<PAGE>
RULE NO. 424(b)(4)
REGISTRATION NO. 333-73435
333-73435-01
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
August 13, 1999, unless we extend it.
The new notes will not trade on any established exchange.
A description of the risks that should be considered by you begins on
page 13 of this prospectus.
This prospectus is dated July 13, 1999.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Where You Can Find More Information........................................ 2
Summary of the Prospectus.................................................. 3
Risk Factors............................................................... 13
This Prospectus Includes Forward-Looking Statements........................ 24
The Merger................................................................. 25
Use of Proceeds............................................................ 27
The Exchange Offer......................................................... 29
Capitalization............................................................. 36
Selected Financial and Operating Information............................... 37
Unaudited Pro Forma Financial Information.................................. 41
Business................................................................... 46
Management................................................................. 52
Principal Stockholders..................................................... 58
Certain Relationships and Related Transactions............................. 60
Description of Certain Indebtedness........................................ 68
Description of the New Notes............................................... 74
Certain Federal Income Tax Considerations.................................. 131
Plan of Distribution....................................................... 131
Incorporation of Material Document by Reference............................ 132
Legal Matters.............................................................. 132
Experts.................................................................... 133
</TABLE>
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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. 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.
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.
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2
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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 provide service in areas with an aggregate population of 5.8 million,
decreased by the percent of our subsidiaries serving those areas owned by third
parties. For example, if a third party owns 40% of our subsidiary, the actual
population of those areas served by that subsidiary will be decreased by 40%
for our calculations. This adjusted population is commonly referred to as net
pops. Our domestic rural cellular systems cover approximately 81,645 square
miles. Our subsidiary in Puerto Rico is a provider of wireless, local
telephone, long distance and internet communications services in Puerto Rico.
These operations use a license that covers a population of 3.8 million net pops
in Puerto Rico and the U.S. Virgin Islands and a license to operate local
telephone service in Puerto Rico. In addition, we own minority shares,
representing approximately 1.2 million net pops, 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.
The Merger
On January 7, 1999, Centennial merged with CCW acquisition Corp. As a
result of the merger, a new group of equity investors acquired a 92.9%
ownership interest in Centennial. The remaining 7.1% interest is owned by
public stockholders. We entered into several financings, including the issuance
of the old notes, in order to fund the merger. See "The Merger" for a more
complete description.
3
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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.
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, August
13, 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, together with certificates for your outstanding notes,
to Norwest Bank Minnesota, National Association, as exchange agent for the
exchange offer. In the alternative, you can tender your old notes by book-entry
delivery following the procedures described in this prospectus in "The Exchange
Offer" section under the heading "Procedures for Tendering."
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."
4
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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.
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 or
you resell your notes in compliance with the prospectus delivery provisions of
the Securities Act.
5
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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.
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 new notes. Centennial Cellular is a holding company
and does not conduct any direct business operations.
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.
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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 money we
owe to our suppliers. 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.
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 our
subsidiary in 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%.
7
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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,
. 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.
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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. 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.
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>
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(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(10).......... 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)(11)....... 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(10).......... 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)(11)....... 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>
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<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.
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(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.
(10) Churn is defined as the number of wireless subscriber cancellations per
month as a percentage of the weighted average total wireless subscribers
at the beginning of the period. Churn is stated as the average monthly
churn rate for the period.
(11) A cell site is a two-way radio location that connects the wireless
telephone user with the telephone system.
Subsequent Event
We have entered into an agreement to acquire 100% of the ownership
interests in a partnership owning the wireless telephone system serving the
Allegen, Michigan rural service area. The Allegen market represents
approximately 100,000 net pops. Our obligation to consummate this transaction
is subject to certain closing conditions, including the relevant regulatory
approvals. We have anticipated completing this acquisition in October 1999.
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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
We expect to incur losses for the foreseeable future and may not be able to
generate enough cash to repay the notes.
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. 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 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. In addition, 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.
Payment of our debt obligations reduces the cash available to use in our
business.
After the merger our total long term debt was significantly greater than
before the merger. Our large amount of debt could adversely affect our business
and you because we must use a substantial portion of our cash to pay our debt
obligations. As a result, we have less cash to use in other areas of our
business. In addition, our debt service obligations increase our
vulnerabilities to:
. adverse economic and industry conditions;
. interest rate increases because borrowings under our credit facility
are at variable interest rates; and
. competitive pressures, as many of our competitors will be less
leveraged than we are.
In addition, we may incur significantly more debt. This may further
reduce the cash we have available to invest in our operations. If 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.
Because the notes rank below our senior debt and below all debt of our
subsidiaries, you may not receive full payment on your notes.
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 credit facility and other senior indebtedness, including the
liabilities of our subsidiaries. We cannot assure you that sufficient assets
will remain to make any payments on the notes. We and our subsidiaries also may
incur additional indebtedness that ranks senior to the notes.
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We may not be able to repay the notes because our subsidiaries may not be
permitted to distribute cash to us.
If we do not receive sufficient cash flow from our subsidiaries we will
not be able to make payments on the notes. 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. In addition, the terms of
existing and future debt of our subsidiaries may restrict our subsidiaries from
distributing cash to us. Our credit facility limits dividends from our
subsidiaries 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. See "Description of the
New Notes--Covenants--Limitation on Restricting Subsidiary Dividends."
Because the notes are unsecured, other lenders will have prior claims to our
assets in the event we become insolvent or are liquidated.
The notes are not secured by any of our assets, other than the funds
pledged to pay the first three interest payments. 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. Our bank lenders will have a claim on
substantially all our assets before the holders of the notes. Accordingly,
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."
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.
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, the holders of
the notes would be prohibited from foreclosing upon or disposing of the escrow
funds without prior bankruptcy court approval. See "Description of the New
Notes--Security."
We may not be able to satisfy our obligation to repurchase the notes upon a
change of control.
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 all 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. The term "change of control" is
defined in the section "Description of the New Notes--Certain Definitions."
We may not be able to repay the notes if we default on our debt covenants.
We or our subsidiaries may fail to comply with restrictions contained in
our debt instruments, even if we are otherwise able to meet our debt service
obligations. In the event of a default, the holders of our debt could elect to
declare all our debt, together with accrued interest, to
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<PAGE>
be due and payable. We cannot assure you that we or our subsidiaries would be
able to make these payments. Covenants contained in the instruments governing
the notes and our credit facility include, among other things, restrictions on
our ability to:
. borrow more funds or create liens,
. repay indebtedness prior to stated maturities,
. sell assets,
. make investments and capital expenditures,
. engage in transactions with stockholders and affiliates,
. engage in mergers or acquisitions, or
. otherwise conduct necessary corporate activities.
In addition, we must meet financial covenants. Our debt instruments may
be violated if we fail to generate sufficient cash flow to pay our debt service
obligations.
We may encounter difficulties obtaining future financing on favorable terms.
We cannot assure you that we will be able to borrow sufficient funds in
the future to satisfy our debt service and working capital requirements or to
finance our acquisition strategy. Even if we were to obtain additional
financing, such financing may be on terms unfavorable to us. Centennial
Cellular Operating has pledged as security to the lenders under its credit
facility the shares of all its direct and indirect subsidiaries other than the
shares of its foreign subsidiaries. The pledge of such shares could impair our
ability to obtain future financing on favorable terms, if at all. See
"Description of Certain Indebtedness."
Our holding company may not be able to make payments on the notes if our
operating subsidiary defaults on its obligations.
Centennial is a co-obligor of the notes. Centennial 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 payments on the notes. In addition, Centennial is not
subject to the covenants of the indenture governing the notes. Accordingly,
Centennial may take actions that reduce its creditworthiness and adversely
affect its ability to repay the notes.
Centennial has unconditionally guaranteed all obligations of 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 not likely be able to service or repay its
indebtedness, including the notes. See "Description of Certain Indebtedness."
Your rights to be repaid would be adversely affected if a court determined that
we issued the notes for inadequate consideration or with intent to defraud our
creditors.
Our ability to repay the notes may be adversely affected if it is
determined in a bankruptcy, insolvency or similar proceeding that:
. we issued the notes with intent to delay or defraud any creditor,
. we contemplated insolvency with a design to prefer some creditors to
the exclusion of others, or
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. we issued the notes for less than reasonably equivalent value and
were insolvent at the time the notes were originally issued.
In such event, a court could, among other things, void all or a portion
of our obligations to you. In this case, you may not be repaid in full. A court
may also subordinate our obligations to you to our other indebtedness to a
greater extent than would otherwise be the case. In this case, other creditors
would be entitled 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 your claims.
If an active trading market does not develop, you may have difficulties
reselling the notes.
The notes are securities for which there currently is no market. If the
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. In addition, substantial
volatility in the market for non-investment grade debt, such as the notes, may
have a material adverse effect on the holders of the notes. This volatility has
increased in recent months and the liquidity of non-investment grade securities
has declined significantly.
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 outstanding notes under the Securities Act. In such event, the
notes would rank equally with the outstanding notes. 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
We may be adversely affected by our competitors, many of whom have greater
financial resources than we do.
Our principal business, wireless telephone service, is highly
competitive. We compete with one cellular licensee in each geographic area.
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, traditional telephone companies and resellers. The FCC requires all
cellular and personal communication system operators to provide service on a
nondiscriminatory basis to resellers. Resellers 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.
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We face increased competition from entities using communications technologies
comparable to cellular service.
Competing technologies or any new technologies may 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. New technologies that are comparable to cellular
service include:
. personal communications services,
. ESMR and
. satellite-based services.
Personal communications services refer to the series of two-way
communication licenses recently awarded by the FCC which are expected to use
digital wireless technologies. 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.
ESMR is a two-way wireless communications service that incorporates
characteristics of cellular technology, including many low-power transmitters
and connection with the network that provides traditional telephone services.
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.
The FCC has issued a number of licenses for satellite-based services that
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.
Competition from other wireless and traditional 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.
Competition from these of telecommunications providers may reduce our market
share and have an adverse effect on our prices and profitability. Our main
competitors for wireless services in the Puerto Rico market are Cellular
Communications of Puerto Rico, Inc. and the Puerto Rico Telephone Company. Both
competitors were earlier entrants into the Puerto Rico wireless market, have
greater resources than we do. They currently hold subscriber market shares of
approximately 47% and 40%, respectively. Cellular Communications and the Puerto
Rico Telephone Company offer cellular service based on both analog and digital
technology and offer greater cellular capability than we do to their customers
traveling outside Puerto Rico. We only offer digital service in Puerto Rico.
The FCC has issued licenses for personal communication services that can
carry large amounts of data in the Puerto Rico market. These systems present
additional competition to our personal communication services operations that
can carry large amounts of data in Puerto Rico.
The Puerto Rico Telephone Company is also our primary competitor for
traditional telephone service. GTE has bought a majority stake in the Puerto
Rico Telephone Company and may make
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changes to improve its competitive position. Any increase in our market
presence will depend upon our ability to obtain customers that are underserved
by the Puerto Rico Telephone Company or looking for an alternative.
If we are successful in making acquisitions, the acquired properties may
adversely affect our business.
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. 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.
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.
Management of those areas 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.
Rapid and significant technological changes in the telecommunications industry
may adversely affect us.
We 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.
We may not be able to modify our business to comply with regulatory changes.
The telecommunications industry is subject to federal and state
regulation that is continually evolving. As new telecommunications laws and
regulations are issued, we may be required to modify our business plans or
operations. There can be no assurance that we can do so in a cost-effective
manner. Further, we cannot assure you that federal or state governments or the
government of the Commonwealth of Puerto Rico 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.
The FCC and state regulatory agencies continue to issue rules
implementing the requirements of the 1996 Telecommunications Act. Such rules
address obligations, which include the obligation of incumbent telephone
companies to allow other carriers to connect to their network by reasonable
means at rates based on cost. The interpretation and implementation of these
and other provisions of the 1996 Telecommunications Act and the FCC rules
implementing the Telecommunications Act continue to be heavily debated and may
have a material adverse impact on our business.
The loss of our licenses could adversely affect our ability to provide wireless
and wireline services.
Cellular and personal communications services licenses are valid for 10
years from the effective date of the license. Failure to file for such renewal
or failure to meet any licensing requirements could lead to a denial of the
application and thus adversely effect our ability to continue to provide
service in that license area. Licensees may renew their licenses for additional
ten year periods by filing a renewal application with the FCC. The renewal
applications are subject to FCC review and are put out for public comment to
ensure that the licensees meet their licensing requirements and comply with
other applicable FCC mandates.
The FCC requires that our subsidiary in Puerto Rico cover at least one-
third of the population of Puerto Rico in five years and two-thirds of the
population in ten years under its B Block license for personal communication
services. Failure to meet these build-out requirements could have a material
effect on our ability to continue operations.
Lambda Operations Corp., our wholly owned telephone subsidiary, is
subject to the regulation of the Puerto Rico Telecommunications Board. The
Puerto Rico Telecommunications Board may determine that our subsidiary's rates
are not cost based or its tariffs are not in the public interest. This
determination could have a material adverse effect on our business and could
result in the denial of our subsidiary's authorization to provide telephone
service.
Both the wireless and local telephone 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 service fund based upon a percentage of
interstate and intrastate revenue. Universal service funds are used to provide
local telephone service to individuals or families qualifying for federal
assistance or households in areas not served by the local telephone company.
Many states, including those we operate in, are implementing local universal
service programs that would also require carriers to contribute additional
funds.
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Our cellular licenses may decrease in value, reducing the asset base that
supports our debt.
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. A
substantial portion of our assets consists of our interests in cellular
licenses held by subsidiaries. The market for the purchase and sale of cellular
licenses 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. Moreover, 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.
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
telephone 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 would
affect our business operations.
We incur costs associated with unauthorized use of our network. Fraud
adversely affects our business by increasing:
. interconnection costs,
. capacity costs,
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. administrative costs,
. costs incurred for fraud prevention and
. payments to other carriers for unbillable fraudulent roaming.
We cannot assure you that costs associated with unauthorized use of our
cellular network will not become substantial in the future.
Our results of operations may decline because of a market decline in roaming
rates and our strategy of aggressively pricing roaming rates.
We earn much of our revenue from customers of other wireless
communications providers who enter our service areas and use their wireless
phones. The use of wireless phones outside a subscriber's local area is
commonly referred to as roaming. Roaming rates per minute under reciprocal
roaming arrangements have declined over the last several years. We expect that
such declines will continue for the foreseeable future. We have also
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 the reach of their service into our service areas. Our
results of operations may decline because the decline in roaming rates may not
be offset by the decrease in roaming expenses we pay to other cellular and
personal communication services providers for roaming changes incurred by our
subscribers in other calling regions.
Our operations in Puerto Rico may be adversely affected if changes in 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. Our business in
Puerto Rico may be adversely affected by such changes in the tax law.
The 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.
The failure of our computer systems to recognize 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.
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Most of our customer-related computer systems and databases, including
our billing systems, are managed by third parties under contractual
arrangements. In addition, our systems are interconnected with various networks
and systems operated by third parties, including traditional land-based
communications networks, long-distance networks, the networks of other wireless
service providers as well as public utilities. 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 cannot
assure you that these third parties will have taken the necessary corrective
actions prior to the year 2000.
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 Acquisition Corp. Mr. Small has had no
prior experience managing our operations.
The loss of any of our senior management employees could have a material
adverse effect on our company unless we can obtain a suitable replacement in a
timely manner. 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 our
subsidiary in Puerto Rico and Peter Chehayl, who became Senior Vice President
and Chief Financial Officer following the merger. In the event of vacancies in
senior management, the additional time and resources toward recruitment, hiring
and training to fill such positions, could result in a material adverse effect
on our business, prospects, operations or results of operations. If management
vacancies are not filled, 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 conducted
through a partnership in which we hold a minority investment as a limited
partner. In addition, these
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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. These partnerships accounted for none of
our total revenues for the fiscal year ended May 31, 1998.
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
network control centers or certain of our wireless antenna sites or microwave
links could have a material adverse effect on our business, prospects,
operating results or ability to service our indebtedness, including the notes.
Possible 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. There is no
assurance that government authorities would not increase regulation of cellular
telephones resulting from these concerns or that cellular telephone companies
may be liable for costs or damages associated with these concerns.
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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.
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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. As
a result of the merger, a new group of equity investors acquired a 92.9%
ownership interest in Centennial. The remaining 7.1% interest is owned by
public stockholders. 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.
Merger Financing
A total of approximately $1.87 billion was required to pay the cash
consideration to Centennial stockholders in the merger, repay our indebtedness,
pay fees and expenses related to the merger and its financing and purchase
pledged securities. The sources of funding for the merger and the related
transactions are described below.
. Equity Financing. 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 purchased $400 million in common shares of CCW Acquisition
Corp. The CCW Acquisition Corp. shares were converted into Centennial
common shares in the merger.
. Bank Financing. Centennial Cellular Operating and its Puerto Rico
subsidiary borrowed approximately $936.0 million under a new $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" for a description
of the credit facility's principal terms.
. High Yield Notes Financing. Centennial Cellular Operating, together
with a co-obligor that has merged into Centennial, issued $370
million of old notes on December 14, 1998.
. Subordinated Debt Financing. WCAS Capital Partners III, L.P., an
investment partnership affiliated with Welsh Carson VIII, purchased
unsecured senior subordinated notes due 2009 of Centennial and common
shares of Centennial at an aggregate price of $180 million. See
"Description of Certain Indebtedness" for a description of the
principal terms of the subordinated debt.
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The chart below shows our organizational structure after the merger and
related transactions.
[Organizational Chart]
Public Welsh, Carson, Anderson & Stowe
Stockholders VIII, L.P. and affiliates
7.1% Blackstone Capital Partners, L.P.
and affiliates
Other equity investors
92.9%
-----------------
Centennial Subordinated debt 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
Rual Cellular de Puerto Rico is the borrower under a
portion of the credit
facility
o Domestic cellular systems o Personal comunication services network
o Minority cellular o Local telephone service provider
investment 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 of old notes, the senior subordinated
notes issued to WCAS Capital Partners III, L.P. 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 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, our
subsidiary in Puerto Rico. At the time of the merger, our subsidiary in
Puerto Rico borrowed $36.0 million under the credit facility. Centennial,
together with the subsidiaries of Centennial Cellular Operating, excluding
initially our subsidiary in Puerto Rico and its subsidiaries, which
subsidiaries have guaranteed the obligations of our subsidiary in 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
27
<PAGE>
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.
28
<PAGE>
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 have been paying
$2,569.00 per day in additional interest under the registration rights
agreement since such date. In addition, since the exchange offer was not
consummated by July 6, 1999, we will be paying an additional $2,569.00 per day
in additional interest under the registration rights agreement from such date
for an aggregate amount of $5,138.00 per day in additional interest. From July
12, 1999, we have no longer been required to pay $2,569.00 of such additional
interest; however, we will be required to pay $2,569.00 of such additional
interest per day until this exchange offer is consummated.
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, we will accept all notes
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 old notes may be offered for resale,
resold and otherwise transferred by the holders other than any such holder that
is our "affiliate" within the meaning of the Securities Act or such holder that
is a broker-dealer, 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 could not rely on the position of the staff of the SEC in Exxon Capital
Holdings Corporation or similar interpretive letters and could not resell your
notes unless an exemption from the registration provisions of the Securities
Act is available for the transfer or you resell your notes in compliance with
the registration and prospectus delivery requirements of the Securities Act.
Each broker-dealer that is issued new notes in the exchange offer for its
own account which were acquired by the broker-dealer as a result of market-
making activities 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 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
29
<PAGE>
"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 transfer 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.
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 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.
Except as noted below, in the event the exchange offer is consummated, we
will not be required to register the old 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--Risks Relating to the Notes."
Pursuant to the registration rights agreement, we are 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.
Expiration Date; Extensions
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 make a public announcement of such
extension, 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.
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
30
<PAGE>
. mail or otherwise deliver the letter of transmittal or the
facsimile, the old notes 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 The Depository Trust
Company's system may make book-entry delivery of the old notes by causing DTC
to transfer the old notes into the exchange agent's account. The Depository
Trust Company is commonly referred to as the DTC. In connection with the
delivery of old notes 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 or an agent's message, as
described below, must 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.
To effectively tender notes through DTC, the financial institution that
is a participant in DTC will electronically transmit its acceptance through the
Automatic Tender Offer Program. DTC will then edit and verify the acceptance
and send an agent's message to the exchange agent for its acceptance. The term
"agent's message" means a message transmitted by DTC, received by the exchange
agent and forming part of the book-entry confirmation, which states that DTC
has received an express acknowledgment from a participant in DTC that is
tendering old notes that are the subject of such book-entry confirmation; that
the participant has received and agrees to be bound by the terms of the
applicable letter of transmittal; and that we may enforce such agreement
against that participant. The exchange agent will make a request to establish
an account for the notes of DTC for the purposes of the exchange offer promptly
after the date of this prospectus.
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 notes, 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, unless the old notes tendered pursuant thereto are tendered:
. by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions"
on the letter of transmittal, or
. for the account of an eligible institution, as described below.
31
<PAGE>
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 an
eligible institution.
An "eligible institution" is 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 an eligible guarantor institution within the meaning of the
Exchange Act, which is a member of the Securities Transfer Agents Medallion
Program or the Stock Exchange Medallion Signature Program.
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 signed by
the registered holder.
If the letter of transmittal 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.
Guaranteed Delivery Procedures
If you desire to accept the exchange offer, and
. certificates for the old notes are not immediately available,
. 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,
a tender may be effected if the exchange agent has received 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 from an eligible institution a properly
completed and duly executed notice of guaranteed delivery, substantially in the
form provided by us, setting forth:
. the name and address of the registered holder,
. the certificate numbers of the old notes,
. the principal amount of such notes to be tendered,
. stating that the tender is being made by the notice of guaranteed
delivery and
. guaranteeing that within five New York Stock Exchange trading days
after the expiration date, the old notes, in proper form for
transfer, or a confirmation of book-entry transfer of such notes
into the exchange agent's account at DTC, will be delivered by such
eligible institution together with a properly completed and duly
executed letter of transmittal, and any other required documents,
or, if applicable, an agent's message in lieu of the letter of
transmittal.
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
32
<PAGE>
of transmittal and any other required documents or, if applicable, an agent's
message in lieu of the letter of transmittal, we may, at our option, reject the
tender.
Acceptance of Old Notes for Exchange
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.
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 defect or irregularity in the tender of
any notes. In addition, we reserve the right to waive any of the conditions of
the exchange offer in our reasonable discretion.
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 notes 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.
By tendering, you will represent to us that, among other things,
. the new notes acquired pursuant to the exchange offer are being
obtained in the ordinary course of your business,
. you have no arrangement with any person to participate in the
distribution of such new notes,
. you are not an "affiliate," as defined under the Securities Act, of
us, and
. if you are a broker or a dealer, as defined in the Exchange Act,
that you acquired the old notes for your own account as a result of
market-making activities or other trading activities and that you
will comply with the registration and prospectus delivery
requirements of the Securities Act.
Withdrawal of Tenders
Except as otherwise provided in this prospectus, 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 under
the caption "Exchange Agent" below 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,
. identify the notes to be withdrawn, including the certificate number
or numbers and principal amount of such notes, or, in the case of
old notes transferred by book-entry transfer, the name and number of
the account at DTC to be credited,
33
<PAGE>
. be signed by the person having deposited the notes to be withdrawn
in the same manner as the original signature on the letter of
transmittal by which such notes were tendered, including any
required signature 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 person
having made the original tender and withdrawing the tender, and
. specify the name in which any such notes are to be registered, if
different from that of the person having deposited the notes to be
withdrawn.
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 old notes you
withdraw 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 old notes so withdrawn are validly retendered. Any old notes that
have been tendered but that are not accepted for exchange will be returned to
you 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 new notes.
34
<PAGE>
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
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.
35
<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 the subordinated debt
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.
36
<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>
37
<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(10).......... 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)(11)....... 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(10).......... 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)(11)....... 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>
38
<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.
39
<PAGE>
(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.
(10) Churn is defined as the number of wireless subscriber cancellations per
month as a percentage of the weighted average total wireless subscribers
at the beginning of the period. Churn is stated as the average monthly
churn rate for the period.
(11) A cell site is a two-way radio location that connects the wireless
telephone user with the telephone system.
Subsequent Event
We have entered into an agreement to acquire 100% of the ownership
interests in a partnership owning the wireless telephone system serving the
Allegen, Michigan rual service area. The Allegen market represents
approximately 100,000 net pops. Our obligation to consummate this transaction
is subject to certain closing conditions, including the relevant regulatory
approvals. We have anticipated completing this acquisition in October 1999.
40
<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.
41
<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.
42
<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.
43
<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
subordinated debt
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
subordinated debt
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>
44
<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 subordinated debt financing.
(9) Represents the amortization of the discount ($22.5 million) on the shares
issued to the holder of senior subordinated 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.
45
<PAGE>
BUSINESS
Centennial Cellular Corp.
We are one of the largest independent wireless communications providers
in the United States and Puerto Rico. Our service areas have a total population
of approximately 10.8 million, decreased by the percent of our subsidiaries
serving those areas owned by third parties. For example, if a third party owns
40% of our subsidiary, the actual population of those areas served by that
subsidiary will be decreased by 40% for our calculations. This adjusted
population is commonly referred to as net pops. We had 426,700 subscribers as
of February 28, 1999. Centennial Rural Cellular serves 5.8 million net pops and
its service area covers approximately 81,645 square miles. Our subsidiary in
Puerto Rico provides wireless and traditional telephone services over a common
communications network in Puerto Rico. Its licensed service areas cover 3.8
million net pops in Puerto Rico and the U.S. Virgin Islands. In addition, we
own minority shares, representing approximately 1.2 million net pops, 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 traditional
(Cellular services) telephone 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, we 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 operating and financial performance has been driven by
the quality and experience of our 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
approximately 1.7 million net pops 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 since January
7, 1999complements the existing management team. Rudy J. Graf, currently
President and Chief Executive Officer of our subsidiary in Puerto Rico, who was
the Chief Operating Officer of Centennial since 1991, manages the day-to-day
operations of our subsidiary in Puerto Rico.
46
<PAGE>
Rural Cellular Systems
Our domestic consolidated systems are among the leading independent
providers of rural wireless telecommunications services. We attempt to acquire
cellular systems next to our existing markets. 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 of the market for users
and potential users of cellular services and in cellular usage by
subscribers;
. 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. The population density of these regions suggests that
the construction of a personal communications services network may
not be economically attractive to competitors at present.
. Above-Average Revenue per Subscriber. Our domestic markets are
strategically located between larger metropolitan areas and tend to
exhibit long commute times and well-traveled roadways. Customers of
other wireless communications providers who enter our service areas
and use their wireless phones have the potential to generate high
levels of cellular revenues. That use outside the subscriber's local
area is commonly referred to as roaming.
Our domestic cellular interests consist primarily of three operating
clusters:
. Michiana Cluster contains approximately 3.4 million net pops in
Michigan, Ohio and Indiana, covering portions of three major
interstate highways that connect Chicago, Detroit and Indianapolis.
. East Texas/Louisiana Cluster contains approximately 2.1 million net
pops, 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 approximately 296,000 net pops,
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.
47
<PAGE>
Puerto Rico Systems
Our Puerto Rico business, which is conducted through our subsidiary in
Puerto Rico, provides a broad range of wireless and traditional telephone
services in the Commonwealth of Puerto Rico, an area covering approximately
3.8 million net pops. Our subsidiary in Puerto Rico owns its own communications
network, making it a so-called "facilities-based" provider of communications
services. It is
. the only provider of personal communications services in the Puerto
Rico market,
. a provider of wireless telephone services to both business and
residential customers, and
. a provider of local and long distance telephone services and 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 communications and
traditional telephone services using its own switch and sophisticated fiber
optic network, which contains over 314 miles of fiber laid 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 wireless antenna sites and digital technology to transmit its calls.
. Wireless Services. Our subsidiary in Puerto Rico offers both
personal communications services and wireless local telephone
service to its customers.
. Personal Communications Services. Personal communication services
refer to the series of two-way communication licenses recently
awarded by the FCC which are expected to use digital wireless
technologies. Our personal communications services business
currently covers approximately 85% of the total population on the
island of Puerto Rico and targets high volume users. We began
offering personal communication services in December 1996. As of
February 28, 1999, we 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 Cellular Telephone
Industry Association.
. Wireless local telephone services. Our subsidiary in Puerto Rico
began offering wireless telephone service to business and
residential customers in August 1997. Our total average revenue per
wireless telephone customer was $94 during the nine months ended
February 28, 1999. This service uses our fully digital network in
Puerto Rico and had over 17,800 subscribers as of February 28, 1999.
. Traditional Telephone Services. Our license to provide local
telephone service authorizes us to connect customers to the local
telephone network and to provide local telephone service. Lambda
Operations, Inc. provides local, long distance and data services,
including internet-related services, to business and government
customers
48
<PAGE>
over our fiber optic network. We believe that our targeted 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 minutes of use to its customers in
February 1999, an increase of 155% 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, 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.
Year 2000
The year 2000 issue is the result of many computer programs being
written abbreviating dates by using two digits rather than 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 its 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:
. awareness,
. assessment,
. remediation,
. testing,
. implementation and
. 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.
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<PAGE>
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 have been
informed by these third parties that their remediation efforts are in various
stages with final completion anticipated in August 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 connected with various networks and systems operated by
third parties, including traditional telephone 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 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 or results of operations.
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 utilize this experience in the
development and implementation of its 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 a material adverse effect on our financial condition or results of
operations.
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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.
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<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 (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 Chairman, Board of Directors
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
Agreements" beginning on page 60.
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<PAGE>
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.
Rudy J. Graf is President and Chief Executive Officer of our subsidiary
in 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
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<PAGE>
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
the Chairman of the board of directors 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.
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,
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<PAGE>
. 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.
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
Corp. 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.
The current members of our board's compensation committee are Thomas P.
McInerney, Anthony J. de Nicola and Mark T. Gallogly. Messrs. McInerney and de
Nicola are managing members of the sole general partner of Welsh Carson VIII.
Mr. Gallogly is a member of the limited liability company that acts as the
general partner of Blackstone Capital Partners, L.P. and its affiliates and is
a Senior Managing Director of The Blackstone Group L.P. Because of these
affiliations, Messrs. McInerney, de Nicola and Gallogly may be deemed to have a
material interest in the matters described under "Certain Relationships and
Related Transactions--Agreements Between Centennial Corp. and its
Stockholders."
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,
55
<PAGE>
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 subsidiary
in Puerto Rico. 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 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 our 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
56
<PAGE>
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.
57
<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(3)....................... 18,875,533 60.6
Anthony J. de Nicola(4)...................... 18,875,533 60.6
Rudolph E. Rupert(5)......................... 18,875,533 60.6
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(6).......................... 9,390,681 30.2
Lawrence H. Guffey(6)........................ 9,390,681 30.2
All directors and executive officers as a
group (12 individuals)...................... 28,336,810 91.0
</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, L.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.
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<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.
(3) Mr. McInerney owns of record 155,328 shares of Centennial common stock.
Welsh, Carson, Anderson & Stowe VIII, L.P., Welsh, Carson, Anderson & Stowe
VII, L.P., WCAS Information Partners, L.P., WCAS Capital Partners III,
L.P., WCA Management Corporation and individuals who are members of the
limited liability company that serves as Welsh, Carson, Anderson & Stowe
VIII's general partner, affiliates of Mr. McInerney, own the remaining
shares of Centennial common stock. Mr. McInerney disclaims beneficial
ownership of such shares except to the extent owned of record by him.
(4) Mr. de Nicola owns of record 13,644 shares of Centennial common stock.
Welsh, Carson, Anderson & Stowe VIII, L.P., Welsh, Carson, Anderson & Stowe
VII, L.P., WCAS Information Partners, L.P., WCAS Capital Partners III,
L.P., WCA Management Corporation and individuals who are members of the
limited liability company that serves as Welsh, Carson, Anderson & Stowe
VIII's general partner, affiliates of Mr. de Nicola, own the remaining
shares of Centennial common stock. Mr. de Nicola disclaims beneficial
ownership of such shares except to the extent owned of record by him.
(5) Mr. Rupert owns of record 13,644 shares of Centennial common stock. Welsh,
Carson, Anderson & Stowe VIII, L.P., Welsh, Carson, Anderson & Stowe VII,
L.P., WCAS Information Partners, L.P., WCAS Capital Partners III, L.P., WCA
Management Corporation and individuals who are members of the limited
liability company that serves as Welsh, Carson, Anderson & Stowe VIII's
general partner, affiliates of Mr. Rupert, own the remaining shares of
Centennial common stock. Mr. Rupert disclaims beneficial ownership of such
shares except to the extent owned of record by him.
(6) Messrs. Gallogly and Guffey do not own of record any shares of Centennial
common stock. Blackstone CCC Capital Partners L.P., Blackstone CCC Offshore
Partners L.P. and Blackstone Family Investment Partnership III L.P.,
affiliates of Messrs. Gallogly and Guffey, own all of the shares of
Centennial common stock. Messrs. Gallogly and Guffey disclaim beneficial
ownership of such shares except to the extent owned of record by either of
them.
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<PAGE>
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 Centennial's current officers, and an individual retirement account
for the benefit of Michael J. Small. The securities purchase agreement outlined
the terms of Centennial's principal stockholders' initial investment in
Centennial.
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 Centennial for
$180 million, a senior subordinated note due 2009 with a face value
of $180 million and 1,626,504 shares of our Class A common shares,
and
(8) CCW Acquisition Corp. and the principal stockholders of
Centennial entered into the stockholders and registration rights
agreements described below.
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,
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(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 Centennial on January 7, 1999,
Centennial 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 Centennial's obligation when Centennial 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 Centennial to another investment fund.
Under the amended and restated stockholders agreement, our principal
stockholders have agreed to establish and maintain for Centennial 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 Centennial's 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.
. Our Chief Executive Officer (Centennial), who is currently Michael J.
Small, serves on Centennial's board of directors.
. Our Chief Executive Officer (Puerto Rico), who is currently Rudy
Graf, serves on Centennial's board of directors.
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. The remaining two directors are elected by all of Centennial's
stockholders, including Centennial's 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 Centennial's 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.
The amended and restated stockholders agreement grants The Blackstone
Group investors, Messrs. Small, Chehayl and Owen, Signal/Centennial Partners,
L.L.C. and Guayacan Private Equity Fund, L.P. 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
. Signal/Centennial Partners, L.L.C. and Guayacan Private Equity Fund,
L.P.
to sell their shares of Class A common stock to a third party who offers to buy
at least 80% of Centennial's capital stock. The sale of Centennial must be for
cash or marketable securities and 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.
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Centennial has granted preemptive rights to purchase shares of
Centennial's common stock in proportion to the ownership of the stockholder in
the situations described below to
. the Welsh Carson investors,
. The Blackstone Group investors,
. Messrs. Small, Chehayl and Owen, and
. Signal/Centennial Partners, L.L.C. and Guayacan Private Equity Fund,
L.P.
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 not apply to
sales by The Blackstone Group investors to their affiliates, sales pursuant to
registered public offerings or sales in compliance with the Securities Act or
distributions by any of The Blackstone Group investors which are limited
partnerships to their limited partners.
Centennial 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 Centennial's certificate of incorporation
or Centennial's by-laws in any manner that adversely affects
. the rights of the holders of Centennial 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 Centennial's
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.
with
. any of our subsidiaries's officers, directors or employees,
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. 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 Centennial that owns, directly or indirectly,
at least 25% of Centennial's outstanding capital stock or any
affiliate of any 25% stockholder of Centennial.
Under the amended and restated stockholders agreement, each of
. Welsh Carson investors,
. The Blackstone Group investors,
. Messrs. Small, Chehayl and Owen, and
. Signal/Centennial Partners, L.L.C. and Guayacan Private Equity
Fund, L.P.
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 Centennial's 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 Centennial's company or any material portion of
Centennial's business,
. any solicitation of proxies with respect to Centennial 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 Centennial,
. propose any matter for submission to a vote of stockholders of
Centennial,
. seek to remove or appoint directors of Centennial 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 Centennial, other than any group consisting
exclusively of stockholders who have signed the amended and
restated stockholders agreement and their affiliates.
Under the amended and restated stockholders agreement Centennial is
required to pay WCA Management Corporation an annual monitoring fee of
$450,000 plus reasonable expenses and
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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
Centennial's 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 Centennial, 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 Centennial's 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 Centennial's obligation
when Centennial 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 Centennial
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
Centennial 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 Centennial
. each of the Welsh Carson investors,
. each of The Blackstone Group investors,
. Messrs. Small, Chehayl and Graf, and
. Signal/Centennial Partners, L.L.C. and Guayacan Private Equity Fund,
L.P.
Former Indebtedness of Certain Executive Officers
During fiscal 1998, Thomas R. Cogar, Senior Vice President of Engineering
of Centennial received a relocation loan from Centennial of approximately
$65,000 and John H. Casey, Senior Vice
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President--Administration of Centennial received a relocation and temporary
housing 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 Communications Corp., the controlling
stockholder of Centennial before the merger, 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
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
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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.
The Merger and Subordinate Note Financing
Welsh, Carson, Anderson & Stowe VIII, L.P. and its affiliates and The
Blackstone Group controlled CCW Acquisition Corp. prior to the merger. Messrs.
McInerney, de Nicola and Rupert, who are members of the general partner of
Welsh, Carson, Anderson & Stowe VIII, L.P., may be deemed to have controlled
CCW Acquisition Corp. prior to the merger. Messrs. Gallogly and Guffey, who are
affiliated with The Blackstone Group, may be deemed to have controlled CCW
Acquisition Corp. prior to the merger. For a description of the merger see "The
Merger."
In addition, WCAS Capital Partners III, L.P., an investment partnership
affiliated with Welsh, Carson, Anderson & Stowe VIII, L.P. bought subordinated
notes of Centennial for $180 million at the time of the merger. Messrs.
McInerney, de Nicola and Rupert, who are members of the general partner of WCAS
Capital Partners III, L.P., may be deemed to control WCAS Capital Partners III,
L.P. See "The Merger."
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The Credit Facility
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, our subsidiary in Puerto Rico.
On January 7, 1999, our subsidiary in 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.
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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 our subsidiary
in 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
. 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,
. 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
6.0:1.0,
. 100% of the net proceeds of the issuance or incurrence of debt or of
any sale and lease-back, and
. 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 our
subsidiary in 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
. 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,
. after January 7, 2000 and on or before January 7, 2001, with a
premium of 1% of the aggregate principal amount of loans prepaid and
. after January 7, 2001, 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 an amount for
. the tranche A loans, tranche A loans to our subsidiary in Puerto Rico
and the revolving credit loans that is 1.50%
. the tranche B loans that is 2.25%, and
. the tranche C loans that is 2.50% or
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(b) a LIBOR rate plus an amount for
. the tranche A loans, tranche A loans to our subsidiary in Puerto Rico
and the revolving credit loans that is 2.50%,
. the tranche B loans that is 3.25%, and
. the tranche C loans that is 3.50%.
Based upon Centennial Cellular Operating's leverage ratio after the
delivery of certain financial statements, the additional amount for tranche A
loans, tranche A loans to our subsidiary in Puerto Rico and revolving credit
loans may be reduced by up to 0.75%. 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
. 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
. an annual administrative agent's fee of $150,000 on January 7 of each
year beginning 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 our subsidiary in
Puerto Rico's direct and indirect existing and future subsidiaries were
required to guarantee our subsidiary in 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 our subsidiary in Puerto Rico under the credit facility
are secured by substantially all of the assets of our subsidiary in 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. 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.
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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,
. 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,
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. 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 financing of the merger, WCAS Capital Partners III, L.P.,
an investment partnership affiliated with Welsh Carson VII, purchased at the
time of the consummation of the merger, senior subordinated notes of Centennial
due 2009 in the original principal amount of $180 million, as well as 1,626,504
Centennial Class A common shares, for an aggregate cash purchase price of
$180 million. The senior subordinated notes bear 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 notes are 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.
The senior subordinated notes contain certain affirmative and negative
covenants typically found in subordinated notes. The senior subordinated notes
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.
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The senior subordinated notes are subordinate in right of payment to the
notes to the extent set forth in the senior subordinated notes. Under the
senior subordinated notes, Centennial may not make any payments on the senior
subordinated notes 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 notes, except in connection with certain bankruptcy events, the
holder of the senior subordinated notes 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 notes are 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, National Association, as trustee, paying agent and
registrar.
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. We also use other terms in this section that
are defined under "--Certain Definitions" beginning on page 107.
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.
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 in the
register of holders.
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Ranking
The payment of the principal of any premium 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 of all amounts 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 in the event of any distribution to our creditors in any bankruptcy,
insolvency or liquidation proceeding with respect to Centennial Cellular
Operating. Holders of new notes may still receive payments made from the trust
described under the caption "--Legal Defeasance and Covenant Defeasance" even
in the event of bankruptcy, insolvency or liquidation.
Upon any bankruptcy, insolvency or liquidation proceeding, any payment or
distribution of Centennial Cellular Operating's assets of any kind will be
paid by Centennial Cellular Operating or by any receiver, trustee 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 or their representative or representatives for the payment of the
Senior Indebtedness until all the Senior Indebtedness has been paid in full in
cash.
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
. the trustee receives a notice from the agent bank under the credit
facility or the holders or the representative of any Designated
Senior Indebtedness indicating that a default has occurred that
permits the holders of that Indebtedness to accelerate its maturity.
Payments on the new notes may and will 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,
(2) 179 days after the date on which the applicable 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
notice, unless the maturity of any Designated Senior Indebtedness
has been accelerated.
No new notice may be delivered as described above unless and until 186
days have elapsed since the effectiveness of the immediately prior notice.
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No event of default that existed or was continuing on the date of
delivery of any such notice to the trustee will be the basis for a subsequent
notice unless such default has 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 than creditors of
Centennial Cellular Operating who are holders of Senior Indebtedness. See "Risk
Factors--Risks Relating to the Notes." 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."
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 any 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.
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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.
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 will 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
of that note 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 when the original note is cancelled. 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 purchase price in cash equal to 101% of the aggregate principal
amount of new notes repurchased plus any accrued and unpaid interest on the new
notes 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
within 45 days after the Change of Control, under the procedures required by
the indenture and described in the notice. We will comply with the requirements
of the Exchange Act and any other securities laws and regulations to the extent
such laws and regulations apply to the repurchase of the new notes as a result
of a Change of Control.
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On the date of payment for the redemption describe above, we will, to the
extent allowed by law:
. accept for payment all new notes or portions of new notes properly
tendered pursuant to the Change of Control Offer,
. deposit with Norwest Bank Minnesota, National Association, as paying
agent, an amount equal to the purchase price for 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.
Norwest Bank Minnesota, National Association, will promptly mail to each
holder of new notes so tendered the purchase price for new notes tendered, and
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; provided that each new note will be in a principal
amount of $1,000 or an integral multiple thereof.
Before 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 any requisite consents 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
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,
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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.
Sinking Fund
The new notes will not have the benefit of a sinking fund.
Security
When the merger was completed, the trustee purchased with the proceeds
of the offering of the old notes for the benefit of the holders of the notes
securities in an amount sufficient to provide for payment of the first three
scheduled interest payments due on the notes. These securities were placed
into a pledge and escrow account. 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 interest payment of approximately $19
million was made on June 15 out of the pledged securities. The next two
interest payments will be funded from the pledged securities unless we give
the trustee other funds to make those two 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 next two 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,
. enter into transactions with Affiliates or Related Persons,
. issue Guarantees,
. sell assets or Capital Stock of Subsidiaries,
. create liens,
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. 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
Incur 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 will 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 our
subsidiary in 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 our subsidiary
in 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 under 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
. any disposition, pledge or transfer of any such Indebtedness to a
Person, other than a disposition, pledge or transfer to
Centennial Cellular Operating or a Restricted Subsidiary, will be
deemed to be an Incurrence of such Indebtedness not permitted by
this clause (3), and
. 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),
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(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
. $25 million and
. 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 from agreements providing for
. indemnification,
. adjustment of purchase price, or
. similar obligations, or
. from related guarantees
each Incurred in connection with the disposition of any business,
assets or Restricted Subsidiary of Centennial Cellular Operating to
the extent they to not result in the obligation to repay borrowed
money 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 under 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 under 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
. Indebtedness of Centennial Cellular Operating or any Restricted
Subsidiary, which Indebtedness is otherwise permitted to be
incurred under this covenant, or
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. Indebtedness for which a lender has provided a 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 have 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
. Indebtedness of Centennial Cellular Operating or any Restricted
Subsidiary and/or
. 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 under
the Currency Hedging Agreements,
(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
. 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 will 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
. the stated amount of any premium or other payment we are required
to pay in connection with such a refinancing under the terms of
the Indebtedness being refinanced or
. the amount of premium or other payment actually paid at that time
to refinance the Indebtedness, plus, in either case, the amount
of reasonable expenses of Centennial Cellular Operating in
connection with such refinancing, and
(13) other Indebtedness of Centennial Cellular Operating or a Guarantor
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 are designated in an officer's
certificate as excluded cash contributions and will not be included
in the computation of the amount of Restricted Payments which
Centennial Cellular Operating can make under "--Limitation on
Restricted Payments."
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For purposes of determining compliance with this covenant, if an item of
Indebtedness meets the criteria of more than one of the categories described
in clauses (1) through (8) above or is entitled to be incurred under the
second paragraph of this covenant, Centennial Cellular Operating may, in its
sole discretion, classify such item of Indebtedness on the date it is incurred
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.
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
. the amount determined by subtracting (x) 1.75 times the aggregate
Consolidated Interest Expense of Centennial Cellular Operating for
the Computation Period from (y) Operating Cash Flow of Centennial
Cellular Operating for the Computation Period, plus
. 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
. 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
. to the extent not otherwise included in the first three bullets
above, an amount equal to the net reduction in Investments in
Unrestricted Subsidiaries 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.
Despite the above, the provisions in clauses (b) or (c) of the
immediately preceding paragraphs will not prohibit, and the provision in
clause (a) of the immediately preceding paragraphs will not prohibit the
payment described in the first bullet of this paragraph (c), 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,
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(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
(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 carried over to
succeeding calendar years;
provided, that such amount in any calendar year may be increased by
an amount not to exceed
. the cash proceeds from the sale of Capital Stock to members of
management, directors or consultants that occurs after December
15, 1998 plus
. 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
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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
. its costs, including all professional fees and expenses, incurred to
comply with its reporting obligations under federal or state laws
or under the indenture,
. 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
. its then currently due taxes attributable solely on account of
Centennial Cellular Operating and its subsidiaries, as a
consolidated filing group or on account of the income of Centennial
related to its investment in Centennial Cellular Operating and its
subsidiaries payable under 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 pay if
they were 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) a refinancing through the substantially concurrent issuance of new
Subordinated Indebtedness of Centennial Cellular Operating, provided
that any such new Subordinated Indebtedness
(a) will not exceed the principal amount 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
. the stated amount of any premium or other payment we are
required to pay with such a refinancing under to the
terms of the Indebtedness being refinanced or
. the amount of premium or other payment actually paid to
refinance the Indebtedness,
plus, in either case, the amount of expenses of Centennial Cellular
Operating incurred with such refinancing;
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(b) 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
(c) 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 no greater than the
quarterly interest payments then due on our subordinated debt as in
effect on December 15, 1998; provided that in no event will that
amount exceed the aggregate amount of Cash from Minority Cellular
Investment Interests received by Centennial Cellular Operating net
of all taxes; and provided further that with respect to any
. loans,
. advances,
. dividends, or
. distributions
after December 15, 1999 and after giving effect to that transaction,
Centennial Cellular Operating would be permitted to incur at least
$1.00 of additional Indebtedness under 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 under 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
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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 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
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pursuant to clause (b) 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, have 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 under 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,
(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, provided that such encumbrances or restrictions if
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,
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(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
engage in 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.
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
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. $1 million, or
. 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,
. 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, so long as any
amendment to those agreements is not disadvantageous to the holders
of the notes in any material respect, or any transaction
contemplated by any of those agreements,
(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 documents relating to the merger, including
any registration rights agreement or purchase agreement, 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 will
only be permitted by this clause,
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(10) to the extent that the terms of any 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 under to a tax sharing agreement between Centennial
Cellular Operating and any other Person with which Centennial
Cellular Operating is required or permitted to file a consolidated
tax return or with which Centennial Cellular Operating is or could
be part of a consolidated 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 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, 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 will 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 will 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 any guarantees, 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
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. 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
(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 in this covenant;
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,
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 dispose of assets acquired and
held for resale in the ordinary course of business,
(2) Centennial Cellular Operating and its Restricted Subsidiaries may
dispose of assets under and in accordance with the "--Limitation on
Mergers, Sale or Consolidation" covenant,
(3) Centennial Cellular Operating and its Restricted Subsidiaries may
dispose of damaged, worn out or other obsolete property in the
ordinary course of business so long as it 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
dispose of assets to Centennial Cellular Operating or any of its
Restricted Subsidiaries in accordance with the terms of the
indenture, and
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(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 will initially be designated a 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 will be applied in the manner applicable to Net Cash
Proceeds from an Asset Sale as set forth under this covenant,
. 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.
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 Asset Offer Sale. The offer
price in any Asset Sale Offer 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.
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
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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 of Centennial Cellular
Operating or any Restricted Subsidiary, or any income or profits of Centennial
Cellular Operating or any Restricted Subsidiary, 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 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 of any such Indebtedness described in clause (A), so
long as the aggregate principal amount of Indebtedness represented
by such Indebtedness, or, 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.
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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
. Centennial Cellular Operating is the continuing entity or
. the resulting, surviving or transferee entity is an entity
organized under the laws of the United States, any state of the
United States 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 will exist or will occur immediately
after giving effect, 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 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 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 under 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 either of us, 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,
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(5) at the time of the transaction any Guarantor unless it is the other
party to the transaction described above, will have by supplemental
indenture confirmed that its Guarantee will 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 of the other entity
comply with the indenture and that all conditions precedent in the indenture
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
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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 to that transaction:
(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 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 of the United States 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,
(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 of the other entity
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 transaction 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
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indenture with the same effect as if the 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 a Related Business.
Limitation on Senior Subordinated Indebtedness. We will not, and will not
permit or cause any Guarantor to, incur 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 equal in right of payment 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. All of our subsidiaries are
currently Restricted Subsidiaries. Centennial Cellular Operating may make
designate a Subsidiary as an Unrestricted Subsidiary only if:
(a) no Default shall have occurred and be continuing at the time of or
after giving effect to such designation,
(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
the greater of the net book value or fair market value of our
interest in that Subsidiary,
(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
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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.
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 will 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 make a revoke of the designation of any
Subsidiary as an Unrestricted Subsidiary if:
(a) no Default will have occurred and be continuing at the time of and
after giving effect to such revocation,
(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 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, under 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.
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Provision of Financial Statements. Whether or not Centennial Cellular
Operating is subject to the reporting requirement 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 if it were subject to the reporting
requirements of the Exchange Act such documents to be filed with the SEC on or
prior to the date such document would be required to be filed with the SEC
. within 15 days of each required filing date, whether or not prior to
the 120th calendar day following January 7, 1999, (1) transmit by
mail to all holders, as their names and addresses appear in the
security register, without cost to such holders and (2) 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 if Centennial Cellular Operating were
subject to the reporting requirements of the Exchange Act, 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 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 of the new notes 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
. 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,
. 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,
. Centennial does not own assets in excess of $10 million other than
the Capital Stock of Centennial Cellular Operating, and
. Centennial does not have outstanding Indebtedness in excess of $10
million, other than indebtedness under our subordinated debt and
Indebtedness as to which Centennial Cellular Operating is also
liable.
Amendments to Subordinated Debt. Centennial will not amend the terms of
our subordinated debt in a manner adverse to the holders of new notes.
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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
when it becomes due and payable and the continuance of such failure
for 30 days,
(2) the failure by us to pay all or any part of the principal, or any
premium on the notes when it becomes due and payable at
. maturity,
. redemption,
. by acceleration or
. otherwise, including, without limitation, payment of the purchase
price for the new notes upon a Change of Control or an Asset Sale
Offer,
(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) certain events of bankruptcy, insolvency, or liquidation affecting
us or any of our Significant Restricted Subsidiaries,
(5) any Guarantee of a Significant Restricted Subsidiary will for any
reason cease to be in full force and effect and enforceable in
accordance with its terms 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,
(6) 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 or which
default
. results from the failure to pay Indebtedness at its final maturity
date or
. results in the acceleration of such Indebtedness before its
express maturity
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. 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
(7) final unsatisfied judgments, orders or decrees in excess of
$20,000,000, exclusive of any portion of any such payment covered by
insurance, at any one time against us or any of our Restricted
Subsidiaries and not stayed, bonded or discharged within 60 days.
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 clause (4) above, then, 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 notice is given by the holders, may declare all principal of and
accrued interest on the notes to be immediately due and payable. 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 clause (4), any
such acceleration will not be effective until the earlier to occur of
. five business days following delivery of a written notice of such
acceleration of the notes to the agent under the credit facility and
. the acceleration of any Indebtedness under the credit facility.
If an Event of Default specified in clause (4) above occurs, all
principal and accrued interest on the notes will be immediately due and payable
without any 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, any premium 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 provision which cannot be 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 powers under the indenture
at the request, order of any of the holders, unless such holders have offered
to the trustee reasonable security or indemnity.
No holder of any of the new notes has any right to institute any
proceedings with respect to the indenture or any remedy under the indenture,
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 inconsistent with such written
request by holders of a majority in aggregate principal amount of
the outstanding notes.
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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, any
premium 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 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, elect to completely
defease the new notes. Such complete defeasance means that we, any such
Guarantor and any other obligor under the indenture will be deemed to have paid
and discharged the entire indebtedness represented, and the indenture will
cease to be of further effect as to all outstanding notes, except as to
(1) rights of holders to receive payments 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 defease a covenant under the indenture and after that defeasance
any omission to comply with such obligations will not constitute a Default or
Event of Default with respect to the notes. In the event a covenant is
defeased, certain events will no longer constitute an Event of Default with
respect to the new notes.
In order to exercise a defeasance,
(1) Centennial Cellular Operating must irrevocably deposit with the
trustee, in trust, for the benefit of the holders, cash, non-
callable government securities or a combination of cash and non-
callable government securities, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, any premium
and interest on such notes on the stated date for payment or on any
redemption date on such notes, and the holders of notes must have a
valid, perfected, exclusive security interest in such trust,
(2) in the case of a defeasance, Centennial Cellular Operating will have
delivered to the trustee an opinion of counsel in the United States
reasonably acceptable to the trustee
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confirming that the holders of new notes will not recognize any gain
or loss for Federal income tax purposes from the defeasance and will
still be subject to the same amount of Federal income tax as if the
defeasance had not occurred,
(3) no Default or Event of Default will 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 91 days after 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,
(4) we will have delivered to the trustee an opinion of counsel
reasonably acceptable to the trustee to the effect that, subject to
certain assumptions, 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,
(5) such defeasance will 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,
(6) such 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,
(7) 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
(8) 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 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 notes 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 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
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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, any premium 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
. all conditions precedent under the indenture relating to the
satisfaction and discharge of such indenture have been complied
with and
. 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, any Guarantor, and the 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 by such amendment or supplement:
(1) change, for any note, the
. payment date,
. amount of payment,
. type of payment,
. place of payment,
. rate of payment
. or impair the right to institute suit for the enforcement of any
such payment when due
including, in each case, amending, changing or modifying any definitions
related to such provisions, but only to the extent such definitions
relate to such provisions, in a manner adverse to the holders,
(2) reduce the percentage of the consent 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 by such modification or
waiver,
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(4) except as otherwise permitted under "--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 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
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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 to the extent
permitted by law.
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.
Certain Definitions
Set forth below is a description of some of the defined terms used in
the indenture. You should read the indenture for the full definition of all
such terms.
"Acquired Indebtedness" means Indebtedness of a Person
. existing at the time such Person becomes a Restricted Subsidiary or
. assumed in connection with the acquisition of assets from such Person,
in each case, other than Indebtedness incurred in connection with such Person
becoming a Restricted Subsidiary or such acquisition.
"Affiliate" means, with respect to any specified Person,
. any other Person directly or indirectly controlling or controlled by,
or under direct or indirect common control with, such specified
Person or
. any officer, director, or controlling stockholder of such other
Person.
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As used in this definition, the term "control" means:
. 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
. the beneficial ownership of 10% or more of the voting power of the
voting common equity of such Person or of warrants or other rights to
acquire such equity, whether or not presently exercisable.
"Affiliate Transaction" means,
. any payment or transfer of assets to,
. purchase of any assets from,
. entering into or amending any transaction or agreement with or for
the benefit of any Affiliate.
"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 means, with respect to
any Person and its Restricted Subsidiaries, the ratio of:
. 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
. 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 the
Reference Period;
provided that, in calculating Annual Operating Cash Flow and
consolidated Indebtedness,
. 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;
. the incurrence of any Indebtedness during the Reference Period or
subsequent period and on or prior to the transaction date and the
application of the proceeds from the transaction to the extent 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;
. Consolidated Interest Expense attributable to any Indebtedness
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
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. all members of the consolidated group of such Person on the transaction
date 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 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
. 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 the board of directors of
Centennial Cellular Operating, will be eliminated or realized within
one year after the date of the transaction; provided that any such cost
savings are calculated in accordance with Regulation S-X under the
Securities Act or
. 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
. the redemption price of such note at December 15, 2003, such redemption
price being described under "--Optional Redemption", plus
. all required interest payments, excluding accrued but unpaid interest,
due on the 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 the note.
Asset Sale" means, the transfer or disposal 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.
"Asset Sale Offer" means an offer to all holders of new notes to purchase
the maximum principal amount of new notes that may be purchased out of the
excess proceeds of an Asset Sale.
"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
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 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 disposition 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
. 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 (1) of the third paragraph of "--Limitation on
Incurrence of Additional Indebtedness" or
. at the time of any Restricted Payment being made pursuant to clause
(9) 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
. 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, in each case maturing within one year
after the date of acquisition,
. 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
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. investments in money market funds substantially all of whose assets
comprise securities of the types described in the first two points
above.
"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 transfers 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 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
. 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 "--Covenants--Limitation on
Restricted Payments" (and such amount will be treated as a
Restricted Payment subject to the provisions in the indenture
described under " --Covenants--Limitation on Restricted
Payments") and
. immediately after such transaction, no person or group, other
than Welsh Carson or Blackstone, is the beneficial owner directly
or indirectly, more than 50% of the total outstanding Voting
Stock of the surviving corporation,
(2) any person or group, other than Welsh Carson or Blackstone, is or
becomes the beneficial owner 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 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.
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
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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 and the principal
securities exchange on which such shares are listed or admitted to
trading is a designated offshore securities market, 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,
. the average of the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or
. 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.
"Computation Period" means February 1, 1999 to the last day of the last
full fiscal quarter before the date of the proposed Restricted Payment.
"Consolidated Interest Expense" of any Person means, for any period, the
sum of, without duplication and determined in each case in accordance with GAAP
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(A) interest expensed or capitalized, paid, accrued, or scheduled to be
paid or accrued, including 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,
. 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 interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and
. 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 for such period, net of taxes, fees and expenses relating to
the applicable transaction
. 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
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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,
. 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 this 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.
"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.
"Designated Senior Indebtedness" means:
. all Senior Indebtedness under the credit facility, and
. any other Senior Indebtedness of at least $25 million and which is
specifically designated "Designated Senior Indebtedness" by
Centennial Cellular Operating.
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"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 of that Capital Stock, 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 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."
"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
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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 on January 7, 1999.
"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 obligations under
the indenture.
"Guarantor" means any Restricted Subsidiary of Centennial Cellular
Operating which becomes a guarantor of Centennial Cellular Operating's
obligations under the indenture.
"Incur" or as appropriate "Incurrence" means 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.
"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 of the assets of such Person,
. 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
. 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;
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(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
. interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements and
. 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 by such Person of capital stock or other ownership
interests or other securities of such other Person or any agreement
to make any such acquisition;
. the making by such Person of any loan or other extension of credit
to, such other Person, including the purchase of property from
another Person subject to an understanding or agreement to resell
such property to such other Person, or any commitment to make any
such loan or extension;
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. 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 pledge, charge or encumbrance of any kind, whether or
not recorded or 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.
"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 under the Securities Act;
. any banker's acceptances or money market deposit accounts issued or
offered by an Eligible Institution;
. 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.
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"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.
"Minority Cellular Investment Interests" means limited partnership or
other equity interests held directly or indirectly by Centennial Cellular
Operating in providers of cellular telephone services 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.
"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.
"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,
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. 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 of the merger, 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
. with respect to Centennial Cellular Operating, any Indebtedness of
Centennial Cellular Operating that is pari passu in right of payment
to the notes
. with respect to Centennial, any Indebtedness of Centennial that is
pari passu in right of payment to the notes and
. 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 if, as a result of such
Investments,
. the Acquired Person immediately thereupon becomes a Restricted
Subsidiary or
. the Acquired Person immediately thereupon either (A) 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 (B) 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
. 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
. 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
. 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
. 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 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.
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"Person" means any
. corporation,
. individual,
. joint stock company,
. joint venture,
. partnership,
. unincorporated association,
. governmental regulatory entity,
. country,
. state or
. political subdivision,
. trust,
. municipality or
. other entity.
"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 purchase money security agreement or conditional sales or other
title retention contract pursuant to which the Lien on such assets is
created 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
to such agreement and any proceeds from such agreement,
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. 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 to such agreement 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.
"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" means a
. repurchase,
. redemption,
. defeasance,
. retirement,
. refinancing,
. acquisition for value or
. payment of principal of any Subordinated Indebtedness, other than
Disqualified Capital Stock.
"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 with such Refinancing Indebtedness;
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. 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,
. 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
. any trust in which any Person described in the diamond point 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 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,
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. 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."
"Senior Indebtedness" means the principal of, any premium 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,
(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.
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"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.
"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.
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"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 will 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 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. 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 and will be
deposited with, or on behalf of, the DTC,
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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 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.
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.
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
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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 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.
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Certificated Notes. An entire global note may be exchanged for definitive
notes in registered, certificated form without interest coupons if:
(1) 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,
(2) Centennial Cellular Operating, at its option, notifies the trustee
in writing that it elects to cause the issuance of certificated
notes, or
(3) 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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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 August 13, 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.
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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 November 11, 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 Centennial 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 of this prospectus.
[LOGO OF CENTENNIAL CELLULAR CORP. APPEARS HERE]
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
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PROSPECTUS
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July 13, 1999
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