SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
September 30, 1995 1-11484
HUNGARIAN TELEPHONE AND CABLE CORP.
(Exact name of Registrant as specified in its charter)
Delaware 13-3652685
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
90 West Street, New York, NY 10006
(Address of principal executive offices)
(212) 571-7400
(The Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days. YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest possible date:
Common Stock, $.001 Par Value 3,912,539 Shares
(Class) (Outstanding at November 17, 1995)
<PAGE>
HUNGARIAN TELEPHONE AND CABLE CORP.
Index
PART 1. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of September 30, 1995
and December 31, 1994.................................................2
Consolidated Condensed Statements of Operations for the three months
ended September 30, 1995 and 1994.....................................3
and the nine months ended September 30, 1995 and 1994.................4
Consolidated Condensed Statements of Cash Flows for the nine months
ended September 30, 1995 and 1994.....................................5
Notes to consolidated financial statements.....................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation..........................13
PART II. Other Information...................................................22
Signature.....................................................................28
<PAGE>
Hungarian Telephone and Cable Corp.
Consolidated Condensed Balance Sheet
September 30, 1995
(in thousands)
September December
30, 1995 31, 1994
--------- --------
Assets
------
Current assets:
Cash $ 7,133 $ 6,966
Restricted cash 906 1,419
Accounts receivable 936 0
Prepayments and other 12,123 2,727
----------------- --------------------
21,098 11,112
----------------- --------------------
Property, plant and equipment 6,872 1,013
Construction in progress 22,670 7,920
Less accumulated depreciation 380 88
----------------- --------------------
Investments 29,162 8,845
---------------- --------------------
Intangible Assets 17,650 4,546
Investments 373 656
Others 526 2,418
================ ====================
$ 68,809 $ 27,577
================= ====================
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Long-term debt due within one year $ 1,204 $ 153
Short-term debt 6,162 300
Accounts payable and accrued expenses 24,386 2,259
Payables to related parties 2,670 892
Advance subscriber payments 3,537 0
----------------- ------------------
37,959 3,604
Long-term debt 8,268 2,299
Advance subscriber payments-noncurrent 0 2,448
Minority interest 5,325 6,663
----------------- ------------------
51,552 15,014
----------------- -------------------
Shareholders' Equity:
Common stock issued, $.001
par value 4 3
Additional paid-in capital 36,322 18,728
Deficit accumulated during
the development stage (7,386) (6,168)
Operating deficit (11,459) 0
Translation adjustment (224) 0
----------------- -------------------
17,257 12,563
================= ==================
$ 68,809 $ 27,577
================= ==================
The accompanying Notes are an integral part of these Financial Statements.
<PAGE>
Hungarian Telephone and Cable Corp.
Consolidated Condensed Statements of Operations
For the Three Months ended September 30, 1995 and 1994
(Dollars in thousands, except per share amounts)
1995 1994
---- ----
Revenues $ 965 $ 992
Expenses:
Operating expenses 5,572 1,417
Management fees 445 0
Depreciation 364 0
--------------- ------------------
6,381 1,417
--------------- ------------------
Loss from operations (5,416) (425)
---------------- ------------------
Other income, net 80 93
Interest expense (583) (50)
Foreign exchange, Gain (Loss) (1,008) -
--------------- ------------------
Loss before minority interest (6,927) (382)
--------------- ------------------
Minority interest 912 1
--------------- ------------------
Net loss $ (6,015) $ (381)
=============== =================
Net loss per share $ (1.93) $ (0.25)
=============== ==================
Weighted average number of common
shares outstanding 3,116,784 1,518,290
The accompanying Notes are an integral part of these Financial
Statements.
<PAGE>
Hungarian Telephone and Cable Corp.
Consolidated Condensed Statements of Operations
For the Nine Months ended September 30, 1995 and 1994
(Dollars in thousands, except per share amounts)
1995 1994
---- ----
$ 2,204 $ 1,395
Revenues
Expenses:
Operating expenses 12,248 2,757
Management fees 1,333 -
Depreciation 1,129 47
----------------- -----------------
14,710 2,804
----------------- -----------------
Loss from operations (12,506) (1,409)
----------------- -----------------
Other income, net 484 150
Interest expense (1,492) (51)
Foreign exchange, Gain (Loss) (2,154) -
----------------- -----------------
Loss before minority interest (15,668) (1,310)
----------------- -----------------
Minority interest 2,280 38
----------------- -----------------
Net loss $ (13,388) $ (1,272)
================= =================
Net loss per share $ (4.64) $ (0.88)
================= =================
Weighted average number of common
shares outstanding 2,887,776 1,442,795
The accompanying Notes are an integral part of these Financial Statements.
<PAGE>
Hungarian Telephone and Cable Corp.
Consolidated Condensed Statements of Cash Flows
For the Nine Months Ended September 30, 1995 and 1994
(Dollars in thousands)
1995 1994
---- ----
Net cash used for operating activities $ (313)$ (5,365)
Cash flows from investing activities
Construction expenditures (28,677) (2,313)
Increase in accounts payable and accrued expenses
related to investing activities 18,469 0
Proceeds from the sale of interest in subsidiaries 1,464 3,087
Redemption of US treasury bills 0 1,498
Increase in investments 0 (301)
Acquisitions (2,784) (686)
Other, net 733 (135)
---------- ---------
(10,795) 1,150
---------- --------
Cash flows from financing activities
Issuance of common stock 0 7,839
Long-term debt borrowings 6,258 0
Short-term debt borrowings 5,562 160
Other, net (37) 0
----------- ---------
11,783 7,999
----------- ---------
Effect of foreign exchange rate changes (508) 52
Increase (decrease) in cash and cash equivalents 167 3,836
Cash and cash equivalents at January 1, 6,966 3,404
----------- ---------
Cash and cash equivalents at September 30, $ 7,133 $ 7,240
============ =========
The accompanying Notes are an integral part of these Financial Statements.
<PAGE>
HUNGARIAN TELEPHONE AND CABLE CORP.
Notes to Consolidated Financial Statements
(Unaudited)
1. Organization and Business
Hungarian Telephone and Cable Corp. ( the "Registrant") or
together with its consolidated subsidiaries, (the "Company" ) was organized on
March 23, 1992 to provide working capital, technical expertise and management
services to community sponsored telecommunications companies in Hungary. The
Company was in the development stage through March 31, 1995.
In February 1994, two subsidiaries were awarded concessions to provide
local public telephone service in their respective districts. These were the
Sarvar region, operated by Raba-Com Rt. ( "Raba-Com" ) which is 66% owned by the
Company and the Salgotarjan region, operated by Kelet-Nograd-Com Rt.)
("Kelet-Nograd-Com") which is 70% owned by the Company.
In August 1995 the Registrant acquired, from Alcatel Austria AG, US
Telecom East, Inc., and Central Euro TeleKom, Inc., 45.12% of the outstanding
capital stock of Papa es Tersege Telefon Koncesszios Rt.("Papatel"), voting
rights with respect to another 6% of the Papatel shares, and rights to receive
up to 85% of the common equity of Hungarotel Tavkozlesi Rt. ("Hungarotel"). In
addition, the Registrant acquired from Magyar Tavkozlesi Rt. ("Matav") a further
25.01% of the outstanding capital stock of Papatel for a purchase price of
$925,000 payable by December 1, 1995. The Registrant also acquired from
Microsystem Telecom Rt. and V.P. Consulting Kft. a further 9.11% of the
outstanding capital stock of Papatel and dividend rights with respect to
another 6% of the Papatel shares for a purchase price of $300,000 payable by
December 31, 1995. Such purchases increased the Registrant's interest in
Papatel to 79.31%. The total consideration for the Papatel and Hungarotel
acquisitions was $11,225,000, satisfied by the Registrant's issuance of 571,429
shares of its common stock, par value .001 ("Common Stock") to certain of the
sellers (subject to reduction based upon certain post-closing purchase price
adjustment provisions following a review of Papatel's and Hungarotel's
accounts), plus $1,225,000, payable $925,000 by December 1, 1995 and $300,000 by
December 31, 1995. The initial conditions to completion were met by August 31,
1995, and the shares were issued (but not delivered) to the sellers on that
date.
Hungarotel and Papatel are both Hungarian corporations which have
concession contracts with the Hungarian Ministry of Transportion,
Telecommunications and Water Management ("the Ministry"). The Ministry approved
the purchase and agreed to certain changes in the concession contracts of such
companies, including a reduction in the concession fees payable by Hungarotel
and Papatel. Amendments to the concession contracts have been signed for
Hungarotel and Papatel covering their primary districts of Bekescsaba and
Oroshaza, and Papa, respectively. The concessions are for a period of 25 years
with an eight year exclusivity period up to 2002.
Hungarotel's service areas are in the Bekescsaba and Oroshaza regions
of Hungary with a combined population of approximately 412,000 and approximately
162,000 households. Papatel's service areas are in the Papa region of Hungary
with a population of approximately 65,000 and approximately 23,000 households.
Consideration for the acquisitions of Hungarotel and Papatel together
with the amounts payable (subsequently paid on November 1995) for lump sum
concession fees of approximately $7,162,000 for those companies have been
accrued. No allowance has been taken into account for any reduction in
consideration arising from the review referred to above, nor for any increase in
the number of the Registrant's shares issuable in the event that the average
trading price for the Registrant's stock during the twenty (20) trading days
preceding August 31, 1998, is below $17.50. In this eventuality, the maximum
number of additional shares issuable would be 46,171 (or less, if the above
described review results in a reduction in the number of shares actually issued
and delivered to the sellers entitled to such shares).
Hungarian Teleconstruct Corp. ("Teleconstruct") had the same officers
and the same four out of five directors as the Registrant through May 31, 1995.
In connection with the agreements with Citizens Utilities Company ("Citizens")
described in note 7, the Registrant's then President, Chief Executive Officer,
and Chief Financial Officer resigned. Since that date two officers own
approximately 1% of the outstanding common stock of both Teleconstruct and the
Company, and would own approximately 13% of Teleconstruct and 10.0% of the
Registrant, if they exercise their options and warrant to purchase common stock.
The exercise prices of the options are below current market prices.
<PAGE>
2. Summary of Significant Accounting Requirements
(a) Principles of Consolidation
The consolidated financial statements include the accounts of the
Registrant and its majority-owned subsidiaries. All material intercompany
balances and transactions have been eliminated.
Hungarotel and Papatel became subsidiaries of the Registrant on August
31, 1995. The results of those companies for September 1995, and the balance
sheets as at September 30, 1995, have therefore been consolidated. However, the
opening balance sheets for those companies, as at January 1, 1995, are subject
to additional review, which is not yet complete. Any adjustments to the opening
balance sheets will potentially reduce the number of shares of Common Stock
issued to some of the sellers, or otherwise affect the value of pre-acquisition
reserves and goodwill.
(b) Foreign Currency Translation
In periods prior to 1995, and for the quarter ended March 31, 1995, the
Company has used the US dollar as the functional currency for its majority-owned
Hungarian subsidiaries. At September 30, 1995, all assets and liabilities have
been translated at the exchange rate in effect at the balance sheet date,
recognizing that the majority of the Company's assets are denominated in
Hungarian forints. Revenue and expense accounts were translated by using the
average exchange rate during the period. The resulting exchange rate differences
are treated as an adjustment to reserves, as a separate component of
stockholders' equity.
The Company also uses the Hungarian forint as the functional currency
for measuring the accounts of Elso in which it has a 30% interest. Gains or
losses resulting from translation were included as a separate component of
stockholders' equity until December 31, 1994. At that date, the cumulative
foreign currency translation adjustment of $113,000 was transferred to foreign
currency loss and recognized in the consolidated statement of loss for the year
ended December 31, 1994.
(c) Net Loss Per Share
The net loss per share is computed using the weighted average number of
common shares outstanding during each period.
(d) Interim periods.
The accompanying consolidated financial statements included herein have
been prepared by the management of the Company without audit. Certain
information and footnote disclosures normally included in consolidated financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. In the opinion of Company management, the
accompanying consolidated financial statements as of September 30, 1995 and for
the three and nine months ended September 30, 1995 and 1994, include all
adjustments necessary for a fair presentation.
These financial statements should be read in conjunction with the
December 31, 1994 consolidated financial statements and notes related thereto.
3. Concentration of Cash and Cash Equivalents and Restricted Cash
(a) Concentration
On September 30, 1995, cash of $ 2,168,123 denominated in US dollars,
was on deposit with a major money center bank and a US Treasury money market
fund in the United States. In addition, $ 8,500,802 (denominated partly in US
dollars and partly in Hungarian forints) was on deposit with Hungarian
government-owned banks, and a foreign-owned bank in Hungary.
(b) Restriction
On September 30, 1995, restricted cash includes $1,283,018 denominated
in Hungarian forints of which $377,358 is classified as a non-current asset. The
restricted cash includes (1) advance connection fees paid by subscribers with
the restriction to be removed upon the completion of the connections and (2)
concession contract fulfillment guarantees with restrictions to be removed upon
fulfilling the build-out requirements prescribed in the concession agreements. A
$314,860 certificate of deposit collateralizes a $300,000 irrevocable and
unconditional letter of credit issued by a bank as a guarantee of payment of a
$300,000 note, payable on December 29, 1995.
<PAGE>
4. Construction in Progress and Concession Rights
Construction-in-progress represents costs incurred in connection with
the development of the local telecommunications networks.
Lump-sum concession fees of approximately $7,162,000 were paid to the
Ministry by Hungarotel and Papatel in November 1995. In addition, yearly
concession fees of 0.3% (in the case of the Oroshaza) and 2.3% (in the case of
the Bekescsaba and Papa regions) of gross revenues earned in the districts will
be payable.
The Registrant, as the majority shareholder of Raba-Com and
Kelet-Nograd Com, has accepted the responsibility as a joint and several
guarantor to meet all commitments and obligations of these concession companies
in accordance with the concession agreements which were signed on March 9, 1994,
including payment of penalties in the amount of 500,000,000 HUF ($4,500,000) per
concession in the event of breach of either agreement or failure to provide
telephone service by dates specified in the concession agreements. As of
December 31, 1994, Raba-Com did not fulfill the requirements for new telephone
lines to be installed in the area; however, it did meet such requirements by
June 30, 1995. The Company believes that Kelet-Nograd Com and Raba-Com may not
fulfill their requirements for new telephone lines in their areas for 1995 but
that, having communicated the reasons for delay, and having demonstrated
accelerating progress, the likelihood of penalties being imposed is remote.
Negotiations have been entered into with Matav, which must be concluded
on or before December 31, 1995, to transfer the assets required for the
operations of the Hungarotel and Papatel regions. The estimated purchase prices
are approximately 341,545,356 HUF, in the case of Papatel, and 1,795,613,000 HUF
in the case of Hungarotel.
Kelet-Nograd Com and Raba-Com are in the process of constructing the
local telecommunications networks which are estimated to cost approximately $100
million, inclusive of the following: concession fees ( $4.8 million );
investment in switch and transmission equipment ( $11 million ); investment in
the line network ( $44 million ); investment in ground buildings, existing lines
and other work ( $38 million ); and management fees ( $2.2 million ).
These two concession companies presently plan to finance these
requirements by having their stockholders, including the Registrant, contribute
additional equity and procuring subordinated and senior debt, with any remaining
requirements funded by net revenue as lines are connected.
Current estimates of the construction cost for the new local
telecommunications networks to be operated by Hungarotel and Papatel total
$180,400,000. The Company has already acquired financial assistance from CU
CapitalCorp ("CUCC"), a wholly-owned subsidiary of Citizens Utilities Company
("Citizens"), to, inter alia, complete the acquisitions of Hungarotel and
Papatel through the introduction of new credit facilities from CUCC, totaling
$33.2 million, of which approximately $2,634,000 had been drawn and
approximately $8 million used in the form of guarantees by September 30, 1995.
The activities of all of the Company's concession companies are
regulated by the Ministry and the terms of their respective concession
agreements or contracts. The Ministry regulates the construction, operation and
sales of local telephone exchanges. The Ministry has also been given the
authority to regulate the industry, including fixing local, long distance and
international call rates, sharing of revenues between the local exchanges and
Matav, approving equipment that can be used, and requiring the local exchanges
to meet specified standards as to growth and services.
In March 1995, Kelet-Nograd Com and Raba-Com entered into contracts
with an unrelated corporation which provide for the construction of the local
telephone exchanges in the two primary districts on a turnkey basis. The minimum
contract price for the two districts is approximately $58.7 million of which the
contractor will finance approximately $10 million representing 85% of the
contract price of the equipment. The financing will be for an eight-year period
with semi-annual installments beginning July 1, 1995, including interest at
DEM-LIBOR plus 1%. The contractor will hold a security interest in all financed
property until the payment of the last installment. On September 30, 1995,
approximately $5.8 million was owed to the contractor under the financing
arrangement. The balance sheet at September 30, 1995 includes $7.25 million of
advance payments to the contractor. These advances will be applied against
future costs to be incurred during the remaining months of 1995.
<PAGE>
5. Payables to related parties.
Payables to related parties at September 30, 1995, relate to amounts
due to Teleconstruct for rent and other services, plus interest for the three
months and the nine months to September 30, 1995, respectively of $7,300 and
$56,300.
6. Loan payable to TeleDenmark International ("ATDI").
TDI has lent Kelet-Nograd Com and Raba-Com a total of $1,705,000 as of
September 30, 1995, as a bridge loan, which is unsecured, repayable under
current arrangements when the two concession companies are able to draw the new
subordinated loan from the shareholders, and carries interest at LIBOR+2.5%. TDI
has also guaranteed a facility from ABN-AMRO Bank, repayable by TDI, Bent
Lundram and Carlsen Dalgaard. The Registrant has issued a counter-indemnity in
favor of TDI. At September 30, 1995, the amount outstanding to ABN-AMRO under
this facility was approximately $1,587,000.
7. Agreements with Citizens
On May 31, 1995, the Registrant and certain wholly-owned subsidiaries
of Citizens entered into the following agreements (the "Citizens Agreements"):
the Master Agreement between the Registrant and CU CapitalCorp., a Delaware
corporation ("CUCC") and a wholly-owned subsidiary of Citizens (the "Master
Agreement"); the Loan Agreement between the Registrant and CUCC and the
Promissory Note related thereto issued by the Registrant to CUCC (the "Loan
Agreement" and the "Note", respectively); the Warrant to Purchase Shares of
Common Stock of Hungarian Telephone and Cable Corp. between the Registrant and
CUCC (the "Warrant"; the Stock Pledge Agreement between the Registrant and CUCC
(the "Stock Pledge Agreement"); the Stock Option Agreement between the
Registrant and CUCC (the "Stock Option Agreement"); the Registration Agreement
between the Registrant and CUCC (the "Registration Agreement"); and the
Management Services Agreement between the Registrant and Citizens International
Management Services Company, a Delaware corporation (ACIMS") and a wholly-owned
subsidiary of Citizens (the "Management Services Agreement"). CUCC
simultaneously entered into voting agreements with three affiliates of the
Registrant (the "Voting Agreements") and consummated the purchase of 300,000
shares of Common Stock from Peter E. Klenner, a former Director of the
Registrant and then the President, Chief Executive Officer and Chief Financial
Officer of the Registrant. Certain such agreements were amended and restated in
September and October 1995 in connection with CUCC providing additional
financial support to the Company and CIMS expanding its management
responsibilities as a result of the Registrant's acquisition of additional
concession companies.
<PAGE>
8. Common Stock.
On September 30, 1995, 60,000 stock options were exercisable at $7.00
per share, 87,500 at $12.25 per share, 5,000 at $14.00 per share 248,997 at
$4.00 per share, 10,000 at $10.00 per share, 101,550 at $13.00 per share,
920,916 at $15 per share, 920,916 at $16.50 per share, 920,917 at $18 per share,
and 626,155 at $13.75 per share.
During the nine months ended September 30, 1995, the Company issued 54,955
shares of Common Stock upon the exercise of placement agent warrants to purchase
such shares at prices ranging from $3.60 to $10.15 per share. In addition, a
former officer exercised options to purchase 230,994 shares of common stock at
$4.00 per share, 20,000 shares at $7.00 per share and 77,500 shares at $12.25
per share. These transactions resulted in net increases in common stock and
additional paid-in capital of $383 and $2,296,643 respectively.
9. Commitments and Contingencies.
(a) Employment Agreements
On September 12, 1995, the Board of Directors of the
Registrant extended the employment contracts of Messrs. Cohen and Genova for one
year and made all of the options previously granted pursuant to such employment
agreements immediately vested instead of vesting over the life of such
employment contracts. As a result of this and the exercise of certain options by
the Registrant's former President, stock compensation expense for the nine
months ended September 30, 1995 amounted to $6,072,000, of which $2,620,000 was
incurred during the three months ended September 30, 1995.
During the nine months ended September 30, 1995, the Company also
paid legal fees of $115,000 to an officer.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Operations
The Company was organized on March 23, 1992 to acquire majority
interests in and to provide working capital, technical expertise and management
services to community sponsored telecommunication companies.
The Company was in the development stage through March 31, 1995 and
has been unprofitable to date.
For the three months ended September 30, 1995, the Company incurred a
net loss of $6,015,000 after net interest expense of $503,000 as compared to a
net loss of $381,000 after net interest and dividend income of $42,000 for the
three months ended September 30, 1994.
For the nine months ended September 30, 1995, the Company incurred a
net loss of $13,388,000 after net interest expense of $1,008,000 as compared to
a net loss of $1,272,000 after net interest and dividend income of $99,000 for
the nine months ended September 30, 1994.
Revenues from the provision of telephone service have increased in the
three month and nine month periods of 1995 as a result of the Company commencing
operations in the Kelet-Nograd Com and Raba-Com concession areas.
On May 31, 1995, stock options were exercised by the Registrant's
former President in connection with the termination of his employment. In
addition, during September 1995, vesting of stock options previously granted to
certain officers was accelerated and the stock options became immediately
exercisable. As a result of these events, stock compensation expense for the
nine months ended September 30, 1995 amounted to $6,072,000, of which $2,620,000
was during the three months ended September 30, 1995. Stock compensation expense
for the nine months ended September 30, 1994 amounted to $90,000.
Management and professional fees have increased for the three and nine
month periods in 1995 due to the Company assuming operations of the Kelet-Nograd
Com and Raba-Com concession areas, and additional activity in connection with
acquisitions. Depreciation and amortization expense has increased during the
three month and nine month periods in 1995 as a result of the Company acquiring
assets and commencing operations.
In 1994, Bell Canada International ("BCI") performed services in
connection with the concession applications. After these services were
performed, the Company terminated its agreement with BCI because the financial
lenders with whom the Company was discussing loans insisted that the manager of
the project have an equity interest in the project and BCI refused to make an
investment in the project on the grounds that it had a policy against investing
in Eastern European situations. In settlement of BCI's claim, the Company agreed
to issue a promissory note for $300,000 payable December 31, 1995, guaranteed by
a bank. In addition, the Company agreed to grant 25,000 five-year assignable
warrants entitling the holder to purchase 25,000 shares of Common Stock, at $20
per share, together with the right to have those warrants included in any
Registration Statement filed by the Company with the U.S. Securities and
Exchange Commission for the sale of Common Stock during the life of the
warrants. BCI was also granted a "put option" to require the Company to purchase
the warrants at an aggregate price of $300,000 out of the proceeds of any public
offering of securities by the Company during the term of the warrants. The
consolidated statement of loss for the nine months ended September 30, 1994
included a $400,000 charge to operations, representing the $300,000 note payable
and $100,000 estimated market value of the warrants.
Matav had been operating a network of approximately 2,500 telephone
lines in the Sarvar district and approximately 12,800 telephone lines in the
Salgetarjan district. As of January 1, 1995, Raba-Com purchased the 2,500
telephone lines and associated buildings and equipment located in its district
from Matav for approximately $665,000 and hired the 55 employees who operated
the network. Since January 1, 1995, Raba-Com has been operating this network,
receiving the revenues and paying operating expenses.
<PAGE>
As of March 1, 1995, Kelet-Nograd Com purchased the 12,800 telephone
lines and associated buildings and equipment located in its district from Matav
for $5.3 million and hired the 160 employees who operated the network.
Kelet-Nograd Com paid Matav with a three year promissory note. The note was
guaranteed by Telecom Denmark as to 28% and by the Registrant as to 72%. The
Registrant pledged its holdings of 50.2% of the outstanding shares of
Kelet-Nograd Com as security for its share of the guarantee. Since March 1,
1995, Kelet-Nograd Com has been operating the network, receiving its revenues
and paying its operating expenses.
The Company commenced construction of new lines in both the Raba- Com
and Kelet-Nograd Com concession areas in March 1995 and should complete
construction of some of the new lines and receive revenues in 1995 both in the
form of subscriber fees and from the use of such new lines.
Liquidity and Capital Resources
During the nine months ended September 30, 1995, the Registrant issued
54,955 shares of Common Stock upon the exercise of placement agent warrants to
purchase such shares at prices ranging from $3.60 to $10.15 per share. In
addition, a former officer exercised options to purchase 230,994 shares of
common stock at $4.00 per share, 20,000 shares at $7.00 per share and 77,500
shares at $12.25 per share. These transactions resulted in net increases in
common stock and additional paid-in capital of $383 and $2,297,000 respectively.
On July 31, 1995, the Registrant entered into an Agreement in Principle
to purchase from Alcatel Austria AG, an Austrian corporation; US Telecom East,
Inc., a Delaware corporation; and Central Euro TeleKom, Inc., a Delaware
corporation, their collective rights to an 85% equity interest in Hungarotel and
a 45% equity interest in Papatel. In exchange, at closing on August 31, 1995 the
Registrant issued 571,429 shares of Common Stock, subject to reduction based
upon certain post-closing purchase price adjustment provisions. The Registrant
could be required to issue up to an additional 46,171 shares if the Registrant's
stock price falls below $17.50 per share for the average of 20 trading days
preceding the third anniversary of the closing.
Hungarotel holds the concession rights to provide telecommunications
services in the Bekescsaba and Oroshaza area of Hungary, which together have a
total population of approximately 412,000 and approximately 162,000 households.
Papatel holds the concession rights to provide telecommunications services in
the Papa area of Hungary, which has a total population of approximately 65,000
and approximately 23,000 households.
At the time of acquisition of Hungarotel and Papatel by the Registrant,
those companies had accumulated obligations and debts of $3 million. The final
number of shares of Common Stock to be issued as consideration for the
acquisitions, and the amount of funding required by Hungarotel and Papatel,
will depend on the value of those companies' liabilities, and the value of their
assets, which should be ascertained by December 1, 1995, and following
completion of the audit of those companies' accounts as of December 31, 1994.
In addition, payments in respect of concession fees ($7.2 million), the
initial payment for assets for use in the concession areas acquired from Matav
(estimated $5.6 million), and cash collateral to secure performance and other
guarantees to be issued to the Ministry ($600,000), must be funded (the
concession fees were paid in November 1995, and the CUCC credit facility
provides for the others not separately funded). Also the capital expenditures
required for constructing three primary networks presently is estimated at $180
million.
The current credit facility provided by CUCC is sufficient to meet some
of the accumulated obligations and all of the lump-sum concession fees, and the
initial payment to Matav, referred to above. The remainder of the accumulated
obligations and the construction cost can only be met out of additional credit
facilities, or new debt or equity instruments which are being considered by
management.
The original Loan Agreement between the Registrant and CUCC provided
for an initial advance by CUCC of up to $4,300,000 to fund certain obligations
pertaining to Consulting and its affiliated concession companies in Hungary, and
a possible second advance of up to an additional $910,000 to fund the repayment
for certain loans to the Registrant from Teleconstruct. Approximately $1,888,000
was advanced by CUCC on July 25, 1995 to fund certain of Consulting's
obligations.
<PAGE>
On September 14, 1995, CUCC provided letters of support to Citibank,
N.A., to induce such bank to issue, on behalf of the Registrant, Papatel and
Hungarotel, and for the benefit of the Ministry and in compliance with the
respective concession contract(s) of Papatel and Hungarotel, three payment
guarantees dated September 18, 1995, for the purpose of guaranteeing the payment
by Papatel and Hungarotel on or before December 1, 1995, of the concession
fees required to be paid to the Ministry under their respective concession
contracts which fees total, in the aggregate, approximately $7,055,000. On
November 8, 1995, such concession fees were paid by Papatel and Hungarotel with
funds borrowed by the Registrant from CUCC under the Amended and Restated Loan
Agreement (as hereinafter described) and loaned by the Registrant to Papatel and
Hungarotel.
On September 28, 1995, the Registrant and CUCC entered into a certain
Agreement to Amend and Restate (the"First Agreement to Amend and Restate")
pursuant to which the Registrant and CUCC, among other things, agreed to provide
certain financial support (the "Initial Financial Support") and to amend the
Loan Agreement to include certain other obligations of the Registrant and to
allow the Registrant to use the remaining portion of the initial advance and all
of the second advance to make and fund subordinated loans to Kelet-Nograd Com
and Raba-Com Rt. ("the Revised Loan Terms"). On October 19, 1995, CUCC advanced
$2,800,000 to the Registrant to enable the Registrant to make such subordinated
loans to Kelet-Nograd Com and Raba- Com. As hereinafter described, consideration
for such Initial Financial Support included the Registrant granting CUCC
additional options to purchase Common Stock.
On October 9, 1995, CUCC provided a letter of support to Citibank,
which Citibank required as a condition to issuing a payment guarantee to Matav
to secure the Registrant's obligation to pay $925,000 to Matav on or before
December 1, 1995 as the purchase price for the shares in Papatel that the
Registrant purchased from Matav.
On October 30, 1995, the Registrant and CUCC entered into a certain
Second Agreement to Amend and Restate ("Second Agreement to Amend and Restate")
pursuant to which the Registrant and CUCC, among other things, further amended
and restated the Loan Agreement and the Note. The Amended and Restated Loan
Agreement and the Amended and Restated Promissory Note dated October 30, 1995
(the "Restated Loan Agreement" and the "Restated Note", respectively) provide
for CUCC to provide financial support to the Company in an aggregate amount of
up to $33,200,000 (inclusive of approximately $13,200,000 of previously provided
or committed financial support), for specific purposes in limited amounts,
including the refinancing of existing loans from CUCC to the Registrant and to
enable the Company to meet certain financial obligations not previously
contemplated by the Loan Agreement or the First Agreement to Amended and Restate
(the "CUCC Financial Support"). Pursuant to the Restated Loan Agreement, CUCC
advanced to the Registrant approximately $36,500 on November 3, 1995 and
$8,000,000 on November 6, 1995. As hereinafter described, consideration for
CUCC's commitment to provide the $20,000,000 of additional financial support
included resetting the exercise price of certain options to purchase Common
Stock previously granted to CUCC and issuing shares of Common Stock to CUCC.
To the extent that the Registrant has not requested provision of all of
the approximately $12,000,000 of the remaining but unused portion of such
$20,000,000 additional financial support available under the Restated Loan
Agreement, by December 31, 1995, then CUCC's commitment to provide any such
unused portion thereof shall terminate effective as of December 31, 1995. The
Company presently expects to fully utilize all the financial support permitted
under the Restated Loan Agreement by year-end 1995, and that the funds generated
by such CUCC Financial Support (i) will permit the Registrant to satisfy
substantially all of its contractual obligations through December 31, 1995; (ii)
will enable Raba and Kelet-Nograd Com to pay substantially all of their
respective payment obligations under their construction-related contracts
through December 31, 1995; and (iii) will enable Papatel and Hungarotel to
satisfy all of their respective payment obligations under their concession
contracts, including paying the required portion of the purchase price for the
Matav assets to be acquired by December 31, 1995. Such funds are insufficient,
however, to enable the Registrant to cover its working capital needs; to enable
Raba and Kelet-Nograd Com to make future required payments under their
respective construction-related contracts, to pay certain outstanding
indebtedness of $3,300,000, or to cover their future capital needs; or to enable
Papatel and Hungarotel to pay certain accrued expenses of approximately
$200,000 and outstanding trade payables of approximately $2,000,000, or to cover
their future construction and working capital needs.
The Restated Loan Agreement provides for customary events of default
and remedies. The loan bears interest at a variable rate equal to prime (as
published in The Wall Street Journal) plus 2% per annum, payable quarterly in
cash or, at the Registrant's election, in shares of Common Stock valued at the
lower of $13.00 per share or a market average price per share during such
quarter. On October 3, 1995, the Registrant issued 2,908 shares of Common Stock
to CUCC in lieu of a cash interest payment. The maturity date is July 25, 1997.
<PAGE>
If the Registrant issues or sells for cash, pursuant to any public or
private offering, any shares of its capital stock or any other securities
(including debt securities) or any obligations convertible into or exchangeable
for such capital stock or securities, then the Registrant must prepay the
outstanding principal and accrued but unpaid interest under the Restated Note in
an amount up to 100% of the aggregate amount of the net proceeds to the
Registrant of such issuance or sale, subject to the prior repayment of 100% of
any third party indebtedness of the Registrant that has been guaranteed by CUCC.
At CUCC's selection, CUCC may provide any or all of the financial
support it may be obligated to provide the Registrant, and may cause the
Registrant to cooperate in refinancing all or any portion of the any loan under
the Loan Agreement or the Restated Loan Agreement, by arranging for a third
party lender to issue letters of credit or payment guarantees on behalf of the
Registrant or to make loan advances to the Registrant; provided that, in each
such case, CUCC offers to guarantee the resulting obligations and indebtedness
of the Registrant to such third party lender. Each such letter of credit,
payment guarantee or loan advance that is supported by a CUCC guarantee reduces
CUCC's remaining commitment to provide financial support. If the interest rate
payable by the Registrant to any such third party lender is less than the
interest rate set forth in the Restated Note, then as partial consideration for
CUCC making such guarantees, the Registrant shall pay to CUCC the difference,
which amount may be payable, subject to certain restrictions, in Common Stock.
The Registrant and CUCC presently are negotiating with a commercial bank
regarding a credit agreement pursuant to which such bank would commit to make up
to $33,200,000 of loans to the Registrant for the same uses as permitted under
the Restated Loan Agreement, a portion of such proceeds are to be used to repay
loans previously made by CUCC under the Loan Agreement and the Restated Loan
Agreement. Such loans would be guaranteed by CUCC, which would satisfy CUCC's
commitment to provide financial support in the amount of such loans.
The Stock Pledge Agreement between the Registrant and CUCC as amended
and restated on September 28, 1995 by the Amended and Restated Stock Pledge
Agreement and as further amended and restated by the Second Amended and Restated
Pledge Agreement dated October 30, 1995 (as so amended and restated to date, the
("Restated Pledge Agreement") provides for the Registrant's pledge, subject to
receipt of certain consents and waivers, of its shares in, and any indebtedness
owing or to be owed to the Registrant from, four of its subsidiaries (Consulting
Kelet-Nograd Com, Raba-Com and Papatel), and the indebtedness owing or to be
owed to the Registrant from, and, when available, the shares of Hungarotel, as
collateral to CUCC to secure the Registrant's obligations under the Restated
Loan Agreement, the Restated Note and the Restated Pledge Agreement.
Contemporaneously with the execution of, and pursuant to, the First
Agreement to Amend and Restate, the Registrant and CUCC also entered into a
Second Stock Option Agreement, dated September 28, 1995 ("Second Stock Option
Agreement"), pursuant to which the Registrant granted CUCC the right to buy
626,155 shares of Common Stock at an exercise price of $17.00 per share during
the five-year period ending September 12, 2000. Such exercise price was reset to
$13.75 per share pursuant to the Second Agreement to Amend and Restate. Such
options were granted to CUCC in consideration of the additional financial
commitments made by CUCC pursuant to the First Agreement to Amend and Restate
and the essential role played by CUCC in enabling the Registrant to obtain the
consent of the Ministry to the Registrant=s acquisition of control of Papatel
and Hungarotel.
As consideration for CUCC committing to provide $20,000,000 of
additional financial support pursuant to the Second Agreement to Amend and
Restate, the Registrant agreed, among other things, to (i) issue 250,000 shares
of Common Stock to CUCC and (ii) reset the initial purchase price of the
Additional Five-Year Option Shares under the Second Stock Option Agreement from
$17.00 per share to $13.75 per share.
The Management Services Agreement between the Registrant and CIMS as
amended by the First Amendment to Management Services Agreement dated September
28, 1995 (the "First Amendment to Management Services Agreement"), provides,
among other things, for CIMS to provide corporate, financial, technical,
construction, marketing and operational services to the Registrant and its
affiliates for a term commencing July 1, 1995, and continuing until December 31,
2007, unless terminated earlier pursuant thereto. The management fee to be paid
by the Registrant to CIMS for such services is the greater of 5% of Adjusted
Gross Revenues (as such term is defined in such agreement) or the Fixed Amount.
<PAGE>
The Fixed Amount for each month in 1995 is $100,000 per month commencing with
the month of July 1995; the Fixed Amount for each of the months of January,
February and March 1996 is $ 208,300; the Fixed Amount for each of the months of
April, May and June 1996, is $270,800; the Fixed Amount for each of the months
of July, August and September 1996 is $338,300; the Fixed Amount for each of the
months of October, November and December 1996 is $395,800; and the Fixed Amount
for each remaining month during the term of the Management Services Agreement
commencing with January 1997 is $416,600, subject to adjustment to reflect
inflation. Such monthly fee payments for 1995 and 1996 may be paid, at the
Registrant's election, in shares of Common Stock having a value, based on a
market average for such month, equal to such fee. If the Registrant elects to
pay any monthly management fee for 1995 or 1996 in cash, the Registrant would
have the option to accrue any such management fee through calendar year 1996 and
to pay the aggregate amount of all such accrued management fees, together with
interest thereon at the United States Prime Rate as announced from time to time
by The Wall Street Journal plus two percent (2%) per annum, in twenty-four (24)
equal monthly installments starting in January 1997. In addition, expenses
incurred by CIMS in providing the management services, including certain
allocable overhead items, will be reimbursed by the Registrant.
The Company is not in a position to direct whether or not, or when,
CUCC may exercise any or all of its warrants or options to purchase Common
Stock. Accordingly, the Company cannot, when determining the sources for its
financial needs, assume the any of these options or warrants will be exercised.
To the extent that the Registrants chooses to pay interest or management fees to
CUCC by issuing shares of Common Stock rather than making cash payments, the
Company's working capital needs will be reduced. However, such issuances would
dilute existing stockholders' proportionate equity interest in the Registrant.
On August 7, 1996 the Company received a decision and order from the Hawaii
Public Utilities Commission ("HPUC") granting the Company approximately $13
million, in total, of the $19 million requested. Part of the increase pertains
to the recovery of restoration and repair costs associated with Hurricane Iniki.
The Company's request for a statewide surcharge to partially recover Iniki
restoration and repair costs which would have reduced the impact of the increase
on the Company's customers on Kauai was denied. The Company is analyzing the
effect of the balance of the order and will decide within 30 days what action,
if any, will be taken.
Capital Expenditures
The financial support provided to date by CUCC, or that CUCC is
obligated to provide through year-end 1995, in either case pursuant to the
Restated Loan Agreement, does not provide the financing necessary for the
Company to complete the build out of the telephone network required for the five
concession areas served by the Registrant's four concession companies. The
financial requirements to build out the telephone network in the Kelet-Nograd
Com and Raba-Com concession areas presently are estimated by the Company to be
approximately $100 million, beginning in 1994, and to be completed by 1997. The
financial requirements to build out the telephone network in the Papatel and
Hungarotel concession areas presently are estimated by the Company to be
approximately $ 180 million, beginning in 1996 and to be completed by 1999.
There can be no assurance as to the ultimate amounts that may be required or the
ability of the Company to meet its construction timetables.
The Company presently plans to finance these requirements by the sale
or issuance of additional securities of the Registrant or one or more of the
concession companies and other debt financings at the Registrant or concession
company level. The Company is presently contemplating the exact nature and mix
of any securities it or its concession company subsidiaries may sell or issue,
and the manner and timing for their sale or issuance. There can be no assurance
that the Company will be able to obtain financing necessary to meet these
requirements.
The shareholders of Raba-Com and Kelet-Nograd Com including the
Registrant have contributed to such concession companies $16.7 million in equity
and have advanced or agreed to advance to such concession companies $ 30.33
million in subordinated debt of which $15 million will be advanced in 1995 and
the remainder in 1996. In addition, the Company currently expects for such
concession companies to arrange, with one or more European commercial banks,
senior debt facilities, to be partially guaranteed by the Registrant, of
approximately $30 million. There can be no assurances that Raba-Com and
Kelet-Nograd Com will receive any of such additional debt financing.
Certain subsidiaries of the Registrant recently applied for subsidies
from the Ministry as a source of funding These subsidiaries, if received, may be
in the form of no interest loans or grants that would not require repayment.
There can be no assurance that the Company will receive any subsidies from the
Ministry.
In order to meet its obligations in the long term with respect to
financial obligations incurred in connection with the acquisition and
construction of the telephone networks of its concession company subsidiaries
and to meet ongoing working capital requirements for operating it and their
business, it is necessary for the Company to improve its operating cash flows.
The Company believes that there is a large customer base in the concession areas
of its concession company subsidiaries willing and able to pay for telephone
service once such customer base is connected to a telephone network. In the
meantime, shortfalls in construction funding and working capital needs will have
to be made through additional financing arrangements, which may include the sale
of additional equity or debt securities of the Company. There can be no
assurance that the Company's operations will achieve sufficient cash flow levels
necessary to service any long-term financing that it may be able to obtain, or
that the Company will be able to obtain new financing arrangements necessary
either to pay when due any such financing arrangements or to fund construction
or working capital needs.
<PAGE>
Inflation and Seasonality
Although the rate of inflation declined in 1994, in 1995, it is still
high, compared to the United States. The rate of inflation was 18% for 1994 as
compared to 20% for 1993 and 22% for 1992. Since the Siemens turnkey contract is
payable in German marks, the costs of the project increase to the extent that
the Hungarian forint is devalued in relation to the Germany currency.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PART II
The Company's business is not seasonal
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
On September 12, 1995, at the Annual Meeting of Stockholders of
the Registrant (the "Annual Meeting"), the stockholders of the Registrant
elected the following persons as directors to hold office until the next annual
meeting of the Registrant's stockholders: Robert Genova, Frank R. Cohen, John B.
Ryan, Max Metzlaff, Donald K. Roberton and James H. Season. The votes were as
follows:
For Against Withheld
Robert Genova 2,294,325 0 48,545
Frank R. Cohen 2,295,200 0 47,670
John B. Ryan 2,294,445 0 48,425
Max Metzlaff 2,296,570 0 46,300
Donald K. Roberton 2,295,045 0 47,825
James H. Season 2,296,470 0 46,400
The following items were also approved by the stockholders of the Registrant at
the Annual Meeting:
Broker
Non
For Against Withheld
--- ------ --------
Abstentions Votes
- ----------- -----
Approval of the 1,272,778 106,935 0 6,800 1,008,260
Stock Option
Agreement dated
May 31, 1995 between
the Company and
CU CapitalCorp.,
the Stock Options granted
pursuant thereto and the
issuance of common stock
upon any exercise thereof
Broker
Non
For Against Withheld
--- ------- --------
Abstentions Votes
- ----------- -----
Ratification of the 2,333,430 4,600 0 0 56,743
appointment of KPMG
Peat Marwick, LLP
as independent auditors
of the Company for
the fiscal year ending
December 31, 1995
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(1) Underwriting Agreement with Texas Capital
Corporation and J.W. Barclay &
Co., Inc.(1)
(3) (a) Certificate of Incorporation filed March 23, 19921
(3) (b) By-laws(1)
(4) (a) Form of Common Stock Certificate1
(4) (b) Form of Underwriters' Warrants(1)
(4) (c) Placement Agreement between the Registrant and
J.W. Barclay & Co., Inc. and form of Placement Agent
Warrants issued in connection with private
placement financing (1)
(4) (d) Placement Agreement between the Registrant and
Commonwealth Associates, as amended, and Placement
Agent Warrant Agreement and Warrant Certificates
issued in connection with the private placement (2)
(5) (a) Opinion of Cohen & Cohen, as to legality of shares
being offered (1)
(5) (b) Opinions from Ruttner & Partners as to Elso (1)
(10) (a) Purchase Agreement between the Registrant and
Klenner Securities, Ltd. dated August 6, 1992
covering 30% of outstanding
shares of Elso including promissory note1
(10) (b) Consulting Agreement between the Registrant and
Klenner Securities, Ltd.dated March 23, 1992 (1)
(10) (c) Employment Agreement between the Registrant and
Frank R. Cohen (1)
(10) (d) 1992 Incentive Stock Option Plan (1)
(10) (e) Form of Consulting Agreement between the
Registrant and Texas Capital Corporation (1)
(10) (f) Decision by the Ministry of Transportation,
Telecommunications and Water Management of the
Republic of Hungary to the application for the
establishment of a telecommunications network and
service provision and the English translation of
the same (1)
(10) (g) Subscription Agreement between the Registrant
and private placement investors containing
registration rights (1)
(10) (h) Proposed purchase agreement of Elso shares between
the Registrant and Matav (1)
(10) (i) Articles of Association of Pilistav, as
amended and Quotation for Refurbishing Telephone
Exchanges (1)
(10) (j) Memorandum of Understanding with Muszertechnika
Holding Ltd.(1)
(10) (k) English translation of Elso Articles of Association1
(10) (l) Sharing Agreement with Hungarian Teleconstruct
Corp. relating to 90 West Street Office space (2)
(10) (m) Employment Agreement between the Registrant and
Robert Genova, as amended (2,3)
(10) (n) Employment Agreement between the Registrant
and Peter E. Klenner, as amended (2,3)
(10) (o) Employment Agreement between the Registrant and
Frank R. Cohen, as amended (2,3)
(10) (p) Form of Concession Agreement (3)
(10) (q) Concession Agreement for Raba-Com Rt.(40
(10) (r) Concession Agreement for Kelet-Nograd Com Rt.(4)
(10) (s) Employment Agreement between the Registrant and Ulf
Robert Sandberg (4)
(10) (t) Joint Venture and Management Agreements with
Telecom Denmark as to Raba-Com Rt.(50
(10) (u) Joint Venture and Management Agreements with
Telecom Denmark as to Kelet-Nograd Com Rt. (5)
(10) (v) Settlement Agreement between Bell Canada
International, Inc. and the Registrant 95)
(10) (w) Equipment supply contracts between Siemens
Telefongyar Kft and Raba-Com and Kelet-Nograd
Com Rt. (5)
(10) (x) Summary of the terms of Raba-Com Rt. agreement to
acquire telephone lines from Matav (6)
(10) (y) Summary of the terms of Kelet-Nograd Com Rt.
agreement to acquire telephone lines from Matav (6)
(10) (z) Turnkey construction contracts between Siemens
and Raba-Com Rt. and Kelet-Nograd Com Rt.(6)
(10)(a)(a) Master Agreement, dated May 31, 1995, between
the Registrant and CU CapitalCorp. (4)
(10)(b)(b) Loan Agreement (which includes the form of the Note
as Exhibit I thereto), dated May 31, 1995, between
the Registrant and CU CapitalCorp. (7)
(10)(c)(c) Warrant, dated May 31, 1995, granted by the
Registrant to CU CapitalCorp.(7)
(10)(d)(d) Stock Pledge Agreement, dated May 31, 1995,
between the Registrant and CU CapitalCorp.(7)
(10)(e)(e) Stock Option Agreement, dated May 31, 1995,
between the Registrant and CU CapitalCorp.(7)
(10)(f)(f) Registration Agreement, dated May 31, 1995,
between the Registrant and CU CapitalCorp.(7)
(10)(g)(g) Management Services Agreement, dated May 31, 1995
between the Registrant and Citizens International
Management Services Company (7)
(10)(h)(h) Voting Agreement, dated May 31, 1995, between
CU CapitalCorp. and Robert Genova (7)
(10)(i)(i) Voting Agreement, dated May 31, 1995, between
CU CapitalCorp. and Frank R. Cohen (7)
(10)(j)(j) Voting Agreement, dated May 31, 1995, between
CU CapitalCorp. and Peter E. Klenner (7)
(10)(k)(k) Agreement In Principle, dated as of July 31, 1995
between the Registrant, Alcatel Austria AG, US
Telecom, Inc., and Central Euro TeleKom, Inc.(8)
(10)(o)(o) Stock Purchase Agreement, dated as of August
31, 1995, between the Registrant, Alcatel
Austria AG, US Telecom East, Inc., and Central
Euro Telekom, Inc.950
(10)(p)(p) Agreement to Amend and Restate, dated September
28, 1995, between the Registrant and CU
CapitalCorp.(10)
(10)(q)(q) Amended and Restated Stock Pledge Agreement,
dated September 28, 1995, between the Registrant
and CU CapitalCorp.(10)
(10)(r)(r) Second Stock Option Agreement, dated September
28, 1995, between the Registrant and CU
CapitalCorp.(10)
(10)(s)(s) First Amendment to Management Services Agreement,
dated September 28, 1995, between the Registrant
and Citizens International Management Services
Company (10)
(10)(t)(t) Second Agreement to Amend and Restate, dated
October 30, 1995, between the Registrant and CU
CapitalCorp.(11)
(10)(u)(u) Amended and Restated Loan Agreement, dated
October 30, 1995, between the Registrant and CU
CapitalCorp. (which includes the form of the
Amended and Restated Promissory Note as Exhibit I
thereto) (6)
(10)(v)(v) Second Amended and Restated Pledge Agreement,
dated October 30, 1995, between the Registrant and
CU CapitalCorp.(11)
(10)(w)(w) Employment Agreement dated November 29, 1994
between the Registrant and Robert Genova,*
(10)(x)(x) Employment Agreement dated November 29, 1994
between the Registrant and Frank R. Cohen**
(10)(y)(y) Concession Agreement dated May 10, 1994 between the
Ministry of Transportation, Telecommunications and
Water Management of the Republic of Hungary and
Raba-Com Rt.12
(10)(z)(z) Concession Agreement dated May 10, 1994 between the
Ministry of Transportation, Telecommunications and
Water Management of the Republic of Hungary and
Kelet-Nograd Com Rt.12
99 (a) Press Release issued by the Registrant on
May 15, 1995 (7)
99 (b) Press Release issued by the Registrant on
August 3, 1995 (8)
99 (c) Press Release issued by the Registrant on
September 5, 1995 (9)
(1) Filed with the Registrant's Registration Statement on Form SB-2 dated
October 20, 1992, as amended (Registration No. 33-53582-NY as amended).
(2) Filed with Current Report on Form 8-K for May 4, 1994.
(3) Filed with Current Report on Form 8-K for February 17, 1994.
(4) Filed with Form 10-KSB for the year ended December 31, 1993.
(5) Filed with the Registrant's Registration Statement on Form SB-2 dated
October 27, 1994, as amended(Registration No. 33-80676, as amended).
(6) Filed with Form 10-KSB for the year ended December 31, 1994.
(7) Filed with Current Report on Form 8-K for May 31, 1995.
(8) Filed with Current Report on Form 8-K for August 31, 1995.
(9) Filed with Current Report on Form 8-K for October 30, 1995.
(10)Filed with Current Report on Form 8-K for September 28, 1995.
(11)Filed with Current Report on Form 8-K for October 30, 1995.
(12)Filed with Current Report on Form 8-K for February 28, 1994.
*Filed as Exhibit 10(b)(b) to the Registrant's Form 10-QSB for the quarter
ended June 30, 1995.
**Filed as Exhibit 10(c)(c) to the Registrant's Form 10-QSB for the quarter
ended June 30, 1995.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
(b) Reports on Form 8-K
The following Current Reports on Form 8-K were filed by the
Registrant during the three months ended September 30, 1995:
Date Filed Description
August 4, 1995 Agreement in Principle with
Alcatel Austria AG et al with
respect to Papatel and Hungarotel
stock purchases
September 5, 1995 Stock Purchase Agreement with
Alcatel Austria AG et al with
respect to Papatel and Hungarotel
stock purchases
The following Current Reports on Form 8-K were filed by the
Registrant subsequent to September 30, 1995 but prior to the filing of this
quarterly report on Form 10-Q:
Date Filed Description
October 6, 1995 Agreement to Amend and Restate
and related agreements, with CU
CapitalCorp. or Citizens
International Management Services
Company
November 3, 1995 Second Agreement to Amend and
Restate, and related agreements,
with CU CapitalCorp.
November 20, 1995 Ministry acceptance of tender
bids by Kelet-Nograd Com and
Raba-Com.
November 20, 1995 Kelet-Nograd Com purchase of
assets from Matav.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on the 20th day of November 1995.
HUNGARIAN TELEPHONE AND CABLE CORP.
By:/s/ Frank R. Cohen
Frank R. Cohen
Treasurer and Chief Financial
Officer
