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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended August 31, 1998
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
Commission file number 0-19603
CENTENNIAL CELLULAR CORP.
(Exact name of registrant as specified in its charter)
Delaware 06-1242753
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Locust Avenue
New Canaan, CT 06840
(Address of principal executive offices, including zip code)
(203) 972-2000
(Registrant's telephone number, including area code)
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Class A Common - 15,085,398 outstanding shares as of September 23, 1998
Class B Common - 10,544,113 outstanding shares as of September 23, 1998
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
August 31,
1998 May 31,
(Unaudited) 1998
------------ ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 29,385 $ 14,620
Accounts receivable, less allowance for doubtful
accounts of $2,713 and $2,693, respectively 41,787 37,178
Inventory - phones and accessories 10,481 7,304
Prepaid expenses and other current assets 2,271 548
------------ ----------
TOTAL CURRENT ASSETS 83,924 59,650
PROPERTY, PLANT AND EQUIPMENT - net 265,130 263,661
EQUITY INVESTMENTS IN WIRELESS SYSTEMS - net 81,441 87,634
DEBT ISSUANCE COSTS, less accumulated amortization of
$6,648 and $6,097, respectively 8,000 8,538
CELLULAR TELEPHONE LICENSES, less accumulated
amortization of $276,015 and $263,633, respectively 223,126 235,508
PERSONAL COMMUNICATIONS SERVICES LICENSE, less accumulated
amortization of $2,716 and $2,324, respectively 60,043 60,435
GOODWILL, less accumulated amortization of $27,629
and $27,016, respectively 121,973 124,533
OTHER ASSETS - net 7,119 7,458
------------ ----------
TOTAL $ 850,756 $ 847,417
============ ==========
</TABLE>
See notes to consolidated financial statements
1
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CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
August 31,
1998 May 31,
(Unaudited) 1998
----------------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 10,586 $ 9,805
Accrued expenses and other current liabilities 77,180 64,445
Payable to affiliate 280 435
--------- ---------
TOTAL CURRENT LIABILITIES 88,046 74,685
LONG-TERM DEBT 500,000 510,000
DEFERRED LIABILITY -- 2,200
DEFERRED INCOME TAXES 27,015 26,584
PREFERRED STOCK:
Convertible redeemable preferred stock
(at aggregate liquidation value) par value $.01 per share,
102,187 shares authorized; issued and outstanding
102,187 shares (redemption value of $1,823.00 per share) 186,287 186,287
Second series convertible redeemable preferred stock
(at aggregate liquidation value) par value $.01 per share, 3,978
shares authorized; issued and outstanding 3,978 shares
(redemption value of $1,823.00 per share) 7,252 7,252
Senior preferred stock, par value $.01 per share, dividend
rate 14%, 250,000 shares authorized, none issued -- --
Additional preferred stock, par value $.01 per share, authorized
10,000,000 shares, 3,978 shares issued as second series
convertible redeemable preferred stock -- --
COMMON STOCKHOLDERS' EQUITY:
Common stock par value $.01 per share:
Class A, 1 vote per share, 100,000,000 shares authorized;
issued, 16,717,607 and 16,716,683 shares,
respectively; and outstanding 15,085,398 and 15,084,474
shares, respectively 167 167
Class B, 15 votes per share, 50,000,000 shares authorized,
issued and outstanding 10,544,113 shares 105 105
Additional paid-in capital 353,915 358,018
Accumulated deficit (278,583) (284,238)
--------- ---------
75,604 74,052
Less: Cost of 1,632,209, Class A common shares
in treasury (30,614) (30,614)
Deferred compensation (2,834) (3,029)
--------- ---------
TOTAL COMMON STOCKHOLDERS' EQUITY 42,156 40,409
--------- ---------
TOTAL $ 850,756 $ 847,417
========= =========
</TABLE>
See notes to consolidated financial statements
2
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CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
August 31, August 31,
1998 1997
------------ ------------
<S> <C> <C>
REVENUE:
Service revenue - Domestic $ 52,964 $ 43,707
Service revenue - Puerto Rico 23,227 7,373
Equipment sales 1,255 1,109
------------ ------------
77,446 52,189
------------ ------------
COSTS AND EXPENSES:
Cost of equipment sold - Domestic 3,881 3,914
Cost of equipment sold - Puerto Rico 652 159
Cost of services - Domestic 6,104 5,728
Cost of services - Puerto Rico 4,278 2,154
Selling, general and administrative - Domestic 14,805 12,180
Selling, general and administrative - Puerto Rico 9,091 5,784
Depreciation and amortization - Domestic 20,755 19,974
Depreciation and amortization - Puerto Rico 11,049 5,088
------------ ------------
70,615 54,981
------------ ------------
OPERATING INCOME (LOSS) 6,831 (2,792)
------------ ------------
INCOME FROM EQUITY INVESTMENTS 3,649 4,206
GAIN ON SALE OF ASSETS 9,556 5
INTEREST EXPENSE - NET - DOMESTIC 8,277 7,922
INTEREST EXPENSE - NET - PUERTO RICO 2,854 2,119
------------ ------------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
AND MINORITY INTEREST 8,905 (8,622)
INCOME TAX EXPENSE (BENEFIT) 3,008 (1,971)
------------ ------------
INCOME (LOSS) BEFORE MINORITY INTEREST 5,897 (6,651)
MINORITY INTEREST IN INCOME OF SUBSIDIARIES (242) (135)
------------ ------------
NET INCOME (LOSS) $ 5,655 $ (6,786)
============ ============
DIVIDEND REQUIREMENT ON PREFERRED STOCK $ 4,113 $ 4,113
============ ============
INCOME (LOSS) APPLICABLE TO COMMON SHARES $ 1,542 $ (10,899)
============ ============
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED $ .06 $ (.41)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD 25,629,000 26,860,000
============ ============
</TABLE>
See notes to consolidated financial statements
3
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<TABLE>
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
(Amounts in thousands, except share data)
<CAPTION>
Common Stock
-------------------------------------
Class A Class B Additional Sharesholder Accumulated
------------------ ------------------ Paid-In Treasury Note Deferred Accumulated
Shares Dollars Shares Dollars Capital Stock Receivable Compensation Deficit Total
---------- ------- ---------- ------- -------- --------- ---------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 1, 1997 16,492,884 $165 10,544,113 $105 $369,704 $ (1,801) $(3,000) $ - $(252,291) $112,882
Common Stock issued in
conjunction with
incentive plans 223,799 2 - - 4,765 - - (3,029) - 1,738
Preferred stock dividends - - - - (16,451) - - - - (16,451)
Treasury stock purchases - - - - - (28,813) - - - (28,813)
Repayment of shareholder
note receivable - - - - - - 3,000 - - 3,000
Net loss - - - - - - - - (31,947) (31,947)
---------- ----- ---------- ----- -------- -------- ------- -------- --------- ------
Balance at May 31, 1998 16,716,683 167 10,544,113 105 358,018 (30,614) - (3,029) (284,238) 40,409
Common Stock issued in
connection with
incentive plans 924 10 10
Preferred stock dividends (4,113) (4,113)
Amortization of Deferred
Compensation 195 195
Net Income 5,655 5,655
---------- ----- ---------- ----- -------- -------- ------- -------- --------- ------
Balance at August 31,
1998 - (unaudited) 16,717,607 $167 10,544,113 $105 $353,915 $(30,614) $ - $(2,834) $(278,583) 42,156
========== ===== ========== ===== ======== ======== ======= ======== ========= ======
See notes to consolidated financial statements
</TABLE>
4
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CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------
August 31, August 31,
1998 1997
------------- --------------
OPERATING ACTIVITIES:
<S> <C> <C>
Cash received from subscribers and others $ 83,306 $ 57,091
Cash paid to suppliers, employees and
governmental agencies (48,808) (34,848)
Interest paid (2,954) (1,953)
------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 31,544 20,290
------------- --------------
INVESTING ACTIVITIES:
Capital expenditures (20,354) (34,759)
Acquisition of other assets (2,200) (33)
Acquisition, disposition and exchange of wireless telephone systems 13,500 -
Distributions received from equity investments 3,675 5,447
------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (5,379) (29,345)
------------- --------------
FINANCING ACTIVITIES:
Proceeds from long-term debt - 25,500
Repayment of long-term debt (10,000) (5,000)
Debt issuance costs paid - (125)
Prepaid transaction costs (1,410) -
Proceeds from issuance of Class A and B Common Stock 10 80
Dividends paid - (4,113)
Treasury stock purchases - (4,192)
------------- --------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (11,400) 12,150
------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 14,765 3,095
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 14,620 43,415
------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 29,385 $ 46,510
============= ==============
</TABLE>
See notes to consolidated financial statements
5
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CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------
August 31, August 31,
1998 1997
------------- -------------
<S> <C> <C>
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Net income (loss) $ 5,655 $ (6,786)
------------- -------------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 31,804 25,062
Minority interest in income of subsidiaries 242 135
Deferred income taxes - increase (decrease) 3,008 (2,862)
Equity in undistributed earnings of investee companies (3,649) (4,206)
Gain on sale of assets (9,556) -
Other 746 601
Change in assets and liabilities net of effects of
acquired wireless telephone systems:
Accounts receivable - (increase) (5,672) (4,082)
Prepaid expenses and other current assets -
(increase) (3,488) (1,179)
Accounts payable and accrued expenses -
increase 11,806 12,950
Customer deposits and prepayments -
increase 648 657
------------- -------------
Total adjustments 25,889 27,076
------------- -------------
Net cash provided by operating activities $ 31,544 $ 20,290
============= =============
</TABLE>
See notes to consolidated financial statements.
6
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CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollar amounts in thousands except share data)
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management, the accompanying interim unaudited consolidated
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the consolidated financial
position of Centennial Cellular Corp. and Subsidiaries (the "Company") as of
August 31, 1998 and the results of its consolidated operations and cash flows
for the periods ended August 31, 1998 and 1997. These financial statements do
not include all disclosures required by generally accepted accounting
principles. The statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's May 31, 1998
Annual Report on Form 10-K, which includes a summary of significant accounting
policies and other disclosures. The consolidated balance sheet at May 31, 1998
is audited.
NOTE 2. AGREEMENT AND PLAN OF MERGER
On July 2, 1998, the Company and CCW Acquisition Corp. ("Acquisition"), a
Delaware corporation organized at the direction of Welsh, Carson, Anderson &
Stowe VIII, L.P. ("WCAS VIII"), entered into an Agreement and Plan of Merger
(the "Merger Agreement") providing for the merger of Acquisition with and into
Centennial (the "Merger"). Centennial will continue as the surviving corporation
(the "Surviving Corporation") in the Merger.
Subject to the effects of proration, pursuant to the Merger Agreement,
outstanding Class A Common Stock ("Class A Common Stock") will be converted into
the right to receive $43.50 per share in cash or to receive common shares of the
Surviving Corporation (the "Surviving Corporation Shares") representing up to
7.1% of the Surviving Corporation Shares outstanding immediately after the
Merger. Class B Common Stock ("Class B Common Stock") will be converted into the
right to receive $43.50 per share in cash; provided, that if the aggregate
number of Surviving Corporation Shares elected to be received by Centennial's
existing stockholders is less than 7.1% of the common shares of the Surviving
Corporation outstanding immediately after the Merger, then a number of Class B
Common Stock equal to the pro rata portion of such shortfall will be converted
into Surviving Corporation Shares. All outstanding Convertible Redeemable
Preferred Stock (the "Convertible Redeemable Preferred Stock") and Second
Series Convertible Redeemable Preferred Stock (the "Second Series Convertible
Redeemable Preferred Stock" and, together with the Convertible Redeemable
Preferred Stock, the "Redeemable Preferred Stock") will be converted into the
right to receive $43.50 per share in cash on an as converted basis.
Because existing holders of common stock of the Company must receive in the
Merger an amount of Surviving Corporation Shares equal to 7.1% of the common
shares of the Surviving Corporation outstanding immediately after the effective
time of the Merger (the "Effective Time"), stockholders who do not elect to
receive any shares may, due to proration, be required to receive some Surviving
Corporation Shares. In addition, stockholders who elect to receive shares may,
due to proration, receive Surviving Corporation Shares and receive cash in
amounts which vary from the amounts such holders elected.
7
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Pursuant to the Merger Agreement, it is anticipated that each option to purchase
Class A Shares (an "Option") granted under the Company's 1991 Employee Stock
Option Plan and Non-Employee/Officer Director Option Plan, as amended
(collectively, the "Option Plans") will be exercised or canceled pursuant to its
terms or in exchange for a cash amount equal to the difference between $43.50
and the exercise price of the Option prior to the Effective Time. Each Option
that is not exercised or canceled will remain outstanding immediately following
the Effective Time and such Options will be subject to adjustment pursuant to
the terms of the Option Plans.
In connection with the execution of the Merger Agreement, Century Communications
Corp. ("Century"), the Company's principal stockholder, entered into a
Stockholder Agreement, dated July 2, 1998, with Acquisition (the "Stockholder
Agreement"). Pursuant to the Stockholder Agreement, Century, which has an
approximate 33% Common Stock interest and, through ownership of the Company's
Class B Common Stock which has disproportionate votes per share (15 votes per
share), an approximate 74% voting interest in the Company at August 31, 1998,
agreed to vote its shares in favor of the merger so long as the Merger Agreement
remains in effect. Because Century agreed to approve the Merger by written
consent in lieu of meeting, and controls, on a fully diluted basis, more than a
majority of the outstanding votes of the Company required to approve the Merger,
no further vote is necessary to approve the Merger.
Pursuant to the Merger Agreement, from the date of the Merger Agreement to the
Effective Time, the Company shall conduct its business in the ordinary course
consistent with past practice and shall use reasonable efforts to preserve
intact its business organizations and relationships with third parties and to
keep available the services of its present officers and key employees. All
statements contained in this Quarterly Report, including discussions of the
Company's plans and strategies, are subject to the Company's covenants regarding
the conduct of its business pending the Merger.
The consummation of the Merger is subject to certain conditions, including,
without limitation, the Company obtaining a final order from the Federal
Communications Commission (the "FCC") approving the transfer of control of the
Company to WCAS VIII and its affiliates and Acquisition obtaining financing
substantially on the terms contemplated by the commitment letters it received in
connection with the Merger Agreement. The Company completed filing the
applications seeking FCC transfer approvals of the Merger. The last of these
applications that are material to the transaction was placed on public notice by
the FCC on August 17, 1998 and was eligible for grant beginning September 17,
1998. Although there can be no assurance that these applications will be granted
or acted on promptly, the Company has no reason to believe that the applications
will not be approved in a timely manner. In addition, Acquisition and the
Company submitted their Notification and Report Forms with respect to the Merger
on September 11, 1998 and on September 25, 1998, the Company's request for early
termination of the waiting period under the HSR Act was granted.
Whether or not the Merger is consummated, all costs and expenses incurred in
connection with the Merger, the Merger Agreement and the transactions
contemplated by the Merger Agreement shall be paid by the party incurring such
expenses. However, in the event the Company or Acquisition shall have terminated
the Merger Agreement as a result of either the Company entering into a
definitive written agreement with respect to any merger, consolidation or other
business combination, tender or exchange offer, recapitalization transaction,
asset or stock purchase or other similar transaction with a third party (an
"Acquisition Transaction") or the Board of Directors of the Company having
withdrawn, modified or amended in any manner adverse to Acquisition or the
stockholders of Acquisition its approval or recommendation of the Merger
Agreement or approved, recommended or endorsed any proposal for an
8
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Acquisition Transaction, then the Company shall simultaneously reimburse
Acquisition for documented fees and expenses (subject to a maximum of $25,000)
and pay Acquisition a termination fee of $40,000.
In connection with the Merger, Acquisition has received a commitment from a
third party for financing for Acquisition and certain existing and future
subsidiaries of the Company in the aggregate amount of approximately $1,600,000
in the form of senior secured credit facilities and an unsecured bridge loan.
Additionally, an affiliate of WCAS VIII has agreed to purchase approximately
$150,000 aggregate amount of subordinated notes of the Surviving Corporation.
Finally, WCAS VIII and other equity investors have agreed to purchase
approximately $350,000 of common stock of the Surviving Corporation. It is
anticipated that this funding will be used to pay the merger consideration
described above, repay or repurchase certain indebtedness of the Company and pay
related fees and expenses. Additionally, pursuant to the Merger Agreement, the
Company has agreed that, upon the request of Acquisition, it will commence
offers to repurchase its two outstanding issuances of public debt (the "Debt
Offers"). Pursuant to the Merger Agreement and at the request of Acquisition,
the Company commenced the Debt Offers and consent solicitations with respect to
these two public debt issuances on September 8, 1998. Through September 23,
1998, approximately 99% of the Company's public debt was tendered and consents
were delivered to the Company. As a condition to the closing of the Merger, the
Company must redeem its two public debt issuances of $350,000 in the aggregate,
prior to the closing date of the Merger. The estimated cost to the Company of
the redemption, including accrued interest, is approximately $406,000 based upon
current market conditions, U.S. treasury yields as of September 29, 1998 and an
assumed payment date of October 15, 1998. The Company's obligation to accept for
purchase, and to pay for, the public debt validly tendered is subject to certain
conditions, including the consumation of the Merger, which, in turn, is subject
to certain other conditions.
The Company anticipates that as part of the financing necessary to effect the
Merger, certain of its subsidiaries will issue approximately $340,000 of debt
securities to qualified institutional buyers under two private placement
offerings pursuant to Rule 144A and Regulation S of the Securities Act of 1933,
as amended. There can be no assurance that Acquisition will receive the funding
referred to above and, in the event that Acquisition must seek alternative
financing to consummate the Merger there can be no assurance that it will be
able to secure alternative financing on terms no less favorable than the terms
of the above commitments. Additionally, there can be no assurance that the Debt
Offers will be consummated.
On August 21, 1998, the Company filed a Preliminary Information Statement with
the SEC relating to the Merger Transaction and anticipates filing a Registration
Statement on Form S-4 which incorporates this information statement in the near
future. The Information Statement/Prospectus also constitutes the prospectus of
the Surviving Corporation for the issuance of shares of common stock in
connection with the transactions contemplated by the Merger Agreement.
The accompanying consolidated financial statements have been prepared on a
historical basis and do not include any adjustments relating to the Agreement
and Plan of Merger.
9
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NOTE 3. LONG-TERM DEBT
The Company and its subsidiaries had the following debt outstanding at August
31, 1998 and May 31,1998:
<TABLE>
<CAPTION>
August 31, May 31,
1998 1998
----------- ---------
<S> <C> <C>
Centennial 8 7/8% Senior Notes due 2001........ $ 250,000 $ 250,000
Centennial 10 1/8% Senior Notes due 2005....... 100,000 100,000
Centennial Domestic Credit Facility............ - 10,000
Puerto Rico Credit Facility..................... 150,000 150,000
----------- ---------
$ 500,000 $ 510,000
=========== =========
</TABLE>
Centennial Puerto Rico Wireless Corporation, a wholly owned subsidiary of the
Company ("CPRW"), has a four year, $180,000 revolving credit facility, as
amended (the "Puerto Rico Credit Facility"). As of August 31, 1998, the Puerto
Rico Credit Facility had $150,000 outstanding. The Commitment available under
the Puerto Rico Credit Facility terminates on February 28, 2001. Quarterly
repayment of amounts outstanding at the termination date are to be made over a
five-year period beginning May 31, 2001, as specified in the Puerto Rico Credit
Facility, as amended. The interest rate payable by CPRW on borrowings
under the Puerto Rico Credit Facility is based, at the election of CPRW, on (a)
the Base Rate, as defined, plus a margin of 1.50% or (b) the Eurodollar Base
Rate, as defined, plus a margin of 2.50%, adjusted for the maintenance of
certain specified ratios, as applicable.
As of August 31, 1998, no amounts were outstanding under the Company's $75,000
domestic revolving credit facility (the "Domestic Credit Facility"). The
commitment available under the Domestic Credit Facility terminates on January
31, 2001 at which point all amounts outstanding are due and payable. The
interest rate payable on the Domestic Credit Facility is based, at the election
of the Company, on (a) the Base Rate, as defined, plus a margin of 2% or (b) the
Eurodollar Base Rate, as defined, plus a margin of 3%.
The aggregate annual principal payments for the next five years and thereafter
under the Company's and CPRW's debt at August 31, 1998 are summarized as
follows:
<TABLE>
<S> <C>
August 31, 1999 $ -
August 31, 2000 -
August 31, 2001 10,500
August 31, 2002 286,000
August 31, 2003 42,000
August 31, 2004 and thereafter 161,500
-----------
$ 500,000
</TABLE>
The Company and CPRW were in compliance with all covenants of their debt
agreements at August 31,1998.
10
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NOTE 4. DISPOSITIONS
On June 8, 1998, the Company disposed of its investment interest in the
Coconino, Arizona RSA, representing approximately 43,500 Net Pops, for $13,500
in cash. The Company recorded a pre-tax gain of $9,556 in relation to the sale
of this investment interest during the three months ended August 31, 1998.
NOTE 5. REVENUE RECOGNITION
Wireless telephone service income includes earned subscriber service revenue and
charges for installation and connections, net of associated roaming costs of
$12,216 and $8,850 for the three months ended August 31, 1998 and 1997,
respectively.
NOTE 6. INCOME (LOSS) PER COMMON SHARE
The Company applies the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" ("SFAS 128"). Under SFAS 128, Basic
earnings per share ("EPS") is calculated by dividing income (loss) applicable to
common shares by weighted average common shares outstanding. Diluted EPS
reflects the potential dilution that could occur if potential common stock
instruments of the Company were exercised, converted or issued.
NOTE 7. COMMITMENTS AND CONTINGENCIES
The Company is controlled by Century. Century has an approximately 33% common
stock interest and, through ownership of the Company's Class B Common Stock
which has disproportionate votes per share (15 votes per share), an approximate
74% voting interest in the Company as of August 31, 1998. The Company and
Century entered into a Services Agreement, effective August 30, 1996 (the
"Services Agreement"), pursuant to which Century, through its personnel,
provides design, construction, management, operational, technical and
maintenance services for the wireless telephone, paging and related systems
owned and operated by the Company. Such services also include providing all the
services necessary for the monitoring, to the extent possible, of the activities
of the partnerships in which the Company has minority equity interests in such
manner as to protect the interests of the Company. Such services have
historically been provided to the Company by Century. As consideration for the
services rendered and to be rendered under the Services Agreement, the Company
pays Century the annual sum of $1,000 and reimburses Century for all costs
incurred by Century or its affiliates (excluding the Company and its
subsidiaries) that are directly attributable to the design, construction,
management, operation and maintenance of the wireless telephone, paging and
related systems of the Company or to the performance by Century of its other
duties under the Services Agreement. For the three months ended August 31, 1998,
the Company has recorded expenses of $250 under the Services Agreement which is
recorded within payable to affiliate on the Company's consolidated balance sheet
at August 31, 1998. Century has entered into an agreement with Acquisition
pursuant to which it has agreed to terminate the Services Agreement as of the
effective date of the Merger.
During the three months ended August 31, 1997, the Company purchased 262,000
shares of its Class A Common Stock in the open market for an aggregate purchase
price of $4,192 pursuant to previous authorizations by the Company's Board of
Directors. These shares were accounted for as treasury shares.
11
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During the three months ended August 31, 1998, the Company has not purchased any
additional shares of its Class A Common Stock in the open market.
In September 1998, the commonwealth of Puerto Rico sustained damage as a result
of the effects of Hurricane Georges. The Company is currently in the process of
evaluating the extent of damage to its Puerto Rico network infrastructure and
the impact the Hurricane will have on the Company's Puerto Rico service revenue
during the second quarter ended November 30, 1998. While the Company is
continuing to evaluate the full extent of the hurricane's impact, based on
insurance coverage currently maintained, the Company does not believe it will
incur significant losses as a result of the effects of the damage caused by
Hurricane Georges.
NOTE 8. NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 129, "Disclosure of Information about Capital
Structures," Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" and Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" in 1997,
and Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" in 1998. Additionally, during
1998, the AICPA's Accounting Standards Executive Committee issued Statement of
Position (SOP) 98-5 "Reporting on the Cost of Start-up Activities". The Company
believes these Statements will not have a material impact on the consolidated
financial statements of the Company when adopted.
NOTE 9. SEGMENT INFORMATION
The Company's consolidated financial statements include two distinct business
segments. The Domestic Wireless telephone segment ("Domestic") owns, operates
and invests in wireless telephone systems in the domestic United States. The
Company's Puerto Rico telephone segment includes the accounts of Centennial
Puerto Rico Wireless Corporation ("Wireless" or the "Puerto Rico Wireless
Telephone System"). Wireless is wholly owned by the Company. Wireless began
providing wireless telephone service in Puerto Rico on December 12, 1996 and
participates in the alternative access business in Puerto Rico pursuant to the
FCC's requirements for interstate service and pursuant to an authorization
issued to Wireless in December 1994 by the Public Service Commission of the
Commonwealth of Puerto Rico for intrastate service. Wireless began providing
competitive access service in September 1997.
12
<PAGE>
<PAGE>
Information about the Company's operations in its two business segments for the
three months ended August 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
Three Months Ended August 31,
-----------------------------
1998 1997
--------- ---------
<S> <C> <C>
Gross revenue:
Domestic $ 53,902 $ 44,516
Puerto Rico 23,544 7,673
--------- ---------
$ 77,446 $ 52,189
========= =========
Operating income (loss):
Domestic $ 8,357 $ 2,720
Puerto Rico (1,526) (5,512)
--------- ---------
$ 6,831 $ (2,792)
========= =========
Net income (loss):
Domestic $ 10,035 $ 847
Puerto Rico (4,380) (7,633)
--------- ---------
$ 5,655 $ (6,786)
========= =========
Assets, at end of period:
Domestic $ 724,804 $ 752,729
Puerto Rico 219,134 163,740
Elimination (93,182) (70,100)
--------- ---------
$ 850,756 $ 846,369
========= =========
Depreciation and amortization:
Domestic $ 20,755 $ 19,974
Puerto Rico 11,049 5,088
--------- ---------
$ 31,804 $ 25,062
========= =========
Capital expenditures:
Domestic $ 8,204 $ 5,618
Puerto Rico 12,150 29,141
--------- ---------
$ 20,354 $ 34,759
========= =========
</TABLE>
The information provided below is that of Centennial Cellular Corp. (before the
consolidation of Puerto Rico), Puerto Rico, and the Company's consolidated
information.
13
<PAGE>
<PAGE>
NOTE 9- CONTINUED
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
AUGUST 31, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Centennial
Cellular
Corp. before
Consolidation
of Puerto Rico Puerto Rico Eliminations Consolidated
-------------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 26,708 $ 2,677 $ - $ 29,385
Accounts receivable - net 30,696 11,091 - 41,787
Inventory - phones and accessories 9,108 1,373 - 10,481
Prepaid expenses and other
current assets 1,875 396 - 2,271
---------- ----------- ---------------- ---------
Total current assets 68,387 15,537 - 83,924
Property, plant & equipment - net 130,089 135,041 - 265,130
Investment in Puerto Rico, at cost 90,100 - (90,100) -
Equity investments in wireless
telephone systems - net 81,441 - - 81,441
Debt issuance costs - net 5,226 2,774 - 8,000
Cellular telephone licenses - net 223,126 - - 223,126
Personal communications services
licenses - net - 60,043 - 60,043
Goodwill - net 121,973 - - 121,973
Other assets - net 4,462 5,739 (3,082) 7,119
----------- ----------- -------------- ----------
$ 724,804 $ 219,134 $ (93,182) $ 850,756
=========== ========== ============== ==========
</TABLE>
14
<PAGE>
<PAGE>
NOTE 9. CONTINUED
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
(CONTINUED)
AUGUST 31, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Centennial Cellular
Corp. before
Consolidation
of Puerto Rico Puerto Rico Eliminations Consolidated
-------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 3,568 $ 7,018 $ -- $ 10,586
Accrued expenses and other
current liabilities 54,798 22,382 -- 77,180
Payable to affiliate 250 30 -- 280
--------- --------- --------- ---------
Total current liabilities 58,616 29,430 -- 88,046
Long-term debt 350,000 150,000 -- 500,000
Deferred liability -- 3,082 (3,082) --
Deferred income taxes 27,015 -- -- 27,015
Convertible redeemable preferred stock 186,287 -- -- 186,287
Second series convertible
redeemable preferred stock 7,252 -- -- 7,252
Common stockholders' equity:
Common stock, par value $.01 per share:
Class A 167 -- -- 167
Class B 105 -- -- 105
Additional paid-in capital 353,915 90,100 (90,100) 353,915
Other (33,448) -- -- (33,448)
Accumulated deficit (225,105) (53,478) -- (278,583)
--------- --------- --------- ---------
Total common stockholders'
equity 95,634 36,622 (90,100) 42,156
--------- --------- --------- ---------
$ 724,804 $ 219,134 $ (93,182) $ 850,756
========= ========= ========= =========
</TABLE>
15
<PAGE>
<PAGE>
NOTE 9. CONTINUED
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
THREE MONTH PERIOD ENDED AUGUST 31, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Centennial
Cellular
Corp. before
consolidation
of Puerto Rico Puerto Rico Eliminations Consolidated
<S> <C> <C> <C> <C>
Revenue $ 53,902 $ 23,544 $ - $ 77,446
-------------- ------------ ----------- ----------
Costs and expenses:
Cost of equipment sold 3,881 652 - 4,533
Cost of services 6,104 4,278 - 10,382
Selling, general & administrative 14,805 9,091 - 23,896
Depreciation and amortization 20,755 11,049 - 31,804
-------------- ----------- ----------- ---------
45,545 25,070 - 70,615
-------------- ----------- ----------- ---------
Operating income (loss) 8,357 (1,526) - 6,831
-------------- ------------ ----------- ---------
Income from equity investments 3,649 - - 3,649
Gain on sale of assets 9,556 - - 9,556
Interest expense 8,277 2,854 - 11,131
-------------- ----------- ----------- ---------
Income (loss) before income tax
expense and minority interest 13,285 (4,380) - 8,905
Income tax expense 3,008 - - 3,008
-------------- ----------- ----------- ---------
Income (loss) before minority interest 10,277 (4,380) - 5,897
Minority interest in income
of subsidiaries (242) - - (242)
-------------- ----------- ---------- ---------
Net income (loss) $ 10,035 $ (4,380) $ - $ 5,655
============== =========== ========== =========
</TABLE>
16
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information contained in this Part I, Item 2 updates, and should be read in
conjunction with, information set forth in Part II, Items 7 and 8, in the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1998, in
addition to the interim consolidated financial statements and accompanying notes
presented in Part I, Item 1 of this Form 10-Q.
RESULTS OF OPERATIONS (Amounts in thousands, except subscriber, pop and share
data)
On July 2, 1998, the Company and Acquisition entered into the Merger Agreement
providing for the Merger. Centennial will continue as the Surviving Corporation
in the Merger.
Subject to the effects of proration, pursuant to the Merger Agreement,
outstanding Class A Common Stock will be converted into the right to receive
$43.50 per share in cash or to receive common shares of the Surviving
Corporation representing up to 7.1% of the Surviving Corporation Shares
outstanding immediately after the Merger. Class B Common Stock will be converted
into the right to receive $43.50 per share in cash; provided, that if the
aggregate number of Surviving Corporation Shares elected to be received by
Centennial's existing stockholders is less than 7.1% of the common shares of
the Surviving Corporation outstanding immediately after the Merger, then a
number of Class B Common Stock equal to the pro rata portion of such shortfall
will be converted into Surviving Corporation Shares. All outstanding
Redeemable Preferred Stock will be converted into the right to receive $43.50
per share in cash on an as converted basis.
Because existing holders of common stock of the Company must receive in the
Merger an amount of Surviving Corporation Shares equal to 7.1% of the common
shares of the Surviving Corporation outstanding immediately after the Effective
Time, stockholders who do not elect to receive any shares may, due to proration,
be required to receive some Surviving Corporation Shares. In addition,
stockholders who elect to receive shares may, due to proration, receive
Surviving Corporation Shares and receive cash in amounts which vary from the
amounts such holders elected.
Pursuant to the Merger Agreement, it is anticipated that each Option granted
under the Company's Option Plans will be exercised or canceled pursuant to its
terms or in exchange for a cash amount equal to the difference between $43.50
and the exercise price of the Option prior to the Effective Time. Each Option
that is not exercised or canceled will remain outstanding immediately following
the Effective Time and such Options will be subject to adjustment pursuant to
the terms of the Option Plans.
In connection with the execution of the Merger Agreement, Century, the Company's
principal stockholder, entered into the Stockholder Agreement, dated July 2,
1998, with Acquisition. Pursuant to the Stockholder Agreement, Century, which
has an approximate 33% Common Stock interest and, through ownership of the
Company's Class B Common Stock which has disproportionate votes per share (15
votes per share), an approximate 74% voting interest in the Company at August
31, 1998, agreed to vote its shares in favor of the Merger so long as the Merger
Agreement remains in effect. Because Century agreed to approve the Merger by
written consent in lieu of meeting, and controls, on a fully diluted basis, more
than a majority of the outstanding votes of the Company required to approve the
Merger, no further vote is necessary to approve the Merger.
17
<PAGE>
<PAGE>
Pursuant to the Merger Agreement, from the date of the Merger Agreement to the
Effective Time, the Company shall conduct its business in the ordinary course
consistent with past practice and shall use reasonable efforts to preserve
intact its business organizations and relationships with third parties and to
keep available the services of its present officers and key employees. All
statements contained in this Quarterly Report, including discussions of the
Company's plans and strategies, are subject to the Company's covenants regarding
the conduct of its business pending the Merger.
The consummation of the Merger is subject to certain conditions, including,
without limitation, the Company obtaining a final order from the FCC approving
the transfer of control of the Company to WCAS VIII and its affiliates and
Acquisition obtaining financing substantially on the terms contemplated by the
commitment letters it received in connection with the Merger Agreement. The
Merger Agreement provides for the payment of certain fees and the reimbursement
of certain expenses to Acquisition in the event of a termination of the Merger
Agreement under certain circumstances. The Company completed filing the
applications seeking FCC transfer approvals of the Merger. The last of these
applications that are material to the transaction was placed on public notice by
the FCC on August 17, 1998 and was eligible for grant beginning September 17,
1998. Although there can be no assurance that these applications will be granted
or acted on promptly, the Company has no reason to believe that the applications
will not be approved in a timely manner. In addition, Acquisition and the
Company submitted their Notification and Report Forms with respect to the Merger
on September 11, 1998 and on September 25, 1998, the Company's request for early
termination of the waiting period under the HSR Act was granted.
The Company is in a highly competitive business, competing with other providers
of wireless telephone service and providers of telephone services using
different and competing technologies. Since August 1988, the Company has
acquired cellular licenses for twenty-nine wireless telephone markets in the
United States that it owns and manages (the "Domestic Wireless Telephone
Systems"). In addition, the Company acquired one of two Metropolitan Trading
Area ("MTA") licenses to provide broadband personal communications services
("PCS") in the Commonwealth of Puerto Rico and the U.S. Virgin Islands
("Wireless" or the "Puerto Rico Wireless Telephone System"). The Company also
participates in the alternative access business in Puerto Rico. Wireless is
wholly owned by the Company. On December 12, 1996, the Company began providing
wireless telephone services in Puerto Rico. There is on-going construction to
complete the buildout of the Puerto Rico Wireless Telephone System. The Puerto
Rico Wireless Telephone System accounted for $23,544 in revenue for the three
months ended August 31, 1998 and had approximately 85,900 subscribers as of
August 31, 1998.
The Company must continue to adapt its business to technological and economic
changes. It is dependent on its ability to increase its number of subscribers,
net of cancellations, and to achieve acceptable revenue per subscriber levels in
increasingly competitive markets. The Company expects net losses to continue
until such time as its wireless telephone operations, the Puerto Rico
telecommunications network and related investments associated with the
acquisition, construction and development of its wireless telephone systems and
Puerto Rico telecommunications network plant generate sufficient earnings to
offset the costs of such activities. There can be no assurance that
profitability will be achieved in the foreseeable future.
18
<PAGE>
<PAGE>
The Company is highly leveraged. The Company requires substantial capital to
operate, construct, expand and acquire wireless telephone systems, to build out
its Puerto Rico telecommunications network, and to pay debt service and
preferred stock dividends. Historically, the Company has been dependent upon
borrowings, the issuance of its equity securities and operating cash flow to
provide funds for such purposes. There can be no assurance that the Company will
continue to have access to such sources of funds.
In connection with the Merger, Acquisition has received a commitment from a
third party for financing for Acquisition and certain existing and future
subsidiaries of the Company in the aggregate amount of approximately $1,600,000
in the form of senior secured credit facilities and an unsecured bridge loan.
Additionally, an affiliate of WCAS VIII has agreed to purchase approximately
$150,000 aggregate amount of subordinated notes of the Surviving Corporation.
Finally, WCAS VIII and other equity investors have agreed to purchase
approximately $350,000 of common stock of the Surviving Corporation. It is
anticipated that this funding will be used to pay the merger consideration
described above, repay or repurchase indebtedness of the Company and pay related
fees and expenses. Additionally, pursuant to the Merger Agreement, the Company
has agreed that, upon the request of Acquisition, it will commence offers to
repurchase its two outstanding issuances of public debt (the "Debt Offers").
Pursuant to the Merger Agreement and at the request of Acquisition, the Company
commenced the Debt Offers and consent solicitations with respect to these two
public debt issuances on September 8, 1998. Through September 23, 1998,
approximately 99% of the Company's public debt was tendered and consents were
delivered to the Company. As a condition to the closing of the Merger, the
Company must redeem its two public debt issuances of $350,000 in the aggregate,
prior to the closing date of the Merger. The estimated cost to the Company of
the redemption, including accrued interest, is approximately $406,000 based upon
current market conditions, U.S. treasury yields as of September 29, 1998 and an
assumed payment date of October 15, 1998. The Company's obligation to accept for
purchase, and to pay for, the public debt validly tendered is subject to certain
conditions, including the consumation of the Merger, which, in turn, is subject
to certain other conditions.
The Company anticipates that as part of the financing necessary to effect the
Merger, certain of its subsidiaries will issue approximately $340,000 of debt
securities to qualified institutional buyers under two private placement
offerings pursuant to Rule 144A and Regulation S of the Securities Act of 1933,
as amended. There can be no assurance that Acquisition will receive the funding
referred to above and in the event that Acquisition must seek alternative
financing to consummate the Merger, there can be no assurance that it will be
able to secure alternative financing on terms no less favorable than the terms
of the above commitments. Additionally, there can be no assurance that the Debt
Offers will be consummated.
On August 21, 1998, the Company filed a preliminary Information Statement with
the SEC relating to the Merger Transaction and anticipates filing a Registration
Statement on Form S-4 which incorporates this information statement in the near
future. The Information Statement/Prospectus also constitutes the prospectus of
the Surviving Corporation for the issuance of shares of common stock in
connection with the transactions contemplated by the Merger Agreement.
19
<PAGE>
<PAGE>
Three Months ended August 31, 1998 and August 31, 1997
Revenue for the three months ended August 31, 1998 was $77,446, an increase of
$25,257 or 48% over revenue of $52,189 for the three months ended August 31,
1997, reflecting growth in subscriptions to wireless telephone service, of
$28,850, partially offset by reductions in rates charged to subscribers of
$4,362. Secondarily, the increase reflects increased roamer usage of $5,229,
partially offset by lower reciprocal roaming rates with other wireless carriers
of $4,460. The Puerto Rico Wireless Telephone System accounted for $15,871 or
63% of the total increase in revenue. This increase reflects subscriber growth
of $19,060, partially offset by subscriber rate reductions of $3,189.
Revenue from the sale of wireless telephones and accessories to subscribers for
the three months ended August 31, 1998 increased by $146 to $1,255 or 13% as
compared to the three months ended August 31, 1997. The increase in revenue was
due to a larger number of telephone units sold during the current three-month
period. The Puerto Rico Wireless Telephone System accounted for $317 and $300 of
the equipment sales (primarily sales of accessories) for the three months ended
August 31, 1998 and 1997, respectively.
Continued growth in revenue is dependent upon increased levels of wireless
subscriptions and maintenance of the current subscriber base and the average
revenue per subscriber. Wireless telephone subscribers at August 31, 1998 were
approximately 354,100, an increase of 53% from the 231,600 subscribers at August
31, 1997. Increases from new activations of 205,200 were offset by subscriber
cancellations of 82,700. The cancellations experienced by the Company are
primarily the result of competitive factors. The Puerto Rico Wireless Telephone
System had approximately 85,900 and 32,800 subscribers at August 31, 1998, and
1997, respectively, and, as a result, accounted for 43% of the net increase in
subscriptions.
Consolidated revenue per subscriber per month, based upon an average number of
subscribers for the three months ended August 31, 1998, was $73 as compared to
$79 for the three months ended August 31, 1997. The average monthly revenue per
subscriber was approximately $68 in the domestic markets, as compared to
approximately $88 in the Company's Puerto Rico Wireless Telephone System. The
Company expects that per subscriber revenue will continue to be impacted by
competition, the expansion of its local service calling areas and lower
reciprocal per minute roaming rates with other wireless carriers.
Cost of services during the three months ended August 31, 1998 was $10,382, an
increase of $2,500 or 32% from the three months ended August 31, 1997. The
increase was primarily due to the continued growth of PCS telephone service in
Puerto Rico. Cost of services for the Puerto Rico Wireless Telephone System was
$4,278 and $2,154 for the three months ended August 31, 1998 and 1997,
respectively. Secondarily, the variable costs associated with a larger revenue
and subscription base and increased coverage areas resulting from the continued
expansion of the Company's network accounted for approximately $376 of the
increase.
Cost of equipment sold during the three months ended August 31, 1998
was $4,533, an increase of $460 or 11% as compared to the three months ended
August 31, 1997. Domestic costs have declined as a result of a general decline
in the wholesale prices of telephones of approximately 32%. Cost of equipment
sold (primarily accessory equipment) for the Puerto Rico Wireless Telephone
System was
20
<PAGE>
<PAGE>
$652 and $159 for the three months ended August 31, 1998 and 1997,
respectively.
Selling, general and administrative expenses rose to $23,896 for the three
months ended August 31, 1998, an increase of $5,932 or 33% above the expenses of
$17,964 for the three months ended August 31, 1997. The Company's managerial,
customer service and sales staff increased approximately 26% to accommodate the
larger subscription and revenue base, anticipated growth of its wireless
telephone business and the continued growth of telephone services in Puerto
Rico. Selling, general and administrative expenses for the Puerto Rico Wireless
Telephone System were $9,091 and $5,784 for the three months ended August 31,
1998 and 1997, respectively.
The Company anticipates continued increases in the cost of services and selling,
general and administrative expenses as the growth of its existing wireless
telephone business continues. In addition, the Company expects that the
continued development of its markets as well as its participation in the Puerto
Rico telecommunications business will contribute to a continued increase in the
level of expenses.
Depreciation and amortization for the three months ended August 31, 1998 was
$31,804, an increase of $6,742 or 27% over the three months ended August 31,
1997. The increase resulted from capital expenditures made during the three
months ended August 31, 1998 and during the fiscal year ended May 31, 1998 in
connection with the development and network expansion of the Company's wireless
telephone systems. Depreciation and amortization related to the Puerto Rico
Wireless Telephone System accounted for $5,961 or 88% of the increase.
As a result of the factors noted above, the operating income for the three
months ended August 31, 1998 was $6,831, an increase of $9,623 from the loss of
$2,792 for the three months ended August 31, 1997. The operating loss for the
Puerto Rico Wireless Telephone System was $1,526 and $5,512 for the three months
ended August 31, 1998 and 1997, respectively.
Interest expense was $11,131 for the three months ended August 31, 1998, an
increase of $1,090 or 11% from the three months ended August 31, 1997. The
increase in interest expense reflects additional borrowings of $50,500 for
working capital, debt service and capital expenditures related to the buildout
of the Puerto Rico Wireless Telephone System's PCS network infrastructure and
the purchase of PCS telephones. The average debt outstanding during the three
months ended August 31, 1998 was $501,630, an increase of $60,527 as compared to
the average debt level of $441,103 during the three months ended August 31,
1997. The increase in average debt outstanding is principally related to
borrowings for the Puerto Rico Wireless Telephone System. The Company's weighted
average interest rate decreased to 9.2% for the three months ended August 31,
1998 from 9.7% for the three months ended August 31, 1997.
After income attributable to minority interests in subsidiaries for the three
months ended August 31, 1998, pretax income was $8,663 as compared to a pretax
loss of $8,757 for the three months ended August 31, 1997. The income tax
expense of $3,008 for the three months ended August 31, 1998 resulted primarily
from the pre-tax gain of $9,556 the Company recognized on the sale of its
Investment Interest in the Coconino, Arizona RSA during the three months ended
August 31, 1998.
21
<PAGE>
<PAGE>
The net income of $5,655 for the three months ended August 31, 1998 represents
an increase of $12,441 from the net loss of $6,786 for the three months ended
August 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended August 31, 1998, earnings exceeded fixed charges by
$8,905. Fixed charges consist of interest expense, including amortization of
debt issue costs and the portion of rents deemed representative of the interest
portion of leases. The amount by which earnings exceeded fixed charges reflects
non-cash charges of $31,804 relating to depreciation and amortization.
During the three months ended August 31, 1998, the Company made capital
expenditures of $20,354, primarily to continue the construction of its Puerto
Rico Wireless Telephone System and its Domestic Wireless Telephone Systems to
expand the coverage areas of existing properties and to upgrade its cell sites
and call switching equipment. Capital expenditures for the Company's Puerto Rico
Wireless Telephone System were $12,150 for the three months ended August 31,
1998, representing 60% of the Company's total capital expenditures. The Puerto
Rico Wireless Telephone System capital expenditures included $4,981 to continue
the buildout of the Company's PCS network infrastructure and $7,169 to purchase
telephone units which remain the property of the Company while in use by
subscribers. The Company's future commitments for property and equipment include
the addition of cell sites to expand coverage and enhancements to the existing
infrastructure of its wireless telephone systems. During fiscal 1999, the
Company anticipates capital expenditures in the Domestic Wireless Telephone
Systems of approximately $40,000. The Company currently estimates that the cost
to continue the build-out of its Puerto Rico network infrastructure through
fiscal 1999 will be approximately $50,000, an increase of approximately $20,000
above prior estimates. This increase is an acceleration of expenditures that
would otherwise take place in future years and is related to the growth the
Company has experienced in its Puerto Rico Wireless Telephone System. It is
anticipated that the Company will seek various sources of external financing
including, but not limited to, bank financing, joint ventures, partnerships and
placement of debt or equity securities of the Company.
Centennial Puerto Rico Wireless Corporation , a wholly owned subsidiary of the
Company ("CPRW"), has a four year, $180,000 revolving credit facility, as
amended (the "Puerto Rico Credit Facility"). As of August 31, 1998, the Puerto
Rico Credit Facility had $150,000 outstanding. The Commitment available under
the Puerto Rico Credit Facility terminates on February 28, 2001. Quarterly
repayments of amounts outstanding at the termination date are to be made over a
five-year period beginning May 31, 2001, as specified in the Puerto Rico Credit
Facility, as amended. The interest rate payable by CPRW on borrowings under the
Puerto Rico Credit Facility is based, at the election of CPRW, on (a) the Base
Rate, as defined, plus a margin of 1.50% or (b) the Eurodollar Base Rate, as
defined, plus a margin of 2.50%, adjusted for the maintenance of certain
specified ratios, as applicable.
As of August 31, 1998, no amounts were outstanding under the Company's $75,000
domestic revolving credit facility (the "Domestic Credit Facility" ). The
commitment available under the Domestic Credit Facility terminates on January
31, 2001 at which point all amounts outstanding are due and payable. The
interest rate payable on the Domestic Credit Facility is based, at the election
of the Company, on (a) the Base Rate,as defined, plus a margin of 2% or (b) the
Eurodollar Base Rate, as defined, plus a margin of 3%.
22
<PAGE>
<PAGE>
The Company also has two outstanding public issuances of debt securities, its
$250,000 8 7/8% Senior Notes due 2001 and its $100,000 10 1/8% Senior Notes due
2005, which bear interest at the rate of 8 7/8% per annum and 10 1/8% per annum,
respectively. Pursuant to the Merger Agreement and at the request of
Acquisition, the Company commenced the Debt Offers on September 8, 1998. Through
September 23, 1998, approximately 99% of the Company's public debt was tendered
to the Company. As a condition to the closing of the Merger, the Company must
complete the Debt Offers prior to the closing date of the Merger. However, there
can be no assurance that the Debt Offers will be completed.
The Domestic Credit Facility, the Puerto Rico Credit Facility and the Company's
public debt instruments require the maintenance of certain financial and
operating covenants, restrict the use of borrowing, limit the incurrence of
additional indebtedness and limit the ability to pay dividends and management
fees. The Company and CPRW were in compliance with all covenants of their debt
instruments at August 31,1998.
The Company has outstanding two classes of preferred stock, which are held by
Citizens Utilities Company ("Citizens") and Century, respectively. The preferred
stock issues carried no cash dividend requirements through August 30, 1996 but
the shares accreted liquidation preference and redemption value at the rate of
7.5% per annum, compounded quarterly until then. The fully accreted liquidation
preference and redemption value of the shares held by Citizens and Century at
August 30, 1996 was $186,287 and $7,252, respectively. Beginning September 1,
1996, the holders of the preferred stock were eligible to receive cash dividends
at the rate of 8.5% per annum, when and as declared by the Board of Directors of
the Company, in its discretion. Assuming no change in the number of shares of
such classes outstanding, the annual dividend that may be declared and made
payable, with respect to the preferred stock is $15,834 and $616, respectively.
Both classes of preferred stock are subject to mandatory redemption in fiscal
2007. Any unpaid dividends continue to accumulate without additional cost to the
Company. During the three months ended August 31, 1998 and 1997, the Company
paid quarterly cash dividends with respect to both classes of preferred stock
totaling $0 and $4,113, respectively. The Company will determine the timing,
amount, or distribution (if any) of additional preferred stock dividends.
In order to meet its obligations with respect to its operating needs, capital
expenditures, debt service and preferred stock obligations, it is important that
the Company continue to improve operating cash flow. In order to do so, the
Company's revenue must increase at a faster rate than operating expenses.
Increases in revenue will be dependent upon continuing growth in the number of
subscribers and maximizing revenue per subscriber. The Company has continued the
development of its managerial, administrative and marketing functions, and is
continuing the construction of wireless systems in its existing and recently
acquired markets in order to achieve these objectives. There is no assurance
that growth in subscribers or revenue will occur. In addition, the Company's
participation in the Puerto Rico telecommunications business has been, and is
expected to continue to be, capital intensive. Further, due to the start-up
nature of the Puerto Rico telecommunications operations, the Company expects
that it will require additional cash investment to fund its operations over the
next several years. The Puerto Rico telecommunications operations has been, and
is expected to continue to be, highly competitive with the two existing wireless
telephone providers, as well as the other Puerto Rico telecommunications license
holders. There is no assurance that the Puerto Rico telecommunications
operations will generate cash flow or reach profitability. Even if the Company's
operating cash flow increases, it is anticipated that cash generated from the
Company's wireless telephone systems will not be sufficient in the next several
years to cover interest, the preferred stock dividends that may be declared and
made payable and required capital
23
<PAGE>
<PAGE>
expenditures.
The Company anticipates that shortfalls in cash flow may be made up either
through debt and equity issuances or additional financing arrangements that may
be entered into by the Company. It is anticipated that the Company's future
funding needs will be met by the refinancing arrangements that are expected to
be made in connection with the Merger, although there is no assurance that this
refinancing will be obtained. Based upon current market conditions and its
current capital structure, the Company believes that cash flows from operations
and funds from currently available credit facilities will be sufficient to
enable the Company to meet required cash commitments through the next
twelve-month period.
The Company has filed a shelf registration statement with the Securities and
Exchange Commission (the "SEC") for up to 8,000,000 shares of its Class A Common
Stock that may be offered from time to time in connection with acquisitions. The
registration statement was declared effective by the SEC on July 14, 1994. As of
September 23, 1998, 4,239,231 shares remain available for issuance under this
shelf registration .
The Company has filed a shelf registration statement with the SEC for the
issuance of $500,000 of the Company's debt securities which was declared
effective by the SEC on April 6, 1995. The debt securities may be issued from
time to time in series on terms to be specified in one or more prospectus
supplements at the time of the offering. If so specified with respect to any
particular series, the debt securities may be convertible into shares of the
Company's Class A Common Stock. As of September 23, 1998, $400,000 remained
available for issuance under this shelf registration.
ACQUISITIONS, EXCHANGES AND DISPOSITIONS
The Company's primary acquisition strategy is to acquire controlling ownership
interests in wireless systems serving markets contiguous or proximate to its
current markets. The Company's strategy of clustering its wireless operations in
contiguous and proximate geographic areas enables it to achieve operating and
cost efficiencies as well as joint advertising and marketing benefits.
Clustering also allows the Company to offer its subscribers more areas of
uninterrupted service as they travel through an area or state. In addition to
expanding its existing clusters, the Company may also seek to acquire interests
in wireless systems in other geographic areas. The Company may also pursue other
communications businesses related to its wireless telephone and other mobile
service operations, as well as other communications businesses it determines to
be desirable. The consideration for such acquisitions may consist of shares of
stock, cash, assumption of liabilities or a combination thereof.
On June 8, 1998, the Company disposed of its Investment Interest in the
Coconino, Arizona RSA representing approximately 43,500 Net Pops, for $13,500 in
cash. During the three months ended August 31, 1998, the Company recorded a gain
of $9,556 in relation to the sale of this Investment Interest.
COMMITMENTS AND CONTINGENCIES
During the three months ended August 31, 1997, the Company directly purchased
262,000 shares of its Class A Common Stock in the open market for an aggregate
purchase price of $4,192 pursuant to previous authorizations by the Company's
Board of Directors. These shares were accounted for as treasury shares. During
the three months ended August 31, 1998. the Company did not directly purchase
any additional
24
<PAGE>
<PAGE>
shares of its Class A Common Stock in the open market.
The Company is controlled by Century. Century has an approximate 33% Common
Stock interest and, through ownership of the Company's Class B Common Stock
which has disproportionate votes per share (15 votes per share), an approximate
74% voting interest in the Company at August 31, 1998. The Company and Century
entered into a Services Agreement, effective August 30, 1996 (the "Services
Agreement"), pursuant to which Century, through its personnel, provides such
design, construction, management, operational, technical and maintenance
services for the wireless telephone, paging and related systems owned and
operated by the Company. Such services also include providing all the services
necessary for the monitoring, to the extent possible, of the activities of the
partnerships in which the Company has minority equity interests in such manner
as to protect the interests of the Company. Such services have historically been
provided to the Company by Century. As consideration for the services rendered
and to be rendered under the Services Agreement, the Company pays Century the
annual sum of $1,000 and reimburses Century for all costs incurred by Century or
its affiliates (excluding the Company and its subsidiaries) that are directly
attributable to the design, construction, management, operation and maintenance
of the wireless telephone, paging and related systems of the Company or to the
performance by Century of its other duties under the Services Agreement. For the
three months ended August 31, 1998, the Company has recorded expenses of $250
under the Services Agreement which is recorded within payable to affiliate on
the Company's consolidated balance sheet at August 31, 1998. Pursuant to the
Stockholder Agreement with Acquisition, Century has agreed to terminate the
Services Agreement as of the effective date of the Merger.
In September 1998, the commonwealth of Puerto Rico sustained damage as a result
of the effects of Hurricane Georges. The Company is currently in the process of
evaluating the extent of damage to its Puerto Rico network infrastructure and
the impact the Hurricane will have on the Company's Puerto Rico service revenue
during the second quarter ended November 30, 1998. While the Company is
continuing to evaluate the full extent of the hurricane's impact, based on
insurance coverage currently maintained, the Company does not believe it will
incur significant losses as a result of the effects of the damage caused by
Hurricane Georges.
During fiscal 1998, the Company began a review of its computer systems and
related software to identify systems and software which might malfunction due to
a misidentification of the Year 2000. A committee consisting of members of
senior management from various disciplines within the Company has been formed
and is meeting regularly to discuss the steps that must be taken to deal with
any potential Year 2000 issues. The Company is utilizing both internal and
external resources to identify, correct or reprogram, and test systems for Year
2000 readiness.
Most of the Company's customer-related computer systems and data bases,
including its billing systems, are managed by third parties under contractual
arrangements. The Company has requested those third parties to advise the
Company as to whether they anticipate difficulties in addressing Year 2000
problems and if so, the nature of such difficulties. The Company is also working
with others in the industry using the same or similar systems to determine the
appropriate steps necessary to address the anticipated difficulties.
The Company is currently undertaking an inventory of all local equipment used in
the transmission and reception of all signals to identify items that need to be
upgraded or replaced. The Company is also
25
<PAGE>
<PAGE>
monitoring industry-wide efforts with respect to signal delivery to its
distribution plant and is working with others in the industry to address
potential solutions.
Management of the Company has not finally determined the cost associated with
its Year 2000 readiness efforts and the related potential impact on the
Company's results of operations. Amounts expended to date have not been
material. There can be no assurance that the systems of other companies on which
the Company relies will be converted in time or that any such failure to convert
by another company will not have an adverse effect on the Company's financial
condition or position.
After evaluating its internal compliance efforts as well as the compliance of
third parties as described above by the end of calendar year 1998, the Company
will develop during 1999 appropriate contingency plans to address situations in
which various systems of the Company, or of third parties with which the Company
does business, are not Year 2000 compliant.
The following tables sets forth (in thousands), for the periods indicated, the
Company's net cash provided by operating activities before interest payments
(net cash provided), the Company's principal uses of such cash and the cash
available for (required from) financing and investing activities.
<TABLE>
<CAPTION>
Three Months Ended August 31,
-------------------------------------------------------------
1998 1997
----------------------- -----------------------
Amount % Amount %
--------- ---------- -------- --------
<S> <C> <C> <C> <C>
Net cash provided by
operating activities $31,544 91.4% $20,290 91.2%
Interest paid 2,954 8.6 1,953 8.8
--------- ---------- -------- --------
Net cash provided $ 34,498 100.0% $ 22,243 100.0%
========= ========== ======== ========
Principal uses of cash:
Interest paid $ 2,954 8.6% $ 1,953 8.8%
Property, plant and equipment 20,354 59.0 34,759 156.2
--------- ---------- -------- --------
Total $ 23,308 67.6% $36,712 165.0%
========= ========== ======= ========
Cash available for (required from)
financing and investing activities $ 11,190 32.4% $(14,469) (65.0)%
========= ========== ======== ========
</TABLE>
Net cash provided by operating activities for the three months ended August 31,
1998 was sufficient to fund the Company's expenditures for property, plant and
equipment of $20,354.
26
<PAGE>
<PAGE>
The following table sets forth the primary cash flows provided by (used in)
financing and investing activities for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended August 31,
-------------------------------
1998 1997
-------- --------
<S> <C> <C>
Issuance of Class A Common Stock $ 10 $ 80
Proceeds from long-term debt - 25,500
Disposition of wireless telephone systems 13,500 -
Distributions received from equity investments 3,675 5,447
-------- --------
Cash available 17,185 31,027
Acquisition of other assets (2,200) (33)
Repayment of long-term debt (10,000) (5,000)
Debt issuance costs paid - (125)
Prepaid transaction costs (1,410) -
Dividends paid - (4,113)
Treasury stock purchases - (4,192)
-------- --------
Cash available for operations and capital expenditures $ 3,575 $ 17,564
======== ========
</TABLE>
* * * * *
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains or incorporates by reference forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Where any such forward-looking statement includes a statement of the assumptions
or bases underlying such forward-looking statement, the Company cautions that
assumed facts or bases almost always vary from actual results, and the
differences between assumed facts or bases and actual results can be material
depending upon the circumstances. Where, in any forward-looking statement, the
Company or its management expresses an expectation or belief as to future
results, there can be no assurance that the statement of expectation or belief
will result or be achieved or accomplished. The words "believe", "expect",
"estimate", "anticipate", "project" and similar expressions may identify
forward-looking statements.
Taking into account the foregoing, the following are identified as important
factors that could cause actual results to differ materially from those
expressed in any forward-looking statement made by, or on behalf of, the
Company: the Company's net losses and stockholders' equity; the capital
intensity of the wireless telephone business and the Company's debt structure;
the competitive nature of the wireless telephone industry; regulation; changes
and developments in technology; subscriber cancellations; restrictive covenants
and consequences of default contained in the Company's financing arrangements;
control by certain of the Company's stockholders and anti-takeover provisions;
the Company's opportunities for growth through acquisitions and investments;
operating hazards and uninsured risks; refinancing and interest rate exposure
risks; potential for changes in accounting standards; and capital calls
associated with
27
<PAGE>
<PAGE>
the Company's Investment Interests. A more detailed discussion of each of the
foregoing factors can be found in the Company's Annual Report on Form 10-K for
the Fiscal Year ended May 31, 1998 under the heading "CAUTIONARY STATEMENT FOR
PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995" in Item 7 of such Form 10-K. Other factors may be detailed
from time to time in the Company's filings with the SEC. The Company assumes no
obligation to update its forward-looking statements or to advise of changes in
the assumptions and factors on which they are based.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
28
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
There are no material pending legal proceedings, other than
routine litigation incidental to the business, to which the
Company or any of its subsidiaries is a party to or which any of
their property is subject.
ITEM 2. Changes in Securities
None
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Report on Form 8-K
Each exhibit identified below is filed as a part of this report.
a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
Exhibit 11 Statement re: computation of per share earnings
Exhibit 20.1 Offer to Purchase and Consent Solicitation,
dated as of September 8, 1998, whereby the
Registrant offers to purchase for cash and
solicitation of consents with respect to 8
7/8% Senior Notes due 2001 and 10 1/8% Senior
Notes due 2005 and Consent and Letter of
Transmittal, dated as of September 8, 1998,
to tender and to give consent in respect of 8
7/8% Senior Notes due 2001 and 10 1/8% Senior
Notes due 2005.
Exhibit 27 Financial data schedule (EDGAR filing
document only)
Exhibit 99.1 Press Release, dated as of September 8, 1998,
of the Registrant announcing Offer to
Purchase and Consent Solicitation for Senior
Notes.
Exhibit 99.2 Press Release dated as of September 25, 1998,
of the Registrant announcing the receipt of
requisite consents in the Tender
</TABLE>
29
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Offers and Consent Solicitations for the
Company's 8 7/8% Senior Notes Due 2001 and
the Company's 10 1/8% Senior Notes Due 2005.
</TABLE>
b) Reports on Form 8-K
None
30
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
October 9, 1998
CENTENNIAL CELLULAR CORP.
/S/ Scott N. Schneider
_________________________________________
Scott N. Schneider
Chief Financial Officer, Senior Vice
President and Treasurer
(Principal Financial Officer)
31
<PAGE>
<PAGE>
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
EXHIBIT TO FORM 10-Q
For the Three Months Ended August 31, 1998 and 1997
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------
August 31, August 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
Net Income (Loss) $ 5,655 $ (6,786)
Preferred stock dividends (4,113) (4,113)
--------------- ----------------
Income (loss) applicable to common shares $ 1,542 $ (10,899)
=============== ================
Average number of common shares and common
share equivalents outstanding
Average number of common shares
outstanding during this period 25,629,000 26,860,000
Add common share equivalents - Options
to purchase common shares - net 661,000 304,000
--------------- ----------------
Average number of common shares and common
share equivalents outstanding 26,290,000 (A) 27,164,000 (A)
=============== ================
Earnings (loss) per common share $ .06 (A) $ (.40)(A)
=============== ================
</TABLE>
(A) In accordance with SFAS 128, the inclusion of common share equivalents
in the computation of earnings per share need not be considered if the
reduction of earnings per share is anti-dilutive. Therefore, loss per
common share and common share equivalents as shown on the Consolidated
Statements of Operations for the periods presented do not include
certain common share equivalents as their effect is anti-dilutive.
32
<PAGE>
<PAGE>
OFFER TO PURCHASE AND CONSENT SOLICITATION
CENTENNIAL CELLULAR CORP.
OFFERS TO PURCHASE FOR CASH AND SOLICITATION OF CONSENTS
WITH RESPECT TO
8 7/8% SENIOR NOTES DUE 2001 AND
10 1/8% SENIOR NOTES DUE 2005
THE TENDER OFFERS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
WEDNESDAY, OCTOBER 14, 1998, UNLESS EXTENDED (THE 'TENDER OFFER EXPIRATION
DATE'). THE SOLICITATIONS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MONDAY, SEPTEMBER 21, 1998, UNLESS EXTENDED (THE 'SOLICITATION EXPIRATION
DATE'). HOLDERS OF THE NOTES MUST TENDER THEIR NOTES ON OR PRIOR TO THE TENDER
OFFER EXPIRATION DATE IN ORDER TO RECEIVE THE PURCHASE PRICE (AS DEFINED BELOW).
HOLDERS OF NOTES MUST TENDER THEIR NOTES AND PROVIDE THEIR CONSENTS (AS DEFINED
BELOW) ON OR PRIOR TO THE SOLICITATION EXPIRATION DATE IN ORDER TO RECEIVE THE
CONSENT PAYMENT (AS DEFINED BELOW). TENDERS MAY BE WITHDRAWN AND CONSENTS MAY BE
REVOKED AT ANY TIME PRIOR TO THE SOLICITATION EXPIRATION DATE, BUT NOT
THEREAFTER.
In connection with the proposed merger (the 'Merger') of Centennial
Cellular Corp., a Delaware corporation (the 'Company'), with CCW Acquisition
Corp., a Delaware corporation ('CCW') organized at the direction of Welsh,
Carson, Anderson & Stowe VIII, L.P., a Delaware limited partnership ('WCAS'),
the Company hereby offers to purchase for cash (each such offer, a 'Tender
Offer' and, collectively, the 'Tender Offers'), upon the terms and subject to
the conditions set forth in this Offer to Purchase and Consent Solicitation (as
it may be amended from time to time, the 'Offer to Purchase and Consent
Solicitation') and the related Consent and Letter of Transmittal (the 'Consent
and Letter of Transmittal' and together with the Offer to Purchase and Consent
Solicitation, the 'Offer Documents'), all of its debt securities listed below
(the 'Notes') for a cash purchase price with respect to each series of Notes as
determined below. Upon consummation of the Merger, the Company (also referred to
as the 'Surviving Corporation') will be the surviving corporation and
approximately 92.9% of its outstanding common stock will be owned by WCAS and
certain other investors.
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE APPLICABLE APPLICABLE
AGGREGATE PRINCIPAL SECURITY REFERENCE REFERENCE U.S. REFERENCE FIXED
CUSIP NO. AMOUNT OUTSTANDING DESCRIPTION DATE/PRICE TREASURY SECURITY PAGE SPREAD
<S> <C> <C> <C> <C> <C> <C>
6 3/8% U.S.
8 7/8% Senior Notes Treasury due
15133VAA7 $250,000,000 due 2001 5-1-99/105.25% 4-30-99 PX3 50.0bps
6 1/2% U.S.
10 1/8% Senior Treasury due
15133VAB5 $100,000,000 Notes due 2005 5-15-05/100% 5-15-05 PX6 75.0bps
<CAPTION>
CONSENT
CUSIP NO. PAYMENT
<S> <C>
15133VAA7 $25.00
15133VAB5 $25.00
</TABLE>
The total consideration with respect to each series of Notes tendered
pursuant to the Tender Offers will be a price calculated in accordance with the
standard market practice as described in Appendices A, B and C to this Offer to
Purchase and Consent Solicitation, based on the assumption that each series of
Notes will be redeemed in full on the Applicable Reference Date as specified
above (the 'Applicable Reference Date') (using the then applicable Redemption
Price) and the yield to the Applicable Reference Date (the 'Tender Offer Yield')
equal to the sum of (x) the yield on the applicable U.S. Treasury security
specified above for each series of Notes as calculated by the Dealer Manager (as
defined below) in accordance with standard market practice, based on the bid
side price for such U.S. Treasury security specified above at 2:00 p.m. on the
second business day immediately preceding the Tender Offer Expiration Date (the
'Price Determination Date'), as displayed on the relevant Bloomberg Page of the
Bloomberg Government Pricing Monitor (or any recognized quotation source
selected by the Dealer Manager in its sole discretion if the Bloomberg
Government Pricing Monitor is not available or is manifestly erroneous), plus
(y) a number of basis points as specified above for each series of Notes (such
price being rounded to the nearest cent per $1,000 principal amount), which
amount includes the Consent Payment (the 'Total
(Cover continued on next page)
------------------------
The Dealer Manager for the Tender Offers and the Solicitation Agent for the
Solicitations is:
MERRILL LYNCH & CO.
------------------------
September 8, 1998
<PAGE>
<PAGE>
(Cover continued from previous page)
Consideration'). The Total Consideration, minus the Consent Payment of $25 (the
'Consent Payment'), is the 'Purchase Price.' In either the case of the Total
Consideration or the Purchase Price, accrued and unpaid interest on such $1,000
principal amount will be paid up to, but not including, the date of payment for
Notes accepted for purchase (the 'Payment Date').
In conjunction with the Tender Offers, the Company hereby solicits (with
respect to each series of Notes, a 'Solicitation,' and collectively, the
'Solicitations') consents (the 'Consents') from Holders of not less than a
majority in aggregate principal amount outstanding of each series of Notes not
owned by the Company or its affiliates (the 'Requisite Consents') to the
Proposed Amendments (the 'Proposed Amendments') to the indenture and supplements
thereto under which each such series of Notes was issued (the 'Indenture' for
each such series and, together with all of the indenture supplements under which
the other Notes were issued, the 'Indentures'). The Proposed Amendments with
respect to each series of Notes would eliminate or modify certain of the
covenants in the Indentures. If a Holder's Notes are not properly tendered
pursuant to the Tender Offers on or prior to the Solicitation Expiration Date or
such Holder's Consents either are not properly delivered, or are revoked and not
properly redelivered, on or prior to the Solicitation Expiration Date, such
Holder will not receive a Consent Payment, even though the Proposed Amendments
will be effective as to any of such Holder's Notes that are not properly
tendered and purchased in the Tender Offers if the Proposed Amendments become
effective. See 'The Proposed Amendments.'
Notwithstanding any other provision of the Tender Offers or the
Solicitations, the Company's obligation to accept for purchase, and to pay for,
Notes validly tendered pursuant to each Tender Offer is subject to certain
conditions, including, among other things, (i) the receipt of the Requisite
Consents prior to the Solicitation Expiration Date, (ii) valid tenders of Notes
from Holders of not less than a majority in aggregate principal amount
outstanding of each series of Notes, and (iii) the consummation of the Merger.
The Merger is subject to certain conditions, including the consummation of the
Tender Offers and the receipt of certain approvals from the Federal
Communications Commission ('FCC'). The Company's obligation to make Consent
Payments with respect to each series of Notes is also subject to certain
conditions, including consummation of the Tender Offers. See 'The Tender Offers
and the Solicitations -- Conditions of the Tender Offers and the Solicitations.'
<PAGE>
<PAGE>
Questions and requests for assistance or for additional copies of this
Offer to Purchase and Consent Solicitation or the accompanying Consent and
Letter of Transmittal may be directed to the Information Agent (as defined
below) or the Dealer Manager at the address and telephone numbers set forth on
the back cover hereof. Beneficial owners may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Tender Offers and the Consent Solicitations.
THE COMPANY RESERVES THE RIGHT WITH RESPECT TO EACH TENDER OFFER AND
SOLICITATION TO WAIVE ANY AND ALL CONDITIONS TO SUCH TENDER OFFER OR
SOLICITATION AND TO ACCEPT FOR PURCHASE ANY NOTE TENDERED PURSUANT TO SUCH
TENDER OFFER. ANY OR ALL OF THE CONDITIONS TO ANY OF THE TENDER OFFERS AND
SOLICITATIONS MAY BE WAIVED INDEPENDENTLY OF WHETHER SUCH CONDITIONS ARE WAIVED
WITH RESPECT TO THE OTHER TENDER OFFERS AND SOLICITATIONS AND THE COMPANY
RESERVES THE RIGHT TO CONSUMMATE ANY OF THE TENDER OFFERS REGARDLESS OF WHETHER
THE OTHERS ARE CONSUMMATED. SUBJECT TO COMPLIANCE WITH APPLICABLE SECURITIES
LAWS AND THE TERMS SET FORTH IN THIS OFFER TO PURCHASE AND CONSENT SOLICITATION,
THE COMPANY RESERVES THE RIGHT TO EXTEND OR TERMINATE ANY OF THE TENDER OFFERS
AND SOLICITATIONS, OR TO OTHERWISE AMEND ANY OF THE TENDER OFFERS AND
SOLICITATIONS IN ANY RESPECT.
THIS OFFER TO PURCHASE AND CONSENT SOLICITATION HAS NOT BEEN FILED WITH OR
REVIEWED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY
OF ANY COUNTRY, NOR HAS ANY SUCH COMMISSION OR AUTHORITY PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS OFFER TO PURCHASE AND CONSENT SOLICITATION. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL AND MAY BE A CRIMINAL OFFENSE.
THIS OFFER TO PURCHASE AND CONSENT SOLICITATION AND THE CONSENT AND LETTER
OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE TENDER OFFERS AND THE SOLICITATIONS.
This Offer to Purchase and Consent Solicitation does not constitute an
offer to any person in any jurisdiction in which such offer would be unlawful,
and the Tender Offers are not being made to, and tenders will not be accepted
from, Holders of Notes in states in which the Tender Offers or acceptance
thereof would constitute a violation of the securities or Blue Sky laws of such
jurisdiction. In accordance with various state securities laws applicable to the
Tender Offers which require the Tender Offers to be made to the public by a
licensed broker or dealer, the Tender Offers are hereby made to the Holders of
Notes residing in each such state by the Dealer Manager on behalf of the
Company. No person has been authorized to make any recommendation on behalf of
the Company as to whether Holders should tender Notes or deliver Consents
pursuant to the Tender Offers or the Solicitations. No person has been
authorized to give any information or to make any representation in connection
therewith other than those contained herein or in the accompanying Consent and
Letter of Transmittal. If made or given, such recommendation or any such
information or representation must not be relied upon as having been authorized
by the Company.
ADDITIONAL 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 and other information with the Securities and Exchange
Commission (the 'Commission'). The reports and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
Room 1024, 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
Citicorp Center, 500 West Madison Street, 14th Floor, Chicago, Illinois
60661-2511.
<PAGE>
<PAGE>
Copies of such material also can be obtained from the Public Reference Section
of the Commission, at its principal office at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, at prescribed rates and at the offices
of the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006. In addition, the Commission maintains a web site on the
Internet that contains reports, proxy statements and other information regarding
registrants that file electronically with the Commission at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Offer to Purchase and Consent Solicitation incorporates by reference
documents which are not presented herein or delivered herewith. Copies of such
documents relating to the Company, other than exhibits to such documents (unless
such exhibits specifically are incorporated by reference in such documents), are
available without charge, upon written or oral request, from Centennial Cellular
Corp., 50 Locust Avenue, New Canaan, Connecticut 06840, Attention: Secretary,
telephone: (203) 972-2000 or the Information Agent, Beacon Hill Partners, Inc.,
90 Broad Street, 20th Floor, New York, N.Y. 10004, Attention: Edward McCarthy,
telephone: (212) 843-8500. In order to ensure timely delivery of the documents
requested, any such request should be made as soon as possible prior to the
Solicitation Expiration Date or Tender Offer Expiration Date.
The following documents previously filed by the Company with the Commission
(File Number 0-19603) are incorporated in this Offer to Purchase and Consent
Solicitation by reference:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 1998 filed with the Commission on August 20, 1998; and
(2) the Company's Current Report on Form 8-K filed with the Commission
on July 16, 1998.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act after the date of this Offer to Purchase
and Consent Solicitation and prior to the Tender Offer Expiration Date shall
also be deemed to be incorporated by reference in this Offer to Purchase and
Consent Solicitation and to be a part hereof from the date of filing of such
documents. Any statement contained in this Offer to Purchase and Consent
Solicitation or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Offer to Purchase and Consent Solicitation to the extent that a statement
contained herein or in any other subsequently filed document which also is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statements as modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Offer to
Purchase and Consent Solicitation.
The Company will provide without charge to each person to whom this Offer
to Purchase and Consent Solicitation is delivered, upon request of such person,
a copy of any of: (i) the Indenture dated November 15, 1993 among the Company
and the Bank of Montreal Trust Company, as Trustee, with respect to the Notes;
(ii) the First Supplemental Indenture dated as of November 15, 1993 between the
Company and Bank of Montreal Trust Company, as Trustee, with respect to the
8 7/8% Senior Notes due 2001; (iii) the Second Supplemental Indenture dated as
of May 11, 1995 between the Company and Bank of Montreal Trust Company, as
Trustee, with respect to the 10 1/8% Senior Notes due 2005; (iv) the forms of
Supplemental Indenture relating to the Proposed Amendments with respect to each
Series of Notes (the 'Supplemental Indentures' for such series of Notes); and
(v) any or all information incorporated by reference in this Offer to Purchase
and Consent Solicitation (not including exhibits to such incorporated
information that are not specifically incorporated by reference into such
information). Written or telephone requests for such copies should be directed
to Scott N. Schneider, Senior Vice President, Chief Financial Officer and
Treasurer, Centennial Cellular Corp., 50 Locust Avenue, New Canaan, Connecticut
06840, telephone: (203) 972-2000 or the Information Agent, Beacon Hill Partners,
Inc., 90 Broad Street, 20th Floor, New York, N.Y. 10004, Attention: Edward
McCarthy, telephone: (212) 843-8500.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Offer to Purchase and Consent Solicitation includes 'forward-looking
statements' within the meaning of various provisions of the Securities Act of
1933, as amended, and the Exchange Act. All statements included in this Offer to
Purchase and Consent Solicitation, other than statements of historical facts,
that address activities, events or developments that the Company expects or
anticipates will or may occur in the future, including such things as future
capital expenditures (including the amount and nature thereof), business
strategy and measures to implement strategy, competitive strengths, goals,
expansion and growth of the Company's business and operations, plans, references
to future success and other such matters are forward-looking statements. Such
statements represent the Company's reasonable judgment on the future and are
subject to risks and uncertainties that could cause the Company's actual results
and financial position to differ materially. Such factors include, but are not
limited to: a change in economic conditions in the Company's markets which
adversely affects the level of demand for wireless services; greater than
anticipated competition resulting in price reductions, new product offerings or
higher customer acquisition costs; better than expected customer growth
necessitating increased investment in network capacity; increased cellular
fraud; the impact of new business opportunities requiring significant initial
investments; and the impact of deployment of new technologies on capital
spending. All forward-looking statements contained in this Offer to Purchase and
Consent Solicitation are qualified in their entirety by this cautionary
statement. The Company does not intend to update or otherwise revise the
forward-looking statements to reflect events or circumstances after the date of
this Offer to Purchase and Consent Solicitation or to reflect the occurrence of
unanticipated events.
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TABLE OF CONTENTS
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ADDITIONAL INFORMATION..................................................................................... 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 2
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION................................................. 3
SUMMARY.................................................................................................... 5
The Company........................................................................................... 5
The Merger............................................................................................ 5
Financing of the Merger............................................................................... 6
Purpose of the Tender Offers and Solicitations........................................................ 6
CERTAIN INVESTMENT CONSIDERATIONS.......................................................................... 7
Potential Adverse Effect on Market for Notes Not Tendered............................................. 7
Loss of Covenant Protection........................................................................... 7
Substantial Leverage; Common Stockholders' Deficit.................................................... 7
Holding Company Structure............................................................................. 8
Restrictive Covenants; Consequences of Default........................................................ 8
Net Losses; Interest Expense.......................................................................... 9
Acquisitions and Investments.......................................................................... 9
Competition........................................................................................... 9
Highly Regulated Industry............................................................................. 10
New Industry; Developing and Changing Technologies; Subscriber Cancellations.......................... 10
Refinancing and Interest Rate Exposure Risks.......................................................... 11
Potential for Changes in Accounting Standards......................................................... 11
Investment Interests; Capital Calls................................................................... 11
Control by WCAS, Blackstone and their Affiliates...................................................... 11
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).................................................... 12
THE TENDER OFFERS AND THE SOLICITATIONS.................................................................... 19
Principal Terms of the Tender Offers and the Solicitations............................................ 19
Conditions of the Tender Offers and the Solicitations................................................. 20
Expiration Date; Extension; Termination; Amendments................................................... 22
Acceptance of Notes for Purchase; Payment for Notes; Payment of Consent Payments...................... 23
Procedures for Tendering Notes and Delivering Consents................................................ 24
Backup Federal Income Tax Withholding................................................................. 28
Withdrawal of Tenders; Revocation of Consents; Absence of Appraisal Rights............................ 28
Dealer Manager........................................................................................ 29
Depositary............................................................................................ 30
Information Agent..................................................................................... 30
Miscellaneous......................................................................................... 30
THE PROPOSED AMENDMENTS.................................................................................... 31
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... 33
General............................................................................................... 33
Sale of Notes Pursuant to the Tender Offers........................................................... 33
The Consent Payments.................................................................................. 34
Withholding of Consent and Retention of Notes......................................................... 34
Backup Withholding.................................................................................... 34
APPENDIX A................................................................................................. 35
APPENDIX B................................................................................................. 36
APPENDIX C................................................................................................. 37
ANNEX I: THE PROPOSED AMENDMENTS........................................................................... A-1
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
incorporated by reference in this Offer to Purchase and Consent Solicitation.
See 'Additional Information' and 'Incorporation of Certain Documents by
Reference.' References herein to the 'Company' include Centennial Cellular Corp.
and its subsidiaries.
THE COMPANY
The Company is primarily engaged in the ownership and operation of wireless
telephone systems. The Company's current wireless telephone interests represent
approximately 10.1 million Net Pops (as defined below). Approximately 6.5
million of these Net Pops are represented by the Company's wireless telephone
systems located in the continental United States (the 'Domestic Wireless
Telephone Systems'). The balance of approximately 3.6 million Net Pops
represents the Company's wireless telephone system in the Commonwealth of Puerto
Rico (the 'Puerto Rico Wireless Telephone System'). 'Pops' means the population
of a market derived from the 1990 Census Report of the Bureau of the Census,
United States Department of Commerce, and 'Net Pops' means a market's Pops
multiplied by the percentage interest that the Company owns in an entity
licensed (a 'licensee') by the FCC to construct or operate a wireless telephone
system in that market.
The Company's wireless telephone systems, which include systems utilizing
both cellular and personal communications service ('PCS') licenses, provide
communications services to vehicle-installed ('mobile'), ready-to-carry
('transportable') and hand-held ('portable') wireless telephones. Wireless
telephone systems are designed to allow for significant mobility of the
subscriber. In addition to mobility, wireless telephone systems provide access
through system interconnections to local and long distance telecommunications
networks and offer other ancillary services such as voice-mail, call-waiting,
call-forwarding and conference calling. These communications services can be
integrated with a variety of competing networks.
The Company operates its Domestic Wireless Telephone Systems pursuant to 29
cellular licenses which it owns, and operates its Puerto Rico Wireless Telephone
System pursuant to a PCS license which it owns. The Company's PCS license also
covers the U.S. Virgin Islands. Wireless telephone technology is based upon the
radio coverage of a given geographic area by a number of overlapping 'cells.'
The Company's current wireless telephone interests represent approximately
10.1 million Net Pops. Approximately 5.4 million of these Net Pops are
represented by interests in those Domestic Wireless Telephone Systems that the
Company owns and operates in three geographic clusters: the Michiana cluster in
Michigan, Ohio and Indiana; the East Texas/Louisiana cluster in Texas, Louisiana
and Mississippi; and the Southwestern cluster in California and Arizona.
Approximately 3.6 million of these Net Pops represent the Company's Puerto Rico
Wireless Telephone System. The balance of approximately 1.1 million of these Net
Pops represents minority interests in limited partnerships which are controlled
by other parties.
Centennial was organized in 1988. The Company's principal corporate office
is located at 1305 Campus Parkway, Neptune, New Jersey 07753. Its telephone
number is (732) 919-1000.
THE MERGER
On July 2, 1998 the Company and CCW entered into an Agreement and Plan of
Merger (the 'Merger Agreement'), providing for the merger of CCW with and into
the Company. The Company will continue as the surviving corporation.
Subject to the effects of proration as described herein, upon the
consummation of the Merger, all issued and outstanding shares of capital stock
of the Company (the 'Shares'), other than Shares owned by CCW or the Company and
Shares owed by persons who perfect statutory dissenter's rights, shall be
converted as follows: (i) outstanding shares of Class A Common Stock, par value
$.01 per share, of the Company (the 'Common Shares'), shall be converted into
the right to (a) retain up to 7.1% of
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Common Shares outstanding after the Merger or (b) receive $43.50 per share in
cash; (ii) outstanding shares of Class B Common Stock, par value $.01 per share,
of the Company (the 'Class B Shares') shall be converted into the right to
receive $43.50 in cash per share, provided that, if the aggregate number of
Common Shares elected to be retained by the Company's existing stockholders is
less than 7.1% of the shares outstanding after the Merger, then a number of
Class B Shares equal to the pro rata portion of such shortfall will be converted
into Common Shares and retained; and (iii) all outstanding shares of (x)
Convertible Preferred Stock, par value $.01 per share, of the Company (the
'Convertible Preferred Shares') and (y) Second Series Convertible Preferred
Stock, par value $.01 per share, of the Company (the 'Second Series Convertible
Preferred Shares' and, together with the Convertible Preferred Shares, the
'Convertible Preferred Stock') shall be converted into the right to receive
$43.50 per share in cash on an as-converted basis.
The Company's principal stockholder, Century Communications Corp.
('Century'), has agreed to vote its Shares of the Company in favor of the Merger
so long as the Merger Agreement remains in effect. Since Century controls, on a
fully diluted basis, more than a majority of the outstanding votes of the
Company required to approve the Merger, no further vote is necessary to approve
the Merger.
FINANCING OF THE MERGER
In connection with the Merger, CCW has received a commitment from a third
party for financing for CCW and certain existing and future subsidiaries of the
Company in the aggregate amount of approximately $1.6 billion in the form of
senior secured credit facilities and an unsecured bridge loan. Additionally, an
affiliate of WCAS has agreed to purchase approximately $150 million aggregate
principal amount of subordinated notes and Common Shares of the Surviving
Corporation for a purchase price of $150 million. Finally, WCAS and other equity
investors have agreed to purchase approximately $350 million of common stock of
the Surviving Corporation. It is anticipated that this funding will be used to
pay the merger consideration described above and related fees and expenses.
Additionally, pursuant to the Merger Agreement, the Company has agreed that,
upon the request of CCW, it will commence the Tender Offers. The Company must
consummate the Tender Offers on or prior to the closing of the Merger. There can
be no assurance that CCW will receive the funding referred to above or, if it
does receive such funding, there can be no assurance as to the timing or terms
thereof. Additionally, there can be no assurance that the Tender Offers will be
consummated. Finally, in the event that CCW must seek alternative financing to
consummate the Merger, there can be no assurance that it will be able to secure
alternative financing on terms no less favorable than the terms of the above
commitments.
PURPOSE OF THE TENDER OFFERS AND SOLICITATIONS
The purpose of the Tender Offers is to facilitate the completion of the
Merger by acquiring the outstanding Notes of the Company. Upon a Change of
Control (as defined in the Indentures), the Company is required to make an offer
to repurchase the Notes, and purchase the Notes of Holders who elect to have
their Notes repurchased, at a repurchase price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest, if any, to
the date of repurchase. The Tender Offers do not constitute the offers to
repurchase required by the Change of Control provisions in the Indentures. Based
upon the Total Consideration stated in this Offer to Purchase and Consent
Solicitation, Holders who tender their Notes in the Tender Offers and deliver
Consents in the Solicitations will receive a payment for their Notes in excess
of 101% of principal amount thereof. The Company will make a separate offer to
repurchase any Notes not acquired in the Tender Offers pursuant to the Change of
Control provisions of the Indentures if the Merger is consummated.
The purpose of the Solicitations and the Proposed Amendments is to
eliminate the restrictive covenants and to amend certain other provisions
contained in the Indentures, and thereby enhance the operating and financial
flexibility of the Company.
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CERTAIN INVESTMENT CONSIDERATIONS
Holders and persons with a beneficial interest in Notes should consider
carefully, in addition to other information contained in the Offer Documents
(including the financial statements and notes thereto incorporated by reference
herein), the following factors in connection with a decision to tender Notes and
deliver Consents.
POTENTIAL ADVERSE EFFECT ON MARKET FOR NOTES NOT TENDERED
In general, trading has taken place in the over-the-counter market. Prices
and trading volumes of the Notes in the over-the-counter market are not reported
and can be difficult to monitor. Quotations for securities such as the Notes may
differ from actual trading prices and should be viewed as approximations.
Beneficial owners of Notes are urged to contact their brokers for current
information regarding the Notes. To the extent that Notes are tendered and
accepted for payment in the Tender Offers, the trading market for Notes that
remain outstanding may be significantly more limited, which might adversely
affect the liquidity of the Notes. An issue of securities with a smaller
outstanding market value available for trading (the 'float') may command a lower
price than would a comparable issue of securities with a greater float.
Therefore, the market price for Notes that are not tendered in the Tender Offers
may be adversely affected to the extent that the amount of the Notes purchased
pursuant to the Tender Offers reduces the float. The reduced float also may tend
to make the trading prices of the Notes that are not tendered more volatile.
Holders of Notes not tendered may attempt to obtain quotations for the Notes
from their brokers; however, there can be no assurance that any trading market
will exist, and the availability of price quotations would depend upon a number
of factors, including the number of Holders of the Notes remaining at such time,
the remaining outstanding principal amount of Notes after consummation of the
Tender Offers and the interest in maintaining a market in the Notes on the part
of securities firms. As a result, there can be no assurance that any trading
market for the Notes will exist after consummation of the Tender Offers and the
Consent Solicitations.
LOSS OF COVENANT PROTECTION
If the Proposed Amendments to the Indentures under which a series of Notes
was issued are adopted and become operative, most of the financial covenants as
well as other substantive covenants and certain events of default in such
Indentures will be eliminated. In that case, the non-tendering holders of the
Notes will not have the benefit of the protections afforded thereby. Such
covenants currently limit the Company and its restricted subsidiaries' ability
to, among other things, incur additional indebtedness, pay dividends or make
certain restricted payments, enter into transactions with affiliates, incur
liens, and issue stock of its subsidiaries. See 'The Proposed Amendments.'
SUBSTANTIAL LEVERAGE; COMMON STOCKHOLDERS' DEFICIT
The wireless telephone business is capital intensive. The Company requires
substantial capital to operate, construct, expand and acquire wireless telephone
systems; to build out and operate its Puerto Rico Wireless Telephone System; and
to service its debt. Historically, the Company has been dependent upon
borrowings, operating cash flow and the issuance of its equity securities to
provide funds for such purposes.
Following the Merger, the Company will be highly leveraged. In connection
with consummating the transactions contemplated by the Merger Agreement, the
Company will enter into certain financing arrangements (the 'Financing') to,
among other things: (i) fund payment of the cash consideration in the Merger,
(ii) repay or repurchase certain indebtedness of the Company, (iii) pay the fees
and expenses incurred in connection with the Merger and (iv) provide for working
capital requirements and general corporate purposes after the effective time of
the Merger.
Although the definitive terms of the Financing have not been finalized as
of the date of this Offer to Purchase and Consent Solicitation, the terms of the
Financing will include significant operating and financial restrictions, such as
limits on the Company's ability to incur indebtedness, create liens, sell
assets, engage in mergers or acquisitions, make investments and pay dividends.
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As of May 31, 1998, after giving pro forma effect to the Merger and the
Financing and the application of the net proceeds therefrom, the Company would
have had (i) $1,546.8 million of consolidated indebtedness and (ii) a common
stockholders' deficit of approximately $698.7 million. The pro forma level of
consolidated indebtedness is substantially greater than the Company's pre-Merger
indebtedness. Such high leverage may have important consequences for the Company
including: (a) the Company's ability to obtain additional financing for future
acquisitions (if any), working capital, capital expenditures or other purposes
may be impaired or any such financing may not be on terms favorable to the
Company; (b) a substantial portion of the Company's cash flow available from
operations after satisfying certain liabilities arising in the ordinary course
of business will be dedicated to the payment of principal of and interest on its
indebtedness, thereby reducing funds that would otherwise be available to the
Company for future business opportunities and other purposes; (c) a substantial
decrease in net operating cash flows or an increase in expenses of the Company
could make it difficult for the Company to meet its debt service requirements or
force it to modify its operations; (d) high leverage may place the Company at a
competitive disadvantage and may make it vulnerable to a downturn in its
business or the economy generally; and (e) certain of the Company's borrowings
will be at variable rates of interest, which could cause the Company to be
vulnerable to increases in such interest rates.
In addition, the substantial leverage will have a negative effect on the
Company's net income. Pro forma net loss for the fiscal year ended May 31, 1998
would have been $101.1 million, as compared to $31.9 million for the same period
on a historical basis, and pro forma interest expense for fiscal 1998 would have
been $153.3 million, as compared to $45.2 million for the same period on a
historical basis.
After the Merger is consummated, the Company's principal sources of
liquidity are expected to be cash flow from operations, net proceeds from the
issuance of senior and subordinated notes of the Surviving Corporation and its
subsidiaries, which are expected to be consummated prior to or simultaneously
with the Merger, and borrowings under two senior secured credit facilities to be
entered into by indirect subsidiaries of the Surviving Corporation. It is
anticipated that the Company's principal uses of liquidity will be to provide
working capital, to meet debt service requirements and other liabilities arising
in the ordinary course and to finance the Company's strategic plans.
HOLDING COMPANY STRUCTURE
Following the Merger, the business of the Company will be conducted through
its subsidiaries. The Company's ability to make principal, interest and other
payments to holders of the Notes when due is dependent on the receipt of
sufficient funds from its direct and indirect subsidiaries. Receipt of such
funds will be restricted and may be prohibited by the terms of existing and
future indebtedness of the Company's subsidiaries, including indebtedness
incurred in connection with the Merger.
RESTRICTIVE COVENANTS; CONSEQUENCES OF DEFAULT
The instruments governing the indebtedness of subsidiaries of the Surviving
Corporation under the Financing entered into and notes to be issued by the
Surviving Corporation and certain of its subsidiaries will impose significant
operating and financial restrictions on the Company and its subsidiaries. Such
restrictions will affect, and in many respects significantly limit or prohibit,
among other things, the ability of the Company to incur additional indebtedness,
pay dividends, repay indebtedness prior to stated maturities, sell assets, make
investments, engage in transactions with stockholders and affiliates, issue
capital stock, create liens, or engage in mergers or acquisitions. In addition,
the credit facilities will require the borrowers thereunder to maintain certain
financial ratios. These restrictions could also limit the ability of the Company
to effect future financings, make needed capital expenditures, withstand a
future downturn in its business or the economy in general, or otherwise conduct
necessary corporate activities. A failure by the Company to comply with these
restrictions could lead to a default under the terms of such indebtedness
notwithstanding the ability of the Company to meet its debt service obligations.
In the event of a default, the holders of such indebtedness could elect to
declare all such indebtedness to be due and payable together with accrued and
unpaid interest. In such event, a significant portion of the Company's other
indebtedness (including its subsidiaries') may become immediately due and
payable and there can be no assurance that the Company would be able to make
such payments or borrow sufficient funds from alternative sources to
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make any such payment. Even if additional financing could be obtained, there can
be no assurance that it would be on terms that are acceptable to the Company.
In addition, the Surviving Corporation and the subsidiaries that are
borrowers under the credit facilities are generally expected to pledge as
security the capital stock of all of their direct and indirect subsidiaries to
the lenders providing such facilities. The pledge of this capital stock could
impair the Company's ability to obtain future financing on favorable terms, if
at all. Further, in the event any subsidiary were to default on its obligations
under the credit facilities and the lenders were to foreclose upon such pledged
capital stock, the Company, as the holding company for such subsidiary, would
likely be unable to service or repay its existing indebtedness.
NET LOSSES; INTEREST EXPENSE
The Company has reported net losses of $(31,947,000), $(33,295,000) and
$(16,631,000) for the fiscal years ended May 31, 1998, 1997 and 1996,
respectively. Operating loss was $(13,301,000), $(26,057,000) and $(19,109,000)
for the respective periods. Interest expense was $45,155,000, $33,379,000 and
$27,886,000 for the respective periods. There can be no assurance that
profitability will be achieved in the foreseeable future. Upon the consummation
of the Financing, interest expense will increase compared to prior years.
ACQUISITIONS AND INVESTMENTS
Opportunities for growth through acquisitions and investments in the
Company's wireless telephone and other communications business, and future
operating results and the success of acquisitions and investments within and
outside the United States may be subject to the effects of, and changes in, U.S.
and foreign trade and monetary policies, laws and regulations, political and
economic developments, inflation rates, and the effects of taxes and operating
conditions.
COMPETITION
The Company's principal business is wireless telephone service. Competition
for wireless telephone service in each of the Company's markets is based
primarily on the quality of service, price, system coverage, enhancements
offered, capacity and customer service. The Company competes with one cellular
licensee in each geographic area and most of these competitors are larger and
have greater financial resources than the Company. The Company also faces
competition from paging companies, landline telephone companies and resellers.
The FCC requires providers of wireless telephone service to offer service to
resellers on a nondiscriminatory basis. A reseller buys blocks of telephone
numbers from a wireless telephone service provider, usually at a discounted
rate, and resells the service to the public for a profit. Many
telecommunications companies resell wireless telephone service as a complement
to other services, such as long distance or local telephone services.
As a result of recent regulatory and legislative initiatives, the Company's
cellular operations are also subject to increased competition from entities
using or proposing to use other comparable communications technologies. The FCC
currently is licensing commercial PCS. The FCC identified two categories of PCS:
broadband and narrowband. PCS is not a specific technology, but a variety of
potential technologies that could compete with cellular telephone systems. For
example, the broadband PCS systems licensed to operate in the 2 GHz band provide
wireless two-way telecommunications services for voice, data, graphic and other
transmissions. Equipment used for broadband PCS includes small, lightweight and
wireless telephone handsets, computers that can communicate over the airwaves
wherever they are located, and portable facsimile machines and other graphic
devices. Many PCS systems have commenced operations in the last few years. When
a PCS system employs microcell technology, as is common, it uses a network of
small, low-powered transceivers placed throughout a neighborhood, business
complex, community or metropolitan area to provide customers with mobile and
portable voice and data communications. Many PCS licensees who will compete with
the Company have access to substantial capital resources. In addition, many of
these companies, or their predecessors and affiliates, already operate large
cellular telephone systems and thus bring significant wireless experience to
this new marketplace. To date, the Company has experienced little impact from
PCS
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competition. However, there can be no assurance of the long-term effect these
new PCS may have on the Company.
Enhanced Specialized Mobile Radio ('ESMR') is a two-way wireless
communications service that incorporates characteristics of cellular technology,
including multiple low-power transmitters and interconnection with the landline
telephone network. ESMR service may compete with cellular service by providing
digital communication technology, lower rates, enhanced privacy and additional
features such as electronic mail and built-in paging.
The Company may also face competition from satellite-based services. The
FCC has issued a number of licenses to provide such services which would enable
subscribers to access mobile communications throughout the world. Additional
proposals for the provision of satellite services remain pending with the FCC
and foreign regulatory bodies must approve certain aspects of some satellite
systems. Although the Company may experience increased competition from such
services in the future, such systems have not affected the Company's operations
to date.
The FCC has also made available other frequency bands that may be used for
the provision of cellular-like services. The General Wireless Communications
Service and the Wireless Communications Service are two such services that are
in their infancy.
The Company is unable to predict whether such competing technologies will
be successful and, if successful, whether any will provide significant
competition to the Company. There can be no assurance, however, that one or more
of the technologies currently used by the Company in its business will not
become inferior or obsolete at some time in the future.
HIGHLY REGULATED INDUSTRY
The licensing, ownership, construction, operation and sale of controlling
interests in wireless telephone systems are regulated by the FCC. Certain
aspects of wireless telephone system ownership, sale, construction, and
operation (including, but not limited to, rates and the resale of wireless
service) may be subject to public utility or other state and municipal
regulation in the areas in which the Company provides service. Changes in the
regulation of wireless telephone system operators or their activities (such as
increased price regulation by state authorities or a decision by the FCC to
permit more than two licensees in each service area) could adversely affect the
business and operating results of the Company.
In addition, FCC licenses are required to provide wireless telephone
service and are subject to renewal and compliance requirements. Non-compliance
may result in fines, termination of the license or a denial by the FCC of an
application to renew the license. There may be competition for FCC licenses upon
the expiration of their initial ten-year terms, and there can be no assurance
that any FCC license will be renewed. The transfer of a license or any
controlling interest in a license is subject to prior approval by the FCC.
The Communications Act of 1934 requires FCC approval for transfers of
controlling interests in any license or construction permit. The Company
completed filing the applications seeking FCC approval of the Merger on July 30,
1998. The last of these applications were placed on public notice by the FCC on
August 17, 1998 and are eligible for grant no sooner than September 17, 1998.
Although there is no guarantee that these applications will be granted or acted
on promptly, the Company has no reason to believe that the applications will not
be approved in a timely manner.
NEW INDUSTRY; SUBSCRIBER CANCELLATIONS; DEVELOPING AND CHANGING TECHNOLOGIES
Although over 600 wireless 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 wireless telephone service by the public. In addition, the
success of the Company's operations may be adversely affected by matters beyond
its control, such as changes in technology, decisions by the federal government
as to spectrum allocation and competition, and the future cost of wireless
telephones. The Company and the industry have also
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been affected by high rates of subscriber cancellations that require continuing
replacement of the customer base in order to maintain subscription levels and
revenues.
The telecommunications industry is subject to rapid and significant changes
in technology, including advancements protected by intellectual property laws.
In particular, the wireless telecommunications industry is experiencing
significant technological change, as evidenced by the increasing pace of digital
upgrades in existing analog wireless systems, evolving industry standards, the
availability of new radio frequency spectrum allocations in which to develop
wireless services, ongoing improvements in the capacity and quality of digital
technology, shorter development cycles for new products and enhancements, and
changes in end-user requirements and preferences. The effect of technological
changes on the business of the Company cannot be predicted, and there can be no
assurance that technological developments will not have a material adverse
effect on the Company.
REFINANCING AND INTEREST RATE EXPOSURE RISKS
The business and operating results of the Company can be adversely affected
by factors such as the availability or cost of capital, changes in interest
rates, changes in tax rates due to new tax laws, market perceptions of the
cellular telephone or other communications businesses of the Company, or
security ratings.
POTENTIAL FOR CHANGES IN ACCOUNTING STANDARDS
Authoritative generally accepted accounting principle or policy changes
from such standard setting bodies as the Financial Accounting Standards Board,
the FCC or the Commission may affect the Company's results of operations or
financial position.
INVESTMENT INTERESTS; CAPITAL CALLS
With respect to any system in which the Company now or in the future holds
an investment interest as a limited partner, the Company has limited ability to
direct the operation of such system and, if it does not meet a capital call, the
Company's ownership interest in such system may be diluted. Capital calls with
respect to the Investment Interests for the fiscal years ended May 31, 1998,
1997 and 1996 were approximately $787,000, $2,878,000 and $1,463,000,
respectively. The Company has, to date, paid all capital calls that it has
received. Although the Company anticipates that such capital calls will decrease
over time, there can be no assurance that such capital calls will, in fact,
decrease. Capital calls may also be issued in connection with acquisitions by
the respective limited partnerships. The Company intends to fund its pending and
future capital calls from internally generated funds, bank borrowings or the
issuance of additional debt or equity securities. There can be no assurance that
the Company will be able to pay such capital calls when due.
CONTROL BY WCAS, BLACKSTONE AND THEIR AFFILIATES
Upon completion of the Merger, 92.9% of the outstanding Common Shares will
be held by the stockholders of CCW. Immediately prior to the Merger, it is
expected that the capital stock of CCW will be owned by WCAS, partnerships
controlled by Blackstone Management Associates III L.L.C. (together with its
affiliates, 'Blackstone') and certain other investors. Accordingly, such
investors will control the Company and have the power to elect all of its
directors, appoint new management and approve or reject any action requiring the
approval of the holders of Common Shares, including adopting amendments to the
Company's Certificate of Incorporation and approving mergers or sales of all or
substantially all of the Company's assets. The directors elected by such
investors will have the authority to effect decisions affecting the capital
structure of the Company, including the issuance of additional capital stock,
the implementation of stock repurchase programs and the declaration of
dividends. There can be no assurance that the capital policies of the Company in
effect prior to the Merger will continue after the Merger.
In addition, the existence of a small number of controlling stockholders
may have the effect of making it difficult for a third party to acquire, or of
discouraging a third party from seeking to acquire, a majority of the
outstanding Common Shares. A third party would be required to negotiate any such
transaction with the investors in CCW and the interests of such investors may be
different from the interests of other holders of Common Shares.
11
<PAGE>
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following Pro Forma Consolidated Financial Statements have been derived
by the application of pro forma adjustments to the Company's historical
consolidated financial statements included herein. The pro forma consolidated
statement of operations for the period presented gives effect to the Merger and
related transactions as if such transactions were consummated as of June 1, 1997
for the fiscal year ended May 31, 1998. The pro forma consolidated balance sheet
gives effect to the Merger and related transactions as if such transactions had
occurred as of May 31, 1998. The adjustments are described in the accompanying
notes. The Pro Forma Consolidated Financial Statements should not be considered
indicative of actual results that would have been achieved had the Merger and
related transactions been consummated on the dates indicated and do not purport
to indicate balance sheet data or results of operations as of any future date or
for any future period. The Pro Forma Consolidated Financial Statements should be
read in conjunction with the Company's historical financial statements and the
notes thereto included herein.
At the effective time of the Merger, CCW will be merged with and into the
Company and the Company will continue as the surviving corporation in the
Merger. CCW was organized in connection with the Merger and has not carried on
any activities to date other than those incident to its formation and the
transactions contemplated by the Merger Agreement.
The pro forma adjustments were applied to the respective historical
consolidated financial statements to reflect and account for the Merger as a
recapitalization. Accordingly, the historical basis of the Company's assets and
liabilities has not been affected by the transaction.
12
<PAGE>
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MAY 31,1998
<TABLE>
<CAPTION>
MAY 31, 1998 PRO FORMA MAY 31, 1998
HISTORICAL ADJUSTMENTS (A) PRO FORMA
------------ --------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 14,620 $ (14,620) $ --
Restricted cash............................................... 40,000 40,000
Accounts receivable, less allowances for doubtful accounts of
$2,693...................................................... 37,178 -- 37,178
Inventory -- Phones and accessories........................... 7,304 -- 7,304
Prepaid expenses and other current assets..................... 548 -- 548
------------ --------------- ------------
Total current assets..................................... 59,650 25,380 85,030
Property, plant and equipment -- net............................... 263,661 -- 263,661
Equity investments in wireless systems -- net...................... 87,634 -- 87,634
Debt issuance costs -- net......................................... 8,538 42,525 51,063
Cellular telephone licenses -- net................................. 235,508 -- 235,508
Personal communications service license -- net..................... 60,435 -- 60,435
Goodwill -- net.................................................... 124,533 -- 124,533
Deferred Income Taxes.............................................. 4,487 4,487
Other assets -- net................................................ 7,458 -- 7,458
------------ --------------- ------------
Total assets............................................. $847,417 $ 72,392 $ 919,809
------------ --------------- ------------
------------ --------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable.............................................. $ 10,240 $ -- $ 10,240
Accrued expenses and other current liabilities................ 64,445 (3,570) 60,875
------------ --------------- ------------
Total current liabilities................................ 74,685 (3,570) 71,115
Long term liabilities:
Long term debt................................................ 510,000 (510,000) --
Senior secured credit facilities.............................. -- 1,076,644 1,076,644
Senior unsecured notes........................................ -- 190,000 190,000
Senior discount notes......................................... -- 150,000 150,000
Subordinated notes............................................ -- 130,171 130,171
Deferred liability............................................ 2,200 -- 2,200
Deferred income taxes......................................... 26,584 (26,584) --
Preferred stock:
Preferred stock -- convertible redeemable..................... 186,287 (186,287) --
Preferred stock -- second series convertible redeemable....... 7,252 (7,252) --
Common stockholders' equity (deficiency):
Common stock -- class A....................................... 167 (80) 87
Common stock -- class B....................................... 105 (105) --
Additional paid in capital.................................... 358,018 1,387 359,405
Accumulated deficit........................................... (284,238) (744,961) (1,029,199)
Class A shares in treasury.................................... (30,614) -- (30,614)
Deferred compensation......................................... (3,029) 3,029 --
------------ --------------- ------------
Total common stockholders' equity (deficiency)........... 40,409 (740,730) (700,321)
------------ --------------- ------------
Total liabilities and stockholders' equity
(deficiency)...................................... $847,417 $ 72,392 $ 919,809
------------ --------------- ------------
------------ --------------- ------------
</TABLE>
See Notes to Pro Forma Consolidated Balance Sheet
13
<PAGE>
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma financial data have been derived by the application of pro
forma adjustments to the Company's historical financial statements as of the
date noted. The Merger has been accounted for as a recapitalization which will
have no impact on the historical basis of the Company's assets and liabilities.
The pro forma financial data assume that there are no dissenting stockholders to
the Merger.
(a) Pro forma adjustments to the Pro Forma Consolidated Balance Sheet are
summarized in the following table (dollars in thousands) and are described in
the notes that follow.
<TABLE>
<CAPTION>
REPAYMENT TRANSACTION
CONVERSION PURCHASE OF FEES AND
OF CLASSB FINANCING PRICE OF COMPENSATION EXISTING EXPENSES TOTAL NET
SHARES (1) (2) EQUITY(3) EXPENSES (4) DEBT (5) (6) ADJUSTMENT
---------- ---------- ----------- ------------ --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents... -$- $1,876,644 $(1,222,394) $(45,300) $(553,570) $ (70,000) $(14,620)
Restricted Cash............. -- 40,000 -- -- -- -- 40,000
Deferred Income Taxes....... -- -- -- -- 4,487 -- 4,487
Debt issuance costs......... -- -- -- -- (8,538 ) 51,063 42,525
Accrued expenses and other
current liabilities....... -- -- -- -- (3,570 ) -- (3,570 )
Deferred tax liability...... (12,627) (13,957 ) (26,584 )
Long term debt.............. -- -- -- -- (510,000 ) -- (510,000 )
Senior secured credit
facilities................ -- 1,076,644 -- -- -- -- 1,076,644
Senior unsecured notes...... -- 190,000 -- -- -- -- 190,000
Senior discount notes....... -- 150,000 -- -- -- -- 150,000
Subordinated notes.......... -- 130,171 -- -- -- -- 130,171
Preferred
stock -- convertible
redeemable................ -- -- (186,287) -- -- -- (186,287 )
Preferred stock -- second
series convertible
redeemable................ -- -- (7,252) -- -- -- (7,252 )
Common stock -- class A..... 105 80 (265) -- -- -- (80 )
Common stock -- class B..... (105) -- -- -- -- -- (105 )
Additional paid in
capital................... -- 369,749 (349,425) -- -- (18,937) 1,387
Deferred Compensation....... -- -- -- 3,029 -- 3,029
Accumulated Deficit --
Increase (Decrease) in
R/E....................... -- -- (679,165) (35,702) (30,094 ) -- (744,961 )
</TABLE>
- ------------
(1) Adjustment represents conversion of existing Class B shares to Class A
shares.
(2) Sources and uses of cash for the recapitalization are as follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
Sources:
Senior secured credit facilities............................... $1,076,644
Senior unsecured notes......................................... 190,000
Senior discount notes.......................................... 150,000
Subordinated notes and common equity (i)....................... 150,000
Cash equity investment......................................... 350,000
----------------------
Total..................................................... $1,916,644
----------------------
----------------------
Uses:
Redemption of Common Shares.................................... $1,088,094
Redemption of Preferred Shares................................. 134,300
Settlement of Options.......................................... 45,300
Repurchase Existing Notes...................................... 350,000
Repayment of Existing Credit Facilities........................ 160,000
Debt Retirement Premium........................................ 40,000
Payment of Accrued Interest.................................... 3,570
Interest Escrow for Senior Unsecured Financing................. 40,000
Transaction Expenses........................................... 70,000
Decrease in Balance Sheet Cash................................. (14,620)
----------------------
Total..................................................... $1,916,644
----------------------
----------------------
</TABLE>
(footnotes continued on next page)
14
<PAGE>
<PAGE>
(footnotes continued from previous page)
(i) The issuance of $150 million principal amount of subordinated notes and
common shares for $150 million in cash has been allocated as $130,171
debt and $19,829 equity.
(3) The adjustments represent the repurchase of common and preferred stock from
existing stockholders.
(4) The adjustments represent the following:
-- Compensation expense of $45,300 ($33,825 after related tax effect)
related to the repurchase of all outstanding stock options at the difference
between $43.50 per share and the exercise price of the options, assuming the
respective option holders agree to such repurchase.
-- Compensation expense of $3,029 ($1,877 after related tax effect) related
to the immediate vesting, at a change of control, of restricted stock issued
under the Company's 1993 Equity Incentive Plan.
(5) The adjustments represent the repayment of existing indebtedness and related
accrued interest by the Company, including an estimated debt retirement
premium of $40,000 ($24,800 after related tax effect), and assumes all note
holders tender their Notes in the Tender Offers. Such premium and
unamortized deferred loan costs of $8,538 ($5,294 after related tax effect)
related to existing indebtedness will be written off as an extraordinary
charge upon early repayment of the existing indebtedness.
(6) The adjustment represents the estimated transaction fees and expenses of
$70,000. The portion of estimated transaction fees and expenses attributable
to the secured credit facilities and unsecured notes totals $51,063 and will
be recorded as debt issuance costs and will be amortized over the expected
life of the debt to be issued. Such estimated debt issuance costs include
estimated fees and expenses payable to banks and related advisors. The
remaining estimated transaction fees and expenses of $18,937 represent costs
associated with the equity transactions.
15
<PAGE>
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR YEAR ENDED MAY 31, 1998
<TABLE>
<CAPTION>
YEAR ENDED MAY 31, 1998
-----------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS NOTE PRO FORMA
----------- ----------- ----- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Service revenue............................................ $ 231,097 $ -- $ 231,097
Equipment sales............................................ 4,719 -- 4,719
Interest income............................................ 1,685 -- 1,685
----------- ----------- ----------
237,501 -- 237,501
----------- ----------- ----------
Costs and expenses:
Cost of services........................................... 38,389 -- 38,389
Cost of equipment sold..................................... 16,429 -- 16,429
Selling, general and administrative expenses............... 81,790 750 (a) 82,540
Depreciation and amortization.............................. 114,194 -- 114,194
----------- ----------- ----------
250,802 750 251,552
----------- ----------- ----------
Operating loss.................................................. (13,301) (750) (14,051)
Interest expense................................................ 45,155 108,107 (b) 153,262
Gain on sale of assets.......................................... 5 -- 5
Income from equity investments.................................. 13,069 -- 13,069
----------- ----------- ----------
Loss before income tax benefit and minority interest............ (45,382) (108,857) (154,239)
Income tax benefit.............................................. (13,597) (39,686) (c) (53,283)
----------- ----------- ----------
Loss before minority interest................................... (31,785) (69,171) (100,956)
Minority interest in income of subsidiaries..................... (162) (162)
Net loss........................................................ (31,947) (69,171) (101,118)
----------- ----------- ----------
Dividend requirements on preferred stock........................ 16,451 (16,451) (d) --
Loss applicable to common shares................................ $ (48,398) $ (52,720) $ (101,118)
----------- ----------- ----------
----------- ----------- ----------
Net loss per common share -- basic and diluted.................. $ (1.85) $ (11.68)
----------- ----------
----------- ----------
Weighted average shares outstanding............................. 26,181,000 8,660,901
----------- ----------
----------- ----------
Pro forma ratio of earnings to fixed charges (e)................ --
</TABLE>
See Notes to Pro Forma Consolidated Statement of Operations
16
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
The pro forma financial data have been derived by the application of pro
forma adjustments to the Company's historical financial statements for the
periods noted. The Merger has been accounted for as a recapitalization which
will have no impact on the historical basis of the Company's assets and
liabilities. The pro forma financial data assumes that there are no dissenting
stockholders to the Merger.
The pro forma adjustments to the Statement of Operations exclude (a) the
write-off of $8,538 ($5,294 after related tax effect) deferred loan costs
associated with the existing indebtedness, (b) the estimated $40,000 ($24,800
after related tax effect) of fees payable for the early retirement of existing
indebtedness, (c) $45,300 ($33,825 after related tax effect) of employee
compensation expenses relating to the exercise of the options, and (d) $3,029
($1,877 after related tax effect) deferred compensation expenses. Such amounts
represent non-recurring expenses which the Company anticipates will be recorded
in the Consolidated Statement of Operations for the periods including the
Merger. The interest rates set forth in the pro forma adjustments reflect
assumptions of anticipated financings (which are subject to certain conditions)
as set forth in the Company's Information Statement submitted to the Commission
on August 21, 1998. Due to recent volatile market conditions, the Company may be
required to finance the transactions (if such financing could be obtained) at
higher interest rates and/or pursuant to different arrangements.
(a) Represents monitoring fee paid to affiliates of WCAS and Blackstone.
(b) The pro forma adjustments to interest expense reflect the following:
<TABLE>
<CAPTION>
YEAR ENDED
MAY 31, 1998
------------
(DOLLARS IN
THOUSANDS)
<S> <C>
Domestic Cellular Credit Facility
Revolving Credit Facility (1).................................................... $ 1,363
Tranche A term loans (2)......................................................... 32,760
Tranche B term loans (3)......................................................... 23,210
Tranche C term loans (4)......................................................... 17,380
Puerto Rico Credit Facility
Revolving Credit Facility (5).................................................... --
Tranche A term loans (6)......................................................... 9,009
Tranche B term loans (7)......................................................... 6,330
Senior Unsecured Notes (8)............................................................ 20,425
Subordinated Notes (9)................................................................ 9,199
Commitment fee (10)................................................................... 667
------------
Cash Interest Expense................................................................. 120,343
Senior Discount Notes (11)............................................................ 17,746
Subordinated Notes (12)............................................................... 7,541
Amortization of discount on subordinated notes (13)................................... 1,888
Amortization of debt issuance costs (14).............................................. 5,744
------------
Pro forma interest expense............................................................ 153,262
Less: historical interest expense on debt repaid (15)................................. (42,663)
Less: historical amortization of debt issuance costs (16)............................. (2,492)
------------
Total adjustment................................................................. $108,107
------------
------------
</TABLE>
- ------------
(1) Represents interest on the Domestic Revolving Credit Facility using an
assumed interest rate of 8.19%, based on the $16.6 million drawdown at the
Closing.
(2) Represents interest on $400 million of Domestic Tranche A term loans using
an assumed interest rate of 8.19%.
(3) Represents interest on $275 million of Domestic Tranche B term loans using
an assumed interest rate of 8.44%.
(4) Represents interest on $200 million of Domestic Tranche C term loans using
an assumed interest rate of 8.69%.
(5) Represents interest on the Puerto Rico Revolving Credit Facility using an
assumed interest rate of 8.19%, assuming no drawdown at the Closing.
(footnotes continued on next page)
17
<PAGE>
<PAGE>
(footnotes continued from previous page)
(6) Represents interest on $110 million of Puerto Rico Tranche A term loans
using an assumed interest rate of 8.19%.
(7) Represents interest on $75 million of Puerto Rico Tranche B term loans
using an assumed interest rate of 8.44%.
(8) Represents interest on $190 million of Domestic Cellular Senior Notes using
an assumed interest rate of 10.75%.
(9) Represents cash interest portion of the $150 million of Subordinated Notes
using an assumed interest rate of 10%.
(10) Represents a 0.5% commitment fee on the unused portions of the Domestic and
Puerto Rico Revolving Credit Facility.
(11) Represents Paid In Kind interest on $150 million of Puerto Rico Senior
Discount Notes using an assumed interest rate of 11.5%, compounding
semi-annually.
(12) Represents Paid In Kind portion of the $150 million of Subordinated Notes
using an assumed interest rate of 13%.
(13) Represents the amortization of the discount ($19.8 million) on the shares
issued to the Subordinated Notes holder.
(14) Represents amortization of deferred financing costs of $51.1 million over
the term of the related debt.
(15) Represents the elimination of historical cash interest expense.
(16) Represents the elimination of historical amortization of deferred financing
fees.
A 0.125% increase or decrease in the assumed weighted average interest rate
applicable to the credit facilities would change the pro forma interest expense
and income before taxes as follows:
<TABLE>
<CAPTION>
YEAR ENDED
MAY 31, 1998
------------
(DOLLARS IN
THOUSANDS)
<S> <C>
Domestic Cellular Credit Facility
Revolving Credit Facility.............................................. $ 21
Tranche A term loans................................................... 500
Tranche B term loans................................................... 344
Tranche C term loans................................................... 250
Puerto Rico Credit Facility
Revolving Credit Facility.............................................. --
Tranche A term loans................................................... 138
Tranche B term loans................................................... 94
Senior Unsecured Notes...................................................... 238
Senior Discount Notes....................................................... 188
------------
Total............................................................. $1,773
------------
------------
</TABLE>
(c) The tax effect of pro forma adjustments to earnings before taxes is based on
the estimated applicable statutory tax rates.
(d) To eliminate dividends on preferred stock redeemed as part of the
Recapitalization.
(e) For purposes of determining the pro forma ratio of earnings to fixed
charges, earnings are defined as earnings before income taxes, minority
interest and extraordinary items, plus fixed charges. Fixed charges include
interest expense on all indebtedness, amortization of deferred debt issuance
costs, and one-third of rental expense on operating leases representing that
portion of rental expense deemed to be attributable to interest. Earnings
were insufficent to cover fixed charges on a pro forma basis for Centennial
Cellular Corp. by $159.2 million.
18
<PAGE>
<PAGE>
THE TENDER OFFERS AND THE SOLICITATIONS
PRINCIPAL TERMS OF THE TENDER OFFERS AND THE SOLICITATIONS
The Tender Offers. Upon the terms and subject to the conditions set forth
in this Offer to Purchase and Consent Solicitation and the related Consent and
Letter of Transmittal, the Company is offering to purchase the Notes for a cash
purchase price with respect to each series of Notes as determined below. The
total consideration with respect to each series of Notes tendered pursuant to
the Tender Offers will be a price calculated in accordance with the standard
market practice as described in Appendices A, B and C to this Offer to Purchase
and Consent Solicitation, based on the assumption that each series of Notes will
be redeemed in full on the Applicable Reference Date as specified below (the
'Applicable Reference Date') (using the then applicable Redemption Price) and
the yield to the Applicable Reference Date (the 'Tender Offer Yield') equal to
the sum of (x) the yield on the applicable U.S. Treasury security specified
below for each series of Notes as calculated by the Dealer Manager in accordance
with standard market practice, based on the bid side price for such U.S.
Treasury security specified below at 2:00 p.m. on the second business day
immediately preceding the Tender Offer Expiration Date (the 'Price Determination
Date'), as displayed on the relevant Bloomberg Page of the Bloomberg Government
Pricing Monitor (or any recognized quotation source selected by the Dealer
Manager in its sole discretion if the Bloomberg Government Pricing Monitor is
not available or is manifestly erroneous), plus (y) a number of basis points as
specified below for each series of Notes (such price being rounded to the
nearest cent per $1,000 principal amount), which amount includes the Consent
Payment (the 'Total Consideration'). The Total Consideration, minus the Consent
Payment of $25.00 is the 'Purchase Price.' In either the case of the Total
Consideration or the Purchase Price, accrued and unpaid interest on such $1,000
principal amount will be paid up to, but not including, the date of payment for
the Notes accepted for purchase (the 'Payment Date').
<TABLE>
<CAPTION>
APPLICABLE
AGGREGATE APPLICABLE REFERENCE APPLICABLE APPLICABLE
PRINCIPAL AMOUNT SECURITY REFERENCE U.S. TREASURY REFERENCE FIXED
CUSIP NO. OUTSTANDING DESCRIPTION DATE/PRICE SECURITY PAGE SPREAD
- ---------- ---------------- ------------------- --------------- -------------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
15133VAA7 $250,000,000 8 7/8% Senior Notes 5-1-99/105.25% 6 3/8% U.S. Treasury PX3 50.0bps
due 2001 due 4-30-99
15133VAB5 $100,000,000 10 1/8% Senior 5-15-05/100% 6 1/2% U.S. Treasury PX6 75.0bps
Notes due 5-15-05
due 2005
<CAPTION>
CONSENT
CUSIP NO. PAYMENT
- ---------- --------
<S> <C>
15133VAA7 $25.00
15133VAB5 $25.00
</TABLE>
The applicable Purchase Price plus accrued and unpaid interest per $1,000
principal amount for each Note purchased to the Tender Offers will be rounded to
the nearest cent. A hypothetical calculation as of 2:00 p.m. on Friday
September 4, 1998 demonstrating the determination of the Total Consideration and
Purchase Price per $1,000 principal amount for the 8 7/8% Senior Notes due 2001
and for the 10 1/8% Senior Notes due 2005 is set forth in Appendices A, B and C
hereto, respectively.
As soon as practicable on the Price Determination Date, but in any event
before 9:00 a.m., New York City time, on the following business day, the Company
will publicly announce such information by release to the Dow Jones News
Service. Because the Purchase Price prior to the Price Determination Date is
based on a fixed spread pricing formula that is linked to the Tender Offer
Yield, the actual amount of cash that will be received by a tendering Holder
pursuant to any Tender Offer will be affected by changes in such yield during
the term of such Tender Offer prior to the Price Determination Date. After the
Price Determination Date, when the Purchase Price is no longer linked to the
Reference Security, the actual amount of cash that will be received by a
tendering Holder pursuant to the Tender Offers will be known and Holders will be
able to ascertain the Purchase Price in the manner described above, unless a
Tender Offer is extended for a period longer than three business days from the
previously scheduled Tender Offer Expiration Date, in which event a new Price
Determination Date may be established with respect to such Tender Offer.
Holders of Notes may, prior to the Price Determination Date, obtain
hypothetical quotes of applicable Tender Offer Yields (calculated as of a then
recent time) and the resulting hypothetical Purchase Prices, and may after the
Price Determination Date obtain the actual applicable Tender Offer Yields and
Purchase Prices, by contacting the Dealer Manager. Although the Fixed Spread
Price will be calculated on the Price Determination Date, information regarding
the closing yield to maturity of each Reference Security on any trading day may
also be found in The Wall Street Journal.
19
<PAGE>
<PAGE>
The Solicitations. Upon the terms and subject to the conditions set forth
in this Offer to Purchase and Consent Solicitation and in the accompanying
Consent and Letter of Transmittal, including, if the Consent Solicitations are
extended or amended, the terms and conditions of any such extensions or
amendments, the Company is also soliciting Consents from Holders of Notes with
respect to the Proposed Amendments to the Indentures under which each series of
Notes was issued. Holders of Notes who tender their Notes in the Tender Offers
on or prior to the Solicitation Expiration Date will be deemed to have consented
to the Proposed Amendments relating to such series. Pursuant to the terms of the
Consent and Letter of Transmittal, the completion, execution and delivery
thereof by a Holder of Notes in connection with the tender of Notes in the
Tender Offers on or prior to the Solicitation Expiration Date constitutes the
Consent of such tendering Holder to the Proposed Amendments. HOLDERS OF NOTES
MAY NOT DELIVER CONSENTS WITHOUT TENDERING THEIR NOTES IN THE TENDER OFFERS.
Although the Proposed Amendments will become effective upon certification
on or after the Solicitation Expiration Date, the Proposed Amendments to the
Indentures under which a series of Notes was issued will not be operative until
the Company has made payment for all Notes in such series that are tendered and
not withdrawn in the applicable Tender Offer and has made the Consent Payments.
Therefore, if the Merger Agreement is terminated without the Merger having been
consummated, the Proposed Amendments will have no force and effect. See
' -- Withdrawal of Tenders; Revocation of Consents; Absence of Appraisal
Rights.' The Company intends to execute the Supplemental Indentures on or
promptly after the Solicitation Expiration Date.
Upon the terms and subject to the conditions set forth in this Offer to
Purchase and Consent Solicitation and in the accompanying Consent and Letter of
Transmittal, the Company will make a Consent Payment of $25.00 per $1,000
principal amount of Notes for which a validly delivered and unrevoked Consent
has been received by the Depositary on or prior to 5:00 p.m., New York City
time, on the Solicitation Expiration Date. The Consent Payment with respect to
the Notes will be paid on the Payment Date concurrently with the payment of the
Purchase Price for such Notes. The Purchase Price plus the Consent Payment are
collectively referred to herein as the Total Consideration.
In order to be eligible to receive the Consent Payments, Holders must
deliver their Consents and tender their Notes on or prior to the Solicitation
Expiration Date. Holders who validly tender their Notes and deliver Consents
subsequent to the Solicitation Expiration Date will receive the Purchase Price
but not the Consent Payment. If the Proposed Amendments become operative, each
Holder of Notes of the affected series will be bound by the Proposed Amendments
whether or not such Holder timely delivered its Consent.
Pursuant to the terms of the Indentures, the Proposed Amendments require
the written consent of the Holders of not less than a majority in aggregate
principal amount outstanding of each series of Notes not owned by the Company or
its affiliates.
CONDITIONS OF THE TENDER OFFERS AND THE SOLICITATIONS
Notwithstanding any other provision of the Tender Offers, the Company shall
not be required to accept for purchase, or to pay for, Notes tendered pursuant
to any Tender Offer, and may terminate, extend or amend such Tender Offer and,
subject to Rule 14e-1 under the Exchange Act, may postpone the acceptance for
purchase and payment for Notes so tendered, whether or not any other Notes have
therefore been accepted for purchase pursuant to such Tender Offer, if (i) the
Company shall not have received the Requisite Consents on or prior to the
Solicitation Expiration Date, (ii) the Company shall not have received valid
tenders of Notes from Holders of not less than majority aggregate principal
amount outstanding of each series of Notes, (iii) the Merger shall not have been
consummated and (iv) any of the General Conditions (as defined below) shall not
have been satisfied.
Notwithstanding any other provisions of the Solicitations, the Company
shall not be required to make the Consent Payments for Consents delivered
pursuant to the Solicitations and may terminate, extend or amend the
Solicitations and may postpone the acceptance for purchase and payment for
Consents so delivered, whether or not other Consent Payments have been made with
respect to any
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other Consent, if (i) the Company shall not have accepted for purchase all Notes
that are tendered in the Tender Offers or (ii) any of the General Conditions
shall not have been satisfied.
For purposes of the foregoing provisions, all of the 'General Conditions'
shall be deemed to have been satisfied unless any of the following conditions
shall occur on or prior to the Payment Date and prior to the acceptance for
payment of any Notes tendered pursuant to the applicable Tender Offer:
(1) there shall have been threatened, instituted or pending any action
or proceeding by or before any court or governmental regulatory or
administrative agency or authority or tribunal, domestic or foreign which
(a) challenges the making of the Tender Offers, the acquisition of Notes
pursuant to the Tender Offers or otherwise relates in any manner to the
Tender Offers or the Solicitations, or (b) in the sole judgment of the
Company, could materially adversely affect the business, financial
condition, income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or materially impair the contemplated
benefits of the Tender Offers and the Solicitations to the Company;
(2) a statute, rule, regulation, judgment, order, stay, decree or
injunction shall have been threatened, proposed, sought, promulgated,
enacted, entered, enforced or deemed to be applicable by any court or
governmental regulatory or administrative agency or authority or tribunal,
domestic or foreign, which, in the sole judgment of the Company, would or
might directly or indirectly prohibit, prevent, restrict, or delay
consummation of the Tender Offers or the Solicitations or that could be
materially adverse to the business, operations, properties, condition
(financial or otherwise), assets, liabilities or prospects of the Company
and its subsidiaries, taken as a whole;
(3) there shall have occurred or be likely to occur any event
affecting the business or financial affairs of the Company that would or
might prohibit, prevent, restrict, or delay consummation of the Tender
Offers or the Solicitations or that will, or is reasonably likely to,
materially impair the contemplated benefits of the Tender Offers or the
Solicitations to the Company or otherwise result in the consummation of the
Tender Offers or the Solicitations not being reasonably likely or not being
in the best interests of the Company;
(4) the Company shall not have obtained all consents, approvals,
waivers or amendments from third parties necessary to permit the
consummation of the Tender Offers or the Solicitations;
(5) there shall have occurred (a) any general suspension of,
shortening of hours for, or limitation on prices for trading in securities
on the New York Stock Exchange, the American Stock Exchange or in the
over-the-counter market (whether or not mandatory), (b) any significant
adverse change in the price of the Notes or the continuation of adverse
conditions or any significant adverse change in the United States
securities or financial markets, (c) a material impairment in the trading
market for debt securities, (d) a declaration of a banking moratorium or
any suspension of payments in respect of banks by federal or state
authorities in the United States (whether or not mandatory), (e) a
commencement of a war, armed hostilities or other national or international
crisis, (f) any limitation (whether or not mandatory) by any governmental
authority on, or other event having a reasonable likelihood of affecting,
the extension of credit by banks or other lending institutions in the
United States, (g) any significant change in United States currency
exchange rates or a suspension of, or limitation on, the markets therefor
(whether or not mandatory), (h) any significant adverse change in United
States securities or financial markets generally or (i) in the case of any
of the foregoing existing at the time of the commencement of the Tender
Offers, a material acceleration or worsening thereof; and
(6) any trustee under the applicable Indentures shall have objected in
any respect to, or taken any action that could, in the sole judgment of the
Company, adversely affect the consummation of the Tender Offers or the
Solicitations or the Company's ability to effect any of the Proposed
Amendments, or shall have taken any action that challenges the validity or
effectiveness of the procedures used by the Company in soliciting the
Consents to the Proposed Amendments (including the form thereof) or in the
making of the Tender Offers or the Solicitations or the acceptance of or
payment for any of the Notes or any of the Consents.
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The foregoing conditions to the Tender Offers and the Solicitations are for
the sole benefit of the Company, any of which may be asserted by the Company in
its sole discretion regardless of the circumstances giving rise to any such
condition (including any action or inaction by the Company) and may be waived by
the Company, in whole or in part, at any time and from time to time in its sole
discretion. The failure by the Company at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Company concerning the events
described in this Section shall be final and binding upon all persons.
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENTS
Each Tender Offer will expire at 5:00 p.m., New York City time, on the
Tender Offer Expiration Date (Wednesday, October 14, 1998, unless extended).
Each Solicitation will expire at 5:00 p.m., New York City time, on the
Solicitation Expiration Date (Monday, September 21, 1998, unless extended). The
Company expressly reserves the right to extend each Tender Offer or Solicitation
for such period or periods as it may determine in its sole discretion from time
to time by giving written or oral notice, promptly followed by written notice to
the Depositary and by making a public announcement by press release to the Dow
Jones News Service prior to 9:00 a.m., New York City time, on the next business
day following the previously scheduled Solicitation Expiration Date or Tender
Offer Expiration Date, as the case may be. During any extension of any Tender
Offer, all Notes previously tendered and not accepted for purchase will remain
subject to such Tender Offer and may, subject to the terms and conditions of
such Tender Offer, be accepted for purchase by the Company. During any extension
of a Solicitation, any Consents delivered to the Depositary will remain
effective, unless revoked, as permitted, prior to the Solicitation Expiration
Date.
The Company expressly reserves the absolute right, in its sole discretion,
to (i) waive any condition to any Tender Offer or Solicitation, (ii) amend any
terms of a Tender Offer or Solicitation and (iii) modify any Tender Offer or
Solicitation. Any waiver or amendment applicable to any Tender Offer or
Solicitation, as the case may be, will apply to all Notes tendered in such
Tender Offer or for which a Consent was delivered, as the case may be,
regardless of when or in what order such Notes were tendered or with respect to
which a Consent was delivered, as the case may be. If the Company makes a
material change in the terms of any Tender Offer or Solicitation or in the
information concerning any Tender Offer or Solicitation or if it waives a
material condition of any Tender Offer or Solicitation, the Company will
disseminate additional Tender Offer or Solicitation materials and will extend
such Tender Offer or Solicitation and will provide additional withdrawal or
revocation rights, in each case to the extent required by law. See
' -- Withdrawal of Tenders; Revocation of Consents; Absence of Appraisal
Rights.'
The Company expressly reserves the right, in its sole discretion, to
terminate any Tender Offer or Solicitation if any of the conditions applicable
thereto set forth under ' -- Conditions of the Tender Offers and the
Solicitations' shall exist and shall not have been waived by the Company. Any
such termination will be followed promptly by public announcement thereof. In
the event the Company shall terminate a Tender Offer, it shall give immediate
notice thereof to the Depositary, and all Notes theretofore tendered pursuant to
such Tender Offer and not accepted for payment shall be returned promptly to the
tendering Holders thereof. In the event the Company shall terminate any
Solicitation it shall give immediate notice to the Depositary, and all Consents
theretofore delivered pursuant to such Solicitation, shall be promptly returned
to the delivering Holders. See ' -- Withdrawal Tender; Revocation of Consents;
Absence of Appraisal Rights' and ' -- Conditions of the Tender Offers and the
Solicitations.'
Any extension, waiver, delay, termination or amendment of a Tender Offer or
Solicitation will be followed as promptly as practicable by public announcement
thereof, such announcement in the case of an extension to be issued no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Solicitation Expiration Date or Tender Offer Expiration
Date, as the case may be. Without limiting the manner by which the Company may
choose to make such announcement, the Company will not, unless otherwise
required by law, have any obligation to publish, advertise or
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otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
ACCEPTANCE OF NOTES FOR PURCHASE; PAYMENT FOR NOTES; PAYMENT OF CONSENT PAYMENTS
Upon the terms and subject to the conditions of the Tender Offers, the
Company will accept for purchase, and promptly after the Tender Offer Expiration
Date will pay for, all Notes validly tendered under the Tender Offers and not
withdrawn. The Company will not accept Notes for purchase prior to the Tender
Offer Expiration Date. The Company expressly reserves the right, in its sole
discretion, to delay acceptance for purchase of Notes tendered under any Tender
Offer or the payment for Notes accepted for purchase (subject to Rule 14e-1
under the Exchange Act, which requires that the Company pay the consideration
offered or return the Notes deposited by or on behalf of the Holders promptly
after the termination or withdrawal of a Tender Offer), or to terminate any
Tender Offer and not accept for purchase any Notes not theretofore accepted for
purchase, if any of the conditions set forth under ' -- Conditions of the Tender
Offers and the Solicitations' shall not have been satisfied or waived by the
Company or in order to comply in whole or in part with any applicable law. In
all cases, payment for Notes purchased pursuant to the Tender Offers will be
made only after timely receipt by the Depositary of (i) such Notes, or timely
confirmation of a book-entry transfer (a 'Book-Entry Confirmation') of such
Notes into the Depositary's account at The Depository Trust Company ('DTC')
pursuant to the procedures set forth below in 'Procedures for Tendering Notes
and Delivering Consents,' (ii) a properly completed and duly executed Consent
and Letter of Transmittal (or a manually signed facsimile thereof, or any tender
of Notes transmitted by an Agent's Message (as defined below)) and (iii) all
necessary signature guarantees and any other documents required by the Consent
and Letter of Transmittal. See ' -- Procedures for Tendering Notes and
Delivering Consents' for a description of the procedures for tendering Notes
pursuant to the Tender Offers.
For purposes of any Tender Offer, the Company will be deemed to have
accepted for payment (and therefore purchased) Notes when and if it gives oral,
to be followed by written, notice to the Depositary of its acceptance of such
Notes for payment pursuant to such Tender Offer. Payment for Notes purchased
pursuant to the Tender Offers will be made by the Company on the Payment Date by
depositing the aggregate purchase price therefor with the Depositary, which will
act as agent for tendering Holders for the purpose of receiving payment from the
Company and transmitting payment to the tendering Holders.
The Consent Payment, with respect to the Consents that have been validly
delivered and not revoked on or prior to the Solicitation Expiration Date, will
be paid on the Payment Date concurrently with the payment of the Purchase Price
for such Notes. Upon the terms and subject to the conditions of the
Solicitations, the Consent Payments with respect to which Consents have been
validly given and not revoked on or prior to the Solicitation Expiration Date
will be made by the Depositary promptly after receipt of funds for the payment
of such Consent Payments by the Depositary.
Tenders of and Consents with respect to Notes pursuant to the Tender Offers
and the Solicitations will be accepted only in principal amounts equal to $1,000
or integral multiples thereof.
If, for any reason whatsoever, acceptance for purchase of or payment for
validly tendered Notes pursuant to any Tender Offer is delayed or the Company is
unable to accept for purchase or to pay for validly tendered Notes pursuant to
such Tender Offer, then the Depositary may, nevertheless, on behalf of the
Company, retain tendered Notes, without prejudice to the rights of the Company
described under ' -- Expiration Date; Extension; Termination; Amendments,'
' -- Conditions of the Tender Offers and the Solicitations' and ' -- Withdrawal
of Tenders; Revocation of Consents; Absence of Appraisal Rights,' but subject
further to Rule 14e-1 under the Exchange Act, which requires that the Company
pay the consideration offered or return the Notes deposited by or on behalf of
the Holders promptly after the termination or withdrawal of the Tender Offers.
Under no circumstances will any additional interest be payable because of
any delay on behalf of the Depositary in the transmission of funds to the Holder
of purchased Notes. If any tendered Notes are not accepted for payment for any
reason pursuant to the terms and conditions of the applicable Tender Offer or if
certificates are submitted evidencing more Notes than are tendered, certificates
evidencing
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unpurchased Notes will be returned, without expense, to the tendering Holder
(or, in the case of Notes tendered by book-entry transfer into the Depositary's
account at DTC pursuant to the procedure set forth under the caption
' -- Procedures for Tendering Notes and Delivering Consents -- Book-Entry
Delivery,' such Notes will be credited to an account maintained at DTC
designated by the participant therein who so delivered such Notes), unless
otherwise requested by such Holder under 'Special Delivery Instructions' in the
Consent and Letter of Transmittal promptly following the Tender Offer Expiration
date or the termination of the applicable Tender Offer.
Tendering Holders whose Notes are purchased in the Tender Offers will not
be obligated to pay brokerage commissions or fees to Merrill Lynch or to pay
transfer taxes with respect to the purchase of their Notes unless the box
entitled 'Special Payment Instructions' or the box entitled 'Special Delivery
Instructions' in the respective Consent and Letter of Transmittal has been
completed, as described in the instructions thereto. The Company will pay all
other charges and expenses in connection with the mailing and delivery of the
Tender Offer and solicitation material. See ' -- Depositary' and
' -- Miscellaneous.'
PROCEDURES FOR TENDERING NOTES AND DELIVERING CONSENTS
General. THE TENDER OF NOTES PURSUANT TO THE CONSENT AND LETTER OF
TRANSMITTAL ON OR PRIOR TO THE SOLICITATION EXPIRATION DATE AND IN ACCORDANCE
WITH THE PROCEDURES DESCRIBED BELOW WILL CONSTITUTE A CONSENT WITH RESPECT TO
THE NOTES TENDERED. Holders of the Notes who tender their Notes in the Tender
Offers on or prior to the Solicitation Expiration Date are obligated to, and
will be deemed to have given, consent to the Proposed Amendments. HOLDERS OF THE
NOTES MAY NOT DELIVER CONSENTS WITHOUT TENDERING THEIR NOTES IN THE TENDER
OFFERS. A defective tender of Notes may, in the sole discretion of the Company,
constitute a valid consent to the Proposed Amendments and be counted for
purposes of determining whether Requisite Consents have been obtained therefor
(and payment of the Consent Payment will be made) even if the accompanying
Notes, if any, are not accepted for purchase by reason of such defect.
Proper Tender of Notes and Consents. For Notes to be properly tendered
pursuant to the Tender Offers, (i) such Notes, together with a properly
completed and duly executed Consent and Letter of Transmittal (or a manually
signed facsimile thereof), and any other documents required by the Consent and
Letter of Transmittal, must be received on or prior to the Tender Offer
Expiration Date or the Solicitation Expiration Date, as the case may be, by the
Depositary at its address set forth on the back cover of this Offer to Purchase
and Consent Solicitation, or (ii) such Notes must be tendered pursuant to the
procedure for book-entry transfer described under the caption ' -- Procedures
for Tendering Notes and Delivering Consents -- Book-Entry Delivery' and a
Book-Entry Confirmation, including any tender of Notes by an Agent's Message
must be received by the Depositary, in each case to the Tender Offer Expiration
Date or the Solicitation Expiration Date, as the case may be, or (iii) after the
Solicitation Expiration Date, the tendering Holder may comply with the
guaranteed delivery procedures described under the caption ' -- Procedures for
Tendering Notes and Delivering Consents -- Guaranteed Delivery.' Holders whose
Notes are registered in the name of a nominee are urged to contact such nominee
promptly if they wish to accept the Tender Offer. ALL CONSENTS AND LETTERS OF
TRANSMITTAL, NOTICES OF GUARANTEED DELIVERY AND NOTES SHOULD BE SENT ONLY TO THE
DEPOSITARY, NOT TO THE COMPANY, CCW, THE TRUSTEE, THE INFORMATION AGENT OR THE
DEALER MANAGER.
Except as provided under the captions ' -- Procedures for Tendering Notes
and Delivering Consents -- Book-Entry Delivery' and ' -- Procedures for
Tendering Notes and Delivering Consents -- Guaranteed Delivery,' unless the
Notes being tendered are deposited with the Depositary on or prior to the Tender
Offer Expiration Date (accompanied by a properly completed and duly executed
Consent and Letter of Transmittal and any other documents required by the
Consent and Letter of Transmittal), the Company may, at its option, reject such
tender. If less than the entire principal amount of any Notes evidenced by a
submitted certificate(s) is to be tendered, the tendering Holder should fill in
the principal amount tendered in the appropriate box on the Consent and Letter
of Transmittal. The entire principal amount represented by all Notes deposited
with the Depositary will be deemed to have been tendered unless otherwise
indicated.
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In all cases, notwithstanding any other provision hereof, the payment for
Notes tendered and accepted for payment pursuant to the Tender Offers will be
made only after the timely receipt by the Depositary of (i) certificates for
such securities or a timely Book-Entry Confirmation, (ii) the Consent and Letter
of Transmittal (or a facsimile thereof) properly completed and duly executed, or
an Agent's Message, and (iii) any required signature guarantees and other
documents required by such Consent and Letter of Transmittal. Accordingly,
tendering Holders may be paid at different times depending upon when
certificates for securities or Book-Entry Confirmations are actually received by
the Depositary.
Tender of Notes Held in Physical Form. To effectively tender Notes held in
physical form (and deliver the related Consents), certificates representing the
Notes, together with a properly completed Consent and Letter of Transmittal (or
a manually signed facsimile thereof), and any other documents required by the
Consent and Letter of Transmittal must be received by the Depositary at its
address set forth on the back cover of this Offer to Purchase and Consent
Solicitation on or prior to the Tender Offer Expiration Date. A tender of Notes
may also be effected through the deposit of Notes with DTC and making book-entry
delivery as described below, along with a properly completed and duly executed
Consent and Letter of Transmittal or Agent's Message required to effectuate the
valid delivery of related Consents with respect to such Notes. After the
Solicitation Expiration Date, a tendering Holder may comply with the guaranteed
delivery procedures set forth below if such Holder is unable to tender Notes on
or prior to the Tender Offer Expiration Date. The guaranteed delivery procedures
set forth below may not be used to effectively tender Notes or deliver Consents
on or prior to the Solicitation Expiration Date. In order to receive both the
Consent Payment and the Purchase Price, the Notes and the Consent and Letter of
Transmittal or Agent's Message must be received by the Depositary on or prior to
the Solicitation Expiration Date. All Consents and Letters of Transmittal,
Notices of Guaranteed Delivery and Notes should be sent only to the Depositary
and should not be sent to the Company, CCW, the Trustee, the Information Agent
or the Dealer Manager.
ALL CONSENTS AND LETTERS OF TRANSMITTAL, NOTICES OF GUARANTEED DELIVERY AND
NOTES SHOULD BE DELIVERED ONLY BY COURIER OR HAND DELIVERY OR TRANSMITTED BY
MAIL. DELIVERIES SHOULD BE MADE ONLY TO THE DEPOSITARY, NOT TO THE COMPANY, CCW,
THE TRUSTEE, THE INFORMATION AGENT OR THE DEALER MANAGER. THE METHOD OF DELIVERY
OF CERTIFICATES FOR NOTES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND
RISK OF THE TENDERING HOLDER, AND DELIVERY WILL BE DEEMED TO BE MADE ONLY WHEN
ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR NOTES ARE SENT BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Tender of Notes Held Through a Custodian. To effectively tender Notes (and
deliver the related consents) that are held of record by a custodian bank,
depositary, broker, trust company or other nominee, the beneficial owner thereof
must instruct such custodian to tender the Notes on the beneficial owner's
behalf. A Letter of Instruction is included in the materials provided with this
Offer to Purchase and Consent Solicitation which may be used by a beneficial
owner to effect the tender. Any beneficial owner of Notes held of record by DTC
or its nominee, through authority granted by DTC, may direct the DTC participant
through which such beneficial owner's Notes are held in DTC to execute, on such
beneficial owner's behalf, a Consent and Letter of Transmittal with respect to
Notes beneficially owned by such beneficial owner.
Tender of Notes Held Through DTC. To effectively tender Notes (and deliver
the related Consents) that are held through DTC, DTC participants should either:
(i) properly complete and duly execute the Consent and Letter of Transmittal (or
a manually signed facsimile thereof), together with any other documents required
by the Consent and Letter of Transmittal, and mail or deliver the Consent and
Letter of Transmittal and such other documents to the Depositary, or (ii)
electronically transmit their acceptance through the DTC Automated Tender Offer
Program ('ATOP') (and thereby tender Notes) for which the transaction will be
eligible. Upon receipt of such Holder's acceptance through ATOP, DTC will edit
and verify the acceptance and send an Agent's Message to the depository for its
acceptance. Delivery of tendered notes must be made to the Depositary pursuant
to the book entry delivery procedures set forth below or the tendering DTC
participant must comply with the guaranteed delivery procedures set forth below
but such guaranteed delivery procedures may only be used for tenders of Notes
after the Solicitation Expiration Date.
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Except as provided below, unless the Notes being tendered are deposited
with the Depositary on or before the applicable Solicitation Expiration Date or
Tender Offer Expiration Date, as the case may be
(accompanied by a properly completed and duly executed Consent and Letter of
Transmittal or Agent's Message), the Company may, at its option, treat such
tender as defective for purposes of the right to receive the applicable Consent
Payment or Purchase Price. Payment for the Notes will be made only against
deposit of the tendered Notes and delivery of all other required documents.
Signature Guarantees. No signature guarantee is required on the Consent and
Letter of Transmittal if the Consent and Letter of Transmittal is signed by the
registered holder of the Notes tendered therewith and payment is to be made
directly to such registered holder, or if Notes are tendered for the account of
an institution that is a member of a Signature Guarantee Program recognized by
the Depositary (i.e., the Securities Transfer Agents Medallion Program (STAMP),
the Stock Exchanges Medallion Program (SEMP) and the New York Stock Exchange's
Medallion Program (MSP)) (each such entity being hereinafter referred to as an
'Eligible Institution'). In all other cases, all signatures on the Consent and
Letter of Transmittal must be guaranteed by an Eligible Institution. (See
Instructions 1 and 5 of the Consent and Letter of Transmittal.) If a Note is
registered in the name of a person other than the person signing a Consent and
Letter of Transmittal, or if payment is to be made or Notes not purchased or
tendered are to be issued, to a person other than the registered holder, then
such Note must be endorsed or accompanied by a written instrument or instruments
of transfer in a form satisfactory to the Company, in either case, executed by
the registered holder with the signatures guaranteed by an Eligible Institution.
Book-Entry Delivery. The Depositary will establish an account or accounts
with respect to the Notes at DTC for purposes of the Tender Offers within two
business days after the date of the commencement of the Tender Offers, and any
financial institution that is a participant in DTC's system may make book-entry
delivery of the Notes by causing DTC to transfer such Notes into the
Depositary's account at DTC in accordance with DTC's procedure for such
transfer.
The term 'Agent's Message' means a message transmitted by DTC and received
by the Depositary and forming a part of a Book-Entry Confirmation, which states
that DTC has received an express acknowledgement from a participant in DTC
tendering the Notes, that such participant has received and agrees to be bound
by the terms of the Consent and Letter of Transmittal and the Company may
enforce such agreement against the participant.
Guaranteed Delivery. If a Holder desires to tender Notes pursuant to the
Tender Offers after the Solicitation Expiration Date, and such Holder's
certificates are not immediately available or time will not permit all required
documents to reach the Depositary on or prior to the Tender Offer Expiration
Date, or such Holder cannot complete the procedures for book-entry transfer on a
timely basis, such Notes may nevertheless be tendered provided that all of the
following conditions are satisfied:
(a) The tender is made by or through an Eligible Institution;
(b) On or prior to the Tender Offer Expiration Date, the Depositary
receives from such Eligible Institution at the address for the Depositary
set forth on the back cover hereof, a properly completed and duly executed
Notice of Guaranteed Delivery (by mail, hand delivery or facsimile
transmission). Such Notice of Guaranteed Delivery shall (i) be
substantially in the form made available by the Company, (ii) set forth the
name and address of the Holder, (iii) describe the Notes and the principal
amount of the Notes tendered, (iv) state that the tender is being made
thereby and (v) guarantee that, within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery, a duly executed Consent and Letter of Transmittal (or a manually
signed facsimile thereof), including any tender of Notes transmitted by an
Agent's Message, together with the certificates representing such Notes (or
appropriate Book-Entry Confirmation) and any other documents required by
the Consent and Letter of Transmittal and the instructions thereto will be
deposited by the Eligible Institution with the Depositary; and
(c) The certificates for the tendered Notes in proper form for
transfer (or appropriate Book-Entry Confirmation), together with a properly
completed and duly executed Consent and Letter of Transmittal (or a
manually signed facsimile thereof), or confirmation of book-entry transfer
of such Notes into the Depositary's account with DTC as described above,
including an Agent's Message in
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connection therewith, and all other documents required by the Consent and
Letter of Transmittal and the instructions thereto, are received by the
Depositary within three New York Stock Exchange trading days after the date
of execution of such Notice of Guaranteed Delivery.
In all cases, payment for Notes tendered and accepted for payment pursuant
to the Tender Offers will be made only after timely receipt by the Depositary of
certificates for such Notes, a properly completed and duly executed Consent and
Letter of Transmittal (or a manually signed facsimile thereof) or Agent's
Message and any other documents required by the Consent and Letter of
Transmittal.
THE PROCEDURES FOR GUARANTEED DELIVERY MAY NOT BE USED TO EFFECT TENDERS OF
NOTES (AND DELIVERY OF THE RELATED CONSENTS) ON OR PRIOR TO THE SOLICITATION
EXPIRATION DATE.
Tender Constitutes an Agreement. The proper tender of Notes pursuant to any
of the procedures described above will constitute a binding agreement between
the tendering Holders and the Company upon the terms and subject to the
conditions of the Tender Offers, and a representation that (i) such Holder owns
the Notes being tendered and is entitled to tender such Notes as contemplated by
the Tender Offers, all within the meaning of Rule 14e-4 under the Exchange Act
and (ii) the tender of such Notes complies with Rule 14e-4 under the Exchange
Act.
Further, by executing a Consent and Letter of Transmittal as set forth
above or permitting an Agent's Message to be delivered, and subject to and
effective upon acceptance for payment of and payment for the Notes tendered
therewith, a tendering Holder irrevocably sells, assigns and transfers to, or
upon the order of, the Company all right, title and interest in and to all the
Notes tendered thereby, waives any and all other rights with respect to the
Notes (including without limitation any existing or past defaults and their
consequences in respect of the Notes and the Indenture under which the Notes
were issued) and releases and discharges the Company from any and all claims
such Holder may have now, or may have in the future, arising out of, or related
to, the Notes, including without limitation any claims that such Holder is
entitled to receive additional principal or interest payments with respect to
the Notes. Each such Holder also appoints the Depositary the true and lawful
agent and attorney-in-fact of such Holder with respect to such Notes, with full
power of substitution and resubstitution (such power of attorney being deemed to
be an irrevocable power coupled with an interest) to (i) deliver such Notes or
transfer ownership of such Notes on the account books maintained by DTC,
together, in each case, with all accompanying evidences of transfer and
authenticity, to or upon the order of the Company, (ii) present such Notes for
transfer on the books of the Company, (iii) receive all benefits or otherwise
exercise all rights of beneficial ownership of such Notes (except that the
Depositary will have no rights to or control over funds from the Company, except
as agent for the Company, for the purchase price for any notes tendered hereby
that are purchased by the Company) and (iv) deliver to the Company and the
Trustee the Consent and Letter of Transmittal as evidence of such Holder's
Consent to the Proposed Amendments and as certification that the Requisite
Consents to the Proposed Amendments duly executed by Holders of such Notes have
been received, all in accordance with the terms of the Tender Offers and
Solicitations.
Determination of Validity; Rejection of Notes; No Obligation to Give Notice
of Defects. All questions as to the principal amount of Notes to be accepted,
the validity, form, eligibility (including the time of receipt) and acceptance
for payment of any tender of Notes or delivery of Consents pursuant to the
procedures described herein and the form and validity (including time of receipt
of notices of withdrawal) of all documents will be determined by the Company in
its sole discretion, which determination shall be final and binding on all
parties. The Company reserves the absolute right to reject any or all tendered
Notes or Consents determined by it not to be in proper form or the acceptance of
or payment for which may be unlawful. The Company also reserves the absolute
right to waive any of the conditions of any Tender Offer or Solicitation and any
defect or irregularity in the tender of any particular Notes or delivery of any
particular Consents. The Company's interpretation of the terms and conditions of
the Tender Offers and the Solicitations (including without limitation the
instructions in the Consent and Letter of Transmittal) shall be final and
binding. No alternative, conditional or contingent tenders or deliveries will be
accepted. Unless waived, any irregularities in connection with tenders of Notes
or deliveries of Consents must be cured within such time as the Company shall
determine. None of the Company, CCW, the Depositary, the Information Agent, the
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Dealer Manager or any other person will be under any duty to give notification
of any defects or irregularities in such tenders of Notes or deliveries of
Consents or will incur any liabilities for failure to give such notification.
Tenders of Notes or deliveries of Consents will not be deemed to have been made
until such irregularities have been cured or waived. Any Notes or Consents
received by the Depositary that are not properly tendered and as to which the
irregularities have not been cured or waived will be returned by the Depositary
to the tendering Holders (in the case of Notes tendered by book-entry transfer
into the Depositary's account at DTC, by crediting the account maintained at DTC
from which such Notes were delivered), unless such Holders have otherwise
provided in the Consent and Letter of Transmittal, as promptly as practicable
following the Tender Offer Expiration Date.
Lost or Missing Certificates. If a Holder desires to tender a Note pursuant
to the Tender Offers, but the Note has been mutilated, lost, stolen or
destroyed, such Holder should write to or telephone the Trustee under the
Indentures at the addresses listed below, about procedures for obtaining
replacement certificates for such Notes, arranging for indemnification or any
other matter that requires handling by such Trustee:
BANK OF MONTREAL TRUST COMPANY
Wall Street Plaza
88 Pine Street
New York, NY 10005
Attention: Reorganization Department
Telephone: (212) 701-7624
Fax: (212) 701-7636
BACKUP FEDERAL INCOME TAX WITHHOLDING
For a discussion of federal income tax considerations relating to backup
withholding, see 'Certain Federal Income Tax Consequences -- Backup
Withholding.'
WITHDRAWAL OF TENDERS; REVOCATION OF CONSENTS; ABSENCE OF APPRAISAL RIGHTS
Tenders of Notes may be withdrawn and Consents with respect thereto may be
revoked at any time until the Solicitation Expiration Date; provided, however,
that if after the Solicitation Expiration Date the Company reduced either (i)
the principal amount of Notes tendered for in a Tender Offer or (ii) the
Purchase Price for the Notes, Notes previously tendered therein may be withdrawn
and Consents with respect thereto may be revoked until the Company certifies
that it possesses the Requisite Consents, which certification shall not occur
earlier than the expiration of 10 business days after the date that notice of
any such reduction is first published, given or sent to affected Holders by the
Company. Holders who have withdrawn tenders of Notes and revoked Consents during
such period may re-tender Notes and deliver Consents during such period by
following one of the procedures described in ' -- Procedures for Tendering Notes
and Delivering Consents.' Tenders of Notes of any series may also be withdrawn
if the Tender Offer with respect to such Notes is terminated without any such
Notes being purchased thereunder or as otherwise provided herein. Following
certification that the Company has obtained the Requisite Consents, and the
Solicitation Expiration Date, the Company intends to execute Supplemental
Indentures reflecting the Proposed Amendments.
Holders who wish to exercise their right of withdrawal with respect to any
Tender Offer must give written notice of withdrawal delivered by mail or hand
delivery, which notice must be received by the Depositary at its address set
forth on the back cover of this Offer to Purchase and Consent Solicitation prior
to the Solicitation Expiration Date. In order to be effective, a notice of
withdrawal must specify the name of the person who deposited the Notes to be
withdrawn (the 'Depositor'), the name in which the Notes are registered if
different from that of the Depositor, and the principal amount of Notes to be
withdrawn. If certificates have been delivered or otherwise identified (through
confirmation or book-entry transfer of such Notes) to the Depositary, the name
of the registered holder and the certificate number or numbers relating to such
Notes withdrawn must also be furnished to the Depositary as aforesaid prior to
the physical release of certificates for the withdrawn Notes (or, in the case of
Notes
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<PAGE>
transferred by book-entry transfer, the name and number of the account at DTC to
be credited with withdrawn Notes). The notice of withdrawal must be signed by
the Holder in the same manner as the Consent and Letter of Transmittal
(including, in any case, any required signature guarantee), or be accompanied by
evidence satisfactory to the Company that the person withdrawing the tender has
succeeded to the beneficial ownership of such Notes.
Withdrawals of tenders of Notes may not be rescinded, and any Notes
withdrawn will thereafter be deemed not validly tendered for purposes of the
applicable Tender Offer. However, properly withdrawn Notes may be retendered by
following one of the procedures described in ' -- Procedures for Tendering Notes
and Delivering Consents' at any time prior to the Tender Offer Expiration Date.
Any Holder who has delivered a Consent, or who succeeds to ownership of
Notes in respect of which a Consent has previously been delivered, may revoke
such Consent prior to the Solicitation Expiration Date by delivery of a written
notice of revocation in accordance with the following procedures. In order to be
effective, a notice of revocation of Consent must (i) contain the name of the
person who delivered the Consent, a description of the Notes to which it
relates, the certificate number or numbers of such Notes and the aggregate
principal amount represented by such Notes, (ii) be signed by the registered
holder thereof and (iii) be received on or prior to the Solicitation Expiration
Date by the Depositary at its address set forth on the back cover of this Offer
to Purchase and Consent Solicitation. A purported notice of revocation that
lacks any of the required information or is dispatched to an improper address
will not be effective to revoke a Consent previously given. Although, as
described below, a withdrawal of a tender of Notes will render the Consent to
the Proposed Amendments defective with respect to such Notes so withdrawn, such
a withdrawal will not, in and of itself, result in a revocation of such Consent
to the Proposed Amendments. A revocation of a Consent can only be accomplished
in accordance with the foregoing procedures. No Holder may revoke a Consent
following the Solicitation Expiration Date.
A valid withdrawal of tendered Notes (without a concurrent valid revocation
of a Consent with respect to such Notes) will render the Consent to the Proposed
Amendments defective with respect to such Notes so withdrawn. A valid revocation
of a Consent with respect to Notes (without a concurrent valid withdrawal of
such Notes) will render the tender of such Notes to which such Consent relates
defective. In the event of such a withdrawal or revocation, the Company will
have the right, which it may waive, to reject such defective tender of Notes or
such defective Consent with respect to such Notes, as the case may be, as
invalid and ineffective. If the Company waives its right to reject a defective
Consent with respect to such Notes the Holder will be entitled to the Tender
Offer Consideration or the Consent Payment, as the case may be.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal or revocation will be determined by the Company, in its
sole discretion, which determination shall be final and binding. None of the
Company, the Depositary, the Information Agent, the Dealer Manager or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or revocation or incur any
liabilities for failure to give any such notification. There are no appraisal or
other similar statutory rights available to the Holders in connection with the
Tender Offers.
DEALER MANAGER
Merrill Lynch & Co. is acting as the Dealer Manager (the 'Dealer Manager')
for the Company in connection with the Tender Offers and as Solicitation Agent
in connection with the Solicitations and has provided certain financial advisory
services to the Company in connection with the Tender Offers and the
Solicitations. The Company will pay the Dealer Manager reasonable and customary
compensation for such services, plus reimbursement for out-of-pocket expenses.
The Company has agreed to indemnify the Dealer Manager against certain
liabilities in connection with its services as the Dealer Manager and financial
advisor, including liabilities under the federal securities laws. At any given
time Merrill Lynch & Co. may trade the Notes or other debt or equity securities
of the Company for its own account or for the accounts of customers and,
accordingly, may hold a long or short position in the Notes or such other
securities.
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<PAGE>
DEPOSITARY
The Depositary for the Tender Offers and the Solicitations is Harris Trust
Company of New York. All deliveries, correspondence and questions sent or
presented to the Depositary relating to the Tender Offers and the Solicitations
should be directed to the address or telephone number set forth on the back
cover of this Offer to Purchase and Consent Solicitation. The Company will pay
the Depositary reasonable and customary compensation for its services in
connection with the Tender Offers and the Solicitations, plus reimbursement for
out-of-pocket expenses. The Company will indemnify the Depositary against
certain liabilities and expenses in connection therewith, including liabilities
under the federal securities laws.
Brokers, dealers (including Merrill Lynch & Co.), commercial banks and
trust companies will be reimbursed by the Company for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
The Company will not pay any fees or commissions to any broker, dealer or other
person (other than the Dealer Manager) in connection with the solicitation of
tenders of Notes pursuant to the Tender Offers.
INFORMATION AGENT
Beacon Hill Partners, Inc. has been appointed as Information Agent for the
Tender Offers and the Solicitations. Questions and request for assistance or
additional copies of the Offer to Purchase and Consent Solicitation, the Consent
and Letter of Transmittal or the Notice of Guaranteed Delivery may be directed
to the Information Agent at its address or telephone numbers set forth of the
back cover page of the Offer to Purchase and Consent Solicitation. Holders of
Notes may also contact their broker, dealer or commercial bank or trust company
for assistance concerning the Tender Offers and the Solicitations.
MISCELLANEOUS
Directors, officers and regular employees of the Company (who will not be
specifically compensated for such services), and the Dealer Manager may contact
Holders of Notes by mail, telephone, fax, telex, telegram messages, mailgram
messages, datagram messages and personal interviews regarding the Tender Offers
and the Solicitations and may request brokers, dealers and other nominees to
forward this Offer to Purchase and Consent Solicitation and related materials to
beneficial owners of Notes.
Request for information or additional copies of this Offer to Purchase and
Consent Solicitation and the related Consents and Letters of Transmittal may be
directed to the Information Agent.
The Company is not aware of any jurisdiction where the making of the Tender
Offers or the Solicitations is not in compliance with the laws of such
jurisdiction. If the Company becomes aware of any jurisdiction where the making
of the Tender Offers or the Solicitations would not be in compliance with such
laws, the Company will make a good faith effort to comply with any such laws or
seek to have such laws declared inapplicable to the Tender Offers or the
Solicitations, as the case may be. If, after such good faith effort, the Company
cannot comply with any such applicable laws, the Tender Offers and the
Solicitations will not be made to (nor will tenders or Consents be accepted from
or on behalf of) the Holders residing in such jurisdiction.
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<PAGE>
THE PROPOSED AMENDMENTS
The following are the Proposed Amendments to the Indentures listed below
that will be reflected in or contained in the applicable Supplemental
Indentures. See Annex I hereto.
(a) Indenture dated as of November 15, 1993 between Centennial Cellular
Corp. as the Company and Bank of Montreal Trust Company, as Trustee.
The Proposed Amendments would eliminate the following covenant:
Section 11.08 ('Statement by Officers as to Default')
(b) First Supplemental Indenture dated as of November 15, 1993 between
Centennial Cellular Corp. as the Company and Bank of Montreal Trust Company, as
Trustee (8 7/8% Senior Notes due 2001).
The Proposed Amendments would eliminate the following covenants:
Section 9.01 ('Restrictions on Merger, Consolidation and Sale of
Substantially All Assets')
Section 9.02 ('Successor Corporation Substituted')
Section 11.10 ('Limitations on Debt and Preferred Stock')
Section 11.11 ('Limitations on Restricted Payments')
Section 11.12 ('Limitations on Transactions with Affiliates')
Section 11.13 ('Limitations on Dividend Restrictions Affecting
Subsidiaries')
Section 11.14 ('Limitations on Liens Securing Debt')
Section 11.15 ('Limitations on Sale of Assets and Subsidiary Stock')
Section 11.17 ('SEC Reports')
The Proposed Amendments would amend the following provisions:
Section 6.01. ('Events of Default') sets forth the Events of Default
with respect to the Notes.
The Proposed Amendments would eliminate the following as Events of
Default:
(i) the failure of the Company to comply with any of its agreements
or covenants in the Restrictions on Merger, Consolidation and Sale of
Substantially All Assets covenant; (ii) the failure of the Company to
comply with any of its agreements or covenants in the Limitations on
Debt and Preferred Stock covenant, the Limitations on Restricted
Payments covenant, the Limitations on Transactions with Affiliates
covenant, the Limitations on Dividend Restrictions Affecting
Subsidiaries covenant, the Limitations on Liens Securing Debt covenant
and the Limitations on Sale of Assets and Subsidiary Stock covenant, and
such failure shall continue for 30 days after written notice is given to
the Company by the Trustee or by the holders of 25% in aggregate
principal amount of the Notes then outstanding; (iii) the failure of the
Company to comply with any of its other agreements or covenants in, or
provisions of, the Notes or the Indenture and such failure shall
continue for a period of 60 days after written notice is given to the
Company by the Trustee or by the holders of 25% in aggregate principal
amount of the Notes then outstanding; (iv) an event of default occurs
(after giving effect to any applicable grace or cure period) under any
mortgage, indenture or other instrument governing any Debt of the
Company or any Restricted Subsidiary for borrowed money, whether such
Debt now exists or shall be created after the date of the Indenture, if
(i) such event of default results from the failure to pay at maturity
$10 million or more in principal amount of such Debt or (ii) as a result
of such event of default the maturity of $10 million or more in
principal amount of such Debt has been accelerated prior to its stated
maturity; (v) any final judgment aggregating $10 million or more shall
be rendered against the Company or a Restricted Subsidiary and shall
remain undischarged for a period (during which execution shall not be
effectively stayed) of 60 days; and (vi) the breach of any other
covenant that is eliminated by the Proposed Amendments.
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<PAGE>
(c) Second Supplemental Indenture dated as of May 11, 1995 between
Centennial Cellular Corp. as the Company and Bank of Montreal Trust Company, as
Trustee (10 1/8% Senior Notes due 2005).
The Proposed Amendments would eliminate the following covenants:
Section 9.01 ('Restrictions on Merger, Consolidation and Sale of
Substantially All Assets')
Section 9.02 ('Successor Corporation Substituted')
Section 11.10 ('Limitations on Debt and Preferred Stock')
Section 11.11 ('Limitations on Restricted Payments')
Section 11.12 ('Limitations on Transactions with Affiliates')
Section 11.13 ('Limitations on Dividend Restrictions Affecting
Subsidiaries')
Section 11.14 ('Limitations on Liens Securing Debt')
Section 11.15 ('Limitations on Sale of Assets and Subsidiary Stock')
Section 11.17 ('SEC Reports')
The Proposed Amendments would amend the following provisions:
Section 6.01. ('Events of Default') sets forth the Events of Default
with respect to the Notes.
The Proposed Amendments would eliminate the following as Events of
Default:
(i) the failure of the Company to comply with any of its agreements
or covenants in the Restrictions on Merger, Consolidation and Sale of
Substantially All Assets covenant; (ii) the failure of the Company to
comply with any of its agreements or covenants in the Limitations on
Debt and Preferred Stock covenant, the Limitations on Restricted
Payments covenant, the Limitations on Transactions with Affiliates
covenant, the Limitations on Dividend Restrictions Affecting
Subsidiaries covenant, the Limitations on Liens Securing Debt covenant
and the Limitations on Sale of Assets and Subsidiary Stock covenant, and
such failure shall continue for 30 days after written notice is given to
the Company by the Trustee or by the holders of 25% in aggregate
principal amount of the Notes then outstanding; (iii) the failure of the
Company to comply with any of its other agreements or covenants in, or
provisions of, the Notes or the Indenture and such failure shall
continue for a period of 60 days after written notice is given to the
Company by the Trustee or by the holders of 25% in aggregate principal
amount of the Notes then outstanding; (iv) an event of default occurs
(after giving effect to any applicable grace or cure period) under any
mortgage, indenture or other instrument governing any Debt of the
Company or any Restricted Subsidiary for borrowed money, whether such
Debt now exists or shall be created after the date of the Indenture, if
(i) such event of default results from the failure to pay at maturity
$10 million or more in principal amount of such Debt or (ii) as a result
of such event of default the maturity of $10 million or more in
principal amount of such Debt has been accelerated prior to its stated
maturity; (v) any final judgment aggregating $10 million or more shall
be rendered against the Company or a Restricted Subsidiary and shall
remain undischarged for a period (during which execution shall not be
effectively stayed) of 60 days; and (vi) the breach of any other
covenant that is eliminated by the Proposed Amendments.
The Proposed Amendments as to any series of Notes will be effected by the
applicable Supplemental Indentures, which will be executed at or promptly
following the date the Requisite Consents with respect to such series have been
obtained. Although the Supplemental Indentures will be executed at or promptly
following the date such Requisite Consents have been obtained, the Proposed
Amendments as to any series of Notes will not become operative until validly
tendered Notes of such series are accepted for payment by the Company. If such
Tender Offer is terminated or withdrawn, or such Notes are not purchased
hereunder (or if the Requisite Consents are not received), the Proposed
Amendments with respect to such series will not become operative. Therefore, if
the Merger Agreement is terminated without the Merger having been consummated,
the Proposed Amendments will have no force and effect.
The Proposed Amendments with respect to each series of Notes constitute a
single proposal and a tendering and consenting Holder must consent to the
Proposed Amendments as an entirety and may
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not consent selectively with respect to certain Proposed Amendments. Pursuant to
the terms of the Indentures, the Proposed Amendments require the Consent of the
Holders of a majority in principal amount of the outstanding Notes of each
series, excluding for such purposes any Notes owned at the time by the Company
or any of its affiliates. Notes owned at the time by the Company or any of its
affiliates will not be counted. If a Tender Offer is consummated and the
Proposed Amendments as to such series of Notes become operative with respect to
the applicable Indenture, the Proposed Amendments will be binding on all
non-tendering Holders of such series.
The completion, execution and delivery of the Consent and Letter of
Transmittal by a Holder in connection with the Tender Offers and the
Solicitations will constitute the Consent of the tendering Holder to the
Proposed Amendments.
The foregoing is qualified in its entirety by reference to the Indentures
and the form of Supplemental Indentures, copies of which can be obtained without
charge from the Information Agent.
IF THE PROPOSED AMENDMENTS BECOME OPERATIVE, HOLDERS OF UNTENDERED NOTES
WILL BE BOUND THEREBY.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary of certain anticipated federal income tax
consequences is based on current law and is for general information only. The
discussion is based on the Internal Revenue Code of 1986, as amended (the
'Code'), temporary and final Treasury regulations promulgated thereunder,
judicial decisions and administrative rulings, all of which are subject to
change, possibly with retroactive effect. The tax treatment of a Holder of Notes
may vary depending upon his or her particular situation. Certain Holders of
Notes (including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, persons holding Notes as part of a hedging
transaction or a straddle, foreign corporations and persons who are not citizens
or residents of the United States) may be subject to special rules not discussed
below. This discussion does not consider the effect of any foreign, state or
local tax laws or any U.S. tax considerations (e.g., estate or gift) other than
U.S. federal income tax considerations that may be relevant to particular
Holders. This discussion is limited to Holders who have held their Notes as
'capital assets' (generally, property held for investment) within the meaning of
Section 1221 of the Code. EACH HOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS
TO THE PARTICULAR TAX CONSEQUENCES OF TENDERING THE NOTES AND CONSENTING TO THE
PROPOSED AMENDMENTS, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN TAX LAWS.
SALE OF NOTES PURSUANT TO THE TENDER OFFERS
A Holder who receives cash for Notes pursuant to the Tender Offers will
recognize gain or loss equal to the difference between the amount of cash
received (excluding amounts attributable to accrued interest that have been
previously included in income by a Holder and not otherwise added to the
Holder's adjusted tax basis) and the Holder's adjusted tax basis in the Notes
sold. A Holder's adjusted tax basis generally will be the original cost of the
Note increased by market discount, if any, previously included in such Holder's
income and reduced by any amortized premium. Subject to the market discount
rules discussed below and subject to the discussion of the Consent Payments
below, such gain or loss generally will be long-term capital gain or loss,
provided the Notes have been held for more than one year. To the extent that the
amount paid for the Notes represents accrued interest, it will constitute
ordinary income to the Holder unless previously included in income. A Holder who
acquired a Note at a market discount (subject to a statutorily-defined de
minimis exception) generally will be required to treat any gain on a sale
thereof pursuant to the Tender Offers as ordinary income rather than capital
gain to the extent of the accrued market discount, unless an election was made
to include market discount in income as it accrued. For Notes that were
purchased on the secondary market, market discount generally equals the excess
of the stated redemption price at maturity (or 'revised issue price' in the case
of a Note having original issue discount) of a debt instrument over a Holder's
initial tax basis in the debt instrument.
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THE CONSENT PAYMENTS
Although the law is unclear, the Consent Payments made to Holders whose
Notes are accepted for payment pursuant to the Tender Offers may be treated
either (i) as additional consideration in exchange for the tendered Notes, in
which case such payments would be taken into account in determining the amount
of gain or loss on the sale (see 'Sale of Notes Pursuant to the Tender Offers'
above) or (ii) as separate fees for consenting to the Proposed Amendments, in
which case such payments likely would constitute ordinary income to recipients.
The Company intends to treat the Consent Payments as additional consideration
paid in exchange for the tendered Notes.
WITHHOLDING OF CONSENT AND RETENTION OF NOTES
The federal income tax consequences to the Holders who retain their Notes
on the adoption of the Proposed Amendments depend upon whether the Proposed
Amendments and the related transactions result in a deemed exchange of the Notes
for new notes (the 'Modified Notes') under Section 1001 of the Code. The
Treasury Regulations provide that a modification that adds, deletes or alters
customary accounting or financial covenants is not a significant modification
and therefore does not result in a deemed exchange. While not free from doubt,
the adoption of the Proposed Amendments and the related transactions should not
result in a deemed exchange for federal income tax purposes. Accordingly,
Holders should not recognize gain or loss as a result of the Proposed Amendments
becoming effective.
Even if the Proposed Amendments and the related transactions were to
constitute a deemed exchange of the Notes, Holders who retain their 10 1/8%
Notes should not recognize gain or loss on such deemed exchange since such
deemed exchange should qualify as a tax-free recapitalization. If the deemed
exchange of 10 1/8% Notes were not to qualify as a recapitalization for federal
income tax purposes, or if the Proposed Amendments and the related transactions
were to constitute a deemed exchange of the 8 7/8% Notes, then a non-tendering
Holder would recognize gain or loss equal to the difference between such
Holder's tax basis in the Notes and the issue price of the Modified Notes. Any
such gain or loss would be capital gain or loss, and would be taxable to
non-tendering Holders in accordance with the rules described above in 'Sale of
Notes Pursuant to the Tender Offers.'
BACKUP WITHHOLDING
A Holder whose Notes are tendered and accepted for payment and who receives
a Consent Payment may be subject to backup withholding at the rate of 31% with
respect to the gross proceeds from the sale of such Notes and the amount of any
Consent Payments received unless such Holder (a) is a corporation or other
exempt recipient and, when required, establishes this exemption or (b) provides
his or her correct taxpayer identification number (which, in the case of an
individual, is his or her social security number), certifies that he or she is
not currently subject to backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A Holder of Notes who
does not provide the Company with his or her correct taxpayer identification
number may be subject to penalties imposed by the IRS. Any amount withheld under
these rules will be creditable against the Holder's federal income tax
liability, and if withholding results in an overpayment of taxes, a refund may
be applied for.
The Company will provide information statements to tendering Holders and
the IRS reporting the cash payments, as required by law.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH HOLDER OF
NOTES SHOULD CONSULT HIS OR HER TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES
OF TENDERING THE NOTES AND RECEIVING CONSENT PAYMENT, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
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APPENDIX A
DESCRIPTION OF PURCHASE PRICE AND
TOTAL CONSIDERATION CALCULATIONS
<TABLE>
<S> <C>
YLD = Tender Offer Yield expressed as a decimal number.
CPN = The nominal interest payable on a Note expressed as a decimal number.
N = The number of semi-annual interest payments, based on the Applicable Reference Date,
from (but not including) the expected Payment Date to (and including) the Applicable
Reference Date.
S = The number of days from and including the semi-annual interest payment date immediately
preceding the expected Payment Date up to, but not including, the expected Payment Date.
The number of days is computed using the 30/360 day-count method.
/ = Divide. The term immediately to the left of the division symbol is divided by the term
immediately to the right of the division symbol before any other addition or subtraction
operations are performed.
exp = Exponentiate. The term to the left of 'exp' is raised to the power indicated by the term
to the right of 'exp'.
RV = The assumed redemption amount, based on the Applicable Reference Date, for each Note per
$1,000 principal amount of a Note.
N = Summate. The term in the brackets to the right of the summation symbol is separately
[Sig] calculated 'N' times (substituting for 'k' in that term each whole number between 1 and
k=1 N, inclusive), and the separate calculations are then added together.
CP = $25.00 per Note, which is equal to the Consent Payment.
Purchase Price =
</TABLE>
<TABLE>
<S> <C> <C> <C>
RV N $1,000(CPN/2)
- ---------------------------- + [Sig] [ ------------------------- ] - $1,000(CPN/2)(S/180) - CP
(1 + YLD/2) exp (N - S/180) k=1 (1 + YLD/2) exp (k-S/180)
Total Consideration = The Purchase Price of a Note per $1,000 principal amount of a Note plus the Consent
Payment per $1,000 principal amount of a Note.
Total Consideration =
RV N $1,000(CPN/2)
- ---------------------------- + [Sig] [ ------------------------- ] - $1,000(CPN/2)(S/180)
(1 + YLD/2) exp (N - S/180) k=1 (1 + YLD/2) exp (k-S/180)
</TABLE>
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APPENDIX B
HYPOTHETICAL PURCHASE PRICE AND
TOTAL CONSIDERATION CALCULATIONS
This Schedule provides a hypothetical illustration of the Purchase Price
and the Total Consideration payable pursuant to the Offer based on hypothetical
data, and should, therefore, be used solely for the purpose of obtaining an
understanding of the calculation of the Purchase Price and the Total
Consideration, as quoted at hypothetical rates and times, and should not be used
or relied upon for any other purpose.
8 7/8% SENIOR NOTES DUE 2001
<TABLE>
<S> <C> <C>
Applicable Reference Date: May 1, 1999
Reference Security: 6 3/8% U.S. Treasury Note Due April 30, 1999 as displayed on
the Bloomberg Government Pricing Monitor, Page PX3
Fixed Spread: 0.50% (50 basis points)
Example:
Assumed Price Determination Date and Time: 2:00 PM, New York City time, on Friday, September 4, 1998
Assumed Payment Date: Thursday, October 15, 1998
Assumed Reference Yield: = 5.113%
Fixed Spread = 0.50%
YLD = 0.05613
CPN = 0.08875
N = 2
S = 164
RV = $1,052.50
CP = $25.00
PURCHASE PRICE = $1,043.15
TOTAL CONSIDERATION = $1,068.15
</TABLE>
36
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<PAGE>
APPENDIX C
HYPOTHETICAL PURCHASE PRICE AND
TOTAL CONSIDERATION CALCULATIONS
This Schedule provides a hypothetical illustration of the Purchase Price
and the Total Consideration payable pursuant to the Offer based on hypothetical
data, and should, therefore, be used solely for the purpose of obtaining an
understanding of the calculation of the Purchase Price and the Total
Consideration, as quoted at hypothetical rates and times, and should not be used
or relied upon for any other purpose.
10 1/8% SENIOR NOTES DUE 2005
<TABLE>
<S> <C> <C>
Applicable Reference Date: May 15, 2005
Reference Security: 6 1/2% U.S. Treasury Note Due May 15, 2005 as displayed on
the Bloomberg Government Pricing Monitor, Page PX6
Fixed Spread: 0.75% (75 basis points)
Example:
Assumed Price Determination Date and Time: 2:00 PM, New York City time, on Friday, September 4, 1998
Assumed Payment Date: Thursday, October 15, 1998
Assumed Reference Yield: = 5.011%
Fixed Spread = 0.75%
YLD = 0.05761
CPN = 0.10125
N = 14
S = 150
RV = $1,000.00
CP = $25.00
PURCHASE PRICE = $1,211.21
TOTAL CONSIDERATION = $1,236.21
</TABLE>
37
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ANNEX I
THE PROPOSED AMENDMENTS
Holders of Notes who desire to accept the Tender Offers in respect of their
Notes will be deemed to have consented to certain amendments to the Indentures
under which the Notes were issued. The following is a summary of the Proposed
Amendments to certain covenants and provisions of the Indentures. This summary
is qualified in its entirety by reference to the full and complete terms
contained in the Indentures. Capitalized terms used herein without definition
have the same meanings as set forth in the Indentures.
If the Proposed Amendments become effective, provisions substantially in
the form of the underlined clauses below will be added to the Indentures and the
provisions substantially in the form of the italicized clauses below will be
deleted from the Indentures.
INDENTURE DATED AS OF NOVEMBER 15, 1993 BETWEEN CENTENNIAL CELLULAR CORP.
AND BANK OF MONTREAL TRUST COMPANY, AS TRUSTEE.
SECTION 11.08. STATEMENT BY OFFICERS AS TO DEFAULT.
[ADD: Intentionally omitted.]
[DELETE: The Company will, within 120 days after the close of each fiscal year,
commencing with the first fiscal year following the issuance of Securities of
any series under this Indenture, file with the Trustee a certificate of the
principal executive officer, the principal financial officer or the principal
accounting officer of the Company, covering the period from the date of issuance
of such Securities to the end of the fiscal year in which such Securities were
issued, in the case of the first such certificate, and covering the preceding
fiscal year in the case of each subsequent certificate, and stating whether or
not, to the knowledge of the signer, the Company has complied with all
conditions and covenants on its part contained in this Indenture, and, if the
signer has obtained knowledge of any default by the Company in the performance,
observance or fulfillment of any such condition or covenant, specifying each
such default and the nature thereof. For the purpose of this Section 11.08,
compliance shall be determined without regard to any grace period or requirement
of notice provided pursuant to the terms of this Indenture.]
FIRST SUPPLEMENTAL INDENTURE DATED AS OF NOVEMBER 15, 1993 BETWEEN CENTENNIAL
CELLULAR CORP. AND BANK OF MONTREAL TRUST COMPANY, AS TRUSTEE (8 7/8% SENIOR
NOTES DUE 2001).
SECTION 9.01. RESTRICTIONS ON MERGER, CONSOLIDATION AND SALE OF SUBSTANTIALLY
ALL ASSETS.
[ADD: Intentionally omitted.]
[DELETE: The Company shall not consolidate with or merge with or into any other
entity or sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets (determined on a consolidated
basis for the Company and its Restricted Subsidiaries) to any entity (other than
the merger of a Wholly Owned Restricted Subsidiary of the Company into another
Wholly Owned Restricted Subsidiary of the Company or the merger of a Wholly
Owned Restricted Subsidiary of the Company into the Company), unless (a) either
(i) the Company shall be the continuing corporation or (ii) the entity (if other
than the Company) formed by such consolidation or into which the Company is
merged or the entity that acquires, by sale, assignment, conveyance, transfer,
lease or disposition, all or substantially all of the properties and assets of
the Company as an entirety shall be a corporation, partnership or trust
organized and validly existing under the laws of the United States of America or
any State thereof or the District of Columbia, and shall expressly assume by a
supplemental indenture the due and punctual payment of the principal of,
premium, if any, and interest on all the Notes and the performance and
observance of every covenant of this Indenture to be performed or observed on
the part of the Company; (b) immediately thereafter, no Default or Event of
Default shall have occurred and be continuing; and (c) immediately after giving
effect to any such transaction involving the incurrence by the Company or any
Restricted Subsidiary, directly or indirectly, of additional Debt (and treating
any Debt not previously an Obligation of the Company or any of its Restricted
Subsidiaries in connection with or as a result of such transaction as having
been incurred at the time of such transaction), the Company or such entity
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could incur, on a pro forma basis after giving effect to such transaction as if
it had occurred at the beginning of the most recent four full fiscal quarters
ending immediately prior to the date of such transaction, at least $1.00 of
additional Debt (other than Permitted Debt) pursuant to Section 11.10; or if, on
a pro forma basis after giving effect to such transaction as if it had occurred
at the beginning of the most recent fiscal quarter ending immediately prior to
the date of such transaction, the Debt to Annualized Operating Cash Flow Ratio
would not be greater than 90% of such ratio immediately preceding such
transaction.]
SECTION 9.02. SUCCESSOR CORPORATION SUBSTITUTED.
[ADD: Intentionally omitted.]
[DELETE: Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
properties and assets of the Company in accordance with Section 9.01, the
successor Person formed by such consolidation or into or with which the Company
is merged or the successor Person to which such sale, assignment, conveyance,
transfer, lease or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Notes with the same effect as if such successor had been
named as the Company herein and in the Notes. When a successor assumes all the
obligations of its predecessor under this Indenture and the Notes, the
predecessor shall be released from those obligations; provided that in the case
of a transfer by lease, the predecessor shall not be released from the payment
of principal, premium, if any, and interest on the Notes.]
SECTION 11.10. LIMITATIONS ON DEBT AND PREFERRED STOCK.
[ADD: Intentionally omitted.]
[DELETE: The Company shall not, and shall not permit any Restricted Subsidiary
to, create, incur, assume or directly or indirectly guarantee or in any other
manner become directly or indirectly liable for ('incur') any Debt (including
Acquired Debt) or issue any Preferred Stock, except that the Company may (i)
issue Preferred Stock that is not Disqualified Stock at any time and (ii) incur
Debt or issue Disqualified Stock if the Debt to Annualized Operating Cash Flow
Ratio of the Company and its Restricted Subsidiaries at the time of incurrence
of such Debt or issuance of such Disqualified Stock, after giving pro forma
effect thereto, is 9.5:1 or less if such incurrence or issuance occurs prior to
November 1, 1995 and 8.5:1 or less if such incurrence or issuance occurs
thereafter, provided that any such Debt incurred by the Company that is not
Senior Debt shall have an average life to maturity no shorter than the remaining
average life to maturity of the Notes and that such Debt incurred shall not have
any principal payments due before the maturity of the Notes.
The foregoing limitations shall not apply to the incurrence of any of the
following (collectively, 'Permitted Debt'): (i) Debt owed by the Company to any
Wholly Owned Restricted Subsidiary provided that any such Debt is subordinated
to the Notes; (ii) Debt under the Notes; (iii) other Debt existing at the date
of this Indenture; (iv) other Debt incurred after the date hereof by the Company
not to exceed at any time $40 million less the sum of (A) the aggregate
principal amount of all Debt incurred by Restricted Subsidiaries plus (B) the
aggregate liquidation preference of Disqualified Stock issued by Restricted
Subsidiaries pursuant to clause (v) of this paragraph; (v) Debt incurred and
Preferred Stock issued by Restricted Subsidiaries, so long as the sum of (A) the
aggregate principal amount of all Debt of Restricted Subsidiaries plus (B) the
aggregate liquidation preference of all outstanding Preferred Stock issued by
Restricted Subsidiaries shall not exceed at any time $10 million; (vi) Debt in
respect of any interest rate protection or hedging arrangements entered into by
the Company to fix the floating interest rate or float the fixed interest rate
of any Debt permitted hereunder; and (vii) Debt incurred in exchange for or the
proceeds of which are used to exchange, refinance or refund any of the foregoing
Debt so long as (A) the principal amount of the Debt incurred does not exceed
the principal amount (plus any premium) of the Debt so exchanged, refinanced or
refunded, (B) where the Debt to be exchanged, refinanced or refunded is not
Senior Debt, the Debt incurred does not have an average life shorter than the
remaining average life of the Debt being so exchanged, refinanced or refunded
and (C) where the Debt to be refinanced, exchanged or refunded is not Senior
Debt, the Debt incurred ranks no more senior and is at least as
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<PAGE>
subordinated in right of payment to the Notes as the Debt being so exchanged,
refinanced or refunded. The Company shall not permit any Unrestricted Subsidiary
to incur Debt that would be recourse to the Company or to any Restricted
Subsidiary or any of their respective assets.]
SECTION 11.11. LIMITATIONS ON RESTRICTED PAYMENTS.
[ADD: Intentionally omitted.]
[DELETE: The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, (a) declare or pay any dividend on, or make any
distribution in respect of (other than dividends and distributions payable
exclusively in Capital Stock, other than Disqualified Stock), or purchase,
redeem or retire for value any Capital Stock of the Company or any Restricted
Subsidiary (except Capital Stock held by the Company or a Wholly Owned
Restricted Subsidiary), other than in exchange for the Company's own Capital
Stock (other than Disqualified Stock), (b) make any principal payment on, or
redeem, repurchase, defease or otherwise acquire or retire for value, more than
one year prior to a scheduled principal payment or maturity, Debt of the Company
that is expressly subordinated in right of payment to the Notes or (c) make any
Restricted Investments (such payments or any other actions described in (a), (b)
and (c) collectively 'Restricted Payments'), unless (i) at the time of and
immediately after giving effect to the proposed Restricted Payment, no Default
or Event of Default shall have occurred and be continuing, (ii) at the time of
and immediately after giving effect to the proposed Restricted Payment, the
Company could incur at least $1.00 of additional Debt pursuant to Section 11.10;
and (iii) at the time of and immediately after giving effect to the proposed
Restricted Payment, the aggregate amount of all Restricted Payments declared or
made after October 31, 1993 shall not exceed, at the date of determination, an
amount equal to the Company's Cumulative Operating Cash Flow from October 31,
1993 to the end of the Company's most recently ended full fiscal quarter, taken
as a single accounting period, less 1.2 times the Company's Cumulative Total
Interest Expense from October 31, 1993 to the end of the Company's most recently
ended full fiscal quarter, taken as a single accounting period.
The foregoing provisions shall not prevent (i) the payment of any dividend
within 60 days after the date of its declaration if at the date of declaration
such payment would be permitted by such provisions; (ii) any transaction with an
officer or director of the Company entered into in the ordinary course of
business (including compensation or employee benefit arrangements with any such
person); (iii) payments made on shares of Existing Preferred Stock in accordance
with its terms as in effect on the Issue Date; (iv) the making of Permitted
Investments; or (v) the making of Restricted Payments not otherwise permitted by
the foregoing provisions in an amount up to $25 million of which no more than
$10 million may be applied for uses of the type referred to in clause (a) of the
preceding paragraph, such amount and application increased by the sum of (A) an
amount equal to the value received by the Company from the issuance or sale by
the Company (other than to a Restricted Subsidiary) after October 31, 1993 of
Capital Stock (other than Disqualified Stock) (the value received if other than
cash, as determined by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced by a Board Resolution except
that if such issuance or sale is made in Capital Stock of the Company for which
there is an active public trading market, the value of such issuance or sale
shall be the market value of such Capital Stock at the date of issuance), plus
(B) dividends or distributions from Unrestricted Subsidiaries to the extent not
included in Operating Cash Flow, less (C) the amount of payments made pursuant
to clause (iii) of this paragraph.]
SECTION 11.12. LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.
[ADD: Intentionally omitted.]
[DELETE: The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into or cause to exist any transaction or
series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any Affiliate
unless (a) such transaction or series of transactions is on terms that are no
less favorable to the Company or such Restricted Subsidiary, as the case may be,
than would be available in a comparable transaction with an unrelated third
party and (b) the Company delivers to the Trustee with respect to a transaction
or series of transactions involving aggregate payments in excess of $10 million
an Officers' Certificate certifying that
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such transaction or series of transactions complies with clause (a) above and
either (i) such transaction or series of transactions is approved by a majority
of the disinterested members of the Board of Directors of the Company or (ii)
such transaction or series of transactions is approved by a majority of the
entire Board of Directors and the Company has delivered to the Trustee an
Opinion of Counsel that such transaction or series of transactions is fair to
the Company or such Restricted Subsidiary from a financial point of view issued
by an investment banking firm of national standing. Notwithstanding the
foregoing, the foregoing provisions shall not apply to (A) any transaction with
an officer or director of the Company entered into in the ordinary course of
business (including compensation or employee benefit arrangements with any such
person), (B) any transaction entered into by the Company or one of its
Restricted Subsidiaries with a Restricted Subsidiary of the Company, (C)
transactions in existence or approved by the Board of Directors of the Company
on or prior to the Issue Date or (D) Restricted Payments permitted under Section
11.11 and any Permitted Investments.]
SECTION 11.13. LIMITATIONS ON DIVIDEND RESTRICTIONS AFFECTING SUBSIDIARIES.
[ADD: Intentionally omitted.]
[DELETE: The Company shall not, and shall not permit any Restricted Subsidiary
to, create or otherwise cause or suffer to exist or become effective or enter
into any agreement with any Person that would cause any consensual encumbrance
or restriction of any kind (except for Permitted Debt) on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distribution on its
Capital Stock, (b) pay any Debt owed to the Company or any Restricted
Subsidiary, (c) make loans or advances to the Company or any Restricted
Subsidiary or (d) transfer any of its property or assets to the Company or any
Restricted Subsidiary, other than such encumbrances or restrictions (i) existing
as of the date hereof or (ii) created in connection with any permitted
refinancing, refunding or replacement of any Debt; provided, however, that the
encumbrances or restrictions contained in the agreements governing any such
refinancing, replacement or refunding of Debt shall be no more restrictive than
the encumbrances or restrictions set forth in the agreements governing the Debt
being refinanced as in effect immediately prior to such refinancing (except that
an encumbrance or restriction that is not more restrictive than those set forth
in Section 11.11 with respect to any Restricted Subsidiary shall in any event be
permitted hereunder) or (iii) created pursuant to an asset sale agreement, stock
sale agreement or similar instrument pursuant to which an Asset Sale permitted
hereunder is to be consummated, so long as such restrictions shall be effective
only for the period from the execution and delivery of such agreement or
instrument through a termination date not later than 180 days after the
satisfaction of all closing conditions in such agreement or instrument.]
SECTION 11.14. LIMITATIONS ON LIENS SECURING DEBT.
[ADD: Intentionally omitted.]
[DELETE: The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur or assume any Liens
(other than Permitted Liens) of any kind against or upon any of its property or
assets, or any proceeds therefrom, to secure Debt unless contemporaneously
therewith effective provision is made to secure the Notes equally and ratably
with such Debt with a Lien on the same assets securing such Debt for so long as
such Debt is secured by such Lien; provided, however, that if such Debt is a
subordinated obligation, the Lien securing such Debt shall be subordinated and
junior to the Lien securing the Notes with the same or lesser relative priority
as such subordinated obligation shall have with respect to the Notes.]
SECTION 11.15. LIMITATIONS ON SALE OF ASSETS AND SUBSIDIARY STOCK.
[ADD: Intentionally omitted.]
[DELETE: (a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, make any Asset Sale unless (a) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined by the Board of Directors, in its sole discretion, of the
entity receiving such consideration) of the assets or Capital Stock sold or
otherwise disposed of and (b) at least 75% of such consideration consists of
cash or Cash Equivalents; provided, however, that this limitation shall not
apply to a transaction whereby the
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Company or any Restricted Subsidiary effects an Asset Sale by the exchange of
assets or property for Productive Assets, or for the Capital Stock constituting
a controlling interest in an entity owning primarily Productive Assets, so long
as after giving effect to the transaction the pro forma Debt to Annualized
Operating Cash Flow Ratio of the Company and its Restricted Subsidiaries would
be no more than 120 percent of the Debt to Annualized Operating Cash Flow Ratio
immediately preceding such transaction. Within one year after any Asset Sale,
the Company (or the Restricted Subsidiary, as the case may be) may apply the Net
Cash Proceeds from such Asset Sale to an investment in Productive Assets. Any
Net Cash Proceeds from the Asset Sale that are not applied or invested as
provided in the preceding sentence constitute 'Excess Proceeds.'
(b) When the aggregate amount of Excess Proceeds exceeds $10 million, the
Company shall make an offer to all Holders of the Notes (the 'Asset Sale
Offer'), pursuant to the provisions of Section 11.15(c) hereof, to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the
outstanding principal amount thereof, plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer. To the extent that the
aggregate amount of Notes tendered pursuant to an offer to purchase is less than
the Excess Proceeds, the Company may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased). Upon completion of such
Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
(c) In the event that, pursuant to this Section 11.15, the Company shall
commence an Asset Sale Offer, it shall follow the procedures set forth in this
Section 11.15(c).
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the 'Offer Period'). No later than five
Business Days after the termination of the Offer Period (the 'Purchase Date')
the Company shall purchase the principal amount required to be purchased
pursuant to Section 11.15(b) hereof (the 'Offer Amount'), of Notes tendered or,
if less than the Offer Amount has been tendered, all Notes tendered in response
to the Asset Sale Offer.
If the Purchase Date is on or after a Regular Record Date and on or before
the related Interest Payment Date, any accrued interest will be paid to the
Person in whose name a Note is registered at the close of business on such
Regular Record Date, and no additional interest will be payable to Holders who
tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of any Asset Sale Offer, the Company shall send, by
first class mail, a notice to each of the Holders, with a copy to the Trustee.
The notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(1) that the Asset Sale Offer is being made pursuant to this Section
11.15 and the length of time the Asset Sale Offer will remain open;
(2) the Offer Amount, the purchase price and the Purchase Date;
(3) that any Note not tendered or accepted for payment will continue
to accrue interest;
(4) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer will be required to surrender the Note, with the form
entitled 'Option of Holder to Elect Purchase' on the reverse side of the
Note completed, to the Company, a depositary, if appointed by the Company,
or a Paying Agent at the address specified in the notice at least five
Business Days before the Purchase Date;
(5) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex,
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facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have the Note
purchased;
(6) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000 or
integral multiples thereof shall be purchased); and
(7) that Holders whose Notes were purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered.
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary (with such
adjustments as may be deemed appropriate by the Company so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be purchased), the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes or portions
thereof tendered, and deliver to the Trustee an Officers' Certificate stating
that such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 11.15(c). The Company, depository or
Paying Agent, as the case may be, shall promptly (but in any case not later than
five Business Days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Note tendered by such Holder
and accepted by the Company for purchase, and the Company shall promptly issue a
new Note, and the Trustee shall authenticate and mail or deliver such new Note
to such Holder equal in principal amount to any unpurchased portion of the Note
surrendered. Any Note not so accepted shall be promptly mailed or delivered by
the Company to the Holder thereof. The Company will publicly announce the
results of the Asset Sale Offer on the Purchase Date.
In the event that the Company commences an Asset Sale Offer, if such Asset
Sale Offer constitutes a 'tender offer' for purposes of Rule 14e-1 under the
Exchange Act at that time, the Company will comply with the requirements of
Rule 14e-1 as then in effect with respect to such Asset Sale Offer.
(d) Simultaneously with the notification of an offer to purchase the Notes
pursuant to this Section 11.15 to the Trustee as required by Section 12.02
hereof, the Company shall provide the Trustee with an Officers' Certificate
setting forth the information required to be included therein by Sections
11.15(c) and 12.02 hereof and, in addition, setting forth the calculations used
in determining the amount of Excess Proceeds to be applied to the purchase of
Notes. If the Company wishes to request the Trustee to give such notification on
its behalf pursuant to Section 12.04 hereof, the Officers' Certificate shall so
state.]
SECTION 11.17. SEC REPORTS.
[ADD: Intentionally omitted.]
[DELETE: So long as any of the Notes are outstanding, the Company will file with
the Commission the annual reports, quarterly reports and other documents that
the Company would have been required to file with the Commission pursuant to
Sections 13(a) and 15(d) of the Exchange Act if the Company was subject to such
Sections, and the Company will promptly provide to all Holders and file with the
Trustee copies of such reports and documents.]
SECTION 6.01. EVENTS OF DEFAULT.
'Event of Default,' whenever used herein with respect to the Notes, means
any one of the following events (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) default in the payment of interest upon any Note when it becomes
due and payable, and continuance of such default for a period of 30 days;
or
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(2) default in the payment of the principal of (or premium, if any,
on) any Note when the same becomes due and payable at maturity, upon
acceleration, optional or mandatory redemption, required repurchase or
otherwise; or
(3) the Company fails to observe, perform or comply with any of its
agreements or covenants pursuant to Section [DELETE: 9.01 and] 11.16
hereof; or
[DELETE: (4) the Company fails to observe, perform or comply with any of
its agreements or covenants pursuant to Sections 11.10, 11.11, 11.12,
11.13, 11.14 and 11.15 hereof, and such default or breach continues for a
period of 30 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in principal amount of the Outstanding Notes a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a 'Notice of Default' hereunder;
or]
[DELETE: (5) the Company fails to observe, perform or comply with any of
its other agreements or covenants in, or provisions of, the Notes or this
Indenture, and such default or breach continues for a period of 60 days
after there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Notes a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a 'Notice of Default' hereunder; or]
[DELETE: (6) an event of default occurs (after giving effect to any
applicable grace or cure period) under any mortgage, indenture or other
instrument governing any Debt of the Company or any Restricted Subsidiary
for borrowed money, whether such Debt now exists or shall be created
hereafter, if (a) such event of default results from the failure to pay at
maturity $10 million or more in principal amount of such Debt or (b) as a
result of such event of default the maturity of $10 million or more in
principal amount of such Debt has been accelerated prior to its stated
maturity; or]
[DELETE: (7) any final judgment or judgments, in an amount of $10 million
or more, in the aggregate, are entered by a court or courts of competent
jurisdiction against the Company or a Restricted Subsidiary and such
judgment or judgments remain undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate of all such undischarged judgments equals or exceeds $10 million;
or]
[DELETE: (8)] [ADD: (4)] the Company or any Restricted Subsidiary pursuant
to or within the meaning of any Bankruptcy Law (a) commences a voluntary
case; (b) consents to the entry of an order for relief against it in an
involuntary case; (c) consents to the appointment of a Custodian of it or
for all or substantially all of its property; (d) makes a general
assignment for the benefit of its creditors or generally is not paying its
debts as they become due; or
[DELETE: (9)] [ADD: (5)] a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that: (a) is for relief against the
Company or any Restricted Subsidiary in an involuntary case; (b) appoints a
Custodian of the Company or any Restricted Subsidiary or for all or
substantially all of the property of the Company or any Restricted
Subsidiary; or (c) orders the liquidation of the Company or any Restricted
Subsidiary, and the order or decree remains unstayed and in effect for 60
consecutive days.
The term 'Bankruptcy Law' means title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. The term 'Custodian' means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.
SECOND SUPPLEMENTAL INDENTURE DATED AS OF MAY 11, 1995 AMONG CENTENNIAL CELLULAR
CORP. AND BANK OF MONTREAL TRUST COMPANY, AS TRUSTEE (10 1/8% SENIOR NOTES DUE
2005).
SECTION 9.01. RESTRICTIONS ON MERGER, CONSOLIDATION AND SALE OF SUBSTANTIALLY
ALL ASSETS.
[ADD: Intentionally omitted.]
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[DELETE: The Company shall not consolidate with or merge with or into any other
entity or sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets (determined on a consolidated
basis for the Company and its Restricted Subsidiaries) to any entity (other than
the merger of a Wholly Owned Restricted Subsidiary of the Company into another
Wholly Owned Restricted Subsidiary of the Company or the merger of a Wholly
Owned Restricted Subsidiary of the Company into the Company), unless (a) either
(i) the Company shall be the continuing corporation or (ii) the entity (if other
than the Company) formed by such consolidation or into which the Company is
merged or the entity that acquires, by sale, assignment, conveyance, transfer,
lease or disposition, all or substantially all of the properties and assets of
the Company as an entirety shall be a corporation, partnership or trust
organized and validly existing under the laws of the United States of America or
any State thereof or the District of Columbia, and shall expressly assume by a
supplemental indenture the due and punctual payment of the principal of,
premium, if any, and interest on all the Notes and the performance and
observance of every covenant of this Indenture to be performed or observed on
the part of the Company; (b) immediately thereafter, no Default or Event of
Default shall have occurred and be continuing; and (c) immediately after giving
effect to any such transaction involving the incurrence by the Company or any
Restricted Subsidiary, directly or indirectly, of additional Debt (and treating
any Debt not previously an Obligation of the Company or any of its Restricted
Subsidiaries in connection with or as a result of such transaction as having
been incurred at the time of such transaction), the Company or such entity could
incur, on a pro forma basis after giving effect to such transaction as if it had
occurred at the beginning of the most recent four full fiscal quarters ending
immediately prior to the date of such transaction, at least $1.00 of additional
Debt (other than Permitted Debt) pursuant to Section 11.10; or if, on a pro
forma basis after giving effect to such transaction as if it had occurred at the
beginning of the most recent fiscal quarter ending immediately prior to the date
of such transaction, the Debt to Annualized Operating Cash Flow Ratio would not
be greater than 90% of such ratio immediately preceding such transaction.]
SECTION 9.02. SUCCESSOR CORPORATION SUBSTITUTED.
[ADD: Intentionally omitted.]
[DELETE: Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
properties and assets of the Company in accordance with Section 9.01, the
successor Person formed by such consolidation or into or with which the Company
is merged or the successor Person to which such sale, assignment, conveyance,
transfer, lease or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Notes with the same effect as if such successor had been
named as the Company herein and in the Notes. When a successor assumes all the
obligations of its predecessor under this Indenture and the Notes, the
predecessor shall be released from those obligations; provided that in the case
of a transfer by lease, the predecessor shall not be released from the payment
of principal, premium, if any, and interest on the Notes.]
SECTION 11.10. LIMITATIONS ON DEBT AND PREFERRED STOCK.
[ADD: Intentionally omitted.]
[DELETE: The Company shall not, and shall not permit any Restricted Subsidiary
to, create, incur, assume or directly or indirectly guarantee or in any other
manner become directly or indirectly liable for ('incur') any Debt (including
Acquired Debt) or issue any Preferred Stock, except that the Company may (i)
issue Preferred Stock that is not Disqualified Stock at any time and (ii) incur
Debt or issue Disqualified Stock if the Debt to Annualized Operating Cash Flow
Ratio of the Company and its Restricted Subsidiaries at the time of incurrence
of such Debt or issuance of such Disqualified Stock, after giving pro forma
effect thereto, is 9.5:1 or less if such incurrence or issuance occurs prior to
November 1, 1995 and 8.5:1 or less if such incurrence or issuance occurs
thereafter, provided that any such Debt incurred by the Company that is not
Senior Debt shall have an average life to maturity no shorter than the remaining
average life to maturity of the Notes and that such Debt incurred shall not have
any principal payments due before the maturity of the Notes.
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The foregoing limitations shall not apply to the incurrence of any of the
following (collectively, 'Permitted Debt'): (i) Debt owed by the Company to any
Wholly Owned Restricted Subsidiary provided that any such Debt is subordinated
to the Notes; (ii) Debt under the Notes; (iii) other Debt existing at the date
of this Indenture; (iv) other Debt incurred after the date hereof by the Company
not to exceed at any time $40 million less the sum of (A) the aggregate
principal amount of all Debt incurred by Restricted Subsidiaries plus (B) the
aggregate liquidation preference of Disqualified Stock issued by Restricted
Subsidiaries pursuant to clause (v) of this paragraph; (v) Debt incurred and
Preferred Stock issued by Restricted Subsidiaries, so long as the sum of (A) the
aggregate principal amount of all Debt of Restricted Subsidiaries plus (B) the
aggregate liquidation preference of all outstanding Preferred Stock issued by
Restricted Subsidiaries shall not exceed at any time $10 million; (vi) Debt in
respect of any interest rate protection or hedging arrangements entered into by
the Company to fix the floating interest rate or float the fixed interest rate
of any Debt permitted hereunder; and (vii) Debt incurred in exchange for or the
proceeds of which are used to exchange, refinance or refund any of the foregoing
Debt so long as (A) the principal amount of the Debt incurred does not exceed
the principal amount (plus any premium) of the Debt so exchanged, refinanced or
refunded, (B) where the Debt to be exchanged, refinanced or refunded is not
Senior Debt, the Debt incurred does not have an average life shorter than the
remaining average life of the Debt being so exchanged, refinanced or refunded
and (C) where the Debt to be refinanced, exchanged or refunded is not Senior
Debt, the Debt incurred ranks no more senior and is at least as subordinated in
right of payment to the Notes as the Debt being so exchanged, refinanced or
refunded. The Company shall not permit any Unrestricted Subsidiary to incur Debt
that would be recourse to the Company or to any Restricted Subsidiary or any of
their respective assets.]
SECTION 11.11. LIMITATIONS ON RESTRICTED PAYMENTS.
[ADD: Intentionally omitted.]
[DELETE: The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, (a) declare or pay any dividend on, or make any
distribution in respect of (other than dividends and distributions payable
exclusively in Capital Stock, other than Disqualified Stock), or purchase,
redeem or retire for value any Capital Stock of the Company or any Restricted
Subsidiary (except Capital Stock held by the Company or a Wholly Owned
Restricted Subsidiary), other than in exchange for the Company's own Capital
Stock (other than Disqualified Stock), (b) make any principal payment on, or
redeem, repurchase, defease or otherwise acquire or retire for value, more than
one year prior to a scheduled principal payment or maturity, Debt of the Company
that is expressly subordinated in right of payment to the Notes or (c) make any
Restricted Investments (such payments or any other actions described in (a), (b)
and (c) collectively 'Restricted Payments'), unless (i) at the time of and
immediately after giving effect to the proposed Restricted Payment, no Default
or Event of Default shall have occurred and be continuing, (ii) at the time of
and immediately after giving effect to the proposed Restricted Payment, the
Company could incur at least $1.00 of additional Debt pursuant to Section 11.10;
(iii) in the case of any Restricted Payment which is a purchase, redemption or
retirement of Capital Stock of the Company other than in exchange for the
Company's own Capital Stock (other than Disqualified Stock), such Restricted
Payment is made only after October 31, 1995; and (iv) at the time of and
immediately after giving effect to the proposed Restricted Payment, the
aggregate amount of all Restricted Payments declared or made after October 31,
1993 shall not exceed, at the date of determination, an amount equal to the
Company's Cumulative Operating Cash Flow from October 31, 1993 to the end of the
Company's most recently ended full fiscal quarter, taken as a single accounting
period, less 1.2 times the Company's Cumulative Total Interest Expense from
October 31, 1993 to the end of the Company's most recently ended full fiscal
quarter, taken as a single accounting period.
The foregoing provisions shall not prevent (i) the payment of any dividend
within 60 days after the date of its declaration if at the date of declaration
such payment would be permitted by such provisions; (ii) any transaction with an
officer or director of the Company entered into in the ordinary course of
business (including compensation or employee benefit arrangements with any such
person); (iii) payments made on shares of Existing Preferred Stock in accordance
with its terms as in effect on the Issue Date; (iv) the making of Permitted
Investments; or (v) the making of Restricted Payments not otherwise permitted by
the foregoing provisions in an amount up to $25 million of which no more than
$10 million may be
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applied for uses of the type referred to in clause (a) of the preceding
paragraph (subject to the limitations contained in clause (iii) of the preceding
paragraph), such amount and application increased by the sum of (A) an amount
equal to the value received by the Company from the issuance or sale by the
Company (other than to a Restricted Subsidiary) after October 31, 1993 of
Capital Stock (other than Disqualified Stock) (the value received if other than
cash, as determined by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced by a Board Resolution except
that if such issuance or sale is made in Capital Stock of the Company for which
there is an active public trading market, the value of such issuance or sale
shall be the market value of such Capital Stock at the date of issuance), plus
(B) dividends or distributions from Unrestricted Subsidiaries to the extent not
included in Operating Cash Flow, less (C) the amount of payments made pursuant
to clause (iii) of this paragraph.]
SECTION 11.12. LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.
[ADD: Intentionally omitted.]
[DELETE: The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into or cause to exist any transaction or
series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any Affiliate
unless (a) such transaction or series of transactions is on terms that are no
less favorable to the Company or such Restricted Subsidiary, as the case may be,
than would be available in a comparable transaction with an unrelated third
party and (b) the Company delivers to the Trustee with respect to a transaction
or series of transactions involving aggregate payments in excess of $10 million
an Officers' Certificate certifying that such transaction or series of
transactions complies with clause (a) above and either (i) such transaction or
series of transactions is approved by a majority of the disinterested members of
the Board of Directors of the Company or (ii) such transaction or series of
transactions is approved by a majority of the entire Board of Directors and the
Company has delivered to the Trustee an Opinion of Counsel that such transaction
or series of transactions is fair to the Company or such Restricted Subsidiary
from a financial point of view issued by an investment banking firm of national
standing. Notwithstanding the foregoing, the foregoing provisions shall not
apply to (A) any transaction with an officer or director of the Company entered
into in the ordinary course of business (including compensation or employee
benefit arrangements with any such person), (B) any transaction entered into by
the Company or one of its Restricted Subsidiaries with a Restricted Subsidiary
of the Company, (C) transactions in existence or approved by the Board of
Directors of the Company on or prior to the Issue Date or (D) Restricted
Payments permitted under Section 11.11 and any Permitted Investments.]
SECTION 11.13. LIMITATIONS ON DIVIDEND RESTRICTIONS AFFECTING SUBSIDIARIES.
[ADD: Intentionally omitted.]
[DELETE: The Company shall not, and shall not permit any Restricted Subsidiary
to, create or otherwise cause or suffer to exist or become effective or enter
into any agreement with any Person that would cause any consensual encumbrance
or restriction of any kind (except for Permitted Debt) on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distribution on its
Capital Stock, (b) pay any Debt owed to the Company or any Restricted
Subsidiary, (c) make loans or advances to the Company or any Restricted
Subsidiary or (d) transfer any of its property or assets to the Company or any
Restricted Subsidiary, other than such encumbrances or restrictions (i) existing
as of the date hereof or (ii) created in connection with any permitted
refinancing, refunding or replacement of any Debt; provided, however, that the
encumbrances or restrictions contained in the agreements governing any such
refinancing, replacement or refunding of Debt shall be no more restrictive than
the encumbrances or restrictions set forth in the agreements governing the Debt
being refinanced as in effect immediately prior to such refinancing (except that
an encumbrance or restriction that is not more restrictive than those set forth
in Section 11.11 with respect to any Restricted Subsidiary shall in any event be
permitted hereunder) or (iii) created pursuant to an asset sale agreement, stock
sale agreement or similar instrument pursuant to which an Asset Sale permitted
hereunder is to be consummated, so long as such restrictions shall be effective
only for the period from the execution and delivery of such agreement or
instrument through a termination date not later than 180 days after the
satisfaction of all closing conditions in such agreement or instrument.]
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SECTION 11.14. LIMITATIONS ON LIENS SECURING DEBT.
[ADD: Intentionally omitted.]
[DELETE: The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur or assume any Liens
(other than Permitted Liens) of any kind against or upon any of its property or
assets, or any proceeds therefrom, to secure Debt unless contemporaneously
therewith effective provision is made to secure the Notes equally and ratably
with such Debt with a Lien on the same assets securing such Debt for so long as
such Debt is secured by such Lien; provided, however, that if such Debt is a
subordinated obligation, the Lien securing such Debt shall be subordinated and
junior to the Lien securing the Notes with the same or lesser relative priority
as such subordinated obligation shall have with respect to the Notes.]
SECTION 11.15. LIMITATIONS ON SALE OF ASSETS AND SUBSIDIARY STOCK.
[ADD: Intentionally omitted.]
[DELETE: (a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, make any Asset Sale unless (a) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined by the Board of Directors, in its sole discretion, of the
entity receiving such consideration) of the assets or Capital Stock sold or
otherwise disposed of and (b) at least 75% of such consideration consists of
cash or Cash Equivalents; provided, however, that this limitation shall not
apply to a transaction whereby the Company or any Restricted Subsidiary effects
an Asset Sale by the exchange of assets or property for Productive Assets, or
for the Capital Stock constituting a controlling interest in an entity owning
primarily Productive Assets, so long as after giving effect to the transaction
the pro forma Debt to Annualized Operating Cash Flow Ratio of the Company and
its Restricted Subsidiaries would be no more than 120 percent of the Debt to
Annualized Operating Cash Flow Ratio immediately preceding such transaction.
Within one year after any Asset Sale, the Company (or the Restricted Subsidiary,
as the case may be) may apply the Net Cash Proceeds from such Asset Sale to an
investment in Productive Assets. Any Net Cash Proceeds from the Asset Sale that
are not applied or invested as provided in the preceding sentence constitute
'Excess Proceeds.'
(b) When the aggregate amount of Excess Proceeds exceeds $10 million, the
Company shall make an offer to all Holders of the Notes (the 'Asset Sale
Offer'), pursuant to the provisions of Section 11.15(c) hereof, to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the
outstanding principal amount thereof, plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer. To the extent that the
aggregate amount of Notes tendered pursuant to an offer to purchase is less than
the Excess Proceeds, the Company may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased). Upon completion of such
Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
(c) In the event that, pursuant to this Section 11.15, the Company shall
commence an Asset Sale Offer, it shall follow the procedures set forth in this
Section 11.15(c).
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the 'Offer Period'). No later than five
Business Days after the termination of the Offer Period (the 'Purchase Date')
the Company shall purchase the principal amount required to be purchased
pursuant to Section 11.15(b) hereof (the 'Offer Amount'), of Notes tendered or,
if less than the Offer Amount has been tendered, all Notes tendered in response
to the Asset Sale Offer.
If the Purchase Date is on or after a Regular Record Date and on or before
the related Interest Payment Date, any accrued interest will be paid to the
Person in whose name a Note is registered at the
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close of business on such Regular Record Date, and no additional interest will
be payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of any Asset Sale Offer, the Company shall send, by
first class mail, a notice to each of the Holders, with a copy to the Trustee.
The notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(1) that the Asset Sale Offer is being made pursuant to this Section
11.15 and the length of time the Asset Sale Offer will remain open;
(2) the Offer Amount, the purchase price and the Purchase Date;
(3) that any Note not tendered or accepted for payment will continue
to accrue interest;
(4) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer will be required to surrender the Note, with the form
entitled 'Option of Holder to Elect Purchase' on the reverse side of the
Note completed, to the Company, a depositary, if appointed by the Company,
or a Paying Agent at the address specified in the notice at least five
Business Days before the Purchase Date;
(5) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have the Note purchased;
(6) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000 or
integral multiples thereof shall be purchased); and
(7) that Holders whose Notes were purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered.
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary (with such
adjustments as may be deemed appropriate by the Company so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be purchased), the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes or portions
thereof tendered, and deliver to the Trustee an Officers' Certificate stating
that such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 11.15(c). The Company, depository or
Paying Agent, as the case may be, shall promptly (but in any case not later than
five Business Days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Note tendered by such Holder
and accepted by the Company for purchase, and the Company shall promptly issue a
new Note, and the Trustee shall authenticate and mail or deliver such new Note
to such Holder equal in principal amount to any unpurchased portion of the Note
surrendered. Any Note not so accepted shall be promptly mailed or delivered by
the Company to the Holder thereof. The Company will publicly announce the
results of the Asset Sale Offer on the Purchase Date.
In the event that the Company commences an Asset Sale Offer, if such Asset
Sale Offer constitutes a 'tender offer' for purposes of Rule 14e-1 under the
Exchange Act at that time, the Company will comply with the requirements of
Rule 14e-1 as then in effect with respect to such Asset Sale Offer.
(d) Simultaneously with the notification of an offer to purchase the Notes
pursuant to this Section 11.15 to the Trustee as required by Section 12.02
hereof, the Company shall provide the Trustee with an Officers' Certificate
setting forth the information required to be included therein by Sections
11.15(c) and 12.02 hereof and, in addition, setting forth the calculations used
in determining the amount of Excess
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Proceeds to be applied to the purchase of Notes. If the Company wishes to
request the Trustee to give such notification on its behalf pursuant to Section
12.04 hereof, the Officers' Certificate shall so state.]
SECTION 11.17. SEC REPORTS.
[ADD: Intentionally omitted.]
[DELETE: So long as any of the Notes are outstanding, the Company will file with
the Commission the annual reports, quarterly reports and other documents that
the Company would have been required to file with the Commission pursuant to
Sections 13(a) and 15(d) of the Exchange Act if the Company was subject to such
Sections, and the Company will promptly provide to all Holders and file with the
Trustee copies of such reports and documents.]
SECTION 6.01. EVENTS OF DEFAULT.
'Event of Default,' whenever used herein with respect to the Notes, means
any one of the following events (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) default in the payment of interest upon any Note when it becomes
due and payable, and continuance of such default for a period of 30 days;
or
(2) default in the payment of the principal of (or premium, if any,
on) any Note when the same becomes due and payable at maturity, upon
acceleration, optional or mandatory redemption, required repurchase or
otherwise; or
(3) the Company fails to observe, perform or comply with any of its
agreements or covenants pursuant to Section [DELETE: 9.01 and] 11.16
hereof; or
[DELETE: (4) the Company fails to observe, perform or comply with any of
its agreements or covenants pursuant to Sections 11.10, 11.11, 11.12,
11.13, 11.14 and 11.15 hereof, and such default or breach continues for a
period of 30 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in principal amount of the Outstanding Notes a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a 'Notice of Default' hereunder;
or]
[DELETE: (5) the Company fails to observe, perform or comply with any of
its other agreements or covenants in, or provisions of, the Notes or this
Indenture, and such default or breach continues for a period of 60 days
after there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Notes a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a 'Notice of Default' hereunder; or]
[DELETE: (6) an event of default occurs (after giving effect to any
applicable grace or cure period) under any mortgage, indenture or other
instrument governing any Debt of the Company or any Restricted Subsidiary
for borrowed money, whether such Debt now exists or shall be created
hereafter, if (a) such event of default results from the failure to pay at
maturity $10 million or more in principal amount of such Debt or (b) as a
result of such event of default the maturity of $10 million or more in
principal amount of such Debt has been accelerated prior to its stated
maturity; or]
[DELETE: (7) any final judgment or judgments, in an amount of $10 million
or more, in the aggregate, are entered by a court or courts of competent
jurisdiction against the Company or a Restricted Subsidiary and such
judgment or judgments remain undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate of all such undischarged judgments equals or exceeds $10 million;
or]
[DELETE: (8)] [ADD: (4)] the Company or any Restricted Subsidiary pursuant
to or within the meaning of any Bankruptcy Law (a) commences a voluntary
case; (b) consents to the entry of an
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order for relief against it in an involuntary case; (c) consents to the
appointment of a Custodian of it or for all or substantially all of its
property; (d) makes a general assignment for the benefit of its creditors
or generally is not paying its debts as they become due; or
[DELETE: (9)] [ADD: (5)] a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that: (a) is for relief against the
Company or any Restricted Subsidiary in an involuntary case; (b) appoints a
Custodian of the Company or any Restricted Subsidiary or for all or
substantially all of the property of the Company or any Restricted
Subsidiary; or (c) orders the liquidation of the Company or any Restricted
Subsidiary, and the order or decree remains unstayed and in effect for 60
consecutive days.
The term 'Bankruptcy Law' means Title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. The term 'Custodian' means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.
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Manually signed facsimile copies of the Consent and Letter of Transmittal
will be accepted. Consents and Letters of Transmittal, certificates for Notes
and any other required documents should be sent by each Holder or such Holder's
broker, dealer, commercial bank, trust company or other nominee to the
Depositary at the address as set forth below:
The Depositary for the Tender Offers and the Consent Solicitations is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Hand, Mail or Overnight Delivery: By Facsimile for Eligible Institutions:
Wall Street Plaza (212) 701-7636
88 Pine Street, 19th Floor Confirm by Telephone:
New York, NY 10005 (212) 701-7624
Attention: Reorganization Department
</TABLE>
Any questions or requests for assistance or additional copies of this Offer
to Purchase and Consent Solicitation, the Consent and Letter of Transmittal and
Notice of Guaranteed Delivery may be directed to the Information Agent or the
Dealer Manager at their telephone numbers and locations set forth below. You may
also contact your broker dealer, commercial bank or trust company or any other
nominee for assistance concerning the Tender Offers.
The Information Agent for the Tender Offers and Consent Solicitations is:
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, N.Y. 10004
Telephone: (212) 843-8500
(800) 755-5001 (toll free)
The Dealer Manager for the Tender Offers and
the Solicitation Agent for the Consent Solicitations is:
MERRILL LYNCH & CO.
World Financial Center, North Tower
New York, N.Y. 10281-1307
Telephone: (888) ML4-TNDR
(888) 654-8637 (toll free)
(212) 449-4914
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CONSENT AND LETTER OF TRANSMITTAL
TO TENDER AND TO GIVE CONSENT IN RESPECT OF
8 7/8% SENIOR NOTES DUE 2001 (CUSIP NO. 15133VAA7) AND
10 1/8% SENIOR NOTES DUE 2005 (CUSIP NO. 15133VAB5)
OF
CENTENNIAL CELLULAR CORP.
PURSUANT TO THE OFFER TO PURCHASE AND CONSENT SOLICITATION
DATED SEPTEMBER 8, 1998
THE TENDER OFFERS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
WEDNESDAY, OCTOBER 14, 1998, UNLESS EXTENDED (THE 'TENDER OFFER EXPIRATION
DATE'). THE SOLICITATIONS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MONDAY, SEPTEMBER 21, 1998, UNLESS EXTENDED (THE 'SOLICITATION EXPIRATION
DATE'). HOLDERS OF THE NOTES MUST TENDER THEIR NOTES ON OR PRIOR TO THE
TENDER OFFER EXPIRATION DATE IN ORDER TO RECEIVE THE PURCHASE PRICE (AS
DEFINED BELOW). HOLDERS OF NOTES MUST TENDER THEIR NOTES AND PROVIDE THEIR
CONSENTS (AS DEFINED BELOW) ON OR PRIOR TO THE SOLICITATION EXPIRATION
DATE IN ORDER TO RECEIVE THE CONSENT PAYMENT (AS DEFINED BELOW). TENDERS
MAY BE WITHDRAWN AND CONSENTS MAY BE REVOKED AT ANY TIME PRIOR TO THE
SOLICITATION EXPIRATION DATE, BUT NOT THEREAFTER.
The Depositary for the Tender Offers and the Solicitations is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Hand, Mail or Overnight Delivery: By Facsimile for Eligible Institutions:
Wall Street Plaza (212) 701-7636
88 Pine Street, 19th Floor Confirm by Telephone:
New York, NY 10005 (212) 701-7624
Attention: Reorganization Department
</TABLE>
DELIVERY OF THIS CONSENT AND LETTER OF TRANSMITTAL TO AN ADDRESS, OR
TRANSMISSION VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A
VALID DELIVERY.
ALL CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE MEANINGS
ASCRIBED TO THEM IN THE OFFER TO PURCHASE AND CONSENT SOLICITATION, DATED
SEPTEMBER 8, 1998.
THE INSTRUCTIONS CONTAINED HEREIN AND IN THE OFFER TO PURCHASE AND CONSENT
SOLICITATION SHOULD BE READ CAREFULLY BEFORE THIS CONSENT AND LETTER OF
TRANSMITTAL IS COMPLETED.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE PAYMENT FOR THE NOTES TO BE
PURCHASED PURSUANT TO THE TENDER OFFERS MUST VALIDLY TENDER (AND NOT WITHDRAW OR
REVOKE) THEIR NOTES TO THE DEPOSITARY PRIOR TO THE TENDER OFFER EXPIRATION DATE.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE THE CONSENT PAYMENT PURSUANT TO THE
SOLICITATIONS MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR NOTES AND DELIVER
(AND NOT REVOKE) THEIR CONSENTS TO THE DEPOSITARY PRIOR TO THE SOLICITATION
EXPIRATION DATE.
CENTENNIAL CELLULAR CORP. (THE 'COMPANY') AND CCW ACQUISITION CORP. ('CCW')
HAVE ENTERED INTO AN AGREEMENT AND PLAN OF MERGER, PURSUANT TO WHICH, AND
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH THEREIN, THE COMPANY WILL MERGE
WITH CCW, WITH THE COMPANY SURVIVING THE MERGER. IN CONNECTION WITH THE
CONSUMMATION OF THE MERGER, THE COMPANY'S NAME WILL REMAIN CENTENNIAL CELLULAR
CORP.
<PAGE>
<PAGE>
By execution hereof, the undersigned acknowledges receipt of the Offer to
Purchase and Consent Solicitation, dated September 8, 1998 (as the same may be
supplemented from time to time, the 'Offer to Purchase and Consent
Solicitation') of the Company and this Consent and Letter of Transmittal and
instructions hereto (the 'Consent and Letter of Transmittal' and together with
the Offer to Purchase and Consent Solicitation, the 'Offer Documents'), which
together constitute (i) the Company's offer to purchase for cash the
above-listed debt securities of the Company (the 'Notes') upon the terms and
conditions set forth in the Offer Documents (the 'Tender Offers'), and (ii) the
Company's solicitation (the 'Solicitations') of consents (the 'Consents') from
Holders to certain proposed amendments (the 'Proposed Amendments'), as described
in the Offer to Purchase and Consent Solicitation, to the indenture under which
each such series of Notes was issued (the 'Indenture' for each series and,
together with all of the indentures under which the other Notes were issued, the
'Indentures'). Holders of Notes who tender such Notes are obligated to consent
to the Proposed Amendments. The tender of Notes under this Consent and Letter of
Transmittal on or prior to the Solicitation Expiration Date will be deemed to
constitute a Consent with respect to the Proposed Amendments. Holders of Notes
who consent to the Proposed Amendments are obligated to tender such Notes in the
Tender Offer. Capitalized terms used but not defined herein have the meaning
given to them in the Offer to Purchase and Consent Solicitation.
The Company's obligation to make Consent Payments with respect to the Notes
is conditioned upon, among other things, acceptance by the Company of all Notes
that are tendered in the Tender Offers for purchase and payment. To be eligible
to receive a Consent Payment, a Holder must have validly tendered (and not
withdrawn) such Holder's Notes on or prior to the Solicitation Expiration Date.
The Offer to Purchase and Consent Solicitation enclosed herewith contains a more
complete description of the Tender Offers and related Solicitations and the
conditions thereof.
USE THIS CONSENT AND LETTER OF TRANSMITTAL ONLY TO TENDER NOTES AND TO
CONSENT TO THE PROPOSED AMENDMENTS. IF NOTES OF MORE THAN ONE SERIES ARE BEING
TENDERED, IT IS NECESSARY TO RETURN A SEPARATE LETTER OF TRANSMITTAL IN RESPECT
OF EACH SERIES OF NOTES TENDERED.
This Consent and Letter of Transmittal is to be used by Holders if (i)
certificates representing Notes are to be physically delivered to the Depositary
herewith by Holders, (ii) tender of Notes is to be made by book-entry transfer
to the Depositary's account at The Depository Trust Company ('DTC') pursuant to
the procedures set forth in the Offer to Purchase and Consent Solicitation under
the caption 'The Tender Offers and the Solicitations -- Procedures for Tendering
Notes and Delivering Consents -- Book-Entry Delivery' by any financial
institution that is a participant in DTC and whose name appears on a security
position listing as the owner of Notes (both Holders and such DTC participants,
acting on behalf of Holders, are referred to herein as 'Acting Holders'), or
(iii) tender of Notes is to be made following the Solicitation Expiration Date
according to the guaranteed delivery procedures set forth in the Offer to
Purchase and Consent Solicitation under the caption 'The Tender Offers and the
Solicitations -- Procedures for Tendering Notes and Delivering
Consents -- Guaranteed Delivery'; and such Holders desire to consent to the
Proposed Amendments to the Indentures under which the Notes were issued and, in
each ease, instructions are not being transmitted through the DTC Automated
Tender Offer Program ('ATOP').
Holders of Notes that are tendering by book-entry transfer to the
Depositary's account at DTC can execute the tender through ATOP for which the
transaction will be eligible. DTC participants that are accepting a Tender Offer
(as defined in the Offer to Purchase and Consent Solicitation) must transmit
their acceptance to DTC which will verify the acceptance and execute a
book-entry delivery to the Depositary's account at DTC. DTC will then send an
Agent's Message to the Depositary for its acceptance. DTC participants may also
accept a Tender Offer by submitting a notice of guaranteed delivery through
ATOP.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
The undersigned should complete, execute and deliver this Consent and
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Tender Offers and the Solicitations.
Your bank or broker can assist you in completing this Consent and Letter of
Transmittal. The instructions included with this Consent and Letter of
Transmittal must be followed. Questions and request for assistance or for
additional copies of the Offer to Purchase and Consent Solicitation, this
Consent and Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the Information Agent, the Dealer Manager or the Depositary. See
Instruction 12 below.
2
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<PAGE>
If Holders desire to tender Notes pursuant to the Tender Offers after the
Solicitation Expiration Date and (i) certificates representing such Notes are
not lost but are not immediately available, (ii) time will not permit this
Consent and Letter of Transmittal, certificates representing such Notes or other
required documents to reach the Depositary prior to the Tender Offer Expiration
Date, or (iii) the procedures for book-entry transfer (including delivery of an
Agent's Message) cannot be completed prior to the Tender Offer Expiration Date,
such Holders may effect a tender of such Notes in accordance with the guaranteed
delivery procedures set forth in the Offer to Purchase and Consent Solicitation
under the caption 'The Tender Offers and the Solicitations -- Procedures for
Tendering Notes and Delivery Consents -- Guaranteed Delivery.' See Instruction 2
below.
HOLDERS WHO TENDER NOTES ARE OBLIGATED TO CONSENT TO THE PROPOSED
AMENDMENTS. DELIVERY OF NOTES BY BOOK-ENTRY TRANSFER OR PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY WILL BE DEEMED TO CONSTITUTE A CONSENT TO THE PROPOSED
AMENDMENTS WITH RESPECT TO SUCH NOTES TENDERED, PROVIDED, HOWEVER, THAT A
PROPERLY COMPLETED AND DULY EXECUTED CONSENT AND LETTER OF TRANSMITTAL IS
RECEIVED BY THE DEPOSITARY. THE PROCEDURES FOR GUARANTEED DELIVERY MAY NOT BE
USED TO EFFECT TENDERS OF NOTES (AND DELIVERY OF THE RELATED CONSENTS) ON OR
PRIOR TO THE SOLICITATION EXPIRATION DATE.
TENDER OF NOTES
[ ] CHECK HERE IF TENDERED NOTES ARE ENCLOSED HEREWITH.
CHECK THE APPROPRIATE BOX BELOW TO INDICATE TO WHICH SERIES OF NOTES THIS
CONSENT AND LETTER OF TRANSMITTAL RELATES. IF NOTES OF MORE THAN ONE SERIES
ARE BEING TENDERED, IT IS NECESSARY TO RETURN A SEPARATE CONSENT AND LETTER
OF TRANSMITTAL IN RESPECT OF EACH SERIES OF NOTES TENDERED (CHECK ONLY ONE
BOX).
[ ] 8 7/8% Senior Notes due 2001
[ ] 10 1/8% Senior Notes due 2005
[ ] CHECK HERE IF CONSENT IS GIVEN AND TENDERED NOTES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH
DTC AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN DTC MAY DELIVER NOTES
BOOK-ENTRY TRANSFER)
Name of Tendering Institution: ............................................
Account Number: ...........................................................
Transaction Code Number: ..................................................
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s): ..........................................
Window Ticket Number (if any): ............................................
Date of Execution of Notice of Guaranteed Delivery: .......................
Name of Eligible Institution that Guaranteed Delivery: ....................
List below the Notes to which this Consent and Letter of Transmittal
relates. If the space provided is inadequate, list the certificate numbers and
principal amounts on a separately executed schedule and affix the
3
<PAGE>
<PAGE>
schedule to this Consent and Letter of Transmittal. Tenders of Notes will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof.
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF NOTES
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) TENDERED AND
OR NAME OF DTC PARTICIPANT AND PARTICIPANT'S CERTIFICATE OR CUSIP AGGREGATE PRINCIPAL AS TO
DTC ACCOUNT NUMBER IN WHICH NOTES ARE HELD NUMBER(S)* AND TITLE AMOUNT WHICH CONSENTS
(PLEASE FILL IN IF BLANK) OF SECURITY REPRESENTED** ARE GIVEN**
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL
AMOUNT AT MATURITY
TENDERED
- ---------------------------------------------------------------------------------------------------------------------------------
*Need not be completed by Holders tendering by book-entry transfers (see below).
- ---------------------------------------------------------------------------------------------------------------------------------
**Unless otherwise indicated in the column labeled 'Principal Amount Tendered And As To Which Consents Are Given' and subject to
the terms and conditions of the Offer to Purchase and Consent Solicitation, a Holder will be deemed to have tendered the entire
aggregate principal amount represented by the Notes indicated in the column labeled 'Aggregate Principal Amount Represented.'
See Instruction 3.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The names and addresses of the registered Holders should be printed, if not
already printed above, exactly as they appear on the Notes tendered hereby. The
Notes and the principal amount of Notes that the undersigned wishes to tender
should be indicated in the appropriate boxes.
HOLDERS WHO WISH TO ACCEPT THE TENDER OFFERS AND TENDER THEIR NOTES MUST
COMPLETE THIS CONSENT AND LETTER OF TRANSMITTAL IN ITS ENTIRETY. HOLDERS WHO
TENDER NOTES ARE OBLIGATED TO CONSENT TO THE PROPOSED AMENDMENTS. THE
COMPLETION, EXECUTION AND DELIVERY OF THIS CONSENT AND LETTER OF TRANSMITTAL IN
CONNECTION WITH THE TENDER OF NOTES CONSTITUTES A CONSENT TO THE PROPOSED
AMENDMENTS WITH RESPECT TO SUCH NOTES TENDERED. HOLDERS OF NOTES WHO DELIVER
THEIR CONSENTS TO THE PROPOSED AMENDMENTS AFTER THE SOLICITATION EXPIRATION DATE
WILL NOT RECEIVE CONSENT PAYMENTS FOR SUCH CONSENTS.
4
<PAGE>
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Tender Offers, the
undersigned hereby tenders to the Company the principal amounts of each series
of Notes indicated in the table above entitled 'Description of Notes' (the
'Notes') under the column heading 'Principal Amount Tendered' and consents to
the Proposed Amendments with respect to the aggregate principal amount of each
series of such Notes. Each of the Tender Offers is referred to herein
individually as a 'Tender Offer' and, collectively, as the 'Tender Offers'.
Subject to, and effective upon, the acceptance for purchase of, and payment
for, the principal amount of the Notes tendered with this Consent and Letter of
Transmittal, the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Company, all right, title and interest in and to the Notes that
are being tendered hereby, and also consents to the Proposed Amendments. The
undersigned hereby irrevocably constitutes and appoints the Depositary the true
and lawful agent and attorney-in-fact of the undersigned (with full knowledge
that the Depositary also acts as the agent of the Company) with respect to such
Notes, with full power of substitution and resubstitution (such
power-of-attorney being deemed to be an irrevocable power coupled with an
interest) to (i) present such Notes and all evidences of transfer and
authenticity to, or transfer ownership of, such Notes on the account books
maintained by DTC to, or upon the order of, the Company, (ii) present such Notes
for transfer of ownership, (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Notes and (iv) deliver to the Company and
the Trustee this Consent and Letter of Transmittal as evidence of the
undersigned's Consent to the Proposed Amendments and as certification that
validly tendered and not revoked consents from Holders of not less than a
majority in aggregate principal amount outstanding of each series of Notes not
owned by the Company or its affiliates (the 'Requisite Consents') to the
Proposed Amendments duly executed by Holders of such Notes have been received,
all in accordance with the terms and conditions of the Tender Offers and the
Solicitations.
The undersigned agrees and acknowledges that, by the execution and delivery
hereof, the undersigned makes and provides the written Consent, with respect to
the principal amount of each series of Notes indicated in the table above
entitled 'Description of Notes' under the column heading 'Principal Amount
Tendered' to the Proposed Amendments as permitted by the Indenture or Indentures
under which such Notes were issued. The undersigned understands that the Consent
provided hereby shall remain in full force and effect until such Consent is
revoked in accordance with the procedures set forth in the Offer to Purchase and
Consent Solicitation and this Consent and Letter of Transmittal, which
procedures are hereby agreed to be applicable in lieu of any and all other
procedures for revocation set forth in the applicable Indentures, which are
hereby waived. The undersigned understands that a revocation of such Consent
will not be effective after the Solicitation Expiration Date. The Company
intends to execute the Supplemental Indentures to the Indentures providing for
the Proposed Amendments on or promptly after the Solicitation Expiration Date,
but the Proposed Amendments will not be operative until the Company has accepted
for payment all Notes tendered and not withdrawn in the Tender Offers. Once such
Supplemental Indentures have been executed, no withdrawal of a tender of Notes
of such series will revoke the corresponding Consent or affect the validity of
such Supplemental Indentures, and the Supplemental Indentures will bind all
Holders from time to time of the Notes of such series (regardless of whether
such Holders shall have granted or revoked Consents to the Proposed Amendments).
The undersigned understands that tenders of Notes may be withdrawn by a
written notice of withdrawal received by the Depositary at any time prior to the
Solicitation Expiration Date. In order for a Holder to revoke a Consent, such
Holder must withdraw the related tendered Notes. In the event of a termination
of any of the Tender Offers, the Notes tendered pursuant to such Tender Offer
will be returned to the tendering Holders promptly (or, in the case of Notes
tendered by book-entry transfer, such Notes will be credited to the account
maintained at DTC from which such Notes were delivered). If the Company makes a
material change in the terms of any Tender Offer or any Solicitation or the
information concerning any Tender Offer or any Solicitation, the Company will
disseminate additional Tender Offer and Solicitation materials and extend such
Tender Offer or, if applicable, such Solicitation, to the extent required by
law.
The undersigned understands that tenders of Notes pursuant to any of the
procedures described in the Offer to Purchase and Consent Solicitation and in
the Instructions hereto and acceptance of such Notes by the Company will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the
5
<PAGE>
<PAGE>
conditions of the Tender Offers and the Solicitations. For purposes of any
Tender Offer, the undersigned understands that validly tendered Notes (or
defectively tendered Notes with respect to which the Company has, or has caused
to be, waived such defect) will be deemed to have been accepted by the Company
if, as and when the Company gives oral or written notice thereof to the
Depositary. For purposes of the Solicitations, Consents as to any series of
Notes received by the Depositary will be deemed to have been accepted if, as and
when the Company and the Trustee execute the Supplemental Indentures relating to
such series of Notes.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Notes tendered
hereby and to give the Consent contained herein, and that when such Notes are
accepted for purchase and payment by the Company, the Company will acquire good
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim or right. The undersigned
will, upon request, execute and deliver any additional documents deemed by the
Depositary or the Company to be necessary or desirable to complete the sale,
assignment and transfer of the Notes tendered hereby, to perfect the
undersigned's Consent to the Proposed Amendments.
All authority conferred or agreed to be conferred by this Consent and
Letter of Transmittal will survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Consent and Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, executors, administrators, successors, assigns, trustees in
bankruptcy and other legal representatives.
The undersigned understands that the delivery and surrender of the Notes is
not effective, and the risk of loss of the Notes does not pass to the
Depositary, until receipt by the Depositary of this Consent and Letter of
Transmittal, or a manually signed facsimile hereof, properly completed and duly
executed, together with all accompanying evidences of authority and any other
required documents in form satisfactory to the Company. All questions as to the
form of all documents and the validity (including time of receipt) and
acceptance of tenders and withdrawals of Notes and deliveries and revocations of
Consents will be determined by the Company, in its sole discretion, which
determination shall be final and binding.
Unless otherwise indicated under 'Special Payment Instructions,' the
undersigned hereby requests that any Notes representing principal amounts not
tendered or not accepted for purchase be issued in the name(s) of, and delivered
to, the undersigned (and, in the case of Notes tendered by book-entry transfer,
by credit to the account of the tendering Holders or brokers at DTC) and checks
constituting payments for Notes to be purchased and Consent Payments to be made
in connection with the Tender Offers and the Solicitations be issued to the
order of the undersigned. In the event that the 'Special Payment Instructions'
box or the 'Special Delivery Instructions' box is completed, the undersigned
hereby requests that any Notes representing principal amounts not tendered or
not accepted for purchase or any checks for payments of the Purchase Price be
issued in the name(s) of, or delivered to, the person(s) at the address(es) so
indicated. The undersigned recognizes that the Company has no obligation
pursuant to the 'Special Delivery Instructions' box to transfer any Notes from
the names of the registered holder(s) thereof if the Company does not accept for
purchase any of the principal amount of such Notes so tendered.
In the event that the 'Special Payment Instructions' box is completed, the
undersigned hereby request(s) that checks for payment of the Purchase Price to
be made in connection with the Tender Offers be issued in the names of, and be
delivered to, the persons at the addresses therein indicated.
6
<PAGE>
<PAGE>
A. SPECIAL PAYMENT
INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if any check for payment of the Purchase Price or
Consent Payments are to be issued in the name of someone other than person
or persons whose signature(s) appear(s) within this Consent and Letter of
Transmittal or issued to an address different from that shown in box
entitled 'Description of Notes' within this Consent and Letter of
Transmittal.
Issue: [ ] Notes [ ] Checks
Name ....................................................................
(PLEASE PRINT)
Address .................................................................
(PLEASE PRINT)
.........................................................................
(ZIP CODE)
.........................................................................
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
B. SPECIAL DELIVERY
INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Notes in a principal amount not tendered or not
accepted for purchase are to be sent to someone other than person or
persons whose signature(s) appear(s) within this Consent and Letter of
Transmittal, or to an address different from that shown in box entitled
'Description of Notes' within this Consent and Letter of Transmittal.
Name ....................................................................
(PLEASE PRINT)
Address .................................................................
(PLEASE PRINT)
.........................................................................
(ZIP CODE)
7
<PAGE>
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING AND CONSENTING HOLDERS OF NOTES
REGARDLESS
OF WHETHER NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
By completing, executing and delivering this Consent and Letter of
Transmittal, the undersigned hereby consents to the Proposed Amendments
with respect to the principal amount of the Notes listed in the box above
labeled 'Description of Notes' under the column heading 'Principal Amount
Tendered and as to which Consents are given.'
This Consent and Letter of Transmittal must be signed by the
registered Holder(s) of Notes exactly as such name(s) appears(s) on
certificate(s) for Notes or, if tendered by a participant in DTC, exactly
as such participant's name appears on a security position listing as owner
of Notes, or by person(s) authorized to become registered Holder(s) by
endorsements and documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, please set forth full title and see Instruction 5.
X ........................................................................
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATORY
(SEE GUARANTEE REQUIREMENT BELOW)
Dated ............................................................. , 1998
Name(s) ..................................................................
(PLEASE PRINT)
.........................................................................
Capacity .................................................................
Address ..................................................................
(INCLUDING ZIP CODE)
Area Code and Tel. Number ................................................
Tax Identification or Social Security No. ................................
(Complete Accompanying Substitute Form W-9)
MEDALLION SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature .....................................................
Name of Firm .............................................................
[PLACE SEAL HERE]
8
<PAGE>
<PAGE>
INSTRUCTIONS
FORMING PARTS OF THE TERMS AND CONDITIONS OF THE TENDER OFFERS AND THE
SOLICITATIONS
1. SIGNATURE GUARANTEES.
Signatures on this Consent and Letter of Transmittal must be guaranteed by
a Medallion Signature Guarantor (as defined in the Offer to Purchase and Consent
Solicitation), unless the Notes tendered hereby are tendered by a registered
Holder of Notes (or by a participant in DTC whose name appears on a security
position listing as the owner of such Notes) that has not completed either the
box entitled 'Special Delivery Instructions' or the box entitled 'Special
Payment Instructions' on this Consent and Letter of Transmittal. If Notes are
registered in the name of a person other than the signer of this Consent and
Letter of Transmittal or if Notes not accepted for payment or not tendered are
to be returned to a person other than the registered Holder, then the signatures
on this Consent and Letter of Transmittal accompanying the tendered Notes must
be guaranteed by a Medallion Signature Guarantor as described above. See
Instruction 5.
2. DELIVERY OF THIS CONSENT AND LETTER OF TRANSMITTAL AND CERTIFICATES FOR NOTES
OR BOOK-ENTRY CONFIRMATIONS; GUARANTEED DELIVERY PROCEDURES.
To tender Notes in the Tender Offers and to deliver Consents in the
Solicitations, physical delivery of certificates for Notes or a confirmation of
any book-entry transfer into the Depositary's account with DTC of Notes tendered
electronically, in connection with a book-entry transfer), and any other
documents required by this Consent and Letter of Transmittal, must be received
by the Depositary at one of its addresses set forth herein prior to the Tender
Offer Expiration Date; provided however, that no Consent Payment will be paid to
Holders who tender their Consent after the Solicitation Expiration Date. The
method of delivery of this Consent and Letter of Transmittal, Notes and all
other required documents to the Depositary is at the election and risk of
Holders. If such delivery is by mail, it is suggested that Holders use properly
insured registered mail, return receipt requested, and that the mailing be made
sufficiently in advance of the Tender Offer Expiration Date or the Solicitation
Expiration Date, as the case may be, to permit delivery to the Depositary prior
to such respective date. Except as otherwise provided below, the delivery will
be deemed made when actually received or confirmed by the Depositary. THIS
CONSENT AND LETTER OF TRANSMITTAL AND NOTES SHOULD BE SENT ONLY TO THE
DEPOSITARY, NOT TO THE COMPANY, THE INFORMATION AGENT, THE TRUSTEE OR THE DEALER
MANAGER.
The term 'Agent's Message' means a message transmitted by DTC to, and
received by the Depositary and forming a part of a Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Notes that such participant has received and
agrees to be bound by the terms of the Consent and Letter of Transmittal and the
Company may enforce such agreement against the participant.
If Holders desire to tender Notes pursuant to the Tender Offers and to
deliver a Consent pursuant to the Solicitations after the Solicitation
Expiration Date and (i) certificates representing such Notes are not lost but
are not immediately available, (ii) time will not permit this Consent and Letter
of Transmittal, certificates representing Notes or other required documents to
reach the Depositary prior to the Tender Offer Expiration Date, or (iii) the
procedures for book-entry transfer cannot be completed prior to the Tender Offer
Expiration Date, such Holder may effect a tender of Notes and delivery of a
Consent to the Proposed Amendments in accordance with the guaranteed delivery
procedures set forth in the Offer to Purchase and Consent Solicitation under the
caption 'The Tender Offers and the Solicitations -- Procedures for Tendering
Notes and Delivering Consents -- Guaranteed Delivery.'
Pursuant to the guaranteed delivery procedures:
(a) such tender must be made by or through an Eligible Institution
(defined as an institution that is a member of a Signature Guarantee
Program recognized by the Depositary, i.e., the Securities Transfer Agents
Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP) and
the New York Stock Exchange's Medallion Signature Program (MSP));
(b) on or prior to the Tender Offer Expiration Date, the Depositary
must have received from such Eligible Institution, at the address of the
Depositary set forth herein, a properly completed and duly executed Notice
of Guaranteed Delivery (by mail, hand delivery or facsimile transmission)
substantially in the form provided by the Company, setting forth the
name(s) and address(es) of the Acting Holder(s), and the principal amount
of Notes being tendered and with respect to which a Consent is being
delivered and stating that the
9
<PAGE>
<PAGE>
tender is being made thereby and guaranteeing that, within three New York
Stock Exchange trading days after the date of execution the Notice of
Guaranteed Delivery, a properly completed and duly executed Consent and
Letter of Transmittal, or a manually signed facsimile thereof (including
any tender of Notes transmitted by an Agent's Message), together with
certificates representing the Notes (or confirmation of book-entry transfer
of such Notes into the Depositary's account with DTC as described above),
and any other documents required by this Consent and Letter of Transmittal
and the instructions hereto, will be deposited by such Eligible Institution
with the Depositary; and
(c) this Consent and Letter of Transmittal or a facsimile hereof,
properly completed, or an Agent's Message, and duly executed certificates
for all physically delivered Notes in proper form for transfer (or
confirmation of book-entry transfer of such Notes into the Depositary's
account with DTC as described above, including an Agent's Message in
connection therewith) and all other required documents must be received by
the Depositary within three New York Stock Exchange trading days after the
date of execution of the Notice of Guaranteed Delivery.
THE COMPANY INTENDS TO EXECUTE THE SUPPLEMENTAL INDENTURES TO THE
INDENTURES PROVIDING FOR THE PROPOSED AMENDMENTS ON OR PROMPTLY AFTER THE
SOLICITATION EXPIRATION DATE, BUT THE PROPOSED AMENDMENTS WILL NOT BE OPERATIVE
UNTIL THE COMPANY HAS ACCEPTED FOR PAYMENT ALL NOTES TENDERED AND NOT WITHDRAWN
IN THE TENDER OFFERS. SUCH SUPPLEMENTAL INDENTURES WILL BE BINDING UPON EACH
HOLDER OF NOTES WHETHER OR NOT SUCH HOLDER GIVES A CONSENT WITH RESPECT THERETO.
3. INADEQUATE SPACE.
If the space provided herein is inadequate, the certificate or CUSIP
numbers and/or the principal amount at maturity represented by the Notes should
be listed on a separate signed schedule attached hereto.
4. PARTIAL TENDERS AND CONSENTS (NOT APPLICABLE TO HOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER).
Tenders of Notes pursuant to the Tender Offers (and the corresponding
Consents thereto pursuant to the Consent Solicitations) will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof. If less than
the entire principal amount of any Notes evidenced by a submitted certificate is
tendered, the tendering Holder must fill in the principal amount tendered in the
last column of the box entitled 'Description of Notes' herein. In the case of a
partial tender of Notes, as soon as practicable after the Tender Offer
Expiration Date, new certificates for the untendered amount of the Notes that
were evidenced by such Holder's old certificates will be sent to such Holder,
unless otherwise provided in the appropriate box of this Consent and Letter of
Transmittal. The entire principal amount that is represented by Notes of any
series delivered to the Depositary will be deemed to have been tendered, and the
tendering Holder will be deemed to have consented to the Proposed Amendments
with respect to the entire principal amount of such Notes, unless otherwise
indicated.
5. SIGNATURES ON THIS CONSENT AND LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER
AND ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Consent and Letter of Transmittal is signed by the registered
Holder(s) of the Notes tendered hereby or with respect to which Consent is
given, the signature(s) must correspond with the name(s) as written on the face
of the certificate(s) without alteration, enlargement or any change whatsoever.
If this Consent and Letter of Transmittal is signed by a participant in DTC
whose name is shown as the owner of the Notes tendered hereby, the signature
must correspond with the name shown on the security position listing as the
owner of the Notes. If any of the Notes tendered hereby are registered in the
name of two or more Holders, all such Holders must sign this Consent and Letter
of Transmittal. If any of the Notes tendered hereby are registered in different
names on several certificates, it will be necessary to complete, sign and submit
as many separate Consents and Letters of Transmittal as there are different
registrations of certificates. If this Consent and Letter of Transmittal or any
Notes or instrument of transfer is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, such person should so indicate
when signing, and proper evidence satisfactory to the Company of such person's
authority to so act must be submitted.
When this Consent and Letter of Transmittal is signed by the registered
Holders of the Notes listed and transmitted hereby, no endorsements of Notes or
separate instruments of transfer are required unless payment is to
10
<PAGE>
<PAGE>
be made, or Notes not tendered or purchased are to be issued, to a person other
than the registered Holders, in which case signatures on such Notes or
instruments of transfer must be guaranteed by a recognized member of the
Medallion Signature Guarantee Program.
IF THIS CONSENT AND LETTER OF TRANSMITTAL IS SIGNED OTHER THAN BY THE
REGISTERED HOLDERS OF THE NOTES LISTED, THE NOTES MUST BE ENDORSED OR
ACCOMPANIED BY APPROPRIATE INSTRUMENTS OF TRANSFER, IN EITHER CASE SIGNED
EXACTLY AS THE NAME OR NAMES OF THE REGISTERED HOLDERS APPEAR ON THE NOTES AND
SIGNATURES ON SUCH NOTES OR INSTRUMENTS OF TRANSFER ARE REQUIRED AND MUST BE
GUARANTEED BY A MEDALLION SIGNATURE GUARANTOR, UNLESS THE SIGNATURE IS THAT OF
AN ELIGIBLE INSTITUTION.
6. SPECIAL DELIVERY AND SPECIAL PAYMENT INSTRUCTIONS.
If Notes in a principal amount not tendered or not accepted for purchase or
the Purchase Price or the Consent Payment are to be issued in the name of a
person other than the signer of this Consent and Letter of Transmittal or sent
an address other than that shown above the appropriate 'Special Payment
Instruction' box or 'Special Delivery Instructions' box on this Consent and
Letter of Transmittal should be completed. All Notes tendered by book-entry
transfer and not accepted for payment will be returned by crediting the account
at DTC designated above as the account for which such Notes were delivered.
7. TAXPAYER IDENTIFICATION NUMBER.
Each tendering Holder is required to provide the Depositary with the
Holder's correct taxpayer identification number ('TIN'), generally the Holder's
social security or federal employer identification number, on Substitute Form
W-9, which is provided under 'Important Tax Information' below, or
alternatively, to establish another basis for exemption from backup withholding.
A holder must cross out item (2) in the Certification box on Substitute Form W-9
if such Holder is subject to backup withholding. Failure to provide the
information on the form may subject the tendering Holder to 31% federal income
tax backup withholding on the payment of the Purchase Price and the Consent
Payment to the Holder or other payee. The box in Part 3 of the form should be
checked if the tendering Holder has not been issued a TIN and has applied for a
TIN or intends to apply for a TIN in the near future. If the box in Part 3 is
checked and the Depositary is not provided with a TIN within 60 days, thereafter
the Depositary will withhold 31% from all such payments with respect to the
Notes to be purchased until a TIN is provided to the Depositary.
8. TRANSFER TAXES.
The Company will pay all transfer taxes applicable to the purchase and
transfer of Notes pursuant to the Tender Offers. If payment of the Purchase
Price is to be made to, or if Notes not tendered or purchased are to be
registered in the name of, any persons other than the registered owners, or if
tendered Notes are registered in the name of any persons other than the persons
signing this Consent and Letter of Transmittal, the amount of any transfer taxes
(whether imposed on the registered Holder or such other person) payable on
account of the transfer to such other person will be deducted from the Purchase
Price unless satisfactory evidence of the payment of such taxes or exemption
therefrom is submitted.
Except as provided in this Instruction 8, it will not be necessary for
transfer stamps to be affixed to the certificates listed in this Consent and
Letter of Transmittal.
9. IRREGULARITIES.
All questions as to the form of all documents and the validity (including
time of receipt) and acceptance of the tenders and withdrawals of Notes and
deliveries and revocations of Consents will be determined by the Company, in its
sole discretion, which determination shall be final and binding. Alternative,
conditional or contingent tenders or Consents will not be considered valid. The
Company reserves the absolute right to reject any or all tenders of Notes that
are not in proper form or the acceptance of which would, in the Company's
opinion, be unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Notes or of delivery as
to particular Consents. The Company's interpretations of the terms and
conditions of the Tender Offers and the Solicitations (including the
instructions in this Consent and Letter of Transmittal) will be final and
binding. Any defect or irregularity in connection with tenders of Notes or
deliveries of Consents must be cured within such time as the Company determines,
unless waived by the Company. Tenders of Notes shall not be deemed to have been
made until all defects or irregularities have been waived by the Company or
cured. A
11
<PAGE>
<PAGE>
defective tender may, in the sole discretion of the Company, constitute a valid
Consent and will be counted for purposes of determining whether Requisite
Consents have been obtained, even if the accompanying Notes are not accepted for
purchase by reason of such defect. None of the Company, the Depositary, the
Dealer Manager, the Information Agent or any other person will be under any duty
to give notice of any defects or irregularities in tenders of Notes or
deliveries of Consents, or will incur any liability to Holders for failure to
give any such notice.
10. WAIVER OF CONDITIONS.
The Company expressly reserves the absolute right, in its sole discretion,
to amend or waive any of the conditions to the Tender Offers or the
Solicitations in the case of any Notes tendered or Consents delivered, in whole
or in part, at any time and from time to time.
11. MUTILATED, LOST, STOLEN, OR DESTROYED CERTIFICATES FOR NOTES.
Any Holder of Notes whose certificates for Notes have been mutilated, lost,
stolen or destroyed should write to or telephone the Trustee at the address or
telephone number set forth in the Offer to Purchase and Consent Solicitation
under the caption 'The Tender Offers and The Solicitations -- Procedures for
Tendering Notes and Delivering Consents -- Lost or Missing Certificates.'
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering Notes and consenting to
the Proposed Amendments and requests for assistance or additional copies of the
Offer to Purchase and Consent Solicitation and this Consent and Letter of
Transmittal may be directed to the Information Agent at its address and
telephone numbers set forth below. Additional information about the Tender
Offers and the Solicitations may be obtained from either the Dealer Manager or
the Depositary, whose address and telephone numbers appear below.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder whose tendered Notes are accepted
for payment is required to provide the Depositary (as payer) with such Holder's
current TIN on Substitute Form W-9 below or otherwise establish a basis for
exemption from backup withholding. If such Holder is an individual, the TIN is
his or her Social Security number. If the Depositary is not provided with the
correct TIN, the Holder or other payee may be subject to a $50 penalty imposed
by the Internal Revenue Service, and payments, including the Purchase Price and
any Consent Payment, made with respect to Notes purchased pursuant to the Tender
Offers may be subject to backup withholding. Failure to comply truthfully with
the backup withholding requirements also may result in the imposition of severe
criminal and/or civil fines and penalties.
Certain Holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. A foreign person, including entities, may qualify as an exempt
recipient by submitting to the Depositary a properly compiled Internal Revenue
Service Form W-8, signed under penalties of perjury, attesting to that Holder's
foreign status. A Form W-8 can be obtained from the Depositary. See the enclosed
'Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9' for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments, including the Purchase Price and
any Consent Payment made with respect to Notes purchased pursuant to the Tender
Offers, the Holder is required to notify the Depositary of the Holder's current
TIN by completing the form below, certifying that the TIN provided on Substitute
Form W-9 is correct (or that such Holder is awaiting a TIN), and that (i) the
Holder has not been notified by the Internal Revenue Service that the Holder is
subject to backup withholding as a result of failure to report all interest or
dividends or (ii) the Internal Revenue Service has notified the Holder that the
Holder is no longer subject to backup withholding.
12
<PAGE>
<PAGE>
WHAT NUMBER TO GIVE THE DEPOSITARY
The Holder is required to give the Depositary the TIN (e.g., Social
Security number or employer identification number) of the registered owner of
the Notes. If the Notes are registered in more than one name or are not held in
the name of the actual owner, consult the enclosed 'Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9' for additional
guidance on which number to report.
<TABLE>
<S> <C> <C>
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK, AS DEPOSITARY
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security Number(s) or
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW Employer Identification
Number(s) ---------------------
FORM W-9 PART 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
DEPARTMENT OF THE TREASURY (1) The number shown on this form is my correct taxpayer identification number (or I
INTERNAL REVENUE SERVICE am waiting for a number to be issued for me), and
(2) I am not subject to backup withholding because:
PAYER'S REQUEST (a) I am exempt from backup withholding, or
FOR TAXPAYER (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject
IDENTIFICATION to backup withholding as a result of a failure to report all interest or dividends, or
NUMBER ('TIN') (c) the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return.
SIGNATURE........................................ PART 3 -- Awaiting TIN [ ]
DATE.............................................
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF 31% OF
ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE TENDER OFFERS AND THE
SOLICITATIONS. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
<TABLE>
<S> <C>
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either
(1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal
Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of
all reportable payments made to me thereafter will be withheld until I provide a number.
Signature ................................................... Date ..................................................
</TABLE>
13
<PAGE>
<PAGE>
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<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
Any questions or requests for assistance or additional copies of
the Offer to Purchase, this Consent and Letter of Transmittal, the
Notice of Guaranteed Delivery or other materials may be directed to
the Information Agent at the address and telephone number set forth
below.
The Information Agent for the Tender Offers and
Consent Solicitations is:
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, N.Y. 10004
Telephone: (212) 843-8500
(800) 755-5001 (toll free)
Beneficial owners may also contact either of the Dealer Manager
at its telephone numbers set forth below or their broker, dealer,
commercial bank or trust company for assistance concerning the Offer
and the Consent Solicitation.
The Dealer Manager for the Tender Offers and the
Solicitation Agent for the Consent Solicitations is:
MERRILL LYNCH & CO.
World Financial Center, North Tower
New York, N.Y. 10281-1307
Telephone: (888) ML4-TNDR
(888) 654-8637 (toll-free)
(212) 449-4914
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> May-31-1998
<PERIOD-END> Aug-31-1998
<CASH> 29,385
<SECURITIES> 0
<RECEIVABLES> 41,787
<ALLOWANCES> 2,713
<INVENTORY> 10,481
<CURRENT-ASSETS> 83,924
<PP&E> 265,130
<DEPRECIATION> 89,726
<TOTAL-ASSETS> 850,756
<CURRENT-LIABILITIES> 88,046
<BONDS> 500,000
<COMMON> 272
193,539
0
<OTHER-SE> 41,884
<TOTAL-LIABILITY-AND-EQUITY> 850,756
<SALES> 77,446
<TOTAL-REVENUES> 77,446
<CGS> 14,915
<TOTAL-COSTS> 70,615
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,131
<INCOME-PRETAX> 8,905
<INCOME-TAX> 3,008
<INCOME-CONTINUING> 5,897
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,655
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
<PAGE>
<PAGE>
EXHIBIT 99.1
CENTENNIAL CELLULAR CORP. ANNOUNCES OFFER TO PURCHASE AND CONSENT
Solicitation
For $350 Million Aggregate Principal Amount of Senior Notes
NEW CANAAN, Conn. and NEW YORK, Sept. 8 /PRNewswire/ -- Centennial
Cellular Corp. ("Centennial") (Nasdaq: CYCL), a leading independent cellular
provider, announced today that in connection with the proposed merger of
Centennial with CCW Acquisition Corp., a Delaware corporation organized at the
direction of Welsh, Carson, Anderson & Stowe VIII, L.P., Centennial has
commenced offers to purchase for cash all $250 million principal amount of its
8-7/8% Senior Notes due 2001 and $100 million principal amount of its 10-1/8%
Senior Notes due 2005. The Company is also soliciting consents from Noteholders
to approve certain amendments to the Indentures pursuant to which the Notes were
issued.
The tenders are for:
--all $250 million of the 8-7/8% Senior Notes due 2001. The purchase
price to be paid for each $1,000 principal amount tendered will be
based on a fixed spread of 50 basis points over the yield of the
6-3/8% U.S. Treasury Note due April 30, 1999 minus the consent
payment described below. The yield will be calculated at 2:00 p.m.
New York City time on the second business date prior to the
expiration date.
--all $100 million of the 10-1/8% Senior Notes due 2005. The purchase
price to be paid for each $1,000 principal amount tendered will be
based on a fixed spread of 75 basis points over the yield of the
6-1/2% U.S. Treasury Note due May 15, 2005, minus the consent
payment described below. The yield will be calculated at 2:00 p.m.
New York City time on the second business date prior to the
expiration date.
The tender offers are expected to remain open until 5:00 p.m. New York
City time on October 14, 1998, unless they are extended. Concurrent with the
tender offers, the Company is soliciting consents to eliminate or modify
substantially all of the covenants in the indenture governing each series of
notes.
The Company will pay consent payments of $25 per $1,000 principal
amount to the holders of the 8-7/8% Notes and the 10-1/8% Notes who tender their
notes and deliver their consents at or prior to 5:00 p.m. New York City time on
the Solicitation Expiration Date which is expected to be September 21, 1998
unless extended.
The tender offer for each series of notes is contingent upon the
holders of a majority of each series of notes consenting to the indenture
amendments and receipt of valid tenders of a majority of the notes and
consummation of the merger.
Information regarding the pricing, tender and delivery procedures and
conditions of the tender offers and consent solicitations are contained in the
Offer to Purchase and Consent Solicitation dated September 8, 1998 and related
documents. Documents can be obtained by contacting Beacon Hill Partners, Inc. at
800-755-5001 or 212-843-8500.
The tender offers and consent solicitations are being managed by
Merrill Lynch & Co. Any questions may be directed to Merrill Lynch at
888-ML4-TNDR or
<PAGE>
<PAGE>
212-449-4914.
Centennial acquires, operates and invests in cellular telephone
systems throughout the United States and the Commonwealth of Puerto Rico.
Centennial's current wireless telephone interests represent approximately 10.1
million Net Pops. Approximately 6.5 million of these Net Pops are represented by
Centennial's wireless telephone systems located in the continental United
States, including approximately 1.1 million Net Pops related to Centennial's
minority equity investments in partnerships owning wireless telephone systems.
The balance of approximately 3.6 million Net Pops represents Centennial's
interest in its wireless telephone systems in Puerto Rico.
This news release is neither an offer to purchase nor a solicitation
of an offer to sell securities. The offers and consent solicitations are made
only by the Offer to Purchase and Consent Solicitation dated September 8, 1998.
SOURCE Centennial Cellular Corp.
CONTACT: Scott N. Schneider, Chief Financial Officer of Centennial
Cellular, 203-972-2002; or Merrill Lynch & Co., 888-654-8637, or 212-449-4914,
or Beacon Hill Partners, 212-843-8500, or 800-755-5001, both for Centennial
Cellular/(CYCL)
<PAGE>
<PAGE>
EXHIBIT 99.2
CENTENNIAL CELLULAR CORP. ACHIEVES REQUISITE CONSENTS IN TENDER OFFERS AND
CONSENT SOLICITATIONS FOR ITS 8-7/8% SENIOR NOTES DUE 2001 AND ITS 10-1/8%
SENIOR NOTES DUE 2005
New Canaan, CT and New York, NY, Sept. 25, 1998. Centennial Cellular
Corp. (the "Company") (Nasdaq: CYCL-news), a leading independent cellular
provider, announced today in connection with its tender offers and consent
solicitations for its outstanding 8-7/8% Senior Notes due 2001 and 10-1/8%
Senior Notes due 2005, that it has received duly executed, unrevoked and
irrevocable consents to the proposed amendments to the respective Indentures
under which the Notes were issued.
As of the close of business on September 21, 1998, approximately
$248.1 million in aggregate principal amount of the 8-7/8% Senior Notes and
approximately $99.6 million of the 10-1/8% Senior Notes had been tendered and
consents had been delivered, representing approximately 99.2% and 99.6%,
respectively, of the $250.0 million aggregate principal amount 8-7/8% Senior
Notes and of the $100.0 million aggregate principal amount 10-1/8% Senior Notes
outstanding.
As described in the Company's Offer to Purchase and Consent
Solicitation, the Company solicited consents to make amendments to the
Indentures under which the Notes were issued, including the elimination of
substantially all of the restrictive covenants and certain of the events of
default. The proposed amendments will not become operative unless the respective
offers to purchase are consummated in accordance with the terms thereunder.
The tender offers are expected to remain open until 5:00 p.m. New York
City time on October 14, 1998, unless they are extended.
The Company's obligation to accept for purchase, and to pay for, Notes
validly tendered pursuant to each tender offer is subject to certain conditions,
including the consummation of the merger of CCW Acquisition Corp. with and into
the Company, which, in turn, is subject to certain other conditions as described
in the Offer to Purchase and Consent Solicitation.
Information regarding the pricing, tender and delivery procedures and
conditions of the tender offers and consent solicitations are contained in the
Offer to Purchase and Consent Solicitation dated September 8, 1998 and related
documents. Documents can be obtained by contacting Beacon Hill Partners, Inc. at
800-755-5001 or 212-843-8500.
The tender offers and consent solicitations are being managed by
Merrill Lynch & Co. Any questions relating to the tender offers and consent
solicitations may be directed to Merrill Lynch at 888-ML4-TNDR or 212-449-4914.
Centennial acquires, operates and invests in cellular telephone
systems throughout the United States and the Commonwealth of Puerto Rico.
Centennial's current wireless telephone interests represent approximately 10.1
million Net Pops. Approximately 6.5 million of these Net Pops are represented by
Centennial's wireless telephone systems located in the continental
<PAGE>
<PAGE>
United States, including approximately 1.1 million Net Pops related to
Centennial's minority equity investments in limited partnerships owning wireless
telephone systems. The balance of approximately 3.6 million Net Pops represents
Centennial's interest in its wireless telephone systems in Puerto Rico.
This news release is neither an offer to purchase nor a solicitation
of an offer to sell securities. The offers and consent solicitations are made
only by the Offer to Purchase and Consent Solicitation dated September 8, 1998.
