-1-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31,1994
0-16690
(Commission File Number)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
(Exact name of registrant as specified in its governing
instruments)
Delaware
(State or other jurisdiction of organization)
13-3429969
(IRS Employer Identification No.)
World Financial Center
South Tower - 14th Floor
New York, New York 10080-6114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 236-6472
N/A
Former name, former address and former fiscal year if changed
since last report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
MOPP10K\MOP1Q.94
Item 1. Financial Statements
TABLE OF CONTENTS
Page
Consolidated Balance Sheets as of March 31, 1994
(Unaudited) and December 31, 1993 (Unaudited) 3-4
Consolidated Statements of Operations for the
thirteen week periods ended March 31, 1994
(Unaudited), and March 31, 1993 (Unaudited) 5-6
Consolidated Statements of Cash Flows for the
thirteen week periods ended March 31, 1994
(Unaudited), and March 31, 1993 (Unaudited) 7-10
Notes to the Consolidated Financial Statements
for the thirteen week periods ended March 31,
1994 (Unaudited) 11-25
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1994 (UNAUDITED)
AND DECEMBER 31, 1993 (UNAUDITED)
March 31, December 31,
Notes 1994 1993
ASSETS:
Cash and cash
equivalents 2 $ 4,483,340 $ 4,657,815
Accounts receivable
(net of allowance for
doubtful accounts of
$193,625 at March
31, 1994 and $171,390
at December 31, 1993) 2,815,093 3,959,680
Prepaid expenses and
deferred charges
(net of accumulated
amortization of
$2,838,313 at
March 31, 1994,
and $2,711,667 at
December 31, 1993) 1,073,553 1,208,573
Property, plant and
equipment (net of
accumulated
depreciation of
$12,515,878 at
March 31, 1994 and
$12,372,024 at
December 31, 1993) 2 5,888,094 5,723,402
Intangible assets (net
of accumulated
amortization of
$20,794,074 at
March 31, 1994 and
$20,481,214 at
December 31, 1993) 2 36,462,982 36,454,624
Investment in joint
ventures and common
stock 1,261,666 1,261,666
Other assets 760,852 867,723
TOTAL ASSETS $ 52,745,580 $ 54,133,483
(Continued on the following page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1994 (UNAUDITED)
AND DECEMBER 31, 1993 (UNAUDITED)
(continued)
March 31, December 31,
Notes 1994 1993
LIABILITIES AND
PARTNERS' DEFICIT:
Liabilities:
Borrowings 2 $ 42,999,804 $ 42,999,804
Accounts payable and
accrued liabilities 9,058,349 8,711,807
Net liabilities of
discontinued
operations and
deconsolidated
subsidiary-Cable
television systems
segment 2,3 120,787,548 113,678,564
Total Liabilities 172,845,701 165,390,175
Minority interest 100,185 99,854
Partners' Deficit:
General Partners:
Capital contributions,
net of offering
expenses 1 1,019,428 1,019,428
Cumulative loss (2,277,884) (2,112,501)
(1,258,456) (1,093,073)
Limited Partners:
Capital contributions,
net of offering
expenses
(112,147.1 Units of
Limited Partnership
Interest) 1 100,914,316 100,914,316
Tax allowance cash
distribution (2,040,121) (2,040,121)
Cumulative loss (217,816,045) (209,137,668)
(118,941,850) (110,263,473)
Total Partners' Deficit (120,200,306) (111,356,546)
TOTAL LIABILITIES AND
PARTNERS' DEFICIT $ 52,745,580 $ 54,133,483
See Notes to Consolidated Financial Statements (Unaudited)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN WEEK PERIODS ENDED
MARCH 31, 1994 (UNAUDITED)
AND MARCH 31, 1993 (UNAUDITED)
March 31, March 31,
Note 1994 1993
s
Operating Revenues $ 3,415,363 $ 886,172
Operating Expenses:
Property operating
expenses 1,599,131 1,101,161
General and
administrative 1,226,475 156,910
Depreciation and
amortization 583,357 172,863
Management fees 784,643 746,700
4,193,606 2,177,634
Operating loss from
continuing
operations (778,243) (1,291,462)
Other(Expense)
Income:
Interest expense (1,279,731) -
Interest income 25,194 57,357
Other expenses (25,667) (42,589)
(1,280,204) 14,768
Loss from
continuing
operations before
equity in loss of
joint ventures and
minority interest
share of
net/(income) loss
of consolidated
joint ventures (2,058,447) (1,276,694)
Equity in loss of
joint ventures 4 - (1,288,838)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN WEEK PERIODS ENDED
MARCH 31, 1994 (UNAUDITED)
AND MARCH 31, 1993 (UNAUDITED)
(continued)
March 31, March 31,
Note 1994 1993
s
Minority interest
share of
net (income)/loss
of consolidated
joint ventures (331) 26,969
Loss from
continuing
operations (2,058,778) (2,538,563)
Loss from
discontinued
operations: 2,
3
Cable television
systems segment (6,784,982) (6,835,258)
Business
information
services segment - (140,292)
NET LOSS $(8,843,760 $(9,514,113)
Per Unit of Limited
Partnership
Interest:
Loss from
continuing
operations $ (18.18) $ (22.41)
Loss from
discontinued
operations (59.89) (61.58)
NET LOSS $ (78.07) $ (83.99)
Number of Units 112,147.1 112,147.1
See Notes to Consolidated Financial Statements
(Unaudited).
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THIRTEEN WEEK PERIODS ENDED MARCH 31, 1994
(UNAUDITED) AND MARCH 31, 1993 (UNAUDITED)
March 31, March 31,
1994 1993
Cash flows from
operating activities:
Net loss $(8,843,760) $ (9,514,113)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and
amortization 583,357 172,863
Bad debt reserve
adjustment 22,235 10,089
Equity in loss of joint
ventures - 1,288,838
Minority interest share
of net (income) loss 331 (26,969)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 31, 1994
(UNAUDITED) AND MARCH 31, 1993 (UNAUDITED)
March 31, March 31,
1994 1993
Change in operating
assets and liabilities
Decrease in accounts
receivable 1,117,923 224,302
Decrease in interest
receivable 4,429 -
Decrease in prepaid
expenses and deferred
charges 8,374 13,359
Decrease/(Increase) in
other assets 106,871 (233,711)
Increase in accounts
payable and accrued
liabilities 346,541 304,758
Increase in net
liabilities of
discontinued operations 7,108,984 7,574,700
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 31, 1994
(UNAUDITED) AND MARCH 31, 1993 (UNAUDITED)
(continued)
March 31, March 31,
1994 1993
Increase in deferred - 690,798
revenue
Net cash provided by
operating activities 455,285 504,914
Cash flows from investing
activities:
Purchase of property,
plant and equipment (308,877) (57,690)
Increase in intangible
assets (320,883) (107,518)
Other - (292,568)
Net cash used in investing
activities (629,760) (457,776)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 31, 1994
(UNAUDITED) AND MARCH 31, 1993 (UNAUDITED)
(continued)
March 31, March 31,
1994 1993
Cash flows from financing
activities:
Principal payments on bank
loans - (350,000)
Net cash used in financing
activities - (350,000)
Net decrease in cash and
cash equivalents (174,475) (302,862)
Cash and cash equivalents
at beginning of period 4,657,815 7,637,846
Cash and cash equivalents
at end of period $ 4,483,340 $ 7,334,984
Cash paid for interest $ 837,107 $ 738,485
See Notes to Consolidated Financial Statements (Unaudited).
ML MEDIA OPPORTUNITY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 31, 1994 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ML Media Opportunity Partners, L.P. (the "Partnership"), was
formed and the Certificate of Limited Partnership was filed
under the Delaware Revised Uniform Limited Partnership Act on
June 23, 1987. Operations commenced on March 23, 1988 with the
first closing of the sale of units of limited partnership
interest. Media Opportunity Management Partners (the "General
Partner") is a joint venture, organized as a general partnership
under New York law, between RP Opportunity Management, L.P., a
limited partnership under Delaware law, and ML Opportunity
Management Inc., a Delaware corporation and an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. The General
Partner was formed for the purpose of acting as general partner
of the Partnership. The General Partner's total capital
contribution was $1,132,800 at December 31, 1993 which
represents 1% of the total Partnership capital contributions.
Pursuant to the terms of the Amended and Restated Agreement of
Limited Partnership, the General Partner is liable for all
general obligations of the Partnership to the extent not paid by
the Partnership. The limited partners are not liable for the
obligations of the Partnership in excess of the amount of their
contributed capital.
The purpose of the Partnership is to acquire, finance, hold,
develop, improve, maintain, operate, lease, sell, exchange,
dispose of and otherwise invest in and deal with media
businesses and direct and indirect interests therein.
Certain 1993 items have been reclassified to conform to 1994
presentation.
In the opinion of the General Partner, the financial statements
include all adjustments necessary to reflect fairly the results
of the interim periods presented. All adjustments are of a
normal recurring nature, except as disclosed in Note 3.
Additional information, including the audited year end 1993
Financial Statements and the Summary of Significant Accounting
Policies, is included in the Partnership's filing on Form 10-K
for the year ended December 31, 1993 on file with the Securities
and Exchange Commission.
Statement of Financial Accounting Standards No. 112
Effective January 1, 1994, the Partnership adopted Statement of
Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits" ("SFAS No. 112"). The effect of
the adoption of SFAS No. 112 was not material to the
Partnership's financial position or results of operations.
2. Liquidity
At March 31, 1994, the Partnership had $4,483,340 in cash and
cash equivalents, of which $1,796,296 was limited for use at the
operating level and $2,687,044 was the Partnership's working
capital.
The Partnership has begun the process of selling or disposing of
certain of its investments. The Partnership sold the assets of
IMPLP/IMPI/Intelidata in July 1993, entered into an agreement to
sell its Windsor Cable Systems in November, 1993 and entered
into an Option Agreement to sell WMXN-FM in January, 1994. In
addition, the Partnership's Prepackaged Plan of Reorganization
of Maryland Cable has been confirmed by the United States
bankruptcy court (see below). The status of all of the
Partnership's investments is discussed in more detail below.
Maryland Cable
Proposed Restructuring
On May 2, 1994, the United States Bankruptcy Court - Southern
District of New York confirmed the Amended Prepackaged Plan of
Reorganization of Maryland Cable and Holdings (the "Prepackaged
Plan"). Consummation of the Prepackaged Plan is subject to
various conditions specified in the Plan, including approval by
the franchising authorities and the FCC of the transfer of the
cable systems operated by Maryland Cable to a newly formed
limited partnership ("Newco") that would acquire all of the
assets of Maryland Cable, subject to the liabilities of Maryland
Cable, and the payment upon consummation of each of the payments
described below. The Prepackaged Plan requires that the Plan be
consummated on or before September 30, 1994. There is no
assurance that the conditions to the Prepackaged Plan will be
satisfied or that the Plan will be consummated.
If the Prepackaged Plan is consummated, control of Maryland
Cable will be transferred to Newco. As such, Maryland Cable has
been deconsolidated in the accompanying balance sheets and
Maryland Cable's operations have been included as discontinued
operations through the first quarter of 1994 (see Note 3).
Maryland Cable's operating losses subsequent to March 31, 1994
through the date of disposal have not been provided for since
the Partnership anticipates a gain on the disposal of Maryland
Cable. In addition, reported interest expense accrued on the
fully-accreted Subordinated Discount Notes for the period
subsequent to March 10, 1994, the date of Maryland Cable's
bankruptcy filing, (which interest expense is included in the
Loss from discontinued operations-Cable television systems
segment in the accompanying statements of operations) differs
from stated contractual interest by approximately $1.4 million.
Such interest will not be paid pursuant to the terms of the
Prepackaged Plan.
Under the Prepackaged Plan, the Partnership would receive a 4.9%
interest in Newco in satisfaction of: (a) the $3,600,000 in
Subordinated Promissory Notes held by the Partnership, plus
accrued interest of approximately $2,700,000; (b) the $5,379,833
in deferred management fees payable to the Partnership; and (c)
certain other amounts payable to the Partnership. The
Partnership has the right, and intends to exercise the right, to
sell its interest in Newco to Newco or to Water Street Corporate
Recovery Fund I, L.P., the holder of 85% of the outstanding
principal amount of the 15-3/8% Subordinated Discount Notes due
1998 (the "Discount Notes") of Maryland Cable on the date the
Prepackaged Plan is consummated (the "Effective Date") for
$2,846,423. ML Cable Partners, which is 99% owned by the
Partnership, would receive payment in full of the $6,830,000
participation it holds in the senior bank debt of Maryland
Cable. In addition, the Partnership would be paid on the
Effective Date a management fee for managing the Maryland Cable
Systems from January 1, 1994 to the Effective Date based on the
gross revenues of the Systems during that period. If, prior to
the Effective Date, holders of the Discount Notes transfer a
majority of the outstanding principal amount of the Discount
Notes, the Partnership would receive an additional payment equal
to 5% of the amount by which the Value (as defined) of the
Systems exceeds $180,000,000. The Prepackaged Plan also
provides for a payment of $500,000 to MultiVision Cable TV Corp.
in settlement of severance and other costs relating to the
termination of MultiVision as manager of the Systems.
Under the Prepackaged Plan, the holders of Maryland Cable's
senior bank debt agreed to accept newly issued promissory notes
from Newco in a principal amount equal to the principal amount
of the senior bank debt plus accrued interest at the default
rate from the date of filing of the Prepackaged Plan.
The filing of the Prepackaged Plan was made on March 10, 1994
pursuant to the Exchange Agreement dated as of December 31, 1993
among the Partnership, Maryland Cable, Holdings, ML Cable
Partners, Water Street and one other holder of the Discount
Notes.
On January 18, 1994, as a result of the defaults under the
senior bank debt, the holders of the senior bank debt exercised
their rights to collect Maryland Cable's lockbox receipts and
apply such receipts towards the repayment of the outstanding
senior bank debt, related accrued interest, and fees and
expenses. As of March 9, 1994, one day prior to the filing of
the Prepackaged Plan, the holders of the senior bank debt
applied approximately $4,800,000 in lockbox receipts towards the
repayment of the outstanding senior bank debt, related accrued
interest, and fees and expenses.
Impact of Cable Legislation
On October 5, 1992, Congress overrode the President's veto of
the Cable Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act") which imposes significant new regulations on
the cable television industry. The 1992 Cable Act required the
development of detailed regulations and other guidelines by the
Federal Communications Commission ("FCC"), most of which have
now been adopted but remain subject to petitions for
reconsideration before the FCC and/or court appeals.
In the area of rate regulation, the 1992 Cable Act establishes
an entirely new regulatory scheme. As an initial effort to
implement this scheme, the FCC, on May 3, 1993, released a
Report and Order ("Rate Order") containing new rules and
regulations governing the rates for certain cable television
services and equipment. The new rules, among other things, set
certain benchmarks which will enable local franchise authorities
to require rates for "basic service" (minimally, local broadcast
and access channels) and the FCC (upon receipt of individual
complaints) to require rates for certain satellite program
services (excluding premium channels) to fall approximately 10%
from September 30, 1992 levels, unless the cable operator is
already charging rates that are at a so-called "competitive"
benchmark level or it can justify a higher rate based on a cost-
of-service showing. Rates of all regulated cable systems will
then be subject to a price cap that will govern the extent to
which rates can be raised in the future without a cost-of-
service showing. The rules announced in May, 1993, became
effective on September 1, 1993, but remained subject to
considerable debate and uncertainty as several major issues and
FCC proceedings awaited resolution.
On February 22, 1994, the FCC adopted a series of additional
measures that expand and substantially alter its cable rate
regulations. (The full text of these further measures was,
however, not released until March 30, 1994.) The major
additional actions taken by the FCC include the following: (1) a
modification of its benchmark methodology in a way which will
effectively require cable rates to be reduced, on average, and
with certain possible exceptions, an additional 7% (i.e., beyond
the 10% reduction previously ordered in 1993) from their
September 30, 1992 level; (2) the issuance of new standards and
requirements to be used in making cost-of-service showings by
cable operators who seek to justify rates above the levels
determined by the benchmark approach; and (3) the clarification
and/or reaffirmation of a number of "going forward" issues that
had been the subject of various petitions for reconsideration of
its May 3, 1993 Rate Order. Several weeks earlier, and partly
in anticipation of these actions, the FCC extended its industry-
wide freeze on rates for regulated cable services until May 15,
1994. The new benchmark standards and cost-of-service rules
become effective May 15, 1994.
In deciding to substantially revise its benchmark methodology
for regulated cable rates, the FCC has actually created two
benchmark systems. Thus, whereas the modified rate regulations
adopted on February 22, 1994 will become effective as of May 15,
1994, regulated rates in effect before that date will continue
to be governed by the old benchmark system.
In its May 1993 Rate Order the FCC exempted from rate regulation
the price of packages of "a la carte" channels if certain
conditions were met. Upon reconsideration, however, the FCC on
February 22, 1994 effectively tightened its regulatory treatment
of "a la carte" packages by establishing more elaborate criteria
designed to ensure that such practices are not employed so as to
unduly evade rate regulation. Now, when assessing the
appropriate regulatory treatment of "a la carte" packages, the
FCC will consider, inter alia, the following factors as possibly
suggesting that such packages do not qualify for non-regulated
treatment: whether the introduction of the package avoids a
rate reduction that otherwise would have been required under the
FCC's rules; whether an entire regulated tier has been
eliminated and turned into an "a la carte" package; whether a
significant number or percentage of the "a la carte" channels
were removed from a regulated service tier; whether the package
price is deeply discounted when compared to the price of an
individual channel; and whether the subscriber must pay
significant equipment or other charges to purchase an individual
channel in the package. In addition, the FCC will consider
factors that will reflect in favor of non-regulated treatment
such as whether the channels in the package have traditionally
been offered on an "a la carte" basis or whether the subscriber
is able to select the channels that comprise the "a la carte"
package. "A la carte" packages which are found to evade rate
regulation rather than enhance subscriber choice will be treated
as regulated tiers, and operators engaging in such practices may
be subject to forfeitures or other sanctions by the FCC. Local
franchising authorities may make the initial determination as to
whether such offerings should be treated as regulated or
unregulated.
In a separate action on February 22, 1994, the FCC adopted
interim rules to govern cost-of-service proceedings initiated by
cable operators. Operators who elect to pursue cost-of-service
proceedings will have their rates based on their allowable
costs, in a proceeding based on principles similar to those that
govern cost-based rate regulation of telephone companies. Under
this methodology, cable operators may recover, through the rates
they charge for regulated cable service, their normal operating
expenses and a reasonable return on investment. The FCC has,
for these purposes, established an interim industry-wide rate of
return of 11.25% It has also determined that acquisition costs
above book value are presumptively excluded from the rate base.
At the same time, certain intangible, above-book costs, such as
start-up losses (limited to losses actually incurred during a
two-year start-up period) and the costs of obtaining franchise
rights and some start-up organizational costs such as customer
lists, may be allowed. There are no threshold requirements
limiting the cable systems eligible for a cost-of-service
showing, except that, once rates have been set pursuant to a
cost-of-service approach, cable operators may not file a new
cost-of-service showing to justify new rates for a period of two
years. Finally, the FCC notes that it will, in certain
individual cases, consider a special hardship showing (or the
need for special rate relief) where an operator demonstrates
that the rates set by a cost-of-service proceeding would
constitute confiscation of investment and that some higher rate
would not represent exploitation of customers. In considering
whether to grant such a request, the FCC emphasizes that, among
other things it would examine the overall financial condition of
the operator and whether there is a realistic threat of
termination of service. The FCC is in the process of receiving
comments on these interim rules and proposes to adopt them as
final rules.
The Partnership is currently unable to assess the full impact of
the FCC's further rate regulation decisions released on March
30, 1994, and the 1992 Cable Act generally upon its business
prospects or future financial results. However, the rate
reductions mandated by the FCC in May of 1993 have had, and will
most likely continue to have, a detrimental impact on the
revenues and profits of the Partnership's cable television
operations. In addition, the rate reductions and limits on the
pricing of a-la-carte cable services announced on February 22,
1994 (and released March 30, 1994) are likely to have a further
detrimental impact on those revenues and profits. Although the
impact of the 1992 Cable Act and certain recent FCC actions
cannot yet be ascertained precisely, once fully implemented,
certain aspects of the new law may have a material negative
impact on the financial condition, liquidity, and value of the
Partnership.
As an example of the effects of the 1992 Cable Act, in complying
with the benchmark regulatory scheme without considering the
effect of any future potential cost-of-service showing, the
Partnership's cable properties, on a franchise by franchise
basis, were required to reduce present combined basic service
rates (broadcast tier and satellite service tier) effective
September 1, 1993. In addition, pursuant to the 1992 Cable Act,
revenue from secondary outlets and from remote control units was
eliminated or reduced significantly. At that time, the
Partnership began instituting charges for converters, as
permitted by the 1992 Cable Act, offering programming services
on an a-la-carte basis, which services are not subject to rate
regulation, and aggressively marketing unregulated premium
services to those subscribers benefiting from decreased basic
rates. Despite the institution of these actions by the
Partnership's cable systems, the rate regulation required by the
1992 Cable Act had a detrimental impact on the revenues and
profits of the Partnership's cable systems. The further rate
reduction mandated by the February 22, 1994 FCC action and any
limits imposed by such action on a-la-carte pricing are likely
to have a further detrimental impact on those revenues and
profits.
GCC
As of March 31, 1994, the Partnership's 351,665 shares in GCC
represented an ownership percentage equal to approximately 4.2%.
On January 20, 1994, the majority stockholders of GCC and
certain holders of interests in MARKETS Cellular Limited
Partnership ("MCLP"), PN Cellular, Inc. ("PNCI" and together
with MCLP, "PNC"), executed a Memorandum of Intention (the
"Memorandum") pursuant to which the parties thereto expressed
their intent to effect a proposed business combination of GCC
and PNC. PNC holds and operates cellular licenses covering a
total of approximately 1.96 million pops (defined as the
population in an area covered by a cellular franchise). If
consummated, this business combination would result in a
cellular operation approximately twice the size of the current
GCC. The Memorandum is not binding on any of the parties
thereto and such parties may withdraw therefrom at any time for
any reason. Furthermore, the parties have not agreed to
definitive terms of such a transaction. No assurance can be
given that definitive agreements will be completed and executed,
or that all required regulatory approvals will be obtained in
order to consummate any such transaction.
WMXN-FM
During the first quarter of 1994, revenues generated by WMXN-FM,
combined with the station's cash balances, were sufficient to
cover its operating costs (before management fees).
The Partnership entered into an Option Agreement, effective
January 25, 1994, with U.S. Radio, Inc. ("U.S. Inc."), a
Delaware corporation, and an affiliated entity, U.S. Radio, L.P.
("U.S. Radio"), a Delaware limited partnership, neither of which
is affiliated with the Partnership. Pursuant to the Option
Agreement, the Partnership granted U.S. Inc. an option (the
"Call") to purchase substantially all of the assets of WMXN-FM
(the "Assets") for a cash price of $3.5 million at any time
prior to January 15, 1995. Also pursuant to the Option
Agreement, U.S. Inc. granted the Partnership the option (the
"Put") to sell the Assets to U.S. Inc. for a cash price of $3.5
million at any time (a) within 30 days after the expiration of
the Call or (b) within 30 days of the termination by the
Partnership of the LMA (see below) as a result of a material
breach of the LMA by U.S. Radio. If the Call or Put is
exercised, the Partnership and U.S. Inc. will immediately revise
as necessary and execute an Asset Purchase Agreement which is an
exhibit to the Option Agreement. If the Call or Put is timely
exercised but U.S. Inc. fails to execute the Asset Purchase
Agreement, then, subject to certain conditions, the Partnership
may elect to cause U.S. Radio to sell its radio stations WOWI-
FM, in Norfolk, Virginia, and WSVY-AM in Portsmouth, Virginia,
together with WMXN-FM (collectively, the "Stations"), with the
first $3.5 million of proceeds, less transaction costs, from
such sale to be retained by the Partnership. The acquisition of
WMXN-FM by U.S. Inc., and/or the sale of the Stations, is
subject to the prior approval of the FCC. There can be no
assurance that the sale of WMXN-FM or the sale of the Stations
will be consummated.
Effective January 31, 1994, the Partnership entered into a Time
Brokerage Agreement (the "LMA") with U.S. Radio. The LMA calls
for the Partnership to make broadcasting time available on WMXN-
FM to U.S. Radio and for U.S. Radio to provide radio programs to
be broadcast on WMXN-FM, subject to certain terms and
conditions, including the rules and regulations of the FCC. In
exchange for providing broadcasting time to U.S. Radio, the
Partnership will receive a monthly fee approximately equal to
its cost of operating WMXN-FM. The LMA will continue until the
earlier of: (i) March 1, 1995 (if neither the Call nor Put has
been exercised); (ii) the consummation of the acquisition of
WMXN-FM by U.S. Inc. pursuant to the Option Agreement; or (iii)
the consummation of a joint sale of the Stations.
The Partnership may choose to advance additional funds to WMXN-
FM if any are required; however, the Partnership has no
obligation to advance any additional funds to WMXN-FM and WMXN-
FM has no liability for borrowed funds.
TCS
As of March 31, 1994, TCS was in default of covenants under its
note agreements and failed to make a scheduled principal payment
of $500,000 due February 28, 1994. In addition, TCS expects to
default on the majority of its scheduled principal payments for
the remainder of 1994 as well as in 1995. TCS is engaged in
negotiations with its note holders, although the outcome of
these negotiations cannot be predicted at this time. While TCS
remains in default, the note holders have the option to exercise
their rights under the notes, which rights include the right to
foreclose on the stock of the operating subsidiaries that own
the three TCS stations, but not the assets of the Partnership.
It is unlikely that the Partnership will recover more than a
nominal amount of its investment in TCS. As of March 31, 1994,
TCS represented 86% of the Partnership's total assets and 95% of
the Partnership's operating revenues from continuing operations.
Paradigm
Paradigm and/or BBAD are not currently producing a sufficient
number of television programs to cover overhead costs
indefinitely, although the Partnership has not advanced any
funds to Paradigm and/or BBAD since the second quarter of 1992.
Paradigm and/or BBAD have taken several steps to reduce
operating costs, primarily by reducing the number and
compensation of employees. However, Paradigm and/or BBAD did
not operate profitably during the first quarter of 1994, and are
currently dependent on outside sources, primarily Associates, to
finance Paradigm's and/or BBAD's monthly operating costs. The
Partnership has elected not to fund such operating costs. The
Partnership has no obligation to advance any additional funds to
Paradigm and/or BBAD and actively sought a strategic partner
that would share in meeting Paradigm's and/or BBAD's potential
future funding needs, but was unable to identify such a partner.
Paradigm and/or BBAD have no liability for borrowed funds. The
Partnership is negotiating with Associates the terms of an
agreement under which Paradigm would retain the three television
movies and the series developed by it, and the other projects
and program concepts developed by Paradigm and/or BBAD would be
assigned to Associates, and Paradigm would retain a percentage
interest in all such projects and concepts. In any event, the
Partnership will most likely recover only a nominal portion, if
any, of its original investment in Paradigm and/or BBAD. Due in
part to the Partnership's unwillingness to advance additional
funds to fund the continuing operating losses and possible
winding down of Paradigm's and BBAD's operating activities, the
Partnership recorded in the second quarter of 1993 a writedown
of approximately $516,000 of certain assets of Paradigm and BBAD
to reduce the Partnership's net investment to a net realizable
value of zero.
Windsor
Windsor's operations did not generate sufficient cash to service
fully its scheduled installments on the Windsor Note. In July,
1992, the Partnership began making monthly payments on the
Windsor Note which were sufficient to pay all interest due;
however, such payments were not sufficient to pay all of
Windsor's scheduled monthly installments of principal; the
Partnership is therefore in default of the Windsor Note. On
June 23, 1992, the holder of the Windsor Note gave the
Partnership notice of default and informed the Partnership that
it has the ability to accelerate the maturity of the
indebtedness and foreclose on the assets of Windsor (but not the
other assets of the Partnership). The Partnership does not
anticipate advancing any funds to Windsor.
On November 16, 1993, the Partnership entered into an Asset
Purchase Agreement with Tar River Communications, Inc. ("Tar
River") to sell the assets of the Windsor Systems to Tar River
for a base purchase price of $3,240,000, subject to adjustment
based on the number of subscribers to the Windsor Systems on the
Closing Date and the accounts receivable and accounts payable of
the systems on the Closing Date. The sale is subject to various
conditions, including consent from the franchising authorities
and extensions of the franchises for the Windsor Systems until
10 years after the Closing Date. The closing is currently
expected to occur in mid-1994.
Investments and EMP, Ltd.
Investments, EMP, Ltd. and their affiliates are, currently,
reliant on their cash balances and/or additional funding from ALP
Enterprises or other, as yet unidentified, financing sources to
fund their continuing operations. Furthermore, the Partnership
expects to advance no further funds to Investments, EMP, Ltd., or
their affiliates beyond those funds already advanced. If
Investments, EMP, Ltd. and their affiliates are unable to
support their operations from current cash balances and/or
additional funding from ALP Enterprises or other, as yet
unidentified, financing sources, Investments and EMP, Ltd. might
be forced to cease their operations. The Partnership is
currently discussing with EMP, Ltd. the terms of a potential
restructuring which should improve EMP, Ltd.'s ability to secure
additional capital by reducing the Partnership's interest in the
media businesses owned and managed by EMP Ltd. In any event, it
is unlikely Registrant will recover its $2 million investment in
Investments.
IMP/Intelidata
Effective July 1, 1993, the Partnership entered into three
transactions to sell the business and assets of IMPLP/IMPI and
Intelidata. As a result of these transactions, the Partnership
recorded a writedown of approximately $364,000 of certain assets
of IMPLP/IMPI/Intelidata in the second quarter of 1993 to reduce
the Partnership's net investment to a net realizable value of
zero.
Subsequent to the sale of the businesses, the Partnership
advanced additional funds totaling approximately $0.1 million to
IMPLP/IMPI and Intelidata to fund cash shortfalls resulting from
the pre-sale claims of certain creditors, but made no such
advances during the first quarter of 1994. However, the
Partnership anticipates that it may be required to make
additional such advances to IMPLP/IMPI and Intelidata during
1994. The total of any Partnership obligations to fund such
advances, including certain contractual obligations, is not
currently anticipated to exceed the amount of the writedown. It
is unlikely that the Partnership will recover any of its
investments in IMPLP/IMPI/Intelidata.
Summary
In summary of the Partnership's liquidity status, of the
approximately $2.7 million that the Partnership has available
for working capital, a portion may be utilized to support
anticipated funding needs, or possible restructurings, as
appropriate for its investments. The Partnership has no
contractual commitment to advance funds to any of these
investments except for the commitments described below.
The Partnership, in the appropriate circumstances, will consider
utilizing its working capital to fund cash shortfalls or to
restructure the debt of certain of its investments. As
discussed above, the Partnership is also selling or disposing of
certain of its investments. Any additional use of the
Partnership's working capital to support its existing
investments is at the discretion of the Partnership except for
commitments made by the Partnership for certain obligations of
Maryland Cable (to the extent that Maryland Cable does not
discharge those obligations).
3. DISCONTINUED OPERATIONS
Cable Television Systems Segment
Due to the pending sale of Windsor and the likely divestiture of
Maryland Cable (see Note 2), the Partnership has presented its
Cable Television Systems Segment (comprised of Maryland Cable
and Windsor) as discontinued operations as of, and for the
quarter ended, March 31, 1994. The December 31, 1993
Consolidated Balance Sheet and the March 31, 1993 Consolidated
Statement of Operations and Consolidated Statement of Cash Flows
have been restated to present the Cable Television Systems
Segment as discontinued operations.
The net liabilities of discontinued operations on the
Consolidated Balance Sheet are comprised of the following:
As of As of
March 31, December 31,
1994 1993
Property, plant and
equipment, net $ 43,946,657 $ 45,342,432
Intangible assets, net 84,235,407 85,521,053
Other assets 6,790,296 6,153,656
Borrowings (237,988,202) (242,623,751)
Other liabilities (17,771,706) (8,071,954)
Net liabilities of
discontinued operations $(120,787,548) $(113,678,564)
Summarized results of discontinued operations of this segment on
the Consolidated Statements of Operations are as follows:
13 Weeks Ended 13 Weeks Ended
March 31, 1994 March 31, 1993
Operating Revenues $10,714,539 $11,173,615
Less: Operating Expenses 8,873,666 10,701,303
Operating Income 1,840,873 472,312
Other Expenses, net (8,625,855) (7,307,570)
Loss from discontinued
operations $(6,784,982) $(6,835,258)
Business Information Services Segment
Effective July 1, 1993, the Partnership sold the business and
assets of IMPLP/IMPI and Intelidata (the Business Information
Services Segment). The results of the Business Information
Services Segment have been reported separately in the
Consolidated Statements of Operations as discontinued
operations. Summarized results of the discontinued operations
of this segment are as follows:
13 Weeks Ended 13 Weeks Ended
March 31, 1994 March 31, 1993
Operating Revenues $ - $ 557,062
Less: Operating Expenses - 698,621
Operating Loss - (141,559)
Other Income, net - 1,267
Loss from discontinued
operations $ - $(140,292)
There were no net liabilities from the discontinued operations
of the Business Information Services Segment as of March 31,
1994 and as of December 31, 1993.
4. TCS
The Partnership consolidated TCS as of March 26, 1993, the date
it received regulatory approval for the restructuring of the
ownership of TCS. Through March 25, 1993, the Partnership
utilized the equity method of accounting for TCS. The following
data was prepared to illustrate the effects of TCS on the
operations of the Partnership:
13 Weeks Ended 13 Weeks Ended
March 31, 1994 March 31, 1993
Total Revenues - TCS $ 3,239,947 $ --
Total Expenses - TCS 4,242,443 --
Equity in loss of
joint venture -
TCS -- (1,288,838)
Net Loss - TCS $ (1,002,496) $ (1,288,838)
Therefore, as a result of TCS being consolidated by the
Partnership, the total revenues and total expenses of the
Partnership increased by approximately $3.2 million and $4.2
million, respectively, for the thirteen weeks ended March 31,
1994.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At March 31, 1994, Registrant had $4,483,340 in cash and cash
equivalents, of which $1,796,296 was limited for use at the
operating level and $2,687,044 was Registrant's working capital.
Registrant has begun the process of selling or disposing of
certain of its investments. Registrant sold the assets of
IMPLP/IMPI/Intelidata in July 1993, entered into an agreement to
sell its Windsor Cable Systems in November, 1993 and entered
into an Option Agreement to sell WMXN-FM in January, 1994. In
addition, Registrant's Prepackaged Plan of Reorganization of
Maryland Cable has been confirmed by the United States
bankruptcy court (see below). The status of all of Registrant's
investments is discussed in more detail below.
In summary of Registrant's liquidity status, of the
approximately $2.7 million that Registrant has for working
capital, a portion may be utilized to support anticipated
funding needs or possible restructurings, as appropriate, for
its investments. Registrant has no contractual commitment to
advance funds to any of its investments except for the
commitments described below.
Registrant, in the appropriate circumstances, will consider
utilizing its working capital to fund cash shortfalls or to
restructure the debt of certain of its investments. As
discussed above, Registrant is also in the process of selling or
disposing of certain of its investments. Any additional use of
Registrant's working capital to support its existing investments
is at the discretion of Registrant except for commitments made
by Registrant for certain obligations of Maryland Cable (to the
extent that Maryland Cable does not discharge those
obligations).
Maryland Cable
Proposed Restructuring
On May 2, 1994, the United States Bankruptcy Court - Southern
District of New York confirmed the Amended Prepackaged Plan of
Reorganization of Maryland Cable and Holdings (the "Prepackaged
Plan"). Consummation of the Prepackaged Plan is subject to
various conditions specified in the Plan, including approval by
the franchising authorities and the FCC of the transfer of the
cable systems operated by Maryland Cable to a newly formed
limited partnership ("Newco") that would acquire all of the
assets of Maryland Cable, subject to the liabilities of Maryland
Cable, and the payment upon consummation of each of the payments
described below. The Prepackaged Plan requires that the Plan be
consummated on or before September 30, 1994. There is no
assurance that the conditions to the Prepackaged Plan will be
satisfied or that the Plan will be consummated.
Under the Prepackaged Plan, Registrant would receive a 4.9%
interest in Newco in satisfaction of: (a) the $3,600,000 in
Subordinated Promissory Notes held by Registrant, plus accrued
interest of approximately $2,700,000; (b) the $5,379,833 in
deferred management fees payable to Registrant; and (c) certain
other amounts payable to Registrant. Registrant has the right,
and intends to exercise the right, to sell its interest in Newco
to Newco or to Water Street Corporate Recovery Fund I, L.P., the
holder of 85% of the outstanding principal amount of the 15-3/8%
Subordinated Discount Notes due 1998 (the "Discount Notes") of
Maryland Cable on the date the Prepackaged Plan is consummated
(the "Effective Date") for $2,846,423. ML Cable Partners, which
is 99% owned by Registrant, would receive payment in full of the
$6,830,000 participation it holds in the senior bank debt of
Maryland Cable. In addition, Registrant would be paid on the
Effective Date a management fee for managing the Maryland Cable
Systems from January 1, 1994 to the Effective Date based on the
gross revenues of the Systems during that period. If, prior to
the Effective Date, holders of the Discount Notes transfer a
majority of the outstanding principal amount of the Discount
Notes, Registrant would receive an additional payment equal to
5% of the amount by which the Value (as defined) of the Systems
exceeds $180,000,000. The Prepackaged Plan also provides for a
payment of $500,000 to MultiVision Cable TV Corp. in settlement
of severance and other costs relating to the termination of
MultiVision as manager of the Systems.
Under the Prepackaged Plan, the holders of Maryland Cable's
senior bank debt agreed to accept newly issued promissory notes
from Newco in a principal amount equal to the principal amount
of the senior bank debt plus accrued interest at the default
rate from the date of filing of the Prepackaged Plan.
The filing of the Prepackaged Plan was made on March 10, 1994
pursuant to the Exchange Agreement dated as of December 31, 1993
among Registrant, Maryland Cable, Holdings, ML Cable Partners,
Water Street and one other holder of the Discount Notes.
On January 18, 1994, as a result of the defaults under the
senior bank debt, the holders of the senior bank debt exercised
their rights to collect Maryland Cable's lockbox receipts and
apply such receipts towards the repayment of the outstanding
senior bank debt, related accrued interest, and fees and
expenses. As of March 9, 1994, one day prior to the filing of
the Prepackaged Plan, the holders of the senior bank debt
applied approximately $4,800,000 in lockbox receipts towards the
repayment of the outstanding senior bank debt, related accrued
interest, and fees and expenses.
Impact of Cable Legislation
On October 5, 1992, Congress overrode the President's veto of
the Cable Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act") which imposes significant new regulations on
the cable television industry. The 1992 Cable Act required the
development of detailed regulations and other guidelines by the
Federal Communications Commission ("FCC"), most of which have
now been adopted but remain subject to petitions for
reconsideration before the FCC and/or court appeals.
In the area of rate regulation, the 1992 Cable Act establishes
an entirely new regulatory scheme. As an initial effort to
implement this scheme, the FCC, on May 3, 1993, released a
Report and Order ("Rate Order") containing new rules and
regulations governing the rates for certain cable television
services and equipment. The new rules, among other things, set
certain benchmarks which will enable local franchise authorities
to require rates for "basic service" (minimally, local broadcast
and access channels) and the FCC (upon receipt of individual
complaints) to require rates for certain satellite program
services (excluding premium channels) to fall approximately 10%
from September 30, 1992 levels, unless the cable operator is
already charging rates that are at a so-called "competitive"
benchmark level or it can justify a higher rate based on a cost-
of-service showing. Rates of all regulated cable systems will
then be subject to a price cap that will govern the extent to
which rates can be raised in the future without a cost-of-
service showing. The rules announced in May, 1993, became
effective on September 1, 1993, but remained subject to
considerable debate and uncertainty as several major issues and
FCC proceedings awaited resolution.
On February 22, 1994, the FCC adopted a series of additional
measures that expand and substantially alter its cable rate
regulations. (The full text of these further measures was,
however, not released until March 30, 1994.) The major
additional actions taken by the FCC include the following: (1) a
modification of its benchmark methodology in a way which will
effectively require cable rates to be reduced, on average, and
with certain possible exceptions, an additional 7% (i.e., beyond
the 10% reduction previously ordered in 1993) from their
September 30, 1992 level; (2) the issuance of new standards and
requirements to be used in making cost-of-service showings by
cable operators who seek to justify rates above the levels
determined by the benchmark approach; and (3) the clarification
and/or reaffirmation of a number of "going forward" issues that
had been the subject of various petitions for reconsideration of
its May 3, 1993 Rate Order. Several weeks earlier, and partly
in anticipation of these actions, the FCC extended its industry-
wide freeze on rates for regulated cable services until May 15,
1994. The new benchmark standards and cost-of-service rules
become effective May 15, 1994.
In deciding to substantially revise its benchmark methodology
for regulated cable rates, the FCC has actually created two
benchmark systems. Thus, whereas the modified rate regulations
adopted on February 22, 1994 will become effective as of May 15,
1994, regulated rates in effect before that date will continue
to be governed by the old benchmark system.
In its May 1993 Rate Order the FCC exempted from rate regulation
the price of packages of "a la carte" channels if certain
conditions were met. Upon reconsideration, however, the FCC on
February 22, 1994 effectively tightened its regulatory treatment
of "a la carte" packages by establishing more elaborate criteria
designed to ensure that such practices are not employed so as to
unduly evade rate regulation. Now, when assessing the
appropriate regulatory treatment of "a la carte" packages, the
FCC will consider, inter alia, the following factors as possibly
suggesting that such packages do not qualify for non-regulated
treatment: whether the introduction of the package avoids a
rate reduction that otherwise would have been required under the
FCC's rules; whether an entire regulated tier has been
eliminated and turned into an "a la carte" package; whether a
significant number or percentage of the "a la carte" channels
were removed from a regulated service tier; whether the package
price is deeply discounted when compared to the price of an
individual channel; and whether the subscriber must pay
significant equipment or other charges to purchase an individual
channel in the package. In addition, the FCC will consider
factors that will reflect in favor of non-regulated treatment
such as whether the channels in the package have traditionally
been offered on an "a la carte" basis or whether the subscriber
is able to select the channels that comprise the "a la carte"
package. "A la carte" packages which are found to evade rate
regulation rather than enhance subscriber choice will be treated
as regulated tiers, and operators engaging in such practices may
be subject to forfeitures or other sanctions by the FCC. Local
franchising authorities may make the initial determination as to
whether such offerings should be treated as regulated or
unregulated.
In a separate action on February 22, 1994, the FCC adopted
interim rules to govern cost-of-service proceedings initiated by
cable operators. Operators who elect to pursue cost-of-service
proceedings will have their rates based on their allowable
costs, in a proceeding based on principles similar to those that
govern cost-based rate regulation of telephone companies. Under
this methodology, cable operators may recover, through the rates
they charge for regulated cable service, their normal operating
expenses and a reasonable return on investment. The FCC has,
for these purposes, established an interim industry-wide rate of
return of 11.25% It has also determined that acquisition costs
above book value are presumptively excluded from the rate base.
At the same time, certain intangible, above-book costs, such as
start-up losses (limited to losses actually incurred during a
two-year start-up period) and the costs of obtaining franchise
rights and some start-up organizational costs such as customer
lists, may be allowed. There are no threshold requirements
limiting the cable systems eligible for a cost-of-service
showing, except that, once rates have been set pursuant to a
cost-of-service approach, cable operators may not file a new
cost-of-service showing to justify new rates for a period of two
years. Finally, the FCC notes that it will, in certain
individual cases, consider a special hardship showing (or the
need for special rate relief) where an operator demonstrates
that the rates set by a cost-of-service proceeding would
constitute confiscation of investment and that some higher rate
would not represent exploitation of customers. In considering
whether to grant such a request, the FCC emphasizes that, among
other things it would examine the overall financial condition of
the operator and whether there is a realistic threat of
termination of service. The FCC is in the process of receiving
comments on these interim rules and proposes to adopt them as
final rules.
Registrant is currently unable to assess the full impact of the
FCC's further rate regulation decisions released on March 30,
1994, and the 1992 Cable Act generally upon its business
prospects or future financial results. However, the rate
reductions mandated by the FCC in May of 1993 have had, and will
most likely continue to have, a detrimental impact on the
revenues and profits of Registrant's cable television
operations. In addition, the rate reductions and limits on the
pricing of a-la-carte cable services announced on February 22,
1994 (and released March 30, 1994) are likely to have a further
detrimental impact on those revenues and profits. Although the
impact of the 1992 Cable Act and certain recent FCC actions
cannot yet be ascertained precisely, once fully implemented,
certain aspects of the new law may have a material negative
impact on the financial condition, liquidity, and value of
Registrant.
As an example of the effects of the 1992 Cable Act, in complying
with the benchmark regulatory scheme without considering the
effect of any future potential cost-of-service showing,
Registrant's cable properties, on a franchise by franchise
basis, were required to reduce present combined basic service
rates (broadcast tier and satellite service tier) effective
September 1, 1993. In addition, pursuant to the 1992 Cable Act,
revenue from secondary outlets and from remote control units was
eliminated or reduced significantly. At that time, Registrant
began instituting charges for converters, as permitted by the
1992 Cable Act, offering programming services on an a-la-carte
basis, which services are not subject to rate regulation, and
aggressively marketing unregulated premium services to those
subscribers benefiting from decreased basic rates. Despite the
institution of these actions by Registrant's cable systems, the
rate regulation required by the 1992 Cable Act had a detrimental
impact on the revenues and profits of Registrant's cable
systems. The further rate reduction mandated by the February
22, 1994 FCC action and any limits imposed by such action on a-
la-carte pricing are likely to have a further detrimental impact
on those revenues and profits.
GCC
As of March 31, 1994, Registrant's 351,665 shares in GCC
represented an ownership percentage equal to approximately 4.2%.
On January 20, 1994, the majority stockholders of GCC and
certain holders of interests in MARKETS Cellular Limited
Partnership ("MCLP"), PN Cellular, Inc. ("PNCI" and together
with MCLP, "PNC"), executed a Memorandum of Intention (the
"Memorandum") pursuant to which the parties thereto expressed
their intent to effect a proposed business combination of GCC
and PNC. PNC holds and operates cellular licenses covering a
total of approximately 1.96 million pops (defined as the
population in an area covered by a cellular franchise). If
consummated, this business combination would result in a
cellular operation approximately twice the size of the current
GCC. The Memorandum is not binding on any of the parties
thereto and such parties may withdraw therefrom at any time for
any reason. Furthermore, the parties have not agreed to
definitive terms of such a transaction. No assurance can be
given that definitive agreements will be completed and executed,
or that all required regulatory approvals will be obtained in
order to consummate any such transaction.
Windsor
Windsor's operations did not generate sufficient cash to service
fully its scheduled installments on the Windsor Note. In July,
1992, Registrant began making monthly payments on the Windsor
Note which were sufficient to pay all interest due; however,
such payments were not sufficient to pay all of Windsor's
scheduled monthly installments of principal; Registrant is
therefore in default of the Windsor Note. On June 23, 1992, the
holder of the Windsor Note gave Registrant notice of default and
informed Registrant that it has the ability to accelerate the
maturity of the indebtedness and foreclose on the assets of
Windsor (but not the other assets of Registrant). Registrant
does not anticipate advancing any funds to Windsor.
On November 16, 1993, Registrant entered into an Asset Purchase
Agreement with Tar River Communications, Inc. ("Tar River") to
sell the assets of the Windsor Systems to Tar River for a base
purchase price of $3,240,000, subject to adjustment based on the
number of subscribers to the systems on the Closing Date and the
accounts receivable and accounts payable of the systems on the
Closing Date. The sale is subject to various conditions,
including consent from the franchising authorities and
extensions of the franchises for the systems until 10 years
after the Closing Date. The closing is currently expected to
occur in mid-1994.
Paradigm
Paradigm and/or BBAD are not currently producing a sufficient
number of television programs to cover overhead costs
indefinitely, although Registrant has not advanced any funds to
Paradigm and/or BBAD since the second quarter of 1992. Paradigm
and/or BBAD have taken several steps to reduce operating costs,
primarily by reducing the number, and compensation, of
employees. However, Paradigm and/or BBAD did not operate
profitably during the first quarter of 1994, and are currently
dependent on outside sources, primarily Associates, to finance
BBAD's monthly operating costs. Registrant elected not to fund
such operating costs. Registrant has no obligation to advance
any additional funds to Paradigm and/or BBAD and actively sought
a strategic partner that would share in meeting Paradigm's
and/or BBAD's potential future funding needs, but was unable to
identify such a partner. Paradigm and/or BBAD have no liability
for borrowed funds. Registrant is negotiating with Associates
the terms of an agreement under which Paradigm would retain the
three television movies and the series developed by it, and the
other projects and program concepts developed by Paradigm and/or
BBAD would be assigned to Associates for further development at
Associates' expense, while Paradigm would retain a percentage
interest in all such projects and concepts. In any event,
Registrant will most likely recover only a nominal portion, if
any, of its original investment in Paradigm and/or BBAD. Due in
part to Registrant's unwillingness to advance additional funds
to fund the continuing operating losses and possible winding
down of Paradigm's and BBAD's operating activities, Registrant
recorded in the second quarter of 1993 a writedown of
approximately $516,000 of certain assets of Paradigm and BBAD to
reduce Registrant's net investment to a net realizable value of
zero.
TCS
As of March 31, 1994, TCS was in default of covenants under its
note agreements and failed to make a scheduled principal payment
of $500,000 due February 28, 1994. In addition, TCS expects to
default on the majority of its scheduled principal payments for
the remainder of 1994 as well as in 1995. TCS is engaged in
negotiations with its note holders, although the outcome of
these negotiations cannot be predicted at this time. While TCS
remains in default, the note holders have the option to exercise
their rights under the notes, which rights include the right to
foreclose on the stock of the operating subsidiaries that own
the three TCS stations, but not the assets of Registrant. It is
unlikely that Registrant will recover more than a nominal amount
of its investment in TCS. As of March 31, 1994, TCS represented
86% of Registrant's total assets and 95% of Registrant's
operating revenues from continuing operations.
Investments and EMP, Ltd.
Investments, EMP, Ltd. and their affiliates are currently
reliant on their cash balances and/or additional funding from
ALP Enterprises or other, as yet unidentified, financing sources
to fund their continuing operations. Furthermore, Registrant
expects to advance no further funds to Investments, EMP, Ltd.,
or their affiliates beyond those funds already advanced by
Registrant. If investments, EMP, Ltd. and their affiliates are
unable to support their operations from current cash balances
and/or additional funding from ALP Enterprises or other, as yet
unidentified, financing sources, Investments and EMP, Ltd. might
be forced to cease their operations. Registrant is currently
discussing with EMP, Ltd. the terms of a potential restructuring
which would improve EMP, Ltd.'s ability to secure additional
capital by reducing Registrant's interest in the media
businesses owned and managed by EMP, Ltd. In any event, it is
unlikely that Registrant will recover its $2 million investment
in Investments.
WMXN-FM
During the first quarter of 1994, revenues generated by WMXN-FM,
combined with the station's cash balances, were sufficient to
cover its operating costs (before management fees).
Registrant entered into an Option Agreement, effective January
25, 1994, with U.S. Radio , Inc. ("U.S. Inc."), a Delaware
corporation, and an affiliated entity, U.S. Radio, L.P. ("U.S.
Radio"), a Delaware limited partnership, neither of which is
affiliated with Registrant. Pursuant to the Option Agreement,
Registrant granted U.S. Inc. an option (the "Call") to purchase
substantially all of the assets of WMXN-FM (the "Assets") for a
cash price of $3.5 million at any time prior to January 15,
1995. Also pursuant to the Option Agreement, U.S. Inc. granted
Registrant the option (the "Put") to sell the Assets to U.S.
Inc. for a cash price of $3.5 million at any time (a) within 30
days after the expiration of the Call or (b) within 30 days of
the termination by Registrant of the LMA (see below) as a result
of a material breach of the LMA by U.S. Radio. If the Call or
Put is exercised, Registrant and U.S. Inc. will immediately
revise as necessary and execute an Asset Purchase Agreement
which is an exhibit to the Option Agreement. If the Call or Put
is timely exercised but U.S. Inc. fails to execute the Asset
Purchase Agreement, then, subject to certain conditions,
Registrant may elect to cause U.S. Radio to sell its radio
stations WOWI-FM, in Norfolk, Virginia, and WSVY-AM in
Portsmouth, Virginia, together with WMXN-FM (collectively, the
"Stations"), with the first $3.5 million of proceeds from such
sale, less transaction costs, to be retained by Registrant. The
acquisition of WMXN-FM by U.S. Inc., and/or the sale of the
Stations, is subject to the prior approval of the FCC. There
can be no assurance that the sale of WMXN-FM or the sale of the
Stations will be consummated.
Effective January 31, 1994, Registrant entered into a Time
Brokerage Agreement (the "LMA") with U.S. Radio. The LMA calls
for Registrant to make broadcasting time available on WMXN-FM to
U.S. Radio and for U.S. Radio to provide radio programs to be
broadcast on WMXN-FM, subject to certain terms and conditions,
including the rules and regulations of the FCC. In exchange for
providing broadcasting time to U.S. Radio, Registrant will
receive a monthly fee approximately equal to its cost of
operating WMXN-FM. The LMA will continue until the earlier of:
(i) March 1, 1995 (if neither the Call nor Put has been
exercised); (ii) the consummation of the acquisition of WMXN-FM
by U.S. Inc. pursuant to the Option Agreement; or (iii) the
consummation of a joint sale of the Stations.
Registrant may choose to advance additional funds to WMXN-FM if
any are required; however, Registrant has no obligation to
advance any additional funds to WMXN-FM and WMXN-FM has no
liability for borrowed funds.
IMP/Intelidata
Effective July 1, 1993, Registrant entered into three
transactions to sell the business and assets of IMPLP/IMPI and
Intelidata. In two separate transactions, Registrant sold the
entire business and substantially all of the assets of
IMPLP/IMPI and a portion of the business and assets of
Intelidata to Phillips Business Information, Inc. ("PBI") for
future consideration based on the revenues of IMPLP/IMPI and the
portion of the Intelidata business acquired by PBI. PBI is not
affiliated with Registrant. At closing, PBI made advances of
$100,000 and $150,000 to IMPLP/IMPI and Intelidata,
respectively, which advances would be recoverable by PBI from
any future consideration payable by PBI to Registrant. In
addition, PBI agreed to assume certain liabilities of IMPLP/IMPI
and Intelidata.
In the third transaction, Registrant sold the remaining business
and assets of Intelidata, which were not sold to PBI, to Romtec
plc ("Romtec") in exchange for future consideration, based on
both the amount of assets and liabilities transferred to Romtec
and the combined profits of the portion of the Intelidata
business acquired by Romtec and another, existing division of
Romtec. In addition, certain liabilities of Intelidata were
assumed by Romtec. Romtec is not affiliated with Registrant.
As a result of the above transactions, Registrant recorded a
writedown of approximately $364,000 of certain assets of
IMPLP/IMPI/Intelidata in the second quarter of 1993 to reduce
Registrant's net investment to a net realizable value of zero.
Subsequent to the sale of the businesses, Registrant advanced
additional funds totaling approximately $0.1 million to
IMPLP/IMPI and Intelidata to fund cash shortfalls resulting from
the pre-sale claims of certain creditors, but made no such
advances during the first quarter of 1994. However, Registrant
anticipates that it may be required to make additional such
advances to IMPLP/IMPI and Intelidata during 1994. The total of
any Registrant obligations to fund such advances, including
certain contractual obligations, is not currently anticipated to
exceed the amount of the writedown. It is unlikely that
Registrant will recover its investments in
IMPLP/IMPI/Intelidata.
Results of Operations
1994 vs. 1993
The following discussion of Registrant's first quarter 1994 and
1993 operating results from continuing operations do not include
the results of Maryland Cable, Windsor, and IMPLP/IMPI and
Intelidata, which are presented as discontinued operations. The
results of operations of these properties are reported on
Registrant's Consolidated Statement of Operations under the
heading "Loss from discontinued operations". However, because
Maryland Cable represented Registrant's major investment as of
March 31, 1994, the results of operations of Maryland Cable are
discussed in more detail below.
Registrant had a loss from continuing operations in the first
quarter of 1994 of approximately $2.1 million, which was
comprised primarily of the following components: (1)
Registrant's combined loss recognized from its investments in
TCS, Paradigm and WMXN-FM of approximately $1.3 million; and (2)
management fees and other general and administrative expenses.
Consolidated operating revenue increased from approximately $0.9
million in the first quarter of 1993 to approximately $3.4
million in the first quarter of 1994 primarily as a result of
the consolidation of TCS's operations in the first quarter of
1994, which generated approximately $3.2 million of revenue
while the first quarter of 1993 reflected TCS's operations under
the equity method of accounting. This increase was partially
offset by revenue decreases of approximately: $0.5 million at
Paradigm/BBAD, due to reduced program production activity; and
$0.2 million at WMXN-FM due to the implementation on January 31,
1994 of the LMA (refer to "Liquidity and Capital Resources"
above), which generally reduced the amount of operating revenue
reported by the station.
Consolidated property operating expenses increased from
approximately $1.1 million in the first quarter of 1993 to
approximately $1.6 million in the first quarter of 1994
primarily as a result of the consolidation of TCS's operations
in the first quarter of 1994, which accounted for approximately
$1.5 million in property operating expenses (the equity method
of accounting was utilized for TCS in the first quarter of
1993). This increase was partially offset by decreases of
approximately: $0.8 million at Paradigm, due to reduced program
production activity; and approximately $0.2 million at WMXN-FM
due to the implementation on January 31, 1994 of the LMA, which
generally reduced the amount of operating expenses reported by
the station. The remaining increases or decreases in property
operating expenses at Registrant's other properties were
immaterial, either individually or in the aggregate.
Consolidated general and administrative expenses increased from
approximately $0.2 million in the first quarter of 1993 to
approximately $1.2 million in the first quarter of 1994,
primarily as a result of the consolidation of TCS's operations
in the first quarter of 1994, which contributed approximately
$1.0 million in general and administrative expenses (the equity
method of accounting was utilized for TCS in the first quarter
of 1993). The remaining increases or decreases in general and
administrative expenses at Registrant's other properties were
immaterial, either individually or in the aggregate.
Interest expense increased from $0.0 million in the first
quarter of 1993 to approximately $1.3 million in the first
quarter of 1994. This increase resulted from the consolidation
of TCS's operations in the first quarter of 1994, which
accounted for approximately $1.3 million of interest expense in
the first quarter of 1994.
Maryland Cable Systems
1994 vs. 1993
For purposes of the following discussion, Maryland Cable is
comprised of the remaining systems, located in Maryland, which
are referred to as the Lanham System, except in the discussions
of depreciation and amortization expense and interest expense in
which discussions Maryland Cable is comprised in 1993 of both
the Lanham System and the Leesburg System. First quarter 1993
results, including the results of the Leesburg System, which was
sold on September 30, 1993, are presented in parenthesis.
For the first quarter of 1994, the Lanham System incurred a net
loss of approximately $7,137,000 as compared to a net loss of
approximately $7,415,000 ($7,174,000 including Leesburg) for the
same period in 1993. This decrease in net loss is primarily due
to lower interest expense and depreciation and amortization
expense, partially offset by higher cable television system
expenses.
The Lanham System's operating revenues increased slightly to
approximately $10,495,000 for the first quarter of 1994 from
approximately $10,454,000 ($10,934,000 including Leesburg) for
the first quarter of 1993. Potential increases in operating
revenues from higher levels of basic subscribers at the Lanham
System were mitigated by basic service rate decreases (due
primarily to the 1993 FCC rate regulations) resulting in only a
marginal increase in actual operating revenues. The average
basic revenue per subscriber per month decreased to $29.51 in
the first quarter of 1994 from $32.10 ($31.72 including
Leesburg) in the first quarter of 1993. The number of basic
subscribers increased to 77,034 at March 31, 1994 from 76,564 at
December 31, 1993 and the number of average basic subscribers
for the first quarter of 1994 increased to 76,673 from 74,430 in
the first quarter of 1993 (79,289 including Leesburg). The
increase in the number of basic subscribers and average basic
subscribers is primarily attributable to increased staffing in
the direct sales area during the first quarter of 1994.
Premium service units decreased to 77,258, or a 100% premium
unit to basic subscriber ratio, at March 31, 1994 from 77,728,
or a 102% premium unit to basic subscriber ratio at December 31,
1993 and from 78,694, or a 105% premium unit to basic subscriber
ratio, (80,983 or 102% including Leesburg) at March 31, 1993.
The average premium revenue rate for the first quarters of 1994
and 1993 was $10.58 and $9.53 ($9.54 including Leesburg),
respectively. The increase in rates is primarily attributable
to the institution of a new pricing structure on September 1,
1993 which increased premium service rates on additional outlets
within a household.
Revenue from pay-per-view services increased to approximately
$416,000 for the first quarter of 1994 from $382,000 ($383,000
including Leesburg) for the first quarter of 1993, primarily as
a result of more special events. Revenue from advertising sales
increased to approximately $264,000 for the first quarter of
1994 from approximately $204,000 ($223,000 including Leesburg)
for the first quarter of 1993 as a result of improved marketing
efforts by the in-house advertising sales force.
Cable television system expenses (which include all expenses
other than depreciation and amortization, interest, management
fees and expenses, and related expenses) were 62% of revenues
during the first quarter of 1994 and 58% (58% including
Leesburg) during the first quarter of 1993. The increase in
expenses is primarily due to payroll and related costs,
programming expenses and copyright fees. The payroll and
related costs increase is due mostly to increased technician
wages and overtime and sales commissions to attain subscriber
gains. Programming expenses increased in 1994 due to increased
basic subscriber counts and increased programming rates.
Copyright fees increased in 1994 due to the September 1, 1993
rate and programming restructuring as a result of 1993 FCC rate
regulations.
Maryland Cable's depreciation and amortization expense decreased
to approximately $3,302,000 for the first quarter of 1994 from
approximately $3,902,000 in the first quarter of 1993 due to the
sale of the Leesburg System and to a decrease in amortization
expense resulting from fully amortized deferred finance charges.
Maryland Cable's interest expense related to the senior and
subordinated debt decreased to approximately $6,427,000 for the
first quarter of 1994 from approximately $7,366,000 for the
first quarter of 1993 primarily as a result of the non-accrual
of interest expense on the Discount Notes subsequent to March
10, 1994, the date of Maryland Cable's bankruptcy filing, and
pursuant to the terms of the Prepackaged Plan. In addition,
interest expense on the senior debt decreased due to lower
outstanding principal in the first quarter of 1994 due to a
required principal payment related to the sale of the Leesburg
System on September 30, 1993. These decreases were partially
offset by increases due to higher interest rates in the first
quarter of 1994 compared to the first quarter of 1993 and
accrued interest on the fully accreted subordinated debt for the
period from January 1, 1994 to March 10, 1994, the date of
Maryland Cable's bankruptcy filing.
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
Reference is hereby made to Part I Item 1. Financial Statements
Footnote 2. Liquidity.
Item 5. Other Information
Reference is hereby made to Part I, Item 2. Management's
Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital Resources regarding the
confirmation on May 2, 1994 by the United States Bankruptcy
Court, Southern District of New York, of the Amended Prepackaged
Plan of Reorganization of Maryland Cable Corp. and Maryland
Cable Holdings Corp.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
10.01 Order of the United States Bankruptcy Court,
Southern District of New York, approving
nonmaterial modifications to the consolidated
prepackaged plan of reorganization of Maryland
Cable Corp. and Maryland Cable Holdings Corp.
10.02 Order of the United States Bankruptcy Court,
Southern District of New York, confirming
debtors' first amended consolidated prepackaged
plan of reorganization under Chapter 11 of the
United States Bankruptcy Code.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: RP Opportunity Management, L.P.
General Partner
By: IMP Opportunity Management Inc.
Dated: May 16,1994 /s/ I. Martin Pompadur
I. Martin Pompadur
Director and President
(principal executive officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: Media Opportunity Management Partners
General Partner
By: ML Opportunity Management Inc.
Dated: May 16, 1994 /s/ Kevin K. Albert
Kevin K. Albert
Director and President
Dated: May 16, 1994 /s/ Robert F. Aufenanger
Robert F. Aufenanger
Director and Executive Vice President
Dated: May 16, 1994 /s/ David G. Cohen
David G. Cohen
Treasurer
(principal financial officer and
principal accounting officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: RP Opportunity Management, L.P.
General Partner
By: IMP Opportunity Management Inc.
Dated:
I. Martin Pompadur
Director and President
(principal executive officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: Media Opportunity Management Partners
General Partner
By: ML Opportunity Management Inc.
Dated: _______________________________
Kevin K. Albert
Director and President
Dated: _______________________________
Robert F. Aufenanger
Director and Executive Vice President
Dated: _______________________________
David G. Cohen
Treasurer
(principal financial officer and
principal accounting officer)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- -----------------------------------x
: Chapter 11
In re: :
: Case Nos. 94 B 41125(BRL)
MARYLAND CABLE HOLDINGS CORP. AND : 94 B 41126
MARYLAND CABLE CORP., :
: (Jointly Administered)
:
Debtors. :
- -----------------------------------x
ORDER CONFIRMING DEBTORS' FIRST AMENDED CONSOLIDATED
PREPACKAGED PLAN OF REORGANIZATION UNDER
CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
Maryland Cable Holdings Corp. ("Holdings"), debtor and
debtor-in-possession, and Maryland Cable Corp. ("Maryland
Cable"), debtor and debtor-in-possession (jointly, the
"Debtors"), having filed their Consolidated Prepackaged Plan of
Reorganization dated February 10, 1994 (the "Plan") and
Disclosure Statement Relating to (i) Participation in Exchange
Agreement and (ii) Solicitation of Votes Respecting the Plan
dated February 10, 1994 (the "Disclosure Statement") with the
Bankruptcy Court (the "Court") pursuant to Section 1121 of
Chapter 11 of Title 11, United States Code, 11 U.S.C. Sections 101
et seq. (the "Bankruptcy Code"); and the Debtors having solicited
votes on the Plan by transmitting copies of the Disclosure
Statement (including the Plan) and a ballot to (i) the Lenders,
(ii) the Discount Note Holders, and (iii) ML Opportunity; and
such ballots having fixed February 28, 1994 at 12:00 noon as the
time and date by which all ballots were to have been received by
the Debtors in order to be counted as acceptances or rejections
of the Plan; and the acceptances and rejections of the Plan of
those holders of Claims that voted having been duly received and
tabulated; and a Certification of Ballots Accepting or Rejecting
the Plan prepared by Proskauer Rose Goetz & Mendelsohn having
been filed with this Court; and an order having been entered on
March 31, 1994 (the "Scheduling Order"), which, among other
things, (i) scheduled a hearing on the adequacy of information
contained in the Disclosure Statement pursuant to Section 1125
of the Bankruptcy Code, and (ii) scheduled a hearing (the
"Confirmation Hearing") to consider Confirmation of the Plan, as
it may be amended or modified, and the procedures relating
thereto for immediately after the Disclosure Statement hearing
pursuant to Sections 1128 and 1129 of the Bankruptcy Code; and
due notice of the Confirmation Hearing and the date by which
objections must be filed having been given in accordance with
the terms of the Scheduling Order; and this Court having found
on May 2, 1994, that (i) the Debtors' Disclosure Statement
contains "adequate information" pursuant to Section 1125 of the
Bankruptcy Code, (ii) the procedures utilized in soliciting
acceptances or rejections of the Plan were accomplished in a
proper and fair manner in accordance with Section 1126(b) of the
Bankruptcy Code and Rule 3018 of the Federal Rules of Bankruptcy
Procedure, and (iii) the Debtors solicited votes respecting the
Plan in good faith and in compliance with the applicable
provisions of Chapter 11 of the Bankruptcy Code, pursuant to
Section 1125(e) of the Bankruptcy Code; and the Debtors having
filed an application seeking entry of an order approving certain
non-material modifications to the Plan on April 28, 1994; and an
order having been entered on May 2, 1994, approving certain non-
material modifications to the Plan (the "Amended Plan"); and the
Confirmation Hearing having been held before this Court on May
2, 1994; and no objections having been received to Confirmation
of the Amended Plan; and upon the entire record of the Debtors'
Chapter 11 cases and the testimony of Ms. Elizabeth McNey Yates,
the Debtors' Vice President, at the Confirmation Hearing; and
after due deliberation; and sufficient cause appearing therefor;
and
IT HAVING BEEN FOUND AND DETERMINED by this Court,
that:
A. Jurisdiction. This Court has jurisdiction over
these Reorganization Cases pursuant to 28 U.S.C. Section 1334.
Confirmation of the Amended Plan and the granting of all relief
herein related thereto is a "core proceeding" pursuant to 28
U.S.C. Section 157(b)(2) and this Court has jurisdiction to enter
this Final Order with respect thereto.
B. Notice and Solicitation.
(1) On April 5, 1994, the Debtors mailed to all
parties in interest a notice advising them of the time and place
of the Confirmation Hearing and the procedure for objecting to
the Plan, as it may be amended or modified.
(2) Any party in interest required to receive notice
of the Confirmation Hearing has received due, proper and
adequate notice thereof. All parties in interest had the
opportunity to appear and be heard at the Confirmation Hearing.
C. Reasonable Classification of Claims (Section
1122(a)). The classification of Claims and Equity Interests in
Articles IV and V of the Amended Plan places Claims or Equity
Interests in a particular Class where such Claim or Equity
Interest is substantially similar to the other Claims or Equity
Interests of such Class, and therefore the Amended Plan
satisfies the requirements of Section 1122(a) of the Bankruptcy
Code.
D. Designation of Classes (Section 1123(a)(1)).
Article II of the Amended Plan designates all Classes of Claims
in accordance with the requirements of Section 1123(a)(1) of the
Bankruptcy Code.
E. Specific Unimpaired Classes (Section 1123(a)(2)).
Article IV of the Amended Plan specifies those Classes of Claims
which are not impaired under the Amended Plan in accordance with
the requirements of Section 1123(a)(2).
F. Specification of Treatment of Impaired Classes
(Section 1123(a)(3)). Article V of the Amended Plan specifies
the Classes of Claims and Equity Interests which are impaired
and the treatment of each such Class, and therefore the Amended
Plan satisfies the requirements of Section 1123(a)(3).
G. No Discrimination (Section 1123(a)(4)). The
Amended Plan provides the same treatment for each Claim or
Equity Interest in a particular Class and therefore the Amended
Plan satisfies the requirements of Section 1123(a)(4) of the
Bankruptcy Code.
H. Implementation of the Amended Plan (Section
1123(a)(5)). Article VI of the Amended Plan provides adequate
means for implementing the Amended Plan, and therefore the
Amended Plan satisfies the requirements of Section 1123(a)(5) of
the Bankruptcy Code.
I. Equity Securities (Section 1123(a)(6)). The
Amended Plan satisfies the requirements of Section 1123(a)(6) of
the Bankruptcy Code since (i) neither Holdings, pursuant to
Section 6.2(d) of the Amended Plan, the NewCo General Partner or
HoldingCo is authorized to issue nonvoting equity securities or
provides for several classes of securities possessing voting
power, (ii) NewCo is not a corporation, and (iii) no other
corporation referred to in Sections 1123(a)(5)(B) or
1123(a)(5)(C) are authorized to issue any equity securities
under the terms of the Amended Plan.
J. Selection of Officers and Directors (Section
1123(a)(7)). The Amended Plan provides for NewCo, the NewCo
General Partner, and HoldingCo to appoint their respective
officers and directors, in a manner that is consistent with the
interests of creditors and equity security holders and with
public policy and therefore the Amended Plan satisfies the
requirements of Section 1123(a)(7) of the Bankruptcy Code.
K. The Amended Plan Complies with the Bankruptcy
Code (Section 1129(a)(1)). The Amended Plan complies with all
applicable provisions of the Bankruptcy Code and, as required
pursuant to Rule 3016(b) of the Federal Rules of Bankruptcy
Procedure, is dated and identifies the Debtors as the proponents
of the Amended Plan, and therefore the Amended Plan satisfies
the requirements of Section 1129(a)(1) of the Bankruptcy Code.
L. The Debtors have Complied with the Provisions of
the Bankruptcy Code (Section 1129(a)(2)). The Debtors, as
proponents of the Amended Plan, have complied with the
applicable provisions of the Bankruptcy Code and therefore the
Debtors have satisfied the requirements of Section 1129(a)(2) of
the Bankruptcy Code.
M. Amended Plan Proposed in Good Faith (Section
1129(a)(3)). The Amended Plan has been proposed in good faith
and not by any means forbidden by law and therefore, the Amended
Plan satisfies the requirements of Section 1129(a)(3) of the
Bankruptcy Code.
N. Payments of Costs and Expenses (Section
1129(a)(4)). Any payment made or to be made by the Debtors, or
by a person issuing securities or acquiring property under the
Amended Plan, for services or for costs and expenses in or in
connection with the Debtors' Chapter 11 cases, or in connection
with the Amended Plan and incident to the cases, has been
approved by, or is subject to the approval of the Court in
accordance with Section 1129(a)(4) of the Bankruptcy Code.
O. Disclosure of Identities of Insiders (Section
1129(a)(5)). The Debtors have disclosed the identity of their
successor, NewCo, the NewCo General Partner, and HoldingCo, and
the creation of such entities is consistent with the interests
of creditors and equity security holders and with public policy.
The Debtors or NewCo will disclose the identity, affiliation and
compensation of the officers and directors of NewCo, the NewCo
General Partner and/or HoldingCo. after their appointment and
therefore the Amended Plan satisfies the requirements of Section
1129(a)(5) of the Bankruptcy Code.
P. No Rate Change (Section 1129(a)(6)). Section
1129(a)(6) is inapplicable to the Amended Plan since the Amended
Plan has not impaired the rights of any governmental regulatory
commission with jurisdiction over the Debtors with respect to
rate changes which may be imposed on the Debtors or NewCo after
Confirmation.
Q. Best Interests of Creditors (Section 1129(a)(7)).
With respect to each impaired Class of Claims and Equity
Interests, (i) each holder of a Claim or Equity Interest of such
Class has accepted the Amended Plan, or will receive or retain
under the Amended Plan on account of such Claim or Equity
Interest property of a value, as of the Effective Date of the
Amended Plan, that is not less than the amount that such holder
would so receive or retain if the Debtors were liquidated under
Chapter 7 of the Bankruptcy Code on such date, and (ii) there
are no holders of Allowed Secured Claims who are entitled to
make elections under Section 1111(b)(2) of the Bankruptcy Code
and therefore the Amended Plan satisfies the requirements of
Section 1129(a)(7) of the Bankruptcy Code.
R. Plan Acceptance (Section 1129(a)(8)). Ballots
accepting the Plan have been timely received from the holders of
Claims in Classes 4 and 5. Holders of Allowed Claims in Classes
1, 2B and 3 are unimpaired within the meaning of Section 1124 of
the Bankruptcy Code and are conclusively presumed to have
accepted the Amended Plan under Section 1126(f) of the
Bankruptcy Code such that solicitation of acceptances or
rejections with respect to such Classes is not required pursuant
to Section 1129(a)(8) of the Bankruptcy Code. Ballots accepting
the Amended Plan have been received from Class 2A prior to
Confirmation. Accordingly, the Amended Plan satisfies the
requirements of Section 1129(a)(8) of the Bankruptcy Code. The
Amended Plan provides for no distributions to Classes 6A and 6B
and therefore, Classes 6A and 6B are deemed to have rejected the
Amended Plan.
S. Amended Plan Treatment of Administrative Claims
and Tax Claims (Section 1129(a)(9)). The Amended Plan satisfies
the requirements of Section 1129(a)(9) of the Bankruptcy Code
since, except to the extent that the holder of a particular
Claim has agreed to a different treatment of such Claim, the
Amended Plan provides that:
(1) With respect to a Claim of a kind specified
in Sections 507(a)(1) or (2) of the Bankruptcy Code, (a) as soon
as practicable after the Effective Date or upon order of this
Court or (b) upon such other terms as may exist in accordance
with the ordinary course of business of the Debtors or (c) as
may be agreed upon between any holder of such Administrative
Claim and the Debtors, the holder of such Claim will receive on
account of such Claim Cash equal to the allowed amount of such
Claim.
(2) Section 1129(a)(9)(B) of the Bankruptcy Code
is inapplicable since there are no Claims of the kind specified
in Section 507(a)(5) and the Debtors have satisfied Claims of
the kind specified in Sections 507(a)(3), (4), and (6) pursuant
to orders of this Court dated March 10, 1994.
(3) With respect to a Claim of a kind specified
in Section 507(a)(7) of the Bankruptcy Code, the holder of such
Claim will receive an account of such Claim either Cash, on the
Effective Date or deferred Cash payments, over a period not
exceeding six years after the date of assessment of such Claim,
of a value, as of the Effective Date of the Amended Plan, equal
to the allowed amount of such Claim.
T. At Least One Impaired Class Accepted the Amended
Plan (Section 1129(a)(10)). At least one Class of Claims that
is impaired under the Amended Plan has accepted the Amended
Plan, determined without including any acceptance of the Amended
Plan by any insider holding a Claim in such Class, and therefore
the Amended Plan satisfies the requirements of Section
1129(a)(10) of the Bankruptcy Code.
U. Feasibility (Section 1129(a)(11)). Confirmation
of the Plan is not likely to be followed by the liquidation, or
the need for further financial reorganization, of NewCo and
therefore, the Amended Plan satisfies the requirements of
Section 1129(a)(11) of the Bankruptcy Code.
V. Fees (Section 1129(a)(12)). The Debtors have or
will pay all amounts due under 28 U.S.C. Section 1930 and therefore
the Amended Plan satisfies the requirements of Section
1129(a)(12) of the Bankruptcy Code.
W. Retiree Benefits (Section 1129(a)(13)). Section
1129(a)(13) is inapplicable to the Amended Plan since the
Debtors are not obligated to provide retiree benefits, as that
term is defined in Section 1114 of the Bankruptcy Code.
X. Cramdown (Section 1129(b)). The Amended Plan
does not discriminate unfairly, and is fair and equitable, with
respect to Classes 6A and 6B since no holder of an Equity
Interest junior to the Equity Interests of such Classes will
receive or retain under the Amended Plan any payment on account
of such junior Equity Interest, and therefore the Amended Plan
may be confirmed pursuant to Section 1129(b) of the Bankruptcy
Code.
Y. No Other Plan (Section 1129(c)). No other plan
has been filed with respect to the Debtors' Chapter 11 cases.
Z. Avoidance of Taxes (Section 1129(d)). No party
in interest that is a governmental unit has requested that the
Amended Plan not be confirmed on the grounds that the principal
purpose of the Amended Plan is the avoidance of taxes or the
avoidance of the application of Section 5 of the Securities Act
of 1933 and therefore the Amended Plan satisfies the
requirements of Section 1129(d) of the Bankruptcy Code.
AA. Releases. The release provisions set forth in
Section 6.9 of the Amended Plan:
(1) are within the jurisdiction of this Court
under 28 U.S.C. Sections 1334(a), (b) and (d);
(2) are each an essential means of implementing
the Amended Plan pursuant to Section 1123(a)(5) of the
Bankruptcy Code;
(3) are integral elements of the settlements and
compromises incorporated in the Amended Plan;
(4) confer material benefits on, are thus are in
the best interests of, the Debtors' Estates; and
(5) are consistent with and permitted pursuant
to Sections 105, 524, 1129 and all other applicable provisions
of the Bankruptcy Code.
BB. Debtors' Duties. The Debtors have completed all
of their obligations and duties with respect to their Estates
pursuant to Section 1107 of the Bankruptcy Code.
THEREFORE, NOW, upon the motion of the Debtors and
after due deliberation, the Court hereby ORDERS, ADJUDGES AND
DECREES THAT:
1. Confirmation. The Amended Plan shall be, and
hereby is, confirmed, having met the requirements of Section
1129 of the Bankruptcy Code.
2. Record Date. Pursuant to Rule 3021 of the
Federal Rules of Bankruptcy Procedure, the record date for the
purpose of determining the Discount Note Holders entitled to
distributions under the Amended Plan shall be the Effective
Date, and the record date for the purpose of determining holders
of Claims in Classes 1, 2A, 2B, 3 and 5 entitled to
distributions under the Amended Plan shall be the date on which
distributions to each such Class are respectively made or
commenced.
3. Allowed Secured Claims of the Lenders. Upon the
Effective Date, and if the New Credit Agreement has become
effective in accordance with its terms (including the
satisfaction or waiver of all conditions precedent thereto), the
Allowed Secured Claims of the Lenders shall be as follows:
a. Principal:
1. Declining Term Advances $67,775,780.86
2. Term Advances 14,523,381.43
3. Total of all Advances $82,299,162.29
b. Interest:
Interest on the Advances at the applicable default
rates under the Amended Credit Agreement from the
period beginning on March 5, 1994 through the
Effective Date.
c. Agency Fee:
Agency fee in the amount of $100,000 payable on
November 1, 1993 to Citibank, N.A.
d. Attorneys' Fees and Expenses:
Reasonable fees and expenses of Sidley & Austin, as
attorneys for the Collateral Agent and the Agent (as
defined in the New Credit Agreement), payable pursuant
to Section 8.04 of the Amended Credit Agreement.
e. Other Obligations:
All other Obligations (as defined in the Amended
Credit Agreement) owing to the Collateral Agent and
the Lenders on the Effective Date; provided, however,
the amount of all such Obligations must be approved by
the Debtors, NewCo, ML Opportunity, holders of at
least a majority in principal amount of the Discount
Notes and Citibank, N.A., as agent for the Lenders.
4. Agreements. All agreements that are contemplated
to be executed and implemented in connection with the Amended
Plan, as provided for in Article IX of the Amended Plan,
including, among other things, the New Credit Agreement
(including all agreements annexed thereto or to be executed in
connection therewith), the Partnership Agreement, the
Subscription Agreement, the Real Property Collateral Documents,
and the Management Agreement (collectively, the "Agreements")
are in the best interests of the Debtors' Estates and shall be,
and hereby are, approved in their entirety, and the Debtors,
NewCo, the Discount Note Holders (including Water Street), and
every other holder of a Claim or Equity Interest, their
successors, transferees and assigns, are hereby authorized and
directed to take any and all actions that may be reasonable or
necessary to consummate the Agreements.
5. Effective Date. The Effective Date of the
Amended Plan shall be, and hereby is, the first Business Day on
which all the conditions in Section 9.1 of the Amended Plan,
have either been satisfied or waived, unless extended by
agreement of (i) the Debtors, (ii) ML Opportunity, and (iii)
Discount Note Holders holding as least a majority in principal
amount of the Discount Notes.
6. Effect of Withdrawal or Revocation. In the event
that the Effective Date does not occur, then the Amended Plan
shall be deemed null and void, and in such event nothing
contained in the Amended Plan shall be deemed to constitute a
waiver or release of any Claims or Equity Interests by or
against the Debtors or any Person or to prejudice in any manner
the rights of the Debtors or any Person in any further
proceedings involving the Debtors.
7. Termination of Certain Agreements. On the
Effective Date, the Exchange Agreement, the Indenture, and the
Amended Credit Agreement and all agreements and documents
relating thereto shall be terminated.
8. Substantive Consolidation. On the Effective
Date, Holdings and Maryland Cable shall be, and hereby are,
deemed substantively consolidated. Accordingly, on the
Effective Date: (i) all intercompany Claims and Equity
Interests by, in and among the Debtors and/or their non-Debtor
affiliates will be eliminated; (ii) except as otherwise provided
in the Amended Plan all assets and all proceeds thereof and all
liabilities of the Debtors will be treated as though they were
pooled; (iii) any obligation of either Debtor and all guarantees
executed by, or joint liability of, any of the Debtors will be
deemed to be one obligation of the consolidated Debtors; (iv)
any Claims filed or to be filed in connection with any such
obligation guaranteed, or joint liability, will be deemed one
Claim against the consolidated Debtors; (v) each and every Claim
filed in the individual case of any of the Debtors will be
deemed filed against the consolidated Debtors in the
consolidated case; and (vi) for purposes of determining the
availability of the right of set-off under Section 553 of the
Bankruptcy Code, the Debtors shall be treated as one entity so
that, subject to the other provisions of Section 553 of the
Bankruptcy Code, debts due to any of the Debtors may be set-off
against the debts of any of the Debtors.
9. Extinguishment of Guarantees. On the Effective
Date, all Claims based upon guarantees of collection, payment or
performance, or joint liability of one or more Debtors, as to
the obligations of any other Debtor, shall be discharged,
released and of no further force and effect.
10. Consolidated Debtors' Rights. On the
Confirmation Date, pursuant to the provisions of Section 1141(b)
of the Bankruptcy Code, all property, assets and rights and
interests related thereto of each of the respective Debtors
shall automatically vest in the consolidated Debtors and the
consolidated Debtors shall be authorized and empowered to take
or cause to be taken all actions necessary to enable them, as
consolidated, to implement effectively the provisions of the
Amended Plan.
11. Exchanges on Liquidation. On the Effective Date:
(i) each Discount Note Holder shall transfer and assign to NewCo
all of its Discount Notes (including the right to receive any
accrued interest thereon) and all of its Class B Shares in
exchange for its Pro Rata share of the Discount Note Holders'
Designation; (ii) ML Opportunity shall transfer and assign to
NewCo the PIK Notes, the Deferred Fees, and other Claims against
either or both of the Debtors; (iii) all outstanding Equity
Interests in Holdings shall be cancelled, annulled and
extinguished; (iv) Holdings shall issue 100 shares of common
stock to NewCo; (v) the (a) Indenture, (b) Discount Notes, (c)
PIK Notes, and (d) right of ML Opportunity to receive Deferred
Fees and other amounts arising from ML Opportunity's other
Claims against either or both of the Debtors shall all be
cancelled, extinguished and annulled, unless otherwise
determined by Maryland Cable, NewCo and the holders of at least
a majority in principal amount of the Discount Notes; and (vi)
Maryland Cable shall be liquidated into Holdings, and Holdings
shall be liquidated into NewCo, pursuant to their respective
Plans of Dissolution and Complete Liquidation, in substantially
the respective forms which are annexed to the Exchange
Agreement. Upon effectuation of the foregoing, all of the
assets of the Debtors and all rights, title, and interests
associated therewith, shall be assigned to NewCo, free and clear
of all liens, Claims and encumbrances, except for those liens,
Claims, encumbrances and liabilities that are not discharged or
that are created pursuant to the terms of the Amended Plan.
12. Distributions. In accordance with Articles V and
VI of the Amended Plan, NewCo, or such Person designated under
the Amended Plan or by NewCo and approved by the Court, shall,
and hereby is, authorized and directed to, on the Effective Date
or such other date as specified in the Amended Plan (or as soon
thereafter as is practicable), (i) make the Cash payments
(except that Cash payments may be made earlier than the
Effective Date to holders of Allowed Claims in Class 3); (ii)
make the Pro Rata distributions of the Discount Note Holders'
Designation to the holders of Allowed Claims in Class 4; (iii)
issue the Replacement Notes to the holders of Allowed Claims in
Class 2A, in accordance with and to the extent provided for in
the New Credit Agreement and the Amended Plan; and (iv) issue
the Preferred Limited Partnership Interests on a pro rata basis
to the subscribers pursuant to the Subscription Agreement.
Water Street, the Subscribers, if any, and ML Opportunity, shall
and are hereby authorized and directed to exercise the Put and
Call (and make the Cash payments provided for therewith) as set
forth in Section 5.3 of the Amended Plan. Distributions of Cash
and Limited Partnership Interests pursuant to the Amended Plan
shall be effectuated when NewCo or its designee receives all
applicable documentation requested of holders of Allowed Claims
and Equity Interests pursuant to the Amended Plan.
13. Exemption from Securities Laws. The exemption
from securities laws set forth in Section 1145 of the Bankruptcy
Code is applicable to the issuance or pledge of all securities
to be distributed under the Amended Plan, including, without
limitation, the respective stock issued by Holdings, the NewCo
General Partner and HoldingCo., and the Partnership interests
issued by NewCo.
14. Discharge. Except as otherwise expressly
provided in Section 1141 of the Bankruptcy Code or the Amended
Plan, the distributions made pursuant to the Amended Plan will
be in full and final satisfaction, settlement, release and
discharge as against the Debtors, of any debt that arose before
the Confirmation Date and any debt of a kind specified in
Sections 502(g), 502(h) or 502(i) of the Bankruptcy Code and all
Claims and Equity Interests of any nature, including, without
limitation, any interest accrued thereon from and after the
Filing Date, whether or not (i) a proof of Claim or Equity
Interest based on such debt, obligation or interest is filed or
deemed filed under Section 501 of the Bankruptcy Code, (ii) such
Claim or Equity Interest is allowed under Section 502 of the
Bankruptcy Code or (iii) the holder of such Allowed Claim or
Equity Interest has accepted the Amended Plan. Therefore, upon
the Effective Date, all Claimants holding Claims against the
Debtors, including, without limitation, non-Debtor affiliates of
the Debtors, and holders of Equity Interests of the Debtors
shall be precluded from asserting against the Debtors or NewCo,
or any of their assets or properties, before or after the
transfer to NewCo, any other or further Claims or Equity
Interests based upon any act or omission, transaction or other
activity of any kind or nature that occurred prior to the
Effective Date, and this Order shall permanently enjoin said
Claimants and holders of Equity Interests, their successors and
assigns, from enforcing or seeking to enforce any such Claims or
Equity Interests.
15. Extinguishment of Liens. Except as otherwise
specifically provided for in the Amended Plan, upon payment or
distribution in full satisfaction of an Allowed Secured Claim,
all liens respecting such Claim shall be deemed extinguished and
of no further force and effect.
16. Releases. On the Effective Date, (i) each of the
Discount Note Holders, ML Opportunity and the Lenders shall be
deemed to have granted general releases in favor of Maryland
Cable, NewCo, and Holdings, (ii) Maryland Cable, NewCo, and
Holdings shall be deemed to have granted general releases in
favor of ML Opportunity, each of the Discount Note Holders and
the Lenders, (iii) each of the Discount Note Holders shall be
deemed to have granted a general release in favor of the Lenders
and ML Opportunity, except that the release shall exclude any
actions by ML Opportunity in the management of Maryland Cable of
a type that if such action had been taken by the general partner
of ML Opportunity, the general partner would not have been
entitled to indemnification for such action under the existing
partnership agreement of ML Opportunity, (iv) ML Opportunity
shall be deemed to have granted general releases in favor of
each of the Discount Note Holders and the Lenders, (v) the
Lenders shall be deemed to have granted general releases in
favor of ML Opportunity and the Discount Note Holders, (vi) the
Lenders, other than ML Cable, shall be deemed to have granted
general releases in favor of ML Cable, and (vii) ML Cable shall
be deemed to have granted general releases in favor of the other
Lenders. Notwithstanding anything contained herein to the
contrary, the releases provided in Section 6.9 of the Amended
Plan shall be only for acts and omissions up to the Effective
Date.
17. Full and Final Satisfaction. All payments and
all distributions under the Amended Plan shall be in full and
final satisfaction, settlement, release and discharge of all
Claims and Equity Interests against the Debtors.
18. Taxes. All transfers of property set forth in
paragraphs 11 and 12 of this Order and Sections 5.1, 5.2, 5.3,
and 6.2 of the Amended Plan, and all prior and subsequent sales
or transfers of property made pursuant to or in connection with
the implementation of the Amended Plan shall be, and hereby are,
deemed to be transfers under the Amended Plan and therefore,
free from the imposition of taxes of the kind specified in
Bankruptcy Code Section 1146(c).
19. Duties and Responsibilities. The Debtors and
NewCo hereby are, authorized and directed to perform their
respective duties and responsibilities pursuant to the Amended
Plan.
20. Consummation of the Amended Plan. In accordance
with Section 1142 of the Bankruptcy Code, the implementation and
consummation of the Amended Plan in accordance with its terms
shall be, and hereby is, authorized and approved, including,
without limitation, the execution and delivery of all documents,
instruments, and agreements to be entered into pursuant to the
terms of the Amended Plan.
21. Implementation of the Amended Plan. In
accordance with Section 1142 of the Bankruptcy Code, the
Debtors, the Lenders, NewCo, the Discount Note Holders
(including Water Street), and every other holder of a Claim or
Equity Interest, their successors, transferees and assigns,
shall be, and hereby are, authorized, empowered and directed to
issue, deliver, file and record any document, and to take any
action necessary or appropriate to implement, effectuate and
consummate the Amended Plan in accordance with its terms,
whether or not any such document is specifically referred to in
the Amended Plan or any exhibit thereto and without further
application to or order of this Court.
22. Ratification of Actions. All actions effected by
the Debtors pursuant to Court order during the period commencing
on the Filing Date and ending on the Confirmation Date and such
other transactions as of the Effective Date which have been
taken pursuant to the Amended Plan in implementation thereof are
hereby ratified.
23. Transfers Effective. In accordance with and
subject to Section 10.2 of the Amended Plan, all of the
transfers and conveyances of assets and property of the Debtors'
estates provided for in the Amended Plan and in the related
documents, including, without limitation, the Agreements, will
be deemed made as of the Effective Date without any further
action on the part of the Debtors, NewCo, the Discount Note
Holders, Citibank, as agent for the Lenders, any Claimant, or
any holder of an Equity Interest, and will be valid and
effective as of the Effective Date without any requirement of
filing or recording of documents of conveyances, and without any
approvals or consents from governmental entities (except
applicable consents from state municipal and political
subdivisions franchising authorities and their successors and
assigns and the FCC) or any other Persons and without regard to
any errors, deficiencies or omissions in the legal descriptions
of any property so to be transferred. The Debtors, NewCo, the
Banks, the Discount Note Holders, and other parties making such
transfers or conveyances may seek to obtain all governmental
approvals or consents which they determine are desirable in a
timely manner. The provisions set forth in Section 10.2 of the
Amended Plan shall be binding on the Debtors, NewCo, the Banks
and all other parties in interest.
24. Executory Contracts and Unexpired Leases.
Subject to the provisions of Section 10.2, as of the Effective
Date, all executory contracts and unexpired leases shall be
deemed assumed by the Debtors and assigned by the Debtors to
NewCo pursuant to Sections 365 and 1123 of the Bankruptcy Code.
In accordance with Section 1123(a)(5)(G) of the Bankruptcy Code,
by the Effective Date or as soon as practicable thereafter, all
defaults, if any, under any executory contract or unexpired
lease shall be assumed pursuant to Section 8.1 of the Amended
Plan and shall be cured by (i) the Cash payment of only those
amounts set forth in proofs of Claim or where no such Claim has
been filed, as determined by the Debtors, or (ii) on such terms
as agreed to in writing between the Debtors and such Claimants.
25. Injunction of Actions. From and after the
Confirmation Date, all holders of Claims and Equity Interests
shall be enjoined from commencing or continuing in any court any
suit, action or other proceeding seeking to hold any of the
Debtors, NewCo and their respective professionals to any of the
foregoing for any act or failure to act in any respect related
to the Reorganization Cases or the Debtors' management of the
Reorganization Cases. In addition, all Persons shall be
permanently enjoined on and after the Confirmation Date (i) from
commencing or continuing in any manner any action or other
proceeding of any kind with respect to any Claim or Equity
Interest against the Debtors, NewCo, or their property;
(ii) from enforcing, attaching, collecting or recovering by any
manner or means, any judgment, award, decree, or order against
the Debtors, NewCo or their property; (iii) from creating,
perfecting or enforcing any encumbrance of any kind against the
Debtors, NewCo or against their property; (iv) from asserting
any set-off, right of subrogation, indemnification, contribution
or recoupment of any kind against any obligation due the
Debtors, NewCo or their property; and (v) from performing any
act, in any manner, in any place whatsoever, that does not
conform to or comply with the provisions of the Amended Plan and
orders of the Court.
26. Automatic Stay. The automatic stay of Section
362(a) of the Bankruptcy Code shall continue and remain in full
force and effect, pursuant to Section 362(c) of the Bankruptcy
Code, (i) with respect to the stay of an act against any and all
property of the Debtors unless and until such property is no
longer property of the Estates of the Debtors, (ii) with respect
to any other act until such time as a Final Order is entered by
the Court with respect to the Debtors, or (iii) unless and until
the Court enters an order pursuant to Section 362(d) of the
Bankruptcy Code granting relief from the automatic stay upon
application on appropriate notice and hearing for cause shown.
27. Conduct of Business. Until the Effective Date,
Maryland Cable is hereby authorized and directed to operate its
business in the ordinary course consistent with its prior
practices taking into consideration the occurrence of the Filing
Date and its impact thereon, except as contemplated by the
Amended Plan and except for changes required by or resulting
from The Cable Television Consumer Protection and Competition
Act of 1992, the Bankruptcy Code or the Federal Rules of
Bankruptcy Procedure.
28. Jurisdiction. From and after the Confirmation
Date and until such time as all payments and distributions
required to be made and all other obligations required to be
performed under the Amended Plan have been made and performed by
the Debtors or NewCo, this Court shall retain such jurisdiction
as is legally permissible, including, but not limited to, the
following purposes:
(1) To hear and determine any and all objections
to the allowance of a Claim or Equity Interest, to liquidate any
Disputed Claims, and to determine any controversy as to the
classification of Claims or Equity Interests or the Reserve;
(2) To hear and determine any and all motions,
applications, adversary proceedings or contested matters pending
on the Confirmation Date;
(3) To hear and determine any and all
applications by Professionals for compensation and reimbursement
of expenses;
(4) To hear and determine any and all pending
applications for the rejection and disaffirmance of executory
contracts and unexpired leases and fix and allow any Claims
resulting therefrom;
(5) To enable the Debtors, NewCo, or any party
acting on behalf of NewCo, to prosecute any and all proceedings
which have been or may be brought prior to the Effective Date to
set aside liens or encumbrances and to recover any transfers,
assets, properties or damages to which the Debtors (or NewCo)
may be entitled under applicable provisions of the Bankruptcy
Code or any other federal, state or local laws except as may be
waived pursuant to the Amended Plan;
(6) To liquidate any disputed, contingent or
unliquidated Claims or Equity Interests;
(7) To enforce the provisions of the Amended
Plan and the injunction and releases provided for in Sections
6.9 and 6.24 of the Amended Plan;
(8) To correct any defect, cure any omission, or
reconcile any inconsistency in the Amended Plan or in this Order
as may be necessary to carry out its purpose and the intent of
the Amended Plan;
(9) To hear and determine any and all actions
pursuant to Sections 544, 547, 548 and 550 of the Bankruptcy
Code to set aside and recover (if applicable) any transfers
determined to be preferential or fraudulent;
(10) To determine any Tax Claim which the Estates
may incur as a result of the transactions contemplated herein;
(11) To determine such other matters as may be
provided for pursuant to this Order or as may be authorized
under the provisions of the Bankruptcy Code;
(12) To resolve any and all disputes that may
arise under the Amended Plan; and
(13) To hear and determine any and all
administrative matters that may arise in closing these cases.
Notwithstanding Section 1141 of the Bankruptcy Code,
this Court shall retain jurisdiction over these Reorganization
Cases as is legally permissible, including, without limitation,
jurisdiction as is necessary to ensure that the purpose and
intent of the Amended Plan are implemented, except to the extent
inconsistent with Section 10.2 of the Amended Plan.
29. Franchises. Notwithstanding anything to the
contrary herein or in the Amended Plan (including, but not
limited to Sections 6.7, 6.12, 8.1, 9.1 and 10.1 of the Amended
Plan), all matters relating to the assumption and/or assignment
of the cable television system franchises, to which the Debtors
are parties, and any matters relating to the regulation of the
cable franchise and regulation of the facilities and services of
the cable franchise system, shall not be subject to or affected
by the jurisdiction of the Court or any federal bankruptcy laws,
the Plan or these Chapter 11 cases, but shall be subject only to
applicable non-bankruptcy laws including federal, state and
local laws, regulations, ordinances and franchises governing the
regulation and franchising of the cable television systems.
This provision shall not apply in the event that NewCo or any
successor of NewCo seeks or is subject to relief sought under
the Bankruptcy Code or other similar state or federal laws in
any subsequent case under the Bankruptcy Code or other similar
proceedings under other state or federal laws.
30. Modification or Amendment. After Confirmation,
the Amended Plan may be further amended as provided for in
Section 1127 of the Bankruptcy Code if, in the opinion of this
Court, the modification does not materially and adversely affect
the interests of holders of Claims and Equity Interests.
However, if the modification materially and adversely affects
holders of Claims and Equity Interests, then a hearing must be
held before this Court with respect to such modifications on
such notice and pursuant to such other requirements as set forth
in a further order of this Court.
31. Retention of Professionals. Subsequent to the
Confirmation Date, the Debtors are hereby authorized, to retain
the services of attorneys, accountants and other agents
necessary to assist and advise them in the performance of their
duties.
32. Payment of Professional Fees and Expenses. The
Debtors are hereby authorized to pay, in the ordinary course and
without further order of this Court, all Professional Fees and
expenses for services rendered in connection with these
Reorganization Cases and the Amended Plan, including those
relating to the resolution of Disputed Claims, incurred after
the Confirmation Date.
33. Final Fee Applications. All final applications
for Professional Fees for services rendered prior to the
Confirmation Date in connection with these Reorganization Cases
and the Amended Plan and all applications for compensation and
reimbursement made pursuant to Sections 503(b)(3), (4), or (5)
of the Bankruptcy Code, shall be filed with this Court within
sixty (60) days after the Confirmation Date. Each such
application shall comply with the applicable provisions of the
Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the
Local Bankruptcy Rules and the Guidelines for Fees and
Disbursements for Professionals in the Southern District of New
York, and shall set forth, among other things, (i) the name and
address of the applicant; (ii) the nature of the professional or
other services rendered and expenses for which reimbursement is
requested for all periods from the date the particular applicant
was retained through the date of such application, including the
nature of services contemplated to be rendered by the applicant
from the date of the application to and including the final fee
hearing; (iii) the amount of compensation and reimbursement of
expenses requested, including an estimation of amounts of
compensation and reimbursement of expenses for the period from
the date of the application to and including the final fee
hearing; (iv) whether any payments have been received on account
and, if so, the amount thereof; and (v) the amounts of
compensation and reimbursement of expenses previously allowed by
the Court, if any.
<PAGE>
34. Notice. Notice of entry of this Order, shall be,
and hereby is, deemed sufficient if served by first class mail
upon all persons having (i) filed a notice of appearance herein
within twenty (20) days from the date hereof, and (ii) appeared
at the Confirmation Hearing.
Dated: New York, New York
May 2, 1994
/s/ Burton R. Lifland
CHIEF UNITED STATES BANKRUPTCY JUDGE
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- -----------------------------------x
: Chapter 11
In re: :
: Case Nos. 94 B 41125(BRL)
MARYLAND CABLE HOLDINGS CORP. AND : 94 B 41126
MARYLAND CABLE CORP., :
: (Jointly Administered)
Debtors. :
:
- -----------------------------------x
ORDER APPROVING NONMATERIAL MODIFICATIONS TO DEBTORS'
CONSOLIDATED PREPACKAGED PLAN OF REORGANIZATION
UPON the application dated April 28, 1994 (the
"Application") of Maryland Cable Holdings Corp. ("Holdings"),
debtor and debtor-in-possession, and Maryland Cable Corp.
("Maryland Cable"), debtor and debtor-in-possession (jointly,
the "Debtors"), seeking entry of an order pursuant to Sections
105, 1127 and 1129 of Chapter 11 of Title 11, United States
Code, 11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code") and Rules
2002, 3019 and 9007 of the Federal Rules of Bankruptcy Procedure
(the "Bankruptcy Rules"), approving nonmaterial modifications to
the Debtors' Consolidated Prepackaged Plan of Reorganization
dated February 10, 1994 (the "Plan"); and it appearing that good
and sufficient notice of the Application and the relief
requested therein has been provided in accordance with this
Court's order dated April 26, 1994, which, among other things,
fixed notice requirements with respect to the Application; and
upon the record of the hearing before this Court on May 2, 1994;
and good and sufficient cause appearing therefor; and after due
deliberation; it is hereby
FOUND, that the proposed modifications to the Plan as
set forth in the Application and as authorized and approved by
this order do not materially adversely affect the treatment of
any party receiving distributions under the Plan, and each such
modification shall be and hereby is deemed to be accepted by all
creditors who have previously accepted the Plan.
THEREFORE, it is hereby
ORDERED, that the Application and the relief requested
therein is hereby approved and authorized in its entirety; and
it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16a of the Application, which
modification is hereby approved in its entirety, such that the
Plan is hereby restated as so modified, and as restated, Section
1.14 of the Plan, entitled "Base Rate" shall be deleted;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16b of the Application, to delete
Section 1.25 of the Plan and amend the Plan to include a new
Section 1.25, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.25 of the Plan shall read as follows:
1.25 "Collateral Agent" shall mean the agent, as
defined in the New Credit Agreement;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16c of the Application, which
modification is hereby approved in its entirety, such that the
Plan is hereby restated as so modified, and as restated, Section
1.29 of the Plan, entitled "Contingent Claim" shall be deleted;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16d of the Application, to delete
Section 1.36 of the Plan and amend the Plan to include a new
Section 1.36, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.36 of the Plan shall read as follows:
1.36 "Discount Note Holders' Designation" shall mean,
collectively, the aggregate number of (i) units of
Limited Partnership Interests, and (ii) shares of
common stock of HoldingCo, which units and shares
shall be issued to the holders of Allowed Claims in
Class 4;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16e of the Application, to delete
Section 1.38 of the Plan and amend the Plan to include a new
Section 1.38, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.38 of the Plan shall read as follows:
1.38 "Disputed Claim" shall mean a Claim against
Maryland Cable or Holdings, to the extent that a proof
of Claim has been timely filed or is deemed timely
filed under applicable law, as to which an objection
has been or may be timely filed by Maryland Cable or
Holdings or any other party in interest and which
objection, if timely filed, has not been withdrawn on
or before any date fixed for filing such objections by
order of the Bankruptcy Court, and it has not been
denied by a Final Order. To the extent an objection
relates to the allowance of any part of a Claim, such
Claim shall be a Disputed Claim only to the extent of
the objection;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16f of the Application to add a new
Section 1.49A to the Plan, which modification is hereby approved
in its entirety, such that the Plan is hereby restated as so
modified, and as restated, Section 1.49A of the Plan shall read
as follows:
1.49A "HoldingCo" shall mean a corporation to be
formed prior to the Effective Date, which will be the
holder of all of the outstanding stock of the NewCo
General Partner, all of the outstanding stock of which
will be issued 95.1% to the Discount Note Holders and
4.9% to ML Opportunity;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16g of the Application, which
modification is hereby approved in its entirety, such that the
Plan is hereby restated as so modified, and as restated, Section
1.55 of the Plan, entitled "LIBO Rate" shall be deleted;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16h of the Application, to delete
Section 1.56 of the Plan and amend the Plan to include a new
Section 1.56, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.56 of the Plan shall read as follows:
1.56 "Limited Partnership Interests" shall mean the
limited partnership interests in NewCo to be issued
(i) 95.1% to the Discount Note Holders and 4.9% to ML
Opportunity pursuant to sections 5.2 and 5.3 herein;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16i of the Application, to delete
Section 1.63 of the Plan and amend the Plan to include a new
Section 1.63, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.63 of the Plan shall read as follows:
1.63 "NewCo General Partner" shall mean Maryland Cable
General Partner, Inc., a Delaware corporation, all of
the outstanding stock of which will be issued to
HoldingCo on the Effective Date;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16j of the Application to add a new
Section 1.64A to the Plan, which modification is hereby approved
in its entirety, such that the Plan is hereby restated as so
modified, and as restated, Section 1.64A of the Plan shall read
as follows:
1.64A "New Credit Agreement" shall mean the
agreement among NewCo, the NewCo General Partner, the
Lenders and the Collateral Agent, together with all
exhibits and schedules annexed thereto, substantially
in the form annexed hereto as Exhibit "1";
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16k of the Application, to delete
Section 1.65 of the Plan and amend the Plan to include a new
Section 1.65, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.65 of the Plan shall read as follows:
1.65 "New Security Agreement" shall mean the agreement
made by NewCo in favor of the Collateral Agent, for
the benefit of the Collateral Agent and the Lenders,
pursuant to which NewCo grants the Collateral Agent a
security interest in substantially all of its personal
property, substantially in the form annexed to the New
Credit Agreement as Exhibit D;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16l of the Application, to delete
Section 1.67 of the Plan and amend the Plan to include a new
Section 1.67, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.67 of the Plan shall read as follows:
1.67 "Partnership Agreement" shall mean the
Partnership Agreement of NewCo, substantially in
the form filed on April 28, 1994;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16m of the Application, to delete
Section 1.71 of the Plan and amend the Plan to include a new
Section 1.71, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.71 of the Plan shall read as follows:
1.71 "Plan" shall mean this first amended
prepackaged consolidated Chapter 11 plan of
reorganization and any exhibits hereto and any
documents incorporated herein by reference, as the
same may from time to time be amended as and to the
extent permitted herein or by the Bankruptcy Code;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16n of the Application to add a new
Section 1.71A to the Plan, which modification is hereby approved
in its entirety, such that the Plan is hereby restated as so
modified, and as restated, Section 1.71A of the Plan shall read
as follows:
1.71A "Pledge Agreement" shall mean the
agreement made by HoldingCo in favor of the Collateral
Agent, for the benefit of the Collateral Agent and the
Lenders, pursuant to which HoldingCo grants to the
Collateral Agent a security interest in all the
capital stock of the NewCo General Partner,
substantially in the form annexed to the New Credit
Agreement as Exhibit "E";
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16o of the Application, to delete
Section 1.73 of the Plan and amend the Plan to include a new
Section 1.73, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.73 of the Plan shall read as follows:
1.73 "Preferred Limited Partnership Interests" shall
mean preferred limited partnership interests in NewCo,
having an aggregate face amount of $650,000 which
shall (i) be offered to all of the Discount Note
Holders first on a Pro Rata basis, and, thereafter, in
the event that there is an undersubscription, to all
Discount Note Holders with respect to the
undersubscribed portion on a first come basis; (ii)
entitle the holders to a priority distribution at an
annual interest rate set forth in the Partnership
Agreement; (iii) be redeemable by NewCo in an amount
equal to face value plus any unpaid priority
distribution in accordance with the Partnership
Agreement; (iv) have a liquidation preference equal to
face value plus any unpaid priority distribution; and
(v) be subject to such other terms and conditions as
set forth in the Subscription Agreement and the
Partnership Agreement. The proceeds from the sale of
Preferred Limited Partnership Interests will be used
to the extent necessary to make payments to ML
Opportunity in accordance with section 6.5 hereof;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16p of the Application to add a new
Section 1.76A to the Plan, which modification is hereby approved
in its entirety, such that the Plan is hereby restated as so
modified, and as restated, Section 1.76A of the Plan shall read
as follows:
1.76A "Real Property Collateral Documents" shall mean
any mortgages, deeds of trust, leasehold mortgages or
other such documents relating to NewCo's real property
executed by NewCo in favor of the Collateral Agent for
the benefit of the Collateral Agent and the Lenders as
contemplated by the New Credit Agreement;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16q of the Application, to delete
Section 1.79 of the Plan and amend the Plan to include a new
Section 1.79, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.79 of the Plan shall read as follows:
1.79 "Replacement Notes" shall mean
collectively, the Term Loan A Notes and the
Term Loan B Notes of NewCo, payable to the
order of each of the respective Lenders,
evidencing the obligations as set forth in
the Confirmation Order of NewCo to the
Lenders through the Effective Date (i) in
the aggregate principal amount of the
Initial Loan Amount (as defined in the New
Credit Agreement), (ii) bearing interest at
the rates set forth in the New Credit
Agreement, (iii) having a maturity date of
December 31, 2002, and (iv) otherwise
governed by the terms of the New Credit
Agreement;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16r of the Application, to delete
Section 1.81 of the Plan and amend the Plan to include a new
Section 1.81, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.81 of the Plan shall read as
follows:
1.81 "Subscriber" shall mean a Discount Note Holder
who elects to purchase Preferred Limited Partnership
Interests, and to be subject to the Put and Call, as
described in Section 5.3 below;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16s of the Application, to delete
Section 1.82 of the Plan and amend the Plan to include a new
Section 1.82, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 1.82 of the Plan shall read as
follows:
1.82 "Subscription Agreement" shall mean,
collectively, the agreements to be entered into by and
between NewCo, ML Opportunity, and the respective
Subscribers pursuant to which the Subscribers shall
purchase Preferred Limited Partnership Interests and
be subject to the Put and Call as described in Section
5.3 below, which agreement shall be in a form
reasonably satisfactory to Water Street, ML
Opportunity and the Debtors;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16t of the Application to add a new
Section 1.83A to the Plan, which modification is hereby approved
in its entirety, such that the Plan is hereby restated as so
modified, and as restated, Section 1.83A of the Plan shall read
as follows:
1.83A "Term Loan A Notes" shall mean
Replacement Notes of NewCo in the aggregate
principal amount of $35,000,000,
substantially in the form annexed to the New
Credit Agreement as Exhibit A, and subject
to the terms and conditions of the New
Credit Agreement;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16u of the Application to add a new
Section 1.83B to the Plan, which modification is hereby approved
in its entirety, such that the Plan is hereby restated as so
modified, and as restated, Section 1.83B of the Plan shall read
as follows:
1.83B "Term Loan B Notes " shall mean
Replacement Notes of NewCo in an aggregate
principal amount equal to the Initial Loan
Amount (as defined in the New Credit
Agreement) less $35,000,000, substantially
in the form annexed to the New Credit
Agreement as Exhibit B, and subject to the
terms and conditions of the New Credit
Agreement;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16v of the Application, to delete
Section 5.1 of the Plan and amend the Plan to include a new
Section 5.1, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 5.1 of the Plan shall read as follows:
5.1 Class 2A (Secured Claims of the Lenders). The
aggregate amount of the Allowed Secured Claims of the
Lenders shall be in the amount or calculated as set
forth in the Confirmation Order. The Lenders shall
receive the Replacement Notes in full satisfaction of
their Allowed Secured Claims in accordance with
Section 1129(b)(2)(A)(i) of the Bankruptcy Code. On
the Effective Date, all outstanding obligations due to
the Lenders under the Amended Credit Agreement and all
related documents shall be restructured as follows:
i. Principal owing to the Lenders under the
Amended Credit Agreement shall be allocated to
each Lender, and be included in each Lender's
Replacement Notes, based on the Allowed Secured
Claim of such Lender to the extent not paid on
the Effective Date under the Amended Credit
Agreement. With respect to the Allowed Secured
Claim of ML Cable, (x) the amount of principal
allocated to such Lender, and included in such
Lender's Replacement Notes, shall be based on the
principal amount of such Lender's participation
and (y) the amount of principal allocated to the
Lender from whom the Lender received its
participation, and the amount of principal
included in such Lender's Replacement Notes,
shall be reduced by a corresponding amount;
ii. Upon the issuance of the Replacement Notes,
the Amended Credit Agreement and all agreements
and documents relating thereto, including the
guaranty of Holdings and the pledge agreement
executed by Holdings, shall be cancelled and
become null and void, and all obligations of any
party under such agreements shall be released and
of no further force and effect;
iii. Pursuant to the New Security Agreement, the
Real Property Collateral Documents and the Pledge
Agreement, the Collateral Agent, on behalf of the
Lenders, shall retain (or be assigned, if
applicable) a valid and first priority lien on,
and security interest in (i) all the capital
stock of the NewCo General Partner, (ii) all the
capital stock of NewCo's present and future
subsidiaries, and (iii) all other present and
future property and assets, real and personal, of
NewCo and each of its subsidiaries, subject only
to certain permitted liens and excepting certain
personal property, all as described in such
documents; and
iv. The Replacement Notes shall be subject to
the terms and conditions set forth in the New
Credit Agreement, annexed hereto as Exhibit "1";
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16w of the Application to delete
Section 5.3 of the Plan and amend the Plan to include a new
Section 5.3, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 5.3 of the Plan shall read as follows:
5.3 Class 5 (Claims of ML Opportunity). On the
Effective Date, ML Opportunity shall receive 4.9%
of the Limited Partnership Interests in NewCo and
a corresponding percentage of the common stock of
HoldingCo., on account of its Claims arising from
(i) the Deferred Fees, (ii) the PIK Notes, and
(iii) other amounts due and owing from the
Debtors to ML Opportunity for which payment or
other treatment is not otherwise expressly
provided for in this Plan. ML Opportunity shall
have the unconditional right (the "Put"),
exercisable by notice to Water Street and the
other Subscribers, if any, given at any time
during the 10 day period commencing on the
Effective Date, to elect to sell the Limited
Partnership Interests in Newco issued to ML
Opportunity (the "ML Interests") for a purchase
price of $2,846,413, to Water Street and to any
other Subscriber. If ML Opportunity does not
elect to sell the ML Interests within the 10 day
period referred to above, Water Street and the
other Subscribers shall purchase (the "Call") the
ML Interests for a purchase price of $2,846,413
on the last day of such ten day period. The
closing of the purchase and sale of the ML
Interests pursuant to the Put or the Call shall
take place at Water Street's offices immediately
following the exercise of the Put or Call. At
the closing, ML Opportunity shall deliver an
assignment or assignments of the ML Interests to
the purchaser or purchasers, and the purchaser or
purchasers shall pay the purchase price for the
ML Interests by wire transfer of Federal funds to
an account designated by ML Opportunity. The
right to participate in the Put and Call shall be
offered to all of the Discount Note Holders
(including Water Street), pursuant to the
Subscription Agreement, first on a Pro Rata
Basis, and, thereafter, in the event that all of
the Discount Note Holders do not elect to
participate, to all of the Discount Note Holders
(including Water Street) on a first come basis.
Water Street shall have the additional right
pursuant to the Call and the additional
obligation pursuant to the Put to purchase the ML
Interests to the extent that the other Discount
Note Holders do not elect to participate in the
Call and the Put. Upon exercise of the Put,
Water Street and the other Subscribers shall be
obligated to purchase the ML Interests in
accordance with this provision; upon exercise of
the Call, ML Opportunity shall be obligated to
sell the ML Interests in accordance with this
provision. The obligation to purchase and sell
as provided in this Section 5.3 shall be
independent of any other obligation under this
Plan, shall be absolute and unconditional, and
shall not be subject to any set-off, defense or
counterclaim or any other circumstance that might
constitute a legal or equitable discharge or
defense;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16x of the Application to delete
Section 6.1 of the Plan and amend the Plan to include a new
Section 6.1, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 6.1 of the Plan shall read as follows:
6.1 Availability of Funds. The funds utilized to
make the Cash payments hereunder have been and will
continue to be generated by funds generated by the
operation of Maryland Cable's cable television systems
in accordance with the provisions of the Cash
Collateral Order, except that Cash needed to make
payments to ML Opportunity under section 6.5 hereof
will be provided from NewCo's sale, prior to or as of
the Effective Date, of the Preferred Limited
Partnership Interests to the Subscribers pursuant to
the Subscription Agreement, having an aggregate
purchase price of $650,000. To the extent that the
holders of the Discount Notes do not subscribe for all
of the Preferred Limited Partnership Interests, Water
Street will subscribe to sufficient amounts of
Preferred Limited Partnership Interests such that the
total amounts received from the subscription will be
$650,000;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16y of the Application to delete
Section 6.2(f) of the Plan and amend the Plan to include a new
Section 6.2(f), which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 6.2(f) of the Plan shall read as
follows:
6.2(f) Maryland Cable shall be liquidated into
Holdings, and Holdings shall be liquidated into NewCo,
pursuant to their respective Plans of Dissolution and
Complete Liquidation, in substantially the respective
forms which are annexed to the Exchange Agreement.
Pursuant to the liquidations, all of the assets of
Maryland Cable and Holdings shall be assigned to
NewCo, subject to all of the liabilities of Maryland
Cable and Holdings that are not discharged or that are
created pursuant to the Plan;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16z of the Application to add a new
Section 6.3A to the Plan, which modification is hereby approved
in its entirety, such that the Plan is hereby restated as so
modified, and as restated, Section 6.3A of the Plan shall read
as follows:
6.3A Termination of Participation Agreement. On
the Effective Date, the Participation Agreement
shall be terminated and ML Cable shall become a
Lender entitled to receive its Pro Rata portion
of the Replacement Notes. ML Cable shall assign
its rights to receive its Pro Rata share of the
Replacement Notes to Water Street or a designee
of Water Street, in accordance with the terms of
the New Credit Agreement;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16aa of the Application, which
modification is hereby approved in its entirety, such that the
Plan is hereby restated as so modified, and as restated, Section
6.4 of the Plan, entitled "Payments to ML Opportunity" shall be
deleted;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16ab of the Application to delete
Section 6.8 of the Plan and amend the Plan to include a new
Section 6.8, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 6.8 of the Plan shall read as follows:
6.8 Partnership Agreement. On the Effective Date,
each of the Discount Note Holders and ML Opportunity
shall execute the Partnership Agreement;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16ac of the Application to delete
Section 6.9 of the Plan and amend the Plan to include a new
Section 6.9, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 6.9 of the Plan shall read as follows:
6.9 Releases. On the Effective Date, (i)
each of the Discount Note Holders, ML
Opportunity and the Lenders shall be deemed
to have granted general releases in favor of
Maryland Cable, NewCo, and Holdings, (ii)
Maryland Cable, NewCo, and Holdings shall be
deemed to have granted general releases in
favor of ML Opportunity, each of the
Discount Note Holders and the Lenders, (iii)
each of the Discount Note Holders shall be
deemed to have granted a general release in
favor of the Lenders and ML Opportunity,
except that the release shall exclude any
actions by ML Opportunity in the management
of Maryland Cable of a type that if such
action had been taken by the general partner
of ML Opportunity, the general partner would
not have been entitled to indemnification
for such action under the existing
partnership agreement of ML Opportunity,
(iv) ML Opportunity shall be deemed to have
granted general releases in favor of each of
the Discount Note Holders, and (v) the
Lenders shall be deemed to have granted
general releases in favor of ML Opportunity
and the Discount Note Holders, (vi) the
Lenders, other than ML Cable, shall be
deemed to have granted general releases in
favor of ML Cable, and (vii) ML Cable shall
be deemed to have granted general releases
in favor of the other Lenders.
Notwithstanding anything contained herein to
the contrary, the releases provided in this
Section 6.9 shall be only for acts and
omissions up to the Effective Date;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16ad of the Application to delete
Section 6.11(c) of the Plan and amend the Plan to include a new
Section 6.11(c), which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 6.11(c) of the Plan shall read as
follows:
(c) NewCo or the NewCo General Partner, or their
designee, shall deliver to each Discount Note
Holder and ML Opportunity (i) a fully executed
counterpart of the Partnership Agreement and (ii)
a stock certificate evidencing its Pro Rata
shares in the NewCo General Partner;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 16ae of the Application to add a new
Section 9.1(i) to the Plan, which modification is hereby
approved in its entirety, such that the Plan is hereby restated
as so modified, and as restated, Section 9.1(i) of the Plan
shall read as follows:
9.1(i) The Confirmation Order, to the extent amended
after May __, 1994, will be entered in a form
acceptable to the Debtors, NewCo, ML Opportunity,
holders of at least a majority in principal amount of
the Discount Notes and Citibank, as agent for the
Banks;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 17 of the Application, to delete
Section 4.4 of the Plan and amend the Plan to include a new
Section 4.4, which modification is hereby approved in its
entirety, such that the Plan is hereby restated as so modified,
and as restated, Section 4.4 of the Plan shall read as follows:
4.4 Class 3 (General Unsecured Claims). Each holder
of an Allowed General Unsecured Claim shall receive on
account of such Claim a Cash payment equal to one
hundred percent (100%) of its Allowed General
Unsecured Claim. Such payments (i) shall be made on
the later of (a) the Effective Date, (b) the date an
Allowed General Unsecured Claim becomes due and
payable in the ordinary course of the Debtors'
business consistent with the Debtors' ordinary payment
practices, or (c) with respect to any Allowed General
Unsecured Claim, such other date as permitted by Final
Order of the Bankruptcy Court, or (ii) may be made, in
whole or in part, on such earlier date as the Debtors
may elect;
and it is further
ORDERED, that the Plan is hereby deemed to be modified
as proposed in paragraph 18 of the Application to add a new
Section 10.2 to the Plan, which modification is hereby approved
in its entirety, such that the Plan is hereby restated as so
modified, and as restated, Section 10.2 of the Plan shall read
as follows:
10.2 Franchises. Notwithstanding anything to the
contrary herein, including but not limited to Sections
6.7, 6.12, 8.1, 9.1 and 10.1 of the Plan, all matters
relating to the assumption and/or assignment of the
cable television system franchises, to which the
Debtors are parties, and any matters relating to the
regulation of the cable franchise and regulation of
the facilities and services of the cable franchise
system, shall not be subject to or affected by the
jurisdiction of the Bankruptcy Court or any federal
bankruptcy laws, the Plan or these Chapter 11 cases,
but shall be subject only to applicable non-bankruptcy
laws including federal, state and local laws,
regulations, ordinances and franchises governing the
regulation and franchising of the cable television
systems. This provision shall not apply in the event
that NewCo or any successor of NewCo seeks or is
subject to relief sought under the Bankruptcy Code or
other similar state or federal laws in any subsequent
case under the Bankruptcy Code or other similar
proceedings under other state or federal laws.
Dated: New York, New York
May 2, 1994
/s/ Burton R. Lifland
CHIEF UNITED STATES BANKRUPTCY JUDGE
