UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ______________
Commission file number 33-72468
33-72468-01
THE HELICON GROUP, L.P.
(Exact name of registrant as specified in its charter)
Delaware 4841 22-3248703
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
HELICON CAPITAL CORP.
(Exact name of registrant as specified in its charter)
Delaware 4841 22-3248702
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
12444 Powerscourt Drive, Suite 100
St. Louis, Missouri 63131
(314) 965-0555
(Address, including Zip Code and telephone number,
including area code, of registrants' principal executive offices)
Indicate by check mark whether the Registrants: (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Yes |X| No |_|
The number of shares outstanding of the common stock of Helicon Capital Corp.,
as of July 30, 1999: 100.
- --------------------------------------------------------------------------------
<PAGE>
THE HELICON GROUP, L.P. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION PAGE
----
Condensed Consolidated Balance Sheets as at December 31,
1998 and June 30, 1999 (Unaudited) 3
Unaudited Condensed Consolidated Statements of Operations
for the three-month and six-month periods ended June 30,
1998 and 1999 4
Unaudited Condensed Consolidated Statement of Changes in
Partners' Deficit for the six month periods ended June 30,
1998 and 1999 5
Unaudited Condensed Consolidated Statements of Cash Flows
for the six-month periods ended June 30, 1998 and 1999 6
Notes to Unaudited Condensed Consolidated Financial
Statements 7
Separate financial statements of Helicon Capital Corp. as co-issuer of the 11%
senior notes due 2003 have not been presented herein because this entity has no
operations and substantially no assets or equity.
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-11
PART II. OTHER INFORMATION
Items 1.-4. None --
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signature Page 13
2
<PAGE>
THE HELICON GROUP, L.P. AND SUBSIDIARY
Condensed Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 31, 1998(a) June 30, 1999
(Unaudited)
-------------------- -------------
<S> <C> <C>
Assets
Cash and cash equivalents $3,200,791 $6,081,861
Receivables from subscribers 1,078,647 1,268,919
Prepaid expenses and other assets 1,607,984 1,120,988
Property, plant and equipment, net 35,913,816 36,662,570
Intangible assets and deferred costs, net 27,705,114 28,845,384
Due from affiliates 250,174 519,959
------------- -------------
Total assets $69,756,526 $74,499,681
============= =============
Liabilities and Partners' Deficit
Liabilities:
Accounts payable $5,144,994 $1,183,198
Accrued expenses 870,870 1,521,574
Subscriptions received in advance 397,346 338,827
Accrued interest 2,163,208 2,277,653
Due to principal owner 5,000,000 5,000,000
Senior secured notes 115,000,000 115,000,000
Loans payable to banks 20,266,922 20,261,571
Senior subordinated loans payable to banks -- 12,000,000
Other notes payable 4,607,378 4,276,549
Due to affiliates 442,639 --
------------- -------------
Total liabilities 153,893,357 161,859,372
------------- -------------
Partners' deficit:
Accumulated partners' deficit (84,135,831) (87,358,691)
Less capital contribution receivable (1,000) (1,000)
------------- -------------
Total partners' deficit (84,136,831) (87,359,691)
------------- -------------
Total liabilities and partners' deficit $69,756,526 $74,499,681
============= =============
</TABLE>
(a) Balance Sheet at December 31, 1998 has been derived from Audited
Consolidated Financial Statements at that date.
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
THE HELICON GROUP, L.P. AND SUBSIDIARY
Unaudited Condensed Consolidated Statement of Operations
for the Three-Month and Six-Month Periods Ended June 30, 1998 and 1999
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1998 1999 1998 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $12,052,566 $13,947,624 $23,863,947 $27,558,572
------------ ------------ ------------ ------------
Operating expenses:
Operating expenses 3,605,556 4,235,270 7,096,079 8,652,013
General and administrative expenses 1,874,650 2,323,514 3,823,301 4,431,240
Marketing expenses 356,085 381,949 746,062 1,121,658
Depreciation and amortization 2,900,557 3,222,118 5,730,827 6,498,924
Management fee charged by affiliate 602,622 697,374 1,193,190 1,377,924
Corporate and other expenses 46,500 396,602 91,501 475,079
------------ ------------ ------------ ------------
Total operating expenses 9,385,970 11,256,827 18,680,960 22,556,838
------------ ------------ ------------ ------------
Operating income 2,666,596 2,690,797 5,182,987 5,001,734
------------ ------------ ------------ ------------
Interest expense (3,835,363) (4,194,991) (7,675,168) (8,313,355)
Interest income 13,008 47,634 36,420 88,761
------------ ------------ ------------ ------------
(3,822,355) (4,147,357) (7,638,748) (8,224,594)
------------ ------------ ------------ ------------
Net loss ($1,155,759) ($1,456,560) ($2,455,761) ($3,222,860)
============ ============ ============ ============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE>
THE HELICON GROUP, L.P. AND SUBSIDIARY
Unaudited Condensed Consolidated Statement of Changes in Partners' Deficit
for the Six-Month Period Ended June 30, 1999
<TABLE>
<CAPTION>
Partners' deficit
-----------------------
Capital
General Limited Contribution
Partners Partners Receivable Total
-------- -------- ---------- -----
<S> <C> <C> <C> <C>
Balance at December 31, 1998 ($474,830) ($83,661,001) ($1,000) ($84,136,831)
Net loss (32,229) (3,190,631) -- (3,222,860)
---------- ------------ ------------ ------------
Balance at June 30, 1999 ($507,059) ($86,851,632) ($1,000) ($87,359,691)
========== ============ ============ ============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
5
<PAGE>
THE HELICON GROUP, L.P. AND SUBSIDIARY
Unaudited Condensed Consolidated Statement of Cash Flows
for the Six-Month Periods Ended June 30, 1998 and 1999
<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
Net loss ($2,455,761) ($3,222,860)
------------ ------------
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 5,730,827 6,498,924
Gain on sale of equipment (1,498) (6,000)
Amortization of debt discount and deferred financing costs 60,000 90,000
Change in operating assets and liabilities net of acquisitions:
Increase in receivables from subscribers (24,812) (163,845)
(Increase) decrease in prepaid expenses and other assets (333,112) 490,351
Decrease in accounts payable and accrued expenses (287,526) (3,332,777)
Decrease in subscriptions received in advance (214,420) (58,518)
(Decrease) increase in accrued interest (5,910) 114,445
------------ ------------
Total adjustments 4,923,549 3,632,580
------------ ------------
Net cash provided by operating activities 2,467,788 409,720
------------ ------------
Cash flows from investing activities:
Purchases of property, plant and equipment (2,203,681) (2,622,059)
Proceeds from sales of equipment 91,128 6,000
Cash paid for net assets of cable television systems acquired -- (5,228,097)
Increase in intangible assets and deferred costs (15,781) (172,340)
------------ ------------
Net cash used in investing activities (2,128,334) (8,016,496)
------------ ------------
Cash flows from financing activities:
Deferred financing costs incurred -- (240,000)
Proceeds from senior subordinated bank loans -- 12,000,000
Repayment of bank loans (4,834) (5,351)
Repayment of other notes payable (236,257) (554,379)
Advances to affiliates (2,316,708) (2,294,303)
Repayments of advances to affiliates 1,541,467 1,581,879
------------ ------------
Net cash (used in) provided by financing activities (1,016,332) 10,487,846
------------ ------------
Net (decrease) increase in cash and cash equivalents (676,878) 2,881,070
Cash and cash equivalents at beginning of period 3,693,625 3,200,791
------------ ------------
Cash and cash equivalents at end of period $3,016,747 $6,081,861
============ ============
Supplemental cash flow information:
Interest paid $7,621,078 $8,108,906
============ ============
Other non-cash items:
Acquisition of property, plant and equipment through issuance
of other notes payable $382,626 $223,550
============ ============
Net assets of internet business transferred to affiliate through
an intercompany loan ($1,553,565) $ --
============ ============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements
6
<PAGE>
THE HELICON GROUP, L.P. AND SUBSIDIARY
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 1998 and 1999
(1) Organization and Nature of Business
The Helicon Group, L.P. (the "Partnership"), a Delaware limited
partnership, operates in one business segment offering cable television
services in the states of Pennsylvania, West Virginia, North Carolina,
Louisiana, Vermont and New Hampshire. The Partnership also offers advanced
services, such as paging, high speed Internet access via cable modems, and
private data networks as well as dial up Internet services.
(2) Basis of Presentation
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements of the Partnership and its wholly owned
subsidiary, Helicon Capital Corp. ("HCC"), reflect all adjustments,
consisting of normal recurring accruals, necessary to present fairly the
Partnership's consolidated financial position as of June 30, 1999, and
their results of operations and cash flows for the three-month and
six-month periods ended June 30, 1998 and 1999. Information included in
the condensed consolidated balance sheet at December 31, 1998 has been
derived from the audited consolidated balance sheet in the Partnership's
and HCC's Annual Report on Form 10-K for the year ended December 31, 1998
(the "1998 Form 10-K") filed with the Securities and Exchange Commission.
The unaudited consolidated financial statements and these notes have been
condensed; therefore, they do not contain all of the disclosures required
by generally accepted accounting principles and should be read in
conjunction with the consolidated financial statements and the other
information in the 1998 Form 10-K.
HCC had nominal assets as of June 30, 1999 and had no operations from the
date of incorporation to June 30, 1999. All intercompany accounts have
been eliminated in consolidation. The results of operations for the
three-month and six-month periods ended June 30, 1998 and 1999 are not
necessarily indicative of the results for a full year.
Helicon OnLine operations are included in the Partnership's consolidated
financial statements effective on June 29,1998.
(3) Other Events
On January 5, 1999, the Partnership entered into a $12,000,000 Senior
Subordinated Loan Agreement with Paribas Capital Funding, LLC (the "1999
Credit Facility"). The 1999 Credit Facility is non-amortizing and is due
January 5, 2003. Initial borrowings of $7,000,000 under the 1999 Credit
Facility financed the acquisition of certain cable television assets in
North Carolina. On February 19, 1999, the Parntership borrowed the
remaining $5,000,000 available under the 1999 Credit Facility. Interest
is payable at 11.5% per annum.
(4) Subsequent Event
On July 30, 1999, Charter-Helicon, LLC ("Charter-Helicon"), acquired a 1%
interest in the Partnership previously owned by Baum Investments, Inc. and
became the General Partner of the Partnership. Concurrently,
Charter-Helicon and Charter Communications, LLC ("CC-LLC"), parent of
Charter- Helicon, acquired all of the partnership interests of Helicon
Partners I, L.P. These transactions are collectively referred to as the
"Helicon/Charter Deal" herein. All debt, except for the 11% Senior Secured
Notes due 2003 and certain equipment credit facilities, was extinguished
in connection with the Helicon/Charter Deal. Effective with this change of
ownership, the Partnership will be managed by Charter Investment, Inc.
7
<PAGE>
THE HELICON GROUP, L.P. AND SUBSIDIARY
June 30, 1998 and 1999
Management's Discussion and Analysis of Financial Condition and Results of
Operations
General
The Helicon Group, L.P. (the "Partnership") incurred a net loss for the
six months ended June 30, 1998 and 1999, respectively. The principal items
contributing to the Partnership's net losses are the high level of expenses
relating to depreciation, amortization and interest. These expenses are the
result of capital expenditures related to continued expansion and rebuilding of
the systems, the Partnership's acquisitions and its financing activities. The
Partnership believes that recurring net losses are common for cable television
companies and expects that such net losses will continue. The Partnership
believes that available working capital and cash flows generated from operations
will be sufficient to meet its operating needs and future commitments. See
"Liquidity and Capital Resources" below.
Recent Cable Regulatory Developments.
On March 29,1999, the Federal Communications Commission ("FCC") adopted
its report and order regarding its final rules regulating cable television
service and cable system operators to the Communications Act of 1934, as
amended, ("Communications Act"). The order provides that the commission's
authority to regulate Cable Programming Service Tier ("CPST") rates will sunset
for cable programming services provide after March 31, 1999, amongst other
provisions. The FCC continues to remain on a regulatory approach of strongly
encouraging and supporting competition to cable television. While the Company
anticipates additional legislative and regulatory developments and changes, the
precise nature of these changes and their impact on the cable industry and the
Company cannot be accurately predicted at this time.
The Partnership is in the process of applying for certification as a competitive
local exchange carrier ("CLEC") in several states. At this time, the Partnership
does not provide any common carrier services as a CLEC.
Results of Operations
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998.
Revenues. Revenues increased $3,694,625 or 15.5% to $27,558,572.
Approximately 50% of the increase in revenues was attributed to the inclusion of
the dial-up internet access provider business ("ISP business") as of June 29,
1998 and approximately 25% was attributed to the January 7, 1999 acquisition of
a cable television system in North Carolina. The balance of the increase was
primarily due to higher basic service and new program service rates. Excluding
the effects of the ISP business, the average monthly cable revenue per basic
subscriber increased from $40.37 in the 1998 period to $42.51 in the 1999
period. The $2.14 increase reflected primarily i) an increase of $2.13 in basic
revenues; ii) an increase of $0.24 due to the new program services; iii) a
decrease of $0.21 in advertising revenue; iv) a increase of $0.05 in premium
subscription revenue; and v) a decrease of $0.07 in other services, which
includes private data network systems and paging.
Operating, Marketing, General and Administrative Expenses. Operating,
marketing, general and administrative expenses increased $2,539,469 or 21.8% to
$14,204,911. Approximately 70% of the increase in expenses was attributed to the
ISP business and approximately 25% attributed to the North Carolina cable
television system acquisition, additional expenses for new and expanded
programming services and private data network services. The balance of the
increase in expenses was consistent with the growth in revenues, coupled with
general cost increases. As a percentage of revenues, operating, marketing,
general and administrative expenses increased from 48.9% in 1998 to 51.5% in
1999.
8
<PAGE>
Depreciation and Amortization. Depreciation and amortization expenses
increased $768,097 or 13.4% to $6,498,924, primarily as a result of $554,795
higher depreciation charges relating to the ISP business, the North Carolina
acquisition and ongoing capital expenditures in the other cable systems; and,
$213,302 higher amortization expense all attributed to the ISP business and the
North Carolina acquisition.
Management Fee Charged by Affiliate. Management fee expenses increased
$184,734 or 15.5% to $1,377,924 consistent with the increase in revenues.
Corporate and other expenses. Corporate and other expenses increased
$383,578 or 419.2% to $475,079 all due to employee severance and other costs
related to the sale of the partnership interests.
Operating Income. Operating income for the six months ended June 30, 1999
decreased $181,253 or 3.5% to $5,001,734 from the $5,182,987 operating income in
the comparable 1998 period. The reduction in operating results was due to
employee severance and other costs related to the sale of the partnership
interests offset in part by the increase in revenues.
Interest Expense. Interest expense increased $638,187 or 8.3% to
$8,313,355 primarily due to interest expense associated with the debt for the
North Carolina acquisition.
Interest Income. Interest income increased $52,341 or 143.7% to $88,761
primarily due to higher average cash balances.
Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998.
Revenues. Revenues increased $1,895,058 or 15.7% to $13,947,624.
Approximately 50% of the increase in revenues was attributed to the inclusion of
the dial-up internet access provider business ("ISP business") as of June 29,
1998 and approximately 25% was attributed to the January 7, 1999 acquisition of
a cable television system in North Carolina. The balance of the increase was
primarily due to higher basic service and new program service rates. Excluding
the effects of the ISP business, the average monthly cable revenue per basic
subscriber increased from $40.82 in the 1998 period to $43.02 in the 1999
period. The $2.20 increase reflected primarily i) an increase of $2.19 in basic
revenues; ii) an increase of $0.24 due to the new program services; iii) a
decrease of $0.17 in advertising revenue; iv) a increase of $0.04 in premium
subscription revenue; and v) a decrease of $0.10 in other services, which
includes private data network systems and paging.
Operating, Marketing, General and Administrative Expenses. Operating,
marketing, general and administrative expenses increased $1,104,442 or 18.9% to
$6,940,733. Approximately 75% of the increase in expenses was attributed to the
ISP business and approximately 20% attributed to the North Carolina cable
television system acquisition, additional expenses for new and expanded
programming services and private data network services. The balance of the
increase in expenses was consistent with the growth in revenues, coupled with
general cost increases. As a percentage of revenues, operating, marketing,
general and administrative expenses increased from 48.4% in 1998 to 49.8% in
1999.
Depreciation and Amortization. Depreciation and amortization expenses
increased $321,561 or 11.1% to $3,222,118, primarily as a result of $288,532
higher depreciation charges relating to the ISP business, the North Carolina
acquisition and ongoing capital expenditures in the other cable systems; and,
$33,029 higher amortization expense all attributed to the ISP business and the
North Carolina acquisition.
Management Fee Charged by Affiliate. Management fee expenses increased
$94,752 or 15.7% to $697,374 consistent with the increase in revenues.
Corporate and other expenses. Corporate and other expenses increased
$350,102 or 752.9% to $396,602 all due to employee severance and other costs
related to the sale of the partnership interests.
9
<PAGE>
Operating Income. Operating income for the three months ended June 30,
1999 increased $24,201 or .9% to $2,690,795 from the $2,666,596 operating income
in the comparable 1998 period. The improvement in operating results was due to
the increase in revenues offset in part by the employee severance and other
costs related to the sale of the partnership interests.
Interest Expense. Interest expense increased $359,628 or 9.4% to
$4,194,991 primarily due to interest expense associated with the debt for the
North Carolina acquisition.
Interest Income. Interest income increased $34,626 or 266.2% to $47,634
primarily due to higher average cash balances.
Liquidity and Capital Resources
The cable television business requires substantial financing for
construction, expansion and maintenance of the cable plant as well as for
acquisitions. The Company has historically financed its capital needs and
acquisitions through long-term debt and, to a lesser extent, through cash
provided from operating activities. The general availability of bank financing
has been variable over recent years. On June 26, 1997, the Company entered into
a new credit facility (the "1997 Credit Facility") with a new bank consisting of
$20,000,000 senior secured term loan facility due November 1, 2000, bearing
interest at LIBOR plus 2.75%, under which $20,000,000 was outstanding at June
30, 1999, secured by all the assets of the Company. The proceeds of the 1997
Credit Facility were used to acquire certain cable television assets in North
Carolina. On January 5, 1999, the 1997 Credit Facility was restated and amended.
On February 24, 1997, the Company entered into a $285,000 loan agreement with a
new bank, under which $261,571 was outstanding at June 30, 1999. The proceeds of
this new loan were used to construct the Company's new office building in
Vermont which secures the loan. On January 5, 1999, the Company entered into a
$12,000,000 Senior Subordinated Loan Agreement with Paribas Capital Funding, LLC
(the "1999 Credit Facility"), all of which was outstanding at June 30, 1999, due
January 5, 2003, bearing interest at 11.5% and secured by all the assets of the
Company. The proceeds were used for acquisitions and working capital
requirements. (See Credit Agreements of the Partnership, below).
The Company operates at low and sometimes negative working capital levels. This
is primarily due to account payable balances, which often include significant
amount of capital expenditures. Such payables are paid when due from available
cash balances, including cash generated from operations up to the date of
payment.
Cash flows provided by operating activities amounted to $2,467,788 and
$409,720 for the six-month periods ended June 30, 1998 and 1999, respectively.
The decrease in cash generated from operations in the 1999 period compared to
the 1998 period resulted primarily from changes in working capital items.
Net cash used in investing activities amounted to $2,128,334 and
$8,016,496 for the six month periods ended June 30, 1998 and 1999, respectively,
and included the following:
o In the 1998 period, the Partnership incurred $2,203,681 in capital
expenditures related to the expansion and rebuilding of the systems
and received $91,128 in proceeds from sales of equipment in the
ordinary course of business.
o In the 1999 period, the Partnership incurred $2,622,059 in capital
expenditures related to the expansion and rebuilding of the systems,
paid $5,228,097 in connection with the acquisition of a cable
television system and incurred $172,340 in other deferred costs.
Net cash used in financing activities amounted to $1,016,332 in the six months
ended June 30, 1998 and net cash provided by financing activities amounted to
$10,487,846 for the six months ended June 30, 1999 which included the following:
10
<PAGE>
o In the 1998 and 1999 period, the Partnership made repayments of
notes payable in the amounts of $236,257 and $554,379 respectively,
which represented principal repayments under the Partnership's
equipment credit facilities.
o In the 1999 period, the Partnership borrowed $12,000,000 from a
bank.
o Advances to other affiliates and repayments of such advances result
from management fees and other reimbursable expenses.
Credit Agreements of the Partnership. On June 30, 1999, the Partnership
had cash and cash equivalents of $6,081,861 and the following credit
arrangements: (i) $115,000,000 aggregate principal amount of 11% Senior Secured
Notes due 2003; (ii) the 1997 Credit Facility with a bank which consisted of a
$20,000,000 senior secured term loan facility due November 1, 2000 all of which
was outstanding, bearing interest at LIBOR plus 2.75% secured by all the assets
of the Company, as restated and amended on January 5, 1999; (iii) the 1999
Credit Facility with a bank which consisted of a $12,000,000 senior subordinated
loan facility due January 5, 2003 all of which was outstanding, bearing interest
at 11.5% secured by all the assets of the Company; (iv) the 10% Note due August
20, 2000 to Simmons Communications Company, L.P. in the amount of $2,036,765
(the original principal amount plus accrued interest thereon through September
30, 1997); (v) $5,000,000 principal amount in favor of Mr. Baum pursuant to a
Prime Plus 2% Subordinated Note which has no due date and may only be repaid,
subject to the passage of certain limiting tests prior to repayment of the
Notes; (vi) $285,000 loan facility from a bank, of which $261,571 was
outstanding, bearing interest at Prime Plus 1.0%, due March 1, 2012, used to
finance the Company's new office building in Vermont; (vii) $ 843,197
non-interest bearing promissory notes issued in connection with the acquisition
of the Internet business which was assumed by the Company on June 29,1998, and
are reported net of imputed interest of $108,368; (viii) $1,396,587 of certain
other equipment credit facilities with various due dates not exceeding five
years.
The Partnership believes that available working capital and cash flows
generated from operations will be sufficient to allow it to meet its planned
capital expenditures and meet its debt obligations and cover its short-term
liquidity needs. Also, while the Partnership presently sees no reason to do so,
it could adjust scheduled capital expenditures if the Partnership's liquidity
position so warrants.
On March 22, 1999, Helicon Partners I, L. P., Baum Investments, Inc. and
all the holders of partnership interests in the Partnership entered into a
purchase agreement by and among Charter Communications, Inc., presently doing
business as Charter Investment, Inc., Charter Communications, LLC and Charter
Helicon, LLC (collectively the "Charter Entities") providing for the sale of all
such partnership interests and Helicon Corp.'s interest in the management
agreements with the Partnership and HPI Acquisition Co, LLC to the Charter
Entities. In connection with the sale, $228,985,000 of cash was paid to the
equity holders; debt of $197,447,000 was repaid; other costs totaling $4,285,000
were incurred. On July 30, 1999, the Helicon/Charter deal was completed.
As a result of the Helicon/Charter Deal (i.e., change of control) and in
accordance with the terms and conditions of the indenture governing the 11%
senior secured notes due 2003 (the "Notes"), the Partnership will offer to
purchase the Notes at a price equal to 101% of their principal amount plus
accrued interest, if any, through the date of purchase.
Inflation
Certain of the Partnership's expenses, such as those for wages and
benefits, for equipment repair and replacement, and for billing and marketing,
increase with general inflation. However, the Partnership does not believe that
its financial results have been, or will be, adversely affected by inflation,
provided that it is able to increase its service rates periodically. The
Partnership, in accordance with FCC regulation, may pass along programming cost
increases to its customers.
Impact of the Year 2000 Issue
The Partnership continues to implement its Year 2000 remediation plan and
expects to be on schedule and on budget with this plan.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Change of Control
On July 30, 1999, there was a change in control with respect to the
Partnership and its wholly owned subsidiary, Helicon Capital Corp.
This change in control was effected by Charter Communications, LLC
("CC-LLC") acquiring all of Helicon Partners I, L.P.'s ("HPI") 99%
limited partnership interests. HPI owns all of the Partnership's
limited partnership interests. CC-LLC's wholly owned subsidiary
Charter-Helicon, LLC ("Charter-Helicon") acquired the remaining 1%
general partnership in the Partnership while the remaining 99%
limited partnership interests continued to be held by HPI. As a
result, CC-LLC indirectly controls 100% of the voting interests in
the Partnership. In addition, Charter Investment, Inc. ("Charter
Investment"), formerly doing business as Charter Communications,
Inc., now provides management services to the Partnership.
CC-LLC and Charter Investment are beneficially owned by Paul G.
Ailen.
The transaction was funded by proceeds from Charter Communications
Operatings, LLC's ("CCO") credit facility dated March 17, 1999, with
the Partnership as guarantor and CCO as borrower. CCO contributed
the funds to complete the purchase described above. CC-LLC and
Charter-Helicon have pledged their respective interests in the newly
acquired entities, and each of the newly acquired Helicon entities
have executed a guarantee with respect to the CCO Credit Agreement
as well as a pledge of any equity interest held by them in
subsidiary entities.
No continuing arrangements exist between the old and new control
groups which may result in a future change of control or affect the
election of directors. Theodore Baum, through his control of Baum
Investments, Inc., the former General Partner of the Partnership,
retained a preferred limited liability company interests in
Charter-Helicon.
Change of Directors
Effective July 30, 1999, Jerald L. Kent was appointed as the sole
member of the Board of Directors of the Partnership and its
subsidiary.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Included in this report:
27.1 Financial Data Schedule -- The Helicon Group, L.P.
(supplied for the information of the Commission)
27.2 Financial Data Schedule -- Helicon Capital Corp.
(supplied for the information of the Commission)
(b) Reports on Form 8-K -- None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this Report to be signed on their behalf by the
undersigned, thereunto duly authorized.
THE HELICON GROUP, L.P.
(Co-Registrant)
Helicon Capital Corp.
(Co-Registrant)
Dated: August 13, 1999 By: /s/ Jerald L. Kent
--------------------------------
Name: Jerald L. Kent
Title: President and Chief Executive
Officer
(Principal Executive Officer)
Dated: August 13, 1999 By: /s/ Kent D. Kalkwarf
--------------------------------
Name: Kent D. Kalkwarf
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from The Helicon
Group, L.P. and Subsidiary and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000915767
<NAME> The Helicon Group, L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 6,081,861
<SECURITIES> 0
<RECEIVABLES> 1,268,919
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,471,768
<PP&E> 36,662,570
<DEPRECIATION> 0
<TOTAL-ASSETS> 74,499,681
<CURRENT-LIABILITIES> 5,321,252
<BONDS> 156,538,120
0
0
<COMMON> 0
<OTHER-SE> (87,358,691)
<TOTAL-LIABILITY-AND-EQUITY> 74,499,681
<SALES> 0
<TOTAL-REVENUES> 27,558,572
<CGS> 0
<TOTAL-COSTS> 22,556,838
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,313,355
<INCOME-PRETAX> 3,222,860
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,222,860
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,222,860
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000915772
<NAME> Helicon Capital Corp.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1
<TOTAL-LIABILITY-AND-EQUITY> 1
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
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<INCOME-PRETAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
