SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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) August 14, 1998
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Telewest Communications plc
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(Exact Name of Registrant as Specified in Its Charter)
England and Wales
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(State or Other Jurisdiction of Incorporation)
0-26840 Not Applicable
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(Commission File Number) (IRS Employer Identification No.)
Genesis Business Park, Albert Drive, Woking, Surrey GU21 5RW, United Kingdom
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(Address of Principal Executive Offices) (Zip Code)
011-44-1483-750-900
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
Execution of Birmingham Cable Agreement and Issue of Press Release
Regarding Same.
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On August 14, 1998, Telewest Communications plc (the
"Registrant") entered into an agreement (the "Agreement"), a copy of which is
attached hereto as exhibit 99.1, with Comcast UK Cable Partners Limited
("Comcast") and NTL Incorporated ("NTL") relating to Comcast's ownership
interest in Birmingham Cable Corporation Limited ("Birmingham Cable") and the
Registrant's and Comcast's respective ownership interest in Cable London plc
("Cable London") and other related matters. Under the terms of the Agreement,
among other things, the Registrant has agreed to acquire Comcast's
27.47(percent) interest in Birmingham Cable, by no later than December 31, 1998,
for (pound) 125 million, plus (pound) 5 million for certain subordinated debt
and fees owed to interest. In addition, the Agreement also provides that the
Registrant will, at its option, either purchase Comcast's 50% interest in Cable
London or sell its 50% interest in Cable London to Comcast (or to NTL following
the amalgamation of Comcast and NTL)at a price notified to Telewest by Comcast
(or NTL). Pursuant to a Press Release, dated August 17, 1998, the text of which
is attached hereto as exhibit 99.3, the Registrant announced that it had entered
into the Agreement. The text of the Agreement and the Press Release are
incorporated herein by reference.
Issue of Press Release Regarding Proposed Appointment of New Chief
Executive Officer.
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Pursuant to a press release, dated August 17, 1998, the
Registrant announced its proposed appointment of Tony Illsley as its new chief
executive officer. The text of such press release is attached hereto as exhibit
99.4 and is incorporated herein by reference.
Issue of Press Release Regarding General Cable Offer and Pre-emptive
Issue.
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Pursuant to a press release dated August 19, 1998, the
Registrant announced certain acceptance levels, scheduling matters and other
issues related the Registrant's offer to acquire the shares of General Cable plc
and the associated pre-emptive issue to the Registrant's shareholders to
subscribe to new shares of the Registrant. The text of such press release is
attached hereto as exhibit 99.5 and is incorporated herein by reference.
Distribution to Shareholders of the Registrant's Interim Report.
On August 20, 1998, the Registrant distributed to its
shareholders a copy of its Interim Report containing its results for the six
month period ended June 30, 1998. The text of such Interim Report is attached
hereto as exhibit 99.2 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
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Exhibit 99.1 Agreement dated August 14, 1998, among
the Registrant, Comcast UK Cable
Partners Limited and NTL Incorporated,
regarding the transfer of interests in
Birmingham Cable Corporation Limited and
Cable London plc.
Exhibit 99.2 Interim Report issued by the Registrant
on August 20, 1998, containing the
Registrant's results for the six month
period ended June 30, 1998.
Exhibit 99.3 Text of press release dated August 17,
1998, issued by the Registrant relating
to the Agreement among the Registrant,
Comcast UK Cable Partners Limited and
NTL Incorporated regarding the transfer
of interests in Birmingham Cable
Corporation Limited and Cable London
plc.
Exhibit 99.4 Text of press release dated August 17,
1998, issued by the Registrant relating
the proposed appointment of Tony Illsley
as its new chief executive officer.
Exhibit 99.5 Text of press release dated August 19,
1998, issued by the Registrant relating
to acceptance levels, scheduling matters
and other issues pertaining to its offer
for the shares of General Cable plc and
the associated pre-emptive issue to the
Registrant's shareholders.
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SIGNATURES
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 hereunto duly authorized.
TELEWEST COMMUNICATIONS PLC
Date: August 20, 1998 By: /s/ Charles Burdick
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Name: Charles Burdick
Title: Group Finance Director
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EXHIBIT INDEX
Exhibit No. Document Description
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99.1 Agreement dated August 14, 1998, among the Registrant,
Comcast UK Cable Partners Limited and NTL Incorporated,
regarding the transfer of interests in Birmingham Cable
Corporation Limited and Cable London plc.
99.2 Interim Report issued by the Registrant on August 20, 1998,
containing the Registrant's results for the six month period
ended June 30, 1998.
99.3 Text of press release dated August 17, 1998, issued by the
Registrant relating to the Agreement among the Registrant,
Comcast UK Cable Partners Limited and NTL Incorporated
regarding the transfer of interests in Birmingham Cable
Corporation Limited and Cable London plc.
99.4 Text of press release dated August 17, 1998, issued by the
Registrant relating the proposed appointment of Tony Illsley
as its new chief executive officer.
99.5 Text of press release dated August 19, 1998, issued by the
Registrant relating to acceptance levels, scheduling matters
and other issues pertaining to its offer for the shares of
General Cable plc and the associated pre-emptive issue to
the Registrant's shareholders.
DATED: 14 August 1998
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(1) TELEWEST COMMUNICATIONS PLC
(2) TELEWEST COMMUNICATIONS HOLDINGS LIMITED
(3) COMCAST UK CABLE PARTNERS LIMITED
(4) NTL INCORPORATED
Agreement in respect of the rights of first refusal
relating to Birmingham Cable and Cable London
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THIS AGREEMENT is made on 14 August 1998
BETWEEN:
(1) TELEWEST COMMUNICATIONS PLC (registered number 298307) whose
registered office is at Genesis Business Park, Albert Drive, Woking,
Surrey GU21 5RW ("Telewest");
(2) TELEWEST COMMUNICATIONS HOLDINGS LIMITED (registered number 02982404)
whose registered office is at Genesis Business Park as aforesaid
("TCHL");
(3) COMCAST UK CABLE PARTNERS LIMITED whose registered office is at
Clarendon House, 2 Church Street West, Hamilton, HM 11, Bermuda
("CUKCP"); and
(4) NTL INCORPORATED whose principal place of business is at 110 East 59th
Street, New York, New York 10022, USA ("NTL").
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 The following words and expressions where used in this Agreement have the
meanings given to them below:-
"acceptance period" as defined in clause 4.2;
"Acquisition" the acquisition of shares in Cable London upon CL
Completion pursuant to clause 4.6;
"Amalgamation" the proposed amalgamation to be made between NTL
(Bermuda) Limited and CUKCP pursuant to the
Agreement and Plan of Amalgamation dated 4 February
1998 between NTL (1), NTL (Bermuda) Limited (2) and
CUKCP (3), as such agreement may be amended or
restructured, or any similar business combination
involving CUKCP and NTL or their affiliates;
"Approvals" (a) the purchaser (as defined in clause 4.5)
receiving written confirmation from the Secretary of
NYFS03...:\19\77119\0005\174\AGR8128R.23C
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State for Trade and Industry ("DTI") and from the
Independent Television Commission ("ITC"), in terms
reasonably satisfactory to the purchaser, to the
effect that the Acquisition will not lead to the
revocation of any licenses (issued pursuant to the
Cable and Broadcasting Act 1984 or the Broadcasting
Act 1990 (as amended)) or the revocation of any of
the telecommunications or wireless telegraphy
licenses issued by the DTI pursuant to the
Telecommunications Act 1984 or the Wireless
Telegraphy Act 1949 or 1998 which are held by Cable
London and any of its subsidiary undertakings;
(b) the Office of Fair Trading having indicated to
the purchaser, in terms reasonably satisfactory to
the purchaser, either that the Acquisition does not
qualify for investigation by the Monopolies and
Mergers Commission pursuant to the Fair Trading Act
1973 or that the Secretary of State for Trade and
Industry has decided not to refer the Acquisition to
the Monopolies and Mergers Commission; and
(c) CIBC consenting, in terms reasonably
satisfactory to the purchaser, to (i) the
Acquisition (ii) the capitalisation referred to in
clause 4.7 (unless the CL Loans and Fees are to be
assigned), (iii) the release of the shares in Cable
London to be sold by the vendor pursuant to the
Acquisition from the security granted to CIBC over
such shares and the termination of any deed of
subordination between the vendor and CIBC and (iv)
the assignment of the CL Loans and Fees to the
purchaser, in each case with effect from CL
Completion (unless the CL Loans and Fees are to be
capitalized pursuant to Clause 4.7);
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"BC Completion" the performance of the obligations to complete the
sale and purchase of the Joint BC Shares and such
other interest (if any) which CUKCP has in any other
shares in Birmingham Cable in accordance with clause
2;
"BC Consultant
Agreement" the Consultant Agreement for Operational Assistance
dated 25 April 1990 between Birmingham Cable (1)
Birmingham Cable Limited (2) and Comcast UK
Consulting Inc. (formerly Comcast BV Inc.) (3) as
amended by a Supplemental Agreement dated 8 April
1994 between Birmingham Cable (1), Birmingham Cable
Limited (2) and Comcast UK Consulting Inc. (3);
"BC Loans and Fees" the subordinated loans (including interest) and fees
due to CUKCP and Comcast UK Consulting Inc. from
Birmingham Cable and its subsidiary undertakings;
"BC Management
Agreement" the Management Agreement dated 25 April 1990 between
Birmingham Cable (1), Birmingham Cable Limited (2),
US West International Holdings Inc. (3) and Comcast
Cablevision of Birmingham Inc. (4) as novated
pursuant to the Assignment Agreement dated 27 August
1990 between Birmingham Cable (1), Birmingham Cable
Limited (2), US West International Holdings Inc.
(3), Comcast Cablevision of Birmingham Inc. (4), US
West Cable Communications Limited (5) and Comcast UK
Consulting Inc. (6) and the Assignment and Amendment
Agreement dated 5 August 1992 between Birmingham
Cable (1), Birmingham Cable Limited (2), US West
Cable Communications Limited (3), Comcast UK
Consulting Inc. (4) and TeleWest Communications
Group Limited (5);
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"BC Offer Notice" the offer notice despatched by the board of
directors of Birmingham Cable pursuant to Article
59(D) of the Articles of Association of Birmingham
Cable following the receipt by Birmingham Cable of a
transfer notice from General Cable PLC dated August
1998;
"Birmingham Cable" Birmingham Cable Corporation Limited (registered
number 2170379);
"Birmingham Link
Agreement" the Agreement concerning Birmingham- Croyden Link
dated February 13, 1993 between National
Transcommunications Limited and Birmingham Cable;
"Business Day" a weekday (other than a Saturday) on which clearing
banks are ordinarily open for business in both the
City of London and New York;
"Cable London" Cable London PLC (registered number 01794264);
"CIBC" Canadian Imperial Bank of Commerce (as agent and
security trustee under the terms of the (pound)170
million credit facility in favor of Cable London);
"CL Completion" the performance of the obligations to complete the
sale and purchase of shares in Cable London in
accordance with clause 4;
"CL Loans and Fees" the subordinated loans (including interest thereon)
and fees due to the vendor and MediaOne Cable
Communica- tions (if the vendor is Telewest) and
Comcast UK Consulting Inc. (if the vendor is CUKCP)
and any of their respective subsidiaries and parent
undertakings from Cable London and its subsidiary
undertakings;
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"Co-ownership
Agreement" the Co-ownership Agreement dated 12 March 1990
originally between US West International Holdings
Inc. (1) and Comcast Cablevision of Birmingham Inc.
(2) as subsequently amended, supplemented and
novated, it being acknowledged by the parties to
this Agreement that the parties to the Co- ownership
Agreement are now TCHL and CUKCP;
"CUKCP Consultant
Agreement" the Consultant Agreement for Operational Assistance
dated 17 August 1989 between Cable London (1) and
Comcast Corporation (2), as subsequently assigned to
Comcast UK Consulting Inc. (for so long as it
remained a subsidiary of Comcast Corporation)
pursuant to an Assignment Agreement dated 14
September 1990 between Comcast Corporation (1),
Comcast UK Consulting Inc. (2), Cable London (3) and
Cable Camden Limited, Cable Enfield Limited, Cable
Hackney & Islington Limited and Cable Haringey
Limited (4);
"Equalisation Deed" the Equalisation Deed dated 17 July 1996 between
Telewest (1) and CUKCP (2);
"GC Shares" the 22,958,319 ordinary shares of (pound)1 each in
Birmingham Cable registered in the name of General
Cable PLC;
"Joint BC Shares" the 28,060,167 ordinary shares of (pound)1 each in
Birmingham Cable registered in the joint names of
TCHL and CUKCP;
"offer" as defined in clause 4.1;
"offer notice" as defined in clause 4.1;
"prescribed period" the period of 90 calendar days after the expiry of
the acceptance period or, if an appropriate election
is made
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pursuant to sub-clause 4.5.2 to extend such period,
the period ending up to 90 calendar days after the
Long Stop Date (as defined in clause 4.5.2);
"purchaser" as defined in clause 4.5;
"Shoot-out Period" the period commencing on the date which is the
earlier of (i) six calendar months after (x) the
date of completion of the Amalgamation or (y) if
earlier, 31 December 1998 and (ii) the earlier of
(a) the date on which a public announcement is made
of a firm intention to make a recommended offer for
the ordinary shares of Telewest (other than those
owned or contracted to be acquired by the offeror or
persons acting in concert with the offeror) or of a
merger between NTL and a third party (being a person
which prior to such merger is not a member of the
same group as NTL) where NTL is not the surviving
entity whether or not, in either case, subject to
the satisfaction of any pre-conditions and (b)
completion of any such offer or merger whether or
not recommended, and ending at midnight on the date
which is three calendar months thereafter (both
dates inclusive);
"Subscription
Agreements" (a) the subscription agreement dated 4 May 1989
between Birmingham Cable (1) and US West
International Holdings Inc. (2);
(b) the BCC Subscription Agreement dated 31 May 1989
between Birmingham Cable (1), US West International
Holdings Inc. (2), Compagnie Generale des Eaux (3),
The Cable Corporation Limited (4) and The Standard
Life Assurance Company (5);
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(c) the Supplemental Subscription Agreement dated 16
March 1990 between Birmingham Cable (1), US West
International Holdings Inc. (2), Compagnie Generale
des Eaux (3), The Cable Corporation Limited (4), The
Standard Life Assurance Company (5), Comcast
Cablevision of Birmingham Inc. (6) and General Cable
Limited (7);
(d) the Second Supplemental Subscription Agreement
dated 16 March 1990 between Birmingham Cable (1), US
West International Holdings Inc. (2), Compagnie
Generale des Eaux (3), The Cable Corporation Limited
(4), The Standard Life Assurance Company (5),
Comcast Cablevision of Birmingham Inc. (6) and
General Cable Limited (7);
(e) the Third Supplemental Subscription Agreement
dated 12 May 1992 between Birmingham Cable (1), US
West International Holdings Inc. (2), Compagnie
Generale des Eaux (3), The Cable Corporation Limited
(4), The Standard Life Assurance Company (5),
Comcast Cablevision of Birmingham Inc. (6), General
Cable Limited (7) and US West Cable Programming
Corporation (8);
(f) the Agreement dated 30 March 1994 between
General Cable Limited (1), Compagnie Generale des
Eaux (2), TCI/US West Communications Inc. (3), US
West International Holdings Inc. (4), United Artists
Cable Television International Holdings Inc. (5),
CUKCP (6), Comcast Corporation (7), The Cable
Corporation Limited (8), Birmingham Cable (9),
Birmingham Cable Limited (10) and The Standard Life
Assurance Company (11); and
(g) the Novation Agreement dated 21 November 1994
between General Cable PLC (1), Compagnie Generale
des Eaux
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(2), TCI/US West Cable Communications Inc. (3), US
West International Holdings Inc. (4), United Artists
Cable Television International Hold- ings Inc. (5),
CUKCP (6), Comcast Corporation (7), Comcast
Cablevision of Birmingham Inc. (8), The Cable
Corporation Limited (9), Birmingham Limited (10),
Birmingham Cable Limited (11), The Standard Life
Assurance Company (12), TCHL (13) and Telewest
Communications plc(14);
"Sum" as defined in clause 4.1;
"Telewest Consultant
Agreement" the Consultant Agreement for Technical Assistance
between Cable London (1) and MediaOne Cable
Communications Limited (2);
"vendor" as defined in clause 4.5.
1.2 Where used in this Agreement, the terms "subsidiary undertaking", "parent
undertaking" and "director" shall have the meanings respectively attributed to
them by the Companies Act 1985 (as amended).
1.3 The headings used in this Agreement are for convenience only and shall not
affect its meaning.
1.4 References to a clause or schedule are (unless otherwise stated) to a clause
of or schedule to this Agreement.
1.5 Words importing one gender shall (where appropriate) include any other
gender and words importing the singular shall (where appropriate) include the
plural and vice versa.
1.6 References in this Agreement to times and dates are references to times and
dates prevailing in London.
2. SALE OF JOINT BC SHARES
2.1 CUKCP shall sell or procure to be sold and Telewest shall purchase:
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2.1.1 CUKCP's interest in the Joint BC Shares with full title guarantee
and such other interest (if any) which CUKCP has in any other shares in
Birmingham Cable;
2.1.2 CUKCP's right to, and interest in, the BC Loans and Fees;
in each case, upon and subject to the terms and conditions of this
Agreement.
2.2 CUKCP shall procure that Telewest shall acquire CUKCP's interest in the
Joint BC Shares and such other interest (if any) which CUKCP has in any other
shares in Birmingham Cable free from all liens, charges and encumbrances and any
other third party rights whatsoever and together with all rights now or
hereafter attaching to them.
2.3 The consideration for the sale and purchase of CUKCP's interest in the Joint
BC Shares and such other interest (if any) which CUKCP has in any other shares
in Birmingham Cable shall be the sum of (pound)125,000,000 and (pound)5,000,000
(or (pound)2,500,000 if the Amalgamation does not occur on or prior to BC
Completion with a further (pound)2,500,000 to be paid forthwith on the
Amalgamation being completed) in respect of CUKCP's interest in the BC Loans and
Fees, which consideration shall be payable in cash.
2.4 BC Completion
2.4.1 BC Completion shall take place at the offices of Freshfields, 65
Fleet Street, London EC4 immediately prior to the Amalgamation being
completed or, if the Amalgamation occurs before 16 October 1998, on 16
October 1998 PROVIDED THAT if the Amalgamation has not taken place by 31
December 1998, BC Completion shall occur on 31 December 1998. Each of
CUKCP and NTL undertakes to give to Telewest not less than 5 days prior
notice of the date on which the Amalgamation is expected to be completed
provided that the Amalgamation shall not be completed prior to such date.
Where BC Completion is to take place immediately prior to the
Amalgamation, BC Completion shall take place in escrow at the offices of
Freshfields as aforesaid on the Business Day immediately prior to the
expected date of the Amalgamation when each of CUKCP and Telewest shall
deliver the documents to be provided by it pursuant to Clause 2.5 to the
other's solicitors and Telewest shall telegraphically transfer the
consideration due by it pursuant to sub-clause
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2.5.2.1 to CUKCP's solicitors. Such documents and monies shall be held to
the order of the deliveror pending satisfaction of the escrow. The sole
escrow condition shall be the Amalgamation being completed when the
documents shall be dated and the documents and monies automatically
released from the escrow to the order of the holder of such documents and
monies. If the escrow condition is not satisfied within two Business Days
of such delivery, the documents and monies (together with any interest
accrued thereon) shall be returned to the deliverors.
2.4.2 CUKCP agrees with Telewest that between the date of this Agreement
and BC Completion it shall not, except with the prior written consent of
Telewest:
2.4.2.1 sell, transfer, assign, grant options over, dispose of, or
otherwise deal in any manner whatsoever with the legal title to, or
the beneficial ownership of, or any other interest in, any shares in
Birmingham Cable beneficially owned by it or any loans due to it
(other than as contemplated by this Agreement);
2.4.2.2 demand repayment of any of the loans or accrued consulting
fees due to it or any of its subsidiary or parent undertakings by
Birmingham Cable or any of its subsidiary undertakings or the
payment of interest thereon (other than as contemplated by this
Agreement); and
2.4.2.3 enter into any agreement to do any of the foregoing in
relation to such shares in Birmingham Cable (other than as
aforesaid).
2.5 On BC Completion:
2.5.1 CUKCP shall deliver to Telewest (subject to the right of Telewest to
waive any such requirement):
2.5.1.1 a stock transfer form duly executed by CUKCP only
transferring the Joint BC Shares to Telewest (subject to TCHL
executing the same in its capacity as a joint transferor);
2.5.1.2 resignation letters executed as deeds in a form reasonably
acceptable to Telewest from Ronald Lawley and Gary Mizga resigning
as
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directors of Birmingham Cable with effect from BC Completion without
any compensation for loss of office and waiving any other claims
which they may have in their capacity as directors against
Birmingham Cable;
2.5.1.3 an agreement in the form set out in Schedule 1 to this
Agreement duly executed by Comcast UK Consulting Inc.;
2.5.1.4 a letter duly signed by CUKCP consenting to Telewest (or, if
so directed by Telewest, TCHL) being registered as the sole holder
of the Joint BC Shares for the purposes of Article 67(C) of
Birmingham Cable's Articles of Association;
2.5.1.5 an assignment in a form reasonably acceptable to Telewest
duly executed by CUKCP and Comcast UK Consulting Inc. assigning
their respective rights and interests in the BC Loans and Fees to
Telewest conditional upon Telewest entering into a deed of
subordination in a form reasonably acceptable to Chemical Investment
Bank Limited ("Chemical") and providing to Chemical such evidence as
is required by clause 12.1(b) of the (pound)175 million Revolving
Credit Facility Agreement dated 15 February 1995 in favor of
Birmingham Cable Limited;
2.5.2 Telewest shall (subject to the right of CUKCP to waive any such
requirement):
2.5.2.1 procure the telegraphic transfer of (pound)130,000,000 (or,
if the Amalgamation does not occur on or prior to BC Completion,
(pound)127,500,000) in cleared funds to an account specified by
CUKCP, receipt of which shall discharge Telewest from its obligation
to pay the consideration for CUKCP's interest in the Joint BC
Shares, such other interest (if any) which CUKCP has in any other
shares in Birmingham Cable and the BC Loans and Fees;
2.5.2.2 deliver to CUKCP the counterpart of the agreement referred
to in sub-clause 2.5.1.3 duly executed by all of the parties to that
agreement (other than Comcast UK Consulting Inc.); and
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2.5.2.3 if required by CUKCP, deliver to CUKCP or, if so directed,
to Chemical Investment Bank Limited, the deed of subordination and
evidence referred to in sub-clause 2.5.1.5 duly executed by
Telewest.
2.6 Subject to CUKCP complying with its obligations under sub-clause 2.5.1, each
of CUKCP, Telewest and TCHL hereby agrees that the sale of CUKCP's interest in
the Joint BC Shares to Telewest (or TCHL) pursuant to clauses 2.1 to 2.5
(inclusive) shall supersede the provisions of section 5 of the Co-ownership
Agreement which would otherwise apply as a result of the Amalgamation being
implemented.
2.7 Each of CUKCP and TCHL hereby (i) waives any claims and rights it may have
as at the date of this Agreement against the other or any of its subsidiary or
parent undertakings as of the date of this Agreement and (ii) agrees that with
effect from BC Completion, the Co-ownership Agreement shall forthwith terminate
without any liability for any of the parties to that Agreement.
2.8 Each of Telewest and TCHL undertakes that with effect from BC Completion, it
shall procure that CUKCP and its parent and subsidiary undertakings are released
from all past, present and future obligations under the Subscription Agreements.
2.9 Promptly following the signing of this Agreement, each of CUKCP and TCHL
shall inform the appraiser appointed under the Co-ownership Agreement of the
settlement reached under this Agreement and CUKCP and TCHL shall each use its
best endeavors to ensure that the appraisal process under such agreement is
terminated as soon as practicable. Any fees and expenses incurred in such
appraisal process shall be payable by CUKCP.
2.10 CUKCP hereby agrees to exercise all voting rights and other powers
available to it and to procure that those persons nominated by it as directors
of Birmingham Cable will vote and act in a manner so as to assist TCHL complying
with its obligations under sub-clause 2.5.2.
2.11 Following BC Completion, Telewest undertakes to CUKCP to use all reasonable
endeavors to obtain the release of CUKCP and its subsidiary and parent
undertakings as at the date of this Agreement from all guarantees, indemnities,
counter-indemnities and letters of comfort of any nature
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whatsoever (together the "Guarantees") given to any third party by CUKCP or any
of its subsidiary or parent undertakings as at the date of this Agreement in
respect of any liability or obligation of Birmingham Cable or any of its
subsidiary undertakings and pending such release, to indemnify CUKCP (for itself
and as agent for its subsidiary and parent undertakings as at the date of this
Agreement ) against all amounts paid by any of them to any third party pursuant
to any such Guarantees arising after BC Completion. Telewest undertakes to CUKCP
(for itself and as agent for its subsidiary and parent undertakings as at the
date of this Agreement) that it will pay any amounts properly due and payable
under the Guarantees as and when the same shall come due.
2.12 If the Amalgamation is completed, NTL agrees that Birmingham Cable may
terminate the Birmingham Link Agreement by giving six months prior written
notice such notice to be served at any time on or after January 1, 2000.
Accordingly, NTL agrees that it shall, and shall procure that National
Transcommunications Limited shall, agree to an appropriate amendment to the
Birmingham Link Agreement to enable such termination in the event that the
Amalgamation occurs and CUKCP receives all sums due to it under clause 2.3.
3. SALE OF GC SHARES
3.1 CUKCP hereby agrees to exercise all voting rights and other powers available
to it and to procure that those persons nominated by it as directors of
Birmingham Cable will vote and act in a manner so as to ensure (so far as it is
within its power to do so) the BC Offer Notice is withdrawn and the pre-emption
procedure commenced by such notice is terminated as soon as practicable after
the signing of this Agreement.
3.2 In the event that such BC Offer Notice is not withdrawn and/or the
pre-emption procedure is not terminated, CUKCP (a) waives any objection it may
have to the BC Offer Notice or the transfer notice issued by General Cable plc
in connection with the BC Offer Notice, whether under Article 59 or Article 67
of Birmingham Cable's Articles of Association, or otherwise; (b) undertakes not
to acquire any GC Shares under the pre-emption provisions set out in Article 59
of Birmingham Cable's Articles of Association pursuant to the BC Offer Notice
(save as required to do so by TCHL to enable TCHL and CUKCP (at the expense of
TCHL and not CUKCP) to take up TCHL's rights under such pre-emption provisions);
and
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(c) hereby waives all and any rights it may have in any such shares acquired by
TCHL (whether jointly with CUKCP or otherwise) under the Co-ownership Agreement
and/or the Articles of Association of Birmingham Cable by virtue of the
operation of such pre-emption provisions (or otherwise).
3.3 CUKCP and NTL hereby agree (a) to waive all and any rights, claims and
potential claims each may have in relation to the takeover of General Cable PLC
by Telewest under the Co-ownership Agreement (and, in particular, clause 4.4
thereof) and (b) to waive all and any rights, claims and potential claims
arising under the Co-ownership Agreement, the Articles of Association of
Birmingham Cable and/or the Articles of Association of Cable London in relation
to such takeover whether by virtue of any change of control of TCHL and/or
Telewest or otherwise.
3.4 CUKCP and NTL agrees to the provisions contained in this clause 3 in
consideration for Telewest and TCHL agreeing to the other provisions of this
Agreement.
4. CABLE LONDON SHOOT-OUT
4.1 At any time during the Shoot-out Period CUKCP may give notice and not later
than the end of the Shoot-out Period CUKCP shall give notice (an "offer notice")
to Telewest offering to sell to Telewest all of the shares in Cable London which
are or will at CL Completion be owned by CUKCP (including any shares issued to
CUKCP pursuant to clause 4.7) and all of the rights and interests of CUKCP and
its subsidiary undertakings in the CL Loans and Fees for the cash sum certain
(not to be calculated by reference to a formula) (the "Sum") specified in the
offer notice on the terms and conditions set out in this clause 4 (the "offer").
If CUKCP fails to give the offer notice prior to the end of the Shootout Period,
then CUKCP shall be deemed to have delivered an offer notice for a sum equal to
(pound)100 million. At any time after the date of a public announcement by CUKCP
and NTL that the Amalgamation will not become effective but prior to 31 December
1998, CUKCP shall have the right to give a notice to Telewest electing to
participate in the procedure specified in this clause 4. Where this applies, for
the purposes of this clause 4 and the definition of the "Shootout Period" the
date of such notice shall be substituted for the date on which the Amalgamation
is completed.
4.2 Telewest shall have a period of 30 calendar days ("the acceptance period")
commencing with and including the date of
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service of the offer notice and expiring at the close of business on the
twenty-ninth calendar day thereafter in which to accept or decline the offer by
notice to CUKCP.
4.3 If Telewest accepts the offer by notice given within the acceptance period,
CUKCP shall sell, and procure that its subsidiary undertakings shall sell,
subject to and conditional upon the Approvals being obtained or waived by
Telewest, to Telewest with full title guarantee free from all liens, charges and
encumbrances (save as provided in subclause 4.6.2.2) and any other third party
rights whatsoever and with all rights then or thereafter attaching thereto and
Telewest shall purchase from CUKCP or any of its subsidiary undertakings all of
the shares in the capital of Cable London owned or to be owned, or in which
CUKCP has an interest, at CL Completion by CUKCP or its subsidiary undertakings
(including any shares issued to CUKCP pursuant to clause 4.7) and from CUKCP and
its subsidiary undertakings their respective rights and interests in the CL
Loans and Fees at the Sum specified in the offer notice.
4.4 If Telewest declines the offer by notice given within the acceptance period,
or no notice is given by Telewest within the acceptance period, Telewest shall
sell, and procure that its subsidiary undertakings and MediaOne Cable
Communications Limited shall sell, subject to and conditional upon the Approvals
being obtained or waivedby CUKCP, to CUKCP with full title guarantee free from
all liens, charges and encumbrances (save as provided in sub-clause 4.6.2.2) and
any other third party rights whatsoever and with all rights then or thereafter
attaching thereto and CUKCP shall purchase from Telewest or any of its
subsidiary undertakings all of the shares in the capital of Cable London owned
and to be owned, or in which Telewest has an interest, at CL Completion by
Telewest or its subsidiary undertakings (including any shares issued to Telewest
pursuant to clause 4.7) and from Telewest and its subsidiary undertakings their
respective rights and interests in the CL Loans and Fees, at the Sum specified
in the offer notice.
4.5 __________...
4.5.1 If either Telewest or CUKCP ("the purchaser") becomes obliged
or agrees under the terms of clauses 4.3 or 4.4 to purchase the
shares in Cable London which are owned by the other ("the vendor"),
the sale of such shares ("the CL Sale Shares") shall be completed on
such date as the
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purchaser may (subject as provided herein) specify on giving not
less than ten Business Days' prior notice to the vendor (provided
that at CL Completion all of the Approvals have been obtained or, to
the extent permitted, waived by the purchaser).
4.5.2 If CL Completion has not occurred within 90 calendar days
after the end of the acceptance period ("the Long Stop Date"), the
purchaser shall cease to be entitled to purchase the CL Sale Shares
and the CL Loans and Fees unless it shall have elected, by notice in
writing to the vendor prior to such date to delay the date of CL
Completion by a period of up to a further 90 calendar days from the
Long Stop Date. If the purchaser exercises such option, it shall pay
to the vendor at CL Completion an amount equal to 5% of the Sum for
every 30 calendar days (or part thereof) by which the date for CL
Completion is extended from the Long Stop Date up to a maximum of 90
days. If the CL Sale Shares have not been purchased by the end of
the prescribed period, the purchaser shall cease to be entitled to
purchase the CL Sale Shares or the CL Loan and Fees and thereafter
(subject to clauses 4.5.3 and 4.5.4) the vendor shall have the
option (to be exercised and completed within 60 days) to purchase
the CL Sale Shares and the CL Loans and Fees from the purchaser for
an amount equal to 70 percent of the Sum and this shall be the only
remedy of the vendor for any failure by the purchaser to acquire the
CL Sale Shares and CL Loans and Fees. If the vendor exercises this
option, it shall give to the purchaser not less than 10 Business
Days' prior notice of the date of CL Completion.
4.5.3 If the purchaser is prohibited from acquiring the CL Sale
Shares solely because it is unable to obtain either of the Approvals
referred to in paragraphs (a) and (b) of the definition of
"Approvals" by the expiry of the prescribed period and the purchaser
elects not to waive such Approvals, the vendor shall have the option
(to be exercised and completed within 60 days) to purchase the CL
Sale Shares from the purchaser for the Sum. If the vendor exercises
this option, it shall give to the purchaser not less than 10
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Business Days' prior notice of the date of CL Completion.
4.5.4 If the purchaser is unable to acquire the CL Sale Shares
because it is unable to obtain the Approval referred to in paragraph
(c) of the definition of "Approvals" by the expiry of the prescribed
period, then (subject to the provisions of clause 4.7) the
provisions of clauses 4.1 to 4.8 (inclusive) shall cease to apply
(without prejudice to any breaches of such clauses prior to such
date).
4.6 At CL Completion:
4.6.1 the vendor shall deliver to the purchaser:
4.6.1.1 a duly executed transfer of the shares in Cable London owned
by the vendor as at CL Completion (including any shares issued to
the vendor pursuant to clause 4.7) together with the share
certificates relating to such shares;
4.6.1.2 resignation letters executed as deeds in a form reasonably
acceptable to the purchaser from those directors of Cable London
appointed by the vendor resigning as directors of Cable London and
its subsidiary undertakings with effect from CL Completion without
any compensation for loss of office and waiving any other claims
whatsoever against Cable London;
4.6.1.3 if the Amalgamation shall not previously have been
completed, an agreement in a form reasonably satisfactory to the
purchaser duly executed by CUKCP (if CUKCP is the vendor) or
MediaOne Cable Communications Ltd. (if Telewest is the seller)
terminating the CUKCP Consultant Agreement (if CUKCP is the vendor)
or the Telewest Consultant Agreement (if Telewest is the seller)
with effect from CL Completion without any liability or obligations
upon either party to that Agreement (and, in the case of the
termination of the CUKCP Consultant Agreement, upon Comcast
Corporation) other than for accrued fees;
4.6.1.4 if CUKCP is the vendor, an agreement in a form reasonably
acceptable to Telewest, duly
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executed by CUKCP terminating the Equalisation Deed with effect
from CL Completion;
4.6.1.5 if Telewest is the vendor, an agreement in a form reasonably
acceptable to CUKCP, terminating all of the provisions of the
Equalisation Deed other than those contained in clauses 1, 4.1, 4.3,
7 and 10 to 14 (inclusive); and
4.6.1.6 unless the CL Loans and Fees are to be capitalized under
clause 4.7, an assignment in a form reasonably acceptable to the
purchaser duly executed by the vendor and MediaOne Cable
Communications Limited (if Telewest is the seller) and, where
appropriate, any of their respective subsidiary or parent
undertakings assigning their respective rights and interests in the
CL Loans and Fees to the purchaser;
4.6.2 the purchaser shall:
4.6.2.1 procure the telegraphic transfer of the Sum (or such
lesser amount in accordance with clause 4) in cleared funds to
such account as the vendor shall specify and any further
amount payable to the vendor pursuant to sub-clause 4.5.1;
4.6.2.2 if required by the vendor, deliver to the vendor or,
if so directed, to CIBC, a mortgage and deed of subordination
in a form reasonably acceptable to CIBC duly executed by the
purchaser, together with a legal opinion in a form reasonably
acceptable to CIBC confirming the capacity of the purchaser to
enter into such documents and that the purchaser's obligations
thereunder are legal, valid and binding and enforceable in
accordance with their terms;
4.6.2.3 deliver to the vendor the counterparts of the
agreements referred to in subclauses 4.6.1.3, 4.6.1.4 or
4.6.1.5 (as appropriate) and 4.6.1.6 duly executed by Cable
London (in the case of the document referred to in sub-clause
4.6.1.3) and the vendor (in the case of the documents referred
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to in sub-clauses 4.6.1.4, 4.6.1.5 and 4.6.1.6).
4.7 Each of CUKCP and Telewest agrees that if a capitalization will result in
the Approval contained in paragraph (c) of the definition of "Approvals" being
obtained, or if requested by the proposed buyer of the CL Sale Shares, it shall,
conditional upon the consent of CIBC being obtained, exercise all voting rights
and other powers of control available to it, and procure that each director of
Cable London appointed by it will vote and act in a manner, so as to procure
that all loans and fees outstanding from the vendor (or any subsidiary or parent
undertaking of the vendor) (as defined in clause 4.5) including any interest on
such loans immediately prior to CL Completion are capitalised into ordinary
shares of (pound)1 each in Cable London immediately prior to or at CL
Completion.
4.8 Each of Telewest and CUKCP undertakes and agrees that prior to CL Completion
it shall exercise all rights and comply with all obligations which it may have
under the Equalisation Deed so as to ensure that any shares in Cable London
which are registered in the name of the other but held as nominee for it shall
be transferred to it.
4.9 The purchaser may waive any of the Approvals (other than the one referred to
in paragraph (c) of the definition of Approvals). Each of the parties agrees to
use best endeavours to procure that the Approvals are obtained following service
of an offer notice and shall cooperate and procure that Cable London and its
subsidiary undertakings shall cooperate to obtain the Approvals. In particular,
each of the parties agrees to take such action as CIBC may reasonably require in
order to obtain the Approval referred to in paragraph (c) of the definition of
Approvals.
4.10 The purchaser undertakes that with effect from CL Completion it shall
procure that the vendor and its parent and subsidiary undertakings as at the
date of this Agreement are released from all past, present and future
obligations under the Agreement dated 10 July 1989 between Cable London (1), US
West International Holdings (2), Comcast Corporation (3), Jerold Samuel Nathan
(4), Malcolm Gee (5), Sally Margaret Davids (6) and Stephen Michael Kirk (7).
4.11 Each of Telewest and CUKCP undertakes to the other that between the date of
this Agreement and the expiry of the Shoot-out Period it shall not and shall
procure that none of
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its subsidiary or parent undertakings shall, except with the prior written
consent of the other:-
4.11.1 sell, transfer, assign, grant options over, dispose of, or
otherwise deal in any manner whatsoever with the legal title to, or the
beneficial ownership of, or any other interest in, any shares in Cable
London owned by it or any loans due to it (other than as contemplated by
this Agreement or the Equalisation Deed);
4.11.2 demand repayment of any of the loans or accrued consultancy fees
due to it or any of its subsidiary or parent undertakings by Cable London
or any of its subsidiary undertakings or the payment of interest thereon
(other than as contemplated by this Agreement);
4.11.3 enter into any agreement to do any of the foregoing in relation to
such shares in Cable London (other than as aforesaid).
4.12 Each of Telewest and CUKCP agrees that it will consult with the other
following the expiry of the acceptance period and will take such action as the
purchaser may reasonably request, at the expense of the purchaser, in order to
minimise the payment of stamp duty on the transfer of any shares or the
assignment of any loans at CL Completion.
4.13 The vendor agrees with the purchaser that it shall exercise all voting
rights and other powers available to it and shall procure that each director of
Cable London appointed by it will act and vote in a manner so as not to prevent
the purchaser complying with its obligations under sub-clause 4.6.2.
4.14 Following CL Completion, the purchaser undertakes to the vendor to use all
reasonable endeavors to obtain the release of the vendor and its subsidiary and
parent undertakings as of the date of this Agreement from all guarantees,
indemnities, counter-indemnities and letters of comfort of any nature whatsoever
(together, the "Guarantees") given in relation to any liability or obligation of
Cable London or any of its subsidiary undertakings and pending such release, to
indemnify the vendor (for itself and as agent for its parent and subsidiary
undertakings) against all amounts paid by it (or any of them) to any third party
pursuant to any such Guarantees arising after CL Completion. The purchaser
further undertakes to the vendor (for itself and as
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agent for its subsidiary and parent undertakings) that it will pay any amounts
properly due and payable under the Guarantees as and when the same fall due.
4.15 If CUKCP is the purchaser, Telewest undertakes to CUKCP, at the expense of
CUKCP, that it shall cooperate, shall exercise all voting rights and other
powers of control available to it and shall procure that each director of Cable
London appointed by it will act and vote in a manner, so as (i) to procure, if
so requested by CUKCP, that Cable London and its subsidiary undertakings are
acquired by CUKCP pursuant to the Acquisition free from all indebtedness (being
indebtedness which is accounted for as such for the purposes of US GAAP) at CL
Completion and (ii) to enable CUKCP to refinance the existing (pound)170 million
facility in favour of Cable London with effect from, or immediately prior to, CL
Completion.
5. CABLE LONDON HOUSEKEEPING
5.1 Each of Telewest and CUKCP hereby agrees that as soon as reasonably
practicable after the date of this Agreement and in any event prior to 31 August
1998, it shall exercise all voting rights and other powers of control available
to it, and shall procure that each director of Cable London appointed by it will
act and vote in a manner, so as to procure that:-
5.1.1 immediately following the Amalgamation being implemented, the CUKCP
Consultant Agreement and the Telewest Consultant Agreement are terminated
without any liability for any of the parties to those agreements and that
each of Telewest and CUKCP waives any claims and rights it may have
against the other or any of its subsidiary or parent undertakings with
respect to those agreements as of the date of this Agreement;
5.1.2 immediately following the Amalgamation being implemented, George
Blumenthal, Barclay Knapp, Leigh Wood and Mark Wynn are appointed as
directors of Cable London and Gary Mizga and Ronald Lawley resign as
directors of Cable London without any compensation for loss of office;
5.1.3 the special resolution set out in Schedule 2 is duly passed.
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5.2 Each of Telewest and CUKCP hereby agrees that immediately following the
Amalgamation being implemented, the following persons shall be treated as having
been appointed by it as its Nominated Directors (as defined in Cable London's
Articles of Association) and shall give notice of such fact to Cable London:-
Telewest Charles Burdick
David Van Valkenburg
Mark Wynn
CUKCP Barclay Knapp
Leigh Wood
George Blumenthal
5.3 Notwithstanding the Articles of Association of Cable London, CUKCP and
Telewest shall ensure that its Nominated Directors (as defined in such Articles)
do not claim any travelling, hotel and other expenses incurred by such directors
in connection with their duties.
6. TELEWEST GUARANTEE
6.1 In consideration of CUKCP entering into this Agreement with TCHL and
Telewest at the request of Telewest, Telewest hereby irrevocably and
unconditionally, as primary obligor, undertakes and guarantees the full, prompt
and complete performance by TCHL of all its obligations under this Agreement and
the due and punctual payment of all sums now or subsequently payable by TCHL to
CUKCP under this Agreement when the same shall become due and undertakes with
CUKCP that if TCHL shall default in the payment of any sum under this Agreement,
Telewest shall forthwith on demand by CUKCP pay such sum to CUKCP.
6.2 The guarantee contained in clause 6.1 is a continuing guarantee and shall
remain in force until all the obligations of TCHL under this Agreement have been
fully performed and all sums payable by TCHL have been fully paid.
6.3 The obligations of Telewest shall not be affected by any act, omission,
matter or thing which, but for this provision, might operate to release or
otherwise exonerate Telewest from its obligations or affect such obligations,
including without limitation and whether or not known to Telewest:-
6.3.1 any time, indulgence, waiver or consent at any time given to TCHL
or any other person;
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6.3.2 any compromise or release of or abstention from perfecting or
enforcing any right or remedy against TCHL or any other person;
6.3.3 any legal limitation, disability, incapacity or other circumstance
relating to TCHL or any other person or any amendment to or variation of
the terms of this Agreement or any other document referred to in this
Agreement; and
6.3.4 any irregularity, unenforceability or invalidity of any
obligations of TCHL under this Agreement or the dissolution,
amalgamation, reconstruction or insolvency of TCHL.
6.4 The guarantee contained in clause 6.1 may be enforced by CUKCP without CUKCP
first taking any steps or proceedings against TCHL.
6.5 All payments to be made by Telewest shall be made in full, without set-off
or counterclaim and without any deduction whatsoever except to the extent
required by law.
6.6 The obligations of Telewest under this clause 6 shall not take effect until,
and are conditional upon, Telewest exercising its rights under clause 11.10.
7. NTL GUARANTEE
7.1 In consideration of TCHL and Telewest entering into this Agreement with
CUKCP and NTL at the request of NTL, NTL hereby irrevocably and unconditionally,
as primary obligor, undertakes and guarantees, the full, prompt and complete
performance by CUKCP of all its obligations under this Agreement and the due and
punctual payment of all sums now or subsequently payable by CUKCP to TCHL under
this Agreement when the same shall become due and undertakes with TCHL that if
CUKCP shall default in the payment of any sum under this Agreement, NTL shall
forthwith on demand by TCHL pay such sum to TCHL.
7.2 The guarantee contained in clause 7.1 is a continuing guarantee and shall
remain in force until all the obligations of CUKCP under this Agreement have
been fully performed and all sums payable by CUKCP have been fully paid.
7.3 The obligations of NTL shall not be affected by any act, omission, matter or
thing which, but for this provision,
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<PAGE>
might operate to release or otherwise exonerate NTL from its obligations or
affect such obligations, including without limitation and whether or not known
to NTL:-
7.3.1 any time, indulgence, waiver or consent at any time given to CUKCP
or any other person;
7.3.2 any compromise or release of or abstention from perfecting or
enforcing any right or remedy against CUKCP or any other person;
7.3.3 any legal limitation, disability, incapacity or other circumstance
relating to CUKCP or any other person or any amendment to or variation
of the terms of this Agreement or any other document referred to in this
Agreement; and
7.3.4 any irregularity, unenforceability or invalidity of any
obligations of CUKCP under this Agreement or the dissolution,
amalgamation, reconstruction or insolvency of CUKCP.
7.4 The guarantee contained in clause 7.1 may be enforced by TCHL or Telewest
without TCHL or Telewest first taking any steps or proceedings against CUKCP.
7.5 All payments to be made by NTL shall be made in full, without set-off or
counterclaim and without any deduction whatsoever except to the extent required
by law.
7.6 The obligations of NTL under this clause 7 shall not take effect until, and
are conditional upon, the completion of the Amalgamation.
8. NOTICES
8.1 Any notice, consent, request, approval or other communication (a "Notice")
to be given or made under this Agreement shall be in writing and signed by or on
behalf of the person giving it and shall be irrevocable without the written
consent of the party or parties on whom it is served.
8.2 Any Notice may only be served:
8.2.1 personally by giving it to any director or the secretary of the
party to be served;
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8.2.2 by leaving it at, or sending it by prepaid first class post (or by
prepaid first class airmail if from one country to another country) to the
address of the party to be served which is referred to in clause 8.4 or if
another address shall have been notified to all the other parties for the
purposes of this clause 8 by notice given in accordance with this clause
8.2, then to the address of such party which shall have been so notified,
for which purpose the latest notification shall supersede all previous
notifications;
8.2.3 by sending it by facsimile transmission to the number for the party
to whom it is to be sent which is referred to in clause 8.4 or if another
number shall have been notified to all the other parties for the purposes
of this clause 8 by notice given in accordance with this clause 8.2, then
to the number of such party which shall have been so notified, for which
purpose the latest notification shall supersede all previous
notifications.
8.3 A Notice shall be deemed served as follows:
8.3.1 in the case of personal service, at the time of
such service;
8.3.2 in the case of leaving the notice at the relevant
address, at the time of leaving it there;
8.3.3 in the case of service by post, on the second Business Day (or the
fourth Business Day if sent by airmail) following the day on which it was
posted and in proving such service it shall be sufficient to prove that
the notice was properly addressed, stamped and posted in the United
Kingdom; and
8.3.4 in the case of service by facsimile transmission, at the time of
transmission.
8.4 If to Telewest or TCHL: Address for service:
Genesis Business Park
Albert Drive
Woking
Surrey GU21 5RW
Fax No: 01483 295165
For the attention of: Victoria Hull
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With a copy to:
Charles Burdick
Fax No.: 01483 295278
Freshfields
65 Fleet Street
London EC4Y IHS
Fax No: 0171 832 7001
For the attention of:
Barry O'Brien and Ben Spiers
and
Weil Gotshal & Manges
One South Place
London EC2
Fax No: 0171 903 0990
For the attention of: David Lefkowitz and
Michael Brady
If to CUKCP: Address for service:
Comcast UK Cable Partners Limited
Clarendon House
2 Church Street West
Hamilton, HM11, Bermuda
Fax No.: (441) 292-4720
For the attention of: Company Secretary
With a copy to:-
NTL Incorporated
110 East 59th Street
26th Floor
New York, NY 10022 (USA)
Fax No: 001 212 906 8497
For the attention of: Richard Lubasch, Esq.
NTL Incorporated
63/65 Petty France
London SW1H 9EU
Fax No: 0171 227 8719
For the attention of: John Gregg, Esq.
Comcast Corporation
1500 Market Street
Philadelphia, Pennsylvania 19102
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Fax No.: (215) 981-7794
For the attention of: General Counsel
Allen & Overy
One New Change
London EC4W 9QQ
Fax No.: 0171 330 9999
For the attention of: Michael Scargill
and
Travers Smith Braithwaite
10 Snow Hill
London EC1A 2AL
Fax No: 0171 236 3728
For the attention of:
Spencer Summerfield Esq.
If to NTL:
NTL Incorporated
110 East 59th Street - 26th Floor
New York, NY 10022 (USA)
Fax No: 001 212 906 8497
For the attention of: Richard Lubasch, Esq.
With a copy to:
NTL Incorporated
63/65 Petty France
London SW1H 9EU
Fax No: 0171 227 8719
For the attention of: John Gregg, Esq.
and
Travers Smith Braithwaite
10 Snow Hill
London EC1A 2AL
Fax No: 0171 236 3728
For the attention of:
Spencer Summerfield Esq.
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9. COSTS
Each party shall be responsible for its own costs and expenses in connection
with the preparation and implementation of this Agreement except where expressly
stated otherwise.
10. ANNOUNCEMENTS
None of the parties to this Agreement shall, without the prior written consent
of the others, make any announcement or statement to the press or to any third
party relating to the contents of this Agreement (a "Relevant Announcement"),
otherwise than where such announcement or statement is required by law or by any
governmental, regulatory or statutory body or by any securities exchange on
which the securities of the relevant party or any of its parent undertakings
are, or are to be, listed or traded (including, without limitation, the London
Stock Exchange and the Nasdaq Stock Market's National Market) or is necessary in
order to obtain the Approvals.
11. GENERAL
11.1 No failure or delay by any party or time or indulgence given by it in or
before exercising any remedy or right under or in relation to this Agreement
shall operate as a waiver of the same nor shall any single or partial exercise
of any remedy or right preclude any further exercise of the same or the exercise
of any other remedy or right.
11.2 No waiver by any party of any requirement of this Agreement or of any
remedy or right under this Agreement shall have effect unless given by notice in
writing signed by such party. No waiver of any particular breach of the
provisions of this Agreement shall operate as a waiver of any repetition of such
breach.
11.3 Any release, waiver or compromise or any other arrangement which any party
gives or enters into with any other party to this Agreement in connection with
this Agreement shall not affect any right or remedy of the first-mentioned party
as regards any other party's liabilities under or in relation to this Agreement
and such other party shall continue to be bound by this Agreement as if it had
been the sole contracting party.
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11.4 Time shall be of the essence of this Agreement, both as regards the dates
and periods specifically mentioned and as to any dates and periods which may by
agreement in writing between the parties be substituted for any of them.
11.5 This Agreement may be executed in two or more counterparts and execution by
each of the parties of any one of such counterparts will constitute due
execution of this Agreement.
11.6 Rights under this Agreement may not be assigned other than by operation of
law. It is acknowledged by the parties that upon implementation of the
Amalgamation, CUKCP will be subsumed into NTL (Bermuda) Limited and that
accordingly thereafter references herein to CUKCP shall be deemed to be
references to the amalgamated company arising from the amalgamation of NTL
(Bermuda) Limited and CUKCP.
11.7 Save as expressly provided in this Agreement, all representations,
warranties and conditions, express or implied and whether statutory or otherwise
are to the extent permitted by law, excluded from, and in relation to, the sale
of any shares pursuant to this Agreement PROVIDED THAT nothing in this clause
11.7 shall purport to exclude liability for fraudulent misrepresentation.
11.8 NTL consents to CUKCP entering into this Agreement.
11.9 Each of CUKCP and Telewest undertakes to the other at the expense of the
other to do or procure to be done all such further acts and things, and execute
or procure the execution of all such other documents (so far as is within its
power so to do) as the other may from time to time reasonably require, for the
purpose of giving to the other the full benefit of all of the provisions of this
Agreement.
11.10 Telewest may, at its option by notice to CUKCP at any time prior to BC
Completion, substitute TCHL as the purchaser of the Joint BC Shares, any other
interest of CUKCP in any other shares in Birmingham Cable and the BC Loans and
Fees and to satisfy the consideration payable in respect thereof. If such option
is exercized, the guarantee in clause 6 shall become effective.
12. APPLICABLE LAW AND JURISDICTION; SERVICE OF PROCESS
12.1 This Agreement shall be governed by and construed in accordance with the
laws of England.
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12.2 The parties irrevocably submit to the exclusive jurisdiction of the Courts
of England and Wales in respect of any claim, dispute or difference arising out
of or in connection with this Agreement.
12.3 CUKCP and NTL shall at all times maintain an agent for service of process
and any other documents in proceedings in England or any other proceedings in
connection with this Agreement. For CUKCP such agent shall be Fleetside Legal
Representatives Services Limited, 9 Cheapside, London EC2V 6AD and for NTL such
agent shall be NTL Groups Limited, Bristol House, 1 Lakeside Road, Farmborough,
Hants GU14 6XP and any writ, judgment or other notice of legal process shall be
sufficiently served on CUKCP and NTL if delivered to such agent at its address
for the time being (and, in the case of NTL, marked for the attention of Robert
McKenzie/Richard Lubasch). Each of CUKCP and NTL undertakes not to revoke the
authority of the agent appointed by it. Notwithstanding the aforesaid, if CUKCP
or NTL shall revoke any such appointment or such appointment shall cease and if,
for any reason, TCHL requests CUKCP or NTL to do so, CUKCP or NTL (as the case
may be) shall promptly appoint another such agent with an address in England and
advise TCHL thereof. If following such a request CUKCP or NTL (as the case may
be) fails to appoint another agent, TCHL shall be entitled to appoint one on
behalf of CUKCP or NTL (as the case may be).
30
<PAGE>
SCHEDULE 1
We refer to the Agreement in respect of the rights of first refusal relating to
Birmingham Cable and Cable London dated 14 August 1998 (the "Agreement").
Words and expressions defined in the Agreement have the same meaning when used
herein.
In consideration of the mutual promises contained therein, we hereby agree to
terminate the BC Consultant Agreement and the BC Management Agreement with
effect from BC Completion without any liability to any party thereto (save for
accrued fees and expenses or claims arising after the date of the Agreement) and
we hereby waive all present and future claims and rights we may have against
each other under such agreements.
- -------------------------
For and on behalf of Comcast UK Consulting Inc.
- -------------------------
For and on behalf of Birmingham Cable Corporation Limited
- -------------------------
For and on behalf of Birmingham Cable Limited
- -------------------------
For and on behalf of Telewest Communications Group Limited
- -------------------------
For and on behalf of Media One Cable Communications Limited
31
<PAGE>
SCHEDULE 2
SPECIAL RESOLUTION
THAT, pursuant to section 9 of the Companies Act 1985, the Articles of
Association of the Company be altered with immediate effect by:-
(a) adding the following words to the end of the last sentence of Article
15(C):-
"PROVIDED THAT the amalgamation of Comcast UK Cable Partners Limited
and NTL (Bermuda) Limited (or any other subsidiary of NTL
Incorporated ) shall be deemed not to result in a change of control
of Comcast UK Cable Partners Limited or any subsidiary or parent
undertaking of Comcast UK Cable Partners Limited and provided
further that the provisions of the first two sentences of this
article 15(c) shall not be capable of applying to any change in
control such as is mentioned in the first sentence of this article
15(c) which occurs at any time during the "Shoot-out Period" as such
expression is defined in an agreement dated 14th August 1998 between
(1) Telewest Communications plc, (2) Telewest Communications
Holdings Limited, (3) Comcast UK Cable Partners Limited and (4) NTL
Incorporated, a copy of which has been deposited with the Company
prior to the adoption of this amendment to these articles."
(b) replacing all references to "Comcast" in Article 17 with references to
Comcast UK Cable Partners Limited;
(c) replacing Article 24(A) with the following new article:
"24(A) Unless and until otherwise agreed by each Significant
Investor, the number of Directors shall be not less than two and not
more than six."
(d) (i) replacing in article 24(C)(a), the words "one Director
("Nominated Director") with the words "up to three Directors
(each a "Nominated Director")" and the words "him" and "his"
with the words "them" and "their"; and
32
<PAGE>
(ii) replacing in Article 24(c)(b), the words "remove the" with the words
"remove any"; and
(e) adding to Article 24, after article 24(D), the following new article:
"24(E) Notwithstanding any other provisions of these Articles, the
quorum for the transaction of any business at any meeting of the
Directors shall be at least one Nominated Director appointed by
each Significant Investor."; and
(f) amending Article 33 by replacing the words "such number of Significant
Investors as hold (directly or indirectly), either individually or
together" with the words "each Significant Investor as holds (directly or
indirectly)".
33
<PAGE>
AS WITNESS this Agreement has been executed on the date first stated above.
SIGNED by )
for and on behalf of )
TELEWEST COMMUNICATIONS PLC ) /Charles J. Burdick
-----------------------------
SIGNED by )
for and on behalf of )
TELEWEST COMMUNICATIONS )
HOLDINGS LIMITED ) /Charles J. Burdick
-----------------------------
SIGNED by )
for and on behalf of )
COMCAST UK CABLE PARTNERS LIMITED ) /Kenneth Mikalauskas
-----------------------------
SIGNED by )
for and on behalf of )
NTL INCORPORATED ) /John F. Gregg
-----------------------------
34
1998 Interim Report
TELEWEST COMMUNICATIONS
[Graphic Omitted]
The above omitted graphic includes photographs of a television and its remote
control, a telephone and a computer keyboard.
TELEWEST COMMUNICATIONS PLC THE FIRST SIX MONTHS OF 1998 HAVE BEEN A DEFINING
PERIOD IN THE DEVELOPMENT OF THE UK CABLE INDUSTRY AND OF TELEWEST IN
PARTICULAR. WE BELIEVE VIRTUALLY ALL THE KEY INDICATORS OF OUR BUSINESS
PERFORMANCE AND GROWTH POTENTIAL SHOW OUR FUTURE PROSPECTS TO BE POSITIVE
WE EXPECT OUR PROGRESS AND POTENTIAL TO BE ENCHANCED BY OUR PLANNED MERGER WITH
GENERAL CABLE PLC AND WE ARE ENCOURAGED BY THE RENEWED INTEREST IN OUR INDUSTRY
A. Gary Ames Chairman
968,503
RESIDENTIAL CUSTOMERS
More than a third of the homes Telewest has marketed now take at least one of
our services. Of these more than 50% subscribe to both telephone and television
services.
27,498
BUSINESS CUSTOMERS
Our business customers take an average of 4.2 lines - or 116,634 lines in total.
As we add General Cable to the Group we expect to see significant future growth
in this sector.
NATIONAL NETWORK
Our franchises are now connected by a high capacity fibre network. In addition
to margin improvements this positions us well to benefit from anticipated rapid
growth in the wholesale and retail data market.
(pound)54.3m
EBITDA
Earnings before interest, tax, depreciation and amortisation were more than
three times higher than in the first half of 1997 and were more than the total
for the whole of last year.
(pound)225.9m
REVENUE
Revenue in the first half of 1998 was up 24.5% over the first half of 1997.
MARGIN IMPROVING
A continuing focus on costs and suppliers, together with continuing economies of
scale have produced a 3.4 percentage point improvement in telephony margin and a
6.7 percentage point rise in television margin.
Page 1
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
TELEVISION
SINCE WE INTRODUCED OUR `MILLENNIUM' PACKAGES
IN FEBRUARY, OUR CUSTOMERS HAVE ENJOYED MORE
CHOICE AND GREATER FLEXIBILITY. THEY HAVE
REWARDED US BY SUBSCRIBING IN RECORD NUMBERS
[Graphic Omitted]
The above omitted graphic depicts in bar graph format television penetration
rates of 21.1%, 22% and 22.8% for the first half of 1996, the first half of 1997
and the first half of 1998, respectively.
642,303
CABLE TELEVISION CUSTOMERS
Our `Millennium' packages are attracting a new audience for cable television
services, while providing a better service for our existing customers.
22.8%
CABLE TELEVISION PENETRATION
Cable television penetration in the first half of 1998 was our highest to date
and is further evidence of the success of our `Millennium' packages. The
improvement has been achieved despite the significant reduction in our build
programme and the consequent reduction in the number of potential new
subscribers available.
33.7%
CABLE TELEVISION CHURN
Though churn increased marginally on the corresponding period in 1997, it
improved on the first quarter and we are determined to make further
improvements. Our research indicates that churn is no longer related primarily
to product issues, which we believe we have now successfully addressed.
Consequently, our focus now is on making further improvements to the quality of
customer service we offer.
(pound)1.7m
CABLE TELEVISION REVENUE
The provision of television to business customers is an increasingly important
aspect of our service. Not just for the (pound)1.7m of revenue it has generated
in the year to date, but also because business customers are increasingly
looking for added value and single supplier relationships.
20%
ON THE FRONT ROW
We have now launched the `Front Row' Pay Per View movie service in all Telewest
franchises. At 20%, the average buy rate exceeds our expectations. We are now
accelerating our plans to expand the service from four to eight channels.
46%
CABLE TELEVISION MARGIN
Our cable television margin in the first half of 1998 increased by 6.7
percentage points on the corresponding period in 1997. Growing customer numbers,
complemented by an improving regulatory environment, have enabled us to
negotiate more favourable terms with programmers and structure our packages to
improve our margin opportunity.
Page 2
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
TELEPHONY
THE TELEPHONY SERVICES OFFERED BY TELEWEST
HAVE BECOME FIRMLY ESTABLISHED IN BOTH THE
RESIDENTIAL AND BUSINESS TELECOMS MARKETS
OUR PERFORMANCE DURING THE FIRST HALF OF 1998 IS A REFLECTION OF TELEWEST'S KEY
ADVANTAGE - THE COST EFFECTIVE PROVISION OF A BROAD RANGE OF TELECOMS SERVICES,
THROUGH OUR HIGH CAPACITY BROADBAND NETWORK
[Graphic Omitted]
The above omitted graphic depicts in bar graph format 498,646, 720,508 and
853,121 residential telephony customers for the first half of 1996, the first
half of the 1997 and the first half of 1998, respectively; 17,365, 23,173 and
27,498 business telephony customers for the first half of 1996, the first half
of 1997 and the first half of 1998, respectively; and 516,011, 743,681 and
880,619 total telephony customers for the first half of 1996, the first half of
1997 and the first half of 1998, respectively.
853,121
RESIDENTIAL TELEPHONY CUSTOMERS
The number of our residential customers is up 18.4% over the corresponding
period in 1997.
27,498
BUSINESS TELEPHONY CUSTOMERS
We have achieved significant growth during the period, boosted by a flexible
approach to service provision and strong local account management.
116,634
BUSINESS TELEPHONY LINES
The number of our business telephony lines is up 4I.2% on the same period in
1997.
30.6%
RESIDENTIAL TELEPHONY PENETRATION
Despite significant `win back' activity by BT, penetration has continued to
climb and is up 1.7 percentage points on the corresponding period in 1997.
Second-line penetration more than doubled to 5%, reflecting growing use of the
Internet and a change in the working habits of our customers.
21.1%
RESIDENTIAL TELEPHONY CHURN
This is a small increase over the corresponding period in 1997. Ongoing
investment in IT support systems and staff training are being implemented to
reduce churn.
4.2
BUSINESS TELEPHONY LINES PER CUSTOMER
Our business customers now take an average of 4.2 lines, up from 3.6 for the
same period in 1997.
Page 3
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
DATA
AS OWNER OF A NATIONAL BROADBAND NETWORK WITH LOCAL LOOP ACCESS IN THE AREAS WE
SERVE, TELEWEST IS WELL POSITIONED TO TAKE ADVANTAGE OF THE STRONG GROWTH IN
DEMAND FOR DATA SERVICES
[Graphic Omitted]
The above omitted graphic is a map of the UK depicting national coverage of the
broadband network and international linkage via leased lines to the US and
Europe.
19,810
CABLE INTERNET DIAL-UP CUSTOMERS
Because around 60% of our Cable Internet customers also subscribe to our
telephony service, the provision of this Internet service generates high margin
telephony revenues, as well as subscription revenues. Telewest's Cable Internet
service has been consistently highly rated by users and, as a result, little
churn is evident.
BROADBAND INTERNET ACCESS
An increasing number of our business customers access our Internet service via
leased line at speeds of up to 2Mb. We expect the number of customers to grow
significantly as more businesses recognise the benefits of being online.
WHOLESALE INTERNET SERVICES
In addition to the direct Internet service, Telewest also provides backbone
Internet services to 30 smaller Internet Service Providers and cable operators.
CABLE MODEM INTRODUCTION
Telewest expects to introduce a high speed Internet service using cable modem
technology during the first half of 1999. This will enable users to access the
Internet at speeds up to 7Mb more than 100 times faster than dial-up speeds
currently available. The service will initially be offered as a premium product
to high spending residential and business users, before a more widespread
consumer launch.
MANAGED DATA SERVICES
Telewest's networks are particularly well suited to the implementation of
managed data networks. An increasing number of customers are taking advantage of
this service.
NATIONAL NETWORK
With our national network complete Telewest is now able to enter the wholesale
data market by offering point-to-point Virtual Private Networks and national
enterprise networks.
Page 4
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
OUR FUTURE
ON 15TH APRIL 1998 WE ANNOUNCED THAT THE
BOARDS OF TELEWEST AND GENERAL CABLE PLC
HAD AGREED A PROPOSED MERGER. WE EXPECT
THE MERGER TO STRENGTHEN THE COMBINED
GROUP'S STRATEGIC POSITION AS A LEADING
UK CABLE OPERATOR
THE INCREASED SCALE AND SCOPE OF THE COMBINED
GROUP WILL PROVIDE OPPORTUNITIES TO ENHANCE
OUR COMPETITIVE POSITION IN THE DELIVERY OF
EXISTING AND NEW SERVICES
David R. Van Valkenburg Chief Executive
[Graphic Omitted]
The above omitted graphic depicts in bar graph format sector leadership in homes
(NTL, CWC and Telewest with 5,182,000, 5,867,000 and 6,101,203 homes,
respectively), homes marketed (NTL, CWC and Telewest with 2,429,000, 3,850,000
and 4,241,934 homes marketed, respectively), residential cable telephony
subscribers (NTL, CWC and Telewest with 846,000, 950,950 and 1,210,780
residential cable telephony subscribers, respectively) and cable television
subscribers (NTL, CWC and Telewest with 702,000, 780,000 and 934,517 cable
television subscribers, respectively).
ONE THIRD OF THE UK CABLE MARKET
Opportunities exist to enhance our business telephony capabilities, using
General Cable's expertise in this area. There are also opportunities to produce
incremental revenues from integrated residential services across a wider base.
In addition, we believe we can achieve cost savings and scale economies across
the Group.
NO.1
THE LARGEST UK CABLE OPERATOR
In addition to the merger with General Cable we have stated our intention
(subject to price and financing) to exercise our rights to acquire Comcast UK
Cable Partners' interests in Birmingham Cable and Cable London. Once acquired
the combined group would be the largest UK cable operator with access to 6.1m
homes and approximately 400,000 businesses.
POSITIONED FOR GROWTH
After completion of the merger with General Cable, Telewest believes it will be
in a stronger position to exploit its competitive position. As a locally
responsive provider of bundled services we have already experienced strong
growth and increasing market share. We believe that the additional scale and
scope coupled with growing demand for services will position us for market
leadership.
DIGITAL SERVICES
Telewest expects to begin the introduction of digital services in the last
quarter of 1998, with a trial service in one franchise area. This is expected to
be followed by a rollout to the other franchises beginning in the first half of
1999. Telewest's digital service is designed to offer a greatly expanded range
of broadcast television, Pay Per View and Near Video on Demand, as well as
Internet access and a broad range of interactive services from a variety of
content suppliers. In strategic terms the introduction of digital services will
enable us to harness the power and capacity of broadband cable networks.
We believe Telewest's key advantages over the other delivery platforms include:
(Y) Significant network capacity which will enable us to expand the range of
services on offer according to demand, complemented by the ability to
tailor services for specific geographic areas and demographic groups.
(Y) A high capacity return path which eliminates the need for a secondary
connection to a telephony network, provides instant interactivity and
allows for the development of increasingly sophisticated services.
(Y) The ability to provide the consumer with an easy upgrade path from analogue
services and no requirement to purchase a set top box.
We believe the launch of digital service provides us with a powerful opportunity
to leverage the investment we have made by developing new products and services
that utilise our existing infrastructure.
Page 5
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
FINANCIAL REVIEW
OUR STRONG PERFORMANCE IN THE FIRST HALF
OF 1998 HAS RESULTED IN AN EBITDA OF (pound)54.3M,
WHICH EXCEEDS THE FULL YEAR 1997 RESULT
WE BELIEVE THESE ARE EXCELLENT RESULTS AND
PROVIDE A FIRM BASE FOR THE NEXT STAGE IN
OUR DEVELOPMENT
Charles J. Burdick Group Finance Director
(pound)54.3M EBITDA
Earnings before Interest, Tax, Depreciation and Amortisation Our EBITDA in the
first half of 1998 is already ahead of the full year result for 1997.
(pound)88.8M
CABLE TELEVISION REVENUE
Our `Millennium' packages have provided consumers with much greater choice and
flexibility. We believe this new approach to marketing our services appeals to
many who would not have subscribed to our services previously. Revenue per
customer has remained stable despite the introduction of `small basic' entry
level packages.
(pound)98.9M
RESIDENTIAL TELEPHONY REVENUE
An increase in our total customer base, improving margins and greater
second-line penetration have all contributed to a 27.1% increase in revenue over
the corresponding period in 1997.
(pound)28.1M
BUSINESS TELEPHONY REVENUE
Business telephony revenue has increased by 41%. Our increasing revenue
indicates that our customers are using us more as they come to appreciate our
products and our ability to deliver service excellence.
(pound)110M
CAPITAL EXPENDITURE
Capital expenditure has declined to almost half the (pound)208 million for the
first half of 1997. This decline is primarily the result of our strategic
decision last year to reduce construction activity and of our continued focus on
costs.
((pound)39.8M)
OPERATING LOSS
Operating losses through the first half of 1998 have declined in line with
expectations and are approximately two thirds of the figure for the
corresponding period in 1997.
Page 6
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
Financial Review Continued
We have achieved a strong performance in the first half of 1998. EBITDA of
(pound)54.3m has already exceeded the full year 1997 result. We believe our
decision to focus the operations on consumer and business packaging, service and
choice is paying off. Penetration of the customer base continues to improve,
with CATV reaching 22.8% and residential telephony reaching 30.6%. These are the
highest levels to date. Revenue has grown by 24.5% over the corresponding period
in 1997. Business telephony is producing substantial growth, up 41%, with
increased revenue per customer. Internet sales have provided the Company with
more than one million pounds of additional revenue so far this year.
Margins continue to grow, with telephony up 3.4 percentage points to 75.3
percentage points and CATV up 6.7 percentage points to 46%. We continue to
benefit from a redistribution of the packages of products in our customer base
with new CATV customers increasingly choosing `Basic' only or `3-4 premium pay
channels', our higher margin products. Second-line penetration in our
residential telephone customer base at 5% is up from 2.2% a year ago. Churn
results to date are not satisfactory and they remain a focus of attention.
SG&A costs for the first half of 1998 were 40.9% of revenues compared to over
50% in 1997 and capital expenditure of (pound)110m is substantially reduced from
(pound)208m last year. Expense and cash management continue to receive strong
focus.
Telewest ended the first half of 1998 with (pound)1.51 billion of debt split
between (pound)0.60 billion of senior bank debt and (pound)0.91 billion of bond
debt. Telewest is operating within its recently restructured bank facilities. We
are looking at financing options in regard to the exercise of our pre-emption
rights resulting from the Comcast/NTL merger.
All references to financial information above are UK GAAP.
Safe Harbour Statement under the US Private Securities Litigation Reform Act of
1995: the foregoing includes certain forward looking statements that involve
various risks and uncertainties which could lead to actual results significantly
different than those anticipated by Telewest. For a discussion of certain of
these risks and uncertainties see the Telewest's 1997 Annual Report and Second
Quarter 10Q.
Page 7
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
OPERATING STATISTICS OWNED AND OPERATED FRANCHISES
2nd Quarter 1998 Net Additions
<TABLE>
<CAPTION>
Net additions Net additions Net additions Net additions
Q2 YTD Q2 YTD
1998 1998 1997 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CABLE TELEVISION
Homes marketed 27.720 62,372 103,615 207,039
CATV customers 24,426 36,315 18,235 31,821
- ---------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 29,398 65,070 119,243 242,020
Residential telephony customers 21,536 42,763 50,931 100,131
Residential telephony lines 31,334 59,491 56,282 109,168
- ---------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony customers 966 2,023 1,668 2,291
Business telephony lines 6,619 15,645 8,061 14,778
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
As at 30 June As at 30 June
1998 1997
- ---------------------------------------------------------------------------------------------------
CABLE TELEVISION
Homes marketed 2,822,566 2,542,992
CATV customers 642,303 559,963
CATV penetration 22.8% 22.0%
Quarterly churn rate (annualised) 28.8% 32.9%
Rolling 12 month churn rate 33.7% 32.2%
- ---------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 2,790,224 2,496,754
Residential telephony customers 853,121 720,508
Residential telephony penetration 30.6% 28.9%
Residential telephony lines 895,659 736,177
Quarterly churn rate per line (annualised) 21.7% 19.1%
Rolling 12 month churn rate 21.1% 19.2%
- ---------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony customers 27,498 23,173
Business telephony lines 116,634 82,601
Average number of lines per customer 4.2 3.6
- ---------------------------------------------------------------------------------------------------
INTERNET
Dial-up customers 19,810 8,806
Cable television and residential
telephony customers 528,614 422,484
Cable television only customers 113,689 137,479
Residential telephony only customers 324,507 298,024
Internet only customers 1,825 2,454
- ---------------------------------------------------------------------------------------------------
</TABLE>
Page 8
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
OPERATING STATISTICS OWNED AND OPERATED AND OPERATED
AND AFFILIATED FRANCHISES*
2nd Quarter 1998 Net Additions
<TABLE>
<CAPTION>
Net additions Net additions Net additions Net additions
Q2 YTD Q2 YTD
1998 1998 1997 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CABLE TELEVISION
Homes marketed 30,355 66,041 114,776 233,044
CATV customers 24,880 38,127 19,445 36,854
- ---------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 32,102 68,452 130,503 268,184
Residential telephony customers 23,527 48,318 55,835 109,647
Residential telephony lines 33,795 66,006 61,423 119,129
- ---------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony customers 1,192 2,381 1,764 2,508
Business telephony lines 8,164 18,297 8,988 16,535
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
As at 30 June As at 30 June
1998 1997
- ---------------------------------------------------------------------------------------------------
CABLE TELEVISION
Homes marketed 3,162,623 2,859,879
CATV customers 725,479 636,453
- ---------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 3,130,779 2,811,225
Residential telephony customers 943,000 795,747
Residential telephony lines 988,547 812,650
- ---------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony customers 30,712 25,806
Business telephony lines 134,970 95,104
Average number of lines per customer 4.4 3.7
- ---------------------------------------------------------------------------------------------------
</TABLE>
*Operating statistics for affiliated franchises represent Telewest's equity
interests in Cable London plc (50.0% interest), Birmingham Cable Corporation
(27.5% interest) and The Cable Corporation (16.5%).
Page 9
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
OPERATING STATISTICS OWNED AND OPERATED FRANCHISES
As at 30 June 1998
<TABLE>
<CAPTION>
London and Midlands and Scotland and
South East South West North East North West Total
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CABLE TELEVISION
Homes marketed 630,203 838,017 757,473 596,863 2,822,556
CATV customers 149,808 185,740 178,507 128,248 642,303
CATV penetration 23.8% 22.2% 23.6% 21.5% 22.8%
- ---------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 624,210 838,140 731,783 596,091 2,790,224
Residential telephony customers 160,580 278,555 230,664 183,322 853,121
Residential telephony penetration 25.7% 33.2% 31.5% 30.8% 30.6%
Residential telephony lines 175,602 289,383 238,958 191,716 895,659
- ---------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony customers 6,583 9,105 6,410 5,400 27,498
Business telephony lines 31,669 42,493 20,759 21,713 116,634
Average number of lines per customer 4.8 4.7 3.2 4.0 4.2
- ---------------------------------------------------------------------------------------------------
</TABLE>
Page 10
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
OPERATING STATISTICS OWNED AND OPERATED FRANCHISES
As at 30 June 1998
<TABLE>
<CAPTION>
London South South West North East Scotland South East North West Midlands Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CABLE TELEVISION
Homes marketed 364,964 382,232 225,079 532,394 265,239 596,863 455,785 2,822,556
CATV customers 81,224 85,153 55,711 122,796 68,584 128,248 100,587 642,303
CATV penetration 22.3% 22.3% 24.8% 23.1% 25.9% 21.5% 22.1% 22.8%
- --------------------------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 358,947 382,355 222,882 508,901 265,263 596,091 455,785 2,790,224
Residential telephony
customers 76,583 121,904 76,346 154,318 83,997 183,322 156,651 853,121
Residential telephony
penetration 21.3% 31.9% 34.3% 30.3% 31.7% 30.8% 34.4% 30.6%
Residential telephony
lines 85,729 128,809 78,004 160,954 89,873 191,716 160,574 895,659
- --------------------------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony
customers 5,034 5,229 1,790 4,620 1,549 5,400 3,876 27,498
Business telephony
lines 25,478 23,266 5,071 15,688 6,191 21,713 19,227 116,634
Average number of
lines per customer 5.1 4.5 2.8 3.4 4.0 4.0 5.0 4.2
<CAPTION>
OPERATING STATISTICS AFFILIATED FRANCHISES
As at 30 June 1998
Cable London Birmingham Cable The Cable Corporation Total Affiliates
Total Equity Total Equity Total Equity Total Equity
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CABLE TELEVISION
Homes marketed 358,497 179,249 415,099 114,152 282,827 46,666 1,056,423 340,067
CATV customers 87,604 43,802 116,893 32,146 43,809 7,228 248,306 83,176
CATV penetration 24.4% 24.4% 28.2% 28.2% 15.5% 15.5% 23.5% 24.5%
- --------------------------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 358,497 179,249 415,099 114,152 285,782 47,154 1,059,378 340,555
Residential telephony
customers 88,094 44,047 128,247 35,268 64,027 10,564 280,368 89,879
Residential telephony
penetration 24.6% 24.6% 30.9% 30.9% 22.4% 22.4% 26.5% 26.4%
Residential telephony
lines 94,110 47,055 128,247 35,268 64,027 10,564 286,384 92,887
- --------------------------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony
customers 3,202 1,601 4,523 1,243 2,234 369 9,959 3,213
Business telephony
lines 16,568 8,284 20,022 5,506 27,548 4,545 64,138 18,335
Average number of lines
per customer 5.2 5.2 4.4 4.4 12.3 12.3 6.4 5.7
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 11
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
UK GAAP UNAUDITED SUMMARISED CONSOLIDATED PROFIT
AND LOSS ACCOUNT
For the six months ended 30 June 1998
<TABLE>
<CAPTION>
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
1998 1997 1997
Note (pound)000 (pound)000 (pound)000
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TURNOVER
Cable television 88,758 76,845 159,918
Telephony - residential 98,918 77,849 166,645
Telephony - business 28,106 19,901 43,882
Other (Internet, Ad Sales etc) 10,095 6,847 16,053
- --------------------------------------------------------------------------------------------------
225,877 181,442 386,498
- --------------------------------------------------------------------------------------------------
OPERATING LOSS (39,816) (59,985) (127,764)
Share of results of associated undertakings (3,457) (5,418) (11,126)
Other interest receivable and similar income 2,968 5,266 14,662
(includes the group share of interest receivable
in associated undertakings of(pound)104,(pound)683 and
(pound)5,565 respectively)
Interest payable and similar charges 3 (101,317) (82,206) (185,681)
- --------------------------------------------------------------------------------------------------
Loss on ordinary activities before tax (141,622) (142,343) (309,909)
Tax on loss on ordinary activities 3 (115) (521)
- --------------------------------------------------------------------------------------------------
Loss on ordinary activities after tax (141,619) (142,458) (310,430)
Minority interests (68) (210) (293)
- --------------------------------------------------------------------------------------------------
Loss for the financial period (141,687) (142,668) (310,723)
- --------------------------------------------------------------------------------------------------
Loss per equity share (pence) (10.0) (10.0) (21.8)
- --------------------------------------------------------------------------------------------------
1 EARNINGS/ (loss) BEFORE INTEREST, TAXES,
DEPRECIATION, AND AMORTISATION ("EBITDA")
- --------------------------------------------------------------------------------------------------
Operating loss (39,816) (59,985) (127,764)
Add: Depreciation 94,079 76,358 177,341
- --------------------------------------------------------------------------------------------------
EBITDA 54,263 16,373 49,577
- --------------------------------------------------------------------------------------------------
2 OPERATING COSTS
- --------------------------------------------------------------------------------------------------
Programming expenses 47,923 46,626 93,441
Telephony expenses 31,315 27,440 50,145
Selling, general, and administrative expenses 92,376 91,003 193,335
Depreciation 94,079 76,358 177,341
- --------------------------------------------------------------------------------------------------
265,693 241,427 514,262
- --------------------------------------------------------------------------------------------------
</TABLE>
Page 12
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
<TABLE>
<CAPTION>
3 Interest payable and similar charges
- --------------------------------------------------------------------------------------------------
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
1998 1997 1997
(pound)000 (pound)000 (pound)000
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Share of interest of associated undertakings 7,721 5,588 15,751
On bank loans and overdrafts and other loans
Wholly repayable within 5 years 41 8,207 16,941
Wholly or partly repayable in more than five years 24,398 5,282 14,741
Finance costs of Senior Discount Debentures 40,548 34,344 71,661
Finance costs of Senior Debentures 11,370 11,318 22,657
Finance charges payable in respect of finance
lease and hire purchase contracts 2,490 1,976 4,702
Exchange losses on foreign currency translation, net 5,218 15,023 30,954
Other 9,531 468 8,274
- --------------------------------------------------------------------------------------------------
101,317 82,206 185,681
- --------------------------------------------------------------------------------------------------
</TABLE>
The consolidated financial statements as set out on pages 10 and 11 which are
unaudited, have been prepared on the basis of the accounting policies set out in
the Company's 1997 Annual Report. The balance sheet, profit and loss account and
cash flow statement at 31 December 1997 is derived from the statutory accounts
for 1997 which have been delivered to the Registrar of Companies. The auditors
have reported on those accounts: their report was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985.
Page 13
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
<TABLE>
<CAPTION>
UK GAAP UNAUDITED SUMMARISED CONSOLIDATED BALANCE SHEET
At 30 June 1998
30 June 30 June 31 December
1998 1997 1997
(pound)000 (pound)000 (pound)000
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIXED ASSETS 1,790,807 1,720,546 1,809,213
- --------------------------------------------------------------------------------------------------
CURRENT ASSETS
Stocks 91 72 32
Debtors 81,479 68,242 70,457
Cash at bank and in hand 26,295 61,732 29,582
- --------------------------------------------------------------------------------------------------
107,865 130,046 100,071
CREDITORS: amounts falling due within one year (197,523) (210,395) (334,756)
- --------------------------------------------------------------------------------------------------
Net current liabilities (89,658) (80,349) (234,685)
- --------------------------------------------------------------------------------------------------
Total assets less current liabilities 1,701,149 1,640,197 1,574,528
CREDITORS: amounts falling due after
more than one year (1,573,948) (1,203,004) (1,305,708)
Minority interests (708) (557) (640)
- --------------------------------------------------------------------------------------------------
CAPITAL AND RESERVES 126,493 436,636 268,180
- --------------------------------------------------------------------------------------------------
</TABLE>
Page 14
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
<TABLE>
<CAPTION>
UK GAAP UNAUDITED SUMMARISED CONSOLIDATED STATEMENT
OF CASH FLOWS
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
1998 1997 1997
(pound)000 (pound)000 (pound)000
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net cash inflow from operating activities 40,861 (2,493) 68,624
- --------------------------------------------------------------------------------------------------
Returns on investments and servicing of finance
Interest received 1,833 2,988 3,599
Interest paid (32,501) (20,044) (63,479)
Interest element of finance lease payments (2,490) (2,594) (4,702)
- --------------------------------------------------------------------------------------------------
Net cash outflow from returns on investments
and servicing of finance (33,158) (19,650) (64,582)
- --------------------------------------------------------------------------------------------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (110,304) (207,504) (436,100)
Sale of tangible fixed assets 4,354 922 6,066
- --------------------------------------------------------------------------------------------------
Net cash outflow from Capital expenditure
and financial investment (105,950) (206,582) (430,034)
- --------------------------------------------------------------------------------------------------
Acquisitions and disposals
Investment in associated undertakings and
other participating interests (3,719) (9,113) (9,633)
- --------------------------------------------------------------------------------------------------
Net cash outflow from Acquisitions
and disposals (3,719) (9,113) (9,633)
- --------------------------------------------------------------------------------------------------
Management of liquid resources
Decrease in fixed deposits, net 8,710 21,523 53,288
- --------------------------------------------------------------------------------------------------
Financing
Cash paid for credit facility arrangement costs (5,900) 0 0
Proceeds from borrowings 110,000 222,500 392,500
Repayment of borrowings (10) 0 (2,375)
Capital element of finance lease payments (5,397) (2,063) (3,971)
- --------------------------------------------------------------------------------------------------
Net cash outflow from financing 98,693 220,437 386,154
- --------------------------------------------------------------------------------------------------
Increase in cash 5,437 4,122 3,817
- --------------------------------------------------------------------------------------------------
</TABLE>
Page 15
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
<TABLE>
<CAPTION>
US GAAP UNAUDITED SUMMARISED CONSOLIDATED STATEMENTS OF OPERATIONS
3 months 3 months 3 months 6 months 6 months 6 months
ended ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June 30 June
1998 1998 1997 1998 1998 1997
$000 (pound)000 (pound)000 $000 (pound)000 (pound)000
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Cable television 74,267 44,578 38,744 147,871 88,758 76,845
Telephony - residential 84,103 50,482 38,175 164,797 98,918 77,849
Telephony - business 24,330 14,604 10,614 46,825 28,106 19,901
Other 9,644 5,789 3,519 16,818 10,095 6,847
- -------------------------------------------------------------------------------------------------------------------
192,344 115,453 91,052 376,311 225,877 181,442
- -------------------------------------------------------------------------------------------------------------------
Operating loss (42,403) (25,452) (36,421) (88,325) (53,016) (73,187)
Interest income 1,626 976 1,748 3,444 2,067 4,110
Interest expense (66,085) (39,667) (32,920) (137,258) (82,388) (63,234)
Foreign exchange losses, net (13,396) (8,041) (172) (2,351) (1,411) (24,299)
Share of losses of affiliates (7,280) (4,370) (5,345) (18,449) (11,074) (10,323)
Minority interest in profits of
consolidated subsidiaries, net (70) (42) (93) (113) (68) (210)
Other, net 417 251 352 1,327 797 473
- -------------------------------------------------------------------------------------------------------------------
Loss before income taxes (127,191) (76,345) (72,851) (241,725) (145,093) (166,670)
Income tax expense (28) (17) (51) 5 3 (115)
- -------------------------------------------------------------------------------------------------------------------
NET LOSS (127,219) (76,362) (72,902) (241,720) (145,090) (166,785)
- -------------------------------------------------------------------------------------------------------------------
Loss per ordinary share
(dollars/pounds) (0.14) (0.08) (0.08) (0.26) (0.16) (0.18)
- -------------------------------------------------------------------------------------------------------------------
1 Earnings/(loss) before interest, taxes,
depreciation and amortisation ("EBITDA")
- -------------------------------------------------------------------------------------------------------------------
Operating loss (42,403) (25,452) (36,421) (88,325) (53,016) (73,187)
Add: depreciation and amortisation
of goodwill 89,891 53,956 45,510 178,727 107,279 89,560
- -------------------------------------------------------------------------------------------------------------------
EBITDA 47,488 28,504 9,089 90,402 54,263 16,373
- -------------------------------------------------------------------------------------------------------------------
2 Operating costs and expenses
- -------------------------------------------------------------------------------------------------------------------
Programming (37,762) (22,666) (23,428) (79,840) (47,923) (46,626)
Telephony (28,512) (17,114) (13,061) (52,171) (31,315) (27,440)
Selling, general and administration (78,584) (47,169) (45,474) (153,898) (92,376) (91,003)
Depreciation (78,893) (47,355) (38,902) (156,736) (94,079) (76,358)
Amortisation of goodwill (10,997) (6,601) (6,608) (21,991) (13,200) (13,202)
- -------------------------------------------------------------------------------------------------------------------
(234,748) (140,905) (127,473) (464,636) (278,893) (254,629)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The consolidated financial statements as set out on pages 12 and 13 which are
unaudited, have been prepared on the basis of the accounting policies set out in
the Company's 1997 Annual Report. The balance sheet, profit and loss account and
cash flow information at 31 December 1997 is derived from the statutory accounts
for 1997 which have been delivered to the Registrar of Companies. The auditors
have reported on those accounts: their report was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985. The
economic environment in which the Company operates is the United Kingdom ("UK")
and hence its reporting currency is Pounds Sterling ("(pound)"). Merely for
convenience, the financial statements contain translations of certain Pounds
Sterling amounts into US Dollars at $1.666 per (pound)1.00, the 10.00am
mid-point of the buying and selling rates of the Federal Reserve Bank of New
York on June 30, 1998 (the Noon Buying Rate of the Federal Reserve Bank of New
York on such date was $1.6695 per (pound)1.00). The presentation of the US
Dollar amounts should not be construed as a representation that the Pounds
Sterling amounts could be so converted into US Dollars at the rate indicated or
at any other rate.
Page 16
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
<TABLE>
<CAPTION>
US GAAP Unaudited summarised consolidated balance sheets
30 June 30 June 31 December
1998 1998 1997
$000 (pound)000 (pound)000
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and cash equivalents 43,807 26,295 29,582
Receivables and prepaid expenses 135,744 81,479 70,459
Investments 125,072 75,073 85,373
Property and equipment 2,854,173 1,713,189 1,705,520
Goodwill 754,215 452,710 465,905
Other assets 73,049 43,847 56,513
- -------------------------------------------------------------------------------------------------
Total assets 3,986,060 2,392,593 2,413,352
- -------------------------------------------------------------------------------------------------
Liabilities
Debt 2,513,154 1,508,496 1,373,054
Other liabilities 482,689 289,729 300,908
- -------------------------------------------------------------------------------------------------
Total liabilities 2,995,843 1,798,225 1,673,962
Minority interests 1,180 708 640
Shareholders' equity 989,037 593,660 738,750
- -------------------------------------------------------------------------------------------------
Total liabilities and shareholders'
equity 3,986,060 2,392,593 2,413,352
- -------------------------------------------------------------------------------------------------
</TABLE>
Page 17
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
<TABLE>
<CAPTION>
US GAAP Unaudited summarised consolidated statements
of cash flows
6 months 6 months 6 months
ended ended ended
30 June 30 June 30 June
1998 1998 1997
$000 (pound)000 (pound)000
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss (241,720) (145,090) (166,785)
Adjustments to reconcile net loss to net cash used
in operating activities
Depreciation 156,736 94,079 76,358
Amortisation of goodwill 21,983 13,195 13,202
Amortisation of deferred financing costs and
issue discount on senior discount debentures 71,761 43,074 37,178
Unrealised loss on foreign currency translation 2,161 1,297 24,061
Share of losses of affiliates 18,448 11,073 10,323
Gain on disposals of assets (1,211) (727) (473)
Minority interests in profits of consolidated
subsidiaries, net 113 68 210
Changes in operating assets and liabilities
Change in receivables (8,963) (5,380) (117)
Change in prepaid expenses (3,430) (2,059) (1,089)
Change in accounts payable 18,356 11,018 (8,648)
Change in other liabilities (21,402) (12,845) (6,363)
Net cash provided by/(used) in operating activities 12,832 7,703 (22,143)
Net cash used in investing activities (182,709) (109,669) (215,695)
Net cash provided by financing activities 164,423 98,693 220,437
- ---------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (5,454) (3,273) (17,401)
Effect of exchange rate changes on cash and cash equivalents (23) (14) 17
Cash and cash equivalents at beginning of period 49,284 29,582 79,116
- ---------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period 43,807 26,295 61,732
- ---------------------------------------------------------------------------------------------------
</TABLE>
Page 18
<PAGE>
1998 Interim Report
TELEWEST COMMUNICATIONS
The contents of this Interim Report, for which the directors of Telewest are
solely responsible, have been approved by J. Henry Schroder & Co. Limited, a
member of The Securities and Futures Authority Limited, for the purposes of
Section 57 of the Financial Services Act 1986.
The Directors and the Proposed Directors of Telewest, whose names are set out on
page III-1 of the Offer Document dated June 29, 1998 accept responsibility for
the information contained in this Interim Report. To the best of the knowledge
and belief of the Directors and Proposed Directors of Telewest (who have taken
all reasonable care to ensure that such is the case), the information contained
in this Interim Report for which they accept responsibility is in accordance
with the facts and does not omit anything likely to affect the import of such
information.
Schroders, which is regulated in the UK by The Securities and Futures Authority
Limited, is acting for Telewest and no one else in connection with the offer by
Telewest for the entire issued share capital of General Cable PLC and will not
be responsible to anyone other than Telewest for providing the protections
afforded to customers of Schroders or for providing advice in relation to the
contents of this Interim Report.
Telewest Communications plc
Genesis Business Park
Albert Drive, Woking
Surrey GU21 5RW
United Kingdom
Telephone: 01483 750900
Facsimile: 01483 750901
E-mail: [email protected]
Homepage: http://www.telewest.co.uk
Registered in England 2983307
London Stock Exchange symbol: `TWT'
NASDAQ symbol: `TWSTY'
Page 19
Not for release, publication or distribution in or into Canada,
Australia or Japan.
Telewest Communications plc ("Telewest")
Agreement between Telewest, Comcast and NTL
Telewest announced today that it has entered into an agreement with Comcast UK
Cable Partners Limited ("Comcast") and NTL Incorporated ("NTL") relating to
Comcast's ownership interest in Birmingham Cable Corporation Limited
("Birmingham Cable") and Telewest's and Comcast's respective ownership interest
in Cable London plc ("Cable London") and other related matters.
Under the terms of the agreement, amongst other things:
* Telewest has agreed to acquire Comcast's 27.47% interest in Birmingham
Cable for (pound)125 million, plus (pound)5 million for certain
subordinated debt and fees owed to Comcast. Completion is expected to
occur by no later than 31 December 1998; and
* Telewest and Comcast have agreed within a certain timeframe to
rationalise their interests in Cable London. Consequently, by no later
than 30 September 1999, Comcast (or NTL following the amalgamation of
Comcast and NTL) will notify Telewest of a price at which Telewest, at
its option, will be required either to purchase Comcast's 50% interest
in Cable London or sell its 50% interest in Cable London to Comcast (or
NTL).
In addition, Telewest and General Cable PLC ("General Cable") have agreed that
Telewest will now acquire General Cable's 44.95% interest in Birmingham Cable
through its merger with General Cable rather than as a separate purchase of such
interest, as previously announced. On completion of these transactions, Telewest
will own over 99% of Birmingham Cable.
Birmingham Cable operates in the Birmingham and Solihull area of the United
Kingdom. As at 31 December 1997, Birmingham Cable had some 471,000 homes of
which approximately 95% had been built and passed. It had some 126,000 cable
television customers and some 117,000 cable telephony customers in its franchise
area. In the financial year ended 31 December 1997, it generated revenues of
approximately (pound)67 million, operating cash flow of approximately (pound)9
million and reported a consolidated loss on ordinary activities before taxation
of approximately (pound)30 million. As at 31 December 1997, Birmingham Cable had
consolidated net assets of approximately (pound)71 million.
Telewest currently intends to fund the acquisition of Comcast's interest in
Birmingham Cable through new borrowings.
<PAGE>
Commenting on these developments, Charles Burdick, Group Finance Director of
Telewest, said:
"This deal strengthens Telewest and resolves the various ownership
issues associated with Birmingham Cable and Cable London. Birmingham
Cable's operations are contiguous with our Midlands franchises and
together they will represent one of the largest clusters of cable
franchises in the United Kingdom with almost one million homes. This
will enable enhanced economics to be realised as we develop and deliver
voice, video and data products to our customers."
17 August 1998
- --------------------------------------------------------------------------------
Press enquiries
Telewest 01483 750900
Charles Burdick
Dewe Rogerson 0171 638 9571
Anthony Carlisle
Not for release, publication or distribution in or into Canada,
Australia or Japan.
Telewest Communications plc ("Telewest")
Telewest names Illsley as new Chief Executive
Telewest today announced the appointment of Tony Illsley as its new Chief
Executive. Illsley will be formally appointed to the board and take up his
appointment in the autumn.
Illsley, 42, has been with PepsiCo, Inc. since 1984 and has been President of
Walkers Snack Foods Limited since 1995. Walkers Snack Foods is one of PepsiCo's
leading business units with a turnover of more than (pound)500 million and
employing approximately 4,000 people.
Gary Ames, Chairman of Telewest, said:
"We are delighted to welcome Tony Illsley to Telewest. He has a strong
record in marketing and leadership and joins Telewest at a time when
our proposed merger with General Cable PLC will create one of the
largest UK cable companies. We look forward to Tony building on our
company's momentum and establishing Telewest as the leader in broadband
video, voice and data."
Tony Illsley, Chief Executive designate of Telewest, said:
"I look forward to joining Telewest. It is now well past the major
build phase and has enormous potential as it develops its product and
service range and deploys customer focussed marketing and
communications. The forthcoming digital launch will only expand this
potential."
17 August 1998
- --------------------------------------------------------------------------------
Press enquiries
Telewest 01483 750900
David Van Valkenburg, interim Chief Executive
Ian Hood, Director of Communications
Dewe Rogerson 0171 638 9571
Anthony Carlisle
<PAGE>
Notes to editors
Tony Illsley
Prior to his current role, Illsley was President of Pepsi-Cola Asia Pacific,
responsible for the company's operations in the region and for developing and
executing their expansion strategy for China. Before this, Illsley spent five
years as Pepsi-Cola's President in Japan restructuring the company's operations
in this market and improving the company's market share and profitability. From
1984 to 1988 he held leadership roles in the group's European soft drinks
operations culminating in responsibility for the then 7-UP European Division
with general management responsibility for ten countries.
Before joining PepsiCo, Illsley worked for five years at Colgate Palmolive in
the United Kingdom, holding various senior marketing roles for key brands. He
was born in Newark, Nottinghamshire, is a business administration graduate of
Bath University and is married with two children.
Telewest
Telewest is a leading provider of cable television and residential and business
cable telephony services in the UK. Telewest owns and operates 28 cable
franchises and has minority equity interests in a number of affiliated companies
which own and operate nine affiliated franchises. As at 30 June 1998, these
owned and operated and affiliated franchises covered approximately 27% of the
homes in the United Kingdom in areas for which cable franchises have been
awarded. At that date, these franchises together included approximately 5.2
million homes and approximately 344,500 businesses, of which approximately 4.4
million and approximately 290,000 were the Telewest Group's equity homes and
equity businesses, respectively. As at 30 June 1998, the network in those
franchises had passed approximately 3.4 million of the Telewest Group's equity
homes (approximately 3.2 million of which had been passed and marketed) and the
Telewest Group had approximately 725,500 equity cable television customers,
988,500 equity residential telephone lines and 134,900 equity business telephone
lines.
On 15 April 1998, Telewest and General Cable PLC announced the terms of a
proposed merger. The enlarged group's owned and operated and affiliated
franchises will cover approximately 32% of the homes in the United Kingdom in
areas for which cable franchises have been awarded.
Not for release, publication or distribution in or into Canada,
Australia or Japan.
TELEWEST COMMUNICATIONS PLC ("TELEWEST")
ACCEPTANCE LEVELS AND CLOSING DATE FOR TELEWEST'S RECOMMENDED OFFER
FOR GENERAL CABLE PLC ("GENERAL CABLE") AND TELEWEST'S PRE-EMPTIVE ISSUE
In connection with its offer for General Cable, Telewest announces the following
matters.
OFFER FOR GENERAL CABLE
1. As at 3.00 p.m. (London time) on 18 August 1998, valid acceptances of
Telewest's recommended offer for General Cable (the "Offer") had been
received in respect of 230,488,876 General Cable shares (representing
approximately 63 per cent. of General Cable's issued share capital).
2. As contemplated in its press release dated 4 August 1998, Telewest
reserves the right to reduce the percentage threshold in condition 1 of
the Offer (set out in Part A of Appendix I of the Offer Document) (the
"Acceptance Condition") from 90% to 75%.
3. Telewest intends to implement such reduction on 28 August 1998 and to
declare the Offer unconditional in all respects on that day, or as soon
as possible thereafter, once:
(a) valid acceptances of the Offer have been received (and not,
where permitted, withdrawn) in respect of 75% or more of
General Cable shares (including General Cable shares
represented by General Cable ADSs) to which the Offer relates;
and
(b) all the remaining conditions of the Offer have been and remain
fulfilled or there are, at that date, no circumstances
indicating that any such conditions may not be capable of
fulfilment.
4. When the Offer is declared unconditional, holders of General Cable
shares (including General Cable shares represented by General Cable
ADSs) will no longer have withdrawal rights under the Offer. Holders of
General Cable shares who do not want to accept the Offer if the
Acceptance Condition is reduced from the 90% level should either not
accept the Offer until after 28 August or withdraw their acceptances
prior to 28 August 1998.
5. The mix and match election under the Offer will remain open for five
days following the date the Offer is declared unconditional. All
holders of General Cable securities accepting the Offer after the mix
and match election terminates will receive the basic terms of the
Offer.
6. On 23 February 1998, the date when General Cable announced that it had
received indications that certain of the discussions which it was
having with third parties might lead to an offer, Telewest held no
General Cable shares or rights over General Cable shares.
7. On 29 March 1998, the date when Telewest and General Cable announced
that merger discussions were at an advanced stage which might result in
a recommended offer being made by Telewest for General Cable and the
<PAGE>
likely terms thereof, General Utilities Holding Limited ("GUHL"), a
subsidiary of Compagnie Generale des Eaux S.A. (now Vivendi S.A.),
irrevocably undertook to accept such an offer, if made, in respect of
its holding of 146,785,916 General Cable shares (representing 40.2 per
cent. of General Cable's then issued share capital), if Telewest
announced a firm intention to make such an offer on or before 15 April
1998. On 15 April 1998, Telewest announced the terms of the Offer
(subject to certain pre-conditions which have been waived or satisfied)
and GUHL confirmed its previous undertaking to accept the Offer.
Acceptances in respect of these shares have now been received and are
included in the acceptance figures given above.
PRE-EMPTIVE ISSUE
1. The latest time and date for acceptance and payment under the
Pre-emptive Issue is 3.00 p.m. (London time) on 28 August 1998.
Telewest does not presently intend to extend the Pre-emptive Issue
beyond 28 August. Any announcement of an extension will be made by 5
p.m. (London time) on 21 August 1998.
2. Consequently, at present, the latest time and date for the splitting of
the Application Forms under the Pre-emptive Issue is 3.00 p.m. (London
time) on 26 August 1998.
3. Pending fulfilment of the conditions of the Pre-emptive Issue
(including the Offer becoming unconditional in all respects and
Admission (as defined in the Pre-emptive Issue Circular dated 29 June
1998)), application monies will be kept in a separate bank account and
any interest earned on such monies will be retained for the benefit of
Telewest.
4. If the conditions of the Pre-emptive Issue are not fulfilled by 18
September (or such later date as Telewest and Schroders may agree), the
Pre-emptive Issue will lapse and all application monies will be
returned to applicants.
19 August 1998
- --------------------------------------------------------------------------------
PRESS ENQUIRIES
TELEWEST 01483 750900
Charles Burdick
J. HENRY SCHRODER & CO. LIMITED ("SCHRODERS") 0171 658 6000
James Steel
Schroders, which is regulated in the UK by The Securities and Futures Authority
Limited, is acting for Telewest and no one else in connection with the Offer and
the Pre-emptive issue and will not be responsible to anyone other than Telewest
for providing the protections afforded to customers of Schroders or for giving
advice in relation to the Offer and the Pre-emptive issue.
