTRODUCTION'; 'SPECIAL FACTORS -- Certain Information Concerning Parent and Merging Company';
and Annex 2 hereto is incorporated herein by reference.
(e) and (f) During the last five years, none of Parent, Merging Company or Sural or, to the best of their
knowledge, any of their respective officers and directors listed in Annex 2 hereto, (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (ii)
was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or final order
enjoining further violations of, or prohibiting activities subject to, Federal or State securities
laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a)-(b) The information set forth in 'SPECIAL FACTORS -- Background of the Transaction -- General
Developments of the Business'; and 'SPECIAL FACTORS -- Background of the Transaction --
Relationship of the Company and the Partnership with Parent' is incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a)-(b) The information set forth in 'INTRODUCTION'; 'SPECIAL FACTORS -- Terms, Purpose and Structure of
the Transaction'; and 'SPECIAL FACTORS -- Plan of Merger' is incorporated herein by reference.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a)-(c) and The information set forth in 'INTRODUCTION'; and 'SPECIAL FACTORS -- Certain Effects of the
(f)-(g) Transaction' is incorporated herein by reference.
(d)-(e) Not applicable.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in 'SPECIAL FACTORS -- Fees and Expenses/Financing of the Transaction'
is incorporated herein by reference.
(c) Not applicable.
(d) Not applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a), (c) The information set forth in 'SPECIAL FACTORS -- Terms, Purpose and Structure of the Transaction';
and (d) 'SPECIAL FACTORS -- Certain Effects of the Transaction'; and 'SPECIAL FACTORS -- Certain Federal
Income Tax Consequences' is incorporated herein by reference.
(b) Not applicable.
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ITEM 8. FAIRNESS OF THE TRANSACTION.
(a)-(b) The information set forth in 'INTRODUCTION'; 'SPECIAL FACTORS -- Background of the Transaction';
and 'SPECIAL FACTORS -- Background of the Transaction -- Fairness of the Transaction' is
incorporated herein by reference.
(c) The information set forth in 'SPECIAL FACTORS -- Terms, Purpose and Structure of the Transaction'
is incorporated herein by reference.
(d) The information set forth in 'SPECIAL FACTORS -- Background of the Transaction -- Fairness of the
Transaction' is incorporated herein by reference.
(e) The information set forth in 'SPECIAL FACTORS -- Terms, Purpose and Structure of the Transaction'
is incorporated herein by reference.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) The information set forth in 'SPECIAL FACTORS -- Background of the Transaction -- Fairness of the
Transaction' is incorporated herein by reference.
(b) The information set forth in 'SPECIAL FACTORS -- Background of the Transaction -- Fairness of the
Transaction' is incorporated herein by reference.
(c) The information set forth in 'SPECIAL FACTORS -- Background of the Transaction -- Fairness of the
Transaction' is incorporated herein by reference.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) The information set forth in 'INTRODUCTION'; 'SPECIAL FACTORS -- Background of the Transaction';
'SPECIAL FACTORS -- Terms, Purpose and Structure of the Transaction'; and 'SPECIAL FACTORS --
Interest of Certain Persons in Securities of the Issuer and the Transaction' is incorporated
herein by reference.
(b) Not applicable.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S SECURITIES.
The information set forth in 'SPECIAL FACTORS -- Interest of Certain Persons in Securities of the
Issuer and the Transaction' is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO THE TRANSACTION.
(a) The information set forth in 'SPECIAL FACTORS -- Interest of Certain Persons in Securities of the
Issuer and the Transaction' is incorporated herein by reference.
(b) The information set forth in 'SPECIAL FACTORS -- Background of the Transaction'; 'SPECIAL FACTORS
-- Background of the Transaction -- Fairness of the Transaction' is incorporated herein by
reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The information set forth in 'SPECIAL FACTORS -- Dissenting Shares/Dissenters Rights' is
incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) The information set forth in 'SPECIAL FACTORS -- Certain Information Concerning the
Company/Financial Information'; and Exhibits (g)(1) and (g)(2) are incorporated herein by
reference.
(b) The information set forth in 'SPECIAL FACTORS -- Certain Effects of the Transaction' is
incorporated herein by reference.
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ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) The information set forth in 'SPECIAL FACTORS -- Background of the Transaction'; and 'SPECIAL
FACTORS -- Plan of Merger' is incorporated herein by reference.
(b) Not applicable.
ITEM 16. ADDITIONAL INFORMATION.
Not applicable.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
(a) Not applicable.
(b)(1)* Fair Value Report of Kane Reece Associates, Inc.
(b)(2)* Consent of Kane Reece Associates, Inc.
(c) Plan of Merger adopted by the Board of Directors of Merging Company on January 10, 1996
incorporated by reference to Annex 1 hereto.
(d)(1)* Cover page to be substituted for cover page of this Schedule 13E-3 as filed with the Securities
and Exchange Commission. Parent and Merging Company intend to transmit to shareholders of the
Company a duplicate copy of this Rule 13E-3 Transaction Statement using Exhibit (d)(1) as a
substitute cover page, without this Cross-Reference Sheet and the Exhibits (other than Exhibits
(d)(3) and (d)(4)) referred to in this Item 17.
(d)(2)* Form of Letter to Shareholders Providing Notice of Issuance of Press Release.
(d)(3)* Form of Letter of Transmittal.
(d)(4)* Form of Dissenters Demand for Payment Form.
(d)(5)* Form of Notice of Adoption of Plan of Merger to be included with the Letter of Transmittal.
(d)(6)* Form of Notice of Merger to be delivered to record shareholders of the Company following the
Effective Date (hereinafter defined) of the Merger.
(d)(7)* Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 to be
included with the Letter of Transmittal.
(d)(8)* Text of Press Release issued by the Company on January 24, 1996.
(d)(9) Text of Sections 761 through 774 of the Michigan Business Corporation Act, as amended,
incorporated by reference to Annex 3 hereto.
(e) The information set forth in 'SPECIAL FACTORS -- Dissenting Shares/Dissenters Rights' is
incorporated herein by reference.
(f) Not applicable.
(g)(1)* Audited financial statements for the two fiscal years required to be filed with the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.
(g)(2)* Unaudited condensed financial statements required to be included in the Company's Quarterly Report
on Form 10-Q for the nine (9) months ended September 30, 1995.
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* As previously filed.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
Dated: March 1, 1996 COMCAST CABLEVISION OF TAYLOR, INC.
By: /s/ Stanley Wang
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Name: Stanley Wang
Title: Senior Vice President
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
Dated: March 1, 1996 CID TRANSACTION CO.
By: /s/ Stanley Wang
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Name: Stanley Wang
Title: Senior Vice President
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INTRODUCTION
This Rule 13E-3 Transaction Statement (this 'Statement') relates to the
short form statutory merger (the 'Merger') of CID Transaction Co., a
newly-formed Michigan corporation (the 'Merging Company') that is a wholly-owned
subsidiary of Comcast Cablevision of Taylor, Inc., a Michigan corporation
('Parent'), with and into Cablevision Investment of Detroit, Inc., a Michigan
corporation (the 'Company'). The Company is an approximately 96.5%-owned
subsidiary of Merging Company and will be the surviving corporation. On the date
of filing a Certificate of Merger with the Department of Commerce of the State
of Michigan (the 'Effective Date'), which is expected to occur on or about March
28, 1996, the Merger will be consummated. From and after the Effective Date, the
Company will be a wholly-owned subsidiary of Parent.
Parent has contributed to Merging Company all of the shares of Common
Stock, constituting 965,124 shares, of the Company it owns so that the Company
is an approximately 96.5%-owned subsidiary of Merging Company. Prior to such
contribution and since the Share Purchase (defined below) on December 22, 1994,
Parent and/or a wholly-owned subsidiary of Parent have, in the aggregate,
continuously owned 90% or more of the Company's Common Stock.
Each share of Common Stock of the Company outstanding and held of record as
of the close of business on the day immediately preceding the Effective Date by
persons other than (i) Merging Company and (ii) persons who perfect their
dissenters rights granted to them by the Company even though not required under
Michigan law (the shares other than those described in (i) and (ii) of this
sentence being hereinafter referred to as the 'Shares' and the holders of the
Shares being hereinafter referred to as the 'Public Shareholders') will, without
any action on the part of any holder thereof, be automatically converted on the
Effective Date into the right solely to receive cash in the amount of $27.54 per
share without interest (the 'Merger Consideration') upon surrender of such
Shares, upon the terms and subject to the conditions set forth in the Plan of
Merger (the 'Plan') and in the Letter of Transmittal, copies of which are
included with this Statement.
Each share of Common Stock of the Company outstanding on the Effective Date
held by Merging Company will be cancelled and extinguished. The common stock of
Merging Company owned by Parent outstanding on the Effective Date will be
converted into one hundred (100) fully paid shares of Common Stock of the
Company, resulting in Parent being the sole shareholder of the Company.
UNDER THE MICHIGAN BUSINESS CORPORATION ACT (THE 'MBCA'), THE APPROVAL OF
THE SHAREHOLDERS OF THE COMPANY IS NOT REQUIRED BY THE PLAN, BECAUSE THE PLAN
HAS BEEN ADOPTED BY THE BOARD OF DIRECTORS AND THE SOLE SHAREHOLDER OF MERGING
COMPANY, THE OWNER OF APPROXIMATELY 96.5% OF THE OUTSTANDING SHARES OF COMMON
STOCK OF THE COMPANY.
THE PARENT HAS CONCLUDED THAT THE MERGER IS FAIR TO THE PUBLIC
SHAREHOLDERS. SEE 'SPECIAL FACTORS -- BACKGROUND OF THE TRANSACTION -- FAIRNESS
OF THE TRANSACTION.'
UNDER THE MBCA, THE SHAREHOLDERS OF THE COMPANY DO NOT HAVE RIGHTS TO
DISSENT FROM ADOPTION OF THE PLAN AND OBTAIN PAYMENT IN CASH OF THE FAIR VALUE
OF THEIR SHARES; HOWEVER, THE COMPANY HAS DECIDED TO GRANT DISSENTERS RIGHTS TO
THE PUBLIC SHAREHOLDERS. SUCH RIGHTS, IF THE STATUTORY PROCEDURES ARE COMPLIED
WITH, COULD LEAD TO A JUDICIAL DETERMINATION OF THE FAIR VALUE (EXCLUDING ANY
ELEMENT OF APPRECIATION OR DEPRECIATION IN ANTICIPATION OF THE ACCOMPLISHMENT OF
THE MERGER) REQUIRED TO BE PAID IN CASH TO SUCH DISSENTING HOLDERS ('DISSENTING
SHAREHOLDERS') FOR THEIR SHARES ('DISSENTING SHARES'). ANY SUCH JUDICIAL
DETERMINATION OF THE FAIR VALUE OF DISSENTING SHARES COULD BE BASED UPON
CONSIDERATIONS OTHER THAN OR IN ADDITION TO THE MARKET VALUE OF THE SHARES AND
THE FACTORS USED TO DETERMINE
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THE MERGER CONSIDERATION TO BE PAID IN THE MERGER, INCLUDING ASSET VALUES AND
THE INVESTMENT VALUE OF THE DISSENTING SHARES. THE VALUE SO DETERMINED COULD BE
MORE OR LESS THAN THE MERGER CONSIDERATION PAID PURSUANT TO THE MERGER. SEE
'SPECIAL FACTORS -- DISSENTING SHARES/DISSENTERS RIGHTS.'
SHAREHOLDERS ELECTING TO DISSENT MUST DEMAND PAYMENT FOR THEIR SHARES BY
COMPLETING THE LETTER OF TRANSMITTAL AND DISSENTERS DEMAND FOR PAYMENT FORM
INCLUDED HEREWITH AND RETURNING SUCH DOCUMENTS AS INSTRUCTED THEREIN, TOGETHER
WITH THEIR CERTIFICATES REPRESENTING DISSENTING SHARES AND ANY OTHER REQUIRED
DOCUMENTS BY APRIL 9, 1996.
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SPECIAL FACTORS
BACKGROUND OF THE TRANSACTION
Business of the Company
The Company is a general partner which holds a 10% partnership interest in
Comcast Cablevision of Detroit (formerly Barden Cablevision and referred to
herein as the 'Partnership'), a Michigan general partnership. The Partnership
operates a cable communications system (the 'System') pursuant to a franchise
agreement (the 'Franchise Agreement') with the city of Detroit, Michigan (the
'City'). The Partnership has two other general partners: Comcast Michigan
Holdings, Inc. (formerly Barden Communications, Inc. and referred to herein as
'CMH') which holds a 40% interest and Detroit Cable TV, Inc. ('Detroit Cable',
and referred to collectively with the Company and CMH as the 'Partners'), a
wholly-owned subsidiary of Parent, which holds a 50% interest. Effective
December 22, 1994, Parent became an affiliate of Comcast Corporation
('Comcast'), a Pennsylvania corporation which is a publicly owned company (see
'SPECIAL FACTORS -- Background of the Transaction -- General Developments of the
Business'). The Company's principal executive offices are located at 1500 Market
Street, Philadelphia, Pennsylvania 19102-2148.
General Developments of the Business
On March 31, 1994, Rogers Communications Inc. ('RCI') acquired
substantially all of the outstanding shares of capital stock of Maclean Hunter
Limited, which was the parent of Maclean Hunter, Inc. ('MHI'). On December 22,
1994 (the 'Purchase Date'), pursuant to a share purchase agreement ( the 'Share
Purchase Agreement') between Comcast and RCI, Comcast MH Holdings, Inc. ('MH
Holdings') purchased all of the issued and outstanding shares of capital stock
of MHI, the sole shareholder of Parent and, in conjunction with a separate
agreement with the shareholder of CMH, acquired all of the issued and
outstanding shares of capital stock of CMH (the purchase of the shares of MHI is
referred to herein as the 'MHI Share Purchase' and, together with the purchase
of the CMH shares, as the 'Share Purchase'). MH Holdings is an indirect
wholly-owned subsidiary of Comcast MHCP Holdings, L.L.C. ('MHCP'), a Delaware
limited liability corporation. MHCP is 55%-owned by a wholly-owned subsidiary of
Comcast and 45%-owned by the California Public Employees' Retirement System
('CalPERS'), and is managed by Comcast. The MHI Share Purchase resulted in a
change of control of the Company because Parent became an indirect wholly-owned
subsidiary of MH Holdings. The ownership structure of the Company is indicated
in the chart set forth below.
_______________
| COMCAST MH |
|HOLDINGS, INC.|
| |
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|
________________________________________
| |
| 100% | 100%
___________________ ______________________
| COM MH, INC. | | COMCAST MICHIGAN |
|(formerly Maclean | | HOLDINGS, INC. |--
| Hunter, Inc.) | | (fomerly Barden | |
| | |Communications, Inc.| |
-------------------- ---------------------- |
| | |
| 100% | |
_______________________ | |
| COMCAST CABLEVISION | | |
| OF TAYLOR, INC. | | |
| (formerly Maclean | | |
|Hunter Cable TV, Inc.)| | |
------------------------ | |
| | |
_______________________________________________________ | |
| | | | |
| 100% | 96.5% 66.7%GP | | 33.3%GP |
______________ _________________ _______________ __________________
| | | | | | | |
|DETROIT CABLE| | CABLEVISION |3.5%| PUBLIC | | CABLE |
| TV, INC. | | INVESTMENT OF |----| SHAREHOLDERS | | MANAGEMENT OF |
| | | DETROIT, INC. | | | | DETROIT |
- -------------- ----------------- --------------- ------------------|
| | 10%GP |
| _________________ |
| 50%GP | COMCAST | |
|___________| CABLEVISION OF |__________________________________________|
| DETROIT |
|(formerly Barden| 40%GP
| Cablevision) |
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MHI owned, directly or indirectly, approximately 59.65% of the Partnership
and substantial other cable television assets while CMH owned 40% of the
Partnership and, apart from an interest in the company that managed the
Partnership, no other material assets. Under the Share Purchase Agreement
between Comcast and RCI, approximately $1.2 billion was provided as payment for
all of the stock of MHI, which included its interest in the Partnership, and for
CMH's interest in the Partnership and the Partnership's management company,
which is 33.3%-owned by CMH. It was the responsibility of RCI to negotiate the
price at which the shareholder of CMH would sell its stock in CMH to Comcast.
These negotiations resulted in a purchase price of $118,060,000 paid by Comcast
to the shareholder of CMH principally for the CMH shares (the 'CMH Purchase
Price') and a purchase price of approximately $1,082,000,000 for the MHI shares.
The Share Purchase Agreement for the MHI shares did not provide for a separate
allocation between its ownership interest in the Partnership and its ownership
of other assets.
Principal Shareholders of the Company
Immediately prior to the contribution by Parent of the Common Stock of the
Company it owned to Merging Company, Parent owned approximately 96.5% of the
issued and outstanding Common Stock of the Company. As of the close of business
on December 31, 1995, the Company had 602 shareholders of record holding
(exclusive of Parent) 34,876 shares, or approximately 3.5% of the outstanding
Common Stock of the Company.
Relationship of the Company and the Partnership with Parent
A promissory note, between the Company and the Partnership, in the
principal amount of $1.0 million bearing interest at 3.52% was repaid by the
Partnership in 1994. The interest rate was based on the mean of the then
prevailing interest rate for certificates of deposit and one percent over the
then prevailing Eurodollar rate. The Company's interest income relating to the
note receivable totalled $6,000 and $50,000 for the years ended December 31,
1994 and 1993, respectively. The Company believes that this loan was on terms
fair and reasonable to it and did not involve a high risk of uncollectibility.
Effective December 22, 1994, management fees are charged to the Partnership
pursuant to a management agreement between Comcast and MH Holdings (the
'Management Agreement'). Under the terms of the Management Agreement, Comcast
supervises the management and operation of the Partnership for compensation
equal to 4.5% of the Partnership's gross revenues, with payment of one-third of
such fees being deferred by MH Holdings. In addition, the Management Agreement
provides for the reimbursement and sharing of certain of Comcast's actual costs
relating to the operations of MH Holdings, including the operations of the
Partnership. For the period from December 22, 1994 through December 31, 1994,
and for the nine months ended September 30, 1995, the Partnership was charged
$83,000 and $2.3 million, respectively.
Effective December 22, 1994, the Partnership is also charged by Comcast for
certain operating expenses, principally programming services, under a separate
agreement between Comcast and MH Holdings (the 'Cost Sharing Agreement'). These
expenses are charged to MH Holdings, and ultimately the Partnership, by Comcast
based on an amount which would approximate what MH Holdings would pay to an
unaffiliated third-party provider of these services, subject to certain
limitations. For the period from December 22, 1994 through December 31, 1994,
the amount charged to the Partnership under the Cost Sharing Agreement was not
significant. For the nine months ended September 30, 1995, the amount charged to
the Partnership under the Cost Sharing Agreement was $14.6 million.
In connection with the Share Purchase, MH Holdings entered into an $850.0
million credit agreement with certain lenders (the 'Credit Agreement'). On
December 22, 1994, the Partnership entered into a loan assumption agreement (the
'Assumption Agreement') with MH Holdings whereby the Partnership, along with
certain other subsidiaries of MH Holdings, would assume a portion of MH
Holdings' obligations under the Credit Agreement. The Partnership's allocated
portion of the total
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commitment under the Credit Agreement was $184.1 million, of which $154.9
million was outstanding as of December 31, 1994. During the nine months ended
September 30, 1995, additional borrowings were made under the Credit Agreement
and the Partnership was allocated an additional $4.3 million pursuant to the
Assumption Agreement, with a corresponding decrease in partners' capital. The
Company has recorded a decrease in its investment in the Partnership for its
proportionate share in this assumed liability of $433,000, with a corresponding
decrease in additional capital. For the nine months ended September 30, 1995,
interest expense of $9.3 million represents interest on the Partnership's
assumed portion of the outstanding borrowings of MH Holdings under the
Assumption Agreement. Neither the Partnership's debt represented by the Credit
Agreement, nor any interest on such debt, was considered in the valuation of the
Company.
As of September 30, 1995, the Company's due from affiliate balance includes
interest bearing amounts from MH Holdings of approximately $1.0 million, which
bear interest at the one-year certificate of deposit rate (6.27% at September
30, 1995).
Prior to the Share Purchase, Cable Management of Detroit, a Michigan
general partnership (the 'Manager Partnership'), was formed by Parent and CMH
for the purpose of entering into a management agreement with the Partnership.
Parent had a two-thirds partnership interest in and controlled the Manager
Partnership; CMH had a one-third interest in the Manager Partnership. Through
November 30, 1994, the Partnership paid the Manager Partnership a monthly fee
equal to 6% of the Partnership's gross revenues. Fees incurred in 1994 and 1993
amounted to approximately $3.6 million and $4.0 million, respectively. This
management agreement was terminated on the Purchase Date.
Through December 21, 1994, the Partnership purchased certain services
jointly with an affiliate owned by Parent. Reimbursement to the affiliate for
these services amounted to approximately $6.5 million and $5.8 million in 1994
and 1993, respectively, of which $1.1 million was due to the affiliate at
December 31, 1993. All amounts due to the affiliate in 1994 were paid prior to
the Share Purchase.
During 1994, MHI advanced a total of $55.7 million to the Partnership. Such
advances were used by the Partnership to repay the outstanding balance under a
loan agreement entered into by the Partnership in 1986 (the 'Loan Agreement')
and to make distributions to the Partners.
Fairness of the Transaction
Parent based the Merger Consideration on the CMH Purchase Price, which was
the result of arm's length negotiations between RCI and the shareholder of CMH.
The CMH Purchase Price was paid in exchange for 100% of the outstanding stock of
CMH. CMH's sole assets on the Purchase Date were its 40% interest in the
Partnership and its 33.33% interest in the Manager Partnership. In its
determination of the Merger Consideration, Parent elected not to allocate any
portion of the CMH Purchase Price to the interest in the Manager Partnership
held by CMH. Since the CMH Purchase Price represented the amount paid for a 40%
interest in the Partnership, Parent determined that the value of a 100% interest
in the Partnership, prior to purchase price adjustments, was $295,150,000.
Pursuant to agreement between the CMH shareholder and Comcast, the final CMH
Purchase Price was reduced by purchase price adjustments in an amount equal to
$59,993,464. This calculation resulted in an adjusted valuation for a 100%
interest in the Partnership equal to $235,156,536. Since the Company's primary
asset is its 10% interest in the Partnership, Parent determined that the value
of the Company, prior to adjustments, was $23,515,654. Parent then added an
amount equal to $1,115,394 to its valuation of the Company, which represented
the net working capital reflected on the Company's books as of December 22,
1994. This resulted in an adjusted valuation of the Company equal to
$24,631,048. The sum of $2.91 per share was then added to the adjusted CMH
Purchase Price, representing an amount equal to the prime rate of interest from
the Purchase Date to March 31, 1996, by which date it is anticipated that the
Public Shareholders could receive the Merger Consideration for the tendered
shares. This determination by the Company resulted in a price of $27.54 per
share, which is greater than the fair value determined by Kane Reece Associates,
Inc. ('Kane Reece'). Parent also considered the fair value report (the 'Kane
Reece Report') prepared by Kane Reece, which determined a fair value for
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the Company's interest in the Partnership of $23.60 per share. Accordingly, the
Board concluded that the Kane Reece Report provided support for the fairness of
the Merger Consideration.
As a consequence of the foregoing, the Board of Directors of Parent
believed that the creation of a special committee of independent directors was
not warranted under the circumstances. Moreover, all of the Directors of Parent
and Merging Company are affiliates of Comcast and, consequently, none of the
Directors are likely to be viewed as independent.
Under the MBCA, Parent may effect the proposed Merger without seeking the
approval of the Board of Directors or shareholders of the Company. On January
10, 1996, the Board of Directors and sole shareholder of Merging Company
approved the Plan. Parent believes that the Merger Consideration is fair to the
Public Shareholders. Parent initially determined the Merger Consideration solely
on the basis of the CMH Purchase Price. Parent then considered a number of
factors which support the fairness of its determination of the Merger
Consideration, including, without limitation, the factors set forth below.
Fair Value Report of Kane Reece. Parent considered the Kane Reece Report
for the purpose of supporting the fairness of the Merger Consideration to the
Public Shareholders. The Kane Reece Report was received by the Parent on January
3, 1996.
Kane Reece valued the shares of the Company's Common Stock after taking
into account such factors and information as Kane Reece considered relevant. For
a description of the Kane Reece Report, see 'SPECIAL FACTORS -- Background of
the Transaction -- Fair Value Report of Kane Reece Associates, Inc.'
Parent considered each of the following valuation approaches utilized by
Kane Reece, solely to determine whether the Merger Consideration is fair to the
Public Shareholders: (i) the present value of projected cash flows prepared by
Kane Reece (the 'Discounted Cash Flow Approach'); (ii) comparison of information
derived from the sale of other cable television companies (the 'Market
Approach'); and (iii) comparison of publicly-traded cable television companies
(the 'Guideline Company Approach'). Parent also considered the price paid to
shareholders by Parent's predecessor to purchase shares of the Company's Common
Stock since 1992 in order to determine whether the Merger Consideration is fair
to the Public Shareholders.
Discounted Cash Flow Approach. Parent compared the value of the Common
Stock of the Company based upon the projected cash flows prepared by Kane Reece
to the Merger Consideration in order to determine whether the Merger
Consideration is fair to the Public Shareholders. In the Kane Reece Report, Kane
Reece reported that its Discounted Cash Flow Approach resulted in a value of
$23.60 per share. Kane Reece used a multiple of 9.0 times its 2006 projected
annual cash flow for the residual value of the Company, and Kane Reece
discounted the projected cash flows and the residual value by an appropriate
discount rate for the Company, which Kane Reece determined to be 15.5%.
Market Approach. Parent compared the assumed value of the Company's Common
Stock based on Kane Reece's analysis of the sales of other cable television
systems to the Merger Consideration in order to determine whether the Merger
Consideration is fair to the Public Shareholders. In the Kane Reece Report, Kane
Reece reported that its Market Approach resulted in a price of $24.39 per share.
Guideline Company Approach. Parent also compared the value of the
Company's shares of Common Stock under the Guideline Company Approach with the
Merger Consideration in order to determine whether the Merger Consideration is
fair to the Public Shareholders. Kane Reece reported that its Guideline Company
Approach resulted in a value of $19.06 per share.
Historical Price for Purchase of Company's Common Stock by Parent's
Predecessor. Since the beginning of 1992, Maclean Hunter Cable TV, Inc.,
Parent's predecessor, has purchased 4,265 shares of the Company's Common Stock
at prices ranging from $13.50 to $15.00 per share. Parent compared such prices
to the Merger Consideration in order to determine whether the Merger
Consideration was fair to the Public Shareholders. See 'Special Factors --
Certain Information Concerning Parent and Merging Company.' There is no
established public trading market for the Company's Common Stock
7
<PAGE>
and consequently, Parent was not able to consider the historical market prices
of the Company's Common Stock.
On January 24, 1996, the Company issued a press release describing the
Merger.
Fair Value Report of Kane Reece Associates, Inc.
Parent received an analysis from Kane Reece with respect to the fair
valuation of the Company's shares of Common Stock held by the Public
Shareholders.
Kane Reece is a nationally recognized appraisal company in the
telecommunications field. Kane Reece is frequently engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
with a concentration in the field of media/communications. Kane Reece was
selected by Parent to act as its appraiser based upon its expertise and
reputation in the valuation of cable companies.
Since Kane Reece is a recognized appraisal company in the
telecommunications field, it has in the past performed valuation and related
services for Comcast and its affiliates and performed such services in
connection with the Share Purchase. The aggregate fees for valuation related
services during 1994 and 1995 were approximately $103,000.
In conducting its analysis, Kane Reece considered such financial and other
factors as it deemed appropriate under the circumstances, including without
limitation: (i) the Partnership's 1996 Budget; (ii) the Partnership's audited
financial statements for the years ended December 31, 1991-1994 and the
Partnership's unaudited financial statements for the 10 months ended October 31,
1994 and 1995; (iii) the September 30, 1995 Form 10-Q of the Company; (iv) the
number of monthly basic subscribers and pay units for 1994 and 1995 and annually
from 1990-1994; (v) system channel charts and rate cards; (vi) system rate
history 1990-1995; (vii) the franchise agreement with the City; (viii) the
reported historical market prices, trading volume and market for the Common
Stock of the Company; (ix) financial and stock market information for the
Company and the Partnership and similar information for certain other
publicly-held cable television companies; and (x) the financial terms of recent
sales of cable television systems. Although Kane Reece did consider the debt
evidenced by the Loan Agreement in conducting the valuation of the Company, Kane
Reece determined not to consider the Partnership's debt represented by the
Credit Agreement, nor any interest on such debt, in the conduct of its analysis.
In addition, Kane Reece held discussions with certain members of the management
of the Company and Parent regarding the business, historical operating results,
financial condition, and future prospects of the Partnership and the Company,
and conducted other financial analyses, studies and investigations as it
considered appropriate.
Kane Reece relied upon the accuracy and completeness of the information
provided to it, including information from the Company and Parent and
information from various published sources. It did not independently verify such
information or undertake independent appraisals of the properties or the other
assets and liabilities of the Company or the Partnership. Kane Reece's report
was based upon conditions as they existed and as they reasonably could have been
evaluated on the date of the Kane Reece Report. No limitations were imposed by
Parent upon Kane Reece with respect to the scope of the investigation made by
Kane Reece in rendering the Kane Reece Report. The Company, Parent and their
management fully cooperated with Kane Reece in connection with its analysis.
Kane Reece performed certain financial analyses which it considered
relevant, including, (i) the Discounted Cash Flow Approach, (ii) the Market
Approach, and (iii) the Guideline Company Approach. Such analyses are set forth
in the Kane Reece Report and are summarized below.
8
<PAGE>
Financial Projections. Kane Reece's projections of the Partnership's
revenues, expenses and operating cash flow for the periods indicated, together
with significant assumptions made in computing the projections, are summarized
below.
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue......................................... $ 74,669 $ 80,398 $ 84,759 $ 90,325 $ 95,174
Expenses........................................ 42,561 45,023 46,618 49,679 52,346
----------- ----------- ----------- ----------- -----------
Operating Cash Flow............................. $ 32,108 $ 35,375 $ 38,141 $ 40,646 $ 42,828
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
2001 2002 2003 2004 2005
----------- ----------- ----------- ----------- -----------
Revenue......................................... $ 101,301 $ 106,754 $ 113,579 $ 119,710 $ 127,118
Expenses........................................ 55,715 58,715 62,469 65,841 69,915
----------- ----------- ----------- ----------- -----------
Operating Cash Flow............................. $ 45,586 $ 48,039 $ 51,110 $ 53,869 $ 57,203
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
Kane Reece's projections were based on (i) interviews with management of
Parent, (ii) financial information (including, without limitation, historical
financial information and estimates of future performance prepared for internal
purposes) provided to Kane Reece by Parent, and (iii) general industry and local
market trends.
Kane Reece's projections assumed that revenue would grow from $74.7 million
in 1996 to $127.1 million in 2005 (a compounded annual growth rate of 6.1%)
primarily due to growth in the number of cable subscribers and growth in average
revenues per subscriber. The number of cable subscribers was assumed to grow
from approximately 126,057 in 1996 to 160,845 in 2005 (a compounded annual
growth rate of 2.7%). Average monthly basic revenue per subscriber was projected
to grow at a compounded annual growth rate of 4.0% after 1996. Pay
(e.g. Home Box Office, Showtime and The Disney Channel) units were projected to
increase from approximately 234,466 units in 1996 to 270,219 in 2005 (a
compounded annual growth rate of 1.6%). The average monthly revenue per pay unit
was assumed to grow from $9.23 in 1996 to $10.70 in 2005 (a compounded annual
growth rate of 1.7%), and the average monthly pay-per-view revenue per basic
subscriber was estimated to grow from $1.98 in 1996 to $3.08 in 2005 (a
compounded annual growth rate of 5.0%).
Total operating expenses were assumed to grow at a compounded annual growth
rate of 5.7% annually between 1996 and 2005 (from $42.6 million in 1996 to $69.9
million in 2005). Operating cash flow was assumed to grow at a compounded annual
growth rate of 6.6% (from $32.1 million in 1996 to $57.2 million in 2005). As a
percentage of revenues, operating cash flow increased from 43% projected for
1996 to 45% in 2005.
Discounted Cash Flow Approach. In the Discounted Cash Flow Approach, Kane
Reece estimated a value for the Company's shares by calculating and then adding
the present values of (i) unleveraged annual cash flow streams for 1996 through
2005 derived from the financial projections as described above, and (ii) the
residual value of the Company.
In any analysis of future cash flows, a critical factor is the selection of
the discount rate which will be utilized in the calculation of the present value
of these future values. The investment's discount rate, also referred to as a
return requirement, is the overall return which an investor expects to achieve
on an investment. The development of the discount rate starts with the
determination of a weighted average cost of capital. The weighted average cost
of capital is made up of two components: debt and equity.
The cost of equity is arrived at by using the Capital Asset Pricing Model.
The derived equity rate represents the return expected on equity capital by an
investor and is consistent with Kane Reece's experience with respect to equity
investor expectations in today's cable television ('CATV') marketplace. Briefly,
this method begins with the risk free rate of return, generally the rate on U.S.
government debt instruments of appropriate duration, and then applies both an
equity risk premium and small stock premium that an equity investor requires in
order to invest. The appropriate discount rate for the Partnership needs to
consider the unsystematic risk associated with a single property.
9
<PAGE>
The next step is to determine the cost of debt capital. This rate is
principally affected by the credit worthiness of the borrower and the general
risk associated with the industry. To estimate the cost of debt as of the
valuation date, Kane Reece reviewed the CATV debt market. Paul Kagan, in the
October 17, 1995 issue of Cable TV Investor, tracked 44 cable bonds providing a
cable high-yield bond average. The average yield to maturity at October 15, 1995
for these bonds was 10.26%. Kane Reece then tax effected this assumed cost of
debt, taking into consideration statutory federal and state tax rates.
The final step is to determine the mixture of debt and equity in the
capital structure. The capital structure percentages were derived based upon a
review of the industry lending practices as of the valuation date. Senior debt
lending limits are typically discussed in terms of cash flow multiples. The
debt-to-equity ratio is derived by comparing the debt lending limit multiples to
the valuation cash flow multiples. Kane Reece calculated a weighted average cost
of capital of 15.5% for the Partnership.
The residual value was determined by multiplying the estimated 2005
operating cash flow by a multiple of 9.0 and applying the discount rate of
15.5%. The Discounted Cash Flow Approach resulted in a valuation of $23.60 per
share of the Company's Common Stock.
Market Approach. The Market Approach requires the appraiser to collect and
analyze recent comparable market transactions and then make value adjustments
based on a comparative analysis between the market transactions and the subject
property. It is important to use transactions which are on or about the
valuation date and which, if possible, straddle that date. The application of
the Market Approach is most commonly found in the appraisal of real estate. The
market for real estate is characterized by frequent sales within a geographic
area, reliably known sale prices, and readily discernable attributes of
properties sold. This is not the case for sales of CATV businesses. The
businesses are comprised of a number of types of tangible and intangible assets,
and data on these transactions are available only through the press and trade
publications. The quality of this reported data is suspect and quite incomplete.
Kane Reece's experience in the CATV industry has been that the publicly
available data is at best an approximation. The buyers and sellers in this
market are under no obligation to report the information. The application of the
Market Approach to the CATV business would be extremely difficult and unreliable
due to the lack of comparative data and the subjectivity of any comparative
value adjustments. Due to the unique nature of each cable property, to complete
a valid comparative analysis the following variables would need to be collected
and analyzed for each market transaction:
-- Homes in Franchise Area
-- Homes Passed by Cable
-- Subscriber Penetration
-- Revenues Per Subscriber
-- Current Cash Flow
-- Operating Margin
-- System/Size Configuration
-- Location
-- Service Area Demographics
-- Physical Plant Condition
-- Required Capital Expenditures
-- Regulatory Environment
-- Competition
-- Specific Buyer and Seller Motivations
-- Liabilities Assumed
Even if all the necessary information was available, the quantification of value
adjustments to reflect differences between market transaction comparative
indicators and the subject property's comparative indicators would be extremely
difficult. As such, the Market Approach was rejected by Kane Reece due to the
lack of appropriate data. While the Market Approach was not used to develop
separate value
10
<PAGE>
conclusions, market data from recent CATV transactions was collected and
reviewed to provide corroborative evidence to the value conclusion determined by
the Discounted Cash Flow Approach.
Industry practice is to describe market transactions for cable systems in
terms of subscriber (price/number subscribers) and cash flow multiples
(price/cash flow). Kane Reece reviewed the transactions, each of which was
greater than 47,000 subscribers, that were announced during 1995. Based on Kane
Reece's review, the weighted averages of price per subscriber and cash flow
multiples yielded a price per share of $24.39. The result of the Market Approach
corroborates the value conclusion determined by the Discounted Cash Flow
Approach.
Guideline Company Approach. The Guideline Company Approach is a technique
that provides an indicated publicly traded equivalent value of equity based on
direct comparison of the Company's common stock to common stocks of publicly
traded companies involved in the same or similar lines of business. Several
approaches for valuing closely held companies are available under the Guideline
Company Approach. Most approaches involve some variation of earnings power or
underlying assets, or a combination of the two. Kane Reece relied on the
following three approaches for its value indications: capitalization of earnings
before interest, taxes, depreciation, and amortization ('EBITDA'),
capitalization of earnings before interest and taxes and capitalization of
revenue. These three approaches rely on data from the publicly traded guideline
companies. The value multiples utilized in the three approaches relate the
guideline companies' stock price at the valuation date to various fundamental
data such as earnings and revenue. These multiples generally take into account
trends in operating performance as well as the stability or instability of the
underlying data. In this manner, the risks associated with the comparative
companies can be viewed in relation to return expectations as exhibited by the
pricing behavior of a particular company's common stock.
Kane Reece selected six publicly-traded companies (i) whose revenues were
substantially derived from cable operations, (ii) that had stock which was
publicly traded and was listed in Standard & Poor's S&P Reports, (iii) which
were United States companies that conducted their business primarily in the
United States, (iv) which were listed in SIC Code 4841, Cable and Other Pay
Services, (v) for which there was adequate information (five years) about such
corporations publicly available, (vi) which had positive cash flow in two of the
last three years and three of the last five years, and (vii) which were not
actively engaged in negotiations to be acquired. The companies used in this
analysis were Adelphia Communications Corp., Cablevision Systems Corporation,
Comcast, Falcon Cable Systems Co., TCA Cable TV, Inc. and Tele-Communications,
Inc.
The Company was equal to or above the guideline company group in the area
of operating income, however it had lower basic penetration, higher pay-to-basic
and higher basic churn. Based on these results, Kane Reece concluded that the
median multiple of the guideline company group is applicable to the Company. In
concluding a value for the Company's Common Stock, greatest weight was given to
the EBITDA approach (80%) as being most indicative of value in this case since
this multiple captures the unique operating properties of the CATV industry, and
additionally, sales transactions in the CATV industry are generally based on
this type of multiple. The other two multiples were given a weighting of 10%
each. The implied valuation of the Company based on the Guideline Company
Approach was $19.06 per share.
Kane Reece gave the greatest weight to the value obtained utilizing the
Discounted Cash Flow Approach, due to the unique characteristics of the CATV
system and the fact that the Discounted Cash Flow Approach incorporates the
unique combination of revenue sources and competitive forces to which the System
is subject. Kane Reece utilized the Market Approach and the Guideline Company
Approach primarily for corroborative purposes, and did not weight such
approaches highly as stand-alone value indicators.
The summary set forth above does not purport to be a complete description
of the Kane Reece Report. Kane Reece believes that its analysis must be
considered as a whole and that selecting portions of such analysis and of the
factors considered by it, without considering all factors and analysis, could
create an incomplete view of the processes underlying its analysis. The
preparation of a valuation report is a complex process and is not necessarily
susceptible to partial analysis or summary description. In its analysis, Kane
Reece made numerous assumptions with respect to industry performance, general
business and economic conditions, re-regulation and other matters, many of
11
<PAGE>
which are beyond the control of Parent or Kane Reece. Any estimates contained
therein are not necessarily indicative of actual values, which may be
significantly more or less favorable than as set forth therein. Estimates of
values of companies do not necessarily reflect the prices at which such
companies could actually be sold. Because such estimates are inherently subject
to uncertainty, none of Kane Reece, the Company, Parent, Merging Company or any
other person assumes responsibility for their accuracy.
The foregoing description of the Kane Reece Report is qualified by
reference to the full text of such report included as an Exhibit to the Schedule
13E-3 filed with the Securities and Exchange Commission (the 'Commission').
Copies of the Kane Reece Report will be made available for inspection and
copying at the principal executive offices of Parent during regular business
hours by any interested shareholder of the Company, or by his or her
representative who has been so designated in writing, and may be inspected and
copied, and obtained by mail, from the Commission as set forth in 'SPECIAL
FACTORS -- Certain Information Concerning the Company/Financial Information'.
TERMS, PURPOSE AND STRUCTURE OF THE TRANSACTION
The purpose of the Merger is for Parent, through Merging Company, to
acquire the entire equity interest in the Company for fair consideration in a
prompt and orderly manner.
One of the reasons Parent proposed the Merger when it did, and why the
Merger, in the view of the management of Parent, will be beneficial to the
Company and to Parent, is that the Merger will enable the Company to participate
in joint ventures and sharing arrangements with Parent-related entities in
connection with the convergence of cable television and other communications
technologies, including voice and data transmission. These arrangements will be
simplified if there is no perceived conflict with the interests of the Public
Shareholders.
Parent also considered the Merger at this point in order to facilitate
additional financing with respect to CATV systems owned by Comcast and unrelated
to the System. Increased competition in the CATV industry and the need to remain
competitive with the technology utilized by competitors creates a need for large
capital expenditures on equipment and research and development. Accordingly, in
order to compete more effectively, CATV companies are required to raise capital.
Following the Merger, Comcast will have the flexibility of utilizing the System
to provide credit enhancement opportunities.
Parent also considered the expense associated with the filing requirements
of a public company. Since the Company's Common Stock is currently registered
under the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), the
Company has an obligation to comply with the proxy rules of Regulation 14A and
Section 14 of the Exchange Act. In addition, the Company is obligated to file
reports with the Commission pursuant to Sections 13 and 15(d) of the Exchange
Act or to disseminate the information contained in such reports. Following the
Merger, the Company will not be required to incur the expense in connection with
filing such reports and complying with such proxy rules.
The acquisition of the entire equity interest in the Company has been
structured as a short form reverse triangular merger under the MBCA in which
Public Shareholders will receive cash for their Shares and the Company will
become a wholly-owned subsidiary of Parent in order to enable Parent to acquire
100% ownership of the Company.
Because immediately prior to the adoption of the Plan, Merging Company
owned more than 90% of the outstanding shares of the Common Stock of the Company
and the Plan was adopted by the Board of Directors and sole shareholder of
Merging Company, the approval of the Board of Directors, shareholders or Public
Shareholders of the Company is not required.
Upon consummation of the Merger, the Public Shareholders of the Company
will no longer have an equity interest in the Company and, therefore, will not
benefit from future earnings and growth. Instead, under the Plan, each Public
Shareholder will have only the right to receive cash as specified in the Plan
for each Share theretofore held by him or her.
12
<PAGE>
The Company will, as a result of the Merger, become a privately-held
corporation, with no active market for its shares of Common Stock. The
registration of the Company's Common Stock under the Exchange Act will be
terminated. The Company will be relieved of the obligation to comply with the
proxy rules of Regulation 14A under Section 14 of the Exchange Act. Moreover,
the Company will no longer be obligated to file reports with the Commission
pursuant to Sections 13 and 15(d) of the Exchange Act or to disseminate the
information contained in such reports. See 'SPECIAL FACTORS -- Certain Effects
of the Transaction'.
PLAN OF MERGER
Under the MBCA, because the Plan has been adopted by the Board of Directors
and sole shareholder of Merging Company, which owns approximately 96.5% of the
outstanding shares of Common Stock of the Company, no action need be taken by
the directors or shareholders of the Company to approve the Plan.
The following is a summary of certain provisions of the Plan, a copy of
which is attached as Annex 1 hereto and incorporated herein by reference. Such
summary is qualified in its entirety by reference to the full text of the Plan.
The Plan provides that, subject to the right of Merging Company to
terminate and abandon the Plan, Merging Company will be merged with and into the
Company, which will be the surviving corporation. The separate existence of
Merging Company will cease. As a result of the Merger, the Company will become a
wholly-owned subsidiary of Parent. In the Merger, each Share held of record by
Public Shareholders as of the close of business on the day immediately preceding
the Effective Date (subject to the provisions applicable to dissenters rights of
appraisal) will, without any action on the part of any holder thereof, be
automatically converted on the Effective Date into the right, upon surrender of
the Shares, to receive the Merger Consideration in cash, without interest
thereon. Each outstanding share of Common Stock of the Company held by Merging
Company outstanding on the Effective Date will be cancelled and extinguished.
The Common Stock of Merging Company owned by Parent outstanding on the Effective
Date will, without any action on the part of Parent, be converted into one
hundred (100) fully paid shares of Common Stock of the Company.
The Articles of Incorporation and Bylaws of the Company in effect on the
Effective Date will continue in full force and effect, unless and until
subsequently amended, as the Articles of Incorporation and Bylaws, respectively,
of the Company.
The Directors and Officers of Merging Company in office on the Effective
Date will be the Directors and Officers of the Company after the Merger and will
continue in office until their successors have been duly elected and qualified,
subject to removal, resignation or such other change as may otherwise occur, and
all other officers and directors of the Company shall thereupon cease to hold
office.
Any cash provided to the Paying Agent pursuant to the Plan and not
exchanged for Shares within 180 days after the Effective Date will be returned
by the Paying Agent to the Company, which thereafter will act as paying agent.
Pursuant to law, the Company is required to escheat to the appropriate state any
funds set aside in exchange for Shares which are not tendered.
THE EFFECTIVE DATE OF THE MERGER WILL BE THE DATE UPON WHICH THE
CERTIFICATE OF MERGER IS FILED WITH THE DEPARTMENT OF COMMERCE OF THE STATE OF
MICHIGAN, WHICH IS EXPECTED TO BE ON OR ABOUT MARCH 28, 1996.
The Plan will have an identical effect on all Public Shareholders other
than those electing to exercise dissenters rights discussed under 'Dissenting
Shares/Dissenters Rights'.
13
<PAGE>
INTEREST OF CERTAIN PERSONS IN SECURITIES OF THE ISSUER AND THE TRANSACTION
As of November 30, 1995, Parent1 beneficially owned 965,124 shares (or
approximately 96.5% of the outstanding shares) of the Common Stock of the
Company. Since the Purchase Date, Parent, or a wholly-owned subsidiary of
Parent, has continuously owned 90% or more of the Company's Common Stock. As
majority shareholder of the Company and Merging Company, Parent has had the
ability to control the Company and Merging Company since the Purchase Date and
has been (and continues to be) able to control election of all of the directors
of the Company and Merging Company. As a result of their control of the Company,
Parent, Merging Company and certain affiliates have an interest in the Merger
that may be deemed to present an actual or potential conflict of interest and
certain officers and directors of Parent who also serve as officers and
directors of the Company may be deemed to have a similar conflict of interest.
To the knowledge of Parent and Merging Company, there are no contracts,
arrangements, understandings or relationships in connection with the Merger with
respect to the shares of Common Stock of the Company other than the Plan and the
agreement with the transfer agent for the Company's Common Stock to serve as
Paying Agent.
To the knowledge of Parent and Merging Company, after reasonable inquiry,
no executive officer, director or affiliate of the Company or of Parent owns any
Common Stock of the Company, except for the shares of Common Stock of the
Company owned by Merging Company.
On January 4, 1996, Parent formed Merging Company as a wholly-owned
subsidiary. On January 10, 1996, Parent contributed the 965,124 shares of the
Common Stock of the Company which it owned to the capital of Merging Company,
resulting in the ownership by Merging Company of approximately 96.5% of the
outstanding Common Stock of the Company.
CERTAIN EFFECTS OF THE TRANSACTION
After the Effective Date, the business of the Company will continue to be
operated and managed under its current trade or business name by the current
operating management. The Company will continue to acquire and dispose of assets
in the ordinary course, as in the past, but has no current plans with respect to
specific acquisition or disposition transactions. Except for the Merger and as
otherwise described herein, neither Parent nor Merging Company has any present
plans or proposals with respect to the Company that would result in an
extraordinary corporate transaction, such as a merger,
- ------------------
1. Parent is a direct wholly-owned subsidiary of COM MH, Inc. (formerly known as
Maclean Hunter, Inc.), which is a direct wholly-owned subsidiary of MH
Holdings. MH Holdings is a direct wholly-owned subsidiary of Comcast
Communications Properties, Inc., a Delaware corporation ('CCPI'), which is a
direct wholly-owned subsidiary of MHCP. Fifty-five percent (55%) of MHCP is
owned by Comcast Cable Communications, Inc., a Delaware corporation ('CCC,
Inc.'), and forty-five percent (45%) of MHCP is owned by CalPERS. CCC, Inc.
is a direct wholly-owned subsidiary of Comcast. At November 30, 1995, Sural
Corporation, a Delaware corporation ('Sural'), owned 1,845,037 shares of
Comcast's Class A Common Stock and was the sole owner of Comcast's Class B
Common Stock. Mr. Ralph J. Roberts, Chairman of the Board of Directors of
Comcast, and members of his family own all of the voting securities of Sural.
Pursuant to Rule 13d-3 of the Exchange Act, Mr. Roberts is deemed to be the
beneficial owner of Comcast's Class A Common Stock owned by Sural. Mr.
Roberts' beneficial ownership also includes 319,070 shares of Comcast's Class
A Common Stock owned directly. Furthermore, pursuant to Rule 13d-3 of the
Exchange Act, Mr. Roberts is deemed to be the beneficial owner of Comcast's
Class B Common Stock owned by Sural. In addition to the shares owned by
Sural, Mr. Roberts has options to purchase 658,125 shares of Comcast's Class
B Common Stock, of which 556,875 options are currently exercisable or are
exercisable within 60 days of November 30, 1995. Since each share of
Comcast's Class B Common Stock is entitled to fifteen votes, the shares of
Comcast's Class A Common Stock and Comcast's Class B Common Stock owned by
Sural constitute approximately 78% of the voting power of the two classes of
Comcast's voting common stock combined (79% if all other shares of Comcast's
Class A Common Stock which Mr. Roberts is deemed to beneficially own and his
shares underlying options to purchase Comcast's Class B Common Stock
currently exercisable or exercisable within 60 days of November 30, 1995 are
included). Comcast's Class B Common Stock is convertible on a share-for-share
basis into Comcast's Class A Common Stock or Comcast's Class A Special Common
Stock. If Sural and Mr. Roberts were to convert Comcast's Class B Common
Stock which they are deemed to beneficially own into Comcast's Class A Common
Stock, Mr. Roberts would beneficially own 11,507,232 shares of Comcast's
Class A Common Stock (approximately 23.7% of Comcast's Class A Common Stock).
14
<PAGE>
reorganization, relocation of operations, sale or transfer of assets or any
material change in the Company's corporate structure, business or composition of
its management.
As set forth in the Plan, Directors and Officers of Merging Company in
office on the Effective Date will be the Directors and Officers of the Company
after the Merger and will continue in office until their successors have been
duly elected and qualified, subject to removal, resignation or such other change
as may otherwise occur and all other officers and directors of the Company shall
thereupon cease to hold office.
The Common Stock of the Company is currently registered under Section 12(g)
of the Exchange Act. Upon consummation of the Merger, the Company will apply to
the Commission for termination of the registration of its shares under the
Exchange Act. Termination of registration of the shares under the Exchange Act
will eliminate the Company's obligation to furnish information to the public and
the Commission pursuant to Sections 13 and 15(d) of the Exchange Act and would
make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement in connection with shareholders' meetings pursuant to Section 14(a)
and the requirements of Rule 13e-3 under the Exchange Act with respect to 'going
private' transactions, no longer applicable to the Company. IT IS THE PRESENT
INTENTION OF PARENT TO SEEK TO CAUSE THE COMPANY TO MAKE AN APPLICATION FOR
TERMINATION OF REGISTRATION OF ITS SHARES OF COMMON STOCK AS SOON AS PRACTICABLE
FOLLOWING THE MERGER. When the Merger is consummated, satisfaction of the
requirements for termination of registration is assured.
If the Merger had occurred on September 30, 1995, the Company's unaudited
pro forma total assets and stockholders' equity at September 30, 1995 would have
been $16.7 million and $9.3 million, respectively, representing increases of
$1.0 million from $15.7 million and $8.3 million, respectively. On a pro forma
basis, the Company's book value per share at September 30, 1995 would have been
$9.32 per share, an increase of $1.00 per share from $8.32 per share. If the
Merger had occurred on January 1, 1994, the Company's unaudited pro forma net
loss for the nine months ended September 30, 1995 would have been $924,000
($0.92 per share), representing an increase of $24,000 ($0.02 per share) from
$900,000 ($0.90 per share), while the Company's unaudited pro forma net income
for the year ended December 31, 1994 would have been $237,000 ($0.24 per share),
representing a decrease of $33,000 ($0.03 per share) from $270,000 ($0.27 per
share). The pro forma per share information presented herein assumes that the
Company's average number of shares of Common Stock outstanding is 1.0 million
shares before and after the Effective Date of the Merger. For periods prior to
the Share Purchase, pro forma financial information does not reflect the effects
of the Share Purchase on the Company's results of operations.
The increase in total assets results from the purchase of the outstanding
Shares from the Public Shareholders and related estimated transaction costs on
the Effective Date of the Merger. The increase in stockholders' equity results
from capital contributions to be made by Parent to Merging Company to fund the
Merger. The change in the Company's net (loss) income on a pro forma basis, for
each period discussed above, results from the additional amortization expense
associated with the excess of amounts paid over book value to acquire the
outstanding Shares from the Public Shareholders, net of related income tax
benefit.
Immediately prior to the contribution by Parent to the capital of Merging
Company of the shares of Common Stock of the Company owned by Parent, Parent
owned approximately 96.5% of the outstanding shares of Common Stock of the
Company. On the Effective Date of the Merger, all of the outstanding shares of
the Common Stock of the Company will be owned by Parent, resulting in an
increase in Parent's interest in the book value and earnings of the Company from
approximately 96.5% to 100%. If Parent's interest in the book value of the
Company had been 100% on September 30, 1995, its share of such book value would
have increased by $291,000 (from $8.0 million to $8.3 million). If Parent's
interest in the (loss) earnings of the Company had been 100% from January 1,
1994, its interest in such (loss) earnings would have increased by ($31,500)
(from ($868,500) to ($900,000)) for the nine months ended September 30, 1995 and
by $9,450 (from $260,550 to $270,000) for the year ended December 31, 1994. The
foregoing is based on historical financial information of the Company
15
<PAGE>
and does not give effect to the pro forma effects of the Merger and Share
Purchase on the Company, as discussed above.
The amounts contained in the preceding unaudited pro forma financial
information are not necessarily indicative of future results nor are they
necessarily indicative of results which actually would have occurred had the
Merger been consummated on the dates indicated.
CERTAIN INFORMATION CONCERNING THE COMPANY/FINANCIAL INFORMATION
The Company's Common Stock is the subject of the Plan as described by this
Rule 13E-3 Transaction Statement. As of January 10, 1996 (the record date for
purposes of determining shareholders of the Company entitled to notice of
adoption of the Plan), 1,000,000 shares of the Company's Common Stock were
outstanding and were held of record by 602 persons. A total of 34,876 shares
were then held of record by persons other than Merging Company.
There is no established public trading market for the Company's Common
Stock. The Company's Common Stock is not listed on any securities exchange.
During the year ended December 31, 1994, the Partnership made a
distribution to the Partners of $12.5 million. The Partnership charged this
distribution against the capital accounts of Detroit Cable, CMH and the Company
on a 50%, 40%, 10% basis, respectively. The Company's share of this distribution
was $1.25 million. The proceeds received by the Company were paid to its
shareholders in 1994 as a cash dividend of $1.25 per share of Common Stock.
During the year ended December 31, 1992, the Partnership made a similar
distribution to the partners of $15.0 million. The Company's share of this
distribution was $1.5 million. The proceeds received by the Company were paid to
its shareholders in 1993 as a cash dividend of $1.50 per share of Common Stock.
The Company is generally restricted from paying further dividends to its
shareholders under the terms of the Credit Agreement.
Set forth below is a summary of certain financial information with respect
to the Company and the Partnership. The audited financial statements contained
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994 and the unaudited financial statements contained in the Company's
Quarterly Report on Form 10-Q for the nine (9) months ended September 30, 1995
are included as Exhibits to the Schedule 13E-3 filed with the Commission. More
comprehensive financial information is included in such reports and other
documents filed by the Company with the Commission, and the following summary is
qualified in its entirely by reference to such reports and other documents and
all of the financial information (including any related notes) contained
therein. Such reports and other documents may be inspected and copies may be
obtained from the offices of the Commission in the manner set forth below.
16
<PAGE>
SUMMARY FINANCIAL INFORMATION
CABLEVISION INVESTMENT OF DETROIT, INC.
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED SEPTEMBER 30, DECEMBER 31,
-------------------- --------------------
1995(1) 1994 1994(1) 1993
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Equity in net (loss) income of Partnership....................... ($ 1,117) $ 721 $ 813 $ 820
Interest income.................................................. 52 33 48 53
Net (loss) income................................................ (900) 305 270 278
BALANCE SHEET DATA (at end of period):
Working capital.................................................. $ 1,103 $ 1,117 $ 1,117 $ 1,109
Total assets..................................................... 15,663 3,499 17,484 4,445
Total stockholders' equity....................................... 8,316 3,490 9,649 4,435
PER SHARE(2)
Net (loss) income................................................ ($ .90) $ .31 $ .27 $ .28
Book value....................................................... 8.32 3.49 9.65 4.44
</TABLE>
- ------------------
1 As a result of the Share Purchase, a new cost basis was established for the
purchased assets and liabilities. The financial position of the Company as of
December 31, 1994 and September 30, 1995 and its results of operations for the
period from December 22, 1994 through December 31, 1994 and for the nine
months ended September 30, 1995, reflect an allocation of the purchase price
to the assets and liabilities of the Company based on relative estimated
market values. For the year ended December 31, 1994, the effects of such
allocations on the Company's results of operations were not significant. For
purposes hereof, 1994 results of operations for the periods prior and
subsequent to the Share Purchase have been combined. Information for the year
ended December 31, 1993 and the nine months ended September 30, 1994
represents that of the predecessor corporation.
2 Average number of shares of common stock outstanding during each period was
1.0 million.
17
<PAGE>
COMCAST CABLEVISION OF DETROIT
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED SEPTEMBER 30, DECEMBER 31,
----------------------- -----------------------
1995(1) 1994 1994(1) 1993
----------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Service income........................................... $ 50,633 $ 49,211 $ 65,380 $ 65,963
Net (loss) income for allocation to partners............. (11,173) 7,064 7,968 8,038
BALANCE SHEET DATA (at end of period):
Working capital (deficiency)............................. $ (57,026) $ (24,778) $ (58,560) $ (13,221)
Total assets............................................. 293,408 74,300 309,129 79,461
Total partners' capital.................................. 69,841 4,303 85,346 9,738
RATIO OF EARNINGS TO FIXED CHARGES: (2) 4.13 3.30 3.87
</TABLE>
- ------------------
1 As a result of the Share Purchase, a new cost basis was established for the
purchased assets and liabilities. The financial position of the Partnership as
of December 31, 1994 and September 30, 1995, and its results of operations for
the period from December 22, 1994 through December 31, 1994 and for nine
months ended September 30, 1995, reflect an allocation of the purchase price
to the assets and liabilities of the Partnership based on relative estimated
market values. For the year ended December 31, 1994, the effects of such
allocations on the Partnership's results of operations were not significant.
For purposes hereof, 1994 results of operations for the periods prior and
subsequent to the Share Purchase have been combined. Information for year
ended December 31, 1993 and for the nine months ended September 30, 1994
represents that of the predecessor partner.
2 Earnings were inadequate to cover fixed charges for the nine months ended
September 30, 1995. The amount of coverage deficiency was $11.2 million.
The Company is subject to the information filing requirements of the
Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, the principal holders of the Company's securities
and any material interest of such persons in transactions with the Company is
required to be described in proxy statements distributed to the Company's
shareholders and filed with the Commission. These reports, proxy statements and
other information should be available for inspection at the Commission's office
at 450 Fifth Street, N.W., Washington, DC 20549, and also should be available
for inspection at the regional offices of the Commission located at Northwestern
Atrium Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450 Fifth
Street, N.W., Washington, DC 20549.
CERTAIN INFORMATION CONCERNING PARENT AND MERGING COMPANY
Merging Company is a newly-incorporated Michigan corporation and a
wholly-owned direct subsidiary of Parent. Merging Company has not conducted any
business to date other than in connection with the Merger.
Parent is a Michigan corporation and an indirect subsidiary of COM MH, Inc.
(formerly known as MHI). Parent's sole assets are its ownership of approximately
96.5% of the Common Stock of the Company; its ownership of 100% of the issued
and outstanding capital stock of Detroit Cable; and its 66.7% general
partnership interest in the Manager Partnership. The principal executive offices
of Parent and the Merging Company are located at 1500 Market Street,
Philadelphia, PA 19102-2148.
The name, citizenship, business addresses, present principal occupation or
employment, and material positions held during the past five years of each of
the directors and executive officers of the Merging Company and of Parent are
set forth in Annex 2 to this Statement, which is incorporated herein by
reference.
18
<PAGE>
Sural holds approximately 78% of the voting power of the two classes of
voting common stock of Comcast combined. Ralph J. Roberts, Chairman of the Board
and a Director of Comcast, Parent, Merging Company and the Company, and members
of his family own all of the voting securities of Sural. Pursuant to Rule 13d-3
of the Securities Exchange Act of 1934, as amended, he is deemed to be the
beneficial owner of the Comcast common stock owned by Sural, as well as the
beneficial owner of the Common Stock of the Company owned by Parent. The
principal executive offices of Sural are located at 1105 Market Street, Suite
1300, Wilmington, Delaware 19801.
The name, citizenship, business addresses, present principal occupation or
employment, and material positions held during the past five years of each of
the directors and executive officers of Sural are set forth in Annex 2 to this
Statement, which is incorporated herein by reference.
Until immediately prior to the time Merging Company merges with and into
the Company, it is anticipated that Merging Company will have no assets,
liabilities or activities other than those incident to its formation and
capitalization (including the shares of the Common Stock of the Company
contributed to it by Parent) and as contemplated to implement the Plan. No
meaningful financial information regarding Merging Company is available.
Since the commencement of the Company's 1992 fiscal year, Parent (including
Maclean Hunter Cable TV, Inc., Parent's predecessor) has purchased 4,265 shares
(.4265%) of the outstanding Common Stock of the Company. The purchase prices for
such shares ranged from $13.50 to $15.00 per share. Parent, or a wholly-owned
subsidiary of Parent, has owned 90% or more of the Company's outstanding Common
Stock since the Purchase Date. The following table sets forth for the periods
indicated the average purchase price paid for such shares.
<TABLE>
<CAPTION>
AVERAGE PURCHASE PRICE
----------------------
<S> <C>
1992
1st Quarter..................................... No Shares Purchased
2nd Quarter..................................... $15.00
3rd Quarter..................................... $15.00
4th Quarter..................................... No Shares Purchased
1993
1st Quarter..................................... No Shares Purchased
2nd Quarter..................................... No Shares Purchased
3rd Quarter..................................... No Shares Purchased
4th Quarter..................................... $13.50
1994
1st Quarter..................................... $13.50
2nd Quarter..................................... No Shares Purchased
3rd Quarter..................................... No Shares Purchased
4th Quarter..................................... No Shares Purchased
1995
1st Quarter..................................... No Shares Purchased
2nd Quarter..................................... No Shares Purchased
3rd Quarter..................................... No Shares Purchased
4th Quarter..................................... No Shares Purchased
</TABLE>
FEES AND EXPENSES/FINANCING OF THE TRANSACTION
It is estimated that the total funds required to consummate the Plan and
pay all related costs and expenses will be approximately $1.0 million. All costs
and expenses incurred in connection with the transactions contemplated by the
Plan shall be paid by the party incurring such expenses except that Parent, from
its available working capital, will provide Merging Company and the Company
surviving the Merger with the funds required to consummate the Merger, including
the aggregate Merger Consideration.
19
<PAGE>
It is estimated that the costs and expenses incurred in connection with the
Plan will be approximately as set forth below:
<TABLE>
<S> <C>
Aggregate Merger Consideration.......................................................... $ 960,485
Appraisal Fees.......................................................................... 20,200
Legal Fees and Expenses (1)............................................................. 7,500
Transfer Agent Fees and Expenses........................................................ 10,400
Filing Fees............................................................................. 192
Printing Fees........................................................................... 10,000
Miscellaneous........................................................................... 1,223
-------------
Total................................................................................... $ 1,010,000
-------------
-------------
</TABLE>
- ------------------
(1) Does not include fees and disbursements in connection with any proceeding
that may relate to the exercise of appraisal rights in respect of Dissenting
Shares.
PROCEDURES FOR SURRENDERING SHARES IN EXCHANGE FOR PAYMENT OF MERGER
CONSIDERATION OR PURSUANT TO THE EXERCISE OF DISSENTERS RIGHTS
DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. In order to receive
the cash payment of $27.54 per Share Merger Consideration to which a holder of
Shares is entitled in exchange for the Shares under the terms of the Merger,
certificates for all physically surrendered Shares, together with a properly
completed and duly executed Letter of Transmittal, and any required signature
guarantees and any other required documents must be received by the Paying Agent
at one of its addresses set forth therein.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES
REPRESENTING SHARES, IS AT THE OPTION AND RISK OF THE SHAREHOLDER. IF SENT BY
MAIL, IT IS RECOMMENDED THAT CERTIFICATES AND DOCUMENTS BE SENT BY REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED.
GUARANTEE OF SIGNATURES. No signature guarantee on the Letter of
Transmittal is required (i) if the Letter of Transmittal is signed by the
registered holder(s) of the Shares being surrendered or deposited, as
applicable, and payment is to be made directly to such registered holder(s) or
(ii) if such Shares are delivered for the account of an 'Eligible Institution'.
For purposes of the Merger, 'Eligible Institution' means a financial institution
that is a member of the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange, Inc. Medallion
Signature Program (each, an 'Eligible Institution'). IN ALL OTHER CASES ALL
SIGNATURES ON THE LETTER OF TRANSMITTAL MUST BE GUARANTEED BY AN ELIGIBLE
INSTITUTION AS DESCRIBED BELOW AND IN THE LETTER OF TRANSMITTAL.
SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If the
Letter of Transmittal is signed by the registered holder of the Shares delivered
thereby, the signature must correspond with the name as written on the face of
the certificate(s) without alteration, enlargement or any change whatsoever. If
any of the Shares delivered are owned of record by two or more joint owners, all
such owners must sign the Letter of Transmittal. If any Shares are registered in
different names on several certificates, it will be necessary to complete, sign
and submit as many separate Letters of Transmittal as there are different
registrations of certificates. If the Letter of Transmittal or any certificates
or stock powers are signed by a trustee, executor, personal representative,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing, and proper evidence satisfactory to the Company of such
person's authority so to act must be submitted.
When the Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted thereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to a person
other than the registered owner(s).
If the Letter of Transmittal is signed by a person other than the
registered owner(s) of the certificates listed and submitted therewith, the
certificate(s) must be endorsed or accompanied by
20
<PAGE>
appropriate stock powers and any other required documents, in either case signed
by the registered owner(s) exactly as the name or name(s) of the registered
owner(s) appear(s) on the certificate(s), unless the Letter of Transmittal is
signed by an Eligible Institution. Signatures on such certificates or stock
powers must be guaranteed by an Eligible Institution.
DISSENTING SHAREHOLDERS. In the case of a shareholder who is exercising
dissenters rights granted by the Company under Michigan law, IN ADDITION TO
DELIVERING A COMPLETED LETTER OF TRANSMITTAL AND HIS OR HER SHARES AS DESCRIBED
ABOVE, A COMPLETED DISSENTERS DEMAND FOR PAYMENT FORM TOGETHER WITH ANY OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE PAYING AGENT BY APRIL 9, 1996 (THE
'DEMAND DATE'). See 'SPECIAL FACTORS -- Summary of Procedure to Exercise
Dissenters Rights'.
SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of a person other than the signer of the Letter of Transmittal or if a
check is to be sent to someone other than the signer of the Letter of
Transmittal or to an address other than that shown on the Letter of Transmittal,
the appropriate boxes on the Letter of Transmittal should be completed.
DETERMINATION OF VALIDITY. All questions as to the validity, form and
eligibility for payment of any surrendered Shares pursuant to any of the
procedures described above will be determined in the sole discretion of the
Company, whose determination will be final and binding.
MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. If any certificate for
Shares has been mutilated, lost, stolen or destroyed, you should contact State
Street Bank (the 'Paying Agent') at telephone number (800) 426-5523 for further
instructions as to obtaining the documents which must be delivered in order to
complete the delivery, surrender or deposit of your Shares.
REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Transaction Statement, the Letter of
Transmittal and the Dissenters Demand for Payment Form may be directed to the
Paying Agent at P.O. Box 9061, Boston, MA 02205-8686. The telephone number of
the Paying Agent is (800) 426-5523.
DISSENTING SHARES/DISSENTERS RIGHTS
Under Michigan law, if a corporation owns at least 90% of each class of
stock of a subsidiary, such corporation can effect a merger with the subsidiary
without the authorization of the board of directors or other shareholders of the
subsidiary, and, consequently, no vote of the shareholders of the Company is
required. The Company has granted the shareholders of the Company the right to
dissent from the adoption of the Plan and obtain payment in cash of the fair
value of their shares (the 'Dissenting Shares') even though dissenters rights
are not required under the MBCA. Such rights, if the statutory procedures are
complied with, could lead to a judicial determination of the fair value
(excluding any appreciation or depreciation in anticipation of the
accomplishment of the Merger, unless exclusion would be inequitable) required to
be paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Dissenting Shares could be based upon
considerations other than or in addition to the market value of the Dissenting
Shares and the factors used to determine the Merger Consideration paid pursuant
to the Merger, including asset values and the investment value of the Dissenting
Shares. The value so determined could be more or less than the Merger
Consideration paid pursuant to the Merger. The MBCA provides that a shareholder
who is entitled to dissent and seek payment for his or her shares may not
challenge the corporate action creating his or her right to dissent unless such
action is unlawful or fraudulent with respect to the shareholder or the Company.
While there do not appear to be dispositive judicial decisions under
Section 711 of the MBCA, which authorizes the type of short form merger
described by the Plan, Section 711 is patterned generally after similar
provisions in the Delaware General Corporation Law. Several decisions by
Delaware courts (which are not controlling upon Michigan courts but which could
influence the judgment of a Michigan court) have held that, in certain
instances, a controlling shareholder of a corporation involved in a merger has a
fiduciary duty to the other shareholders that requires the merger
21
<PAGE>
to be fair to shareholders who did not have control. In determining whether a
merger is fair to shareholders who lack control, the Delaware courts have
considered, among other things, the type and amount of consideration to be
received by the shareholders and whether there were fair dealings among the
parties. The Delaware Supreme Court has indicated in recent decisions that in
most cases the remedy available in a merger that is found not to be 'fair' is a
damages remedy based on essentially the same principles.
SUMMARY OF PROCEDURE TO EXERCISE DISSENTERS RIGHTS
Under Section 762 of the MBCA, the shareholders of the Company are not
entitled to exercise dissenters rights. However, the Company has decided to
grant dissenters rights to any shareholder who complies with the procedures set
forth in the MBCA. Dissenting shareholders will be entitled to the rights and
remedies of dissenting shareholders provided in the MBCA, including having the
'fair value' of his or her Dissenting Shares (exclusive of any element of
appreciation or depreciation in anticipation of the accomplishment or
expectation of the Merger, unless exclusion would be inequitable) judicially
determined and paid to such dissenting shareholder. The following is a brief
summary of Sections 761 through 774 of the MBCA which sets forth the procedures
for dissenting from adoption of the Plan and demanding statutory appraisal
rights. This summary is qualified in its entirety by reference to Sections 761
through 774 of the MBCA, the full text of which is attached hereto as Annex 3.
DISSENTING SHAREHOLDERS ARE URGED TO CAREFULLY READ ANNEX 3 HERETO. FAILURE TO
TAKE ANY STEP IN A TIMELY MANNER IN CONNECTION WITH THE EXERCISE OF DISSENTERS
RIGHTS MAY RESULT IN THE LOSS OR WAIVER OF THESE RIGHTS.
SHAREHOLDERS OF RECORD AND BENEFICIAL OWNERS OF SHARES WHO DESIRE TO
EXERCISE THEIR DISSENTERS RIGHTS ('DISSENTING SHAREHOLDERS') MUST DEMAND PAYMENT
FOR THEIR DISSENTING SHARES BY COMPLETING THE LETTER OF TRANSMITTAL AND
DISSENTERS DEMAND FOR PAYMENT FORM INCLUDED HEREIN, AND RETURNING SUCH FORMS AS
INSTRUCTED THEREIN, TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, AND OTHER
REQUIRED DOCUMENTS AND HIS OR HER CERTIFICATES REPRESENTING DISSENTING SHARES SO
THAT THEY ARE RECEIVED BY THE PAYING AGENT BY APRIL 9, 1996 (THE 'DEMAND DATE').
Certificates representing Dissenting Shares will be returned to Dissenting
Shareholders if the Merger has not been effectuated within sixty (60) days of
the Demand Date. FOR DISSENTERS RIGHTS TO BE PERFECTED, THE PAYING AGENT MUST
HAVE RECEIVED THE COMPLETED DISSENTERS DEMAND FOR PAYMENT FORM, LETTER OF
TRANSMITTAL, THE CERTIFICATES REPRESENTING DISSENTING SHARES AND ANY OTHER
REQUIRED DOCUMENTS BY THE DEMAND DATE. Dissenting Shareholders should mail the
completed Letter of Transmittal, Dissenters Demand for Payment Form, the
certificates representing the Dissenting Shares and any other required documents
to the address and pursuant to the instructions contained in the Letter of
Transmittal.
A record holder of shares may assert dissenters rights as to fewer than all
of the shares registered in his or her name only if such holder dissents with
respect to all of the shares beneficially owned by any one person and notifies
the Company in writing of the name and address of such beneficial owner on whose
behalf such record holder dissents (as set forth in the Dissenters Demand for
Payment Form). In that event, such record holder's rights will be determined as
if the shares as to which it has dissented and its other shares were registered
in the names of different shareholders.
A beneficial owner of shares who is not the record holder may assert
dissenters rights with respect to shares held on his or her behalf and shall be
treated as a Dissenting Shareholder under the MBCA if such beneficial owner
submits to the Paying Agent not later than the Demand Date a written consent of
the record holder (as set forth in the Dissenters Demand for Payment Form). A
beneficial owner may not dissent with respect to some but less than all shares
owned by such beneficial owner, whether or not the shares so owned are
registered in his or her name.
A DISSENTING SHAREHOLDER WHO FAILS TO DEMAND PAYMENT ON A TIMELY BASIS, OR
FAILS, ON A TIMELY BASIS, AS DESCRIBED BY THIS TRANSACTION STATEMENT, TO DEPOSIT
OR DELIVER DISSENTING SHARES, THE LETTER OF TRANSMITTAL, THE DEMAND FOR PAYMENT
FORM AND ANY OTHER REQUIRED DOCUMENTS, SHALL NOT BE ENTITLED TO DISSENTERS
RIGHTS. THE HOLDER OF DISSENTING SHARES SHALL RETAIN ALL OTHER
22
<PAGE>
RIGHTS OF A SHAREHOLDER UNTIL THOSE RIGHTS ARE CANCELLED BY EFFECTUATION OF THE
PROPOSED MERGER.
The MBCA contains detailed provisions concerning the Company's duty to
notify a Dissenting Shareholder, the procedures for determining the value of the
dissenters shares, Dissenting Shareholders' rights to payment, the situations
whereby dissenters rights will terminate (for example, abandonment of the Plan),
the procedures for settling disputes over valuation and other provisions too
numerous to set forth in detail herein. Sections 761 through 774 of the MBCA are
attached hereto as Annex 3. The Company will act in compliance with these
provisions in its handling of dissenters rights.
Shareholders should note that the Parent has concluded that the Merger is
fair to the Public Shareholders. See 'Special Factors -- Fairness of the
Transaction.'
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Generally, the receipt of cash by a Public Shareholder of the Company in
exchange for his or her Shares pursuant to the Plan or the receipt of cash by
holders of Dissenting Shares (excluding interest, if any, awarded by a court in
a proceeding related thereto) will result in gain or loss for federal income tax
purposes equal to the difference between the amount of cash received in exchange
for the shares sold and such shareholder's adjusted tax basis in such shares.
Provided that the shares constitute capital assets in the hands of the
shareholder, such gain or loss will be capital gain or loss, and will be long-
term capital gain or loss if the holder has held the shares for more than one
year at the time of sale.
The foregoing discussion may not be applicable to certain types of
shareholders, including shareholders who are not citizens or residents of the
United States and foreign corporations, or to entities that are otherwise
subject to special tax treatment under the Internal Revenue Code of 1986, as
amended (such as insurance companies, tax-exempt entities and regulated
investment companies).
Neither Merging Company nor Parent anticipates the recognition of any gain,
loss or income by reason of the Merger.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. THE PRECISE TAX CONSEQUENCES OF
THE PLAN WILL DEPEND ON THE PARTICULAR CIRCUMSTANCES OF THE HOLDER. SHAREHOLDERS
ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS.
------------------------
Merging Company and Parent have filed with the Commission the Schedule
13E-3 pursuant to Rule 13e-3 under the Exchange Act, and furnished certain
additional information with respect to the Merger, and may file amendments
thereto. The Schedule 13E-3 and any amendments thereto, including exhibits, will
be made available for inspection and copying at the principal executive offices
of Parent during regular business hours by any interested shareholder of the
Company or by his or her representative who has been so designated in writing
and may be inspected and copied at the offices of the Securities and Exchange
Commission at 450 Fifth Street, N.W., Washington, DC 20549, and also should be
available for inspection at the regional offices of the Commission located at
Northwestern Atrium Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450 Fifth
Street, N.W., Washington, DC 20549.
23
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ANNEX 1
PLAN OF MERGER
BACKGROUND OF PLAN
CID Transaction Co. ('Merging Company') is a business corporation organized
under the laws of the State of Michigan. Approximately ninety-six and one-half
percent (96.5%) of the issued and outstanding shares of Common Stock, par value
$.01 ('Subsidiary Common Stock'), of Cablevision Investment of Detroit, Inc., a
Michigan corporation (the 'Subsidiary'), is owned by Merging Company. Merging
Company is a wholly-owned subsidiary of Comcast Cablevision of Taylor, Inc., a
Michigan corporation ('Parent').
Merging Company and the Subsidiary are herein sometimes collectively called
the 'Constituent Corporations'.
Pursuant to Section 711(1) and Section 713(2)(b) of the Michigan Business
Corporation Act, as amended (the 'MBCA'), the Board of Directors and sole
shareholder of Merging Company have approved the merger of Merging Company with
and into Subsidiary (the 'Merger'), with the Subsidiary to exist as the
surviving corporation, pursuant to the terms of this Plan. The MBCA does not
require that this Plan be approved by the shareholders or Board of Directors of
the Subsidiary.
The Parent has concluded that the Merger is fair to the Public Shareholders
(as hereinafter defined) and the Board of Directors of Subsidiary has accepted
that determination.
1. MERGER
1.1 Upon the terms and subject to the conditions hereof, the Constituent
Corporations shall, on the 'Effective Date' (as hereinafter defined), be merged
into a single corporation in accordance with the applicable provisions of the
MBCA by the Merging Company merging into the Subsidiary. The Subsidiary shall be
the surviving corporation (the 'Surviving Corporation'). The separate existence
of Merging Company will cease upon the Effective Date. The Merger shall have the
effects set forth in Section 724 of the MBCA. As of the Effective Date, the
Subsidiary will be a wholly-owned subsidiary of Parent.
1.2 Not less than thirty (30) days prior to the Effective Date, Parent and
Merging Company shall file with the Securities and Exchange Commission a Rule
13e-3 Transaction Statement (the 'Schedule 13E-3') with respect to the Merger
and shall take all steps necessary to cause a Rule 13e-3 Transaction Statement
(the 'Transaction Statement'), as such Transaction Statement may be corrected,
amended and supplemented, to be disseminated to record holders of Subsidiary
Common Stock as, and to the extent, required by applicable law.
2. ARTICLES OF INCORPORATION, BYLAWS, DIRECTORS AND OFFICERS
2.1 Articles of Incorporation
The Articles of Incorporation of the Subsidiary in effect on the Effective
Date shall continue in full force and effect, unless and until subsequently
amended, as the Articles of Incorporation of the Surviving Corporation.
2.2 Bylaws
The Bylaws of the Subsidiary in effect on the Effective Date shall continue
in full force and effect, unless and until subsequently amended, as the Bylaws
of the Surviving Corporation.
2.3 Directors and Officers
The Directors and Officers of Merging Company in office on the Effective
Date shall become the Directors and Officers of the Surviving Corporation and
shall continue in office until their successors have been duly elected or
appointed and qualified, subject to removal, resignation or such other change as
may otherwise occur, or as otherwise provided by law, and on the Effective Date
of the Merger all
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other officers and directors of Subsidiary shall thereupon cease to hold office.
3. STATUS OF OUTSTANDING CAPITAL STOCK
3.1 The designation and number of outstanding shares of capital stock of
each of the Subsidiary and Merging Company is as follows:
(a) The Subsidiary has 1,000,000 shares of Common Stock, par value
$.01 per share, issued and outstanding. The Common Stock of Subsidiary is
not entitled to vote on the Merger.
(b) The Merging Company has 100 shares of Common Stock issued and
outstanding. The Common Stock of Merging Company is entitled to one (1)
vote per share on the Merger.
3.2 On the Effective Date, by virtue of the Merger and without any action
on the part of the Merging Company, the Surviving Corporation or Parent:
(a) Each share of Subsidiary Common Stock, par value $.01 per share (a
'Share'), issued and outstanding immediately prior to the Effective Date of
the Merger (other than Shares to be cancelled pursuant to Section 3.2
hereof and Shares held by any holder who becomes entitled to payment of the
fair value for his or her Shares pursuant to the exercise of dissenters
rights) shall be cancelled and extinguished and be converted into and
become solely a right to receive $27.54 in cash without interest thereon
(the 'Merger Consideration'), payable to the holder thereof (individually,
a 'Public Shareholder' and collectively, the 'Public Shareholders') upon
surrender of the certificates (or other indicia of ownership of Shares
acceptable to Merging Company) formerly representing such Shares as
provided in Section 5 hereof.
(b) Each Share issued and outstanding immediately prior to the
Effective Date of the Merger and held by Merging Company shall be cancelled
and retired, and no payment shall be made with respect thereto.
(c) Each share of Common Stock of Merging Company owned by Parent
issued and outstanding immediately prior to the Effective Date shall be
converted into one (1) share of Common Stock of the Surviving Corporation.
4. DISSENTING SHARES
4.1 Notwithstanding anything in this Plan to the contrary, Shares
('Dissenting Shares') held by shareholders who shall have delivered a written
demand for payment for such Shares ('Dissenting Shareholders'), and any other
required documents, as, in the manner, and within the time period, provided in
Sections 762 through 774 of the MBCA and who shall not have lost such right to
appraisal shall not be converted into or represent a right to receive the Merger
Consideration, but the holders thereof shall be entitled solely to such rights
as are granted by Sections 762 through 774 of the MBCA.
4.2 The Subsidiary shall give Parent and Merging Company (i) prompt notice
of receipt of any written demands for payment and any other instruments served
pursuant to Sections 762 through 774 of the MBCA and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under Sections 762 through 774 of the MBCA. The Subsidiary shall not, except
with the prior written consent of Parent, voluntarily make any payment with
respect to any demands for payment or offer to settle or settle any such
demands.
5. PAYMENT FOR SHARES
5.1 Prior to the Effective Date, Parent and Merging Company shall designate
a bank or trust company to act as Paying Agent in the Merger (the 'Paying
Agent') pursuant to a written agreement (the 'Paying Agent Agreement'). At or
prior to the Effective Date, Parent will take all steps necessary to enable and
cause Merging Company to provide the Paying Agent with the amounts necessary to
make the payments contemplated by Section 3.1, which amounts shall be placed by
the Paying Agent in a separate account (the 'Fund'). Out of the Fund, the Paying
Agent shall make the payments referred to in Section 3.1. The Fund shall not be
used for any other purpose. The Paying Agent may
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invest portions of the Fund, as directed by Parent and/or Merging Company (so
long as such directions do not impair the Paying Agent's ability to make other
payments referred to in Section 3 hereof or otherwise impair the rights of
holders of Shares as described in such Section 3.1). Any net earnings resulting
from, or interest or income produced by, such investments shall be paid to
Parent as and when requested by Parent. The Surviving Corporation shall replace
any monies lost through any investment pursuant to this Section.
5.2 Not less than twenty (20) days prior to the Effective Date, the
Surviving Corporation shall cause the Paying Agent to mail to each record holder
of Shares, (i) the Transaction Statement, (ii) a Notice of Adoption of Plan of
Merger approved by Parent and Merging Company, (iii) a form letter of
transmittal approved by Parent and Merging Company for use by Public
Shareholders and holders of Dissenting Shares (the 'Letter of Transmittal')
(which shall specify the procedure for delivery of the certificates representing
Shares ('Certificates') or Dissenting Shares ('Dissenting Certificates') and any
other required documents to the Paying Agent) and (iv) any other required
documents, instruments or disclosures requested by Parent and Merging Company to
be transmitted to shareholders of Subsidiary.
5.3 Promptly after the Effective Date, the Parent shall cause the Paying
Agent to mail to each record holder of Shares immediately prior to the Effective
Date, a Notice of Merger approved by Parent and Merging Company, together with
any other documents, instruments or disclosures requested by Parent and Merging
Company to be transmitted to shareholders of Subsidiary.
5.4 Upon surrender to the Paying Agent of a Certificate, together with the
Letter of Transmittal and any other duly executed required documents, the holder
of such Certificate shall be entitled to receive in exchange therefor, on the
Effective Date, cash in an amount equal to the Merger Consideration, and such
Certificate shall forthwith be cancelled. No interest will be paid or accrued on
the cash payable upon the surrender of Shares. Until surrendered in accordance
with the provisions of this Section 5, each Share (other than Shares held by
Merging Company or Dissenting Shares) shall represent for all purposes only the
right to receive the Merger Consideration, without any interest thereon.
5.5 Subject to full compliance with this Section 5, any cash provided to
the Paying Agent pursuant to this Section 5 and not exchanged for Shares within
180 days after the Effective Date will be returned by the Paying Agent to the
Surviving Corporation which thereafter will act as paying agent. The Surviving
Corporation will escheat to the appropriate state, in accordance with applicable
law, any funds set aside to exchange for Shares which are not tendered.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to a holder of Shares for any Merger Consideration delivered to
a public official pursuant to applicable abandoned property, escheat and similar
laws.
5.6 In connection with the Merger, the Subsidiary will cause its transfer
agent promptly to furnish Parent and Merging Company with mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of the record holders of Shares as of a recent date
immediately prior to the Effective Date and will cause its transfer agent to
furnish Parent and Merging Subsidiary with such additional information and
assistance as Parent or its agents may reasonably request (including, without
limitation, any of the foregoing) in transmitting the Transaction Statement and
the Letter of Transmittal to Public Shareholders.
6. NO FURTHER RIGHTS OR TRANSFERS
At and after the Effective Date and without affecting the conversion
referred to in Section 3.3 hereof, each holder of issued and outstanding Shares
of Subsidiary Common Stock immediately prior to the Effective Date shall cease
to have any rights as a shareholder of the Subsidiary, except for the right to
surrender his or her Shares in exchange for the Merger Consideration or to
perfect his or her right to receive payment for Shares pursuant to dissenters
rights granted by the Subsidiary under Sections 762 through 767 of the MBCA and
Section 4 hereof if such holder has validly exercised and perfected and not
withdrawn his or her right to receive payment therefor. There shall be no
transfers on
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the stock transfer books of the Surviving Corporation of the Shares from and
after the Effective Date. If, after the Effective Date and without affecting the
conversion referred to in Section 3.3 hereof, Certificates formerly representing
Shares are presented to the Surviving Corporation, they shall be cancelled and
exchanged solely for the Merger Consideration (unless such Certificates are
being deposited solely in connection with the exercise of dissenters rights as
Dissenting Certificates or represent Shares to be cancelled pursuant to Section
3.2).
7. ADJUSTMENTS
If, between the date of adoption of this Plan and the Effective Date, the
outstanding Shares shall be changed into a different number of shares or a
different class by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or a stock dividend thereon
shall be declared with a record date prior to the Effective Date, the amount of
consideration to be received pursuant to this Plan in exchange for each
outstanding Share shall be correspondingly adjusted.
8. EFFECTIVE DATE
The Board of Directors of Merging Company shall take all action necessary
in order that the Merger provided for herein shall be effective pursuant to the
laws of the State of Michigan. The Effective Date shall be the date upon which a
Certificate of Merger is filed with the Department of Commerce of the State of
Michigan (the 'Effective Date').
9. TERMINATION AND AMENDMENT
Notwithstanding anything to the contrary contained herein, (i) this Plan of
Merger and the Merger provided for herein may be terminated and abandoned at any
time prior to the Effective Date by the Board of Directors of Merging Company,
and (ii) this Plan of Merger may be amended at any time prior to its Effective
Date by the Board of Directors of Merging Company. To the full extent permitted
by applicable law, after the Effective Date the provisions of this Plan of
Merger may be interpreted, amended or waived by the Board of Directors of the
Surviving Corporation.
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ANNEX 2
DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth for each director and executive officer of Parent,
Sural, Merging Company and the Company, the name, business address, position,
present principal occupation or employment and five-year employment history.
Except as otherwise noted, (i) each person listed below is a citizen of the
United States and (ii) the business address of each person listed below is 1500
Market Street, Philadelphia, Pennsylvania 19102-2148.
Ralph J. Roberts was elected as Chairman of the Board of Directors of the
Company in December 1994. Mr. Roberts has served as the Chairman of the Board of
Directors of Parent since December 1994 and of Merging Company since its
incorporation. Mr. Roberts has served as a Director and Chairman of the Board of
Directors of Comcast for more than five years. Mr. Roberts is the President and
a Director of Sural. Mr. Roberts devotes a major portion of his time to the
business and affairs of Comcast. Mr. Roberts is also a Director of Comcast UK
Cable Partners Limited and Storer Communications, Inc.
Julian A. Brodsky was elected as Vice Chairman of the Board of Directors,
Assistant Treasurer and Assistant Secretary of the Company in December 1994. Mr.
Brodsky has served as the Vice Chairman, Assistant Treasurer, Assistant
Secretary and Director of Parent since December 1994 and of Merging Company
since its incorporation. Mr. Brodsky has served as a Director and Vice Chairman
of the Board of Directors of Comcast for more than five years. Mr. Brodsky
presently serves as the Treasurer and a Director of Sural. Mr. Brodsky devotes a
major portion of his time to the business and affairs of Comcast. Mr. Brodsky is
also a Director of Comcast UK Cable Partners Limited, Storer Communications,
Inc. and RBB Fund, Inc.
Brian L. Roberts was elected to the Board of Directors and President of the
Company in December 1994. Mr. Roberts has served as Vice Chairman and Director
of the Parent since December 1994 and as President and Director of the Merging
Company since its incorporation. Mr. Roberts has served as President and as a
Director of Comcast for more than five years. Mr. Roberts presently serves as
Vice President and a Director of Sural. Mr. Roberts devotes a major portion of
his time to the business and affairs of Comcast. Mr. Roberts is also a Director
of Turner Broadcasting System, Inc., Comcast UK Cable Partners Limited and
Storer Communications, Inc. He is the son of Mr. Ralph J. Roberts.
John R. Alchin was elected Senior Vice President and Treasurer of the
Company in December 1994. Mr. Alchin has served as Senior Vice President and
Treasurer of Parent since December 1994 and of Merging Company since its
incorporation. Mr. Alchin has served as a Senior Vice President and Treasurer of
Comcast for more than five years. Mr. Alchin is a citizen of Australia. Mr.
Alchin devotes a substantial amount of his time to Comcast. Mr. Alchin is a
director of Comcast UK Cable Partners Limited.
Lawrence S. Smith was elected as Senior Vice President of the Company in
December 1994. Mr. Smith has served as Senior Vice President of Parent since
December 1994 and of Merging Company since its incorporation. Mr. Smith has
served as Executive Vice President of Comcast since December 1995. Prior to his
appointment as Executive Vice President of Comcast, Mr. Smith served as Senior
Vice President of Comcast for more than five years. Mr. Smith devotes a
substantial amount of his time to Comcast. Mr. Smith is a director of Comcast UK
Cable Partners Limited.
Stanley L. Wang was elected to the Board of Directors, and Senior Vice
President and Secretary of the Company in December 1994. Mr. Wang has served as
the Senior Vice President, Secretary and Director of Parent since December 1994
and of Merging Company since its incorporation. Mr. Wang has served as Senior
Vice President, Secretary and General Counsel of Comcast for more than five
years. Mr. Wang devotes a major portion of his time to the business and affairs
of Comcast. Mr. Wang is a Director of Storer Communications, Inc.
Suzanne F. Roberts has been, for more than five years, Vice President and a
Director of Sural,
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Comcast's largest shareholder. Ms. Roberts is the spouse of Ralph J. Roberts.
Thomas G. Baxter was elected President of the Parent in December 1994. Mr.
Baxter has also served as the President of CCC, Inc. for more than five years.
Gary Mizga was elected as Regional Senior Vice President of Parent in
December 1994. Mr. Mizga has also served as Regional Senior Vice President of
CCC, Inc. for more than five years.
Michael S. Tallent was elected as Senior Vice President of Parent in
December 1994. Mr. Tallent has also served as Senior Vice President of CCC, Inc.
since 1991. Prior to joining CCC, Inc. in 1991, Mr. Tallent served as President
of Storer Communications, Inc. from 1988 through 1991.
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ANNEX 3
DISSENTERS RIGHTS PROVISIONS OF MICHIGAN BUSINESS CORPORATION ACT
450.1761. DEFINITIONS
Sec. 761. As used in sections 762 to 774:3
(a) 'Beneficial shareholder' means the person who is a beneficial
owner of shares held by a nominee as the record shareholder.
(b) 'Corporation' means the issuer of the shares held by a dissenter
before the corporate action, or the surviving corporation by merger of that
issuer.
(c) 'Dissenter' means a shareholder who is entitled to dissent from
corporate action under section 7624 and who exercises that right when and
in the manner required by sections 764 through 7725.
(d) 'Fair value', with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would
be inequitable.
(e) 'Interest' means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances.
(f) 'Record shareholder' means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(g) 'Shareholder' means the record or beneficial shareholder.
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Amended by P.A. 1988, No. 58, Section 1, Eff. April 1; P.A. 1989, No. 121,
Section 1, Eff. Oct. 1.; P.A. 1993, No. 91, Section 1, Eff. Oct. 1.
3. Sections 450.1762 to 450.1774
4. Section 450.1762.
5. Sections 450.1764 through 450.1772
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450.1762. SHAREHOLDER'S RIGHT TO DISSENT, FAIR VALUE OF SHARES; EXCEPTIONS TO
RIGHT TO DISSENT
Sec. 762. (1) A shareholder is entitled to dissent from, and obtain payment
of the fair value of his or her shares in the event of, any of the following
corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party if shareholder approval is required for the merger by section 703a1
or the articles of incorporation and the shareholder is entitled to vote on
the merger, or the corporation is a subsidiary that is merged with its
parent under section 711.2
(b) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan.
(c) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution but not including a sale pursuant
to court order.
(d) An amendment of the articles giving rise to a right to dissent
pursuant to section 621.3
(e) A transaction giving rise to a right to dissent pursuant to
section 754.4
(f) Any corporate action taken pursuant to a shareholder vote to the
extent the articles, bylaws, or a resolution of the board provides that
voting or nonvoting shareholders are entitled to dissent and obtain payment
for their shares.
(g) The approval of a control share acquisition giving rise to a right
to dissent pursuant to section 799.5
(2) Unless otherwise provided in the articles, bylaws, or a resolution of
the board, a shareholder may not dissent from any of the following:
(a) Any corporate action set forth in subsection (1)(a) to (e) as to
shares which are listed on a national securities exchange or held of record
by not less than 2,000 persons on the record date fixed to determine the
shareholders entitled to receive notice of and to vote at the meeting of
shareholders at which the corporate action is to be acted upon.
(b) A transaction described in subsection (1)(a) in which shareholders
receive cash or shares that satisfy the requirements of subdivision (a) or
any combination thereof.
(c) A transaction described in subsection (1)(b) in which shareholders
receive cash or shares that satisfy the requirements of subdivision (a) or
any combination thereof.
(d) A transaction described in subsection (1)(c) which is conducted
pursuant to a plan of dissolution providing for distribution of
substantially all of the corporation's net assets to shareholders in
accordance with their respective interests within 1 year after the date of
the transaction, where the transaction is for cash or shares that satisfy
the requirements of subdivision (a) or any combination thereof.
(3) A shareholder entitled to dissent and obtain payment for his or her
shares pursuant to subsection (1)(a) to (e) may not challenge the corporate
action creating his or her entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
(4) A shareholder who exercises his or her right to dissent and seek
payment for his or her shares pursuant to subsection (1)(f) may not challenge
the corporate action creating his or her entitlement unless that action is
unlawful or fraudulent with respect to the shareholder or the corporation.
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Amended by P.A. 1988, No. 58, Section 1, Eff. April 1; P.A. 1989, No. 121,
Section 1, Eff. Oct. 1.
1. Section 450.1703a.
2. Section 450.1711.
3. Section 450.1621.
4. Section 450.1754.
5. Section 450.1799.
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450.1763. DISSENTER'S RIGHTS; PARTIAL DISSENTER, BENEFICIAL SHAREHOLDER
Sec. 763. (1) A record shareholder may asset dissenters' rights as to fewer
than all the shares registered in his or her name only if he or she dissents
with respect to all shares beneficially owned by any 1 person and notifies the
corporation in writing of the name and address of each person on whose behalf he
or she asserts dissenters' rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which he or she dissents and
his or her other shares were registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on his or her behalf only if all of the following apply:
(a) He or she submits to the corporation the record shareholder's
written consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights.
(b) He or she does so with respect to all shares of which he or she is
the beneficial shareholder or over which he or she has power to direct the
vote.
450.1764. CORPORATE ACTION CREATING DISSENTERS' RIGHTS; VOTE AT SHAREHOLDERS'
MEETING, NOTICE; ACTION TAKEN WITHOUT SHAREHOLDER VOTE, NOTICE
Sec. 764. (1) If proposed corporate action creating dissenters' rights
under section 7621 is submitted to a vote at a shareholders' meeting, the
meeting notice must state that shareholders are or may be entitled to assert
dissenters' rights under this act and shall be accompanied by a copy of sections
761 to 774.2
(2) If corporate action creating dissenters' rights under section 762 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in section 766.3 A shareholder
who consents to the corporate action is not entitled to assert dissenters
rights.
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Amended by P.A. 1989, No. 121, Section 1, Eff. Oct. 1; P.A. 1993, No. 91,
Section 1, Eff. Oct. 1.
1. Section 450.1762.
2. Section 450.1761 to 450.1774.
3. Section 450.1766.
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450.1765. SHAREHOLDER ASSERTING DISSENTER RIGHTS; WRITTEN NOTICE OF INTENT TO
DEMAND PAYMENT FOR SHARES, SUBMISSION PRIOR TO VOTE AT SHAREHOLDER
MEETING
Sec. 765. (1) If proposed corporate action creating dissenters' rights
under section 7611 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights must deliver to the
corporation before the vote is taken written notice of his or her intent to
demand payment for his or her shares if the proposed action is effectuated and
must not vote his or her shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1)
is not entitled to payment for his or her shares under this act.
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Amended by P.A. 1989, No. 121, Section 1, Eff. Oct. 1.
1. Section 450.1762.
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450.1766. DELIVERY OF WRITTEN DISSENTERS NOTICE BY CORPORATION; NOTICE CONTENTS
Sec. 766. (1) If proposed corporate action creating dissenters' rights
under section 7621 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of section 765.2
(2) The dissenters' notice must be sent no later than 10 days after the
corporate action was taken, and must provide all of the following:
(a) State where the payment demand must be sent and where and when
certificates for shares represented by certificates must be deposited.
(b) Inform holders of shares without certificates to what extent
transfer of the shares will be restricted after the payment demand is
received.
(c) Supply a form for the payment demand that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether he or she acquired beneficial ownership
of the shares before the date.
(d) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the
date the subsection (1) notice is delivered.
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Amended by P.A. 1989, No. 121, Section 1, Oct. 1.
1. Section 450.1762.
2. Section 450.1765.
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450.1767. SHAREHOLDERS SENT DISSENTER'S NOTICE; DEMAND FOR PAYMENT,
CERTIFICATION OF BENEFICIAL OWNERSHIP DATE, DEPOSIT OF CERTIFICATES;
RIGHTS RETAINED; FAILURE TO DEMAND PAYMENT
Sec. 767. (1) A shareholder sent a dissenter's notice described in section
7661 must demand payment, certify whether he or she acquired beneficial
ownership of the shares before the date required to be set forth in the
dissenters' notice pursuant to section 766(2)(c),2 and deposit his or her
certificates in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits his or her share
certificates under subsection (1) retains all other rights of a shareholder
until these rights are canceled or modified by the taking of the proposed
corporate action.
(3) A shareholder who does not demand payment or deposit his or her share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his or her shares under this act.
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Amended by P.A. 1985, No. 76, Section 1, Imd. Eff. July 5; P.A. 1989, No. 121,
Section 1, Eff. Oct. 1.
1. Section 450.1766.
2. Section 450.1766(2)(c).
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450.1768. TRANSFER OF SHARES WITHOUT CERTIFICATES, RESTRICTION; RIGHTS RETAINED
Sec. 768. (1) The corporation may restrict the transfer of shares without
certificates from the date the demand for their payment is received until the
proposed corporate action is taken or the restrictions released under section
770.1
(2) The person for whom dissenters' rights are asserted as to shares
without certificates retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
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Amended by P.A. 1985, No. 76, Section 1, Imd. Eff. July 5; P.A. 1989, No. 121,
Section 1, Eff. Oct. 1.
1. Section 450.1770.
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450.1769. PAYMENT TO DISSENTERS OF ESTIMATED FAIR VALUE OF SHARES PLUS ACCRUED
INTEREST; ACCOMPANYING INFORMATION
Sec. 769. (1) Except as provided in section 771,1 within 7 days after the
proposed corporate action is taken or a payment demand is received, whichever
occurs later, the corporation shall pay each dissenter who complied with section
7672 the amount the corporation estimates to be the fair value of his or her
shares, plus accrued interest.
(2) The payment must be accompanied by all of the following:
(a) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an income
statement for that year, a statement of changes in shareholder's equity for
that year, and if available the latest interim financial statements.
(b) A statement of the corporation's estimate of the fair value of the
shares.
(c) An explanation of how the interest was calculated.
(d) A statement of the dissenter's right to demand payment under
section 772.3
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Amended by P.A. 1989, No. 121, Section 1, Eff. Oct. 1; P.A. 1993, No. 91,
Section 1, Eff. Oct. 1.
1. Section 450.1771.
2. Section 450.1767.
3. Section 450.1772.
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450.1770. FAILURE OF CORPORATION TO TAKE PROPOSED ACTION; RETURN OF
CERTIFICATES, RELEASE OF TRANSFER RESTRICTIONS; TAKING ACTION AFTER
RETURN AND RELEASE, NEW DISSENTER'S NOTICE
Sec.1770. (1) If the corporation does not take the proposed action within
60 days after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on shares without certificates.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under section 7661 and repeat the payment demand procedure.
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Amended by P.A. 1989, No. 121, Section 1, Eff. Oct. 1.
1. Section 450.1766.
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450.1771. ELECTION BY CORPORATION TO WITHHOLD PAYMENT FROM CERTAIN DISSENTERS;
ESTIMATE OF FAIR VALUE OF SHARES, OFFER OF PAYMENT, STATEMENT
Sec. 771. (1) A corporation may elect to withhold payment required by
section 7691 from a dissenter unless he or she was the beneficial owner of the
shares before the date set forth in the dissenters' notice pursuant to section
766(2)(c).2
(2) To the extent the corporation elects to withhold payment under
subsection (1), after taking the proposed corporate action, it shall estimate
the fair value of the shares, plus accrued interest, and shall offer to pay this
amount to each dissenter who shall agree to accept it in full satisfaction of
his or her demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenter's right to demand payment under
section 772.3
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Amended by P.A. 1989, No. 121, Section 1, Eff. Oct. 1.
1. Section 450.1769.
2. Section 450.1766(2)(c).
3. Section 450.1772.
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450.1772. ESTIMATE OF FAIR VALUE, WRITTEN NOTICE; DEMAND FOR PAYMENT,
CONDITIONS; WAIVER OF RIGHT TO DEMAND PAYMENT
Sec. 772. (1) A dissenter may notify the corporation in writing of his or
her own estimate of the fair value of his or her shares and amount of interest
due, and demand payment of his or her own estimate of the fair value of his or
her shares and amount of interest due, and demand payment of his or her
estimate, less any payment under section 769,1 or reject the corporation's offer
under section 7712 and demand payment of the fair value of his or her shares and
interest due, if any 1 of the following applies:
(a) The dissenter believes that the amount paid under section 769 or
offered under section 771 is less than the fair value of his or her shares
or that the interest due is incorrectly calculated.
(b) The corporation fails to make payment under section 769 within 60
days after the date set for demanding payment.
(c) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on shares without certificates within 60 days after the date set
for demanding payment.
(2) A dissenter waives his or her right to demand payment under this
section unless he or she notifies the corporation of his or her demand in
writing under subsection (1) within 30 days after the corporation made or
offered payment for his or her shares.
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P.A. 1972, No. 284, Section 722, added by P.A. 1989, No. 121, Section 1, Eff.
Oct. 1, 1989.
1. Section 450.1769.
2. Section 450.1771.
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450.1773. UNSETTLED DEMAND FOR PAYMENT, APPRAISAL PROCEEDINGS; COMMENCEMENT,
PARTIES, JURISDICTION, APPRAISERS, DISCOVERY RIGHTS, JUDGMENT AMOUNT
Sec. 773. (1) If a demand for payment under section 7721 remains unsettled,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the 60-day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(2) The corporation shall commence the proceeding in the circuit court of
the county in which the corporation's principal place of business or registered
office is located. If the corporation is a foreign corporation without a
registered office or principal place of business in this state, it shall
commence the proceeding in the county in this state where the principal place of
business or registered office of the domestic corporation whose shares are to be
valued was located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties shall be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) is plenary and exclusive. The court may appoint 1 or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds the fair value of his or her
shares, plus accrued interest, of his or her after-acquired shares for which the
corporation elected to withhold payment under section 771.2
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P.A. 1972, No. 284, Section 773, added by P.A. 1989, No. 121, Section 1, Eff.
Oct. 1989.
1. Section 450.1772.
2. Section 450.1771.
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450.1773A. APPOINTMENT OF REFEREE TO CONDUCT PROCEEDINGS; POWERS AND DUTIES
Sec. 773a. (1) In a proceeding brought pursuant to section 773,1 the court
may, pursuant to the agreement of the parties, appoint a referee selected by the
parties and subject to the approval of the court. The referee may conduct
proceedings within the state, or outside the state by stipulation of the parties
with the referee's consent, and pursuant to the Michigan court rules. The
referee shall have powers that include, but are not limited to, the following:
(a) To hear all pretrial motions and submit proposed orders to the
court. In ruling on the pretrial motion and proposed orders, the court
shall consider only those documents, pleadings, and arguments that were
presented to the referee.
(b) To require the production of evidence, including the production of
all books, papers, documents, and writings applicable to the proceeding,
and to permit entry upon designated land or other property in the
possession or control of the corporation.
(c) To rule upon the admissibility of evidence pursuant to the
Michigan rules of evidence.
(d) To place witnesses under oath and to examine witnesses.
(e) To provide for the taking of testimony by deposition.
(f) To regulate the course of the proceeding.
(g) To issue subpoenas, when a written request is made by any of the
parties, requiring the attendance and testimony of any witness and the
production of evidence including books, records, correspondence, and
documents in the possession of the witness or under his or her control, at
a hearing before the referee or at a deposition convened pursuant to
subdivision (e). In case of a refusal to comply with a subpoena, the party
on whose behalf the subpoena was issued may file a petition in the court
for an order requiring compliance.
(2) The amount and manner of payment of the referee's compensation shall be
determined by agreement between the referee and the parties, subject to the
court's allocation of compensation between the parties at the end of the
proceeding pursuant to equitable principles, notwithstanding section 774.2
(3) The referee shall do all of the following:
(a) Make a record and reporter's transcript of the proceeding.
(b) Prepare a report, including proposed findings of fact and
conclusions of law, and a recommended judgment.
(c) File the report with the court, together with all original
exhibits and the reporter's transcript of the proceeding.
(4) Unless the court provides for a longer period, not more than 45 days
after being served with notice of the filing of the report described in
subsection (3), any party may serve written objections to the report upon the
other party. Application to the court for action upon the report and objections
to the report shall be made by motion upon notice. The court, after hearing, may
adopt the report, may receive further evidence, may modify the report, or may
recommit the report to the referee with instructions. Upon adoption of the
report, judgment shall be entered in the same manner as if the action had been
tried by the court and shall be subject to review in the same manner as any
other judgment of the court.
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P.A. 1972, No. 284, Section 773a, added by P.A. 1989, No. 121, Section 1, Eff.
Oct. 1, 1989.
1. Section 450.1773.
2. Section 450.1774.
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450.1774. APPRAISAL PROCEEDING; DETERMINATION OF COSTS, ASSESSMENT OF COSTS,
FEES AND EXPENSES
Sec. 774. (1) The court in an appraisal proceeding commenced under section
7731 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under section 772.2
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable in the
following manner:
(a) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of sections 764 through 772.3
(b) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this act.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to those counsel reasonable fees paid out of the amounts awarded the
dissenters who were benefited.
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P.A. 1972, No. 284, Section 774, added by P.A. 1989, No. 121, Section 1, Eff.
Oct. 1, 1989.
1. Section 450.1773.
2. Section 450.1772.
3. Sections 450.1764 through 450.1772.
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