<PAGE>
As filed with the Securities and Exchange Commission on June 17, 1999.
Registration No. 333-73435
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CENTENNIAL CELLULAR CORP.
CENTENNIAL CELLULAR OPERATING CO. LLC
(Exact Name of Registrant as Specified in Its Charter)
Delaware 4841 06-1158179
Delaware 4841 13-4035089
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification Number)
Incorporation or Classification Code
Organization) Number)
---------------
1305 Campus Parkway
Neptune, New Jersey 07753
(732) 919-1000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrants' Principal Executive Offices)
---------------
Michael J. Small
Chief Executive Officer
Centennial Cellular Corp.
1305 Campus Parkway
Neptune, New Jersey 07753
(732) 919-1000
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent For Service)
---------------
with a copy to:
Robert A. Schwed, Esq.
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
(212) 841-5700
---------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
---------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
---------
CALCULATION OF REGISTRATION FEE
<TABLE>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<CAPTION>
Title Of Each Proposed Maximum Proposed Maximum
Class Of Securities To Amount To Be Offering Aggregate Amount Of
Be Registered Registered Price Per Note(1) Offering Price(1) Registration Fee
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 3/4% Senior
Subordinated Notes due
2008, Series B $370,000,000 100% $370,000,000 $102,860*
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
* Fee previously paid.
The registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+This information in this prospectus is not complete and may be changed. We +
+may not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 17, 1999
PROSPECTUS
Centennial Cellular Corp. and
Centennial Cellular Operating Co. LLC,
Exchange Offer for $370,000,000
10 3/4% Senior Subordinated Notes due 2008
-----------
This is an offer to exchange the outstanding, unregistered 10 3/4% Senior
Subordinated Notes of Centennial Cellular Corp. and Centennial Cellular
Operating Co. LLC you now hold for new, substantially identical 10 3/4% Senior
Subordinated Notes that will be free of the transfer restrictions that apply to
the old notes. This offer will expire at 5:00 p.m., New York City time, on
, 1999, unless we extend it. You must tender your old, unregistered notes by
the deadline to obtain new, registered notes and the liquidity benefits they
offer.
We agreed with the initial purchasers of the old notes to make this offer
and register the issuance of the new notes following the closing. This offer
applies to any and all old notes tendered by the deadline.
The new notes will not trade on any established exchange. The new notes
have the same financial terms and covenants as the old notes, and are subject
to the same business and financial risks.
A DESCRIPTION OF THOSE RISKS BEGINS ON PAGE 14 OF THIS PROSPECTUS.
This prospectus is dated , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information........................................ 2
Summary of the Prospectus.................................................. 4
Risk Factors............................................................... 14
This Prospectus Includes Forward-Looking Statements........................ 27
The Merger................................................................. 28
Use of Proceeds............................................................ 30
The Exchange Offer......................................................... 32
Capitalization............................................................. 39
Selected Financial and Operating Information............................... 40
Unaudited Pro Forma Financial Information.................................. 43
Business................................................................... 48
Management................................................................. 52
Principal Stockholders..................................................... 57
Certain Relationships and Related Transactions............................. 59
Description of Certain Indebtedness........................................ 67
Description of the New Notes............................................... 72
Certain Federal Income Tax Considerations.................................. 124
Plan of Distribution....................................................... 124
Incorporation of Material Document by Reference............................ 125
Legal Matters.............................................................. 125
Experts.................................................................... 125
</TABLE>
----------------
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-4 under the
Securities Act concerning the new notes. The SEC's rules and regulations allow
us to omit from this prospectus some of the information contained in the
registration statement. For further information concerning Centennial Cellular
Corp. and the notes, we refer you to the registration statement and the
documents filed as exhibits to the registration statement.
Centennial Cellular Corp. also files annual, quarterly and special
reports, proxy and information statements and other information with the SEC.
You may read and copy any document we file with the SEC, including the
registration statement, at the SEC's public reference room at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's web site
(http://www.sec.gov). You may also request copies of such documents, upon
payment of a duplicating fee, by writing to the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Centennial's common stock is listed on the Nasdaq
National Market. You may read reports and other information filed by Centennial
with the Nasdaq National Market at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Centennial Cellular Operating Co. LLC is a wholly-owned subsidiary of
Centennial. Because of this relationship and because the new notes are co-
issued by Centennial and Centennial Cellular Operating, we intend to request a
no-action letter from the SEC's staff confirming that Centennial Cellular
Operating will not have to comply as a separate registrant with the periodic
reporting and other informational requirements of the Securities Exchange Act
of 1934.
2
<PAGE>
This prospectus incorporates important business and financial information
about Centennial and Centennial Cellular Operating that is not included in, or
delivered with, the prospectus. This information is available without charge to
you by making a written or oral request to Centennial at 1305 Campus Parkway,
Neptune, New Jersey 07753, Attention: Chief Financial Officer (telephone: (732)
919-1000). To obtain timely delivery of such information, you should request
the information no later than five business days prior to the expiration date
of the exchange offer.
----------------
3
<PAGE>
SUMMARY OF THE PROSPECTUS
The following summary contains a general discussion of our businesses,
the offering and summary financial information. We encourage you to read this
entire prospectus for a more complete understanding of Centennial, Centennial
Cellular Operating and the exchange offer. Centennial Cellular Operating became
a wholly-owned subsidiary of Centennial on January 7, 1999 as a result of the
merger of Centennial and CCW Acquisition Corp.
Centennial Cellular Corp.
Our company is one of the largest independent wireless telecommunications
service providers in the United States and Puerto Rico with approximately
426,700 subscribers as of February 28, 1999. Our domestic rural cellular
systems serve a population of 5.8 million, adjusted for our percentage
ownership in entities servicing this marketplace, and these systems cover
approximately 81,645 square miles. Our subsidiary, Centennial de Puerto Rico,
is a fully integrated provider of communications services in Puerto Rico. These
operations utilize a personal communications services license that covers an
adjusted population of 3.8 million in Puerto Rico and the U.S. Virgin Islands
and a competitive local exchange carrier license to operate in Puerto Rico. In
addition, we own minority shares, representing an adjusted population of
approximately 1.2 million, in certain other cellular operations controlled and
managed by other cellular operators.
Our Principal Executive Offices
The address of our principal executive offices is 1305 Campus Parkway,
Neptune, New Jersey 07753. Our telephone number is (732) 919-1000. Centennial
is the sole member of Centennial Cellular Operating and holds all of its
material assets through Centennial Cellular Operating.
Risk Factors
You should consider all of the information in this prospectus before
tendering your outstanding notes in the exchange offer. The risks of an
investment in Centennial and Centennial Cellular Operating include our
substantial indebtedness, our history of net losses, competitive conditions and
the potential for adverse regulatory impact. See the "Risk Factors" section of
this prospectus for a discussion of these and other risks involved in an
investment in Centennial and Centennial Cellular Operating.
Summary of the Terms of the Exchange Offer
On December 14, 1998, we completed the private offering of $370.0 million
principal amount of our 10 3/4% Senior Subordinated Notes due 2008. In
connection with that offering, we agreed, among other things, to deliver to you
this prospectus and to use our best efforts to complete the exchange offer by
July 6, 1999.
The Exchange Offer
We are offering to exchange an equal principal amount of our 10 3/4%
Senior Subordinated Notes due 2008, which have been registered under the
Securities Act, for our outstanding 10 3/4% Senior Subordinated Notes due 2008.
In order to be exchanged, an outstanding note must be properly tendered and
accepted. You may tender outstanding notes only in integral multiples of
$1,000.
4
<PAGE>
As of this date, there is $370.0 million principal amount of notes
outstanding. The exchange offer will be completed regardless of whether all or
less than all of the outstanding notes are tendered for exchange.
Expiration Date
The exchange offer will expire at 5:00 p.m., New York City time, ,
1999, unless we decide to extend the expiration date.
Procedures for Tendering Outstanding Notes
If you wish to tender your outstanding notes for exchange, you must
transmit on or before the expiration date a properly completed and executed
copy of the letter of transmittal delivered with this prospectus, or a
facsimile of the letter of transmittal, and all other documents required by the
letter of transmittal, to Norwest Bank Minnesota, National Association, as
exchange agent for the exchange offer. You must also deliver:
. a timely confirmation of book-entry transfer of your outstanding
notes in accordance with the procedure for book-entry transfers
described in this prospectus in "The Exchange Offer" section under
the heading "Procedures for Tendering," or
. certificates for your outstanding notes.
Guaranteed Delivery Procedures
If you wish to tender your outstanding notes and, before the expiration
date of the exchange offer,
. your outstanding notes are not immediately available,
. you cannot deliver your outstanding notes, the letter of transmittal
or any other required documents to Norwest Bank Minnesota, National
Association, as exchange agent, or
. you cannot complete the procedures for book-entry transfer,
you may tender your outstanding notes by following the guaranteed delivery
procedures described in "The Exchange Offer" section under the heading
"Guaranteed Delivery Procedures."
Special Procedures for Beneficial Owners
If you wish to tender outstanding notes that are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee, you
should promptly instruct the registered holder to tender on your behalf. If you
wish to tender on your own behalf, you must, prior to completing the procedures
described above under the heading "Procedures for Tendering Outstanding Notes,"
either register ownership of the outstanding notes in your name or obtain a
properly completed bond power from the registered holder.
5
<PAGE>
Withdrawal Rights
You may withdraw the tender of your notes at any time prior to 5:00 p.m.,
New York City time, on the expiration date.
Certain U.S. Federal Income Tax Consequences
The exchange of new notes for outstanding notes in the exchange offer
will generally not be a taxable event for United States federal income tax
purposes.
Conditions to the Exchange Offer
The exchange offer is not subject to any conditions other than that it
does not violate applicable law or any applicable interpretation of the SEC
staff.
Use of Proceeds
We will not receive any proceeds from the issuance of the new notes in
the exchange offer.
Summary of Ability to Resell the New Notes
We believe that the new notes issued in the exchange offer may be offered
for resale, resold or otherwise transferred by you without compliance with the
registration and prospectus delivery provisions of the Securities Act, but
only if:
. you acquire the new notes in the ordinary course of business,
. you are not participating, do not intend to participate and have no
arrangement or understanding with any person to participate in a
distribution of the new notes, and
. you are not an affiliate of ours, as the term affiliate is defined in
Rule 405 under the Securities Act and which may include our executive
officers and directors, another person having control over our
operations or management or an entity we control.
By executing and delivering the letter of transmittal, you will represent
to us that the above statements by you are true. If any of these statements
are untrue, you may not resell your notes unless an exemption from the
registration provisions of the Securities Act is available for the transfer.
Each broker-dealer that is issued new notes in the exchange offer for its
own account in exchange for outstanding notes which were acquired by the
broker-dealer as a result of market-making or other trading activities, must
acknowledge that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of the new notes. A broker-dealer
may use this prospectus, as it may be amended or supplemented from time to
time, for an offer to resell, resale or similar transfer of the new notes
issued to it in the exchange offer.
6
<PAGE>
Summary Description of the New Notes
Notes Offered
We are offering $370.0 million aggregate principal amount of 10 3/4%
Senior Subordinated Notes due 2008. The form and terms of the new notes will be
the same as the form and terms of the outstanding notes except that:
. the new notes will bear a different CUSIP number from the
outstanding notes,
. the new notes will have been registered under the Securities Act
and, therefore, will not bear legends restricting their transfer,
and
. you will not be entitled to any exchange or registration rights with
respect to the new notes.
The new notes will evidence the same debt as the outstanding notes, will
be entitled to the benefits of the indenture governing the outstanding notes
and will be treated under the indenture as a single class with the outstanding
notes.
Issuers
Centennial Cellular and its wholly owned subsidiary, Centennial Cellular
Operating. Centennial Cellular and Centennial Cellular Operating are each
liable for repayment of the 10 3/4% Senior Subordinated Notes. Centennial
Cellular is a holding company and does not conduct any direct business
operations. Separate financial statements for Centennial Cellular Operating
have not been included in this Prospectus because management believes that
these financial statements would not be material to holders of the notes.
Maturity
December 15, 2008.
Interest Payment Dates
We will pay interest on the notes on June 15 and December 15 of each
year, beginning June 15, 1999.
Ranking
The notes are subordinated to all our senior debt, including all our debt
under our senior secured credit facility. The notes rank equally with any
senior subordinated debt, and rank senior to all our subordinated debt. Both
Centennial and Centennial Operating are holding companies. The notes are
neither guaranteed by our subsidiaries nor secured by their assets, so they
will effectively rank below all debt of our subsidiaries, including trade
payables. Our ability to pay interest on the notes and to redeem the notes at
maturity will depend on whether our subsidiaries can pay dividends and make
other distributions to us.
7
<PAGE>
On February 28, 1999, the notes:
. were subordinated to $933.9 million of senior debt under the credit
facility, and
. were effectively ranked junior to the guarantees of $933.9 million
of this debt by the subsidiaries of Centennial Cellular Operating,
other than a portion of such debt that was borrowed directly by
Centennial de Puerto Rico, which has not initially guaranteed this
debt.
The notes are senior to a face amount of $180 million of subordinated
notes issued to WCAS Capital Partners III, L.P. The only debt of Centennial,
without its subsidiaries, as of February 28, 1999 were these subordinated
notes, Centennial's guarantee under the credit facility and the notes for which
the exchange offer is being made.
Security
At the time the outstanding notes were issued, we used a portion of the
proceeds to purchase a portfolio of government securities in an amount
sufficient to pay the first three interest payments on the notes. We pledged
this portfolio of securities for your benefit and the benefit of other holders
of the notes. The notes are otherwise unsecured. You should also read the
section captioned "Description of the New Notes" under the heading "Security."
Optional Redemption
We may redeem any of the notes on or after December 15, 2003 at the
redemption prices set forth in the "Description of the New Notes" section under
the heading "Optional Redemption."
Prior to December 15, 2001, we may redeem up to 35% of the aggregate
principal amount of the then outstanding notes with the net proceeds of one or
more public equity offerings or strategic equity offerings at 110.75% of their
principal amount, plus accrued interest.
Change of Control
If we experience specific kinds of changes in control, we must offer to
repurchase any then-outstanding notes at 101% of their principal amount, plus
any accrued interest to the date of repurchase. In addition, if the change of
control occurs before December 15, 2003, we may elect to redeem the notes at
100% of their principal amount, plus interest, if any, to the date of
redemption, plus a computed premium, which will not be less than 5.375%.
Covenants
The indenture governing the notes contains covenants that, among other
things, limit our ability and the ability of our restricted subsidiaries to:
. incur additional debt,
. pay dividends on, redeem or repurchase our capital stock,
8
<PAGE>
. make investments,
. restrict dividend or other payments to us,
. enter into transactions with affiliates or related persons,
. guarantee indebtedness,
. sell assets,
. create liens,
. engage in a merger, sale or consolidation, and
. enter into new lines of business.
These covenants are subject to important exceptions and qualifications,
which are described under the heading "Description of the New Notes--Covenants"
in this Prospectus.
9
<PAGE>
Summary Historical Financial Information
The following table sets forth summary historical consolidated financial
information for Centennial as of February 28, 1999 and 1998 and for the nine
months ended February 28, 1999 and 1998. Such data were derived from our
unaudited condensed consolidated financial statements and notes, but, in the
opinion of our management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
position and results of operations for such periods. Operating results for the
nine months ended February 28, 1999 and 1998 do not necessarily show what the
results for a full year may be. The table also sets forth summary historical
consolidated financial information for Centennial for the five years ended May
31, 1998. Such data were derived from our audited consolidated financial
statements and notes. Since the information in this table is only a summary,
you should read our historical financial statements and the related notes, "--
Sources and Uses of Funds," and "Unaudited Pro Forma Financial Information"
found elsewhere in this prospectus.
<TABLE>
<CAPTION>
Nine months ended
February 28, Years ended May 31,
------------------------ -------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Domestic operating
revenue............... $ 174,980 $ 133,953 $ 182,944 $ 145,120 $ 112,197 $ 85,419 $ 56,373
Puerto Rico operating
revenue............... 87,611 35,752 54,557 5,903 -- -- --
----------- ----------- ----------- ----------- ----------- ---------- ----------
Total operating
revenue................ 262,591 169,705 237,501 151,023 112,197 85,419 56,373
Cost of services and
equipment sold......... 50,783 42,248 54,818 38,228 26,129 22,152 13,424
----------- ----------- ----------- ----------- ----------- ---------- ----------
Gross profit............ 211,808 127,457 182,683 112,795 86,068 63,267 42,949
Selling, general and
administrative......... 81,460 62,142 81,790 55,132 34,188 26,055 17,787
Depreciation and
amortization........... 97,702 82,637 114,194 83,720 70,989 65,642 47,652
Recapitalization costs.. 58,852 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ---------- ----------
Operating loss.......... (26,206) (17,322) (13,301) (26,057) (19,109) (28,430) (22,490)
Interest expense--net... 48,553 31,801 45,155 33,379 27,886 23,357 21,040
Gain on sale of assets.. 8,414 8 5 3,819 8,310 -- --
Income from minority
cellular investment
interests(1)........... 9,352 9,843 13,069 15,180 10,473 4,670 3,645
----------- ----------- ----------- ----------- ----------- ---------- ----------
Loss before income tax
benefit and minority
interest............... (56,993) (39,272) (45,382) (40,437) (28,212) (47,117) (39,885)
Income tax benefit...... (10,114) (13,527) (13,597) (7,295) (11,596) (14,456) (11,780)
Minority interest in
income (loss) of
subsidiaries(2)........ 142 (337) 162 153 15 69 (321)
----------- ----------- ----------- ----------- ----------- ---------- ----------
Loss from continuing
operations............. (46,737) (26,082) (31,947) (33,295) (16,631) (32,730) (27,784)
Extraordinary loss on
early extinguishment of
debt, net of tax....... (40,526) 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ---------- ----------
Net loss................ $ (87,263) $ (26,082) $ (31,947) $ (33,295) $ (16,631) $ (32,730) $ (27,784)
=========== =========== =========== =========== =========== ========== ==========
Ratio of earnings to
fixed charges(3)....... -- -- -- -- -- -- --
Other Consolidated Data:
Adjusted EBITDA(4)...... $ 130,348 $ 65,315 $ 99,208 $ 55,852 $ 47,793 $ 34,444 $ 24,080
Adjusted EBITDA margin.. 49.6% 38.5% 42.1% 37.4% 44.2% 41.7% 43.6%
Cash flows provided by
(used in):
Operating activities... $ 98,654 $ 46,196 $ 54,771 $ 26,956 $ 24,282 $ 10,390 $ (3,558)
Investing activities... (51,262) (99,290) (126,111) (118,094) (78,765) (79,834) (64,749)
Financing activities... (28,098) 24,274 42,545 67,256 152 182,722 65,702
Capital expenditures.... 69,819 103,187 129,300 88,990 38,082 17,538 8,947
Net Pops(5)(6).......... 10,846,000 10,846,000 10,846,000 10,846,000 10,661,000 6,491,500 5,020,400
Subscribers(5).......... 426,700 298,500 322,200 203,900 135,000 85,900 49,000
</TABLE>
10
<PAGE>
(Table continued from preceding page)
<TABLE>
<CAPTION>
Nine months ended
February 28, Years ended May 31,
---------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Dollars in thousands, except as noted)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Rural Cellular
Data:
Adjusted EBITDA(4)...... $ 91,520 $ 60,249 $ 86,669 $ 64,278 $ 48,208 $ 34,511 $ 24,080
Adjusted EBITDA margin.. 52.3% 45.0% 47.8% 44.9% 44.6% 41.8% 43.6%
Net loss: .............. (76,736) (1,890) (1,188) (16,081) (15,585) (32,650) (27,784)
Cash Flow provided by
(used in):
Operating............. 69,385 46,441 50,139 36,919 25,068 10,430 (3,558)
Investing............. (7,018) (21,395) (52,023) (59,633) (79,574) (79,874) (64,749)
Financing............. (37,702) (56,848) (32,431) (3,742) 152 182,722 65,702
Capital expenditures.... $ 25,130 $ 31,363 $ 38,996 $ 38,921 $ 22,604 $ 17,319 $ 8,947
Net Pops (excluding
Minority Cellular
Investment
Interests)(5)(6)....... 5,831,000 5,777,000 5,777,000 5,777,000 5,592,000 5,412,100 3,941,000
Subscribers............. 309,300 237,900 252,700 187,000 135,000 85,900 49,000
Penetration(5)(7)....... 5.3% 4.1% 4.4% 3.2% 2.4% 1.6% 1.2%
Churn rate.............. 1.9% 1.8% 1.8% 2.3% 2.5% 2.5% 3.0%
Average monthly revenue
per unit (actual
dollars)(8)............ $ 69 $ 70 $ 68 $ 73 $ 74 $ 68 $ 69
Acquisition cost per
cellular customer
(actual dollars)(9).... $ 316 $ 307 $ 308 $ 343 $ 351 $ 431 $ --
Cell sites(5)........... 400 329 363 212 185 -- --
Retail and service
centers(5)............. 69 58 59 41 25 -- --
Other Centennial de
Puerto Rico Data:
Adjusted EBITDA(4)...... $ 38,828 $ 5,066 $ 12,539 $ (8,426) $ (415) $ (67) --
Adjusted EBITDA margin.. 44.3% 14.2% 23.1% n.a. n.a. n.a. --
Net loss: .............. (10,527) (24,192) (30,759) (17,214) (1,046) (80) --
Cash Flow provided by
(used in):
Operating............. 29,269 (245) 4,632 (9,963) (786) (40) --
Investing............. (44,244) (77,895) (74,088) (58,461) 809 40 --
Financing............. 9,604 81,122 74,976 70,998 -- -- --
Capital expenditures.... $ 44,689 $ 71,824 $ 90,304 $ 50,069 $ 15,478 $ 219 --
Net Pops(5)............. 3,839,000 3,839,000 3,839,000 3,839,000 3,839,000 -- --
Subscribers(5).......... 117,400 60,600 69,500 16,900 -- -- --
Penetration(5)(7)....... 3.1% 1.6% 1.8% 0.4% -- -- --
Churn rate.............. 3.5% 4.0% 4.6% 2.6% -- -- --
Average monthly revenue
per unit (actual
dollars)(8)............ $ 91 $ 94 $ 92 $ 113 -- -- --
Acquisition cost per
cellular customer
(actual dollars)(9).... $ 203 $ 166 $ 164 $ 310 -- -- --
Cell sites(5)........... 125 109 113 74 -- -- --
Retail and service
centers(5)............. 51 35 44 25 -- -- --
</TABLE>
<TABLE>
<CAPTION>
As of February 28, As of May 31,
-------------------- --------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- -------- -------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets............ $ 956,672 $837,056 $847,417 $844,850 $785,812 $844,384 $502,384
Long-term Debt.......... 1,458,857 490,000 510,000 429,000 350,000 350,000 250,000
Redeemable preferred
stock.................. 0 193,539 193,539 193,539 189,930 176,340 163,706
Common stockholders'
equity (deficit)....... (605,800) 51,205 40,409 112,882 160,006 188,831 24,143
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Nine months ended Year ended
February 28, 1999 May 31, 1998
-------------------- --------------------
(Dollars in thousands)
Historical Pro Forma Historical Pro Forma
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Pro Forma Data:
Revenues........................... $262,591 $262,591 $237,501 $ 235,816
Costs and expenses................. 288,797 230,508 250,802 251,552
-------- -------- -------- ---------
Operating income (loss)............ (26,206) 32,083 (13,301) (15,736)
Net loss........................... $(87,263) $(54,931) $(31,947) $(143,411)
======== ======== ======== =========
</TABLE>
- --------
(1) Represents our proportionate share of profits and losses based on our
interest in earnings of limited partnerships controlled and managed by
other cellular operators accounted for on the equity method.
(2) Represents the percentage share of earnings of our consolidated
subsidiaries that is allocable to unaffiliated holders of minority
interests.
(3) For the purposes of determining the 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. The ratio of earnings to fixed charges is less than one-to-one
for all periods presented and, therefore, earnings are inadequate to cover
fixed charges. The amount by which earnings are less than fixed charges
for the nine months ended February 28, 1999 and 1998 are $56,993 and
$39,272, respectively, and for the years ended May 31, 1998, 1997, 1996,
1995 and 1994 are $45,382, $43,189, $33,412, $47,117 and $39,885,
respectively.
(4) Adjusted EBITDA is defined, for any period, as earnings before income from
our minority cellular investment interests that are controlled and managed
by third parties, allocations to minority interests in consolidated
subsidiaries, interest expense, interest income, income taxes,
depreciation and amortization, recapitalization costs, extraordinary loss
on early extinguishment of debt and gain on sale of assets. EBITDA is
commonly used to analyze companies on the basis of operating performance,
leverage and liquidity. While Adjusted EBITDA should not be construed as a
substitute for operating income or a better measure of liquidity than cash
flow from operating activities, which are determined in accordance with
generally accepted accounting principles. It is included in this
prospectus because management believes that it provides additional
information with respect to the anticipated ability of Centennial to meet
future debt service, capital expenditures and working capital
requirements.
(5) As of period-end.
(6) For the periods ended January 28, 1999 and 1998 and the years ended May
31, 1998, 1997 and 1996, the number of Net Pops is based on the 1997
Kagan's Cellular Telephone Atlas. For the years ended May 31, 1995 and May
31, 1994, the number of Net Pops is based on 1990 population figures of a
metropolitan service area or rural service area, as derived from the 1990
U.S. Census data.
(7) The penetration rate equals the percentage of total population in our
service areas who are subscribers to our cellular service as of period-
end.
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(8) ARPU is defined as total monthly revenue per average subscriber.
(9) For the year ended as of the date shown. Determined for each period as
total marketing cost plus cost of equipment sales (net of associated
revenue), divided by the total subscriber activations during the fiscal
year.
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RISK FACTORS
You should carefully consider the following factors and other information
in this prospectus before deciding to exchange outstanding notes for new notes.
Any of the following risks could have a material adverse impact on our
business, financial condition or results of operations or on the value of the
notes.
Risks Relating to the Notes
Our debt service consumes a substantial portion of the cash we generate and
reduces the cash available to invest in our operations.
We have a significant amount of indebtedness. Our large amount of debt
could significantly affect our business and you because, among other things,
it:
. limits our ability to obtain additional financing for any future
acquisitions, working capital, capital expenditures or other
purposes;
. limits our ability to use operating cash flow in other areas of our
business because we must dedicate a substantial portion of these
funds to make principal payments and fund debt service;
. increases our vulnerability to adverse economic and industry
conditions;
. increases our vulnerability to interest rate increases because
borrowings under our credit facility are at variable interest rates;
and
. increases our vulnerability to competitive pressures, as many of our
competitors will be less leveraged than we are.
As of February 28, 1999:
. We had outstanding total long-term indebtedness of approximately
$1.46 billion, and
. Centennial, without its subsidiaries, had face amount, $180 million
of long-term indebtedness, other than its guarantee under the credit
facility and its co-obligation under the outstanding notes.
Following the financings related to the merger, our total long-term
indebtedness was substantially greater than our long-term indebtedness before
the merger. In addition, the indenture governing the outstanding notes and our
other debt instruments allows us to incur additional indebtedness, including
secured indebtedness. As of February 28, 1999, Centennial Cellular Operating
had an aggregate of $115.0 million available for borrowing under the credit
facility.
In order to service our debt, we require a significant amount of cash. However,
our ability to generate cash depends on many factors that are beyond our
control.
Prevailing economic conditions and financial, business and other factors
in the markets we serve, many of which are beyond our control, will affect our
ability to pay interest on the notes and satisfy our other debt obligations.
Upon the issuance of the notes, our consolidated interest expense has increased
compared to prior years. We currently believe that our cash flow, together with
available borrowings under the credit facility, will permit us to pay our
operating expenses and service our debts for the foreseeable future. Our belief
is based on significant assumptions, including, among other things, that we
will succeed in implementing our business strategy and that there will be
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no material adverse developments in our business, liquidity or capital
requirements. If, in the future, we cannot generate sufficient cash from
operations to make scheduled payments on the notes or to meet our other
obligations, we will need to refinance, obtain additional financing or sell
assets. We cannot assure you that our business will generate cash flow, or that
we will be able to obtain funding sufficient to satisfy our debt service
requirements. On a pro forma basis, earnings were insufficient to cover fixed
charges for Centennial and Centennial Cellular Operating by $161.8 million and
$138.9 million for the year ended May 31, 1998, and by $64.7 million and $48.2
million for the nine months ended February 28, 1999.
Our existing debt instruments contain restrictions and limitations that could
significantly affect our ability to operate our business and repay the notes.
We and our subsidiaries are subject to significant operating and
financial restrictions contained in the instruments governing the notes and our
credit facility. Such restrictions affect, and in many respects significantly
limit or prohibit, among other things, our ability to:
. borrow more funds,
. pay dividends,
. repay indebtedness prior to stated maturities,
. sell assets,
. make investments,
. engage in transactions with stockholders and affiliates,
. create liens, or
. engage in mergers or acquisitions.
In addition, the credit facility requires us to maintain certain
financial ratios. These restrictions could also limit our ability to obtain
financing in the future, make needed capital expenditures, withstand a future
downturn in our business or the economy in general or in our specific areas of
coverage, or otherwise conduct necessary corporate activities. If we or our
subsidiaries fail to comply with these restrictions, we may be in default under
the terms of such indebtedness, even if we are otherwise able to meet our debt
service obligations. In the event of a default, the holders of such
indebtedness could elect to declare all such indebtedness, together with
accrued interest, to be due and payable and a significant portion of our other
indebtedness (including the notes) and that of our subsidiaries may become
immediately due and payable. We cannot assure you that we or our subsidiaries
would be able to make such payments or borrow sufficient funds from alternative
sources to make any such payment. Even if we were to obtain additional
financing, such financing may be on terms unfavorable to us.
Because the notes rank below our senior debt and below all debt of our
subsidiaries, you may not receive full payment on your notes.
The notes are subordinated to all the debt under our credit facility and
other senior indebtedness. In addition, the notes effectively rank junior to
all liabilities of our subsidiaries. As of February 28, 1999 Centennial
Cellular Operating had outstanding $933.9 million of senior indebtedness and
$370 million of senior subordinated indebtedness.
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We also may incur additional indebtedness that ranks senior to the notes and
our subsidiaries may incur additional indebtedness consistent with the terms of
our debt agreements. In the event of our bankruptcy, liquidation or
dissolution, our assets would be available to pay obligations on the notes only
after all payments had been made on our senior indebtedness. We cannot assure
you that sufficient assets will remain to make any payments on the notes. In
addition, certain events of default under our senior indebtedness would
prohibit us from making any payments on the notes.
Because our subsidiaries may not be permitted to pay dividends to us, we may
not be able to repay the notes.
Our company depends on the cash flow from our subsidiaries to meet our
obligations, including all payments on the notes. Accordingly, our ability to
make payments to holders of the notes depends on the receipt of sufficient
funds from our subsidiaries. Because of the terms of existing and future
indebtedness of our subsidiaries, including the credit facility, which is
initially secured by the assets of our domestic subsidiaries, we may be
restricted in receiving funds from our subsidiaries. Our credit facility limits
dividends to a specified amount so long as no event of default exists under the
credit agreement. The indenture for the notes permits our subsidiaries to enter
into agreements which restrict dividends and distributions to us and the
subsidiaries have no legal obligation to pay dividends. We cannot assure that
our subsidiaries will have sufficient funds to distribute to us or that state
corporate laws will allow dividends to be paid. See "Description of the New
Notes--Covenants--Limitation on Restrictions on Subsidiary Dividends."
Because the notes are unsecured, other lenders will have prior claims to our
assets in the event we became insolvent or are liquidated.
In addition to being subordinate to all of our senior indebtedness, the
notes are not secured by any of our assets, other than the funds pledged to pay
the first three interest payments. Our obligations under our credit facility
are secured by substantially all of our assets, including assets held by our
subsidiaries. Under the indenture for the notes, we and our subsidiaries are
permitted to incur additional secured indebtedness. If we became insolvent or
are liquidated, or if payment under our credit facility is accelerated, the
lenders under our credit facility would be entitled to exercise the remedies
available to a secured lender under applicable law. Therefore, our bank lenders
will have a claim on such assets before the holders of the notes. Because the
notes are unsecured, there may be no assets remaining for the holders of notes
or any assets may be insufficient to pay off the notes. See "Description of
Certain Indebtedness."
We expect to continue to incur net losses for the foreseeable future which may
adversely affect our ability to repay the notes.
Since our formation, we have concentrated on the acquisition, exchange,
construction, initial operation and development of cellular telephone systems
in our domestic markets and the provision of facilities-based integrated
communications in Puerto Rico. Our business operations have incurred net losses
for each of the past five fiscal years and, after giving pro forma effect to
the offering of the outstanding notes and borrowings under the credit facility,
Centennial Cellular Operating would have incurred a net loss of $120.5 million
for the fiscal year ended May 31, 1998. We expect to report net losses for the
foreseeable future due to increased interest payments and non-cash charges such
as depreciation and amortization. We cannot assure you that in future periods
our operations will generate sufficient earnings to pay our obligations,
including the notes.
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We may not be able to fulfill our obligations under our credit facility
following a change of control and, as a consequence, would be unable to satisfy
our obligation to repurchase the notes.
Upon certain change of control events, each holder of notes may require
us to repurchase all or a portion of its notes at a purchase price equal to
101% of the principal amount thereof, plus accrued interest. Our ability to
repurchase the notes upon a change of control event will be limited by the
terms of our debt agreements. Upon a change of control event, we may be
required immediately to repay the outstanding principal, any accrued interest
on and any other amounts owed by us under our credit facility or the
subordinated notes financing provided by WCAS Capital Partners III, L.P. There
can be no assurance that we would be able to repay amounts outstanding under
our credit facility or obtain necessary consents under such facility to
repurchase these notes. Any requirement to offer to purchase any outstanding
notes may result in us having to refinance our outstanding indebtedness, which
we may not be able to do. In addition, even if we were able to refinance such
indebtedness, such financing may be on terms unfavorable to us. If we are
unable to repay our outstanding debt upon a change of control, we would be in
default under the instruments governing our debt and debtholders would have
various default remedies, the exercise of which may prevent the notes from
being repaid. The term "change of control" is defined in the section
"Description of the New Notes--Certain Definitions."
Because we have pledged the capital stock of many of our subsidiaries to the
lenders under the credit facility, we may encounter difficulties obtaining
future financing on favorable terms.
Centennial Cellular Operating has pledged as security the shares of all
its direct and indirect subsidiaries (other than foreign subsidiaries) to the
lenders under its credit facility. The pledge of such shares could impair our
ability to obtain future financing on favorable terms, if at all. Further, in
the event Centennial Cellular Operating were to default on its obligations
under the credit facility and the lenders were to foreclose upon such pledged
capital stock, Centennial Cellular Operating, as the holding company for such
subsidiary, would likely be unable to service or repay its indebtedness,
including the notes. See "Description of Certain Indebtedness."
We conduct our operations through a holding company structure, which leaves the
parent entity unlikely to be able to service its debt obligations if our
subsidiary defaults on its obligations.
Centennial, which is a co-obligor of the notes, has no assets other than
the stock of Centennial Cellular Operating. Therefore, Centennial would be
unlikely to be able to make payments on the notes if Centennial Cellular
Operating fails to make such payments. In addition, Centennial is not subject
to the covenants of the indenture governing the notes and, accordingly,
Centennial is not restricted from taking actions that may reduce its
creditworthiness and adversely affect its ability to repay the notes.
Centennial has unconditionally guaranteed all obligations of its
subsidiary, Centennial Cellular Operating, which is the borrower under the
credit facility. In the event that Centennial Cellular Operating were to
default on its obligations under the credit facility and the lenders were to
seek to enforce such guarantee, Centennial would likely be unable to service or
repay its indebtedness, including the notes. See "Description of Certain
Indebtedness."
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If we entered bankruptcy, you would not be able to foreclose on the escrow
funds securing the interest payments without approval from a bankruptcy court.
If we or any of our subsidiaries commence a bankruptcy or reorganization
case, or one is commenced against us, the bankruptcy law may prevent the
trustee under the indenture governing the notes from foreclosing on and selling
the escrow funds if an event of default on the notes occurs. Under applicable
bankruptcy law, secured creditors such as the holders of the notes are
prohibited from foreclosing upon or disposing of a debtor's property without
prior bankruptcy court approval. See "Description of the New Notes--Security."
The rights of holders of the notes to be repaid would be adversely affected if
a court were to conclude that we issued the outstanding notes for inadequate
consideration and at a time when we were insolvent or that we issued the notes
with intent to defraud our creditors.
If we are unable to meet our obligations in the future, in a bankruptcy,
insolvency or similar proceeding our ability to repay the notes may be
adversely affected if it is determined that we were insolvent at the time the
notes were originally issued. We would be considered insolvent if:
(1) we incurred the indebtedness with intent to hinder, delay or defraud
any present or future creditor or we contemplated insolvency with a
design to prefer one or more creditors to the exclusion in whole or
in part of others; or
(2) we incurred the indebtedness for less than reasonably equivalent
value and, at the time, we
. were insolvent,
. were rendered insolvent by reason of such incurrence,
. were engaged in a business or transaction for which our remaining
assets constituted unreasonably small capital,
. intended to incur, or believed that we would incur, debts beyond
our ability to pay such debts as they matured or
. were a defendant in an action for money damages or had a judgment
for money damages docketed against us (in either case, if after
final judgment, the judgment remained unsatisfied).
In such event, a court could, among other things, (x) void all or a
portion of our obligations to you, the effect of which would be that you may
not be repaid in full and/or (y) subordinate our obligations to you to our
other existing and future indebtedness to a greater extent than would otherwise
be the case, the effect of which would entitle other creditors to be paid in
full before any payment could be made on the notes. We cannot assure you that,
after providing for all prior claims, there would be sufficient assets to
satisfy the claims of holders of the notes.
If an active trading market does not develop, you may have difficulties
reselling the notes.
The notes are being offered to the holders of the outstanding notes. The
outstanding notes were sold to the initial purchasers on December 14, 1998 and
then resold to "qualified institutional buyers" (as defined in Rule 144A under
the Securities Act) and pursuant to offers and sales outside the United States
within the meaning of Regulation S under the Securities Act and are eligible
for
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trading in the Private Offerings, Resale and Trading through Automated Linkages
(PORTAL) market. The new notes are securities for which there currently is no
market. If the new notes are traded, they may trade at a discount from their
face value, depending upon prevailing interest rates, the market for similar
securities and other factors. We do not intend to apply for listing of the
notes on any securities exchange or the Nasdaq National Market. Accordingly, we
cannot assure you that a liquid trading market for the notes will develop.
Historically, there has been substantial volatility in the market for
non-investment grade debt, such as the notes, due to market disruptions. This
volatility has increased in recent months and the liquidity of non-investment
grade securities has declined significantly. We cannot assure you that the
market, if any, for the notes will not be subject to similar disruptions. Any
such disruptions may have a material adverse effect on the holders of the
notes.
If you do not exchange your notes for new notes, your outstanding notes may
trade at discount because you may not be able to transfer such notes.
In the event the exchange offer is consummated, we will not be required
to register the old notes under the Securities Act. In such event, the notes
would rank equally with the outstanding notes, and the holders of outstanding
notes seeking liquidity in their investment would have to rely on exemptions
from registration requirements under the securities laws, including the
Securities Act. A reduction of the aggregate principal amount of the currently
outstanding notes as a result of the consummation of the exchange offer may
have an adverse effect on the ability of holders of the outstanding notes to
transfer such notes.
Risks Relating to Our Business
Because the wireless telephone service industry is highly competitive, we may
be adversely affected by competitors with superior financial resources and/or
technology.
Our principal business, wireless telephone service, is highly
competitive. Competition for wireless telephone service in each of our markets
is based primarily on the quality of service, price, system coverage,
enhancements offered, capacity and customer service. We compete with one
cellular licensee in each geographic area and most of these competitors are
larger, have greater financial resources than we do and may be less leveraged
than we are. We also face competition from paging companies, landline telephone
companies and resellers. The FCC requires all cellular and personal
communication system operators to provide service on a nondiscriminatory basis
to resellers, who provide service to customers but do not hold an FCC license
or own facilities to provide such services. Instead, a reseller buys blocks of
cellular telephone numbers from a licensed carrier, usually at a discounted
rate, and resells service to the public. Thus, a reseller may be both a
customer of a cellular or personal communications services provider and also a
competitor.
As a result of recent regulatory and legislative initiatives, we also
face increased competition from entities using or proposing to use other
comparable communications technologies. The FCC currently is licensing
commercial personal communication services. Many personal communication
services licensees who will compete with us have access to substantial capital
resources. In addition, many of these companies, or their affiliates, already
operate large cellular telephone systems and thus bring significant wireless
experience to this new marketplace. To date, we have experienced little impact
from personal communication services competition in our domestic markets.
However, there
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can be no assurance of the long-term effect these new personal communication
services licensees may have on us.
ESMR is a two-way wireless communications service that incorporates
characteristics of cellular technology, including many low-power transmitters
and connection 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. Nextel Communications, Inc. is the primary provider of such
services today.
We 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 systems 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.
We are unable to predict whether such competing technologies or any new
technologies will be successful and, if successful, whether any will provide
significant competition for us. We cannot assure you that one or more of the
technologies that we currently use in our business will not become inferior or
obsolete at some time in the future.
Competition from other wireless and wireline telephone service providers in
Puerto Rico may reduce our market share and adversely affect prices.
The market for wireless services is highly competitive in Puerto Rico.
Our two main competitors for wireless services in the Puerto Rico market are
Cellular Communications of Puerto Rico, Inc., which has agreed to be acquired
by SBC Communications, Inc., a U.S. telecommunications company, and Telephonos
de Mexico, S.A., a Mexican telecommunications company, and the Puerto Rico
Telephone Company, of which a majority is owned by GTE Corporation, a U.S.
telecommunications company, and a minority is owned by the Commonwealth of
Puerto Rico. Both CoreComm and the Puerto Rico Telephone Company were earlier
entrants into the Puerto Rico wireless market, have greater resources than we
do and currently hold subscriber market shares of approximately 47% and 40%,
respectively. CoreComm and the Puerto Rico Telephone Company offer both analog
and digital cellular service to their subscribers and offer more capability of
cellular service than us to their customers traveling outside Puerto Rico.
The FCC has issued broadband personal communication services licenses for
the Puerto Rico market. If these licenses become operational, these broadband
personal communication services systems will present additional competition to
our personal communication services operations in Puerto Rico.
Our primary competitor for wireline service is the incumbent provider,
the Puerto Rico Telephone Company, which has considerably greater resources
than we do. GTE has bought a majority stake in the Puerto Rico Telephone
Company and controls the Puerto Rico Telephone Company's board of directors.
GTE also has significantly greater resources than we do and may make changes to
improve service which in turn may strengthen the Puerto Rico Telephone
Company's competitive position. The growth of our market presence will depend
upon our ability to obtain customers that are underserved by the PRTC (or its
successor) or looking for an alternative. Because of our ability to provide
more timely installation and service to date, we have primarily attracted
customers on the basis of quality and service rather than price.
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Competition from these different types of telecommunications providers
may reduce our market share and have an adverse effect on our prices and
profitability.
If we are successful in making acquisitions, the acquired properties may not
perform as expected.
We intend to expand our current business in adjacent areas through
acquisition and also to acquire other small to mid-sized metropolitan service
areas and strategic rural service areas that we believe are undervalued or
underdeveloped or that possess traits that indicate high potential cellular use
and superior financial performance. We face risks that the systems we own and
those we acquire in the future will not perform as expected and that such
systems will not generate the returns necessary to repay the indebtedness
incurred to acquire, or fund the capital expenditures needed to develop, the
systems. In addition, expansion of our operations may place a significant
strain on our management, financial and other resources. Our ability to manage
future growth will depend upon our ability to monitor operations, control
costs, integrate acquired properties, maintain effective quality controls and
significantly expand our internal management, technical and accounting systems,
all of which will result in higher operating expenses. A failure to expand
these areas or to implement and improve our systems, procedures and controls in
an efficient manner and at a pace consistent with the growth of our business
could have a material adverse effect on our business, prospects, operating
results and ability to service our indebtedness, including the notes.
We may not be able to obtain financing to implement our acquisition strategy.
We expect to finance acquisitions with cash on hand, through issuances of
debt or equity securities and through borrowings under credit arrangements,
including pursuant to the credit facility. We cannot assure you that we will be
able to obtain additional financing in order to finance our acquisition
strategy. The ability to obtain debt or equity financing is subject to market
conditions and our current debt instruments limit our ability to incur
additional indebtedness.
Rapid and significant technological changes in the telecommunications industry
may adversely affect us.
Telecommunications providers face rapid and significant changes in
technology. New technologies may be protected by patents or other intellectual
property laws and therefore may not be available. In particular, the wireless
telecommunications industry is experiencing significant technological change,
including:
. the increasing pace of digital upgrades in existing analog wireless
systems,
. evolving industry standards,
. the allocation of new radio frequency spectrum in which to license
and operate 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.
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Like others in the industry, we are uncertain about the extent of
customer demand as well as the extent to which airtime and monthly access rates
may continue to decline. We cannot predict the effect of technological changes
on our business, and it is possible that technological developments will have a
material adverse effect on us.
Extensive governmental regulation of the telecommunications industry requires
us to obtain regulatory approvals and creates the possibility for regulatory
change that would adversely affect our business.
The Federal Communications Commission personal communication services and
state regulatory bodies primarily regulate telecommunication services. Wireless
telecommunication services such as cellular and personal communication services
are regulated by the FCC and operate pursuant to licenses or authorizations
issued by the FCC. State regulatory bodies have limited power over wireless
services. Their authority is limited to the regulation of consumer protection
issues and certain matters delegated to them by the FCC such as the approval
and enforcement of interconnection agreements between telecommunication
carriers and universal service funding.
Wireline telecommunication companies are subject to local state and
municipal regulation. These regulations often require that carriers be
authorized to provide local service via a franchise or licensing procedure.
Lambda Operations Corp., our wholly owned wireline subsidiary, falls under such
regulation. Lambda a subject to the regulation of the Puerto Rico
Telecommunications Board and is an authorized competitive access provider and
local exchange carrier. The Puerto Rico Telecommunications Basis rules require
that carriers file their tariffs and applicable rates. Such tariffs and rates
are subject to review by the Puerto Rico Telecommunications Board to ensure
that those rates are cost based and that the tariffs are in the public
interest.
Both the wireless and wireline subsidiaries are subject to siting and
zoning regulation which could materially affect our ability to build new sites
and expand our coverage. All telecommunication providers are obligated to
contribute to the federal universal fund based upon a percentage of interstate
revenue. Many states, including those we operate in, are implementing local
universal service programs that would also require carriers to contribute
additional funds.
The telecommunications industry is subject to federal and state
regulation that is continually evolving. As new laws and regulation are
promulgated, we may be required to modify our business plans or operations in
order to comply. We cannot assure you that we can do so in a cost effective
manner. Further, we can not assure you that federal or state governments or the
government of the commonwealth will not make regulations or take other actions
that might have a material adverse effect on our business. If the FCC allocates
radio spectrum for services that compete with our business thereby introducing
additional competitors, these changes could materially and adversely affect our
business prospects, operating results or our ability to service our
indebtedness, including the notes. Similarly, the loss of our licenses or
authorizations to provide wireless or wireline services could materially and
adversely affect our ability to continue operations.
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The value of our principal assets, our cellular licenses, may decrease,
reducing the asset base that supports our debt.
A substantial portion of our assets consists of our interests in cellular
licenses held by subsidiaries. While there currently exists a market for the
purchase and sale of cellular licenses, including those in our markets, that
market may not exist in the future or the values of our licenses in that market
may fall. The future value of our interests in our cellular licenses will
depend significantly upon the success of our business. The transfer of
interests in such licenses is subject to prior FCC approval, which may have the
effect of reducing the value of the license. As a consequence, if the market
value of our cellular licenses decreases significantly, we may realize a
material loss upon the sale of any of our licenses and our ability to sell
assets to repay debt would be significantly affected.
Business and economic factors, severe weather and political conditions in
Puerto Rico may significantly affect our operations in Puerto Rico and hurt our
overall performance.
Our business in Puerto Rico is dependent on the business and economic
conditions and consumer spending generally in Puerto Rico. If existing economic
conditions in Puerto Rico were to deteriorate, the market for wireless or
wireline services in Puerto Rico may grow more slowly or decline. This would
have an adverse impact on our business in Puerto Rico and, because our Puerto
Rico operations currently generate approximately 30% of our company's Adjusted
EBITDA, on our financial condition and results of operations generally.
In particular, our business in Puerto Rico may be materially adversely
affected by events such as hurricanes, labor strikes and the like which affect
Puerto Rico generally. Any change in Puerto Rico's political status with the
U.S., or the ongoing debate on such status, could also affect the economy of
Puerto Rico. The ultimate effect of possible changes in Puerto Rico's
governmental and political status is uncertain and, accordingly, we cannot
assure you that such changes will not materially adversely affect our business
and results of operations.
A substantial increase in fraudulent and/or unbilled use of our network or
costs incurred to prevent such use would affect our business operations.
Like most companies in the cellular industry, we incur costs associated
with unauthorized use of our network. Fraud increases interconnection costs,
capacity costs, administrative costs, costs incurred for fraud prevention and
payments to other carriers for unbillable fraudulent roaming. We currently
employ anti-fraud measures in our rural cellular clusters and intend to
continue to develop and invest in measures to prevent cellular fraud. Even so,
we cannot assure you that we will not incur substantial costs due to fraud. In
addition, while we have not experienced significant costs in the past due to
our anti-fraud measures and the costs associated with unauthorized use of our
cellular network, we cannot assure you that these costs will not become
substantial in the future.
A general decline in roaming rates and our strategy of aggressively pricing
roaming rates may lead to lower roaming revenues that are not fully offset by
roaming expenses we pay to other providers, and thus a decrease in results of
operations.
We earn much of our revenue from customers of other cellular providers
who are roaming in our markets. Roaming rates per minute under reciprocal
roaming arrangements have declined over the last several years and we expect
that such declines will continue for the foreseeable future. We
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have implemented a strategy of aggressively pricing roaming rates to encourage
other cellular and personal communications services providers to include
portions of our service areas within their home calling regions and to
discourage wireless providers from expanding their footprints into our service
areas. While we benefit from lower roaming rates when we remit to other
cellular providers roaming charges incurred by our subscribers in other
cellular providers' calling regions, we receive less revenue per minute of use
from customers roaming in our markets. We cannot assure you that the decline in
roaming rates will be offset by the benefits of increased roaming minutes of
use by other cellular and personal communication services providers or that
such decline will not materially adversely affect our results of operations.
Our operations in Puerto Rico, which depends in part on business customers
using our networks, may be adversely affected if changes in tax incentives and
tax benefits available to businesses in Puerto Rico cause companies to reduce
their business activities in Puerto Rico.
The demand for our services in Puerto Rico is significantly affected by
the level of business activity in the island providing tax incentives for U.S.
companies to operate in Puerto Rico and to reinvest the earnings from their
Puerto Rico operations in Puerto Rico. As a result of a 1996 amendment to the
Internal Revenue Code, the tax benefits available to corporations doing
business in Puerto Rico phase out in annual increments through 2005.
Consequently, such corporations may reduce or close their Puerto Rico
operations and may reduce their re-investments in Puerto Rico. The changes may
also reduce the incentives for new investments in Puerto Rico. We do not yet
know the full extent to which our business in Puerto Rico will be affected by
such changes in the tax law.
The potential failure of our computer systems and those of third parties with
whom we deal to recognize the year 2000 could significantly disrupt our
operations, causing a decline in cash flow and revenue and other difficulties.
The Year 2000 issue is the result of many computer programs being written
abbreviating dates by using two digits rather that four digits in the year
field. As a result, unless corrected, a computer program that has date
sensitive software may recognize a date using "00" in the year field as 1900
rather than the year 2000. This could result in system failures and errors
causing disruptions to various aspects of our business, including computer
systems, voice and data networks and building infrastructures.
We began a review of our computer systems and related software in fiscal
1998 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 was formed and is meeting regularly to
discuss the steps to be taken, and the results of steps that have been
completed, to deal with any potential Year 2000 issues. Our plan to address the
Year 2000 issue consists of six phases: (1) awareness (2) assessment (3)
remediation (4) testing (5) implementation and (6) contingency planning.
For our internal computer systems and software, the awareness and
assessment phases have been completed and the remediation stage is in process.
Testing and implementation are expected to be completed by August 1999.
Most of our customer-related computer systems and databases, including
our billing systems, are managed by third parties under contractual
arrangements. We have taken an active role in monitoring the progress of these
third parties, including selective Year 2000 compliance testing. We
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<PAGE>
have been informed by these third parties that their remediation efforts are in
various stages with final completion anticipated in September 1999.
For the local equipment used in the transmission and reception of all
signals, we completed the awareness and assessment phases in 1998. Any
remediation efforts that were necessary have since been completed and we
believe this local equipment is Year 2000 compliant.
Our systems are interconnected with various networks and systems operated
by third parties, including landline communications networks, long-distance
networks, the networks of other wireless service providers as well as public
utilities. The operators of these networks and systems are responsible for
addressing the Year 2000 issue in their own systems. The ability of our systems
to operate, including the ability to provide wireless service, is dependent
upon these third party networks and systems being Year 2000 compliant. We have
requested information from these vendors in order to determine to what extent
we may be exposed to their failure to correct their own year 2000 problems.
While many of these third parties have indicated to us that they are or
anticipate being Year 2000 compliant prior to December 31, 1999, we cannot
assure you that these third parties will have taken the necessary corrective
actions prior to the year 2000.
We currently believe that our worst case scenario with respect to the
Year 2000 may involve the interruption of telecommunications services and/or
interruption of customer billing. Either or both of these events could have a
material adverse effect on our financial condition, results of operations or
cash flows.
We have contingency plans in place for maintaining and restoring service
in the event of a natural disaster, power failure or software-related
interruption of service, and are working to use this experience in the
development and implementation of our Year 2000 contingency plans. Our Year
2000 contingency plans will consist of the following:
. identifying teams that will be on site at the network operating
centers at the time of the date change to monitor the networks and
critical systems to react immediately to commence repairs,
. developing alternate plans for critical work processes in the event
these processes experience Year 2000 disruptions; and
. developing alternate processes to support critical customer
functions in the event mechanized processes experience Year 2000
disruptions.
We anticipate having these Year 2000 contingency plans in place before December
31, 1999.
The amounts expended to date by us related to Year 2000 compliance have
not been material and have been expensed as incurred. We do not anticipate that
future amounts to be expended related to Year 2000 compliance will be material
or have an adverse effect on our financial condition, results of operations or
cash flows.
Our management team is newly-formed and has not yet demonstrated its
effectiveness in managing Centennial.
Michael J. Small, who is the President and Chief Executive Officer of
Centennial, became the Chief Executive Officer of Centennial upon the
consummation of the merger with CCW
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Acquisition Corp. Mr. Small has had no experience managing our operations. We
have employment contracts with seventeen members of senior management,
including Mr. Small, whose contract expires on September 30, 2002; Rudy J.
Graf, who is the President and Chief Executive Officer of Centennial de Puerto
Rico and Peter Chehayl, who became Senior Vice President and Chief Financial
Officer following the merger. To the extent that these key individuals do not
remain with Centennial at the end of their respective employment terms, such
change in management could have a material adverse effect on our company unless
we can obtain a suitable replacement in a timely manner. Our management will
also be required to devote additional time and resources toward recruitment,
hiring and training to fill such positions, which, if substantial, could result
in a material adverse effect on our business, prospects, operations or results
of operations. If the senior management team is not put into place, or if our
executive officers do not achieve their management objectives in a timely
manner, our business, prospects, operating results and ability to service our
indebtedness, including the notes, may be materially adversely affected.
A group of affiliated stockholders control the voting power of Centennial which
may have interests adverse to the interests of the holders of the notes.
Welsh Carson VIII, certain of its affiliates and certain other equity
investors hold 92.9% of Centennial's outstanding shares of common stock.
Accordingly, these equity investors, directly or indirectly, control our
company and have the power to elect all of our directors, appoint new
management and approve or reject any action requiring the approval of
stockholders, including adopting amendments to our charter and approving
mergers and sales of all or substantially all of our assets. The equity
investors may make decisions that are adverse to your interests. In addition,
the existence of a controlling stockholder 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 Centennial common stock. See
"Principal Stockholders" and "Certain Relationships and Related Transactions--
Agreements between Centennial Cellular Corp. and Its Stockholders."
A portion of our operations are conducted through partnerships in which we have
a minority interest, we do not control such operations and are subject to
capital calls made by the controlling partner.
We have a limited ability to direct the operation of any system in which
we now or in the future hold a minority investment as a limited partner. In
addition, these investment partnerships are entitled to make certain demands
for capital contributions, including to complete acquisitions by the limited
partnerships. If we do not meet such a capital call, our ownership interest in
such system may be diluted. Capital calls with respect to such investment
interests for the fiscal years ended May 31, 1998, 1997 and 1996 were
approximately $0.8 million, $2.9 million and $1.5 million, respectively. We
cannot assure you that we will be able to pay future capital calls when due. In
addition, under the indenture relating to the notes, Centennial Cellular
Operating will be permitted to dividend to Centennial all cash received from
Centennial Cellular Operating's non-subsidiary investment interests.
Our operations may be adversely affected by equipment failures or by natural
disasters that disrupt our network.
A major equipment failure or a natural disaster affecting any one of our
central switching offices or certain of our cell sites or microwave links could
have a material adverse effect on our
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<PAGE>
business, prospects, operating results or ability to service our indebtedness,
including the notes. Although we currently carry "business interruption"
insurance, our insurance policies may not entirely cover all damages we may
suffer.
Concerns as to the health effects of radio frequency emission may adversely
affect the demand for cellular telephone services.
Media reports have suggested that certain radio frequency emissions from
portable cellular telephones may be linked to cancer and interfere with heart
pacemakers and other medical devices. Concerns over radio frequency emissions
and interference may have the effect of discouraging the use of cellular
telephones, which could have an adverse effect upon our business.
THIS PROSPECTUS INCLUDES FORWARD-LOOKING STATEMENTS
Some statements and information contained in this prospectus are not
historical facts, but are "forward-looking statements", as such term is defined
in the Private Securities Litigation Reform Act of 1995. We wish to caution you
that these forward-looking statements are only predictions, and actual events
or results may differ materially as a result of risks that we face, including
those set forth herein under "Risk Factors." These forward-looking statements
can be identified by the use of forward-looking terminology such as "believes",
"expects", "plans", "may", "will", "would", "could", "should", or "anticipates"
or the negative of these words or other variations of these words or other
comparable words, or by discussions of strategy that involve risks and
uncertainties.
27
<PAGE>
THE MERGER
On January 7, 1999, Centennial merged with CCW Acquisition Corp., a new
Delaware corporation organized by Welsh, Carson, Anderson & Stowe VIII, L.P.,
pursuant to a merger agreement dated as of July 2, 1998. The merger was
accounted for as a recapitalization in which the historical basis of our
company's assets and liabilities was not affected and no new goodwill related
to the merger was created.
Welsh, Carson, Anderson & Stowe VIII, L.P., certain of its affiliates,
including WCAS Capital Partners III, L.P., certain affiliates of Blackstone
Capital Partners, L.P. and certain other investors provided $580 million in
capital contributions. These equity investors purchased $400 million in common
shares of CCW Acquisition Corp.
To finance the merger, Centennial Cellular Operating and its Puerto Rico
subsidiary borrowed approximately $936.0 million under the $1,050 million
credit facility. A group of lenders provided Centennial Cellular Operating with
the credit facility, consisting of an $900 million term loan facility and a
$150 million revolving credit facility. See "Description of Certain
Indebtedness."
WCAS Capital Partners III, L.P., an investment partnership affiliated
with Welsh Carson VIII, purchased, at the time of the consummation of the
merger, unsecured subordinated notes due 2009 of Centennial and common shares
of Centennial at an aggregate price of $180 million. In addition, the other
equity investors made a common equity contribution of $400 million to purchase
common shares at the time of the consummation of the merger.
A total of approximately $1.87 billion was required to pay the cash
consideration to Centennial stockholders in the merger, repay our indebtedness,
pay the related fees and expenses and purchase pledged securities. The sources
of funding for the merger and the related transactions were the credit
facility, the financing from WCAS Capital Partners III, L.P., the common equity
contribution and the offering of the old notes.
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<PAGE>
The chart below shows our organizational structure after the merger and
related transactions.
[ORGANIZATIONAL CHART]
Public Equity
Stockholders Investors
7.1% 92.9%
Centennial Mezzanine financing,
Cellular Corp. co-obligor of the notes
and guarantor under
the credit facility
Centennial Cellular Co-obligor of the notes
Operating Co. LLC borrower under the credit facility
Centennial Centennial A Puerto Rico subsidiary
Rural Cellular de Puerto Rico is the borrower under a
portion of the credit
facility
o Domestic cellular systems o Personal communication services network
o Minority cellular o Competitive local exchange carrier
investments interests
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<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the issuance of new notes in the
exchange offer. The offering of notes resulted in net proceeds to us of
approximately $357.1 million, after payment of underwriting discounts and other
issuance costs totaling approximately $12.9 million.
The net proceeds from the offering, the mezzanine financing and the
common equity contribution, together with borrowings under the credit facility,
were used to:
. fund payment of the cash consideration in the merger,
. repay or repurchase indebtedness of Centennial,
. pay the fees and expenses incurred in connection with the merger, the
merger financings and related transactions, and
.purchase the pledged securities.
The following table sets forth the sources and uses of funds in
connection with the financing of the merger as of the merger's consummation on
January 7, 1999:
<TABLE>
<CAPTION>
Amount
---------------------
(Dollars in millions)
<S> <C>
Sources of Funds
Credit facility(1)...................................... $ 936.0
Old notes(2)............................................ 370.0
Subordinated debt financing of parent (Centennial)(3)... 180.0
Common equity contribution.............................. 400.0
--------
Total Sources of Funds................................ $1,886.0
========
Uses of Funds
Cash merger consideration(4)............................ $1,210.7
Repayment of net existing indebtedness and preferred
dividends accrued(5)................................... 535.4
Restricted interest escrow investment(2)................ 57.5
Premiums on debt tender offers for tendered notes(6).... 39.8
Fees and expenses(7).................................... 42.6
--------
Total Uses of Funds................................... $1,886.0
========
</TABLE>
- --------
(1) Our credit facility consists of three term loans in aggregate principal
amount of $900.0 million and a revolving credit facility in an aggregate
principal amount of up to $150.0 million. The borrowers under these
facilities are Centennial Cellular Operating and, for $125.0 million of the
term loans and up to $60.0 million of the revolving credit facility,
Centennial de Puerto Rico. At the time of the merger, Centennial de Puerto
Rico borrowed $36.0 million under the credit facility. Centennial, together
with the subsidiaries of Centennial Cellular Operating, excluding initially
Centennial de Puerto Rico and its subsidiaries, which subsidiaries have
guaranteed the obligations of Centennial de Puerto Rico under the credit
facility, have unconditionally guaranteed, jointly and severally, the debt
under our credit facilities. See "Description of Certain Indebtedness."
(2) Upon consummation of the merger, approximately $57.5 million of the
proceeds from the old notes was deposited with the trustee to purchase
pledged securities to pay the first three
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scheduled interest payments on the notes at the stated interest rate. See
"Description of the New Notes--Security."
(3) WCAS Capital Partners III, L.P., an investment partnership affiliated with
Welsh Carson VIII, purchased, at the time of the consummation of the
merger, unsecured subordinated notes due 2009 and common shares of
Centennial at an aggregate price of $180 million. This $180 million of
financing has been allocated as $157.5 million debt and $22.5 million
equity. The subordinated notes are obligations of Centennial only and,
accordingly, pro forma financial information for Centennial Cellular
Operating does not reflect any obligation for this debt.
(4) Includes $1,033.1 million in consideration for the Centennial common
shares, $128.2 million in consideration for the Centennial common shares
issued upon conversion of Centennial's preferred stock and $49.4 million
in consideration for the settlement of outstanding options to purchase
Centennial common shares and the settlement of restricted shares. The
options were exercised or cancelled in exchange for a cash amount equal to
the difference between $13.83 and the exercise price of the option
immediately before the merger. The restricted shares were acquired in
exchange for the cash amount of $13.83.
(5) Represents the amount required to repay our total pre-merger indebtedness
and pay interest on our indebtedness and dividends on our then outstanding
preferred stock. At the time of the merger, we repurchased 99.4% of our
then outstanding 8 7/8% senior notes due 2001 and 99.8% of our then
outstanding 10 1/8% senior notes due 2005. The amount shown includes
accrued interest of $6.9 million and preferred dividends of $18.1 million.
(6) The amount required to pay the debt tender premiums associated with the
debt tender offers for our notes due 2001 and 2005. The amount shown above
includes the consent solicitation fees associated with the debt tender
offers.
(7) Assumed for simplicity to be paid by Centennial and includes all fees and
expenses related to the merger, the offering of old notes and related
transactions.
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THE EXCHANGE OFFER
Purpose of the Exchange Offer
The holders of the notes currently are entitled to registration rights
under a registration rights agreement. Pursuant to the registration rights
agreement, we became obligated to file with the SEC a registration statement
covering the offer by us to the holders of the notes to exchange all of the
notes for the new notes. This exchange offer, if consummated, will satisfy our
obligations under the registration rights agreement.
Because the registration statement of which this prospectus forms a part
was not declared effective by the SEC by June 6, 1999, we are paying $2,569.00
per day in additional interest under the registration rights agreement. Once
the registration statement is declared effective, we will no longer be required
to pay that additional interest if this exchange offer is consummated by July
6, 1999. After July 6, 1999 we will be required to pay additional interest
until this exchange offer is consummated. We are also required to file a shelf
registration statement with the SEC if a holder of notes is not allowed to
participate in this exchange offer by law.
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, we will accept all properly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on the
expiration date. We will issue $1,000 principal amount of new notes in exchange
for each $1,000 principal amount of outstanding notes accepted in the exchange
offer. Holders may tender some or all of their notes pursuant to the exchange
offer.
Based on an interpretation by the staff of the SEC set forth in no-action
letters issued to third parties, we believe that the new notes issued pursuant
to the exchange offer in exchange for notes may be offered for resale, resold
and otherwise transferred by the holders thereof (other than any such holder
that is our "affiliate" within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such new notes are acquired in
the ordinary course of such holders' business, and such holders have no
arrangement with any person to participate in the distribution of such new
notes. See Morgan Stanley & Co., Inc., SEC No-Action Letter (available June 5,
1991), Exxon Capital Holdings Corporation, SEC No-Action Letter (available May
13, 1988), and Shearman & Sterling, SEC No-Action Letter (available July 2,
1993).
If you were to be participating in the exchange offer for the purposes of
distributing securities in a manner not permitted by the SEC's interpretation,
you (1) could not rely on the position of the staff of the SEC in Exxon Capital
Holdings Corporation or similar interpretive letters and (2) must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction.
Each broker-dealer that receives new notes for its own account, as a
result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
new notes. The letter of transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This prospectus, as
it may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of new notes. See "Plan of Distribution."
Except as described above, this prospectus may not be used for an offer
to resell, resale or other retransfer of new notes.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or the acceptance of it would not be in compliance with the securities or
blue sky laws of such jurisdiction.
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<PAGE>
Terms of the Exchange Offer
As of the date of this prospectus, there was $370,000,000 aggregate
principal amount of the notes outstanding. This prospectus, together with the
letter of transmittal, is being sent to all registered holders of old notes as
of the date of this prospectus.
We will be deemed to have accepted validly tendered notes when, as and if
we have given written notice of acceptance to the exchange agent. The Exchange
Agent will act as agent for the tendering holders of notes for the purposes of
receiving the new notes from us and delivering new notes to the tendering
holders.
If any tendered notes are not accepted for exchange because of an invalid
tender, certificates for any such unaccepted notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
expiration date.
If notes are not tendered, they will remain outstanding and will continue
to accrue interest from their date of issue, December 14, 1998, at a rate of 10
3/4% per annum.
In the event the exchange offer is consummated, we will not be required
to register the notes that are not tendered. In that event, holders of notes
seeking liquidity in their investment would have to rely on exemptions to
registration requirements under the securities laws, including the Securities
Act. See "Risk Factors--Consequences of the Exchange Offer to Non-Tendering
Holders of the notes."
Expiration Date; Extentions
The term "expiration date" means the expiration date set forth on the
cover page of this prospectus, unless we, in our discretion, extend the
exchange offer, in which case the term "expiration date" means the latest date
to which the exchange offer is extended.
In order to extend the expiration date, we will notify the exchange agent
of any extension by written notice and will mail to the record holders of notes
an announcement thereof, each prior to 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration date. Such
announcement may state that we are extending the exchange offer for a specified
period of time.
In addition, we will issue notice of each such extension by press release
or other similar public announcement.
Interest on the New Notes
The notes will bear interest from December 14, 1998, payable semiannually
on June 15 and December 15 of each year, commencing June 15, 1999, at a rate of
10 3/4% per annum.
Procedures for Tendering
Unless the tender is being made in book-entry form, to tender in the
exchange offer, a holder must complete, sign and date the letter of
transmittal, or a facsimile of it,
. have the signatures guaranteed if required by the letter of
transmittal and
33
<PAGE>
. mail or otherwise deliver the letter of transmittal or the
facsimile, the old preferred stock and any other required documents,
to the exchange agent prior to 5:00 p.m., New York City time, on the
expiration date.
Any financial institution that is a participant in DTC's Book-Entry
Transfer Facility system may make book-entry delivery of the old preferred
stock by causing DTC to transfer the old notes into the exchange agent's
account. Although delivery of old notes may be effected through book-entry
transfer into the exchange agent's account at DTC, the letter of transmittal
(or facsimile), with any required signature guarantees and any other required
documents, must, in any case, be transmitted to and received or confirmed by
the exchange agent at its addresses set forth under the caption "exchange
agent," below, prior to 5:00 p.m., New York City time, on the expiration date.
Delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the exchange agent.
The tender by a holder of old notes will constitute an agreement between
us and the holder in accordance with the terms and subject to the conditions
set forth in this prospectus and in the letter of transmittal.
The method of delivery of old notes and the letter of transmittal and all
other required documents to the exchange agent is at the election and risk of
the holders. Instead of delivery by mail, we recommend that holders use an
overnight or hand delivery service. In all cases, holders should allow
sufficient time to assure delivery to the exchange agent before the expiration
date. No letter of transmittal of old notes should be sent to us. Holders may
request their respective brokers, dealers, commercial banks, trust companies or
nominees to effect the tenders for such holders.
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on behalf of the beneficial owner. If the
beneficial owner wishes to tender on that owner's own behalf, the owner must,
prior to completing and executing the letter of transmittal and delivery of
such owner's old preferred stock, either make appropriate arrangements to
register ownership of the old notes in the owner's name or obtain a properly
completed bond power from the registered holder. The transfer of registered
ownership may take considerable time.
Signature on a letter of transmittal or a notice of withdrawal, must be
guaranteed by an eligible guarantor institution within the meaning of Rule
17Ad-15 under the Exchange Act, unless the old notes tendered pursuant thereto
are tendered:
. by a registered holder who has not completed the box entitled
"Special Payment Instructions" or "Special Delivery Instructions" on
the letter of transmittal, or
. for the account of an eligible guarantor institution.
In the event that signatures on a letter of transmittal or a notice of
withdrawal, are required to be guaranteed, such guarantee must be by:
. a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.,
. a commercial bank or trust company having an office or correspondent
in the United States or
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<PAGE>
. an "eligible guarantor institution".
If the letter of transmittal is signed by a person other than the
registered holder of any old notes, the old notes must be endorsed by the
registered holder or accompanied by a properly completed bond power, in each
case signed or endorse in blank by the registered holder.
If the letter of transmittal or any old notes or bond powers are signed
or endorsed by trustees, executors, administrators, guardians, attorney-in-
fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
unless waived by us, submit evidence satisfactory to us of their authority to
act in that capacity with the letter of transmittal.
We will determine all questions as to the validity, form, eligibility
(including time of receipt) and acceptance and withdrawal of tendered old notes
in our sole discretion. We reserve the absolute right to reject any and all old
notes not properly tendered or any old preferred stock whose acceptance by us
would, in the opinion of our U.S. counsel, be unlawful. We also reserve the
right to waive any defects, irregularities or conditions of tender as to any
particular old notes either before or after the expiration date. Our
interpretation of the terms and conditions of the exchange offer (including the
instructions in the letter of transmittal) will be final and binding, on all
parties. Unless waived, any defects or irregularities in connection with
tenders of old notes must be cured within a time period we will determine.
Although we intend to request the exchange agent to notify holders of defects
or irregularities relating to tenders of old notes, neither we, the exchange
agent nor any other person will have any duty or incur any liability for
failure to give such notification. Tenders of old notes will not be considered
to have been made until such defects or irregularities have been cured or
waived. Any old preferred stock received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the exchange agent to the tendering
holders, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.
The exchange agent will make a request promptly after the date of this
prospectus to establish accounts with respect to the notes at the book-entry
transfer facility for the purpose of aiding the exchange offer, and subject to
the establishment of these accounts, any financial institution, that is a
participant in the book-entry transfer facility's system may make book-entry
delivery of notes by causing such book-entry transfer facility to transfer
notes into the exchange agent's account with respect to the notes in accordance
with the book-entry transfer facility's procedures for such transfer. Although
delivery of notes may be effected through book-entry transfer into the exchange
agent's accounts at the book-entry transfer facility, an appropriate letter of
transmittal with any required signature guarantee and all other required
documents must in each case be transmitted to and received or confirmed by the
exchange agent at its address set forth on page 34 of this prospectus on or
prior to the expiration date, or, if the guaranteed delivery procedures
described below are complied with, within the time period provided under such
procedures.
Guaranteed Delivery Procedures
If you desire to accept the exchange offer, and
. time will not permit a letter of transmittal or notes to reach the
exchange agent before the expiration date, or
. the procedure for book-entry transfer cannot be completed on a
timely basis,
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<PAGE>
a tender may be effected if the Exchange Agent has received at its office
listed at the end of this section on or prior to the expiration date a letter,
telegram or facsimile transmission from an eligible institution setting forth
your name and address, the names in which the notes are registered and, if
possible, the certificate numbers of your notes to be tendered, and stating
that the tender is being made thereby and guaranteeing that within five New
York Stock Exchange trading days after the date of execution of such letter,
telegram or facsimile transmission by the eligible institution, the notes, in
proper form for transfer (or a confirmation of book-entry transfer of such
notes into the Exchange Agent's account at the book-entry transfer facility),
will be delivered by such eligible institution together with a properly
completed and duly executed letter of transmittal (and any other required
documents). Unless notes being tendered by the above-described method are
deposited with the exchange agent within the time period set forth above
(accompanied or preceded by a properly completed letter of transmittal and any
other required documents), we may, at our option, reject the tender. Copies of
a notice of guaranteed delivery which may be used by eligible institutions for
the purposes described in this paragraph are available from the exchange agent.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of notes will be determined
by us, which determination will be final and binding. We reserve the absolute
right to reject any or all tenders not in proper form or the acceptance for
exchange of which may, in the opinion of our counsel, be unlawful. We also
reserve the absolute right to waive any of the conditions of the exchange offer
or any defect or irregularity in the tender of any notes. None of us, the
exchange agent or any other person will be under any duty to give notification
of any defects or irregularities in tenders or incur any liability for failure
to give such notification.
By tendering, you will represent to us that, among other things, (i) the
notes acquired pursuant to the exchange offer are being obtained in the
ordinary course of your business, (ii) you have no arrangement with any person
to participate in the distribution of such new notes, (iii) you are not an
"affiliate," as defined under Rule 405 of the Securities Act, of us, and (iv)
if you are a broker or a dealer (as defined in the Exchange Act), that you
acquired the notes for your own account as a result of market-making activities
on other trading activities and that you have not entered into any arrangement
or understanding with us or any of our "affiliates" to distribute the new notes
received in the exchange offer.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the expiration date.
To withdraw a tender of notes in the exchange offer, a written
transmission notice of withdrawal via telegram, telex, facsimile transmission
or letter must be received by the exchange agent at its address set forth
herein prior to 5:00 p.m., New York City time, on the expiration date. Any such
notice of withdrawal must:
. specify the name of the person having deposited the notes to be
withdrawn (the "Depositor"),
. identify the notes to be withdrawn (including the certificate number
or numbers and principal amount of such notes),
. be signed by the Depositor in the same manner as the original
signature on the Letter of Transmittal by which such notes were
tendered (including any required signature
36
<PAGE>
guarantees) or be accompanied by documents of transfer sufficient to
have the trustee with respect to the notes register the transfer of
such notes into the name of the depositor withdrawing the tender,
and
. specify the name in which any such notes are to be registered, if
different from that of the Depositor.
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by us, which
determination shall be final and binding on all parties. Any notes you
withdrew will be deemed not to have been validly tendered for purposes of the
exchange offer, and no new notes will be issued to you with respect thereto
unless the notes so withdrawn are validly retendered. Any notes that have been
tendered but that are not accepted for exchange will be returned to them as
soon as practicable after withdrawal, rejection of tender or termination of
the exchange offer. Properly withdrawn notes may be retendered by following
one of the procedures described above under "Procedures for Tendering" at any
time prior to the expiration date.
Conditions
The exchange offer is not subject to any conditions other than that the
exchange offer does not violate applicable law or any applicable
interpretation of the staff of the SEC.
Accounting Treatment
The new notes will be recorded at the same carrying value as the old
notes as reflected in our accounting records on the date of the exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes
upon the completion of the exchange offer. Any expenses of the exchange offer
that we paid will be capitalized and amortized over the term of the notes.
Exchange Agent
Norwest Bank Minnesota, National Association has been appointed as
exchange agent for the exchange offer. Questions and requests for assistance
and requests for additional copies of this prospectus or of the letter of
transmittal and deliveries of completed letters of transmittal with tendered
notes should be directed to the exchange agent addressed as follows:
<TABLE>
<S> <C> <C>
BY REGISTERED OR BY HAND DELIVERY OR
CERTIFIED MAIL: OVERNIGHT COURIER: IN PERSON:
Norwest Bank Minnesota Norwest Bank Minnesota, Norwest Bank Minnesota,
National Association National Association National Association
Corporate Trust Operations Corporate Trust Operations Norstar East Bldg.
P.O. Box 1517 Norwest Center 608 2nd Ave. S.
Minneapolis, MN 55480-1517 Sixth and Marquette 12th Floor
Minneapolis, MN 55479-0113 Corporate Trust Services
Minneapolis, MN 55479-0113
</TABLE>
BY FACSIMILE:
(612) 667-4927
CONFIRM BY TELEPHONE
(612) 667-9764
37
<PAGE>
Fees and Expenses
We will not make any payments to brokers, dealers, or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and will reimburse the exchange
agent for its reasonable out-of-pocket expenses in connection with the exchange
offer. We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this prospectus, letters of transmittal and related
documents to you in handling or forwarding tenders for exchange. In addition we
will pay legal and accounting fees that we incur in connection with this
exchange offer.
38
<PAGE>
CAPITALIZATION
The following table presents the actual consolidated capitalization of
Centennial and Centennial Cellular Operating as of February 28, 1999. You
should read this table with "The Merger," the unaudited consolidated financial
statements of Centennial, including the notes to the unaudited consolidated
financial statements for the nine months ended February 28, 1999, incorporated
by reference into this prospectus and the unaudited pro forma financial
statements included in this prospectus. See "Unaudited Pro Forma Financial
Information."
<TABLE>
<CAPTION>
As of February 28, 1999
------------------------------
Centennial
Centennial Cellular Operating
---------- ------------------
(Dollars in thousands)
<S> <C> <C>
Cash........................................... $ 33,914 $ 33,914
========== ==========
Restricted investments(1)...................... $ 57,501 $ 57,501
========== ==========
Debt (including current portion):
Credit facility(2)............................. $ 933,875 $ 933,875
Notes issued in the offering(1)................ 370,000 370,000
Notes issued in WCAS Capital Partners
financing(3).................................. 157,875 --
Senior notes due 2001 and 2005................. 1,607 1,607
---------- ----------
Total debt..................................... 1,463,357 1,305,482
Stockholders' deficit.......................... (605,800) (447,925)
---------- ----------
Total capitalization........................... $ 857,557 $ 857,557
========== ==========
</TABLE>
- --------
(1) Upon consummation of the merger, approximately $57,501 of the proceeds from
the notes were used to purchase securities pledged to pay the first three
scheduled interest payments on the notes. See "Description of the New
Notes--Security."
(2) Centennial has the ability to borrow an additional $116,125 for general
corporate purposes pursuant to a revolving credit facility under the credit
facility.
(3) Represents the debt portion of $180,000 principal amount of subordinated
notes and Centennial common shares issued in the financing provided by WCAS
Capital Partners III, L.P.
39
<PAGE>
SELECTED FINANCIAL AND OPERATING INFORMATION
The following table presents certain selected unaudited historical
consolidated financial information for Centennial and its subsidiaries
. as of February 28, 1999 and 1998 and for the nine months ended
February 28, 1999 and 1998,
. as of and for the five years ended May 31, 1998.
You should read this table with "Use of Proceeds," "Unaudited Pro Forma
Financial Information" and the consolidated financial statements, including in
each case the notes to those financial statements, included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
Nine months ended
February 28, Years ended May 31,
---------------------- --------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Domestic operating
revenue................ $ 174,980 $ 133,953 $ 182,944 $ 145,120 $ 112,197 $ 85,419 $ 56,373
Puerto Rico operating
revenue................ 87,611 35,752 54,557 5,903 -- -- --
---------- ---------- ---------- ---------- ---------- --------- ---------
Total operating
revenue................ 262,591 169,705 237,501 151,023 112,197 85,419 56,373
Cost of services and
equipment sold......... 50,783 42,248 54,818 38,228 26,129 22,152 13,424
---------- ---------- ---------- ---------- ---------- --------- ---------
Gross profit............ 211,808 127,457 182,683 112,795 86,068 63,267 42,949
Selling, general and
administrative......... 81,460 62,142 81,790 55,132 34,188 26,055 17,787
Depreciation and
amortization........... 97,702 82,637 114,194 83,720 70,989 65,642 47,652
Recapitalization costs.. 58,852 0 0 0 0 0 0
---------- ---------- ---------- ---------- ---------- --------- ---------
Operating loss.......... (26,206) (17,322) (13,301) (26,057) (19,109) (28,430) (22,490)
Interest expense--net... 48,553 31,801 45,155 33,379 27,886 23,357 21,040
Gain on sale of assets.. 8,414 8 5 3,819 8,310 -- --
Income from Minority
Cellular Investment
Interests(1)........... 9,352 9,843 13,069 15,180 10,473 4,670 3,645
---------- ---------- ---------- ---------- ---------- --------- ---------
Loss before income tax
benefit and minority
interest............... (56,993) (39,272) (45,382) (40,437) (28,212) (47,117) (39,885)
Income tax benefit...... (10,114) (13,527) (13,597) (7,295) (11,596) (14,456) (11,780)
Minority interest in
income (loss) of
subsidiaries(2)........ 142 (337) 162 153 15 69 (321)
---------- ---------- ---------- ---------- ---------- --------- ---------
Loss from continuing
operations............. (46,737) (26,082) (31,947) (33,295) (16,631) (32,730) (27,784)
Extraordinary loss on
early extinguishment of
debt, net of tax....... (40,526) 0 0 0 0 0 0
---------- ---------- ---------- ---------- ---------- --------- ---------
Net loss................ $ (87,263) $ (26,082) $ (31,947) $ (33,295) $ (16,631) $ (32,730) $ (27,784)
========== ========== ========== ========== ========== ========= =========
Ratio of earnings to
fixed Charges(3)....... -- -- -- -- -- -- --
Other Consolidated Data:
Adjusted EBITDA(4)...... $ 130,348 $ 65,315 $ 99,208 $ 55,852 $ 47,793 $ 34,444 $ 24,080
Adjusted EBITDA margin.. 49.6% 38.5% 42.1% 37.4% 44.2% 41.7% 43.6%
Cash flows provided by
(used in):
Operating activities... $ 98,654 $ 46,196 $ 54,771 $ 26,956 $ 24,282 $ 10,390 $ (3,558)
Investing activities... (51,262) (99,290) (126,111) (118,094) (78,765) (79,834) (64,749)
Financing activities... (28,098) 24,274 42,545 67,256 152 182,722 65,702
Capital expenditures.... 69,819 103,187 129,300 88,990 38,082 17,538 8,947
Net Pops(5)(6).......... 10,846,000 10,846,000 10,846,000 10,846,000 10,661,000 6,491,500 5,020,400
Subscribers(5).......... 426,700 298,500 322,200 203,900 135,000 85,900 49,000
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Nine months ended
February 28, Years ended May 31,
---------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Dollars in thousands, except as noted)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Rural Cellular
Data:
Adjusted EBITDA(4)...... $ 91,520 $ 60,249 $ 86,669 $ 64,278 $ 48,208 $ 34,511 $ 24,080
Adjusted EBITDA margin.. 52.3% 45.0% 47.8% 44.9% 44.6% 41.8% 43.6%
Net loss: .............. (76,736) (1,890) (1,188) (16,081) (15,585) (32,650) (27,784)
Cash Flow provided by
(used in):
Operating............. 69,385 46,441 50,139 36,919 25,068 10,430 (3,558)
Investing............. (7,018) (21,395) (52,023) (59,633) (79,574) (79,874) (64,749)
Financing............. (37,702) (56,848) (32,431) (3,742) 152 182,722 65,702
Capital expenditures.... $ 25,130 $ 31,363 $ 38,996 $ 38,921 $ 22,604 $ 17,319 $ 8,947
Net Pops (excluding
Minority Cellular
Investment
Interests)(5)(6)....... 5,831,000 5,777,000 5,777,000 5,777,000 5,592,000 5,412,100 3,941,000
Subscribers............. 309,300 237,900 252,700 187,000 135,000 85,900 49,000
Penetration(5)(7)....... 5.3% 4.1% 4.4% 3.2% 2.4% 1.6% 1.2%
Churn rate.............. 1.9% 1.8% 1.8% 2.3% 2.5% 2.5% 3.0%
Average monthly revenue
per unit (actual
dollars)(8)............ $ 69 $ 70 $ 68 $ 73 $ 74 $ 68 $ 69
Acquisition cost per
cellular customer
(actual dollars)(9).... $ 316 $ 307 $ 308 $ 343 $ 351 $ 431 $ --
Cell sites(5)........... 400 329 363 212 185 -- --
Retail and service
centers(5)............. 69 58 59 41 25 -- --
Other Centennial de
Puerto Rico Data:
Adjusted EBITDA(4)...... $ 38,828 $ 5,066 $ 12,539 $ (8,426) $ (415) $ (67) --
Adjusted EBITDA margin.. 44.3% 14.2% 23.1% n.a. n.a. n.a. --
Net loss: .............. (10,527) (24,192) (30,759) (17,214) (1,046) (80)
Cash Flow provided by
(used in):
Operating............. 29,269 (245) 4,632 (9,963) (786) (40) --
Investing............. (44,244) (77,895) (74,088) (58,461) 809 40 --
Financing............. 9,604 81,122 74,976 70,998 -- -- --
Capital expenditures.... $ 44,689 $ 71,824 $ 90,304 $ 50,069 $ 15,478 $ 219 --
Net Pops(5)............. 3,839,000 3,839,000 3,839,000 3,839,000 3,839,000 -- --
Subscribers(5).......... 117,400 60,600 69,500 16,900 -- -- --
Penetration(5)(7)....... 3.1% 1.6% 1.8% 0.4% -- -- --
Churn rate.............. 3.5% 4.0% 4.6% 2.6% -- -- --
Average monthly revenue
per unit (actual
dollars)(8)............ $ 91 $ 94 $ 92 $ 113 -- -- --
Acquisition cost per
cellular customer
(actual dollars)(9).... $ 203 $ 166 $ 164 $ 310 -- -- --
Cell sites(5)........... 125 109 113 74 -- -- --
Retail and service
centers(5)............. 51 35 44 25 -- -- --
</TABLE>
<TABLE>
<CAPTION>
As of February 28, As of May 31,
-------------------- --------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- -------- -------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets............ $ 956,672 $837,056 $847,417 $844,850 $785,812 $844,384 $502,384
Long-term Debt.......... 1,458,857 490,000 510,000 429,000 350,000 350,000 250,000
Redeemable preferred
stock.................. 0 193,539 193,539 193,539 189,930 176,340 163,706
Common stockholders'
equity (deficit)....... (605,800) 51,205 40,409 112,882 160,006 188,831 24,143
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Nine months ended Year ended
February 28, 1999 May 31, 1998
-------------------- --------------------
(Dollars in thousands)
Historical Pro Forma Historical Pro Forma
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Pro Forma Data:
Revenues........................... $262,591 $262,591 $237,501 $ 235,816
Costs and expenses................. 288,797 230,508 250,802 251,552
-------- -------- -------- ---------
Operating income (loss)............ (26,206) 32,083 (13,301) (15,736)
Net loss........................... $(87,263) $(54,931) $(31,947) $(143,411)
======== ======== ======== =========
</TABLE>
- --------
(1) Represents our proportionate share of profits and losses based on our
interest in earnings of limited partnerships controlled and managed by
other cellular operators which we account for on the equity method.
(2) Represents the percentage share of earnings of our consolidated
subsidiaries that is allocable to unaffiliated holders of minority
interests.
(3) For the purposes of determining the 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. The ratio
of earnings to fixed charges is less than one-to-one for all periods
presented and, therefore, earnings are inadequate to cover fixed charges.
The amount by which earnings are less than fixed charges for the nine
months ended February 28, 1999 and 1998 are $56,993 and $39,272,
respectively, and for the years ended May 31, 1998, 1997, 1996, 1995 and
1994 are $45,382, $43,189, $33,412, $47,117 and $39,885, respectively.
(4) Adjusted EBITDA is defined, for any period, as earnings before income from
minority cellular investment interests that are controlled and managed by
third parties, allocations to minority interests in consolidated
subsidiaries, interest expense, interest income, income taxes, depreciation
and amortization, recapitalization costs, extraordinary loss on early
extinguishment of debt and gain on sale of assets. EBITDA is commonly used
to analyze companies on the basis of operating performance, leverage and
liquidity. While Adjusted EBITDA should not be construed as a substitute
for operating income or a better measure of liquidity than cash flow from
operating activities, which are determined in accordance with generally
accepted accounting principles. It is included in this prospectus because
management believes that it provides additional information with respect to
the anticipated ability of Centennial to meet future debt service, capital
expenditures and working capital requirements.
(5) As of period-end.
(6) For the periods ended January 28, 1999 and 1998 and the years ended May 31,
1997 and 1996, the number of Net Pops is based on the 1997 Kagan's Cellular
Telephone Atlas. For the years ended May 31, 1995 and May 31, 1994, the
number of Net Pops is based on 1990 population figures of a metropolitan
service area or a rural service area, as derived from the 1990 U.S. Census
data.
(7) The penetration rate equals the percentage of total population in our
service areas who are subscribers to our cellular service as of period-end.
(8) ARPU is defined as total monthly revenue per average subscriber.
(9) For the year ended as of the date shown. Determined for each period as
total marketing cost plus cost of equipment sales (net of associated
revenue), divided by the total subscriber activations during the fiscal
year.
42
<PAGE>
CENTENNIAL CELLULAR CORP.
CENTENNIAL CELLULAR OPERATING CO. LLC
UNAUDITED PRO FORMA FINANCIAL INFORMATION
We created the following pro forma consolidated financial statements by
making adjustments to our historical consolidated financial statements
incorporated by reference into this prospectus. The unaudited pro forma
statements of operations and other unaudited pro forma supplemental financial
information gives effect to
.financings related to the merger and
. the debt tender offers and the repayment or conversion of our other
existing indebtedness.
The pro forma statements of operations information for the fiscal year
ended May 31, 1998 and the nine months ended February 28, 1999 have been
prepared as if such transactions had occurred on June 1, 1997. The adjustments
are described in the accompanying notes.
You should not consider the pro forma consolidated financial statements
to be indicative of actual results that would have been achieved had the merger
and related transactions been consummated on the date or for the periods
indicated and do not purport to indicate results of operations as of any future
date or for any future period. You should read the pro forma consolidated
financial statements with our historical financial statements and the notes to
the historical financial statements incorporated by reference in this
prospectus.
A pro forma balance sheet as of February 28, 1999 is not presented
because the merger occurred on January 7, 1999.
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 Centennial's assets
and liabilities have not been affected by the transaction.
43
<PAGE>
CENTENNIAL CELLULAR CORP.
CENTENNIAL CELLULAR OPERATING CO. LLC
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended May 31, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma
------------------------
Centennial
Pro Forma Cellular
Historical Adjustments Centennial Operating(a)
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues:
Service revenue.......... $231,097 $ -- $ 231,097 $ 231,097
Equipment sales.......... 4,719 -- 4,719 4,719
Interest income.......... 1,685 (1,685)(b) -- --
-------- --------- --------- ---------
237,501 (1,685) 235,816 235,816
-------- --------- --------- ---------
Cost and expenses:
Cost of cellular
service................. 38,389 -- 38,389 38,389
Cost of equipment sold... 16,429 -- 16,429 16,429
Selling, general and
administrative.......... 81,790 750 (c) 82,540 82,540
Depreciation and
amortization............ 114,194 -- 114,194 114,194
-------- --------- --------- ---------
250,802 750 251,552 251,552
-------- --------- --------- ---------
Operating loss............. (13,301) (2,435) (15,736) (15,736)
Interest expense........... 45,155 109,029 (e) 154,184 131,273
Gain on sale of assets..... 5 -- 5 5
Income from equity
investments............... 13,069 -- 13,069 13,069
-------- --------- --------- ---------
Loss before income tax
benefit and minority
interests................. (45,382) (111,464) (156,846) (133,935)
Income tax benefit......... (13,597) -- (f) (13,597) (13,597)
-------- --------- --------- ---------
Loss before minority
interest.................. (31,785) (111,464) (143,249) (120,338)
Minority income in income
of subsidiaries........... (162) -- (162) (162)
-------- --------- --------- ---------
Net loss................... $(31,947) $(111,464) $(143,411) $(120,500)
======== ========= ========= =========
Dividend on preferred
stock..................... $ 16,451 $ (16,451)(g) -- --
======== ========= ========= =========
Net loss applicable to
common stock.............. $(48,398) $ (95,013) $(143,411) $(120,500)
======== ========= ========= =========
</TABLE>
See Notes to Pro Forma Statements of Operations.
44
<PAGE>
CENTENNIAL CELLULAR CORP.
CENTENNIAL CELLULAR OPERATING CO. LLC
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Nine Months Ended February 28, 1999
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma
-----------------------
Centennial
Pro Forma Cellular
Historical Adjustments Centennial Operating(a)
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues:
Service revenue............ $257,209 $ -- $257,209 $257,209
Equipment sales............ 5,382 -- 5,382 5,382
-------- ------- -------- --------
Revenue...................... 262,591 -- 262,591 262,591
-------- ------- -------- --------
Cost and expenses:
Cost of cellular service... 35,347 -- 35,347 35,347
Cost of equipment sold..... 15,436 -- 15,436 15,436
Selling, general and
administrative............ 81,460 563 (c) 82,023 82,023
Depreciation and
amortization.............. 97,702 -- 97,702 97,702
Recapitalization expenses.... 58,852 (58,852)(d) -- --
-------- ------- -------- --------
288,797 58,289 230,508 230,508
-------- ------- -------- --------
Operating income (loss)...... (26,206) 58,289 32,083 32,083
Interest expense, net........ 48,553 66,483 (e) 115,036 98,456
Gain on sale of assets....... 8,414 -- 8,414 8,414
Income from equity
investments................. 9,352 -- 9,352 9,352
-------- ------- -------- --------
Loss before income tax
benefit and minority
interests................... (56,993) (8,194) (65,187) (48,607)
Income tax benefit........... (10,114) -- (f) (10,114) (10,114)
-------- ------- -------- --------
Income (loss) before minority
interest.................... (46,879) (8,194) (55,073) (38,493)
Minority interest in income
of subsidiaries............. 142 -- 142 142
-------- ------- -------- --------
Loss from continuing
operations.................. $(46,737) $(8,194) $(54,931) $(38,351)
======== ======= ======== ========
Dividend on preferred stock.. $ 9,906 $(9,906)(g) -- --
======== ======= ======== ========
Loss from continuing
operations applicable to
common stock................ $(56,643) $ -- $(54,931) $(38,351)
======== ======= ======== ========
</TABLE>
See Notes to Pro Forma Statements of Operations.
45
<PAGE>
CENTENNIAL CELLULAR CORP.
CENTENNIAL CELLULAR OPERATING CO. LLC
NOTES TO PRO FORMA STATEMENTS OF OPERATIONS
(Dollars in thousands)
We created the following pro forma financial data by making adjustments
to our historical financial statements for the periods noted. The merger has
been accounted for as a recapitalization. Accordingly, the historical basis of
our assets and liabilities have not been affected by the transaction. The pro
forma financial data assume that there were no dissenting stockholders to the
merger.
(a) The pro forma statement of operations of Centennial Cellular
Operating includes all of the same adjustments made for Centennial noted below
except interest expense related to the subordinated notes described in the
table under note (e).
(b) To eliminate interest income on overnight deposits.
(c) Represents estimated monitoring fee to be paid to Welsh Carson and
Blackstone.
(d) The pro forma statements of operations for the year ended May 31,
1998 do not include any adjustments for one-time non-recurring expenses
incurred at the closing of the recapitalization by Centennial and Centennial
Cellular Operating. Such amounts are recorded in the Statement of Operations
for the nine months ended February 28, 1999 and are deducted as an adjustment
in determining pro forma loss for the period.
(e) The pro forma adjustments to interest expense reflect the following:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
May 31, 1998 February 28, 1999
--------------------------------- ---------------------------------
Consolidated Centennial Consolidated Centennial
(including Parent) Rural Cellular (including Parent) Rural Cellular
------------------ -------------- ------------------ --------------
<S> <C> <C> <C> <C>
Credit Facility
Revolving credit
facility(1).......... $ 3,128 $ 3,128 $ 2,346 $ 2,346
Tranche A term
loans(2)............. 43,450 43,450 32,588 32,588
Tranche B term
loans(3)............. 18,380 18,380 13,785 13,785
Tranche C term
loans(4)............. 18,880 18,880 14,160 14,160
Notes issued in the
offering(5)............ 39,775 39,775 29,831 29,831
Notes issued in the WCAS
Capital Partners
financing(6)........... 9,199 -- 8,910 --
Commitment fee(7)....... 570 570 428 428
-------- -------- -------- --------
Cash Interest Expense... 133,382 124,183 102,048 93,138
Notes issued in the WCAS
Capital Partners
Financing(8)........... 11,441 -- 5,967 --
Amortization of discount
on subordinated
notes(9)............... 2,271 -- 1,703 --
Amortization of debt
issuance costs(10)..... 7,090 7,090 5,318 5,318
-------- -------- -------- --------
Pro forma interest
expense................ 154,184 131,273 115,036 98,456
Less: historical
interest expense on
debt repaid(11)........ (45,155) (45,155) (48,553) (48,553)
-------- -------- -------- --------
Total adjustment.... $109,029 $ 86,118 $ 66,483 $ 49,903
======== ======== ======== ========
</TABLE>
46
<PAGE>
- --------
(1) Represents interest on our revolving credit facility using an assumed
interest rate of 8.69%, assuming $36.0 million drawdown at the closing of
the merger.
(2) Represents interest on an assumed $500 million of the under our credit
facility tranche A term loans using an assumed interest rate of 8.69%.
(3) Represents interest on an assumed $200 million of the under our credit
facility tranche B term loans using an assumed interest rate of 9.19%.
(4) Represents interest on an assumed $200 million of the under our credit
facility tranche C term loans using an assumed interest rate of 9.44%.
(5) Represents interest on $370 million of the notes using an interest rate of
10.75%.
(6) Represents cash interest portion of the $180 million (in principal amount
at maturity) of the subordinated discount notes issued to WCAS Capital
Partners III.
(7) Represents a 0.5% commitment fee on the unused portion of our revolving
credit facility.
(8) Represents Paid in Kind portion of the $180 million of subordinated notes
issued in the WCAS Capital Partners financing.
(9) Represents the amortization of the discount ($22.5 million) on the shares
issued to the holder of notes issued to WCAS Capital Partners III.
(10) Represents amortization of deferred financing costs of $60.9 million over
the term of the related debt.
(11) Represents the elimination of historical interest expense.
A 0.125% increase or decrease in the assumed weighted average interest
rate applicable to our credit facility and the notes would change the pro forma
interest expense and income before taxes as follows:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
May 31, 1998 February 28, 1999
------------ -----------------
<S> <C> <C>
Credit facility
Revolving credit facility................. $ 45 $ 34
Tranche A term loans...................... 625 469
Tranche B term loans...................... 250 187
Tranche C term loans...................... 250 187
------ ----
Total................................... $1,170 $877
====== ====
</TABLE>
(f) No net tax benefit is provided for the pro forma adjustments to
earnings before taxes on the assumption that an offsetting increase to the
valuation allowance would be recorded with respect to the resultant tax loss
carryforward asset.
(g) To eliminate dividends on preferred stock redeemed as part of the
merger.
47
<PAGE>
BUSINESS
Centennial Cellular Corp.
Our company is one of the largest independent wireless communications
providers in the United States and Puerto Rico with an adjusted population of
approximately 10.8 million and 426,700 subscribers as of February 28, 1999.
Centennial Rural Cellular serves an adjusted population of 5.8 million and its
service area covers approximately 81,645 square miles. Our subsidiary,
Centennial de Puerto Rico, provides wireless and wireline services over a
common communications network in Puerto Rico. These operations use a personal
communications services license that covers an adjusted population of 3.8
million in Puerto Rico and the U.S. Virgin Islands and a competitive local
exchange carrier license to operate in Puerto Rico. In addition, we own
minority shares, representing an adjusted population of approximately 1.2
million, in other cellular operations controlled and managed by other cellular
operators (referred to as "minority cellular investment interests").
The table below shows certain data for each of our two principal business
segments.
<TABLE>
<CAPTION>
Centennial de Puerto Rico
(Personal communication services
Centennial Rural Cellular wireless and Competitive local
(Cellular services) exchange carrier wireline services)
------------------------------ ------------------------------------------
Year ended Nine months ended Year ended Nine months ended
May 31, 1998 February 28, 1999 May 31, 1998 February 28, 1999
------------ ----------------- ----------------- --------------------
(in millions, except as noted)
<S> <C> <C> <C> <C>
Net Pops................ 5.8 5.8 3.8 3.8
Subscribers (in
thousands)............. 252.7 309.3 69.5 117.4
Penetration............. 4.4% 5.3% 1.8% 3.1%
Revenue................. $182.9 $175.0 $ 54.6 $ 87.6
Adjusted EBITDA......... $ 86.7 $ 91.5 $ 12.5 $ 38.8
Annualized Adjusted
EBITDA................. $ 86.7 $122.0 $ 12.5 $ 51.8
Net loss................ $ (1.2) $(76.7) $ (30.7) $(10.5)
</TABLE>
For the year ended May 31, 1998, our company earned revenue of $237.5
million, representing a compound annual growth rate of 45% over the previous
two fiscal years. Adjusted EBITDA for the year ended May 31, 1998 was $99.2
million, representing a compound annual growth rate of 44% over the previous
two fiscal years. Net loss for the year ended May 31, 1998 was $31.9 million.
The success of our company's operating and financial performance has been
driven by the quality and experience of its management and employees. We expect
to continue to benefit from the experienced members of operating management who
are expected to remain at Centennial Rural Cellular following the merger. This
management team built us through internal growth and acquisitions from an
adjusted population of approximately 1.7 million in 1988 to approximately 10.8
million Net Pops (including those in Puerto Rico and minority cellular
investment interests) as of February 28, 1999. The addition of Michael Small,
formerly the Chief Financial Officer of 360(degrees) Communications Company,
now a subsidiary of ALLTEL Corporation, as our Chief Executive Officer
following the merger complements the existing management team. Rudy J. Graf,
currently President and Chief Executive Officer of Centennial de Puerto Rico,
who was the Chief Operating Officer of Centennial since 1991, manage the day-
to-day operations of Centennial de Puerto Rico, our subsidiary in Puerto Rico.
48
<PAGE>
Rural Cellular Systems
Our domestic consolidated systems are among the leading independent
providers of rural non-wireline cellular telecommunications services. We
believe our rural and small-city cellular systems provide strong growth
opportunities due to lower penetration rates and higher subscriber growth
rates. We focus on underdeveloped rural and small-city cellular areas that have
a significant number of potential customers for wireless communications because
we believe these areas offer:
. Potential Penetration Growth. We believe these areas are in the
early stages of their growth cycles and offer significant
opportunities for increases in penetration and cellular usage;
. Insulation from Potential Competition. These regions are currently
subject to less competition from other wireless providers, such as
personal communications services, as compared to larger metropolitan
service areas, and the population density of these regions suggests
that the build-out of a personal communications services network may
not be economically attractive to competitors at present; and
. Above-Average Revenue per Subscriber. Our domestic markets, which
are strategically located between larger metropolitan areas, tend to
exhibit long commute times and well-traveled roadways that have the
potential to generate high levels of cellular minutes of use and
roaming revenues.
Our domestic cellular interests consist primarily of three operating
clusters:
. Michiana Cluster contains an adjusted population of approximately
3.4 million in Michigan, Ohio and Indiana, covering portions of
three major interstate highways that connect Chicago, Detroit and
Indianapolis.
. East Texas/Louisiana Cluster contains an adjusted population of
approximately 2.1 million, covering portions of interstate highway
I-10, as well as sections of Texas, Louisiana and Mississippi
adjacent to Houston, New Orleans, Shreveport and Baton Rouge.
. Southwestern Cluster contains an adjusted population of
approximately 296,000, covering the Yuma, Arizona and El Centro,
California markets and is bordered by Los Angeles to the northwest,
San Diego to the west, Phoenix to the east and Mexicali, Mexico to
the south.
Our domestic operations have achieved significant increases in revenue,
Adjusted EBITDA and number of subscribers since 1988. For the year ended May
31, 1998, our domestic operations earned revenue of $182.9 million,
representing a compound annual growth rate of 28% over the previous two fiscal
years. Adjusted EBITDA from domestic operations for the year ended May 31, 1998
was $86.7 million, representing a compound annual growth rate of 34% over the
previous two fiscal years. Net loss for the year ended May 31, 1998 was $1.2
million. As of May 31, 1998, our domestic operations had approximately 252,700
subscribers, representing a compound annual growth rate of 37% over the number
of subscribers in the previous two fiscal years.
Puerto Rico Systems
Our Puerto Rico business, which is conducted through our subsidiary in
Puerto Rico, is a facilities-based independent cellular provider of a broad
range of wireless and wireline services in the
49
<PAGE>
Commonwealth of Puerto Rico, an area covering an adjusted population of
approximately 3.8 million. It is (1) the only provider of personal
communications services in the Puerto Rico market, (2) a provider of
facilities-based wireless local loop services to both business and residential
customers, and (3) a provider of local, long distance and enhanced data
services through its subsidiary, Lambda Operations, Inc., which competes with
the incumbent Puerto Rico Telephone Company. We believe that Puerto Rico
represents an attractive market for communications services due to unmet demand
for wireless and local phone service, high population density in the island's
metropolitan areas, a growing economy and a stable business environment.
Our subsidiary in Puerto Rico offers wireless and wireline services using
a shared Lucent Technologies 5 ESS switch and its sophisticated fiber optic
network, which contains over 314 route miles of fiber throughout the island of
Puerto Rico. The digital personal communications services network allows for
coverage in most areas of Puerto Rico using its established base of 120 cell
sites and CDMA technology to transmit its calls.
. Wireless Services. Our subsidiary in Puerto Rico offers both
personal communications services and wireless local loop service to
its customers. Our personal communications services business
currently covers approximately 85% of the total Pops on the island
of Puerto Rico and targets high volume users. We began offering
personal communication services, in December 1996 and as of February
28, 1999 had approximately 99,600 subscribers, an increase of 83%
over our approximately 54,500 subscribers at February 28, 1998. Our
total average revenue per personal communications services customer
was approximately $89 during the nine months ended February 28,
1999, compared to approximately $46 for the average U.S. wireless
customer for the nine months ended September 30, 1998, according to
data from the CTIA. Centennial de Puerto Rico began offering
wireless local loop service to business and residential customers in
August 1997. Our total average revenue per wireless local loop
customer was $94 during the nine months ended February 28, 1999.
This service uses our fully digital CDMA network in Puerto Rico and
had over 17,800 subscribers as of February 28, 1999.
. Wireline Services. Lambda Operations, Inc. provides local, long
distance and enhanced data services (including internet-related
services) to business and government customers over our high
bandwidth, fiber optic network. We believe that our targeted
competitive local exchange carrier customers have sophisticated
communications service requirements, including the need for a
reliable network providing data access and private line services and
high quality customer service. Lambda has grown rapidly since its
inception in September 1997, primarily due to its ability to offer a
broad range of products as well as responsive and reliable service
in an underserved market. Lambda provided approximately 56.9 million
MOUs to its customers in February 1999, an increase of 90% over the
minutes of use provided in May 1998.
Since operations commenced in December 1996, our subsidiary in Puerto
Rico has achieved significant growth in subscribers, revenue and Adjusted
EBITDA, which we attribute to our premium service capabilities, experienced
local management team and limited competition in the region. Revenue for the
fiscal year ended May 31, 1998 was $54.6 million, compared to $5.9 million for
the year ended May 31, 1997. Adjusted EBITDA for the fiscal year ended May 31,
1998 was $12.5 million, compared to an Adjusted EBITDA deficit of $(8.4)
million for the prior period. Net loss for the year ended May 31, 1998 was
$30.8 million. Revenue for the nine months ended February 28,
50
<PAGE>
1999 was $87.6 million. Adjusted EBITDA for the nine months ended February 28,
1999 was $38.8 million or $51.8 million on an annualized basis. Net loss for
the nine months ended February 28, 1999 was $10.5 million.
Additional Information
You can find more information about our business, competition,
regulation, employees, properties and legal proceedings in our
. Annual Report on Form 10-K for the fiscal year ended May 31, 1998,
. Quarterly Reports on Form 10-Q for the quarters ended August 31,
1998, November 30, 1998 and February 28, 1999, and
. Current Reports on Form 8-K filed on July 16, 1998, October 19,
1998, December 7, 1998 and January 22, 1999.
Each of these documents is incorporated by reference into this prospectus. You
can get copies of these documents by contacting us as indicated under "Where
You Can Find More Information" on page 2 of this prospectus.
51
<PAGE>
MANAGEMENT
Directors and Executive Officers
Centennial Cellular Operating
Centennial Cellular Operating is a member-managed limited liability
company organized under Delaware law. The sole member of Centennial Cellular
Operating is Centennial. The executive officers of Centennial Cellular
Operating are identical to and hold identical positions as the persons
identified below as directors and executive officers of Centennial.
Centennial
Executive officers of Centennial are elected annually by the Board of
Directors and serve until their successors are duly elected and qualified.
Centennial has 7 directors. Each director is elected annually and serves until
their successors are duly elected and qualified.
On January 7, 1999, upon the consummation of the merger, the directors
identified below were designated by Welsh Carson VIII and Blackstone and
elected to the Board of Directors. There are no arrangements or understandings
between any officer and any other person pursuant to which the officer was
selected, and there are no family relationships between any executive officers
or any directors of Centennial. The names, ages and positions of the executive
officers and directors of Centennial are listed below along with their business
experience during at least the past five years.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Michael J. Small................. 41 President and Chief Executive Officer
(Centennial) and Director
Rudy J. Graf..................... 50 President and Chief Executive Officer
(Centennial de Puerto Rico) and Director
Peter W. Chehayl................. 51 Senior Vice President, Treasurer and Chief
Financial Officer
Phillip H. Mayberry.............. 46 President--Domestic Operations
Kari L. Jordan................... 45 President--Caribbean Operations
Thomas R. Cogar, Jr. ............ 42 Senior Vice President--Engineering
Michael Marrero.................. 37 Senior Vice President--Engineering (Puerto
Rico)
Thomas E. Bucks.................. 42 Senior Vice President--Controller
John H. Casey, III............... 42 Senior Vice President--Administration
Thomas E. McInerney.............. 57 Director
Anthony J. de Nicola............. 34 Director
Rudolph E. Rupert................ 33 Director
Mark T. Gallogly................. 42 Director
Lawrence H. Guffey............... 30 Director
</TABLE>
In addition to the persons named above, the stockholders of Centennial
will elect two outside directors, who have not yet been designated.
Our directors are elected under a stockholders agreement that is
described in detail under "Certain Relationships and Related Transactions--
Agreements between Centennial Cellular Corp. and Its Stockholders--Stockholders
Agreement" beginning on page 61.
Michael J. Small is President and Chief Executive Officer of Centennial.
Upon the consummation of the merger he became Chief Executive Officer and a
director of Centennial. Prior to joining Centennial, Mr. Small served as
Executive Vice President and Chief Financial Officer of 360(degrees)
Communications Company since 1995. 360(degrees) Communications is now a
subsidiary of ALLTEL Corporation. Before 1995, he served as President of Lynch
Corporation, a diversified acquisition-oriented company with operations in
telecommunications, manufacturing and transportation services.
52
<PAGE>
Rudy J. Graf is President and Chief Executive Officer of Centennial de
Puerto Rico and a director of Centennial. He had been Chief Operating Officer
of Centennial since August 1991, and was Vice President, Operations of
Centennial from November 1990 to August 1991. Before joining Centennial, Mr.
Graf served in various executive capacities, including Regional Vice President
from December 1987 to July 1990 and as Vice President and General Manager from
December 1985 to November 1987 of Metromedia Company, a cellular telephone
company.
Peter W. Chehayl became Senior Vice President, Treasurer and Chief
Financial Officer of Centennial upon the consummation of the Merger. Before
joining Centennial, Mr. Chehayl was the Vice President and Treasurer of
360(degrees) Communications Company (now a subsidiary of ALLTEL Corporation)
since 1996. From 1991 to 1996, he served as Vice President--Capital Markets at
Sprint Corporation.
Phillip H. Mayberry has been President--Domestic Operations of Centennial
since January 1999 and was Senior Vice President--Operations since December
1994. He served as Vice President, Operations of Centennial from April 1990 to
December 1994. From March 1989 to April 1990, Mr. Mayberry was a Vice President
and General Manager of Metro Mobile CTS, Inc., a cellular telephone company.
Kari L. Jordan has been President--Caribbean Operations of Centennial
since January 1999. She joined Centennial in January 1998 as Senior Vice
President of International Operations from PrimeCo where she was responsible
for the operations of the North Texas MTA. From 1990 to January 1997, Ms.
Jordan worked at US Cellular as Vice President of Business Development. During
her tenure at US Cellular, Ms. Jordan also served as Vice President of National
Operations and Regional General Manager.
Thomas R. Cogar, Jr. joined Centennial in September 1990 as Director of
Engineering and has been Senior Vice President, Engineering of Centennial since
August 1991. From May 1987 to September 1990, Mr. Cogar was employed by Metro
Mobile CTS, Inc. in various technical capacities, most recently as Northeast
Manager of Technical Operations.
Michael Marrero has been Senior Vice President--Engineering (Puerto Rico)
of Centennial since April 1997, and was Director of Technical Operations from
April 1995 to April 1997. Prior to joining Centennial, Mr. Marrero served as
the Manager of Strategic Planning for the PRTC from May 1988 to April 1995.
Before 1987, Mr. Marrero served in various capacities at Bell Corp.
Thomas E. Bucks has been Senior Vice President--Controller of Centennial
since March 1995. Before joining Centennial, Mr. Bucks was employed by
Southwestern Bell Corporation in various financial capacities, most recently as
District Manager--Financial Analysis and Planning.
John H. Casey, III has been Senior Vice President--Administration of
Centennial since July 1997 and served as Vice President--Operations from
January 1995 to June 1997. He was a regional manager of Centennial from January
1991 until December 1994. From August 1989 to December 1990, Mr. Casey was
employed by McCaw Cellular One as a district general manager.
Thomas E. McInerney is a director of Centennial Cellular Operating and of
Centennial. He has served as a managing member or general partner of the
respective sole general partners of Welsh Carson VIII and other associated
investment partnerships since 1986. He is a director of The Cerplex Group,
Inc., The BISYS Group, Inc., MedE America Corporation and several private
companies.
53
<PAGE>
Anthony J. de Nicola is a director of Centennial Cellular Operating and
of Centennial. He has served as a managing member or general partner of the
respective sole general partners of Welsh Carson VIII and other associated
investment partnerships since 1994. Previously he worked for William Blair &
Co. for four years financing middle market buyouts. He is a director of MedE
America Corporation and several private companies.
Rudolph E. Rupert is a director of Centennial Cellular Operating and
Centennial. In April, 1999, he became a managing member or general partner at
the respective sole general partners of Welsh Carson VIII and other associated
investment partnerships. He was a Vice President of the investment adviser to
Welsh Carson VIII and other associated investment partnerships from 1997 to
April, 1999. From 1994 to 1997, he worked for three years at General Atlantic
Partners where he was involved in the information technology industry. From
1987 to 1992, he worked for Lazard Freres and Company, initially in the Mergers
and Acquisitions Department and then with Lazard's European leveraged buyout
fund. Mr. Rupert is a director of several private companies.
Mark T. Gallogly is a member of the limited liability company that acts
as the general partner of Blackstone Capital Partners, L.P. and its affiliates.
He is a Senior Managing Director of The Blackstone Group L.P. and has been with
Blackstone since 1989. Mr. Gallogly is a member of the boards of directors of
InterMedia Partners VI, L.P., CommNet Cellular Inc. and TWFanch-One Co.
Lawrence H. Guffey is a Vice President of The Blackstone Group, L.P.,
with which he has been associated since 1991. He is a member of the board of
directors of CommNet Cellular Inc. and TWFanch-One Co.
Committees of the Board
The current members of our board's compensation committee are Thomas E.
McInerney, Anthony J. de Nicola and Mark T. Gallogly. Our compensation
committee makes recommendations to our board of directors concerning the salary
and cash bonus compensation for our chief executive officer and determines the
salary and cash bonus compensation for our other executive officers and senior
management. Our board's compensation committee also administers our employee
stock option plan, other than our 1993 Management Equity Investment Plan. Our
1993 Management Equity Investment Plan is administered by a separate committee
of our board whose membership is the same as our stock option committee. Our
stock option committee makes recommendations to our board of directors, which
determines:
. the recipients of awards under this plan, including the number of shares
awarded and,
. subject to the terms of the plan, the duration of restrictions. Our
compensation committee determines the participants and selects the
recipients of awards or units under our 1991 Employee Stock Purchase
Plan and our 1991 Stock Equivalent Plan and the amount and terms of
compensation granted under each plan. The compensation committee met
once during the fiscal year ended May 31, 1998.
Our board of directors determines the recipients of options under our
1991 Employee Stock Option Plan and the provisions of options granted under
such plan, including the option price, term and number of shares subject to
option. Our employee stock option committee, administers our 1991 Employee
Stock Option Plan subject to the authority and responsibility of the board of
directors. Our employee stock option committee met twice during the fiscal year
ended May 31, 1998.
54
<PAGE>
Our board's audit committee consists of Anthony J. de Nicola, Rudolph E.
Rupert and Lawrence H. Guffey. The audit committee recommends our independent
auditors to our board of directors and reviews the following matters with the
independent auditors:
. scope and results of the independent audits;
. corporate accounting;
. internal accounting control procedures;
. adequacy and appropriateness of financial reporting to shareholders; and
. such other related matters as the audit committee considers to be
appropriate. The audit committee met once during the fiscal year ended
May 31, 1998.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
During the fiscal year ended May 31, 1998, the members of our board's
compensation committee were William M. Kraus and David Z. Rosensweig. Mr.
Rosensweig also served as Secretary of Centennial and Century Communications.
Mr. Rosensweig is a member of Leavy Rosensweig & Hyman, which provides legal
services to Centennial. During fiscal 1998, Centennial paid a total of
approximately $426,000 for legal services and disbursements to Leavy Rosensweig
& Hyman.
Employment Agreements
In connection with the merger, we entered into an employment agreement
with Michael Small, our President and Chief Executive Officer. Mr. Small's base
salary is $250,000 per annum, plus an annual bonus of up to $225,000 subject to
achievement of specified performance targets for fiscal 1999. The initial term
of Mr. Small's employment agreement expires on September 30, 2002, but will
automatically renew for subsequent one-year terms unless either we or Mr. Small
give notice of non-renewal at least 90 days before the expiration of the
renewal term. If we terminate Mr. Small's employment for other than as a result
of his failing to comply with the terms of the employment agreement, or if Mr.
Small terminates his employment with us because we failed to comply with the
agreement, he is entitled to continue to receive his base salary, any bonus
payable with respect to the one-year period following such termination and
other benefits. Mr. Small also received incentive stock options and non-
qualified stock options to purchase an aggregate 405,000 Centennial common
shares, vesting over four years beginning with the fiscal year ended May 31,
1999 if we attain certain Adjusted EBITDA targets. If the performance targets
are not met, Mr. Small's stock options will vest over four years commencing
January 7, 2006. These stock options are subject to accelerated vesting if Mr.
Small's employment is terminated other than as a result of his failing to
comply with the terms of the employment agreement or if he quits other than
because we failed to comply with the agreement following a change of control of
our company. During the employment term and for a period of one year following
the termination of his employment, except if he quits other than because we
failed to comply with the agreement, Mr. Small is subject to non-competition
and non-solicitation provisions.
In connection with the merger, we entered into an employment agreement
with Rudy J. Graf, the President and Chief Executive Officer of our Puerto
Rican subsidiary. Mr. Graf's base salary is $226,800 per annum, plus an annual
bonus of up to $200,000 subject to achievement of specified performance targets
for fiscal 1999. The term of Mr. Graf's employment agreement expired on
55
<PAGE>
May 31, 1999. If we terminate Mr. Graf's employment for other than as a result
of his failing to comply with the terms of the employment agreement, he is
entitled to receive his base salary for the remainder of the employment term
and any bonus payable for the 1999 fiscal year. On January 7, 2006, Mr. Graf
will receive 51,726 Centennial common shares subject to the terms of a
restricted stock purchase agreement. Mr. Graf will also receive incentive stock
options and non-qualified stock options to purchase an aggregate 390,000
Centennial common shares, vesting over four years beginning with the fiscal
year ended May 31, 1999 if Centennial attains specified Adjusted EBITDA
targets. If such targets are not met, the stock options will vest over four
years commencing on January 7, 2006. During the employment term and for a
period of two years following the termination of his employment, Mr. Graf is
subject to non-competition and non-solicitation provisions.
Peter Chehayl is employed by us as our Senior Vice President and Chief
Financial Officer. Mr. Chehayl's base salary is $165,000 per annum, plus an
annual bonus of up to $90,000. He is also eligible for options to purchase
75,000 Centennial common shares.
Director Compensation
Centennial Cellular Operating. None of the directors of Centennial
Cellular Operating will receive any remuneration from Centennial Cellular
Operating for their attendance at board and committee meetings during 1999.
Centennial. During the fiscal year ended May 31, 1998, each of our
directors who was not also an employee of our company received quarterly
retainers of $3,000 plus a uniform fee of $750 for each board and committee
meeting attended. In addition, options for 1,000 shares of Centennial common
shares were automatically granted under the 1993 Non-Employee/Officer
Directors' Stock Option Plan to each director who was not an employee on the
date of each annual meeting of our shareholders. During such period, our
directors who were also employees of our company received no remuneration for
attendance at board and committee meetings.
Our directors who are not employees receive compensation that is in
accordance with the Welsh Carson and Blackstone's customary practices and
consistent with compensation paid to directors in comparable public companies.
Additional Information
You can find more information about our executive compensation and
various benefit plans in our
. Annual Report on Form 10-K for the fiscal year ended May 31, 1998,
. Quarterly Reports on Form 10-Q for the quarters ended August 31,
1998, November 30, 1998 and February 28, 1999,
. Proxy Statement for the Annual Meeting of Stockholders filed on
November 28, 1998,
. Information Statement filed on December 8, 1998, and
. Current Reports on Form 8-K filed on July 16, 1998, October 19,
1998, December 7, 1998 and January 22, 1999.
Each of these documents is incorporated by reference into this prospectus. You
can get copies of these documents by contacting us as indicated under "Where
You Can Find More Information" on page 2 of this prospectus.
56
<PAGE>
PRINCIPAL STOCKHOLDERS
After the merger and related transactions, all of the issued and
outstanding capital stock of Centennial Cellular Operating is owned by
Centennial. The table below contains information regarding the beneficial
ownership of Centennial's common shares as of January 7, 1999 by
. each stockholder who owns beneficially five percent or more of
Centennial's common shares,
. each director of Centennial,
. each executive officer and
. all directors and officers as a group.
The number of shares beneficially owned by each stockholder, director or
officer is determined according to the rules of the SEC, and the information is
not necessarily indicative of beneficial ownership for any other purpose. Under
current rules, beneficial ownership includes any shares as to which the
individual or entity has sole or shared voting power or investment power. As a
consequence, several persons may be deemed to be the "beneficial owners" of the
same shares. Unless otherwise noted in the footnotes to this table, each of the
stockholders named in this table has sole voting and investment power with
respect to the Centennial common shares shown as beneficially owned. The
percentage ownership of each stockholder is calculated based on 31,125,579
common shares outstanding (after giving effect to a three-for-one stock split
effected on January 8, 1999).
<TABLE>
<CAPTION>
Beneficial Ownership
Immediately After Merger
------------------------------
Name and Address Amount Percentage
---------------- --------------- --------------
<S> <C> <C>
Welsh, Carson, Anderson & Stowe VIII,
L.P.(1)..................................... 17,249,026 55.4%
WCAS Capital Partners III, L.P.(1)........... 1,626,507 5.2
Blackstone Investors(2)...................... 9,390,681 30.2
Thomas E. McInerney(1)....................... 155,328 *
Anthony J. de Nicola(1)...................... 13,644 *
Rudolph E. Rupert(1)......................... 13,644 *
Michael J. Small............................. 30,000 *
Rudy J. Graf................................. 16,842 *
Peter Chehayl................................ 7,500 *
Phillip Mayberry............................. 8,718 *
Thomas Cogar................................. 5,676 *
Thomas E. Bucks.............................. 1,860 *
John Casey................................... -- --
Mark T. Gallogly(2).......................... -- --
Lawrence H. Guffey(2)........................ -- --
All directors and executive officers as a
group (12 individuals)...................... 70,596 *
</TABLE>
- --------
* Less than one percent.
(1) The address for Welsh, Carson, Anderson & Stowe VIII, L.P. and WCAS Capital
Partners III, L.P. is 320 Park Avenue, Suite 2500, New York, New York
10022. Certain of the shares reflected as owned by Welsh, Carson, Anderson
& Stowe VIII, L.P. are owned beneficially and of record by Welsh, Carson,
Anderson & Stowe VII, L.P. (1,944,351), WCAS Information Partners, P.
(68,223) and WCA Management Corporation (170,556), limited partnerships and
corporations affiliated with Welsh, Carson, Anderson & Stowe VIII, L.P. Up
to an aggregate 862,452 shares included as beneficially owned by Welsh,
Carson, Anderson & Stowe VIII, L.P.
57
<PAGE>
are owned beneficially and of record by individuals who are members of the
limited liability company that serves as its sole general partner, including
Messrs. McInerney and de Nicola, and individuals employed by its investment
advisor, including Mr. Rupert. Messrs. McInerney, de Nicola and Rupert may
be deemed to share beneficial ownership of the shares owned by Welsh,
Carson, Anderson & Stowe VIII, L.P., and disclaim beneficial ownership of
such shares except to the extent owned of record by them.
(2) The total number of shares beneficially owned by Blackstone Investors are
owned by Blackstone CCC Capital Partners L.P. (7,471,074), Blackstone CCC
Offshore Capital Partners L.P. (1,356,165) and Blackstone Family Investment
Partnership III L.P. (563,442). Blackstone Management Association III
L.L.C. ("BMA") is the general partner of each of these partnerships, and
Messrs. Peter G. Peterson and Stephen A. Schwarzman, as the founding
members of BMA, may be deemed to share, together with BMA, beneficial
ownership of such shares. The address of the Blackstone Investors, BMA and
Messrs. Peterson and Schwarzman is c/o The Blackstone Group, 345 Park
Avenue, New York, New York 10154. Mr. Gallogly, who is a member of BMA, and
Mr. Guffey, who is an employee of certain affiliates of BMA, disclaim
beneficial ownership of such shares.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Agreements Between Centennial Cellular Corp. and Its Stockholders
Securities Purchase Agreement. On December 29, 1998, CCW Acquisition
Corp. entered into a securities purchase agreement with a group of investors
lead by Welsh, Carson, Anderson & Stowe and The Blackstone Group. This
investor group included Messrs. Michael J. Small, Peter W. Chehayl and Edward
G. Owen, three of our current officers, and an individual retirement account
for the benefit of Michael J. Small. The securities purchase agreement
outlined the terms of our principal stockholders' initial investment in our
company.
On January 7, 1999, immediately before the merger was completed, each of
the following transactions took place:
(1) a group of investors consisting of
.Welsh, Carson, Anderson and Stowe VIII, L.P.,
.Welsh, Carson, Anderson and Stowe VII, L.P.,
.WCAS Information Partners, L.P.,
.WCA Management Corporation,
. thirteen investment professionals employed by WCA
Management Corporation, and
. three trusts for the benefit of family members of one of
these investment professionals
purchased a total of $255.3 million of Class A common shares
from CCW Acquisition Corp. at a price of $14.6578 per share,
(2) three investment funds controlled by The Blackstone Group
purchased a total of $137.6 million of Class A common shares from
CCW Acquisition Corp. at a price of $43.9735 per share,
(3) Michael J. Small and an individual retirement account for his
benefit purchased a total of approximately $440,000 of Class A
common shares from CCW Acquisition Corp. at a price of $14.6578 per
share,
(4) Peter W. Chehayl purchased approximately $110,000 of Class A
common shares from CCW Acquisition Corp. at a price of $14.6578 per
share,
(6) Edward G. Owen purchased approximately $220,000 of Class A
common shares from CCW Acquisition Corp. at a price of $14.6578 per
share,
(7) WCAS Capital Partners III, L.P. purchased from our company for
$180 million, a senior subordinated note due 2009 with a face value
of $180 million and 542,169 shares of our Class A common shares, and
(8) CCW Acquisition Corp. and the principal stockholders of our
company entered into the stockholders and registration rights
agreements described below.
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In addition, on January 7, 1999, as required by the securities purchase
agreement,
(1) we paid a consummation fee of approximately $10.7 million to
WCA Management Corporation,
(2) we paid a consummation fee of approximately $3.3 million to
Blackstone Management Partners III, L.L.C., and
(3) in connection with
. the due diligence investigation conducted by and on behalf
of the stockholders of CCW Acquisition Corp. prior to the
merger, and
. the negotiation and preparation of the merger agreement,
the agreements related to the financing of the merger, the
securities purchase agreement, stockholders agreement and
registration rights agreement,
we paid approximately
. $400,000 to the Welsh Carson investors and $200,000 to The
Blackstone Group investors as reimbursement for their out-
of-pocket expenses, and
. $13.9 million to various law firms, accountants and
investment banks on behalf of the Welsh Carson investors
and The Blackstone Group investors.
When CCW Acquisition Corp. was merged with our company on January 7, 1999, we
succeeded to all of the rights and obligations of CCW Acquisition Corp. under
the securities purchase agreement.
Stockholders's Agreements. On January 7, 1999 each of the stockholders of
CCW Acquisition Corp. who purchased shares under the securities purchase
agreement and CCW Acquisition Corp. entered into a stockholders agreement. The
stockholders agreement became our obligation when we merged with CCW
Acquisition Corp. on January 7, 1999. The original stockholders agreement was
superceded by a first amended and restated stockholders agreement on January
20, 1999 in connection with the transfer by WCA Management Corporation of its
equity interest in our company to another investment fund.
Under the amended and restated stockholders agreement, our principal
stockholders have agreed to establish and maintain for our company a board of
directors consisting of nine members. Our directors are elected as described
below.
. So long as the Welsh Carson investors own 25% of the Class A common
shares purchased by them on January 7, 1999, they can elect three
directors. Currently Thomas E. McInerney, Anthony J. de Nicola and
Rudolph E. Rupert serve as the Welsh, Carson investors' board
representatives. The chairman of our board of directors, who is
currently Thomas E. McInerney, is selected by the Welsh Carson
investors.
. So long as The Blackstone Group investors own 25% of the Class A
common shares purchased by them on January 7, 1999, they can elect
two directors. Currently Mark T. Gallogly and Lawrence H. Guffey
serve as The Blackstone Group investors' board representatives.
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. Our Chief Executive Officer (Centennial), who is currently Michael J.
Small, serves on our board of directors.
. Our Chief Executive Officer (Centennial de Puerto Rico), who is
currently Rudy Graf, serves on our board of directors.
. The remaining two directors are elected by all of our stockholders,
including our principal stockholders. These outside directors must be
qualified as outside directors under NASDAQ rules and cannot be
members of our management or affiliated with any of our stockholders
who are party to the amended and restated stockholders agreement.
The amended and restated stockholders agreement calls for the creation of
the following board committees:
. A compensation committee consisting of three directors. Two of the
committee members are selected by the Welsh Carson investors and one
is selected by The Blackstone Group investors.
. An audit committee consisting of three directors. One audit committee
member is selected by the Welsh Carson investors, one is selected by
The Blackstone Group investors and one is required to be an outside
director.
The amended and restated stockholders agreement requires that each other
committee of our board of directors consist of at least two members, one of
whom is selected by the Welsh Carson investors and one of whom is selected by
The Blackstone Group investors.
The amended and restated stockholders agreement places restrictions on
the ability of Messrs. Small, Chehayl and Owen to transfer shares of Class A
common stock owned in their names or on their behalf without the consent of the
Welsh Carson investors. Exceptions have been made for transfers in registered
public offerings or to their spouses or children or to family trusts. In
addition, the amended and restated stockholders agreement allows the Welsh
Carson investors to repurchase at fair market value any shares owned by any of
these management investors at the time of the termination of their employment
with our company.
The amended and restated stockholders agreement grants The Blackstone
Group investors, Messrs. Small, Chehayl and Owen and two other stockholders the
right to participate in any sale of Class A common shares by any of the Welsh
Carson investors. These co-sale provisions do not apply to transfers by Welsh
Carson investors to affiliates, transfers by any of the Welsh Carson investors
that are limited partnerships to their limited partners and transfers by Welsh
Carson investors that are individuals to their spouses or children or to family
trusts.
The amended and restated stockholders agreement grants the Welsh Carson
investors the right to require
. The Blackstone Group investors,
. Messrs. Small, Chehayl and Owen, and
. two other stockholders of our company
to sell their shares of Class A common stock to a third party who offers to buy
at least 80% of the capital stock of the company. The sale of the company must
be for cash or marketable securities and
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must require that we pay the fees and expenses of the selling stockholders.
This right will terminate if and when The Blackstone Group investors own more
shares of Class A common stock than the Welsh Carson investors.
We have granted preemptive rights to
. the Welsh Carson investors,
. The Blackstone Group investors,
. Messrs. Small, Chehayl and Owen, and
. two other stockholders of our company.
These preemptive rights apply to any sale by us of common shares or securities
convertible into or exchangeable for common shares such as convertible debt,
options or warrants. Issuances of employee stock options and registered public
offerings are excluded from the preemptive rights provisions of the amended and
restated stockholders agreement.
The amended and restated stockholders agreement grants to the Welsh
Carson investors a right of first offer that applies to sales of Class A common
shares by The Blackstone Group investors. In other words, if any of The
Blackstone Group investors wishes to sell it shares, it must first allow the
Welsh Carson investors to make an offer to purchase the shares. If an offer is
made by any of the Welsh Carson investors, The Blackstone Group investors
cannot sell the shares to a third party on material terms which are the same
as, or more favorable, in the aggregate, to, the terms offered by the Welsh,
Carson investors for the shares. This right of first offer does apply to sales
by The Blackstone Group investors to their affiliates, sales pursuant to
registered public offerings or sales in compliance with Rule 144 under the
Securities Act or distributions by any of The Blackstone Group investors which
are limited partnerships to their limited partners.
Our company has agreed not to take any of the following actions without
the approval of the Welsh Carson investors and The Blackstone Group investors
until the amended and restated stockholders agreement is terminated:
(1) amend, alter or repeal our certificate of incorporation or our by-
laws in any manner that adversely affects
.the rights of the holders of out Class A common stock generally, or
. the rights of the stockholders party to the amended and restated
stockholders agreement,
(2) enter into, or permit any of our subsidiaries to enter into, any
transaction, other than
. normal employment arrangements, benefit programs and employee
incentive option programs on reasonable terms,
. any transaction with a director that is approved by our board of
directors in accordance with Delaware law,
. customer transactions in the ordinary course of business, and
. the transactions contemplated by the amended and restated
registration rights agreement described below.
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with
. any of our subsidiaries's officers, directors or employees,
. any person related by blood or marriage to any of our
subsidiaries's officers, directors or employees,
. any entity in which any of our subsidiaries's officers, directors
or employees owns any beneficial interest,
. any stockholder of our company that owns, directly or indirectly,
at least 25% of our outstanding capital stock or any affiliate of
any 25% stockholder of our company.
Under the amended and restated stockholders agreement, each of
. Welsh Carson investors,
. The Blackstone Group investors,
. Messrs. Small, Chehayl and Owen, and
. two of our other stockholders
have agreed not to, and agreed to cause their affiliates not to, directly or
indirectly, alone or in concert with others, without the prior written consent
of the Welsh Carson investors, take any of the following actions:
(1) effect, seek, offer, engage in, propose or participate in:
.any acquisition of beneficial ownership of our equity or debt
securities other than
(a) pursuant to the preemptive rights granted under the
amended and restated stockholders agreement,
(b) acquisitions from other stockholders who have signed the
amended and restated stockholders agreement or
(c) any stock dividend, stock reclassification or other
distribution or dividends to the holders of our Class A
common stock generally,
. any extraordinary transaction such as a merger or tender offer
involving our company or any material portion of our business,
. any solicitation of proxies with respect to our company or any
action resulting in any stockholder party to the amended and
restated stockholders agreement or any of its affiliates
becoming a participant in any board of director election
contest with respect to our company,
. propose any matter for submission to a vote of stockholders of
our company,
. seek to remove or appoint directors of our company outside of
the provisions of the amended and restated stockholders
agreement, or
. form, join or in any way participate in or assist in the
formation of a group of two or more persons for the purposes
of acquiring, holding, voting, or disposing of equity
securities of our company, other than any group consisting
exclusively of stockholders who have signed the amended and
restated stockholders agreement and their affiliates.
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Under the amended and restated stockholders agreement we are required to
pay WCA Management Corporation an annual monitoring fee of $450,000 plus
reasonable expenses and Blackstone Management Partners III, L.L.C. an annual
monitoring fee of $300,000 plus reasonable expenses. We are no longer required
to pay these management fees if either the Welsh Carson investors or The
Blackstone Group investors sells 75% of the shares purchased by them on January
7, 1999.
All of the provisions of the amended and restated stockholders agreement
that are described above, other than the provisions governing the election of
our board of directors and the composition of its committees, will terminate
upon the earlier to occur of
. the completion of a registered public offering of common stock
raising not less than $50 million for our company, and
. the transfer by either the Welsh Carson investors or The
Blackstone Group investors of 50% or more of the shares of
Class A common stock purchased by them on January 7, 1999.
The provisions of the amended and restated stockholders agreement
governing the election of our board of directors and the composition of its
committees, will terminate upon the earlier to occur of
. the completion of a registered public offering of common stock
raising not less than $50 million for our company, and
. the transfer by both the Welsh, Carson investors or The
Blackstone Group investors of 50% or more of the shares of
Class A common stock purchased by them on January 7, 1999.
Registration Rights Agreements. On January 7, 1999 each of the
stockholders of CCW Acquisition Corp. who purchased shares under the securities
purchase agreement and CCW Acquisition Corp. entered into a registration rights
agreement. The registration rights agreement became our obligation when we
merged with CCW Acquisition Corp. on January 7, 1999. The original registration
rights agreement was superceded by a first amended and restated registration
rights agreement on January 20, 1999 in connection with the transfer by WCA
Management Corporation of its equity interest in our company to another
investment fund.
The amended and restated registration rights agreement grants the Welsh
Carson investors and The Blackstone Group investors the right to require our
company to register their shares of Class A common stock under the Securities
Act at any time on or after January 7, 2002. The amended and restated
registration rights agreement grants each of the following persons the right to
include, at their request, shares of Class A common stock owned by them in
registrations under the Securities Act by our company
.each of the Welsh Carson investors,
.each of The Blackstone Group investors,
.Messrs. Small, Chehayl and Graf, and
.two of our other stockholders.
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Former Indebtedness of Certain Executive Officers
During fiscal 1998, Thomas R. Cogar, Vice President of Engineering of
Centennial received a relocation loan from Centennial of approximately $65,000
and John H. Casey, Vice President--Administration of Centennial received a
relocation and temporary house loan of approximately $200,000. The loans bore
interest at the rate of 5.0 % annually and have been repaid in full.
Arrangements with Former Controlling Stockholder
At the time of the merger, Century entered into a non-compete agreement
with Centennial, in which Century agreed that, until January 7, 2002, it will
not engage in, or acquire a controlling interest in, any business that competes
with any of Centennial's current operations in Puerto Rico. This agreement does
not extend to the activities of Century's existing joint venture in Puerto
Rico, Century-ML.
Century owned a controlling interest in Centennial prior to the merger.
Before the merger Centennial and Century maintained combined workers
compensation and general insurance policies. The premiums were allocated
between Centennial and Century based upon the actual cost of each respective
company's coverage. Centennial believes that the amounts payable by Centennial
under this arrangement were more favorable than the premiums Centennial would
have paid if it had obtained coverage under a separate policy. Centennial's
cost of such insurance was approximately $0.6 million, $0.7 million and $1.7
million for the fiscal years ended May 31, 1998, 1997 and 1996, respectively.
All of these costs were paid in full during the current fiscal year. In fiscal
1996, Centennial and Century also maintained combined group health, life and
casualty coverage. Under the merger agreement, Centennial has covenanted to
maintain employee benefits and incentive compensation that are no less
favorable than its existing arrangements at least until January 2002.
Centennial and Century entered into a services agreement, effective
August 30, 1996, pursuant to which Century, through its personnel, provides
design, construction, management, operational, technical and maintenance for
the wireless telephone, paging and related systems owned and operated by
Centennial. Such services also include providing all the services necessary for
the monitoring, to the extent possible, of the activities of the partnerships
in which Centennial has minority equity interests, in such manner as to protect
the interests of Centennial. Such services have historically been provided to
Centennial by Century. As consideration for the services rendered under the
services agreement, Centennial paid Century the annual sum of $1.0 million and
reimbursed Century for all costs incurred by Century or its affiliates
(excluding Centennial and its subsidiaries) that were directly attributable to
the design, construction, management, operation and maintenance of the wireless
telephone, paging and related systems of Centennial or to the performance by
Century of its other duties under the services agreement. For the years ended
May 31, 1998 and 1997, Centennial recorded expenses of $1.0 million and $0.8
million, respectively, under the services agreement. At May 31, 1998 and 1997,
$0.3 million and $0.8 million, respectively, of such amounts were recorded
within Payable to Affiliate on Centennial's consolidated balance sheet. As of
the effective time of the merger, Century and Centennial terminated the
services agreement.
Centennial leases space for the mobile telephone switching office serving
the southwestern cluster and space on an antenna tower in the southwestern
cluster from Century for an aggregate current annual rent of approximately
$1,000 pursuant to an oral month-to-month lease agreement. Further, Centennial
leases certain warehouse space in Puerto Rico to Century-ML for a current
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annual rent of approximately $23,000 pursuant to a written lease agreement.
Centennial leases and shares capacity on the fiber optic cable television
facility and network of Century-ML fiber network for the purposes of operating
as a competitive access provider. Centennial shares the cost of construction,
operation and maintenance of the Century-ML fiber network on a pro rata basis
based on the percentage of the number of fibers of the network used by or
reserved for Centennial.
During fiscal 1997, Centennial recorded a deferred asset and related
payable to an affiliate in its consolidated balance sheet in the amount of $6.0
million to reflect certain costs incurred by Centennial to secure the use of
the fiber optic network as required by the facilities agreement. This amount,
which was paid by Centennial during fiscal 1998, represents Centennial's share
of the costs of constructing Century-ML's fiber optic network.
Leavy Rosensweig & Hyman, of which David Z. Rosensweig, a director and
Secretary of Centennial prior to the merger, is a member, provides legal
services to Centennial.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The Credit Facility
In connection with the merger, Centennial and some of its subsidiaries
entered into the credit facility with Merrill Lynch Capital Corporation,
NationsBank, N.A., The Chase Manhattan Bank, The Bank of Nova Scotia and Morgan
Stanley Senior Funding, Inc. and other financial institutions, pursuant to
which those lenders provided credit facilities to certain of Centennial's
subsidiaries. The following is a summary of the terms and conditions of each
credit facility.
The Borrowers. The borrowers under our credit facility are Centennial
Cellular Operating, a wholly owned direct subsidiary of Centennial, and
Centennial de Puerto Rico, a wholly owned direct subsidiary of Centennial
Cellular Operating.
The Facility. Our credit facility consists of three term loans in
aggregate principal amount of $900.0 million and a revolving credit facility in
an aggregate principal amount of up to $150.0 million. The borrowers under
these facilities are Centennial Cellular Operating and, for $125.0 million of
the term loans and up to $60.0 million of the revolving credit facility,
Centennial de Puerto Rico, our subsidiary in Puerto Rico. At the time of the
merger, Centennial de Puerto Rico borrowed $36.0 million under the credit
facility.
Use of Credit Facility Proceeds. The proceeds of our credit facility were
used, together with other proceeds of the financings related to the merger, to
fund payment of cash consideration in the merger, repay Centennial's
indebtedness, including the purchase of the tendered notes in the debt tender
offers, pay the related fees and expenses and purchase the pledged securities.
In addition, the revolving credit facility is available subject to the
conditions in the credit facility to finance future working capital needs,
capital expenditures, permitted acquisitions, and for general corporate
purposes.
Under certain circumstances, the credit facility may be increased by up
to $150 million in aggregate principal amount, upon terms and conditions no
more onerous than those contained in the credit facility.
Availability of Loans. The revolving credit loans are available in a
principal amount not to exceed $65 million on a revolving basis until 30 days
prior to the maturity of the revolving credit loans. Up to $25 million of the
revolving credit facility is available for the issuance of letters of credit
and up to $30 million of the revolving credit facility is available for swing
loans.
Maturity of Loans. The revolving credit commitments will be reduced
quarterly beginning on February 28, 2002 in amounts to amortize the commitments
until the revolving credit facility matures on January 7, 2008. The term loans
consist of four tranches and amortize over eight years for tranche A term
loans, eight years for tranche A term loans to Centennial do Puerto Rico eight
and one-half years for tranche B term loans and nine years for tranche C term
loans.
Prepayments. Borrowings and commitments under our credit facility are
subject to mandatory prepayment and reduction in an amount equal to (a) 100% of
the net proceeds of asset dispositions, including insurance proceeds resulting
from casualty to assets, subject to the borrower's ability to reinvest such
proceeds under certain circumstances, (b) 75% of excess cash flow, reduced to
50% with respect to any fiscal year if the ratio of total debt to operating
cash flow) is less than
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6.0:1.0, (c) 100% of the net proceeds of the issuance or incurrence of debt or
of any sale and lease-back, and (d) 50% of the net proceeds of any issuance of
equity securities. Voluntary prepayment of the loans will be permitted in whole
or in part with prior notice. The revolving credit loans and the tranche A and
tranche A loans to Centennial de Puerto Rico are subject to prepayment without
premium or penalty, other than funding losses, subject to limitations as to
minimum amounts. The tranche B and tranche C loans are subject to prepayment
(x) on or prior to the first anniversary of the closing of the credit facility,
with a premium of 2% of the aggregate principal amount of loans prepaid, (y)
after the first anniversary of the closing of the credit facility and on or
prior to the second anniversary of the closing of the credit facility, with a
premium of 1% of the aggregate principal amount of loans prepaid and (z)
thereafter, without premium or penalty, other than funding losses, subject to
limitations as to minimum amounts.
Interest Rates. Borrowings under our credit facility bear interest at a
rate per annum of, at the borrowers' option, either (a) the higher of (1) the
announced prime rate of NationsBank, and (2) the federal funds rate, plus
0.50%, plus the Applicable Margin (as defined) or (b) a LIBOR rate plus the
Applicable Margin. The maximum Applicable Margin for the tranche A loans,
tranche A loans to Centennial de Puerto Rico and the revolving credit loans is
2.00% for base rate loans and 3.00% for LIBOR loans, for the tranche B loans
will be 2.50% for base rate loans and 3.50% for LIBOR loans, and for the
tranche C loans will be 2.75% for base rate loans and 3.75% for LIBOR loans.
Based upon Centennial Cellular Operating's leverage ratio after the delivery of
certain financial statements after July 7, 1999, the Applicable Margin for
tranche A loans, tranche A loans to Centennial de Puerto Rico and revolving
credit loans may be reduced by up to 1.250% for base rate loans and LIBOR
loans. The default rate under our credit facility is 2.00% above the otherwise
applicable rate.
Fees and Expenses. Our credit facility requires the borrower to pay (a)
commitment fees to the Lenders in an amount equal to 0.50% or 0.375% per annum
on the unused commitment under the revolving credit facility, depending on
Centennial Cellular Operating's leverage ratio, and (b) an administrative
agent's fee of $150,000 on January 7, 2000. Additionally, the borrowers paid
various fees and costs in connection with the credit facility, including
commitment fees and underwriting fees to Merrill Lynch Capital, NationsBank,
Chase, Nova Scotia, and Morgan Stanley.
Guarantees. Centennial and each of Centennial Cellular Operating's direct
and indirect existing and future subsidiaries, other than foreign subsidiaries,
will be required to guarantee Centennial Cellular Operating's obligations under
the credit facility, and Centennial Cellular Operating and Centennial de Puerto
Rico's direct and indirect existing and future subsidiaries were required to
guarantee Centennial de Puerto Rico's obligations under our credit facility.
Security. The obligations of Centennial Cellular Operating under our
credit facility are secured by substantially all of the assets of Centennial
and each of its direct and indirect existing and future subsidiaries, other
than foreign subsidiaries, including the capital stock of such subsidiaries,
and the obligations of Centennial de Puerto Rico under the credit facility are
secured by substantially all of the assets of Centennial de Puerto Rico and
each of its direct and indirect existing and future subsidiaries, including the
capital stock of such subsidiaries.
In addition, Centennial guaranteed our credit facility and pledged as
security for Centennial Cellular Operating's obligations the capital stock of
Centennial Cellular Operating to the Lenders under the credit facility. The
pledge of that capital stock of Centennial Cellular Operating could impair
Centennial Cellular Operating's ability to obtain future financing on favorable
terms, if at all.
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Further, in the event Centennial Cellular Operating were to default on its
obligations under the credit facility and the lenders were to foreclose upon
such pledged capital stock of Centennial Cellular Operating, Centennial, as the
holding company of Centennial Cellular Operating, would likely be unable to
service or repay its indebtedness, including the notes.
Representations and Warranties. Our credit facility contains
representations and warranties customarily found in loan agreements for similar
financings.
Affirmative Covenants. Our credit facility contains affirmative
covenants customarily found in loan agreements for similar financings.
Centennial Cellular Operating is required to enter into interest rate hedging
agreements with respect to 50% of the indebtedness under the credit facility
for a period of time satisfactory to the lenders.
Negative Covenants. Our credit facility contains customary restrictive
covenants, including covenants that limit, subject to certain exceptions the
ability of the Centennial Cellular Operating and its subsidiaries to:
. incur indebtedness or contingent obligations, issue guarantees or
enter into operating leases,
. grant liens or negative pledges,
. make investments or enter into joint ventures,
. make certain restricted payments,
. make fundamental changes in their business, corporate structure or
capital structure,
. sell assets or receivables,
. make capital expenditures,
. enter into transactions with affiliates,
. amend documents relating to other existing indebtedness and other
material documents, or
. prepay other indebtedness.
Financial Covenants. Our credit facility contains financial covenants
relating to:
. minimum interest coverage ratio,
. minimum fixed charge coverage ratio,
. maximum ratio of total debt to operating cash flow,
. maximum ratio of senior debt to operating cash flow,
. minimum pro forma debt service coverage ratio, and
. limitation on capital expenditures.
Events of Default. Our credit facility includes standard events of
default, including, subject to certain exceptions, those related to:
. default in the payment of principal and interest,
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. cross-default in payment of other indebtedness of more than $10.0
million,
. materially incorrect representations and warranties,
. default in the observance or performance of any of the affirmative
or negative covenants included in the credit facility documentation
or in the related security and pledge documents,
. the failure to or admission in writing of an inability to pay debts
when such debts become due,
. certain events of bankruptcy,
. certain judgments or decrees involving more than $10.0 million,
. certain ERISA events,
. a change of control,
. the failure of the applicable credit facility documents or any
material provision thereof, the guarantees, security documents or
any related documents to be in full force and effect,
. certain non-monetary judgments or decrees which might have a
material effect,
. the termination, revocation or nonrenewal of one or more cellular
licenses if such termination, revocation or nonrenewal will have a
material effect, and
. the failure of the merger to be consummated substantially concurrent
with the extension of credit under the credit facilities.
Subordinated Debt
As part of the mezzanine financing, WCAS Capital Partners III, L.P., an
investment partnership affiliated with Welsh Carson VII, purchased at the time
of the consummation of the merger, a Senior Subordinated Note of Centennial due
2009 in the original principal amount of $180 million, as well as 1,626,504
Centennial common shares, for an aggregate cash purchase price of $180 million.
The Senior Subordinated Note bears cash interest at a rate of 10% or pay-in-
kind interest at a rate of 13% per annum. Centennial Cellular Operating is
restricted from making cash payments to Centennial to service the debt under
certain circumstances under the notes and the credit facility. See "Description
of the New Notes--Covenants--Limitation on Restricted Payments."
The Senior Subordinated Note is prepayable at Centennial's option and
must, subject to the terms of the indenture for the notes and the credit
facility be prepaid in the event of a "Change in Control," defined as:
. the acquisition by a person or group acting together, other than the
equity investors and their affiliates of either at least 50% of the
voting stock of Centennial or sufficient voting power to elect a
majority of the board of directors,
. a merger or consolidation of Centennial as a result of which the
stockholders of Centennial do not continue to hold a majority of the
voting capital stock of the resulting entity, or
. the sale by Centennial of substantially all of its assets.
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The Senior Subordinated Note contains certain affirmative and negative
covenants typically found in subordinated notes. The Senior Subordinated Note
may not be transferred without the consent of the Lenders under the credit
facility or, during the period ending 180 days after the closing of the
offering of the notes, without the consent of Merrill Lynch on behalf of the
initial purchasers of the notes.
The Senior Subordinated Note is subordinate in right of payment to the
notes to the extent set forth in the Senior Subordinated Note. Under the Senior
Subordinated Note, Centennial may not make any payments thereon if there is a
default under any "Senior Indebtedness" which is defined to include the notes.
If an "Event of Default" occurs under the Senior Subordinated Note, except in
connection with certain bankruptcy events, the holder of the Senior
Subordinated Note may not accelerate such debt unless the indebtedness under
the notes and the credit facility have been accelerated for at least 90 days.
The Senior Subordinated Note is also subordinate to the credit facility to the
same extent.
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DESCRIPTION OF THE NEW NOTES
Introduction to the Indenture
The new notes like the old notes will be, issued under the indenture
dated December 14, 1998 among Centennial Cellular Operating Co. LLC, as
Centennial Cellular Operating, Centennial Cellular Corp., as a co-obligor, and
Norwest Bank Minnesota, N.A., as trustee.
The new notes are the same as the old notes except that the new notes:
. will have a new CUSIP number,
. will not bear legends restricting their transfer, and
. will not contain certain terms providing for an increase in the
interest rate under the circumstances described in the registration
rights agreement.
The following description is a summary of the material provisions of the
indenture. It does not restate that agreement in its entirety. We urge you to
read the indenture because it, and not this description, define your rights as
holders of these notes.
In this description of notes, the term "Centennial Cellular Operating"
refers to Centennial Cellular Operating Co. LLC and does not include its
subsidiaries and the term "Centennial" refers to Centennial Cellular Corp. and
does not include its subsidiaries.
General Terms of the Notes
The new notes:
. will be our senior subordinated obligations,
. will be limited to $370 million aggregate principal amount,
. will mature on December 15, 2008, and
. will bear interest at the rate 10 3/4% per annum.
Interest will be paid semi-annually on June 15 and December 15 of each
year, beginning on December 15, 1999 to the holder at the close of business on
the preceding December 1.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
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Methods of Receiving Payments on the Notes
If a holder has given wire transfer instructions to us, we will make all
principal, premium and interest payments on the holder's notes in accordance
with those instructions. All other payments on the notes will be made at our
office or agency within the City and State of New York unless we elect to make
interest payments by check mailed to the holders at their address set forth in
the register of holders.
Ranking
The payment of the principal of, premium, if any, and interest on, the
new notes will be subordinated to the prior payment in full of all of our
Senior Indebtedness. The new notes will be senior subordinated indebtedness of
Centennial Cellular Operating ranking at the same level with all other senior
subordinated indebtedness of Centennial Cellular Operating and senior to all
Subordinated Indebtedness of Centennial Cellular Operating.
The holders of Senior Indebtedness will be entitled to receive payment in
full in cash of all amounts due or to become due in respect of Senior
Indebtedness before the holders of new notes will be entitled to receive any
payment with respect to the new notes (except that holders of new notes may
receive payments made from the trust described under the caption "--Legal
Defeasance and Covenant Defeasance"), in the event of any distribution to our
creditors in any bankruptcy, insolvency or liquidation proceeding with respect
to Centennial Cellular Operating. Upon any bankruptcy, insolvency or
liquidation proceeding, any payment or distribution of Centennial Cellular
Operating's assets of any kind or character, whether in cash, property or
securities, to which the holders of the new notes or the trustee would be
entitled will be paid by Centennial Cellular Operating or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, or by the holders of the new notes or by the trustee
if received by them, directly to the holders of Senior Indebtedness (pro rata
to such holders on the basis of the amounts of Senior Indebtedness held by
such holders) or their representative or representatives, as their interests
may appear, for application to the payment of the Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid in full in
cash, after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of Senior Indebtedness.
Centennial Cellular Operating also may not make any payment in respect of
the new notes if:
. a payment default on Designated Senior Indebtedness occurs and is
continuing; or
. any other default occurs and is continuing on Designated Senior
Indebtedness that permits holders of the Designated Senior
Indebtedness to accelerate its maturity and the trustee receives a
notice of such default (a "Payment Blockage Notice") from the agent
bank (the "Agent Bank") under the credit facility or the holders or
the representative of any Designated Senior Indebtedness.
Payments on the new notes may and shall be resumed:
. in the case of a payment default, upon the date on which such default
is cured or waived; and
. in case of a nonpayment default, the earlier of
(1) the date on which such nonpayment default is cured or waived,
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(2) 179 days after the date on which the applicable Payment
Blockage Notice is received or
(3) the date on which the trustee receives written notice from the
Agent Bank or the representative for such Designated Senior
Indebtedness, as the case may be, rescinding the applicable
Payment Blockage Notice, unless the maturity of any Designated
Senior Indebtedness has been accelerated.
No new Payment Blockage Notice may be delivered unless and until 186 days
have elapsed since the effectiveness of the immediately prior Payment Blockage
Notice.
No event of default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the trustee shall be, or be made,
the basis for a subsequent Payment Blockage Notice unless such default shall
have been cured or waived for a period of not less than 90 days.
As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of Centennial Cellular
Operating, holders of the new notes may recover less ratably than creditors of
Centennial Cellular Operating who are holders of Senior Indebtedness. See "Risk
Factors--Subordination." Centennial Cellular Operating and its Restricted
Subsidiaries will be subject to financial tests limiting the amount of
additional Indebtedness, including Senior Indebtedness, that Centennial
Cellular Operating and its Restricted Subsidiaries can incur. See "--
Covenants--Limitation on Incurrence of Additional Indebtedness."
"Senior Indebtedness" means the principal of, premium, if any, and
interest, including interest, to the extent allowable, accruing after the
filing of a petition initiating any proceeding under any state, federal or
foreign bankruptcy law, on any Indebtedness of Centennial Cellular Operating,
whether outstanding on December 14, 1998 or created, incurred or assumed, and
whether at any time owing, actually or contingent, unless, in the case of any
particular indebtedness, it expressly provides that such indebtedness will not
be senior in right of payment to the new notes. Despite the above, "Senior
Indebtedness" will not include:
(1) Indebtedness evidenced by the new notes,
(2) Indebtedness that is subordinate or junior in right of payment to
any Indebtedness of Centennial Cellular Operating,
(3) Indebtedness which when incurred and without respect to any election
under Section 1111(b) of Title 11 United States Code, is without
recourse to Centennial Cellular Operating,
(4) Indebtedness which is represented by Disqualified Capital Stock,
(5) any liability for foreign, federal, state, local or other taxes owed
or owing by Centennial Cellular Operating to the extent such
liability constitutes Indebtedness,
(6) Indebtedness of Centennial Cellular Operating to a Subsidiary or any
other Affiliate of Centennial Cellular Operating or any of such
Affiliate's Subsidiaries,
(7) to the extent it might constitute Indebtedness, amounts owing for
goods, materials or services purchased in the ordinary course of
business or consisting of trade accounts payable owed or owing by
Centennial Cellular Operating, and amounts owed by Centennial
Cellular Operating for compensation to employees or services
rendered to Centennial Cellular Operating,
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(8) that portion of any Indebtedness which at the time of issuance is
issued in violation of the indenture, and
(9) Indebtedness evidenced by any guarantee of any Subordinated
Indebtedness or Pari Passu Indebtedness.
"Designated Senior Indebtedness" means:
(1) all Senior Indebtedness under the credit facility, and
(2) any other Senior Indebtedness of at least $25 million and which is
specifically designated "Designated Senior Indebtedness" by
Centennial Cellular Operating.
Optional Redemption
General. After December 15, 2003, we may redeem all or a part of the new
notes, upon not less than 30 nor more than 60 days' notice, at the redemption
prices, expressed as percentages of principal amount, set forth below plus any
accrued and unpaid interest, to the applicable redemption date, if redeemed
during the twelve-month period beginning on December 15 of the years indicated
below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003........................................ 105.375%
2004........................................ 103.583%
2005........................................ 101.792%
</TABLE>
After December 15, 2005, we may redeem all or part of the new notes at 100% of
their principal amount plus any accrued and unpaid interest.
Upon Equity Offerings. At any time before December 15, 2001, we may on
one or more occasions redeem up to 35% of the aggregate principal amount of new
notes issued under the indenture at a redemption price of 110.750% of the
principal amount of those notes, plus accrued and unpaid interest to the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings or Strategic Equity Offerings; provided that:
. at least 65% of the aggregate principal amount of new notes remains
outstanding immediately after the occurrence of such redemption,
. any redemption because of a Strategic Equity Offering is not in
connection with or after a Change of Control,
. any proceeds received must be contributed to issuer prior to such
redemption, and
. the redemption must occur within 60 days of the date of the closing
of such Equity Offering.
Except under the preceding paragraphs, the new notes will not be
redeemable at our option before December 15, 2003.
Upon a Change of Control. At any time before December 15, 2001, we may
redeem all or part of the new notes upon a Change of Control. Such redemption
must be made within 60 days after a Change of Control at the redemption price
of:
. 100% of the principal amount , plus
. any accrued and unpaid interest to the redemption date, plus
. any Applicable Premium.
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Despite the above, the redemption price will not be less than 105.375%
of the principal amount of new notes plus any accrued and unpaid interest to
the redemption date.
Selection and Notice. If less than all of the new notes are to be
redeemed at any time, the trustee will select the new notes for redemption as
follows:
. if the new notes are listed, in compliance with the requirements of
the principal national securities exchange on which the new notes
are listed; or
. if the new notes are not so listed, on a pro rata basis, by lot or
by such method as the trustee deems fair and appropriate.
Despite the above, any redemption relating to a Public Equity Offering
or a Strategic Equity Offering will be on a pro rata basis, or as near as
possible to a pro rata basis.
No new notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each holder of new notes to be redeemed
at its registered address. Notices of redemption may not be conditional.
If any new note is to be redeemed in part only, the notice of redemption
that relates to that new note shall state the portion of the principal amount
thereof to be redeemed. A new note in principal amount equal to the unredeemed
portion of the original note will be issued in the name of the holder of the
note upon cancellation of the original. Notes called for redemption become due
on the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on new notes or portions of them called for redemption.
Repurchase at the Option of Holders
Change of Control. If a Change of Control occurs, each holder of new
notes will have the right to require us to repurchase all or any part, in
parts of $1,000 or an integral multiples of $1,000, of that holder's new notes
pursuant to the Change of Control Offer. In the Change of Control Offer, we
will offer a Change of Control Purchase Price in cash equal to 101% of the
aggregate principal amount of new notes repurchased plus accrued and unpaid
interest thereon, if any, to the date of purchase. Within 30 days following
any Change of Control, we will mail a notice to each holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase new notes on within 45 days after the Change of Control,
pursuant to the procedures required by the indenture and described in the
notice. We will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations to the extent such laws and
regulations are applicable in connection with the repurchase of the new notes
as a result of a Change of Control.
On the date of payment for the redemption describe above, we will, to
the extent lawful:
. accept for payment all new notes or portions of new notes properly
tendered pursuant to the Change of Control Offer,
. deposit with the Paying Agent an amount equal to the Change of
Control Purchase Price in respect of all new notes or portions of
new notes so tendered, and
. deliver or cause to be delivered to the trustee the new notes so
accepted together with an Officers' Certificate stating the
aggregate principal amount of new notes or portions of new notes
being purchased by us.
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The Paying Agent will promptly mail to each holder of new notes so
tendered the Change of Control Purchase Price for new notes tendered, and the
trustee will promptly authenticate and mail, or cause to be transferred by book
entry, to each holder a new note equal in principal amount to any unpurchased
portion of new notes surrendered, if any; provided that each such new note will
be in a principal amount of $1,000 or an integral multiple thereof.
Prior to complying with any of the provisions of this "--Repurchase at
the Option of Holders--Change of Control" covenant, we will either repay all
outstanding Senior Indebtedness or obtain the requisite consents, if any, under
all agreements governing outstanding Senior Indebtedness to permit the
repurchase of notes required by this covenant. We will publicly announce the
results of the Change of Control Offer on or as soon as practicable after it is
completed.
The provisions described above that require us to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether or not any other provisions of the indenture are applicable. Except as
described above with respect to a Change of Control, the indenture does not
contain provisions that permit the holders of the new notes to require that we
repurchase or redeem the new notes in the event of a takeover, recapitalization
or similar transaction.
Our outstanding Senior Indebtedness currently prohibits us from
purchasing any new notes, and also provides that certain change of control
events with respect to us would constitute a default under the agreements
governing the Senior Indebtedness. Any future credit agreements or other
agreements relating to Senior Indebtedness to which we become a party may
contain similar restrictions and provisions. In the event a Change of Control
occurs at a time when we are prohibited from purchasing new notes, we could
seek the consent of its senior lenders to the purchase of new notes or could
attempt to refinance the borrowings that contain such prohibition. If we do not
obtain such consent or repay such borrowings, we will remain prohibited from
purchasing new notes. In such case, our failure to purchase tendered new notes
would be an Event of Default under the indenture which would, in turn, be a
default under our Senior Indebtedness. In those circumstances, the
subordination provisions in the indenture would likely restrict payments to the
holders of new notes.
The definition of Change of Control includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or substantially
all" of our assets and our Subsidiaries taken as a whole. Although there is a
limited body of case law interpreting the phrase "substantially all," there is
no precise established definition of the phrase under applicable law.
Accordingly, the ability of a holder of new notes to require us to repurchase
new notes as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of our assets and our Subsidiaries taken as a
whole to another Person or group may be uncertain.
Asset Sales. Within one year after the receipt of any Net Cash Proceeds
from an Asset Sale, we or any Restricted Subsidiary may apply such Net Cash
Proceeds, at its option:
. to repay or repurchase our or any Restricted Subsidiary's Senior
Indebtedness; or
. to acquire assets of a Related Business, or the Capital Stock of a
Person, all or substantially all of whose assets and property are
used in a Related Business.
Any Net Cash Proceeds from Asset Sales that are not applied or invested
as provided in the preceding paragraph will constitute "Excess Proceeds".
Within one year after an Asset Sale when the aggregate amount of Excess
Proceeds exceeds $15 million, we will be required to make an offer to all
holders of new notes (an "Asset Sale Offer") to purchase the maximum principal
amount of new notes that may be purchased out of the Excess Proceeds. The offer
price in any Asset Sale Offer
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will be equal to 100% of principal amount plus any accrued and unpaid interest
to the date of purchase, and will be payable in cash. If the aggregate
principal amount of new notes tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the trustee will select the new notes to be
purchased on a pro rata basis.
Sinking Fund
The new notes will not have the benefit of a sinking fund.
Security
When the merger was completed, the trustee purchased and still holds for
the benefit of the holders of the notes the Pledged Securities in an amount
sufficient to provide for payment of the first three scheduled interest
payments due on the notes. This amount does not include any additional
interest that we are required to pay because the registration statement of
which this exchange offer is a part failed to be declared effective on a
timely basis.
We used about $60 million to purchase Pledged Securities at the time of
the merger. The Pledged Securities are Government Securities maturing on
different dates corresponding to the dates that we have to make the first
three interest payments. The first three interest payments will be funded from
the Pledged Securities unless we give the trustee other funds to make the
three interest payments. In that case, the trustee would be allowed to release
the funds in the collateral account that would have been used to make any of
those payments to us.
Interest earned on the Pledged Securities will be held in a cash
collateral account by the trustee. After we have made the first three interest
payments or, if an internationally recognized independent accounting firm or
investment banking firm determines that the amount of funds in the account
exceed the amount necessary to make the first three interest payments, any
excess in the collateral account will be returned to us.
The new notes will be secured by a first priority security interest in
the Pledged Securities and the cash collateral account. We may replace the
Government Securities originally pledged as collateral with Marketable U.S.
Securities, if they have a value at least equal to 125.0% of the amount of
unpaid first three interest payments.
After we have made the first three interest payments any remaining
Pledged Securities will be returned to us. After that time, the new notes will
no longer be secured.
Covenants
In the indenture, we agreed to some restrictions that limit our and our
Restricted Subsidiaries' ability to:
. incur additional debt,
. pay dividends, acquire shares of our Capital Stock or that of our
Restricted Subsidiaries, redeem our Indebtedness or that of our
Restricted Subsidiaries that is subordinate to the notes or make
Investments,
. restrict our Subsidiaries' abilities to pay dividends to us or other
Restricted Subsidiaries,
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. enter into transactions with Affiliates or Related Persons,
. issue Guarantees,
. sell assets or Capital Stock of Subsidiaries,
. create liens,
. engage in a merger, sale or consolidation,
. enter into new lines of business, and
. designate Subsidiaries as Unrestricted Subsidiaries.
Limitation on Incurrence of Additional Indebtedness. Centennial Cellular
Operating will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, issue, create, incur, assume, guarantee or otherwise
directly or indirectly become liable for, or otherwise become responsible for,
contingently or otherwise (individually or collectively, to "Incur" or, as
appropriate, an "Incurrence"), any Indebtedness, including any Acquired
Indebtedness. Neither the accrual of interest, including the issuance of "pay
in kind" securities or similar instruments in respect of such accrued interest,
pursuant to the terms of Indebtedness Incurred in compliance with this
covenant, nor the accretion of original issue discount, nor the mere extension
of the maturity of any Indebtedness shall be deemed to be an Incurrence of
Indebtedness.
Despite the above, Centennial Cellular Operating and any Guarantor may
Incur Indebtedness, including Acquired Indebtedness, and any Restricted
Subsidiary may Incur Acquired Indebtedness if the Centennial Cellular
Operating's Annual Operating Cash Flow Ratio, after giving effect to the
Incurrence of such Indebtedness and the application of the proceeds therefrom,
would have been less than 8.25 to 1.0 at any time prior to December 31, 2000
and 7.5 to 1.0 after December 31, 2000.
The above will not prohibit the Incurrence of the following:
(1) Indebtedness of Centennial Cellular Operating, any Guarantor or
Centennial de Puerto Rico under the credit facility not exceeding
$1.05 billion, reduced by permanent reductions in commitments in
satisfaction of the Net Cash Proceeds application requirement set
forth in "--Limitation on Asset Sales and Sales of Subsidiary
Stock," provided, that the amount of Indebtedness of Centennial de
Puerto Rico under this clause (1) does not exceed 25% of the amount
which may be borrowed under this clause (1),
(2) Indebtedness of Centennial Cellular Operating (a) pursuant to the
old notes or new notes or (b) existing on December 15, 1998, other
than under the credit facility,
(3) Indebtedness between Centennial Cellular Operating and any
Restricted Subsidiary of Centennial Cellular Operating or between
Restricted Subsidiaries of Centennial Cellular Operating, provided
that, in the case of Indebtedness of Centennial Cellular Operating,
such obligations are unsecured and subordinated in all respects to
the holders' rights pursuant to the new notes; provided, further,
that with respect to any Indebtedness in excess of $250,000, any
such Indebtedness is made pursuant to an intercompany note in the
form attached to the indenture; provided, further, that (a) any
disposition, pledge or transfer of any such Indebtedness to a
Person, other than a disposition, pledge or
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transfer to Centennial Cellular Operating or a Restricted
Subsidiary, shall be deemed to be an Incurrence of such Indebtedness
not permitted by this clause (3), and (b) any transaction pursuant
to which any Restricted Subsidiary, which has Indebtedness owing to
Centennial Cellular Operating or any other Restricted Subsidiary,
ceases to be a Restricted Subsidiary will be deemed to be the
Incurrence of Indebtedness by such Restricted Subsidiary that is not
permitted by this clause (3),
(4) Capitalized Lease Obligations and Purchase Money Indebtedness of
Centennial Cellular Operating and any Restricted Subsidiary in an
aggregate amount or aggregate principal amount, as the case may be,
outstanding not exceeding the greater of (x) $25 million and (y) 5%
of Centennial Cellular Operating's Total Assets; provided that in
the case of Purchase Money Indebtedness, such Indebtedness will not
be more than 100% of the cost determined in accordance with GAAP to
Centennial Cellular Operating or such Restricted Subsidiary of the
property purchased or leased with the proceeds,
(5) Indebtedness of Centennial Cellular Operating or any Restricted
Subsidiary arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from
guarantees or letters of credit, surety bonds or performance bonds
securing any obligations of Centennial Cellular Operating or its
Restricted Subsidiaries under such agreements, in any case Incurred
in connection with the disposition of any business, assets or
Restricted Subsidiary of Centennial Cellular Operating to the
extent none of the above results in the obligation to repay an
obligation for money borrowed by any Person,
(6) any guarantee by any Restricted Subsidiary of the credit facility
or any other Indebtedness made in accordance with the provisions of
"--Limitation on Issuances of Guarantees,"
(7) Indebtedness incurred by Centennial Cellular Operating or any of
its Restricted Subsidiaries in connection with the acquisition of a
new Restricted Subsidiary, the majority of whose revenues for the
most recent twelve months for which audited or unaudited financial
statements are available are from a Related Business, or of
property, businesses or assets which, or Capital Stock of a Person
all or substantially all of whose assets, are of a type generally
used in a Related Business; provided, that the principal amount or
accreted value, as applicable, of such Indebtedness, together with
any other outstanding Indebtedness incurred pursuant to this clause
(7), does not exceed $40 million in the aggregate at any one time
outstanding; and provided, further, that the principal amount of
Indebtedness that may be incurred pursuant to this clause (7) and
clause (11) by any individual Restricted Subsidiary that is not a
Guarantor will not exceed $25 million in the aggregate,
(8) Indebtedness of Centennial Cellular Operating or any Restricted
Subsidiary under standby letters of credit or reimbursement
obligations with respect to standby letters of credit issued in the
ordinary course of business and consistent with industry practices;
provided that upon the drawing of such letters of credit or the
incurrence of such Indebtedness, such obligations are reimbursed
within 30 days following such drawing or incurrence,
(9) Interest Rate Protection Obligations relating to (A) Indebtedness
of Centennial Cellular Operating or any Restricted Subsidiary,
which Indebtedness is otherwise permitted to be incurred under this
covenant, or (B) Indebtedness for which a lender has provided a
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commitment in an amount reasonably anticipated to be incurred by
Centennial Cellular Operating or any Restricted Subsidiary in the 12
months after such Interest Rate Protection Obligations has been
incurred; provided, however, that the notional principal amount of
such Interest Rate Protection Obligations does not exceed the
principal amount of the Indebtedness, including Indebtedness subject
to commitments, to which such Interest Rate Protection Obligations
relate,
(10) Currency Hedging Agreements relating to (A) Indebtedness of
Centennial Cellular Operating or any Restricted Subsidiary and/or
(B) obligations to purchase or sell assets or properties, in each
case, incurred in the ordinary course of business of Centennial
Cellular Operating or any Restricted Subsidiary; provided, however,
that such Currency Hedging Agreements do not increase the
Indebtedness or other obligations of Centennial Cellular Operating
or any Restricted Subsidiary outstanding other than as a result of
the fluctuations in foreign currency exchange rates or by reason of
fees, indemnities and compensation payable thereunder,
(11) Indebtedness of Centennial Cellular Operating or any Guarantor,
other than as otherwise permitted pursuant to this covenant, not to
exceed $100 million in the aggregate; provided, that Centennial
Cellular Operating's Restricted Subsidiaries that are not
Guarantors may incur up to $50 million in the aggregate of the $100
million of Indebtedness which may be incurred under this clause
(11); and provided, further, that the principal amount of
Indebtedness that may be incurred under this clause (11) and clause
(7) by any individual Restricted Subsidiary that is not a Guarantor
shall not exceed $25 million in the aggregate at any one time
outstanding,
(12) Refinancing Indebtedness incurred to extend, renew, replace or
refund Indebtedness permitted under the second paragraph of this
covenant or clause (2) of this paragraph, plus the lesser of (a)
the stated amount of any premium or other payment required to be
paid in connection with such a refinancing pursuant to the terms of
the Indebtedness being refinanced or (b) the amount of premium or
other payment actually paid at such time to refinance the
Indebtedness, plus, in either case, the amount of expenses of
Centennial Cellular Operating reasonably incurred in connection
with such refinancing, and
(13) other Indebtedness of Centennial Cellular Operating or a Guarantor
in an amount not greater than the aggregate amount of cash
contributions made to the capital of Centennial Cellular Operating
(other than in exchange for Disqualified Capital Stock); provided
that the amount of such cash contributions ("Excluded Cash
Contributions") are designated in an officer's certificate as
Excluded Cash Contributions and shall not be included in the
computation of the amount of Restricted Payments which Centennial
Cellular Operating can make pursuant to "--Limitation on Restricted
Payments."
For purposes of determining compliance with this covenant, if an item of
Indebtedness meets the criteria of more than one of the categories of
permitted Indebtedness described in clauses (1) through (8) above or is
entitled to be incurred pursuant to the second paragraph of this covenant,
Centennial Cellular Operating may, in its sole discretion, classify such item
of Indebtedness on the date of incurrence in any manner that complies with
this covenant and such item of Indebtedness will be treated as having been
incurred under only one of these clauses or under the second paragraph of this
covenant.
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Limitation on Restricted Payments. Centennial Cellular Operating will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment, if, immediately before or after giving
effect to the Restricted Payment
(a) a Default or an Event of Default would exist,
(b) Centennial Cellular Operating would not be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Annual Operating Cash
Flow Ratio provision set forth in the second paragraph of "--Limitation on
Incurrence of Additional Indebtedness," or
(c) the aggregate amount of all Restricted Payments made by Centennial
Cellular Operating and its Restricted Subsidiaries, including such proposed
Restricted Payment if not made in cash, then the fair market value of any
property used, from and after December 15, 1998 and on or before the date of
such Restricted Payment, will exceed the sum of (i) the amount determined by
subtracting (x) 1.75 times the aggregate Consolidated Interest Expense of
Centennial Cellular Operating for the period (taken as one accounting period)
from February 1, 1999 to the last day of the last full fiscal quarter before
the date of the proposed Restricted Payment (the "Computation Period") from (y)
Operating Cash Flow of Centennial Cellular Operating for the Computation
Period, plus (ii) the aggregate Net Proceeds received by Centennial Cellular
Operating from the sale, other than to a Subsidiary of Centennial Cellular
Operating of its Qualified Capital Stock after December 15, 1998 and on or
before the date of such Restricted Payment, other than any such Net Proceeds
received by Centennial Cellular Operating in connection with the financing of
the merger and in any case other than Excluded Contributions, Excluded Cash
Contributions and Investment Equity, plus (iii) 100% of the aggregate amount of
non-recourse contributions to the capital of Centennial Cellular Operating
since the December 15, 1998, in any case other than Excluded Contributions,
Excluded Cash Contributions and Investment Equity, plus (iv) to the extent not
otherwise included in clauses (i)-(ii), above, an amount equal to the net
reduction in Investments in Unrestricted Subsidiaries resulting from payments
of dividends, repayment of loans or advances, or other transfers of assets, in
each case to Centennial Cellular Operating or any Restricted Subsidiary from
Unrestricted Subsidiaries, or from redesignations of Unrestricted Subsidiaries
as Restricted Subsidiaries (valued in each case as provided in the definition
of "Investments").
Notwithstanding the foregoing, the provisions set forth in clauses (b) or
(c) of the immediately preceding paragraphs will not prohibit, and the
provision set forth in clause (a) of the immediately preceding paragraphs will
not prohibit the payment described in clause (i), the following:
(1) the payment of any dividend within 60 days after the date of its
declaration if such dividend could have been made on the date of
its declaration in compliance with the above provisions,
(2) the redemption, defeasance, repurchase or other acquisition or
retirement of any Indebtedness or Capital Stock of Centennial
Cellular Operating or its Restricted Subsidiaries either in
exchange for or out of the Net Proceeds of the substantially
concurrent sale (other than to a Subsidiary of Centennial Cellular
Operating) of Qualified Capital Stock (in the case of any
redemption, defeasance, repurchase or other acquisition or
retirement of any Subordinated Indebtedness or Capital Stock of
Centennial Cellular Operating or its Restricted Subsidiaries) or
Subordinated Indebtedness, in the case of any redemption,
defeasance, repurchase or other acquisition or retirement of any
Indebtedness of Centennial Cellular Operating or its Restricted
Subsidiaries, of Centennial Cellular Operating,
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(3) loans, advances, dividends or distributions by Centennial Cellular
Operating to Centennial in order to fund the payment of the
management or other similar fees to equity investors or their
Affiliates in Centennial permitted by the covenant "--Limitation on
Transactions with Related Persons,"
(4) the purchase, redemption or other acquisition or retirement for
value of Capital Stock of Centennial, or loans, advances,
dividends, or distributions by Centennial Cellular Operating to
Centennial to fund the above, from employees, former employees,
directors, former directors, consultants and former consultants of
Centennial or any of its Subsidiaries pursuant to the terms of the
agreements under which such Capital Stock was acquired in an amount
not to exceed $2.5 million in the aggregate in any calendar year
with unused amounts in any calendar year being carreeding calendar
years; provided, that such amount in any calendar year may be
increased by an amount not to exceed (a) the cash proceeds from the
sale of Capital Stock to members of management, directors or
consultants that occurs after December 15, 1998 plus (b) the cash
proceeds of key man life insurance policies received by Centennial
Cellular Operating and its Restricted Subsidiaries after December
15, 1998,
(5) repurchases of Capital Stock of Centennial Cellular Operating
deemed to occur upon exercise of stock options if such Capital
Stock represents a portion of the exercise price of such options,
(6) loans, advances, dividends or distributions by Centennial Cellular
Operating to Centennial to fund the acquisition, repurchase or
other repayment in respect of Centennial's common shares, Class B
Shares, Convertible Preferred Stock, par value $.01 per share,
Second Series Convertible Preferred Stock, par value $.01 per
share, or options or warrants to purchase any of the foregoing, in
each case pursuant to the merger agreement,
(7) loans, advances, dividends or distributions by Centennial Cellular
Operating to Centennial not exceeding an amount necessary to allow
Centennial to pay (a) its costs, including all professional fees
and expenses, incurred to comply with its reporting obligations
under federal or state laws or under the indenture, (b) its other
operational expenses (other than taxes) incurred in the ordinary
course of business and not exceeding $1 million in any fiscal year
(with unused amounts in any fiscal year being carried over to the
next two succeeding fiscal years) and (c) its then currently due
taxes attributable solely on account of Centennial Cellular
Operating and its subsidiaries (as a consolidated, combined or
unitary filing group) or on account of the income of Centennial
related to its investment in Centennial Cellular Operating and its
subsidiaries payable pursuant to a tax sharing agreement between
Centennial and Centennial Cellular Operating and its subsidiaries
and the reasonable expenses of preparing returns reflecting such
taxes not to exceed in any event the amount of tax that Centennial
Cellular Operating and the Restricted Subsidiaries would otherwise
pay if not part of such filing group, provided that Centennial
agrees to be obligated to contribute to Centennial Cellular
Operating any refund Centennial receives relating to any such
taxes,
(8) the repurchase, redemption, defeasance, retirement, refinancing,
acquisition for value or payment of principal of any Subordinated
Indebtedness, other than Disqualified Capital Stock (a
"refinancing"), through the substantially concurrent issuance of
new
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Subordinated Indebtedness of Centennial Cellular Operating, provided
that any such new Subordinated Indebtedness (1) will be in a
principal amount that does not exceed the principal amount so
refinanced, or, if such Subordinated Indebtedness provides for an
amount less than the principal amount to be due and payable upon a
declaration of acceleration, then such lesser amount as of the date
of determination, plus the lesser of (I) the stated amount of any
premium or other payment required to be paid in connection with such
a refinancing pursuant to the terms of the Indebtedness being
refinanced or (II) the amount of premium or other payment actually
paid at such time to refinance the Indebtedness, plus, in either
case, the amount of expenses of Centennial Cellular Operating
incurred in connection with such refinancing; (2) has a final
maturity date later than the final maturity date of, and has a
Weighted Average Life equal to or greater than the Weighted Average
Life of, the Indebtedness to be refinanced; and (3) is expressly
subordinated in right of payment to the new notes at least to the
same extent as the Subordinated Indebtedness to be refinanced,
(9) loans, advances, dividends or distributions by Centennial Cellular
Operating to Centennial in an amount no greater than the current
quarterly interest payments then due on the Mezzanine Financing as
in effect on December 15, 1998; provided that in no event shall
such amount exceed the aggregate amount of Cash from Minority
Cellular Investment Interests received by Centennial Cellular
Operating net of all taxes (on a consolidated basis required to be
paid in respect thereof; and provided further that with respect to
any loans, advances, dividends or distributions after December 15,
1999 and after giving effect thereto, Centennial Cellular Operating
would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Annual Operating Cash Flow Ratio test
contained in the second paragraph of "--Limitation on Incurrence of
Additional Indebtedness,"
(10) the declaration and payment of dividends or distributions to
holders of any class or series of Disqualified Capital Stock of
Centennial Cellular Operating or any Preferred Stock of its
Restricted Subsidiaries issued or incurred in accordance with the
covenant "--Limitation on Incurrence of Additional Indebtedness,"
(11) the payment of dividends on Centennial Cellular Operating's common
stock following the first initial public offering of Centennial's
or Centennial Cellular Operating's common stock after December 15,
1998, of up to 6% per annum of the net cash proceeds received by
Centennial Cellular Operating in such public offering or
contributed by Centennial to Centennial Cellular Operating from the
net cash proceeds of an equity offering by Centennial,
(12) loans, advances, dividends or distribution by Centennial Cellular
Operating to Centennial to fund the repurchase, retirement or other
acquisition for value of Capital Stock of Centennial in existence
on December 15, 1998 Date after January 7, 1999, which will not
exceed 7.1% of the outstanding Capital Stock of Centennial prior to
January 7, 1999,) and which are not held by Welsh Carson,
Blackstone or their respective Affiliates or any members of
management of Centennial or Centennial Cellular Operating or any of
their Subsidiaries, including any Capital Stock issued in respect
of such Capital Stock as a result of a stock split,
recapitalization, merger, combination, consolidation or otherwise,
provided that (A) the amount per share paid under this clause (12)
will not exceed $13.83 per share, as such amount will be adjusted
as determined in good faith by the board of directors of Centennial
Cellular Operating
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for stock splits, stock dividends, recapitalizations, stock
recombinations, mergers, reverse stock splits, consolidations or
similar transactions, and (B) after giving effect thereto,
Centennial Cellular Operating would be permitted to incur at least
$1.00 of additional Indebtedness under the Annual Operating Cash
Flow Ratio test contained in the second paragraph of "--Limitation
on Incurrence of Additional Indebtedness",
(13) Investments made with Excluded Contributions, and
(14) other Restricted Payments in an aggregate amount not to exceed $2
million.
100% of the amounts expended under clauses (1), (2) to the extent the Net
Proceeds from the concurrent sale of Qualified Capital Stock has been added to
the aggregate Net Proceeds calculation pursuant to clause (ii) of the first
paragraph of this covenant, (4), (5), (10), (11) and (12) of the immediately
preceding paragraph will be deducted from the calculation of aggregate
Restricted Payments.
Limitation on Restricting Subsidiary Dividends. Centennial Cellular
Operating will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, assume or suffer to exist any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary of
Centennial Cellular Operating to:
. pay dividends or make other distributions on the Capital Stock of any
Restricted Subsidiary of Centennial Cellular Operating
. pay or satisfy any obligation to Centennial Cellular Operating or any
of its Restricted Subsidiaries or
. otherwise transfer assets or make or pay loans or advances to
Centennial Cellular Operating or any of its Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) any applicable law or any governmental or administrative regulation
or order,
(2) Refinancing Indebtedness permitted under the indenture, provided
that the restrictions contained in the instruments governing such
Refinancing Indebtedness are no more restrictive in the aggregate
than those contained in the instruments governing the Indebtedness
being refinanced immediately before such refinancing,
(3) restrictions with respect solely to a Restricted Subsidiary of
Centennial Cellular Operating imposed pursuant to a binding
agreement which has been entered into for the sale or disposition
of all or substantially all of the Capital Stock or assets of such
Restricted Subsidiary, provided that such restrictions apply solely
to the Capital Stock or assets being sold of such Restricted
Subsidiary,
(4) restrictions contained in any agreement relating to a Person or
real or tangible personal property acquired after December 15, 1998
which are not applicable to any Person or property, other than the
Person or property so acquired and which were not put in place in
connection with, or in contemplation of, such acquisition,
(5) any agreement, other than those referred to in clause (4), of a
Person acquired by Centennial Cellular Operating or a Restricted
Subsidiary of Centennial Cellular Operating, which restrictions
existed at the time of acquisition,
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(6) contractual encumbrances or restrictions in effect on December 15,
1999 and customary encumbrances and restrictions contained in the
security agreements related to the credit facility and encumbrances
and restrictions which will be contained in the credit facility on
January 7, 1999 as such encumbrances or restrictions may be
amended, provided that such encumbrances or restrictions as amended
are no more restrictive in the aggregate than those contained in
the security agreements and the credit facility in effect on
January 7, 1999,
(7) the indenture and the old notes or new notes,
(8) Purchase Money Indebtedness for property acquired in the ordinary
course of business to the extent such encumbrance or restriction
relates to the property underlying the Purchase Money Indebtedness,
(9) Indebtedness of Restricted Subsidiaries otherwise permitted to be
incurred under the covenants "--Limitation on Incurrence of
Additional Indebtedness" and "--Limitation on Liens," which
encumbrances or restrictions in the aggregate with all such
previous encumbrances or restrictions do not restrict greater than
10% of Centennial Cellular Operating's Annual Operating Cash Flow
on the date of incurrence of the Indebtedness,
(10) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business,
(11) customary provisions in joint venture agreements and other similar
agreements entered into in the ordinary course of business to the
extent such encumbrance and restriction relates to the activities
and assets of such joint venture or similar entity and provided
that the Annual Operating Cash Flow determined as of the date of
execution of any such joint venture or similar agreement in all
such joint ventures or similar entities which are subject to such
encumbrances or restrictions do not exceed 10% of Centennial
Cellular Operating's Annual Operating Cash Flow on the date of
execution of such joint venture or similar agreement, or
(12) customary provisions restricting subletting or assignment of any
lease entered into the ordinary course of business.
Limitation on Transactions with Related Persons. Centennial Cellular
Operating will not, and will not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction") involving in one or a series of
related transactions an aggregate consideration in excess of $5.0 million,
unless (a) such Affiliate Transaction is on terms that are not materially less
favorable to Centennial Cellular Operating or the relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction
by Centennial Cellular Operating or such Restricted Subsidiary with an
unrelated Person and Centennial Cellular Operating delivers an officer's
certificate to the trustee certifying that such Affiliate Transaction complies
with this clause (a) and (b) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $10.0 million, Centennial Cellular Operating delivers to the trustee
a resolution adopted by the majority of the Disinterested Directors approving
such Affiliate Transaction and set forth in an officer's certificate certifying
that such Affiliate Transaction complies with clause (a) above.
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The foregoing provisions will not apply to the following:
(1) transactions between or among Centennial Cellular Operating and/or
any of its Restricted Subsidiaries,
(2) Restricted Payments permitted by the provisions of the indenture
described above under the covenant "--Limitation on Restricted
Payments,"
(3) the payment of annual management, consulting, monitoring and
advisory fees and related expenses to Welsh Carson, Blackstone and
their respective Affiliates in an amount in any calendar year not
to exceed the greater of (a) $1 million or (b) 1% of Annual
Operating Cash Flow,
(4) the payment of reasonable and customary fees paid to, and indemnity
provided on behalf of, officers, directors, employees or
consultants of Centennial Cellular Operating or any Restricted
Subsidiary,
(5) payments by Centennial Cellular Operating or any of its Restricted
Subsidiaries to Welsh Carson, Blackstone and their respective
Affiliates made for any financial advisory, financing, underwriting
or placement services or in respect of other investment banking
activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by a
majority of the Board of Directors of Centennial Cellular Operating
in good faith,
(6) transactions with respect to which Centennial Cellular Operating or
any of its Restricted Subsidiaries, as the case may be, delivers to
the trustee a letter from an investment banking firm of national
standing stating that such transaction is fair to Centennial
Cellular Operating or such Restricted Subsidiary from a financial
point of view,
(7) payments or loans to employees or consultants which are approved by
a majority of the Board of Directors of Centennial Cellular
Operating in good faith,
(8) any agreement as in effect on December 15, 1998 or any amendment
thereto, so long as any such amendment is not disadvantageous to
the holders of the notes in any material respect, or any
transaction contemplated by any such agreement,
(9) the existence of, or the performance by Centennial Cellular
Operating or any of its Restricted Subsidiaries of its obligations
under the terms of, the Recapitalization Documents, including any
registration rights agreement or purchase agreement related
thereto, to which it is a party on December 15, 1998 and any
similar agreements which it may enter into after December 15, 1998;
provided, however, that the existence of, or the performance by
Centennial Cellular Operating or any of its Restricted Subsidiaries
of obligations under any future amendment to any such existing
agreement or under any similar agreement entered into after
December 15, 1998 shall only be permitted by this clause,
(10) to the extent that the terms of any such amendment or new agreement
are not otherwise disadvantageous to the holders of the new notes
in any material respect,
(11) the payment of all fees, expenses, bonuses and awards related to
the Recapitalization including fees to Welsh Carson and Blackstone,
and
(12) any payment pursuant to a tax sharing agreement between Centennial
Cellular Operating and any other Person with which Centennial
Cellular Operating is required or
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permitted to file a consolidated tax return or with which Centennial
Cellular Operating is or could be part of a consolidated, combined
or unitary group for tax purposes, which payments are not in excess
of the tax liabilities attributable solely to Centennial Cellular
Operating and its Restricted Subsidiaries (as a consolidated,
combined or unitary group).
Limitation on Issuances of Guarantees. (a) Centennial Cellular Operating
will not cause or permit any Restricted Subsidiary, which is not a Guarantor,
directly or indirectly, to guarantee, assume or in any other manner become
liable with respect to any Indebtedness of Centennial Cellular Operating or any
Restricted Subsidiary, other than under the credit facility, except for any
Indebtedness under the credit facility constituting Pari Passu Indebtedness or
Subordinated Indebtedness, unless such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture to the indenture and becomes a
Guarantor except that
(A) such guarantee need not be secured unless required under "--
Limitation on Liens,"
(B) if such Indebtedness is by its terms Senior Indebtedness, any such
assumption, guarantee or other liability of such Restricted
Subsidiary with respect to such Indebtedness shall be senior to such
Restricted Subsidiary's Guarantee of the notes to the same extent as
such Senior Indebtedness is senior to the new notes, and
(C) if such Indebtedness is by its terms expressly subordinated to the
new notes, any such assumption, guarantee or other liability of such
Restricted Subsidiary with respect to such Indebtedness shall be
subordinated to such Restricted Subsidiary's Guarantee of the notes
at least to the same extent as such Indebtedness is subordinated to
the notes.
(b) Despite the above, any Guarantee by a Restricted Subsidiary of the
new notes will provide by its terms that it and all Liens securing the same
will be automatically and unconditionally released and discharged upon
(1) any sale, exchange or transfer, to any Person not an Affiliate of
Centennial Cellular Operating, of all of Centennial Cellular
Operating's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary, which transaction is in compliance
with the terms of the indenture and such Restricted Subsidiary is
released from all guarantees, if any, by it or other Indebtedness of
Centennial Cellular Operating or any Restricted Subsidiaries, or
(2) the release by the holders of the Indebtedness of Centennial
Cellular Operating described in clause (a) above or their guarantee
by such Restricted Subsidiary, including any deemed release upon
payment in full of all obligations under such Indebtedness, which
resulted in the notes being guaranteed by such Restricted
Subsidiary, at such time as
. no other Indebtedness of Centennial Cellular Operating has been
guaranteed by such Restricted Subsidiary or
. the holders of all such other Indebtedness which is guaranteed by
such Restricted Subsidiary also release their guarantee by such
Restricted Subsidiary, including any deemed release upon payment
in full of all obligations under such Indebtedness.
Limitation on Asset Sales and Sales of Subsidiary Stock. Centennial
Cellular Operating will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale, unless
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(1) with respect to any transaction or related series of transactions of
securities, property or assets with an aggregate fair market value
in excess of $2,500,000, at least 75% of the value of consideration
for the assets disposed of in such Asset Sale consists of cash or
Cash Equivalents, provided that any cash or Cash Equivalents
received within 12 months following any such Asset Sale upon
conversion of any property or assets, other than in the form of cash
or Cash Equivalents, received in consideration of such Asset Sale
shall be applied promptly in the manner required of Net Cash
Proceeds of any such Asset Sale as set forth above; provided further
that Centennial Cellular Operating and its Restricted Subsidiaries
will not be required to receive any cash in connection with the
transfer or contribution of assets to a joint venture, excluding
. Senior Indebtedness under a bank credit facility (and any
Refinancing Indebtedness issued to refinance any such
Indebtedness) or any Indebtedness of a Restricted Subsidiary in
each case that is assumed by a transferee which assumption
permanently reduces the amount of Indebtedness outstanding on
December 15, 1998 and permitted to have been Incurred under the
covenant "--Limitation on Incurrence of Additional Indebtedness",
including that in the case of a revolver or similar arrangement
that makes credit available, such commitment is permanently
reduced by such amount,
. Purchase Money Indebtedness secured exclusively by the assets
subject to such Asset Sale which is assumed by a transferee, and
. marketable securities that are promptly converted into cash or
Cash Equivalents, and
(2) the Board of Directors of Centennial Cellular Operating determines
in good faith that Centennial Cellular Operating or such Restricted
Subsidiary, as applicable, would receive fair market value in
consideration of such Asset Sale.
Despite the above:
(1) Centennial Cellular Operating and its Restricted Subsidiaries may,
in the ordinary course of business, convey, sell, lease, transfer,
assign or otherwise dispose of assets acquired and held for resale
in the ordinary course of business,
(2) Centennial Cellular Operating and its Restricted Subsidiaries may
convey, sell, lease, transfer, assign or otherwise dispose of assets
under and in accordance with the "--Limitation on Mergers, Sales or
Consolidations" covenant,
(3) Centennial Cellular Operating and its Restricted Subsidiaries may
sell or dispose of damaged, worn out or other obsolete property in
the ordinary course of business so long as such property is no
longer necessary for the proper conduct of the business of
Centennial Cellular Operating or such Restricted Subsidiary, as
applicable,
(4) Centennial Cellular Operating and its Restricted Subsidiaries may
convey, sell, lease, transfer, assign or otherwise dispose of assets
to Centennial Cellular Operating or any of its Restricted
Subsidiaries in accordance with the terms of the indenture, and
(5) Centennial Cellular Operating and its Restricted Subsidiaries may,
in the ordinary course of business exchange all or a portion of its
property, businesses or assets for property, businesses or assets
which, or Capital Stock of a Person all or substantially all of
whose assets, are of a type used in the business of Centennial
Cellular Operating on December 14, 1998 or a Related Business;
provided that such Person shall initially be designated a
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Restricted Subsidiary if such Person becomes a Subsidiary of
Centennial Cellular Operating by virtue of such Asset Sale, or a
combination of any such property, businesses or assets, or Capital
Stock of such a Person and cash or Cash Equivalents, provided that
. if otherwise than in the ordinary course of business, in the case
of exchanges in excess of $15 million upon receipt of a favorable
written opinion by an independent financial advisor of national
reputation as to the fairness from a financial point of view to
Centennial Cellular Operating or such Restricted Subsidiary of the
proposed transaction,
. a majority of the Disinterested Directors of the Board of
Directors of Centennial Cellular Operating approve a resolution of
the board of directors that such exchange is fair to Centennial
Cellular Operating or such Restricted Subsidiary, as the case may
be,
. any cash or Cash Equivalents received pursuant to any such
exchange shall be applied in the manner applicable to Net Cash
Proceeds from an Asset Sale as set forth under "--Repurchase at
the Option of Holders--Asset Sales."
. any Capital Stock of a Person received in an Asset Sale pursuant
to this clause (5) will be owned directly by Centennial Cellular
Operating or a Restricted Subsidiary and, when combined with the
Capital Stock of such Person already owned by Centennial Cellular
Operating and its Restricted Subsidiaries, will constitute a
majority of the voting power and Capital Stock of such Person.
Restricted Payments that are made in compliance with "--Limitation on
Restricted Payments" shall not be deemed to be Asset Sales.
Limitation on Liens. Centennial Cellular Operating will not, and will not
cause or permit any Restricted Subsidiary to, directly or indirectly, create,
incur or affirm any Lien of any kind securing any Pari Passu Indebtedness or
Subordinated Indebtedness, including any assumption, guarantee or other
liability with respect to any such Lien by any Restricted Subsidiary upon any
property or assets, including any intercompany notes, of Centennial Cellular
Operating or any Restricted Subsidiary owned on December 14, 1998 or acquired
after December 14, 1998, or any income or profits therefrom, unless the new
notes are directly secured equally and ratably with or, in the case of
Subordinated Indebtedness, prior or senior to the new notes, with the same
relative priority as the new notes will have with respect to such Subordinated
Indebtedness the obligation or liability secured by such Lien except for Liens
A) securing any Indebtedness which became Indebtedness pursuant to a
transaction permitted under "--Limitation on Merger, Sale or
Consolidation" or securing Acquired Indebtedness which was created
prior to and not created in connection with, or in contemplation of
the incurrence of such Pari Passu Indebtedness or Subordinated
Indebtedness, including any assumption, guarantee or other liability
by any Restricted Subsidiary, and which Indebtedness is permitted
under the provisions of "--Limitation on Incurrence of Additional
Indebtedness," or
(B) securing any Indebtedness incurred in connection with any
refinancing, renewal, substitutions or replacements of any such
Indebtedness described in clause (A), so long as the aggregate
principal amount of Indebtedness represented by such Indebtedness,
or,
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if such Indebtedness provides for an amount less than the principal
amount of such Indebtedness to be due and payable upon a declaration
of acceleration of the maturity of such Indebtedness, the original
issue price of such Indebtedness plus any accreted value attributable
of such Indebtedness since the original issuance of such
Indebtedness, is not increased by such refinancing by an amount
greater than the lesser of
. the stated amount of any premium or other payment required to be
paid in connection with such a refinancing pursuant to the terms
of the Indebtedness being refinanced, or
. the amount of premium or other payment actually paid at such time
to refinance the Indebtedness, plus, in either case, the amount of
expenses of Centennial Cellular Operating incurred in connection
with such refinancing; provided, however, that in the case of
clauses (A) and (B), any such Lien only extends to the assets that
were subject to such Lien securing such Indebtedness prior to the
related acquisition by Centennial Cellular Operating or its
Restricted Subsidiaries.
Despite the above, any Lien securing the new notes granted under this
covenant will be automatically and unconditionally released and discharged upon
the release by the holders of the Pari Passu Indebtedness or Subordinated
Indebtedness described above of their Lien on the property or assets of
Centennial Cellular Operating or any Restricted Subsidiary, including any
deemed release upon payment in full of all obligations under such Indebtedness,
at such time as the holders of all such Pari Passu Indebtedness or Subordinated
Indebtedness also release their Lien on the property or assets of Centennial
Cellular Operating or such Restricted Subsidiary, or upon any sale, exchange or
transfer to any Person not an Affiliate of Centennial Cellular Operating of the
property or assets secured by such Lien, or of all of the Capital Stock held by
Centennial Cellular Operating or any Restricted Subsidiary in, or all or
substantially all the assets of, any Restricted Subsidiary creating such Lien.
Limitation on Merger, Sale or Consolidation. Centennial Cellular
Operating will not consolidate with or merge with or into another Person, or
sell, lease, convey, transfer or otherwise dispose of all or substantially all
of its properties and assets computed on a consolidated basis, whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons, and Centennial Cellular Operating will not permit
any Restricted Subsidiary to enter into any such transaction or series of
transactions which would result in a sale, lease, conveyance, transfer or other
disposition of all or substantially all of the properties and assets of
Centennial Cellular Operating on a consolidated basis, unless
(1) either (a) Centennial Cellular Operating is the continuing entity or
(b) the resulting, surviving or transferee entity is an entity
organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental
indenture all of the obligations of Centennial Cellular Operating in
connection with the new notes, the indenture, as the case may be,
and the new notes, the indenture will remain in full force and
effect as so supplemented and any Guarantee shall be confirmed as
applied to the surviving entity's obligations,
(2) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a pro forma basis (and treating
any Indebtedness not previously an obligation of Centennial Cellular
Operating or any of its Restricted Subsidiaries which becomes the
obligation of Centennial Cellular Operating or any of its Restricted
Subsidiaries as a
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result of such transaction as having been incurred at the time of
such transaction) to such transaction,
(3) immediately before and immediately after giving effect to such
transaction on a pro forma basis (on the assumption that the
transaction occurred on the first day of the four-quarter period for
which financial statements are available ending immediately prior to
the consummation of such transaction with the appropriate
adjustments with respect to the transaction being included in such
pro forma calculation), either Centennial Cellular Operating or
resulting surviving or transferee entity would immediately
thereafter be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Annual Operating Cash Flow Ratio
provision set forth in the second paragraph of the "--Limitation on
Incurrence of Additional Indebtedness" covenant or such Annual
Operating Cash Flow Ratio would be lower than such ratio immediately
prior to such transaction,
(4) at the time of the transaction any co-obligor, unless it is the
other party to the transaction described above, will have by
supplemental indenture confirmed that it remains a co-obligor under
the indenture and the new notes,
(5) at the time of the transaction each Guarantor, if any, unless it is
the other party to the transaction described above, will have by
supplemental indenture confirmed that its Guarantee shall apply to
such Person's obligations under the indenture and the new notes, and
(6) at the time of the transaction Centennial Cellular Operating or the
resulting surviving or transferee entity will have delivered, or
caused to be delivered, to the trustee, in form and substance
reasonably satisfactory to the trustee, an officers' certificate and
an opinion of counsel, each to the effect that such consolidation,
merger, transfer, sale, assignment, conveyance, transfer, lease or
other transaction and the supplemental indenture in respect thereof
comply with the indenture and that all conditions precedent therein
provided for relating to such transaction have been complied with.
Despite the above, any Restricted Subsidiary may merge with and into any
other Restricted Subsidiary or Centennial Cellular Operating.
Centennial will not, in a single transaction or through a series of
related transactions, consolidate with or merge with or into any other Person,
other than Centennial Cellular Operating or any Guarantor or sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of
its properties and assets to any Person or group of Persons (other than
Centennial Cellular Operating or any Guarantor) unless at the time and after
giving effect thereto:
(1) either (a) Centennial will be the continuing corporation or (b) the
Person (if other than Centennial) formed by such consolidation or
into which Centennial is merged or the Person which acquires by
sale, assignment, conveyance, transfer, lease or disposition all or
substantially all of the properties and assets of Centennial on a
Consolidated basis will be a corporation duly organized and validly
existing under the laws of the United States of America, any state
thereof or the District of Columbia and such Person expressly
assumes, by a supplemental indenture, in a form reasonably
satisfactory to the Trustee, all the obligations of Centennial under
the new notes and the indenture and such new note and indenture will
remain in full force and effect,
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(2) immediately before and immediately after giving effect to such
transaction on a pro forma basis, no Default or Event of Default
will have occurred and be continuing, and
(3) at the time of the transaction Centennial or the surviving entity
will have delivered, or caused to be delivered, to the trustee, in
form and substance reasonably satisfactory to the trustee, an
officers' certificate and an opinion of counsel, each to the effect
that such consolidation, merger, transfer, sale, assignment,
conveyance, lease or other transaction and the supplemental
indenture in respect thereof comply with the indenture and that all
conditions precedent therein provided for relating to such
transaction have been complied with.
In the event that Centennial merges or consolidates with or into
Centennial Cellular Operating, the provisions of the first paragraph of this
Section are also required to be satisfied.
Upon any consolidation or merger or any transfer, other than a lease, of
all or substantially all of the assets of Centennial Cellular Operating or
Centennial, as the case may be in accordance with the above, the successor
corporation formed by such consolidation or into which Centennial Cellular
Operating or Centennial, as the case may be, is merged or to which such
transfer is made, will succeed to, and be substituted for, and may exercise
every right and power of, Centennial Cellular Operating or Centennial, as the
case may be, under the indenture with the same effect as if such successor
entity had been named in the indenture as Centennial Cellular Operating or
Centennial, as the case may be, and Centennial Cellular Operating or
Centennial, as the case may be, except in connection with a transfer that
results in the transfer of assets constituting or accounting for less than 95%
of the consolidated assets will as of the last balance sheet available,
revenues, or Annual Operating Cash Flow of Centennial Cellular Operating or
Centennial, as the case may be (as of the last twelve month period for which
financial statements are available, will be released from the obligations under
the new notes and the indenture.
Limitation on Lines of Business. Neither Centennial Cellular Operating
nor any of its Restricted Subsidiaries will directly or indirectly engage in
any line or lines of business activity other than that which, in the
reasonable, good faith judgment of the board of directors of Centennial
Cellular Operating, is a Related Business.
Limitation on Senior Subordinated Indebtedness. We will not, and will not
permit or cause any Guarantor to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise in any manner become directly or indirectly
liable for or with respect to or otherwise permit to exist any Indebtedness
that is subordinate in right of payment to any of our Indebtedness or such
Guarantor, as the case may be, unless such Indebtedness is also pari passu with
the new notes or the Guarantee of such Guarantor or subordinated in right of
payment to the new notes or such Guarantee at least to the same extent as the
notes or such Guarantee are subordinated in right of payment to Senior
Indebtedness or Senior Indebtedness of such Guarantor, as the case may be, as
set forth in the indenture.
Limitation on Unrestricted Subsidiaries. Centennial Cellular Operating
may designate any Subsidiary, other than a Guarantor, as an "Unrestricted
Subsidiary" under the indenture (a "Designation") only if:
(a) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation,
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(b) Centennial Cellular Operating would be permitted to make an
Investment at the time of Designation, assuming the effectiveness of
such Designation, under "--Limitation on Restricted Payments" above
in an amount (the "Designation Amount") equal to the greater of (1)
the net book value of Centennial Cellular Operating's interest in
such Subsidiary calculated in accordance with GAAP or (2) the fair
market value of Centennial Cellular Operating's interest in such
Subsidiary as determined in good faith by Centennial Cellular
Operating's board of directors,
(c) such Unrestricted Subsidiary does not own any Capital Stock in any
Restricted Subsidiary of Centennial Cellular Operating which is not
simultaneously being designated an Unrestricted Subsidiary,
(d) such Unrestricted Subsidiary is not liable, directly or indirectly,
with respect to any Indebtedness other than Unrestricted Subsidiary
Indebtedness, provided that an Unrestricted Subsidiary may provide a
Guarantee for the new notes, and
(e) such Unrestricted Subsidiary is not a party to any agreement,
contract, arrangement or understanding at such time with Centennial
Cellular Operating or any Restricted Subsidiary unless the terms of
any such agreement, contract, arrangement or understanding are no
less favorable to Centennial Cellular Operating or such Restricted
Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of Centennial Cellular Operating or,
in the event such condition is not satisfied, the value of such
agreement, contract, arrangement or understanding to such
Unrestricted Subsidiary will be considered a Restricted Payment.
In the event of any such Designation, Centennial Cellular Operating will
be deemed to have made an Investment constituting a Restricted Payment pursuant
to the covenant "--Limitation on Restricted Payments" for all purposes of the
indenture in the Designation Amount.
Centennial Cellular Operating will not and will not cause or permit any
Restricted Subsidiary to at any time
. provide credit support for (provided that operational contracts in
the ordinary course of business shall not be deemed credit support),
or subject any of its property or assets, other than the Capital
Stock of any Unrestricted Subsidiary, to the satisfaction of, any
Indebtedness of any Unrestricted Subsidiary, including any
undertaking, agreement or instrument constituting such Indebtedness,
other than Permitted Investments in Unrestricted Subsidiaries, or
. be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary.
For purposes of the above, the Designation of a Subsidiary of Centennial
Cellular Operating as an Unrestricted Subsidiary will be deemed to be the
Designation of all of the Subsidiaries of such Subsidiary as Unrestricted
Subsidiaries.
Centennial Cellular Operating may revoke any Designation of a Subsidiary
as an Unrestricted Subsidiary (a "Revocation") if:
(a) no Default shall have occurred and be continuing at the time of and
after giving effect to such Revocation,
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(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred
at such time, have been permitted to be incurred for all purposes of
the indenture, and
(c) unless such redesignated Subsidiary shall not have any Indebtedness
outstanding, other than Indebtedness that would be Permitted
Indebtedness, immediately after giving effect to such proposed
Revocation, and after giving pro forma effect to the incurrence of
any such Indebtedness of such redesignated Subsidiary as if such
Indebtedness was incurred on the date of the Revocation, Centennial
Cellular Operating could incur $1.00 of additional Indebtedness,
other than Permitted Indebtedness, pursuant to the covenant
described under "--Limitation on Incurrence of Additional
Indebtedness."
All Designations and Revocations must be evidenced by a resolution of the
board of directors of Centennial Cellular Operating delivered to the Trustee
certifying compliance with the foregoing provisions.
Provision of Financial Statements. Whether or not Centennial Cellular
Operating is subject to Section 13(a) or 15(d) of the Exchange Act, so long as
any new notes are outstanding, Centennial Cellular Operating will, to the
extent permitted under the Exchange Act, file with the SEC the annual reports,
quarterly reports and other documents which Centennial Cellular Operating would
have been required to file with the SEC pursuant to Section 13(a) or 15(d) if
it were so subject, such documents to be filed with the SEC on or prior to the
date (the "Required Filing Date") by which Centennial Cellular Operating would
have been required so to file such documents if it were so subject. Centennial
Cellular Operating will also in any event
. within 15 days of each Required Filing Date, whether or not prior to
the 120th calendar day following January 7, 1999) (i) transmit by
mail to all holders, as their names and addresses appear in the
security register, without cost to such holders and (ii) file with
the trustee copies of the annual reports, quarterly reports and
other documents which Centennial Cellular Operating would have been
required to file with the SEC pursuant to Section 13(a) or 15(d) of
the Exchange Act if Centennial Cellular Operating were subject to
either of such Sections, and
. if filing such documents by Centennial Cellular Operating with the
SEC is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and
delivery, supply copies of such documents to any prospective
purchaser of notes at Centennial Cellular Operating's cost.
So long as any of the new notes remain outstanding, Centennial Cellular
Operating will make new notes available to any prospective purchaser of new
notes or beneficial owner of notes in connection with any sale of the
information required by Rule 144A(d)(4) under the Securities Act, until such
time as Centennial Cellular Operating has either exchanged the notes for
securities identical in all material respects which have been registered under
the Securities Act or until such time as the holders thereof have disposed of
such new notes pursuant to an effective registration statement under the
Securities Act. Centennial Cellular Operating will be deemed to have satisfied
the requirements set forth above if (a) Centennial prepares, files, mails and
supplies reports and other documents prepared on a consolidated basis of the
types required above, in each case within the applicable time periods, (b)
Centennial Cellular Operating is not required to file such reports and other
documents separately under the applicable rules and regulations of the SEC
(after giving effect to any exemptive relief) because of the filings made by
Centennial, (c) Centennial does not own
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assets in excess of $10 million other than the Capital Stock of Centennial
Cellular Operating, and (d) Centennial does not have outstanding Indebtedness
in excess of $10 million, other than indebtedness under the Mezzanine Financing
and Indebtedness as to which Centennial Cellular Operating is also liable).
Amendments to Mezzanine Financing. The Mezzanine Financing will be in
substantially the form attached to the indenture and Centennial will not amend
the terms of the Mezzanine Financing in a manner adverse to the holders of new
notes.
Additional Covenants. The indenture also contains covenants with respect
to the following matters:
. payment of principal, premium and interest,
. maintenance of an office or agency in The City of New York,
. arrangements regarding the handling of money held in trust,
. maintenance of corporate existence,
. payment of taxes and other claims,
. maintenance of properties, and
. maintenance of insurance.
Events of Default and Remedies
The Indenture defines an Event of Default as:
(1) the failure by us to pay any installment of interest on the notes as
and when the same becomes due and payable and, with respect to any
installment of interest after the first three Interest Payment
Dates, the continuance of such failure for 30 days, whether or not
prohibited by the subordination provisions of the indenture,
(2) the failure by us to pay all or any part of the principal, or
premium, if any, on the notes when and as the same becomes due and
payable at maturity, redemption, by acceleration or otherwise,
including, without limitation, payment of the Change of Control
Purchase Price or the Asset Sale Offer Price, whether or not
prohibited by the subordination provisions of the Indenture,
(3) the failure by us to observe or perform any other covenant or
agreement contained in the notes or the indenture and, subject to
certain exceptions, the continuance of such failure for a period of
30 days after written notice is given to Centennial Cellular
Operating by the trustee or to Centennial Cellular Operating and the
trustee by the holders of at least 25% in aggregate principal amount
of the notes outstanding,
(4) there shall have been the entry by a court of competent jurisdiction
of (a) a decree or order for relief in respect of Centennial,
Centennial Cellular Operating or any Significant Restricted
Subsidiary in an involuntary case or proceeding under any applicable
Bankruptcy Law or (b) a decree or order adjudging Centennial,
Centennial Cellular Operating, or any Significant Restricted
Subsidiary bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment or composition of or in respect of
Centennial, Centennial Cellular Operating, or any Significant
Restricted Subsidiary under any
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applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of Centennial, Centennial Cellular Operating or any
Significant Restricted Subsidiary or of any substantial part of their
respective properties, or ordering the winding up or liquidation of
their affairs, and any such decree or order for relief shall continue
to be in effect, or any such other decree or order shall be unstayed
and in effect, for a period of 60 consecutive days,
(5) (a) Centennial, Centennial Cellular Operating, or any Significant
Restricted Subsidiary commences a voluntary case or proceeding under
any applicable Bankruptcy Law or any other case or proceeding to be
adjudicated bankrupt or insolvent, (b) Centennial, Centennial
Cellular Operating or any Significant Restricted Subsidiary consents
to the entry of a decree or order for relief in respect of
Centennial, Centennial Cellular Operating or such Significant
Restricted Subsidiary in an involuntary case or proceeding under any
applicable Bankruptcy Law or to the commencement of any bankruptcy
or insolvency case or proceeding against it, (c) Centennial,
Centennial Cellular Operating or any Significant Restricted
Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law,
(d) Centennial, Centennial Cellular Operating or any Significant
Restricted Subsidiary (I) consents to the filing of such petition or
the appointment of, or taking possession by, a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of
Centennial, Centennial Cellular Operating or such Significant
Restricted Subsidiary or of any substantial part of their respective
properties, (II) makes an assignment for the benefit of creditors or
(III) admits in writing its inability to pay its debts generally as
they become due or (e) Centennial, Centennial Cellular Operating or
any Significant Restricted Subsidiary takes any corporate action in
furtherance of any such actions in this paragraph (5),
(6) any Guarantee of a Significant Restricted Subsidiary will for any
reason cease to be, or will for any reason be asserted in writing by
any Guarantor or Centennial Cellular Operating not to be, in full
force and effect and enforceable in accordance with its terms,
except to the extent contemplated by the indenture and any such
Guarantee, or Centennial will for any reason cease to be, or will
for any reason be asserted in writing not to be, a co-obligor
pursuant to the notes, except to the extent contemplated by the
indenture and the notes,
(7) one or more defaults in any Indebtedness for money borrowed by us or
any of our Restricted Subsidiaries (or the payment of which is
guaranteed by us or any of our Restricted Subsidiaries), whether
such Indebtedness or guarantee now exists or is created after
December 15, 1998, which default results from the failure to pay
Indebtedness at its final maturity date or results in the
acceleration of such Indebtedness prior to its express maturity and,
in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness
which was not paid at its final maturity date or the maturity of
which has been so accelerated, aggregates $20,000,000 or more, and
(8) final unsatisfied judgments, orders or decrees, not subject to
appeal, of any court or regulatory or administrative agency
aggregating in excess of $20,000,000 (exclusive of any portion of
any such payment covered by insurance, if and to the extent the
insurer has acknowledged in writing its liability therefor), at any
one time rendered against us or any of our Restricted Subsidiaries
and not stayed, bonded or discharged within 60 days.
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The indenture provides that, if a Default occurs and is continuing,
the trustee must, within 90 days after the occurrence of such
Default, give to the holders notice of such Default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clauses (4) and (5) above relating to us or any
Significant Restricted Subsidiary), then in every such case, unless the
principal of all of the notes shall have already become due and payable, either
the trustee or the holders of not less than 25% in aggregate principal amount
of the notes then outstanding, by notice in writing to Centennial Cellular
Operating (and to the trustee if given by holders) (an "Acceleration Notice"),
may declare all principal of the notes (or the Change in Control Purchase Price
if the Event of Default includes failure to pay the Change in Control Purchase
Price or the Special Redemption Price in connection with any Special Mandatory
Redemption if the Event of Default relates to failure to make payment in
connection with the Special Mandatory Redemption), determined as set forth
below, including in each case accrued interest on the notes to be due and
payable immediately; provided that so long as the credit facility shall be in
full force and effect, if an Event of Default shall have occurred and be
continuing (other than as specified in clauses (4) or (5) with respect to us or
any Significant Restricted Subsidiary), any such acceleration will not be
effective until the earlier to occur of (x) five business days following
delivery of a written notice of such acceleration of the notes to the agent
under the credit facility and (y) the acceleration of any Indebtedness under
the credit facility. If an Event of Default specified in clauses (4) and (5)
above relating to us or any Restricted Subsidiary occurs, all principal and
accrued interest on the notes will be immediately due and payable on all
outstanding notes without any declaration or other act on the part of trustee
or the holders. The holders of a majority in aggregate principal amount of
notes generally are authorized to rescind such acceleration if all existing
Events of Default, other than the non-payment of the principal of, premium, if
any, and interest on the notes which have become due solely by such
acceleration, have been cured or waived.
The holders of a majority in aggregate principal amount of the notes at
the time outstanding may waive on behalf of all the holders any Default, except
a Default in the payment of principal of or interest on any note not yet cured,
or a Default with respect to any covenant or provision which cannot be modified
or amended without the consent of the holder of each outstanding note affected.
Subject to the provisions of the Indenture relating to the duties of the
trustee, the trustee will be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
holders, unless such holders have offered to the trustee reasonable security or
indemnity. Subject to all provisions of the indenture and applicable law, the
holders of a majority in aggregate principal amount of the notes at the time
outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee, or
exercising any trust or power conferred on the trustee.
No holder of any of the new notes has any right to institute any
proceedings with respect to the indenture or any remedy thereunder, unless
. the holders of at least 25% in aggregate principal amount of the
outstanding notes have made written request, and offered reasonable
indemnity, to the trustee to institute such proceeding as trustee
under the notes and the indenture, and
. the trustee has failed to institute such proceeding within 15 days
after receipt of such notice and the trustee, within such 15-day
period, has not received directions
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inconsistent with such written request by holders of a majority in
aggregate principal amount of the outstanding notes.
Such limitations do not, however, apply to a suit instituted by a holder
of a new note for the enforcement of the payment of the principal of, premium,
if any, or interest on such note on or after the respective due dates
expressed in such note.
We must notify the trustee within five business days after any Default.
We must deliver to the trustee, not more than 120 days after the end of each
fiscal year, a written statement as to compliance with the indenture,
including whether or not any Default has occurred.
The Trust Indenture Act contains limitations on the rights of the
trustee, should it become a creditor of us or any Guarantor, if any, to obtain
payment of claims in certain cases or to realize on certain property received
by it in respect of any such claims, as security or otherwise. The trustee is
permitted to engage in other transactions, provided that if it acquires any
conflicting interest it must eliminate such conflict upon the occurrence of an
Event of Default or else resign.
Legal Defeasance and Covenant Defeasance
Centennial Cellular Operating may, at its option and at any time, elect
to have our obligations and the obligations of any Guarantor and any other
obligor upon the new notes discharged with respect to the outstanding notes
("Legal Defeasance"). Such Legal Defeasance means that we, any such Guarantor
and any other obligor under the indenture shall be deemed to have paid and
discharged the entire indebtedness represented, and the indenture shall cease
to be of further effect as to all outstanding notes, except as to
(1) rights of Holders to receive payments in respect of the principal
of, premium, if any, and interest on such notes when such payments
are due from the trust funds,
(2) our obligations with respect to such notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost
or stolen notes, and the maintenance of an office or agency for
payment and money for security payments held in trust,
(3) the rights, powers, trust, duties, and immunities of the trustee,
and Centennial Cellular Operating's obligations in connection with
the indenture, and
(4) the Legal Defeasance provisions of the indenture.
In addition, Centennial Cellular Operating may, at its option and at any
time, elect to have our obligations and the obligations of any Guarantor
released with respect to certain covenants that are described in the indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the notes. In the event Covenant Defeasance occurs, certain events (not
including events described in clauses (1), (2), (4) (with respect to the Co-
Obligors) and (5) (with respect to the us) described under "--Events of
Default") will no longer constitute an Event of Default with respect to the
new notes.
In order to exercise either Legal Defeasance or Covenant Defeasance,
(1) Centennial Cellular Operating must irrevocably deposit with the
trustee, in trust, for the benefit of the holders, U.S. Legal
Tender, non-callable government securities or a combination thereof,
in such amounts as will be sufficient, in the opinion of a
nationally
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recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such notes on the
stated date for payment thereof or on any redemption date of such
principal or installment of principal of, premium, if any, or
interest on such notes, and the holders of notes must have a valid,
perfected, exclusive security interest in such trust,
(2) in the case of Legal Defeasance, Centennial Cellular Operating shall
have delivered to the trustee an opinion of counsel in the United
States reasonably acceptable to the trustee confirming that
. Centennial Cellular Operating has received from, or there has been
published by the Internal Revenue Service, a ruling, or
. since the date of the indenture, there has been a change in the
applicable Federal income tax law, in each case to the effect
that, and based thereon such opinion of counsel will confirm that,
the holders of such notes will not recognize income, gain or loss
for Federal income tax purposes as a result of such Legal
Defeasance, and will be subject to Federal income tax in the same
amount, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred,
(3) in the case of Covenant Defeasance, Centennial Cellular Operating
will have delivered to the trustee an opinion of counsel in the
United States reasonably acceptable to such trustee confirming that
the holders of such notes will not recognize income, gain or loss
for Federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred,
(4) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91 date of deposit (other than a Default which
results from the borrowing of amounts to finance the defeasance and
which borrowing does not result in a breach or violation of, or
constitute a default under, any other material agreement or
instrument to which we or any Restricted Subsidiary is a party or to
which it is bound) (it being understood that such condition will not
be satisfied until the expiration of such 91-day period),
(5) we shall have delivered to the trustee an opinion of counsel in the
United States reasonably acceptable to the trustee to the effect
that (assuming that no holder of any notes would be considered an
insider of Centennial Cellular Operating under any applicable
bankruptcy or insolvency law) after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors rights generally,
(6) such defeasance or covenant defeasance shall not cause the trustee
to have a conflicting interest for purposes of the Trust Indenture
Act with respect to any securities of Centennial Cellular Operating
or any Guarantor,
(7) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under the indenture
or any other material agreement or instrument to which we or any of
our Subsidiaries is a party or by which we or any of our
Subsidiaries is bound,
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(8) we will have delivered to the trustee an officers' certificate
stating that the deposit was not made by Centennial Cellular
Operating with the intent of preferring the holders of such notes
over any other creditors of Centennial Cellular Operating or with
the intent of defeating, hindering, delaying or defrauding any other
creditors of Centennial Cellular Operating or others, and
(9) Centennial Cellular Operating will have delivered to the trustee an
officers' certificate and opinion of counsel each stating that all
conditions precedent provided for or relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
Satisfaction and Discharge
The indenture will be discharged and will cease to be of further effect,
except as to surviving rights of registration of transfer or exchange of the
notes as expressly provided for in the indenture, as to all outstanding notes
under the indenture when
(a) either
. all such notes theretofore authenticated and delivered, except
lost, stolen or destroyed notes which have been replaced or paid
or notes whose payment has been deposited in trust or segregated
and held in trust by Centennial Cellular Operating and thereafter
repaid to Centennial Cellular Operating or discharged from such
trust as provided for in the indenture, have been delivered to the
trustee for cancellation, or
. all notes not theretofore delivered to the trustee for
cancellation (x) have become due and payable, (y) will become due
and payable at their Stated Maturity within one year, or (z) are
to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption
by the trustee in the name, and at the expense, of Centennial
Cellular Operating; and we or any Guarantor has irrevocably
deposited or caused to be deposited with the trustee as trust
funds in trust an amount in United States dollars sufficient to
pay and discharge the entire indebtedness on the notes not
theretofore delivered to the trustee for cancellation, including
principal of, premium, if any, and accrued interest at Maturity,
Stated Maturity or redemption date,
(b) we or any Guarantor has paid or caused to be paid all other sums
payable under the indenture by us and any Guarantor, and
(c) we have delivered to the trustee an officers' certificate and an
opinion of independent counsel each stating that (i) all conditions
precedent under the indenture relating to the satisfaction and
discharge of such indenture have been complied with and (ii) such
satisfaction and discharge will not result in a breach or violation
of, or constitute a default under, the indenture or any other
material agreement or instrument to which we, any Guarantor or any
Subsidiary is a party or by which we, any Guarantor or any
Subsidiary is bound.
Amendments and Supplements
We and the trustee may enter into a supplemental indenture for certain
limited purposes without the consent of the holders. With the consent of the
holders of not less than a majority in aggregate principal amount of the notes
at the time outstanding, we, each Guarantor, if any, and the
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trustee are permitted to amend or supplement the indenture or any supplemental
indenture or modify the rights of the holders; provided that no such
modification may, without the consent of each holder affected thereby:
(1) change the Stated Maturity of, or the Change of Control Purchase
Date or the Asset Sale Offer Period on, or change to an earlier date
any redemption date of, any note, or reduce the principal amount
thereof or the rate (or extend the time for payment) of interest
thereon or any premium payable upon the redemption thereof, or
change the place of payment where, or the coin or currency in which,
any note or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the redemption date), or reduce the Change
of Control Purchase Price or the Asset Sale Offer Price or alter the
redemption provisions or the provisions of the "--Repurchase of
Notes at the Option of the Holder Upon a Change of Control"
covenant, including, in each case, amending, changing or modifying
any definitions related thereto, but only to the extent such
definitions relate thereto, in a manner adverse to the holders,
(2) reduce the percentage in principal amount of the outstanding notes,
the consent of whose holders is required for any such amendment,
supplemental indenture or waiver provided for in the indenture,
(3) modify any of the waiver provisions, except to increase any required
percentage or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the
holder of each outstanding note affected thereby,
(4) except as otherwise permitted under "--Certain Covenants--Limitation
on Merger, Sale or Consolidation," consent to the assignment or
transfer by us or any Guarantor of any of its rights and obligations
under the indenture, or
(5) amend or modify any of the provisions of the indenture relating to
the subordination of the notes or any Guarantee in any manner
adverse to the holders of the notes or any Guarantee.
Despite the above, without the consent of any holders of the notes, we,
any Guarantor, any other obligor under the notes and the trustee may modify or
amend the indenture:
(a) to evidence the succession of another Person to Centennial,
Centennial Cellular Operating or a Guarantor, and the assumption by
any such successor of the covenants of Centennial, Centennial
Cellular Operating or such Guarantor in the indenture and in the
notes and in any Guarantee in accordance with "--Covenants--
Limitation on Merger, Sale or Consolidation,"
(b) to add to the covenants of Centennial, Centennial Cellular
Operating, any Guarantor or any other obligor upon the notes for the
benefit of the holders of the notes or to surrender any right or
power conferred upon Centennial, Centennial Cellular Operating or
any Guarantor or any other obligor upon the notes, as applicable, in
the indenture, in the notes or in any Guarantee,
(c) to cure any ambiguity, or to correct or supplement any provision in
the indenture, the notes or any Guarantee which may be defective or
inconsistent with any other provision in the indenture, the notes or
any Guarantee or make any other provisions with respect to matters
or questions arising under the indenture, the notes or any
Guarantee; provided
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that, in each case, such provisions shall not adversely affect the
interest of the holders of the notes,
(d) to comply with the requirements of the SEC in order to effect or
maintain the qualification of the indenture under the Trust
Indenture Act,
(e) to add a Guarantor under the indenture,
(f) to evidence and provide the acceptance of the appointment of a
successor trustee under the indenture, or
(g) to mortgage, pledge, hypothecate or grant a security interest in
favor of the trustee for the benefit of the holders of the notes as
additional security for the payment and performance of Centennial's,
Centennial Cellular Operating's and any Guarantor's obligations
under the indenture, in any property, or assets, including any of
which are required to be mortgaged, pledged or hypothecated, or in
which a security interest is required to be granted to the trustee
pursuant to the Indenture or otherwise.
The holders of a majority in aggregate principal amount of the notes
outstanding may waive compliance with certain restrictive covenants and
provisions of the indenture.
No Personal Liability of Partners, Stockholders, Officers, Directors
No direct or indirect stockholder (or partner, limited liability company
member or employee of a stockholder), employee, officer or director, as such,
past, present or future of us or any successor entity or any Affiliate of us
will have any personal liability in respect of our obligations under the
indenture or the notes by reason of his or its status as such stockholder,
employee, officer or director.
Governing Law
The indenture, the notes and any Guarantee will be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to the conflicts of law principles thereof.
Concerning the Trustee
The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of Centennial or Centennial Cellular Operating, to
obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise. The trustee
will be permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the SEC for permission to continue as trustee with such conflict or resign as
trustee.
The holders of a majority in principal amount of the then outstanding
notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
occurs (which has not been cured), the trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request of any holder of notes unless such holder shall have offered to
the trustee security and indemnity satisfactory to it against any loss,
liability or expense.
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Certain Definitions
Set forth below are certain defined terms used in the indenture.
Reference is made to the indenture for the full definition of all such terms,
as well as any other terms used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (1) existing at
the time such Person becomes a Restricted Subsidiary or (2) assumed in
connection with the acquisition of assets from such Person, in each case,
other than Indebtedness incurred in connection with, or in contemplation of,
such Person becoming a Restricted Subsidiary or such acquisition, as the case
may be. Acquired Indebtedness will be deemed to be Incurred on the date of the
related acquisition of assets from any Person or the date the acquired Person
becomes a Restricted Subsidiary, as the case may be.
"Affiliate" means, with respect to any specified Person, (1) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person or (2) any officer,
director, or controlling stockholder of such other Person. For purposes of
this definition, the term "control" means (a) the power to direct the
management and policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by
contract, or otherwise, or (b) without limiting the foregoing, the beneficial
ownership of 10% or more of the voting power of the voting common equity of
such Person (on a fully diluted basis) or of warrants or other rights to
acquire such equity (whether or not presently exercisable).
"Annual Operating Cash Flow" on any date means, with respect to any
Person, the Operating Cash Flow for the Reference Period.
"Annual Operating Cash Flow Ratio" on any date (the "Transaction Date")
means, with respect to any Person and its Restricted Subsidiaries, the ratio
of:
(1) consolidated Indebtedness of such Person and its Restricted
Subsidiaries on the Transaction Date (after giving pro forma effect to the
Incurrence of such Indebtedness) (and without duplication of any
Indebtedness that may be the obligation of such Person and/or one or more
of its Subsidiaries) divided by
(2) the aggregate amount of Annual Operating Cash Flow of such Person
(determined on a pro forma basis after giving effect to all Investments in
and acquisitions or dispositions of any company or any business or any
assets out of the ordinary course of business, whether by merger, stock
purchase or sale or asset purchase or sale, made by such Person and its
Subsidiaries from the beginning of the Reference Period through the
Transaction Date as if such Investment, acquisition or disposition had
occurred at the beginning of such Reference Period);
provided that, for purposes of such computation, in calculating Annual
Operating Cash Flow and consolidated Indebtedness,
(a) the transaction giving rise to the need to calculate the Annual
Operating Cash Flow Ratio will be assumed to have occurred (on a pro forma
basis) on the first day of the Reference Period;
(b) the incurrence of any Indebtedness during the Reference Period or
subsequent thereto and on or prior to the Transaction Date (and the
application of the proceeds therefrom to the extent
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used to retire Indebtedness or to acquire businesses) will be assumed to
have occurred (on a pro forma basis) on the first day of such Reference
Period;
(c) Consolidated Interest Expense attributable to any Indebtedness
(whether existing or being incurred) bearing a floating interest rate shall
be computed as if the rate in effect on the Transaction Date had been the
applicable rate for the entire period; and
(d) all members of the consolidated group of such Person on the
Transaction Date terence Period shall be deemed to be members of the
consolidated group of such Person for the entire Reference Period.
When the above definition is used in connection with Centennial Cellular
Operating and its Restricted Subsidiaries, references to a Person and its
Subsidiaries in the foregoing definition shall be deemed to refer to
Centennial Cellular Operating and its Restricted Subsidiaries. Any such pro
forma calculation may include adjustments for the pro forma effect of (a) any
cost savings accounted for on an annualized basis as a result of an
acquisition by Centennial Cellular Operating or a Restricted Subsidiary which,
in the good faith judgment of Centennial Cellular Operating (as determined by
a resolution of the board of directors of Centennial Cellular Operating), will
be eliminated or realized within one year after the date of such transaction
(provided that any such cost savings are calculated in accordance with
Regulation S-X under the Securities Act (or any successor regulation)) or (b)
any direct quantifiable savings from the conversion of roaming expense which
Centennial Cellular Operating will obtain within one year of the transaction
in the good faith judgment of the board of directors of Centennial Cellular
Operating from the acquisition of a third party which prior to such
acquisition had a contract with Centennial Cellular Operating or any
Restricted Subsidiary for roaming services.
"Applicable Premium" means, with respect to a note at any redemption
date, the excess of (A) the present value at such time of (1) the redemption
price of such note at December 15, 2003 (such redemption price being described
under "--Optional Redemption"), plus (2) all required interest payments
(excluding accrued but unpaid interest) due on such note through December 15,
2003, computed using a discount rate equal to the Treasury Rate plus 50 basis
points, over (B) the then outstanding principal amount of such note.
"Asset Sale" means, the conveyance, sale transfer, assignment or other
disposal of, directly or indirectly, in one or more transactions, any
property, business or assets, including by merger or consolidation or sale and
leaseback transaction, and including the sale or other transfer or issuance of
any Capital Stock of any Restricted Subsidiary of Centennial Cellular
Operating, whether by Centennial Cellular Operating or a Restricted
Subsidiary.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978,
as amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding up, liquidation, reorganization
or relief of debtors or any amendment to, succession to or change in any such
law.
"Capitalized Lease Obligations" means obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations, as determined in accordance with
GAAP.
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"Capital Stock" means, with respect to any Person, any capital stock of
such Person and shares, interests, participations or other ownership interests
(however designated) of any Person and any rights (other than debt securities
convertible into capital stock), warrants and options to purchase any of the
foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation, each general
and limited partnership interest of such Person if such Person is a
partnership and all membership or other interests if such Person is a limited-
liability company, and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distribution of assets of, the issuing Person.
"Cash from Minority Cellular Investment Interests" means any dividends,
distributions, interest payments or other periodic payments of cash
(collectively a "cash distribution") received directly or indirectly by
Centennial Cellular Operating from its Minority Cellular Investment Interests;
provided, however, that "Cash from Minority Cellular Investment Interests"
will not include any proceeds received directly by Centennial Cellular
Operating from the liquidation, sale, merger, consolidation, transfer or other
disposition (collectively, a "sale") of any Minority Cellular Investment
Interest, except that Cash from Minority Cellular Investment Interests shall
include in every fiscal year ending after the sale of any Minority Cellular
Investment Interest an amount equal to the cash distributions received
directly or indirectly by Centennial Cellular Operating from such Minority
Cellular Investment Interest during the twelve months prior to such sale if
either (a) the proceeds of such sale are used to permanently reduce the amount
of Indebtedness which may be borrowed under the credit facility in accordance
with clause (i) of the third paragraph of "--Limitation on Incurrence of
Additional Indebtedness" or (b) at the time of any Restricted Payment being
made pursuant to clause (ix) of the second paragraph of "--Limitation on
Restricted Payments," Centennial Cellular Operating would be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Annual
Operating Cash Flow Ratio provision set forth in the second paragraph of "--
Limitation on Incurrence of Additional Indebtedness" assuming that Centennial
Cellular Operating was the obligor of additional Indebtedness in a principal
amount equal to the net after-tax proceeds received from such sale.
"Cash Equivalents" means (1) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (2) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by Standard & Poor's Ratings Group or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition and (3) investments in
money market funds substantially all of whose assets comprise securities of
the types described in clauses (1) and (2) above.
"Centennial de Puerto Rico" means a direct or indirect Restricted
Subsidiary of Centennial Cellular Operating which controls Centennial Cellular
Operating's Puerto Rico operations.
"Change of Control" means the occurrence of any of the following events:
(1) Centennial or Centennial Cellular Operating consolidates with or
merges with or into any Person or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets
to any Person, or any Person consolidates with or merges into or with
Centennial or Centennial Cellular Operating, in any such event pursuant
to a transaction
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in which the outstanding Voting Stock of Centennial or Centennial
Cellular Operating is converted into or exchanged for cash, securities
or other property, other than any such transaction where
(A) the outstanding Voting Stock of Centennial or Centennial
Cellular Operating is changed into or exchanged for (x) Voting Stock
of the surviving corporation which is not Disqualified Capital Stock
or (y) cash, securities and other property (other than Capital Stock
of the surviving corporation) in an amount which could be paid by
Centennial or Centennial Cellular Operating as a Restricted Payment
as described under "--Certain Covenants--Limitation on Restricted
Payments" (and such amount will be treated as a Restricted Payment
subject to the provisions in the indenture described under "--Certain
Covenants--Limitation on Restricted Payments") and
(B) immediately after such transaction, no "person" or "group,"
other than Welsh Carson or Blackstone, is the beneficial owner (as
such term is used in Rule 13d-3 and 13d-5 promulgated pursuant to the
Exchange Act), directly or indirectly, more than 50% of the total
outstanding Voting Stock of the surviving corporation,
(2) any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), other than Permitted Holders, is or becomes the "beneficial
owner" (as such term is used in Rule 13d-3 and 13d-5 promulgated
pursuant to the Exchange Act), directly or indirectly, of Voting Stock
representing more than 50% of the voting power of the Voting Stock of
Centennial or Centennial Cellular Operating then outstanding normally
entitled to vote in elections of directors or
(3) during any period of 12 consecutive months, individuals who at
the beginning of any such 12-month period constituted the board of
directors of Centennial or Centennial Cellular Operating (together with
any new directors whose election to such board or whose nomination for
election by the shareholders of Centennial or Centennial Cellular
Operating was designated by the Welsh Carson or Blackstone or approved
by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
to constitute at least a majority of the board of directors of
Centennial or Centennial Cellular Operating then in office. Each of (1)
through (3) of this definition shall also be deemed to apply to any
Restricted Subsidiary of Centennial which directly or indirectly
controls Centennial Cellular Operating.
"Change of Control Offer" means an irrevocable and unconditional offer
by us to repurchase the outstanding notes if a Change of Control has occurred.
"Closing Price" on any Trading Day with respect to the per share price
of any shares of Capital Stock means the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the
Nasdaq National Market or, if such shares are not listed or admitted to
trading on any national securities exchange or quoted on Nasdaq National
Market but Centennial Cellular Operating is a Foreign Company (as defined in
Rule 3b-4(b) under the Exchange Act) and the
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principal securities exchange on which such shares are listed or admitted to
trading is a Designated Offshore Securities Market (as defined in Rule 902(a)
under the Securities Act), the average of the reported closing bid and asked
prices regular way on such principal exchange, or, if such shares are not
listed or admitted to trading on any national securities exchange or quoted on
the Nasdaq National Market and Centennial Cellular Operating and principal
securities exchange do not meet such requirements, the average of the closing
bid and asked prices in the over-the-counter market as furnished by any New
York Stock Exchange member firm is selected from time to time by Centennial
Cellular Operating for that purpose and is reasonably acceptable to the
Trustee.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker, having a maturity comparable to
the first redemption date of the notes, that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of a comparable maturity to the first
redemption date of such notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the trustee after consultation with
Centennial Operating Cellular.
"Comparable Treasury Price" means, with respect to any Redemption Date,
(A) the average of the Reference Treasury Dealer Quotations for such Redemption
Date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any Redemption Date, the average, as determined by the trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the trustee
by such Reference Treasury Dealer at 3:30 p.m., New York time, on the third
business day preceding such Redemption Date.
"Consolidated Interest Expense" of any Person means, for any period, the
sum of, without duplication and determined in each case in accordance with GAAP
(a) interest expensed or capitalized, paid, accrued, or scheduled to be
paid or accrued (including, in accordance with the following
sentence, interest attributable to the Capitalized Lease
Obligations) of such Person and its consolidated Restricted
Subsidiaries during such period, including
. original issue discount and non-cash interest payments or accruals
on any Indebtedness,
. the interest portion of all deferred payment obligations,
. all commissions, discounts and other fees and charges owed with
respect to bankers' acceptances and letters of credit financings
and currency and Interest Rate Protection Obligations and Currency
Hedging Agreements and excluding the amortization of deferred
financing fees, in each case to the extent attributable to such
period and
(b) the amount of cash dividends accrued or payable by such Person or
any of its consolidated Restricted Subsidiaries in respect of
preferred stock (other than by Restricted Subsidiaries of such
Person to such Person or such Person's Restricted Subsidiaries).
For purposes of this definition, (x) interest on a Capitalized Lease
Obligation will be deemed to accrue at an interest rate reasonably determined
by Centennial Cellular Operating to be the rate of
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interest implicit in such Capitalized Lease Obligation in accordance with GAAP
and (y) interest expense attributable to any Indebtedness represented by the
guaranty by such Person or a Subsidiary of such Person of an obligation of
another Person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed to the extent not otherwise included and whether or not
paid by such Person or Subsidiary. When the above definition is used in
connection with Centennial Cellular Operating and its Restricted Subsidiaries,
references to a Person and its Subsidiaries in the foregoing definition shall
be deemed to refer to Centennial Cellular Operating and its Restricted
Subsidiaries.
"Consolidated Net Income" of any Person, for any period, means the net
income (or loss) of such Person and its consolidated Restricted Subsidiaries
for such period, determined (on a consolidated basis) in accordance with GAAP,
adjusted to exclude, only to the extent included in computing such net income
(or loss) and without duplication,
. all extraordinary gains or losses and all gains and losses from the
sales or other dispositions of assets out of the ordinary course of
business (net of taxes, fees and expenses relating to the transaction
giving rise thereto) for such period,
. the net income, if positive, of any Person, that is not a Subsidiary,
in which such Person or any of its Subsidiaries has an interest
(other than a Minority Cellular Investment Interest), except to the
extent of the amount of dividends or distributions actually paid to
such Person or a Subsidiary of such Person,
. except as provided in the definition of "Annual Operating Cash Flow
Ratio," the net income (or loss) of any Subsidiary acquired in a
pooling of interests transaction for any period prior to the date of
such acquisition,
. for purposes of the "Covenants-- Limitation on Restricted Payments"
covenant, the net income, if positive, of any Restricted Subsidiary
of such Person that is not a Guarantor to the extent that the
declaration or payment of dividends or similar distributions is not
at the time permitted by operation of the terms of its charter or any
agreement or instrument applicable to such Subsidiary except to the
extent of the amount of dividends or distributions actually paid to
such Person or a Subsidiary of such Person,
. any gain or loss, net of taxes, realized upon the termination of any
employee benefit plan,
. any restoration to net income of any contingency reserve, except to
the extent provision for such reserve was made out of income accrued
at any time following the date of the indenture,
. any net gain or loss arising from the acquisition of any securities
such Person,
. the cumulative effect of a change in accounting principles (ix) the
amount of any nonrecurring charges or income of Centennial Cellular
Operating or any Restricted Subsidiary (including any one-time costs
incurred in connection with acquisitions after December 15, 1999)
certified as non-recurring in an officer's certificate and deducted
or included in such period in computing Consolidated Net Income and
. any net income, if positive, resulting from Centennial Cellular
Operating's Minority Cellular Investment Interests. When the
foregoing definition is used in connection with Centennial Cellular
Operating and its Restricted Subsidiaries, references to a Person and
its Subsidiaries in the above definition shall be deemed to refer to
Centennial Cellular Operating and its Restricted Subsidiaries.
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"Currency Hedging Agreements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
foreign exchange contracts, currency swap agreements or other similar
agreements or arrangements designed to protect against the fluctuations in
currency values.
"Default" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"Disinterested Director" means, with respect to any transaction or series
of related transactions, a member of the board of directors of Centennial
Cellular Operating who does not have any material direct or indirect financial
interest in or with respect to such transaction or series of related
transactions.
"Disqualified Capital Stock" means, with respect to any Person, Capital
Stock of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of any event or the passage of time would be, required to be redeemed or
repurchased, including at the option of the holder thereof, by such Person or
any of its Subsidiaries, in whole or in part, on or prior to the Stated
Maturity of the notes; provided that
. Capital Stock will not be deemed to be Disqualified Capital Stock if
it may only be so redeemed or repurchased solely in consideration of
Qualified Capital Stock of Centennial Cellular Operating and
. any Capital Stock that would not constitute Disqualified Capital
Stock but for provisions of that Capital Stock giving holders thereof
the right to require such Person to repurchase or redeem such Capital
Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the notes shall not
constitute Disqualified Capital Stock if the "asset sale" or "change
of control" provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions
contained in "Covenants--Limitation on Asset Sales and Sales of
Subsidiary Stock" and "Repurchase at the Option of the Holders--
Change of Control" covenants and such Capital Stock specifically
provides that such Person will not repurchase or redeem any such
Capital Stock pursuant to such provision prior to Centennial Cellular
Operating's repurchase of such notes as are required to be
repurchased pursuant to "Covenants--Limitation on Asset Sales and
Sales of Subsidiary Stock" and "Repurchase of Notes at the Option of
the Holders--Change of Control."
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million or its equivalent in
foreign currency, whose debt is rated "A" or higher (or the equivalent rating
or higher), according to Moody's Investors Service, Inc., Standard & Poor's
Ratings Group or Duff & Phelps Credit Rating Co., or such similar equivalent
rating by at least one "nationally recognized statistical rating organization,"
as defined in Rule 436 under the Securities Act, respectively, at the time as
of which any investment or rollover therein is made.
"Excluded Cash Contributions" has the meaning given to such item in the
covenant "--Limitation on Incurrence of Additional Indebtedness."
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"Excluded Contributions" means the net cash proceeds received by
Centennial Cellular Operating after December 15, 1998 from:
.contributions to its common equity capital and
. the sale, other than to a Subsidiary or to any Centennial Cellular
Operating or Subsidiary management equity plan or stock option plan
or any other management or employee benefit plan or agreement, of
Capital Stock, other than Disqualified Capital Stock, of Centennial
Cellular Operating, in each case designated as Excluded Contributions
pursuant to an officer's certificate executed by an officer of
Centennial Cellular Operating, the cash proceeds of which are
excluded from the calculation set forth in the first paragraph of the
"Covenants--Limitation on Restricted Payments" and which may not also
be designated Excluded Cash Contributions.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or, if FASB ceases to exist,
any successor thereto; provided, however, that for purposes of determining
compliance with covenants in the indenture other than those relating to
financial statement delivery, "GAAP" means such generally accepted accounting
principles as in effect as of the Issue Date.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which
obligations or guarantee the full faith and credit of the United States is
pledged and which have a remaining weighted average life to maturity of not
more than one year from the date of Investment therein.
"Guarantee" means the guarantee by a Guarantor of our Indenture
Obligations.
"Guarantor" means any Restricted Subsidiary of Centennial Cellular
Operating which becomes a guarantor of Centennial Cellular Operating's
Indenture Obligations.
"Indebtedness" of any Person means, without duplication,
(a) all liabilities and obligations, contingent or otherwise, of such
Person,
. in respect of borrowed money, whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a
portion thereof,
. evidenced by bonds, notes, debentures or similar instruments,
. representing the balance deferred and unpaid of the purchase price
of any property or services except, other than accounts payable or
other obligations to trade creditors which have remained unpaid
for greater than 90 days past their original due date or to
financial institutions, which obligations are not being contested
in good faith and for which appropriate reserves have been
established, those incurred in the ordinary course of its business
that would constitute ordinarily a trade payable to trade
creditors,
. evidenced by bankers' acceptances or similar instruments issued or
accepted by banks,
. for the payment of money relating to a Capitalized Lease
Obligation, or
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. evidenced by a letter of credit or a reimbursement obligation of
such Person with respect to any letter of credit;
(b) all obligations of such Person under Interest Rate Protection
Obligations or Currency Hedging Agreements;
(c) all liabilities of others of the kind described in the preceding
clauses (a) or (b) that such Person has guaranteed or that is
otherwise its legal liability or which are secured by any assets or
property of such Person and all obligations to purchase, redeem or
acquire any Capital Stock;
(d) all Disqualified Capital Stock of such Person and all Preferred
Stock of such Person's Restricted Subsidiaries valued at the greater
of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends; and
(e) any and all deferrals, renewals, extensions, refinancing and
refundings, whether direct or indirect, of, or amendments,
modifications or supplements to, any liability of the kind described
in any of the preceding clauses (a), (b), (c), (d) or this clause
(e), whether or not between or among the same parties; provided that
the outstanding principal amount at any date of any Indebtedness
issued with original issue discount is the face amount of such
Indebtedness less the remaining unamortized portion of the original
issue discount of such Indebtedness at such date.
The "maximum fixed repurchase price" of any Disqualified Capital Stock
which does not have a fixed repurchase price will be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness will be required
to be determined pursuant to the indenture, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such
fair market value to be determined in good faith by the board of directors of
Centennial Cellular Operating of such Disqualified Capital Stock.
"Interest Rate Protection Obligations" means, with respect to any Person,
the Obligations of such Person under (a) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (b) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates. For purposes of the indenture, the amount of such
obligations shall be the amount determined in respect of such obligation as of
the end of the then most recently ended fiscal quarter of such Person, based on
the assumption that such obligation had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
obligation provides for the netting of amounts payable by and to such Person
under such obligation or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount of
such obligations shall be the net amount so determined, plus any premium due
upon default by such Person.
"Investment" by any Person in any other Person means, without
duplication,
. the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services,
securities or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of such
other Person or any agreement to make any such acquisition;
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. the making by such Person of any deposit with, or advance, loan or
other extension of credit to, such other Person, including the
purchase of property from another Person subject to an understanding
or agreement, contingent or otherwise, to resell such property to
such other Person, or any commitment to make any such advance, loan
or extension;
. the entering into by such Person of any guarantee of, or other
contingent obligation with respect to, Indebtedness or other
liability of such other Person;
. the making of any capital contribution by such Person to such other
Person; and
. the designation by the Board of Directors of Centennial Cellular
Operating of any Person to be an Unrestricted Subsidiary. For
purposes of the "--Limitation on Restricted Payments" covenant, (1)
"Investment" shall include and be valued at the fair market value of
the net assets of any Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary and
shall exclude the fair market value of the net assets of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary
is designated a Restricted Subsidiary and (2) the amount of any
Investment shall be equal to the fair market value of such Investment
plus the fair market value of all additional Investments by
Centennial Cellular Operating or any of its Restricted Subsidiaries
at the time any such Investment is made; provided that, for purposes
of this sentence, the fair market value of net assets shall be as
determined in the reasonable judgment of the board of directors of
Centennial Cellular Operating.
"Investment Equity" has the meaning given to such term in the definition
of "Permitted Investment."
"Lien" means any mortgage or deed of trust, lien, pledge, charge,
privilege, security interest, assignment, deposit, arrangement, easement,
hypothecation, claim, preference, priority or other encumbrance of any kind,
whether or not filed, recorded or otherwise perfected under applicable law with
respect to property of any kind, including any conditional sale, capital lease
or other title retention agreement and any lease deemed to constitute a
security interest and any option or other agreement to give any security
interest, real or personal, movable or immovable, now owned or hereafter
acquired.
"Marketable U.S. Securities" means:
. Government Securities;
. any time deposit account, money market deposit and certificate of
deposit maturing not more than 270 days after the date of acquisition
issued by, or time deposit of, an Eligible Institution;
. commercial paper maturing not more than 270 days after the date of
acquisition issued by a corporation (other than an Affiliate of
Centennial Cellular Operating) with a rating, at the time as of which
any investment therein is made, of "P-1" or higher according to
Moody's Investors Service, Inc., "A-1" or higher according to
Standard & Poor's Ratings Group or "A-1" or higher according to Duff
& Phelps Credit Rating Co., or such similar equivalent rating by at
least one "nationally recognized statistical rating organization," as
defined in Rule 436 under the Securities Act;
. any banker's acceptances or money market deposit accounts issued or
offered by an Eligible Institution;
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. repurchase obligations with a term of not more than 7 days for
Government Securities entered into with an Eligible Institution; and
. any fund investing exclusively in investments of the types described
above.
"Maturity Date" means, when used with respect to any note, the date
specified on such note as the fixed date on which the final installment of
principal of such note is due and payable, in the absence of any acceleration
thereof pursuant to the provisions of the indenture regarding acceleration of
Indebtedness or any Change of Control Offer or Asset Sale Offer.
"Mezzanine Financing" means the $180 million in aggregate principal
amount of Senior Subordinated Notes due 2009 issued by Centennial to WCAS
Capital Partners III, L.P., dated January 7, 1999.
"Minority Cellular Investment Interests" means limited partnership or
other equity interests held directly or indirectly by Centennial Cellular
Operating in cellular telephony providers which are not Subsidiaries of or
otherwise controlled, directly or indirectly, by Centennial Cellular Operating
in existence on January 7, 1999.
"Net Cash Proceeds" means the aggregate amount of cash and Cash
Equivalents received by Centennial Cellular Operating and its Restricted
Subsidiaries in respect of an Asset Sale, including upon the conversion to cash
and Cash Equivalents of (A) any note or installment receivable at any time, or
(B) any other property as and when any cash and Cash Equivalents are received
in respect of any property received in an Asset Sale but only to the extent
such cash and Cash Equivalents are received within one year after such Asset
Sale, less the sum of
. all out-of-pocket fees, commissions and other expenses incurred in
connection with such Asset Sale, including the amount estimated in
good faith by the board of directors of Centennial Cellular Operating
of income, franchise, sales and other applicable taxes required to be
paid by Centennial Cellular Operating or any Restricted Subsidiary of
Centennial Cellular Operating in connection with such Asset Sale and
. the aggregate amount of cash so received which is used to retire any
existing Senior Indebtedness of Centennial Cellular Operating or
Indebtedness of its Restricted Subsidiaries, as the case may be,
which is required to be repaid in connection with such Asset Sale or
is secured by a Lien on the property or assets of Centennial Cellular
Operating or any of its Restricted Subsidiaries, as the case may be.
"Net Proceeds" means the aggregate net proceeds, including the fair
market value of non-cash proceeds constituting equipment or other assets of a
type generally used in a Related Business an amount reasonably determined by
the board of directors of Centennial Cellular Operating for amounts under
$10,000,000 and by a financial advisor or appraiser of national reputation for
equal or greater amounts, received by a Person from the sale of Qualified
Capital Stock, other than to a Subsidiary of such Person, after payment of out-
of-pocket expenses, commissions and discounts incurred and net of taxes paid or
payable in connection therewith.
"Obligation" means any principal, premium, interest, including interest
accruing subsequent to a bankruptcy or other similar proceeding whether or not
such interest is an allowed claim enforceable against Centennial Cellular
Operating in a bankruptcy case under federal bankruptcy law, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable
pursuant to the terms of the documentation governing any Indebtedness.
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"Operating Cash Flow" of any Person means
(a), with respect to any period, the Consolidated Net Income of such
Person for such period, plus
(b) the sum, without duplication (and only to the extent such amounts are
deducted from net revenues in determining such Consolidated Net Income), of
. the provisions for income taxes for such period for such Person and
its consolidated Restricted Subsidiaries,
. depreciation, amortization and other non-cash charges of such Person
and its consolidated Restricted Subsidiaries and
. Consolidated Interest Expense of such Person for such period,
determined, in each case, on a consolidated basis for such Person and
its consolidated Restricted Subsidiaries in accordance with GAAP,
plus
(c) any fees, expenses or charges related to any equity offering,
Permitted Investment, acquisition or recapitalization or Indebtedness
permitted to be incurred by the indenture (in each case, whether or not
successful) and fees, expenses or charges related to the merger, related
transactions and the financings thereof, including fees to Welsh Carson and
Blackstone, less
(d) the amount of all cash payments made during such period by such
Person and its Restricted Subsidiaries to the extent such payments relate
to non-cash charges that were added back in determining Operating Cash Flow
for such period or for any prior period.
"Pari Passu Indebtedness" means (a) with respect to Centennial Cellular
Operating, any Indebtedness of Centennial Cellular Operating that is pari
passu in right of payment to the notes (b) with respect to Centennial, any
Indebtedness of Centennial that is pari passu in right of payment to the notes
and (c) with respect to any Guarantee, Indebtedness which ranks pari passu in
right of payment to such Guarantee.
"Permitted Investment" means
(1) Investments in Cash Equivalents;
(2) Investments in Centennial Cellular Operating or a Restricted
Subsidiary;
(3) Investments in a Person substantially all of whose assets are of
a type generally used in a Related Business (an "Acquired Person") if,
as a result of such Investments, (A) the Acquired Person immediately
thereupon becomes a Restricted Subsidiary or (B) the Acquired Person
immediately thereupon either (1) is merged or consolidated with or into
Centennial Cellular Operating or any of its Restricted Subsidiaries and
the surviving Person is Centennial Cellular Operating or a Restricted
Subsidiary or (2) transfers or conveys all or substantially all of its
assets to, or is liquidated into, Centennial Cellular Operating or any
of its Restricted Subsidiaries;
(4) Investments in accounts and notes receivable acquired in the
ordinary course of business;
(5) any securities received in connection with an Asset Sale and any
Investment with the Net Cash Proceeds from any Asset Sale in Capital
Stock of a Person, all or substantially all of whose assets are of a
type used in a Related Business, that complies with the "-- Limitation
on Asset Sales and Sales of Subsidiary Stock" covenant;
(6) any guarantee issued by a Restricted Subsidiary incurred in
compliance with the indenture;
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(7) advances and prepayments for asset purchases in the ordinary
course of business in a Related Business of Centennial Cellular
Operating or a Restricted Subsidiary;
(8) customary loans or advances made in the ordinary course of
business to officers, directors or employees of Centennial Cellular
Operating or any of its Restricted Subsidiaries for travel,
entertainment, and moving and other relocation expenses,
(9) advances to employees not in excess of $1 million outstanding at
any one time, in the aggregate;
(10) any Investment acquired by Centennial Cellular Operating or any
of its Restricted Subsidiaries (a) in exchange for any other Investment
or accounts receivable held by Centennial Cellular Operating or any such
Restricted Subsidiary in connection with or as a result of a bankruptcy,
workout, reorganization of such other Investment or accounts receivable
or (b) as a result of a foreclosure by Centennial Cellular Operating or
any of its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured
Investment in default;
(11) Interest Rate Protection Obligations or Currency Hedging
Agreements permitted under clauses (9) or (10) of the "--Limitation on
Incurrence of Additional Indebtedness" covenant;
(12) Investments the payment for which consists of Qualified Capital
Stock of Centennial Cellular Operating ("Investment Equity"); provided,
however, that the issuance of such Qualified Capital Stock equity
interests will not increase the amount available for Restricted Payments
under the "--Limitation on Restricted Payments" covenant;
(13) Investments in Permitted Joint Ventures which in the aggregate
at any one time outstanding do not exceed $10 million; and
(14) any Investment in a Related Business, including in an
Unrestricted Subsidiary, having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (14)
that are at that time outstanding, which does not exceed the greater of
(x) $20 million or (y) 4% of Total Assets at the time of such Investment
with the fair market value of each Investment being measured at the time
made and without giving effect to subsequent changes in value.
"Permitted Joint Venture" means, as applied to any Person, any other
Person engaged in a Related Business
(a) over which such Person is responsible (either directly or through a
services agreement) for day-to-day operations or otherwise has operational
and managerial control of such other Person or
(b) of which more than forty percent (40%) of the outstanding Voting
Stock (other than directors' qualifying shares) of such other Person in the
case of a corporation, or more than forty percent (40%) of the outstanding
ownership interests of such other Person, in the case of an entity other
than a corporation, is at the time owned directly or indirectly by such
Person.
"Person" means any corporation, individual, joint stock company, joint
venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality
or other entity.
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"Pledge and Escrow Agreement" means the Pledge and Escrow Agreement,
dated as of the date of the Indenture, among us, the Trustee and the collateral
agents named therein.
"Pledged Securities" means the securities purchased by Centennial
Cellular Operating with a portion of the net proceeds from the Offering to be
deposited in the Escrow and Pledge Account.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents however designated of such
Person's preferred or preference stock whether now outstanding, or issued after
December 15, 1999, and including, without limitation, all classes and series of
preferred or preference stock of such Person.
"Public Equity Offering" means an underwritten offer and sale of common
stock, which is Qualified Capital Stock, of Centennial Cellular Operating or
Centennial with aggregate proceeds of at least $50 million pursuant to a
registration statement that has been declared effective by the SEC pursuant to
the Securities Act, other than a registration statement on Form S-8 or any
successor form covering substantially the same transactions, S-4 or any
successor form covering substantially the same transactions, or otherwise
relating to equity securities issuable under any employee benefit plan of such
corporate entity.
"Purchase Money Indebtedness" means any Indebtedness of Centennial
Cellular Operating or its Restricted Subsidiaries which is secured by a Lien on
assets related to the business of Centennial Cellular Operating or its
Restricted Subsidiaries and any additions and accessions thereto, which are
purchased by Centennial Cellular Operating or its Restricted Subsidiaries at
any time after the notes are issued; provided that
. the security agreement or conditional sales or other title retention
contract pursuant to which the Lien on such assets is created
(collectively a "Purchase Money Security Agreement") will be entered
into within 90 days after the purchase or substantial completion of
the construction of such assets and shall at all times be confined
solely to the assets so purchased without further recourse to either
Centennial Cellular Operating or any of its Restricted Subsidiaries
or acquired, any additions and accessions thereto and any proceeds
therefrom,
. at no time will the aggregate principal amount of the outstanding
Indebtedness secured by Purchase Money Security Agreements be
increased, except in connection with the purchase of additions and
accessions thereto and except in respect of fees and other
obligations in respect of such Indebtedness and
. (A) the aggregate outstanding principal amount of Indebtedness
secured by a Purchase Money Security Agreement determined on a per
asset basis in the case of any additions and accessions will not at
the time such Purchase Money Security Agreement is entered into
exceed 100% of the purchase price to Centennial Cellular Operating or
its Restricted Subsidiaries of the assets subject to such agreement
or (B) the Indebtedness secured by a Purchase Money Security
Agreement will be with recourse solely to the assets so purchased or
acquired, any additions and accessions thereto and any proceeds
therefrom.
"Qualified Capital Stock" means any Capital Stock of a Person that is not
Disqualified Capital Stock.
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"Reference Period" with regard to any Person means the last four full
fiscal quarters of such Person for which financial information, which
Centennial Cellular Operating will use its best efforts to compile in a timely
manner, in respect of such Person is available ended on or immediately
preceding any date upon which any determination is to be made pursuant to the
terms of the notes or the indenture.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated and three other primary U.S. Government securities dealers
in The City of New York to be selected by Centennial Cellular Operating and
their respective successors.
"Refinancing Indebtedness" means any Indebtedness of Centennial Cellular
Operating or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Centennial Cellular Operating or such Restricted
Subsidiary (other than intercompany Indebtedness); provided that:
. the principal amount (or accreted value, if applicable) of such
Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of premium and reasonable expenses incurred
in connection therewith);
. such Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life equal to
or greater than the Weighted Average Life of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded;
. if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the
notes, such Refinancing Indebtedness is subordinated in right of
payment to, the notes on terms at least as favorable to the holders
of notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded; and
. such Indebtedness is incurred either by Centennial Cellular Operating
or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded.
"Related Business" means any business related to, or complementary to,
the ownership, development, operation or acquisition of communications systems
as determined by the board of directors of Centennial Cellular Operating.
"Related Person" means, with respect to any Person, (i) any Affiliate of
such Person or any spouse, immediate family member, or other relative who has
the same principal residence of any Affiliate of such Person and (ii) any trust
in which any Person described in clause (i) above, has a beneficial interest.
"Restricted Payment" means, with respect to any Person,
. any dividend or other distribution on shares of Capital Stock of such
Person or any Restricted Subsidiary of such Person,
. any payment on account of the purchase, redemption or other
acquisition or retirement for value in whole or in part, of any
shares of Capital Stock of such Person, any entity
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which controls such Person or any Restricted Subsidiary of such
Person, which Capital Stock is held by Persons other than such Person
or any of its Restricted Subsidiaries, or options, warrants or other
rights to acquire such Capital Stock,
. any defeasance, redemption, repurchase or other acquisition or
retirement for value, in whole or in part, of any Indebtedness of
such Person other than the scheduled repayment thereof at maturity
and any mandatory redemption or mandatory repurchase, by such Person
or a Subsidiary of such Person that is subordinate in right of
payment to the notes other than in exchange for Refinancing
Indebtedness permitted to be Incurred under the indenture and except
for any such defeasance, redemption, repurchase, other acquisition or
payment in respect of Indebtedness held by any Restricted Subsidiary
and
. any Investment (other than a Permitted Investment);
provided, however, that the term "Restricted Payment" does not include
. any dividend, distribution or other payment on shares of Capital
Stock of Centennial Cellular Operating or any Restricted Subsidiary
solely in shares of Qualified Capital Stock or in options, warrants
or other rights to acquire such Qualified Capital Stock),
. any dividend, distribution or other payment to Centennial Cellular
Operating, or any dividend to any of its Restricted Subsidiaries, by
any of its Subsidiaries,
. any dividend, distribution or other payment by any Restricted
Subsidiary on shares of its Capital Stock that is paid pro rata to
all holders of such Capital Stock and
. the purchase, redemption or other acquisition or retirement for value
of shares of Capital Stock of any Restricted Subsidiary held by
Persons other than the Centennial Cellular Operating or any of its
Restricted Subsidiaries.
"Restricted Subsidiary" means any Subsidiary of Centennial Cellular
Operating that has not been designated by the board of directors of Centennial
Cellular Operating by board resolution delivered to the trustee as an
Unrestricted Subsidiary pursuant to and in compliance with "Covenants--
Limitation on Unrestricted Subsidiaries."
"Significant Restricted Subsidiary" means one or more Restricted
Subsidiaries having an aggregate net book value of assets in excess of 5% of
the net book value of the assets of Centennial Cellular Operating and its
Restricted Subsidiaries on a consolidated basis.
"Stated Maturity" means the date fixed for the payment of any principal
or premium pursuant to the Indenture and the notes, including the Maturity
Date, upon redemption, acceleration, Asset Sale Offer, Change of Control Offer
or otherwise.
"Strategic Equity Investor" means any Person which is, or a controlled
Affiliate of any Person which is, engaged in the ownership, development,
operation or acquisition of communications systems and which, as of the last
available annual or quarterly financial statements, has Total Common Equity of
at least $1.0 billion.
"Strategic Equity Offering" means an offer or sale of Common Stock or
Preferred Stock, other than Disqualified Capital Stock, of Centennial Cellular
Operating, with aggregate proceeds of at least $50.0 million to a Strategic
Equity Investor other than in connection with or after the occurrence of a
Change of Control.
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"Subordinated Indebtedness" means Indebtedness of Centennial Cellular
Operating or a Guarantor subordinated in right of payment to the notes or a
Guarantee, as the case may be.
"Subsidiary" with respect to any Person, means
. a corporation at least 50% of whose Capital Stock with voting power,
under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by such Person, by such Person and one
or more Subsidiaries of such Person or by one or more Subsidiaries of
such Person,
. a partnership in which such Person or a Subsidiary of such Person is,
at the time, a general partner of such partnership, or
. any Person in which such Person, one or more Subsidiaries of such
Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has (x)
at least a fifty percent ownership interest or (y) the power to elect
or direct the election of the directors or other governing body of
such Person.
"Total Assets" means the total assets of Centennial Cellular Operating
and its Restricted Subsidiaries shown on the Consolidated balance sheet of
Centennial Cellular Operating and its Restricted Subsidiaries prepared in
accordance with GAAP as of the last day of the immediately preceding fiscal
quarter for which financial statements are available.
"Total Common Equity" of any Person means, as of any date of
determination, the product of (1) the aggregate number of outstanding primary
shares of Common Stock of such Person on such day (which shall not include any
options or warrants on, or securities convertible or exchangeable into, shares
of Common Stock of such Person) and (2) the average Closing Price of such
Common Stock over the 20 consecutive Trading Days immediately preceding such
day. If no such Closing Price exists with respect to shares of any such class,
the value of such shares for purposes of clause (2) of the preceding sentence
will be determined by the board of directors of Centennial or Centennial
Cellular Operating in good faith and evidenced by a resolution of the board of
directors filed with the trustee.
"Trading Day," with respect to a securities exchange or automated
quotation system, means a day on which such exchange or system is open for a
full day of trading.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury Price
for such redemption date.
"Unrestricted Subsidiary" means any Subsidiary of Centennial Cellular
Operating, other than a Guarantor designated as such pursuant to and in
compliance with "--Covenants--Limitation on Unrestricted Subsidiaries."
"Voting Stock" means, with respect to a Person, Capital Stock of such
Person having generally the right to vote in the election of a majority of the
directors of such Person or having generally the right to vote with respect to
the organizational matters of such Person.
"Weighted Average Life" means, when applied to any Indebtedness at any
date, the number of years obtained by dividing (1) the sum of the products
obtained by multiplying (a) the amount of
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each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (2) the
then outstanding principal amount of such Indebtedness.
Book-Entry Delivery And Form
The Global Note. The certificates representing the old notes were issued,
and the certificates representing the new notes will be issued, in fully
registered form, without coupons. The old notes are represented by one or more
permanent global certificates in definitive, fully registered form without
interest coupons in an aggregate amount of $370 million (the "Initial Global
Note"). Except as described in the next paragraph, the new notes initially will
be represented by one or more permanent global certificates in definitive,
fully registered form (the "Global Notes") and will be deposited with, or on
behalf of, the DTC, and registered in the name of Cede & Co., as the DTC's
nominee or will remain in the custody of the trustee pursuant to a FAST Balance
Certificate Agreement between the DTC and the trustee. If your interest in old
notes is represented by the Initial Global Note and you fail to tender in the
exchange offer, we may issue and deliver to you a separate certificate
representing your old notes in registered form without interest coupons.
Certain Book-Entry Procedures for Global Notes. The descriptions of the
operations and procedures of DTC that follow are provided solely as a matter of
convenience. These operations and procedures are solely within the control of
the respective settlement systems and are subject to change by them from time
to time. Centennial Cellular Operating takes no responsibility for these
operations and procedures and urges investors to contact DTC or its
participants directly to discuss these matters.
DTC has advised Centennial Cellular Operating that: DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "Clearing Agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participants and facilitate the clearance and
settlement of securities transactions between participants through electronic
book-entry changes in accounts of its participants, eliminating the need for
physical transfer and delivery of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations. Indirect access to the DTC system is
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly ("indirect participants").
Under procedures established by DTC,
(1) upon the issuance of the Initial Global Certificate, DTC
credited, on its internal system, the respective principal amount of the
individual beneficial interests represented by such Global Notes to the
accounts with DTC of the participants through which such interests are
held and
(2) ownership of beneficial interest in the Global Notes are shown
on, and the transfer of that ownership is effected only through, records
maintained by DTC or its nominees (with respect to interest of
participants) and the records of participants and indirect participants
(with respect to interests of persons other than participants).
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As long as DTC, or its nominee, is the registered holder of a Global
Note, DTC or such nominee, as the case may be, will be considered the sole
owner and holder of the notes represented by such Global Note for all purposes
under the indenture and the new notes. Except in the limited circumstances
described below, owners of beneficial interests in a Global Note will not be
entitled to have any portions of such Global Note registered in their names,
and will not receive or be entitled to receive physical delivery of notes in
definitive form and will not be considered the owners or Holders of the Global
Note (or any notes represented by the Global Note) under the indenture or the
notes.
The laws of some states require that certain persons take physical
delivery in definitive form of securities that they own. The ability to
transfer beneficial interests in a Global Note to such persons may be limited
to that extent. Because DTC can act only on behalf of its participants, which
in turn act on behalf of indirect participants and certain banks, the ability
of a person having beneficial interests in a Global Note to pledge such
interest to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests.
Payments of the principal of, premium, if any, and interest on Global
Notes will be made to DTC or its nominee as the registered owner of the Global
Notes. Neither Centennial Cellular Operating, the trustee nor any of their
respective agents will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interest in the Global Notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Centennial Cellular Operating expects that DTC or its nominee, upon
receipt of any payment of principal premium or interest in respect of a Global
Note representing any notes held by it or its nominee, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Note for
such notes as shown on the records of DTC or its nominee. Centennial Cellular
Operating also expects that payments by participants to owners of beneficial
interests in such Global Note held through such participants will be governed
by standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name." Such
payments will be the responsibility of such participants. None of Centennial
Cellular Operating or the Trustee will be liable for any delay by DTC or any of
its participants in identifying the beneficial owners of the notes, and
Centennial Cellular Operating and the trustee may conclusively rely on and will
be protected in relying on instructions from DTC or its nominee as the
registered owner of the notes for all purposes.
Interests in the Global Notes will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its participants. Transfers between
participants in DTC will be effected in accordance with DTC's procedures, and
will be settled in same-day funds.
DTC has advised Centennial Cellular Operating that it will take any
action permitted to be taken by a holder of notes only at the direction of one
or more participants to whose accounts with DTC interests in the Global Notes
are credited and only in respect of such portion of the aggregate principal
amount of the notes as to which such participant or participants has or have
given such direction. However, if there is an Event of Default under the notes,
DTC reserves the right to
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<PAGE>
exchange the Global Notes for Notes in certificated form, and to distribute
such Notes to its participants. See "--Certificated Notes."
Although DTC has agreed to the foregoing procedures in order to
facilitate transfer of beneficial ownership interests in the Global Notes among
participants of DTC, it is under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
None of Centennial Cellular Operating, the trustee nor any of their respective
agents will have any responsibility for the performance by DTC or its
participants or indirect participants of their respective obligations under the
rules and procedures governing its operations, including maintaining,
supervising or reviewing the records relating to or payments made on account
of, beneficial ownership interests in Global Notes.
Certificated Notes. An entire Global Note may be exchanged for definitive
notes in registered, certificated form without interest coupons ("Certificated
Notes") if:
(i) DTC (x) notifies the company that it is unwilling or unable to
continue as depositary for the Global Notes and Centennial Cellular
Operating then fails to appoint a successor depositary within 90
days or (y), has ceased to be a clearing agency registered under the
Exchange Act,
(ii) Centennial Cellular Operating, at its option, notifies the trustee
in writing that it elects to cause the issuance of Certificated
Notes, or
(iii) there will have occurred and be continuing a Default or an Event
of Default with respect to notes. In any such case, Centennial
Cellular Operating will notify the trustee in writing that, upon
surrender by the direct and indirect participants of their
interest in such Global Note, Certificated Notes will be issued to
each person that such direct and indirect participants and the DTC
identify as being the beneficial owner of the related notes.
Beneficial interests in Global Notes held by any direct or indirect
participant may be exchanged for Certificated Notes upon request to DTC, by a
direct participant, for itself or on behalf of an indirect participant, to the
trustee in accordance with customary DTC procedures. Certificated Notes
delivered in exchange for any beneficial interest in any Global Note will be
registered in the names, and issued in any approved denominations, requested by
DTC on behalf of such direct or indirect participant, in accordance with DTC's
customary procedures.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The summary below describes the material United States federal income tax
consequences of the exchange of old notes for new notes as of the date of this
prospectus. The discussion below is based upon the provisions of the Internal
Revenue Code of 1986, as amended, and regulations, rulings and judicial
decisions thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified so as to result in federal income tax
consequences different from those discussed below. You should consult your own
tax advisors concerning the federal income tax consequences in light of their
particular situations as well as any consequences arising under the laws of any
other taxing jurisdiction.
Exchange of Notes
The exchange of old notes for new notes pursuant to the exchange offer
should not be treated as an "exchange" for federal income tax purposes, because
the new notes should not be considered to differ materially in kind or extent
from the old notes. Rather, the new notes received by you should be treated as
a continuation of your old notes. As a result, there should be no federal
income tax consequences to you if you exchange notes for new notes pursuant to
the exchange offer.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account pursuant
to the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes where
such old notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. We have agreed that, for a period of 90
days after the expiration date of the exchange offer, we will make this
prospectus available to any broker-dealer for use in connection with any such
resale. In addition, for a period of 90 days after the expiration date, all
dealers effecting transactions in the new notes may be required to deliver a
prospectus.
We will not receive any proceeds from any sale of new notes by broker-
dealers. New notes received by broker-dealers for their own account pursuant to
the exchange offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the new notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such new notes. Any broker-dealer that resells new notes that
were received by it for its own account pursuant to the exchange offer and any
broker or dealer that participates in a distribution of new notes may be deemed
to be an "underwriter" within the meaning of the Securities Act, and any profit
on any such resale of new notes and any commissions or concessions received by
any such person may be deemed to be underwriting compensation under the
Securities Act. The letter of transmittal states that a broker-dealer will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act by acknowledging that it will deliver and by delivering a
prospectus. We have no arrangement or understanding with any broker or dealer
to distribute the New Notes received in the exchange offer.
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<PAGE>
For a period of 90 days after the expiration date we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the letter of
transmittal.
INCORPORATION OF MATERIAL DOCUMENT BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means we can disclose important information to you by
referring you to those documents. The information included in the following
documents is incorporated by reference and is considered to be a part of this
prospectus. The most recent information that we file with the SEC automatically
updates and supersedes more dated information. We have previously filed the
following document with the SEC and are incorporating it by reference into this
prospectus:
. Annual Report on Form 10-K for the fiscal year ended May 31, 1998,
. Quarterly Reports on Form 10-Q for the quarters ended August 31, 1998,
November 30, 1998, and February 28, 1999,
. Proxy Statement for the Annual Meeting of Stockholders filed on
November 28, 1998,
. Information Statement filed on December 8, 1998, and
. Current Reports on Form 8-K filed on July 16, 1998, October 19, 1998,
December 7, 1998 and January 22, 1999.
We also incorporate by reference all documents subsequently filed by us
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act until all of
the old notes are exchanged for new notes.
We will provide without charge to each person, including any person
having a control relationship with that person, to whom a prospectus is
delivered, a copy of any or all of the information that has been incorporated
by reference in this prospectus but not delivered with this prospectus. If you
would like to obtain this information from us, please direct your request,
either in writing or by telephone to Peter W. Chehayl, Senior Vice President,
Centennial Cellular Corp., 1305 Campus Parkway, Neptune, New Jersey 07753. In
order to insure timely delivery of the documents, any request should be made
five days before , 1999, which is when the exchange offer expires.
LEGAL MATTERS
The validity of the new notes will be passed upon for us by Reboul,
MacMurray, Hewitt, Maynard & Kristol, New York, New York.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from Centennial's Annual Report on
Form 10-K for the year ended May 31, 1998 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports which are
incorporated by reference herein, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dealer Prospectus Delivery Obligation
Until , 1999, all dealers that effect transactions in these
securities, whether or not participating in this Exchange Offer, may be
required to deliver a prospectus. This is in addition to the dealers'
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
No person is authorized in connection with any offering made hereby to
give any information or to make any representation other than as contained in
this Prospectus or the accompanying Letter of Transmittal, and, if given or
made, such information or representation must not be relied upon as having been
authorized by the Company or Centennial Cellular Operating. Neither this
Prospectus nor the accompanying Letter of Transmittal or both together
constitute an offer to sell or a solicitation of an offer to buy any security
other than the New Notes offered hereby, nor does it constitute an offer to
sell or a solicitation of an offer to buy any securities offered hereby to any
person in any jurisdiction in which it is unlawful to make such offer or
solicitation to such person. Neither the delivery of this Prospectus or the
accompanying Letter of Transmittal or both together, nor any sale made
hereunder shall under any circumstances imply that the information contained
herein is correct as of any date subsequent to the date hereof.
[LOGO] Centennial Cellular Corp.
Centennial Cellular Corp.
Centennial Cellular Operating Co. LLC
Offer to Exchange Their
10 3/4% Senior Subordinated Notes due 2008, Series B,
for Any and All of Their Outstanding
10 3/4% Senior Subordinated Notes due 2008, Series A
----------------
PROSPECTUS
----------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware
("DGCL") empowers a Delaware corporation to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of such corporation)
by reason of the fact that such person is or was a director, officer, employee
or agent of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation or
enterprise. A corporation may indemnify such person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. A Delaware corporation may indemnify officers
and directors in an action by or in the right of the corporation to procure a
judgment in its favor under the same conditions, except that no indemnification
is permitted without judicial approval if the officer or director is adjudged
to be liable to the corporation. Where an officer or director is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses (including attorneys' fees)
which he actually and reasonably incurred in connection therewith. The
indemnification provided is not deemed to be exclusive of any other rights to
which an officer or director may be entitled under any corporation's by-law,
agreement, vote or otherwise.
In accordance with Section 145 of the DGCL, Centennial Cellular Corp.
("Centennial") has adopted a by-law that provides that, to the fullest extent
permitted by DGCL, Centennial shall indemnify any person serving as a director
or officer of Centennial and every such director or officer serving at the
request of Centennial as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise for expenses
incurred in the defense of, or in connection with, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative. Under Section 145 of the DGCL and Centennial's by-laws, such
indemnification shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 18-108 of the Delaware Limited Liability Company Act (the "LLC
Act") empowers a Delaware limited liability company to indemnify and hold
harmless any member or manager or other person from and against any and all
claims and demands whatsoever. In accordance with such section, the limited
liability company agreement of Centennial Cellular Operating Co. LLC
("Centennial Cellular Operating") provides that, to the fullest extent
permitted by the LLC Act, Centennial Cellular Operating shall indemnify a
member, any affiliate of a member, any officers, directors, shareholders,
partners, employees, representatives or agents of a member, or their respective
affiliates, or any employee or agent of Centennial Cellular Operating or its
affiliates (each, a "Covered Person") for any loss, damage or claim incurred by
such Covered Person by reason of
II-1
<PAGE>
any act or omission performed or omitted by such Covered Person in good faith
on behalf of Centennial Cellular Operating and in a manner reasonably believed
to be within such Covered Person's scope of authority.
Each of Centennial and Centennial Cellular Operating has purchased and
maintains insurance to protect persons entitled to indemnification pursuant to
its by-laws or limited liability company agreement (as the case may be), the
DGCL or the LLC Act against expenses, judgments, fines and amounts paid in
settlement, to the fullest extent permitted by the DGCL or the LLC Act (as the
case may be).
Item 21. Exhibits and Financial Statement Schedules
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S> <C>
3.1 Amended and Restated Certificate of Incorporation of Centennial
Cellular Corp. (incorporated by reference to Exhibit 3.1 to
Centennial Cellular Corp.'s Current Report on Form 8-K filed on
January 22, 1999)...............................................
3.2 Amended and Restated By-Laws of Centennial Cellular Corp.
(incorporated by reference to Exhibit 3.2 to Centennial Cellular
Corp.'s Current Report on Form 8-K filed on January 22, 1999)...
3.3 Certificate of Formation of Centennial Cellular Operating Co.
LLC*............................................................
3.4 Limited Liability Company Agreement of Centennial Cellular
Operating Co. LLC*..............................................
4.1 Indenture dated as of December 14, 1998 between Centennial
Cellular Operating Co. LLC and Centennial Finance Corp. and The
Chase Manhattan Bank, as trustee, relating to the 10 3/4% Senior
Subordinated Notes due 2008 (incorporated by reference to
Exhibit 4.4 to Centennial Cellular Corp.'s Current Report on
Form 8-K filed on January 22, 1999).............................
4.2 Assumption Agreement and Supplemental Indenture, dated as of
January 7, 1999, to the Indenture dated as of December 14, 1998
(incorporated by reference to Exhibit 4.5 to Centennial Cellular
Corp.'s Current Report on Form 8-K filed on January 22, 1999)...
4.3 Form of 10 3/4% Senior Subordinated Note due 2008, Series B of
the registrant (included in Exhibit 4.1)........................
4.4 Registration Rights Agreement, dated as of December 14, 1998,
among Centennial Cellular Operating Co. LLC, Centennial Finance
Corp. and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
NationsBanc Montgomery Securities LLC, Morgan Stanley & Co.
Incorporated and Chase Securities Inc., as initial purchasers
(incorporated by reference to Exhibit 4.3 to Centennial Cellular
Corp.'s Current Report on Form 8-K filed on January 22, 1999)...
4.5 Pledge and Escrow Agreement, dated as of December 14, 1998, from
Centennial Cellular Operating Co. LLC and Centennial Finance
Corp., as Pledgors, to The Chase Manhattan Bank, as Trustee
(incorporated by reference to Exhibit 4.8 to Centennial Cellular
Corp.'s Current Report on Form 8-K filed on January 22, 1999)...
5.1 Opinion of Reboul, MacMurray, Hewitt, Maynard & Kristol as to
the legality of the securities being registered**...............
10.1 Purchase Agreement, dated December 9, 1998, among Centennial
Cellular Operating Co. LLC, Centennial Finance Corp., and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc
Montgomery Securities LLC, Morgan Stanley & Co. Incorporated and
Chase Securities Inc., as initial purchasers, relating to the
issuance and sale of $370,000,000 aggregate principal amount of
the registrants' 10 3/4% Senior Subordinated Notes due 2008,
Series A*.......................................................
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S> <C>
10.2 Credit Agreement dated as of January 7, 1999 among Centennial
Cellular Operating Co. LLC, as Borrower; Centennial Wireless PCS
Operations Corp., as PR Borrower; Centennial Cellular Corp., as
a Guarantor; the other Guarantors party thereto; each of the
lenders named therein; Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as lead arranging agent;
Nationsbank, N.A., as co-arranger and administrative agent; The
Chase Manhattan Bank, as co-arranger and co-documentation agent;
The Bank of Nova Scotia, as co-documentation agent; Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as syndication agent; and Morgan Stanley Senior Funding, Inc.,
as senior managing agent (incorporated by reference to Exhibit
10.1 to Centennial Cellular Corp.'s Current Report on Form 8-K
filed on January 22, 1999)......................................
10.3 Employment Agreement dated as of January 7, 1999 between
Centennial Cellular Corp. and Michael Small (incorporated by
reference to Exhibit 10.3 to Centennial Cellular Corp.'s Current
Report on Form 8-K filed on January 22, 1999)...................
10.4 Employment Agreement dated as of January 7, 1999 between
Centennial Cellular Corp. and Rudy J. Graf (incorporated by
reference to Exhibit 10.4 to Centennial Cellular Corp.'s Current
Report on Form 8-K filed on January 22, 1999)...................
10.5 Incentive Award Plan, as amended (incorporated by reference to
Exhibit 10.11 to Centennial Cellular Corp.'s Form S-1 filed on
September 27, 1991).............................................
10.6 1993 Management Equity Incentive Plan, (incorporated by
reference to Exhibit 10.9 to Centennial Cellular Corp.'s Annual
Report on Form 10-K for the fiscal year ended May 31, 1994).....
10.7 1993 Non-Employment/Officer Directors' Stock Option Plan,
(incorporated by reference to Exhibit 10.10 to Centennial
Cellular Corp.'s Annual Report on Form 10-K for the fiscal year
ended May 31, 1994).............................................
12.1 Statements re Computation of Ratios**...........................
23.1 Consent of Reboul, MacMurray, Hewitt, Maynard & Kristol
(included in their opinion filed as Exhibit 5.1)**..............
23.2 Consent of Deloitte & Touche LLP................................
24.1 Power of Attorney of the members of the Board of Directors of
the registrant (included in the signature pages of the
Registration Statement).........................................
24.2 Power of Attorney for Thomas E. Bucks...........................
25.1 Statement on Form T-1 of Eligibility of Trustee*................
99.1 Form of Letter of Transmittal*..................................
99.2 Form of Notice of Guaranteed Delivery*..........................
99.3 Stockholders Agreement dated as of January 7, 1999 among CCW
Acquisition Corp. and the Purchasers named in Schedules I, II,
III and IV thereto*.............................................
</TABLE>
- --------
*Previously filed.
**To be filed by amendment.
II-3
<PAGE>
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change in such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(d) The undersigned registrant hereby undertakes that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), Centennial
Cellular Operating undertakes that such reoffering prospectus will contain the
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<PAGE>
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(e) The undersigned registrant hereby undertakes that every prospectus:
(i) that is filed pursuant to paragraph (c) immediately preceding, or (ii) that
purports to meet the requirements of Sections 10(a)(3) of the Securities Act
and is used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(f) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, each of the
registrants has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Neptune,
state of New Jersey, on June 17, 1999.
Centennial Cellular Corp.
/s/ Michael J. Small
_____________________________________
Michael J. Small,
President, Chief Executive
Officer and Director
Centennial Cellular Operating Co.
LLC
By: Centennial Cellular Corp., its
sole member
/s/ Michael J. Small
_____________________________________
Michael J. Small,
Chief Executive Officer and
Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President, Chief Executive June 17, 1999
______________________________________ Officer and Director
Michael J. Small (Principal Executive
Officer)
* Senior Vice President, June 17, 1999
______________________________________ Treasurer and Chief
Peter W. Chehayl Financial Officer
(Principal Financial
Officer)
* Senior Vice President and June 17, 1999
______________________________________ Controller (Principal
Thomas E. Bucks Accounting Officer)
* President and Chief June 17, 1999
______________________________________ Executive Officer
Rudy J. Graf (Centennial de Puerto
Rico), Director
* Director June 17, 1999
______________________________________
Thomas E. McInerney
* Director June 17, 1999
______________________________________
Anthony J. de Nicola
* Director June 17, 1999
______________________________________
Rudolph E. Rupert
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director June 17, 1999
______________________________________
Mark T. Gallogly
* Director June 17, 1999
______________________________________
Lawrence H. Guffey
</TABLE>
- --------
* Pursuant to the Power of Attorney designated as Exhibit 24.1 hereto and
previously included in the S-4 and the Power of Attorney designated as
Exhibit 24.2 hereto:
/s/ Michael J. Small
By: _________________________________
Michael J. Small
Attorney-in-Fact
II-7
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 2 to this
Registration Statement of Centennial Cellular Corp. on Form S-4 of our reports
dated July 17, 1998 appearing in the Annual Report on Form 10-K of Centennial
Cellular Corp. for the year ended May 31, 1998 and to the reference to us under
the heading "Experts" in such Prospectus, which is part of this Registration
Statement.
Deloitte & Touche LLP
Stamford, Connecticut
June 15, 1999
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
The undersigned officer of each of Centennial Cellular Corp. and
Centennial Cellular Operating Co. LLC, hereby appoints Michael J. Small and
Thomas E. McInerney, or either of them individually, as attorney-in-fact for
the undersigned, with full power of substitution for, and in the name, place and
stead of the undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, any and all amendments
(including post-effective amendments) and exhibits to the registration statement
on Form S-4 of Centennial Cellular Corp. and Centennial Cellular Operating Co.
LLC (Regi
stration No. 333-73435) and any and all applications and other
documents to be filed with the Securities and Exchange Commission pertaining to
the registration of the securities covered thereby, with full power and
authority to do and perform any and all acts and things whatsoever requisite and
necessary or desirable, hereby ratifying and confirming all that said attorney-
in-fact, or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney this 16th day of June, 1999.
/s/Thomas E. Bucks
-------------------
Thomas E. Bucks
