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) JUNE 16, 1998
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NTL INCORPORATED
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-22616 52-1822078
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
110 East 59th Street, New York, New York 10022
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code (212)906-8440
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
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On June 16, 1998, NTL Incorporated ("NTL") announced that it had entered
into an acquisition agreement (the "ComTel Agreement") with Vision Networks III
B.V., a wholly owned subsidiary of Royal PTT Nederland NV (KPN), for the
acquisition of the operations of ComTel Limited and Telecential Communications
(collectively, "ComTel").
Under the ComTel Agreement, NTL will acquire ComTel for a total of 550
million pounds sterling in two stages. In the first stage, NTL has acquired
certain of the ComTel properties for consideration of 275 million pounds
sterling in cash; in the second stage, upon the completion of certain corporate
reorganizations within ComTel, NTL will acquire the remaining ComTel properties
for 200 million pounds sterling in cash and 75 million pounds sterling in a new
NTL PIK Preferred Stock (the "Preferred Stock"). The Preferred Stock will have a
pay-in-kind coupon of 9.9%, will mature in 2008, and is redeemable within 15
months for common stock valued at market, new NTL convertible preferred
securities, or cash.
NTL has financed the cash portion of the first stage of the transaction
through a loan facility, completed through an amendment to NTL's existing bank
facility with the Chase Manhattan Bank. At the time of the transaction, ComTel
will not have any outstanding indebtedness.
NTL also announced that it had entered into an acquisition agreement (the
"Diamond Agreement") with Diamond Cable Communications plc ("Diamond").
Under the Diamond Agreement, Diamond shareholders will receive 0.25 shares
of NTL Common Stock for each Diamond Ordinary Share. Diamond has approximately
60.7 million fully diluted shares outstanding, and the total consideration for
the transaction will be approximately 15.2 million NTL shares. Based on the
closing price on June 15, 1998 of NTL Common Stock, the purchase price implies a
total Diamond equity value of approximately $630 million.
The Diamond Agreement contains provisions such that if NTL's stock price
exceeds $52 per share for a measuring period prior to closing (the "Cap"), the
number of NTL shares issued to Diamond will be decreased such that the
consideration for four Diamond shares will not exceed $52. In the event that the
transaction is not closed within four months, the Cap will be increased by
$0.50, and an additional $0.50 per month thereafter until closing. The Diamond
Agreement also contains provisions such that if NTL's stock price falls below
$36 per share for a measuring period prior to closing, Diamond has the right to
terminate the transaction, subject to NTL's right to adjust the exchange ratio
such that the consideration will be $36 for four Diamond shares. The closing of
the Diamond Agreement is subject to shareholder approval, bond consents and
customary closing conditions.
NTL also announced that it has provided to the Trustee of its 10 7/8%
Senior Deferred Coupon Notes due 2003 (the "Notes") a notice that it will redeem
the Notes on October 15, 1998. Pending such redemption, NTL has deposited in
trust with the Trustee an amount equal to $218,586,840 to pay the redemption
price (including principal) on the Notes, thereby defeasing
<PAGE>
certain of its obligations under the indenture governing the Notes.
A copy of the press releases issued by NTL regarding these announcements
are attached hereto as exhibits and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
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Exhibits
99.1 Press release, issued June 16, 1998 re: ComTel Limited
99.2 Press release, issued June 16, 1998 re: Diamond Cable
Communications plc
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NTL INCORPORATED
(Registrant)
By: /s/ Richard J. Lubasch
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Name: Richard J. Lubasch
Title: Senior Vice President-
General Counsel
Dated: June 16, 1998
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EXHIBIT INDEX
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Exhibit Page
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99.1 Press release, issued June 16, 1998 re: ComTel Limited
99.2 Press release, issued June 16, 1998 re: Diamond Cable Communications plc
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
NTL INCORPORATED ANNOUNCES ACQUISITION
OF COMTEL LTD
COMTEL SHAREHOLDERS TO RECEIVE CASH AND PREFERRED STOCK
New York, New York (June 16, 1998) - NTL Incorporated (NASDAQ: NTLI; EASDAQ:
NTLI.ED) announced today that it had entered into an acquisition agreement (the
"ComTel Agreement") with Vision Networks III B.V., a wholly owned subsidiary of
Royal PTT Nederland NV (KPN), for the acquisition of the operations of ComTel
Limited and Telecential Communications (collectively, "ComTel").
Under the ComTel Agreement, NTL will acquire ComTel for a total of 550 million
pounds sterling in two stages. In the first stage, NTL has acquired certain of
the ComTel properties for consideration of 275 million pounds sterling in cash;
in the second stage, upon the completion of certain corporate reorganizations
within ComTel, NTL will acquire the remaining ComTel properties for 200 million
pounds sterling in cash and 75 million pounds sterling in a new NTL PIK
Preferred Stock (the "Preferred Stock"). The Preferred Stock will have a
pay-in-kind coupon of 9.9%, will mature in 2008, and is redeemable within 15
months for common stock valued at market, new NTL convertible preferred
securities, or cash.
NTL has financed the cash portion of the first stage of the transaction through
a loan facility, completed through an amendment to NTL's existing bank facility
with the Chase Manhattan Bank. At the time of the transaction, ComTel will not
have any outstanding indebtedness.
Commenting on the transaction, J. Barclay Knapp, President and Chief Executive
Officer, said: "We are delighted to announce this significant transaction. With
the addition of ComTel and Comcast UK's 100%-owned operations, we will have
nearly 4 million franchise homes, more than 650,000 customers and nearly 60,000
business lines. ComTel's franchises are directly adjacent to our Suburban London
franchises in Hertfordshire/Bedfordshire and Surrey/Hampshire, and have more
than 1.1 million homes and more than 500 million pounds sterling in network
investment. We look forward to working with their customers, employees and
suppliers going forward."
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PRO FORMA OPERATING STATISTICS
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CURRENT PRO FORMA
NTL NTL (1)
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Franchise homes 2,090,000 3,952,000
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Homes marketed (ResTel) 887,400 1,972,000
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Homes marketed (CATV) 887,400 2,185,000
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Res. Telephony subscribers/lines 337,800 668,000
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Res. Tel. Penetration 38% 34%
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CATV Subscribers 341,900 611,000
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CATV penetration 39% 28%
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Business Subscribers 8,100 16,000
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Business Lines 31,000 57,000
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Annualized Q1 Revenues (mm) $590 $850
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Annualized Q1 EBITDA (mm) $55 $76
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P,P&E (mm) (2) $2,100 $3,500
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(1) Pro forma for the acquisition of ComTel and Comcast UK's 100%-owned
franchises. Data as of March 31, 1998. Data includes approximately 200,000
ComTel CATV-only homes passed which are subject to new build; the remaining
ComTel homes are comparable to the homes passed by NTL's existing dual
network.
(2) Includes approximately $500 million in P,P&E related to NTL's national
telecoms and broadcast businesses.
Completion of the second stage of the transaction is subject to certain closing
conditions. NTL assumes management control over all ComTel franchises effective
immediately.
ComTel operates telephony/cable networks in the United Kingdom. ComTel's
franchises cover approximately 1.1 million homes and are located in the Midlands
and South East England regions, covering areas including: Oxford, Swindon,
Coventry and Stratford. As of March 31, 1998, ComTel had passed approximately
991,000 homes, and had more than 161,000 residential telephony subscribers,
166,000 cable television subscribers and 2,600 business telephony subscribers.
NTL announces redemption of bonds:
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The Company also announced today that it has provided to the Trustee of its 10
7/8% Senior Deferred Coupon Notes due 2003 (the "Notes") a notice that it will
redeem the Notes on October 15, 1998. Pending such redemption, the Company has
deposited in trust with the Trustee an amount equal to $218,586,840 to pay the
redemption price (including principal) on the Notes, thereby defeasing certain
of its obligations under the indenture governing the Notes.
<PAGE>
NTL Incorporated is a leading alternative telecommunications company in the
United Kingdom. The Company owns and operates one of only five independent
national telecoms networks in the UK, and offers national business telecoms,
national and international carrier telecommunications services, and satellite
and radio communications services. Through its local telecoms division, the
Company offers residential telephony, residential cable television and Internet
services over advanced broadband fiber networks in six major franchise areas in
the UK. The Company's broadcast services division operates a national broadcast
transmission network of more than 1,200 owned and shared transmission sites, and
offers digital and analog broadcast transmission services to major television
and radio stations nationwide in the UK.
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For further information contact: In the U.S.: John F. Gregg, Managing Director -
Corporate Development, Michael A. Peterson, Director - Corporate Development or
Richard J. Lubasch, Senior Vice President - General Counsel at (212) 906-8440;
in the UK: Bret Richter, Director - Corporate Development at (0171) 227-8700 or
Alison Smith, Group Communications at (01252) 402662; or via e-mail at
[email protected].
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
NTL INCORPORATED ANNOUNCES ACQUISITION
OF DIAMOND CABLE COMMUNICATIONS PLC
DIAMOND SHAREHOLDERS TO RECEIVE NTL SHARES
New York, New York (June 16, 1998) - NTL Incorporated (NASDAQ: NTLI; EASDAQ:
NTLI.ED) announced today that it had entered into an acquisition agreement (the
"Diamond Agreement") with Diamond Cable Communications plc ("Diamond").
Under the Diamond Agreement, Diamond shareholders will receive 0.25 shares of
NTL Common Stock for each Diamond Ordinary Share. Diamond has approximately 60.7
million fully diluted shares outstanding, and the total consideration for the
transaction will be approximately 15.2 million NTL shares. Based on yesterday's
closing price of NTL Common Stock, the purchase price implies a total Diamond
equity value of approximately $630 million.
The Diamond Agreement contains provisions such that if NTL's stock price exceeds
$52 per share for a measuring period prior to closing (the "Cap"), the number of
NTL shares issued to Diamond will be decreased such that the consideration for
four Diamond shares will not exceed $52. In the event that the transaction is
not closed within four months, the Cap will be increased by $0.50, and an
additional $0.50 per month thereafter until closing. The Diamond Agreement also
contains provisions such that if NTL's stock price falls below $36 per share for
a measuring period prior to closing, Diamond has the right to terminate the
transaction, subject to NTL's right to adjust the exchange ratio such that the
consideration will be $36 for four Diamond shares.
As of March 31, 1998, Diamond had total debt of approximately $1,257 million,
which is expected to remain outstanding, and cash of approximately $414 million.
Earlier today, NTL announced that it had acquired ComTel Limited for 550 million
pounds sterling in cash and preferred stock.
Commenting on the transactions completed today, J. Barclay Knapp, President and
Chief Executive Officer, said: "With the Diamond and ComTel transactions
announced today, NTL has moved to the forefront of the UK telecommunications
industry. We will now cover approximately 25% of the UK with our cable telephone
franchises with a total of approximately 5.2 million homes under franchise,
nearly 850,000 residential telephony customers, more than 700,000 CATV
customers, more than 85,000 business telephony lines and approximately $1
billion in annualized revenues. Together with our recently completed national
telecoms network and our excellent results to date, NTL is well on its way to
becoming the premier company in the industry.
<PAGE>
"As a result of increased usage of our national fiber network, and overall
economies of scale in our operations, we believe that we can realize annual cost
savings in excess of 100 million pounds sterling in the future. Geographically,
these franchises fit nearly perfectly with each other and the rest of our
properties, and gives NTL a market presence which will carry the Company forward
to the future".
Robert T. Goad, Chief Executive of Diamond, said, "I am very pleased to announce
our collaboration with NTL, which I view as an outstanding transaction for
Diamond and indeed the industry. Diamond has proven that cable telephony in the
UK is a viable business and takes pride in its stellar results to date. Now we
will be able to take our success to the next level by helping form the true
industry leader. The combined entity is uniquely positioned to seize a
remarkable opportunity which will dramatically enhance shareholder value."
Robert Goad will join NTL's Board of Directors and remain a principal of the
combined company.
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PRO FORMA OPERATING STATISTICS
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CURRENT PRO FORMA
NTL NTL (1)
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Franchise homes 2,090,000 5,182,000
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Homes marketed (ResTel) 887,400 2,429,000
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Homes marketed (CATV) 887,400 2,641,000
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Res. Telephony subscribers/lines 337,800 846,000
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Res. Tel. penetration 38% 35%
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CATV Subscribers 341,900 702,000
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CATV penetration 39% 27%
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Business Subscribers 8,100 22,000
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Business Lines 31,000 86,000
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Annualized Q1 Revenues (mm) $590 $984
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Annualized Q1 EBITDA (mm) $55 $104
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P,P&E (mm) (2) $2,100 $4,200
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(1) Pro forma for the acquisition of Diamond, ComTel and Comcast UK's
100%-owned franchises. Data as of March 31, 1998. Data includes
approximately 200,000 ComTel CATV-only homes passed which are subject to
new build; the remaining ComTel homes are comparable to the homes passed by
NTL's existing dual network.
(2) Includes approximately $500 million in P,P&E related to NTL's national
telecoms and broadcast businesses.
Diamond operates telephony/cable networks in the United Kingdom. Diamond's
franchises cover
<PAGE>
more than 1.2 million homes and are located in the East Midlands region,
covering areas including: Nottingham, Leicester, Lincolnshire and South
Humberside. As of March 31, 1998, Diamond had passed approximately 575,000
homes, and had approximately 178,000 residential telephony subscribers, 90,000
cable television subscribers and 6,200 business telephony subscribers. Diamond
is majority owned by European Cable Capital Partners, which is beneficially
owned by Goldman, Sachs & Co.
NTL Incorporated is a leading alternative telecommunications company in the
United Kingdom. The Company owns and operates one of only five independent
national telecoms networks in the UK, and offers national business telecoms,
national and international carrier telecommunications services, and satellite
and radio communications services. Through its local telecoms division, the
Company offers residential telephony, residential cable television and Internet
services over advanced broadband fiber networks in six major franchise areas in
the UK. The Company's broadcast services division operates a national broadcast
transmission network of more than 1,200 owned and shared transmission sites, and
offers digital and analog broadcast transmission services to major television
and radio stations nationwide in the UK.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
In addition to the historical information presented, this release also includes
certain forward-looking statements relating to cost savings. Such statements
represent the Company's reasonable judgment on the future and are based on
assumptions and factors that could cause actual results to differ materially.
Examples of relevant assumptions and factors include, but are not limited to,
overall market penetration for the Company's services, competition from
providers of alternative services and general economic conditions. The Company
assumes no obligation to update these forward-looking statements to reflect
actual results, changes in assumptions or changes in factors affecting such
statements.
* * * * * * *
For further information contact: In the U.S.: John F. Gregg, Managing Director -
Corporate Development, Michael A. Peterson, Director - Corporate Development or
Richard J. Lubasch, Senior Vice President - General Counsel at (212) 906-8440;
in the UK: Bret Richter, Director - Corporate Development at (0171) 227-8700 or
Alison Smith, Group Communications at (01252) 402662; or via e-mail at
[email protected].
