<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1999
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-------------------------
NTL INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4899 52-1822078
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
(212) 906-8440
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
</TABLE>
<TABLE>
<S> <C>
RICHARD J. LUBASCH, ESQ. COPY TO:
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND THOMAS H. KENNEDY, ESQ.
SECRETARY SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
NTL INCORPORATED 919 THIRD AVENUE
110 EAST 59TH STREET NEW YORK, NEW YORK 10022
NEW YORK, NEW YORK 10022 (212) 735-3000
(212) 906-8440
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At
such time or times on and after which the Registration Statement becomes
effective as the Selling Stockholders may determine.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
7% Convertible Subordinated Notes Due 2008.... $600,000,000 100% $600,000,000 $166,800
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Common Stock, par value $0.01 per share
(including the associated Rights to purchase
Series A Junior Participating Preferred
Stock)(1)................................... (2) 0 0 0(3)
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</TABLE>
(1) Prior to the occurrence of certain events, the Series A Junior
Participating Preferred Stock Purchase Rights will not be evidenced
separately from shares of Common Stock.
(2) Includes the shares of Common Stock initially issuable upon conversion
of the Convertible Notes at the rate of 16.3265 shares of Common Stock
per $1,000 principal amount of Convertible Notes. Pursuant to Rule 416
under the Securities Act, such number of shares of Common Stock
registered hereby shall also include an indeterminate number of
additional shares of Common Stock that may be issued from time to time
upon conversion of the Convertible Notes by reason of adjustment of the
conversion price in certain circumstances outlined in the prospectus.
See "Description of the Convertible Notes -- Conversion."
(3) Pursuant to Rule 457(i) under the Securities Act, there is no filing fee
with respect to the shares of Common Stock issuable upon conversion of
the Convertible Notes, because no additional consideration will be
received in connection with the exercise of the conversion privilege.
THE REGISTRANT AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
The information in this prospectus is not complete and may be changed. The
selling securityholders identified in this prospectus may not sell these
securities until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
Subject to completion, dated , 1999
Prospectus
[NTL LOGO]
7% CONVERTIBLE SUBORDINATED NOTES DUE 2008 AND SHARES OF COMMON STOCK
NTL INCORPORATED
- - Selling securityholders who are identified in this prospectus may offer and
sell an indeterminate number of:
-- 7% Convertible Subordinated Notes Due
2008 of NTL
-- shares of common stock of NTL
by using this prospectus.
- - The offering price for the convertible notes is not set but will be determined
according to negotiation between a selling securityholder and the prospective
purchaser. The offering price for the common stock will be negotiated or, if
sold on the Nasdaq National Market, at prevailing market price.
- - Our common stock is traded on the Nasdaq National Market under the symbol
NTLI. On February 9, 1999, the last reported sales price of the common stock
was $74 3/4 per share. There is no public market for the convertible notes,
and we do not intend to apply to the Nasdaq National Market or any other
securities exchange in order to list the convertible notes.
WE URGE YOU TO CAREFULLY READ THE "RISK FACTORS" SECTION BEGINNING ON PAGE
10, WHERE WE DESCRIBE SPECIFIC RISKS ASSOCIATED WITH THESE SECURITIES, BEFORE
YOU MAKE YOUR INVESTMENT DECISION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 1999
<PAGE> 3
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We are currently subject to the informational requirements of the
Securities Exchange Act of 1934, as amended. We file reports, proxy statements,
information statements and other information with the Commission under the
Exchange Act. You can inspect and copy any reports, proxy statements,
information statements and other information we file with the Commission at the
public reference facilities the Commission maintains at:
Room 1024, Judiciary Plaza,
450 Fifth Street, N.W.,
Washington, D.C. 20549,
and at the Commission's Regional Offices located at:
Suite 1400, Northwestern Atrium Center,
500 West Madison Street,
Chicago, Illinois 60661
and
13th Floor, Seven World Trade Center,
New York, New York 10048,
and you may also obtain copies of such material by mail from the Public
Reference Section of the Commission at:
450 Fifth Street, N.W.,
Washington, D.C. 20549,
at prescribed rates.
The Commission also maintains a site on the World Wide Web, the address of
which is http://www.sec.gov. That site also contains our reports, proxy and
information statements and other information. Reports, proxy statements and
other information concerning the Company may also be inspected at the offices of
the Nasdaq Stock Market, Reports Section, at:
1735 K Street, N.W.,
Washington, D.C. 20006.
If the new notes are listed on the Luxembourg Stock Exchange, copies of our
reports, proxy statements and other information will also be made available free
of charge at the office of our agent in Luxembourg, Banque Internationale a
Luxembourg S.A.
This prospectus is part of a registration statement filed by us with the
Commission. It does not contain all the information included or incorporated in
the registration statement. The full registration statement can be obtained from
the Commission as indicated above or from us.
<PAGE> 4
INCORPORATION OF DOCUMENTS BY REFERENCE
The Commission allows us to incorporate by reference some information about
NTL that we file with the Commission. This allows us to disclose important
information to you by referencing those filed documents. Any information that we
reference this way is considered part of this prospectus.
The following documents filed by us with the Commission are incorporated by
reference into this prospectus:
(a) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, dated March 30, 1998 as amended by Form 10-K/A-1, dated
October 12, 1998, as amended by Form 10-K/A-2, dated November 6, 1998;
(b) the Company's Quarterly Reports on Form 10-Q for the three months
ended March 31, 1998, dated May 14, 1998, for the three months ended June
30, 1998, dated August 14, 1998 and for the three months ended September
30, 1998, dated November 12, 1998;
(c) the Company's Current Reports on Form 8-K dated February 5, 1998
(filed February 6, 1998), March 6, 1998 (filed March 9, 1998), March 18,
1998 (filed March 20, 1998), May 29, 1998 (filed June 2, 1998), June 16,
1998 (filed June 16, 1998), August 14, 1998 (filed August 18, 1998),
October 5, 1998 (filed October 5, 1998), October 27, 1998 (filed October
28, 1998), October 29, 1998 (filed November 4, 1998), December 16, 1998
(filed December 17, 1998), December 21, 1998 (filed December 23, 1998),
December 22, 1998 (filed December 22, 1998) and January 25, 1999 (filed on
January 25, 1999); and
(d) the Company's Proxy Statement on Schedule 14A dated January 29,
1999.
We incorporate by reference the documents listed above and any future
filings made by us with the Commission pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act until the end of the exchange offer. Any information
incorporated by reference this way will automatically be deemed to update and
supersede this information.
We will provide you without charge on your oral or written request, a copy
of any or all documents which are incorporated by reference to this prospectus,
except for exhibits which are specifically incorporated by reference into those
documents. You should direct your request to:
NTL Incorporated
110 East 59th Street
26th Floor
New York NY 10022
Attention: Richard J. Lubasch
Tel: (212) 906 8440
To ensure timely delivery of any documents you request, you should make
such a request at least five days before the exchange offer expires. In
addition, copies of those
<PAGE> 5
documents will also be made available free of charge at the office of our agent
in Luxembourg.
------------------------
You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer of the new notes in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
appearing in this prospectus is accurate as of the date on the front cover of
this prospectus only. Our business, financial condition, results of operations
and prospects may have changed since that date.
------------------------
In this prospectus, references to "pounds sterling," "L" "pence" or "p" are
to the lawful currency of the United Kingdom and references to "U.S. dollars,"
"dollars," "$" or "c" are to the lawful currency of the United States. For your
convenience only we have translated some pound sterling amounts into U.S.
dollars and certain U.S. dollar amounts into pounds sterling. We are not making
any representation to you regarding those translated amounts. Unless we
otherwise clearly indicate, the translations of pounds sterling into U.S.
dollars have been made at $1.6995 per L1.00, the noon buying rate in The City of
New York for cable transfers in pounds sterling as certified for customers
purposes by the Federal Reserve Bank of New York on September 30, 1998. See
"Exchange Rates" for information regarding the noon buying rate for the past ten
fiscal years. On February 4, 1999, the noon buying rate was 1.64 per L1.00.
------------------------
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information presented in or incorporated by reference into this
prospectus constitutes "forward-looking statements" as that term is defined in
the Private Securities Litigation Reform Act. The words "believe," "anticipate,"
"should," "intend," "plan," "will," "expect," "estimates," "projects",
"positioned" and "strategy," and similar expressions identify such
forward-looking statements in this prospectus. Although we believe that our
expectations are based on reasonable assumptions within the bounds of our
knowledge of our business and operations, actual results, performance or
achievements of the Company or industry results may differ materially from our
expectations expressed or implied in those forward-looking statements. Factors
that could cause actual results to differ from expectations include the risk
factors described under the caption "Risk Factors" in this prospectus, as well
as the following:
- general economic and business conditions
- industry trends
- our ability to design network routes and install facilities
- barriers to obtaining and maintaining government licenses or approvals
- our ability to finance construction and development at a reasonable cost
and on satisfactory terms
- changes in our assumptions concerning customer acceptance, penetration,
churn rates and competition with alternative service providers
<PAGE> 6
PROSPECTUS SUMMARY
This summary highlights information about us and the exchange offer which
is contained elsewhere or incorporated by reference in this prospectus. This
summary is not complete and may not contain all the information that is
important to you. You should read the entire prospectus, including the financial
statements and related notes, before making a decision to exchange your old
notes. When we refer to NTL in this prospectus, we mean NTL and its consolidated
subsidiaries, except where we make it clear that we are only referring to the
parent company. The statistical data included in this prospectus is as at
September 30, 1998, unless we indicate otherwise. That statistical data does not
include statistical data relating to ComTel or Partners, each of which we have
recently acquired or give effect to our proposed acquisition of Diamond.
ABOUT NTL
We are a leading communications company in the United Kingdom, providing
residential, business and wholesale customers with the following services:
- residential telecoms and television services, including residential
telephony, cable television and Internet access services;
- national telecoms services including national business telecoms, national
and international carrier telecommunications, and satellite and radio
communications services; and
- broadcast services including digital and analog television and radio
broadcast transmission services.
We provide a broad range of services over local, national and international
network infrastructure. We operate:
- advanced local broadband networks serving entire communities throughout
our regional franchise areas;
- the UK's first synchronous digital hierarchy backbone telecommunications
network, as well as satellite earth stations and radio communications
facilities from our tower sites across the UK; and
- a broadcast transmission network which provides national, regional and
local analog and digital transmission services to customers throughout
the UK.
In March 1997, we changed our name from International CableTel Incorporated
to NTL Incorporated to reflect the integration of the services provided by us
following our acquisition of NTL Group Limited in 1996, and to capitalize on NTL
Group Limited's 30 year history in the United Kingdom as a provider of reliable
communications services.
ABOUT OUR RESIDENTIAL TELECOMS AND TELEVISION SERVICES
We are the third largest operator of local broadband communications systems
in the UK as measured by the number of homes in its franchise areas, and have
achieved the highest customer penetration and lowest churn rates of any
multi-system operator in the
1
<PAGE> 7
UK. We are presently the sole provider of broadband services in our franchise
areas, offering residential telephony, cable television and Internet access
services to customers connected to our networks.
As of September 30, 1998, we had more than 429,000 residential customers,
approximately 92% of which subscribed to both telephony and television services.
As of September 30, 1998, we had approximately 823,400 revenue generating units
resulting in 40.1% telephony penetration, 40.6% cable penetration and 80.7%
revenue generating unit penetration of homes marketed by us. As of September 30,
1998, after giving pro forma effect to the acquisition of Partners, without
including the Cable London franchise, and the proposed acquisition of Diamond,
we had approximately 1.1 million residential customers, approximately 61% of
which subscribed to both telephony and television services. As of September 30,
1998, after giving similar pro forma effect, we had approximately 1.8 million
revenue generating units resulting in 35.3% telephony penetration, 28% cable
penetration and 61.6% revenue generating unit penetration of homes marketed. By
comparison, based on published statistics of the Independent Television
Commission, dated March 9, 1998, as of January 1, 1998, UK cable customer
penetration averaged approximately 28% for telephony and approximately 22.2% for
cable television. As of January 1, 1998, the UK telephony/cable industry had
connected approximately 3.4 million telephone lines and approximately 2.4
million broadband cable customers.
The following table illustrates operating statistics for our newly
constructed network:
<TABLE>
<CAPTION>
PRO FORMA(1)
-------------
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
------------- ------------- ---------------------------------------
1998 1998(6) 1997 1996 1995 1994
------------- ------------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Homes passed(2)...................... 3,378,500 1,197,000 1,007,000 779,100 463,000 144,000
Homes marketed....................... 2,907,800(3) 1,020,000 810,000 467,300 176,200 7,200
Homes marketed (as % of homes
passed)............................ 86% 85% 80% 60% 38% 5%
Total customers...................... 1,111,300 429,600 321,300 168,200 57,700 2,280
Total revenue generating units(4).... 1,792,000 823,400 608,500 302,000 102,330 3,960
Customer penetration................. 38% 42% 40% 36% 33% 32%
Revenue generating unit
penetration(5)..................... 62% 81% 75% 65% 58% 55%
Annualized churn..................... NA 14% 11% 10% NM NM
</TABLE>
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(1) Pro forma operating statistics for our newly constructed network give
effect to the acquisition of Partners (without including the Cable London
franchise), our acquisition of ComTel and our proposed acquisition of
Diamond.
(2) "Homes passed" is the expression in common usage in the cable industry as
the measurement of the size of a cabled area, meaning the total number of
residential premises which have the potential to be connected to our
network.
(3) Represents only those homes marketed for cable television. As of September
30, 1998, on a pro forma basis, 2,776,000 homes were marketed for
telephone.
(4) A revenue generating unit is one telephone account or one cable television
account; a dual customer represents two revenue generating units.
(5) Revenue generating unit penetration is the number of revenue generating
units per 100 homes marketed. As defined, maximum revenue generating unit
penetration is 200%.
(6) Does not include operating data related to ComTel.
NA Not available.
NM Not meaningful due to the limited customer base and recent commencement of
services.
2
<PAGE> 8
Our customer base and revenue generating units both increased by nearly
100% in 1997 compared to year-end 1996. We believe that much of its success
during this period has been due to our marketing strategies and the introduction
of innovative residential service packages which bundle telephony and a small
selection of cable television channels within a single product offering. We also
give customers the opportunity to purchase additional channel packages and
premium channels. Consistent with our objectives, the high penetration rates
generated by this strategy have led to increased levels of gross profit
contribution per home passed.
We believe that we have also maintained high levels of customer
satisfaction as indicated by our low rates of churn. During 1997, we maintained
an annualized churn rate of less than 11%, a rate which is significantly lower
than the published churn rates of all other UK telephony/cable operators. In a
recent survey of a sample of our customers, we found that 89% of our customers
would recommend the service to a friend or relative, and that only 15% had ever
considered changing their telephone service back to British Telecommunications
plc.
Our local franchise areas cover approximately 2.1 million homes, spanning a
broad geographic area across England, Scotland, Wales and Northern Ireland. As
of September 30, 1998, our integrated full-service network had been constructed
past over 1.2 million (or approximately 57%) of its homes under franchise. Our
local broadband networks use advanced high capacity synchronous digital
hierarchy fiber rings which serve entire communities, bringing fiber connections
directly to businesses and "Siamese" coaxial/copper connections to residences.
Our local networks cover approximately 2,500 route miles of fiber backbone
network, with approximately 175,000 fiber miles, and an estimated 5,000 route
miles of "Siamese" coaxial/copper connections.
ABOUT OUR NATIONAL TELECOMS SERVICES
Our objective in national telecoms services is to successfully integrate
our strategies for developing, operating and marketing local telephony/cable
systems with our national network to provide high-quality voice, data and video
communications services throughout the UK. We have constructed a national
synchronous digital hierarchy fiber telecoms network, which is one of only five
national telecoms networks in the UK. Our national network currently covers
approximately 1,500 route miles and 40,000 fiber miles throughout England,
Scotland and Wales. During 1998, we extended the network to include the first
resilient fiber connection between Northern Ireland, the Republic of Ireland and
England.
The integration of our local networks with the national telecoms network
creates strategic advantages for our telephony business. The national network
allows us to carry telecommunications traffic between each of our franchise
areas and throughout the United Kingdom and, therefore, achieve significant
savings on the interconnection fees we pay to other carriers. In addition, using
the national telecoms network gives us greater pricing flexibility and will
enable us to design and offer new telephony service packages to our customers,
which we believe should have a positive effect on our penetration rates.
3
<PAGE> 9
Capitalizing on the extended reach of our national network, we are
competing for a share of the approximately L21 billion ($36 billion) UK telecoms
market on a national basis. In the business telecoms market, we have been
increasingly successful in obtaining telecoms contracts from businesses located
within its franchise areas. As of September 30, 1998, we had a total of
approximately 11,300 business customers and 44,200 business telephony lines,
which represented growth in the first nine months of 1998 of more than 70% for
both customers and lines. Our current business customers include major
international corporations, universities, local governmental authorities, and
small and medium sized businesses. We believe that we can build on the strengths
gained in its local franchise areas to approach targeted business users located
in other areas of the UK. To connect the "last mile" to the customers' premises
from the national network, we have a variety of options, including building
fiber where justified, using microwave links from the our tower infrastructure,
or leasing circuits from other local operators. We launched our national
business telecoms service in November 1997 and our strategy is to target medium
to large sized businesses, beginning with those located near the major urban
areas currently served by our national network.
We also offer a variety of other telecommunications services from its
national fiber network and microwave transmission facilities. We compete in the
growing market for bandwidth and leased line services as a national and
international wholesale telecommunications carrier. Our international facilities
license allows us to carry international traffic, and we have recently entered
into an agreement for a 25 year lease of international telecommunications
capacity on a new transatlantic fiber optic cable connecting The Netherlands,
Germany, the UK and the United States. We are also expanding our product
portfolio to include virtual private networks, managed data networks, ATM and
frame relay services and multi-media services.
In addition to business and carrier telecoms, we provide the following
telecom services:
- a full range of services in the design, building and operation of radio
based networks, and the provision of infrastructure and support services
to customers in the emergency services sector;
- global satellite connectivity for clients requiring video, digital audio
and data services; and
- residential, wholesale and business Internet access and support services,
consulting and systems integration services, and Intranet design and
implementation.
ABOUT OUR BROADCAST SERVICES
Our broadcast services group includes the original core business of NTL
Group Limited which has been providing television and radio broadcasters with
broadcast transmission services for more than 30 years.
We transmit television and radio broadcast signals for the UK's main
commercial television channels and independent radio stations from a national
infrastructure of over 1,200 owned and shared transmission sites across the UK.
Our current customers include
4
<PAGE> 10
the Independent Television companies, Channel 4 and the Welsh Fourth Channel,
and Channel 5. The broadcast services group provides us with a stable contracted
revenue stream from a variety of customers, through long-term contracts
generally with eight to ten year terms. In addition to transmission services,
the broadcast services group markets value added services to its existing
television customers. This group also designs, installs, operates and maintains
new transmitter networks and has a spectrum planning service to plan the
coverage of television and radio networks.
Two of the four recipients of the digital terrestrial television
multiplexes awarded to date have selected the Company as the preferred supplier
of transmission services. The introduction of digital terrestrial television
broadcasting in the UK will significantly expand our broadcasting transmission
services business.
------------------------
We are a Delaware corporation, and were incorporated on April 2, 1993. NTL
is a holding company and conducts its operations through direct and indirect
wholly owned subsidiaries. NTL is not a subsidiary of any other company. Our
principal executive office is located at 110 East 59th Street, New York, New
York 10022, and our telephone number is (212) 906-8440.
5
<PAGE> 11
RECENT DEVELOPMENTS
COMPLETION OF PARTNERS ACQUISITION
On February 4, 1998, NTL and NTL (Bermuda) Limited, a Bermuda corporation
and a wholly owned subsidiary of NTL ("Sub"), entered into an Agreement and Plan
of Amalgamation, as amended, with Comcast UK Cable Partners Limited which
provided for the amalgamation of Sub with Partners. At special meetings of
shareholders of NTL and of Partners held on October 29, 1998, the amalgamation
was approved by our shareholders and the shareholders of Partners. The
amalgamation closed on the same day following receipt of those approvals.
Partners' shareholders received 0.3745 shares of our common stock for each
Partners' Class A common share or Class B common share, an aggregate of
approximately 18,700,000 shares of our common stock.
EASTERN GROUP ACQUISITION
On December 22, 1998, we acquired Eastern Group from Eastern Group plc for
L60 million in cash and L31 million in 9.9% preferred stock, series B. Such 9.9%
preferred stock, series B has a pay-in-kind coupon of 9.9%, will mature in 2008
and is redeemable within 18 months for cash or NTL common stock.
Eastern Group is headquartered in Ipswich, England, and is comprised of two
business divisions. The telecoms division utilizes a 1,800 km synchronous
digital hierarchy fiberoptic network across the southeast and east of England,
and the radio sites division, consisting of 121 radio masts across East Anglia,
serves the UK's major mobile phone network operators.
NEWCASTLE UNITED SHARE ACQUISITION
On December 17, 1998, Premium TV Limited, a wholly-owned subsidiary of NTL,
acquired 9,000,000 shares, or 6.3%, of Newcastle United from Cameron Hall
Developments Limited, the majority shareholder of Newcastle United, for
approximately L10 million in cash.
In conjunction with the sale of such shares, Cameron Hall Developments also
entered into an irrevocable commitment to Premium TV which provides that if
Premium TV makes a general offer for all of the issued share capital of
Newcastle United, Cameron Hall Developments will accept such offer in respect of
the remaining balance of its shares in Newcastle United, representing 50.8% of
the issued share capital of Newcastle United. If made, any such offer would be
at a price of 111.7p per share in cash and may, if Premium TV so decides, carry
a full zero coupon loan note alternative.
Premium TV's decision regarding whether to make such an offer may be
influenced by, among other things, the substance of the report by the Monopolies
and Mergers Commission on the proposed offer for Manchester United Football
Club. The irrevocable commitment given by Cameron Hall Developments is binding
until 12 weeks following the publication of such report, subject to extension in
certain circumstances.
6
<PAGE> 12
PROPOSED DIAMOND ACQUISITION
On June 16, 1998, we entered into an acquisition agreement with the
shareholders of Diamond Cable Communications, plc. Pursuant to the diamond
agreement, on the closing date of the diamond transaction, we will transfer to
each shareholder of Diamond one share of NTL common stock for each four issued
and outstanding ordinary shares, par value 2.5p per share, and each deferred
share, par value 25p per share, of Diamond. However, the Diamond Agreement
provides for adjustment of such consideration in that the number of shares of
NTL common stock to be transferred for each four ordinary shares will be
decreased such that the value of such consideration will not exceed $65.00. The
diamond agreement provides that a maximum of approximately 15.2 million shares
of common stock will be issued in connection with the Diamond transaction. The
consummation of the Diamond transaction is subject to, among other things, the
approval by our stockholders of the issuance of shares of common stock in
accordance with the terms of the diamond agreement. There can be no assurance
that the Diamond acquisition will be consummated on the terms described herein
or at all. See "Risk Factors -- Network construction costs, need for additional
financing."
STRATEGIC PARTNERSHIP WITH MICROSOFT
On January 25, 1999, we agreed with Microsoft to jointly develop new
broadband services for delivery to customers in the UK and Ireland. In addition,
Microsoft has agreed to purchase $500 million of our 5.25% convertible preferred
stock. Such 5.25% convertible preferred stock is convertible into NTL common
stock at a conversion price of $100 per share, is redeemable in 10 years for
cash or NTL common stock and may be redeemed by NTL on the earlier of 7 years or
the date on which NTL common stock has traded above $120 for 25 consecutive
trading days.
We have agreed with Microsoft to work closely together with respect to the
development of new digital services and intend to enter into additional
agreements throughout 1999 regarding software and services. In addition,
Microsoft will receive five-year warrants to purchase NTL common stock at an
exercise price of $84 per share.
OFFERING OF 11 1/2% NOTES AND 12 3/8% NOTES
On November 2, 1998, we issued and sold $625 million in aggregate principal
amount of our 11 1/2% Senior Notes Due 2008. The 11 1/2% notes carry a cash-pay
current coupon. We used the net proceeds of the 11 1/2% notes to partially repay
indebtedness outstanding under the new credit facility. The 11 1/2% notes were
offered and sold in transactions exempt from, or not subject to, the
registration requirements of the Securities Act.
On November 6, 1998, we issued and sold $450 million in aggregate principal
amount at maturity of our 12 3/8% Senior Deferred Coupon Notes Due 2008. Cash
interest will not accrue on the 12 3/8% notes prior to October 1, 2003. We used
a portion of the net proceeds of the 12 3/8% notes to repay the indebtedness
remaining outstanding under the new credit facility after the application of the
net proceeds from the offering of the 11 1/2% notes. The 12 3/8% notes were
offered and sold in transactions exempt from, or not subject to, the
registration requirements of the Securities Act.
7
<PAGE> 13
THE OFFERING
Securities offered............ Up to $600,000,000 aggregate principal amount
of 7% convertible subordinated notes due 2008
and up to 9,795,918 shares of common stock,
plus such indeterminate number of additional
shares of common stock that may be issued from
time to time upon conversion of the convertible
notes by reason of adjustment to the conversion
price in certain circumstances described
herein.
Maturity...................... December 15, 2008.
Interest payment dates........ June 15 and December 15 of each year,
commencing June 15, 1999.
Conversion.................... The convertible notes, unless previously
redeemed, are convertible at the option of the
holder thereof at any time after 90 days
following the date of original issuance thereof
and prior to maturity into shares of common
stock at a conversion price of $61.25 per
share, subject to adjustment in certain events.
See "Description of the convertible
notes -- conversion."
Optional redemption........... The convertible notes will be redeemable, in
whole or from time to time in part, at our
option, on at least 30 but not more than 60
days' prior notice, at any time on or after
December 15, 2001, at the redemption prices set
forth herein together with accrued and unpaid
interest and Liquidated Damages, if any, to the
date of redemption. See "Description of the
convertible notes -- optional redemption."
Subordination................. The convertible notes are general unsecured
obligations of the Company and are subordinate
in right of payment to all of our existing and
future Senior Debt. In addition, the
convertible notes are effectively subordinated
to all existing and future liabilities of our
subsidiaries, partnerships and affiliated joint
ventures, including trade payables. On
September 30, 1998, after giving effect to the
acquisition of Partners and our recent debt
financings and the use of proceeds from those
transactions we would have had approximately
$3.7 billion accreted value of senior debt
outstanding and our subsidiaries would have had
approximately $967 million of liabilities that
effectively rank senior to the convertible
notes. The ability of NTL and our subsidiaries
to incur additional
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<PAGE> 14
indebtedness and liabilities is not limited by
the terms of the indenture pursuant to which
the convertible notes were issued. See
"Description of the convertible
notes -- Subordination of convertible notes."
Change of control............. Upon a Change of Control, holders of the
convertible notes will have the right, subject
to certain restrictions and conditions, to
require us to repurchase all or any part of the
convertible notes at a purchase price equal to
101% of the principal amount thereof together
with accrued and unpaid interest and Liquidated
Damages, if any, to the date of repurchase. We
may not have sufficient funds or the financial
resources necessary to satisfy, or may be
precluded by the terms governing its
indebtedness from satisfying, our obligations
to repurchase the convertible notes and other
debt that may become repayable upon a Change of
Control. See "Description of the convertible
notes -- repurchase at the option of holders."
Risk factors.................. See "Risk Factors" for a discussion of certain
factors that should be considered in evaluating
an investment in the convertible notes.
Use of proceeds............... The selling securityholders will receive all of
the net proceeds from the sale of the offered
securities sold pursuant to this prospectus. We
will not receive any proceeds from sales by the
selling securityholders of the offered
securities.
United States federal tax
considerations............. There are certain federal income tax
considerations associated with purchasing,
holding and disposing of the convertible notes.
See "United States federal tax considerations."
9
<PAGE> 15
RISK FACTORS
Prospective investors should consider carefully all of the information set
forth in this Prospectus and incorporated by reference in this Prospectus. See
"Where you can find more information about us" and "Incorporation of documents
by reference." Prospective investors should particularly evaluate the following
risks before deciding to purchase the convertible notes or the common stock
issuable on conversion of the convertible notes.
OUR SUBSTANTIAL LEVERAGE COULD ADVERSELY AFFECT THE FINANCIAL HEALTH OF THE
COMPANY
We are and, for the foreseeable future will continue to be, highly
leveraged. On September 30, 1998, after giving effect to our acquisition of
Partners and our recent debt financings and the use of proceeds from those
transactions, the accreted value of our total long-term indebtedness, including
our 13% senior redeemable exchangeable preferred stock, was approximately $5.0
billion. This debt represents approximately 90% of our total capitalization. The
indentures governing our outstanding indebtedness do not restrict our ability or
our subsidiaries' ability to incur additional indebtedness. Our ability and the
ability of our subsidiaries to make scheduled payments under present and future
indebtedness will depend on, among other things:
- our ability to complete the build out of our franchises on a timely and
cost effective basis,
- our ability to access the earnings of our subsidiaries (which may be
subject to significant contractual and legal limitations),
- our future operating performance and that of our subsidiaries and
- our ability to refinance our indebtedness when necessary.
Each of these factors is to a large extent subject to economic, financial,
competitive, regulatory and other factors that are beyond our control. See
"-- The anticipated construction costs of our network will increase as a result
of our acquisitions and will require substantial amounts of additional funding,"
"-- Need for additional financing -- we do not expect to generate sufficient
cash flow to repay at maturity the entire principal amount of our outstanding
indebtedness," "-- We cannot be certain as to future network construction
progress and costs" and "-- We are a holding company that is dependent upon cash
flow from our subsidiaries -- our ability to access that cash flow may be
limited in some circumstances."
Future agreements and debt instruments may contain covenants which, among
other things, may require us to:
- maintain certain financial ratios,
- restrict or prohibit the payment of dividends and other distributions to
us by our subsidiaries,
- restrict asset sales and dictate the use of proceeds from the sale of
assets.
Compliance with these restrictions, in combination with our current indebtedness
and holding company structure, could limit our ability to respond to market
conditions or
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<PAGE> 16
meet extraordinary capital needs or otherwise could restrict corporate
activities and the ability of some of our subsidiaries to make payments to us
which might otherwise fund payments due on the notes and our other obligations
as they fall due. We cannot assure you that such restrictions will not adversely
affect our ability to finance our future operations or capital needs, to service
and repay indebtedness including, without limitation, the notes or to engage in
other business activities, such as acquisitions, which may be in our interest.
See "-- We are a holding company that is dependent upon cash flow from our
subsidiaries -- our ability to access that cash flow may be limited in some
circumstances."
The degree to which we are leveraged could have important consequences to
you including the following:
- increasing our vulnerability to adverse changes in general economic
conditions or increases in prevailing interest rates,
- limiting our ability to obtain additional financing for working capital,
capital expenditures, acquisitions and general corporate purposes,
including the build out of the networks in the franchises and the
development and expansion of our business,
- requiring a substantial portion of our cash flow from operations to be
dedicated to debt service requirements, thereby reducing the funds
available for dividends, operations and future business opportunities and
- increasing our exposure to increases in interest rates given that some of
our borrowings may be at variable rates of interest.
In addition, we may under some circumstances be obligated to offer to
repurchase outstanding securities prior to maturity. We cannot assure you that
we will have available financial resources necessary or otherwise be able to
repurchase those securities in such circumstances, including, without
limitation, on the occurrence of a Change of Control Triggering Event.
THE ANTICIPATED CONSTRUCTION COSTS OF OUR NETWORK WILL INCREASE AS A RESULT OF
OUR RECENT ACQUISITIONS AND WILL REQUIRE SUBSTANTIAL AMOUNTS OF ADDITIONAL
FUNDING
Following our recent and proposed acquisitions, our capital expenses and
cost of operations for the development, construction and operation of our
combined telecommunications networks will significantly increase. We intend to
fund a portion of these costs with cash, cash equivalents and marketable
securities and funds generated by the operations of our subsidiaries. However,
given our most recent acquisitions, we estimate that significant amounts of
additional funding will be necessary to meet these capital expenditure
requirements.
We cannot be certain that:
- we will be able to obtain additional financing with acceptable terms,
- actual construction costs will meet our expectations,
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<PAGE> 17
- we will satisfy conditions precedent to advances under future credit
facilities,
- we will not acquire additional businesses that require additional
capital,
- we will be able to generate sufficient cash from operations to meet
capital requirements, debt service and other obligations when required or
- our subsidiaries will withstand exposure to exchange and interest rate
fluctuations.
We do not have any firm additional financing plans to address the factors
enumerated above, except in relation to our new credit facility which we discuss
below.
NEED FOR ADDITIONAL FINANCING -- WE DO NOT EXPECT TO GENERATE SUFFICIENT CASH
FLOW TO REPAY AT MATURITY THE ENTIRE PRINCIPAL AMOUNT OF OUR OUTSTANDING
INDEBTEDNESS
We anticipate that we will not generate sufficient cash flow from
operations to repay at maturity the entire principal amount of our outstanding
indebtedness. Some of the measures we may take to refinance our debt include:
- refinancing all or portions of such indebtedness,
- seeking modifications to the terms of such indebtedness,
- seeking additional debt financing, which may require us to obtain the
consent of some of our lenders, and
- seeking additional equity financing.
We cannot be certain that we will succeed in executing any of these
measures.
ACQUISITIONS ARE SUBJECT TO RISK
We will continue to consider strategic acquisitions and combinations that
involve operators or owners of licenses to operate cable, telephone, television
or telecommunications systems or services and related businesses that operate
principally in the UK. If consummated, some of these transactions would
significantly alter our holdings and might require us to incur substantial
indebtedness or raise additional equity. We cannot assure you that, with respect
to the recent acquisitions of Comcast, ComTel and Eastern and the proposed
Diamond acquisition, as well as future acquisitions, that we:
- will realize any anticipated benefits,
- will successfully integrate the businesses with our operations, or
- will manage such integration without adversely affecting NTL.
The indentures governing our existing indebtedness allow us to assume
additional debt in order to finance the acquisition of either tangible or
intangible assets, licenses and computer software that are used in connection
with a cable business, as well as entities that are directly or indirectly
engaged in a cable business.
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<PAGE> 18
WE ARE A HOLDING COMPANY THAT IS DEPENDENT UPON CASH FLOW FROM OUR
SUBSIDIARIES -- OUR ABILITY TO ACCESS THAT CASH FLOW MAY BE LIMITED IN SOME
CIRCUMSTANCES
We are a holding company that conducts its operations through direct and
indirect wholly-owned subsidiaries and affiliated joint ventures. Consequently,
we hold no significant assets other than our investments in and advances to our
subsidiaries and affiliated joint ventures. We depend upon the receipt of
sufficient funds from our subsidiaries and affiliated joint ventures to meet our
obligations. Additionally, our claim to any distribution of assets following
liquidation of a subsidiary or joint venture is subordinate to the prior senior
claims of any other creditors or direct or indirect owners of those subsidiaries
and joint ventures. The obligations of our subsidiaries which are payable to us
are also subordinate to the claims of the lenders under the new credit facility.
Additionally, the terms of the new credit facility when renegotiated and
the terms of existing and future indebtedness of our subsidiaries may limit the
payment of dividends, loans and other distributions to us. In the absence of a
default, we anticipate that the new credit facility, when we renegotiate it,
will generally permit payments to us to pay the interest and principal of
existing indebtedness.
Each of our subsidiaries that is a Delaware corporation may pay dividends
under Delaware General Corporation Law only out of its surplus or, in the event
that it has no surplus, out of its net profits for that fiscal year or the
immediately preceding fiscal year in which the subsidiary declares the dividend.
Each of our subsidiaries that is a UK corporation may pay dividends under UK law
only out of distributable profits. Under UK law such distributable profits
consist of accumulated, realized profits less previous distributions and
capitalization as well as realized losses that have not been written off in a
reduction or reorganization of capital. Other statutory and general English law
obligations also affect the ability of our subsidiaries to declare dividends and
the ability of our subsidiaries to make payments to us in compliance with inter
company loans. In addition, the UK may impose a withholding tax on payments of
interest and advance corporation tax on distributions by our UK subsidiaries.
Each of our subsidiaries that is a Bermuda corporation may pay dividends subject
to the satisfaction of statutory solvency tests.
The old notes are, and the new notes will be effectively subordinated to
all existing and future indebtedness and other liabilities and commitments of
our subsidiaries, including borrowings under the new credit facility. As of
September 30, 1998, after giving effect to our acquisition of Partners, our
recent debt financings and the use of proceeds from those transactions, the
total liabilities of our subsidiaries were approximately $967 million. In
addition, our subsidiaries may incur additional indebtedness to finance the
construction, capital expenditure and working capital needs of a cable business
and the acquisition of cable assets or the acquisitions of certain entities,
directly or indirectly, engaged in a cable business, if such entities meet some
qualifying criteria. In light of our strategy of continued growth, in part
through acquisitions, we may and our subsidiaries may incur substantial
indebtedness in the future. Borrowings under the new credit facility are, and a
substantial portion of our and
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<PAGE> 19
our subsidiaries' future indebtedness is expected to be, secured by liens and
other security interests over the assets of our subsidiaries and our equity
interests in our subsidiaries. In addition, our ability and, therefore, the
holders of notes, to benefit from distributions of assets of our subsidiaries
may be limited to the extent that the outstanding shares of any of its
subsidiaries and such subsidiary's assets are pledged to secure other debt of
ours or our subsidiaries.
Any right we have to receive assets of any subsidiary upon such
subsidiary's liquidation or reorganization will be structurally subordinated to
the claims of that subsidiary's creditors, except to the extent we are
recognized as an unsubordinated creditor of such subsidiary. However, to the
extent we are so recognized, our claims would still be subject to any security
interests in the assets of such subsidiary and any liabilities of such
subsidiary senior to those held by us and may otherwise be challenged by third
parties in a liquidation or reorganization proceeding. In addition, the new
credit facility requires us to subordinate its right to repayment of
indebtedness outstanding between it and the borrower under such agreement or any
other subsidiary of ours to the rights of the lenders under the agreement. In
particular our rights and other subsidiaries to repayment of principal and
interest lent by them to the borrower or other subsidiaries under the new credit
facility have been and will be subordinated to the rights of the lenders under
the new credit facility pursuant to subordination agreements with such lenders.
Our principal fixed assets are cable headends, cable televisions and
telecommunications distribution equipment, telecommunications switches and
customer equipment, transmission towers, masts and antennas and the sites on
which they are located. These assets are highly specialized and, individually,
may have limited marketability. If secured creditors seize the assets that
secure our debt, these creditors would likely seek to sell the business as a
going concern.
WE HAVE HISTORICALLY INCURRED LOSSES AND GENERATED NEGATIVE CASH FLOWS
We had net losses for
- the nine months ended September 30, 1998 of $336.1 million and
for the years ended December 31,
- 1997: $333.1 million
- 1996: $254.5 million
- 1995: $90.8 million
- 1994: $29.6 million
- 1993: $11.1 million
As of September 30, 1998, our accumulated deficit was $1.1 billion.
Diamond had net (loss) for the nine months ended September 30, 1998 and
1997 and for the years ended December 31, 1997, 1996, 1995, 1994 and 1993 of
L(46.1 million), L(58.8 million), L(76.6 million), L(35.8 million), L(27.6
million), L(8.7 million) and L(2.8 million), respectively. As of September 30,
1998, Diamond's accumulated deficit was L(204.3) million.
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<PAGE> 20
Construction and operating expenditures have resulted in negative cash
flow, which we expect will continue at least until we establish an adequate
customer base. We also expect to incur substantial additional losses. We cannot
be certain that we will achieve or sustain profitability in the future. Failure
to achieve profitability could diminish our ability to sustain operations and
obtain additional required funds. In addition, such a failure would adversely
affect our ability to make required payments on our indebtedness and our
preferred stock.
WE HAVE HISTORICALLY HAD A DEFICIENCY OF EARNINGS TO FIXED CHARGES AND EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
For the nine months ended September 30, 1998 and the years ended December
31, 1997, 1996, 1995, 1994 and 1993, our earnings were insufficient to cover
fixed charges by approximately $351.7 million, $355.4 million, $257.1 million,
$105.4 million, $31.8 million and $10.4 million, respectively. Our earnings for
the nine months ended September 30, 1998 and the year ended December 31, 1997
were insufficient to cover combined fixed charges and preferred stock dividends
by $363.3 million and $367.4 million, respectively. Fixed charges consist of
interest expense, including capitalized interest, amortization of fees related
to debt financing and rent expense deemed to be interest.
WE ARE SUBJECT TO REGULATORY REQUIREMENTS TO MEET BUILD MILESTONES IN THE
CONSTRUCTION OF OUR NETWORK
We hold licences under the Telecommunications Act 1984 and the Broadcasting
Act 1990 which grant exclusive rights to convey and provide cable television
services for the relevant areas subject to obligations as to the number of
premises to which, and the timetable within which, such services must be made
available. The aggregate requirement is to pass approximately 4 million
(excluding Cable London and Diamond) premises over the period up to 2005. This
position is now under review by the regulatory authorities in view of the U.K.
Government's announcement in 1998 that all exclusive franchising would come to
an end by January 1, 2001. We believe we have the necessary resources to satisfy
our build program milestones between now and January 1, 2001, although we cannot
be certain that such obligations will be met. Failure to meet license milestone
requirements, or to modify such requirements may result in revocation of the
relevant licenses.
WE CANNOT BE CERTAIN AS TO FUTURE NETWORK CONSTRUCTION PROGRESS AND COSTS
At September 30, 1998, construction of our network had passed in excess of
57% of our final milestone requirements for all our franchises. Successful
construction and development of the combined network will depend on, among other
things, our ability to:
- continue to design network routes,
- install facilities,
- obtain and maintain any required government licenses or approvals and
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<PAGE> 21
- finance construction and development,
all in a timely manner, at reasonable costs and on satisfactory terms and
conditions. We cannot be certain that the actual costs of network construction
will remain as budgeted.
Our licenses generally require underground construction of our network
through a procedure that is significantly more expensive and time consuming than
the aerial alternative. Underground construction is more expensive because
mechanized installment methods conflict with underground utility infrastructure.
Additionally, we must bear the cost of restoring the surface area when
construction is complete. To date we have been successful in negotiating
favorable construction contracts, but construction costs could increase
significantly over the next few years as existing contracts expire and as demand
for cable construction services grow. We cannot be certain that we will be able
to construct our network in a timely manner or at a reasonable cost.
WE ARE SUBJECT TO SIGNIFICANT COMPETITION IN OUR BUSINESSES
We face significant competition from established and new competitors in the
areas of residential telephony, business telecoms services and cable television.
We believe that competition will intensify in each of these business areas,
particularly business telecommunications.
Residential Telephony. We compete primarily with British
Telecommunications plc in providing telephone services to residential customers.
BT, formerly the only major national public telephone operator in the UK,
occupies an established market position and manages fully built networks with
resources that are substantially greater than ours. According to OFTEL, at March
31, 1997, British Telecommunications serviced nearly 90% of UK residential
telephone exchange line customers. Our growth in telecommunications services
depends upon our ability to appropriate British Telecommunications' customers.
In our view, value-for-money is currently one of the more important
influences on UK customers. Our goal to remain competitive with British
Telecommunications' residential telephony service rates may cause a decline in
our average per-line residential telecommunications revenues, and we may not
achieve desired penetration rates. Consequently, we may experience a decline in
total revenues.
On February 8, 1996, the DTI awarded British Telecommunications and
RadioTEL Systems licences that authorize those companies to operate radio fixed
access services in the 2 GHz band in Scotland, Wales and Northern Ireland. These
licensees create additional competition for the our residential telephony
services in some remote rural areas of our franchise in Northern Ireland.
We also compete with mobile networks, which is a technology that may grow
to be competitive with our other networks, particularly if call charges are
reduced further on the mobile networks. Our radio communications group may
enable us to benefit from growth in the mobile networks technology. We cannot
assure you that we will be able to compete successfully with British
Telecommunications or any other telecommunication operations.
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<PAGE> 22
We believe that we have a competitive advantage in the residential market
because we offer integrated telephone, cable television, telecommunication
services including interactive and on-line services and dual product packages
that are designed to encourage customers to subscribe to multiple services. We
cannot be certain that this perceived competitive advantage will continue.
Indeed, the UK recently announced that British Telecommunications and all other
operators would be permitted to provide and convey cable television services
throughout the UK starting January 1, 2001. In addition, all areas currently
without franchises will open to general competition in the future, and exclusive
franchises will no longer be awarded.
British Sky Broadcasting currently markets telecommunications services on
an indirect access basis (which requires the customer to dial additional digits
before entering the primary telephone number, thus diverting calls onto another
operator's network). In addition, BSkyB has proposed a joint venture with BT,
Midland Bank and Matsushita that is known as British Interactive Broadcasting.
If this joint venture's bid to enter the interactive digital services market
passes review by the competition directorate of the European Commission, we
believe that the resulting combination would provide significant competition.
Business Telecommunications. British Telecommunications is also our
principal competitor in providing business telecommunications services.
Additionally, we compete with Cable & Wireless Communications, Energis
Communications Limited, a subsidiary of the National Grid Company plc, Scottish
Telecom in Scotland and with other companies that have been granted
telecommunications licenses such as WorldCom and Colt, and the new non-network
based resellers, such as Citibell. In the future, we may compete with additional
entrants to the business telecommunications market, such as AT&T U.K.
Competition is based on price range and quality of services, and the Company
expects price competition to intensify if existing and new market entrants
compete aggressively.
Cable television. Our cable television systems compete with direct
reception over-the-air broadcast television, direct-to-home satellite services
and satellite master antenna systems. Additionally, pay television and
pay-per-view services offered by us compete with other communications and
entertainment media, including home video, cinema exhibition of feature films,
live theater and newly emerging multimedia services.
On September 29, 1993, the ITC issued a statement encouraging British
Telecommunications and the other national public telephone operators to provide
"video-on-demand" services under their existing licenses. We expect to face
competition from programming provided by video-on-demand services, including
those provided by public telephone operators with national licenses, as well as
after 2001 from companies which seek to provide cable television services in our
franchises under the recently announced change of government policy.
The Broadcasting Act of 1996 provides for the regulation of digital
terrestrial television that will initially provide an additional 18 or more new
terrestrial channels serving between 60% and 90% of the UK's population. Some of
the channels are reserved for digital simultaneous broadcasting by the existing
terrestrial broadcasters. The
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<PAGE> 23
introduction of digital terrestrial television, as well as digital satellite
television, will provide both additional programming sources as well as
increased competition.
We do not now how developing media may impact the market for cable
television systems. As-of-yet undeveloped technologies may become dominant in
the future and render cable television systems less profitable or even obsolete.
Broadcast Services. In February 1997, the UK Government sold the Home
Service and World Service transmission businesses of the British Broadcasting
Corporation to a consortium led by Castle Tower Corporation. We may encounter
significant competition from this consortium following the expiration of our
current contracts with the Independent Television contractors and Channel 4 and
the Welsh Fourth Channel for the provision of transmission services.
WE HAVE LIMITED ACCESS TO PROGRAMMING WHICH MAY AFFECT THE COMPETITIVENESS OF
OUR CABLE TELEVISION SERVICES
The competitiveness of our cable television services depends on our access
to programming at a reasonable cost. Like many other cable operators, we obtain
most of our programming through unofficial arrangements with BSkyB and other
programming suppliers. BSkyB is currently the most important supplier of cable
programming and the exclusive supplier of certain programming. BSkyB provides
the industry with a range of programming, including the most popular mainstream
premium movie channels available in the UK and, currently, exclusive English
premier league soccer games. BSkyB also competes with us by operating a direct
to home satellite service that provides programming, including programming that
is also offered by us, to approximately 4 million subscribers in the UK. BSkyB's
programming is crucial in attracting and retaining cable television subscribers
and, in the absence of more alternative programming sources, BSkyB may raise
prices for its programming without significant competitive pricing pressure.
To date, we have not had a formal contract with BSkyB, although we have
discussed entering such an agreement for some time. We cannot be certain that we
will reach a definitive agreement with BSkyB, that the terms of such agreement
will improve our current arrangement, or that BSkyB will continue to supply
programming to us on reasonable commercial terms. Moreover, we have not, to
date, entered into written contracts with many of our other program suppliers.
The loss of BSkyB or other programming, a deterioration in the perceived quality
of BSkyB or other programming, or a material increase in the price that we must
pay for BSkyB or other programming could have a material adverse effect on us.
OUR PRINCIPAL BUSINESSES ARE SUBJECT TO GOVERNMENT REGULATION WHICH MAY CHANGE
ADVERSELY TO US
Our principal business activities in the UK are regulated and supervised by
various governmental bodies that include the ITC, the Department of Culture,
Media and Sport, the Radio Communications Agency, the Radio Authority and OFTEL
under the directions of the Director General and the DTI on behalf of The
Secretary of State for
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<PAGE> 24
Trade and Industry. Changes in laws, regulations or governmental policy or the
interpretations of such laws or regulations affecting our activities and those
of our competitors, such as licensing requirements, changes in price regulation
and deregulation of interconnection arrangements, could have a material adverse
effect on us.
Specifically, the prices that we may charge the ITV companies, Channel 4
and Welsh Fourth Channel, for television transmission services are subject to
price controls imposed by the OFTEL. On December 24, 1996, the Director General
of OFTEL issued a formal modification to our Telecommunications Act License to
address the new price control for the television transmission services that we
provide to the ITV companies, Channel 4 and Welsh Fourth Channel. Under the new
arrangements, our total revenues receivable for such services (excluding certain
insignificant items) can not exceed L53.15 million in 1997 and, through 2002,
they will be adjusted annually by the Retail Prices Index minus 4%. These price
controls may be reviewed again prior to 2002 and price controls for the year
following December 31, 2002 may have a material adverse effect on the revenues
receivable from the ITV companies, Channel 4 and Welsh Fourth Channel.
As a UK company we are subject to regulatory initiatives of the European
Commission. Changes in EU Directives, particularly television "production" and
"programming" quotas, may reduce the range of programing and increase the costs
of purchasing television programming. In addition, EU Directives may introduce
provisions that require us to provide access to our cable network infrastructure
to other service providers.
OUR BROADCAST SERVICES BUSINESS IS DEPENDENT UPON SITE SHARING ARRANGEMENT
As a result of, among other factors, a natural shortage of potential
transmission sites and the difficulties in obtaining planning permission for
erection of further masts, CTI and NTL have made arrangements to share a large
number of sites. Under the present arrangements, one of the parties is the
owner, lessee or licensee of each site and the other party is entitled to
request a license to use certain facilities at that site. Each site license
granted pursuant to the site sharing agreement is for an initial period expiring
on December 31, 2005, subject to title and to the continuation in force of the
site sharing agreement. Each site sharing agreement provides that, if requested
by the sharing party, it will be extended for further periods. Either party may
terminate the agreement by 5 years' notice in writing to the other expiring on
December 31, 2005 or at any date which is a date 10 years or a multiple of 10
years after December 31, 2005. Although we do not anticipate that the site
sharing agreement or the site licenses will be terminated, we cannot assure you
that such a termination will not occur. Termination of the site sharing
arrangements would have a material adverse effect on our business.
OUR BROADCAST SERVICES BUSINESS IS DEPENDENT UPON ITV AND OTHER CONTRACTS
Our broadcast services business is substantially dependent upon contracts
with the ITV contractors, Channel 4/Welsh Fourth Channel and Vodafone for the
provision of transmission services. The prices that we may charge these
companies for television transmission services are subject to regulation by
OFTEL. See "-- Our principal
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businesses are subject to government regulation which may change adversely to
us." The contracts with the ITV contractors and Channel 4/Welsh Fourth Channel
terminate on December 31, 2002. Although, historically, the ITV contractors and
Channel 4/Welsh Fourth Channel have renewed their contracts with us, we cannot
assure you that they will do so upon expiration of the current contracts, that
they will not negotiate terms for our provision of transmission services on a
basis less favorable to us or that they would not seek to obtain from third
parties a portion of the transmission services currently provided by us. The
loss of any one of these contracts could have a material adverse effect on us.
MANAGEMENT OF GROWTH AND EXPANSION
We have experienced rapid growth and development in a relatively short
period, and we plan to meet our strategic objectives and regulatory milestones.
Management of such growth will require, among other things, stringent control of
construction and other costs, continued development of our financial and
management controls, increased marketing activities and the training of new
personnel. Failure to manage our rapid growth and development successfully could
have a material adverse effect on us.
WE ARE DEPENDENT UPON A SMALL NUMBER OF KEY PERSONNEL
A small number of key executive officers manage our businesses, and the
loss of one or more of them could have a material adverse effect on us. We
believe that our future success will depend in large part on our continued
ability to attract and retain highly skilled and qualified personnel. We have
not entered into written employment contracts or non-compete agreements with,
nor have we obtained life insurance policies covering, such key executive
officers. Some of our senior managers also serve as members of senior management
of other companies in the telecommunications business.
THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGES AND WE
CANNOT PREDICT THE EFFECT OF SUCH CHANGES ON OUR BUSINESSES
The telecommunications industry is subject to rapid and significant changes
in technology and the effect of technological changes on our businesses cannot
be predicted. However, the cost of implementation for emerging and future
technologies could be significant, and our ability to fund such implementation
may depend on our ability to obtain additional financing.
WE ARE SUBJECT TO CURRENCY RISK TO THE EXTENT WE OBTAIN FINANCING IN US DOLLARS
BUT INCUR EXPENSES IN POUNDS STERLING
To the extent that we obtain financing in United States dollars and incur
construction and operating expenses in British pounds sterling, we will
encounter currency exchange rate risks. In addition, we generate revenues
primarily in British pounds sterling while we pay interest and principal
obligations with respect to most of our existing indebtedness in United States
dollars. We have entered into an option agreement to hedge some of the risk of
exchange rate fluctuations related to debt service and corporate expenses. While
we may consider entering into additional transactions to
20
<PAGE> 26
hedge the risk of exchange rate fluctuations, we cannot be certain that we will
engage in such transactions; or, if we do, that those transactions will be
successful and that shifts in the currency exchange rates will not have a
material adverse effect on us.
WE HAVE LIMITED INSURANCE COVERAGE OF OUR NETWORK
We obtain insurance of the type and in the amounts that we believe are
customary in the UK for similar companies. Consistent with this practice, we do
not insure the underground portion of our cable network. Any catastrophe that
affects a significant portion of a system's underground cable network could
result in substantial uninsured losses.
ANTI-TAKEOVER MATTERS
Certain provisions of the indenture and the indentures governing the senior
notes and our outstanding 7% convertible subordinated notes due 2008, the
"existing convertible notes", may have the effect of delaying or preventing
transactions involving a Change of Control of NTL, including transactions in
which stockholders might otherwise receive a possible substantial premium for
their shares over then current market prices, and may limit the ability of
stockholders to approve transactions that they may deem to be in their best
interest.
A Change of Control would require us to make an offer to purchase all the
convertible notes and the existing convertible notes and may require us or our
subsidiaries to offer to repurchase other indebtedness under existing or future
agreements governing such indebtedness, including, in certain circumstances, the
senior notes. As a consequence, a Change of Control may require us to refinance
substantial amounts of our indebtedness and would impose other significant
obligations on us. Our inability to purchase all or some of the convertible
notes tendered for purchase, would also constitute an event of default under the
indenture and the indentures governing the senior notes and the existing
convertible notes, which would have certain adverse consequences to us and
holders of the convertible notes.
Our Restated Certificate of Incorporation, as amended and presently in
effect, contains certain provisions which may have the effect, alone or in
combination with each other or with the existence of authorized but unissued
common stock and any series of preferred stock, of precluding or rendering more
difficult a hostile takeover, making it more difficult to remove or change the
composition of our incumbent Board of Directors and our officers, being adverse
to stockholders who desire to participate in a tender offer and depriving
stockholders of possible opportunities to sell their shares at temporarily
higher prices. See "Description of Capital Stock -- Certain Special Provisions."
In particular, the rights issuable pursuant to our stockholder rights plan have
certain anti-takeover effects as they will cause substantial dilution to a
person or group that acquires a substantial interest NTL without the prior
approval of our Board of Directors. The effect of such rights may be to inhibit
a change in control of NTL, including through a third party tender offer at a
price which reflects a premium to then prevailing trading prices, that may be
beneficial to our stockholders. See "Description of capital stock --
21
<PAGE> 27
NTL rights agreement." Under the Restated Certificate of Incorporation, holders
of common stock and holders of the series A junior Participating Preferred
Stock, the "rights preferred stock", issued upon exercise of such rights
generally vote as a class, with each share of common stock being entitled to one
vote per share and each share of rights preferred stock being entitled to 100
votes per share. As a result of the provisions of the Restated Certificate of
Incorporation and the ownership of NTL, no change of control requiring
stockholder approval is possible without the consent of the owners of the rights
preferred stock.
THE INSTRUMENTS GOVERNING SOME OF OUR INDEBTEDNESS IMPOSE LIMITATIONS ON OUR
ABILITY TO PAY DIVIDENDS
The indentures governing the senior notes impose certain limitations on the
payment of dividends. Our ability to pay cash dividends on our equity securities
including the common stock and to make other "Restricted Payments" is limited
under the indentures governing the senior notes to the sum of (i) the difference
between Cumulative EBITDA (as defined in the indentures governing the senior
notes) and 1.5 times Cumulative Interest Expense (also as defined in the
indentures governing the Senior Notes) plus (ii) net proceeds from the sale of
capital stock (excluding the proceeds of our offering of 10 million shares of
common stock in October 1993). Further, the terms of the new credit facility
restrict, and the terms of other future indebtedness of our subsidiaries may
(subject to the terms of the indentures governing the senior notes) restrict,
the ability of certain of our subsidiaries to distribute earnings to NTL or make
other payments to us. See "-- We are a holding company that is dependent upon
cash flow from our subsidiaries. Our ability to access that cash flow may be
limited in some circumstances" above. We have never paid cash dividends on our
common stock. In addition, the payment of any dividends by us in the future will
be at the discretion of our Board of Directors and will depend upon, among other
things, future earnings, operations, capital requirements, our general financial
condition and the general financial condition of our subsidiaries and general
business conditions. See "-- We have historically incurred losses and generated
negative cash flows" and "Dividend policy."
THE MARKET PRICE OF THE COMMON STOCK AND THE CONVERTIBLE NOTES IS SUBJECT TO
VOLATILITY
The market price of the common stock has been subject to volatility and, in
the future, the market price of the common stock and the convertible notes could
be subject to wide fluctuations in response to numerous factors, many of which
are beyond our control. These factors include, among other things, actual or
anticipated variations in our operating results, our earnings releases and our
competitors' earnings releases, announcements of technological innovations,
changes in financial estimates by securities analysts, market conditions in the
industry and the general state of the securities markets, governmental
legislation or regulation, currency and exchange rate fluctuations, as well as
general economic and market conditions, such as recessions.
22
<PAGE> 28
LACK OF PUBLIC MARKET FOR THE CONVERTIBLE NOTES
There has been no public market for the convertible notes prior to the
offering of the convertible notes in December 1998. The registration rights
agreement does not obligate us to keep the registration statement of which this
prospectus forms a part effective beyond the second anniversary of the date of
issuance of the convertible notes. Although the initial purchasers have advised
us that they currently intend to make a market in the convertible notes, they
are not obligated to do so and any such market making may be discontinued at any
time without notice. Accordingly, there can be no assurance as to the ongoing
development or liquidity of any market that may develop for the convertible
notes.
FORWARD-LOOKING STATEMENTS
This Prospectus includes or incorporates by reference certain projections
of broadcast transmission revenues, build-out results and other forward-looking
statements, including those using words such as "believe," "anticipate,"
"should," "intend," "plan," "will," "expects," "estimates," "projects,"
"positioned," "strategy," and similar expressions; in reviewing such information
it should be kept in mind that actual results may differ materially from those
in such projections and forward-looking statements. Important assumptions and
factors that could cause actual results to differ materially from those
contemplated or projected, forecast, estimated or budgeted in or expressed or
implied by such projections and forward-looking statements include those
specified in this Risk Factors section, as well as industry trends, our ability
to continue to design network routes, install facilities, obtain and maintain
any required government licenses or approvals and finance construction and
development, all in a timely manner, at reasonable costs and on satisfactory
terms and conditions, as well as assumptions about customer acceptance, churn
rates, overall market penetration and competition from providers of alternative
services, and availability, terms and deployment of capital. We assume no
obligation to update projections or other forward-looking statements to reflect
actual funding requirements, capital expenditures and results, changes in
assumptions or in the factors affecting such projections or other
forward-looking statements. There can be no assurance that:
- any financings will be obtained when required, on acceptable terms or at
all;
- actual amounts required to complete our planned build out will not exceed
the amount we estimate (see "-- We cannot be certain as to future network
construction progress and costs") or that additional financing
substantially in excess of that amount will not be required;
- we will not acquire franchises, licenses or other new businesses that
would require additional capital;
- operating cash flow will meet expectations or that we will be able to
access such cash from its subsidiaries' operations to meet any unfunded
portion of its capital requirements when required or to satisfy the terms
of the notes, or our other debt instruments and agreements for the
incurrence of additional debt financing (see
23
<PAGE> 29
"-- We are a holding company that is dependent upon cash flow from our
subsidiaries -- our ability to access that cash flow may be limited in
some circumstances");
- Our subsidiaries will not incur losses from their exposure to exchange
rate fluctuations or be adversely affected by interest rate fluctuations
(see "-- We are subject to currency risk to the extent we obtain
financing in U.S. dollars but incur expenses in pounds sterling");
- there will not be adverse changes in applicable United States, United
Kingdom or Bermuda tax laws; or
- the effects of monetary union in Europe, when achieved, will not be
materially adverse to us.
All forward-looking statements included or incorporated by reference in this
prospectus are expressly qualified by the foregoing.
24
<PAGE> 30
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the sale
of the securities sold pursuant to this prospectus. We will not receive any of
the proceeds from sales by the selling securityholders of the offered
securities.
EXCHANGE RATES
The following table sets forth, for the periods indicated, the Noon Buying
Rate for pounds sterling expressed in U.S. dollars per Ll.00.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, PERIOD END AVERAGE(1) HIGH LOW
- ----------------------- ---------- ---------- ----- -----
<S> <C> <C> <C> <C>
1988.......................................... $1.81 $1.78 $1.91 $1.66
1989.......................................... 1.61 1.63 1.82 1.51
1990.......................................... 1.93 1.79 1.98 1.59
1991.......................................... 1.87 1.76 2.00 1.60
1992.......................................... 1.51 1.76 2.00 1.51
1993.......................................... 1.48 1.50 1.59 1.42
1994.......................................... 1.57 1.53 1.64 1.46
1995.......................................... 1.55 1.58 1.64 1.53
1996.......................................... 1.71 1.56 1.72 1.49
1997.......................................... 1.65 1.64 1.71 1.56
1998.......................................... 1.66 1.66 1.72 1.61
1999 (through February 4)..................... 1.64 1.65 1.66 1.63
</TABLE>
- ---------------
(1) The average of the noon buying rates on the last day of each month during
the relevant period.
25
<PAGE> 31
PRICE RANGE OF COMMON STOCK
Our common stock is quoted and traded on the Nasdaq National Market System
under the symbol "NTLI." From October 14, 1993 through March 26, 1997, our
common stock was quoted and traded on the Nasdaq National Market System under
the symbol "ICTL." The following table sets forth, for the periods indicated,
the high and low reported sales prices per share of common stock as reported on
the Nasdaq National Market System.
<TABLE>
<CAPTION>
NTL
--------------
COMMON STOCK
--------------
HIGH LOW
---- ----
<S> <C> <C>
1996
First Quarter............................................. $ 30 1/8 $ 21 5/8
Second Quarter............................................ 34 1/8 27 3/4
Third Quarter............................................. 30 22 5/8
Fourth Quarter............................................ 28 1/4 22 5/8
1997
First Quarter............................................. $ 26 3/4 $ 18 1/8
Second Quarter............................................ 27 1/4 19
Third Quarter............................................. 27 7/8 20 1/8
Fourth Quarter............................................ 29 3/8 25 1/4
1998
First Quarter............................................. $ 45 3/4 $ 26 3/4
Second Quarter............................................ 54 35 3/4
Third Quarter............................................. 65 35 1/2
Fourth Quarter............................................
1999
First Quarter (through February 4, 1999).................. $ 83 1/8 $ 53 3/4
</TABLE>
The market price of shares of our common stock are subject to fluctuation.
As a result, you are urged to obtain current market quotations. On February 9,
1999, the last reported sales price per share of common stock, as reported on
the Nasdaq National Market System, was $74 3/4. As of February 9, 1999 there
were approximately 580 recordholders of common stock. This figure does not
reflect beneficial ownership of shares held in nominee name.
DIVIDEND POLICY
Since our inception, we have not declared or paid any cash dividends on our
common stock. We currently intend to retain our earnings for future growth and,
therefore, does not anticipate paying cash dividends in the foreseeable future.
26
<PAGE> 32
CAPITALIZATION
The following table sets forth our capitalization as of September 30, 1998
and as adjusted for
(1) our acquisition of Partners, (including the sale by Partners of its
interest in Birmingham Cable Corporation Limited and the application of
the proceeds from that transaction before the completion of the
acquisition),
(2) the redemption of our 10 7/8% notes on October 15, 1998,
(3) the offering of our 11 1/2% notes and the application of the net
proceeds from that transaction of approximately $607 million,
(4) the offering of our 12 3/8% notes and the application of the net
proceeds from that transaction of approximately $242 million and
(5) the offering of the convertible notes in December 1998 and the
application of the net proceeds from that transaction of approximately
$583 million (clauses (2), (3), (4) and (5) are collectively referred
to in this prospectus as the "recent financings").
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1998
-----------------------------
ACTUAL AS ADJUSTED
-------------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and marketable securities............ $ 597,769 $ 1,319,362
========== ===========
Short term debt:
10 7/8% Notes Due 2003(1)................................. $ 148,781 $ --
Partners' 9% Note Payable to Comcast...................... -- 20,450
Current portion of long-term debt......................... -- 3,298
---------- -----------
Total short-term debt............................. $ 148,781 $ 23,748
========== ===========
Long-term debt:
12 3/8% Deferred Coupon Notes Due 2008.................... $ -- $ 249,773
11 1/2% Notes Due 2008.................................... -- 625,000
9 1/2% Notes Due 2008(2).................................. 211,693 211,693
10 3/4% Deferred Coupon Notes Due 2008.................... 316,445 316,445
9 3/4% Deferred Coupon Notes Due 2008..................... 845,172 845,172
10% Notes Due 2007........................................ 400,000 400,000
11 1/2% Deferred Coupon Notes Due 2006.................... 809,150 809,150
12 3/4% Deferred Coupon Notes Due 2005.................... 229,652 229,652
7% Convertible Subordinated Notes Due 2008................ -- 600,000
7% Convertible Subordinated Notes Due 2008................ 275,000 275,000
New Credit Facility....................................... 798,377 --
Partners' 11.20% Discount Debentures Due 2007............. -- 410,230
Partners' Other........................................... -- 8,850
---------- -----------
Total long-term debt.............................. 3,885,489 4,980,965
---------- -----------
Senior redeemable exchangeable preferred stock, par value
$0.01 per share, plus accreted dividends; liquidation
preference $121,000,000; 121,000 shares issued and
outstanding............................................... 120,044 120,044
Shareholders' equity (deficiency):
Series preferred stock, $0.01 par value, 10,000,000 shares
authorized; 125,000 shares issued and outstanding...... 1 1
Common stock, $0.01 par value, 400,000,000 shares
authorized, 41,392,000 shares (actual) and 60,092,000
shares (as adjusted) issued and outstanding(3)(4)...... 414 601
Additional paid-in capital(3)............................. 844,368 1,452,661
Accumulated other comprehensive income.................... 184,115 184,115
(Deficit)(1)(5)........................................... (1,053,157) (1,080,572)
---------- -----------
Total shareholders' equity (deficiency)........... (24,259) 556,806
---------- -----------
Total capitalization........................................ $3,981,274 $ 5,657,815
========== ===========
</TABLE>
27
<PAGE> 33
- ---------------
(1) We redeemed all of the outstanding 10 7/8% Notes on October 15, 1998 using
cash on deposit with the trustee. We recorded an extraordinary loss from the
early extinguishment of debt of approximately $7.9 million as a result of
the redemption.
(2) Net of unamortized discount of $669,000.
(3) In October 1998, we issued approximately 18,700,000 shares of our common
stock in connection with the completion of the acquisition of Partners.
(4) Does not include an aggregate of 35,715,000 shares of common stock,
consisting of:
(1) 15,773,000 shares of common stock subject to options;
(2) 697,000 shares of common stock subject to warrants;
(3) approximately 2,821,000 shares of common stock issuable upon the
conversion of preferred stock;
(4) 7,261,000 shares of common stock issuable upon conversion of our
existing Convertible Notes; and
(5) 9,796,000 shares of common stock initially issuable upon conversion of
our new Convertible Notes.
(5) In October 1998, we recorded an extraordinary loss from the early
extinguishment of debt of approximately L11.5 million ($20 million) as a
result of the repayment of the new credit facility using the proceeds from
the sale of the 11 1/2% old notes and the 12 3/8% old notes.
28
<PAGE> 34
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of and for the
years ended December 31, 1993, 1994, 1995, 1996 and 1997 have been derived from
our consolidated financial statements and the related notes. The selected
consolidated financial data and balance sheet data as of and for the nine months
ended September 30, 1998 and the selected consolidated financial data for the
nine months ended September 30, 1997 have been derived from our unaudited
consolidated financial statements and the related notes included in this
prospectus, which we believe include all adjustments necessary for a fair
presentation of our financial condition and results of operations for such
periods. The results of operations for interim periods are not necessarily
indicative of the results for a full year's operations. You should read the
following information in conjunction with "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business," the Consolidated Financial Statements of the Company and the related
notes and the other financial data appearing in or incorporated by reference
into this prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------------------------
1998 1997 1997 1996(1) 1995 1994 1993
--------- --------- --------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues............. $ 484,590 $ 348,373 $ 491,775 $ 228,343 $ 33,741 $ 13,745 $ 10,078
(Loss) before extraordinary
item......................... (331,866) (256,792) (328,557) (254,454) (90,785) (29,573) (11,076)
Net (loss)..................... (336,105) (256,792) (333,057) (254,454) (90,785) (29,573) (11,076)
Basic and diluted net (loss)
per common share:
(Loss) before extraordinary
item(2)...................... (9.17) (8.26) (10.60) (8.20) (3.01) (.98) (.83)
Net (loss) per common
share(2)..................... (9.29) (8.26) (10.74) (8.20) (3.01) (.98) (.83)
Weighted average number of
common shares used in the
computation of basic and
diluted net loss per common
share(2)..................... 37,436 32,101 32,117 31,041 30,190 30,175 13,327
Ratio of earnings to fixed
charges(3)................... -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, AS OF DECEMBER 31,
------------- ----------------------------------------------------------
1998 1997 1996(1) 1995 1994 1993
------------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency)........ $ 350,878 $ (52,344) $ 242,102 $ 76,128 $251,544 $410,421
Fixed assets, net................... 3,134,655 1,756,985 1,459,528 639,674 191,725 36,422
Total assets........................ 4,622,238 2,421,639 2,454,611 1,010,669 664,366 594,976
Long-term debt...................... 3,885,489 2,015,057 1,732,168 513,026 143,488 130,553
Senior Redeemable Exchangeable
Preferred Stock................... 120,044 108,534 -- -- -- --
Shareholders' equity (deficiency)... (24,259) (61,668) 328,114 339,257 436,534 452,402
</TABLE>
- ---------------
(1) In May 1996, NTL purchased NTL Group Limited for an aggregate purchase price
of approximately $439 million, including goodwill of approximately $263
million.
29
<PAGE> 35
The net assets and results of operations of NTL Group Limited are included
in the consolidated financial statements from the date of the acquisition.
(2) After giving retroactive effect to the four-for-three stock split by way of
stock dividend paid in August 1995.
(3) Fixed charges consist of interest expense, including capitalized interest,
amortization of fees related to debt financing and rent expense deemed to be
interest. The fixed charges coverage deficiency amounted to $357.1 million,
$355.4 million, $257.1 million, $105.4 million, $31.8 million and $10.4
million for the nine months ended September 30, 1998 and for the years ended
December 31, 1997, 1996, 1995, 1994 and 1993, respectively. For the nine
months ended September 30, 1998 and for the year ended December 31, 1997,
our earnings were insufficient to cover combined fixed charges and preferred
stock dividends by $363.3 million and $367.4 million.
We did not declare or pay any cash dividends during the years indicated.
30
<PAGE> 36
DESCRIPTION OF THE CONVERTIBLE NOTES
GENERAL
The convertible notes were issued under an indenture dated as of December
16, 1998, by and between the Company and The Chase Manhattan Bank, as trustee.
The indenture and the registration rights agreement are filed as exhibits to the
registration statement of which this prospectus forms a part. The following
summary of selected provisions of the convertible notes, the indenture and the
registration rights agreement is not complete and is qualified in its entirety
by reference to the provisions of the convertible notes, the indenture and the
registration rights agreement, including the definitions in the indenture of
some of the terms used below. The definitions of some terms used in the
following summary are set forth below under "-- Certain definitions." The term
"Company" refers to NTL Incorporated and not any of its subsidiaries.
The convertible notes are general unsecured obligations of the Company,
subordinated in right of payment to all existing and future senior debt of the
Company as described under "-- Subordination of Convertible Notes" and
convertible into common stock as described under "-- Conversion." The
convertible notes rank pari passu in right of payment to the existing
convertible notes. The indenture does not contain any financial covenants or
restrictions on the payment of dividends, the incurrence of senior debt or
issuance or repurchase of securities of the Company. The indenture contains no
covenants or other provisions to afford protection to holders of the convertible
notes in the event of a highly leveraged transaction or a change in control of
the Company except to the extent described under "-- Repurchase at the Option of
Holders."
The operations of the Company are conducted through its subsidiaries,
partnerships and joint ventures and, therefore, the Company is dependent upon
the cash flow of its subsidiaries, partnerships and affiliated joint ventures to
meet its obligations, including its obligations under the convertible notes. As
a result, the convertible notes are effectively subordinated to all existing and
future liabilities of the Company's subsidiaries, partnerships and affiliated
joint ventures, including trade payables.
PRINCIPAL, MATURITY AND INTEREST
The convertible notes are limited to $600,000,000 aggregate principal
amount. The convertible notes bear interest from the date of original issuance,
at the rate per annum set forth on the cover page of this prospectus and mature
on December 15, 2008.
Interest on the convertible notes is payable semiannually on June 15 and
December 15 of each year (each an "Interest Payment Date"), commencing on June
15, 1999, to holders of record at the close of business on June 1 or December 1
(each a "Regular Record Date") immediately preceding such Interest Payment Date.
Interest is computed on the basis of a 360-day year comprised of twelve 30-day
months.
Interest on the convertible notes accrues from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
original issuance.
31
<PAGE> 37
The convertible notes are payable both as to principal interest and
Liquidated Damages, if any, at the office or agency of the Company maintained
for such purpose within the City and State of New York or, at the option of the
Company, payment of interest may be made by check mailed to the holders of the
convertible notes at their respective addresses set forth in the register of
holders of convertible notes (provided that a holder of convertible notes with
an aggregate principal amount in excess of $5,000,000 will be paid by wire
transfer in immediately available funds at the election of such holder if such
holder previously specified in writing to the Company and the paying agent wire
transfer instructions). Until otherwise designated by the Company, the Company's
office or agency in New York will be the office of the Trustee maintained for
such purpose. The convertible notes were issued in registered form, without
coupons, and in denominations of $1,000 and integral multiples thereof.
OPTIONAL REDEMPTION
Except as referred to herein under "-- Optional tax redemption," the
convertible notes are redeemable, in whole or from time to time in part (in any
integral multiple of $1,000), at the option of the Company at any time on or
after December 15, 2001, at the following redemption prices (expressed as
percentages of the principal amount set forth below), upon not less than 30 nor
more than 60 days' prior notice, if redeemed during the 12-month period
beginning December 15 of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2001...................................................... 104.375%
2002...................................................... 103.500
2003...................................................... 102.625
2004...................................................... 101.750
2005...................................................... 100.875
2006 and thereafter....................................... 100.000%
</TABLE>
In the case of a redemption of any convertible notes referred to under
"-- Optional Tax Redemption," redemption of such convertible notes shall be made
at the principal amount thereof together with accrued and unpaid interest and
Liquidated Damages, if any, to the applicable redemption date.
OPTIONAL TAX REDEMPTION
The convertible notes may be redeemed at the option of the Company, in
whole but not in part, upon not less than 30 nor more than 60 days' prior
notice, at any time at a redemption price equal to the principal amount thereof
together with accrued and unpaid interest to the date fixed for redemption if
after the date on which the provisions described under "-- Additional Amounts"
become applicable (the "Relevant Date") there has occurred any change in or
amendment to the laws (or any regulations or official rulings promulgated
thereunder) of the United Kingdom, the Netherlands, Netherlands Antilles,
Bermuda or the Cayman Islands, (or any political subdivision or taxing authority
thereof or therein), or any change in or amendment to the official application
or interpretation of such laws, regulations or rulings (a "Change in Tax Law")
which becomes effective after the Relevant Date, as a result of which the
32
<PAGE> 38
Company is or would be so required on the next succeeding Interest Payment Date
to pay Additional Amounts with respect to the Convertible Notes with respect to
withholding taxes imposed by the United Kingdom, the Netherlands, Netherlands
Antilles, Bermuda or the Cayman Islands, (or any political subdivision or taxing
authority thereof or therein)(a "Withholding Tax") and such Withholding Tax is
imposed at a rate that exceeds the rate (if any) at which Withholding Tax was
imposed on the Relevant Date; provided, however, that
(1) this paragraph shall not apply to the extent that, at the Relevant
Date it was known or would have been known had professional advice of a
nationally recognized accounting firm in the United Kingdom, the
Netherlands, Netherlands Antilles, Bermuda or the Cayman Islands, as the
case may be, been sought, that a Change in Tax Law in the United Kingdom,
the Netherlands, Netherlands Antilles, Bermuda or the Cayman Islands, was
to occur after the Relevant Date,
(2) no such notice of redemption may be given earlier than 90 days
prior to the earliest date on which the Company would be obliged to pay
such Additional Amounts were a payment in respect of the Convertible Notes
then due,
(3) at the time such notice of redemption is given, such obligation to
pay such Additional Amounts remains in effect and
(4) the payment of such Additional Amounts cannot be avoided by the use
of any reasonable measures available to the Company.
The convertible notes may also be redeemed, in whole but not in part, at
any time at a redemption price equal to the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, to the date fixed
for redemption if the person formed after the Relevant Date by a consolidation,
amalgamation, reorganization or reconstruction (or other similar arrangement) of
the Company or the person into which the Company is merged after the Relevant
Date or to which the Company conveys, transfers or leases its properties and
assets after the Relevant Date substantially as an entirety (collectively, a
"Subsequent Consolidation") is required, as a consequence of such Subsequent
Consolidation and as a consequence of a Change in Tax Law in the United Kingdom,
the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands
occurring after the date of such Subsequent Consolidation to pay Additional
Amounts with respect to Withholding Tax on the Convertible Notes and such
Withholding Tax is imposed at a rate that exceeds the rate (if any) at which
Withholding Tax was or would have been imposed on the date of such Subsequent
Consolidation; provided, however, that this paragraph shall not apply to the
extent that, at the date of such Subsequent Consolidation it was known or would
have been known had professional advice of a nationally recognized accounting
firm in the United Kingdom been sought, that a Change in Tax Law in the United
Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman
Islands was to occur after such date. The Company will also pay, or make
available for payment, to holders on the redemption date any Additional Amounts
(as described, but subject to the exceptions referred to, under "Additional
Amounts") resulting from the payment of such redemption price.
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MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders," the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the convertible notes.
REPURCHASE AT THE OPTION OF HOLDERS
Upon the occurrence of a Change of Control, each holder of convertible
notes shall have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such holder's Convertible
Notes pursuant to the offer described below (the "Change of Control Offer") at a
purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the Change of Control
Payment Date (the "Change of Control Payment"). Within 40 days following any
Change of Control, the Company shall mail a notice to each holder stating:
(1) that the Change of Control Offer is being made pursuant to the
covenant entitled "Change of Control" and that all Convertible Notes
tendered will be accepted for payment;
(2) the purchase price and the purchase date, which shall be no earlier
than 30 days nor later than 40 days from the date such notice is mailed
(the "Change of Control Payment Date");
(3) that any convertible notes not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in the payment of the Change of
Control Payment, all convertible notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that holders electing to have any convertible notes purchased
pursuant to a Change of Control Offer will be required to surrender the
convertible notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the convertible notes completed, to the Paying
Agent at the address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control Payment Date;
(6) that holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the principal amount of convertible notes delivered for purchase,
and a statement that such holder is withdrawing his election to have such
convertible notes purchased; and
(7) that holders whose convertible notes are being purchased only in
part will be issued new convertible notes equal in principal amount to the
unpurchased portion of the convertible notes surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral multiple
thereof.
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The Company will comply with the requirements of Rules 13e-4 and 14e-1
under the Securities Exchange Act of 1934, as amended, and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the convertible notes in
connection with a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful,
(1) accept for payment convertible notes or portions thereof tendered
pursuant to the Change of Control Offer,
(2) deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all convertible notes or portions thereof so
tendered and
(3) deliver or cause to be delivered to the Trustee the convertible
notes so accepted together with an officers' certificate stating the
convertible notes or portions thereof tendered to the Company. The paying
agent shall promptly mail to each holder of convertible notes so accepted
for payment (or, if such holder of convertible notes holds an aggregate
principal amount in excess of $5,000,000 will be paid by wire transfer in
immediately available funds at the election of such holder if such holder
previously specified in writing to the Company and the paying agent) an
amount equal to the purchase price for such convertible notes, and the
trustee shall promptly authenticate and mail to each holder a new
convertible note equal in principal amount to any unpurchased portion of
the convertible notes surrendered, if any; provided that each such new
convertible note shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
Except as described above with respect to a Change of Control, the
indenture does not contain any other provisions that permit the holders of the
convertible notes to require that the Company repurchase or redeem the
convertible notes in the event of a takeover, recapitalization or similar
restructuring. Although the indenture contains several covenants, including the
provision described under "-- Merger, Consolidation or Sale of Assets" below,
the provisions of the indenture may not necessarily afford holders of the
convertible notes protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company that may adversely affect the holders of the convertible notes.
The Change of Control Offer requirement of the convertible notes may in
certain circumstances make more difficult or discourage a takeover of the
Company, and, thus, the removal of incumbent management. The Change of Control
Offer requirement, however, is not the result of management's knowledge of any
specific effort to accumulate the Company's stock or to obtain control of the
Company by means of a merger, tender offer, solicitation or otherwise, or part
of a plan by management to adopt a series of antitakeover provisions. Instead,
the Change of Control Offer requirement is a result of negotiations between the
Company and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it
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is possible that the Company would decide to do so in the future. Subject to the
limitations discussed below, the Company could, in the future, enter into
certain transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control under the
indenture, but that could increase the amount of indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit ratings.
Change of control provisions are contained in each of the indentures for
our 11 1/2% notes, in an aggregate principal amount of $625 million, our 12 3/8%
notes, in an aggregate principal amount at maturity of $450 million, our 9 1/2%
Senior Notes Due 2008 (the "9 1/2% Notes"), in an aggregate principal amount of
L125 million ($209 million), our 10 3/4% Senior Deferred Coupon Notes Due 2008
(the "10 3/4% Notes"), in an aggregate principal amount at maturity of L300
million ($501 million), our 9 3/4% Senior Deferred Coupon Notes Due 2008 (the
"9 3/4% Notes"), in an aggregate principal amount at maturity of $1,300 million,
our 10% Senior Notes Due 2007 (the "10% Notes"), in an aggregate principal
amount of $400 million, our 12 3/4% Senior Deferred Coupon Notes Due 2005 (the
"12 3/4% Notes"), in an aggregate principal amount at maturity of $277,803,500,
and our 11 1/2% Deferred Coupon Notes Due 2006 (the "11 1/2% Deferred Coupon
Notes" and, together with the 11 1/2% Notes, the 12 3/8% Notes, the 9 1/2%
Notes, the 10 3/4% Notes, the 9 3/4% Notes, the 10% Notes and the 12 3/4% Notes,
the "Senior Notes"), in an aggregate principal amount at maturity of $1,050
million, which rank senior to the Convertible Notes. The indentures for the
Existing Convertible Notes and for the Partners 11.20% Debentures also contain
change of control provisions.
The Company's ability to pay cash to the holders of Convertible Notes
pursuant to a Change of Control Offer may be limited by the Company's then
existing financial resources. See "Risk Factors -- Our substantial leverage
could adversely affect the financial health of the Company" and "-- We are a
holding company that is dependent upon cash flow from our subsidiaries -- our
ability to access that cash flow may be limited in some circumstances." The new
credit facility does, and any future credit agreements or other agreements
relating to indebtedness of the Company may, contain prohibitions or
restrictions on the Company's ability to effect a Change of Control Payment. In
the event a Change of Control occurs at a time when such prohibitions or
restrictions are in effect, the Company could seek the consent of its lenders to
the purchase of the convertible notes and other indebtedness containing change
of control provisions or could attempt to refinance the borrowings that contain
such prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will be effectively prohibited from purchasing the
convertible notes. In such case, the Company's failure to purchase tendered
convertible notes would constitute an Event of Default under the Indenture.
Moreover, the events that constitute a Change of Control under the Indenture
constitute events of default under the new credit facility and may also
constitute events of default under future debt instruments or credit agreements
of the Company or the Company's subsidiaries. Such events of default may permit
the lenders under such debt instruments or credit agreements to accelerate the
debt and, if such debt is not paid or repurchased, to enforce their security
interests in what may be all or substantially all of the assets of the Company's
subsidiaries. Any such enforcement
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may limit the Company's ability to raise cash to repay or repurchase the
convertible notes.
For the reasons described in the three immediately preceding paragraphs,
there can be no assurance that the Company will be able to repurchase the
convertible notes upon a Change of Control.
The Board of Directors of the Company may not, by itself, waive or modify
the Change of Control provisions of the indenture. All the provisions of the
indenture, including the Change of Control provision, may only be waived or
modified pursuant to the provisions described under "-- Amendment, Supplement
and Waiver" below.
SELECTION AND NOTICE
If less than all of the convertible notes are to be redeemed at any time,
selection of convertible notes for redemption will be made by the trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the convertible notes are listed, or, if the convertible notes
are not so listed, on a pro rata basis, by lot or by such method as the trustee
shall deem fair and appropriate, provided that no convertible notes of $1,000 or
less shall be redeemed in part. Notice of redemption shall be mailed by first
class mail at least 30 but not more than 60 days, prior to the redemption date
to each holder of convertible notes to be redeemed at its registered address. If
any convertible note is to be redeemed in part only, the notice of redemption
that relates to such convertible note shall state the portion of the principal
amount thereof to be redeemed. A new convertible note in principal amount equal
to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original convertible note. On and after the
redemption date, interest ceases to accrue on convertible notes or portions of
them called for redemption.
CONVERSION
The holder of any convertible note has the right, exercisable at any time
after 90 days following the date of original issuance thereof and prior to
maturity, to convert the principal amount thereof (or any portion thereof that
is an integral multiple of $1,000) into shares of common stock at the conversion
price set forth on the cover page of this prospectus, subject to adjustment as
described below (the "Conversion Price"), except that if a convertible note is
called for redemption, the conversion right will terminate at the close of
business on the business day immediately preceding the date fixed for
redemption. Upon conversion, no adjustment or payment will be made for interest,
but if any holder surrenders a convertible note for conversion after the close
of business on the record date for the payment of an installment of interest and
prior to the opening of business on the next interest payment date, then,
notwithstanding such conversion, the interest payable on such interest payment
date will be paid to the registered holder of such convertible note on such
record date. In such event, such convertible note, when surrendered for
conversion, need not be accompanied by payment of an amount equal to the
interest payable on such interest payment date on the portion
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so converted. No fractional shares will be issued upon conversion but a cash
adjustment will be made for any fractional interest.
The Conversion Price is subject to adjustment upon the occurrence of
certain events, including:
(1) the issuance of shares of common stock as a dividend or
distribution on the common stock;
(2) the subdivision or combination of the outstanding common stock;
(3) the issuance to substantially all holders of common stock of rights
or warrants to subscribe for or purchase common stock (or securities
convertible into common stock) at a price per share less than the then
current market price per share, as defined;
(4) the distribution of shares of capital stock of the Company (other
than common stock), evidences of indebtedness or other assets (excluding
dividends in cash, except as described in clause (5) below) to all holders
of common stock;
(5) the distribution, by dividend or otherwise, of cash to all holders
of common stock in an aggregate amount that, together with the aggregate of
any other distributions of cash that did not trigger a Conversion Price
adjustment to all holders of its common stock within the 12 months
preceding the date fixed for determining the stockholders entitled to such
distribution and all Excess Payments in respect of each tender offer or
other negotiated transaction by the Company or any of its Subsidiaries for
common stock concluded within the preceding 12 months not triggering a
conversion price adjustment, exceeds 10% of the product of the current
market price per share (determined as set forth below) on the date fixed
for the determination of stockholders entitled to receive such distribution
times the number of shares of common stock outstanding on such date;
(6) payment of an Excess Payment in respect of a tender offer or other
negotiated transaction by the Company or any of its subsidiaries for common
stock, if the aggregate amount of such Excess Payment, together with the
aggregate amount of cash distributions made within the preceding 12 months
not triggering a conversion price adjustment and all Excess Payments in
respect of each tender offer or other negotiated transaction by the Company
or any of its subsidiaries for common stock concluded within the preceding
12 months not triggering a conversion price adjustment, exceeds 10% of the
product of the current market price per share on the expiration of such
tender offer times the number of shares of common stock outstanding on such
date; and
(7) the distribution to substantially all holders of common stock of
rights or warrants to subscribe for securities (other than those referred
to in clause (3) above). In the event of a distribution to substantially
all holders of common stock of rights to subscribe for additional shares of
the Company's capital stock (other than those referred to in clause (3)
above), the Company may, instead of making any adjustment in the Conversion
Price, make proper provision so that each
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holder of a convertible note who converts such convertible note after the
record date for such distribution and prior to the expiration or redemption
of such rights shall be entitled to receive upon such conversion, in
addition to shares of common stock, an appropriate number of such rights.
No adjustment of the Conversion Price will be made until cumulative
adjustments amount to one percent or more of the Conversion Price as last
adjusted.
If the Company reclassifies or changes its outstanding common stock, or
consolidates with or merges into or transfers or leases all or substantially all
of its assets to any person, or is a party to a merger that reclassifies or
changes its outstanding common stock, the convertible notes will become
convertible into the kind and amount of securities, cash or other assets which
the holders of the convertible notes would have owned immediately after the
transaction if the holders had converted the convertible notes immediately
before the effective date of the transaction.
The indenture also provides that if rights, warrants or options expire
unexercised the Conversion Price shall be readjusted to take into account the
actual number of such warrants, rights or options which were exercised.
In the indenture, the "current market price" per share of common stock on
any date shall be deemed to be the average of the Daily Market Prices for the
shorter of
(1) 30 consecutive business days ending on the last full trading day on
the exchange or market referred to in determining such Daily Market Prices
prior to the time of determination (as defined in the indenture) or
(2) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such
distribution through such last full trading day prior to the time of
determination.
The Company is permitted to make such reductions in the Conversion Price as
it, in its discretion, determines to be advisable in order that any stock
dividend, subdivision of shares, distribution or rights to purchase stock or
securities or distribution of securities convertible into or exchangeable for
stock made by the Company to its stockholders will not be taxable to the
recipients.
SUBORDINATION OF CONVERTIBLE NOTES
The convertible notes are subordinate in right of payment to all existing
and future Senior Debt. The indenture does not restrict the amount of Senior
Debt or other Indebtedness of the Company or any Subsidiary of the Company. On
September 30, 1998, after giving effect to our acquisition of Partners, the
recent financings and use of proceeds from those transactions, the Company had
approximately $3.7 billion accreted value of Senior Debt outstanding ($2.5
billion of which is comprised of the accreted value of Senior Notes, the
aggregate principal amount at maturity of which is approximately $3.6 billion).
The payment of the principal of, interest on or any other amounts due on
the convertible notes is subordinated in right of payment to the prior payment
in full of all
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Senior Debt of the Company. No payment on account of principal of, redemption
of, interest on or any other amounts due on the convertible notes, including,
without limitation, any payments on the Change of Control Offer, and no
redemption, purchase or other acquisition of the convertible notes may be made
unless
(1) full payment of amounts then due on all Senior Debt have been made or
duly provided for pursuant to the terms of the instrument governing such Senior
Debt, and
(2) at the time for, or immediately after giving effect to, any such
payment, redemption, purchase or other acquisition, there shall not exist under
any Senior Debt or any agreement pursuant to which any Senior Debt has been
issued, any default which shall not have been cured or waived and which shall
have resulted in the full amount of such Senior Debt being declared due and
payable.
In addition, the indenture provides that if any of the holders of any issue
of Senior Debt notify (the "Payment Blockage Notice") the Company and the
trustee that a default has occurred giving the holders of such Senior Debt the
right to accelerate the maturity thereof, no payment on account of principal,
redemption, interest, Liquidated Damages, if any, or any other amounts due on
the convertible notes and no purchase, redemption or other acquisition of the
convertible notes will be made for the period (the "Payment Blockage Period")
commencing on the date notice is received and ending on the earlier of
(A) the date on which such event of default shall have been cured or waived
or
(B) 180 days from the date notice is received.
Notwithstanding the foregoing, only one Payment Blockage Notice with
respect to the same event of default or any other events of default existing and
known to the person giving such notice at the time of such notice on the same
issue of Senior Debt may be given during any period of 360 consecutive days
unless such event of default or such other events of default have been cured or
waived for a period of not less than 90 consecutive days. No new Payment
Blockage Period may be commenced by the holders of Senior Debt during any period
of 360 consecutive days unless all events of default which triggered the
preceding Payment Blockage Period have been cured or waived.
Upon any distribution of its assets in connection with any dissolution,
winding-up, liquidation or reorganization of the Company or acceleration of the
principal amount due on the convertible notes because of an Event of Default,
all Senior Debt must be paid in full before the holders of the convertible notes
are entitled to any payments whatsoever.
As a result of these subordination provisions, in the event of the
Company's insolvency, holders of the convertible notes may recover ratably less
than general creditors of the Company.
If payment of the convertible notes is accelerated because of an Event of
Default, the Company or the Trustee shall promptly notify the holders of Senior
Debt or the trustee(s) for such Senior Debt of the acceleration. The Company may
not pay the convertible notes until five days after such holders or trustee(s)
of Senior Debt receive
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notice of such acceleration and, thereafter, may pay the convertible notes only
if the subordination provisions of the Indenture otherwise permit payment at
that time.
The convertible notes are obligations exclusively of the Company. Since the
operations of the Company are conducted through its Subsidiaries, the cash flow
and the consequent ability to service debt, including the convertible notes, of
the Company, are dependent upon the earnings of its Subsidiaries and the
distribution of those earnings to, or upon loans or other payments of funds by
those Subsidiaries to, the Company. The payment of dividends and the making of
loans and advances to the Company by its Subsidiaries may be subject to
statutory or contractual restrictions, are dependent upon the earnings of those
Subsidiaries and are subject to various business considerations.
Any right of the Company to receive assets of any of its Subsidiaries upon
their liquidation or reorganization (and the consequent right of the holders of
the convertible notes to participate in those assets) will be effectively
subordinated to the claims of that Subsidiary's creditors (including trade
creditors), except to the extent that the Company is itself recognized as a
creditor of such Subsidiary, in which case the claims of the Company would still
be subordinate to any security interests in the assets of such Subsidiary and
any indebtedness of such Subsidiary senior to that held by the Company.
On September 30, 1998, after giving effect to our acquisition of Partners,
the recent financings and the application of proceeds from those transactions,
the Company had approximately $3.7 billion of indebtedness outstanding that
would have constituted Senior Debt (excluding liabilities of a type not required
to be reflected as a liability on the balance sheet of the Company in accordance
with GAAP) and approximately $967 million of indebtedness outstanding and other
obligations of Subsidiaries of the Company (excluding intercompany liabilities
and liabilities of a type not required to be reflected as a liability on the
balance sheet of such subsidiaries in accordance with GAAP) as to which the
convertible notes would have been structurally subordinated. The indenture will
not limit the amount of additional indebtedness, including Senior Debt, which
the Company can create, incur, assume or guarantee, nor will the indenture limit
the amount of indebtedness and other liabilities which any Subsidiary can
create, incur, assume or guarantee.
In the event that, notwithstanding the foregoing, the trustee or any holder
of convertible notes receives any payment or distribution of assets of the
Company of any kind in contravention of any of the terms of the Indenture,
whether in cash, property or securities, including, without limitation by way of
set-off or otherwise, in respect of the convertible notes before all Senior Debt
is paid in full, then such payment or distribution will be held by the recipient
in trust for the benefit of holders of Senior Debt, and will be immediately paid
over or delivered to the holders of Senior Debt or their representative or
representatives to the extent necessary to make payment in full of all Senior
Debt remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of Senior Debt.
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MERGER, CONSOLIDATION OR SALE OF ASSETS
The indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions to another
corporation, person or entity unless
(1) the Company is the surviving corporation or the entity or the
person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda, the Cayman Islands or of
the United States, any state thereof or the District of Columbia;
(2) the entity or person formed by or surviving any such consolidation
or merger (if other than the Company) or the entity or person to which such
sale, assignment, transfer, lease, conveyance or other disposition will
have been made assumes all the Obligations (including the due and punctual
payment of Additional Amounts if the surviving corporation is a corporation
organized or existing under the laws of the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands) of
the Company under the convertible notes and the indenture, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event of Default
exists;
(4) the Company or any entity or person formed by or surviving any such
consolidation or merger or to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made will have a ratio of
Indebtedness to Annualized Pro Forma EBITDA equal to or less than the ratio
of Indebtedness to Annualized Pro Forma EBITDA of the Company immediately
preceding the transaction; provided, however, that, if the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company immediately
preceding such transaction is 6:1 or less, then the ratio of Indebtedness
to Annualized Pro Forma EBITDA of the Company may be 0.5 greater than such
ratio immediately preceding such transaction; and
(5) such transaction would not result in the loss of any material
authorization or Material License of the Company or its Subsidiaries.
ADDITIONAL AMOUNTS
The following provisions of this paragraph will apply only in the event
that the Company becomes, or a successor to the Company is, a corporation
organized or existing under the laws of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands. All payments made by the
Company on the convertible notes will be made without deduction or withholding,
for or on account of, any and all present or future taxes, duties, assessments,
or governmental charges of whatever nature
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unless the deduction or withholding of such taxes, duties, assessments or
governmental charges is then required by law. If any deduction or withholding
for or on account of any present or future taxes, assessments or other
governmental charges of the United Kingdom, the Netherlands, the Netherlands
Antilles, Bermuda or the Cayman Islands (or any political subdivision or taxing
authority thereof or therein) shall at any time be required in respect of any
amounts to be paid by the Company under the convertible notes, the Company will
pay or cause to be paid such additional amounts ("Additional Amounts") as may be
necessary in order that the net amounts received by a holder of a convertible
note after such deduction or withholding shall be not less than the amounts
specified in such convertible note to which such holder is entitled; provided,
however, that the Company shall not be required to make any payment of
Additional Amounts for or on account of:
(1) any tax, assessment or other governmental charge to the extent such
tax, assessment or other governmental charge would not have been imposed
but for
(a) the existence of any present or former connection between
such holder (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, such holder, if such
holder is an estate, nominee, trust, partnership or corporation), other
than the holding of a convertible note or the receipt of amounts
payable in respect of a convertible note and the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands or
any political subdivision or taxing authority thereof or therein,
including, without limitation, such holder (or such fiduciary, settlor,
beneficiary, member, shareholder or possessor) being or having been a
citizen or resident thereof or being or having been present or engaged
in trade or business therein or having or having had a permanent
establishment therein or
(b) the presentation of a convertible note (where presentation is
required) for payment on a date more than 30 days after the date on
which such payment became due and payable or the date on which payment
thereof is duly provided for, whichever occurs later, except to the
extent that the holder would have been entitled to Additional Amounts
had the convertible note been presented on the last day of such period
of 30 days;
(2) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure to comply by the holder of a convertible
note, or, if different, the beneficial owner of the interest payable on a
convertible note, with a timely request of the Company addressed to such
holder or beneficial owner to provide information, documents or other
evidence concerning the nationality, residence, identity or connection with
the taxing jurisdiction of such holder or beneficial owner which is
required or imposed by a statute, regulation or administrative practice of
the taxing jurisdiction a precondition to exemption from all or part of
such tax, assessment or governmental charge;
(3) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
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(4) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of principal amount
at maturity, redemption amount, Change of Control Payment, interest with
respect to a convertible note or withholding from the proceeds of a sale or
exchange of a convertible note;
(5) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal amount at
maturity, redemption amount, Change of Control Payment or interest with
respect to a convertible note, if such payment can be made, and is in fact
made, without such withholding by any other Paying Agent located inside the
United States;
(6) any tax, assessment or other governmental charge imposed on a
holder that is not the beneficial owner of a convertible note to the extent
that the beneficial owner would not have been entitled to the payment of
any such Additional Amounts had the beneficial owner directly held such
convertible note;
(7) any combination of items (1), (2), (3), (4), (5) and (6) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, any convertible note to any holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor would not have been entitled to any
Additional Amounts had such beneficiary or settlor been the holder of such
convertible note. All references to interest on the convertible notes in the
indenture or the convertible notes shall include any Additional Amounts payable
to the Company pursuant to this paragraph.
REPORTS
Whether or not required by the rules and regulations of the Commission, so
long as any convertible notes are outstanding, the Company will file with the
Commission and furnish to the holders of the convertible notes all quarterly and
annual financial information required to be contained in a filing with the
Commission on Forms 10-Q and 10-K (or the equivalent thereof under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") for foreign
private issuers in the event the Company becomes a corporation organized under
the laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands), including a "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and with respect to
the annual information only, a report thereon by the Company's certified
independent accountants, in each case, as required by the rules and regulations
of the Commission as in effect on the Issuance Date.
EVENTS OF DEFAULTS AND REMEDIES
The indenture provides that each of the following constitutes an Event of
Default:
(1) default for 30 days in the payment when due of interest (and
Additional Amounts, if applicable) on the convertible notes;
(2) default in payment when due of principal on the convertible notes;
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(3) failure by the Company to comply with the provisions described
under "-- Repurchase at the Option of the Holders";
(4) failure by the Company for 60 days after notice to comply with
certain other covenants and agreements contained in the indenture or the
convertible notes;
(5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists, or is created after the Issuance Date, which default (a) is caused
by a failure to pay when due principal or interest on such Indebtedness
within the grace period provided in such Indebtedness (which failure
continues beyond any applicable grace period) (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its express
maturity and in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10 million or more;
(6) failure by the Company or any Restricted Subsidiary of the Company
to pay final judgements (other than any judgment as to which a reputable
insurance company has accepted full liability) aggregating in excess of $5
million, which judgments are not stayed within 60 days after their entry;
(7) certain events of bankruptcy or insolvency with respect to the
Company or any of its Material Subsidiaries; and
(8) the revocation of a Material License.
If any Event of Default occurs and is continuing, the trustee or the
holders of at least 25% in principal amount of the then outstanding convertible
notes may declare all the convertible notes to be due and payable immediately,
subject to the provisions limiting payment described in "-- Subordination of
convertible notes." Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, with respect to
the Company or any Material Subsidiary, all outstanding convertible notes will
become due and payable without further action or notice. Holders of the
convertible notes may not enforce the indenture or the convertible notes except
as provided in the indenture. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding convertible notes may
direct the trustee in its exercise of any trust or power. The trustee may
withhold from holders of the convertible notes notice of any continuing Default
or Event of Default (except a Default or Event of Default relating to the
payment of principal or interest or Liquidated Damages, if any) if it determines
that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the convertible
notes then outstanding by notice to the trustee may on behalf of the holders of
all of the convertible notes waive any existing Default or Event of Default and
its consequences
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under the indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the convertible notes.
The Company is required to deliver to the trustee annually a statement
regarding compliance with the indenture, and the Company is required, upon
becoming aware of any Default or Event of Default, to deliver to the trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS
No director, officer, employee, incorporator or shareholder of the Company,
as such, shall have any liability for any Obligations of the Company under the
convertible notes or the indenture or for any claim based on, in respect of, or
by reason of, such Obligations or their creation. Each holder of the convertible
notes by accepting a convertible note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the
convertible notes. Such waiver may not be effective to waive liabilities under
the federal securities laws and it is the view of the Commission that such a
waiver is against public policy.
BOOK-ENTRY, DELIVERY AND FORM
The convertible notes sold within the United States to qualified
institutional buyers were issued in the form of one or more global notes. The
global notes were deposited with, or on behalf of, DTC and registered in the
name of DTC or its nominee. Except as set forth below, the global notes may be
transferred, in whole and not in part, only to DTC or another nominee of DTC.
Investors may hold their beneficial interests in the global notes directly
through DTC if they are Participants in such system or indirectly through
organizations that are Participants in such system.
DTC is a limited-purpose trust company that was created to hold securities
for its participating organizations (collectively, the "Participants" or "DTC's
Participants") and to facilitate the clearance and settlement of transactions in
such securities between Participants through electronic book-entry changes in
accounts of its Participants. DTC's Participants include securities brokers and
dealers (including the Initial Purchasers), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's system
is also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants" or "DTC's Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through DTC's
Participants or DTC's Indirect Participants.
The Company expects that pursuant to procedures established by DTC
(1) upon the issuance of the global notes, DTC will credit the accounts
of Participants designated by the initial purchasers with portions of the
principal amount of the global notes and
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(2) ownership of the convertible notes evidenced by the global notes
will be shown on, and the transfer of ownership thereof will be effected
only through, records maintained by DTC (with respect to the interests of
the Depositary's Participants), DTC's Participants and DTC's Indirect
Participants. Prospective purchasers are advised that the laws of some
states require that certain persons take physical delivery in definitive
form of securities that they own. Consequently, the ability to transfer
convertible notes evidenced by the global notes will be limited to such
extent.
So long as the global note holder is the registered owner of any
convertible notes, the global note holder will be considered the sole holder
under the indenture of any convertible notes evidenced by the global notes.
Beneficial owners of convertible notes evidenced by the global notes will not be
considered the owners or holders thereof under the indenture for any purpose,
including with respect to the giving of any directions, instructions or
approvals to the trustee thereunder. Neither the Company nor the trustee will
have any responsibility or liability for any aspect of the records of DTC or for
maintaining, supervising or reviewing any records of DTC relating to the
convertible notes.
Payments in respect of the principal of, interest and Liquidated Damages,
if any, on any convertible notes registered in the name of the global note
holder on the applicable record date will be payable by the Trustee to or at the
direction of the global note holder in its capacity as the registered holder
under the Indenture. Under the terms of the indenture, the Company and the
trustee may treat the persons in whose names convertible notes, including the
global notes, are registered as the owners thereof for the purpose of receiving
such payments. Consequently, neither the Company nor the trustee has or will
have any responsibility or liability for the payment of such amounts to
beneficial owners of convertible notes (including principal, interest and
Liquidated Damages, if any). The Company believes, however, that it is currently
the policy of DTC to immediately credit the accounts of the relevant
Participants with such payments, in amounts proportionate to their respective
holdings of beneficial interests in the relevant security as shown on the
records of DTC. Payments by DTC's Participants and DTC's Indirect Participants
to the beneficial owners of Convertible Notes will be governed by standing
instructions and customary practice and will be the responsibility of DTC's
Participants or DTC's Indirect Participants.
CERTIFICATED NOTES
The convertible notes sold to a limited number of "accredited investors"
(as defined in Rule 501(a)(1), (2), (3), (4) or (7) under the securities act)
were issued in the form of registered definitive certificates. Furthermore,
subject to certain conditions, any person having a beneficial interest in the
global notes may, upon request to the trustee, exchange such beneficial interest
for convertible notes evidenced by certificated securities. Upon any such
issuance, the trustee is required to register such certificated securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if
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(1) the Company notifies the trustee in writing that DTC is no longer
willing or able to act as a depositary and the Company is unable to locate
a qualified successor within 90 days or
(2) the Company, at its option, notifies the trustee in writing that it
elects to cause the issuance of convertible notes in the form of
certificated securities under the Indenture, then, upon surrender by the
global note holder of its global notes, convertible notes in such form will
be issued to each person that the global note holder and DTC identify as
being the beneficial owner of the related convertible notes.
Neither the Company nor the trustee will be liable for any delay by the
global note holder or DTC in identifying the beneficial owners of convertible
notes and the Company and the trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or DTC for all
purposes.
TRANSFER AND EXCHANGE
A holder may transfer or exchange convertible notes in accordance with the
indenture. The registrar and the trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the indenture. The Company is not required to transfer or exchange
any convertible note selected for redemption. Also, the Company is not required
to transfer or exchange any convertible note for a period of 15 days before a
selection of convertible notes to be redeemed.
The registered holder of a convertible note will be treated as the owner of
it for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture or
the convertible notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the then outstanding
convertible notes (including consents obtained in connection with a tender offer
or exchange offer for convertible notes), and any existing default or compliance
with any provision of the indenture or the convertible notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding convertible notes (including consents obtained in connection with a
tender offer or exchange offer for convertible notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any convertible notes held by a nonconsenting holder of
convertible notes)
(1) reduce the principal amount of convertible notes whose holders must
consent to an amendment, supplement or wavier,
(2) reduce the principal of or change the fixed maturity of any
convertible note or alter the provisions with respect to the redemption of
the convertible notes,
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(3) reduce the rate of or change the time for payment of interest on
any Convertible Note,
(4) waive a default in the payment of principal of or interest or
Liquidated Damages, if any, on any convertible notes (except a rescission
of acceleration of the convertible notes by the holders of at least a
majority in aggregate principal amount of the convertible notes and a
waiver of the payment default that resulted from such acceleration),
(5) make any convertible note payable in money other than that stated
in the convertible notes,
(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of holders of convertible notes to
receive payments of principal of or interest or Liquidated Damages, if any,
on the convertible notes,
(7) waive a redemption payment with respect to any convertible note,
(8) impair the right to convert the convertible notes into common
stock,
(9) modify the conversion or subordination provisions of the indenture
in a manner adverse to the holders of the convertible notes or
(10) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
convertible notes, the Company and the trustee may amend or supplement the
indenture or the convertible notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated convertible notes in addition to or
in place of certificated convertible notes, to provide for the assumption of the
Company's obligations to holders of the convertible notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the holders of the convertible notes or that does not
adversely affect the legal rights under the Indenture of any such holder, or to
comply with requirements of the Commission in order to maintain the
qualification of the indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The holders of a majority in principal amount of the then outstanding
convertible notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the trustee,
subject to certain exceptions. The indenture provides that, in case an Event of
Default shall occur (which shall not have been cured), the trustee will be
required, in the exercise of its power, to use the degree of care of a prudent
man in the conduct of his own affairs. Subject to
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such provisions, the trustee will be under no obligation to exercise any of its
rights or powers under the indenture at the request of any holder of convertible
notes, unless such holder shall have offered to the trustee security and
indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
the Registration Rights Agreement without charge by writing to the Company, 110
East 59th Street, New York, New York 10022, Attention: Richard J. Lubasch, Esq.,
Senior Vice President, General Counsel and Secretary.
DEFINITIONS
Set forth below are selected defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Annualized Pro Forma EBITDA" means, with respect to any person, such
person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock, including, without
limitation, partnership interests.
"Change of Control" means
(1) the sale, lease or transfer of all or substantially all of the
assets of the Company to any "Person" or "group" (within the meaning of
Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor
provision to either of the foregoing, including any group acting for the
purpose of acquiring, holding or disposing of securities within the meaning
of Rule 13d-5(b)(1) under the Exchange Act) (other than any Permitted
Holder),
(2) the approval by the requisite stockholders of the Company of a plan
of liquidation or dissolution of the Company,
(3) any "Person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act or any successor provision to either of the
foregoing, including any group acting for the purpose of acquiring, holding
or disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than any Permitted Holder, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50%
of the total voting power of all classes of the voting stock of the Company
and/or warrants or options to acquire such voting stock, calculated on a
fully diluted basis, unless, as a result of such transaction, the ultimate
direct or indirect ownership of the Company is substantially the same
immediately after such transaction as it was immediately prior to such
transaction, or
(4) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Company's Board of Directors
(together
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with any new directors whose election or appointment by such board or whose
nomination for election by the shareholders of the Company was approved by
a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute
a majority of the Company's Board of Directors then in office.
"Consolidated Interest Expense" means, for any person, for any period, the
amount of interest in respect of Indebtedness (including amortization of
original issue discount, amortization of debt issuance costs, and noncash
interest payments on any Indebtedness and the interest portion of any deferred
payment obligation and after taking into account the effect of elections made
under any Interest Rate Agreement, however denominated, with respect to such
Indebtedness), the amount of Redeemable Dividends, Restricted Subsidiary
Preferred Stock Dividends and the interest component of rentals in respect of
any capital lease obligation paid, in each case whether accrued or scheduled to
be paid or accrued by such person and its Subsidiaries (other than
Non-Restricted Subsidiaries) during such period to the extent such amounts were
deducted in computing Consolidated Net Income, determined on a consolidated
basis in accordance with GAAP. For purposes of this definition, interest on a
capital lease obligation shall be deemed to accrue at an interest rate
reasonably determined by such person to be the rate of interest implicit in such
capital lease obligation in accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any person for any period,
the aggregate of the Net Income of such person and its Subsidiaries (other than
Non-Restricted Subsidiaries) for such period, on a consolidated basis,
determined in accordance with GAAP; provided that
(1) the Net Income of any person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid to the referent
person or a Wholly Owned Subsidiary,
(2) the Net Income of any person that is a Subsidiary (other than a
Subsidiary of which at least 80% of the Capital Stock having ordinary
voting power for the election of directors or other governing body of such
Subsidiary is owned by the referent person directly or indirectly through
one or more Subsidiaries) shall be included only to the extent of the
amount of dividends or distributions paid to the referent person or a
Wholly Owned Subsidiary,
(3) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded and
(4) the cumulative effect of a change in accounting principles shall be
excluded.
"Default" means any event that is or, with the passage of time or the
giving of notice or both, would be an Event of Default.
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"Disqualified Stock" means any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Convertible Notes mature.
"EBITDA" means, for any person, for any period, an amount equal to
(1) the sum of
(a) Consolidated Net Income for such period (exclusive of any
gain or loss realized in such period upon an Asset Sale), plus
(b) the provision for taxes for such period based on income or
profits to the extent such income or profits were included in computing
Consolidated Net Income and any provision for taxes utilized in
computing net loss under clause (i) hereof, plus
(c) Consolidated Interest Expense for such period, plus
(d) depreciation for such period on a consolidated basis, plus
(e) amortization of intangibles for such period on a consolidated
basis, plus
(f) any other noncash item reducing Consolidated Net Income for
such period, minus
(2) all noncash items increasing Consolidated Net Income for such
period, all for such person and its Subsidiaries determined in accordance
with GAAP consistently applied.
"Excess Payment" means the excess of
(A) the aggregate of the cash and value of other consideration paid by
the Company or any of its Subsidiaries with respect to shares acquired in a
tender offer or other negotiated transaction over
(B) the market value of such acquired shares after giving effect to the
completion of a tender offer or other negotiated transaction.
"Exchange Rate Contract" means, with respect to any person, any currency
swap agreements, forward exchange rate agreements, foreign currency futures or
options, exchange rate collar agreements, exchange rate insurance and other
agreements or arrangements, or combination thereof, designed to provide
protection against fluctuations in currency exchange rates. An Exchange Rate
Contract may also include an Interest Rate Agreement.
"Existing Convertible Notes" means the Company's 7% Convertible
Subordinated Notes Due 2008.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of
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Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession, which are in
effect on the Issuance Date.
"Global Notes" means the Rule 144A Global Notes.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Indebtedness" means, with respect to any person, any indebtedness of such
person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases and sale-and-leaseback transactions) or representing any hedging
obligations under an Exchange Rate Contract or an Interest Rate Agreement,
except any such balance that constitutes an accrued expense or trade payable if
and to the extent any of the foregoing indebtedness (other than obligations
under an Exchange Rate Contract or an Interest Rate Agreement) would appear as a
liability upon a balance sheet of such person prepared in accordance with GAAP,
and also include to the extent not otherwise included, the Guarantee of items
which would be included within this definition.
"Interest Rate Agreement" means, for any person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Issuance Date" means the date on which the convertible notes are first
authenticated and issued.
"Material License" means a license to operate a cable or telephone system
held by the Company or any its Subsidiaries which system at the time of
determination covers a number of Net Households which equals exceeds 5% of the
aggregate number of Net Households covered by all of the licenses to operate
cable telephone systems held by the Company and its Subsidiaries at such time.
"Material Subsidiary" means
(1) NTL UK Group, Inc. (formerly known as OCOM Sub II, Inc.), NTL Group
Limited, CableTel Surrey, CableTel Cardiff Limited, CableTel Glasgow, CableTel
Newport and CableTel Kirklees and
(2) any other Subsidiary of the Company which is a "significant subsidiary"
as defined in Rule 1-02(w) of Regulation S-X under the Securities Act and the
Exchange Act (as such Regulation is in effect on the date of the Indenture).
"Net Income" means, with respect to any person for a specific period, the
net income (loss) of such person during such period, determined in accordance
with GAAP,
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excluding, however, any gain (but not loss) during such period, together with
any related provision for taxes on such gain (but not loss), realized during
such period in connection with any Asset Sale (as defined in the Indenture)
(including, without limitation, dispositions pursuant to sale-and-leaseback
transactions), and excluding any extraordinary gain (but not loss) during such
period, together with any related provision for taxes on such extraordinary gain
(but not loss).
"10% Notes" means the Company's 10% Series B Senior Notes Due 2007
outstanding at any given time.
"12 3/4% Notes" means the Company's 12 3/4% Series A Senior Deferred Coupon
Notes Due 2005 outstanding at any given time.
"11 1/2% Deferred Coupon Notes" means the Company's 11 1/2% Series B Senior
Deferred Coupon Notes Due 2006 outstanding at any given time.
"10 3/4% Notes" means the Company's 10 3/4% Senior Deferred Coupon Notes
Due 2008 and the Company's 10 3/4% Series B Senior Deferred Coupon Notes due
2008 outstanding at any given time.
"9 3/4% Notes" means the Company's 9 3/4% Senior Deferred Coupon Notes Due
2008 and the Company's 9 3/4% Series B Deferred Coupon Notes Due 2008
outstanding at any given time.
"9 1/2% Notes" means the Company's 9 1/2% Senior Notes Due 2008 and the
Company's 9 1/2% Series B Deferred Coupon Notes Due 2008 outstanding at any
given time.
"11 1/2% Notes" means the Company's 11 1/2% Senior Notes Due 2008 and the
Company's 11 1/2% Series B Senior Notes Due 2008 outstanding at any given time.
"12 3/8% Notes" means the Company's 12 3/8% Senior Deferred Coupon Notes
Due 2008 and the Company's 12 3/8% Series B Senior Deferred Coupon Notes Due
2008 outstanding at any given time.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Designee" means
(1) a spouse or a child of a Permitted Holder,
(2) trusts for the benefit of a Permitted Holder or a spouse or child of a
Permitted Holder,
(3) in the event of the death or incompetence of a Permitted Holder, his
estate, heirs, executor, administrator, committee or other personal
representative or
(4) any person so long as a Permitted Holder owns at least 50% of the
voting power of all classes of the voting stock of such person.
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"Permitted Holders" means George S. Blumenthal, J. Barclay Knapp and their
Permitted Designees.
"Pro Forma EBITDA" means for any Person, for any period, the EBITDA of such
Person as determined on a consolidated basis in accordance with GAAP
consistently applied after giving effect to the following:
(1) if, during or after such period, such Person or any of its
Subsidiaries shall have made any Asset Sale (as defined in the Indenture),
Pro Forma EBITDA of such Person and its Subsidiaries for such period shall
be reduced by an amount equal to the Pro Forma EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Sale for the period or increased by an amount equal to the Pro Forma EBITDA
(if negative) directly attributable thereto for such period and
(2) if, during or after such period, such Person or any of its
Subsidiaries completes an acquisition of any Person or business which
immediately after such acquisition is a Subsidiary of such Person or whose
assets are held directly by such Person or a Subsidiary of such Person, Pro
Forma EBITDA shall be computed so as to give pro forma effect to the
acquisition of such Person or business; and provided further that, with
respect to the Company, all of the foregoing references to "Subsidiary" or
"Subsidiaries" shall be deemed to refer only to a "Restricted Subsidiary"
or "Restricted Subsidiaries" of the Company.
"Redeemable Dividend" means, for any dividend with regard to Disqualified
Stock, the quotient of the dividend divided by the difference between one and
the maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Disqualified Stock.
"Restricted Subsidiary" means any Subsidiary of the Company which is not a
Non-Restricted Subsidiary.
"Restricted Subsidiary Preferred Stock Dividend" means, for any dividend
with regard to preferred stock of a Restricted Subsidiary, the quotient of the
dividend divided by the difference between one and the maximum statutory federal
income tax rate (expressed as a decimal number between 1 and 0) then applicable
to the issuer of such preferred stock.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Notes" means one or more permanent global notes that are
deposited with and registered in the name of the Depositary or its nominee,
representing a series of Convertible Notes sold to U.S. persons in reliance on
Rule 144A or another exemption from the registration requirements of the
Securities Act.
"Senior Debt" means the principal of, interest on and other amounts due on
(1) Indebtedness of the Company, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed by the
Company, for money borrowed from banks or other financial institutions;
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(2) Indebtedness of the Company, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed by the
Company in compliance with the Indenture, including, without limitation,
the Senior Notes; and
(3) Indebtedness of the Company under interest rate swaps, caps or
similar hedging agreements and foreign exchange contracts, currency swaps
or similar agreements:
unless, in the instrument creating or evidencing or pursuant to which
Indebtedness under (1) or (2) is outstanding, it is expressly provided that such
Indebtedness is not senior in right of payment to the Convertible Notes. Senior
Debt includes, with respect to the obligations described in clauses (1) and (2)
above, interest accruing, pursuant to the terms of such Senior Debt, on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company, whether or not post-filing interest is allowed in such proceeding, at
the rate specified in the instrument governing the relevant obligation.
Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not
include:
(a) Indebtedness of or amounts owed by the Company for compensation to
employees, or for goods or materials purchased in the ordinary course of
business, or for services;
(b) Indebtedness of the Company to a Subsidiary of the Company; or
(c) the Existing Convertible Notes.
"Senior Notes" means the 10% Notes, the 12 3/4% Notes, the 11 1/2% Deferred
Coupon Notes, the 10 3/4% Notes, the 9 3/4% Notes, the 9 1/2% Notes, the 11 1/2%
Notes and the 12 3/8% Notes.
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any person or one or more of the other
Subsidiaries of that person or a combination thereof.
"Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary all
of the Capital Stock of which (except directors' qualifying shares) is at the
time owned directly or indirectly by the Company.
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REGISTRATION RIGHTS
The following summary of certain provisions of the registration rights
agreement is not complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the registration rights agreement, which is
incorporated by reference into the registration statement of which this
prospectus forms a part.
We entered into the registration rights agreement pursuant to which we
agreed, at our expense, for the benefit of the holders of the offered securities
to file with the Commission the registration statement covering resale of the
offered securities, by March 16, 1999. We will use our best efforts to cause the
registration statement to become effective as promptly as is practicable, but in
any event by June 14, 1999, and to keep the registration statement effective
until the earlier of
(1) the sale pursuant to the registration statement of all the offered
securities registered thereunder and
(2) the expiration of the holding period applicable to such offered
securities held by persons that are not affiliates of NTL under Rule 144(k)
under the Securities Act, or any successor provision, subject to certain
permitted exceptions.
We will be permitted to suspend the use of this prospectus under certain
circumstances relating to pending corporate developments, public filings with
the Commission and similar events for a period not to exceed 30 days in any
three-month period or not to exceed an aggregate of 90 days in any 12-month
period; provided, however, that we will be permitted to suspend the use of this
Prospectus for a period not to exceed 60 days in any three-month period or 90
days in any 12-month period under certain circumstances relating to probable
acquisitions, acquisitions, financings or similar transactions. We have agreed
to pay predetermined liquidated damages as described herein ("Liquidated
Damages") to holders of offered securities if the Registration Statement is not
timely filed or made effective or if this Prospectus is unavailable for periods
in excess of those permitted above. Such Liquidated Damages shall accrue until
such failure to file or become effective or unavailability is cured
(1) in respect of any convertible note, at a rate per annum equal to
0.25% for the first 90 day period after the occurrence of such event and
0.5% thereafter on an amount equal to the sum of the Issue Price of the
convertible note and
(2) in respect of each share of common stock, at a rate per annum equal
to 0.25% for the first 90 day period and 0.5% thereafter on the then
applicable conversion price for a share of common stock which equals the
Issue Price of $1,000 principal amount of convertible note divided by the
Conversion Rate in effect.
Selling securityholders must complete and deliver to us a notice and
questionnaire the form of which was sent to all holders of record known to us,
at least three business days prior to any intended distribution of offered
securities pursuant to the registration statement. Holders of offered securities
are required to complete and deliver the questionnaire prior to the
effectiveness of the registration statement so that such holders
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may be named as selling securityholders in this prospectus at the time of
effectiveness. Upon receipt of such a completed questionnaire, together with
such other information as may be reasonably requested by us, from a selling
securityholder following the effectiveness of the registration statement, the
Company will, as promptly as practicable but in any event within five business
days of such receipt, file such amendments to the registration statement or
supplements to this prospectus as are necessary to permit such selling
securityholder to deliver this prospectus, including any supplements hereto, to
purchasers of offered securities (subject to our right to suspend the use of
this prospectus as described above). We have agreed to pay Liquidated Damages in
the amount set forth above to holders of offered securities if we fail to make
such filing in the time required or, if such filing is a post-effective
amendment to the registration statement required to be declared effective under
the Securities Act, if such amendment is not declared effective within 45 days
of the filing thereof.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of NTL consists of 400,000,000 shares of
common stock, par value $.01 per share, and 10,000,000 shares of preferred
stock, par value $.01 per share. At the close of business on January 28, 1999:
(1) approximately 60,470,000 shares of common stock were issued and
outstanding;
(2) no shares of common stock were held by NTL in its treasury;
(3) approximately 125,000 shares of the 13% preferred stock were issued
and outstanding;
(4) 1,000,000 shares of series A junior participating preferred stock,
the "rights preferred stock", were reserved for issuance pursuant
to the rights agreement;
(5) approximately 17,057,000 shares of common stock were reserved for
issuance pursuant to the conversion of the 7% convertible notes;
(6) approximately 2,880,000 shares of common stock were reserved for
issuance upon the exercise of certain warrants;
(7) approximately 16,144,000 shares of common stock were reserved for
issuance pursuant to various NTL employee and director stock
options;
(8) 125,280 shares of 9.9% non-voting mandatorily redeemable preferred
stock, series A, the "9.9% preferred stock, series A", were issued
and outstanding;
(9) 52,217 shares of 9.9% non-voting mandatorily redeemable preferred
stock, series B, the "9.9% preferred stock, series B", were issued
and outstanding; and
(10) 500,000 shares of 5 1/4% convertible preferred stock, series A,
the "5 1/4% preferred stock", were issued and outstanding.
COMMON STOCK
The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders of NTL and do not
have cumulative voting rights in the election of directors. Holders of common
stock are entitled to receive ratably such dividends as may from time to time be
declared by our board of directors out of funds legally available therefor. In
the event of a liquidation, dissolution or winding up of NTL, holders of common
stock would be entitled to share ratably in all of our assets available for
distribution to holders of common stock remaining after payment of liabilities
and liquidation preference of any outstanding preferred stock. Holders of common
stock have no preemptive rights and have no rights to convert their common stock
into any other securities, and there are no redemption provisions with respect
to such shares. All of the outstanding shares of common stock are fully paid and
nonassessable.
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PREFERRED STOCK
Our board of directors has the authority to issue preferred stock in one or
more series and to fix as to any such series the designation, title, voting
powers and any other preferences, and relative, participating, optional or other
special rights and qualifications, limitations or restrictions, without any
further vote or action by our stockholders.
13% Preferred Stock. The 13% preferred stock ranks prior to the common
stock, rights preferred stock and 9.9% preferred stock with respect to dividend
rights and rights on liquidation, winding up and dissolution, and each share of
13% preferred stock has a liquidation preference of $1,000. Holders of shares of
13% preferred stock are entitled to receive, when, as and if declared by our
board of directors, quarterly dividends per share at a rate of 13% per annum.
Dividends accruing on or prior to February 15, 2004, may, at our option, be paid
in cash, by issuing additional shares of 13% preferred stock having an aggregate
liquidation preference equal to the amount of such dividends, or in any
combination of the foregoing. Dividends accruing after February 15, 2004 must be
paid in cash. We may redeem any or all of the 13% preferred stock on or after
February 15, 2002 at declining redemption prices as set forth in the certificate
of designation with respect to the 13% preferred stock, plus accrued and unpaid
dividends to the date of redemption. We must redeem all outstanding shares of
13% preferred stock on February 15, 2009 at a price equal to 100% of the
liquidation preference thereof, plus accrued and unpaid dividends to the date of
redemption.
Holders of 13% preferred stock have no general voting rights, except as
otherwise required under the DGCL and except in certain circumstances as set
forth in the certificate of designation with respect to the 13% preferred stock
including
(1) amending certain rights of the holders of the 13% preferred stock
and
(2) the issuance of any class of equity securities that ranks on a
parity with or senior to the 13% preferred stock, other than additional
shares of the 13% preferred stock issued in lieu of cash dividends or
parity securities issued to finance the redemption by us of the 13%
preferred stock.
In addition, if
(1) dividends are in arrears for six quarterly periods (whether or not
consecutive) or
(2) we fail to make a mandatory redemption or an offer to purchase all
of the outstanding shares of 13% preferred stock following an 13% preferred
stock Change of Control Triggering Event, as defined in the certificate of
designation with respect to the 13% preferred stock, as required or fail to
pay pursuant to such redemption or offer, holders of a majority of the
outstanding shares of 13% preferred stock, voting as a class, will be
entitled to elect two directors to our board of directors. In the event of
an 13% preferred stock Change of Control Triggering Event, we will, subject
to certain conditions, offer to purchase all outstanding shares of 13%
preferred stock at a purchase price equal to 101% of the liquidation
preference thereof, plus accrued and unpaid dividends to the date of
purchase. Moreover, in the
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event of an 13% preferred stock Change of Control Call Event, as defined in
the certificate of designation with respect to the 13% preferred stock, we
will have the option to redeem all of the outstanding shares of 13%
preferred stock at a redemption price equal to 100% of the liquidation
preference thereof plus the applicable premium and accrued and unpaid
dividends to the date of repurchase.
On any scheduled dividend payment date, we may, at our option, exchange
all, but not less than all, of the shares of 13% preferred stock then
outstanding into our 13% series B subordinated exchange debentures due 2009.
9.9% preferred stock, series A. The 9.9% preferred stock, series A ranks
prior to the common stock and rights preferred stock with respect to dividend
rights and rights on liquidation, winding up and dissolution, and each share of
9.9% preferred stock, series A has a liquidation preference of $1,000 per share.
Holders of shares of 9.9% preferred stock, series A are entitled to receive,
when, as and if declared by our board of directors cumulative dividends at a
rate of 9.9% per annum of the Stated Value of $1,000. Dividends are payable on
the 9.9% preferred stock, series A on the date that the 9.9% preferred stock,
series A is redeemed. Dividends may, at our option, be paid in cash, by issuing
shares of common stock or by issuing shares of convertible preferred stock, or
in any combination of the foregoing. We may redeem any or all of the 9.9%
preferred stock, series A at any time at a redemption price equal to $1,000 per
share, plus accrued and unpaid dividends to the date of redemption. We must
redeem all outstanding shares of 9.9% preferred stock, series A on September 21,
2008 at a redemption price equal to $1,000 per share, plus accrued and unpaid
dividends to the date of redemption. If we have not exercised our right to
optionally redeem the 9.9% preferred stock, series A by December 22, 1998, we
shall mandatorily redeem all of the outstanding shares of 9.9% preferred stock,
series A at a redemption price equal to $1,000 per share plus accrued and unpaid
dividends to the date of redemption. We, at our option, may effect the mandatory
redemption of the 9.9% preferred stock, series A, in cash, in exchange for
shares of common stock, in exchange for shares of convertible preferred stock or
in any combination of the foregoing.
Holders of 9.9% preferred stock, series A have no general voting rights,
except as otherwise required under the DGCL and except in certain circumstances
as set forth in the certificate of designation with respect to the 9.9%
preferred stock, series A including amending certain rights of the holders of
the 9.9% preferred stock, series A. No approval is required of the holders of
the 9.9% preferred stock, series A for the issuance of any other class of equity
securities.
Convertible preferred stock. The convertible preferred stock, par value
$.01 per share, the "convertible preferred stock", may be issued, at our option,
in redemption of the 9.9% preferred stock. The convertible preferred stock, if
issued, will rank prior to the common stock, the rights preferred stock and any
other class of capital stock or series of preferred stock that by its terms
ranks junior to the convertible preferred stock, collectively "junior stock",
with respect to dividend rights and rights on liquidation, winding up and
dissolution. Each share of convertible preferred stock will have a liquidation
preference of $1,000. Holders of convertible preferred shares will be entitled
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to receive, when as and if declared by our board of directors, cumulative
dividends from the date that the convertible preferred stock is issued in
accordance to the following terms
(1) dividends will be declared in preference to dividends on any junior
stock;
(2) dividends will be paid at a rate determined at the time of issuance
of the convertible preferred stock, and
(3) dividends may be paid, in our sole discretion, in cash, by issuing
shares of common stock or by issuing additional shares of convertible
preferred stock or any combination of the foregoing. Dividends will accrue
semi-annually from the second anniversary of the issuance of the
convertible preferred stock.
The convertible preferred shares will be redeemable at any time, in whole
or in part, at our option, for $1,000 in cash per share. After the third
anniversary of their issuance, the convertible preferred stock may be redeemed,
at our option, for shares of common stock. The convertible preferred stock is
mandatorily redeemable on the tenth anniversary of its issuance at a redemption
price of $1,000 per share in cash or for shares of common stock. The convertible
preferred stock will be convertible at the option of the holders thereof at any
time into an amount of shares of common stock determined in accordance with a
formula set forth in the certificate of designation relating thereto, subject to
adjustment in certain circumstances.
The holders of convertible preferred stock will have no voting rights,
except as required by law and as provided in the certificate of designations
relating thereto. convertible preferred stock holders may elect two new members
of our board of directors if the accumulation of accrued and unpaid dividends on
the outstanding convertible preferred stock constitutes an amount equal to three
semi-annual dividends.
9.9% preferred stock, series B. The 9.9% preferred stock, series B ranks
prior to the common stock and the rights preferred stock with respect to
dividend rights and rights on liquidation, winding up and dissolution, and each
share of 9.9% preferred stock, series B has a liquidation preference of $1,000
per share. Holders of shares of 9.9% preferred stock, series B are entitled to
receive, when, as and if declared by our board of directors dividends at a rate
of 9.9% per annum of the Stated Value of $1,000. Dividends are payable on the
9.9% preferred stock, series B on the date that the 9.9% preferred stock, series
B is redeemed. Dividends may, at our option, be paid in cash, by issuing shares
of common stock, or in any combination of the foregoing. We may redeem any or
all of the 9.9% preferred stock, series B at any time at a redemption price
equal to $1,000 per share, plus accrued and unpaid dividends to the date of
redemption. We must redeem all outstanding shares of 9.9% preferred stock,
series B on December 21, 2008 at a redemption price equal to $1,000 per share,
plus accrued and unpaid dividends to the date of redemption. If we have not
exercised our right to optionally redeem the 9.9% preferred stock, series B by
June 15, 2000, we shall mandatorily redeem all of the outstanding shares of 9.9%
preferred stock, series B at a redemption price equal to $1,000 per share plus
accrued and unpaid dividends to the date of redemption. We must also redeem all
outstanding shares of 9.9% preferred stock, series B in the event of a
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Reorganization, as defined in the certificate of designation with respect to the
9.9% preferred stock, series B, subject to certain exceptions. We, at our
option, may effect the mandatory redemption of the 9.9% preferred stock, series
B in cash, in exchange for shares of common stock, or in any combination of the
foregoing.
Holders of the 9.9% preferred stock, series B have no general voting
rights, except as otherwise required under the DGCL and except in certain
circumstances as set forth in the certificate of designation with respect to the
9.9% preferred stock, series B, including amending certain rights to the holders
of the 9.9% preferred stock, series B.
5 1/4% convertible preferred stock, series A. The 5 1/4% preferred stock
ranks prior to the common stock, the rights preferred stock, the 9.9% preferred
stock, series A, and the 9.9% preferred stock, series B, and junior only to the
13% preferred stock, with respect to dividend rights and rights on liquidation,
winding up and dissolution, and each share of 5 1/4% preferred stock has a
liquidation preference of $1,000, plus any accrued and unpaid dividends. Holders
of shares of 5 1/4% preferred stock are entitled to receive, when, as and if
declared by our board of directors quarterly dividends per share at a rate of
5 1/4% per annum. Dividends may be paid, at our option, either in
(1) cash,
(2) common stock or
(3) additional shares of preferred stock having terms substantially
similar to the 5 1/4% preferred stock, "additional preferred", except that
the conversion rate and value of the shares of such additional preferred
shall be increased for each dividend payment date after the first dividend
payment date by a compounding factor set forth in the certificate of
designations with respect to the 5 1/4% preferred stock.
We may redeem any or all of the 5 1/4% preferred stock on the earlier of
(1) seven years from the issue date and
(2) that date when the common stock has for a period of over 25 trading
days traded at a value over $120 per share, at our option, for either
(A) cash in an amount of $1,000 per share of 5 1/4% preferred
stock, plus accrued and unpaid dividends,
(B) common stock valued at $1,025 per share of 5 1/4% preferred
stock, plus accrued and unpaid dividends, in the case of a redemption
occurring at least seven years from the issue date,
(C) common stock valued at $1,000 per share of 5 1/4% preferred
stock, plus accrued and unpaid dividends, in the case of a redemption
due to the trading value of the common stock over a 25-day period, or
(D) any combination of cash and common stock at a redemption
price based on the respective combination of the consideration. Holders
of shares of 5 1/4% preferred stock have the option to require us to
redeem all outstanding shares of 5 1/4% preferred stock on and after
January 28, 2009, at a price equal
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to 100% of the liquidation preference thereof, payable in cash, common
stock, or any combination thereof.
We must redeem all shares of 5 1/4% preferred stock that remain outstanding
on the twentieth anniversary of the issue date at a redemption price equal to
$1,000 per share, payable at our option in cash, common stock or any combination
thereof, plus accrued and unpaid dividends.
Holders of shares of 5 1/4% preferred stock have no general voting rights,
except as otherwise required by law and except in certain circumstances as set
forth in the certificate of designations with respect to the 5 1/4% preferred
stock, including
(1) if dividends are in arrears for six quarterly periods (whether or
not consecutive),
(2) for purposes of amending certain rights of the holders of shares of
the 5 1/4% preferred stock or
(3) to approve the issuance of any equity securities that rank on a
parity with or senior to the 5 1/4% preferred stock or the increase of the
authorized amounts of any such other class or series, other than shares of
additional preferred or shares of securities that rank on a parity with or
senior to the 5 1/4% preferred stock issued in order to refinance, redeem
or refund the 13% preferred stock, provided the maximum accrual value of
such securities may not exceed the maximum accrual value of the 13%
preferred stock.
Holders of shares of 5 1/4% preferred stock have the right, at any time and
from time to time, to convert any or all outstanding shares of 5 1/4% preferred
stock held by them (but not any fractional shares) into common stock, such that
each share of the 5 1/4% preferred stock is convertible into 10 shares of common
stock, subject to adjustment in accordance with the certificate of designations;
provided, that the number of shares of common stock deliverable upon conversion
of the 5 1/4% preferred stock (together with the conversion of any shares of
additional preferred) shall not exceed 7,590,994, subject to adjustment in
accordance with the certificate of designations.
CERTAIN SPECIAL CHARTER PROVISIONS
Our restated certificate of incorporation, as amended, the "charter",
contains the provisions described below. Such charter provisions may have the
effect, alone or in combination with each other or with the existence of
authorized but unissued common stock and any series of preferred stock, of
precluding or rendering more difficult a hostile takeover making it more
difficult to remove or change the composition of our incumbent board of
directors and its officers, being adverse to stockholders who desire to
participate in a tender offer and depriving stockholders of possible
opportunities to sell their shares at temporarily higher prices.
Classified board and filling of vacancies on the board of directors. The
charter provides that the directors shall be divided into three classes, each of
which shall serve a staggered three-year term, and that vacancies on our board
of directors that may occur
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between annual meetings may be filled by our board of directors. In addition,
this provision specifies that any director elected to fill a vacancy on our
board of directors will serve for the balance of the term of the replaced
director.
Removal of directors. The charter provides that directors can be removed
only by the stockholders for cause and then only by the affirmative vote of the
holders of not less than two-thirds of the combined voting power of NTL.
Voting requirement for certain business combinations. The charter also
provides that, in addition to any affirmative vote required by law, the
affirmative vote of holders of two-thirds of the voting power of NTL shall be
necessary to approve any "business combination", as hereinafter defined,
proposed by an "interested stockholder", as hereinafter defined. The additional
voting requirements will not apply, however, if:
(1) the business combination was approved by not less than a majority
of the continuing directors or
(2) a series of conditions are satisfied requiring, in summary, the
following:
(A) that the consideration to be paid to our stockholders in the
business combination must be at least equal to the higher of (x) the
highest per-share price paid by the interested stockholder in acquiring
any shares of common stock during the two years prior to the
announcement date of the business combination or in the transaction in
which it became an interested stockholder, such date is referred to
herein as the "determination date", whichever is higher or (y) the fair
market value per share of common stock on the announcement date or
determination date, whichever is higher, in either case appropriately
adjusted for any stock dividend, stock split, combination of shares or
similar event (non-cash consideration is treated similarly) and
(B) certain "procedural" requirements are complied with, such as
the Consent Solicitation of proxies pursuant to the rules of the
Commission and no decrease in regular dividends (if any) after the
interested stockholder became an interested stockholder (except as
approved by a majority of the continuing directors).
An "interested stockholder" is defined as anyone who is the beneficial
owner of more than 15% of the voting power of the voting stock, other than us
and any employee stock plans sponsored by us, and includes any person who is an
assignee of or has succeeded to any shares of voting stock in a transaction not
involving a public offering that were at any time within the prior two-year
period beneficially owned by an interested stockholder. The term "beneficial
owner" includes persons directly and indirectly owning or having the right to
acquire or vote the stock. Interested stockholders participate fully in all
stockholder voting.
A "business combination" includes the following transactions:
(1) merger or consolidation of us or any subsidiary of ours with an
interested stockholder or with any other corporation or entity which is, or
after such merger or consolidation would be, an affiliate of an interested
stockholder;
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(2) the sale or other disposition by us or a subsidiary of ours of
assets having a fair market value of $5,000,000 or more if an interested
stockholder (or an affiliate thereof) is a party to the transaction;
(3) the adoption of any plan or proposal for the liquidation or
dissolution of NTL proposed by or on behalf of an interested stockholder
(or an affiliate thereof); or
(4) any reclassification of securities, recapitalization, merger with a
subsidiary, or other transaction which has the effect, directly or
indirectly, of increasing the proportionate share of any class of the
outstanding stock (or securities convertible into stock) of NTL or a
subsidiary owned by an interested stockholder (or an affiliate thereof).
Determinations of the fair market value of non-cash consideration are made
by a majority of the continuing directors.
The term "continuing directors" means any member of our board of directors,
while such person is a member of our board of directors, who is not an Affiliate
or Associate or representative of the interested stockholder and was a member of
our board of directors prior to the time that the interested stockholder became
an interested stockholder, and any successor of a continuing director while such
successor is a member of the our board of directors, who is not an Affiliate or
Associate or representative of the interested stockholder and is recommended or
elected to succeed the continuing director by a majority of continuing
directors.
Voting requirements for certain amendments to the charter. The charter
provides that the provisions set forth in this section under the heading
"Certain special charter provisions" may not be repealed or amended in any
respect, unless such action is approved by the affirmative vote of the holders
or not less than two-thirds of the voting power of NTL. The requirement of an
increased stockholder vote is designed to prevent a stockholder who controls a
majority of the voting power of NTL from avoiding the requirements of the
provisions discussed above by simply amending or repealing such provisions.
SECTION 203 OF THE DGCL
Generally, Section 203 of the DGCL prohibits a publicly held Delaware
corporation from engaging in any business combination with an interested
stockholder for a period of three years following the time that such stockholder
becomes an interested stockholder, unless
(1) prior to such time either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder is approved by the board of directors of the corporation,
(2) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at
the time the transaction commenced, excluding, for purposes of determining
the number of shares
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outstanding, those shares held by persons who are both directors and
officers and certain employee stock plans or
(3) at or after such time the business combination is approved by the
board and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least two-thirds of
the outstanding voting stock which is not owned by the interested
stockholder. A business combination includes certain mergers,
consolidations, asset sales, transfers and other transactions resulting in
a financial benefit to the interested stockholder. An interested
stockholder is a person who, together with affiliates and associates, owns
(or within the preceding three years, did own) 15% or more of the
corporation's voting stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is Continental Stock
Transfer & Trust Company.
NTL RIGHTS AGREEMENT
On August 27, 1993, our board of directors adopted the rights agreement.
The rights agreement provides that one right will be issued with each share of
common stock issued (whether originally issued or from our treasury) on or after
October 13, 1993 and prior to the rights distribution date, as defined herein.
The rights are not exercisable until the rights distribution date and will
expire at the close of business on October 13, 2003 unless previously redeemed
by us as described below. When exercisable, each right entitles the owner to
purchase from us one one-hundredth of a share of rights preferred stock at a
purchase price of $100.00. A holder of convertible notes will not be entitled to
receive rights unless such holder converts such convertible notes into shares of
common stock prior to the rights distribution date.
Except as described below, the rights will be evidenced by the common stock
certificates. The rights will separate from the common stock and a "rights
distribution date" will occur upon the earlier of
(1) 10 days following a public announcement that a person or group of
affiliated or associated persons, an "acquiring person", has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of the common stock, the "stock acquisition date", and
(2) 10 business days following the commencement of a tender offer or
exchange offer that would result in a person or group becoming an acquiring
person.
After the rights distribution date, rights certificates will be mailed to
holders of record of the common stock as of the rights distribution date and
thereafter the separate rights certificates alone will represent the rights.
The rights preferred stock issuable upon exercise of the rights will be
entitled to a minimum preferential quarterly dividend payment of $0.01 per share
and will be entitled to an aggregate dividend of 100 times the dividend, if any,
declared per share of common stock other than one payable in common stock. In
the event of liquidation, the holders of
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the rights preferred stock will be entitled to a minimum preferential
liquidation payment of $1.00 per share plus accrued and unpaid dividends and
will be entitled to an aggregate payment of 100 times the payment made per share
of the common stock. Each share of rights preferred stock will have 100 votes
and will vote together with the common stock. In the event of any merger,
consolidation or other transaction in which shares of the common stock are
changed or exchanged, each share of rights preferred stock will be entitled to
receive 100 times the amount received per share of the common stock. These
rights are protected by customary antidilution provisions. Because of the nature
of the rights preferred stock's dividend, liquidation and voting rights, the
value of one one-hundredth of a share of rights preferred stock purchasable upon
exercise of each Right should approximate the value of one share of the common
stock.
In the event that a person becomes an acquiring person (except pursuant to
a tender offer or an exchange offer for all outstanding shares of common stock
at a price and on terms determined by at least a majority of the members of our
board of directors who are not officers of NTL and who are not representatives,
nominees, affiliates or associates of an acquiring person, to be fair to our
stockholders and otherwise in our best interests and the best interests of our
stockholders, a "qualifying offer"), each holder of a right will thereafter have
the right to receive, upon the exercise thereof at the then current exercise
price, the common stock (or, in certain circumstances, cash, property or other
of our securities) having a value equal to two times the exercise price of the
right. Notwithstanding any of the foregoing, following the occurrence of any
such event, all rights that are or (under certain circumstances specified in the
rights agreement) were beneficially owned by any acquiring person (or certain
related parties) will be null and void. However, rights are not exercisable
following the occurrence of the event set forth above until such time as the
rights are no longer redeemable by us as set forth below.
In the event that, at any time following the stock acquisition date,
(1) we are acquired in a merger or other business combination
transaction in which we are not the surviving corporation or the common
stock is changed or exchanged (other than a merger which follows a
qualifying offer and satisfies certain other requirements) or
(2) 50% or more of our assets, cash flow or earning power is sold or
transferred, each holder of a right (except rights which previously have
been voided as set forth above) shall thereafter have the right to receive,
upon the exercise thereof at the then current exercise price, common stock
of the acquiring company having a value equal to two times the exercise
price of the right.
At any time until 10 days following the stock acquisition date, we may
redeem the right in whole, but not in part, at a price of $0.01 per right.
Immediately upon the action of our board of directors ordering redemption of the
rights, the rights will terminate and the only right of the holders of the
rights will be to receive the $0.01 redemption price.
Until a right is exercised, the holder thereof, as such, shall have no
rights as a stockholder of NTL, including without limitation, the right to vote
or to receive
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dividends. While the distribution of the rights will not be taxable to
stockholders or to us, stockholders may, depending upon the circumstances,
recognize taxable income in the event that the rights become exercisable for the
common stock (or other consideration) or for common stock of the acquiring
company as set forth above.
Other than those provisions relating to the principal terms of the rights,
any of the provisions of the rights agreement may be amended by our board of
directors prior to the rights distribution date. After the rights distribution
date, the provisions of the rights agreement may be amended by our board of
directors in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of rights (excluding the interests of any
acquiring person) or to shorten or lengthen any time period under the rights
agreement, provided that no amendment to adjust the time period governing
redemption shall be made at such time as the rights are not redeemable.
The rights have certain anti-takeover effects as they will cause
substantial dilution to a person or group that acquires a substantial interest
in us without the prior approval of our board of directors. The effect of the
rights may be to inhibit a change in control of NTL (including through a third
party tender offer at a price which reflects a premium to then prevailing
trading prices) that may be beneficial to our stockholders.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
Each of the following summaries of our existing debt instruments is
complete. You should refer to the relevant agreements for a full description of
the terms of those debt instruments. See "Where you can find more information
about us". The following summaries do not include summaries of the debt
instruments of Diamond. Capitalized terms used and not defined below have the
meanings set forth in such debt instruments.
THE 12 3/4% NOTES
In April 1995, we issued $277,803,500 aggregate principal amount at
maturity of our 12 3/4% senior deferred coupon notes due 2005, the "old 12 3/4%
notes", at a discount to their aggregate principal amount to generate gross
proceeds to us of approximately $150 million. The old 12 3/4% notes were issued
and sold in a transaction exempt from the registration requirement of the
Securities Act pursuant to Rule 144A under the Securities Act or in transactions
complying with Regulation S under the Securities Act. On August 18, 1995 we
issued $277,803,500 aggregate principal amount at maturity of the 12 3/4% series
A senior deferred coupon notes due 2005, the "12 3/4% notes", in exchange for
the old 12 3/4% notes pursuant to the indenture relating thereto, the "12 3/4%
notes indenture". The terms of the 12 3/4% notes are identical in all material
respects to the old 12 3/4% notes except for certain transfer restrictions and
registration rights applicable to the old 12 3/4% notes. The old 12 3/4% notes
were cancelled on August 18, 1995 on consummation of the exchange offer which
was made pursuant to our prospectus dated July 18, 1995, forming part of the
registration statement on Form S-4 (File No. 33-92794) filed with the Commission
on May 26, 1995.
The 12 3/4% notes accrete at a rate of 12 3/4% computed on a semiannual
bond equivalent basis to an aggregate principal amount at maturity of
$277,803,500. Cash interest on the 12 3/4% notes does not accrue until prior to
April 15, 2000. Thereafter, the 12 3/4% notes accrue interest in cash at the
rate of 12 3/4% per annum on the principal amount payable semiannually on April
15 and October 15 of each year, commencing October 15, 2000 to holders of record
on the immediately preceding April 1, and October 1. The 12 3/4% notes mature on
April 15, 2005. The 12 3/4% notes are redeemable, at our option at any time, in
whole or in part, on or after April 15, 2000 at the redemption prices set forth
in the 12 3/4% notes indenture, plus any unpaid interest, if any, to the date of
redemption. The 12 3/4% notes may also be redeemed at our option in whole but
not in part in certain circumstances where additional amounts, as defined in the
12 3/4% notes indenture, are payable under the 12 3/4% notes. In such
circumstances the 12 3/4% notes to be repurchased must be repurchased at 100% of
Accreted Value, or, as the case may be, principal amount thereof. Upon a Change
of Control Triggering Event, as defined in the 12 3/4% notes indenture, holders
of the 12 3/4% notes have the right to require us to repurchase all or any part
of the 12 3/4% notes at a repurchase price equal to 101% of the Accreted Value
thereof plus accrued and unpaid interest, if any. Subject to certain conditions,
we are obligated to offer to purchase the 12 3/4% notes and other Qualified
Senior Notes, as defined in the 12 3/4% notes indenture, with the Excess
Proceeds of certain Asset Sales at a redemption price of 100% of the Accreted
Value or, as the case may be, principal amount thereof plus accrued and unpaid
interest. The
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12 3/4% notes indenture contains certain restrictions with respect to, among
other things, the payment of dividends, the repurchase of stock and the making
of certain other Restricted Payments, the incurrence of additional Indebtedness,
the creation of certain Liens, certain Asset Sales, transactions with
Subsidiaries and other Affiliates and mergers and consolidations.
The 12 3/4% notes are senior unsecured obligations of NTL ranking pari
passu in right of payment of principal and interest with all of our other
existing and future senior unsecured obligations and rank senior to all of our
other existing and future subordinated debts, including, without limitation, the
convertible notes and the existing convertible notes.
In January 1996, we obtained the necessary consents of the registered
holders of the 12 3/4% notes to certain proposed amendments to the 12 3/4% notes
indenture. On January 22, 1996, we and Chemical Bank, now known as The Chase
Manhattan Bank, as trustee, executed a first supplemental indenture to effect
those amendments. In general, the amendments modified the 12 3/4% notes
indenture by amending the covenant entitled "Limitations on Dividend and Other
Payment Restrictions Affecting Subsidiaries" and other provisions to facilitate
the arrangement of our then proposed credit facilities and other financings and
make certain conforming and other changes to the 12 3/4% notes indenture.
In October 1998, we received the necessary consents of registered holders
of the 12 3/4% notes to amend the 12 3/4% notes indenture so as to allow us and
our subsidiaries to take certain actions that were previously prohibited under
the 12 3/4% notes indenture, particularly regarding the financing of our and our
subsidiaries' business and pending and future acquisitions, including our
acquisition of Partners. In addition, the amendment eliminated some, but not
all, of certain differences between the covenants in the 12 3/4% notes indenture
and the existing 10 3/4% notes, 9 3/4% notes and 9 1/2% notes indentures. On
October 14, 1998, we and The Chase Manhattan Bank, as trustee, executed a second
supplemental indenture to effect such amendment.
THE 11 1/2% DEFERRED COUPON NOTES
In January 1996, we issued $1,050 million aggregate principal amount at
maturity of our 11 1/2% series A senior deferred coupon notes due 2006, the "old
11 1/2% deferred coupon notes", at a discount to their aggregate principal
amount to generate gross proceeds to us of approximately $600,127,500. The old
11 1/2% deferred coupon notes were issued and sold in a transaction exempt from
the registration requirement of the Securities Act pursuant to Rule 144A under
the Securities Act. On May 23, 1996, we issued $1,050 million aggregate
principal amount at maturity of the 11 1/2% series B senior deferred coupon
notes due 2006, the "11 1/2% deferred coupon notes", in exchange for the old
11 1/2% deferred coupon notes pursuant to the indenture relating thereto, the
"11 1/2% deferred coupon notes indenture". The terms of the 11 1/2% deferred
coupon notes are identical in all material respects to the old 11 1/2% deferred
coupon notes except for certain transfer restrictions and registration rights
applicable to the old 11 1/2% deferred coupon notes. The old 11 1/2% deferred
coupon notes tendered for exchange were cancelled on May 23, 1996 on
consummation of the exchange offer made pursuant to
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our prospectus dated April 22, 1996, forming part of our registration statement
on Form S-4 (File No. 333-1010) filed with the Commission on April 16, 1996.
The 11 1/2% deferred coupon notes accrete at a rate of 11 1/2% computed on
a semiannual bond equivalent basis to an aggregate principal amount at maturity
of $1,050 million. Cash interest on the 11 1/2% deferred coupon notes does not
accrue until February 1, 2001. Thereafter, the 11 1/2% deferred coupon notes
accrue interest in cash at the rate of 11 1/2% per annum on the principal amount
payable semiannually on February 1 and August 1 of each year, commencing August
1, 2001, to holders of record on the immediately preceding January 15, and July
15. The 11 1/2% deferred coupon notes mature on February 1, 2006. The 11 1/2%
deferred coupon notes are redeemable, at our option at any time, in whole or in
part, on or after February 1, 2001 at the redemption prices set forth in the
11 1/2% deferred coupon notes indenture plus any accrued unpaid interest to the
date of redemption. The 11 1/2% deferred coupon notes may also be redeemed at
our option in whole but not in certain circumstances where "Additional Amounts",
as defined in the 11 1/2% deferred coupon notes indenture, are payable under the
11 1/2% notes. In such circumstances, the 11 1/2% deferred coupon notes to be
repurchased must be repurchased at 100% of accreted value or, as the case may
be, principal amount thereof plus accrued and unpaid interest. Upon a Change of
Control Triggering Event, as defined in the 11 1/2% deferred coupon notes
indenture, holders of the 11 1/2% deferred coupon notes have the right to
require us to repurchase all or any part of the 11 1/2% deferred coupon notes at
a repurchase price equal to 101% of the accreted value or, as the case may be,
principal amount thereof plus accrued and unpaid interest, if any. Subject to
certain conditions, we are obligated to offer to purchase the 11 1/2% deferred
coupon notes and other Qualified Senior Notes, as defined in the 11 1/2%
deferred coupon notes indenture), with the Excess Proceeds of certain Asset
Sales at a redemption price of 100% of the accreted value or, as the case may
be, principal amount thereof plus accrued and unpaid interest, if any. The
11 1/2% deferred coupon notes indenture contains certain restrictions with
respect to, among other things, the payment of dividends, the repurchase of
stock and the making of certain other Restricted Payments, the incurrence of
additional Indebtedness, the creation of certain Liens, certain sales of assets,
transactions with Subsidiaries and other Affiliates and mergers and
consolidations.
In October 1998, we received the necessary consents of registered holders
of the 11 1/2% deferred coupon notes to amend the 11 1/2% deferred coupon notes
indenture so as to allow us and our subsidiaries to take certain actions that
were previously prohibited under the 11 1/2% deferred coupon notes indenture,
particularly regarding the financing of our and our subsidiaries' business and
pending and future acquisitions, including our acquisition of Partners. In
addition, the amendment eliminated some, but not all, of certain differences
between the covenants in the 11 1/2% deferred coupon notes indenture and the
existing 10 3/4% notes, 9 3/4% notes and 9 1/2% notes indentures. On October 14,
1998, we and The Chase Manhattan Bank, as trustee, executed a first supplemental
indenture to effect such amendment.
The 11 1/2% deferred coupon notes are senior unsecured obligations of NTL
ranking pari passu in right of payment of principal and interest with all of our
other existing and
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future senior unsecured obligations and rank senior to all of our other existing
and future subordinated debt, including, without limitation, the convertible
notes and the existing convertible notes.
THE 10% NOTES
In February 1997, we issued $400 million aggregate principal amount of our
10% series A senior notes due 2007, the "old 10% notes". The old 10% notes were
issued and sold in a transaction exempt from the registration requirement of the
Securities Act pursuant to Rule 144A under the Securities Act. On June 27, 1997
we issued $400 million aggregate principal amount at maturity of our 10% series
B senior notes due 2007, the "10% notes", in exchange for the old 10% notes
pursuant to the indenture relating thereto, the "10% notes indenture". The terms
of the 10% notes are identical in all material respects to the old 10% notes
except for certain transfer restrictions and registration rights applicable to
the old 10% notes. The old 10% notes tendered for exchange were cancelled on
June 27, 1997 on consummation of the exchange offer made pursuant to our
prospectus dated May 27, 1997, forming part of our registration statement on
Form S-4 (File No. 333-25577) filed with the Commission on April 21, 1997.
The 10% notes accrue interest in cash at the rate of 10% per annum on the
principal amount payable semiannually on February 15 and August 15 of each year,
to holders of record on the immediately preceding February 1, and August 1. The
10% notes mature on February 15, 2007. The 10% notes are redeemable, at our
option at any time, in whole or in part, on or after February 15, 2002 are
redemption prices set forth in the 10% notes indenture, plus any accrued unpaid
interest to the date of redemption. The 10% notes may also be redeemed at our
option in whole but not in certain circumstances where "Additional Amounts", as
defined in the 10% notes indenture, are payable under the 10% notes. In such
circumstances, the 10% notes to be repurchased must be repurchased at 100% of
the principal amount thereof plus accrued and unpaid interest. Upon a Change of
Control Triggering Event, as defined in the 10% notes indenture, holders of the
10% notes have the right to require us to repurchase all or any part of the 10%
notes at a repurchase price equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any. Subject to certain conditions, we are
obligated to offer to purchase the 10% notes and other Qualified Senior Notes,
as defined in the 10% notes indenture, with the Excess Proceeds of certain Asset
Sales at a redemption price of 100% of the principal amount thereof plus accrued
and unpaid interest, if any. The 10% notes indenture contains certain
restrictions with respect to, among other things, the payment of dividends, the
repurchase of stock and the making of certain other Restricted Payments, the
incurrence of additional Indebtedness, the creation of certain Liens, certain
sales of assets, transactions with Subsidiaries and other Affiliates and mergers
and consolidations.
In October 1998, we received the necessary consents of registered holders
of the 10% notes to amend the 10% notes indenture so as to allow us and our
subsidiaries to take certain actions that were previously prohibited under the
10% notes indenture, particularly regarding the financing of our and our
subsidiaries' business and pending and
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future acquisitions, including our acquisition of Partners. In addition, the
amendment eliminated some, but not all, of certain differences between the
covenants in the 10% notes indenture and the existing 10 3/4% notes, the 9 3/4%
notes and the 9 1/2% notes indentures. On October 14, 1998, we and The Chase
Manhattan Bank, as trustee, executed a first supplemental indenture to effect
such amendment.
The 10% notes are senior unsecured obligations of NTL ranking pari passu in
right of payment of principal and interest with all of our other existing and
future senior unsecured obligations and rank senior to all of our other existing
and future subordinated debt, including, without limitation, the convertible
notes and the existing convertible notes.
THE 10 3/4% NOTES
In March 1998, we issued L300 million ($500,010,000) aggregate principal
amount of maturity of our 10 3/4% senior deferred coupon notes due 2008, the
"old 10 3/4% notes", at a discount to their aggregate principal amount to
generate gross proceeds to us of approximately L124,587,000. The old 10 3/4%
notes were issued and sold in a transaction exempt from the registration
requirement of the Securities Act pursuant to Rule 144A under the Securities
Act. On October 22, 1998 we commenced an exchange offer to exchange all
outstanding old 10 3/4% notes for a like principal amount at maturity of the
10 3/4% series B senior deferred coupon notes due 2008, the "new 10 3/4% notes",
registered under the Securities Act. The terms of the new 10 3/4% notes are
identical in all material respects to the old 10 3/4% notes except for certain
transfer restrictions and registration rights applicable to the old 10 3/4%
notes.
The 10 3/4% notes accrete at a rate of 10 3/4% computed on a semiannual
bond equivalent basis to an aggregate principal amount at maturity of L300
million ($500,010,000). Cash interest on the 10 3/4% notes does not accrue until
April 1, 2003. Thereafter, the 10 3/4% notes accrue interest in cash at the rate
of 10 3/4% per annum on the principal amount payable semiannually on April 1 and
October 1 of each year, commencing April 1, 2003, to holders of record on the
immediately preceding March 15, and September 15. The 10 3/4% notes mature on
April 1, 2008. The 10 3/4% notes are redeemable, at our option at any time, in
whole or in part, on or after April 1, 2003 at the redemption prices set forth
in the 10 3/4% notes indenture plus any accrued unpaid interest to the date of
redemption. The 10 3/4% notes may also be redeemed at our option in whole but
not in certain circumstances where "Additional Amounts", as defined in the
10 3/4% notes indenture, are payable under the 10 3/4% notes. In such
circumstances, the 10 3/4% notes to be repurchased must be repurchased at 100%
of accreted value or, as the case may be, principal amount thereof plus accrued
and unpaid interest. Upon a Change of Control Triggering Event, as defined in
the 10 3/4% notes indenture, holders of the 10 3/4% notes have the right to
require us to repurchase all or any part of the 10 3/4% notes at a repurchase
price equal to 101% of the accreted value or, as the case may be, principal
amount thereof plus accrued and unpaid interest, if any. Subject to certain
conditions, we are obligated to offer to purchase the 10 3/4% notes and other
Qualified Senior Notes, as defined in the 10 3/4% notes indenture, with the
Excess Proceeds of certain Asset Sales at a redemption price of 100% of the
accreted value or, as the case
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may be, principal amount thereof plus accrued and unpaid interest, if any. The
10 3/4% notes indenture contains certain restrictions with respect to, among
other things, the payment of dividends, the repurchase of stock and the making
of certain other Restricted Payments, the incurrence of additional Indebtedness,
the creation of certain Liens, certain sales of assets, transactions with
Subsidiaries and other Affiliates and mergers and consolidations.
The 10 3/4% notes are senior unsecured obligations of NTL ranking pari
passu in right of payment of principal and interest with all of our other
existing and future senior unsecured obligations and rank senior to all of our
other existing and future subordinated debt, including, without limitation, the
convertible notes and the existing convertible notes.
THE 9 3/4% NOTES
In March 1998, we issued $1,300 million aggregate principal amount at
maturity of our 9 3/4% senior deferred coupon notes due 2008, the "old 9 3/4%
notes", at a discount to their aggregate principal amount to generate gross
proceeds to us of approximately $802,412,000. The old 9 3/4% notes were issued
and sold in a transaction exempt from the registration requirement of the
Securities Act pursuant to Rule 144A under the Securities Act. On October 22,
1998 we commenced an exchange offer to exchange all outstanding old 9 3/4% notes
for a like principal amount at maturity of the 9 3/4% series B senior deferred
coupon notes due 2006, the "9 3/4% notes", registered under the securities act.
The terms of the 9 3/4% notes are identical in all material respects to the old
9 3/4% notes except for certain transfer restrictions and registration rights
applicable to the old 9 3/4% notes.
The 9 3/4% notes accrete at a rate of 9 3/4% computed on a semiannual bond
equivalent basis to an aggregate principal amount at maturity of $1,300,000,000.
Cash interest on the 9 3/4% notes does not accrue until April 1, 2003.
Thereafter, the 9 3/4% notes accrue interest in cash at the rate of 9 3/4% per
annum on the principal amount payable semiannually on April 1 and October 1 of
each year, commencing April 1, 2003, to holders of record on the immediately
preceding March 15, and September 15. The 9 3/4% notes mature on April 1, 2008.
The 9 3/4% notes are redeemable, at our option at any time, in whole or in part,
on or after April 1, 2003 at the redemption prices set forth in the 9 3/4% notes
indenture plus any accrued unpaid interest to the date of redemption. The 9 3/4%
notes may also be redeemed at our option in whole but not in certain
circumstances where "Additional Amounts", as defined in the 9 3/4% notes
indenture, are payable under the 9 3/4% notes. In such circumstances, the 9 3/4%
notes to be repurchased must be repurchased at 100% of accreted value or, as the
case may be, principal amount thereof plus accrued and unpaid interest. Upon a
Change of Control Triggering Event, as defined in the 9 3/4% notes indenture,
holders of the 9 3/4% notes have the right to require us to repurchase all or
any part of the 9 3/4% notes at a repurchase price equal to 101% of the accreted
value or, as the case may be, principal amount thereof plus accrued and unpaid
interest, if any. Subject to certain conditions, we are obligated to offer to
purchase the 9 3/4% notes and other Qualified Senior Notes, as defined in the
9 3/4% notes indenture, with the Excess Proceeds of certain Asset Sales at a
redemption price of
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100% of the accreted value or, as the case may be, principal amount thereof plus
accrued and unpaid interest, if any. The 9 3/4% notes indenture contains certain
restrictions with respect to, among other things, the payment of dividends, the
repurchase of stock and the making of certain other Restricted Payments, the
incurrence of additional Indebtedness, the creation of certain Liens, certain
sales of assets, transactions with Subsidiaries and other Affiliates and mergers
and consolidations.
The 9 3/4% notes are senior unsecured obligations of NTL ranking pari passu
in right of payment of principal and interest with all of our other existing and
future senior unsecured obligations and rank senior to all of our other existing
and future subordinated debt, including, without limitation, the convertible
notes and the existing convertible notes.
THE 9 1/2% NOTES
In March 1998 we issued L125 million ($208,337,500) aggregate principal
amount of our 9 1/2% senior notes due 2008, the "old 9 1/2% notes". The old
9 1/2% notes were issued and sold in a transaction exempt from the registration
requirement of the Securities Act pursuant to Rule 144A under the Securities
Act. On October 22, 1998 we commenced an exchange offer to exchange all
outstanding old 9 1/2% notes for a like principal amount of the 9 1/2% series B
senior notes due 2008, the "9 1/2% notes", registered under the Securities Act.
The terms of the 9 1/2% notes are identical in all material respects to the old
9 1/2% notes except for certain transfer restrictions and registration rights
applicable to the old 9 1/2% notes.
The 9 1/2% notes accrue interest in cash at the rate of 9 1/2% per annum on
the principal amount payable semiannually on April 1, and October 1 of each
year, to holders of record on the immediately preceding March 15 and September
15. The 9 1/2% notes mature on April 1, 2008. The 9 1/2% notes are redeemable at
our option at any time, in whole or in part, on or after April 1, 2003 are
redemption prices set forth in the 9 1/2% notes indenture, plus any accrued
unpaid interest to the date of redemption. The 9 1/2% notes may also be redeemed
at our option in whole but not in certain circumstances where "Additional
Amounts", as defined in the 9 1/2% notes indenture, are payable under the 9 1/2%
notes. In such circumstances, the 9 1/2% notes to be repurchased must be
repurchased at 100% of the principal amount thereof plus accrued and unpaid
interest. Upon a Change of Control Triggering Event, as defined in the 9 1/2%
notes indenture, holders of the 9 1/2% notes have the right to require us to
repurchase all or any part of the 10% notes at a repurchase price equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any subject
to certain conditions, we are obligated to offer to purchase the 9 1/2% notes
and other Qualified Senior Notes, as defined in the 9 1/2% notes indenture, with
the Excess Proceeds of certain Asset Sales at a redemption price of 100% of the
principal amount thereof plus accrued and unpaid interest, if any. The 9 1/2%
notes indenture contains certain restrictions with respect to, among other
things, the payment of dividends, the repurchase of stock and the making of
certain other Restricted Payments, the incurrence of additional Indebtedness,
the creation of certain Liens, certain sales of assets, transactions with
Subsidiaries and other Affiliates and mergers and consolidations.
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The 9 1/2% notes are senior unsecured obligations of NTL ranking pari passu
in right of payment of principal and interest with all of our other existing and
future senior unsecured obligations and rank senior to all of our other existing
and future subordinated debt, including, without limitation, the convertible
notes and the existing convertible notes.
THE 11 1/2% NOTES
On November 2, 1998, we issued $625 million aggregate principal amount of
our 11 1/2% senior notes due 2008, the "11 1/2% old notes". The 11 1/2% old
notes were offered and sold in transactions exempt from the registration
requirement of the Securities Act pursuant to Rule 144A under the Securities Act
and Regulation S under the Securities Act. On January 27, 1998, we filed a
registration statement on Form S-4 relating to offer to exchange all outstanding
11 1/2% old notes for a like principal amount of 11 1/2% series B senior notes
due 2008, the "11 1/2% new notes" and, together with the 11 1/2% old notes, the
"11 1/2% notes." The terms of the 11 1/2% new notes will be identical in all
material respects to the 11 1/2% old notes except for certain transfer
restrictions and registration rights applicable to the 11 1/2% old notes.
The 11 1/2% notes accrue interest in cash at the rate of 11 1/2% per annum
on the principal amount payable semiannually on April 1, and October 1 of each
year, to holders of record on the immediately preceding March 15 and September
15. The 11 1/2% notes mature on October 1, 2008. The 11 1/2% notes are
redeemable at our option at any time, in whole or in part, on or after October
1, 2003 at redemption prices set forth in the 11 1/2% notes indenture, plus any
accrued unpaid interest to the date of redemption. The 11 1/2% notes may also be
redeemed at our option in whole but not in certain circumstances where
"Additional Amounts", as defined in the 11 1/2% notes indenture, are payable
under the 11 1/2% notes. In such circumstances, the 11 1/2% notes to be
repurchased must be repurchased at 100% of the principal amount thereof plus
accrued and unpaid interest. Upon a Change of Control Triggering Event, as
defined in the 11 1/2% notes indenture, holders of the 11 1/2% notes have the
right to require us to repurchase all or any part of the 11 1/2% notes at a
repurchase price equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any Subject to certain conditions, we are obligated to offer
to purchase the 11 1/2% notes and other Qualified Senior Notes, as defined in
the 11 1/2% notes indenture, with the Excess Proceeds of certain Asset Sales at
a redemption price of 100% of the principal amount thereof plus accrued and
unpaid interest, if any. The 11 1/2% notes indenture contains certain
restrictions with respect to, among other things, the payment of dividends, the
repurchase of stock and the making of certain other Restricted Payments, the
incurrence of additional Indebtedness, the creation of certain Liens, certain
sales of assets, transactions with Subsidiaries and other Affiliates and mergers
and consolidations.
The 11 1/2% notes are senior unsecured obligations of NTL ranking pari
passu in right of payment of principal and interest with all of our other
existing and future senior unsecured obligations and rank senior to all of our
other existing and future subordinated debt, including, without limitation, the
convertible notes and the existing convertible notes.
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THE 12 3/8% NOTES
On November 6, 1998, we issued $450 million aggregate principal amount at
maturity of our 12 3/8% senior deferred coupon notes due 2008, the "12 3/8% old
notes". The 12 3/8% old notes were offered and sold in transactions exempt from
the registration requirements of the Securities Act pursuant to Rule 144A under
144A under the Securities Act and Regulation S under the Securities Act. On
January 27, 1998, we filed a registration statement on Form S-4 relating to
offer to exchange all outstanding 12 3/8% old notes for a like principal amount
of 12 3/8% series B senior deferred coupon notes due 2008, the "12 3/8% new
notes" and, together with the 12 3/8% old notes, the "12 3/8% notes." The terms
of the 12 3/8% new notes will be identical in all material respects to the
12 3/8% old notes except for certain transfer restrictions and registration
rights applicable to the 12 3/8% old notes.
The 12 3/8% notes accrete at a rate of 12 3/8% computed on a semiannual
bond equivalent basis to an aggregate principal amount at maturity of $450
million. Cash interest on the 12 3/8% notes does not accrue until April 1, 2003.
Thereafter, the 12 3/8% notes accrue interest in cash at the rate of 12 3/8% per
annum on the principal amount payable semiannually on April 1 and October 1 of
each year, commencing October 1, 2003, to holders of record on the immediately
preceding March 15, and September 15. The 12 3/8% notes mature on October 1,
2008. The 12 3/8% notes are redeemable, at our option at any time, in whole or
in part, on or after October 1, 2003 at the redemption prices set forth in the
12 3/8% notes indenture plus any accrued unpaid interest to the date of
redemption. The 12 3/8% notes may also be redeemed at our option in whole but
not in certain circumstances where "Additional Amounts", as defined in the
10 3/4% notes indenture, are payable under the 12 3/8% notes. In such
circumstances, the 12 3/8% notes to be repurchased must be repurchased at 100%
of accreted value or, as the case may be, principal amount thereof plus accrued
and unpaid interest. Upon a Change of Control Triggering Event, as defined in
the 12 3/8% notes indenture, holders of the 12 3/8% notes have the right to
require us to repurchase all or any part of the 12 3/8% notes at a repurchase
price equal to 101% of the accreted value or, as the case may be, principal
amount thereof plus accrued and unpaid interest, if any. Subject to certain
conditions, we are obligated to offer to purchase the 12 3/8% notes and other
Qualified Senior Notes, as defined in the 12 3/8% notes indenture, with the
Excess Proceeds of certain Asset Sales at a redemption price of 100% of the
accreted value or, as the case may be, principal amount thereof plus accrued and
unpaid interest, if any. The 12 3/8% notes indenture contains certain
restrictions with respect to, among other things, the payment of dividends, the
repurchase of stock and the making of certain other Restricted Payments, the
incurrence of additional Indebtedness, the creation of certain Liens, certain
sales of assets, transactions with Subsidiaries and other Affiliates and mergers
and consolidations.
The 12 3/8% notes are senior unsecured obligations of NTL ranking pari
passu in right of payment of principal and interest with all of our other
existing and future senior unsecured obligations and rank senior to all of our
other existing and future subordinated debt, including, without limitation, the
convertible notes and the existing convertible notes.
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PARTNER'S 11.20% DISCOUNT DEBENTURES DUE 2007
On November 15, 1995, Partners issued $517,321,000 aggregate principal
amount at maturity of its 11.20% senior discount debentures due 2007, the
"Partners 11.20% debentures", at a discount to their aggregate principal amount
to generate gross proceeds to Partners of approximately $299,999,621. The
Partners 11.20% debentures were registered with the Commission on Partners'
registration statement on Form S-1 (File No. 33-96932).
The Partners 11.20% debentures accrete at the rate of 11.20% per annum,
compounded semiannually to an aggregate principal amount at maturity of
$517,321,000. Cash interest on the Partners 11.20% debentures does not accrue
until November 15, 2000. Thereafter, the Partners 11.20% debentures accrue
interest at the rate of 11.20% per annum on the principal amount payable
semiannually on May 15 and November 15 of each year, commencing May 15, 2001.
The Partners 11.20% debentures mature on November 15, 2007. The Partners 11.20%
debentures are redeemable, at the option of Partners at any time, in whole or in
part, on or after November 15, 2000 at the redemption prices set forth in the
Partners 11.20% debentures indenture plus accrued and unpaid interest to the
date of redemption. The Partners 11.20% debentures may also be redeemed by
Partners in whole but not in part in certain circumstances where "Additional
Amounts", as defined in the Partners 11.20% debentures indenture, are payable on
the Partners 11.20% debentures after November 15, 2001. In such circumstances,
the Partners 11.20% debentures may be redeemed at 100% of their principal amount
plus accrued and unpaid interest to the date of redemption. Upon a Change of
Control Triggering Event, as defined in the Partners 11.20% debentures
indenture, holders of the Partners 11.20% debentures have the right to require
us to repurchase all or any part of the Partners 11.20% debentures at a
repurchase price equal to 101% of the accreted value or, as the case may be,
principal amount thereof plus accrued and unpaid interest, if any. Subject to
certain conditions, we are obligated to offer to purchase the Partners 11.20%
debentures with the Excess Proceeds of certain Asset Sales at a redemption price
of 100% of the accreted value or, as the case may be, principal amount thereof
plus accrued and unpaid interest, if any. The Partners 11.20% debentures
indenture contains certain restrictions with respect to, among other things, the
payment of dividends, the repurchase of stock and the making of certain other
Restricted Payments, the incurrence of additional Indebtedness, the creation of
certain Liens, certain sales of assets, transactions with Affiliates and mergers
and consolidations.
The Partners 11.20% debentures are senior unsecured obligations of Partners
ranking pari passu in right of payment of principal and interest with all other
existing and future senior unsecured obligations of Partners.
THE NEW CREDIT FACILITY
In August 1997, NTL (UK) Group, Inc., a wholly-owned subsidiary of NTL,
which is the holding company for the United Kingdom operations and the parent
company of NTLIH, and NTLIH entered into an agreement with The Chase Manhattan
Bank pursuant to which Chase has agreed to fully underwrite a term loan
facility. In June 1998, we entered into an amendment to the new credit facility
and borrowed L275
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<PAGE> 85
million ($467 million) for the first stage of the ComTel acquisition. We
borrowed an additional L200 million ($340 million) in September 1998 for the
second stage of the ComTel acquisition. In November 1998, we repaid all amounts
outstanding under the new credit facility from the net proceeds of the offering
of the 11 1/2% notes and the 12 3/8% notes.
EXISTING CONVERTIBLE NOTES
In June 1996, we issued and sold an aggregate principal amount of $275
million of our 7% convertible subordinated notes due 2008, the "existing
convertible notes", in transactions exempt from, or not subject to, the
registration requirements of the Securities Act. Cash interest on the existing
convertible notes is payable semiannually on June 15 and December 15 of each
year, commencing December 16, 1996. The existing convertible notes mature on
June 15, 2008. The existing convertible notes are convertible at the option of
the holder thereof at any time prior to maturity, unless previously redeemed,
into shares of our common stock, at a conversion price of $37.875 per share
subject to further adjustment in certain events. The existing convertible notes
are redeemable, in whole or in part, at our option, at any time on or after June
5, 1999, at the redemption prices set forth in the indenture pursuant to which
the existing convertible notes were issued, the "existing convertible notes
indenture". Upon a Change of Control Triggering Event, as defined in the
existing convertible notes indenture, holders of the existing convertible notes
have the right to require us to purchase all or any part of the existing
convertible notes at a purchase price equal to 101% of the principal amount
thereof and any accrued and unpaid interest to the date of purchase. The
existing convertible notes indenture contains certain restrictions with respect
to, among other things, certain Asset Sales, payment of Additional Amounts and
mergers and consolidations.
The existing convertible notes are unsecured obligations of NTL,
subordinated in right of payment to all of our existing and future senior debt,
as defined in the existing convertible notes indenture, including, without
limitation, the senior notes.
On September 13, 1996, the Commission declared effective our shelf
registration statement relating to the resale of the existing convertible notes
and the common stock issuable upon conversion thereof by the holders thereof.
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UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a discussion of selected anticipated U.S. federal income
tax consequences of the purchase, ownership and disposition of the convertible
notes as of the date hereof. It deals only with convertible notes held as
capital assets by initial holders, and does not deal with special situations
including those that may apply to a particular holder such as exempt
organizations, dealers in securities, financial institutions, insurance
companies, persons who are not U.S. holders, and holders whose "functional
currency" is not the U.S. dollar, or special rules with respect to straddle or
"hedging transactions." The federal income tax considerations set forth below
are based upon the Internal Revenue Code of 1986, as amended and regulations,
rulings and judicial decisions thereunder as of the date hereof, and such
authorities may be repealed, revoked or modified (possibly retroactively) so as
to result in federal income tax consequences different from those discussed
below. As used herein, the term "U.S. holder" means a beneficial owner of a
convertible note that is for United States federal income tax purposes
(1) a citizen or resident of the United States,
(2) a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political subdivision
thereof,
(3) an estate or trust, described in Section 7701(a)(30) of the
Internal Revenue Code, or
(4) a person whose worldwide income or gain is otherwise subject to
United States federal income taxation on a net income basis.
Prospective investors are urged to consult their tax advisors regarding the
particular tax consequences of purchasing, holding and disposing of the
convertible notes or our common stock, including the tax consequences arising
under any state, local or foreign laws.
Payments of interest on convertible notes generally will be taxable to U.S.
Holders as ordinary interest income at the time such payments are accrued or
received (in accordance with the U.S. holder's method of accounting for federal
income tax purposes).
A U.S. holder will not recognize gain or loss upon conversion of the
convertible notes solely into our common stock (except with respect to cash
received in lieu of fractional shares, or any amounts attributable to accrued
and unpaid interest on the convertible notes, which will be treated as interest
for federal income tax purposes). The U.S. holder's basis in the common stock
received on conversion will be the same as such holder's adjusted tax basis in
the convertible notes at the time of conversion, and the holding period for the
common stock received on conversion will include the holding period of the
convertible notes that were converted.
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<PAGE> 87
A U.S. holder will recognize gain or loss upon the sale, redemption or
other taxable disposition of the convertible notes in an amount equal to the
difference between such holder's adjusted tax basis in the convertible note and
the amount received therefor (other than amounts attributable to accrued and
unpaid interest on the convertible notes, which will be treated as interest for
federal income tax purposes). Such gain or loss generally will be long-term
capital gain or loss if the convertible notes were held for more than one year.
The conversion price of the convertible notes is subject to adjustment
under certain circumstances. Under Section 305 of the Internal Revenue Code and
the Treasury Regulations issued thereunder, adjustments or the failure to make
such adjustments to the conversion price of the convertible notes may result in
a taxable constructive distribution to U.S. holders of convertible notes,
resulting in ordinary income (subject to a possible dividends received deduction
in the case of corporate holders) to the extent of our current and accumulated
earnings and profits if, and to the extent that, certain adjustments in the
conversion price that may occur in limited circumstances (particularly an
adjustment to reflect a taxable dividend to holders of our common stock)
increase the proportionate interest of a U.S. holder of a convertible note
convertible into fully diluted common stock, whether or not the holders ever
convert the convertible notes. Generally, a U.S. holder's tax basis in a
convertible note will be increased by the amount of any such constructive
dividend.
We intend to take the position that the likelihood of paying Liquidated
Damages described under "Description of convertible notes -- registration
rights" is remote and that Liquidated Damages, if paid, would be taxable to a
U.S. holder of convertible notes as ordinary interest income in accordance with
such holder's method of accounting for income tax purposes. The Internal Revenue
Service may take a different position, however, which could affect the timing to
the U.S. holder's income with respect to Liquidated Damages.
The preceding discussion of certain United States federal income tax
consequences is for general information only and is not tax advice. Accordingly,
each investor should consult its own tax adviser as to particular tax
consequences to it of purchasing, holding, and disposing of the convertible
notes and our common stock, including the applicability and effect of any state,
local or foreign tax laws, and of any proposed changes in applicable laws.
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<PAGE> 88
SELLING SECURITYHOLDERS
The following table sets forth, as of , 1998, the respective
principal amount of convertible notes beneficially owned and offered hereby by
each selling securityholder, the common stock owned by each selling
securityholder and the common stock issuable upon conversion of such convertible
notes, which may be sold from time to time by such selling securityholder
pursuant to this prospectus. Such information has been obtained from the selling
securityholders.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT AT
MATURITY OF
DEBENTURES COMMON STOCK
BENEFICIALLY OWNED AND PERCENT OF TOTAL OWNED PRIOR TO COMMON STOCK TO BE
SELLING SECURITY HOLDERS OFFERED HEREBY OUTSTANDING DEBENTURES ORIGINAL OFFERING REGISTERED HEREBY(1)
- -------------------------------- ---------------------- ---------------------- ----------------- --------------------
<S> <C> <C> <C> <C>
</TABLE>
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* Less than one percent.
(1) The shares of common stock to be registered hereby are calculated on an "as
converted" basis using the conversion rate described on the front cover page
of this Prospectus.
None of the selling securityholders listed above has, or within the past
three years has had, any position, office or other material relationship with us
or any of our predecessors or affiliates. Because the selling securityholders
may offer all or some portion of the above referenced securities pursuant to
this prospectus or otherwise, no estimate can be given as to the amount or
percentage of such securities that will be held by the selling securityholders
upon termination of any such sale. In addition, the selling securityholders
identified above may have sold, transferred or otherwise disposed of all or a
portion of such securities since , 1999 in transactions exempt
from the registration requirements of the Securities Act. The selling
securityholders may sell all, part or none of the securities listed above.
Generally, only selling securityholders identified in the foregoing table
who beneficially own the offered securities set forth opposite their respective
names may sell such offered securities pursuant to the registration statement,
of which this prospectus forms a part. We may from time to time include
additional selling securityholders in supplements to this Prospectus.
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<PAGE> 89
PLAN OF DISTRIBUTION
The offered securities are being registered to permit public secondary
trading of such securities by the holders thereof from time to time after the
date of this prospectus. NTL will not receive any of the proceeds from the sale
by the selling securityholders of the offered securities. NTL will bear all fees
and expenses incident to its obligation to register the offered securities.
The selling securityholders may sell all or a portion of the offered
securities beneficially owned by them and offered hereby from time to time
directly through one or more underwriters, broker-dealers or agents. If the
offered securities are sold through underwriters or broker-dealers, the selling
securityholder will be responsible for underwriting discounts or commissions or
agent's commissions. Such offered securities may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
Such sales may be effected in transactions (which may involve crosses or block
transactions)
(1) on any national securities exchange or quotation service on which
the offered securities may be listed or quoted at the time of sale
(including the NNM for the common stock),
(2) in the over-the-counter market, or
(3) through the writing of options (whether such options are listed on
an options exchange or otherwise).
In connection with sales of the offered securities or otherwise, the
selling securityholder may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of the offered securities in the course
of hedging in positions they assume. The selling securityholder may also sell
offered securities short and deliver offered securities to close out short
positions, or loan or pledge offered securities to broker-dealers that in turn
may sell such offered securities. If the selling securityholders effect such
transactions by selling offered securities to or through underwriters, broker-
dealers or agents, such underwriters, brokers, dealers or agents may receive
commissions in the form of discounts, concessions or commissions from the
selling securityholders or commissions from purchasers of offered securities for
whom they may act as agent or to whom they may sell as principal (which
discounts, concessions or commissions as to particular underwriters,
brokers-dealers or agents may be in excess of those customary in the types of
transactions involved).
The outstanding common stock is listed for trading on the NNM under the
symbol "NTLI." The Company does not intend to apply for listing of the
Convertible Notes on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System.
Accordingly, no assurance can be given as to the development of liquidity or any
trading market for the convertible notes. See "Risk Factors--Absence of Public
Market."
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The selling securityholders and any broker-dealer participating in the
distribution of the offered securities may be deemed to be "underwriters" within
the meaning of the Securities Act, and any commissions paid, or any discounts or
concessions allowed to any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act.
Under the securities laws of certain states, the offered securities may be
sold in such states only through registered or licensed brokers or dealers. In
addition, in certain states the offered securities may not be sold unless the
offered securities have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied
with.
There can be no assurance that any selling securityholder will sell any or
all of the convertible notes or offered securities registered pursuant to the
shelf registration statement, or which this Prospectus forms a part. In
addition, any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule
144 or Rule 144A rather than pursuant to this Prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of any
of the offered securities by the selling securityholders and any other such
person. Furthermore, Regulation M may restrict the ability of any person engaged
in the distribution of the offered securities to engage in market-making
activities with respect to the particular offered securities being distributed.
All of the foregoing may affect the marketability of the offered securities and
the ability of any person or entity to engage in market-making activities with
respect to the offered securities.
All expenses of the registration of the convertible notes and common stock
pursuant to the registration rights agreement will be paid by the Company,
including, without limitation, Commission filing fees and expenses of compliance
with state securities or "blue sky" laws; provided, however, that the selling
securityholders will pay all underwriting discounts and selling commissions, if
any. The selling securityholders will be indemnified by the Company against
certain civil liabilities, including certain liabilities under the Securities
Act, or will be entitled to contribution in connection therewith. The company
will be indemnified by the selling securityholders against certain civil
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.
Upon sale pursuant to the shelf registration statement, of which this
prospectus forms a part, the offered securities will be freely tradable in the
hands of persons other than affiliates of the Company.
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LEGAL MATTERS
The validity of the issuance of the convertible notes and the common stock
issuable upon conversion of the convertible notes will be passed upon for the
Company by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, special
counsel for the Company.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1997, as set forth in their report, which is
incorporated by reference in this prospectus. Our consolidated financial
statements and schedule are incorporated by reference in reliance on their
report, given on their authority as experts in accounting and auditing.
The consolidated financial statements as of December 31, 1997 and 1996 and
for each of the three years in the period ended December 31, 1997 of Comcast UK
Cable Partners Limited and subsidiaries incorporated by reference herein have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is also incorporated herein by reference and have been so included
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
The consolidated financial statements as of December 31, 1997 and 1996 and
for each of the three years in the period ended December 31, 1997 of Birmingham
Cable Corporation Limited and Cable London PLC incorporated by reference herein
have been audited by Deloitte & Touche, independent auditors, as stated in their
reports, which are also incorporated herein by reference and have been so
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
The combined financial statements of ComTel UK Finance, B.V. and its
subsidiaries as of and for the year ended December 31, 1997, and the combined
financial statements of Telecential as of and for the 16 months ended December
31, 1996, incorporated by reference herein have been audited by Deloitte &
Touche, independent auditors, as stated in their reports, which are also
incorporated by reference herein and have been so included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
The combined financial statements as of and for the year ended December 31,
1996 of ComTel UK Finance B.V. incorporated by reference herein have been
incorporated by reference in reliance on the report of Coopers & Lybrand,
independent Chartered Accountants given upon their authority as experts in
accounting and auditing.
The consolidated financial statements of Diamond Cable Communications Plc
as of December 31, 1996 and 1997 and for each of the years in the three-year
period ended December 31, 1997 incorporated by reference herein have been
audited by KPMG, independent auditors, to the extent and for the periods
indicated in their reports thereon.
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<PAGE> 92
Such financial statements have been included in reliance upon the reports of
KPMG given on their authority as experts in accounting and auditing.
ENFORCEABILITY OF CIVIL LIABILITIES
A substantial majority of our assets are located outside the United States.
As a result, it may not be possible for you to realize in the United States upon
judgments of courts of the United States predicated upon the civil liability
under the federal securities laws of the United States. The United States and
England do not currently have a treaty providing for the reciprocal recognition
and enforcement of judgments, other than arbitration awards, in civil and
commercial matters. Therefore, a final judgment for the payment of a fixed debt
or sum of money rendered by any United States court based on civil liability,
whether or not predicated solely upon the United States federal securities laws,
would not automatically be enforceable in England. In order to enforce in
England a United States judgment, proceedings must be initiated by way of common
law action before a court of competent jurisdiction in England. An English court
will, subject to what is said below, normally order summary judgment on the
basis that there is no defense to the claim for payment and will not
reinvestigate the merits of the original dispute. In such an action, an English
court will treat the United States judgment as creating a valid debt upon which
the judgment creditor could bring an action for payment, as long as
(1) the United States court had jurisdiction over the original proceeding,
(2) the judgment is final and conclusive on the merits,
(3) the judgment does not contravene English public policy,
(4) the judgment must not be for a tax, penalty or a judgment arrived at by
doubling, trebling or otherwise multiplying a sum assessed as
compensation for the loss or damage sustained and
(5) the judgment has not been obtained by fraud or in breach of the
principles of natural justice.
Based on the foregoing, there can be no assurance that you will be able to
enforce in England judgments in civil and commercial matters obtained in any
United States court. There is doubt as to whether an English court would impose
civil liability in an original action predicated solely upon the United States
federal securities laws brought in a court of competent jurisdiction in England.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH ANY
OTHER INFORMATION. THIS PROSPECTUS MAY BE DELIVERED TO YOU AFTER THE DATE OF
THIS PROSPECTUS. HOWEVER, YOU SHOULD REALIZE THAT THE AFFAIRS OF NTL MAY HAVE
CHANGED SINCE THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS WILL NOT REFLECT SUCH
CHANGES. YOU SHOULD NOT CONSIDER THIS PROSPECTUS TO BE AN OFFER OR SOLICITATION
RELATING TO THE NOTES IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION
IS NOT AUTHORIZED. FURTHERMORE, YOU SHOULD NOT CONSIDER THIS PROSPECTUS TO BE AN
OFFER OR SOLICITATION RELATING TO THE NOTES IF THE PERSON MAKING THE OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR IF IT IS UNLAWFUL FOR YOU TO RECEIVE
SUCH AN OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Where You Can Find More Information... --
Incorporation of Certain Documents by
Reference........................... --
Special Note Regarding Forward Looking
Statements.......................... --
Prospectus Summary.................... 1
Risk Factors.......................... 10
Use of Proceeds....................... 25
Exchange Rates........................ 25
Price Range of Common Stock........... 26
Dividend Policy....................... 26
Capitalization........................ 27
Selected Consolidated Financial
Data................................ 29
Description of the Convertible
Notes............................... 31
Description of Capital Stock.......... 59
Description of Certain Indebtedness... 70
United States Federal Tax
Considerations...................... 81
Plan of Distribution.................. 84
Legal Matters......................... 86
Experts............................... 86
Enforceability of Civil Liabilities... 87
</TABLE>
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[LOGO]
NTL Incorporated
$600,000,000
7% Convertible Subordinated Notes
Due 2008
------------------------
PROSPECTUS
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February , 1999
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<PAGE> 94
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by the Company in connection
with the Offering.
<TABLE>
<S> <C>
SEC registration fee....................................... $166,800.00
Legal fees and expenses.................................... *
Accounting fees and expenses............................... *
Printing and engraving fees................................ *
Miscellaneous expenses..................................... *
Total............................................ *
</TABLE>
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(*) To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 102 of the Delaware General Corporation Law (the
"DGCL"), the Company's Amended and Restated Certificate of Incorporation
eliminates a director's personal liability for monetary damages to the Company
and its stockholders arising from a breach or alleged breach of a director's
fiduciary duty except for liability under Section 174 of the DGCL or liability
for a breach of the director's duty of loyalty to the Company or its
stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or for any transaction in
which the director derived an improper personal benefit. The effect of this
provision in the certificate of incorporation is to eliminate the rights of the
Company and its stockholders (through stockholders, derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting from negligent or
grossly negligent behavior) except in the situations described above.
The Company's Restated By-laws provide that directors and officers of the
Company shall be indemnified against liabilities arising from their service as
directors and officers to the full extent permitted by law. Section 145 of the
DGCL empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the best interests
of the corporation, and, with
II-1
<PAGE> 95
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
Section 145 also empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the fight of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Court of Chancery or the court in which
such action was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnify for such
expenses which the court shall deem proper.
Section 145 further provides that to the extent that a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation is empowered to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
The Company has entered into a director and officer indemnity agreement
("Indemnity Agreement") with each officer and director of the Company (an
"Indemnitee"). Under the bylaws and these Indemnity Agreements, the Company must
indemnify an Indemnitee to the fullest extent permitted by the DGCL for losses
and expenses incurred in connection with actions in which the indemnitee is
involved by reason of having been a director or officer of the Company. The
Company is also obligated to advance expenses an indemnitee may incur in
connection with such actions before any resolution of the action.
II-2
<PAGE> 96
ITEM 16. EXHIBITS
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
3.1 Restated Certificate of Incorporation of the Company, as
amended by the Certificate of Amendment, dated June 5, 1996
and the Certificate of Amendment dated October 29, 1998*
3.1(a) Certificate of Ownership and Merger, dated as of March 26,
1997(6)
3.2 Restated By-laws of the Company(1)
4.1 Indenture, dated as of December 16, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the Convertible Notes.*
4.2 Registration Rights Agreement, dated as of December 16, with
respect to Convertible Notes.*
4.1 Indenture, dated as of November 2, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 11 1/2% Notes(12)
4.2 Indenture, dated as of November 6, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 12 3/8% Notes(12)
4.3 Registration Rights Agreement, dated as of November 2, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 11 1/2% Notes(12)
4.4 Registration Rights Agreement, dated as of November 6, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 12 3/8% Notes(12)
4.5 Indenture, dated as of February 12, 1997, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 10% Notes(10)
4.6 Certificate of Designation, dated February 12, 1997, with
respect to the Redeemable Preferred Stock(10)
4.7 Registration Rights Agreement, dated February 12, 1997, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Chase Securities Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated with respect to
the 10% Notes(10)
4.8 Registration Rights Agreement, dated February 12, 1997, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Chase Securities Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated with respect to
the Redeemable Preferred Stock(10)
4.9 Form of Convertible Notes (included in Exhibit 4.1)
4.11 Indenture, dated as of June 12, 1996, by and between the
Company and Chemical Bank, as Trustee, with respect to the
7% Convertible Notes(8)
</TABLE>
II-3
<PAGE> 97
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.12 Registration Rights Agreement, dated June 12, 1996, by and
among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation and Salomon Brothers Inc, with
respect to the 7% Convertible Notes(8)
4.13 Indenture, dated as of January 30, 1996, by and among the
Company and Chemical Bank, as Trustee, with respect to the
11 1/2% Notes(7)
4.14 Registration Rights Agreement, dated January 30, 1996, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Brothers Inc and Chase
Securities, Inc., with respect to the 11 1/2% Notes(7)
4.15 Indenture, dated as of April 20, 1995, by and among the
Company and Chemical Bank, as Trustee, with respect to the
12 3/4% Notes(2)
4.16 First Supplemental Indenture, dated as of January 22, 1996,
by and among the Company and Chemical Bank, as Trustee with
respect to the Indenture included as Exhibit 4.19(7)
4.17 Registration Agreement, dated April 13, 1995 by and among
the Company and Salomon Brothers Inc, Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.,
with respect to the 12 3/4% Notes(2)
4.18 Indenture, dated as of April 20, 1995, by and among the
Company and Chemical Bank, as Trustee, with respect to the
7 1/4% Convertible Notes(3)
4.19 Registration Agreement, dated April 12, 1995, by and among
the Company and Salomon Brothers Inc, Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman Sachs & Co.,
with respect to the 7 1/4% Convertible Notes(3)
4.20 Indenture, dated as of October 1, 1993, by and among the
Company and Chemical Bank, as Trustee with respect to the
10 7/8% Senior Notes(4)
4.21 First Supplemental Indenture, dated January 23, 1996, by and
among the Company and Chemical Bank, as Trustee, with
respect to the Indenture included as Exhibit 4.24(7)
4.22 Rights Agreement, dated as of October 1, 1993, between the
Company and Continental Transfer & Trust Company, as Rights
Agent(1)
4.23 Indenture, dated as of November 15, 1995, between Comcast
U.K. Cable Partners Limited and Bank of Montreal Trust
Company, as Trustee, with respect to the 11.20% Senior
Discount Debentures Due 2007 of Comcast U.K. Cable Partners
Limited.(13)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
the legality of the notes being registered hereby*
10.1 Compensation Plan Agreements, as amended and restated
effective June 3, 1997(11)
10.2 Form of Director and Officer Indemnity Agreement (together
with a schedule of executed Indemnity Agreements)(2)
</TABLE>
II-4
<PAGE> 98
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
11.1 Statement of computation of per share earnings(11)
12.1 Computation of Ratio of Earnings to Fixed Charges and
Combined Fixed Charges and Preferred Stock Dividends*
21.1 Subsidiaries of the Company(11)
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Deloitte & Touche -- Birmingham
23.4 Consent of Deloitte & Touche -- London
23.5 Consent of Deloitte & Touche -- Comtel
23.6 Consent of Coopers & Lybrand -- ComTel
23.7 Consent of KPMG -- Diamond
23.8 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1)*
25.1 Form T-1 Statement of Eligibility of Trustee with respect to
Indenture included as Exhibit *
99.1 Prescribed Diffusion Service License, dated July 21, 1987,
issued to British Cable Services Limited (now held by
CableTel Surrey and Hampshire Limited) for the area of West
Surrey and East Hampshire, England(5)
99.2 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Inverclyde, Scotland(5)
99.3 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Bearsden and Milngavie, Scotland(5)
99.4 Prescribed Diffusion Service License, dated December 3,
1990, issued to Newport Cablevision Limited (renamed
CableTel Newport) for the area of Newport, Wales(5)
99.5 Prescribed Diffusion Service License, dated July 10, 1984,
issued to Clyde Cablevision (renamed CableTel Glasgow) for
the area of North Glasgow and Clydebank, Strathclyde,
Scotland(5)
99.6 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Greater Glasgow, Scotland(5)
99.7 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Paisley and Renfrew, Scotland(5)
</TABLE>
II-5
<PAGE> 99
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.8 Prescribed Diffusion Service License, dated December 3,
1990, issued to Cable and Satellite Television Holdings Ltd
(renamed CableTel West Glamorgan Limited) for the area of
West Glamorgan, Wales(5)
99.9 Prescribed Diffusion Service License, dated December 3,
1990, issued to British Cable Services Limited for the area
of Cardiff and Penarth, Wales (now held by CableTel Cardiff
Limited)(5)
99.10 Prescribed Diffusion Service License, dated December 3,
1990, issued to Kirklees Cable (renamed CableTel Kirklees)
for the area of Huddersfield and Dewsbury, West Yorkshire,
England(5)
99.11 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision Communications Company of
Hertfordshire Ltd (renamed CableTel Hertfordshire Limited)
for the area of Broxbourne and East Hertfordshire,
England(5)
99.12 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision Communications Company Ltd
(renamed CableTel Central Hertfordshire Limited) for the
area of Central Hertfordshire, England(5)
99.13 Prescribed Diffusion Service License, dated March 26, 1990,
issued to CableVision Bedfordshire Limited (renamed CableTel
Bedfordshire Ltd.) for the area of Luton and South
Bedfordshire(5)
99.14 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision North Bedfordshire Ltd (renamed
CableTel North Bedfordshire Ltd.) for the area of North
Bedfordshire, England(5)
99.15 Local Delivery Service License, dated October 2, 1995,
issued to CableTel Northern Ireland Limited for Northern
Ireland(5)
99.16 Local Delivery Service License, dated December 6, 1995,
issued to CableTel South Wales Limited for Glamorgan and
Gwent, Wales(5)
99.17 Local Delivery Service License, dated March 13, 1991, issued
to Maxwell Cable TV Limited for Pembroke Dock, Dyfed, Wales
(now held by Metro South Wales Limited)(5)
99.18 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Camarthen, Wales (now held
by Metro South Wales Limited)(5)
99.19 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Milford Haven, Wales (now
held by Metro South Wales Limited)(5)
99.20 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Cwmgors (Amman Valley), West
Glamorgan, Wales(5)
99.21 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Ammanford, West Glamorgan,
Wales(5)
</TABLE>
II-6
<PAGE> 100
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.22 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Brecon, Gwent, Wales(5)
99.23 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Haverfordwest, Preseli,
Wales(5)
99.24 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Neyland, Preseli, Wales (now
held by Metro South Wales Limited)(5)
99.25 License, dated January 11, 1991, issued to Cablevision
Communications Company of Hertfordshire Ltd (renamed
CableTel Hertfordshire Limited) for the Hertford, Cheshunt
and Ware (Lea Valley) cable franchise, England(5)
99.26 License, dated December 8, 1990, issued to Cablevision
Communications Company Limited for Central Hertfordshire
(renamed CableTel Central Hertfordshire Limited), England(5)
99.27 License, dated August 23, 1989, issued to Cablevision
Bedfordshire Limited for Bedford and surrounding areas,
England(5)
99.28 License, dated January 9, 1991, issued to Cablevision North
Bedfordshire Ltd for North Bedfordshire, England(5)
99.29 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Inverclyde Cable
Franchise, Scotland(5)
99.30 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Bearsden and Milngavie
Cable Franchise, Scotland(5)
99.31 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Paisley and Renfrew Cable
Franchise, Scotland(5)
99.32 License, dated June 7, 1985, issued to Clyde Cablevision Ltd
(renamed CableTel Glasgow) for North West Glasgow and
Clydebank, Scotland(5)
99.33 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Greater Glasgow cable
franchise, Scotland(5)
99.34 License, dated October 13, 1993, issued to Insight
Communications Cardiff Limited (renamed CableTel Cardiff
Limited) for Cardiff, Wales(5)
99.35 License, dated January 22, 1991, issued to Newport
Cablevision Limited (renamed CableTel Newport), for Newport
Cable franchise Wales(5)
99.36 License, dated May 18, 1990, issued to Cable and Satellite
Television Holdings Limited (renamed CableTel West
Glamorgan) for West Glamorgan, Wales(5)
99.37 License, dated December 20, 1990, issued to Kirklees Cable
(renamed CableTel Kirklees) for the Huddersfield and
Dewsbury cable franchise, England(5)
</TABLE>
II-7
<PAGE> 101
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.38 License, dated October 13, 1993, issued to Insight
Communications Guildford Limited (renamed CableTel Surrey
and Hampshire Limited) for the West Surrey/East Hampshire
(Guildford) Cable Franchise, England(5)
99.39 License, dated January 20, 1995, issued to CableTel
Bedfordshire Ltd. for the area of South Bedfordshire,
England(5)
99.40 License, dated January 20, 1995, issued to CableTel North
Bedfordshire Ltd. for the area of Bedford, England(5)
99.41 License, dated January 20, 1992, issued to Cable and
Satellite Television Holdings Limited (renamed CableTel West
Glamorgan Limited) for the area of Swansea, Neath and Port
Talbot, Wales(5)
99.42 License, dated January 20, 1995, issued to Cabletel
Hertfordshire Ltd. for the area of Hertford, Cheshunt and
Ware (Lea Valley), England(5)
99.43 License, dated January 20, 1995, issued to Cabletel Central
Hertfordshire Ltd. for the area of Central Hertfordshire,
England(5)
99.44 License, dated July 21, 1995, issued to CableTel Kirklees(5)
99.45 License, dated June 8, 1995, issued to CableTel Bedfordshire
Ltd.(5)
99.46 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Neyland, Wales(5)
99.47 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Cwmgors, Wales(5)
99.48 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Ammanford, Wales(5)
99.49 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Carmarthen, Wales(5)
99.50 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Haverfordwest, Wales(5)
99.51 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Pembroke Dock, Wales(5)
99.52 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Milford Haven, Wales(5)
99.53 License, dated October 27, 1995, issued to CableTel South
Wales Limited for the area of Glamorgan and Gwent, Wales(5)
99.54 License, dated January 26, 1996, issued to Cabletel South
Wales Limited, for part of the Glamorgan area(5)
99.55 License, dated November 3, 1997, issued to NTL (UK) Group,
Inc. for the Provision of Radio Fixed Access Operator
Services(10)
99.56 Agreement and Plan of Amalgamation; Undertaking of Comcast
Corporation; Undertaking of Warburg, Pincus Investors,
L.P.(11)
</TABLE>
II-8
<PAGE> 102
- ---------------
* To be filed by amendment.
(1) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63570.
(2) Incorporated by reference from the Company's Registration Statement on Form
S-4, File No. 33-92794.
(3) Incorporated by reference from the Company's Registration Statement on Form
S-3, File No. 33-92792.
(4) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63572.
(5) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 20, 1996.
(6) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 26, 1997.
(7) Incorporated by reference to the Company's Registration Statement on Form
S-4, File No. 333-1010.
(8) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-07879.
(9) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-16751.
(10) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed on March 28, 1997.
(11) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed with the Commission on March 30, 1998.
(12) Incorporated by reference to the Company's Registration Statement on Form
S-4, File No. 333-71279.
(13) Incorporated by reference to the Registration Statement on Form S-3, File
No. 33-96932, of Comcast U.K. Cable Partners Limited.
ITEM 17. UNDERTAKINGS
(A) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to section 15(d) of
the Securities Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(B) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the registrant
II-9
<PAGE> 103
pursuant to the foregoing provisions, or otherwise, the registrant has
been advised that in the opinion of the Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person
of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(C) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall
be deemed to be part of this Registration Statement as of the time
it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(D) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to
include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-10
<PAGE> 104
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, State of New York, on the 12th day of
February, 1999.
NTL Incorporated
By /s/ RICHARD J. LUBASCH
------------------------------------
Richard J. Lubasch
Senior Vice President --
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GEORGE S. BLUMENTHAL Chairman of the Board, Treasurer February 12, 1999
- --------------------------------- and Director
George S. Blumenthal
/s/ J. BARCLAY KNAPP President, Chief Executive and February 12, 1999
- --------------------------------- Financial Officer and Director
J. Barclay Knapp
/s/ GREGG GORELICK Vice President -- Controller February 12, 1999
- ---------------------------------
Gregg Gorelick
/s/ SIDNEY R. KNAFEL Director February 12, 1999
- ---------------------------------
Sidney R. Knafel
/s/ TED H. MCCOURTNEY Director February 12, 1999
- ---------------------------------
Ted H. McCourtney
/s/ DEL MINTZ Director February 12, 1999
- ---------------------------------
Del Mintz
/s/ ALAN J. PATRICOFF Director February 12, 1999
- ---------------------------------
Alan J. Patricof
</TABLE>
II-11
<PAGE> 105
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WARREN POTASH Director February 12, 1999
- ---------------------------------
Warren Potash
/s/ MICHAEL S. WILLNER Director February 12, 1999
- ---------------------------------
Michael S. Willner
</TABLE>
II-12
<PAGE> 106
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
3.1 Restated Certificate of Incorporation of the Company, as
amended by the Certificate of Amendment, dated June 5, 1996
and the Certificate of Amendment dated October 29, 1998*
3.1(a) Certificate of Ownership and Merger, dated as of March 26,
1997(6)
3.2 Restated By-laws of the Company(1)
4.1 Indenture, dated as of December 16, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the Convertible Notes.*
4.2 Registration Rights Agreement, dated as of December 16, with
respect to Convertible Notes.*
4.1 Indenture, dated as of November 2, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 11 1/2% Notes(12)
4.2 Indenture, dated as of November 6, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 12 3/8% Notes(12)
4.3 Registration Rights Agreement, dated as of November 2, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 11 1/2% Notes(12)
4.4 Registration Rights Agreement, dated as of November 6, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 12 3/8% Notes(12)
4.5 Indenture, dated as of February 12, 1997, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 10% Notes(10)
4.6 Certificate of Designation, dated February 12, 1997, with
respect to the Redeemable Preferred Stock(10)
4.7 Registration Rights Agreement, dated February 12, 1997, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Chase Securities Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated with respect to
the 10% Notes(10)
4.8 Registration Rights Agreement, dated February 12, 1997, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Chase Securities Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated with respect to
the Redeemable Preferred Stock(10)
4.9 Form of Convertible Notes (included in Exhibit 4.1)
4.11 Indenture, dated as of June 12, 1996, by and between the
Company and Chemical Bank, as Trustee, with respect to the
7% Convertible Notes(8)
</TABLE>
<PAGE> 107
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.12 Registration Rights Agreement, dated June 12, 1996, by and
among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation and Salomon Brothers Inc, with
respect to the 7% Convertible Notes(8)
4.13 Indenture, dated as of January 30, 1996, by and among the
Company and Chemical Bank, as Trustee, with respect to the
11 1/2% Notes(7)
4.14 Registration Rights Agreement, dated January 30, 1996, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Brothers Inc and Chase
Securities, Inc., with respect to the 11 1/2% Notes(7)
4.15 Indenture, dated as of April 20, 1995, by and among the
Company and Chemical Bank, as Trustee, with respect to the
12 3/4% Notes(2)
4.16 First Supplemental Indenture, dated as of January 22, 1996,
by and among the Company and Chemical Bank, as Trustee with
respect to the Indenture included as Exhibit 4.19(7)
4.17 Registration Agreement, dated April 13, 1995 by and among
the Company and Salomon Brothers Inc, Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.,
with respect to the 12 3/4% Notes(2)
4.18 Indenture, dated as of April 20, 1995, by and among the
Company and Chemical Bank, as Trustee, with respect to the
7 1/4% Convertible Notes(3)
4.19 Registration Agreement, dated April 12, 1995, by and among
the Company and Salomon Brothers Inc, Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman Sachs & Co.,
with respect to the 7 1/4% Convertible Notes(3)
4.20 Indenture, dated as of October 1, 1993, by and among the
Company and Chemical Bank, as Trustee with respect to the
10 7/8% Senior Notes(4)
4.21 First Supplemental Indenture, dated January 23, 1996, by and
among the Company and Chemical Bank, as Trustee, with
respect to the Indenture included as Exhibit 4.24(7)
4.22 Rights Agreement, dated as of October 1, 1993, between the
Company and Continental Transfer & Trust Company, as Rights
Agent(1)
4.23 Indenture, dated as of November 15, 1995, between Comcast
U.K. Cable Partners Limited and Bank of Montreal Trust
Company, as Trustee, with respect to the 11.20% Senior
Discount Debentures Due 2007 of Comcast U.K. Cable Partners
Limited.(13)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
the legality of the notes being registered hereby*
10.1 Compensation Plan Agreements, as amended and restated
effective June 3, 1997(11)
10.2 Form of Director and Officer Indemnity Agreement (together
with a schedule of executed Indemnity Agreements)(2)
</TABLE>
<PAGE> 108
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
11.1 Statement of computation of per share earnings(11)
12.1 Computation of Ratio of Earnings to Fixed Charges and
Combined Fixed Charges and Preferred Stock Dividends*
21.1 Subsidiaries of the Company(11)
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Deloitte & Touche -- Birmingham
23.4 Consent of Deloitte & Touche -- London
23.5 Consent of Deloitte & Touche -- Comtel
23.6 Consent of Coopers & Lybrand -- ComTel
23.7 Consent of KPMG -- Diamond
23.8 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1)*
25.1 Form T-1 Statement of Eligibility of Trustee with respect to
Indenture included as Exhibit *
99.1 Prescribed Diffusion Service License, dated July 21, 1987,
issued to British Cable Services Limited (now held by
CableTel Surrey and Hampshire Limited) for the area of West
Surrey and East Hampshire, England(5)
99.2 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Inverclyde, Scotland(5)
99.3 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Bearsden and Milngavie, Scotland(5)
99.4 Prescribed Diffusion Service License, dated December 3,
1990, issued to Newport Cablevision Limited (renamed
CableTel Newport) for the area of Newport, Wales(5)
99.5 Prescribed Diffusion Service License, dated July 10, 1984,
issued to Clyde Cablevision (renamed CableTel Glasgow) for
the area of North Glasgow and Clydebank, Strathclyde,
Scotland(5)
99.6 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Greater Glasgow, Scotland(5)
99.7 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Paisley and Renfrew, Scotland(5)
</TABLE>
<PAGE> 109
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.8 Prescribed Diffusion Service License, dated December 3,
1990, issued to Cable and Satellite Television Holdings Ltd
(renamed CableTel West Glamorgan Limited) for the area of
West Glamorgan, Wales(5)
99.9 Prescribed Diffusion Service License, dated December 3,
1990, issued to British Cable Services Limited for the area
of Cardiff and Penarth, Wales (now held by CableTel Cardiff
Limited)(5)
99.10 Prescribed Diffusion Service License, dated December 3,
1990, issued to Kirklees Cable (renamed CableTel Kirklees)
for the area of Huddersfield and Dewsbury, West Yorkshire,
England(5)
99.11 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision Communications Company of
Hertfordshire Ltd (renamed CableTel Hertfordshire Limited)
for the area of Broxbourne and East Hertfordshire,
England(5)
99.12 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision Communications Company Ltd
(renamed CableTel Central Hertfordshire Limited) for the
area of Central Hertfordshire, England(5)
99.13 Prescribed Diffusion Service License, dated March 26, 1990,
issued to CableVision Bedfordshire Limited (renamed CableTel
Bedfordshire Ltd.) for the area of Luton and South
Bedfordshire(5)
99.14 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision North Bedfordshire Ltd (renamed
CableTel North Bedfordshire Ltd.) for the area of North
Bedfordshire, England(5)
99.15 Local Delivery Service License, dated October 2, 1995,
issued to CableTel Northern Ireland Limited for Northern
Ireland(5)
99.16 Local Delivery Service License, dated December 6, 1995,
issued to CableTel South Wales Limited for Glamorgan and
Gwent, Wales(5)
99.17 Local Delivery Service License, dated March 13, 1991, issued
to Maxwell Cable TV Limited for Pembroke Dock, Dyfed, Wales
(now held by Metro South Wales Limited)(5)
99.18 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Camarthen, Wales (now held
by Metro South Wales Limited)(5)
99.19 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Milford Haven, Wales (now
held by Metro South Wales Limited)(5)
99.20 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Cwmgors (Amman Valley), West
Glamorgan, Wales(5)
99.21 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Ammanford, West Glamorgan,
Wales(5)
</TABLE>
<PAGE> 110
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.22 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Brecon, Gwent, Wales(5)
99.23 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Haverfordwest, Preseli,
Wales(5)
99.24 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Neyland, Preseli, Wales (now
held by Metro South Wales Limited)(5)
99.25 License, dated January 11, 1991, issued to Cablevision
Communications Company of Hertfordshire Ltd (renamed
CableTel Hertfordshire Limited) for the Hertford, Cheshunt
and Ware (Lea Valley) cable franchise, England(5)
99.26 License, dated December 8, 1990, issued to Cablevision
Communications Company Limited for Central Hertfordshire
(renamed CableTel Central Hertfordshire Limited), England(5)
99.27 License, dated August 23, 1989, issued to Cablevision
Bedfordshire Limited for Bedford and surrounding areas,
England(5)
99.28 License, dated January 9, 1991, issued to Cablevision North
Bedfordshire Ltd for North Bedfordshire, England(5)
99.29 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Inverclyde Cable
Franchise, Scotland(5)
99.30 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Bearsden and Milngavie
Cable Franchise, Scotland(5)
99.31 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Paisley and Renfrew Cable
Franchise, Scotland(5)
99.32 License, dated June 7, 1985, issued to Clyde Cablevision Ltd
(renamed CableTel Glasgow) for North West Glasgow and
Clydebank, Scotland(5)
99.33 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Greater Glasgow cable
franchise, Scotland(5)
99.34 License, dated October 13, 1993, issued to Insight
Communications Cardiff Limited (renamed CableTel Cardiff
Limited) for Cardiff, Wales(5)
99.35 License, dated January 22, 1991, issued to Newport
Cablevision Limited (renamed CableTel Newport), for Newport
Cable franchise Wales(5)
99.36 License, dated May 18, 1990, issued to Cable and Satellite
Television Holdings Limited (renamed CableTel West
Glamorgan) for West Glamorgan, Wales(5)
99.37 License, dated December 20, 1990, issued to Kirklees Cable
(renamed CableTel Kirklees) for the Huddersfield and
Dewsbury cable franchise, England(5)
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.38 License, dated October 13, 1993, issued to Insight
Communications Guildford Limited (renamed CableTel Surrey
and Hampshire Limited) for the West Surrey/East Hampshire
(Guildford) Cable Franchise, England(5)
99.39 License, dated January 20, 1995, issued to CableTel
Bedfordshire Ltd. for the area of South Bedfordshire,
England(5)
99.40 License, dated January 20, 1995, issued to CableTel North
Bedfordshire Ltd. for the area of Bedford, England(5)
99.41 License, dated January 20, 1992, issued to Cable and
Satellite Television Holdings Limited (renamed CableTel West
Glamorgan Limited) for the area of Swansea, Neath and Port
Talbot, Wales(5)
99.42 License, dated January 20, 1995, issued to Cabletel
Hertfordshire Ltd. for the area of Hertford, Cheshunt and
Ware (Lea Valley), England(5)
99.43 License, dated January 20, 1995, issued to Cabletel Central
Hertfordshire Ltd. for the area of Central Hertfordshire,
England(5)
99.44 License, dated July 21, 1995, issued to CableTel Kirklees(5)
99.45 License, dated June 8, 1995, issued to CableTel Bedfordshire
Ltd.(5)
99.46 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Neyland, Wales(5)
99.47 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Cwmgors, Wales(5)
99.48 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Ammanford, Wales(5)
99.49 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Carmarthen, Wales(5)
99.50 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Haverfordwest, Wales(5)
99.51 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Pembroke Dock, Wales(5)
99.52 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Milford Haven, Wales(5)
99.53 License, dated October 27, 1995, issued to CableTel South
Wales Limited for the area of Glamorgan and Gwent, Wales(5)
99.54 License, dated January 26, 1996, issued to Cabletel South
Wales Limited, for part of the Glamorgan area(5)
99.55 License, dated November 3, 1997, issued to NTL (UK) Group,
Inc. for the Provision of Radio Fixed Access Operator
Services(10)
99.56 Agreement and Plan of Amalgamation; Undertaking of Comcast
Corporation; Undertaking of Warburg, Pincus Investors,
L.P.(11)
</TABLE>
<PAGE> 112
- ---------------
* To be filed by amendment.
(1) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63570.
(2) Incorporated by reference from the Company's Registration Statement on Form
S-4, File No. 33-92794.
(3) Incorporated by reference from the Company's Registration Statement on Form
S-3, File No. 33-92792.
(4) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63572.
(5) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 20, 1996.
(6) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 26, 1997.
(7) Incorporated by reference to the Company's Registration Statement on Form
S-4, File No. 333-1010.
(8) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-07879.
(9) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-16751.
(10) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed on March 28, 1997.
(11) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed with the Commission on March 30, 1998.
(12) Incorporated by reference to the Company's Registration Statement on Form
S-4, File No. 333-71279.
(13) Incorporated by reference to the Registration Statement on Form S-3, File
No. 33-96932, of Comcast U.K. Cable Partners Limited.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of NTL Incorporated for
the registration of $600,000,000 of its 7% convertible subordinated notes due
2008 and shares of its common stock and to the incorporation by reference
therein of our report dated March 20, 1998, with respect to the consolidated
financial statements and schedule of NTL Incorporated included in its Annual
Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
February 11, 1999
New York, New York
<PAGE> 1
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
NTL Incorporated on Form S-3 of our report dated February 27, 1998, appearing in
the NTL Incorporated Proxy Statement dated January 29, 1999, on the consolidated
financial statements as of December 31, 1997 and 1996 and for each of the three
years in the period ended December 31, 1997 of Comcast UK Cable Partners Limited
and subsidiaries and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Philadelphia, Pennsylvania
February 11, 1999
<PAGE> 1
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
NTL Incorporated on Form S-3 of our report dated February 27, 1998 (March 16,
1998 as to Note 3), appearing in the NTL Incorporated Proxy Statement dated
January 29, 1999, on the consolidated financial statements as of December 31,
1997 and 1996 and for each of the three years in the period ended December 31,
1997 of Birmingham Cable Corporation Limited and subsidiaries and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche
Birmingham, England
February 11, 1999
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of NTL Incorporated on Form S-3 of our report dated February 27, 1998, appearing
in the NTL Incorporated Proxy Statement dated January 29, 1999 on the
consolidated financial statements as of December 31, 1997 and 1996 and for each
of the three years in the period ended December 31, 1997 and 1996 and for each
of the three years in the period ended December 31, 1997 of Cable London PLC and
subsidiaries and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE
London, England
February 11, 1999
<PAGE> 1
Exhibit 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated June 5, 1998 (except Note 10 as to which the date is
July 16, 1998) with respect to the financial statements of ComTel UK Finance
B.V., and of our report dated June 5, 1998 (except Note 9 as to which the date
is July 16, 1998) with respect to the combined financial statements of
Telecential Communications (Canada) Limited and Telecential Communications (UK)
Limited, included in (i) the Registration Statement on Form S-3 relating to the
resale by certain securityholders of 7% Convertible Subordinated Notes Due 2008
of NTL Incorporated and (ii) Amendment No. 1 to the Registration Statement on
Form S-4 relating to the offer by NTL Incorporated to exchange its 11 1/2%
Series B Senior Notes due 2008 and 12 3/8% Series B Senior Deferred Coupon Notes
due 2008, which have been registered under the Securities Act 1933, as amended,
for the related series of its issued and outstanding 11 1/2% Senior Notes Due
2008 and 12 3/8% Senior Deferred Coupon Notes Due 2008.
/s/ Deloitte & Touche
Deloitte & Touche
Chartered Accountants
Bracknell, England
February 11, 1999
<PAGE> 1
EXHIBIT 23.6
11 February 1999
We hereby consent to the incorporation by reference in the Registration
Statement of NTL Incorporated on Form S-3, of our report, dated 5 June 1998,
except for Note 10 as to which the date is 16 July 1998, on our audit of the
Combined Financial Information of ComTel UK Finance B.V. as of and for the year
ended 31 December 1996. We also consent to the references to our firm under the
caption "Experts".
/s/ COOPERS & LYBRAND
Coopers & Lybrand
Chartered Accountants
London, United Kingdom
<PAGE> 1
Exhibit 23.7
CONSENT OF INDEPENDENT AUDITORS
To the board of directors
Diamond Cable Communications Plc
We consent to the use of our report with respect to Diamond Cable
Communications Plc incorporated by reference herein and to references to our
firm under the headings "Experts" in the Registration Statement on Form S-3 of
NTL Incorporated.
/s/ KPMG
-------------------
KPMG
Nottingham, England
February 11, 1999
