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PROSPECTUS FILED PURSUANT TO RULE 424(b)(1)
REGISTRATION NO. 333-49033
416,705 SHARES
TELEMUNDO GROUP, INC.
SERIES A COMMON STOCK
This prospectus (the "Prospectus") relates to 416,705 shares (the "Shares")
of Series A Common Stock, par value $.01 per share (the "Series A Common
Stock"), of Telemundo Group, Inc. ("Telemundo" or the "Company") being offered
for resale from time to time by Reliance Group Holdings, Inc. ("RGH") and
Reliance Insurance Company, an indirect wholly owned subsidiary of RGH ("RIC"
and, together with RGH, the "Selling Stockholders").
The Company will not receive any proceeds from this offering. The Selling
Stockholders have advised the Company that they intend to distribute the
Shares from time to time in one or more transactions, in the Nasdaq National
Market, in the over-the-counter market or otherwise at prices and terms then
prevailing or at prices related to the then current market price, or in
negotiated transactions, as market and business conditions warrant. The
Selling Stockholders may effect such transactions directly or indirectly
through underwriters or dealers, through brokers or other agents, or directly
to one or more purchasers. See "Selling Stockholders" and "Plan of
Distribution." The Company will pay the expenses in connection with the
registration of the Shares (other than any underwriting discounts, selling
commissions and transfer taxes, and fees and expenses of counsel and other
advisors, if any, to the Selling Stockholders).
The Series A Common Stock trades on the Nasdaq National Market under the
symbol "TLMD." On May 6, 1998, the last reported sale price of the Series A
Common Stock, as reported by the Nasdaq National Market, was $42 1/4 per
share.
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SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS
RELEVANT TO AN INVESTMENT IN THE SERIES A COMMON STOCK.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Shares may be offered for sale by the Selling Stockholders from time to
time in one or more transactions, in the Nasdaq National Market, in the over-
the-counter market or otherwise at prices and terms then prevailing or at
prices related to the then current market price, or in negotiated
transactions, as market and business conditions warrant. The Selling
Stockholders may effect such transactions directly, or indirectly through
underwriters, broker-dealers or agents acting on their behalf, and in
connection with such sales, such broker-dealers or agents may receive
compensation in the form of commissions, concessions, allowances or discounts
from the Selling Stockholders and/or the purchasers of the Shares for whom
they may act as agent or to whom they sell Shares as principal or both (which
commissions, concessions, allowances or discounts might be in excess of
customary amounts). See "Plan of Distribution."
The Selling Stockholders and any broker-dealers, agents or underwriters that
participate with the Selling Stockholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), in which event any commissions
received by such broker-dealers, agents or underwriters and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
The date of this Prospectus is May 11, 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at
the Commission's New York regional office at Seven World Trade Center, Suite
1300, New York, New York 10048 and at the Commission's Chicago regional office
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Such reports and other information may also be inspected at of the
offices of the Nasdaq National Market, 1735 K Street, N.W., Washington, D.C.
20006. The Commission also maintains a web site that contains reports, proxy
and information statements and other information regarding registrants,
including the Company, that file electronically with the Commission, at
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits, the "Registration Statement")
under the Securities Act, with respect to the Shares offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits thereto, certain portions of which have been omitted as permitted by
the rules and regulations of the Commission. Statements contained in this
Prospectus or in any document incorporated by reference herein as to the
contents of any document referred to herein or therein are not necessarily
complete, and in each instance, reference is made to such documents filed as
an exhibit to the Registration Statement or such other documents, which may be
obtained from the Commission as indicated above upon payment of the fees
prescribed by the Commission. Each such statement is qualified in its entirety
by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by reference into this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, as amended by Form 10-K/A filed on May 8, 1998;
2. The description of the Company's Series A Common Stock contained in
the Company's Registration Statement on Form 8-A (the "Form 8-A") under the
Exchange Act filed with the Commission on December 9, 1994; and
3. The Company's preliminary Proxy Statement on Schedule 14A for a
special meeting of the Company's stockholders filed with the Commission on
May 8, 1998.
In addition, each document filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of Shares shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date such document is filed with the Commission.
Any statement contained in this Prospectus or in any document incorporated
or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for the purposes of this Prospectus to the extent that
a statement contained in this Prospectus, or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as modified or superseded, to
constitute a part of this Prospectus.
All information appearing in this Prospectus is qualified in its entirety by
the information and financial statements (including the notes thereto)
appearing in the documents incorporated herein by reference. This Prospectus
incorporates documents by reference which are not presented herein or
delivered herewith. These documents (other than exhibits to such documents
which are not specifically incorporated by reference into such documents) are
available without charge, upon written or oral request by any person to whom
this Prospectus is delivered. Requests for such documents should be directed
to the Company at its principal executive offices, 2290 West 8th Avenue,
Hialeah, Florida 33010 Attention: Vincent L. Sadusky, telephone (305) 884-
8200.
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RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors in the Series A Common Stock should carefully consider
the following matters before purchasing any of the Shares offered hereby.
Certain information contained in this Prospectus constitutes "forward-looking
statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act, which can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"estimate" or "continue" or the negative thereof or other variations thereon
or comparable terminology.
The following factors constitute cautionary statements identifying important
factors, including certain risks and uncertainties, that should be considered
carefully in evaluating the Company and its business before purchasing the
shares of Series A Common Stock being offered hereby. The Company cautions the
reader that this list of factors may not be exhaustive.
RISK THAT THE MERGER WILL NOT BE CONSUMMATED
On November 24, 1997, the Company, TLMD Station Group, Inc., a Delaware
corporation (the "Purchaser"), and TLMD Acquisition Co., a Delaware
corporation and a wholly-owned subsidiary of the Purchaser ("Sub"), entered
into an Agreement and Plan of Merger dated as of such date (the "Merger
Agreement"), pursuant to which Sub will be merged with and into the Company
(the "Merger"), with the Company being the surviving corporation and becoming
a wholly-owned subsidiary of the Purchaser. In the Merger, each outstanding
share of the Company's Series A Common Stock and of the Company's Series B
Common Stock, par value $.01 per share (the "Series B Common Stock" and
together with the Series A Common Stock, the "Common Stock"), (other than
shares of Common Stock held by the Purchaser, Sub or any other wholly owned
subsidiary of the Purchaser, or in the treasury of the Company or by any
wholly owned subsidiary of the Company, all of which will be canceled with no
payment being made with respect thereto, or by stockholders of the Company who
exercise and perfect their statutory appraisal rights under Delaware law),
will be converted into the right to receive $44.00 in cash. The $44.00 per
share represents a 76% premium over the price for the Series A Common Stock on
July 16, 1997, the day before the Company issued a press release confirming
that it was pursuing discussions with potential strategic programming partners
for purposes of expanding its programming options and enhancing stockholder
value and announcing that it has retained Lazard Freres & Co. LLC to assist it
in such process. Subject to certain conditions, if the Merger has not been
completed by July 30, 1998, the purchase price per share of the Common Stock
will increase at a rate of 8% per annum (approximately $0.29 per share per
month) during the period commencing on July 30, 1998 and ending on the day
before the date on which the Merger is completed.
Consummation of the Merger is subject to various conditions, including
approval by the Federal Communications Commission (the "FCC") of the transfer
of the Company's broadcast licenses without the imposition of certain
specified conditions or restrictions that are not acceptable to the Purchaser,
approval of the Merger by the holders of a majority of the outstanding Common
Stock voting together as a single class, the Purchaser's securing the
financing necessary to consummate the Merger and other related transactions
and the expiration of the applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). The
Company has received notice of the early termination of the HSR waiting
periods with respect to each of the applications filed by the Company, the
Purchaser and certain of the Purchaser's affiliates. Although the Purchaser
has obtained binding commitments for the required financing, these commitments
also contain a variety of conditions. As a result of the various conditions to
the completion of the Merger, there can be no assurance that the Merger will
be consummated.
On December 30, 1997, the Company and the Purchaser filed applications with
the FCC seeking FCC approval of the transfer of control of the Company and its
subsidiaries holding FCC broadcast licenses. On February 18, 1998, the Company
was informed that Univision Communications, Inc. ("Univision") had filed a
"Petition to Deny" with the FCC with respect to the FCC's consideration of the
Merger and the resulting change of control of the Company's FCC broadcast
licenses. On March 4, 1998, the Company and the Purchaser each
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filed an "Opposition to Petition to Deny," and on March 16, 1998, Univision
filed a reply to the "Oppositions to Petition to Deny." On March 31, 1998, the
Purchaser filed a response to Univision's reply, and on April 10, 1998,
Univision filed a "Rebuttal" to the Purchaser's response. While the Company
believes that Univision's Petition is without merit, there can be no assurance
that the FCC will so find, that the FCC will not condition its approval of the
change of control in a manner unacceptable to the Purchaser or that the Merger
will be consummated.
It is expected that if the Merger is not consummated for any reason, the
Company's current management, under the direction of the Board of Directors,
will continue to manage the Company as an ongoing business. Although other
potential transaction partners were identified during the strategic
transaction process conducted by the Company which led to the execution of the
Merger Agreement, no other transaction is currently being considered by the
Company as an alternative to the Merger. If, for any reason, the Merger is not
consummated, there can be no assurance that the transactions previously
offered to the Company will remain available to the Company on the same or
similar terms, that any other transaction acceptable to the Company will be
offered or that the Company's operations will not be adversely impacted.
CERTAIN LITIGATION RELATING TO THE MERGER
The Company is aware of six lawsuits that have been filed relating to the
Merger. The Company and its directors are defendants in all of the lawsuits.
Certain of the Company's significant stockholders are defendants in two of the
lawsuits. All of the lawsuits were filed by stockholders of the Company not
affiliated with the Purchaser or its affiliates, seeking to represent a
putative class of all such stockholders. All of the lawsuits were filed in the
Delaware Court of Chancery.
While the allegations of each complaint are not identical, all of the
lawsuits assert that the $44.00 per share price to be paid to the stockholders
of the Company not affiliated with the Purchaser or its affiliates is
inadequate and does not represent the value of the assets and future prospects
of the Company and that the Merger Agreement serves no legitimate business
purpose. The complaints also allege that the defendants engaged in self-
dealing without regard to conflicts of interest and that the defendants
breached their fiduciary duties in approving the Merger Agreement.
All of the complaints seek preliminary and injunctive relief prohibiting the
Company from, among other things, consummating the Merger. As of the date
hereof no motion to enjoin any of the proceedings contemplated by the Merger
Agreement has been made. The complaints also seek unspecified damages,
attorneys' fees and other relief. The Company believes that the allegations
contained in the complaints are without merit and intends to contest the
actions vigorously. The individual defendants have advised the Company that
they also believe that the allegations in the complaints are without merit and
that they intend to contest the actions vigorously.
On March 5, 1998, the six actions were consolidated for all purposes and the
Mimona Capital complaint in CA No. 16052-NC was designated as the sole
operative complaint for the consolidated action. As of the date hereof none of
the defendants has been required to answer, move or otherwise respond to the
complaints and no discovery has been taken.
HISTORY OF LOSSES
On December 30, 1994, the Company emerged from Bankruptcy. Although the
Company has reported operating income for each of the three years ended
December 31, 1997, 1996 and 1995, it reported a net loss for each of those
years. The Company reported net losses of $13.4 million, $18.4 million and
$10.1 million for the three years ended December 31, 1997, 1996 and 1995,
respectively. The net loss for 1996 reflects an extraordinary loss of $17.2
million. There can be no assurance that the Company will achieve or sustain
profitability in the future.
COMPETITION
The broadcasting industry is highly competitive. The Company's owned and
operated television stations and affiliates face competition for advertising
revenue from other Spanish-language and English-language television
broadcasters. The Company's competitors also include cable television
operators, direct broadcast
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satellite systems, Spanish-language and English-language radio broadcasters,
and other media including newspapers, magazines, movies and other forms of
entertainment and advertising. Many of the Company's competitors are better
capitalized and have greater financial resources and flexibility than the
Company.
In the Spanish-language television broadcast market, the Company has faced
significant competition from Univision, which operates the other Spanish-
language broadcast network in the United States and has a substantially
greater audience share than the Company. In each of the markets in which the
Company owns and operates full-power stations, except Puerto Rico, the
Company's station competes directly with a full-power Univision station. The
Univision stations and the Univision network affiliates together reach a
larger percentage of Hispanic viewers in the U.S. than the Company's stations
and affiliates and have attracted as much as 83% of the U.S. Spanish-language
television network audience (as reported by Nielsen Media Research, Inc.
("Nielsen")). Generally, the competing Univision stations have been operating
in their markets longer than have the Company's stations. Univision also owns
Galavision, a Spanish-language cable network that is reported to serve
approximately 2.5 million Hispanic subscribers, representing approximately 55%
of all Hispanic households that subscribed to cable television in 1997. Both
Grupo Televisa, S.A. de C.V. ("Televisa") and Corporacion Venezolana de
Television, C.A. ("Venevision"), which are significant stockholders of
Univision, have entered into long-term contracts to supply Spanish-language
programming to the Univision and Galavision networks. Televisa is the largest
supplier of Spanish-language programs in the world. Through these program
license agreements, Univision has the right of first refusal to air in the
U.S. all Spanish-language programming produced by Televisa and Venevision.
These supply contracts currently provide Univision with a competitive
advantage in obtaining programming originating from Mexico and in targeting
Hispanics of Mexican origin, who account for approximately 64% of the U.S.
Hispanic market. The Company's stations, particularly in Puerto Rico and
Los Angeles, also face competition from various independent Spanish-language
television stations.
The Company also competes with English-language broadcasters for Hispanic
viewers, including the four principal English-language television networks,
ABC, CBS, NBC and Fox, and in certain cities, the UPN and WB networks. Certain
of these English-language networks and others have begun producing Spanish-
language programming and simulcasting certain programming in English and
Spanish. Several cable programming networks have recently commenced, or
announced their intention to commence, Spanish-language services as well.
There can be no assurance that current Spanish-language television viewers
will continue to watch the Company's or any other Spanish-language
broadcasters' programming rather than English-language programming. In
addition, many of the Company's competitors are better capitalized and have
greater financial resources and flexibility than the Company. It is possible
that increased competition for viewers and revenues may have a material
adverse effect on the Company's financial condition or future results of
operations.
IMPACT OF NEW TECHNOLOGIES
In recent years, the FCC has adopted policies providing for authorization of
new technologies and a more favorable operating environment for certain
existing technologies that have the potential to provide additional
competition for television stations. Further advances in technology such as
video compression, direct broadcast satellites and programming delivered
through fiber optic telephone lines could facilitate the entry of new channels
and encourage the development of increasingly specialized "niche" programming.
In particular, the Company may be affected by the development of digital
television technology ("DTV") and the adoption of standards and regulations
for DTV by the FCC. The FCC recently completed several rulemaking proceedings
in order to implement DTV. Broadcasters are tentatively required to complete
the transition to DTV broadcasting by 2006, subject to biennial reviews to
evaluate the progress of implementation. DTV implementation will impose
significant additional costs on the Company, primarily due to the capital
costs associated with construction of DTV facilities and increased operating
costs both during and after the transition period and no assurance can be
given that the Company will have adequate financial resources to incur such
costs. Moreover, broadcasters who elect not to engage in DTV broadcasting at
an early stage could suffer a significant competitive disadvantage. The
Company is unable to predict the effect that technological changes will have
on the broadcast television industry or on the Company's financial condition
or future results of operations.
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The FCC has acknowledged that DTV channel allotment may involve displacement
of existing low-power television stations, particularly in major television
markets. Accordingly, the Company's existing low-power owned and operated
stations and broadcast affiliates may be materially adversely affected. The
network's largest low power broadcast station, which is an affiliated station,
represents approximately 2.6% of the Company's coverage of the U.S. Hispanic
market.
NETWORK DEPENDENCE ON PROGRAMMING AND DISTRIBUTION SYSTEM
The Spanish-language television market shares for the network and its
stations are dependent upon the Company's ability to produce, acquire and
distribute programming which attracts a significant national audience. If the
Company's programming fails to attract viewers, the Company's ability to
attract advertisers and generate revenues and profits would be impaired.
Although the Company makes significant investments in programming, there can
be no assurance that the Company's programming will achieve or maintain
satisfactory viewership levels in the future.
The Company currently provides programming to 144 broadcast stations and
satellite direct cable affiliates which represent approximately 31% of the
Company's coverage of the U.S. Hispanic market. The Company provides its
affiliates with programming transmitted by the Company network and in exchange
receives the right to sell generally between 50% and 60% of the commercial
advertising time available during such programming. The ability of the Company
to cost-effectively renew its affiliations or attract new affiliates depends
in part on the ability of the Company to provide programming that will attract
a satisfactory viewing audience. The Company also competes with other
broadcasters for relationships with affiliates. Although the Company expects
to continue to be able to renew its affiliation agreements, no assurance can
be given that such renewals will be obtained on a cost-effective basis. No
affiliate accounts for more than 2.9% of the Company's coverage of the U.S.
Hispanic market.
The Company broadcasts its programs to its owned and operated stations and
affiliates by means of satellite. Although the Company's satellite lease
agreement provides for the use, subject to availability, of other satellites
in the event of a failure, there can be no assurance that such other
satellites would be available to the Company, or if available, whether the use
of such other satellites could be obtained on favorable terms. The operation
of the satellite is outside the control of the Company and a disruption of the
transmissions could have a material adverse effect on the Company's financial
condition or future results of operations.
INDUSTRY AND ECONOMIC CONDITIONS; SEASONALITY
The Company's profitability may be affected by numerous factors, including
changes in audience tastes, priorities of advertisers, reductions in
advertisers' budgets, new laws and governmental regulations and policies,
changes in broadcast technical requirements, technological advances, proposals
to eliminate the tax deductibility of certain advertising expenses incurred by
advertisers and changes in the willingness of financial institutions and other
lenders to finance television station acquisitions and operations. The Company
cannot predict which, if any, of these or other factors might have a
significant impact on the television broadcasting industry in the future, nor
can it predict what impact, if any, the occurrence of these or other events
might have on the Company's financial condition or future results of
operations.
Historically, advertising in most forms of media has correlated with the
general condition of the economy. Television broadcasters are also exposed to
the general economic conditions of the local regions in which they operate.
Due to the concentration of revenues from WKAQ in Puerto Rico, the Company may
be adversely affected more than other broadcasters by an economic downturn in
Puerto Rico.
Seasonal revenue fluctuations are common in the television broadcasting
industry and the Company's revenue reflects seasonal patterns with respect to
advertiser expenditures. Increased advertising during the holiday season
results in increases in advertising revenue for the fourth quarter,
particularly in Puerto Rico. As a result, the Company experiences seasonal
fluctuations in its revenue to a greater degree than its direct competitors
and the broadcasting industry in general. Because costs are more ratably
spread throughout the year, the impact of this seasonality on operating income
may be pronounced. See "--Concentration of Revenue from WKAQ in Puerto Rico."
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CONCENTRATION OF REVENUE FROM WKAQ IN PUERTO RICO
The Company's owned and operated station in Puerto Rico, WKAQ, accounted for
approximately 26% of the Company's net commercial air time sales for the year
ended December 31, 1997. A significant decline in the revenue of WKAQ could
have a material adverse effect on the Company's financial condition or future
results of operations.
GOVERNMENT REGULATION
The television broadcasting industry is subject to extensive and changing
regulation. Among other things, the Communications Act of 1934 (the
"Communications Act") and FCC rules and policies require that each television
broadcaster must operate in compliance with a license issued by the FCC. Each
of the Company's television stations operates pursuant to one or more licenses
issued by the FCC that expire at different times. The Company must apply to
renew these licenses, and third parties may challenge those applications.
Although the Company has no reason to believe that its licenses will not be
renewed in the ordinary course, there can be no assurance that its licenses
will be renewed.
The Communications Act and FCC rules and policies prohibit the transfer of
control of an entity that holds television broadcast and certain other
communications licenses without the prior approval of the FCC. Accordingly,
the approval by the FCC of the transfer of control of the Company and its
subsidiaries holding FCC licenses is required prior to the consummation of the
Merger. Applications requesting FCC consent to the transfer of control of the
Company's broadcast licenses were filed with the FCC on December 30, 1997. On
February 18, 1998, the Company was informed that Univision had filed a
"Petition to Deny" with the FCC with respect to the FCC's consideration of the
Merger and the resulting change of control of the Company's FCC broadcast
licenses. On March 4, 1998, the Company and the Purchaser each filed an
"Opposition to Petition to Deny," and on March 16, 1998, Univision filed a
reply to the "Oppositions to Petition to Deny." On March 31, 1998, the
Purchaser filed a response to Univision's reply, and on April 10, 1998,
Univision filed a "Rebuttal" to the Purchaser's response. While the Company
believes that Univision's Petition is without merit, there can be no assurance
that the FCC will so find, that the FCC will not condition its approval of the
change of control in a manner unacceptable to the Purchaser or that the Merger
will be consummated.
The FCC also regulates ownership and control by foreign interests. The
Company's Restated Certificate of Incorporation (the "Restated Certificate")
requires compliance with the Communications Act including the provisions
governing ownership and control by foreign interests. The Company believes
that it is currently in compliance with such provisions. However, if the
Company fails to comply with the foreign ownership restrictions in the
Restated Certificate, the FCC has the ability to enforce such foreign
ownership restrictions through warnings, fines, cancellations of licenses or
other actions. While the Company seeks to comply with such restrictions, it
cannot predict the outcome of any such FCC challenge or any other changes in
regulatory practices that may affect its business and prospects.
Notwithstanding certain foreign ownership of the Purchaser, the Purchaser has
represented to the Company in the Merger Agreement that it is fully qualified
under the Communications Act and FCC rules and policies pertaining to foreign
ownership to control the FCC licenses held by the Company and its
subsidiaries. There can be no assurance, however, that the FCC will find the
Purchaser so qualified and if the Purchaser is found not to be in compliance
with the foreign ownership provisions of the Communications Act, the FCC may
require the Purchaser to adjust its ownership structure or, in the
alternative, may disapprove the Merger.
Under current FCC regulations, the officers, directors and certain of the
equity owners of a broadcasting company are deemed to have an "attributable
interest" in the broadcasting company. In the case of a corporation owning or
controlling television stations, subject to certain exceptions, there is
generally attribution only to officers and directors and to stockholders who
own 5% or more of the outstanding voting stock (except for certain
institutional investors, which are subject to a 10% voting stock benchmark
provided certain conditions are satisfied).
Under current FCC rules governing multiple and cross-ownership of broadcast
companies, a license to operate a television station will not be granted
(unless established waiver standards are met) to any party (or parties under
common control) that has an attributable interest in another television
station with an overlapping
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service contour, as defined in the rules. The regulations also prohibit a
party from having an attributable interest in television stations located in
markets which, in the aggregate, include more than 35% of total U.S.
television households. (For purposes of this rule, UHF stations are attributed
with 50% of the television households in their respective markets). The rules
also prohibit (with certain qualifications) a party from holding attributable
interests in (i) a television and a radio station, (ii) a television station
and a cable television system, or (iii) a television or radio station and a
daily newspaper, in the same local market. In addition, the FCC's "cross-
interest" policy generally prohibits a party (or parties under common control)
that has an attributable interest in one media company from having a non-
attributable but "meaningful" interest, including a significant non-voting
equity interest, in another media company serving "substantially the same
area." The FCC is conducting rulemaking proceedings to consider, among other
things, changes in its attribution rules and the modification of the local
cross-ownership restrictions and the cross-interest policy. In addition, on
March 12, 1998, the FCC commenced a formal inquiry to review all of its
broadcast ownership rules which are not otherwise under review, including the
national audience limitation, the associated 50% discount for UHF stations and
the cable/television cross-ownership rule. The Company cannot predict the
timing or effect of any changes resulting from these rulemaking proceedings.
The Company has been advised by the Purchaser that the Purchaser does not
have any attributable interests in other broadcast stations, cable systems or
newspapers, but that the parent company of one of the Purchaser's shareholders
directly or indirectly holds (i) attributable interests in cable television
systems within each of the markets served by the Company's television
stations, and (ii) non-attributable interests in television stations operating
within certain of the markets served by the Company's television stations. The
Company believes that this shareholder's interest in the Purchaser will be
deemed not to be attributable under FCC rules or "meaningful" under the cross-
interest policy, as appropriate, and that therefore it would not place the
Purchaser in violation of the rules or the cross-interest policy as a result
of the other attributable or non-attributable media interests of this
shareholder. There can be no assurance, however, that the FCC will find the
interest to be either non-attributable or not "meaningful," or that in the
absence of such findings the Purchaser would continue to be willing to
consummate the Merger.
Congress and the FCC currently have under consideration and may in the
future adopt new laws or modify existing laws and regulations and policies
regarding a wide variety of matters, including the adoption of attribution
rules which would further restrict broadcast station ownership, that could
directly or indirectly adversely affect the ownership and operation of the
Company's broadcast properties, as well as the Company's business strategies.
The adoption of various measures could accelerate the existing trend toward
vertical integration in the media and home entertainment industries and cause
the Company to face more formidable competition in the future. The
Telecommunications Act of 1996 modified or eliminated restrictions on the
offering of multiple network services by the existing major television
networks, restrictions on the participation by the regional telephone
operating companies in cable television and other direct-to-home video
technologies, and certain restrictions on broadcast station ownership. The
Company is unable to predict whether these or other potential changes in the
regulatory environment could restrict or curtail the ability of the Company to
acquire, operate and dispose of stations or, in general, to compete profitably
with other operators of television stations and other media properties.
OWNERSHIP BY MAJOR STOCKHOLDERS
As of December 31, 1997, TLMD Partners II, L.L.C. ("TLMD II"), which is a
significant stockholder of the Company, Mr. Leon Black, a director of the
Company who may be deemed to be an affiliate of TLMD II, Bastion Capital Fund,
L.P. ("Bastion"), a significant stockholder of the Company, and Hernandez
Partners, a California general partnership of which Roland A. Hernandez, the
chief executive officer and a director of the Company is a partner
(collectively referred to herein as the "Major Stockholders") beneficially
owned an aggregate of 1,017,930 shares of Series A Common Stock, representing
approximately 14.2% of the Series A Common Stock outstanding, and 3,083,154
shares of the Series B Common Stock outstanding, representing approximately
99.9% of the Series B Common Stock outstanding, and 4,101,084 shares of the
total Common Stock, constituting approximately 39.9% of the Common Stock
outstanding. The Series B Common Stock is
8
<PAGE>
entitled to elect a majority of the Board of Directors of the Company. The
Major Stockholders have entered into a Shareholders Agreement dated as of
December 20, 1994, as amended (the "Shareholders Agreement"), pursuant to
which each of them has agreed, among other things, subject to the provisions
of the Shareholders Agreement, that all of the shares of Common Stock owned by
each of them will be voted by a three-member voting committee acting by
majority vote. As a result, the voting committee is entitled to elect a
majority of the Company's directors (and to vote all shares of Common Stock
subject to the Shareholders Agreement for certain nominees specified by the
Major Stockholders) and this may affect certain types of material
transactions, including a change of control of the Company. The Shareholders
Agreement (other than provisions relating to certain shareholders' rights to
participate in certain sales of Common Stock by TLMD II) will terminate on the
earlier of the date when no shares of Series B Common Stock are outstanding
(which will occur no later than December 30, 1999) or the date when TLMD II
ceases to own at least 245,003 shares of Series B Common Stock. The
Shareholders Agreement (other than such sale participation rights) may also be
terminated as of a date specified by TLMD II subject to the receipt of any
requisite regulatory approvals.
RELIANCE ON KEY PERSONNEL
The Company believes that its success will continue to be dependent upon its
ability to attract and retain skilled managers and other personnel, including
its present officers and network talent. The loss of the services of any of
its key personnel may have a material adverse effect on the operations of the
Company. The Company presently does not maintain any key man life insurance
policies on any of its personnel. The Company generally has employment
agreements with its key personnel which contain non-competition covenants.
POSSIBLE VOLATILITY OF SERIES A COMMON STOCK PRICE
The market price of the Series A Common Stock could be subject to
significant fluctuations in response to various factors and events, including
the consummation of, the failure to consummate or the timing of the
consummation of, the Merger, the liquidity of the market for the Series A
Common Stock, variations in the Company's operating results and new statutes
or regulations, or changes in the interpretation of existing statutes or
regulations, affecting the broadcast industry generally or the Spanish
language television market in particular.
ABSENCE OF DIVIDENDS
The Company has never declared or paid any dividends with respect to the
Series A Common Stock. The Company's credit facility, 10 1/4% Senior Notes due
2001 and 10 1/2% Senior Notes due 2006 contain certain restrictions with
respect to the payment of dividends to the Company's stockholders. Any
determination to pay dividends in the future will be at the discretion of the
Company's Board of Directors and will be dependent upon the Company's results
of operations, financial condition, capital expenditures, working capital
requirements, any contractual restrictions and other factors deemed relevant
by the Company's Board of Directors. The Company does not anticipate that any
cash dividends will be paid on the Series A Common Stock in the foreseeable
future.
YEAR 2000 ISSUES
The Company has developed plans, utilizing internal resources, to ensure its
information systems are capable of properly utilizing dates beyond December
31, 1999 (the "Year 2000" issue). During the past year, the Company upgraded
or replaced many of its accounting and traffic computer systems, including the
conversion to new software which is Year 2000 compliant, at a total cost of
approximately $450,000. Additionally, the Company has evaluated its other
principal computer systems and determined they are substantially Year 2000
compliant. The Company is also seeking to work with its relevant customers,
suppliers and other service providers to ensure their systems are Year 2000
compliant. Although the impact on the Company caused by the failure of its
significant customers, suppliers and other service providers to achieve Year
2000 compliance in a timely and effective manner is uncertain, the Company's
business and results of operations could be materially adversely affected by
such failure.
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<PAGE>
USE OF PROCEEDS
The proceeds from the sale of the Shares offered hereby are solely for the
account of the Selling Stockholders. Accordingly, the Company will receive
none of the proceeds from sales thereof.
THE COMPANY
The Company is one of two Spanish-language television broadcast networks in
the United States. The network provides programming 24 hours per day to its
owned and operated stations and affiliates, which serve 61 markets in the
United States, including the 37 largest Hispanic markets, and reach
approximately 85% of all U.S. Hispanic households. The Company has seven full-
power owned and operated UHF stations serving the seven largest Hispanic
markets in the U.S.--Los Angeles, New York, Miami, San Francisco, Chicago,
San Antonio and Houston. The Company also owns and operates the leading full-
power VHF television station and related production facilities in Puerto Rico.
The Company's network offers a variety of entertainment and news programs,
including movies, telenovelas, talk and entertainment shows, national and
international news, music and sporting events.
The Company also distributes its programming through 15 owned and operated
low-power television stations, 43 affiliated broadcast stations and 101
satellite direct cable affiliates. The Company's programming is carried on an
additional 570 cable systems in markets served by broadcast stations in the
Company's network.
The Company is a Delaware corporation and its principal executive offices
are located at 2290 West 8th Avenue, Hialeah, Florida 33010, telephone number
(305) 884-8200.
THE MERGER
On November 24, 1997, the Company, the Purchaser and Sub entered into the
Merger Agreement pursuant to which, subject to the terms and conditions set
forth therein, the Merger will occur and the Company will become a wholly-
owned subsidiary of the Purchaser. In the Merger, each outstanding share of
Common Stock (other than shares of Common Stock held by the Purchaser, Sub or
any other wholly owned subsidiary of the Purchaser, or in the treasury of the
Company or by any wholly owned subsidiary of the Company, all of which will be
canceled with no payment being made with respect thereto, or by stockholders
of the Company who exercise and perfect their statutory appraisal rights under
Delaware law) will be converted into the right to receive $44.00 in cash. The
$44.00 per share represents a 76% premium over the price for the Series A
Common Stock on July 16, 1997, the day before the Company issued a press
release confirming that it was pursuing discussions with potential strategic
programming partners for purposes of expanding its programming options and
enhancing stockholder value and announcing that it has retained Lazard Freres
& Co. LLC to assist it in such process. Subject to certain conditions, if the
Merger has not been completed by July 30, 1998, the purchase price per share
of the Common Stock will increase at the rate of 8% per annum (approximately
$0.29 per share per month) during the period commencing on July 30, 1998 and
ending on the day before the date on which the Merger is completed.
The Purchaser will be beneficially owned by (i) Apollo Investment Fund III,
L.P. ("Apollo Investment") which may be deemed to be an affiliate of TLMD II,
a significant stockholder of the Company, (ii) Bastion, which is also a
significant stockholder of the Company, (iii) Liberty and (iv) Sony Pictures
Entertainment Inc. ("SPE"). Following the completion of the Merger, the
Purchaser will be owned 24.95% by SPE, 24.95% by Liberty and 50.1% by Station
Partners, LLC, an entity to be owned 68% by Apollo Investment and 32% by
Bastion.
A special committee of the Company's Board of Directors, whose members have
no financial interest in the Purchaser or its affiliates, unanimously
recommended approval of the Merger Agreement and the transactions contemplated
thereby (the "Transactions") to the Board of Directors which, relying upon
such recommendation, approved the Merger Agreement and the Transactions.
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Completion of the Merger is subject to various conditions, including
approval by the FCC of the transfer of the Company's broadcast licenses
without the imposition of certain specified conditions or restrictions that
are not acceptable to the Purchaser, approval of the Merger by the holders of
a majority of the outstanding shares of Common Stock (voting together as a
single class), the Purchaser's securing the financing required to accommodate
the transaction under the debt and equity commitments that have been arranged
(or pursuant to alternative financing arrangements) and the expiration of the
applicable waiting period under the HSR Act. The Company has received notice
of the early termination of the HSR waiting periods with respect to all of the
applications filed by the Company, the Purchaser and certain of the
Purchaser's affiliates.
Under certain conditions, the Company may terminate the Merger Agreement and
accept a proposal determined by its Board of Directors (as provided in the
Merger Agreement) to be superior, from a financial point of view to the
stockholders of the Company (other than stockholders affiliated with the
Purchaser or their affiliates), to the Merger, subject to the payment of a
termination fee of $15 million to the Purchaser and the reimbursement of up to
an aggregate of $2.5 million in expenses incurred by the Purchaser in
connection with the transactions contemplated by the Merger Agreement. The
Purchaser will be required to pay a termination fee of $17.5 million to the
Company if, solely as a result of the failure of the Purchaser and Sub to
obtain an FCC order regarding the transfer of the Company's broadcast licenses
without the imposition of certain conditions which are not acceptable to the
Purchaser, the Merger has not been consummated on or before December 31, 1998
and the Merger Agreement is at such time or thereafter terminated by either
the Company or the Purchaser.
On December 30, 1997, the Company and the Purchaser filed applications with
the FCC seeking FCC approval of the transfer of control of the Company and its
subsidiaries holding FCC broadcast licenses. On February 18, 1998, the Company
was informed that Univision had filed a "Petition to Deny" with the FCC with
respect to the FCC's consideration of the Merger and the resulting change of
control of the Company's FCC broadcast licenses. On March 4, 1998, the Company
and the Purchaser each filed an "Opposition to Petition to Deny," and on March
16, 1998, Univision filed a reply to the "Oppositions to Petition to Deny." On
March 31, 1998, the Purchaser filed a response to Univision's reply, and on
April 10, 1998, Univision filed a "Rebuttal" to the Purchaser's response.
While the Company believes that Univision's Petition is without merit, there
can be no assurance that the FCC will so find, that the FCC will not condition
its approval of the change of control in a manner unacceptable to the
Purchaser or that the Merger will be consummated.
On February 18, 1998, the Company filed with the Commission a preliminary
Proxy Statement on Schedule 14A pursuant to Rule 14a-1 of the Exchange Act,
with respect to the scheduling of a special meeting of the stockholders of the
Company to, among other things, vote on the approval and adoption of the
Merger Agreement and the Transactions (such Proxy Statement, as amended, is
referred to herein as the "Preliminary Proxy"). Concurrently with such filing,
the Company, the Purchaser, Sub, Apollo Investment and Bastion filed with the
Commission a Schedule 13E-3 Transaction Statement (such Transaction Statement,
as amended, is referred to herein as the "Transaction Statement") pursuant to
Rule 13e-3 of the Exchange Act with respect to the Merger. On April 20, 1998
the Company filed Amendment No. 1 to the Preliminary Proxy with the Commission
and on May 8, 1998 filed Amendment No. 2 to the Preliminary Proxy with the
Commission. Concurrently, with the filing of Amendment No. 1 to the
Preliminary Proxy on April 20, 1998, the Company, the Purchaser, Sub, Apollo
Investment and Bastion filed Amendment No. 1 to the Transaction Statement. On
April 23, 1998, the Company, the Purchaser, Sub, Apollo Investment and Bastion
filed Amendment No. 2 to the Transaction Statement. Concurrently with the
filing of Amendment No. 2 to the Preliminary Proxy with the Commission, the
Purchaser, Sub, Apollo Investment and Bastion filed Amendment No. 3 to the
Transaction Statement.
On February 20, 1998, the Company, the Purchaser and certain affiliates of
the Purchaser filed with the Antitrust Division of the Department of Justice
and the Federal Trade Commission certain notification and report forms with
respect to the Merger and certain related transactions pursuant to the
requirements of the HSR Act and the rules and regulations promulgated
thereunder. The Company has received notice of the early termination of the
HSR waiting periods with respect to all of the applications so filed.
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<PAGE>
SELLING STOCKHOLDERS
As of March 26, 1998, the Selling Stockholders beneficially owned warrants
to purchase 416,705 shares of Series A Common Stock (the "Reliance Shares")
which, if exercised and outstanding, would represent approximately 5.5% of the
outstanding Series A Common Stock and approximately 3.9% of the total
outstanding shares of Common Stock. The Reliance Shares include 416,667 shares
of Series A Common Stock represented by currently exercisable warrants held by
RIC to purchase such shares at an exercise price of $7.19 per share (the "RIC
Warrants"). One-third of the RIC Warrants are exercisable for the five year
period which began on December 30, 1995, one-third are exercisable for the
five year period which began on December 30, 1996 and one-third are
exercisable for the five-year period which began on December 30, 1997. The
Reliance Shares also include 38 shares of Series A Common Stock represented by
currently exercisable warrants (32 of which are held by RIC and 6 of which are
held by RGH) to purchase such shares at an exercise price of $7.00 per share
(the "Reliance Creditor Warrants"). The shares of Series A Common Stock being
registered hereby are the shares underlying the RIC Warrants and the Reliance
Creditor Warrants. Neither the RIC Warrants nor the Reliance Creditor Warrants
are being registered hereby. Of the 416,705 shares of Series A Common Stock to
be owned by the Selling Stockholders upon exercise of the RIC Warrants and the
Reliance Creditor Warrants, 416,699 shares and 6 shares are being registered
hereby on behalf of RIC and RGH, respectively. After completion of the sale by
the Selling Stockholders, assuming the sale of all shares of Series A Common
Stock being offered hereby, neither RIC nor RGH will own any shares of Common
Stock.
On December 30, 1994, in connection with the consummation of the Company's
Plan of Reorganization, the Company, RIC and certain other parties entered
into a registration rights agreement (the "Registration Rights Agreement")
pursuant to which the Company agreed, subject to the terms and conditions of
the Registration Rights Agreement, to register under the Securities Act Common
Stock held by RIC and certain of its affiliates (the "Rights Holders"). Under
the Registration Rights Agreement, the Company is obligated, subject to the
terms and conditions of the Registration Rights Agreement, upon demand by the
Rights Holders, to use reasonable diligence to effect, and is obligated to
maintain for not more than 90 days, the registration under the Securities Act
of certain registrable securities as defined in the Registration Rights
Agreement. Under the terms of the Registration Rights Agreement, the Company
has agreed to indemnify the Selling Stockholders and the Selling Stockholders
have agreed to indemnify the Company against certain liabilities, including
liabilities under the Securities Act.
On February 12, 1996, pursuant to the Registration Rights Agreement, the
Company registered for resale an aggregate of 994,231 shares of Series A
Common Stock then beneficially owned by RIC and certain of its affiliates. All
of those shares were sold by RIC and its affiliates during the period that
such registration statement remained effective.
On October 15, 1997, RIC requested that Telemundo file a registration
statement for the 416,705 shares of Series A Common Stock beneficially owned
by the Selling Stockholders. On November 5, 1997, the Company informed RIC
that it was exercising its rights under the Registration Rights Agreement to
postpone the filing of a registration statement with respect to such
securities for a reasonable period of time (not to exceed 135 days). During
such period, the Company negotiated and executed the Merger Agreement and
prepared and initially filed the Preliminary Proxy. On February 24, 1998, the
Company informed the Selling Stockholders that it would be unable to file a
registration statement complying with the requirements of Rule 3-01 of
Regulation S-X promulgated by the Commission until it had completed its audit
for the year ended December 31, 1997 and filed its Annual Report on Form 10-K
for such year (which has been incorporated herein by reference), and that upon
completion of such actions it would promptly file the requested registration
statement. On March 2, 1998 RIC filed a complaint in the United States
District Court for the Southern District of New York alleging that the Company
had breached the Registration Rights Agreement by failing to file a
registration statement for the 416,667 shares of Series A Common Stock which
RIC is entitled to purchase by virtue of its ownership of the RIC Warrants.
The complaint alleges damages in an amount not less than $14,504,178.27. On
March 25, 1998 the Company filed an answer to RIC's complaint denying the
allegations set forth therein. On March 31, 1998, Telemundo filed its Annual
Report on Form 10-K for the year ended December 31, 1997 and filed the
requested registration statement. Limited discovery is currently proceeding.
The Company believes that it has meritorious defenses to the allegations
contained in the complaint and intends to contest the action vigorously.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The statements set forth below are summaries of certain provisions relating
to the capital stock of the Company and are qualified in their entirety by the
provisions of the Restated Certificate, a copy of which is filed as an exhibit
to the Registration Statement of which this Prospectus forms a part.
The Company is authorized to issue 21,000,000 shares, consisting of
1,000,000 shares of Preferred Stock, par value $.01 per share ("Preferred
Stock"), and 20,000,000 shares of Common Stock, par value $.01 per share,
divided into two series as follows: (i) 14,388,394 shares of Series A Common
Stock and (ii) 5,611,606 shares of Series B Common Stock. At March 26, 1998,
there were no shares of Preferred Stock, 7,180,592 shares of Series A Common
Stock and 3,086,498 shares of Series B Common Stock issued and outstanding.
Voting Rights. Except as discussed below or as required by law, the holders
of the Series A Common Stock vote together with the holders of the Series B
Common Stock as a single class and are entitled to one vote for each share
held of record on each matter submitted to a vote of stockholders. Cumulative
voting in the election of directors is not permitted. Except as otherwise
provided by law or in the Restated Certificate or the Amended and Restated By-
Laws of the Company (the "By-Laws"), the affirmative vote of a majority of the
shares represented at a meeting of stockholders and entitled to vote on the
matter submitted is required for stockholder approval. For a discussion of the
voting requirements for the election of directors, see "Other Provisions."
Dividends and Liquidation. Holders of Common Stock are entitled to receive
ratably such dividends as may be lawfully declared by the Board of Directors
and paid by the Company and, in the event of liquidation, dissolution or
winding up of the Company, are entitled to share ratably in all assets
available for distribution after payment or provision for payment of the debts
and other liabilities of the Company, and of preferential amounts, if any, to
holders of any other class or series of stock of the Company. Any dividend
paid in shares of Common Stock shall be paid only in shares of Series A Common
Stock.
Conversion and Preemptive Rights. The Series A Common Stock is neither
redeemable nor convertible, and the holders of Series A Common Stock have no
preemptive rights to purchase any securities of the Company. Shares of Series
B Common Stock are convertible on a one-for-one basis into shares of Series A
Common Stock at the option of the holder. All outstanding shares of Series B
Common Stock automatically convert into shares of Series A Common Stock on a
one-for-one basis immediately upon the earlier of (i) December 30, 1999 and
(ii) such time as there are less than 2,000,000 shares of Series B Common
Stock issued and outstanding, as may be adjusted as a result of a
recapitalization, stock dividend, combination or stock split-up which results
in a change in the number of shares of Series B Common Stock. Shares of Series
B Common Stock held by a person shall also convert on a one-for-one basis into
shares of Series A Common Stock upon the transfer to a person other than
certain permitted transferees as described in the Restated Certificate. The
Company may not issue any additional shares of Series B Common Stock.
Restriction on Ownership and Transfer. The Restated Certificate provides
that so long as the provisions of Section 310 of the Communications Act apply
to the Company, except as provided by law, not more than 25% of either (a) the
aggregate number of shares of stock of the Company outstanding in any series
entitled to vote on any matter before a meeting of stockholders shall at any
time be voted, and (b) the aggregate number of shares of stock of the Company
outstanding, shall at any time be owned of record, by or for the account of
aliens or their representatives or by or for the account of a foreign
government or representative, or by or for the account of any corporation
organized under the law of a foreign country, and the Restated Certificate
contains restrictions on transfer if such transfer would result in the
aggregate number of shares of stock owned by such entities exceeding 25% of
the number of shares of stock then outstanding. Additionally, any transfer of
the Company's capital stock shall not be permitted if such transfer would
violate the Communications Act or the rules promulgated thereunder.
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Other Provisions. Prior to the first date on which there are no outstanding
shares of Series B Common Stock ("Conversion"), the total number of directors
constituting the Board of Directors of the Company must be at least nine (9)
directors, the smallest number constituting a majority of whom are elected by
the holders of the Series B Common Stock, and the remainder of whom are
elected by the holders of the Series A Common Stock. Prior to Conversion, any
director of the Company may be removed from office without cause, at any time,
by the affirmative vote of stockholders representing not less than a majority
of the holders of the series of Common Stock that elected such director. Any
vacancy created by the removal of a director may be filled prior to Conversion
only by the holders of the series of Common Stock that elected the director
that was removed. After Conversion (a) the Board of Directors of the Company
will initially consist of the number of directors in office immediately prior
thereto, and thereafter such number as may be fixed in accordance with the By-
Laws, (b) the directors will be elected solely by the holders of the Series A
Common Stock, and (c) any director may be removed and the vacancy created by
the removal filled in accordance with the provisions of the Delaware General
Corporation Law and the By-Laws.
Prior to Conversion, any vacancy in the Board of Directors, whether arising
from death, resignation, or any other cause (other than removal or an increase
in the number of directors), may be filled by a majority of the remaining
directors of the same series as the director who left the Board of Directors
or, if only one director of such series remains in office, then by such sole
director, in either case, though less than a quorum; or by the stockholders of
the series that elected such director at the next annual meeting thereof or at
a special meeting thereof. If there are no remaining directors of the same
series, a special meeting of stockholders of that series must be held as soon
as possible to elect the successor. Each director so elected will hold office
until his successor has been elected and qualified.
Prior to Conversion, in the event of a newly created directorship in the
Board of Directors of the Company resulting from an increase in the size of
the Board of Directors, half of the directors appointed to fill the vacancies
resulting therefrom will be Series A Common Stock directors and the remaining
newly appointed directors will be Series B Common Stock directors, in either
case selected by a majority of the directors of that series then in office,
though less than a quorum, or by the holders of the series of Common Stock
entitled to elect such director at the next annual meeting thereof or at a
special meeting thereof. From and after Conversion, any vacancy in the Board
of Directors will be filled in accordance with the provisions of the Delaware
General Corporation Law and the By-Laws.
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds from this offering. The
Selling Stockholders have advised the Company that they intend to distribute
the Shares from time to time in one or more transactions, in the Nasdaq
National Market, in the over-the-counter market or otherwise at prices and
terms then prevailing or at prices related to the then current market price,
or in negotiated transactions, as market and business conditions warrant. The
Selling Stockholders may also make private sales directly or through a broker
or brokers. Alternatively, any of the Selling Stockholders may from time to
time offer the Shares through underwriters, dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Stockholders and the purchasers of the Shares for whom they
may act as agent. Neither the Company nor the Selling Stockholders can
presently estimate the amount of such compensation. Other than as indicated
herein, the Company knows of no existing arrangements between the Selling
Stockholders and any other holder of Common Stock, underwriter, dealer, or
broker or other agent relating to the sale or distribution of the shares of
Series A Common Stock offered hereby.
To the extent required, the aggregate number of Shares to be sold, the names
of the Selling Stockholders, the purchase price, the name of any such agent,
dealer or underwriter and any applicable commissions with respect to a
particular offer will be set forth in an accompanying Prospectus Supplement.
The aggregate proceeds to the Selling Stockholders from the sale of the Shares
will be the selling price of such Shares less any commissions. There can be no
assurance that the Selling Stockholders will sell any or all of the Shares
offered hereby.
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<PAGE>
The Shares may be sold from time to time in one or more transactions at
fixed offering prices, which may be changed, or at varying prices determined
at the time of sale or at negotiated prices. Such prices will be determined by
the holders of such securities or by agreement between such holders and
underwriters or dealers who may receive fees or commissions in connection
therewith.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers that participate with the
Selling Stockholders in such a distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
commissions received by broker-dealers, agents or underwriters and any profit
on the resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Neither the Company nor the
Selling Stockholders can presently estimate the amount of such compensation.
Agents for the sale or distribution of the Shares offered hereby, and
underwriters, if any, may engage in transactions with or perform services for
the Company or its affiliates in the ordinary course of business.
The Registration Rights Agreement provides that all expenses relating to the
registration of the Shares (other than underwriting discounts and commissions,
transfer taxes, if any, and fees and expenses of counsel and advisors to the
Selling Stockholders) will be borne by the Company. The Registration Rights
Agreement further provides that the Company and the Selling Stockholders will
indemnify one another against certain liabilities, including civil liabilities
under the Securities Act, or will contribute to payments either party may be
required to make in respect thereof.
EXPERTS
The audited consolidated financial statements and the related financial
statement schedule incorporated in this Prospectus by reference from the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, as
amended by Form 10-K/A filed on May 8, 1998, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report which is
incorporated herein by reference, and have been so included in reliance upon
the reports of such firm given upon their authority as experts in accounting
and auditing.
LEGAL MATTERS
The validity of the shares of Series A Common Stock offered hereby and
certain legal matters have been passed upon for the Company by Latham &
Watkins, Los Angeles, California.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY ONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Risk Factors............................................................... 3
Use of Proceeds............................................................ 10
The Company................................................................ 10
The Merger................................................................. 10
Selling Stockholders....................................................... 12
Description of Capital Stock............................................... 13
Plan of Distribution....................................................... 14
Experts.................................................................... 15
Legal Matters.............................................................. 15
</TABLE>
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416,705 SHARES
TELEMUNDO GROUP, INC.
SERIES A COMMON STOCK
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PROSPECTUS
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MAY 11, 1998
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