<PAGE> 1
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As filed with the Securities and Exchange Commission on June 1, 1994
REGISTRATION NO. 33-53157
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
____________________
TELE-COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Delaware 4841 84-0588868
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) (Primary Standard Industrial Classification Code Number) Identification No.)
</TABLE>
5619 DTC Parkway
Englewood, Colorado 80111-3000
(303) 267-5500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
____________________
Stephen M. Brett, Esq.
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
(303) 267-5500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
____________________
Copy to:
Elizabeth M. Markowski, Esq.
Baker & Botts, L.L.P.
885 Third Avenue
New York, New York 10022-4834
(212) 705-5000
____________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this registration statement becomes
effective.
If any of the securities being registered on this Form are being
offered in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box: / /
____________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
TELE-COMMUNICATIONS, INC.,
Cross Reference Sheet Between Items in Form S-4 and Prospectus
Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Item No. Form S-4 Caption Heading in Prospectus
-------- ---------------- ---------------------
<S> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION
Item 1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus . . . . . . . . Outside Front Cover Page
Item 2. Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . . . . . . . Inside Front Cover Page; Available Information;
Incorporation of Certain Documents by Reference
Item 3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information . . . . . . . . Summary; Certain Considerations; The Company
Item 4. Terms of the Transaction . . . . . . . . . . . The Exchange Offer; Certain Federal Income Tax
Considerations; Description of New Notes; Comparison of
Existing Notes and New Notes
Item 5. Pro Forma Financial Information . . . . . . . . Incorporation of Certain Documents by Reference
Item 6. Material Contacts with the Company Being
Acquired . . . . . . . . . . . . . . . . . . . *
Item 7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters . . . . . . . . . . . *
Item 8. Interests of Named Experts and Counsel . . . . Legal Matters; Experts
Item 9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . . . . . . . *
B. INFORMATION ABOUT THE REGISTRANT
Item 10. Information with Respect to S-3
Registrants . . . . . . . . . . . . . . . . . . Recent Developments
Item 11. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference
Item 12. Information with Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . . . . . *
Item 13. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . *
Item 14. Information with Respect to Registrants
Other than S-3 or S-2 Registrants . . . . . . . *
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
Item 15. Information with Respect to S-3
Companies . . . . . . . . . . . . . . . . . . . *
Item 16. Information with Respect to S-3 or S-2
Companies . . . . . . . . . . . . . . . . . . . *
Item 17. Information with Respect to Companies
Other than S-3 or S-2 Companies . . . . . . . . *
D. VOTING AND MANAGEMENT INFORMATION
Item 18. Information if Proxies, Consents or
Authorizations are to be Solicited . . . . . . *
Item 19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer . . . . . . . . . . . . . *
</TABLE>
__________________
* Omitted because inapplicable or answer is in the negative.
<PAGE> 3
PROSPECTUS
TELE-COMMUNICATIONS, INC.
OFFER TO EXCHANGE ITS 9.55% SENIOR NOTES, SERIES A, DUE DECEMBER 15, 2001,
8.67% SENIOR NOTES, SERIES B, DUE AUGUST 31, 2002, 8.85%
SENIOR NOTES, SERIES C, DUE AUGUST 31, 2002, 9.82% SENIOR NOTES, SERIES D, DUE
SEPTEMBER 30, 1997 AND 10.25% SENIOR NOTES, SERIES E,
DUE SEPTEMBER 30, 2000 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 FOR ANY AND ALL OF ITS OUTSTANDING 9.55% SENIOR
NOTES, SERIES A, DUE DECEMBER 15, 2001, 8.67% SENIOR NOTES, SERIES B, DUE
AUGUST 31, 2002, 8.85%, SENIOR NOTES, SERIES C, DUE
AUGUST 31, 2002, 9.82% SENIOR NOTES, SERIES D, DUE SEPTEMBER 30, 1997 AND
10.25% SENIOR NOTES, SERIES E, DUE SEPTEMBER 30, 2000
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON JUNE 28, 1994, UNLESS EXTENDED
Tele-Communications, Inc., a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the related Letter of Transmittal (the "Letter of Transmittal")
(which together constitute the "Exchange Offer"), to exchange up to $5,000,000
aggregate principal amount of 9.55% Senior Notes, Series A, due December 15,
2001 ("New Series A Notes"), up to $26,500,000 aggregate principal amount of
8.67% Senior Notes, Series B, due August 31, 2002 ("New Series B Notes"), up to
$36,000,000 aggregate principal amount of 8.85% Senior Notes, Series C, due
August 31, 2002 ("New Series C Notes"), up to $32,000,000 aggregate principal
amount of 9.82% Senior Notes, Series D, due September 30, 1997 ("New Series D
Notes") and up to $20,000,000 aggregate principal amount of 10.25% Senior
Notes, Series E, due September 30, 2000 ("New Series E Notes", and together
with the New Series A Notes, the New Series B Notes, the New Series C Notes and
the New Series D Notes, the "New Notes") of the Company for a like principal
amount of the Company's issued and outstanding 9.55% Senior Notes, Series A,
due December 15, 2001 ("Existing Series A Notes"), 8.67% Senior Notes, Series
B, due August 31, 2002 ("Existing Series B Notes"), 8.85% Senior Notes, Series
C, due August 31, 2002 ("Existing Series C Notes"), 9.82% Senior Notes, Series
D, due September 30, 1997 ("Existing Series D Notes") and 10.25% Senior Notes,
Series E, due September 30, 2000 ("Existing Series E Notes", and together with
the Existing Series A Notes, the Existing Series B Notes, the Existing Series C
Notes and the Existing Series D Notes, the "Existing Notes"), respectively,
with the holders thereof. The terms of each series of New Notes are
substantially identical to the terms of the corresponding series of the
Existing Notes to be exchanged therefor, except as described herein. See
"Description of the New Notes" and "Comparison of Existing Notes and New
Notes".
(Continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________
The date of this Prospectus is June 1, 1994.
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(Continued from previous page)
The Existing Notes were issued pursuant to a Note Exchange Agreement,
dated as of July 1, 1993, as amended, between the Company and certain
institutional investors (the "Note Exchange Agreement"), in a transaction not
registered under the Securities Act of 1933 (the "Securities Act"), in reliance
upon the exemption provided in Section 4(2) of the Securities Act.
Accordingly, the Existing Notes may not be reoffered, resold or otherwise
pledged, hypothecated or transferred in the United States unless so registered
or unless an applicable exemption from the registration requirements of the
Securities Act is available. The New Notes issued pursuant to the Exchange
Offer may be offered for resale, resold and otherwise transferred by holders
thereof (other than any such holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities Act
provided that such New Notes are acquired in the ordinary course of such
holder's business and such holder is not participating, and has no arrangement
with any person to participate, in the distribution of such New Notes. By
tendering Existing Notes and executing the Letter of Transmittal, the holder
thereof is representing to the Company that such conditions have been met. The
Company has not entered into any arrangement or understanding with any person
to distribute the New Notes and to the best of the Company's information and
belief, each person participating in the Exchange Offer is acquiring the New
Notes in the ordinary course of its business and has no arrangement or
understanding with any person to participate in the distribution of the New
Notes to be received in the Exchange Offer.
UNDER NO CIRCUMSTANCES MAY THIS PROSPECTUS BE USED FOR AN OFFER TO
RESELL, RESALE OR OTHER RETRANSFER OF NEW NOTES.
Holders of Existing Notes whose Existing Notes are not tendered and
accepted in the Exchange Offer will continue to hold such Existing Notes and
will be entitled to all the rights and preferences and will be subject to the
limitations applicable thereto under the Note Exchange Agreement, except for
any such rights or limitations which, by their terms, terminate or cease to be
effective as a result of the Exchange Offer. See "Comparison of Existing Notes
and New Notes -- Payment Provisions -- Repurchases". Such Existing Notes will
not be entitled to the benefits of the provisions of the Note Exchange
Agreement relating to the contingent increase in the interest rate applicable
to the Existing Notes if the Exchange Offer is not consummated by a specified
date and no Contingent Interest (as defined herein) will accrue or be payable
with respect to such Existing Notes. Following consummation of the Exchange
Offer, the holders of Existing Notes will continue to be subject to the
existing restrictions upon transfer thereof and the Company will have no
obligation to such holders to provide for registration under the Securities Act
of the Existing Notes held by them or to make an exchange offer of registered
securities for such Existing Notes. See "Certain Considerations --
Restrictions on Transfer; Consequences of Failure to Exchange" and "The
Exchange Offer -- Purpose of the Exchange Offer; Contingent Interest".
________________________
The Company will accept for exchange any and all Existing Notes that
are validly tendered on or prior to 12:00 midnight, New York City time, on the
date the Exchange Offer expires, which will be June 28, 1994, unless the
Exchange Offer is extended (the "Expiration Date"). Tenders of Existing Notes
may be withdrawn at any time prior to the Expiration Date. The Exchange Offer
is not conditioned upon any minimum principal amount of Existing Notes being
tendered for exchange, but is subject to certain conditions which may be waived
by the Company. Existing Notes may be tendered, and New Notes will be issued,
only in denominations of $100,000 and integral multiples thereof. Any Existing
Notes not accepted for exchange for any reason will be returned without expense
to the tendering holders thereof as promptly as practicable after the
expiration or termination of the Exchange Offer. The Company will pay all the
expenses incurred by it incident to the Exchange Offer. See "The Exchange
Offer". (Continued on next page)
2
<PAGE> 5
(Continued from previous page)
Holders whose Existing Notes are tendered and accepted for exchange
will not receive accrued interest (other than Contingent Interest) thereon on
the date of exchange. Instead, interest (other than Contingent Interest)
accruing from June 15, 1994 through the Expiration Date on Existing Series
A Notes accepted for exchange will be payable on the New Series A Notes issued
in exchange therefor on December 15, 1994, interest (other than Contingent
Interest) accruing from January 31, 1994 through the Expiration Date on
Existing Series B Notes and Existing Series C Notes accepted for exchange will
be payable on the New Series B Notes and the New Series C Notes, respectively,
issued in exchange therefor on July 31, 1994, and interest (other than
Contingent Interest) accruing from March 30, 1994 through the Expiration Date
on Existing Series D Notes and Existing Series E Notes accepted for exchange
will be payable on the New Series D Notes and the New Series E Notes,
respectively, issued in exchange therefor on September 30, 1994. The amount of
Contingent Interest that has accrued on Existing Notes accepted for exchange
will be payable to the tendering holders on the Issue Date (as defined herein)
of the New Notes issued in exchange thereof. See "The Exchange Offer --
Acceptance of Tenders" and "Description of the New Notes -- Interest".
No assurance can be given that an active public or private market for
the New Notes will develop. The Company does not intend to list the New Notes
on a national securities exchange or to apply for quotation of the New Notes on
The Nasdaq Stock Market. To the extent the Existing Notes are tendered and
accepted in the Exchange Offer, the trading market, if any exists or develops,
for untendered and tendered but unaccepted Existing Notes could be adversely
affected.
THE COMPANY HAS NO SIGNIFICANT AMOUNT OF INDEBTEDNESS OUTSTANDING TO WHICH
THE EXISTING NOTES ARE, OR THE NEW NOTES WILL BE, SENIOR IN RIGHT OF PAYMENT
AND DOES NOT HAVE ANY CURRENT FIRM ARRANGEMENTS TO ISSUE ANY SIGNIFICANT
INDEBTEDNESS TO WHICH THE EXISTING NOTES OR NEW NOTES WOULD BE SENIOR IN RIGHT
OF PAYMENT. SEE "SUMMARY -- THE NEW NOTES -- RANKING." A SUBSTANTIAL PORTION
OF THE CONSOLIDATED LIABILITIES OF THE COMPANY HAVE BEEN INCURRED BY ITS
SUBSIDIARIES AND THE RIGHTS OF THE HOLDERS OF EXISTING NOTES AND NEW NOTES TO
PARTICIPATE IN THE DISTRIBUTION OF ANY ASSETS OF ANY SUBSIDIARY UPON ITS
LIQUIDATION OR REORGANIZATION WILL BE EFFECTIVELY SUBORDINATE TO THE RIGHTS OF
THE CREDITORS OF SUCH SUBSIDIARY. AT MARCH 31, 1994, THE AGGREGATE AMOUNT OF
THE OUTSTANDING DEBT OF THE COMPANY'S CONSOLIDATED SUBSIDIARIES WAS
APPROXIMATELY $4.91 BILLION (INCLUDING GUARANTIES OF INDEBTEDNESS OF OTHERS AND
THE UNACCRETED PORTION OF INDEBTEDNESS ISSUED AT A DISCOUNT, BUT EXCLUDING
INDEBTEDNESS OWED TO THE COMPANY). AT THAT DATE, THE COMPANY'S CONSOLIDATED
SUBSIDIARIES HAD AN AGGREGATE OF APPROXIMATELY $1.374 BILLION IN UNDRAWN LINES
OF CREDIT. SEE "DESCRIPTION OF NEW NOTES -- GENERAL."
3
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AVAILABLE INFORMATION
The Company has filed with the Commission a registration statement on
Form S-4 (together with all amendments, exhibits and schedules, referred to as
the "Registration Statement") under the Securities Act with respect to the New
Notes offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is made to the Registration Statement. Statements made
in this Prospectus as to the contents of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such
reference. The Registration Statement may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Seven World Trade Center, New
York, New York 10048 and at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports and other information with the Commission. Reports, proxy statements
and other information filed by the Company may be inspected and copied as
provided above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference: (i)
the Company's Annual Report on Form 10-K for the year ended December 31, 1993,
as amended by Form 10-K/A (Amendment No. 1) (ii) the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994, as amended by Form
10-Q/A (Amendment No. 1) and (iii) the Company's Current Reports on Form 8-K
dated February 15, 1994, February 25, 1994 and April 6, 1994. All documents
filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date hereof and prior to the termination
of the offering made hereby shall be deemed to be incorporated herein by
reference and to be a part hereof from the respective dates of the filing of
such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN CERTAIN
EXHIBITS TO SUCH DOCUMENTS) ARE AVAILABLE FROM THE COMPANY WITHOUT CHARGE UPON
WRITTEN OR ORAL REQUEST ADDRESSED TO STEPHEN M. BRETT, ESQ., SENIOR VICE
PRESIDENT, TELE-COMMUNICATIONS, INC., TERRACE TOWER II, 5619 DTC PARKWAY,
ENGLEWOOD, COLORADO 80111-3000; TELEPHONE (303) 267-5500. IN ORDER TO ENSURE
TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
JUNE 21, 1994.
4
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SUMMARY
The following summary information is qualified in its entirety by the
more detailed information, financial statements and pro forma financial
information appearing elsewhere in this Prospectus or incorporated by reference
herein.
THE EXCHANGE OFFER
Background . . . . . . . . In 1990, 1991 and 1992, two indirect
wholly-owned subsidiaries of the Company
issued several series of non-convertible notes
(the "Subsidiary Notes") to various
institutional investors pursuant to three
separate note purchase agreements. To reduce
the amount of outstanding indebtedness of
these subsidiaries, the Company entered into
the Note Exchange Agreement with certain of
the holders of Subsidiary Notes, providing
for the exchange (the "Initial Exchange") of
the Subsidiary Notes held by them for newly
issued Existing Notes with substantially
identical financial terms to the Subsidiary
Notes and containing substantially similar
covenants to the covenants made by the
issuers of the Subsidiary Notes. In order
to encourage holders of Subsidiary Notes to
participate in the Initial Exchange, the
Company stated in the Note Exchange Agreement
its intention to make the Exchange Offer to
holders of Existing Notes. See "The Exchange
Offer -- Purpose of the Exchange Offer;
Contingent Interest."
Securities Offered . . . . $5,000,000 aggregate principal amount of New
Series A Notes, $26,500,000 aggregate
principal amount of New Series B Notes,
$36,000,000 aggregate principal amount of
New Series C Notes, $32,000,000 aggregate
principal amount of New Series D Notes and
$20,000,000 aggregate principal amount of New
Series E Notes. The New Notes will be issued
under the Indenture, dated as of April 15,
1994 (the "Indenture"), between the Company
and The Bank of New York, as trustee (the
"Trustee").
The terms of each series of New Notes are
substantially identical to the terms of the
corresponding series of Existing Notes that
are to be exchanged therefor, except as
described under "Comparison of Existing
Notes and New Notes" and except that the
New Notes have been registered under the
Securities Act.
The Exchange Offer . . . . Each series of New Notes is being offered in
exchange for a like principal amount of the
corresponding series of Existing Notes. The
Existing Notes may be exchanged only in
integral multiples of $100,000. The Company
is making the Exchange Offer in order to
provide holders of Existing Notes with freely
transferable securities (except as provided
herein) and to avoid the increase in interest
rates provided for pursuant to the Note
Exchange Agreement if the Exchange Offer is
not made. See "The Exchange Offer -- Purpose
of the Exchange Offer; Contingent Interest".
For a description of the
5
<PAGE> 8
procedures for tendering, see "The Exchange
Offer -- Procedures for Tendering Existing
Notes."
Resale . . . . . . . . . The New Notes issued pursuant to the Exchange
Offer in exchange for Existing Notes may be
offered for resale, resold and otherwise
transferred by holders thereof (other than
any such holder that is an "affiliate" of
the Company within the meaning of Rule 405
under the Securities Act) without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided
that such New Notes are acquired in the
ordinary course of such holder's business and
such holder has no arrangement with any person
to participate in the distribution of such New
Notes.
If any person were to be participating
in the Exchange Offer for the purpose of
distributing securities in a manner not
permitted by the preceding paragraph, such
person must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with a secondary
resale transaction. See "The Exchange Offer
-- Purpose of the Exchange Offer; Contingent
Interest".
Expiration Date; Withdrawal . . The Exchange Offer will expire at 12:00
midnight, New York City time, on June 28,
1994, unless the Exchange Offer is extended,
in which case the term "Expiration Date"
means the latest date and time to which the
Exchange Offer is extended. Existing Notes
tendered pursuant to the Exchange Offer may
be withdrawn at any time prior to the
Expiration Date. Any Existing Notes not
accepted for exchange for any reason will be
returned without expense to the tendering
holders thereof as promptly as practicable
after the expiration or termination of the
Exchange Offer.
Conditions to the
Exchange Offer . . . . . . The Exchange Offer is subject to certain
conditions. See "The Exchange Offer --
Certain Conditions to the Exchange Offer".
The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Existing
Notes being tendered for exchange.
No Federal or state regulatory
requirements must be complied with or
approvals obtained in connection with the
Exchange Offer, other than applicable
requirements under Federal and state
securities laws.
Certain Federal Income
Tax Considerations.. . . . . Generally, for Federal income tax purposes,
holders of Existing Notes should not
recognize any taxable gain or loss as a result
of the exchange of their Existing Notes for
New Notes. See "Certain Federal Income Tax
Considerations".
Untendered Existing Notes . . Holders of Existing Notes who do not tender
their Existing Notes in the Exchange Offer or
whose Notes are not accepted for exchange will
continue to hold such Existing Notes and will
be entitled to all the rights and preferences
and will be subject to the limitations
applicable thereto under the Note Exchange
Agreement, except for any such rights or
limitations which, by their terms, terminate
or cease to be
6
<PAGE> 9
effective as a result of the Exchange Offer.
See "Comparison of Existing Notes and New
Notes -- Payment Provisions -- Repurchases".
If the Exchange Offer is consummated, such
Existing Notes will not be entitled to the
benefits of the provisions of the Note
Exchange Agreement relating to the contingent
increase in the interest rate applicable to
the Existing Notes if the Exchange Offer is
not consummated by a specified date; no
Contingent Interest will accrue or be payable
with respect to such Existing Notes and the
holders thereof will not have any right
to require the Company to register the
Existing Notes or to make an exchange offer of
registered securities for such Existing Notes.
All untendered and tendered but unaccepted
Existing Notes will continue to be subject to
the existing restrictions on transfer
thereof. To the extent that Existing Notes
are tendered and accepted in the Exchange
Offer, the trading market, if any exists or
develops, for untendered and tendered but
unaccepted Existing Notes could be adversely
affected. See "Certain Considerations --
Restrictions on Transfer; Consequences of
Failure to Exchange".
Contingent Interest . . . . Pursuant to the Note Exchange Agreement,
because the Issue Date (as defined below)
of the New Notes had not occurred by the
close of business on December 31, 1993, the
rate per annum at which interest accrues
on each Existing Note increased, contingently,
by 0.2% effective January 1, 1994 (the
"Interest Rate Adjustment") and the
incremental interest that accrues as a result
of such adjustment (the "Contingent Interest")
will be payable on the earlier of the Issue
Date or June 30, 1994, and thereafter (if
applicable) on the regular interest payment
date for such Existing Note; provided that
such Interest Rate Adjustment, and the accrual
and payment of the Contingent Interest that
would otherwise result therefrom, are
contingent upon the tender and acceptance for
exchange of such Existing Note if the Issue
Date occurs prior to June 30, 1994. The
interest rate on the Existing Notes will be
restored to the initial rate on the Issue
Date, if the same occurs prior to June 30,
1994, and the amount of Contingent Interest
that accrued from January 1, 1994 to and
including the Issue Date on those Existing
Notes that have been tendered and accepted for
exchange will be payable to the tendering
holders on the Issue Date. If the Issue Date
has not occurred prior to June 30, 1994, the
Exchange Offer will be withdrawn, the Interest
Rate Adjustment will become permanent and the
payment of the Contingent Interest will cease
to be subject to any contingencies. The Issue
Date is defined as (i) the day immediately
following the Expiration Date unless the New
Notes required to be issued in exchange for
tendered and accepted Existing Notes have
not been authenticated by the Trustee within
three Business Days after the Expiration Date
or (ii) if later, the date such New Notes are
actually authenticated by the Trustee.
Exchange Agent . . . . . . The Bank of New York, the Trustee under the
Indenture, is serving as exchange agent
(the "Exchange Agent") in connection with the
Exchange Offer. The mailing address of the
Exchange Agent is: The Bank of New York, 101
Barclay Street (7 East), Reorganization
7
<PAGE> 10
Section, New York, New York 10286, Attention:
Enrique Lopez. Hand deliveries and deliveries
by overnight courier should be addressed to
The Bank of New York, 101 Barclay Street,
lobby level, Corporate Trust Services Window,
New York, New York 10286, Attention: Enrique
Lopez. For information with respect to the
Exchange Offer, the telephone number for the
Exchange Agent is (212) 815-2742 and the
facsimile number for the Exchange Agent is
(212) 571-3080.
THE NEW NOTES
Stated Maturity Dates . . . New Series A Notes: December 15, 2001
New Series B Notes: August 31, 2002
New Series C Notes: August 31, 2002
New Series D Notes: September 30, 1997
New Series E Notes: September 30, 2000
Interest Payment Dates . . New Series A Notes: June 15 and December 15
New Series B Notes: January 31 and July 31
New Series C Notes: January 31 and July 31
New Series D Notes: March 30 and September 30
New Series E Notes: March 30 and September 30
Holders whose Existing Notes are tendered
and accepted for exchange will not receive
accrued interest (other than Contingent
Interest) thereon on the date of exchange.
Instead, interest (other than Contingent
Interest) accruing from June 15, 1994
through the Expiration Date on Existing Series
A Notes accepted for exchange will be payable
on the New Series A Notes issued in exchange
therefor on December 15, 1994, interest
(other than Contingent Interest) accruing from
January 31, 1994 through the Expiration Date
on Existing Series B Notes and Existing Series
C Notes accepted for exchange will be payable
on the New Series B and New Series C Notes,
respectively, issued in exchange therefor on
July 31, 1994, and interest (other than
Contingent Interest) accruing from March 30,
1994 through the Expiration Date on the
Existing Series D Notes and Existing Series E
Notes accepted for exchange will be payable on
the New Series D Notes and New Series E Notes,
respectively, issued in exchange therefor on
September 30, 1994. See "Description of the
New Notes -- Interest".
Minimum Denominations . . . $100,000 and integral multiples of $100,000
in excess thereof.
Ranking . . . . . . . . . . The New Notes are general unsecured
obligations of the Company and will rank on
a parity in right of payment to all existing
and future unsecured and unsubordinated
indebtedness of the Company. At March 31,
1994, the Company (which, for this purpose,
does not
8
<PAGE> 11
include any of its subsidiaries) had an
aggregate of approximately $5.49 billion of
debt outstanding (including the Existing Notes
and guarantees of indebtedness of others, but
excluding indebtedness to subsidiaries),
substantially all of which would rank on a
parity in right of payment with the New
Notes. At that date, the Company (which,
for this purpose, does not include any of its
subsidiaries) also had an aggregate of
approximately $560 million in undrawn lines of
credit. See "Description of New Notes --
General".
Principal Installments . . The principal amount of the New Notes of
each series is payable, without premium,
in consecutive annual installments (each a
"Principal Installment") in the amounts per
$100,000 in Original Principal Amount of each
New Note of the applicable series and on the
dates indicated below. In the event of any
optional prepayment in part of a New Note,
however, the amount of principal so prepaid
per $100,000 in Original Principal Amount of
such Note will be applied to reduce pro rata
the amount of each Principal Installment
thereafter due and payable with respect to
such Note. See "Description of New Notes --
Principal Installments".
New Series A Notes: Principal
Installments of $20,000 are payable on
December 15, 1997, 1998, 1999 and 2000, with
the remaining balance payable on the Stated
Maturity Date.
New Series B Notes: Principal
Installments of $16,667 are payable on July
31, 1997, 1998, 1999, 2000 and 2001, with the
remaining balance payable on the Stated
Maturity Date.
New Series C Notes: Principal
Installments of $25,000 are payable on July
31, 1999, 2000 and 2001, with the remaining
balance payable on the Stated Maturity Date.
New Series D Notes: Principal
Installments of $25,000 are payable on
September 30, 1994, 1995 and 1996, with the
remaining balance payable on the Stated
Maturity Date.
New Series E Notes: Principal
Installments of $10,000, $12,500, $12,500,
$20,000 and $20,000 are payable on September
30, 1995, 1996, 1997, 1998 and 1999,
respectively, with the remaining balance
payable on the Stated Maturity Date.
Optional Prepayment . . . . The New Notes of each series are subject to
prepayment at the option of the Company, in
whole at any time or in part from time to
time, at the prepayment prices and on the
terms and conditions described under
"Description of New Notes -- Optional
Prepayment".
Optional Redemption of
Non-Consenting Notes . . . . If the Company has requested in writing the
consent of the holders of the outstanding New
Notes to a Prohibited Act or if at any time on
or after December 1, 1999, the Company has
requested in writing the
9
<PAGE> 12
consent of the holders of the outstanding
New Notes to Increased Debt Capacity and, in
either case, the Company has not received the
consent thereto of a Majority-in-Interest of
Holders of the New Notes within 30 days
thereafter, the Company at its option may
redeem all but not less than all of the Non-
Consenting Notes at the redemption prices and
on the terms and conditions described under
"Description of New Notes -- Optional
Redemption". See "Description of New Notes --
Certain Definitions".
Change of Control . . . . . With respect to the New Notes of each series,
if a Put Event occurs at any time after the
date on which New Notes of such series are
first issued and on or prior to the Stated
Maturity Date of the New Notes of such series,
each holder will have the right, as provided
in and subject to the terms of the Indenture,
at such holder's option to require the Company
to purchase all or any portion (such portion
to be $100,000 in Original Principal Amount or
an integral multiple thereof) of such holder's
New Notes of such series at a purchase price
equal to 100% of the unpaid principal amount
of such New Note (or such portion), plus
accrued and unpaid interest thereon to the
date of repurchase. See "Description of New
Notes -- Change of Control".
Certain Additional
Covenants . . . . . . . . The Indenture contains certain additional
covenants which, among other things, impose
certain restrictions on the ability of the
Company or any Restricted Subsidiary to (i)
pay or declare dividends, repurchase stock or
make certain other payments, (ii) make certain
loans or investments or provide certain
guarantees, (iii) create certain liens, (iv)
incur certain additional Indebtedness, (v)
repay certain Indebtedness owed to
Unrestricted Subsidiaries, (vi) merge or
consolidate with, or acquire the stock or
assets of, any person, (vii) sell assets or
notes or accounts receivable, (viii) sell
stock or Indebtedness of a Restricted
Subsidiary, (ix) take or permit to be taken
certain actions involving employee benefit
plans which are covered by ERISA, and (x)
engage in certain transactions with
affiliates. The Indenture also contains
covenants which require the Company to
maintain Annualized Cash Flow at not less than
110% of Consolidated Debt Service, prohibit
the Company from deriving less than 80% of its
Gross Revenues from sources other than the
CATV Business and impose certain requirements
if the Company is included in a consolidated
income tax return with any person other than a
subsidiary. Each of the foregoing covenants
are subject to certain exceptions. See
"Description of New Notes -- Certain
Covenants" and "-- Certain Definitions".
Events of Default . . . . . See "Description of New Notes -- Defaults
and Remedies".
10
<PAGE> 13
THE COMPANY
The Company or its predecessor companies have been principally engaged in
the acquisition, development and operation of cable television systems since
the early 1950's. The Company believes that, measured by the number of basic
subscribers, it is the largest provider of basic cable television services in
the United States. At December 31, 1993, the Company, through its subsidiaries
and affiliates, operated cable television systems throughout the continental
United States and Hawaii. Through certain joint ventures, the Company also has
cable television systems and related investments in the United Kingdom and
other parts of Europe. Unless the context indicates otherwise, the "Company"
means Tele-Communications, Inc. and its consolidated subsidiaries.
The Company and Liberty Media Corporation ("Liberty") have entered into an
Agreement and Plan of Merger, dated as of January 27, 1994, as amended (the
"Merger Agreement"), providing for a combination of the two companies (the
"TCI/Liberty Combination"). The TCI/Liberty Combination would be effected
through the merger of the Company and the merger of Liberty with separate
wholly-owned subsidiaries of a new holding company formed by the Company and
Liberty, TCI/Liberty Holding Company ("TCI/Liberty"). The Company and Liberty
would each be the surviving corporation of its respective merger and, after
giving effect to the transaction, would each be a wholly-owned subsidiary of
TCI/Liberty. Consummation of the TCI/Liberty Combination is subject to the
approval of the respective stockholders of each company, the receipt of
necessary governmental and regulatory approvals and other customary conditions.
If the TCI/Liberty Combination occurs, TCI/Liberty will change its name to
"Tele-Communications, Inc." and the Company will change its name to "TCI
Communications, Inc." The Company will continue to be the obligor with respect
to the Existing Notes, the New Notes following their issuance, and all other
indebtedness and other obligations of the Company outstanding at the time the
TCI/Liberty Combination is consummated, and TCI/Liberty will not assume any of
such indebtedness or other obligations. See "Recent Developments".
11
<PAGE> 14
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth selected historical financial data for the
Company for the three-month periods ended March 31, 1994 and 1993 and for each
of the five fiscal years in the period ended December 31, 1993. The table also
sets forth selected unaudited pro forma balance sheet data for the Company as
of March 31, 1994, giving pro forma effect to the TCI/Liberty Combination
as if the same had occurred as of March 31, 1994, and selected unaudited pro
forma statement of operations data for the Company for the three months ended
March 31, 1994 and for the year ended December 31, 1993, giving pro forma
effect to the TCI/Liberty Combination and another transaction (see note (1)
below) as if the same had occurred prior to January 1, 1994 and prior to
January 1, 1993, respectively. See "Recent Developments". The pro forma
financial data are not necessarily indicative of the financial position or
results of operations that would have been obtained had the TCI/Liberty
Combination and such other transaction been effective at or prior to such
assumed dates, or of the future results of operations of the Company. The
following information is qualified in its entirety by, and should be read in
conjunction with, the consolidated financial statements of the Company and the
unaudited condensed pro forma financial statements of the Company incorporated
by reference in this Prospectus.
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, Year Ended December 31,
------------------------------------------------------------------- -------------------------------------------------
Pro Forma Pro Forma
1994(1) 1994 1993 1993(1) 1993 1992 1991 1990 1989
------------------------------------------------------------------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:
Revenue . . . . . . . . . . . . . $ 1,060 1,060 1,018 4,153 4,153 3,574 3,214 2,940 2,358
Operating income . . . . . . . . . $ 234 234 247 916 916 864 674 546 455
Earnings (loss) from:
Continuing operations . . . . . . $ 24 32 53 (9) (7) 7 (78) (191) (262)
Discontinued operations . . . . . -- -- -- -- -- (15) (19) (63) (3)
------- ----- ----- ------ ----- ----- ----- ----- -----
24 32 53 (9) (7) (8) (97) (254) (265)
Dividend requirement on
redeemable preferred
stocks . . . . . . . . . . . . . -- -- (1) -- (2) (15) -- -- --
------- ----- ----- ------ ----- ----- ----- ----- -----
Net earnings (loss) attributable
to common shareholders. . . . . . $ 24 32 52 (9) (9) (23 ) (97) (254) (265)
======= ===== ===== ====== ===== ===== ===== ===== =====
Earnings (loss) attributable
to common shareholders
per common share:
Continuing operations . . . . . N/A $.07 .11 N/A (.02) (.01) (.22) (.54) (.74)
Discontinued operations . . . . N/A -- -- N/A -- (.04) (.05) (.18) (.01)
$.07 $.11 (.02) (.05) (.27) (.72) (.75)
===== ===== ===== ===== ===== ===== =====
Weighted average common
shares outstanding . . . . . . . N/A 492 469 N/A 433 424 360 355 353
</TABLE>
(Continued on next page)
12
<PAGE> 15
(In millions)
<TABLE>
<CAPTION>
March 31, December 31,
--------------------- --------------------------------------
Pro Forma
1994(2) 1994 1993 1992 1991 1990 1989
--------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY BALANCE SHEET DATA:
Property and equipment, net . . . . . $ 5,026 5,026 4,935 4,562 4,081 4,156 3,692
Franchise costs, net . . . . . . . . $ 9,141 9,141 9,197 9,300 8,104 7,348 6,811
Net assets of discontinued
operations . . . . . . . . . . . . $ -- -- -- -- 242 54 580
Total assets . . . . . . . . . . . . $16,851 17,058 16,520 16,310 15,166 14,106 13,560
Debt . . . . . . . . . . . . . . . . $10,008 10,008 9,900 10,285 9,455 8,922 8,007
Common stockholders' equity . . . . . $ 2,147 2,354 2,112 1,726 1,570 748 840
Shares outstanding
(net of treasury shares):
Class A common stock . . . . . . . N/A 404 403 382 370 310 305
Class B common stock . . . . . . . N/A 47 47 48 49 48 48
</TABLE>
---------------
(1) Reflects the elimination in the proposed TCI/Liberty Combination of the
Company's share of Liberty's historical earnings, the elimination of the
historical dividend requirement on the Company's redeemable preferred stocks,
which were converted into shares of the Company's Class A common stock
subsequent to December 31, 1993, and the income tax effect of the pro forma
adjustments.
(2) Reflects the conversion in the proposed TCI/Liberty Combination of the
Company's investment in Liberty common stock and preferred stock into an
investment in TCI/Liberty common stock and preferred stock, respectively, at
the carryover basis of the Company's investment in Liberty. Such amount is
reflected as a reduction of stockholders' equity due to its related party
nature.
13
<PAGE> 16
CERTAIN CONSIDERATIONS
The following factors, among others, should be considered carefully
before making an investment decision with respect to the New Notes.
Losses. The Company has incurred a net loss in each of the last three
fiscal years and losses from continuing operations in the fiscal years ended
December 31, 1993 and December 31, 1991. The Company had net earnings for the
three-month periods ended March 31, 1994 and 1993. See "Summary -- Selected
Historical and Pro Forma Financial Data". Notwithstanding the losses it has
incurred, the Company has been able to, and expects to continue to be able to,
satisfy its debt service and other obligations as and when they become due.
The Company's operating income before depreciation, amortization and other
non-cash credits or charges ($1,858 million, $1,637 million and $1,430
million for the years ended December 31, 1993, 1992 and 1991, respectively,
and $450 million and $467 million for the three months ended March 31, 1994 and
1993, respectively) has historically been sufficient to cover the Company's
interest expense ($731 million, $718 million and $826 million for the years
ended December 31, 1993, 1992 and 1991, respectively, and $178 million and
$181 million for the three months ended March 31, 1994 and 1993, respectively).
The Company's interest coverage ratio for the years ended December 31, 1993,
1992 and 1991 was 254%, 228%, and 173%, respectively, and for the three
months ended March 31, 1994 and 1993 was 253% and 258%, respectively.
Rate Regulation. On October 5, 1992, Congress enacted the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act"), which greatly expands Federal and local regulation of the cable
television industry. On April 15, 1993, the Federal Communications Commission
("FCC") adopted certain rate regulations as required by the 1992 Cable Act,
which regulations became effective on September 1, 1993, and imposed a
moratorium on certain rate increases. As a result of such actions, the rates
charged by a cable television company for basic and tier services and its
equipment and installation charges (the "Regulated Services") are now under the
jurisdiction of local franchising authorities and the FCC. Basic and tier
service rates are evaluated against competitive benchmark rates as published by
the FCC and equipment and installation charges are based on actual costs. The
rate regulations do not apply to the relatively few systems which are subject
to "effective competition" or to services offered on an individual service
basis, such as premium movie and pay-per-view services.
Any rates for the Company's Regulated Services that exceeded the
benchmarks were reduced as required by the 1993 rate regulations, which
provided in such circumstances for the reversal of any rate increases effected
since September 30, 1992 and further reductions of up to 10%. The Company
initially estimated that, on an annualized basis, implementation of the 1993
rate regulations would result in a reduction to revenue ranging from $140
million to $160 million. As a result of the implementation by the Company on
September 1, 1993 of its new rates for Regulated Services, the Company
experienced a revenue reduction of approximately $44 million during the four
months ended December 31, 1993 and approximately $35 million during the three
months ended March 31, 1994. The rates charged by the Company for Regulated
Services are subject to review by the FCC if a complaint has been filed or by
the appropriate local franchising authority if such authority has been
certified. For those franchise areas in which the rates for Regulated Services
are not yet so subject to review by the FCC or a local franchising authority,
the rate increase moratorium continues in effect through May 15, 1994.
On February 22, 1994, the FCC announced that it had adopted revised
rate regulations, including revised benchmarks, for Regulated Services,
which regulations became effective on May 15, 1994. Regulated cable systems
will have a 60-day period in which to implement new rates that comply with the
1994 rate regulations provided that certain requirements are met, including
continued compliance on a voluntary basis with the moratorium on rate
increases. Cable television systems that do not elect to make a
cost-of-service showing are required to set their rates for Regulated Services
at a level equal to the higher of the FCC's revised benchmark rates or the
system's September 30, 1992 rates minus 17%. Accordingly, the revised
regulations may result in additional rate reductions of up to 7% beyond the
maximum reductions established under the FCC's 1993 rate regulations. Based on
the FCC Executive Summary included in the February 22 announcement, the Company
estimated that its revenue could be
14
<PAGE> 17
further decreased by approximately $144 million on an annualized basis. The
text of the FCC's revised rate regulations was released on March 30, 1994.
Pending a detailed analysis of the new rules and of the Company's rates and
services, the Company cannot determine whether the actual reduction in revenue
will differ materially from the original estimate of $144 million on an
annualized basis.
The Company's estimates of the revenue reductions that may result from
the FCC's actions in 1993 and 1994 are prior to any possible mitigating factors
(none of which is assured) such as (i) the provision of alternate service
offerings, (ii) the implementation of rate adjustments to non-regulated
services, and (iii) the utilization of cost-of-service methodologies. The FCC
has adopted interim "cost-of-service" rules which would allow a cable operator
to recover, through rates charged for Regulated Services, its normal operating
expenses plus an interim rate of return of 11.25%, which rate may change in the
future. However, the FCC has presumptively excluded from the rate base
acquisition costs above the book value of tangible assets and of allowable
intangible assets at the time of acquisition, has declined to prescribe
depreciation rates and has suggested that the rules will have limited
usefulness for cable operators.
Based on the foregoing, the Company believes that the 1993 and 1994
rate regulations will have a material adverse effect on its results of
operations.
Ratios of Earnings to Fixed Charges. The ratio of earnings to fixed
charges of the Company was 1.02 and 1.22 for the years ended December 31, 1992
and 1993, respectively, and 1.43 and 1.25 for the three months ended March 31,
1993 and 1994, respectively. The ratio of earnings to fixed charges was less
than 1.00 for the years ended December 31, 1989, 1990 and 1991; thus, earnings
available for fixed charges were inadequate to cover fixed charges for such
periods. The amounts of the coverage deficiencies were $430 million, $399
million and $177 million for the years ended December 31, 1989, 1990 and 1991,
respectively. For the ratio calculations, earnings available for fixed charges
consist of earnings (losses) before income taxes plus fixed charges (minus
capitalized interest), distributions from and (earnings) losses of less than
50%-owned affiliates with debt not guaranteed by the Company (net of earnings
not distributed of less than 50%-owned affiliates), and minority interest in
earnings (losses) of consolidated subsidiaries (including an amount
representing the pretax earnings which would be required to cover preferred
stock dividend requirements of consolidated subsidiaries). Fixed charges
consist of (i) interest (including capitalized interest) on debt, excluding
interest to 50%-owned affiliates, (ii) the Company's proportionate share of
interest of 50%-owned affiliates, (iii) that portion of rental expense the
Company believes to be representative of interest (one third of rental
expense), (iv) amortization of debt expense, (v) that portion of minority
interest in earnings of consolidated subsidiaries that represents the amount of
pretax earnings that would be required to cover preferred stock dividend
requirements excluding similarly adjusted preferred stock dividend requirements
of consolidated subsidiaries to 50%-owned affiliates, and (vi) the amount
representing the pretax earnings which would be required to cover preferred
stock dividend requirements of 50%-owned affiliates, other than amounts to the
Company. The Company has guaranteed the debt of certain less than 50%-owned
affiliates and certain other entities in which it has an interest. Fixed
charges of $745,000, $710,000, $506,000, $2,517,000 and $13,833,000 relating to
such guarantees for the years ended December 31, 1989, 1990, 1991, 1992 and
1993, respectively, and fixed charges of $629,000 and $3,458,000 relating to
such guarantees for the three months ended March 31, 1993 and 1994,
respectively, have not been included in fixed charges.
Restrictions on Transfer; Consequences of Failure to Exchange.
Existing Notes that are not tendered or are tendered but not accepted for
exchange will, following the consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof and the Company will
have no obligation to provide for the registration under the Securities Act of
such Existing Notes or to make any offer to exchange registered securities for
such Existing Notes. No Interest Rate Adjustment will be made and no
Contingent Interest will accrue or be payable with respect to Existing Notes
that are not tendered or are tendered but not accepted for exchange.
Each holder (other than any holder who is an affiliate of the Company
within the meaning of Rule 405 under the Securities Act) who duly exchanges
Existing Notes for New Notes in the Exchange Offer will receive New Notes that
are freely tradeable under the Securities Act provided that such holder
acquired the New Notes in the ordinary course of its business and is not
participating, and has no arrangement with any person to participate, in
15
<PAGE> 18
the distribution of such New Notes. Accordingly, any holder of Existing Notes
who tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Notes may be deemed to have received restricted
securities and, if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. To the extent that Existing Notes are tendered and
accepted in the Exchange Offer, the trading market, if any exists or develops,
for untendered and tendered but unaccepted Existing Notes could be adversely
affected.
THE COMPANY
The Company is a Delaware corporation incorporated in 1968 with
executive offices at Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado
80111-3000; telephone (303) 267-5500. Unless the context indicates otherwise
and except as used in the discussions under the captions "Description of New
Notes" and "Comparison of Existing Notes and New Notes", the "Company" means
Tele-Communications, Inc. and its consolidated subsidiaries.
The Company or its predecessor companies have been principally engaged
in the acquisition, development and operation of cable television systems since
the early 1950's. The Company believes that, measured by the number of basic
subscribers, it is the largest provider of basic cable television services in
the United States. At March 31, 1994, the Company, through its
subsidiaries and affiliates, operated cable television systems throughout the
continental United States and Hawaii. Through certain joint ventures, the
Company also has cable television systems and related investments in the United
Kingdom and other parts of Europe.
RECENT DEVELOPMENTS
The Company and Liberty have entered into the Merger Agreement which
provides for a combination of the two companies. The TCI/Liberty Combination
would be effected through the merger of the Company and the merger of Liberty
with separate wholly-owned subsidiaries of a new holding company, TCI/Liberty,
formed by the Company and Liberty. The Company and Liberty would each be the
surviving corporation of its respective merger and, after giving effect to the
transaction, would each be a wholly-owned subsidiary of TCI/Liberty. In the
transaction, the outstanding shares of each class of the Company's common stock
(including shares held by Liberty and shares held by subsidiaries of the
Company, but excluding shares held by the Company directly in its treasury)
would be converted into shares of the corresponding class of TCI/Liberty's
common stock on the basis of one share of TCI/Liberty common stock for each
share of the Company's common stock, and the outstanding shares of each class
of Liberty's common stock (including shares held by the Company, but excluding
shares held by Liberty in its treasury) would be converted into shares of the
corresponding class of TCI/Liberty's common stock on the basis of 0.975 of a
share of TCI/Liberty common stock for each share of Liberty's common stock.
Shares of one class of outstanding preferred stock of Liberty (including shares
owned by the Company) would be converted into shares of a class of preferred
stock of TCI/Liberty having designations, preferences, rights and
qualifications, limitations and restrictions substantially identical to the
shares of preferred stock being converted. Shares of the remaining two classes
of preferred stock of Liberty, all of which are held by the Company, would be
converted into shares of equivalent value of a class of preferred stock of
TCI/Liberty. Liberty was initially a wholly-owned subsidiary of the Company
formed for the purpose of effectuating a restructuring of the Company's
interests in certain cable programming businesses and cable television
interests. Pursuant to the plan for such restructuring, in early 1991 the
Company contributed certain of its programming and cable television assets to
Liberty in exchange for shares of several classes of Liberty's preferred stock,
and Liberty effected an exchange offer of shares of Liberty's common stock for
a portion of the outstanding shares of the Company's common stock, thereby
becoming a separate public company. Due to the significant economic interest
in Liberty held by the Company through its ownership of equity securities of
Liberty and other related party considerations, the Company has accounted for
its investment in Liberty under the equity method. Accordingly, the Company
has not recognized any income relating to dividends, including preferred stock
dividends, and the Company has continued to record the earnings or losses
generated by the interests contributed to Liberty (by recognizing 100% of
Liberty's earnings or losses before deducting preferred stock dividends). For
summary information with respect to the pro forma effect of the TCI/Liberty
Combination on the
16
<PAGE> 19
Company's financial condition and results of operations, see "Summary --
Selected Historical and Pro Forma Financial Data".
The TCI/Liberty Combination is subject to the approval of the
respective stockholders of each company, the receipt of necessary governmental
and regulatory approvals and other customary conditions. If the TCI/Liberty
Combination occurs, TCI/Liberty will change its name to "Tele-Communications,
Inc." and the Company will change its name to "TCI Communications, Inc." The
Company will continue to be the obligor with respect to the Existing Notes, the
New Notes following their issuance, and all other indebtedness and other
obligations of the Company outstanding at the time the TCI/Liberty Combination
is consummated, and TCI/Liberty will not assume any of such indebtedness or
other obligations.
THE EXCHANGE OFFER
GENERAL
The Company hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus and in the related Letter of
Transmittal (which together constitute the Exchange Offer), to exchange up to
$5,000,000 aggregate principal amount of New Series A Notes for a like
aggregate principal amount of Existing Series A Notes, up to $26,500,000
aggregate principal amount of New Series B Notes for a like aggregate principal
amount of Existing Series B Notes, up to $36,000,000 aggregate principal amount
of New Series C Notes for a like aggregate principal amount of Existing Series
C Notes, up to $32,000,000 aggregate principal amount of New Series D Notes for
a like aggregate principal amount of Existing Series D Notes and up to
$20,000,000 aggregate principal amount of New Series E Notes for a like
aggregate principal amount of Existing Series E Notes properly tendered on or
prior to the Expiration Date and not withdrawn as permitted pursuant to the
procedures described below. An aggregate of $119,500,000 principal amount of
Existing Notes are outstanding. The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Existing Notes being tendered. The
Company will issue New Notes in denominations of $100,000 and integral
multiples thereof in exchange for Existing Notes of the corresponding series
and of like aggregate principal amount accepted for exchange in the Exchange
Offer. Holders may tender some or all of their Existing Notes pursuant to the
Exchange Offer in denominations of $100,000 and integral multiples thereof.
PURPOSE OF THE EXCHANGE OFFER; CONTINGENT INTEREST
In the Note Exchange Agreement, the Company stated its then intention
to make the Exchange Offer and agreed that if the Issue Date for the New Notes
to be issued in exchange for Existing Notes tendered and accepted pursuant to
the Exchange Offer had not occurred by the close of business on December 31,
1993, the rate per annum at which interest accrues on each series of Existing
Notes would be increased, contingently, by 0.2% effective as of January 1,
1994, and that if the Issue Date had not occurred prior to June 30, 1994, the
Interest Rate Adjustment would become permanent. The Company's purpose in
making the Exchange Offer is to avoid the contingent increase in the interest
rates applicable to the Existing Notes provided for pursuant to the Note
Exchange Agreement becoming a permanent increase. If the Issue Date occurs
prior to June 30, 1994, the interest rate applicable to those Existing Notes
that are tendered and accepted for exchange pursuant to the Exchange Offer will
be restored to the initial rate applicable thereto and the amount of the
Contingent Interest that has accrued on such Existing Notes from January 1,
1994 to and including the Issue Date will be payable on the Issue Date to the
tendering holders thereof. No Interest Rate Adjustment will be made, and no
Contingent Interest will accrue or be payable, with respect to those Existing
Notes that are not tendered and accepted for exchange in the Exchange Offer if
the Issue Date occurs prior to June 30, 1994. See "Summary -- The Exchange
Offer -- Contingent Interest".
The Exchange Offer provides holders of Existing Notes with New Notes
that will generally be freely transferable by holders thereof (other than any
holder who is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act), who may offer for resale, resell or otherwise
transfer such New Notes without
17
<PAGE> 20
complying with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holder's business and such holder is not participating, and has no
arrangement with any person to participate, in a distribution of the New Notes.
By tendering Existing Notes and executing the Letter of Transmittal, the holder
thereof is representing to the Company that it acquired the New Notes in the
ordinary course of its business and that it is not participating in, and has no
arrangement with any person to participate in, a distribution of the New Notes.
Any holder of Existing Notes who tenders in the Exchange Offer for the purpose
of participating in a distribution of the New Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction.
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT
The Exchange Offer will expire at 12:00 midnight, New York City time,
on June 28, 1994, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" means the latest time
and date to which the Exchange Offer is extended.
The Company expressly reserves the right at any time and from time to
time to extend the period of time during which the Exchange Offer remains open
by giving oral notice (confirmed in writing) or written notice of such
extension to the Exchange Agent and either by mailing an announcement thereof
to the record holders of Existing Notes or by making a timely public
announcement of such extension communicated, unless otherwise required by
applicable law or regulation, by making a release through the Dow Jones News
Service, in each case, no later than 9:00 a.m., New York City time on the next
business day following the previously scheduled Expiration Date. During any
such extension, all Existing Notes previously tendered will remain subject to
the Exchange Offer.
In addition, the Company expressly reserves the right, prior to the
first acceptance of tendered Existing Notes, (i) to delay acceptance for
exchange of any tendered Existing Notes or to terminate the Exchange Offer and
not accept for exchange any Existing Notes, subject to the provisions of Rule
14e-1(c) under the Exchange Act which requires that the tender offeror pay the
consideration offered or return the tendered securities promptly after the
termination or withdrawal of the Exchange Offer, and (ii) to amend the terms of
the Exchange Offer. If any such delay in acceptance, termination or amendment
occurs, the Company will notify the Exchange Agent and will either issue a press
release or give oral or written notice thereof to the holders of Existing Notes
as promptly as practicable.
If any amendment by the Company of the Exchange Offer constitutes a
material change in the information previously disclosed to the holders of
Existing Notes, the Company will, in accordance with the applicable rules of
the Commission, disseminate promptly disclosure of such change in a manner
reasonably calculated to inform such holders of such change. If it is
necessary to permit an adequate dissemination of information regarding such
material change, the Company will extend the Exchange Offer to permit adequate
time for holders of Existing Notes to consider the additional information.
For purposes of the Exchange Offer, a "business day" means any day
other than Saturday, Sunday or a Federal holiday, and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Existing Notes and may terminate or amend the Exchange Offer, if at
any time before the acceptance of such Existing Notes for exchange, any
material change occurs which is likely to affect the Exchange Offer, including,
but not limited to, the following:
(a) there shall be threatened, instituted or pending any
action or proceeding before, or any injunction, order or decree shall
have been issued by, any court or any governmental agency relating,
directly or indirectly, to the Exchange Offer or any other transaction
contemplated by the Exchange Offer or otherwise affecting the Company
which, in the sole judgment of the Company, would or might prohibit,
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restrict or delay consummation of the Exchange Offer or otherwise
impair the ability of the Company to proceed with the Exchange Offer;
(b) there shall occur any development in any pending action
or proceeding which, in the sole judgment of the Company, would or
might prohibit, restrict or delay consummation of the Exchange Offer
or otherwise impair the ability of the Company to proceed with the
Exchange Offer;
(c) any law, statute, rule or regulation shall have been
proposed, adopted, enacted or made applicable, or any action shall
have been taken by any governmental authority which, in the sole
judgment of the Company, would or might prohibit, restrict or delay
consummation of the Exchange Offer or otherwise impair the ability of
the Company to proceed with the Exchange Offer;
(d) there exists, in the sole judgment of the Company, any
actual or threatened legal impediment (including a default or
prospective default under any agreement, indenture or other instrument
or obligation to which the Company is a party or by which it is bound)
to the consummation of the Exchange Offer; or
(e) there shall occur a change in the current interpretation
of the staff of the Commission which interpretation permits the New
Notes issued pursuant to the Exchange Offer in exchange for the
Existing Notes to be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that
such New Notes are acquired in the ordinary course of such holders'
business and such holders are not participating in, and have no
arrangement with any person to participate in, the distribution of
such New Notes.
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances giving rise to
any such condition or may be waived by the Company in whole or in part at any
time and from time to time in its sole discretion. The failure by the Company
at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Existing
Notes tendered, and no New Notes will be issued in exchange for any such
Existing Notes, if at such time any stop order shall be threatened by the
Commission or be in effect with respect to the Registration Statement or the
qualification of the Indenture under the Trust Indenture Act of 1939 (the
"TIA").
The Exchange Offer is not conditioned on any minimum principal amount
of Existing Notes being tendered for exchange.
PROCEDURES FOR TENDERING EXISTING NOTES
The tender to the Company of Existing Notes by a holder thereof as set
forth below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal.
A holder of Existing Notes may tender Existing Notes by (a) properly
completing and signing the Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to the Letter of Transmittal shall be deemed to
include a facsimile thereof) and delivering the same, together with the Existing
Notes being tendered and any required signature guarantees, to the Exchange
Agent at its address set forth under "-- Exchange Agent" below on or prior to
the Expiration Date, or (b) complying with the guaranteed delivery procedures
described below.
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THE METHOD OF DELIVERY OF EXISTING NOTES, LETTERS OF TRANSMITTAL AND
ALL OTHER DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT
REQUESTED, BE USED, AND PROPER INSURANCE BE OBTAINED. IN ALL CASES SUFFICIENT
TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY. NO EXISTING NOTES OR LETTERS
OF TRANSMITTAL SHOULD BE SENT TO THE COMPANY.
Only a holder of Existing Notes may tender such Existing Notes in the
Exchange Offer. The term "holder" with respect to the Exchange Offer means any
person in whose name Existing Notes are registered in the Note Register
maintained by the Company. New Notes will not be issued in the name of a
person other than that of the registered holder of the Existing Notes appearing
on the Note Register. Any beneficial holder whose Existing Notes are
registered in the name of a nominee and that wishes to tender should contact
such registered holder promptly and instruct such registered holder to tender
on its behalf. If such beneficial holder wishes to tender on its own behalf,
the beneficial holder must, prior to completing and executing the Letter of
Transmittal and delivering its Existing Notes, makes appropriate arrangements
to register ownership of the Existing Notes in such beneficial holder's name.
If the Letter of Transmittal is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or others
acting in a fiduciary or representative capacity, such person should so
indicate when signing, and unless waived by the Company, evidence satisfactory
to the Company of such person's authority to so act must be submitted with the
Letter of Transmittal.
If New Notes are to be delivered to an address other than that of the
registered holder appearing on the Note Register, the signature on the Letter
of Transmittal must be guaranteed by a commercial bank or trust company having
an office or correspondent in the United States, or by a member firm of a
national securities exchange or the National Association of Securities Dealers,
Inc. or by another Eligible Guarantor Institution within the meaning of Rule
17(A)(d)-15 under the Exchange Act (any of the foregoing is hereinafter
referred to as an "Eligible Institution").
If a holder desires to tender Existing Notes pursuant to the Exchange
Offer and such holder's Existing Notes are not immediately available or time
will not permit all of the above documents to reach the Exchange Agent prior to
the Expiration Date, such tender may be effected if the following conditions are
satisfied:
(a) such tenders are made by or through an Eligible
Institution;
(b) a properly completed and duly executed Notice
of Guaranteed Delivery, in substantially the form provided by the
Company, is received by the Exchange Agent as provided below on or
prior to the Expiration Date; and
(c) the Existing Notes, in proper form for transfer, together
with a properly completed and duly executed Letter of Transmittal and
all other documents required by the Letter of Transmittal, are
received by the Exchange Agent within five New York Stock Exchange,
Inc. trading days after the date of execution of such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile transmission or mail to the Exchange Agent and must
set forth the name and address of the holder of the Existing Notes, the series
and serial number of such Existing Notes and the principal amount of Existing
Notes tendered, state that the tender is being made timely and include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed Letter of Transmittal accompanied by Existing
Notes or a Notice of Guaranteed Delivery from an Eligible Institution is
received by the Exchange Agent. Issuances of New Notes in exchange for
Existing Notes tendered pursuant to a Notice of Guaranteed Delivery by an
Eligible Institution will be made only against delivery of the Letter of
Transmittal (and any other required documents) and the tendered Existing Notes
to the Exchange Agent.
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Partial tenders of Existing Notes may be made only if (i) the
principal amount tendered is equal to $100,000 or an integral multiple thereof
and (ii) the remaining untendered portion of such Existing Notes is in the
principal amount of $100,000 or an integral multiple thereof. Holders
tendering less than the entire principal amount of any Existing Note must
appropriately indicate such fact on the Letter of Transmittal accompanying the
tendered Existing Notes.
With respect to tenders of Existing Notes, the Company reserves full
discretion to determine whether the documentation is complete and generally to
determine all questions as to tenders, including the time of receipt of a
tender, the propriety of execution of any document, and all other questions as
to the validity, form, eligibility, acceptance and withdrawal of any tender,
which determination by the Company will be final and binding on all parties.
The Company reserves the right to reject any tender not in proper form or
otherwise not valid or acceptance of which may, in the opinion of the Company's
counsel, be unlawful and to waive any irregularities or conditions, and the
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions on the Letter of Transmittal) will be final and
binding on all parties. The Company shall not be obligated to give notice of
any defects or irregularities in tenders and shall not incur any liability for
failure to give any such notice. The Exchange Agent may, but shall not be
obligated to, give notice of any irregularities or defects in tenders, and shall
not incur any liability for any failure to give any such notice. Existing Notes
shall not be deemed to have been duly or validly tendered unless and until all
defects and irregularities have been cured or waived. All improperly tendered
Existing Notes, as well as Existing Notes in excess of the principal amount
tendered for exchange, will be returned (unless irregularities and defects are
timely cured or waived),without cost to the tendering holder promptly after the
Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase and make offers to purchase Existing Notes that remain outstanding
subsequent to the Expiration Date in the open market, privately negotiated
transactions or otherwise. The terms of any such purchases or offers may
differ from the Exchange Offer.
WITHDRAWAL RIGHTS
Tenders of Existing Notes may be withdrawn at any time prior to the
Expiration Date, unless previously accepted for exchange. To be effective, a
written notice of withdrawal must be received by the Exchange Agent prior to
the Expiration Date at the address set forth under "-- Exchange Agent" below.
Any such notice of withdrawal must (i) specify the person named in the Letter
of Transmittal as having tendered the Existing Notes to be withdrawn, (ii)
identify the Existing Notes to be withdrawn (including the series, the serial
number or numbers and the principal amount of such Existing Notes), and (iii)
be signed by the holder in the same manner as the original signature on the
Letter of Transmittal by which such Existing Notes were tendered (including any
required signature guarantees). Any Existing Notes so withdrawn will be deemed
not to have been validly tendered for exchange for purposes of the Exchange
Offer. The Exchange Agent will return the properly withdrawn Existing Notes as
soon as practicable following receipt of notice of withdrawal. All questions
as to the validity, form and eligibility (including time of receipt) of notices
of withdrawals will be determined by the Company in its sole discretion, which
determination will be final and binding on all parties. Properly withdrawn
Existing Notes may be retendered by following the procedures described under
"-- Procedures for Tendering Existing Notes" above at any time prior to the
Expiration Date.
ACCEPTANCE OF TENDERS
Subject to the terms and conditions of the Exchange Offer, including
the reservation of certain rights by the Company, Existing Notes properly
tendered and not withdrawn will be accepted promptly after the Expiration Date.
Subject to such terms and conditions, New Notes to be issued in exchange for
properly tendered Existing Notes will be mailed by the Exchange Agent promptly
after the acceptance of the tendered Existing Notes, and the amount of the
Contingent Interest that has accrued on such properly tendered Existing Notes
from January 1, 1994 to and including the Issue Date will be paid by the
Company by wire transfer to the account of the holders of properly tendered
Existing Notes. For purposes of the Exchange Offer, the Company will be deemed
to have accepted
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properly tendered Existing Notes for exchange when the Company has given oral or
written notice thereof to the Exchange Agent.
Holders whose Existing Notes are accepted for exchange will not
receive accrued interest (other than Contingent Interest) thereon on the date
of exchange. Instead interest (other than Contingent Interest) accruing from
June 15, 1994 through the Expiration Date on Existing Series A Notes accepted
for exchange will be payable on the New Series A Notes issued in exchange
therefor on December 15, 1994, interest (other than Contingent Interest)
accruing from January 31, 1994 through the Expiration Date on Existing Series B
Notes and Existing Series C Notes accepted for exchange will be payable on the
New Series B Notes and New Series C Notes, respectively, issued in exchange
therefor on July 31, 1994, and interest (other than Contingent Interest)
accruing from March 30, 1994 through the Expiration Date on the Existing Series
D Notes and Existing Series E Notes accepted for exchange will be payable on
the New Series D Notes and New Series E Notes, respectively, issued in exchange
therefor on September 30, 1994.
If any tendered Existing Notes are not accepted for any reason set
forth in the terms and conditions of the Exchange Offer, such unaccepted
Existing Notes will be returned without expense to the tendering holder thereof
as promptly as practicable after the expiration or termination of the Exchange
Offer.
UNTENDERED EXISTING NOTES
Holders of Existing Notes whose Existing Notes are not tendered or are
tendered but not accepted in the Exchange Offer will continue to hold such
Existing Notes and will be entitled to all the rights and preferences and will
be subject to the limitations applicable thereto under the Note Exchange
Agreement, except for any such rights or limitations which, by their terms,
terminate or cease to be effective as a result of the Exchange Offer. See
"Comparison of Existing Notes and New Notes -- Payment Provisions --
Repurchases". No Interest Rate Adjustment will be made and no Contingent
Interest will accrue or be payable with respect to such Existing Notes.
Following consummation of the Exchange Offer, the holders of Existing Notes will
continue to be subject to the existing restrictions upon transfer thereof and
the Company will have no obligation to such holders to provide for the
registration under the Securities Act of the Existing Notes held by them or to
make an exchange offer of registered securities for such Existing Notes. To the
extent that Existing Notes are tendered and accepted in the Exchange Offer, the
trading market, if any exists or develops, for untendered and tendered but
unaccepted Existing Notes could be adversely affected.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the
Exchange Offer. Letters of Transmittal must be addressed to the Exchange Agent
as follows:
By Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street (7 East) 101 Barclay Street
Reorganization Section Lobby Level
New York, New York 10286 Corporate Trust Services Window
Attention: Enrique Lopez New York, New York 10286
Attention: Enrique Lopez
By Facsimile:
(212) 571-3080
Confirm by Telephone:
(212) 815-2742
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The Bank of New York also acts as trustee (the "Trustee") under the
Indenture. Questions regarding Exchange Offer procedures and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent as set forth above.
DELIVERY TO OTHER THAN THE ABOVE ADDRESS WILL NOT CONSTITUTE VALID
DELIVERY.
SOLICITATION OF TENDERS; EXPENSES
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred by the Company in connection with the Exchange
Offer will be paid by the Company.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those
contained in this Prospectus. If given or made, such information or
representations should not be relied upon as having been authorized by the
Company. Neither the delivery of this Prospectus nor any exchange made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the respective dates as of
which information is given herein. The Exchange Offer is not being made to
(nor will tenders be accepted from or on behalf of) holders of Existing Notes
in any jurisdiction in which the making of the Exchange Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction.
TRANSFER TAXES
Holders who tender their Existing Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith except that holders
who request that Existing Notes not tendered or not accepted in the Exchange
Offer be returned to a person other than the registered tendering holder will
be responsible for the payment of any applicable transfer tax thereon.
ACCOUNTING TREATMENT
The New Notes will be recorded at the carrying value of the Existing
Notes as reflected in the Company's accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company upon the exchange of New Notes for Existing Notes.
Expenses incurred in connection with the issuance of the New Notes will be
amortized over the term of the New Notes.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Under Federal income tax law, a holder of Existing Notes should not
recognize gain or loss upon an exchange of Existing Notes for New Notes
pursuant to the Exchange Offer. A holder's tax basis in the New Notes received
pursuant to the Exchange Offer will be the same as such holder's basis in the
Existing Notes exchanged therefor and a holder's holding period for New Notes
received pursuant to the Exchange Offer will include such holder's holding
period for the Existing Notes if such Notes were held as capital assets at the
time of the exchange.
The tax analysis is based in part on Proposed Treasury Regulation
Section 1.1001-3(a). The regulations on which these conclusions rely are
proposed, not final. Although the Internal Revenue Service could generally be
expected to follow the approach set forth in proposed regulations of this type,
there is no requirement that it do so. Proposed regulations may be withdrawn,
may be made prospective only, or may be changed in whole or in part before they
are made final. Additionally, either the Internal Revenue Service or the
courts may subsequently determine that the proposed regulations (to the extent
they are favorable to taxpayers) are inconsistent with case law
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<PAGE> 26
or otherwise invalid. A United States Supreme Court decision, Cottage Savings
Association v. Commissioner, issued prior to the issuance of Proposed Treasury
Regulation Section 1.1001-3(a) could be interpreted to require the recognition
of gain or loss upon an exchange of Existing Notes for New Notes pursuant to the
Exchange Offer. Notwithstanding Proposed Treasury Regulation Section
1.1001-3(a), a court therefore could treat such exchange as a taxable exchange.
Finally, the tax analysis assumes that the New Notes are being issued for the
Existing Notes, and does not take into account prior exchanges involving the
Existing Notes. If the exchange of New Notes for Existing Notes is integrated
with prior exchanges, the tax consequences could be different.
Each exchanging holder should consult with his individual tax advisor
as to any foreign, state and local tax consequences of the Exchange Offer as
well as to the effect of his particular facts and circumstances on the matters
discussed herein.
DESCRIPTION OF NEW NOTES
GENERAL
The Company issued $5,000,000 aggregate principal amount of Existing
Series A Notes, $26,500,000 aggregate principal amount of Existing Series B
Notes, $36,000,000 aggregate principal amount of Existing Series C Notes,
$40,000,000 aggregate principal amount of Existing Series D Notes and
$20,000,000 aggregate principal amount of Existing Series E Notes pursuant to
the Note Exchange Agreement on July 1, 1993. A subsequent principal payment
with respect to the Existing Series D Notes reduced the aggregate outstanding
principal amount thereof to $32,000,000.
The New Notes will be issued under the Indenture, which will be
qualified under the TIA upon the effectiveness of the Registration Statement of
which this Prospectus is a part. The Indenture authorizes the original
issuance of New Series A Notes in the aggregate principal amount of $5,000,000,
New Series B Notes in the aggregate principal amount of $26,500,000, New Series
C Notes in the aggregate principal amount of $36,000,000, New Series D Notes in
the aggregate principal amount of $32,000,000 and New Series E Notes in the
aggregate principal amount of $20,000,000. The terms of each series of New
Notes are substantially identical to the terms of the corresponding series of
Existing Notes that are to be exchanged therefor, except as described under
"Comparison of Existing Notes and New Notes" and except that the New Notes have
been registered under the Securities Act. The Existing Notes represent, and
the New Notes will represent, unsecured general obligations of the Company that
rank on a parity in right of payment to all existing and future unsecured and
unsubordinated indebtedness of the Company.
The Company is a holding company and its assets consist primarily of
investments in its subsidiaries. A substantial portion of the consolidated
liabilities of the Company have been incurred by its subsidiaries. Therefore,
the Company's rights and the rights of its creditors, including holders of
Existing Notes and holders of New Notes, to participate in the distribution of
assets of any subsidiary upon the latter's liquidation or reorganization will
be subject to prior claims of the subsidiary's creditors, including trade
creditors, except to the extent that the Company may itself be a creditor with
recognized claims against the subsidiary (in which case the claims of the
Company would still be subject to the prior claims of any secured creditor of
such subsidiary and of any holder of indebtedness of such subsidiary that is
senior to that held by the Company). At March 31, 1994, the aggregate amount
of the outstanding debt of the Company's consolidated subsidiaries was
approximately $4.91 billion (including guaranties of indebtedness of others and
the unaccreted portion of indebtedness issued at a discount, but excluding
indebtedness owed to the Company). At that date, the Company's consolidated
subsidiaries had an aggregate of approximately $1.374 billion in undrawn lines
of credit.
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The Existing Notes are, and the New Notes will be, obligations
exclusively of the Company. The Company's ability to service its indebtedness,
including the Existing Notes and the New Notes, is dependent primarily upon the
earnings of its subsidiaries and the distribution or other payment of such
earnings to the Company in the form of dividends, loans or advances, payment or
reimbursement for management fees and expenses, and repayment of loans and
advances from the Company. The subsidiaries are separate and distinct legal
entities and have no obligation, contingent or otherwise, to pay any amounts
due pursuant to the Existing Notes or the New Notes or to make any funds
available therefor, whether by dividends, loans or other payments. The payment
of dividends or the making of loans and advances to the Company by its
subsidiaries may be subject to statutory or regulatory restrictions, are
contingent upon the earnings of those subsidiaries and are subject to various
business considerations. Further, certain of the Company's subsidiaries are
subject to loan agreements that prohibit or limit the transfer of funds by such
subsidiaries to the Company in the form of loans, advances or dividends and
require that such subsidiaries' indebtedness to the Company be subordinate to
the indebtedness under such loan agreements. The amount of net assets of
subsidiaries subject to such restrictions exceeds the Company's consolidated
net assets.
The terms of the New Notes include those stated in the Indenture and
those made part of the Indenture by reference to the TIA as in effect on the
date of the Indenture. The New Notes are subject to all such terms and holders
are referred to the Indenture and the TIA for a statement of such terms. See
"-- Additional Information". The following summary of certain provisions of
the Indenture does not purport to be complete and is subject to, and qualified
in its entirety by reference to, all provisions of the Indenture and those
terms made a part of the Indenture by reference to the TIA, including the
definitions therein of certain terms. As used in this section "Description of
the New Notes", unless the context indicates otherwise, the term "Company"
means Tele-Communications, Inc. and does not include any of its subsidiaries.
The definitions of certain capitalized terms used in this section are set forth
below under "-- Certain Definitions".
INTEREST
The New Notes of each series will bear interest at the interest rate
shown for such series on the cover page of this Prospectus. Interest will be
payable semiannually on June 15 and December 15 of each year in the case of the
New Series A Notes, on January 31 and July 31 of each year in the case of the
New Series B Notes and New Series C Notes, and on March 30 and September 30 of
each year in the case of the New Series D Notes and New Series E Notes (each
such date being an "Interest Payment Date" for New Notes of the applicable
series). Interest (except defaulted interest) payable with respect to a New
Note on an Interest Payment Date will be paid to the person in whose name such
New Note (or one or more predecessor New Notes) is registered at the close of
business on the Regular Record Date for such Interest Payment Date, which will
be the first day of the month in which such Interest Payment Date falls in the
case of the New Series A Notes, and will be the fifteenth day of the month in
which such Interest Payment Date falls in the case of the New Series B Notes,
New Series C Notes, New Series D Notes and New Series E Notes. Interest on each
New Note will accrue from the last Interest Payment Date on which interest was
paid on the New Notes of such series or, if no interest has been paid, from
June 15, 1994 in the case of the New Series A Notes, January 31, 1994 in the
case of the New Series B Notes and New Series C Notes, and March 30, 1994 in the
case of the New Series D Notes and New Series E Notes (each such date being the
last interest payment date on which interest was paid on the corresponding
series of Existing Notes). Interest will also be payable on the Stated Maturity
Date, and on any Principal Payment Date, Optional Prepayment Date, Redemption
Date or Purchase Date on which a New Note is prepaid, redeemed or purchased
prior to the Stated Maturity Date, in whole or in part, on the amount of
principal then paid (the Stated Maturity Date and each such Principal Payment
Date, Optional Prepayment Date, Redemption Date or Purchase Date being referred
to as a "Maturity Date" with respect to the principal amount, premium, if any,
and interest payable on such date with respect to a New Note). Interest payable
on a Maturity Date (other than a Purchase Date that is after a record date for
an interest payment and on or prior to the related interest payment date) will
be payable to the person to whom principal is payable. (Paragraph 1 of the New
Notes)
If the Company defaults in a payment of interest on New Notes of any
series on any Interest Payment Date, it will pay the defaulted interest to the
persons who are holders of New Notes of such series at the close of business
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<PAGE> 28
on a subsequent special record date fixed by the Company. At least 15 days
prior to such special record date, the Company will mail to each holder of New
Notes of such series a notice that states the special record date, the payment
date and the amount of defaulted interest to be paid. The Company will notify
the Trustee of the amount of defaulted interest proposed to be paid on each New
Note of such series and the date of the proposed payment, and at the same time
the Company will deposit with the Paying Agent an amount of money equal to the
aggregate amount proposed to be paid in respect of such defaulted interest or
will make arrangements satisfactory to the Paying Agent for such deposit prior
to the date of the proposed payment. The Company may pay defaulted interest in
any other lawful manner. (Section 2.10)
To the extent permitted by applicable law, interest will be payable on
overdue interest, principal and premium, if any, on a New Note at a rate per
annum equal to the greater of (i) the rate per annum announced publicly from
time to time by The Bank of New York in New York, New York as its "prime rate"
and (ii) 2% in excess of the rate per annum shown for New Notes of such series
on the cover page of this Prospectus. (Section 4.02; Paragraph 1 of the New
Notes)
PRINCIPAL INSTALLMENTS
The principal amount of the New Notes of each series will be payable,
without premium, in consecutive annual installments in the amounts and on the
dates (each a "Principal Payment Date") set forth below with respect to the
applicable series of New Notes, and on the Stated Maturity Date for New Notes
of such series. In the event that a New Note is prepaid in part at the option
of the Company, however, the amount of principal so prepaid per $100,000 in
Original Principal Amount of such New Note will be applied to reduce pro rata
the amount of each Principal Installment thereafter due and payable in respect
of such New Note. (Paragraph 2 of the New Notes)
New Series A Notes. The New Series A Notes are payable in Principal
Installments of $20,000 per $100,000 in Original Principal Amount of a New
Series A Note on December 15 of each year, from and including December 15,
1997, to and including December 15, 2000, with the remaining balance payable on
the Stated Maturity Date of December 15, 2001.
New Series B Notes. The New Series B Notes are payable in Principal
Installments of $16,667 per $100,000 in Original Principal Amount of a New
Series B Note on July 31 of each year, from and including July 31, 1997, to and
including July 31, 2001, with the remaining balance payable on the Stated
Maturity Date of August 31, 2002.
New Series C Notes. The New Series C Notes are payable in Principal
Installments of $25,000 per $100,000 in Original Principal Amount of a New
Series C Note on July 31 of each year, from and including July 31, 1999, to and
including July 31, 2001, with the remaining balance payable on the Stated
Maturity Date of August 31, 2002.
New Series D Notes. The New Series D Notes are payable in Principal
Installments of $25,000 per $100,000 in Original Principal Amount of a New
Series D Note on September 30 of each year, from and including September 30,
1994, to and including September 30, 1996, with the remaining balance payable
on the Stated Maturity Date of September 30, 1997.
New Series E Notes. The New Series E Notes are payable in
Principal Installments of $10,000 per $100,000 in Original Principal Amount of
a New Series E Note on September 30, 1995, $12,500 per $100,000 in Original
Principal Amount of a New Series E Note on each of September 30, 1996 and
September 30, 1997, and $20,000 per $100,000 in Original Principal Amount of a
New Series E Note on each of September 30, 1998 and September 30, 1999, with
the remaining balance payable on the Stated Maturity Date of September 30,
2000.
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OPTIONAL PREPAYMENTS
Subject to the terms and conditions of the Indenture, the New Notes of
each series may be prepaid, at the option of the Company, in whole at any time
or in part from time to time, at a prepayment price equal to the unpaid
principal amount of the New Note (or portion thereof) to be prepaid, plus
accrued and unpaid interest on the unpaid principal amount so prepaid to the
date fixed for prepayment (the "Optional Prepayment Date"), plus a premium
equal to the excess, if any, of (i) the sum of the net present values of all
Principal Installments and installments of interest scheduled to be paid after
such Optional Prepayment Date with respect to the unpaid principal amount of
the New Note (or portion thereof) to be prepaid, discounted at the Basic
Discount Rate for the New Notes of such series over (ii) the unpaid principal
amount of the New Note (or portion thereof) to be so prepaid; provided that no
premium will be payable if the Optional Prepayment Date is on or after December
15, 1999 in the case of the New Series A Notes, February 1, 2000 in the case of
the New Series B Notes, February 1, 2001 in the case of the New Series C Notes,
September 30, 1996 in the case of the New Series D Notes, or September 30, 1999
in the case of the New Series E Notes. (Paragraph 6 of the New Notes) The
Basic Discount Rate for the New Notes of each series is the rate equal to the
Treasury Yield with respect to the New Notes of such series plus 0.5%.
In the event of any partial prepayment of the New Notes of a series,
the aggregate principal amount of such prepayment will be applied to the
partial prepayment of the outstanding New Notes of such series pro rata in
accordance with the respective unpaid principal amounts of such New Notes and
will be applied ratably to the unpaid principal amount per $100,000 in Original
Principal Amount of a New Note of such series, with the amount of such
prepayment per $100,000 in Original Principal Amount of a New Note being
rounded, if applicable, to the nearest $1.00. Subject to such rounding, the
aggregate principal amount of any partial prepayment of the New Notes of any
series must be in a minimum amount of $1,000,000 or an integral multiple of
$500,000 in excess thereof; provided, however, that when the Company is
required to make an optional prepayment with respect to two series of New Notes
as described below, then the foregoing minimum amount requirement will only
apply to the aggregate principal amount of the partial prepayment with respect
to the New Notes of one of such two series, and the aggregate principal amount
of the partial prepayment with respect to the other of such two series shall
be determined on the basis of the pro rata payment requirement described below.
(Section 3.01(d))
With respect to the New Series B Notes and the New Series C Notes, the
Indenture provides that no optional prepayment with respect to the New Series B
Notes may be made prior to February 1, 2000 unless the Company simultaneously
makes an optional prepayment with respect to the same percentage of the
aggregate unpaid principal amount of the outstanding New Series C Notes
(subject to rounding differences) and, subject to the following sentence, no
optional prepayment with respect to the New Series C Notes may be made prior to
February 1, 2001 unless simultaneously therewith the Company makes an optional
prepayment with respect to the same percentage of the aggregate unpaid
principal amount of the outstanding New Series B Notes (subject to rounding
differences). If the Company determines to make an optional prepayment with
respect to the New Series B Notes on an Optional Prepayment Date that is on or
after February 1, 2000 and on or prior to January 31, 2001, then the Indenture
requires the Company to offer to prepay in the aggregate the same percentage of
the aggregate unpaid principal amount of the outstanding New Series C Notes on
such Optional Prepayment Date as it has elected to prepay of the New Series B
Notes, at a prepayment price equal to the unpaid principal amount of the New
Series C Notes or portions thereof to be prepaid, plus accrued and unpaid
interest on the unpaid principal amount so prepaid to the Optional Prepayment
Date. Any holder of New Series C Notes that desires to accept the prepayment
offer must deliver written notice of such acceptance to the Paying Agent by the
close of business on the sixteenth day preceding the Optional Prepayment Date,
after which time the right to accept such offer will terminate. With respect
to each New Series C Note as to which the prepayment offer has been accepted,
the portion of the unpaid principal amount to be prepaid will be determined on
the same basis as if all holders of New Series C Notes had accepted the
prepayment offer and the aggregate amount that the Company offered to prepay
was applied to the prepayment of the New Series C Notes pro rata in accordance
with the respective unpaid principal amounts thereof. (Section 3.01(b)) The
Company will comply with any applicable requirements of Rule 14e-1 promulgated
under the Exchange Act and any
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applicable securities laws and regulations in connection with the performance of
its obligations with respect to any prepayment offer.
With respect to the New Series D Notes and the New Series E Notes, no
optional prepayment may be made with respect to either of such two series
unless simultaneously therewith the Company makes an optional prepayment with
respect to the same percentage of the aggregate unpaid principal amount of the
outstanding New Notes of the other of such two series (subject to rounding
differences). (Section 3.01(c))
Notice of the Company's election to make an optional prepayment with
respect to the New Notes of a series will be mailed at least 30 days but not
more than 60 days before the Optional Prepayment Date to each holder of New
Notes of such series at such holder's registered address. (Section 3.03)
OPTIONAL REDEMPTION OF NON-CONSENTING NOTES
The Company may redeem, at its option, all but not less than all of
the New Notes of all holders that have not consented to a Prohibited Act if the
Company has not received the consent to such Prohibited Act of a
Majority-in-Interest of Holders within 30 days after the Company's written
request therefor, provided that (1) such Prohibited Act is undertaken in good
faith for a bona fide business reason and not primarily to avoid the
requirements applicable to a prepayment at the option of the Company, and (2)
at the time notice of redemption is given, (a) the Company has sufficient funds
available to it to pay the aggregate redemption price payable on the date fixed
for redemption (the "Redemption Date"), and (b) immediately before and after
giving effect to the redemption of the Non-Consenting Notes and after giving
effect to such Prohibited Act, the Company would be permitted to incur at least
$1.00 of additional Funded Debt pursuant to clause (2) of the covenant
described under "-- Certain Covenants -- Indebtedness" and no Event of Default
or Default exists or would then be continuing. (Section 3.02(a); Paragraph
7(a) of the New Notes)
If at any time on or after December 1, 1999, the Company has requested
in writing the consent of the holders of New Notes to Increased Debt Capacity
and has not received the consent of a Majority-in-Interest of Holders within 30
days thereafter, the Company may redeem, at its option, all but not less than
all of the New Notes of all holders that have not consented to the Increased
Debt Capacity, provided that at the time any notice of redemption is given, (1)
the Company has sufficient funds available to it to pay the aggregate
redemption price payable on the Redemption Date, and (2) immediately before and
after giving effect to the redemption of the Non-Consenting Notes and after
giving effect to such Increased Debt Capacity, the Company would be permitted
to incur at least $1.00 of additional Funded Debt pursuant to clause (2) of the
covenant described under "-- Certain Covenants -- Indebtedness" and no Event of
Default or Default exists or would then be continuing. (Section 3.02(b);
Paragraph 7(b) of the New Series A Notes, New Series B Notes, New Series C
Notes and New Series E Notes)
The redemption price for each Non-Consenting Note to be redeemed at the
option of the Company will be an amount equal to the unpaid principal amount of
such Non-Consenting Note, plus accrued and unpaid interest thereon to the
Redemption Date, plus a premium equal to the excess, if any, of (i) the sum of
the net present values of all Principal Installments and installments of
interest scheduled to be paid after such Redemption Date with respect to the
unpaid principal amount of such Non-Consenting Note, discounted at the Optional
Redemption Discount Rate for New Notes of such series over (ii) the unpaid
principal amount of such Non-Consenting Note; provided that, with respect to an
optional redemption of Non-Consenting Notes with respect to Increased Debt
Capacity, no premium will be payable if the Redemption Date is on or after
December 15, 2000 in the case of the New Series A Notes, August 31, 2001 in the
case of the New Series B Notes and New Series C Notes, September 30, 1996 in the
case of the New Series D Notes, or September 30, 1999 in the case of the New
Series E Notes. (Paragraph 7 of the New Notes) The Optional Redemption Discount
Rate for the New Notes of each series is the rate equal to the Treasury Yield
with respect to the New Notes of such series plus 1%.
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The Redemption Date for an optional redemption of Non-Consenting Notes
will be not less than 30 days nor more than 60 days after the date of the
Company's written request for the consent of holders of New Notes to the
Prohibited Act or Increased Debt Capacity, and notice of the Company's election
to redeem the Non-Consenting Notes, if not included in such written request for
consent, will be mailed at least 15 days before the Redemption Date to each
holder of New Notes to be redeemed at such holder's registered address.
CHANGE OF CONTROL
With respect to the New Notes of any series, if both (i) a Change of
Control of the Company shall occur at any time after the date on which New Notes
of such series are first issued and on or prior to the Stated Maturity Date of
the New Notes of such series and (ii) on any date during the period commencing
90 days before and ending 90 days after a public filing has been made with the
Commission or other general public disclosure has been made indicating the
occurrence of such Change of Control, the then current rating of the New Notes
of such series by Duff & Phelps Credit Rating Co. or its successor ("D&P") or by
Moody's Investors Service, Inc. or its successor ("Moody's") is downgraded to
lower than BBB-, in the case of D&P (or an equivalent successor rating), or
lower than Baa3, in the case of Moody's (or an equivalent successor rating) and,
in the event that such downgrading shall have occurred during the 90-day period
prior to such public disclosure, the rating assigned to such series of New Notes
by D&P or Moody's as of the close of business on the date of such public
disclosure remains lower than BBB-or lower than Baa3, respectively (the
occurrence of the conditions specified in both (i) and (ii) above being a "Put
Event"), then each holder of New Notes of such series shall have the right to
require the Company to repurchase all or any portion (such portion to be
$100,000 in Original Principal Amount or an integral multiple thereof) of such
holder's New Notes of such series at a purchase price equal to 100% of the
unpaid principal amount of such New Note (or such portion), plus accrued and
unpaid interest on the unpaid principal amount of such New Note (or such
portion) to the date fixed for purchase pursuant to the Indenture (the "Purchase
Date"), all as provided in, and subject to the terms of, the Indenture. Within
15 days following the occurrence of a Put Event, the Company will give a notice
to each holder of New Notes of such series setting forth, among other things,
details regarding the right of such holder to require the Company to repurchase
such holder's New Notes of such series, the Purchase Date, and the name and
address of the Paying Agent (which for this purpose will be the Trustee) to
which such New Notes are to be presented and surrendered. The Purchase Date
will be the 90th day following the date on which such notice is mailed by the
Company to holders of New Notes of such series at their registered addresses.
Any holder intending to exercise its right to put its New Notes of such series
to the Company must deliver written notice of such intention to the Paying
Agent, and concurrently present and surrender to the Paying Agent the New Notes
to be purchased, by the close of business on the fifteenth day preceding the
Purchase Date, after which time the right of holders of New Notes of such series
to require the Company to purchase the same shall terminate. The Company will
not be obligated, with respect to the New Notes of any series, to purchase such
New Notes or give notice to the holders thereof with respect to more than one
Put Event. (Section 3.08) The applicability of this provision of the New Notes
is limited to the circumstances described above and this provision is not
designed to, and may not, provide rights to the holders of New Notes in all
circumstances in which the market value of the New Notes held by them may be
adversely affected, whether as the result of the Company's engaging in a highly
leveraged transaction or otherwise. This provision would not apply to the
acquisition of beneficial ownership of shares of the Company's common stock by a
Controlling Person or by any other person if and for so long as the shares of
the Company's common stock beneficially owned by the Controlling Persons
represent in the aggregate thirty percent (30%) or more of the combined voting
power of all shares of the Company's common stock calculated on a fully diluted
basis. The term "Controlling Person" includes each of the Company's Chairman of
the Board, its President and each director of the Company as of the date of the
Indenture, their respective family members, estates and heirs, Kearns-Tribune
Corporation and the trustee under the Company's Employee Stock Purchase Plan.
See "-- Certain Definitions." The proposed TCI/Liberty Combination, if
consummated, will not result in a Change of Control of the Company. See "Recent
Developments".
The Company's payment obligations with respect to the New Notes,
including its obligation to pay the purchase price of New Note the holder of
which has elected to require the Company to repurchase such New Note following
the occurrence of a Put Event, are unsecured, unsubordinated obligations of the
Company and rank on a
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parity in right of payment with other unsecured, unsubordinated indebtedness of
the Company. Approximately $5.328 billion of the Company's outstanding
indebtedness at March 31, 1994 (excluding for this purpose the Existing Notes)
include provisions that would permit the holders to require the Company to
repurchase or repay such indebtedness upon the occurrence of a Put Event, a
Change of Control of the Company or events similar thereto, which obligation of
the Company would rank on a parity with its repurchase obligation with respect
to the New Notes. In addition, approximately $4.164 billion of the outstanding
indebtedness of the Company's subsidiaries include provisions that would require
the applicable subsidiary to repurchase or repay such indebtedness upon a Change
of Control of the Company or events similar thereto. The Company anticipates
that it and its subsidiaries will continue to issue indebtedness with similar
covenants in the future. If a Put Event were to occur, there can be no
assurance that the Company would have sufficient funds to satisfy its repurchase
obligations with respect to the New Notes and such other indebtedness. The
failure of the Company to repurchase a New Note which the holder has elected to
require it to repurchase following the occurrence of a Put Event would
constitute an Event of Default with respect to such New Notes and may cause the
acceleration of the maturity of other indebtedness of the Company after notice
and/or passage of time.
No amendment, supplement or waiver may be made to the Indenture or to
the New Notes of any series which would materially adversely affect the rights
of any holder of New Notes to require the Company to purchase such New Notes
upon the occurrence of a Put Event without the consent of the holder of each
outstanding New Note of the series affected thereby.
The Company will comply with any applicable requirements of Rule 14e-1
promulgated under the Exchange Act and any applicable securities laws and
regulations in connection with the performance of its obligations with respect
to any Put Event.
METHOD OF PAYMENT
Payment of the principal, premium, if any, and interest on the New
Notes will be made in money of the United States of America that at the time of
payment is legal tender for the payment of public and private debts and may be
made by check payable in such money, to the holders thereof upon presentation
of such New Notes at the office of the Paying Agent; provided, however, that
payment of principal and interest payable on a Principal Payment Date or an
Interest Payment Date (other than the Stated Maturity Date) without
presentation of the New Note (i) may be made by check mailed to a holder's
registered address or (ii) upon receipt by the Paying Agent of appropriate
instructions in writing from the holder thereof (provided such holder is the
holder of New Notes with an aggregate unpaid principal amount of $1,000,000 or
more having the same Principal Payment Date or Interest Payment Date, as
applicable), not less than 16 days prior to such Principal Payment Date or
Interest Payment Date, shall be made by wire transfer of immediately available
funds to such account at a bank in The City of New York, New York (or other
bank consented to by the Company and the Paying Agent) as the holder shall have
designated in such instructions so long as such bank has appropriate facilities
therefor. Except as provided above, a holder must surrender its New Note to a
Paying Agent to collect principal, premium, if any, and interest payable on a
Maturity Date. Provided such presentation and surrender is made on a Maturity
Date (other than a Principal Payment Date) by a holder of New Notes to be paid,
prepaid, redeemed or purchased on such Maturity Date in an aggregate unpaid
principal amount of $1,000,000 or more (determined before giving effect to the
principal payment to be made on such Maturity Date), payment of the principal,
premium, if any, and interest payable on such Maturity Date with respect to
such New Note shall be made by wire transfer of immediately available funds to
such account at a bank in The City of New York, New York (or other bank
consented to by the Company and the Paying Agent) as the holder shall have
designated, provided that such bank has appropriate facilities therefor and
that appropriate wire transfer instructions in writing have been received by
the Paying Agent not less than 16 days prior to such Maturity Date. If a
Maturity Date or an Interest Payment Date falls on a day that is not a Business
Day, the related payment of principal, premium, if any, or interest payable
with respect to such Maturity Date or Interest Payment Date shall be paid on
the next succeeding Business Day, and no interest will accrue on the amount so
payable for the period on and after such Maturity Date or Interest Payment
Date, as the case may be. (Paragraph 3 of the New Notes)
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CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Designation of Restricted Subsidiaries. The Company may at any time
designate an Unrestricted Subsidiary as a Restricted Subsidiary or designate a
Restricted Subsidiary as an Unrestricted Subsidiary, provided that (1) no Event
of Default or Default shall exist immediately before or after such designation,
(2) on a pro forma basis at the time of such designation, the Company would be
permitted to incur at least $1.00 of additional Funded Debt pursuant to clause
(2) of the "Indebtedness" covenant below, (3) such designation shall not render
the Company and its Restricted Subsidiaries insolvent or generally unable to
pay its or their respective debts as they become due, and (4) an Officers'
Certificate with respect to such designation is delivered to the Trustee within
75 days after the end of the fiscal quarter of the Company in which such
designation is made (or, in the case of a designation made during the last
fiscal quarter of any fiscal year of the Company, within 120 days after the end
of such fiscal year), which Officers' Certificate shall state the effective
date of such designation. The Company shall make the initial designation of
Restricted Subsidiaries with respect to the New Notes, and deliver the
required Officers' Certificate to the Trustee, on or prior to the date of
initial issuance of New Notes of each series. (Section 4.03)
Debt Service Test. The Company will not permit the Annualized Cash
Flow of the Company and its Restricted Subsidiaries for any fiscal quarter of
the Company to be less than 110% of Consolidated Debt Service of the Company
and its Restricted Subsidiaries (computed on a pro forma basis) for the four
fiscal quarters immediately succeeding the end of such fiscal quarter.
(Section 4.07)
Restricted Payments. Neither the Company nor any Restricted
Subsidiary may (i) pay or declare any dividend on any class of its capital
stock (other than dividends payable solely in capital stock of the Company or
warrants, rights or options to acquire capital stock of the Company) or make
any other distribution on account of any class of its capital stock, (ii)
retire, redeem, purchase or otherwise acquire, directly or indirectly, any
shares of any class of its capital stock or any warrants, rights or options to
acquire any such shares, or (iii) make or provide for any mandatory sinking
fund payments required in connection with any class of its capital stock (all
of the foregoing being "Restricted Payments"), except that (1) any Restricted
Subsidiary may make Restricted Payments to the Company or another Restricted
Subsidiary in respect of cash and other forms of dividends and distributions on
account of any series or class of its capital stock, (2) the Company or any
Restricted Subsidiary may make cash dividends on Money Market Preferred Stock
included within the definition of Funded Debt, and (3) the Company or any
Restricted Subsidiary may make any other Restricted Payment, provided that in
each case permitted under this clause (3), (a) immediately before and after
giving effect to such Restricted Payment, no Event of Default or Default exists
or would then be continuing, and (b) immediately before and after giving effect
to such transaction, the Company would be permitted to incur at least $1.00 of
additional Funded Debt pursuant to clause (2) of the "Indebtedness" covenant.
Neither the Company nor any Restricted Subsidiary may (i) make any payment of
principal, interest or premium, if any, in respect of Subordinated Debt if (x)
immediately before or after giving effect to such payment an Event of Default
or Default exists and is continuing, or (B) a Put Event shall have occurred
(other than a Put Event with respect to which all time periods for the purchase
of New Notes to be purchased at the option of the holders have fully expired),
provided, however, that the Company may make regularly scheduled payments with
respect to Approved Subordinated Debt in accordance with its terms as in effect
on the date of the Indenture (but subject to the subordination terms thereof);
or (ii) make any voluntary purchase, redemption, retirement or prepayment of
principal, interest or premium, if any, in respect of Approved Subordinated
Debt if immediately before or after giving effect to such purchase, redemption,
retirement or prepayment, as the case may be, an Event of Default or Default
exists and is continuing. As of December 31, 1993, the aggregate outstanding
principal amount of the Approved Subordinated Debt was $441,000.
Loan and Investment Limitations. Neither the Company nor any
Restricted Subsidiary may make or permit to remain outstanding any loan or
advance to, or provide any Guaranty (or enter into any contract or agreement
which is substantially equivalent in economic effect to a Guaranty) of the
obligations of, or own, purchase or acquire
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any stock, obligation or securities of, or any other interest in, or make any
capital contribution to, any person (each an "Investment"), except (1)
endorsements of negotiable instruments for collection in the ordinary course;
(2) Investments in the Company by a Restricted Subsidiary or Investments by the
Company or any Restricted Subsidiary in any Restricted Subsidiary (except that
an Investment in a less than Wholly-owned Restricted Subsidiary will be deemed a
Restricted Payment subject to the "Restricted Payments" covenant to the extent
that the Investment increases the capitalization of the Restricted Subsidiary
and the Company or Restricted Subsidiary making the Investment does not receive
an equity interest or other economic equivalent attributable to such
Investment); (3) existing Investments listed on an Exhibit to the Indenture; (4)
Investments in commercial paper rated in the highest category of ratings by
Standard & Poor's Corporation or Moody's; (5) Investments in certificates of
deposit with maturities of less than 12 months issued by certain commercial
banks; (6) Investments in obligations of or guaranteed by the United States
Government or any agency thereof having a term of less than one year; (7)
certain Investments in Unrestricted Subsidiaries in connection with the
Company's normal cash management practices; (8) other Investments, provided that
(a) such Investment is without recourse (other than to the extent permitted
in clause (9) below), (b) no Event of Default or Default exists immediately
before or after giving effect to such Investment, (c) on a pro forma basis
immediately upon making such Investment, the Company would be permitted to
incur at least $1.00 of additional Funded Debt under clause (2) of the
"Indebtedness" covenant, and (d) such Investment will not render the Company and
its Restricted Subsidiaries insolvent or unable to pay its or their respective
debts as they become due; and (9) any Guaranty, provided that (a) the maximum
aggregate amount of liability under such Guaranty and all Guaranties then
outstanding does not exceed 10% of the maximum aggregate amount of Short-Term
Debt and Funded Debt which the Company and its Restricted Subsidiaries would
then be permitted to incur under clause (2) of the "Indebtedness" covenant, (b)
the amount of the liability under such Guaranty can be readily identified and
shall be expressly subject to a specified limit, (c) the maximum amount of the
liability under such Guaranties will be deemed Short-Term Debt or Funded Debt
for all purposes under the Indenture, (d) the Company or the Restricted
Subsidiary could incur the Short-Term Debt or Funded Debt evidenced by such
Guaranty under clause (2) of the "Indebtedness" covenant, (e) immediately upon
incurring such Guaranty, the Company or the Restricted Subsidiary would be
permitted to incur at least $1.00 of additional Funded Debt pursuant to clause
(2) of the "Indebtedness" covenant, and (f) no Event of Default or Default
exists immediately before or after giving effect to the transaction. A Guaranty
that was permitted to be incurred pursuant to clause (9) above at the time of
incurrence may remain outstanding notwithstanding that it would not be
permitted to be incurred thereafter. (Section 4.09)
Liens. Neither the Company nor any Restricted Subsidiary may create,
assume or suffer to exist any Lien upon any of their respective properties or
assets, real, personal or mixed, tangible or intangible, whether now owned or
hereafter acquired, except (1) Liens upon property of a Restricted Subsidiary
in favor of and securing Indebtedness owing to the Company or another
Restricted Subsidiary; (2) certain specified statutory and good faith deposits
and similar Liens; (3) Liens imposed by law or for taxes, assessments or other
governmental charges or levies if the obligation secured thereby is not yet due
or subject to penalties for non-payment, or the validity or amount of which is
being contested by appropriate legal proceedings and with respect to which
adequate reserves have been established in accordance with generally accepted
accounting principles, and Liens arising out of a judgment or award with
respect to which the Company or Restricted Subsidiary is prosecuting an appeal
or proceedings for review and with respect to which it shall have secured a
stay of execution pending such appeal or proceedings, or with respect to which
it shall have posted a bond and established adequate reserves in accordance
with generally accepted accounting principles for the payment of such judgment
or award; (4) purchase money Liens upon any real property or equipment or
interest therein, provided that (a) the outstanding principal amount of the
Short-Term Debt or Funded Debt secured by such Lien does not at any time exceed
100% of the lesser of (i) the purchase price paid for the real property,
equipment or interest therein which is encumbered by such Lien or (ii) the fair
market value at the time of purchase of such real property or equipment or
interest therein, (b) such Lien does not encumber any other asset owned by the
Company or any Restricted Subsidiary, (c) the Short-Term Debt or Funded Debt
secured by such Lien is permitted under clause (2) of the "Indebtedness"
covenant, and (d) no Event of Default or Default exists immediately before or
after giving effect to such transaction; (5) existing Liens listed on an
Exhibit to the Indenture; (6) a pledge by the Company or a Restricted
Subsidiary of its interest in any shares of any class of stock or other
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security of any Unrestricted Subsidiary, provided that the Indebtedness or
obligation secured by such Lien is without recourse to the Company or any
Restricted Subsidiary or any of its or their other property and assets, except
as would otherwise be permitted under this "Liens" covenant; and (7) a Lien not
otherwise permitted under this "Liens" covenant if the Company makes or causes
to be made effective provision whereby the then outstanding New Notes (together
with, if the Company shall so determine, any other Indebtedness ranking equally
with the New Notes, whether then existing or thereafter created) are secured
equally and ratably with (or prior to) the Indebtedness secured by such Lien
for so long as such Indebtedness is so secured, and the Company delivers to the
Trustee an officers' certificate with respect to compliance with this clause
(7) and an opinion of counsel as to the validity of the Lien so securing the
New Notes. (Section 4.10)
Indebtedness. Neither the Company nor any Restricted Subsidiary may
incur or assume any Short-Term Debt or Funded Debt, including any Guaranty,
except (1) the Indebtedness evidenced by the New Notes; (2) Short-Term Debt or
Funded Debt, provided that (a) after giving effect to such transaction, the
aggregate amount of Senior Debt then outstanding shall not exceed seven times
Annualized Cash Flow of the Company and its Restricted Subsidiaries for the most
recent three-month period ending the month immediately preceding such
transaction (after giving effect to the inclusion of Cash Flow derived from the
use of such Short-Term Debt or Funded Debt), (b) after giving effect to such
transaction, the aggregate amount of Total Debt then outstanding shall not (i)
at any time prior to December 1, 1999 exceed eight times Annualized Cash Flow of
the Company and its Restricted Subsidiaries for the most recent three-month
period ending the month immediately preceding such transaction (after giving
effect to the inclusion of Cash Flow derived from the use of such Short-Term
Debt or Funded Debt), and (ii) on or after December 1, 1999 exceed seven times
Annualized Cash Flow of the Company and its Restricted Subsidiaries for the
three-month period ending the month immediately preceding such transaction
(after giving effect to the inclusion of Cash Flow derived from the use of such
Short-Term Debt or Funded Debt), (c) immediately before and after giving effect
to such transaction no Default or Event or Default shall exist, and (d) if any
such Short-Term Debt or Funded Debt is secured by Liens, such Short-Term Debt or
Funded Debt is permitted under clause (3) below and if any such Short-Term Debt
or Funded Debt is Short-Term Debt or Funded Debt of a Restricted Subsidiary, it
is permitted under clause (4) below; (3) Short-Term Debt or Funded Debt secured
by purchase money Liens permitted under the "Liens" covenant, provided that (a)
such Short-Term Debt or Funded Debt is permitted under clause (2) above, and
immediately after incurring or assuming such Short-Term Debt or Funded Debt, the
sum of the aggregate outstanding principal amount of all Short-Term Debt and
Funded Debt of the Company and the Restricted Subsidiaries secured by Liens plus
the aggregate outstanding principal amount of all Short-Term Debt and Funded
Debt of all Restricted Subsidiaries (excluding amounts otherwise included as
secured Short-Term Debt or Funded Debt of the Company and the Restricted
Subsidiaries) shall not exceed 15% of the maximum aggregate amount of all
Short-Term Debt and Funded Debt which the Company and its Restricted
Subsidiaries would then be permitted to incur pursuant to clause (2) above, and
(b) immediately before and after giving effect to such transaction no Event of
Default or Default shall exist; and (4) Short-Term Debt or Funded Debt incurred
or assumed by a Restricted Subsidiary (including outstanding Funded Debt of any
Unrestricted Subsidiary at the time it is designated a Restricted Subsidiary),
provided that (a) such Short-Term Debt or Funded Debt is permitted under clause
(2) above, and immediately after incurring or assuming such Short-Term Debt or
Funded Debt, the sum of the aggregate outstanding principal amount of all
Short-Term Debt and Funded Debt of all Restricted Subsidiaries plus the
aggregate outstanding principal amount of all Short-Term Debt and Funded Debt of
the Company and the Restricted Subsidiaries secured by purchase money Liens
permitted under the "Liens" covenant (excluding amounts otherwise included as
Short-Term Debt or Funded Debt of any Restricted Subsidiary) shall not exceed
15% of the maximum aggregate amount of all Short-Term Debt and Funded Debt which
the Company and its Restricted Subsidiaries would then be permitted to incur
pursuant to clause (2) above, and (b) immediately before and after giving effect
to such transaction no Event of Default or Default shall exist. (Section 4.11)
Indebtedness to Unrestricted Subsidiaries. Neither the Company nor
any Restricted Subsidiary may make any payment (including prepayments and
purchases) in respect of Indebtedness for borrowed money owing to and held by
an Unrestricted Subsidiary or a Restricted Subsidiary which is not a
Wholly-owned Restricted Subsidiary if, immediately before or after giving
effect to such payment, (x) an Event of Default or a Default shall have
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occurred and be continuing, (y) on a pro forma basis, and after giving
immediate effect to such transaction, the Company would not be permitted to
incur at least $1.00 of additional Funded Debt under clause (2) of the
"Indebtedness" covenant, or (z) a Put Event shall have occurred (other than a
Put Event with respect to which all time periods for the purchase of New Notes
to be purchased at the option of the holders have expired), provided, however,
that the Company may reimburse the Subsidiaries for expenditures made in the
day-to-day operations of the Subsidiaries pursuant to the Company's normal cash
management practices. (Section 4.12)
Mergers and Acquisitions. Neither the Company nor any Restricted
Subsidiary may merge or consolidate with or acquire the stock or assets of any
person, except that: (1) the Company may consolidate with or merge into any
person, provided that (a) the person formed by such consolidation or into which
the Company is merged shall be a corporation organized and existing under the
laws of the United States, any State thereof or the District of Columbia and
shall expressly assume, by supplemental indenture, all the obligations of the
Company under the New Notes and the Indenture, (b) on a pro forma basis, and
after giving immediate effect to such transaction, no Event of Default or
Default shall exist, and (c) on a pro forma basis, and after giving immediate
effect to such transaction, such successor corporation would be permitted to
incur at least $1.00 of additional Funded Debt pursuant to clause (2) of the
"Indebtedness" covenant; (2) the Company or a Restricted Subsidiary may merge
with, or acquire all or substantially all of the stock or assets of, any person
other than a Restricted Subsidiary, in a transaction in which the Company or the
Restricted Subsidiary shall be the surviving or continuing corporation, provided
that (i) the Company or the Restricted Subsidiary shall assume all outstanding
Indebtedness of the non-surviving or acquired person with respect to which the
Company or the Restricted Subsidiary could be held legally liable, or which
could be satisfied from any assets of the Company or the Restricted Subsidiary
and such Indebtedness would then be permitted as additional Funded Debt under
clause (2) of the "Indebtedness" covenant, (ii) on a pro forma basis, and after
giving immediate effect to such transaction, such transaction would not result
in a violation of the "Limitation on Other Business" covenant, (iii) on a pro
forma basis, and after giving immediate effect to such transaction and the
incurrence or assumption of such Indebtedness, no Event of Default or Default
shall exist, and (iv) on a pro forma basis, and after giving immediate effect to
such transaction, the Company would be permitted to incur at least $1.00 of
additional Funded Debt pursuant to clause (2) of the "Indebtedness" covenant;
(3) (A) a Restricted Subsidiary may merge into the Company and may merge into or
consolidate with another Restricted Subsidiary, (B) a Restricted Subsidiary may
sell, lease or otherwise dispose of all or substantially all of its assets to,
the Company or another Restricted Subsidiary, and (C) the Company or any
Restricted Subsidiary may acquire the stock or assets of any other Restricted
Subsidiary, provided, however, that the Company may not merge with, a Restricted
Subsidiary may not merge into or consolidate with, and neither the Company or a
Restricted Subsidiary may purchase or otherwise acquire all or substantially all
of the stock or assets of a Restricted Subsidiary, other than a Wholly-owned
Restricted Subsidiary, unless any Indebtedness or other obligation to purchase
or otherwise provide compensation for all or any part of the stock or assets of,
or any interest in, such other Restricted Subsidiary not then owned by the
Company or the Restricted Subsidiary surviving such merger or consolidation or
making such acquisition, as the case may be, incurred or to be incurred in
connection with such transaction would then be permitted as additional Funded
Debt under clause (2) of the "Indebtedness" covenant; (4) the Company or a
Restricted Subsidiary may, in the ordinary course of its business, acquire
assets of any person, other than assets which constitute all or any substantial
part of the assets of such person; and (5) the Company or a Restricted
Subsidiary may make acquisitions of the stock or assets of any person permitted
under the "Loan and Investment Limitations" covenant. (Section 4.13)
Sale of Assets. Neither the Company nor any Restricted Subsidiary may
sell, lease, transfer or otherwise dispose of any of its properties and assets
(including pursuant to an order, judgment or decree requiring the divestiture of
assets) outside of the normal course of business as conducted as of the date of
the Indenture, except that the Company or a Restricted Subsidiary may sell,
lease, transfer or otherwise dispose of less than substantially all of its
assets to any person other than a Restricted Subsidiary, provided that in each
such case (i) the Company or such Restricted Subsidiary receives consideration
which represents the fair market value of such assets at the time of such sale
or disposition, (ii) any such sale or disposition shall be on a non-recourse
basis (except as permitted under clause (9) of the "Loan and Investment
Limitations" covenant), (iii) no Event of Default or Default shall have occurred
and be continuing either before or after the consummation of such transaction,
and (iv) after giving effect
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to such transaction, the Company would be permitted to incur at least $1.00 of
additional Funded Debt pursuant to clause (2) of the "Indebtedness" covenant,
and provided, further that: (1) In the case of a sale or disposition of an
asset or group of assets (other than as provided in clauses (2) or (3) below),
the following conditions are satisfied: (A) during the twelve-month period
ending the month immediately preceding the month in which the proposed sale or
disposition occurs, the sum of the Annualized Cash Flow attributable to the
assets to be sold or disposed of by the Company or any Restricted Subsidiary for
the three-month period ending the month immediately preceding the month in which
such sale or disposition would occur, plus the Annualized Cash Flow attributable
to all other assets sold or disposed of by the Company or any Restricted
Subsidiary during such twelve-month period for the three-month period ending the
month immediately preceding the month in which the respective sales or
dispositions occurred, does not exceed 15% of the Annualized Cash Flow of the
Company and its Restricted Subsidiaries for the three-month period ending the
month immediately preceding the month in which the proposed sale or disposition
occurs, including the Annualized Cash Flow for the same three-month period
related to any Unrestricted Subsidiary or to any Subsidiary which is acquired by
the Company or a Restricted Subsidiary which in each case is designated to be a
Restricted Subsidiary during the same calendar month as the proposed sale or
disposition; and (B) on a cumulative basis in respect of all assets sold or
disposed of by the Company or any Restricted Subsidiary during the five-year
period ending the month immediately preceding the month in which any proposed
sale or disposition would occur, the sum of the Annualized Cash Flow
attributable to each such asset so sold or disposed of for the three-month
period ending the month immediately preceding the month in which such asset was
so sold or disposed of does not, in the aggregate, exceed 40% of the Annualized
Cash Flow of the Company and its Restricted Subsidiaries for the three-month
period ending the month immediately preceding the month in which the proposed
sale or disposition would occur, including the Annualized Cash Flow for the same
three-month period related to any Unrestricted Subsidiary or to any Subsidiary
which is acquired by the Company or a Restricted Subsidiary which in each case
is designated to be a Restricted Subsidiary during the same calendar month as
the proposed sale or disposition; or (2) In the case of a trade or exchange of
an asset or group of assets, the following conditions are satisfied: (A) the
assets received by the Company or the Restricted Subsidiary are free of any
Liens except as permitted under the "Liens" covenant; (B) during the
twelve-month period ending the month immediately preceding the month in which
the proposed exchange transaction occurs, the sum of the Annualized Cash Flow
attributable to the assets to be exchanged by the Company or any Restricted
Subsidiary for the three- month period ending the month immediately preceding
the month in which such exchange transaction would occur, plus the Annualized
Cash Flow attributable to all other assets exchanged by the Company or any
Restricted Subsidiary during such twelve-month period for the three-month period
ending the month immediately preceding the month in which the respective
exchange transactions occurred, does not exceed 15% of the Annualized Cash Flow
of the Company and its Restricted Subsidiaries for the three-month period ending
the month immediately preceding the month in which the proposed exchange
transaction occurs, including the Annualized Cash Flow for the same three-month
period related to any Unrestricted Subsidiary or to any Subsidiary which is
acquired by the Company or a Restricted Subsidiary which in each case is
designated to be a Restricted Subsidiary during the same calendar month as the
proposed exchange transaction; (C) on a cumulative basis in respect of all
assets exchanged by the Company or any Restricted Subsidiary during the
five-year period ending the month immediately preceding the month in which any
proposed exchange transaction would occur, the sum of the Annualized Cash Flow
attributable to each such asset so traded or exchanged for the three-month
period ending the month immediately preceding the month in which such asset was
so traded or exchanged does not, in the aggregate, exceed 40% of the Annualized
Cash Flow of the Company and its Restricted Subsidiaries for the three-month
period ending the month immediately preceding the month in which the proposed
exchange transaction would occur, including the Annualized Cash Flow for the
same three- month period related to any Unrestricted Subsidiary or to any
Subsidiary which is acquired by the Company or a Restricted Subsidiary which in
each case is designated to be a Restricted Subsidiary during the same calendar
month as the proposed exchange transaction; (D) such transaction shall not
render the Company and its Restricted Subsidiaries insolvent or generally unable
to pay its or their respective debts as they become due; (E) the Company
notifies the Trustee of such trade or exchange; and (F) in the case of a trade
or exchange of an asset or group of assets, in one transaction or a series of
related transactions, in which the sum of the Annualized Cash Flows attributable
to the assets traded or exchanged by the Company or any Restricted Subsidiary
for the three-month period ending the month immediately preceding the month in
which such exchange transaction (or, if a series of transactions, the last
transaction) would occur exceeds 5% of
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the Annualized Cash Flow of the Company and its Restricted Subsidiaries for such
three- month period, the assets received by the Company or the Restricted
Subsidiary in such exchange transaction shall be assets used in the CATV
Business; or (3) In the case of the sale or other disposition of any shares of
stock, any Indebtedness or any security of a Restricted Subsidiary, the
following conditions are satisfied: (A) all shares of stock, all Indebtedness
and all securities of such Restricted Subsidiary at the time owned by the
Company or by any other Restricted Subsidiary are sold or otherwise disposed of
to a person other than the Company or any Restricted Subsidiary; (B) immediately
after each such sale or other disposition, such Restricted Subsidiary shall not
own, directly or indirectly, any shares of stock, any Indebtedness or any
security of the Company or of any other Restricted Subsidiary; and (C) such sale
or other disposition would then be permitted under clause (1) or (2) above, as
the case may be. Nothing contained in the "Sale of Assets" covenant prohibits
the sale, transfer or other disposition by the Company or any Restricted
Subsidiary of all or any part of the assets and property, or of any shares of
stock, any Indebtedness or any security, of any Unrestricted Subsidiary,
provided that any such sale, transfer or disposition shall, in respect of any
Indebtedness or obligation related thereto, be without recourse to the Company
or any Restricted Subsidiary, or any of its or their other property and assets
except as would be permitted under the "Liens" covenant. Further, nothing
contained in the "Sale of Assets" covenant prohibits the making of any
Restricted Payment permitted by the "Restricted Payments" covenant or any
Investment permitted by the "Loan and Investment Limitations" covenant.
(Section 4.14)
Sale or Discount of Receivables. Neither the Company nor any
Restricted Subsidiary may sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
(Section 4.15)
Limitation on Other Business. The Company will not, during any
three-month period, permit less than 80% of the total Gross Revenues of the
Company and its Restricted Subsidiaries to be derived from the acquisition,
ownership, expansion, operation and maintenance of a CATV Business. (Section
4.16)
ERISA. Neither the Company nor any Restricted Subsidiary may: (a)
terminate or withdraw from any Plan so as to result in any material liability
to the Pension Benefit Guaranty Corporation; (b) engage in or permit any person
to engage in any Prohibited Transaction involving any Plan which would subject
the Company to any material tax, penalty or other liability; (c) incur or
suffer to exist any material funding deficiency described in Section 302 of
ERISA, whether or not waived, involving any Plan; or (d) allow or suffer to
exist any event or condition which presents a material risk of incurring a
material liability to the Pension Benefit Guaranty Corporation. For the
purpose of this covenant only, a tax, penalty or other liability shall be
considered material if it is in excess of 5% of consolidated net earnings of
the Company and its Restricted Subsidiaries and such tax, penalty or other
liability is not covered in full by insurance. (Section 4.17)
Consolidated Tax Returns. The Company will not file, or consent to the
filing of, any consolidated income tax return with any person other than a
subsidiary, unless the Company shall become a subsidiary of, or controlled by or
under common control with, or is merged into or consolidated with any person,
including, without limitation, any Affiliate, in which event the Company shall
be liable for and pay no more tax than would be payable by the Company if the
Company were not a subsidiary of, or under the control of or under common
control with, or had not been merged into or consolidated with, such person.
(Section 4.18)
Disposition of Stock and Indebtedness of Restricted Subsidiaries.
Neither the Company nor any Restricted Subsidiary may sell or otherwise dispose
of any shares of stock or any Indebtedness of a Restricted Subsidiary, except
(1) to the Company or to a Restricted Subsidiary, and (2) as permitted under
the "Restricted Payments", "Mergers and Acquisitions" and "Sale of Assets"
covenants. (Section 4.19)
Transactions With Affiliates. Neither the Company nor any Restricted
Subsidiary may (a) make any loan or advance or otherwise extend credit to any
of their respective Affiliates, or (b) enter into any other transaction with
any of their respective Affiliates, if the terms and conditions of such loan,
advance, extension of credit or other
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transaction are, at the time of the making or entering into of any thereof, less
favorable to the Company or such Restricted Subsidiary in any material respect
than the terms and conditions which would apply in a similar transaction with a
person other than such Affiliate, provided, however, that this covenant shall
not apply to (i) loans or advances made by the Company or any Restricted
Subsidiary to an Unrestricted Subsidiary which are permitted to be incurred
under the "Loan and Investment Limitations" covenant, (ii) management services
rendered by the Company or any Restricted Subsidiary in the ordinary course of
business to cable television systems of Affiliates for which services the
Company or such Restricted Subsidiary is fully and fairly compensated on a
current basis by such Affiliate, (iii) any transaction involving the Company and
one or more Restricted Subsidiaries, exclusively, (iv) any transaction involving
two or more Restricted Subsidiaries, exclusively, (v) any transaction approved
by the Board of Directors of the Company as being fair and reasonable and in the
best interest of the Company involving the Company and one or more of its
directors, officers or employees with respect to their compensation or
incentives to continued service with the Company, or (vi) any Restricted Payment
permitted pursuant to the "Restricted Payments" covenant. (Section 4.20)
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms.
"Affiliate" of any person means any other person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such person. A person shall be deemed to control a corporation if such person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such corporation, whether through the ownership
of voting securities, by contract or otherwise.
"Annualized Cash Flow" means, as of any date of determination, the
product of (i) Cash Flow for the fiscal quarter ending on such date or most
recently ended prior to such date, or as the context may require, Cash Flow for
the three-month period ending the month immediately preceding such date,
multiplied by (ii) four. The determination of Annualized Cash Flow of the
Company and its Restricted Subsidiaries shall be made on a consolidated basis.
"Capitalized Lease Obligations" means all rental obligations which, in
accordance with generally accepted accounting principles, are or will be
required to be capitalized on the books of the Company or any Subsidiary, in
each case taking as the amount thereof the amount which would be treated as
Indebtedness (net of interest expense) in accordance with such principles.
"Cash Flow" means, for any period for which the amount thereof is to
be determined, (a) the sum of (i) Net Income, plus (ii) interest, depreciation
and amortization, deferred taxes and other non-cash charges (to the extent
deducted in determining Net Income) to income of the Company and its Restricted
Subsidiaries for such period, less (b) deferred taxes or other non-cash items
which are a non-cash contribution to Net Income, excluding in each case all
non-recurring items. Cash Flow of the Company and its Restricted Subsidiaries
shall be determined, for any period for which the amount thereof is to be
determined, after giving effect to acquisitions and dispositions of assets of
the Company or any of the Restricted Subsidiaries (and designations of
Restricted Subsidiaries and Unrestricted Subsidiaries) during such period as if
such transactions had occurred on the first day of such period.
"CATV Business" of any person means the business of owning a cable
television system or systems and related communications activities.
"Change of Control" of the Company means the acquisition by any person
(other than the Company, any Subsidiary, any employee stock ownership plan or
other employee benefit plan of the Company or any Subsidiary, or any
Controlling Person) during any period of 12 consecutive months of beneficial
ownership of shares of the common stock of the Company representing in the
aggregate 30% or more of the combined voting power of all shares of the
Company's common stock, calculated on a fully diluted basis as of the date
immediately prior to the
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date of such acquisition (or, if there be more than one acquisition during such
twelve-month period, the date of the last such acquisition); provided, however,
that notwithstanding the foregoing no Change of Control shall be deemed to have
occurred if and for so long as the shares of the common stock of the Company
beneficially owned by the Controlling Persons represent in the aggregate 30% or
more of the combined voting power of all shares of the Company's common stock
calculated on a fully diluted basis.
"Code" means the Internal Revenue Code of 1986.
"consolidated," when used with reference to any financial term (but
not when used with respect to any tax return or tax liability), means the
aggregate for two or more persons of the amounts signified by such term for all
such persons, with intercompany items eliminated and, with respect to earnings,
after eliminating the portion of earnings properly attributable to minority
interests, if any, in the capital stock of any such person.
"Controlling Person" means each of (1) the Chairman of the Board of
the Company as of the date of the Indenture, (2) the President of the Company
as of the date of the Indenture, (3) each of the directors of the Company as of
the date of the Indenture, (4) the respective family members, estates and heirs
of each of the persons referred to in clauses (1) through (3) above and any
trust or other investment vehicle for the primary benefit of any of such
persons or their respective family members of heirs, (5) Kearns-Tribune
Corporation, a Delaware corporation or any successor thereto by merger or
consolidation and (6) the trustee under the Company's Employee Stock Purchase
Plan or any successor plan. As used with respect to any person, the term
"family member" means the spouse, siblings and lineal descendants of such
person. The trustee under the Company's Employee Stock Purchase Plan or any
successor plan shall be deemed to have beneficial ownership of all shares of
common stock of the Company held under the plan, whether or not allocated to or
vested in participants' accounts.
"Debt Service" of the Company and its Restricted Subsidiaries means,
for any period for which the amount thereof is to be determined, the sum of
(i) all interest paid or payable, and if floating interest obligations are
involved, interest at the rate in effect at the time of calculation, plus all
amounts of principal required to be paid during such period in respect of the
New Notes, any other then outstanding Short-Term Debt or Funded Debt
(excluding, however, the principal amount of any Renewable Indebtedness or
Refundable Indebtedness included in Funded Debt, as set forth in the definition
of "Funded Debt"), together with the aggregate amounts of all payments required
to be made by the Company or any of its Restricted Subsidiaries during such
period to obtain or effect the satisfaction or discharge of, or to acquire, the
New Notes, or any of such other Short-Term Debt or Funded Debt, provided that
(a) the determination of amounts payable in respect of such Funded Debt or
Short-Term Debt relating to any Minority Interest shall be made by reference to
any mandatory schedule for the retirement or redemption of such Minority
Interest, or if the Company or any Restricted Subsidiary is a party to any
repurchase or other agreement pursuant to which it is obligated, at the option
of the holder(s) thereof, to repurchase, redeem, retire or otherwise acquire
any Minority Interest or part thereof, as of the first date on which such
option may be exercised (whether or not in fact exercised), the amount payable
in respect of such Minority Interest shall be the full amount of the Company's
or such Restricted Subsidiary's obligations thereunder, and (b) the
determination of amounts payable in respect of Funded Debt or Short-Term Debt
of the Company or any Restricted Subsidiary consisting of unfunded pension
liabilities shall be made in accordance with the funding standard account
entitled "Amortization of Unfunded Past Service Liabilities" set forth in
Section 412(b)(2)B(ii) of the Code, and (ii) the aggregate amount of all
payments required to be made during such period by such person (determined as
if such person were called upon to perform such Guaranties under the terms of
the mandatory payment provisions of the underlying obligation, without giving
effect to any possible acceleration of such obligation) pursuant to, or to
obtain or effect the discharge of, such person's obligations under any Guaranty
during such period.
"Default" means any of the events specified in Section 5.01 (Events of
Default) of the Indenture whether or not any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act has been satisfied.
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"ERISA" means the Employee Retirement Income Security Act of 1974.
"Funded Debt" of any person means and includes, as of any date as of
which the amount thereof is to be determined, without duplication (i) all
Indebtedness of such person for borrowed money, any Guaranty by such person of
Indebtedness for borrowed money and any Capitalized Lease Obligation of such
person, whether secured or unsecured, which by its terms has a final maturity,
duration or payment date more than one year from the date of determination
thereof (including, without limitation, (x) any balance of Indebtedness which
was Funded Debt at the time of its creation maturing within one year from the
date of determination, and (y) any Indebtedness of such person for borrowed
money having a final maturity, duration or payment date within one year from
such date of determination, which, pursuant to the terms of a revolving credit
or similar agreement or otherwise, may be renewed or extended one or more
consecutive times at the option of such person to a final maturity, duration or
payment date more than one year from such date of determination, whether or not
theretofore renewed or extended), (ii) the present value of the aggregate
unfunded portion of all vested benefits under all Plans, (iii) any obligation of
the Company or any Restricted Subsidiary to redeem, purchase or otherwise
acquire from any other person (other than a Wholly-owned Restricted Subsidiary),
at the option of such person, any shares of any class of stock of, or other
interest in, the Company or any Restricted Subsidiary, and (iv) the par value or
other value of Money Market Preferred Stock of the Company or any Restricted
Subsidiary as to which dividends and other payments are calculated.
For purposes of calculating Funded Debt, (a) Indebtedness for borrowed
money which is governed by an agreement that provides for the automatic renewal
of the maturity of such Indebtedness subject only to the accuracy of
representations and warranties made in such agreement (which agreement, by its
terms, does not require confirmation as to the accuracy of representations and
warranties therein relating to litigation and material adverse changes for such
automatic renewal) and the absence of default thereunder ("Renewable
Indebtedness") shall be considered Indebtedness for borrowed money which has a
final maturity, duration or payment date more than one year from the date of
determination of the amount of Funded Debt to the extent such renewals thereof
permit such Indebtedness to mature more than one year from such date of
determination, and (b) the current maturities of Funded Debt, Indebtedness for
borrowed money represented by short-term commercial paper, and other short-term
indebtedness to the extent, in each case, that the Company or any Restricted
Subsidiary has unused availability under a committed credited facility which
has a final maturity, duration or payment date more than one year from the date
of determination of the amount of Funded Debt ("Refundable Indebtedness") and
the Company or any Restricted Subsidiary intends to utilize such unused
availability, or other Refundable Indebtedness, to refund or replace such
Refundable Indebtedness shall be considered Indebtedness for borrowed money
which has a final maturity, duration or payment date more than one year from
the date of determination. For the purposes of any computation of Debt
Service, any Refundable Indebtedness which the Company or any Restricted
Subsidiary is able to refund, as of the date of such determination, under the
unused availability of a committed credit facility shall be deemed to amortize
and to bear interest in the manner provided in such committed credit facility
as if the principal amount of such Refundable Indebtedness were Indebtedness
for borrowed money thereunder.
Notwithstanding the foregoing, Funded Debt shall not include (i)
Indebtedness for borrowed money of the Company owed solely to a Restricted
Subsidiary, (ii) Indebtedness for borrowed money of a Restricted Subsidiary
owed solely to the Company or another Restricted Subsidiary, and (iii)
Indebtedness for borrowed money of the Company or any Restricted Subsidiary
owed solely to any Unrestricted Subsidiary, subject in each case to the
provisions of the "Indebtedness to Unrestricted Subsidiaries" covenant, and
provided that if any such Indebtedness is sold or transferred by a Restricted
Subsidiary or an Unrestricted Subsidiary to a person other than a Subsidiary,
such Indebtedness shall be Funded Debt which shall be deemed to have been
incurred at the time of such sale or transfer.
"Gross Revenues" for any period means the gross revenues from
continuing operations of the Company and its Restricted Subsidiaries for such
period prior to deducting operating expenses, overhead, costs of goods sold,
provisions for taxes and reserves or any other deduction, all determined and
consolidated in accordance with generally accepted accounting principles after
eliminating all intercompany items.
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"Guaranty" of any person means and includes, as of any date as of
which the amount thereof is to be determined, without duplication (i) all
obligations of such person to purchase any materials, supplies or other
property, or to obtain the services of any other person, or for the sale or use
of any materials, supplies or other property, or the rendering of services, if
the relevant contract or other related document requires that payment for such
materials, supplies or other property to be purchased, or for such services to
be rendered, shall be made regardless of whether or not delivery of such
materials, supplies or other property is ever made or tendered, or such
services are ever performed or tendered or that payment for such materials,
supplies or other property to be sold or used, or payment for such services to
be rendered, shall be subordinated to any Indebtedness of such person owed to
the purchaser or user of such materials, supplies or other property, or the
beneficiary of such services, (ii) all obligations of such person to advance or
supply funds to, or to purchase property or services from, any other person, if
the purpose is to enable such other person to maintain working capital, net
worth or any other balance sheet condition or to pay debts, dividends or
expenses of such other person or to assure such other person or any third party
against any liability or loss, including, without limitation, obligations under
any agreement or understanding, oral or written, pursuant to which such person
is obligated to advance funds to or on behalf of any other person upon the
happening of one or more stated events, (iii) all contracts for the rental or
lease (as lessee) of any real or personal property which provide that the
payment obligations thereunder are absolute and unconditional under conditions
not customarily found in commercial leases then in general use or require that
the lessee purchase or otherwise acquire securities or obligations of the
lessor, and (iv) all guaranties, endorsements and other contingent obligations,
direct or indirect, on the part of such person (other than endorsements of
negotiable instruments for collection in the ordinary course of business) for
the payment, discharge or satisfaction of Indebtedness of others, including any
agreement, contingent or otherwise, to (x) purchase such Indebtedness of
others, or (y) purchase or sell property or services primarily to permit the
debtor in respect of such Indebtedness of others to pay the same or the owner
of such Indebtedness of others to avoid loss, or (z) supply funds to or invest
in any such debtor.
A Guaranty shall not include any letter of credit, any bond obligation
of, or any guarantee of performance by, the Company or any Restricted Subsidiary
undertaken or incurred in the ordinary course of its or their business as
presently conducted for or on behalf of a Subsidiary.
"Increased Debt Capacity" means an increase in the limitation on
Indebtedness which may be incurred under clause (2) of the "Indebtedness"
covenant by reference to Total Debt from seven times Annualized Cash Flow of
the Company and its Restricted Subsidiaries to eight times Annualized Cash Flow
of the Company and its Restricted Subsidiaries.
"Indebtedness" of the Company or any Restricted Subsidiary means and
includes, as of any date as of which the amount thereof is to be determined,
without duplication, (i) all items (other than capital items such as capital
stock, surplus and retained earnings, as well as reserves for taxes in respect
of income deferred to the future and other deferred credits and reserves) which
in accordance with generally accepted accounting principles would be included
in determining total liabilities as shown on the liability side of a balance
sheet of the Company or any Restricted Subsidiary as of such date, (ii) the
full amount of any contingent liability or obligation of the Company or any
Restricted Subsidiary, including, without limitation, the payment of money,
under or related to any preferred stock, any other security, right, or
interest, or any rights or interests attendant thereto or granted in connection
therewith, of the Company or such Restricted Subsidiary, any of which is issued
as, or in conjunction with, an anti-takeover or similar corporate protective
measure, such amount to be determined as of the time of issuance of such
preferred stock, other security, right or interest, without regard to when any
rights or interests thereunder may vest in or otherwise become exercisable by
the holders thereof, (iii) all obligations which are secured by any Lien
existing on any property or assets owned by the Company or any Restricted
Subsidiary (except capital stock of an Unrestricted Subsidiary owned by the
Company or a Restricted Subsidiary), whether or not the obligations secured
thereby shall have been assumed by the Company or any Restricted Subsidiary,
provided that in respect of secured, fully non-recourse obligations, the
maximum amount of the Indebtedness of the Company or any Restricted Subsidiary
shall be the lesser of the amount of the Indebtedness secured and the amount
carried on the books of the
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Company or any Restricted Subsidiary as at the time of any such determination as
the value of the property, asset or collateral securing such Indebtedness, and
(iv) all Guaranties of the Company or any Restricted Subsidiary.
Indebtedness shall not include any contingent liability or contingent
obligation with respect to any letter of credit, any bond obligation, or any
guarantee of performance, undertaken or incurred by the Company or any
Restricted Subsidiary in the ordinary course of its or their business (other
than in connection with the borrowing of money or the obtaining of credit) as
presently conducted for or on behalf of a Subsidiary.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing), any conditional sale or title retention agreement, and the filing
of or agreement to give any financing statement under the Uniform Commercial
Code of any jurisdiction.
"Majority-in-Interest of Holders" means, when used with respect to the
New Notes generally, the holders of New Notes constituting, as of any date on
which a determination is made, at least 51% of the aggregate unpaid principal
amount of the outstanding New Notes of all series as of such date; and, when
used with respect to the New Notes of a particular series, the holders of New
Notes of such series constituting, as of any date on which a determination is
made, at least 51% of the aggregate unpaid principal amount of the outstanding
New Notes of that series as of such date.
"Minority Interest" means the shares of any class of the capital
stock, or any option, warrant or other right to purchase or acquire any capital
stock, other than Money Market Preferred Stock included in the definition of
Funded Debt or Short-Term Debt, of any Restricted Subsidiary owned or
controlled, directly or indirectly, by any person other than the Company or one
or more Wholly-owned Restricted Subsidiaries.
"Money Market Preferred Stock" means preferred stock issued on terms
where the rate of dividend paid thereon is determined by (i) reference to a
recognized financial index, or (ii) through an auction mechanism conducted by a
recognized financial institution.
"Net Income" or, if negative, "Net Loss" for any period means Gross
Revenues of the Company and its Restricted Subsidiaries for such period (taken
as a cumulative whole) less operating and non-operating expenses, including
provisions for all taxes and reserves (including reserves for deferred income
taxes) of the Company, all determined in accordance with generally accepted
accounting principles on a consolidated basis, but not including in Gross
Revenues any gains (net of expenses and taxes applicable thereto) in excess of
losses resulting from the sale, conversion or other disposition of non-current
or capital assets, any gains resulting from the write-up of assets, any gains
resulting from the defeasance or acquisition of the securities of the Company
or any Restricted Subsidiary, any earnings of any person acquired by the
Company or any Restricted Subsidiary through purchase, merger or consolidation
or otherwise for any year prior to the date of acquisition, and excluding from
Gross Revenues any undistributed earnings or losses of Affiliates of the
Company other than Restricted Subsidiaries; all determined in accordance with
generally accepted accounting principles.
"Plan" means any plan (other than a Multi-employer Plan) subject to
Title IV of ERISA maintained for employees of the Company or any ERISA
Affiliate (and any such plan no longer maintained by the Company or any of its
ERISA Affiliates to which the Company or any of its ERISA Affiliates has made
or was required to make any contributions within any of the preceding five
years).
"Prohibited Act" means any one or more of the following: (i) the
incurrence of any Indebtedness which would constitute Short-Term Debt or Funded
Debt not then permitted under the "Indebtedness" covenant; (ii) any transaction
which would involve the making of a Restricted Payment or other payment not
then permitted under the "Restricted Payments" covenant; (iii) any transaction
pertaining to the sale, lease, transfer or other disposition of assets not then
permitted under the "Sale of Assets" covenant; or (iv) any designation of a
Restricted Subsidiary or
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any designation deleting a Restricted Subsidiary not then permitted to be made
under the "Designation of Restricted Subsidiaries" covenant.
"Prohibited Transaction" means any transaction described in Section
406 of ERISA which is not exempt by reason of Section 408 of ERISA or the
transitional rules set forth in Section 414(c) of ERISA and any transaction
described in Section 4975(c) of the Code which is not exempt by reason of
Section 4975(c)(2) or Section 4975(d) of the Code, or the transitional rules of
Section 2003(c) of ERISA.
"Restricted Subsidiary" means, as of any date of determination, any
corporation organized under the laws of any state of the United States or the
District of Columbia, provided that not less than 80% of the voting control
thereof and not less than 80% of the overall economic equity therein, at the
time as of which any determination is being made, is owned, beneficially and of
record, by the Company or one or more Wholly-owned Restricted Subsidiaries, or
both, which corporation has been designated as a Restricted Subsidiary, unless
and until designated as an Unrestricted Subsidiary.
"Senior Debt" means, as of any date as of which the amount thereof is
to be determined, (i) the aggregate amount of all Total Debt then outstanding,
less (ii) the aggregate amount of all Subordinated Debt then outstanding.
"Short-Term Debt" of any person means and includes, as of any date as
of which the amount thereof is to be determined, without duplication, all
Indebtedness of such person for borrowed money, any Guaranty by such person of
Indebtedness for borrowed money and any Capitalized Lease Obligation of such
person, whether secured or unsecured, other than Funded Debt. Notwithstanding
the foregoing, Short-Term Debt shall not include (i) Indebtedness for borrowed
money of the Company owed solely to a Restricted Subsidiary, (ii) Indebtedness
for borrowed money of a Restricted Subsidiary owed solely to the Company or
another Restricted Subsidiary, and (iii) Indebtedness for borrowed money of the
Company or any Restricted Subsidiary owed solely to any Unrestricted
Subsidiary, subject in each case to the provisions of the "Indebtedness to
Unrestricted Subsidiaries" covenant, and provided that if any such
Indebtedness is sold or transferred by a Restricted Subsidiary or an
Unrestricted Subsidiary to a person other than a Subsidiary, such Indebtedness
shall be Short-Term Debt which shall be deemed to have been incurred at the
time of such sale or transfer.
"Subordinated Debt" means all unsecured Funded Debt of the Company
which is subordinated in right of payment to (x) the prior payment of the New
Notes, and (y) all other Funded Debt of the Company which is not subordinated
to any other Indebtedness of the Company.
"Subsidiary" means any corporation organized under the laws of any
state of the United States or the District of Columbia, at least 50% of the
total combined voting power of all classes of voting stock of which shall, at
the time as of which any determination is being made, be owned by the Company
either directly or through Subsidiaries.
"Total Debt" means, as of any date as of which the amount thereof is
to be determined, the sum of (i) the aggregate amount of consolidated
Short-Term Debt of the Company and its Restricted Subsidiaries then
outstanding, plus (ii) the aggregate amount of consolidated Funded Debt of the
Company and its Restricted Subsidiaries then outstanding.
"Treasury Yield" means, when used with respect to the New Notes of any
series, the yield which shall be imputed from the yields of those actively
traded "On the Run" United States Treasury Notes having maturities as close as
practicable to the Weighted Average Life to Maturity of the New Notes of such
series interpolating linearly between representative yields (as necessary).
"On the Run" United States Treasury Notes shall mean the most recently
auctioned United States Treasury Notes for such maturity, which are currently
available through Telerate page 500. The yields of such United States Treasury
Notes shall be determined as of 10:00 A.M. Eastern Time on the fifth Business
Day prior to the applicable Optional Prepayment Date or Redemption Date.
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"Unrestricted Subsidiary" means, as of any date of determination, any
Subsidiary of the Company that is not a Restricted Subsidiary.
"Weighted Average Life to Maturity" as applied to any Indebtedness at
any date means the number of years obtained by dividing (a) the then unpaid
principal amount of such Indebtedness into (b) the total of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity or required payment, including payment at final
maturity, in respect thereof, by (ii) the number of years (calculated to the
nearest one-twelfth) which will elapse between such date and the date on which
such payment is to be made.
"Wholly-owned Restricted Subsidiary" means any Restricted Subsidiary
all of whose outstanding shares (other than directors' qualifying shares
required by law) of every class of capital stock, at the time as of which any
determination is being made, are owned, beneficially and of record, by the
Company or one or more other Wholly-owned Restricted Subsidiaries, or both.
DENOMINATIONS AND FORM
The New Notes will be issued only in registered form, without coupons,
in denominations of $100,000 in Original Principal Amount and any integral
multiple thereof. (Section 2.02)
REGISTRAR AND PAYING AGENT
The Company will maintain an office or agency where the New Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where New Notes may be presented for payment ("Paying Agent").
The Company may have one or more co-Registrars (provided that there will be
only one security register, which will be maintained by the principal
Registrar) and one or more additional paying agents with respect to any series
of New Notes. Initially, the Trustee will act as Paying Agent and Registrar
for each series of New Notes. (Section 2.03)
TRANSFER AND EXCHANGE
New Notes of any series will be exchangeable at the option of the
holder for an equal aggregate Original Principal Amount of New Notes of the
same series of other authorized denominations and otherwise containing
identical terms and provisions. Every New Note presented or surrendered for
registration of transfer or for exchange shall be duly endorsed, or accompanied
by appropriate transfer documents duly executed, by the registered holder or
his attorney duly authorized in writing. No service charge will be made for
any registration of transfer or exchange of New Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.
The Registrar shall not be required to register the transfer of or
exchange (i) any New Note to be prepaid at the option of the Company in
accordance with the provisions described under "-- Optional Prepayment" or any
New Series C Note in respect of which a prepayment offer made by the Company in
accordance with the provisions described under "-- Optional Prepayment" is
validly accepted by the holder thereof (except, in the case of any such New
Note (including any such New Series C Note) not prepaid in full, a transfer or
exchange thereof after notation has been made thereon by the Trustee following
the relevant Optional Prepayment Date of the amount of such prepayment and the
change in the amount of each Principal Installment thereafter due and payable
with respect to such New Note), or (ii) any New Note in respect of which a
notice requiring the purchase thereof by the Company at the option of the
holder following a Put Event has been given by such holder in accordance with
the provisions described under "-- Change of Control" (except, in the case of
any New Note to be so purchased in part, the portion thereof not to be so
purchased).
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The Indenture further provides that, if the Company solicits the
consent of the holders of New Notes to a Prohibited Act or an Increased Debt
Capacity in accordance with the provisions described under "-- Optional
Redemption of Non-Consenting Notes", the Registrar shall not be required to
register the transfer of or exchange any New Notes during the period commencing
with the day following the date of the Company's written request for such
consent (or, if a record date has been fixed, the day following such record
date) and ending on the second full Business Day following the last day on
which consent may be given by holders in response to such solicitation (which
day (the "Final Consent Date") may not be more than 30 days after the date of
such written request). If the Company has not received the consent of a
Majority-in-Interest of Holders to the Prohibited Act or Increased Debt
Capacity by the Final Consent Date, then the Registrar shall also not be
required to register the transfer of or exchange any Non-Consenting Note unless
the Company advises the Registrar that it will not exercise its option to
redeem the Non-Consenting Notes, or the Company fails to give notice of such
optional redemption to the holders of Non-Consenting Notes within the time
period specified in the Indenture or to deposit the redemption price therefor
with the Paying Agent as and when required by the Indenture. (Section 2.06)
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Subject to certain exceptions, the Indenture or the New Notes of any
series may be amended or supplemented, and compliance with any provision of the
Indenture or of the New Notes by the Company may be waived, with the consent of
a Majority-in-Interest of Holders of the New Notes of all series or of the
series affected by the amendment, supplement or waiver, as applicable.
(Section 8.02) Without the consent of any holder of New Notes, the Company and
the Trustee may amend or supplement the Indenture or the New Notes of any
series (i) to cure any ambiguity, defect or inconsistency, (ii) to provide for
uncertificated New Notes in addition to certificated New Notes (so long as any
"registration-required obligation" within the meaning of Section 163(f)(2) of
the Code is in registered form for purposes of the Code), (iii) to make any
change that, in the good faith opinion of the Board of Directors, does not
materially adversely affect the rights of any holder of New Notes, or (iv) to
make certain other changes specified in the Indenture. (Section 8.01) In the
case of a Prohibited Act or Increased Debt Capacity for which the consent of a
Majority-in-Interest of Holders was solicited by the Company and not received,
if the Company exercises its right to redeem all and not less than all the
Non-Consenting Notes pursuant to the provisions described under "-- Optional
Redemption of Non-Consenting Notes" and deposits with the Paying Agent or sets
aside and segregates in trust money sufficient to pay the aggregate redemption
price for such New Notes, then the holders of New Notes will be deemed to have
consented to the taking of or engaging in such Prohibited Act or the Increased
Debt Capacity, as applicable. (Section 4.21)
DEFAULTS AND REMEDIES
An Event of Default with respect to New Notes of any series means any
of the following: (i) the Company shall default in the payment or prepayment
of principal or premium on any New Note of such series when the same shall
become due; (ii) the Company shall default in the payment or prepayment of any
interest on any New Note of such series when the same shall become due, and
such default shall remain unremedied for five days; (iii) any of the Company or
any Restricted Subsidiary fails to pay any part of the principal of, the
premium, if any, or the interest on, or any other payment of money due under,
any of its Indebtedness (other than the New Notes of that series) or any
Capitalized Lease with respect to which it is obligated, having a then
outstanding aggregate principal amount (in the case of Indebtedness) or
relating to property or other assets having an aggregate value (in the case of
a Capitalized Lease) of $10,000,000 or more, beyond any period of grace with
respect thereto; or any of the Company or any Restricted Subsidiary fails to
perform or observe any other agreement, term or condition contained in any
document evidencing or securing such Indebtedness, or in such Capitalized
Lease, or in any agreement under which any such Indebtedness was issued or
created, in each case, if the effect of such failure is to cause, or permit the
holders of such Indebtedness to cause, or permit any other party to such
Capitalized Lease to cause, any payment in respect of such Indebtedness or such
Capitalized Lease to become due prior to its stated date of maturity, whether
or not such failure or default is waived by, or on behalf of, the holders of
such Indebtedness or by any other party to such Capitalized Lease; (iv) any
representation or warranty made in any certificate delivered to the Trustee by
the Company in connection with or pursuant to the Indenture shall prove to be
false or misleading in any material respect
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on the date as of which made; (v) the Company shall fail to perform or observe
any of its other agreements or covenants contained in the Indenture or in the
New Notes and such failure continues for 30 days after the Trustee or the
holders of at least 25% in aggregate unpaid principal amount of the New Notes
notifies the Company of such failure; (vi) certain events of bankruptcy or
insolvency shall occur; (vii) any order, judgment or decree shall be entered in
any proceedings against the Company or any Restricted Subsidiary decreeing the
dissolution of the Company or such Restricted Subsidiary and such order,
judgment or decree remains unstayed and in effect for more than 90 days; (viii)
any final judgment for the payment of money shall be rendered against the
Company or any Restricted Subsidiary or any judgment, writ of attachment, or
similar process shall be issued or levied against a substantial part of its and
their property or assets, taken as a whole, and such judgment, writ or other
order shall not be discharged within 90 days from the date of entry thereof or
within such longer period as the execution of such judgment shall have been
stayed, and such judgment, together with all other such judgments, exceeds in
the aggregate $10,000,000; or (ix) certain events or conditions shall occur
with respect to any Plan or a Multi-employer Plan and such event or condition
would result in the aggregate amount of the Company's or a Restricted
Subsidiary's liability to a Plan or a Multi-employer Plan or to the Pension
Benefit Guaranty Corporation under Sections 4062, 4063, 4064, 4201 or 4202 of
ERISA being in excess of 5% of the consolidated net earnings of the Company and
its Restricted Subsidiaries, and such liability shall not be covered in full by
insurance. (Section 5.01) If an Event of Default (other than an Event of
Default specified in clause (i), (ii), (vi) or (vii)) occurs with respect to
outstanding New Notes and is continuing, the Trustee or a Majority-in-Interest
of Holders of the New Notes may declare to be due and payable immediately (A)
the unpaid principal amount of all of the New Notes then outstanding and (B)
accrued interest thereon. The Indenture provides for automatic acceleration of
such amounts upon the occurrence of the events specified in clauses (vi) and
(vii) above. If an Event of Default specified in clause (i) or (ii) above
occurs and is continuing with respect to the New Notes of any series, a
Majority-in-Interest of Holders of New Notes of that series may declare to be
due and payable immediately (A) the unpaid principal amount of all of the New
Notes of such series then outstanding and (B) interest accrued thereon. Upon
the acceleration of New Notes of any series (other than an automatic
acceleration upon the occurrence of an Event of Default described in clause
(vi) or (vii) above), in addition to the unpaid principal amount and interest
required to be paid by the Company in accordance with the terms of the New
Notes of such series, the Company shall also pay, to the extent permitted by
law, a premium on the entire unpaid principal amount of each outstanding New
Note of such series equal to the maximum premium that would have been payable
with respect to such New Note if such New Note were then being prepaid in full
at the option of the Company in accordance with the provisions described under
"-- Optional Prepayment" (but calculated without regard to the provision that
states that no prepayment premium is payable after a date specified for the New
Notes of each series). The holders of not less than 66 2/3% in aggregate
unpaid principal amount of the outstanding New Notes (or, in the case of an
acceleration of New Notes of a particular series as a result of the occurrence
of an Event of Default specified in clause (i) or (ii) above with respect to
such series, the outstanding New Notes of the series with respect to which the
acceleration applies) may rescind an acceleration and its consequences with
respect to the New Notes if all existing Events of Default (other than the
non-payment of the principal amount of, premium and accrued interest on the New
Notes that have become due solely by such acceleration) with respect to the New
Notes have been cured or waived and if the rescission would not conflict with
any judgment or decree. (Section 5.02) Subject to certain exceptions, a
Majority-in-Interest of Holders of the New Notes may waive on behalf of the
holders of all of the New Notes an existing Default or Event of Default and its
consequences and, when so waived, such Default or Event of Default is deemed
cured and not continuing. (Section 5.04) Subject to certain limitations, a
Majority-in-Interest of Holders of New Notes may direct the Trustee in its
exercise of any trust or power with respect to the New Notes. (Section 5.05)
The Trustee may withhold from holders of New Notes of any series notice of any
continuing default (except a default in payment of principal, premium, if any,
or interest on any New Note of such series) if it determines that withholding
notice is in their interest. (Section 6.05) The Company is required to file
periodic reports with the Trustee as to the absence of any default. (Section
4.06)
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NO PERSONAL LIABILITY
No past, present or future director, officer, employee or stockholder,
as such, of the Company or the Trustee or any successor of either thereof shall
have any liability for any obligation of the Company or the Trustee under the
New Notes or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each holder of New Notes by
accepting a New Note waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the New Notes. (Section
9.11)
SATISFACTION AND DISCHARGE
The Company's obligations under the New Notes of any series and the
Indenture with respect to the New Notes of such series (except for certain
specified obligations) will be satisfied and discharged in accordance with the
provisions of the Indenture if either (i) all New Notes of such series
previously authenticated and delivered (other than destroyed, lost or
wrongfully-taken New Notes which have been replaced or paid, or New Notes for
whose payment money has theretofore been held in trust and thereafter repaid to
the Company) have been delivered to the Trustee for cancellation, or (ii) the
Notes of such series mature within one year or are to be prepaid in full within
one year under arrangements satisfactory to the Trustee or notice of redemption
of all of the outstanding Notes of such series has been given pursuant to the
Indenture and the Company irrevocably deposits in trust with the Trustee (or
another trustee satisfying the requirements of the Indenture) money or U.S.
Government Obligations or a combination thereof sufficient to pay the unpaid
principal amount of, premium, if any, and interest on all New Notes of such
series previously authenticated and delivered, and not theretofore cancelled or
delivered to the Trustee for cancellation (other than any such New Note
referenced in the parenthetical in clause (i) above) to maturity, prepayment or
redemption, as the case may be. (Section 7.01)
THE TRUSTEE
The Bank of New York acts as depository for funds of, makes loans to,
and performs other services for the Company and certain of its affiliates in
the normal course of business and acts as trustee with respect to several
series of the Company's outstanding senior debt securities. The Bank of New
York is also acting as Exchange Agent for the Exchange Offer and serves as
transfer agent and registrar for the Class A and Class B Common Stock of the
Company. John C. Malone, President and a director of the Company, is a
director of The Bank of New York.
The Trustee in its individual or any other capacity may become the
owner or pledgee of New Notes and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not the Trustee,
provided it complies with the terms of the Indenture. (Section 6.03)
ADDITIONAL INFORMATION
The Indenture is an exhibit to the Registration Statement. Anyone who
receives this Prospectus may obtain copies of the Indenture without charge by
writing to Stephen M. Brett, Esq., Senior Vice President of the Company, at the
address set forth under "The Company". The foregoing summary of certain
provisions of the Indenture does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all provisions of the Indenture,
including the definitions of certain terms. Wherever particular provisions or
defined terms of the Indenture are referred to, such provisions or defined
terms are incorporated herein by reference.
COMPARISON OF EXISTING NOTES AND NEW NOTES
The covenants, events of default and terms of each series of Existing
Notes are substantially similar to the covenants, events of default and terms
of the corresponding series of New Notes for which they may be exchanged
pursuant to the Exchange Offer, except as set forth below.
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PAYMENT PROVISIONS
Principal Payments. The principal payment schedules for the New Notes
and the Existing Notes of the respective series are substantively the same.
The Note Exchange Agreement specifies an aggregate principal amount that is to
be paid on each Principal Payment Date for the applicable series of Existing
Notes and provides for the application of such aggregate amount to the payment
of the Existing Notes of such series on a pro rata basis (based on the
aggregate outstanding principal amount of the Existing Notes of such series).
In lieu of providing for an aggregate payment and the pro rata application
thereof to the New Notes of a series, the Indenture specifies the amount of the
principal payment to be made per $100,000 in Original Principal Amount of each
New Note on the applicable Principal Payment Date for the New Notes of such
series. In the event of any partial prepayment of principal, the Note Exchange
Agreement and the Indenture each provide that the aggregate principal amount of
the prepayment made with respect to the Existing Notes or the New Notes, as
applicable, of a series, shall be applied to the prepayment of each outstanding
Existing Note or New Note, as applicable, of such series pro rata in accordance
with the respective unpaid principal amounts of such Existing Notes or New
Notes. The Indenture further provides that the amount prepaid with respect to
each New Note shall be applied ratably to the unpaid principal amount per
$100,000 in Original Principal Amount of such New Note, with the amount of such
prepayment per $100,000 in Original Principal Amount of a New Note being
rounded, if applicable, to the nearest $1.00. In the event of a partial
prepayment of the principal of the Existing Notes or New Notes, as applicable,
of a series, both the Note Exchange Agreement and the Indenture provide for the
reduction of the amount of the regularly scheduled installments of principal
thereafter due and payable with respect to the Existing Notes or New Notes, as
applicable, of such series. In the case of the Note Exchange Agreement, the
aggregate principal amount of such prepayment is applied to reduce pro rata the
aggregate amount of each scheduled principal payment thereafter due with
respect to the Existing Notes of the applicable series. In the case of the
Indenture, the amount prepaid per $100,000 in Original Principal Amount of a
New Note is applied to reduce pro rata the amount of each Principal Installment
per $100,000 in Original Amount of such New Note that is thereafter due.
Because the scheduled principal payments for the Existing Notes are stated in
terms of an aggregate amount for all Existing Notes of a series, rather than an
amount per Existing Note, the Note Exchange Agreement also provides that in the
event of any repurchase or optional redemption in part of the Existing Notes of
a series the aggregate amount of such repurchase or redemption shall be applied
to reduce pro rata the aggregate principal payments thereafter scheduled to be
made with respect to the Existing Notes of such series. See "Description of
New Notes -- Principal Installments".
Repurchases. The Note Exchange Agreement provides that, prior to the
Issue Date, the Company will not repurchase any Existing Notes of a holder
unless prior to any such repurchase the Company offers to repurchase on a pro
rata basis a proportionate principal amount of the Existing Notes of all
holders of Existing Notes of such series on the same terms and offers to
repurchase on a pro rata basis a proportionate principal amount of the Existing
Notes of all holders of Existing Notes of each other series on economically
equivalent terms. From and after the Issue Date this provision of the Note
Exchange Agreement will cease to be applicable and the Company may at any time
and from time to time make purchases of any Existing Notes and New Notes
outstanding on terms acceptable to the holders of the Notes being repurchased.
Optional Prepayments. The provisions of the Note Exchange Agreement
and the Indenture relating to prepayments of the Existing Notes and the New
Notes, respectively, at the option of the Company are substantially identical
except as described below. In accordance with the Note Exchange Agreement, any
partial prepayment with respect to the Existing Series D Notes and Existing
Series E Notes must be in the minimum amount of $1,000,000 and additional
increments of $500,000 and be allocated on a pro rata basis between the two
series (based upon the aggregate unpaid principal amount of all Existing Series
D Notes and Existing Series E Notes outstanding). A similar requirement
applies to the optional prepayment of the Existing Series B Notes and Existing
Series C Notes prior to specified dates. Pursuant to the Indenture, if the
Company elects to make a partial prepayment with respect to the New Series D
Notes, it must likewise make an optional prepayment of a pro rata portion of
the New Series E Notes and vice versa. The minimum amount requirement,
however, would apply to the amount of the prepayment with respect to one of the
two series to be prepaid, rather than to the total amount to be prepaid of both
series as
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in the Note Exchange Agreement, and the amount of the prepayment with respect
to the other of the two series would be determined on the basis of the pro rata
payment requirement. A similar variation from the terms of the Note Exchange
Agreement applies with respect to optional prepayments of the New Series B
Notes and New Series C Notes.
If the Company elects to make an optional prepayment with respect to
the Existing Series B Notes or the New Series B Notes during the period
beginning on February 1, 2000 and ending on January 31, 2001, then the Note
Exchange Agreement and the Indenture, respectively, require the Company to make
a simultaneous offer to prepay the same portion of the Existing Series C Notes
or New Series C Notes, as applicable. Pursuant to the Note Exchange Agreement,
a holder of an Existing Series C Note desiring to accept such offer must so
notify the Company (by telephone confirmed promptly in writing) within eight
business days of its receipt of such prepayment notice. In accordance with the
Indenture, to accept such prepayment offer, the holder of a New Series C Note
must deliver written notice of such acceptance to the Paying Agent by the close
of business on the sixteenth day preceding the Optional Prepayment Date. See
"Description of New Notes -- Optional Prepayments".
Designated Event. With respect to the Existing Notes only, in the
event that any "Designated Event" shall occur, each holder of an Existing Note
shall have the right to require the Company to purchase all of the Existing
Notes of such holder, at a price for each Existing Note to be purchased equal
to the unpaid principal amount of such Existing Note, plus all accrued and
unpaid interest thereon to the date fixed for purchase (the "Designated Event
Purchase Date"), plus a premium equal to the excess, if any, of (i) the net
present value of all remaining scheduled payments of interest and principal on
such Existing Note, discounted at the Basic Discount Rate for such series of
Existing Notes, over (ii) the outstanding principal amount of such Existing
Note. Within 10 days following the occurrence of a Designated Event, the
Company will give notice to each holder of an Existing Note describing the
facts and circumstances giving rise to such Designated Event and stating that
such holder's Existing Notes will be prepaid by the Company pursuant to the
terms of the Note Exchange Agreement if such holder so elects. Any holder
intending to exercise its right to require the Company to purchase its Existing
Notes shall give written notice to the Company no later than 30 days after the
Company gives notice of such Designated Event (or, if no notice is given, not
later than 60 days after such holder obtains actual knowledge that such
Designated Event has occurred). The Designated Event Purchase Date shall be a
date fixed by the Company which shall be not less than 30 days nor more than 60
days after the giving by such holder of the notice that such holder elects to
have the Existing Notes held by such holder purchased (or, if no date is
specified by the Company, on the 60th day after the giving of such notice by
such holder). On the 35th day following the giving of notice by the Company of
a Designated Event or, if no notice is given, on the 65th day after such
Designated Event occurred, the Company will notify each holder of an Existing
Note of the aggregate principal amount of all Existing Notes which the holders
thereof have required to be purchased and the identity of each such holder.
Each holder of an Existing Note shall then have the additional right,
exercisable by written notice given to the Company not later than five business
days after the giving of such notice by the Company, to elect to require the
Company to purchase all of the Existing Notes held by such holder if such
holder had not previously requested such purchase in connection with such
Designated Event or to revoke its election to require the Company to purchase
all of the Existing Notes held by such holder in connection with such
Designated Event (but not any subsequent Designated Event). In the event that
any holder exercises such additional right to elect to require the Company to
purchase the Existing Notes held by such holder, the Company shall purchase, on
a date specified by the Company (which date shall not be less than 30 days nor
more than 60 days after the giving by such holder of such notice or, if no date
is specified by the Company, on the 60th day after the giving of such notice by
such holder), the Existing Notes held by such holder, at the same price
described above.
The Note Exchange Agreement defines a "Designated Event" as the
authorization by the Company's Board of Directors (or a duly authorized
committee thereof) of any of the following: (a) a consolidation or merger of
the Company or any person which owns, directly or indirectly, not less than a
majority of the outstanding shares of each class of the Company's common stock
(a "Holding Company") or a sale of all or substantially all of the properties
and assets of the Company or any Holding Company; (b) a dividend or other
distribution by the Company to its shareholders, in one transaction or a series
of related transactions, of cash, property or securities (other than a
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dividend or other distribution (i) of cash, property or securities of or with
funds or assets provided by an Unrestricted Subsidiary, or (ii) payable solely
in capital stock of the Company that is not convertible into or exchangeable
for any debt securities of the Company), having an aggregate fair market value
at the time of such distribution that is 30% or more of the fair market value
of the common stock of the Company outstanding immediately prior to such
distribution (both such fair market values as determined by the Board of
Directors or such committee); or (c) an acquisition by the Company or any
Restricted Subsidiary for cash, property or securities (other than (i) cash,
property or securities from or of an Unrestricted Subsidiary, or (ii) capital
stock of the Company that is not convertible into or exchangeable for any debt
securities of the Company), in one transaction or a series of related
transactions, of more than 30% of each class of the common stock of the Company
outstanding immediately prior to the commencement of such acquisition; provided
that any event described above shall be a Designated Event only at such time,
if any, within the 12-month period immediately following the occurrence of such
event, that the aggregate amount of Total Debt then outstanding exceeds eight
times Annualized Cash Flow for the then most recent three-month period.
Change of Control. The circumstances which will give rise to a Put
Event following a Change of Control are essentially the same under the Note
Exchange Agreement and the Indenture, with certain exceptions. Under the
Indenture, one of the elements of a Put Event with respect to the New Notes of
a series is the downgrading of the then current rating of the New Notes of such
series by either D&P or Moody's to the extent provided in the Indenture. With
respect to the Existing Notes, this element of a Put Event is phrased in terms
of the downgrading of the Company's publicly traded senior debt securities of
any series. If a Put Event occurs with respect to any series of New Notes,
each holder of New Notes of such series shall have the right to require the
Company to repurchase all or any portion of such holder's New Notes, provided
that such portion is $100,000 in Original Principal Amount or an integral
multiple thereof. If a Put Event occurs with respect to any series of Existing
Notes, holders of Existing Notes have the same right to require the Company to
purchase all or any portion of their Existing Notes except that such portion
shall be in minimum authorized denominations of $1,000,000 or the unpaid
principal amount of such Existing Note if less than $1,000,000. Under the
Indenture, any holder intending to exercise its right to require the Company to
purchase all or any portion of such holder's New Notes following a Put Event
must deliver notice of its intention to the Paying Agent and concurrently
present and surrender to the Paying Agent the New Notes to be purchased no
later than 15 days prior to the date fixed for purchase of such New Notes.
While the Note Exchange Agreement requires holders of Existing Notes to give
similar notice to the Company of their intention to require the Company to
purchase all or any portion of their Existing Notes, holders of Existing Notes
are not required to physically surrender their Existing Notes at the time such
notice is given in order for their right to have been properly exercised. See
"Description of the New Notes -- Change of Control".
Method of Payment; Transfers; Calculation of Premiums. Payments of
principal, interest and premium, if any, with respect to an Existing Note are
required to be made by transfer of immediately available funds for credit to
the account of the holder of such Existing Note as specified in the Note
Exchange Agreement or as such holder may designate in writing. Each holder has
agreed that before selling or otherwise transferring an Existing Note, such
holder will make a notation on such Existing Note of all principal payments
previously made thereon and of the date to which interest thereon has been
paid, and will notify the Company of the name and address of the transferee or
assignee of such Existing Note and of the notations so made on such Existing
Note. If any payment of principal, interest or premium with respect to an
Existing Note falls due on a day which is not a business day, then such payment
is required to be made on the next preceding Business Day. No presentation or
surrender of an Existing Note is required in order to receive any payment of
principal, interest or premium thereon. An Existing Note that has been paid,
prepaid or repurchased in full must be surrendered to the Company for
cancellation. The Existing Notes are transferable by endorsement and delivery.
The Company maintains a Note Register at its principal office in which the
Existing Notes are registered and transfers and exchanges thereof may be
recorded. Any Existing Note issued in exchange for any Existing Note or Notes
upon transfer thereof carries the rights to unpaid interest and interest to
accrue which were carried by the Existing Note or Notes so transferred. See
"Description of New Notes -- Method of Payment" and " -- Transfer and
Exchange".
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The Note Exchange Agreement and the Indenture provide that the
Company's calculation of the amount of any premium payable upon a prepayment,
redemption or purchase of Existing Notes or New Notes, respectively, as set
forth in an officers' certificate shall be binding on the holders of such Notes
in the absence of manifest error. The Note Exchange Agreement further
provides, however, that if prior to the date fixed for such payment, any holder
of Existing Notes objects to the Company's calculation of the premium payable
with respect to such holder's Existing Notes (which objection shall be in
writing and set forth in reasonable detail such holder's computation of the
premium), then the computation of such holder shall be binding on the Company
with respect to such holder's Existing Notes absent manifest error.
COMPARISON OF CERTAIN COVENANTS
Designation of Restricted Subsidiaries. The conditions to which the
Company's right to designate an Unrestricted Subsidiary as a Restricted
Subsidiary or designate a Restricted Subsidiary as an Unrestricted Subsidiary
is subject under the Note Exchange Agreement and the Indenture are
substantially identical, except that the Note Exchange Agreement includes the
further condition that after giving effect to such designation, there shall not
be a material and adverse effect on the Company and its Restricted Subsidiaries
with respect to the prospects for the future generation of Cash Flow,
Subscriber Penetration Levels (as defined in the Note Exchange Agreement), the
general mix of assets, or the condition, quality and developmental level of
technical equipment. Further, the Note Exchange Agreement, requires the
Company to provide each original holder of an Existing Note, each assignee of
the entirety of the interest of any such holder and each holder of at least
$2,000,000 aggregate principal amount of Existing Notes (each, a "Designated
Holder") with notice not less than 20 business days after making such
designation and, in the event any newly designated Subsidiary represents
greater than 30% of the Annualized Cash Flow for the three-month period ending
the month immediately preceding the date of such designation, such notice shall
also be accompanied by a certificate of an officer of the Company containing
information as to the Cash Flow, Subscriber Penetration Levels (as defined in
the Note Exchange Agreement) and financial condition of such Subsidiary. See
"Description of New Notes -- Certain Covenants -- Designation of Restricted
Subsidiaries".
Restricted Payments. The covenant in the Note Exchange Agreement with
respect to Restricted Payments is substantially identical to the corresponding
covenant in the Indenture, except that the Note Exchange Agreement also
prohibits the Company and the Restricted Subsidiaries from making any payment
of principal, interest or premium, if any, in respect of Subordinated Debt if a
Designated Event shall have occurred (other than a Designated Event with
respect to which all time periods for the holders of Existing Notes to be
prepaid as described under "Payment Provisions -- Designated Event" have fully
expired), other than regularly scheduled payments with respect to Approved
Subordinated Debt in accordance with its terms as in effect on the date of the
Note Exchange Agreement. See "Description of New Notes -- Certain Covenants --
Restricted Payments." The Approved Subordinated Debt consists of the Company's
11 1/8% senior subordinated debentures due October 1, 2003, in the aggregate
outstanding principal amount of $441,000, which were issued pursuant to an
indenture dated as of September 29, 1988, as amended, between the Company and
National Westminster Bank USA, as trustee.
Loan and Investment Limitations. The specified exceptions set forth
in the Note Exchange Agreement to the covenant restricting Investments by the
Company and the Restricted Subsidiaries are substantially identical to those
set forth in the Indenture, except that, in the case of the exception for
Investments in or with respect to any Unrestricted Subsidiary that are made in
anticipation of the receipt of funds in the day-to-day operations of the
Subsidiaries sufficient to reimburse the Company or the Restricted Subsidiary
making such Investment, as applicable, pursuant to the Company's normal cash
management practices, the Note Exchange Agreement requires that such funds be
anticipated to be received within 45 days after such Investment is made. See
"Description of New Notes -- Certain Covenants -- Loan and Investment
Limitations".
Liens. The Indenture and the Note Exchange Agreement each contain a
covenant which limits the ability of the Company or any Restricted Subsidiary
to create, assume or suffer to exist any Lien upon any of their respective
properties or assets, subject to certain exceptions. The Indenture includes an
exception, which is not
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present in the Note Exchange Agreement, that specifically permits the Company
or a Restricted Subsidiary to create, assume or suffer to exist a Lien which
would not otherwise be permitted under such covenant if the Company makes or
causes to be made effective provision whereby the then outstanding New Notes
are secured equally and ratably with (or prior to) the Indebtedness secured by
such Lien for so long as such Indebtedness shall be so secured and certain
other requirements are met. See "Description of New Notes -- Certain Covenants
-- Liens". The Note Exchange Agreement contains a separate affirmative
covenant which provides that if the Company or any Restricted Subsidiary shall
create or assume any Lien upon any of its respective properties or assets that
is not permitted under the Liens covenant contained in the Note Exchange
Agreement, the Company, within 30 days thereof, shall either make or cause to
be made effective provision whereby the Existing Notes will be secured by such
Lien equally and ratably with any and all other Indebtedness thereby secured as
long as any such other Indebtedness shall be so secured, or shall cause such
Lien to be released and fully discharged against any property or assets of the
Company or any Restricted Subsidiary.
Indebtedness to Unrestricted Subsidiaries. The Company's covenant in
the Note Exchange Agreement not to make or permit any Restricted Subsidiary to
make any payment (including prepayments and purchases) in respect of
Indebtedness for borrowed money owing to and held by an Unrestricted Subsidiary
or a Restricted Subsidiary which is not a Wholly-owned Restricted Subsidiary
under specified circumstances is substantially identical to the corresponding
covenant in the Indenture, except that the Note Exchange Agreement also
prohibits the making of any such payment if, immediately before or after giving
effect to such payment, a Designated Event shall have occurred (other than a
Designated Event with respect to which all time periods for the holders of
Existing Notes to be prepaid as described under "Payment Provisions --
Designated Event" have expired). See "Description of New Notes -- Certain
Covenants -- Indebtedness to Unrestricted Subsidiaries".
Mergers and Acquisitions. The covenants set forth in the Indenture
and the Note Exchange Agreement which limit the ability of the Company or a
Restricted Subsidiary to merge or consolidate with or acquire the stock or
assets of any person are substantially identical, except that the Note Exchange
Agreement requires the Company to be the surviving or continuing corporation in
any such transaction involving the Company, whereas the Indenture permits the
Company to consolidate with or merge into another person if specified
requirements are met. See "Description of New Notes -- Certain Covenants --
Mergers and Acquisitions".
Sale of Assets. The covenants set forth in the Indenture and the Note
Exchange Agreement with respect to the sale, lease, transfer or other
disposition by the Company or any Restricted Subsidiary of any of its
properties and assets are substantially identical, except that the conditions
that must be satisfied in order for a trade or exchange of an asset or group of
assets to be effected in compliance with the Note Exchange Agreement include
the further requirement that, after giving effect to such transaction, there
shall not be a material and adverse effect on the Company and its Restricted
Subsidiaries with respect to the prospects for the future generation of Cash
Flow, Subscriber Penetration Levels (as defined in the Note Exchange
Agreement), the general mix of assets or the condition, quality and
developmental level of technical equipment. Notice of such trade or exchange
(including information equivalent to that required to be given to the Trustee
under the corresponding covenant of the Indenture) is required to be given to
each holder of Existing Notes. See "Description of New Notes -- Certain
Covenants -- Sale of Assets".
Certain Deliveries. In accordance with the Note Exchange Agreement,
the Company is required to deliver to each Designated Holder within 15 days
after it files them with the Commission copies of the annual reports and of the
information, documents and other reports which the Company is required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
Further, within 120 days after the end of each fiscal year, the Company is
required to deliver to each Designated Holder a certificate of an appropriate
officer with respect to the Company's compliance with the conditions and
covenants contained in the Note Exchange Agreement and a written statement of
the Company's independent auditors with respect to whether, in connection with
their audit examination, any Event of Default has come to their attention. In
accordance with the Indenture, copies of such filings with the Commission, the
officer's compliance certificate and the written statement of the Company's
independent auditors
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are required to be delivered to the Trustee rather than the holders of the New
Notes. (Sections 4.04 and 4.06 of the Indenture)
CERTAIN ADDITIONAL COVENANTS
The Note Exchange Agreement provides that until the Existing Notes
have been paid in full in accordance with the terms thereof (and otherwise as
provided in the Note Exchange Agreement), the Company shall be subject to the
further covenants summarized below. None of the following covenants are
contained in the Indenture and, therefore, the benefits thereof will not be
available to the holders of New Notes.
Maintenance of Properties; Insurance. The Company and each Restricted
Subsidiary (i) shall maintain, preserve and keep its plant, properties and
equipment in good repair, working order and condition and will from time to
time make all repairs, renewals, replacements, additions and betterments, as
needed, so that the efficiency thereof shall be fully preserved and maintained,
except assets disposed of by the Company or any Restricted Subsidiary in the
ordinary course of business where such assets are obsolete or no longer useful
or required in the operation of the Company's or such Restricted Subsidiary's
business, and (ii) shall maintain insurance coverage by reputable insurance
companies or associations, in such forms and amounts and against such hazards
as are customary for companies engaged in similar businesses and owning and
operating similar properties.
Ownership of Restricted Subsidiaries. The Company shall at all times
own, directly or indirectly through a Wholly-owned Restricted Subsidiary, not
less than 80% of the issued and outstanding shares of capital stock of each
Restricted Subsidiary.
Payment of Taxes and Other Claims. Except as provided in the "Liens"
covenant, the Company will, and will cause each Restricted Subsidiary to pay
when due (i) all taxes, assessments, and other governmental charges or levies
imposed upon it or any of its or their respective properties or income, which,
if unpaid, might result in the creation of a Lien upon any of its or their
respective material properties, and (ii) all claims or demands for labor,
materials and supplies, which, if unpaid, might result in the creation of a
Lien upon any of its or their respective material properties.
ERISA. The Company shall deliver to any holder of Existing Notes:
(a) promptly and in any event within ten days after the Company knows or has
reason to know of the occurrence of (i) any of the events set forth in Section
4043(b) of ERISA, (ii) a withdrawal from a Plan described in Section 4063 of
ERISA, or (iii) a cessation of operations described in Section 4068(f) of ERISA
(each, a "Reportable Event"), with respect to a Plan, a copy of any materials
required to be filed with the Pension Benefit Guaranty Corporation with respect
to such Reportable Event together with a statement of an appropriate officer of
the Company setting forth details as to such Reportable Event and the action
which the Company proposes to take with respect thereto; (b) at least ten days
prior to the filing by any plan administrator of a Plan of a notice of intent
to terminate such Plan, a copy of such notice; (c) promptly and in any event
within ten days after the Company knows or has reason to know of any event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, a
statement of an appropriate officer of the Company describing such event or
condition; (d) promptly and in no event more than ten days after receipt
thereof by the Company or any ERISA Affiliate, each notice received by the
Company or an ERISA Affiliate concerning the imposition of any withdrawal
liability under Section 4202 of ERISA; and (e) promptly after receipt thereof,
a copy of any notice the Company or any ERISA Affiliate may receive from the
Pension Benefit Guaranty Corporation or the Internal Revenue Service with
respect to any Plan or Multi-employer Plan, provided, however, that this
covenant does not apply to notices of general application promulgated by the
Pension Benefit Guaranty Corporation or the Internal Revenue Service.
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DEFAULTS AND REMEDIES
The events which constitute an Event of Default under the Note
Exchange Agreement and the Indenture are substantially similar except as
described below. Under the Note Exchange Agreement, if the Company defaults in
the payment or prepayment of principal or premium on any Existing Note of any
series when the same shall become due, or defaults in the payment or prepayment
of any interest on any Existing Note of any series when the same shall become
due and such default as to interest remains unremedied for five days, such
event will constitute an Event of Default with respect to the Existing Notes of
all series. Under the Indenture, such event would constitute an Event of
Default only with respect to the New Notes of the particular series with
respect to which the payment default occurred. Both the Indenture and the Note
Exchange Agreement, however, include cross-default provisions in the event of a
failure to pay any principal of, or premium or interest on, any Indebtedness
having a then outstanding aggregate principal amount of $10,000,000 or more,
beyond any applicable grace period. The Note Exchange Agreement provides that
the Company's failure to perform any of the requirements of certain of the
affirmative covenants made in the Note Exchange Agreement (relating to the
designation of Restricted and Unrestricted Subsidiaries, the ratable securing
of the Existing Notes, the ownership of Restricted Subsidiaries and the giving
of notice of defaults by the Company), and the Company's failure to comply with
any of the negative covenants contained therein, will constitute an Event of
Default with respect to the Existing Notes without any requirement of notice to
the Company or passage of time. The failure to perform or observe any other
term or condition of the Note Exchange Agreement or of any of the Existing
Notes will constitute an Event of Default if not remedied within 30 days after
such failure shall have become known to the Company. See "Description of New
Notes -- Defaults and Remedies". The periods of time that certain events or
conditions (relating to the involuntary appointment of a custodian or receiver;
an involuntary bankruptcy, reorganization or similar proceeding; entry of a
decree of dissolution, and entry of final judgments exceeding a specified
aggregate amount) would have to continue unremedied (by dismissal, stay or
discharge) before an Event of Default would occur under the Note Exchange
Agreement or the Indenture is more than 60 days, in the case of the Note
Exchange Agreement, and more than 90 days, in the case of the Indenture. Under
the Indenture, the occurrence of certain events or conditions with respect to a
Plan or a Multi-employer Plan will constitute an Event of Default if such
events or conditions would result in liabilities in excess of certain amounts
and that are not covered in full by insurance. Under the Note Exchange
Agreement, if such events or conditions occur with respect to the Company, as
opposed to a Restricted Subsidiary, an Event of Default will occur without
regard to the amount of the liabilities or their coverage by insurance.
Further, the Note Exchange Agreement provides that it shall be an Event of
Default with respect to the Existing Notes if an order, judgment or decree is
entered in any proceeding against the Company or any Restricted Subsidiary
decreeing a split-up of the Company or any Restricted Subsidiary which requires
the divestiture of assets of the Company or any Restricted Subsidiary the
Annualized Cash Flows of which for the three-month period ending the month
immediately prior to the date of such order, judgment or decree shall have
contributed 15% or more of the Annualized Cash Flow of the Company and the
Restricted Subsidiaries for the same period, and such order, judgment or decree
remains unstayed and in effect for more than 60 days, unless the Company can
demonstrate, to the reasonable satisfaction of a Majority-in-Interest of
Holders of Existing Notes, that it could make any such asset divestitures
within the time period required in order to comply with such order, judgment or
decree without violating any of the terms and conditions of the Note Exchange
Agreement. The Indenture does not include an equivalent provision.
If an Event of Default (other than certain events of bankruptcy or
insolvency) occurs with respect to outstanding Existing Notes, the Note
Exchange Agreement provides that a Majority-in-Interest of Holders of the
Existing Notes may declare to be due and payable immediately the unpaid
principal amount of all of the Existing Notes then outstanding and accrued
interest thereon. The Note Exchange Agreement provides for automatic
acceleration of such amounts upon the occurrence of certain events of
bankruptcy or insolvency. If an Event of Default occurs by virtue of the
Company's failure to make any payment of principal, premium or interest on any
Existing Note when due, then any holder of an Existing Note as to which such
default in payment has occurred and is continuing may at its option declare the
unpaid principal amount of, and accrued interest on, such Existing Note to be
due and payable immediately. The acceleration provisions of the Indenture are
substantially similar, except that (i) if a payment default occurs with respect
to any New Note of a series, a Majority-in-Interest of Holders of the New Notes
of that particular series may declare the same to be due and payable and no
individual holder has the
53
<PAGE> 56
separate right to accelerate the payment of his or its New Note, and (ii) in
addition to providing for the automatic acceleration of the payment of the New
Notes upon the occurrence of certain events of bankruptcy or insolvency, the
Indenture provides for such automatic acceleration if an order, judgment or
decree is entered in any proceedings against the Company or a Restricted
Subsidiary decreeing the dissolution of the Company or such Restricted
Subsidiary and such order, judgment or decree remains unstayed and in effect
for more than 90 days. Upon the acceleration of New Notes or Existing Notes
(other than an automatic acceleration), the Indenture and the Note Exchange
Agreement, respectively, provide for the payment of a premium in addition to
principal and interest. The Note Exchange Agreement, subject to certain
conditions, permits the holders of not less than 66 2/3% in aggregate principal
amount of the Existing Notes then outstanding to annul any declaration of
acceleration of Existing Notes and the consequences thereof, provided that such
annulment occurs within six months after such declaration. The Indenture,
subject to similar conditions, permits the holders of not less than 66 2/3% in
aggregate unpaid principal amount of the outstanding New Notes (or the New
Notes of a particular series in the case of an acceleration of New Notes of
that series following a payment default with respect to such series) to rescind
an acceleration and its consequences with respect to the New Notes at any time.
See "Description of New Notes -- Defaults and Remedies". In accordance with
the Indenture, no holder of New Notes shall have the right to pursue any remedy
with respect to the Indenture or the New Notes (other than a suit for
enforcement of any payment on such holder's New Notes that has not been paid
when due), unless certain conditions are met, including that the holders of at
least 25% in aggregate unpaid principal amount of the outstanding Notes make a
written request to the Trustee to pursue the remedy and offer and provide to
the Trustee indemnity satisfactory to it against any loss, liability or expense
and that the Trustee does not comply with such request within 60 days
thereafter. (Sections 5.06 and 5.07) The Note Exchange Agreement does not
include any equivalent limitation on the rights of holders of Existing Notes.
AMENDMENTS AND WAIVERS
The Note Exchange Agreement and the Indenture may each be amended, and
compliance with the respective provisions thereof may be waived, with the
consent of a Majority-in-Interest of Holders of the Existing Notes or the New
Notes, as applicable, subject to certain exceptions which are substantially
similar, except that the Note Exchange Agreement further provides that no
amendment or waiver consented to after the acceleration of any Existing Note or
Notes shall, without the consent of the holder thereof, affect the rights of
the holder of such accelerated Existing Note, including the right to receive
immediate payment of all unpaid principal, premium, if any, and interest
thereon. The Indenture provides that no waiver of a default in the payment of
principal of, premium, if any, or interest on a New Note will be effective
without the consent of the holder of such New Note. The Indenture provides
that the Company and the Trustee may amend or supplement the Indenture in
certain respects without the consent of any holder of New Notes. The Note
Exchange Agreement does not include any equivalent provision. The Note Exchange
Agreement prohibits the Company from soliciting, requesting or negotiating for
or with respect to any proposed waiver or amendment unless each holder of
Existing Notes is afforded the opportunity of considering the same and further
prohibits the Company from paying any remuneration to any holder of Existing
Notes as consideration for or as an inducement to the entering into by such
holder of any waiver or amendment, unless such remuneration is concurrently
paid, on the same terms, ratably to the holders of all of the Existing Notes
then outstanding. The Indenture does not contain an equivalent provision. See
"Description of New Notes -- Amendments, Supplements and Waivers" and "--
Defaults and Remedies".
TERMINATION OF COMPANY'S OBLIGATIONS
The Note Exchange Agreement does not contain any provision equivalent
to the provision of the Indenture described under "Description of New Notes --
Termination of Company's Obligations".
LEGAL MATTERS
Certain legal matters with respect to the New Notes offered hereby
will be passed upon for the Company by Baker & Botts, L.L.P., 885 Third Avenue,
New York, New York 10022-4834. Jerome H. Kern, a partner of
54
<PAGE> 57
Baker & Botts, L.L.P., is a director of the Company and certain partners of
Baker & Botts, L.L.P. serve as Assistant Secretaries of the Company.
EXPERTS
The consolidated balance sheets of Tele-Communications, Inc. and
subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1993, and the related
financial statement schedules, which appear in Tele-Communications, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1993, have been
incorporated by reference herein in reliance upon the reports, dated March 21,
1994, of KPMG Peat Marwick, independent auditors, incorporated by reference
herein, and upon the authority of said firm as experts in auditing and
accounting.
The consolidated balance sheets of Liberty Media Corporation and
subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the years
ended December 31, 1993 and 1992 and the period from April 1, 1991 to December
31, 1991 and the consolidated statements of operations, stockholders' equity,
and cash flows of "Liberty Media" (a combination of certain programming
interests and cable television assets of Tele-Communications, Inc.) for the
period from January 1, 1991 to March 31, 1991, which appear in
Tele-Communications, Inc.'s Current Report on Form 8-K dated April 6, 1994,
have been incorporated by reference herein in reliance upon the report, dated
March 18, 1994, of KPMG Peat Marwick, independent auditors, incorporated by
reference herein, and upon the authority of said firm as experts in auditing
and accounting.
55
<PAGE> 58
<TABLE>
=================================================== ===================================================
<S> <C>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL
HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED
BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
NEW NOTES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER TELE-COMMUNICATIONS, INC.
OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, $5,000,000
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION 9.55% SENIOR NOTES, SERIES A
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS DUE DECEMBER 15, 2001
SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF. $26,500,00
8.67% SENIOR NOTES, SERIES B
DUE AUGUST 31, 2002
--------------------
$36,000,00
8.85% SENIOR NOTES, SERIES C
TABLE OF CONTENTS DUE AUGUST 31, 2002
Page
$32,000,00
Available Information . . . . . . . . . . . . . . 4 9.82% SENIOR NOTES, SERIES D
Incorporation of Documents by DUE SEPTEMBER 30, 1997
Reference . . . . . . . . . . . . . . . . . . 4
Summary . . . . . . . . . . . . . . . . . . . . . 5 $20,000,00
Certain Considerations . . . . . . . . . . . . .14 10.25% SENIOR NOTES, SERIES E
The Company . . . . . . . . . . . . . . . . . . .16 DUE SEPTEMBER 30, 2000
Recent Developments . . . . . . . . . . . . . . .16
The Exchange Offer . . . . . . . . . . . . . . .17
Certain Federal Income Tax Considerations . .24 --------------------
Description of New Notes . . . . . . . . . . . .24 PROSPECTUS
Comparison of Existing Notes and --------------------
New Notes . . . . . . . . . . . . . . . . . .47
Legal Matters . . . . . . . . . . . . . . . . . .55
Experts . . . . . . . . . . . . . . . . . . . . .55
JUNE 1, 1994
=================================================== ===================================================
</TABLE>
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides,
generally, that a corporation shall have the power to indemnify any person who
was or is a party or is threatened to be made a party to any suit or proceeding
(except actions by or in the right of the corporation) by reason of the fact
that such person is or was a director or officer of the corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. A corporation may similarly indemnify such person for expenses
actually and reasonably incurred by him in connection with the defense or
settlement of any action or suit by or in the right of the corporation,
provided such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, in the
case of claims, issues and matters as to which such person shall have been
adjudged liable to the corporation, provided that a court shall have
determined, upon application, that, despite the adjudication of liability but
in view of all of the facts and circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
Section 102(b)(7) of the Delaware General Corporation Law provides,
generally, that the certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision may not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under section 174 of Title 8, or (iv) for any transaction from which the
director derived an improper personal benefit. No such provision may eliminate
or limit the liability of a director for any act or omission occurring prior to
the date when such provision becomes effective.
Article V, Paragraph FOURTH of the Company's Restated Certificate of
Incorporation provides as follows:
"FOURTH: (A) To the fullest extent permitted by the
Delaware General Corporation Law as the same exists or may
hereafter be amended, a director of this corporation shall not
be liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
(B) This corporation shall, to the fullest extent
permitted by, and in the manner permissible under, the laws of
the State of Delaware, (i) indemnify, and (ii) advance
litigation expenses prior to the final disposition of an
action, to any person made or threatened to be made a party to
an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that he
or she is or was a director or officer of this corporation or
served any other enterprise as a director or officer at the
request of this corporation and such rights of indemnification
and to advancement of litigation expenses shall also be
applicable to the heirs, executors, administrators and other
similar legal representatives of any such director or officer.
(C) The foregoing provisions of this paragraph
FOURTH shall be deemed to be a contract between this
corporation and each director and officer who serves in such
capacity at any time while this paragraph FOURTH is in effect,
and any repeal or modification thereof shall not
II-1
<PAGE> 60
affect any rights or obligations then or theretofore existing
or any action, suit or proceeding theretofore or thereafter
brought based in whole or in part upon any such state of
facts.
(D) The foregoing rights of indemnification and to
advancement of litigation expenses shall not be deemed
exclusive of any other rights to which any director or officer
or his or her legal representatives may be entitled apart from
the provisions of this paragraph FOURTH."
Article IV, Section 6 of the Company's By-laws also contains an
indemnity provision, requiring the Company to indemnify members of the Board of
Directors and officers of the Company and their respective heirs, personal
representatives and successors in interest, to the extent provided by the
Delaware Corporation statutes and by the Company's Restated Certificate of
Incorporation.
The Company has also entered into indemnification agreements with each
of its directors (each director, an "indemnitee"). The indemnification
agreements provide (i) for the prompt indemnification to the fullest extent
permitted by law against any and all expenses, including attorneys' fees and
all other costs, expenses and obligations paid or incurred in connection with
investigating, defending, being a witness or participating in (including on
appeal), or in preparing for ("Expenses"), any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation ("Claim"), related
to the fact that such indemnitee is or was a director, officer, employee, agent
or fiduciary of the Company or is or was serving at the Company's request as a
director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by a director or officer
in any such capacity, and against any and all judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection therewith) of any Claim, unless the
Reviewing Party (one or more members of the Board of Directors or other person
appointed by the Board of Directors, who is not a party to the particular
claim, or independent legal counsel) determines that such indemnification is
not permitted under applicable law and (ii) for the prompt advancement of
Expenses, and for reimbursement to the Company if the Reviewing Party
determines that such indemnitee is not entitled to such indemnification under
applicable law. In addition, the indemnification agreements provide (i) a
mechanism through which an indemnitee may seek court relief in the event the
Reviewing Party determines that the indemnitee would not be permitted to be
indemnified under applicable law (and therefore is not entitled to
indemnification or expense advancement under the indemnification agreement) and
(ii) indemnification against all expenses (including attorneys' fees), and
advancement thereof if requested, incurred by the indemnitee in seeking to
collect an indemnity claim or advancement of expenses from the Company or
incurred in seeking to recover under a directors' and officers' liability
insurance policy, regardless of whether successful or not. Furthermore, the
indemnification agreements provide that after there has been a "change in
control" of the Company (as defined in the indemnification agreements), other
than a change in control approved by a majority of directors who were directors
prior to such change, then, with respect to all determinations regarding a
right to indemnity and the right to advancement of Expenses, the Company will
seek legal advice only from independent legal counsel selected by the
indemnitee and approved by the Company.
The indemnification agreements impose upon the Company the burden of
proving that an indemnitee is not entitled to indemnification in any particular
case and negate certain presumptions that may otherwise be drawn against an
indemnitee seeking indemnification in connection with the termination of
actions in certain circumstances. Indemnitees' rights under the
indemnification agreements are not exclusive of any other rights they may have
under the Delaware General Corporation Law, the Company's By-laws or otherwise.
Although not requiring the maintenance of directors' and officers' liability
insurance, the indemnification agreements require that indemnitees be provided
with the maximum coverage available for any director or officer of the Company
if there is such a policy.
The Company may purchase liability insurance policies covering its
directors and officers.
II-2
<PAGE> 61
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
Exhibit
Number Description
------- -----------
3.1 Registrant's Restated Certificate of Incorporation, dated July
19, 1979, as amended on June 12, 1980, June 18, 1981, June 9,
1983, May 20, 1986, June 12, 1987, January 14, 1988, November
4, 1991, December 2, 1991, December 2, 1991, December 27,
1991, April 3, 1992, February 8, 1993, March 19, 1993 and July
23, 1993. (Incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993. Commission File No. 0-5550.)
3.2 Registrant's By-Laws, as Amended and Restated July 19, 1979,
with amendments April 8, 1980, October 29, 1987 and December
10, 1993. (Incorporated herein by reference to the
Registrant's Current Report on Form 8-K dated April 6, 1994.
Commission File No. 0-5550.)
4.1 Indenture, dated as of April 15, 1994, between the Registrant
and The Bank of New York, as Trustee.*
4.2 Form of 9.55% Senior Note, Series A (included as Exhibit A to
Exhibit 4.1).*
4.3 Form of 8.67% Senior Note, Series B (included as Exhibit B to
Exhibit 4.1).*
4.4 Form of 8.85% Senior Note, Series C (included as Exhibit C to
Exhibit 4.1).*
4.5 Form of 9.82% Senior Note, Series D (included as Exhibit D to
Exhibit 4.1).*
4.6 Form of 10.25% Senior Note, Series E (included as Exhibit E to
Exhibit 4.1).*
5 Opinion of Baker & Botts, L.L.P., regarding the legality of
the New Notes.*
8 Opinion of Sherman & Howard, regarding certain tax matters.*
12 Calculation of Ratios of Earnings to Fixed Charges.
21 List of Subsidiaries of the Registrant. (Incorporated herein
by reference to Exhibit 21 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993. Commission
File No. 0-5550.)
23.1 Consent of KPMG Peat Marwick.*
23.2 Consent of KPMG Peat Marwick.*
23.4 Consent of Baker & Botts, L.L.P. (included in Exhibit 5).
23.5 Consent of Sherman & Howard (included in Exhibit 8).
24 Power of Attorney.*
II-3
<PAGE> 62
Exhibit
Number Description
------- -----------
25 Statement of Eligibility of The Bank of New York, as Trustee,
on Form T-1.*
99.1 Form of Letter of Transmittal for Existing Notes.
99.2 Form of Notice of Guaranteed Delivery.
____________________
* Previously filed.
(b) Financial Statement Schedules.
Schedule II - Amounts Receivable from Related Parties
and Employees Other Than Related Parties,
Years ended December 31, 1993, 1992 and 1991*
Schedule III - Condensed Information as to the
Financial Position of the Registrant, December 31, 1993
and 1992; Condensed Information as to the Operations and
Cash Flows of the Registrant,
Years ended December 31, 1993, 1992 and 1991*
Schedule V - Property and Equipment,
Years ended December 31, 1993, 1992 and 1991*
Schedule VI - Accumulated Depreciation of
Property and Equipment,
Years ended December 31, 1993, 1992 and 1991*
Schedule VII - Guarantees of Securities of Other Issuers,
December 31, 1993*
Schedule VIII - Valuation and Qualifying Accounts,
Years ended December 31, 1993, 1992 and 1991*
Schedule IX - Short-Term Borrowings,
Years ended December 31, 1993, 1992 and 1991*
Schedule X - Supplementary Statement of
Operations Information,
Years ended December 31, 1993, 1992 and 1991*
_____________________
* Incorporated herein by reference to the same
schedule included as part of the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993 (Commission File No. 0-5550).
II-4
<PAGE> 63
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement; provided, however,
that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post- effective
amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(5) To respond to requests for information that is
incorporated by reference into the prospectus pursuant to Item 4,
10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-5
<PAGE> 64
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF GREENWOOD VILLAGE, STATE OF COLORADO, ON MAY 31, 1994.
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
Name: Stephen M. Brett
Title: Senior Vice President
II-6
<PAGE> 65
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman of the Board May 31, 1994
(Bob Magness) and Director
* President and Director May 31, 1994
(John C. Malone) (Principal Executive Officer)
* Executive Vice President May 31, 1994
(Donne F. Fisher) and Director
(Principal Financial Officer)
* Senior Vice President May 31, 1994
(Gary K. Bracken) and Controller
(Principal Accounting Officer)
* Director May 31, 1994
(Jerome H. Kern)
* Director May 31, 1994
(John W. Gallivan)
* Director May 31, 1994
(Kim Magness)
* By: /s/Stephen M. Brett
Stephen M. Brett
Attorney-in-Fact
</TABLE>
II-7
<PAGE> 66
EXHIBIT INDEX
<TABLE>
<Caption
Exhibit
Number Exhibit Page No.
------- ------- --------
<S> <C>
3.1 Registrant's Restated Certificate of Incorporation, dated July
19, 1979, as amended on June 12, 1980, June 18, 1981, June 9,
1983, May 20, 1986, June 12, 1987, January 14, 1988, November
4, 1991, December 2, 1991, December 2, 1991, December 27,
1991, April 3, 1992, February 8, 1993, March 19, 1993 and July
23, 1993. (Incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993. Commission File No. 0-5550.)
3.2 Registrant's By-Laws, as Amended and Restated July 19, 1979,
with amendments April 8, 1980, October 29, 1987 and December
10, 1993. (Incorporated herein by reference to the
Registrant's Current Report on Form 8-K dated April 6, 1994.
Commission File No. 0-5550.)
4.1 Indenture, dated as of April 15, 1994, between the Registrant
and The Bank of New York, as Trustee.*
4.2 Form of 9.55% Senior Note, Series A (included as Exhibit A to
Exhibit 4.1).*
4.3 Form of 8.67% Senior Note, Series B (included as Exhibit B to
Exhibit 4.1).*
4.4 Form of 8.85% Senior Note, Series C (included as Exhibit C to
Exhibit 4.1).*
4.5 Form of 9.82% Senior Note, Series D (included as Exhibit D to
Exhibit 4.1).*
4.6 Form of 10.25% Senior Note, Series E (included as Exhibit E to
Exhibit 4.1).*
5 Opinion of Baker & Botts, L.L.P., regarding the legality of
the New Notes.*
8 Opinion of Sherman & Howard, regarding certain tax matters.*
12 Calculation of Ratios of Earnings to Fixed Charges.
21 List of Subsidiaries of the Registrant. (Incorporated herein
by reference to Exhibit 21 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993. Commission
File No. 0-5550.)
23.1 Consent of KPMG Peat Marwick.*
23.2 Consent of KPMG Peat Marwick.*
23.4 Consent of Baker & Botts, L.L.P. (included in Exhibit 5).
23.5 Consent of Sherman & Howard (included in Exhibit 8).
24 Power of Attorney.*
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page No.
------- ------- --------
<S> <C>
25 Statement of Eligibility of The Bank of New York, as Trustee,
on Form T-1.*
99.1 Form of Letter of Transmittal for Existing Notes.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
____________________
* Previously filed.
<PAGE> 1
EXHIBIT 12
TELE-COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
Calculation of Ratios of Earnings to Fixed Charges
(amounts in millions, except for ratios)
(unaudited)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1989 1990 1991 1992(a) 1993(a)
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings (losses) from continuing operations before income taxes $ (389) (308) (108) 45 161
Add:
Interest on debt 895 990 928 815 738
Interest portion of rentals 19 23 23 22 23
Amortization of debt expense 5 6 6 9 12
Distributions from and (earnings) losses of less than
50%-owned affiliates with debt not guaranteed by TCI 46 34 (27) (10) 26
Minority interests in earnings (losses) of consolidated
subsidiaries, including preferred stock dividend requirement
of consolidated subsidiaries (36) (63) 24 277 13
Elimination of preferred stock dividend requirement
of consolidated subsidiaries to 50%-owned affiliates (31) (36) (42) (250) -
Preferred stock dividend requirements of 50%-owned
affiliates, other than amounts to TCI 25 15 23 175 -
-------------------------------------------------------
Earnings available for fixed charges $ 534 661 827 1,083 973
=======================================================
Fixed charges:
Interest on debt:
TCI and consolidated subsidiaries $ 766 868 826 718 731
Elimination of interest of consolidated subsidiaries to
50%-owned affiliates (51) (51) (47) (36) -
TCI's proportionate share of interest of 50%-owned
affiliates 180 173 149 133 7
-------------------------------------------------------
895 990 928 815 738
Interest portion of rentals 19 23 23 22 23
Amortization of debt expense 5 6 6 9 12
Preferred stock dividend requirements of consolidated
subsidiaries 46 56 61 281 14
Elimination of preferred stock dividend requirements of
consolidated subsidiaries to 50%-owned affiliates (31) (36) (42) (250) -
Preferred stock dividend requirements of 50%-owned
affiliates, other than amounts to TCI 25 15 23 175 -
Capitalized interest 5 6 5 6 9
-------------------------------------------------------
Total fixed charges $ 964 1,060 1,004 1,058 796
=======================================================
Ratio of earnings to fixed charges - - - 1.02 1.22
Deficiency $ (430) (399) (177) - -
</TABLE>
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-----------------------
1993(a) 1994(a)
-----------------------
<S> <C> <C>
Earnings (losses) from continuing operations before income taxes 91 63
Add:
Interest on debt 183 180
Interest portion of rentals 6 6
Amortization of debt expense 3 3
Distributions from and (earnings) losses of less than
50%-owned affiliates with debt not guaranteed by TCI (9) (12)
Minority interests in earnings (losses) of consolidated
subsidiaries, including preferred stock dividend requirement
of consolidated subsidiaries 5 3
Elimination of preferred stock dividend requirement
of consolidated subsidiaries to 50%-owned affiliates - -
Preferred stock dividend requirements of 50%-owned
affiliates, other than amounts to TCI - -
----------------------
Earnings available for fixed charges 279 243
======================
Fixed charges:
Interest on debt:
TCI and consolidated subsidiaries 181 178
Elimination of interest of consolidated subsidiaries to
50%-owned affiliates - -
TCI's proportionate share of interest of 50%-owned
affiliates 2 2
----------------------
183 180
Interest portion of rentals 6 6
Amortization of debt expense 3 3
Preferred stock dividend requirements of consolidated
subsidiaries 2 2
Elimination of preferred stock dividend requirements of
consolidated subsidiaries to 50%-owned affiliates - -
Preferred stock dividend requirements of 50%-owned
affiliates, other than amounts to TCI - -
Capitalized interest 1 3
----------------------
Total fixed charges 195 194
======================
Ratio of earnings to fixed charges 1.43 1.25
Deficiency - -
</TABLE>
(continued)
(a) Preferred stock dividend requirements have been increased to an amount
representing the pretax earnings which would be required to cover such
dividend requirements. The effective income tax rate utilized for purposes
of increasing preferred stock dividend requirements in 1993 has been
adjusted to exclude the effect of the federal income tax rate change in the
third quarter of 1993.
<PAGE> 2
TELE-COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
Calculation of Ratios of Earnings to Fixed Charges, continued
(amounts in millions, except for ratios)
(unaudited)
Fixed charges related to interest on debt of less than 50%-owned affiliates
guaranteed by TCI:
<TABLE>
<CAPTION>
Years ended December 31,
<S> <C>
1989 $ 745
1990 710
1991 506
1992 2,517
1993 13,833
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
<S> <C>
1993 $ 629
1994 3,458
</TABLE>
<PAGE> 1
LETTER OF TRANSMITTAL
TELE-COMMUNICATIONS, INC.
OFFER TO EXCHANGE ITS
9.55% SENIOR NOTES, SERIES A DUE DECEMBER 15, 2001,
8.67% SENIOR NOTES, SERIES B DUE AUGUST 31, 2002,
8.85% SENIOR NOTES, SERIES C DUE AUGUST 31, 2002,
9.82% SENIOR NOTES, SERIES D DUE SEPTEMBER 30, 1997 AND
10.25% SENIOR NOTES, SERIES E DUE SEPTEMBER 30, 2000
("NEW NOTES")
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
9.55% SENIOR NOTES, SERIES A DUE DECEMBER 15, 2001,
8.67% SENIOR NOTES, SERIES B DUE AUGUST 31, 2002,
8.85% SENIOR NOTES, SERIES C DUE AUGUST 31, 2002,
9.82% SENIOR NOTES, SERIES D DUE SEPTEMBER 30, 1997 AND
10.25% SENIOR NOTES, SERIES E DUE SEPTEMBER 30, 2000
("EXISTING NOTES")
PURSUANT TO THE PROSPECTUS, DATED JUNE 1, 1994
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
JUNE 28, 1994 OR SUCH LATER DATE AND TIME TO WHICH THE EXCHANGE
OFFER MAY BE EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO THE EXPIRATION DATE.
TO: THE BANK OF NEW YORK, EXCHANGE AGENT
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT DELIVERY:
The Bank of New York The Bank of New York
101 Barclay Street (7 East) 101 Barclay Street
Reorganization Section Lobby Level
New York, New York 10286 Corporate Trust Services Window
Attention: Enrique Lopez New York, New York 10286
Attention: Enrique Lopez
</TABLE>
BY FACSIMILE:
(212) 571-3080
CONFIRM BY TELEPHONE:
(212) 815-2742
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THIS ENTIRE LETTER OF
TRANSMITTAL CAREFULLY BEFORE
COMPLETING ANY BOX BELOW
-----------------------------------
List below the Existing Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the series, certificates
numbers and principal amount of Existing Notes should be listed on a separate
signed schedule affixed hereto.
<TABLE>
--------------------------------------------------------------------------------------------------------------
DESCRIPTION OF EXISTING NOTES (1) (2) (3) (4)
--------------------------------------------------------------------------------------------------------------
OUTSTANDING
PRINCIPAL
AMOUNT OF
OUTSTANDING EXISTING
PRINCIPAL NOTES
NAME(S) AND ADDRESS(ES) OF REGISTERED SERIES OF AMOUNT OF TENDERED
HOLDER(S) EXISTING CERTIFICATE EXISTING (IF LESS THAN
(PLEASE FILL IN, IF BLANK) NOTES NUMBER(S) NOTES ALL)*
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
<FN>
--------------------------------------------------------------------------------------------------------------
* Unless otherwise indicated, the holder will be deemed to have tendered
the full aggregate principal amount represented by such Existing Notes. The
outstanding principal amount of Existing Notes tendered hereby must be
$100,000 or an integral multiple thereof. See Instruction 2.
--------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
The undersigned acknowledges that he/she has received and reviewed the
Prospectus, dated June 1, 1994 (the "Prospectus"), of Tele-Communications,
Inc., a Delaware corporation (the "Company"), and this Letter of Transmittal
(the "Letter"), which together constitute the Company's offer (the "Exchange
Offer") to exchange up to $5,000,000 aggregate principal amount of 9.55% Senior
Notes, Series A due December 15, 2001 (the "New Series A Notes"), up to
$26,500,000 aggregate principal amount of 8.67% Senior Notes, Series B due
August 31, 2002 (the "New Series B Notes"), up to $36,000,000 aggregate
principal amount of 8.85% Senior Notes, Series C due August 31, 2002 (the "New
Series C Notes"), up to $32,000,000 aggregate principal amount of 9.82% Senior
Notes, Series D due September 30, 1997 (the "New Series D Notes") and up to
$20,000,000 aggregate principal amount of 10.25% Senior Notes, Series E due
September 30, 2000 (the "New Series E Notes," and together with the New Series
A Notes, New Series B Notes, New Series C Notes and New Series D Notes, the
"New Notes") of the Company for a like principal amount of the Company's issued
and outstanding 9.55% Senior Notes, Series A due December 15, 2001 (the
"Existing Series A Notes"), 8.67% Senior Notes, Series B due August 31, 2002
(the "Existing Series B Notes"), 8.85% Senior Notes, Series C due August 31,
2002 (the "Existing Series C Notes"), 9.82% Senior Notes, Series D due December
30, 1997 (the "Existing Series D Notes") and 10.25% Senior Notes, Series E, due
September 30, 2000 (the "Existing Series E Notes," and together with the
Existing Series A Notes, Existing Series B Notes, Existing Series C Notes and
Existing Series D Notes, the "Existing Notes"), respectively, from the holders
thereof.
The undersigned has completed the appropriate boxes above and below
and signed this Letter to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
/ / CHECK HERE IF EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
--------------------------------------------------
Window Ticket Number (if any)
-------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
----------------------------
Name of Eligible Institution that Guaranteed Delivery
-------------------------
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer,
the undersigned hereby tenders to the Company the aggregate principal amount of
Existing Notes indicated above. Subject to, and effective upon, the acceptance
for exchange of the Existing Notes tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to such Existing Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the Existing
Notes tendered hereby and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim when the same are accepted by
the Company. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Company or the Exchange Agent to be
necessary or desirable to complete the sale, assignment and transfer of the
Existing Notes tendered hereby.
The undersigned also acknowledges that the New Notes issued in
exchange for the Existing Notes pursuant to the Exchange Offer may be offered
for resale, resold and otherwise transferred by holders thereof (other than any
such holder that is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act of 1933, as amended (the "Securities Act"))
without compliance with the registration and prospectus delivery provisions of
the Securities Act provided that such New Notes are acquired in the ordinary
course of such holder's business and
<PAGE> 3
such holder is not participating, and has no arrangement with any person to
participate, in the distribution of such New Notes.
The undersigned represents that (i) the New Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of such holder's
business, (ii) such holder is not participating, and has no arrangements with
any person to participate, in the distribution of such New Notes, and (iii)
such holder is not an "affiliate," as defined under Rule 405 of the Securities
Act, of the Company, or if such holder is an affiliate, that such holder will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
All authority conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer -- Withdrawal Rights"
section of the Prospectus.
The undersigned understands that if its Existing Notes are accepted
for exchange, such holder will not receive accrued interest (other than
Contingent Interest, as such term is defined in the Prospectus) on the date of
exchange. Instead, interest (other than Contingent Interest) accruing from
June 15, 1994 through the Expiration Date on Existing Series A Notes accepted
for exchange will be payable on the New Series A Notes issued in exchange
therefor on December 15, 1994, interest (other than Contingent Interest)
accruing from January 31, 1994 through the Expiration Date on Existing Series B
and Existing Series C Notes accepted for exchange will be payable on the New
Series B Notes and the New Series C Notes, respectively, issued in exchange
therefor on July 31, 1994, and interest (other than Contingent Interest)
accruing from March 30, 1994 through the Expiration Date on Existing Series D
and Existing Series E Notes accepted for exchange will be payable on the New
Series D Notes and the New Series E Notes, respectively, issued in exchange
therefor on September 30, 1994. The amount of Contingent Interest that has
accrued on Existing Notes accepted for exchange will be payable to the
tendering holder on the Issue Date of the New Notes issued in exchange thereof.
The undersigned recognizes that, under certain circumstances set forth
in the Prospectus under "The Exchange Offer -- Certain Conditions to the
Exchange Offer," the Company may not be required to accept for exchange any of
the Existing Notes tendered. Existing Notes not accepted for exchange or
withdrawn will be returned to the undersigned at the address set forth below
unless otherwise indicated under "Special Delivery Instructions" below.
Unless otherwise indicated under the box entitled "Special Delivery
Instructions" below, please send the New Notes (and, if applicable, substitute
certificates representing Existing Notes for any Existing Notes not exchanged)
to the undersigned at the address shown above in the box entitled "Description
of Existing Notes."
-3-
<PAGE> 4
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF
EXISTING NOTES" ABOVE AND SIGNING THIS LETTER WILL BE DEEMED TO HAVE TENDERED
THE EXISTING NOTES AS SET FORTH IN SUCH BOX ABOVE.
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Existing Notes not exchanged
and/or New Notes are to be sent to someone other than the person or persons
whose signature(s) appear(s) on this Letter above or to such person or persons
at an address other than shown in the box entitled "Description of Existing
Notes" on this Letter above.
Mail: New Notes and/or Existing Notes to:
Name(s): . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE TYPE OR PRINT)
. . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE TYPE OR PRINT)
Address: . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
(ZIP CODE)
IMPORTANT: UNLESS GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH, THIS
LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATE(S) FOR EXISTING
NOTES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE EXCHANGE AGENT
PRIOR TO 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THE EXPIRATION DATE.
-4-
<PAGE> 5
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
Dated: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURE(S) OF OWNER(S) DATE
Area Code and Telephone Number . . . . . . . . . . . . . . . .
If a holder is tendering any Existing Notes, this Letter must be signed by
the registered holder(s) as the name(s) appear(s) on the certificate(s) for the
Existing Notes. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in
a fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE TYPE OR PRINT)
Capacity: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Address: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution: . . . . . . . . . . . . . . . . . . . . . . . . . . .
(AUTHORIZED SIGNATURE)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(TITLE)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(NAME AND FIRM)
Dated: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-5-
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND EXISTING NOTES; GUARANTEED DELIVERY PROCEDURE.
This Letter is to be used to forward, and must accompany, all certificates
representing Existing Notes tendered pursuant to the Exchange Offer.
Certificates representing the Existing Notes in proper form for transfer as
well as a properly completed and duly executed copy of this Letter (or a
manually signed facsimile hereof) and all other documents required by this
Letter, must be received by the Exchange Agent at its address set forth herein
on or before the Expiration Date, or the tendering holder must comply with the
guaranteed delivery procedures set forth below. Existing Notes tendered hereby
must be in the outstanding principal amount of $100,000 or an integral multiple
thereof.
Tendering holders of Existing Series D Notes must make a notation on the
schedule attached to each such Existing Series D Note of all principal payments
previously made thereon and of the date to which interest thereon has been
paid.
If a holder desires to tender Existing Notes and such holder's Existing
Notes are not immediately available or time will not permit such holder's
Letter of Transmittal, Existing Notes or other required documents to reach the
Exchange Agent on or before the Expiration Date, such holder may tender its
Existing Notes pursuant to the guaranteed delivery procedures set forth in the
"Exchange Offer -- Procedures For Tendering Existing Notes" section of the
Prospectus. Pursuant to such procedures,
(i) such tender must be made by or through an Eligible
Institution (as defined below);
(ii) on or prior to the Expiration Date, the Exchange Agent
must receive from such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided
by the Company (by facsimile transmission, mail or hand delivery), setting
forth the name and address of the holder of such Existing Notes, the
series and serial number of such Existing Notes and the principal amount
of Existing Notes tendered and stating that the tender is being made
thereby and guaranteeing that, within five New York Stock Exchange, Inc.
trading days after the date of execution of such Notice of Guaranteed
Delivery, a duly executed Letter of Transmittal or facsimile thereof,
together with the Existing Notes and any other documents required by this
Letter and the instructions hereto, will be deposited by such Eligible
Institution with the Exchange Agent; and
(iii) this Letter, or a facsimile hereof, and Existing Notes in
proper form for transfer and all other required documents must be received
by the Exchange Agent within five New York Stock Exchange, Inc. trading
days after the date of execution of such Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Existing Notes and all other
required documents is at the election and risk of the tendering holders, but
the delivery will be deemed made only when actually received by the Exchange
Agent. If such delivery is by mail, it is recommended that registered mail
properly insured, with return receipt requested, be used. In all cases,
sufficient time should be allowed to permit timely deliver.
See "The Exchange Offer" section in the Prospectus.
-6-
<PAGE> 7
2. PARTIAL TENDERS.
Partial tenders of Existing Notes may be made only if (i) the outstanding
principal amount tendered is equal to $100,000 or an integral multiple thereof
and (ii) the remaining untendered portion of such Existing Notes is in the
outstanding principal amount of $100,000 or an integral multiple thereof. If
less than all of the Existing Notes evidenced by a submitted certificate are to
be tendered, the tendering holder(s) should fill in the principal amount of
Existing Notes in the box entitled "Description of Existing Notes -- Principal
Amount of Existing Notes Tendered." A reissued certificate representing the
balance of the nontendered Existing Notes will be sent to such tendering
holder, unless otherwise provided in the box entitled "Special Delivery
Instructions" in this Letter, promptly after the Expiration Date. All of the
Existing Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Existing Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Existing Notes are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Existing Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
Only the registered holder of an Existing Note may tender such Existing
Note in the Exchange Offer. New Notes will not be issued in the name of a
person other than that of the registered holder of the Existing Notes appearing
in the box entitled "Description of Existing Notes" in this Letter. Any
beneficial holder whose Existing Notes are registered in the name of a nominee
and that wishes to tender should contact such registered holder promptly and
instruct such registered holder to tender on its behalf. If such beneficial
holder wishes to tender on his own behalf, the beneficial holder must, prior to
completing and executing this Letter and delivering such Existing Notes, make
appropriate arrangements to register ownership of such Existing Notes in such
holder's name by contacting the Exchange Agent.
The signatures on this Letter or a notice of withdrawal, as the case may
be, must be guaranteed unless the Existing Notes surrendered for exchange
pursuant thereto are tendered by a registered holder of the Existing Notes who
has not completed the box entitled "Special Delivery Instructions" in this
Letter. In the event that the signatures in this Letter or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantees
must be by a firm which is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc. or
by a commercial bank or trust company having an office or correspondent in the
United States or by such other Eligible Guarantor Institution within the
meaning of Rule 17(A)(d)-15 under the Securities Exchange Act of 1934, as
amended (collectively, "Eligible Institutions").
4. SPECIAL DELIVERY INSTRUCTIONS.
Tendering holders of Existing Notes should indicate in the box entitled
"Special Delivery Instructions" the name and address to which New Notes issued
pursuant to the Exchange Offer and/or substitute certificates evidencing
Existing Notes not exchanged are to be sent, if different from the name or
address of the person signing this Letter. If no such instructions are given,
any New Notes will be delivered to the address of the person signing this
Letter and any Existing Notes not exchanged will be returned to the address of
the person signing this Letter.
-7-
<PAGE> 8
5. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9.
Under the federal income tax laws, payments that may be made by the
Company on account of New Notes issued pursuant to the Exchange Offer may be
subject to backup withholding at the rate of 31%. In order to avoid such
backup withholding, each tendering holder should complete and sign the
Substitute Form W-9 included in this Letter and either (a) provide the correct
taxpayer identification number ("TIN") and certify, under penalties of perjury,
that the TIN provided is correct and that (i) the holder has not been notified
by the Internal Revenue Service (the "IRS") that the holder is subject to
backup withholding as a result of failure to report all interest or dividends
or (ii) the IRS has notified the holder that the holder is no longer subject to
backup withholding; or (b) provide an adequate basis for exemption. If the
tendering holder has not been issued a TIN and has applied for one, or intends
to apply for one in the near future, such holder should write "Applied For" in
the space provided for the TIN in Part I of the Substitute Form W-9, sign and
date the Substitute Form W-9 and sign the Certificate of Payee Waiting Taxpayer
Identification Number. If "Applied For" is written in Part I, the Company (or
the Paying Agent under the Indenture governing the New Notes) shall retain 31%
of payments made to the tendering holder during the sixty (60) day period
following the date of the Substitute Form W-9. If the holder furnishes the
Exchange Agent or the Company with his or her TIN within sixty (60) days after
the date of the Substitute Form W-9, the Company (or the Paying Agent) shall
remit such amounts retained during the sixty (60) day period to the holder and
no further amounts shall be retained or withheld from payments made to the
holder thereafter. If, however, the holder has not provided the Exchange Agent
or the Company with his or her TIN within such sixty (60) day period, the
Company (or the Paying Agent) shall remit such previously retained amounts to
the IRS as backup withholding. In general, if a holder is an individual, the
taxpayer identification number is the Social Security number of such
individual. If the Exchange Agent or the Company is not provided with the
correct taxpayer identification number, the holder may be subject to a $50
penalty imposed by the IRS. Certain holders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. In order for a foreign individual to
qualify as an exempt recipient, such holder must submit a statement (generally,
IRS Form W-8), signed under penalties of perjury, attesting to that
individual's exempt status. Such statements can be obtained from the Exchange
Agent. For further information concerning backup withholding and instructions
for completing the Substitute Form W-9 (including how to obtain a taxpayer
identification number if you do not have one and how to complete the Substitute
Form W-9 if Existing Notes are registered in more than one name), consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Existing Notes to be deemed invalidly tendered, but may require the Company (or
the Paying Agent) to withhold 31% of the amount of any payments made on account
of the New Notes. Backup withholding is not an additional federal income tax.
Rather, the federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the
transfer of Existing Notes to it or its order pursuant to the Exchange Offer.
If, however, New Notes and/or substitute Existing Notes not exchanged are to be
delivered to any person other than the registered holder of the Existing Notes
tendered hereby or if a transfer tax is imposed for any reason other than the
transfer of Existing Notes to the Company or its order pursuant to the Exchange
Offer, the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly
to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Existing Notes specified in this
Letter.
-8-
<PAGE> 9
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or
all conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Existing Notes, by execution of this
Letter, shall waive any right to receive notice of the acceptance of their
Existing Notes for exchange.
Neither the Company nor any other person is obligated to give notice of
defects or irregularities in any tender, nor shall any of them incur any
liability for failure to give any such notice.
9. INADEQUATE SPACE.
If the space provided herein is inadequate, the aggregate principal amount
of each series of Existing Notes being tendered and the certificate number or
numbers (if available) should be listed on a separate schedule attached hereto
and separately signed by all parties required to sign this Letter.
10. MUTILATED, LOST, STOLEN OR DESTROYED EXISTING NOTES.
Any holder whose Existing Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent at the address and telephone number indicated above.
-9-
<PAGE> 10
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: TELE-COMMUNICATIONS, INC.
<TABLE>
<S> <C>
SUBSTITUTE PART 1 - PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT TIN:------------------------
AND CERTIFY BY SIGNING AND DATING BELOW. SOCIAL SECURITY NUMBER OR
FORM W-9 EMPLOYER IDENTIFICATION NUMBER
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE PART 2 -- TIN Applied For / /
CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
PAYOR'S REQUEST FOR
TAXPAYER (1) the number shown on this form is my correct Taxpayer Identification Number (or I am
IDENTIFICATION NUMBER waiting for a number to be issued to me).
("TIN") AND
CERTIFICATION (2) I am not subject to backup withholding either because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding, and
(3) any other information provided in this form is true and correct.
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . DATE . . . . . . . . . . . . . . .
</TABLE>
You must cross out item (2) of the above certification if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your tax return and you have not
been notified by the IRS that you are no longer subject to backup
withholding.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administrative Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.
----------------------------------------- --------------------------
SIGNATURE DATE
-10-
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
9.55% SENIOR NOTES, SERIES A DUE DECEMBER 15, 2001,
8.67% SENIOR NOTES, SERIES B DUE AUGUST 31, 2002,
8.85% SENIOR NOTES, SERIES C DUE AUGUST 31, 2002,
9.82% SENIOR NOTES, SERIES D DUE SEPTEMBER 30, 1997 AND
10.25% SENIOR NOTES, SERIES E DUE SEPTEMBER 30, 2000
of
TELE-COMMUNICATIONS, INC.
This form, or one substantially equivalent hereto, must be used to
tender Existing Notes pursuant to the Exchange Offer described in the
Prospectus, dated June 1, 1994 (the "Prospectus"), of Tele-Communications,
Inc., a Delaware corporation (the "Company"), if a holder of Existing Notes
cannot deliver a Letter of Transmittal to the Exchange Agent listed below (the
"Exchange Agent") or cannot deliver the Existing Notes to be tendered at or
prior to 12:00 midnight, New York City time, on June 28, 1994 or such later
date and time to which the Exchange Offer may be extended (the "Expiration
Date"). This form, or one substantially equivalent hereto, must be delivered
by hand or sent by telegram, facsimile transmission or mail to the Exchange
Agent, and must be received by the Exchange Agent on or prior to the Expiration
Date. See "The Exchange Offer -- Procedure for Tendering Existing Notes" in
the Prospectus. Capitalized terms used herein and not defined herein shall
have the meanings ascribed thereto in the Prospectus.
TO: THE BANK OF NEW YORK, EXCHANGE AGENT
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT DELIVERY:
The Bank of New York The Bank of New York
101 Barclay Street (7 East) 101 Barclay Street
Reorganization Section Lobby Level
New York, New York 10286 Corporate Trust Services Window
Attention: Enrique Lopez New York, New York 10286
Attention: Enrique Lopez
</TABLE>
BY FACSIMILE:
(212) 571-3080
CONFIRM BY TELEPHONE:
(212) 815-2742
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby represents that he or she is the holder of the
Existing Notes indicated below and that the Letter of Transmittal cannot be
delivered to the Exchange Agent and/or the certificates representing such
Existing Notes cannot be delivered to the Exchange Agent on or before the
Expiration Date. The undersigned hereby tenders to the Company the Existing
Notes indicated below pursuant to the guaranteed delivery procedures set forth
in the Prospectus and the Letter of Transmittal, receipt of which is hereby
acknowledged.
Name(s) of Tendering Holder(s):
---------------------------------------------
------------------------------------------------------------------------------
Please Type or Print
------------------------------------------------------------------------------
Signature
Address(s):
-----------------------------------------------------------------
------------------------------------------------------------------------------
Telephone Number(s):
--------------------------------------------------------
Name(s) in which Existing Notes are registered:
------------------------------
<TABLE>
<CAPTION>
Principal Amount
Series Certificate No(s). Tendered*
------ ------------------ --------
<S> <C> <C>
-------------------------- ------------------------- --------------------------
-------------------------- ------------------------- --------------------------
-------------------------- ------------------------- --------------------------
-------------------------- ------------------------- --------------------------
-------------------------- ------------------------- --------------------------
</TABLE>
------------------------
* Must be in denominations of $100,000 and any integral multiple thereof.
-2-
<PAGE> 3
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, an Eligible Institution within the meaning of Rule
17(A)(d)-15 under the Securities Exchange Act of 1934, as amended, hereby
guarantees that the undersigned will deliver to the Exchange Agent the
certificates representing the Existing Notes being tendered hereby in proper
form for transfer with delivery of a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof), with any
required signature guarantees and any other required documents, all within five
New York Stock Exchange, Inc. trading days after the date of execution hereof.
<TABLE>
<S> <C>
--------------------------------------------------- ---------------------------------------------------
Firm Authorized Signature
Name:
--------------------------------------------------- ---------------------------------------------
Address Please Type or Print
Date:
--------------------------------------------------- ----------------------------------------------
Zip Code
---------------------------------------------------
Telephone No.
</TABLE>
The institution that completes this form must communicate the
guarantee to the Exchange Agent and must deliver the certificates representing
any Existing Notes and the Letter of Transmittal to the Exchange Agent within
the time period shown herein. Failure to do so could result in a financial
loss to such institution.
-3-
