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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 9, 1996
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International CableTel Incorporated
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(Exact name of Registrant as Specified in its Charter)
Delaware 0-22616 52-1822078
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
110 East 59th Street, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
(212) 906-8440
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 9, 1996, an indirect wholly owned English subsidiary (the "Purchaser")
of International CableTel Incorporated (the "Company") purchased all the issued
shares of NTL Group Limited ("NTL") pursuant to an offer (the "Offer") to all
the NTL shareholders and optionholders made on May 8, 1996 in accordance with a
deed of irrevocable undertaking (the "Undertaking") dated March 28, 1996,
between the Company, the Purchaser and the directors and institutional
shareholders of NTL.
Pursuant to the Undertaking, the Offer and a deed of adjustment (the "Deed
of Adjustment"), the Purchaser paid the Initial Payment (approximately
(Pounds)204 million) in cash at closing, and agreed to pay the Further Payment
(approximately (Pounds)35 million, subject to reduction in accordance with the
Deed of Adjustment), on or before the first anniversary of the closing of the
acquisition. The Initial Payment was comprised of a payment of approximately
(Pounds)157 million to NTL's shareholders and optionholders and payments of
approximately (Pounds)46.7 million to repay NTL's bank indebtedness such that
NTL was acquired free from existing bank indebtedness.
In addition to the Initial Payment and Further Payment, the Purchaser is
required to pay (Pounds)17.1 million (the "ACT Payment"), representing the
estimated recoverable advance corporation tax previously paid by NTL, to the
former NTL shareholders in October 1996. The ACT Payment corresponds to the
amount of that advance corporation tax that is expected to be available for
set off against NTL's liability for mainstream corporation tax for the period
ended December 31, 1995 or reclaimed in respect of prior periods. The
Purchaser's obligation to pay the ACT Payment is not, however, conditioned upon
NTL's receipt of a tax credit of (Pounds)17.1 million or on the ability of NTL
to set off (Pounds)17.1 million of advance corporation tax. The Purchaser has
also assigned (to a trustee for the former NTL shareholders) NTL's rights to
receive up to approximately (Pounds)12.5 million retained in an escrow account
as security for claims against warranties given by NTL in respect of its sale of
its Advanced Products Division in October 1995. The Company has guaranteed the
Purchaser's obligations under the Undertaking, the Offer and the Deed of
Adjustment (collectively the "Acquisition Agreements").
The Initial Payment was financed principally by bank loans under the terms
of two secured loan facilities agreements (the "NTL Facilities Agreements")
dated March 28, 1996 between the Purchaser, the Arranger and The Chase
Manhattan Bank N.A., as agent. Up to (Pounds)165 million is available pursuant
to senior secured loan facilities (the "A Facilities") and comprised of (i)
the Short Term Facility (of (Pounds)50 million), (ii) the Long Term Facility
(of (Pounds)90 million), and (iii) the Revolving Facility (of up to (Pounds)25
million). The Term Loan Facilities were made available to finance a portion of
the Initial Payment and to refinance monies used to pay a portion of the
Initial Payment including related acquisition expenses. The Revolving Facility
is available until December 31, 1997 for capital expenditure and working
capital purposes of NTL's group. Up to (Pounds)2 million of the Revolving
Facility is available by way of standby letter of credits to guarantee
overdraft and other working capital facilities made available by any clearing
bank of the Purchaser.
The Chase Manhattan Bank N.A. also made available to the Purchaser
(Pounds)60 million under the Bridge Facility to finance most of the remainder
of the Initial Payment and acquisition costs and expenses. The Bridge Facility
is secured by guarantees from the Company, OCOM Corporation, OCOM Sub I, Inc.,
OCOM Sub III, Inc., CableTel UK Group, Inc., CableTel (UK) Limited, NTL and
certain of its subsidiaries, and by second ranking fixed and floating charges
over the present and future assets of the Purchaser (subject to certain
exceptions), NTL and certain of its subsidiaries, subject to certain
subordination arrangements. The Bridge Facility must be repaid in full by
December 31, 1996. The guarantees require that (Pounds)62.5 million be
retained in an interest-bearing deposit account with the lender until the
Bridge Facility is repaid.
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ITEM 5. OTHER EVENTS
On May 13, 1996, the Company and Virgin Communications Limited ("Virgin
Communications") announced the creation of Virgin Net. The new company will
offer high quality Internet access and interactive services to UK consumers and
small office/home office users. Both a service and a content provider, Virgin
Net will offer an easy-to-use Interface to the World Wide Web and act as a focal
point for a range of Internet and broadband services. A prototype consumer
service will be tested by the end of the year.
The new company will be jointly owned by CableTel's subsidiary CableTel
Ventures Limited, 49% and Virgin Communications 51%. Cable Online Limited,
another subsidiary of CableTel, has entered into a commercial contract to
provide a dial-up national network and back office infrastructure necessary to
access Virgin Net and the wider Internet.
On May 22, 1996, the Company announced that it intends to raise gross
proceeds of approximately $225 million from an offering to be completed in June
1996 of Convertible Subordinated Notes Due 2008 (the "Convertible Notes").
The Convertible Notes will not have been registered under the Securities
Act of 1933, as amended (the "Securities Act") or any state securities laws, and
unless so registered, may not be offered or sold except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws.
Accordingly, the Convertible Notes will be offered and sold within the
United States under Rule 144A only to "qualified institutional buyers" and to a
limited number of institutional "accredited investors" that make certain
representations and agreements and outside the United States in accordance with
Regulation S under the Securities Act.
On May 23, 1996, Don Cruickshank, the Director General of
Telecommunications, published the initial conclusions of his review of the
price control for the television transmission services provided by NTL to
the ITV companies, Channel 4 and S4C. In the release, the Office of
Telecommunications stated, "the Director General expects to publish his final
proposals next month. During the interval NTL will be consulting with the
television companies on certain proposed changes to the service arrangements.
The final statement will set out the Director General's view on the level
of the initial price ("PO") for the new price control period and the value
of "x" in the "RPI-x" price control formula. The interim statement indicates
that, on present assumptions, the initial price is expected to be (pounds)53.4m
and that the value of "x" is expected to be 4% to 4.5%. This compares with
the television companies' current overall annual bill of (pounds)56.4m and the
present price control formula of RPI-1%. The new price cap will last
until the end of 2002." As used in the preceding quote, RPI means retail price
index.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information.
It is impracticable for the Company to file the unaudited pro forma
financial information required by Item 7(b) of the Current report on Form 8-K at
this time. The Company will file unaudited pro forma financial information
giving effect to the acquisition of NTL for the year ended December 31, 1995 and
as of and for the three months ended March 31, 1996 as soon as practicable and
in any event no later than the date on which it is required to file such
information pursuant to Item 7(b)(2) of the Current Report on Form 8-K.
(c) Exhibits. *
2.1 Deed of Irrevocable Undertaking dated March 28, 1996 by and among
Addroute Limited, certain shareholders in the NTL Group Limited, NTL
Group Limited and International CableTel Incorporated
2.2 Form of Offer Document dated March 28, 1996 of Addroute Limited for
NTL Group Limited
2.3 Deed of Adjustment dated March 28, 1996 by and among Addroute Limited
and Mercury Asset Management plc.
10.1 The A Facilities Agreement, dated March 28, 1996, by and among
Addroute Limited, Chase Investment Bank Limited and The Chase
Manhattan Bank, N.A.
10.2 The B Facility Agreement, dated March 28, 1996, by and among
Addroute Limited, Chase Investment Bank Limited and The Chase
Manhattan Bank, N.A.
10.3 Guarantee of Certain Liabilities of Addroute Limited, dated March 28,
1996, by and among the Registrant, OCOM Corporation, OCOM Sub I Inc.,
CableTel (UK) Group Inc., OCOM Sub III Inc., CableTel (UK) Limited,
and the Chase Manhattan Bank, N.A.
10.4 Deed of Undertaking of the Registrant to Addroute Limited dated March
28, 1996 in relation to the Further Payment.
10.5 Short Term Po Deed of Undertaking of the Registrant to Chase
Manhattan Bank, N.A. and Addroute Limited dated March 28, 1996 in
relation to the Reduction Amount
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* All exhibits are incorporated herein by reference to exhibits to Amendment
No. 2 to the Company's Form S-4 Registration Statement (333-1010), filed on
April 16, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNATIONAL CABLETEL INCORPORATED
Date: May 23, 1996 By: /s/ RICHARD J. LUBASCH
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Name: Richard J. Lubasch
Title: Senior Vice President
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EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
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2.1 Deed of Irrevocable Undertaking dated March 28, 1996 by and among
Addroute Limited, certain shareholders in the NTL Group Limited, NTL
Group Limited and International CableTel Incorporated
2.2 Form of Offer Document dated March 28, 1996 of Addroute Limited for
NTL Group Limited
2.3 Deed of Adjustment dated March 28, 1996 by and among Addroute Limited
and Mercury Asset Management plc.
10.1 The A Facilities Agreement, dated March 28, 1996, by and among
Addroute Limited, Chase Investment Bank Limited and The Chase
Manhattan Bank, N.A.
10.2 The B Facility Agreement, dated March 28, 1996, by and among
Addroute Limited, Chase Investment Bank Limited and The Chase
Manhattan Bank, N.A.
10.3 Guarantee of Certain Liabilities of Addroute Limited, dated March 28,
1996, by and among the Registrant, OCOM Corporation, OCOM Sub I Inc.,
CableTel (UK) Group Inc., OCOM Sub III Inc., CableTel (UK) Limited,
and the Chase Manhattan Bank, N.A.
10.4 Deed of Undertaking of the Registrant to Addroute Limited dated March
28, 1996 in relation to the Further Payment.
10.5 Short Term Po Deed of Undertaking of the Registrant to Chase
Manhattan Bank, N.A. and Addroute Limited dated March 28, 1996 in
relation to the Reduction Amount
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* All exhibits are incorporated herein by reference to exhibits to Amendment
No. 2 to the Company's Form S-4 Registration Statement (333-1010), filed on
April 16, 1996.
