SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JANUARY 25, 1999
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NTL INCORPORATED
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-22616 52-1822078
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
110 East 59th Street, New York, New York 10022
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code (212) 906-8440
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
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On January 25, 1999, Microsoft Corp. ("Microsoft") and NTL Incorporated
("NTL") announced an agreement to jointly develop new, broadband services for
delivery to customers in the United Kingdom and Ireland.
In addition, Microsoft will make a $500 million investment in NTL to
accelerate deployment of high-speed voice, video and data services over its
national fiber-optic telecommunications networks and to continue the company's
rapid introduction of advanced Internet, telephone and cable television services
over its broadband facilities. NTL is Britain's leading new-entrant local
telecommunications competitor, with more than 1.4 million telephone, cable
television and Internet customers.
Microsoft and NTL will work together closely in the development of new
digital services and intend to enter into further agreements regarding software
and services as opportunities arise throughout 1999. Specifically, Microsoft and
NTL will form a Technology Group to guide the development of new digital
services. In recognition of Microsoft's extension of these products and services
to NTL, Microsoft will receive 1.2 million five-year warrants to purchase NTL
common stock at an exercise price of $84 per share.
Microsoft has agreed to purchase $500 million of NTL's 5.25 percent
convertible preferred stock. The preferred stock is convertible into NTL common
stock at a conversion price of $100 per share. The preferred stock is redeemable
10 years from the date of issuance in cash or NTL common stock and may be
redeemed by NTL on the earlier of seven years or the date on which NTL's common
stock has traded above $120 for 25 consecutive trading days. Dividends are
payable at NTL's option in cash, common stock or additional shares of preferred
stock. The closing of the purchase of the preferred stock is expected to occur
shortly.
A copy of the press release and Purchase Agreement are attached hereto as
exhibits and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
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Exhibits
99.1 Purchase Agreement, dated January 25, 1999
99.2 Press release, issued January 25, 1999
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NTL INCORPORATED
(Registrant)
By: /s/ Richard J. Lubasch
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Name: Richard J. Lubasch
Title: Senior Vice President-
General Counsel
Dated: January 25, 1999
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EXHIBIT INDEX
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Exhibit Page
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99.1 Purchase Agreement, dated January 25, 1999
99.2 Press release, issued January 25, 1999
EXHIBIT 99.1
Purchase Agreement
January 25, 1999
Microsoft Corporation
One Microsoft Way
Redmond, Washington 98052-6399
Ladies and Gentlemen:
NTL Incorporated, a Delaware corporation ("NTL"), proposes, subject to the
terms and conditions stated herein (including the attached schedules), to issue
and sell to Microsoft Corporation (the "Purchaser"), an aggregate liquidation
amount of $500,000,000 of 5-1/4% Convertible Preferred Stock having the terms
set forth on Schedule I, together with warrants having the terms set forth on
Schedule II (the "Securities").
1 NTL represents and warrants to, and agrees with, the Purchaser that:
(a) NTL's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and NTL's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998 have been made available to the Purchaser in
connection with the offering of the Securities. All documents of NTL
subsequently filed with the United States Securities and Exchange
Commission (the "Commission") pursuant to Section 13(a), 13(c) or 15(d) of
the United States Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or prior to the date hereof and any reference to the
documents prepared or distributed in connection with the offering of the
Securities shall be deemed to include any documents filed with the
Commission pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act
after the date hereof and prior to such specified date; all documents filed
under the Exchange Act by NTL and so deemed to be included, or any
amendment or supplement thereto, are hereinafter called the "Exchange Act
Reports". The Exchange Act Reports, when they were or are filed with the
Commission, conformed or will conform in all material respects to the
applicable requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder. The Exchange Act Reports did not
and will not, as of their respective dates, contain an untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
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(b) There has not been any material adverse change in, or any adverse
development which materially affects, the business, properties or financial
condition or results of operations of NTL and its subsidiaries taken as a
whole since September 30, 1998; and, since September 30, 1998, there has
not been any material change in the capital stock or long-term debt of NTL
or any of its subsidiaries not reported in an Exchange Act Report or any
material adverse change or any development involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of NTL and its
subsidiaries taken as a whole;
(c) NTL has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Delaware, with
corporate power and authority to own its properties and conduct its
business as described in the Exchange Act Reports, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns
or leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and each
significant subsidiary (as defined in Regulation S-X of the Commission,
each a "Significant Subsidiary") of NTL has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(d) NTL has an authorized, issued and outstanding capitalization as
set forth in the attached Exhibit A, and all of the issued shares of
capital stock of NTL have been duly and validly authorized and issued and
are fully paid and non-assessable; and all of the issued shares of capital
stock of each Significant Subsidiary of NTL have been duly and validly
authorized and issued, are fully paid and non-assessable and (except for
directors' qualifying shares) are owned directly or indirectly by NTL, free
and clear of all liens, encumbrances, equities or claims;
(e) The Securities, and the shares of common stock issuable upon
conversion, exercise or redemption of the Securities, including any
dividends in the form of Securities or common stock, have been duly and
validly authorized by NTL, and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and fully paid
and non-assessable, and the issuance of the Securities is not subject to
preemptive or other similar rights;
(f) The execution and delivery of this Agreement and the consummation
of the transactions contemplated herein and therein, have been duly
authorized by all necessary corporate action on the part of NTL, and when
executed by NTL and the other parties thereto will not conflict with or
result in any breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
security interest, lien, charge or encumbrance upon any property
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or assets of NTL or its Significant Subsidiaries pursuant to any indenture,
mortgage, deed of trust, loan agreement, contract or other agreement or
instrument to which NTL or any of its Significant Subsidiaries is a party
or by which NTL or any of its Significant Subsidiaries may be bound or to
which any of the property or assets of NTL or any of its Significant
Subsidiaries is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or the By-laws of NTL or
the Certificate of Incorporation or By-laws of any of its Significant
Subsidiaries or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over NTL or any of its
Significant Subsidiaries or any of their properties; and other than the
listing of the shares of common stock underlying the Securities on the
Nasdaq National Market, no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Securities and the
shares of common stock issuable upon conversion, exercise or redemption of
the Securities, including any dividends in the form of Securities or common
stock, or the consummation by NTL of the transactions contemplated by this
Agreement, except such as have been, or will have been obtained or received
prior to the Time of Delivery;
(g) Neither NTL nor any of its Significant Subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(h) There are no legal or governmental proceedings pending to which
NTL or any of its Significant Subsidiaries is a party or of which any
property of NTL or any of its Significant Subsidiaries is the subject
which, if determined adversely to NTL or any of its Significant
Subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future financial position, shareholders'
equity or results of operations of NTL and its subsidiaries taken as a
whole; and, to the best of NTL's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
2 Subject to the terms and conditions herein set forth, NTL shall issue
and sell to the Purchaser, and the Purchaser agrees to purchase from NTL, at an
aggregate purchase price of $500,000,000, the Securities.
3 (a) The Purchaser hereby acknowledges and agrees with NTL that the
Securities have not been registered under the Securities Act of 1933 (the
"Securities Act") and may not be offered or sold except pursuant to an exemption
from the registration requirements of the Securities Act and are subject to the
restrictions on transfer and redemption rights of NTL under the terms of the
Securities. The Purchaser further agrees
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that it has not entered and will not enter into any contractual arrangement with
respect to the distribution or delivery of the Securities other than (i)
pursuant to a Registration Rights Agreement between the parties, the form of
which is attached as Exhibit B (the "Registration Rights Agreement"), (ii)
pursuant to a bona fide transaction with a nationally recognized investment
banking firm which constitutes a hedge against changes in the market price of
the common stock of NTL, or (iii) with the prior written consent of NTL;
provided, however, that any such hedging transaction undertaken pursuant to (ii)
above shall (y) be in compliance with all legal and regulatory requirements and
(z) not be intended to manipulate the price of the NTL Common Stock.
(b) The Purchaser hereby acknowledges and agrees that it will not sell,
transfer, assign or otherwise dispose of any NTL Common Stock other than
pursuant to (i) the Registration Rights Agreement, (ii) a bona fide transaction
with a nationally recognized investment banking firm which constitutes a hedge
against changes in the market price of the common stock of NTL, or (iii) Rule
144 under the Securities Act; provided, however, that any such hedging
transaction undertaken pursuant to (ii) above shall (y) be in compliance with
all legal and regulatory requirements and (z) not be intended to manipulate the
price of the NTL Common Stock.
4 (a) The Securities to be purchased by the Purchaser hereunder will
be represented by one or more definitive certificated Securities. NTL will
deliver the Securities to the Purchaser, against payment by or on behalf of such
Purchasers of the purchase price therefor by wire transfer of Federal (same day)
funds to an account designated by NTL or against payment by the Purchaser of the
purchase price therefor by certified or official bank check or checks, payable
to the order of NTL in Federal (same day) funds. The time and date of such
delivery and payment shall be 10:00 a.m., New York City time, on January [27],
1999 or such other time and date as the Purchaser and NTL may agree upon in
writing. Such time and date are herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including any additional
documents requested by the Purchaser pursuant to Section 7(e) hereof and the
Securities will be delivered at such time and date at the offices of Skadden,
Arps, Slate, Meagher & Flom LLP ("Skadden Arps"), 919 Third Avenue, New York,
New York 10022, all at the Time of Delivery. For the purposes of this Section 4,
"New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5 NTL agrees with the Purchaser:
(a) At any time when NTL is not subject to Section 13 or 15(d) of the
Exchange Act and prior to two years from the Time of Delivery, for the
benefit of the holders from time to time of Securities, to furnish at its
expense, upon request, to
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holders of Securities information (the "Additional Issuer Information")
satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the
Securities Act;
(b) To make available to the holders of the Securities as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, shareholders' equity and cash flows
of NTL and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter
ending after the date hereof), consolidated summary financial information
of NTL and its subsidiaries for such quarter in reasonable detail; and
(c) During a period of five years from the date hereof, to make
available to you copies of all reports or other communications (financial
or other) furnished to shareholders of NTL, and to make available to the
Purchaser (i) as soon as they are generally available, copies of any
reports and financial statements furnished to or filed with the Commission
or any securities exchange on which the Securities or any class of
securities of NTL is listed; and (ii) such additional information
concerning the business and financial condition of NTL as the Purchaser may
from time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of NTL and its subsidiaries
are consolidated in reports furnished to its shareholders generally or to
the Commission).
6 NTL covenants and agrees with the Purchaser that NTL will pay or cause
to be paid the following: (i) the cost of producing this Agreement, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(ii) the cost of preparing the certificates for the Securities and (iii) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section. It
is understood, however, that, except as provided in this Section, the Purchaser
will pay all of its own costs and expenses, including the fees of its counsel.
7 The obligations of the Purchaser to purchase the Securities shall be
subject to the accuracy of the representations and warranties on the part of NTL
contained herein as of the date hereof and the Time of Delivery, to the accuracy
of the statements of NTL made in any certificates pursuant to the provisions
hereof, to the performance by NTL of its obligations hereunder and (unless
delivery is not required until a subsequent date) to the following additional
conditions:
(a) Prior to the Time of Delivery, NTL shall have furnished to the
Purchaser (i) the form of the Securities incorporating the terms in
Schedules I and II in form and substance reasonably satisfactory to the
Purchaser and its counsel, (ii) an executed Registration Rights Agreement
in form and substance reasonably satisfactory to the
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Purchaser and its counsel, and (iii) such further information, certificates
and documents as the Purchaser and its counsel may reasonably request.
(b) (i) There has not been any material adverse change in, or any
adverse development which materially affects, the business, properties or
financial condition or results of operations of NTL and its subsidiaries
taken as a whole since the date hereof, and (ii) since the date hereof
there shall not have been any change in the capital stock or long-term debt
of NTL or any of its Significant Subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, shareholders' equity or results of
operations of NTL and its subsidiaries taken as a whole, otherwise than as
set forth or contemplated herein, the effect of which, in any such case
described in Clause (i) or (ii), is in the judgment of the Purchaser so
material and adverse as to make it impracticable or inadvisable to proceed
with the offering or the delivery of the Securities on the terms and in the
manner contemplated herein;
(c) On or after the date hereof and prior to the Time of Delivery,
there shall not have occurred any of the following: (i) a suspension or
material limitation in trading in securities generally on the New York
Stock Exchange or NASDAQ; (ii) a suspension or material limitation in
trading in NTL's securities on NASDAQ, (iii) a general moratorium on
commercial banking activities declared by either Federal or New York State
authorities; or (iv) the outbreak or escalation of hostilities involving
the United States (other than involving Iraq) or the declaration by the
United States of a national emergency or war, if the effect of any such
event specified in this clause (iv) in the judgment of the Purchaser makes
it impracticable or inadvisable to proceed with the offering or the
delivery of the Securities on the terms and in the manner contemplated
herein;
(d) NTL shall have furnished to you certificates of NTL, signed by the
Chief Executive Officer, the President or a Senior Vice President of NTL
and by the principal accounting or financial officer of NTL, as to the
accuracy of the representations and warranties of NTL herein at and as of
such Time of Delivery, as to the performance by NTL of all of their
respective obligations hereunder to be performed at or prior to such Time
of Delivery, and as to such other matters as the you may reasonably
request.
(e) Purchaser shall have received an opinion of Skadden Arps regarding
the Securities and the shares of common stock of NTL underlying the
Securities substantially as set forth as Exhibit C.
8 (a) As of the Closing, the Purchaser and their Affiliates (as defined
in the Exchange Act) will have no beneficial ownership (as defined in Rule 13d-3
promulgated
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under the Exchange Act) of any securities of NTL other than as a result of the
Purchaser' acquisition of the Securities.
(b) The Purchaser hereby agrees that, for a period of three (3) years
from the date hereof, the Purchaser and their Affiliates will not (unless
required by law or by an order of a court of competent jurisdiction):
(i) in any manner acquire, agree to acquire, make any public or
private offer or proposal to acquire or announce or disclose any
intention to make an offer or proposal to acquire, directly or
indirectly, by purchase or otherwise (except pursuant to a stock
split, stock dividend, or other pro rata distribution by NTL to
holders of any class of its outstanding securities entitled to vote
generally in the election of directors ("Voting Securities") or upon
conversion of the Securities), Voting Securities other than the
Securities and the shares of common stock of NTL underlying the
Securities issuable upon conversion, exercise or redemption of the
Securities, including any dividends in the form of Securities or
common stock, such that immediately after such acquisition, Purchaser
would have beneficial ownership in excess of fifteen percent (15%) of
NTL's common stock;
(ii) propose to enter into, or announce or disclose any intention
to propose to enter into, directly or indirectly, any merger, business
combination or similar transaction involving NTL or its Affiliates or
to purchase, directly or indirectly, all or a material portion of the
assets of NTL or any of its Affiliates;
(iii) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) or otherwise act
in concert with any Person, (x) for the purpose of circumventing the
provisions of this Agreement or (y) for the purpose of acquiring,
holding, voting or disposing of any Voting Securities except as
otherwise provided in this Agreement;
(iv) (x) request NTL (or its directors, officers, employees or
agents), directly or indirectly, to take any action which might
require NTL or any of its Affiliates to make a public announcement
regarding the possibility of (A) the acquisition of Voting Securities
by the Purchaser, (B) a business combination, merger or similar
transaction involving the Purchaser, on the one hand, and NTL or any
of its Affiliates, on the other hand, (C) the sale to the Purchaser of
all or a material portion of the assets of NTL or any of its
Affiliates, or (D) the amendment or waiver of any of the provisions
hereof, or (y) make any public statement regarding any of the
foregoing or with respect to the business, management or conduct of
NTL or its Affiliates;
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(v) deposit any Voting Securities in a voting trust or subject
them to a voting agreement or other agreement of similar effect; or
(vi) arrange, or participate in the arranging of, financing for
the purchase of any Voting Securities by any person or entity.
(c) It is anticipated that the Purchaser and NTL will be discussing
and entering into various business and contractual relationships.
Notwithstanding the provisions of clause (ix) of paragraph (b), the
Purchaser shall be free to (i) discuss such relationships with NTL and to
fully assert and protect their rights thereunder or (ii) meet privately
with the Chief Executive Officer and/or Chairman of the Board of NTL to
discuss matters generally of interest to shareholders other than matters
related to control or change of control of NTL.
(d) The parties hereto jointly and severally agree and covenant that
any breach of this Section 8 by any of them will cause immediate and
irreparable harm to the other, for which there is no adequate remedy at
law, and each hereby acknowledges and consents to right of the other to
seek the entry, by a court of competent jurisdiction, of any temporary,
preliminary or permanent injunction, or other remedial relief which would
arrest or redress any such breaches of this Section 8.
(e) The restrictions in this Section 8 shall be binding on Purchaser
and its affiliates for the period provided in subsection 8(b); provided,
however, that upon transfer (after the second anniversary hereof) of the
underlying Common Stock received upon conversion or upon exercise of the
Securities, the transferee(s) shall take such shares free and clear of any
restrictions under this Section 8.
(f) In the event the Purchaser shall during the period provided in
subsection 8(b): (i) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" (as such terms are defined
or used in Regulation 14A of the Exchange Act) to vote, or seek to advise
or influence any person with respect to the voting of, any Voting
Securities, or become a "participant" in an "election contest" (as such
terms are defined or used in Regulation 14A of the Exchange Act) relating
to the election of directors of NTL, or initiate, propose or solicit
holders of Voting Securities for the approval of any shareholder proposal
(under Rule 14a-8 under the Exchange Act or otherwise), provided that the
Purchasers shall not be deemed to have engaged in a "solicitation" or to
have become a "participant" in accordance with this Agreement or by reason
of participation in NTL's solicitation of proxies in connection with any
annual or special meeting of shareholders of NTL, (ii) otherwise act, alone
or in concert with others (including by providing financing for another
party), to seek or offer to control or influence, in any manner, the
management, Board of Directors or policies of NTL, including, without
limitation, by seeking to add or
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remove any member of the Board of Directors of NTL, or (iii) vote or cause
its Affiliates to vote at any annual or special meeting or in any action by
consent any Voting Securities of NTL in any manner other than in proportion
to the votes of all other holders of Voting Securities, then in such event
NTL shall have the option of terminating any contractual relationships
pursuant to the Letter of Intent of even date between NTL and Purchaser.
9 The respective agreements, representations, warranties and other
statements of NTL and the Purchaser, as set forth in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement, shall remain in
full force and effect, regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of the Purchaser or any controlling
person of any Purchaser, or NTL, or any officer or director or controlling
person of NTL, and shall survive delivery of and payment for the Securities.
10 This Agreement may be terminated by mutual agreement of the parties,
in which event, (i) NTL shall not then be under any liability or obligation to
the Purchaser with respect to the Securities except as provided in Section 6
hereof and (ii) the Purchaser shall not then be under any liability or
obligation to NTL with respect to this Agreement except as provided in Section 6
hereof.
11 All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchaser shall be delivered or sent by mail, telex or
facsimile transmission to: Microsoft Corporation, One Microsoft Way, Redmond,
Washington 98052-6399, Attention: Vice President, Finance; Chief Financial
Officer and General Counsel, Finance and Administration, with a copy to Preston
Gates & Ellis LLP, 701 Fifth Avenue, Seattle, WA 98014, Attention: C. Kent
Carlson; and if to NTL shall be delivered or sent by mail or facsimile
transmission to NTL Incorporated, 110 East 59th Street, New York, New York
10022, Attention: General Counsel, with a copy to Skadden, Arps, Slate, Meagher
& Flom LLP, 919 Third Avenue, New York, New York 10022, Attention: Thomas H.
Kennedy. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
12 This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchaser and NTL and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Securities from the Purchaser shall be
deemed a successor or assign by reason merely of such purchase.
13 Time shall be of the essence of this Agreement.
14 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
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15 This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
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If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between the Purchaser and NTL.
Very truly yours,
NTL INCORPORATED
By: /s/ John F. Gregg
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Name: John F. Gregg
Title: Vice President -
Business Development
Accepted as of the date hereof:
MICROSOFT CORPORATION
By: /s/ Gregory B. Maffei
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Name: Gregory B. Maffei
Title: Chief Financial Officer
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TERM SHEET FOR THE
5-1/4% SENIOR CONVERTIBLE PREFERRED STOCK
Issuer: NTL Incorporated ("NTL")
Instrument: 500,000 shares of non-voting 5-1/4% Senior Convertible
Preferred Stock (the "5-1/4% Senior Preferred").
Issue Price: 1,000.00 per share of 5-1/4% Senior Preferred
Dividend: Quarterly at the rate of 5-1/4% per annum from the issue
date, either (at NTL's option) in cash, 5-1/4% Senior
Preferred or common stock (if in common stock, at a common
stock, valuation based on a 25 trading day average price).
In the event NTL elects to pay the dividend in additional
shares of 5-1/4% Senior Preferred ("PIK"), the PIK dividend
for such quarter shall be 1.3125% of the total amount of the
5-1/4% Senior Convertible Preferred Stock held by Purchaser
(including all previous PIK dividends) at the time of the
applicable dividend and the conversion price for such
applicable PIK dividend shall be increased by 1.3125% over
the initial conversion price of the 5-1/4% Senior Preferred
(if the initial PIK dividend) or the conversion price for
the most recent PIK dividend (for all subsequent PIK
dividends). An illustrative example of a potential operation
of this PIK dividend provision has been circulated by the
parties. Unless all shares of common stock previously issued
as quarterly dividends are currently subject to an effective
registration statement relating to their re-sale, no PIK
dividend may be made in any quarter.
Rank: Until Conversion or Redemption, senior to all equity
securities of NTL, except for the current outstanding shares
of NTL's 13% Senior Redeemable Exchangeable Preferred Stock
(the "13% Preferred"); provided however that no additional
shares of the 13% Preferred shall be issued (other than PIK
dividends) and in the event of a refinancing of the existing
outstanding shares of the 13% Preferred, the maximum accrual
value of such refinancing shall not exceed in the aggregate
the aggregate maximum
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accrual value for the outstanding 13% Preferred (including
all PIK dividends in such valuations).
Maturity Date: 10 years from the issue date unless previously redeemed or
converted.
Optional
Redemption: At NTL's option, at $1,000.00 per share of 5-1/4% Senior
Preferred, plus accrued dividends redeemable on the earlier
of (a) seven years from the issue date and (b) that date
when the NTL common stock has for a period of 25 trading
days traded over $120.00 per share payable (at NTL's option)
in cash at $1,000.00 per 5-1/4% Senior Preferred share, plus
accrued dividends, or in NTL common stock at (i) $1,025.00
per 5-1/4% Senior Preferred share, plus accrued dividends in
the case of a redemption pursuant to (a), or (ii) $1,000,00
per 5-1/4% Senior Preferred share, plus accrued dividends in
the case of a redemption pursuant to (b). If in common
stock, valuation based on a 25 trading day average price.
Mandatory
Redemption: At maturity at the holder's option, at $1,000.00 per 5-1/4%
Senior Preferred share, plus accrued dividends, payable (at
NTL's option) in cash or NTL common stock (if in common
stock, valuation based on a 25 trading day average price).
Conversion: Convertible into 10 shares of common stock per share of
5-1/4% Senior Preferred.
Anti-dilution: Subject to standard anti-dilution provisions.
Registration
Rights: Substantially as set forth as Exhibit B to the Preferred
Stock Purchase Agreement.
Restrictions
on Transfer: Shares of 5-1/4% Senior Preferred are non-transferable
except to Microsoft affiliates. The underlying common stock
is non-transferable for twenty-four months from closing,
except for hedging transactions as provided for in the
Purchase Agreement and to Microsoft affiliates.
<PAGE>
TERM SHEET FOR THE
WARRANTS
Issuer: NTL Incorporated ("NTL")
Instrument: 1,200,000 warrants. Each warrant will entitle the holder to
purchase one share of NTL common stock
Exercise Price: $84 per share
Exercise Period: At any time on or after the date of issuance and prior to
5:00 p.m. New York City time on the date that is the fifth
anniversary of the date of issuance
Anti-dilution: Subject to standard anti-dilution provisions
Exercise
Provisions: The warrant shall provide for the option to exercise into
NTL common stock on a cashless basis.
Registration
Rights as to
Underlying
Common Stock Shares of Common Stock issuable on the exercise of the
Warrants shall be registered pursuant to a Registration
Rights Agreement, attached as Exhibit A to the Purchase
Agreement.
Restrictions
on Transfer: The warrant is non-transferable (except to affiliates). The
shares of common stock issuable upon exercise of the warrant
are not transferable for twenty-four (24) months following
the closing except for hedging transactions as provided for
in the Purchase Agreement and to Microsoft affiliates, and
subsequently, sales of common stock are limited to (i)
buyers who, following such sale, do not own more than 4.9%
of NTL's common stock and (ii) open market transactions.
EXHIBIT 99.2
MICROSOFT AND NTL ANNOUNCE STRATEGIC PARTNERSHIP TO ACCELERATE DEPLOYMENT
OF BROADBAND SERVICES IN THE U.K. AND THE REPUBLIC OF IRELAND
MICROSOFT TO MAKE $500 MILLION INVESTMENT IN NTL
REDMOND, WASH. AND NEW YORK - JAN. 25, 1999 - Microsoft Corp. and NTL Inc.
today announced an agreement to jointly develop new, broadband services for
delivery to customers in the United Kingdom and Ireland.
In addition, Microsoft will make a $500 million investment in NTL to
accelerate deployment of high-speed voice, video and data services over its
national fiber-optic telecommunications networks and to continue the company's
rapid introduction of advanced Internet, telephone and cable television services
over its broadband facilities. NTL is Britain's leading new-entrant local
telecommunications competitor, with more than 1.4 million telephone, cable
television and Internet customers.
"Microsoft believes in our vision of bringing advanced digital Internet,
telephone and television services to consumers and businesses throughout the UK
via all platforms," said Barclay Knapp, president and CEO of NTL. "NTL's
pioneering marketing, network and back-office resources, coupled with
Microsoft's world leadership in personal computing and digital television, will
make for a great combination."
"NTL and Microsoft share a common vision for the delivery of new and
exciting digital technologies and services to NTL cable customers in the UK and
Ireland," said Craig Mundie, Microsoft's senior vice president for consumer
strategy. "We are very excited by the opportunities we will have for expanding
customer choice and control of their future TV experience."
Microsoft and NTL will work together closely in the development of new
digital services
- MORE -
<PAGE>
MICROSOFT AND NTL ANNOUNCE STRATEGIC PARTNERSHIP PAGE 2
and intend to enter into further agreements regarding software and services as
opportunities arise throughout 1999. Specifically, Microsoft and NTL will form a
Technology Group to guide the development of new digital services. In
recognition of Microsoft's extension of these products and services to NTL,
Microsoft will receive 1.2 million five-year warrants to purchase NTL common
stock at an exercise price of $84 per share.
Microsoft has agreed to purchase $500 million of NTL's 5.25 percent
convertible preferred stock. The preferred stock is convertible into NTL common
stock at a conversion price of $100 per share. The preferred stock is redeemable
10 years from the date of issuance in cash or NTL common stock and may be
redeemed by NTL on the earlier of seven years or the date on which NTL's common
stock has traded above $120 for 25 consecutive trading days. Dividends are
payable at NTL's option in cash, common stock or additional shares of preferred
stock. The closing of the purchase of the preferred stock is expected to occur
shortly.
NTL Inc. (NASDAQ: NTLI; EASDAQ: NTLI.ED) is a leading alternative
telecommunications company in the United Kingdom. The company offers local
business and residential telephony, residential cable television and Internet
services over advanced broadband fiber networks in six major franchise areas in
the UK. Through its national telecoms services division, the company owns and
operates one of only five independent national telecoms networks in the UK, and
offers national business telecoms, national and international carrier
telecommunications services, and satellite and radio communications services.
The company's broadcast services division operates a national broadcast
transmission network of more than 1,200 owned and shared transmission sites, and
- MORE -
<PAGE>
MICROSOFT AND NTL ANNOUNCE STRATEGIC PARTNERSHIP PAGE 3
offers digital and analog broadcast transmission services to major television
and radio stations nationwide in the UK.
Microsoft (Nasdaq "MSFT") is the worldwide leader in software for personal
computers. The company offers a wide range of products and services for business
and personal use, each designed with the mission of making it easier and more
enjoyable for people to take advantage of the full power of personal computing
every day.
#########
Microsoft is either a registered trademark or a trademark of Microsoft Corp. in
the United States and/or other countries.
FOR FURTHER INFORMATION FROM NTL, CONTACT:
In the U.S.: John F. Gregg, Managing Director - Corporate Finance & Development;
Richard J. Lubasch, Senior Vice President - General Counsel; or Kathy Mikrakis -
Investor Relations at (212) 906-8440
In the UK: Alison Smith, Group Communications at (01252) 402662; or via e-mail
at [email protected].
FOR MORE INFORMATION FROM MICROSOFT, ANALYSTS ONLY:
Carla Lewis, Senior Director, Investor Relations, (425) 936-3703
FOR MORE INFORMATION FROM MICROSOFT, PRESS ONLY:
Tom Pilla, Microsoft Corp., (425) 936-0756
Heidi Rothauser, Waggener Edstrom, (425) 637-9097
Note to editors: If you are interested in viewing additional information on
Microsoft, please visit the Microsoft Web page at
http://www.microsoft.com/presspass/ on Microsoft's corporate information pages.
Shareholder and financial information is available at
http://www.microsoft.com/msft/.
