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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 11, 1998
Date of Earliest Event Reported: November 19, 1998
TELE-COMMUNICATIONS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-26264 84-1289408
(Commission File Number) (I.R.S. Employer Identification No.)
5619 DTC Parkway
Englewood, Colorado 80111
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (303) 267-5500
<PAGE>
Item 5. Other Events.
On November 19, 1998, Tele-Communications International, Inc. (the
"Company") completed a merger (the "Merger") in which the Company became a
wholly-owned subsidiary of Tele-Communications, Inc. In connection with the
Merger, the Company and The Bank of New York, as Trustee, entered into a First
Supplemental Indenture, dated as of November 19, 1998 (the "Supplemental
Indenture") to the Indenture, dated as of February 7, 1996 (the "Original
Indenture" and, together with the Supplemental Indenture, the "Indenture")
governing the Company's 4 1/2% Convertible Subordinated Debentures due 2006 (the
"Debentures"). The Supplemental Indenture is filed as Exhibit 4.2 hereto. The
Supplemental Indenture provides for, among other things, an adjustment in the
conversion terms of the Debentures required as a result of the Merger and the
terms of the Original Indenture. Consummation of the Merger also constituted a
"Change of Control" under Section 4.02 of the Original Indenture. Accordingly,
holders of Debentures have the right (the "Change of Control Right") until 5:00
p.m., Eastern time, on January 12, 1999 (the "Change of Control Purchase Date")
to require the Company to purchase such holders' Debentures at a purchase price
payable in cash equal to 100% of the principal amount thereof plus accrued and
unpaid interest to the Change of Control Purchase Date. On December 11, 1998,
the Company published a Notice of the Change of Control Right in the National
Edition of The Wall Street Journal and caused a similar notice to be mailed to
each holder of Debentures. The forms of such notices of the Change of Control
Right (the "Change of Control Notices") are filed as Exhibits 99.1 and 99.2,
respectively. The descriptions contained in this Form 8-K of certain provisions
of the Supplemental Indenture and the terms of the Change of Control Right are
qualified in their entirety by the complete text of the Supplemental Indenture
and the Change of Control Notices, respectively, which are filed as exhibits
hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit No. Description
- ----------- -----------
4.1 Original Indenture between the Registrant and The Bank of New
York, as trustee, dated as of February 7, 1996/1/
4.2 Supplemental Indenture between the Registrant and The Bank of New
York, as trustee, dated as of November 19, 1998.
- ------------------
/1/ Incorporated herein by reference from the Registrant's Form S-1
(Registration Number 33-80491) as declared effective by the commission on
February 1, 1996.
1
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99.1 Notice to Holders published in The Wall Street Journal on
December 11, 1998.
99.2 Notice of change of control, supplemental indenture and
adjustment in conversion terms, dated December 11, 1998.
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: December 11, 1998
TELE-COMMUNICATIONS INTERNATIONAL, INC.
By: /s/ Graham Hollis
------------------------------------------
Graham Hollis
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
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EXHIBIT 4.2
SUPPLEMENTAL INDENTURE
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===============================================================================
TELE-COMMUNICATIONS INTERNATIONAL, INC.
And
THE BANK OF NEW YORK, Trustee
________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of November 19, 1998
Supplement to Indenture
Dated as of February 7, 1996
____________________
4 1/2% Convertible Subordinated Debentures due 2006
==============================================================================
<PAGE>
FIRST SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of
November 19, 1998 between TELE-COMMUNICATIONS INTERNATIONAL, INC., a Delaware
corporation (the "Company" or "TINTA"), and THE BANK OF NEW YORK, a New York
banking corporation (the "Trustee"), as Trustee under the indenture of TINTA
(the "Indenture") dated as of February 7, 1996. Capitalized terms used herein
without definition shall have the respective meanings ascribed to such terms in
the Indenture.
RECITALS
--------
WHEREAS, TINTA and the Trustee have entered into the Indenture, pursuant to
which TINTA has issued $345,000,000 aggregate principal amount of its 4 1/2%
Convertible Subordinated Debentures due 2006 (the "Securities"), which are
convertible into TINTA's Series A Common Stock, $1.00 par value per share
("TINTA Series A Stock");
WHEREAS, TINTA, Tele-Communications, Inc., a Delaware corporation ("TCI"),
and Liberty Group Acquisition Co., a wholly-owned subsidiary of TCI ("Merger
Sub") have entered into the Agreement and Plan of Merger, dated as of August 24,
1998 (the "Merger Agreement"), pursuant to which TCI will acquire the entire
equity interest in TINTA not already beneficially owned by TCI by means of a
merger (the "Merger") of Merger Sub with and into TINTA. In the Merger, each
outstanding share of TINTA Series A Stock and each outstanding share of TINTA's
Series B Common Stock, $1.00 par value per share ("TINTA Series B Stock" and
together with the TINTA Series A Stock, "TINTA Common Stock") (other than any
such shares held by TINTA in its treasury or owned of record by TCI or any
subsidiary of TCI, all of which will be canceled), will be converted into the
right to receive 0.58 of a share of Tele-Communications, Inc. Series A Liberty
Media Group Common Stock, $1.00 par value per share ("LMG Series A Stock"), in
accordance with the terms of the Merger Agreement;
WHEREAS, Section 10.16 of the Indenture provides that if TINTA is a party
to a transaction described therein, TINTA shall enter into a supplemental
indenture providing for the conversion of the Securities after such transaction
into the kind and amount of securities the Holders would have owned immediately
after such transaction had they converted their securities immediately before
such transaction and providing for adjustments to such conversion privilege;
WHEREAS, Section 9.01 of the Indenture authorizes TINTA and the Trustee to
enter into a supplemental indenture to comply with Section 10.16 of the
Indenture without notice to or the consent of any Holder;
WHEREAS, TINTA desires to execute this Supplemental Indenture in connection
with the Merger in accordance with the foregoing provisions of the Indenture;
WHEREAS, TINTA has furnished the Trustee with (i) a copy of the resolutions
duly adopted by the Board of Directors authorizing the entering into of this
Supplemental Indenture, certified by
2
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the Secretary of the Company, (ii) an Officers' Certificate, pursuant to
Sections 12.04 and 12.05 of the Indenture, and (iii) an Opinion of Counsel,
pursuant to Sections 9.06, 12.04 and 12.05 of the Indenture; and
WHEREAS, all things necessary to make this Supplemental Indenture a valid
supplement to the Indenture have been satisfied.
NOW, THEREFORE, each party hereto, for the benefit of the other party
hereto and the equal and proportionate benefit of the Holders, is executing and
delivering this Supplemental Indenture and hereby agrees as follows:
ARTICLE ONE
AMENDMENTS TO THE INDENTURE
SECTION 1. The following terms are hereby added to Section 1.01 of
Indenture in their respective appropriate alphabetical places:
"Company Common Stock" means the common stock, par value $1.00 per
share, of the Company immediately following the Effective Time.
"Effective Time" means November 19, 1998.
SECTION 2. Each of the definitions of the following terms in Section 1.01
of the Indenture is hereby amended in its entirety to read as follows:
"Series A Stock" means the Tele-Communications, Inc. Series A Liberty
Media Group Common Stock, par value $1.00 per share, of the Parent, which
term shall include, where appropriate, in the case of any reclassification,
recapitalization or other change in the Series A Stock, or in the case of a
consolidation or merger of Parent with or into another person affecting the
Series A Stock, such capital stock to which a holder of Series A Stock
shall be entitled upon the occurrence of such event.
"Series B Stock" means the Tele-Communications, Inc. Series B Liberty
Media Group Common Stock, par value $1.00 per share, of the Parent, which
term shall include, where appropriate, in the case of any reclassification,
recapitalization or other change in the Series B Stock, or in the case of a
consolidation or merger of Parent with or into another person affecting the
Series B Stock, such capital stock to which a holder of Series B Stock
shall be entitled upon the occurrence of such event.
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SECTION 3. Section 4.02 of the Indenture is hereby amended by deleting all
references to the capitalized term "Common Stock" and inserting in lieu thereof
"Company Common Stock".
SECTION 4. The fifth paragraph of Section 10.03 of the Indenture is hereby
amended to read in its entirety: "The Company will not be required to deliver
certificates for shares of Series A Stock upon conversion while the Parent's
stock transfer books are closed for a meeting of stockholders or for the payment
of dividends or for any other purpose, but certificates for shares of Series A
Stock shall be delivered as soon as the stock transfer books shall again be
opened."
SECTION 5. Section 10.06 of the Indenture is hereby amended to read in its
entirety:
"SECTION 10.06 Parent to Provide Stock.
The Parent has separately agreed to at all times reserve out of its
authorized but unissued Series A Stock or Series A Stock held in treasury
enough shares of Series A Stock to permit the conversion of all outstanding
Securities.
All shares of Series A Stock which may be delivered upon conversion of
the Securities shall be validly issued, fully paid and non-assessable and
shall be free from any preemptive rights.
In order that the Company may deliver shares of Series A Stock upon
conversion of the Securities, the Parent has separately agreed to endeavor
to comply with all applicable Federal and State securities laws and to
endeavor to cause such shares to be listed on each national securities
exchange or other national trading market on which the Series A Stock is
listed."
SECTION 6. Section 10.07 of the Indenture is hereby amended by deleting
the references to the "Company" and inserting in lieu thereof the "Parent".
SECTION 7. Section 10.08 of the Indenture is hereby amended by deleting
the references to the "Company" and inserting in lieu thereof the "Parent".
SECTION 8. Section 10.09 of the Indenture is hereby amended by deleting
the references to the "Company" and inserting in lieu thereof the "Parent".
SECTION 9. Section 10.13 of the Indenture is hereby amended by deleting
the references to the "Company" and inserting in lieu thereof the "Parent".
SECTION 10. Section 10.15 is hereby amended to read in its entirety:
"SECTION 10.15 Notice of Certain Transactions.
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If:
(1) the Parent takes any action which would require an adjustment in
the conversion price or conversion rate;
(2) the Parent consolidates or merges with, or transfers all or
substantially all of its assets to, another corporation, and
stockholders of the Parent must approve the transaction; or
(3) there is a dissolution or liquidation of the Parent,
a Holder of a Security may want to convert it into shares of Series A
Stock prior to the record date for, or the effective date of, the
transaction so that he may receive the rights, warrants, securities or
assets which a holder of shares of Series A Stock on the date may
receive. Therefore, the Company shall give to the Securityholders and
the Trustee in accordance with Section 12.02 a notice stating the
proposed record or effective date, as the case may be. Failure to
give the notice or any defect in it shall not affect the validity of
any transaction referred to in clause (1), (2) or (3) of this
Section."
SECTION 11. Section 10.16 is hereby amended by:
(a) deleting the title of such Section and inserting in lieu thereof
"Consolidation, Merger or Sale of the Parent; Special Distributions.";
(b) deleting the first sentence of the first paragraph and inserting
in lieu thereof the words "If the Parent is a party to a merger which
reclassifies or changes its outstanding Series A Stock, the Company shall
enter into a supplemental indenture." and
(c) deleting the reference to in the last paragraph to the "Company"
and inserting in lieu thereof the "Parent".
ARTICLE TWO
MISCELLANEOUS
SECTION 1. Holders' Rights under Section 10.16 of the Indenture. On and
-----------------------------------------------------
after the Effective Time and during the period the Securities shall be
convertible pursuant to the terms of such Securities, a Holder of a Security may
convert it into the amount of LMG Series A Stock which he would have owned
immediately after the Merger if he had converted the Security immediately before
the Effective Time, subject to adjustment after the Effective Time in accordance
with the provisions of Article Ten of the Indenture.
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SECTION 2. Construction with Indenture. All of the covenants, agreements
----------------------------
and provisions of this Supplemental Indenture shall be deemed to be and
construed as part of the Indenture to the same extent as if fully set forth
therein and shall be fully enforceable in the manner provided in the Indenture.
Except as provided in this Supplemental Indenture, the Indenture shall remain in
full force and effect and the terms and conditions thereof are hereby confirmed.
SECTION 3. Conflict with the TIA. If any provision of this Supplemental
----------------------
Indenture modifies or excludes any provision of the TIA that is required under
such act to be part of and govern the Indenture or this Supplemental Indenture,
the latter provision shall control. If any provision hereof modifies or
excludes any provision of the TIA that may be so modified or excluded, the
latter provision shall be deemed to apply to this Supplemental Indenture as so
modified or excluded, as the case may be.
SECTION 4. Date of Effectiveness. This Supplemental Indenture shall
----------------------
become a legally effective and binding instrument upon the later of (i) the
execution and delivery hereof by all parties hereto or (ii) the Effective Time.
SECTION 5. Securities Deemed Conformed. Beginning at the effective time
----------------------------
of this Supplemental Indenture, the provisions of each Security then outstanding
shall be deemed to be conformed, without the necessity for reissuance or
exchange of Securities or any other action on the part of any Holder, the
Company or the Trustee, so as to reflect this Supplemental Indenture.
SECTION 6. Successors. All agreements of the Company and the Trustee in
-----------
this Supplemental Indenture and in the Indenture as amended and supplemented
hereby shall bind their respective successors.
SECTION 7. Benefits of Supplemental Indenture. Nothing in this
-----------------------------------
Supplemental Indenture, express or implied, shall give to any person, other than
the parties hereto and their successors hereunder, any Agent and the Holders,
any benefit or any legal or equitable right, remedy or claim under this
Supplemental Indenture or the Indenture as amended or supplemented hereby.
SECTION 8. Separability. In case any provision in this Supplemental
-------------
Indenture, or in the Indenture as amended and supplemented hereby, shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
it being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
SECTION 9. Trustee Responsibility. The Trustee assumes no duties,
-----------------------
responsibilities or liabilities by reason of this Supplemental Indenture other
than as set forth in the Indenture. The Trustee assumes no responsibility for
the correctness of the statements herein contained, which shall be taken as
statements of the Company. This Supplemental Indenture is executed and accepted
by
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the Trustee subject to all of the terms and conditions of its acceptance of
the trust under the Indenture, as fully as if said terms and conditions were
herein set forth in full.
SECTION 10. Counterparts. This Supplemental Indenture may be executed in
-------------
counterparts, each of such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute but one and the
same instrument.
SECTION 11. Governing Law. The laws of the State of New York shall govern
--------------
this Supplemental Indenture without regard to principles of conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
TELE-COMMUNICATIONS INTERNATIONAL, INC.
By: /s/ Graham E. Hollis
---------------------------------------
Name: Graham E. Hollis
Title: Executive Vice President and
Chief Financial Officer
(Seal)
Attest: /s/ Elisa L. Fuller
-------------------------------
Name: Elisa L. Fuller
Title: Assistant Secretary
THE BANK OF NEW YORK
By: /s/ Remo J. Reale
---------------------------------------
Name: Remo J. Reale
Title: Assistant Vice President
(Seal)
Attest: /s/ Mary La Gumina
--------------------------------------------
Name: Mary La Gumina
Title: Assistant Vice President
8
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EXHIBIT 99.1
NOTICE TO HOLDERS PUBLISHED
ON DECEMBER 11, 1998
<PAGE>
NOTICE OF CHANGE OF CONTROL
TO THE HOLDERS OF 4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES
DUE 2006 OF TELE-COMMUNICATIONS INTERNATIONAL, INC.
NOTICE IS HEREBY GIVEN to all holders of 4 1/2% Convertible Subordinated
Debentures due 2006 (the "Debentures") of Tele-Communications International,
Inc. ("TINTA") pursuant to Section 4.02 of the Indenture, dated as of February
7, 1996 (the "Original Indenture"), as amended and supplemented by a First
Supplemental Indenture (the "Supplemental Indenture"), dated as of November 19,
1998 (as so amended and supplemented, the "Indenture"), between TINTA and The
Bank of New York, as trustee (the "Trustee"), as follows:
On November 19, 1998, pursuant to an Agreement and Plan of Merger, dated as
of August 24, 1998, by and among Tele-Communications, Inc. ("TCI"), TINTA and
Liberty Group Acquisition Co., a wholly-owned subsidiary of TCI ("Merger Sub"),
Merger Sub was merged with and into TINTA (the "Merger"). As a result of the
Merger, TINTA became a wholly-owned subsidiary of TCI and each outstanding share
of TINTA's Series A Common Stock, $1.00 par value per share (the "TINTA Series A
Stock"), not already beneficially owned by TCI was converted into the right to
receive .58 of a share of Tele-Communications, Inc. Series A Liberty Media Group
Common Stock, $1.00 par value per share (the "LMG Series A Stock").
The consummation of the Merger constituted a "Change of Control" under
Section 4.02 of the Indenture. As a result, under the Indenture, each holder of
Debentures has the right (the "Change of Control Right"), until 5:00 p.m.,
Eastern time, on January 12, 1999 (the "Change of Control Purchase Date"), to
require TINTA to purchase such holder's Debentures in whole or in part in
integral multiples of $1,000 at a purchase price (the "Change of Control
Purchase Price") payable in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest to the Change of Control
Purchase Date. The Change of Control Purchase Price per $1,000 principal amount
of Debentures will be $1,018.375 (including accrued and unpaid interest of
$18.375). As of the date of this Notice, there are neither holders of Senior
Debt (as defined in the Indenture) nor the existence of an Event of Default (as
defined in the Indenture) which would prevent payment of the Change of Control
Purchase Price. All Debentures, or portions thereof, validly tendered and not
withdrawn will be accepted for payment on, and will cease to accrue interest
after, the Change of Control Purchase Date. The Change of Control Purchase Price
shall be paid to all holders who validly tender and do not withdraw their
Debentures promptly following the later of (x) January 12, 1999 and (y) the time
of delivery of their Debentures to the Paying Agent pursuant to the procedures
described below. Any Debentures, or portions thereof, not tendered or accepted
for payment will continue to accrue interest. Holders who choose to tender less
than all of their Debentures should deliver with their Debentures a written and
executed statement providing the identification numbers and principal amounts of
the particular Debentures to be purchased. Holders whose Debentures are
purchased only in part will be issued Debentures equal in principal amount to
the unpurchased portion of the Debentures surrendered.
Holders electing to have Debentures purchased pursuant to the Change of
Control Right must complete and deliver to the Paying Agent a completed change
of control purchase notice, a form of which is being sent to the holders and
which may be obtained from the Paying Agent at the address set forth below (the
"Change of Control Purchase Form"), or draft a written notice that contains the
same information as that indicated on the Change of Control Purchase Form. The
Change of Control Purchase Form and such written notice of purchase are herein
collectively referred to as the "Change of Control Purchase Notice". The
completed Change of Control Purchase Notice must include the signature of the
holder of record of such Debentures and must be delivered to the Paying Agent at
the address specified below prior to 5:00 p.m., Eastern time, on January 12,
1999. In addition, the Debentures being purchased must be surrendered to the
Paying Agent to collect payment. The Debentures being purchased may be
delivered prior to, on or after January 12, 1999; however, the Change of Control
Purchase Price will only be paid if the Debentures so delivered to the Paying
Agent conform in all respects to the description thereof set forth in the
related Change of Control Purchase Notice and such notice has been received by
the Paying Agent prior to 5:00 p.m., Eastern Time, on January 12, 1999.
A Change of Control Purchase Notice may be withdrawn in whole or in a
portion thereof that is $1,000 or an integral multiple thereof at any time prior
to 5:00 p.m., Eastern time, on January 12, 1999 by delivery to the Paying Agent
of a completed withdrawal notice, a form of which is being sent to the holders
and which may be obtained from the Paying Agent at the address set forth below
(the "Withdrawal Notice Form"), or a written notice of withdrawal that contains
the same information as indicated on the Withdrawal Notice Form. The Withdrawal
Notice Form and such written notice of withdrawal are herein collectively
referred to as the "Withdrawal Notice".
Prior to the Merger, the Debentures were convertible at the option of the
holder into shares of TINTA Series A Stock at a conversion price of $27.30 per
share. In accordance with the terms of the Original Indenture, upon
consummation of the Merger, TINTA and the Trustee entered into the Supplemental
Indenture in order to provide that a holder of Debentures may convert them into
the amount of LMG Series A Stock which such holder would have owned immediately
after the Merger if he had converted the Debentures into shares of TINTA Series
A Stock immediately before November 19, 1998 (the "Effective Time"). The
Supplemental Indenture also amends certain other provisions of the Original
Indenture in order to provide for adjustments to the conversion price after the
Effective Time which are as nearly equivalent as practicable to the adjustments
provided for in the Original Indenture. As a result of the Merger, the
Indenture currently provides that a holder of Debentures may, at any time prior
to maturity, convert the principal amount of such Debentures (or any portion
thereof equal to $1,000 or any integral multiple of $1,000) into shares of LMG
Series A Stock at a conversion price of $47.07 per share. The Debentures are no
longer convertible into TINTA Series A Stock. Holders wishing to convert
Debentures must comply with paragraph 7 of the Debentures. If the Debentures
are called for redemption, a holder may convert all or a portion of the
Debentures at any time before the close of business on the business day next
preceding the day fixed for redemption. The Conversion Agent for the Debentures
is the Paying Agent. A Debenture in respect of which a Change of Control
Purchase Notice has been delivered may be converted only if such notice is
timely withdrawn as described in the preceding paragraph. On conversion, no
adjustment for interest or dividends will be made. A holder entitled to a
fractional share of LMG Series A Stock upon conversion shall receive cash equal
to the then current market value of such fractional share.
THE PAYING AGENT FOR THE CHANGE OF CONTROL RIGHT IS THE BANK OF NEW YORK.
DEBENTURES, CHANGE OF CONTROL PURCHASE NOTICES AND WITHDRAWAL NOTICES MAY BE
DELIVERED TO THE PAYING AGENT BY MAIL, HAND OR OVERNIGHT COURIER AT THE
FOLLOWING ADDRESS:
The Bank of New York
Corporate Trust Operations
101 Barclay Street, Floor 7E
New York, New York 10286
Attention: Tolutope Adeyoju
Telephone: (212) 815-2824
<PAGE>
EXHIBIT 99.2
NOTICE OF CHANGE OF CONTROL, SUPPLEMENTAL
INDENTURE AND ADJUSTMENT IN CONVERSION TERMS
<PAGE>
TELE-COMMUNICATIONS INTERNATIONAL, INC.
Notice of Change of Control
And
Notice of Supplemental Indenture and Adjustment in Conversion Terms
With respect to its 4 1/2% Convertible Subordinated Debentures due 2006
CUSIP NO.: 87924HAA0
NOTICE IS HEREBY GIVEN to all holders ("Holders") of 4 1/2% Convertible
Subordinated Debentures due 2006 (the "Debentures") of Tele-Communications
International, Inc. ("TINTA" or the "Company") pursuant to Sections 4.02, 10.14
and 10.16 of the Indenture, dated as of February 7, 1996 (the "Original
Indenture"), as amended and supplemented by a First Supplemental Indenture (the
"Supplemental Indenture"), dated as of November 19, 1998 (as so amended and
supplemented, the "Indenture"), between the Company and The Bank of New York, as
trustee (the "Trustee"), as set forth below.
On November 19, 1998, pursuant to an Agreement and Plan of Merger, dated as
of August 24, 1998, by and among Tele-Communications, Inc. ("TCI"), TINTA and
Liberty Group Acquisition Co., a wholly-owned subsidiary of TCI ("Merger Sub"),
Merger Sub was merged with and into Company (the "Merger"). As a result of the
Merger, the Company became a wholly-owned subsidiary of TCI and each outstanding
share of the Company's Series A Common Stock, $1.00 par value per share (the
"TINTA Series A Stock"), not already beneficially owned by TCI was converted
into the right to receive .58 of a share of Tele-Communications, Inc. Series A
Liberty Media Group Common Stock, $1.00 par value per share (the "LMG Series A
Stock").
CHANGE OF CONTROL RIGHT
The consummation of the Merger constituted a "Change of Control" under
Section 4.02 of the Indenture. As a result, under the Indenture, each holder of
Debentures has the right (the "Change of Control Right") until 5:00 p.m.,
Eastern time, on January 12, 1999 (the "Change of Control Purchase Date") to
require the Company to purchase such holder's Debentures in whole or in part in
integral multiples of $1,000 at a purchase price (the "Change of Control
Purchase Price") payable in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest to the Change of Control
Purchase Date. The Change of Control Purchase Price per $1,000 principal amount
of Debentures will be $1,018.375 (including accrued and unpaid interest of
$18.375). As of the date of this Notice, there are neither holders of Senior
Debt (as defined in the Indenture) nor the existence of an Event of Default (as
defined in the Indenture) which would prevent payment of the Change of Control
Purchase Price. All Debentures, or portions thereof, validly tendered and not
withdrawn will be accepted for payment on, and will cease to accrue interest
after, the Change of Control Purchase Date. The Change of Control Purchase Price
shall be paid to all Holders who validly tender and do not withdraw their
Debentures promptly following the later of (x) January 12, 1999 and (y) the time
of delivery of their Debentures to the Paying Agent pursuant to the procedures
described below. Any Debentures, or portions thereof, not tendered or accepted
for payment will continue to accrue interest. Holders who choose to tender less
than all of their Debentures should deliver with their Debentures a written and
executed statement providing the identification numbers and principal amounts of
the particular Debentures to be purchased. Holders whose Debentures are
purchased only in part will be issued Debentures equal in principal amount to
the unpurchased portion of the Debentures surrendered.
Holders electing to have Debentures purchased pursuant to the Change of
Control Right must complete a change of control purchase notice, a form of which
is enclosed herewith (the "Change of Control Purchase Form"), or draft a written
notice that contains the same information as that indicated on the Change of
Control Purchase Form. The Change of Control Purchase Form and such written
notice of purchase are herein collectively referred to as the "Change of Control
Purchase Notice". The completed Change of Control Purchase Notice must include
the signature of the holder of record of such Debentures and must be delivered
to the Paying Agent at the address specified below prior to 5:00 p.m., Eastern
time, on January 12, 1999. In addition, the Debentures being purchased must be
surrendered to the Paying Agent to collect payment. The Debentures being
purchased may be delivered prior to, on or after January 12, 1999; however, the
Change of Control Purchase Price will only be paid if the Debentures so
delivered to the Paying Agent conform in all respects to the description thereof
set forth in the related Change of Control Purchase Notice and such notice has
been received by the Paying Agent prior to 5:00 p.m., Eastern time, on January
12, 1999.
A Change of Control Purchase Notice may be withdrawn in whole or in a
portion thereof that is $1,000 or an integral multiple thereof at any time prior
to 5:00 p.m., Eastern time, on January 12, 1999 by delivery to the Paying Agent
of a completed withdrawal notice, a form of which is enclosed herewith (the
"Withdrawal Notice Form"), or a written notice of withdrawal that contains the
same information as indicated on the Withdrawal Notice Form. The Withdrawal
Notice Form and such written notice of withdrawal are herein collectively
referred to as the "Withdrawal Notice".
<PAGE>
ADJUSTMENT IN CONVERSION TERMS
Prior to the Merger, the Debentures were convertible at the option of the
holder into shares of TINTA Series A Stock at a conversion price of $27.30 per
share. In accordance with the terms of the Original Indenture, upon
consummation of the Merger, the Company and the Trustee entered into the
Supplemental Indenture in order to provide that a holder of Debentures may
convert them into the amount of LMG Series A Stock which such holder would have
owned immediately after the Merger if he had converted the Debentures into
shares of TINTA Series A Stock immediately before November 19, 1998 (the
"Effective Time"). The Supplemental Indenture also amends certain other
provisions of the Original Indenture in order to provide for adjustments to the
conversion price after the Effective Time which are as nearly equivalent as
practicable to the adjustments provided for in the Original Indenture. As a
result of the Merger, the Indenture currently provides that a holder of
Debentures may, at any time prior to maturity, convert the principal amount of
such Debentures (or any portion thereof equal to $1,000 or any integral multiple
of $1,000) into shares of LMG Series A Stock at a conversion price of $47.07 per
share. The Debentures are no longer convertible into TINTA Series A Stock.
Holders wishing to convert Debentures must comply with paragraph 7 of the
Debentures. If the Debentures are called for redemption, a Holder may convert
all or a portion of the Debentures (in integral multiples of $1,000) at any time
before the close of business on the business day next preceding the day fixed
for redemption. The Conversion Agent for the Debentures is the Paying Agent. A
Debenture in respect of which a Change of Control Purchase Notice has been
delivered may be converted only if such notice is timely withdrawn as described
above. On conversion, no adjustment for interest or dividends will be made. A
holder entitled to a fractional share of LMG Series A Stock upon conversion
shall receive cash equal to the then current market value of such fractional
share. For a summary of the material U.S. Federal income tax consequences to
holders of Debentures resulting from the change in the conversion terms of the
Debentures pursuant to the Supplemental Indenture, see "Certain U.S. Federal
Income Tax Considerations" below.
THE PAYING AGENT FOR THIS CHANGE OF CONTROL RIGHT IS THE BANK OF NEW YORK.
DEBENTURES, CHANGE OF CONTROL PURCHASE NOTICES AND WITHDRAWAL NOTICES MAY BE
DELIVERED TO THE PAYING AGENT BY MAIL, HAND OR OVERNIGHT COURIER AT THE
FOLLOWING ADDRESS:
The Bank of New York
Corporate Trust Operations
101 Barclay Street, Floor 7E
New York, New York 10286
Attention: Tolutope Adeyoju
Telephone: (212) 815-2824
DO NOT SEND DEBENTURES TO TELE-COMMUNICATIONS INTERNATIONAL, INC. OR TELE-
COMMUNICATIONS, INC.
The method of delivery of the Debentures, Change of Control Notices and
Withdrawal Notices is at the option and risk of the holder of such Debentures
and delivery will be deemed made only when actually received by the Paying
Agent. In all cases, sufficient time should be allowed to ensure timely
delivery.
Holders with questions concerning this Notice of Change of Control should
contact the Paying Agent at (212) 815-2824 (Attention: Tolutope Adeyoju).
Under the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the Paying Agent may be obligated to withhold 31% of the Change of
Control Purchase Price from any holder of Debentures who has failed to furnish
the Paying Agent with a valid taxpayer identification number or a certification
that such holder is not subject to backup withholding under the Code. Holders
who wish to avoid the application of these provisions should submit a completed
IRS Form W-9 when presenting their Debentures.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material U.S. Federal income tax
consequences to holders of the Debentures resulting from the change in the
conversion terms of the Debentures pursuant to the terms of the Supplemental
Indenture. This discussion is based upon the provisions of the Code, the
applicable Treasury Regulations promulgated and proposed thereunder, judicial
authority and current administrative rulings and practice, all of which are
subject to change.
Except as specifically provided below, the following summary only addresses
the tax consequences of the change in conversion terms of the Debentures
pursuant to the Supplemental Indenture to a holder of the Debentures that is (i)
an individual citizen or resident of the United States, (ii) a corporation or
partnership that is organized under the laws of the United States or any state
thereof or the District of Columbia, (iii) an estate the income of which is
subject to U.S. Federal income taxation regardless of its source, or (iv) a
trust which is subject to the supervision of a court within the United States
and the control of a U.S. fiduciary (a "U.S. Person"). This summary does not
address all the possible tax consequences that may be applicable to a particular
holder in light of its individual investment
2
<PAGE>
circumstances, nor does it address the tax consequences to (i) persons that are
not U.S. Persons, (ii) persons that may be subject to special treatment under
U.S. Federal income tax law, such as banks, insurance companies, thrift
institutions, regulated investment companies, real estate investment trusts,
tax-exempt organizations, and dealers in Debentures or currencies, (iii) persons
that will hold the Debentures as part of a position in a "straddle" or as part
of a "hedging," "conversion," or other integrated investment transaction for
U.S. Federal income tax purposes, (iv) persons whose functional currency is not
the U.S. dollar, or (v) persons that do not hold the Debentures as capital
assets. Moreover, the effect of any applicable state, local or foreign tax laws
is not discussed.
Holders of the Debentures are urged to consult their own tax advisors
regarding the Federal, state, local and other tax considerations of the
amendment to the conversion terms of the Debentures pursuant to the Supplemental
Indenture.
Prior to the Merger, the Debentures were convertible at the option of the
holder into shares of TINTA Series A Stock. The conversion of the Debentures
into TINTA Series A Stock would have been a tax-free exchange, and no gain or
loss would have been recognized by a holder as a result of such conversion
(except with respect to cash received in lieu of a fractional share). The
holder would have had a tax basis in the shares of TINTA Series A Stock issued
upon conversion equal to its tax basis in the converted Debentures (except for
any portion of the holder's tax basis allocated to a fractional share), and the
holding period of the TINTA Series A Stock would have included the holding
period of the converted Debentures.
As described under "Adjustment in Conversion Terms," as a result of the
Merger, the conversion terms of the Debentures have been modified in accordance
with the Supplemental Indenture to provide that upon exercise of the conversion
right, a holder will be entitled to receive shares of LMG Series A Stock at the
applicable conversion price (as such may be adjusted) and cash in lieu of a
fractional share. Although a holder of Debentures will not recognize gain or
loss solely as a result of TINTA's amendment of the terms of the Indenture, upon
exercise of the conversion right, a holder will now recognize gain or loss on
the exchange of the Debentures for LMG Series A Stock in an amount equal to the
excess of (i) the sum of the fair market value of the LMG Series A Stock at the
time of the exchange and cash received in lieu of a fractional share and (ii)
the holder's tax basis in the exchanged Debentures. The holder will have a tax
basis in the LMG Series A Stock equal to the fair market value of such stock on
the date of the exchange, and the holding period for such stock will begin the
day after the exchange.
TELE-COMMUNICATIONS INTERNATIONAL, INC.
December 11, 1998
3
<PAGE>
CHANGE OF CONTROL PURCHASE NOTICE
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2006
OF
TELE-COMMUNICATIONS INTERNATIONAL, INC.
<TABLE>
<CAPTION>
<S> <C>
1. Certificate Number of Debenture(s) to be purchased*:
2. Portion of the principal amount of Debentures to be purchased (must be
$1,000 or an integral multiple thereof)*:++
3. The Debentures referred to above shall be purchased by Tele-Communications
International, Inc. ("TINTA") pursuant to the terms and conditions
specified in the Indenture, dated as of February 7, 1996, between TINTA
and The Bank of New York, as trustee, as amended.*
</TABLE>
Name: ___________________________________
(Please type or print)
_________________________________________
Signature
(Sign exactly as your name appears on the
Debenture)
Dated: ___________________
PLEASE FIND THE DEBENTURES BEING PURCHASED ENCLOSED HEREWITH.
++ For holders who desire to redeem only a portion of the Debentures represented
by a certificate held by them, but must remit certificate(s) to the Paying
Agent representing all of the Debentures held by them, please include your
address below to which the Paying Agent may deliver replacement Debentures
representing the unpurchased portion:
________________________________
________________________________
________________________________
________________________________
________________________________
* If a holder does not use this form, the written notice of purchase sent to the
Paying Agent must contain the information listed above.
THIS CHANGE OF CONTROL PURCHASE NOTICE MUST BE RECEIVED BY THE PAYING AGENT
BY 5:00 P.M.,
EASTERN TIME, ON JANUARY 12, 1999
4
<PAGE>
WITHDRAWAL NOTICE
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2006
OF
TELE-COMMUNICATIONS INTERNATIONAL, INC.
<TABLE>
<CAPTION>
<S> <C>
1. Certificate Number of Debenture(s), the Change of Control Purchase Notice
with respect to which is to be withdrawn*:
2. Portion of the principal amount of such Debentures as to which this
Withdrawal Notice applies (must be $1,000 or an integral multiple
thereof)*:
3. Portion of the principal amount of such Debentures which remains subject
to the original Change of Control Purchase Notice and which has been or
will be delivered for purchase by Tele-Communications International, Inc.
(must be $1,000 or an integral multiple thereof).*
</TABLE>
Name: ___________________________________
(Please type or print)
_________________________________________
Signature
(Sign exactly as your name appears on the
Debenture)
Dated: ___________________
PLEASE REMIT THOSE DEBENTURES WHICH ARE BEING WITHDRAWN TO ME AT THE FOLLOWING
ADDRESS:
________________________________
________________________________
________________________________
________________________________
________________________________
* If a holder does not use this form, the written notice of withdrawal sent to
the Paying Agent must contain the information listed above.
THIS WITHDRAWAL NOTICE MUST BE RECEIVED BY THE PAYING AGENT BY 5:00 P.M.,
EASTERN TIME, ON JANUARY 12, 1999
5
