<PAGE> 1
Registration No. 33-53317
PROSPECTUS Filed pursuant to Rule 424(b)(3)
[LOGO]
5,779,101 Shares
McCAW CELLULAR COMMUNICATIONS, INC.
CLASS A COMMON STOCK
Par Value $.01
-----------------------------
McCaw Cellular Communications, Inc., a Delaware corporation (the
"Company"), has registered 5,779,101 shares of its Class A Common Stock,
$.01 par value per share (the "Class A Common Stock"), which may from time
to time be offered by this Prospectus principally in connection with the
formation or the acquisition, directly or indirectly, of entities or
interests in entities which have received or may receive a license from the
Federal Communications Commission (the "FCC") to provide cellular service.
Such shares may be issued in exchange for the shares of capital stock (by
merger or otherwise), partnership interests or other assets representing an
interest, direct or indirect, in other companies or other entities, or in
exchange for assets used in or related to the business of such entities.
In general, the terms of such acquisitions will be determined by direct
negotiations between representatives of the Company and the owners of the
businesses or properties to be acquired or, in the case of entities which
are more widely held, through exchange offers to stockholders or documents
soliciting the approval of statutory mergers, consolidations or sales of
assets. Underwriting discounts or commissions will generally not be paid
by the Company. Under some circumstances, however, the Company may issue
shares of Class A Common Stock covered by this Prospectus to pay brokers'
commissions incurred in connection with acquisitions. This Prospectus does
not cover any resale of Class A Common Stock, and no person is authorized
to make use of this Prospectus in connection with any such resale or
distribution.
From November 10, 1993 through April 27, 1994, the Company issued
1,420,899 shares of the Class A Common Stock in connection with
acquisitions pursuant to a prior prospectus.
The Company has filed a Registration Statement on Form S-4 (No. 33-
53317) under the Securities Act of 1933, as amended (the "Securities Act"),
with the Securities and Exchange Commission (the "Commission") covering up
to 3,200,000 shares of the Class A Common Stock offered hereby. The
Company has also filed a Registration Statement on Form S-4 (No. 33-50317)
which became effective on November 10, 1993. This Prospectus also relates
to the 4,000,000 shares of Class A Common Stock covered by Registration
Statement No. 33-50317, of which 2,579,101 shares remain unissued.
The Class A Common Stock is quoted on the Nasdaq National Market under
the symbol "MCAWA" and on the Pacific Stock Exchange under the symbol
"MCWA." The Company has two classes of common stock, the Class A Common
Stock and the Class B Common Stock, par value $.01 per share (the Class B
Common Stock and, together with the Class A Common Stock, the "Common
Stock"). The rights of holders of Class A Common Stock and holders of
Class B Common Stock are essentially identical except for voting rights.
Holders of Class A Common Stock are entitled to one vote per share and
holders of Class B Common Stock are entitled to 10 votes per share. See
"Risk Factors" and "Description of Capital Stock of the Company."
The Company has entered into an Agreement and Plan of Merger (the
"AT&T Merger Agreement") with American Telephone and Telegraph Company
(which subsequently changed its name to AT&T Corp.) ("AT&T") pursuant to
which, subject to the satisfaction of several conditions, including the
receipt of necessary governmental consents, the Company will become a
wholly owned subsidiary of AT&T and the Common Stock will be exchanged for
the common stock, par value $1.00 per share (the "AT&T Stock"), of AT&T.
See "Recent Development."
___________________________________
An investment in the shares offered hereby involves a high degree of
risk. See "Risk Factors."
------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------------------------------
The date of this Prospectus is May 9, 1994<PAGE>
<PAGE> 2
No dealer, salesperson or other person has been authorized to give
any information or to make any representation other than that contained or
incorporated by reference in this Prospectus in connection with the offer
contained in this Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company
since the date hereof or that the information herein is correct as of any
time subsequent to the date hereof.
TABLE OF CONTENTS
Page Page
Available Information..............2 Selected Proportionate
Incorporation of Certain Cellular Operating Data......19
Documents by Reference...........3 The Offering..................21
The Company........................4 Description of Capital
Recent Development.................5 Stock of the Company........22
Risk Factors.......................6 Legal Matters.................27
Selected Consolidated Financial Experts.......................27
Data.............................16
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information
filed by the Company with the Commission may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of
the Commission at 7 World Trade Center, Suite 1300, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained from the
public reference section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements
and other information filed by the Company can also be inspected and copied
at the offices of the Pacific Stock Exchange, 301 Pine Street, San
Francisco, California, on which exchange the Class A Common Stock is
listed.
The Company has filed Registration Statements under the Securities
Act, covering the securities described herein. This Prospectus does not
contain all of the information set forth in the Registration Statements,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is
hereby made to the Registration Statements and the exhibits thereto, which
may be inspected without charge at the office of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and copies of which may be
obtained from the Commission at prescribed rates.
<PAGE>
<PAGE> 3
As indicated below, this Prospectus incorporates documents by
reference with respect to the Company which are not presented
herein or delivered herewith. These documents (excluding certain
exhibits) are available to any person, including any beneficial
owner, to whom this Prospectus is delivered upon oral or written
request and without charge. Requests should be directed to the
Company, 5400 Carillon Point, Kirkland, Washington 98033,
Attention: Investor Relations, telephone (206) 828 1350. In order
to ensure timely delivery of the documents, any request should be
made five days prior to the date on which a final investment
decision is to be made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company
with the Commission pursuant to the Exchange Act are incorporated
herein by reference (File No. 1-9854):
1. The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993, as amended; and
2. The Company's Current Reports on Form 8-K, filed (a)
September 17, 1993, as amended October 12, 1993, October
29, 1993 and April 18, 1994 and (b) April 5, 1994.
All documents filed by the Company with the Commission pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the
termination of the offering made by this Prospectus shall be
deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the date of filing of such documents. Any
statement contained herein or in a document all or a portion of
which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified shall not be
deemed to constitute a part of this Prospectus except as so
modified, and any statement so superseded shall not be deemed to
constitute part of this Prospectus.<PAGE>
<PAGE> 4
THE COMPANY
The Company develops and provides wireless personal
communications services, including cellular telephone, messaging
and air-to-ground communications. The Company, both directly and
through its 52% ownership of LIN Broadcasting Corporation
(together with its subsidiaries, "LIN"), is the largest cellular
telephone company in the United States based on 1992 revenues.
The Company is also the fifth largest radio common carrier
operator in the United States based on 1992 year-end subscribers.
Radio common carrier systems provide messaging services (a lower-
cost, complementary product line to cellular services) and
conventional mobile phone and telephone answering services. The
Company also owns Claircom Communications Group, L.P., which
began providing common carrier voice communications services for
airline passengers in February 1993 and plans to provide two-way
data communication services beginning in 1994. LIN also owns
seven network-affiliated television stations. The mailing
address of the Company's principal executive offices is 5400
Carillon Point, Kirkland, Washington 98033, and its telephone
number is (206) 827-4500.
RECENT DEVELOPMENT
On August 16, 1993, the Company entered into the AT&T Merger
Agreement pursuant to which the Company would merge with a
subsidiary of AT&T and thereby become a wholly owned subsidiary
of AT&T (the "Merger" or "AT&T Transaction"). AT&T is subject to
the information and reporting requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and
other information with the Commission. AT&T Stock is traded on
the New York Stock Exchange. For pro forma financial information
regarding AT&T assuming consummation of the AT&T Transaction, see
the Company's Report on Form 8-K filed September 17, 1993, as
amended October 12, 1993, October 29, 1993, and April 18, 1994,
incorporated by reference herein.
In the AT&T Transaction, and subject to the terms referred
to in the following sentences, each share of the Common Stock
would be converted into one share of AT&T Stock. In the event
that the average closing price of the AT&T Stock is greater than
$71.73 per share during the 20 most recent trading days ending on
the fifth business day prior to the closing of the AT&T
Transaction, the exchange rate will be adjusted downward to
provide for the delivery of shares of AT&T Stock worth $71.73 for
each share of Common Stock, but in no event less than 0.909
shares of AT&T Stock for each share of Common Stock. In the
event that the average closing price of the AT&T Stock is less
than $53.00 per share during such period, the exchange rate will
be adjusted upward to provide for the delivery of shares of AT&T
Stock worth $53.00 for each share of Common Stock, but in no
event more than 1.111 shares of AT&T Stock for each share of
Common Stock.
The AT&T Transaction has been approved by the respective
Boards of Directors of AT&T and the Company and by the Company's
stockholders, but is subject to the satisfaction of several
conditions, including the receipt of necessary governmental<PAGE>
<PAGE> 5
consents. See "Risk Factors." Necessary governmental consents
include approval by the FCC, which has not yet been obtained, and
the expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, which has not yet
occurred. The AT&T Transaction is also subject to the conditions
that the Company receive an opinion of counsel that no gain or
loss will be recognized upon the exchange of Common Stock for
shares of AT&T Stock and that AT&T receive from its independent
public accountants an opinion that the AT&T Transaction will
qualify for pooling-of-interests accounting treatment.
The obligations of AT&T and McCaw to consummate the Merger
are also subject to the condition that there be no preliminary or
permanent injunction or other order by any court or governmental
or regulatory authority of competent jurisdiction, including any
state governmental or regulatory authorities, prohibiting
consummation of the Merger or permitting such consummation only
subject to any condition or restriction unacceptable to AT&T in
its reasonable judgment. In addition, the obligation of AT&T to
consummate the Merger is subject to the condition that no suit,
action, investigation, inquiry or other proceeding by any United
States governmental body or other material governmental body
shall have been instituted and be pending which imposes or which
would be reasonably expected to impose any condition or
restriction unacceptable to AT&T in its reasonable judgment.
Each party has agreed to use all reasonable efforts to have any
such injunction or order lifted and otherwise satisfy the
conditions to Closing.
On April 5, 1994, the United States District Court for the
District of Columbia issued an Order in the case entitled United
States v. Western Electric Co. Inc., et al., Civil Action No. 82-
0192, declaring that AT&T's acquisition of the Company's interest
in cellular properties controlled by a Bell Operating Company
would violate Section I(D) of the Modification of Final Judgment
(the "Decree"), United States v. American Telephone and Telegraph
Co., 552 F. Supp. 131, 226-34 (D.D.C. 1982), aff'd sub nom,
Maryland v. United States, 460 U.S. 1001 (1983), and that AT&T
must seek a waiver or modification of the Decree in order to
proceed with the Merger. There can be no assurance as to
whether, or when, the Court will grant any such waiver or
modification.
Either party will have a right to terminate the AT&T Merger
Agreement if the Merger has not closed by September 30, 1994.
Separately, AT&T has agreed to purchase, at the Company's option,
exercisable in the event the AT&T Merger Agreement is terminated,
approximately 11.7 million newly issued shares of the Class A
Common Stock at $51.25 per share, for a total purchase price of
$600 million. Such purchase would be subject to certain
conditions, including the receipt of necessary governmental
approvals. In the event that it is finally judicially determined
that the AT&T Merger Agreement was terminated as a result of a
breach of the Company's obligations thereunder, AT&T has the
right to require the Company to repurchase all shares so<PAGE>
<PAGE> 6
purchased by AT&T, at the original purchase price plus interest
at 7% per annum.
RISK FACTORS
The shares of Class A Common Stock offered hereby are
speculative and involve a high degree of risk. Investors should
carefully consider, together with the other information contained
in this Prospectus and the documents incorporated by reference,
the following risk factors.
Proposed AT&T Transaction
The Company has entered into the AT&T Merger Agreement,
consummation of which is subject to the satisfaction of several
conditions, including the receipt of necessary governmental
consents. See "Recent Development." The Company expects
extensive comments, and in some cases challenges, to be filed in
connection with proceedings to obtain such consents. The Federal
Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") frequently
scrutinize the legality under the antitrust laws of transactions
such as the Merger. At any time before or after the Merger is
consummated, the FTC or the Antitrust Division could, among other
things, seek under the antitrust laws to enjoin the Merger or to
cause AT&T to divest itself, in whole or in part, of the Company
or of other business conducted by AT&T. Under certain
circumstances, private parties may also bring legal action under
the antitrust laws challenging the Merger, including the
challenge based on the Decree. See "Recent Development," which
describes an order issued April 5, 1994 declaring that AT&T must
seek a waiver or modification of the Decree in order to proceed
with the Merger. There can be no assurance that AT&T and the
Company will prevail with respect to challenges made to the AT&T
Transaction or with respect to any conditions that may be imposed
upon it.
In addition, although the parties have agreed that neither
party may terminate the AT&T Merger Agreement without cause prior
to September 30, 1994, certain of such proceedings may take a
significant length of time. The length of time to complete such
proceedings is beyond the control of the Company. While the
Company anticipates that all such consents will be received and
other conditions satisfied, there can be no assurance that they
will be within the time provided in the AT&T Merger Agreement and
no assurance can be given as to when the AT&T Transaction will be
consummated. If it is not consummated, the price of the Class A
Common Stock could decline substantially. Prior to the
announcement by the Company in November 1992 that it was
considering a transaction with AT&T, the Class A Common Stock was
trading at approximately $25 per share.
If the AT&T Transaction is consummated, the Company will
become a wholly owned subsidiary of AT&T, and the Company's
stockholders, including holders of the shares of Class A Common
Stock offered hereby, will become stockholders of AT&T.
Accordingly, prior to such consummation the price of the Class A <PAGE>
<PAGE> 7
Common Stock will be determined in large part by the value of the
AT&T Stock for which the Common Stock will be exchanged and the
likelihood that the Merger will be consummated. See "Recent
Development."
The following risk factors do not reflect the financial
resources, strategic benefits or other effects on the Company
that may result from the consummation of the AT&T Transaction.
If the AT&T Transaction is consummated the shares of Class A
Common Stock will be converted into shares of AT&T Stock and all
such risks will become part of the risks of investing in AT&T
Stock after giving effect to the Merger.
Losses
The Company's activities have primarily consisted of the
acquisition of interests in cellular licensees and the
construction, operation and expansion of cellular, air-to-ground,
messaging and broadcasting communications systems. The Company
has experienced substantial net losses, exclusive of gains on
disposition of assets, and has had insufficient internally
generated funds to cover capital, operating expenditures and debt
service since its inception. For the years ended December 31,
1993, 1992, 1991 and 1989, the Company's net losses were $272.3
million, $285.6 million, $2,231.4 million and $288.5 million,
respectively. Excluding the gain recognized on the Company's
transaction with BellSouth Corporation (the "BellSouth
Transaction"), the net loss for the year ended December 31, 1991
would have been approximately $2,474.7 million, including
interest expense of $578.0 million. Excluding the gain
recognized on the Company's transaction with Contel Cellular Inc.
(the "Contel Transaction"), the net loss for the year ended
December 31, 1990 would have been approximately $595.7 million
instead of the actual reported net income for such period, which
was $562.3 million.
High Leverage; Capital Requirements
Both the Company and LIN have outstanding several issues of
indebtedness. The Company maintains two bank credit facilities
under which $4.0 billion is available (the "McCaw Bank Credit
Facilities"). Under the McCaw Bank Credit Facilities borrowings
are subject to the satisfaction of certain conditions. The
Company also entered into a Credit Agreement with AT&T under
which an aggregate of $350 million is available for the Company's
financing of certain acquisitions and other business
opportunities.
LIN maintains two bank facilities, including a $1.75 billion
facility entered into by a subsidiary holding the majority of its
cellular properties and a $350 million facility entered into by a
subsidiary holding the majority of its broadcast television
properties. LIN's credit facilities prohibit the payment of
dividends and distributions to LIN by its major operating
subsidiaries, thereby effectively limiting the ability of LIN to
transfer funds to the Company. <PAGE>
<PAGE> 8
The Company
As of December 31, 1993, the Company, exclusive of LIN, had
total indebtedness of approximately $3.5 billion, including
approximately $3.4 billion pursuant to the McCaw Bank Credit
Facilities. Total interest expense for the Company, exclusive of
LIN, for the twelve month period ended December 31, 1993 was
approximately $298.8 million. The Company's indebtedness under
the McCaw Bank Credit Facilities bears interest at fluctuating
rates. Although the Company has entered into interest rate
protection agreements with respect to a significant portion of
such indebtedness, increases in interest rates on such
indebtedness could adversely affect the Company's results of
operations and the cash available to service the Company's
indebtedness. During 1993, the Company redeemed all of its
outstanding convertible senior subordinated indebtedness and
replaced its other senior subordinated indebtedness with
indebtedness under the McCaw Bank Credit Facilities. These
redemptions should result in significant future interest savings.
In addition to servicing its substantial indebtedness, the
Company will need capital to operate and expand its cellular
systems, to fund operating losses for its cellular systems, to
make future acquisitions of cellular and messaging interests and
to accommodate the transition from "analog" to "digital" cellular
service. These capital requirements will be substantial for the
foreseeable future. The conversion from analog to digital
equipment will require significant expenditures but will
substantially expand the capacity of the Company's cellular
systems.
The Company does not expect that its operations will
generate sufficient cash to meet its expenditure requirements for
the next few years. Historically the Company has raised
financing through the issuance of public indebtedness, bank
borrowings and the sale of equity or assets. Pending closing of
the AT&T Transaction, AT&T has agreed to finance (through the
credit agreement discussed above) the Company's pursuit of
certain acquisition and other business opportunities. In
addition, AT&T has agreed to purchase approximately 11.7 million
newly issued shares of Class A Common Stock for a total purchase
price of $600 million in the event that the AT&T Merger Agreement
is terminated. See "Recent Development."
There can be no assurance that the Company will be able to
obtain additional financing or sell assets when needed or, if it
is able to obtain such financing or sell assets, that the terms
will be favorable to the Company. The Company will be required
by the terms of the McCaw Bank Credit Facilities to apply the
proceeds of certain asset sales to the repayment of loans
thereunder. While the Company expects to have sufficient
internally generated funds to repay its indebtedness at maturity,
there can be no assurance that this will occur. Alternatively,
the Company believes it will be able to make such repayments
through the refinancing of such obligations, sales of equity,
sales of assets or other arrangements. There can be no assurance<PAGE>
<PAGE> 9
that the Company will be able to refinance such indebtedness or,
if the Company is able to do so, that the terms available will be
favorable to the Company.
LIN
LIN's total indebtedness as of December 31, 1993 was
approximately $1.7 billion. For the twelve month period ended
December 31, 1993, LIN had interest expense of approximately
$95.4 million. LIN's indebtedness bears interest at fluctuating
rates. Although LIN has entered into interest rate protection
agreements with respect to a significant portion of such
indebtedness, increases in interest rates on such indebtedness
could adversely affect LIN's ability to service its indebtedness.
In addition to servicing its substantial indebtedness, LIN
will need capital to operate and expand its cellular systems,
including switching to digital transmitting equipment, and to
make future acquisitions of cellular interests.
While LIN has generated sufficient cash to meet its
expenditure requirements, LIN continues to have substantial debt
service and operating and capital requirements. If cash
generated from operations is not sufficient to fund those
requirements, LIN will have to borrow additional amounts under
its cellular revolving credit facility, issue additional debt
through a private or public offering, sell equity or certain
assets or enter into other arrangements such as joint ventures
and restructurings. There can be no assurance that LIN will be
able to obtain such additional financing or sell assets when
needed or, if it is able to obtain such financing or sell assets,
that the terms will be favorable to LIN. While LIN expects to
have sufficient internally generated funds to repay its
indebtedness at maturity, there can be no assurance this will
occur.
Insufficient Earnings to Cover Fixed Charges
The Company's earnings were insufficient to cover combined
fixed charges and preferred stock dividends for the years ended
December 31, 1993, 1992, 1991 and 1989. The deficiencies for
such years were $104.8 million, $347.1 million, $352.5 million
and $321.8 million, respectively. Excluding the gain recognized
on the BellSouth Transaction for the year ended December 31,
1991, the deficiency would have been $595.8 million. In
addition, excluding the gain recognized on the Contel
Transaction, during the year ended December 31, 1990 the
Company's earnings would have been insufficient to cover combined
fixed charges and preferred stock dividends by $506.8 million.
Assuming the Contel Transaction, the LIN Acquisition and the
Metromedia Transaction had been completed as of January 1, 1990,
and excluding the gains recognized on the Contel Transaction and
Metromedia Transaction and certain other nonrecurring charges,
the amount of such deficiency would have been $776.2 million for
the year ended December 31, 1990.
<PAGE>
<PAGE> 10
Revenue Growth and Covenants
Under the McCaw Bank Credit Facilities, the Company must
remain in compliance with a series of financial covenants which
compare, among other things, the levels of the Company's
indebtedness to its cash flow (as defined in the McCaw Bank
Credit Facilities) as of the end of each quarter. Exclusive of
the effect of significant acquisitions, the Company's revenues
and cash flows (as defined in the McCaw Bank Credit Facilities)
have grown at significant rates in the past. While the Company
expects its revenues and cash flows to continue to grow in the
future, there can be no assurance that this will occur or that
the rates of growth will equal the rates achieved by the Company
in prior periods. Indeed, as absolute levels of revenues and
cash flows increase, it is expected that the percentage rate of
growth will decline.
It is the Company's policy to carefully monitor the state of
its business, cash requirements and capital structure. From time
to time, the Company may enter into transactions pursuant to
which debt is extinguished, such as the Company's transaction
with CMT Partners and the redemption of the Company's senior
subordinated indebtedness. Any failure to comply with these or
other covenants and restrictions contained in the Company's
indebtedness could result in a default thereunder. The ability
of the Company to comply with these provisions may be affected by
events beyond its control. If the Company fails to service its
indebtedness or satisfy the covenants contained in the McCaw Bank
Credit Facilities or the agreements relating to its other
indebtedness, the Company will be in default. In such an event,
holders of the Company's indebtedness will be able to exercise
their rights, including the right to declare all the borrowed
funds and interest thereon immediately due and payable. If the
Company were unable to repay such indebtedness, the holders of
such indebtedness could proceed against their collateral, if any.
Substantially all the Company's assets, including its stock in
subsidiaries and its ownership interests in entities holding
cellular licenses, are pledged or encumbered as security for
indebtedness.
Restrictions on Payment of Dividends
The Company has never paid any cash dividends on the Common
Stock. The Company's Board of Directors will determine future
dividend policy based on the Company's results of operations,
financial condition, capital requirements and other
circumstances. The McCaw Bank Credit Facilities and the AT&T
Merger Agreement prohibit the Company from paying cash dividends
on the Class A Common Stock. There are also restrictions on the
ability of certain of the Company's subsidiaries to pay dividends
to the Company. It is not anticipated that any cash dividends
will be paid on the Common Stock in the foreseeable future.
<PAGE>
<PAGE> 11
Private Market Value Guarantee
The Company has entered into a Private Market Value
Guarantee for the benefit of LIN's stockholders (other than the
Company and its affiliates) providing that, for as long as the
Company and its affiliates (or any buyer of 25% or more of LIN's
common stock from the Company) beneficially own in the aggregate
at least 25% of the outstanding shares of LIN common stock on a
fully diluted basis or the Company's designees constitute a
majority of LIN's Board of Directors and any shares are held by
other persons, LIN's affairs will be conducted in accordance with
the provisions of the Private Market Value Guarantee, which
limits the ability of the Company to control LIN. For example,
all material transactions between the Company and LIN must be
approved by a majority of the independent directors of LIN. In
addition, LIN may not make any acquisition or disposition (except
for acquisition of cellular interests in its existing markets) if
the independent directors unanimously determine that such
acquisition or disposition is not in the best interests of LIN.
Finally, no transactions by LIN may be undertaken if the
independent directors unanimously determine that it would likely
depress the value of LIN at the time the Company is required to
take the actions described in the next paragraph.
In addition, the Company will be obligated in 1995 either to
offer to purchase all the remaining shares of LIN common stock
for private market value (as determined in accordance with the
provisions of the Private Market Value Guarantee) or put LIN up
for sale. In the event that the Company chooses to purchase the
remaining shares of LIN at such time, it may be necessary for the
Company to incur substantial additional indebtedness or sell
substantial additional equity to make such acquisition. There
can be no assurance that such indebtedness or equity will be
available to the Company or, if it is available, that the terms
thereof will be favorable to the Company or that the Company will
otherwise be able to finance such purchase. In the event that
the Company elects not to acquire the remaining interest in LIN,
but instead chooses to put LIN up for sale, there can be no
guarantee that any sale will be consummated, or if consummated
that the price obtained by the Company will be favorable. If the
AT&T Transaction is consummated, all of the foregoing elections
and obligations of the Company will be assumed by AT&T.
Industry and Operating History
The Company commenced operating its first cellular system in
1984. Although numerous cellular telephone systems are
operational in the United States and other countries, the
industry has only a limited operating history. As a result,
there is uncertainty concerning the future of the industry and
the potential demand for cellular telephones and service by the
public. In addition, the success of the Company's cellular
systems may be affected by matters beyond its control, such as
the future cost of cellular telephones, changes in technology and
competition from other providers of wireless communications. See
"Competition." <PAGE>
<PAGE> 12
Competition
The FCC awards only two cellular licenses in each market -
an A Block and a B Block license. During its initial licensing
of Metropolitan Statistical Areas ("MSA") and rural service areas
("RSA"), the FCC reserved the A Block license for a nonwireline
company (which in each of the Company s markets is the
partnership or other entity in which the Company owns an
interest) and the B Block license for an affiliate of a local
wireline telephone company. Now, subject to FCC rules, an A
Block or a B Block license may be granted to either a wireline or
nonwireline entity, but no entity may control more than one
license per market. B Block licensees compete directly with the
Company in attracting and retaining cellular telephone customers
and dealers in each of the markets in which the Company operates.
Competition is principally on the basis of services and
enhancements offered, the technical quality of the system,
quality and responsiveness of customer service and price.
Competition may be intense. The financial and other resources
available to the B Block licensees have been, in most cases,
substantially greater than those available to the Company and
because the Company has generally purchased its licenses, the B
Block licensees generally have less invested in their licenses
than does the Company. In addition, the B Block licensee
generally completed construction and commenced operation of its
system earlier than the Company's partnership, giving the B Block
licensee a significant head start. GTE Corporation and most of
the other major B Block licensees have formed a national network
similar to the one created by the Company, which competes with
the Company's national network.
In addition to B Block cellular competition, the Company and
its unconsolidated affiliates expect to face competition from
enhanced specialized mobile radio services ("ESMR") operations,
such as Nextel, which are providing cellular-like services in the
Company's California markets. A number of other ESMR networks
are scheduled to begin either operation or construction in 1994
in other cities as well.
In September 1993, the FCC adopted rules for the licensing
of personal communications services ("PCS"). While the Company
and other cellular carriers will be eligible to compete for these
licenses, the amount of PCS spectrum that cellular carriers may
acquire in their own cellular market areas is limited.
Furthermore, the FCC's rules provide for as many as seven PCS
licenses in any market area, so the likelihood of additional
competition in wireless services has increased. The FCC has also
established Rand-McNally Major Trading Areas ("MTAs") and Basic
Trading Areas ("BTAs") as the licensing areas for PCS services.
Both MTAs and BTAs are larger than a cellular MSA or RSA. In
some instances, an MTA may exceed in size the Company's cluster
of cellular licenses in a particular geographic region. It is
expected that PCS licenses will begin to be awarded in 1994.
Several parties to the FCC proceeding including the Company have
petitioned for reconsideration of certain aspects of the PCS
rules and it is possible that the FCC could amend its rules based
on these petitions.<PAGE>
<PAGE> 13
Additional Acquisitions of Assets and Indebtedness
The Company may pursue opportunities to acquire additional
cellular interests (including stock of publicly traded companies)
as they become available, including additional interests in
licensees in which it currently owns, or has a right or an
obligation to acquire, an interest, as well as interests in
licensees serving other markets. The Company may also acquire
interests in other communications businesses. Such acquisitions
may be substantial and may involve the incurrence of substantial
additional amounts of indebtedness. Under the Private Market
Value Guarantee described above, the Company will be obligated to
present certain acquisition opportunities to LIN before pursuing
them itself. In addition, the AT&T Merger Agreement restricts
the Company's pursuit of certain acquisition opportunities.
Control of the Company
The outstanding equity of the Company is currently
beneficially owned approximately 22.2% by members of the McCaw
family, including Craig O. McCaw, John E. McCaw, Jr., Keith W.
McCaw and Bruce R. McCaw, all of whom are brothers and (except
for Keith W. McCaw) directors of the Company, and management,
approximately 17.9% by BT USA and approximately 6.9% by AT&T.
The balance of the equity of the Company currently is owned by
the public. As a result of the disproportionate voting rights
between the Class A Common Stock and the Class B Common Stock,
members of the McCaw family and management currently hold
approximately 61.3% of the combined voting power of both classes
of Common Stock, and BT USA currently holds approximately 21.33%
of the combined voting power. See "Description of Capital Stock
of the Company - Shareholders Agreements."
As a result of the reduced voting rights of Class A Common
Stock and as a result of the shareholder agreements described
below in "Description of Capital Stock of the Company -
Shareholders Agreements," the Company's public stockholders are
not collectively able to (i) elect, or defeat the election of,
any of the Company's directors, (ii) amend or prevent the
amendment of the Company's Restated Certificate of Incorporation,
(iii) effect or prevent a merger, sale of assets or other
corporate transaction, or (iv) accept any hostile bid that would
result in a takeover of the Company.
Regulation
The licensing, construction, operation, sale,
interconnection arrangements and acquisition of cellular systems
are regulated to varying degrees by the FCC. Changes in the
regulation of the Company's activities, such as increased price
regulation or deregulation of interconnection arrangements, could
adversely affect the Company's results. The Company's FCC
cellular operating licenses are granted for ten year periods.
Failure to receive renewals could have an adverse effect on the
Company.<PAGE>
<PAGE> 14
In addition, certain aspects of cellular system operations,
including the setting of rates, may be subject to public utility
regulation in the state in which service is provided. Public
utility or public service commissions (or certain of the
commissioners) and legislators in several states have expressed
an interest in examining whether the cellular industry should be
more closely regulated by such states. Such regulation could
include one or all of the following: regulating the manner in
which cellular service is provided to "wholesale" or "bulk"
purchasers who resell such service to the public; regulating the
provision of cellular service across landline telephone
"exchange" or "LATA" boundaries; or mandating that cellular
providers allow "equal access" to long-distance providers,
thereby allowing cellular subscribers to choose their long-
distance provider. There can be no assurance that this does not
evidence a future trend in increased state regulation of the
cellular industry.
FCC Licenses
The Company's assets consist primarily of intangible assets,
such as interests in entities holding FCC licenses, the value of
which will depend significantly upon the success of the Company's
business. While the Company believes that there is presently a
market for such interests, such market may not exist in the
future or the values obtainable may be lower than at present. As
a consequence, in the event of default on indebtedness of the
Company or any other event which would result in the liquidation
of the Company's assets, there can be no assurance that the
proceeds would be sufficient to pay the Company's obligations.
In addition, any such sale would require federal and possibly
state regulatory approval which could preclude or substantially
delay consummation of such sale.
Limitation on Foreign Ownership; Redemption Provision
Under applicable law, no FCC license may be held by any
entity if the total percentage of its shares owned of record or
voted by non-U.S. persons or entities exceeds 25% if the FCC
finds that the public interest will be served by the refusal or
revocation of such license. Under Article IX of the Company's
Restated Certificate of Incorporation, the Company has the right
to redeem outstanding shares of its stock if the Company's Board
of Directors determines that such redemption is necessary to
prevent the loss or secure the reinstatement of any governmental
license or franchise held by the Company.
Because BT USA owns a significant portion of the 25%
permitted foreign ownership, the Company may, from time to time,
redeem stock from non-U.S. persons or entities. The Company has
agreed with BT USA that in the event it becomes necessary to
redeem outstanding capital stock of the Company to prevent the
violation of any applicable foreign ownership limitation, to the
fullest extent possible, the Company shall first designate for
redemption securities held by all persons or entities other than
BT USA before designating for redemption any securities held by
<PAGE>
<PAGE> 15
BT USA. Furthermore, in the event that securities held by BT USA
are designated for redemption, the Company has agreed to provide
BT USA with a certain price protection with respect to the shares
repurchased from BT USA. Such price protection would not be
applicable to shares redeemed from persons or entities other than
BT USA. Any such redemptions would be conducted by first
identifying shares held by non-U.S. persons or entities, second,
selecting the shares to be redeemed in such manner as may be
determined by the Board of Directors, subject to the agreements
made with BT USA and, finally, giving at least 30 days' written
notice of the redemption date to the record holders of the shares
selected to be redeemed.<PAGE>
<PAGE> 16
<TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
Set forth below is selected consolidated historical financial data with respect to the Company for the five years
ended December 31, 1993. During these five years, the Company has been involved in a number of significant
transactions. Therefore, the following selected financial data may not be comparable from year to year. This data
should be read in conjunction with the consolidated financial statements of the Company and related notes thereto for
the corresponding periods in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, as
amended, which are incorporated by reference herein. See "Incorporation of Certain Documents by Reference".
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1993 1992(2) 1991(2) 1990(1) 1989
---- ------- ------- ------- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net revenues $2,194,810 $1,743,336 $1,365,571 $1,037,453 $504,138
Operating and corporate expenses 1,407,574 1,098,645 904,933 736,148 451,999
Depreciation 225,239 179,747 143,231 103,288 65,049
Valuation loss on equipment 123,559 -- -- -- --
Amortization of intangible assets 178,360 205,452 201,617 149,637 127,312
-------- -------- -------- -------- --------
Income (loss) from operations 260,078 259,492 115,790 48,380 (140,222)
Other income (expense):
Interest expense (394,187) (490,040) (577,992) (496,602) (245,523)
Equity in income of
unconsolidated investees 71,071 40,177 22,874 16,752 6,886
Provision for preferred stock
dividend of a subsidiary (134,300) (134,300) (134,300) (52,348) --
Other, net(3)(4) (29,944) 39,065 298,609 855,217 90,331
-------- -------- -------- -------- --------
Income (loss) before extraordinary
items and cumulative effect of
the change in accounting for
income taxes (227,282) (285,606) (275,019) 371,399 (288,528)
Extraordinary items: Loss on early
extinguishment of debt, net of
income tax benefit in 1993 and
income tax benefit of prior years'
operating loss in 1990 (45,034) -- -- 190,919 --
Cumulative effect of the change in
accounting for income taxes -- -- (1,956,346) -- --
-------- -------- -------- -------- --------
Net income (loss) $(272,316) $(285,606) $(2,231,365) $562,318 $(288,528)
========== ========== ============ ======== ==========
(continued)<PAGE>
<PAGE> 17
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1993 1992(2) 1991(2) 1990(1) 1989
---- ------- ------- ------- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data (con't.):
Weighted average number of
common and common
equivalent shares
outstanding 202,948 182,675 181,487 182,424 148,158
======= ======= ======= ======= =======
Per share amounts:
Income (loss) before
extraordinary items and
cumulative effect of the
change in accounting for
income taxes $(1.12) $(1.60) $(1.62) $1.92 $(2.07)
Extraordinary items: Loss on early
extinguishment of debt in 1993
and income tax benefit in 1990 (0.22) -- -- 1.05 --
Cumulative effect of the
change in accounting
for income taxes -- -- (10.78) -- --
------- ------- ------- ------- -------
Net income (loss) $(1.34) $(1.60) $(12.40) $2.97 $(2.07)
======= ======= ======== ===== =======
(continued)<PAGE>
<PAGE> 18
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1993 1992(2) 1991(2) 1990(1) 1989
---- ------- ------- ------- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital (deficit) $(91,459) $71,674 $146,757 $288,970 $773,417
Property and equipment, net 1,616,480 1,439,058 1,196,482 874,725 630,264
Total assets 9,064,929 8,955,445 8,727,637 8,714,165 3,041,344
Net deferred tax liability 1,955,687 1,899,581 1,993,920 40,047 --
Long-term portion of debt and
mandatory repurchase obligation 4,989,746 5,562,393 5,281,742 5,289,236 1,786,376
Redeemable preferred stock of
a subsidiary 1,305,248 1,170,948 1,036,648 902,348 --
Total stockholders' investment
(deficiency) (37,904) (409,741) (135,623) 2,044,711 1,003,969
- ----------------------
(1) Effective January 1, 1990, the Company prospectively changed its amortization period for cellular licensing costs
from 10 years to 40 years to conform more closely with industry practices. The effect of this change for the year
ended December 31, 1990 was to reduce amortization of intangible assets $153.1 million, increase equity in income
of unconsolidated investees $99.3 million, increase net income $242.4 million and increase net income per common
share $1.33. In addition, during 1990, the Company acquired controlling interest in LIN and LIN acquired
controlling interest in the A Block licensee in New York City.
(2) The retroactive adoption of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes," effective January 1, 1991, increased net loss in 1991 by the cumulative effect of the change in accounting
for income taxes of $1,956.3 million or $10.78 per share, increased 1992 and 1991 amortization of intangibles by
$1.0 million and $0.2 million, respectively, and increased 1992 and 1991 other, net by $80.1 million and $76.3
million, respectively. The adoption decreased the loss per share before extraordinary item and cumulative effect
of the change in accounting for income taxes by $0.43 to a loss of $1.60 in 1992 and by $0.42 to a loss of $1.62 in
1991. The effect of the adoption on the December 31, 1992 and 1991 balance sheets was to increase total assets by
$39.5 million and $10.9 million, respectively; increase net deferred tax liability by $1,861.1 million and $1,911.7
million, respectively; and negatively impact stockholders' investment (deficiency) by $1,801.2 million and $1,880.3
million, respectively.
(3) Includes $243 million in pre-tax gain on the BellSouth Transaction for the year ended December 31, 1991 and $1,158
million in pre-tax gain on the Contel Transaction for the year ended December 31, 1990.
(4) The year ended December 31, 1993 includes $79 million in nonrecurring charges associated with the McCaw Bank Credit
Facilities; $91.5 million in after tax gains recognized on the sale of the Company's Upstate New York and certain
Kansas cellular interests and $49.6 million increase in tax expense resulting from the adjustment of the Company's
tax liability to reflect the increase in federal tax rates from 34% to 35%.
</TABLE>
<PAGE>
<PAGE> 19
SELECTED PROPORTIONATE CELLULAR OPERATING DATA
The following table sets forth unaudited, supplemental financial
data for the Company's cellular segment reflecting proportionate
consolidation of entities in which the Company has a substantial
interest. This presentation differs from the consolidation
methodology used to prepare the Company's principal financial
statements in accordance with generally accepted accounting
principles. The proportionate cellular operating data reflects the
Company's ownership percentage of systems consolidated for financial
reporting purposes (including approximately 52% of LIN's proportionate
results) and the Company's ownership percentage of certain of its
significant unconsolidated investees (which are accounted for on the
equity method for financial reporting purposes).
Year Ended December 31,
1993 1992(4) 1991(4)
---- ------- -------
($ in thousands)
Service revenue $1,646,630 $1,284,402 $ 974,505
Equipment revenue, net 286 1,342 191
---------- ---------- ----------
Net revenues 1,646,916 1,285,744 974,696
---------- ---------- ----------
Direct costs and expenses
excluding marketing 513,051 413,350 323,507
Marketing expenses 393,629 301,162 257,650
Depreciation 195,573 151,169 120,250
Valuation loss on equipment 93,786 -- --
Amortization of intangible
assets 178,214 229,050 223,480
---------- ---------- ----------
Total operating costs 1,374,253 1,094,731 924,887
---------- ---------- ----------
Operating income
proportionate basis $272,663 $191,013 $49,809
======== ======== ========
Proportionate subscribers(1) 1,934,000 1,366,000 985,000
Proportionate pops(2)(3) 61,600,000 60,400,000 57,400,000
- --------------------------
(1) As of December 31, 1993, 100% of subscribers in markets which the
Company (exclusive of LIN) owned at least a 50% interest in plus
100% of the subscribers of the cellular systems serving the CMT
Partners was 1,602,000 and average penetration in such markets
was 3.10%. The Company's (exclusive of LIN's) proportionate
share of subscribers based on its December 31, 1993 ownership
position in markets where it owned an interest was 1,481,000. As
of December 31, 1993, 100% of subscribers in markets in which LIN
owned an interest was 1,434,000 and average penetration in such
markets was 3.34%. LIN's proportionate share of such subscribers
based on its ownership position at December 31, 1993 was 865,000.<PAGE>
<PAGE> 20
(2) Calculated by multiplying (i) the Donnelley Marketing Service
estimate of current population in a market by (ii) the percentage
ownership interest which the Company owned, or had the right or
obligation to acquire, in the A Block licensee for that market.
As of December 31, 1993, the Company (exclusive of LIN) owned
47.4 million proportionate pops and LIN owned 27.2 million
proportionate pops.
(3) Excludes 0.9 million, 0.4 million and 2.3 million proportionate
pops for the periods ended December 31, 1993, 1992 and 1991,
respectively, which are not reflected in the supplemental
financial data for the Company's cellular segment set forth above
because the effect on such results would not be material. Such
pops consisted primarily of pending acquisitions and minority
interests accounted for by the cost method for financial
reporting purposes.
(4) During the first quarter of 1993, the Company retroactively
adopted SFAS No. 109, effective January 1, 1991. The effect on
the proportionate cellular operating data was to increase
amortization expense and decrease operating income by $1.0
million in 1992 and $0.2 million in 1991.<PAGE>
<PAGE> 21
THE OFFERING
This Prospectus relates to up to 5,779,101 shares of Class A
Common Stock, which the Company proposes to issue in its
continuing program of acquisitions of entities or interests in
entities which have received or may receive a license from the
FCC to provide cellular service. The consideration for any
acquisition may consist of cash, notes or other evidences of
debt, assumptions of liabilities, equity securities or a
combination thereof, as determined from time to time by
negotiations between the Company and the owners of businesses or
properties to be acquired. In general, the terms of acquisitions
will be determined by direct negotiations between the
representatives of the Company and the owners of the businesses
or properties to be acquired or, in the case of entities which
are more widely held, through exchange offers to stockholders or
documents soliciting approval of statutory mergers,
consolidations or sales of assets. Underwriting discounts or
commissions will generally not be paid by the Company. Under
some circumstances, however, the Company may issue shares of
Class A Common Stock covered by this Prospectus to pay brokers'
commissions incurred in connection with acquisitions.
This Prospectus does not cover any resale of Class A Common
Stock, and no person is authorized to make use of this Prospectus
in connection with any such resale or distribution.
From November 10, 1993 to April 27, 1994, the Company issued
1,420,899 shares of Class A Common Stock in connection with
acquisitions pursuant to a prior prospectus.
Restrictions on Resale of Class A Common Stock
The Class A Common Stock offered hereby has been registered
under the Securities Act, but this registration does not cover
resale or distribution by the person who receives shares of the
Class A Common Stock issued by the Company in its acquisitions.
Affiliates of entities acquired by the Company may not sell
shares of Class A Common Stock registered under this Prospectus
except pursuant to an effective registration statement under the
Securities Act covering such shares, or in compliance with Rule
145 promulgated under the Securities Act or another applicable
exemption from the registration requirements of the Securities
Act. Generally, Rule 145 permits such affiliates to sell such
shares immediately following the acquisition in compliance with
certain volume limitations and manner of sale requirements.
Under Rule 145, sales by such affiliates during any three-month
period cannot exceed the greater of (i) 1% of the shares of Class
A Common Stock outstanding (approximately 1.45 million shares
assuming 145 million shares of Class A Common Stock remain
outstanding) and (ii) the average weekly reported volume of
trading of such Class A Common Stock on all national securities
exchanges and/or reported through the Nasdaq National Market
during the four calendar weeks preceding the proposed sale.
These restrictions do not apply to the exchange of shares of
Class A Common Stock for shares of AT&T Stock in the AT&T
Transaction and, in any event, will cease to apply under most<PAGE>
<PAGE> 22
other circumstances if the affiliate has held the shares of Class
A Common Stock for at least two years, provided that the person
or entity is not then an affiliate of the Company. Individuals
who are not affiliates of the entity being acquired will not be
subject to resale restrictions under Rule 145 and may resell
shares of Class A Common Stock immediately following the
acquisition without an effective registration statement under the
Securities Act. Rule 145 will also restrict the sale of shares
of AT&T Stock acquired by affiliates of the Company in the AT&T
Transaction.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
Common Stock
The Company's authorized Common Stock consists of 400
million shares of Class A Common Stock, par value $.01 per share,
and 200 million shares of Class B Common Stock, par value $.01
per share. As of March 31, 1994, the Company had outstanding
149,311,440 shares of Class A Common Stock and 59,731,051 shares
of Class B Common Stock. The Company has never paid any cash
dividends and it is expected that the McCaw Bank Credit
Facilities relating to the Company's senior bank indebtedness and
certain other indebtedness of the Company will prohibit or
restrict the payment of dividends in the future.
The Class A Common Stock and the Class B Common Stock are
identical in all respects except that (i) the holders of Class A
Common Stock are entitled to one vote per share and the holders
of Class B Common Stock are entitled to 10 votes per share with
respect to all matters on which holders of Common Stock are
entitled to vote, (ii) if common stock dividends are declared,
holders of Class A Common Stock will receive shares of Class A
Common Stock and holders of Class B Common Stock will receive
shares of Class B Common Stock and (iii) each share of Class B
Common Stock is convertible into one share of Class A Common
Stock at the option of the holder at any time. These voting
provisions should result in the McCaw family's retaining control
over the Company, despite any accumulation of Class A Common
Stock by third parties. See "Risk Factors - Control of the
Company." Other than the voting provisions, there are no special
features of the Common Stock, such as supermajority voting
provisions, cumulative voting for directors or liabilities to
further calls.
In the event of liquidation, dissolution or winding up of
the Company, the holders of the Class A Common Stock and the
Class B Common Stock are entitled to share pro rata in the
balance of assets, if any, remaining after the payment of all
debts and other liabilities of the Company. Dividends may be
declared and paid to the holders of Class B Common Stock only if
at such time an equal per share dividend shall be declared and
paid to the holders of Class A Common Stock, and vice versa.
Also, the Company may redeem stock from any holder at the lesser
of (i) fair market value and (ii) such holder's purchase price,
if purchased within a year of such redemption, to prevent the <PAGE>
<PAGE> 23
loss, or permit the reinstatement, of any license or franchise,
where such loss is based upon such holder s failing to possess
prescribed qualifications.
No shares of the Common Stock have any preemptive rights.
However, subject to certain limitations, the BT Purchase
Agreement (as defined below) provides that BT USA will have
rights with respect to issuances of capital stock. See "BT USA
Purchase Right" below. Certain of BT USA's rights under the BT
Purchase Agreement and the BT Shareholders Agreement (as defined
below) have been incorporated in the Company's charter. Under
the Communications Act, not more than 25% of the Company's
capital stock may be owned of record or voted by other than U.S.
citizens or entities. Under Article IX of the Company's Restated
Certificate of Incorporation, the Company has the right to redeem
outstanding shares of its stock if the Board of Directors
determines that such redemption is necessary to prevent the loss,
or secure the reinstatement, of any governmental license or
franchise held by the Company.
The transfer agent and registrar for the Class A Common
Stock is Chemical Trust Company of California.
See "Recent Development" and "Risk Factors -- Proposed AT&T
Transaction" for a description of the proposed AT&T Transaction.
BT USA Purchase Right
Pursuant to the Amended and Restated Purchase Agreement
dated as of January 19, 1989, as amended as of May 1, 1989,
between the Company and BT USA (the "BT Purchase Agreement"), BT
USA has the right, in the event of an issuance of capital stock
by the Company, to acquire a number of shares of such capital
stock from the Company such that its percentage ownership
interest in the Company's capital stock remains the same
immediately after such issuance as immediately before such
issuance.
Shareholders Agreements
Members of the McCaw family, including the McCaw brothers,
the Company and certain members of the Company's management and
their related trusts have entered into a shareholders agreement
(the "McCaw Shareholders Agreement"), dated as of May 31, 1989,
as amended, which provides that the parties thereto will vote
their shares of the Common Stock in accordance with the
directions of Craig O. McCaw (and his successor, each the
"Designated Party") and that the Designated Party is entitled to
designate all members of the Company's Board of Directors.
Currently, the Designated Party controls shares representing an
aggregate of approximately 63% of the outstanding voting power of
the Company. Under the McCaw Shareholders Agreement, any
Designated Party is entitled, subject to certain restrictions, to
designate his successor as Designated Party. In the absence of
such designation, successor Designated Parties will be selected
by the McCaw family in the manner specified in the McCaw
Shareholders Agreement.<PAGE>
<PAGE> 24
The structure of the Company's Board of Directors has been
further defined by a separate shareholders agreement (the "BT
Shareholders Agreement"), dated June 20, 1989, entered into by
the McCaw brothers, the Company and BT USA, and the Company's By-
Laws. As of March 31, 1994, BT USA held shares representing an
aggregate of approximately 21.3% of the outstanding voting power
of the Company. These documents currently provide that BT USA
will be entitled to designate four directors, subject to
reduction so that its Board representation remains substantially
proportionate with its equity interest in the Company and does
not exceed the 25% limitation established under federal law on
non-U.S. citizens as directors, that the Designated Party will be
required to designate three directors independent of any
relationship with any officer or director of the Company or with
himself, BT USA or any other holder of 1% or more of the
Company's outstanding stock (the "Independent Directors") and
that the Designated Party will be entitled to designate a number
of additional directors constituting a majority of the Company's
Board. Thus, at all times the Designated Party will remain
entitled to designate directors constituting a majority of the
Company's Board.
As part of a purchase of shares of Class A Common Stock by
AT&T on February 23, 1993, AT&T currently has the right to
designate one member of the Company s Board of Directors but has
not yet done so. BT USA has agreed that, so long as the AT&T
Merger Agreement is in effect, such designee may be elected to
the Board notwithstanding any provision of the BT Shareholders
Agreement to the contrary.
In addition to the foregoing, the BT Purchase Agreement and
the BT Shareholders Agreement also contain certain other
provisions that may affect the Company. The BT Purchase
Agreement provides that BT USA will have rights with respect to
certain issuances of the Common Stock. See "BT USA Purchase
Right" above. In addition, for so long as BT USA maintains
ownership of Common Stock representing a sufficient number of
shares entitling it to designate a nominee to serve as a member
of the Board of Directors of the Company, and, subject to certain
exceptions, for a period of 12 months thereafter, BT USA has
agreed that it will not, other than through the Company, (i)
engage in the United States in the business of acquiring,
constructing or operating cellular telephone systems; (ii) assist
any person in relation to any such business in the United States
or become interested in any person engaged in any such business
in the United States whether as an owner, partner or joint
venturer, except for ownership of 5% or less of public companies;
(iii) subject to certain exceptions, solicit or encourage any
employees having access to confidential information of the
Company to leave the employment of the Company or any of its
affiliates, or hire any such employee who has terminated his
employment within one year after such termination; or (iv)
solicit or participate in the solicitation of any part of the
business of the Company from any person who is a customer or a
prospective customer of the Company at the time of such
solicitation, nor shall BT USA interfere with or disrupt any
<PAGE>
<PAGE> 25
other then existing business relationship of the Company of which
BT USA is aware. So long as the AT&T Merger Agreement is in
effect, the Company has waived the provisions described in the
foregoing sentence with respect to BT USA's investment in and
relationship with MCI Communications Corporation. Such waiver
will terminate five days after notice by the Company to BT USA of
any termination of the AT&T Merger Agreement.
Under the BT Purchase Agreement and the Company's Restated
Certificate of Incorporation and By-Laws, the Company's Board of
Directors will not be permitted to take any action without the
approval of a majority of the Independent Directors or a majority
of such directors and the directors not designated by the
Designated Party, except in the case of (i) certain swaps of
cellular assets, (ii) acquisitions of direct or indirect
interests in, or assets of, the A Block cellular licensees in the
10 largest markets (based on 1980 pops) (provided such
acquisitions do not involve more than 37 million such pops in the
aggregate) and the Pittsburgh and San Francisco/San Jose markets,
and (iii) a merger or sale of the Company. In addition, the
Company will not be permitted, without BT USA's consent, to (i)
amend its charter or By-Laws in ways that would adversely impair
BT USA's rights contemplated by the BT Purchase Agreement, (ii)
issue regular voting equity in excess of certain specified
amounts (which amounts are at least 10% of outstanding equity in
any year), (iii) issue Class B Common Stock or preferred stock
with disproportionate voting rights, (iv) conduct business
outside the telecommunications and related businesses, or (v)
sell or otherwise dispose of, in any 12-month period, cellular
assets involving 15% or more of the aggregate pops in which the
Company has an interest or noncellular assets involving 15% or
more of the fair market value of the Company's total assets.
In the event that in any 12-month period there are four or
more resolutions concerning "significant business decisions"
proposed in good faith by the Designated Party which are not
adopted by the Board of Directors, then, unless BT USA has
supported such resolutions, the Designated Party may have the
right to require BT USA to sell its Common Stock to a third party
or to the Company. In such event BT USA shall be entitled to
receive appraised value for its shares or, if more, its purchase
price plus 12% interest per year for a period not to exceed three
years.
The members of the McCaw family who are parties to the BT
Shareholders Agreement have agreed that they shall not at any
time transfer any shares of stock or convert any shares of Class
B Common Stock to Class A Common Stock if, immediately following
such transfer or conversion, the Designated Party will not own or
possess the power to vote in the aggregate a number of shares of
stock (not including any such shares owned by the Jordan Trust or
the Taylor Voting Trust) representing the "Necessary Percentage"
of the aggregate voting power of the equity of the Company, other
than in a transaction constituting a sale of the Company pursuant
to an auction process. For this purpose, the term "Necessary
Percentage" means the percentage of the aggregate voting power of
<PAGE>
<PAGE> 26
the capital stock of the Company then outstanding which, together
with the maximum percentage of the voting power of the Company
represented by the stock owned by BT USA at any time on or before
such date (as determined in accordance with the provisions of the
BT Purchase Agreement), is equal to more than 50% of the
aggregate voting power of the capital stock of the Company then
outstanding.
With respect to the appointment of a substitute Designated
Party other than John E. McCaw, Jr., Wayne M. Perry or the
transferee of the Designated Party's rights under the BT
Shareholders Agreement in the event of a sale of the Company, the
Independent Directors shall have the right to consent to the
appointment of such substitute Designated Party, such consent not
to be unreasonably withheld.
The Company has agreed that until June 20, 1999, so long as
BT USA owns at least 15% of the outstanding shares of the
Company's Common Stock, any Sale of the Company (as defined),
including any sale of shares by the McCaw family immediately
following which the Designated Party no longer holds or controls
shares representing the Necessary Percentage, will be pursuant to
auction procedures. If BT USA is dissatisfied with the terms of
any such sale, the Company will purchase (or will cause the
proposed buyer to purchase) all of BT USA's equity interest in
the Company at the same price being received by the other sellers
of the Company's stock in such transaction, except that BT USA
shall be entitled to receive certain price protection (fair
market value or, in certain circumstances, BT USA's purchase
price for the shares or a price per share as high as $53) in
respect of the Company shares initially purchased by BT USA, as
well as certain other shares. BT USA has agreed to waive these
rights in connection with the AT&T Transaction.
All the provisions of the BT Shareholders Agreement and the
other agreements made by the Company and BT USA may be waived or
terminated by the parties.
Preferred Stock
The Company has 10 million authorized shares of Preferred
Stock, par value $.01 per share, none of which is outstanding,
which may be issued from time to time in one or more classes or
series. The Company's Restated Certificate of Incorporation
authorizes the Board of Directors to issue from time to time one
or more series of Preferred Stock with such designations and
preferences, relative, participating, optional and other special
rights and qualifications, limitations and restrictions thereon,
as permitted by law and as fixed from time to time by resolution
of the Board of Directors. Because of its broad discretion with
respect to the creation and issuance of any series of Preferred
Stock without stockholder approval, the Board of Directors could
adversely affect the voting power of the holders of Common Stock,
and, by issuing shares of Preferred Stock with certain voting,
conversion and/or redemption rights, could discourage any attempt
to obtain control of the Company in any transaction not approved
by the Board of Directors, including a hostile tender offer. <PAGE>
<PAGE> 27
LEGAL MATTERS
The legality of the Class A Common Stock offered hereby will
be passed upon for the Company by Perkins Coie, 1201 Third
Avenue, 40th Floor, Seattle, Washington 98101.
EXPERTS
The consolidated financial statements and schedules of the
Company incorporated in this Prospectus by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, as amended, have been audited by Arthur
Andersen & Co., independent public accountants, as set forth in
their reports, which include an explanatory paragraph with
respect to the change in the method of accounting for income
taxes effective January 1, 1991, as explained in Note 1 to the
Company's consolidated financial statements. In those reports,
that firm states that with respect to LIN and its subsidiaries
its opinion is based on the reports of other independent
auditors, namely Ernst & Young. The combined financial
statements and schedules of LIN's Unconsolidated Affiliates at
December 31, 1993 and for each of the three years in the period
ended December 31, 1993, have been audited by Ernst & Young,
independent auditors, as set forth in their report thereon,
which, as to the years 1993 and 1992, is based in part on the
report of Deloitte & Touche, independent auditors, which also
places reliance on other auditors. The consolidated financial
statements and supporting schedules referred to above have been
incorporated herein by reference in reliance upon the authority
of those firms as experts in giving said reports.
The consolidated financial statements of AT&T and its
subsidiaries included in the Company's Current Report on Form 8-
K, filed September 17, 1993, as amended on October 12, 1993,
October 29, 1993 and April 18, 1994, and incorporated by
reference in this Prospectus are incorporated by reference herein
in reliance upon the report of Coopers & Lybrand, independent
auditors, given on the authority of that firm as experts in
accounting and auditing.
