<PAGE>
Rule No. 424(b)(5)
Registration No. 33-63139
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 6, 1996)
$350,000,000
TCI COMMUNICATIONS, INC.
REMARKETED FLOATING RATE RESET NOTES DUE SEPTEMBER 15, 2003
---------------
The interest rate on the Notes will reset quarterly, and will equal LIBOR
plus the applicable Spread. The Spread during the one year period ending
September 15, 1997 is .65%. The Spread will be adjusted on September 15, 1997,
and on each September 15 thereafter which corresponds to the beginning of a
Subsequent Spread Period, pursuant to agreement between the Company and the
Remarketing Underwriter on the Spread Determination Date for such Subsequent
Spread Period (except as otherwise provided below). If the Company and the
Remarketing Underwriter are unable to agree on the Spread, (1) the Subsequent
Spread Period will be one year, (2) the Spread for such Subsequent Spread
Period will be the Alternate Spread and (3) the Notes will be redeemable at
the option of the Company, in whole or in part, upon at least 10 Business Days
notice given by no later than the second Business Day after the relevant
Spread Determination Date, at a redemption price equal to 100% of the
principal amount thereof, together with accrued interest to the redemption
date. Interest on the Notes is payable quarterly on March 15, June 15,
September 15 and December 15 (or, if not a Business Day, on the next
succeeding Business Day), beginning December 16, 1996. See "Certain Terms of
the Notes--Interest."
If the Company and the Remarketing Underwriter agree on the Spread with
respect to any Subsequent Spread Period, each Note may be tendered to the
Remarketing Underwriter for purchase from the tendering Noteholder at 100% of
its principal amount and for remarketing by the Remarketing Underwriter on
September 15, 1997 and on any September 15 thereafter immediately following
the end of a Subsequent Spread Period (the "Tender Date"). Notice of a
beneficial owner's election to tender to the Remarketing Underwriter must be
received by the Remarketing Underwriter during the five calendar day period
ending at 5:00 p.m., New York City time, on the fifth calendar day following
the relevant Spread Determination Date. The obligation of the Remarketing
Underwriter to purchase tendered Notes from the tendering Noteholders will be
subject to certain conditions and termination events customary in the
Company's public offerings. If the Remarketing Underwriter for any reason does
not purchase all tendered Notes on the relevant Tender Date, (1) all tender
notices relating thereto will be null and void, (2) the Subsequent Spread
Period will be one year, (3) the Spread for such Subsequent Spread Period will
be the Alternate Spread and (4) the Notes will be redeemable at the option of
the Company, in whole or in part, upon at least 10 Business Days prior notice
given by no later than the second Business Day following the relevant Tender
Date, at a redemption price equal to 100% of the principal amount thereof,
together with accrued interest to the redemption date. No beneficial owner of
any Note shall have any rights or claims against the Company or the
Remarketing Underwriter as a result of the Remarketing Underwriter not
purchasing such Notes, except as provided in clause (3) of the preceding
sentence. See "Certain Terms of the Notes--Tender at Option of Beneficial
Owners."
The Notes are also redeemable, at the option of the Company, on September
15, 1997 and on any September 15 thereafter immediately following the end of a
Subsequent Spread Period, in whole or in part, upon notice thereof given at
any time during the 45 calendar day period ending on the tenth calendar day
prior to the redemption date (provided that notice of any partial redemption
must be given to the Noteholders at least 15 calendar days prior to the
redemption date), at 100% of their principal amount, together with accrued
interest to the redemption date. Unless previously redeemed, the Notes will
mature on September 15, 2003. See "Certain Terms of the Notes--Redemption of
the Notes."
The Notes will be represented by a single Global Note registered in the name
of The Depository Trust Company (the "Depositary") or its nominee. Beneficial
interests in the Global Note will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary and its
participants. Except as described herein, Notes in definitive form will not be
issued.
SEE "RISK FACTORS" ON PAGE S-2 OF THIS PROSPECTUS SUPPLEMENT FOR A
DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN
INVESTMENT IN THE NOTES OFFERED HEREBY.
---------------
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 SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note............................... 100% .625% 99.375%
- --------------------------------------------------------------------------------
Total.................................. $350,000,000 $2,187,500 $347,812,500
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from September 11, 1996.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $100,000.
---------------
The Notes are offered by the Underwriter, subject to prior sale, when, as
and if issued to and accepted by the Underwriter, subject to approval of
certain legal matters by counsel for the Underwriter and certain other
conditions. The Underwriter reserves the right to withdraw, cancel, or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Global Note will be made in book-entry form only through the
facilities of the Depositary on or about September 11, 1996.
---------------
MERRILL LYNCH & CO.
---------------
The date of this Prospectus Supplement is September 6, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT
LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
RISK FACTORS
The Company incurred net losses of $120 million and $5 million for the years
ended December 31, 1995 and 1993, respectively, and net losses of $188 million
and $24 million for the six months ended June 30, 1996 and 1995, respectively.
The Company had net earnings of $94 million for the year ended December 31,
1994. 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 cash flow
(operating income before depreciation, amortization and other non-cash credits
or charges) ($2,043 million, $1,801 million and $1,858 million for the years
ended December 31, 1995, 1994 and 1993, respectively, and $1,051 million and
$1,015 million for the six months ended June 30, 1996 and 1995, respectively)
has historically been sufficient to cover its interest expense ($962 million,
$777 million and $731 million for the years ended December 31, 1995, 1994 and
1993, respectively, and $493 million and $464 million for the six months ended
June 30, 1996 and 1995, respectively). The Company's interest coverage ratios
for the years ended December 31, 1995, 1994 and 1993 were 212%, 232% and 254%,
respectively, and for the six months ended June 30, 1996 and 1995 were 213%
and 219%, respectively. Operating cash flow is a measure of value and
borrowing capacity within the cable television industry and is not intended to
be a substitute for cash flows provided by operating activities, a measure of
performance prepared in accordance with generally accepted accounting
principles, and should not be relied upon as such. Operating cash flow, as
defined, does not take into consideration substantial costs of doing business,
such as interest expense, and should not be considered in isolation to other
measures of performance.
Another measure of liquidity is net cash provided by operating activities as
reflected in the Company's consolidated statements of cash flows. Net cash
provided by operating activities ($1,263 million, $1,142 million and $1,251
million for the years ended December 31, 1995, 1994 and 1993, respectively,
and $531 million and $581 million for the six months ended June 30, 1996 and
1995, respectively) reflects net cash from the operations of the Company
available for the Company's liquidity needs after taking into consideration
the aforementioned substantial costs of doing business not reflected in
operating cash flow. Amounts expended by the Company for its investing
activities exceed net cash provided by operating activities.
USE OF PROCEEDS
The Company intends to use a portion of the net proceeds of the sale of the
Notes to repay a loan participation of approximately $170,000,000 with an
average blended interest rate of 5.91%. The loan participation was used (i) to
repay $125,825,000 principal amount of the Company's medium term notes, issued
under its medium term note program, with an average blended interest rate of
6.75% and (ii) for general corporate purposes. The Company intends to use the
remaining portion of the proceeds to repay commercial paper of the Company
with an average blended interest rate of 5.79% and to repay money market loans
with an average interest rate of 5.71%. The proceeds received from the sale of
the commercial paper and the money market loans were used for general
corporate purposes.
S-2
<PAGE>
CERTAIN TERMS OF THE NOTES
The following description of the particular terms of the Notes offered
hereby (which are a series of "Senior Debt Securities" described in the
accompanying Prospectus) supplements, and to the extent inconsistent therewith
replaces, insofar as such description relates to the Notes, the description of
the general terms and provisions of the Senior Debt Securities set forth in
the accompanying Prospectus, to which description reference is hereby made.
The statements under this caption "Certain Terms of the Notes" are subject to
the detailed provisions of the Indenture referred to below, a copy of which is
filed as an exhibit to the Registration Statement of which the Prospectus
forms a part, and of the Remarketing Agreement and the Remarketing
Underwriting Agreement referred to below, the forms of each of which will be
filed, pursuant to a Current Report on Form 8-K, as an exhibit to such
Registration Statement. Whenever particular provisions of the Indenture, the
Remarketing Agreement or the Remarketing Underwriting Agreement, or terms
defined therein, are referred to, such provisions or definitions are
incorporated by reference as part of the statements made and the statements
are qualified in their entirety by such reference. Capitalized terms not
defined herein have the meanings ascribed to them in the accompanying
Prospectus and the Indenture.
GENERAL
The Notes will be issued under an Indenture, dated as of December 20, 1995
(the "Indenture"), between the Company and The Bank of New York, as trustee
(the "Trustee"), and are a series of Senior Debt Securities described in the
accompanying Prospectus. The Notes will be limited to $350,000,000 aggregate
principal amount and will mature, unless previously redeemed, on September 15,
2003.
BOOK-ENTRY, DELIVERY AND FORM
Upon issuance, the Notes will be represented by a single Global Note, which
will be deposited with, or on behalf of, the Depositary and will be registered
in the name of the Depositary or a nominee of the Depositary. The Global Note
may not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor depositary or a nominee of such successor depositary.
So long as the Depositary or its nominee is the registered owner of the
Global Note, the Depositary or its nominee, as the case may be, will be the
sole owner of the Notes represented thereby for all purposes under the
Indenture and may be treated by the Company or the Trustee as the owner of the
Global Note for all purposes whatsoever. Except as otherwise provided in this
section, owners of beneficial interests in the Global Note will not be
entitled to receive physical delivery of certificated Notes and will not be
considered the owners thereof for any purpose under the Indenture, and the
Global Note shall not be exchangeable or transferable. Accordingly, each
beneficial owner must rely on the procedures of the Depositary and, if such
beneficial owner is not a Participant, on the procedures of the Participant
through which such beneficial owner owns its interest in order to exercise any
rights of an owner under the Global Note or the Indenture. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in certificated form. Such limits and such laws
may impair the ability to transfer beneficial interests in the Global Note.
None of the Company, the Trustee, any Paying Agent or the Registrar will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership in the Global Note or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Global Note will be exchangeable for certificated Notes of like tenor
and terms and of differing authorized denominations aggregating a like
principal amount, only if the Depositary is at any time unwilling, unable or
ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days of the Company's receipt of notice to
such effect or if the Company, in its sole discretion, at any time determines
that the Notes shall no longer be represented by such Global Note, then in
either event the Global Note shall be exchanged for Notes in definitive form
pursuant to the Indenture.
S-3
<PAGE>
The following is based on information furnished by the Depositary:
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934. The Depositary holds securities
that its participants ("Participants") deposit with the Depositary. The
Depositary also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants of the Depositary ("Direct Participants")
include securities brokers and dealers (including Merrill Lynch, Pierce,
Fenner & Smith Incorporated), banks, trust companies, clearing corporations
and certain other organizations. The Depositary is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc., and the National Association of Securities Dealers,
Inc. Access to the Depositary's system is also available to others such as
securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules
applicable to the Depositary and its Participants are on file with the
Securities and Exchange Commission.
Purchasers of Notes under the Depositary's system must be made by or
through Direct Participants, which will receive a credit for such Notes on
the Depositary's records. The ownership interest of each actual purchaser
of each Note represented by the Global Note ("Beneficial Owner") is in turn
to be recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from the Depositary of their
purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participants
through which such Beneficial Owner entered into the transaction. Transfers
of beneficial ownership interests in the Global Note are to be accomplished
by entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificated Notes representing
their beneficial ownership interests in the Global Note, except in the
event that use of the book-entry system for the Global Note is
discontinued.
To facilitate subsequent transfers, the Global Note deposited with, or on
behalf of, the Depositary will be registered in the name of the
Depositary's partnership nominee, Cede & Co. The deposit of the Global Note
with the Depositary and the registration thereof in the name of Cede & Co.
effect no change in beneficial ownership. The Depositary has no knowledge
of the actual Beneficial Owners of the Notes represented by the Global
Note; the Depositary's records reflect only the identity of the Direct
Participants to whose accounts such Notes are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Notes are being redeemed, the Depositary's practice is to determine by lot
the amount of the interest of each Direct Participant in the Global Note to
be redeemed.
Neither the Depositary nor Cede & Co. will consent or vote with respect
to the Notes. Under its usual procedures, the Depositary mails an Omnibus
Proxy to the Company as soon as possible after the applicable record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose account interests in the Notes represented by
the Global Note are credited on the applicable record date (identified in a
listing attached to the Omnibus Proxy).
Principal and interest payments on the Notes will be made to the
Depositary. The Depositary's practice is to credit Direct Participants'
accounts on the applicable payment date in accordance with their respective
holdings shown on the Depositary's records unless the Depositary has reason
to believe that it will not receive payment on such date. Payments by
Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the
accounts of customers in
S-4
<PAGE>
bearer form or registered in "street name," and will be the responsibility
of such Participant and not of the Depositary, the Trustee or the Company,
subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal and interest to the Depositary is
the responsibility of the Company or the Trustee, disbursement of such
payments to Direct Participants shall be the responsibility of the
Depositary, and disbursement of such payments to the Beneficial Owners
shall be the responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice of any election to have its
beneficial interest in the Notes purchased or tendered, through its
Participant, to the Remarketing Underwriter and shall effect delivery of
such interest in the Notes by causing the Direct Participant to transfer
the Participant's interest in the Global Note representing such Beneficial
Owner's interest in the Notes, on the Depositary's records, to the
Remarketing Underwriter. Any requirement for delivery of Notes will be
deemed satisfied when the ownership rights in the Global Note representing
such interest in the Notes are transferred by Direct Participants on the
Depositary's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Notes at any time by giving reasonable
notice to the Company or the Trustee. Under such circumstances, in the
event that a successor securities depository is not obtained, certificated
Notes are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depository). In
that event, certificated Notes will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
INTEREST
The Notes will bear interest from September 11, 1996, payable quarterly in
arrears on December 15, March 15, June 15 and September 15 of each year (or,
if not a Business Day (as defined below), on the next succeeding Business Day
(except as described below)) (each an "Interest Payment Date"), commencing
December 16, 1996, to the persons in whose names the Notes are registered at
the close of business on the December 1, March 1, June 1, and September 1
preceding such December 15, March 15, June 15 and September 15, respectively.
The interest rate on the Notes will reset quarterly. The Notes will bear
interest at a per annum rate (computed on the basis of the actual number of
days elapsed over a 360-day year) equal to LIBOR (as defined below) for the
applicable Quarterly Period (as defined below) plus the applicable Spread (as
defined below). The initial Quarterly Period will be the period from and
including September 11, 1996 to but excluding the first Interest Payment Date
(December 16, 1996) (the "Initial Quarterly Period") (which is a period of 96
days and therefore longer than a regular Quarterly Period). Thereafter, each
Quarterly Period will be from and including the most recent Interest Payment
Date to which interest has been paid to but excluding the next Interest
Payment Date; the first day of a Quarterly Period is referred to herein as an
"Interest Reset Date."
The Spread applicable during the one year period ending on September 15,
1997 (the "Initial Spread Period") will be .65% (the "Initial Spread"). Thus,
the interest rate per annum during the Initial Quarterly Period will be equal
to LIBOR, determined as of September 9, 1996, plus .65%. The interest rate per
annum for each succeeding Quarterly Period during the Initial Spread Period
will equal LIBOR for such Quarterly Period plus the Initial Spread.
Thereafter, the Spread will be determined in the manner described below for
each subsequent Spread period (a "Subsequent Spread Period"), which will be
the period of at least one year and not more than six years, designated by the
Company, commencing on a September 15 (the "Commencement Date") and ending
one, two, three, four, five or six years subsequent, as the case may be,
through and including 2003 (except that no Subsequent Spread Period may end
after September 15, 2003). Unless notice of redemption of the Notes as a whole
has been given, the first Commencement Date will be September 15, 1997.
If any Interest Payment Date (other than at maturity or upon redemption),
Interest Reset Date, Spread Determination Date (as defined below),
Commencement Date or Tender Date (as defined below) would otherwise
S-5
<PAGE>
be a day that is not a Business Day, such Interest Payment Date, Interest
Reset Date, Spread Determination Date, Commencement Date or Tender Date will
be postponed to the next succeeding day that is a Business Day, except that if
such Business Day is in the next succeeding calendar month, such Interest
Payment Date, Interest Reset Date, Spread Determination Date, Commencement
Date or Tender Date shall be the next preceding Business Day.
If the maturity date or a redemption date falls on a day that is not a
Business Day, the related payment of principal and interest will be made on
the next succeeding Business Day as if it were made on the date such payment
was due, and no interest will accrue on the amounts so payable for the period
from and after such dates.
LIBOR applicable for each Quarterly Period will be determined by the Rate
Agent (as defined under "Tender at Option of Beneficial Owners" below) as of
the second London Business Day (as defined below) (the "LIBOR Determination
Date") preceding each Interest Reset Date in accordance with the following
provisions:
(i) LIBOR will be determined on the basis of the offered rates for three-
month deposits in U.S. Dollars of not less than U.S. $1,000,000, commencing
on the second London Business Day immediately following such LIBOR
Determination Date, which appears on the Telerate Page 3750 (as defined
below) as of approximately 11:00 a.m., London time, on such LIBOR
Determination Date. "Telerate Page 3750" means the display designated on
page "3750" on the Telerate Service (or such other page as may replace the
3750 page on that service or such other service or services as may be
nominated by the British Bankers' Association for the purpose of displaying
London interbank offered rates for U.S. Dollar deposits). If no rate
appears on the Telerate Page 3750, LIBOR for such LIBOR Determination Date
will be determined in accordance with the provisions of paragraph (ii)
below.
(ii) With respect to a LIBOR Determination Date on which no rate appears
on Telerate Page 3750 as of approximately 11:00 a.m., London time, on such
LIBOR Determination Date, the Rate Agent shall request the principal London
offices of each of four major reference banks in the London interbank
market selected by the Rate Agent to provide the Rate Agent with a
quotation of the rate at which three-month deposits in U.S. Dollars,
commencing on the second London Business Day immediately following such
LIBOR Determination Date, are offered by it to prime banks in the London
interbank market as of approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount of not less
than U.S. $1,000,000 that is representative for a single transaction in
such market at such time. If at least two such quotations are provided,
LIBOR for such LIBOR Determination Date will be the arithmetic mean of such
quotations as calculated by the Rate Agent. If fewer than two quotations
are provided, LIBOR for such LIBOR Determination Date will be the
arithmetic mean of the rates quoted as of approximately 11:00 a.m., New
York City time, on such LIBOR Determination Date by three major banks in
The City of New York selected by the Rate Agent (after consultation with
the Company) for loans in U.S. Dollars to leading European banks, having a
three-month maturity commencing on the second London Business Day
immediately following such LIBOR Determination Date and in a principal
amount equal to an amount of not less than U.S. $1,000,000 that is
representative for a single transaction in such market at such time;
provided, however, that if the banks selected as aforesaid by the Rate
Agent are not quoting as mentioned in this sentence, LIBOR for such LIBOR
Determination Date will be the LIBOR determined with respect to the
immediately preceding LIBOR Determination Date, or in the case of the first
LIBOR Determination Date, LIBOR for the Initial Quarterly Period.
The Spread that will be applicable during each Subsequent Spread Period will
be the percentage (a) recommended by the Remarketing Underwriter (as defined
under "Tender at Option of Beneficial Owners" below) so as to result in a rate
that, in the opinion of the Remarketing Underwriter, will enable tendered
Notes to be remarketed by the Remarketing Underwriter at 100% of the principal
amount thereof, as described under "Tender at Option of Beneficial Owners"
below, and (b) agreed to by the Company.
Unless notice of redemption of the Notes as a whole has been given, the
Spread for each Subsequent Spread Period and the duration of such Subsequent
Spread Period will be established by 3:00 p.m., New York City time, on the
10th calendar day prior to the Commencement Date of such Subsequent Spread
Period (the "Spread
S-6
<PAGE>
Determination Date"). The Company will request, not later than 7 nor more than
15 calendar days prior to any Spread Determination Date, that the Depositary
notify its Participants of such Spread Determination Date and of the
procedures that must be followed if any beneficial owner of a Note wishes to
tender such Note as described under "Tender at Option of Beneficial Owners"
below. The term "Business Day" means any day other than a Saturday or Sunday
or a day on which banking institutions in The City of New York are required or
authorized to close and that is also a London Business Day. The term "London
Business Day" means any day on which dealings in U.S. Dollars are transacted
in the London interbank market.
In the event that the Company and the Remarketing Underwriter do not agree
on the Spread for any Subsequent Spread Period, then (1) the Subsequent Spread
Period will be one year, (2) the Spread for such Subsequent Spread Period will
be the Alternate Spread and (3) the Notes will be redeemable at the option of
the Company, in whole or in part, upon at least 10 Business Days notice given
by no later than the second Business Day after the Spread Determination Date
in the manner described under "Redemption of Notes" below, at a redemption
price equal to 100% of the principal amount thereof, together with accrued
interest to the redemption date. The Alternate Spread will be the percentage
equal to LIBOR (determined as described above) for the Quarterly Period
beginning on the Commencement Date for such Subsequent Spread Period.
Unless notice of redemption of the Notes as a whole has been given, the
Company will cause a notice to be published on the New York Business Day (as
defined below) following the Spread Determination Date for each Subsequent
Spread Period in the manner described below, specifying (1) the term of such
Subsequent Spread Period, (2) the Spread for such Subsequent Spread Period,
(3) that LIBOR for the initial Quarterly Period of such Subsequent Spread
Period will be determined as of the relevant LIBOR Determination Date (which
date shall be specified in such notice) and (4) the identity of the
Remarketing Underwriter, if applicable. Such notice will be given by
publication in a daily newspaper in the English language of general
circulation in The City of New York, which is expected to be The Wall Street
Journal. The term "New York Business Day" means any day other than a Saturday
or Sunday or a day on which banking institutions in The City of New York are
required or authorized to close.
All percentages resulting from any calculation of any interest rate for the
Notes will be rounded, if necessary, to the nearest one hundred thousandth of
a percentage point, with five one millionths of a percentage point rounded
upward and all dollar amounts will be rounded to the nearest cent, with one-
half cent being rounded upward.
TENDER AT OPTION OF BENEFICIAL OWNERS
In the event the Company and the Remarketing Underwriter agree on the Spread
on the Spread Determination Date with respect to any Subsequent Spread Period,
the Company and the Remarketing Underwriter will enter into a Remarketing
Underwriting Agreement (the "Remarketing Underwriting Agreement") on such
Spread Determination Date, under which the Remarketing Underwriter will agree,
subject to the terms and conditions set forth therein, to purchase from
tendering Noteholders on September 15, 1997 and on any September 15 thereafter
immediately following the end of a Subsequent Spread Period (the "Tender
Date") all Notes with respect to which the Remarketing Underwriter receives a
Tender Notice as described below at 100% of the principal amount thereof (the
"Purchase Price"). In such event (except as otherwise provided in the next
succeeding paragraph), each beneficial owner of a Note may, at such owner's
option, upon giving notice as provided below (the "Tender Notice"), tender
such Note for purchase by the Remarketing Underwriter on the Tender Date at
the Purchase Price. The Purchase Price will be paid by the Remarketing
Underwriter in accordance with the standard procedures of the Depositary,
which currently provide for payments in same-day funds. Interest accrued on
the Notes with respect to the preceding interest period will be paid in the
manner described under "Book-Entry, Delivery and Form" and "Interest" above.
If such beneficial owner has an account at the Remarketing Underwriter and
tenders such Note through such account, such beneficial owner will not be
required to pay any fee or commission to the Remarketing Underwriter. If such
Note is tendered through a broker, dealer, commercial bank, trust company or
other institution, other than the Remarketing Underwriter, such holder may be
required to pay fees or commissions to such other institution. It is currently
anticipated that Notes so purchased by the Remarketing Underwriter will be
remarketed by it.
S-7
<PAGE>
The Tender Notice must be received by the Remarketing Underwriter during the
period commencing on the calendar day following the Spread Determination Date
(or, if not a Business Day, on the next succeeding Business Day) and ending at
5:00 p.m., New York City time, on the fifth calendar day following the Spread
Determination Date (or, if not a Business Day, on the next succeeding Business
Day) (the "Notice Date"). In order to ensure that a Tender Notice is received
on a particular day, the beneficial owner of Notes must direct his broker or
other designated Participant or Indirect Participant to give such Tender
Notice before the broker's cut-off time for accepting instructions for that
day. Different firms may have different cut-off times for accepting
instructions from their customers. Accordingly, beneficial owners should
consult the brokers or other Participants or Indirect Participants through
which they own their interests in the Notes for the cut-off times for such
brokers, other Participants or Indirect Participants. See "Book-Entry,
Delivery and Form" above. Except as otherwise provided below, a Tender Notice
shall be irrevocable. If a Tender Notice is not received for any reason by the
Remarketing Underwriter with respect to any Note by 5:00 p.m., New York City
time, on the Notice Date, the beneficial owner of such Note shall be deemed to
have elected not to tender such Note for purchase by the Remarketing
Underwriter.
The obligation of the Remarketing Underwriter to purchase Notes from
tendering Noteholders will be subject to several conditions precedent set
forth in the Remarketing Underwriting Agreement that are customary in the
Company's public offerings, including a condition that no material adverse
change in the condition of the Company and its subsidiaries, taken as a whole,
shall have occurred since the Spread Determination Date. In addition, the
Remarketing Underwriting Agreement will provide for the termination thereof by
the Remarketing Underwriter upon the occurrence of certain events that are
also customary in the Company's public securities offerings. In the event
that, with respect to any Subsequent Spread Period, the Remarketing
Underwriter does not for any reason purchase on the relevant Tender Date all
of the Notes for which a Tender Notice shall have been given, (1) all such
Tender Notices will be null and void, (2) none of the Notes for which such
Tender Notices shall have been given will be purchased by the Remarketing
Underwriter on such Tender Date, (3) the Subsequent Spread Period will be one
year, which Subsequent Spread Period shall be deemed to have commenced upon
the applicable Commencement Date, (4) the Spread for such Subsequent Spread
Period will be the Alternate Spread and (5) the Notes will be redeemable at
the option of the Company, in whole or in part, upon at least 10 Business Days
prior notice given by no later than the second Business Day following the
relevant Tender Date in the manner described under "Redemption of the Notes"
below, at a redemption price equal to 100% of the principal amount thereof,
together with accrued interest to the redemption date.
No beneficial owner of any Note shall have any rights or claims under the
Remarketing Underwriting Agreement or against the Company or the Remarketing
Underwriter as a result of the Remarketing Underwriter not purchasing such
Notes, except as provided in clause (4) of the last sentence of the preceding
paragraph. The Company will have no obligation under any circumstance to
repurchase any Notes, except in the case of Notes called for redemption as
described below.
If the Remarketing Underwriter does not purchase all Notes tendered for
purchase on any Tender Date, it will promptly notify the Company and the
Trustee. As soon as practicable after receipt of such notice, the Company will
cause a notice to be published specifying (1) the one-year term of the
Subsequent Spread Period, (2) the Spread for such Subsequent Spread Period
(which shall be the Alternate Spread) and (3) LIBOR for the initial Quarterly
Period of such Subsequent Spread Period. Such notice will be published on a
New York Business Day in a daily newspaper in the English language of general
circulation in The City of New York, which is expected to be The Wall Street
Journal.
The term "Remarketing Underwriter" means the nationally recognized broker-
dealer selected by the Company to act as remarketing underwriter (the
"Remarketing Underwriter"). The term "Rate Agent" means the nationally
recognized broker-dealer selected by the Company as its agent to determine
LIBOR and the interest rate of the Notes for any Quarterly Period (the "Rate
Agent"). Pursuant to a Remarketing Agreement dated as of September 6, 1996
with the Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated has
agreed to act as Remarketing Underwriter and Rate Agent. The Company, in its
sole discretion, may change the Remarketing Underwriter and the Rate Agent for
any Subsequent Spread Period at any time on or prior to 3:00 p.m., New York
City time, on the Spread Determination Date relating thereto.
S-8
<PAGE>
Each of the Rate Agent and the Remarketing Underwriter, in its individual or
any other capacity, may buy, sell, hold and deal in any of the Notes. Either
of such parties may exercise any vote or join in any action which any
beneficial owner of Notes may be entitled to exercise or take with like effect
as if it did not act in any capacity under the Remarketing Agreement. Either
of such parties, in its individual capacity, either as principal or agent, may
also engage in or have an interest in any financial or other transaction with
the Company as freely as if it did not act in any capacity under the
Remarketing Agreement.
REDEMPTION OF THE NOTES
The Notes may not be redeemed prior to September 15, 1997. On that date and
on any September 15 thereafter immediately following the end of a Subsequent
Spread Period, the Notes may be redeemed, at the option of the Company, in
whole or in part, upon notice thereof given at any time during the 45 calendar
day period ending on the tenth calendar day prior to the redemption date
(provided that notice of any partial redemption must be given at least 15
calendar days prior to the redemption date), at a redemption price equal to
100% of the principal amount thereof, together with accrued interest to such
redemption date. In the event that less than all of the outstanding Notes are
to be redeemed, the Notes to be redeemed shall be selected by such method as
the Company shall deem fair and appropriate. So long as the Global Note is
held by the Depositary, the Company will give notice to the Depositary, whose
nominee is the record holder of all of the Notes, and the Depositary will
determine the principal amount to be redeemed from the account of each
Participant. A Participant may determine to redeem from some beneficial owners
(which may include a Participant holding Notes for its own account) without
redeeming from the accounts of other beneficial owners. The Notes are also
subject to redemption as provided under "Tender at Option of Beneficial
Owners" above.
Notice of redemption of the Notes will be given by publication in a daily
newspaper in the English language of general circulation in The City of New
York, which is expected to be The Wall Street Journal.
CHANGE OF CONTROL
As more fully described in the accompanying Prospectus under the caption
"Description of Debt Securities--Senior Debt Securities--Change of Control,"
Section 4.02 of the Indenture provides that, if a Put Event occurs, each
holder of Notes will have the right, as provided in, and subject to the terms
of, the Indenture, to require the Company to repurchase all or any portion of
such holder's Notes at a purchase price equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase. A
Put Event will occur if, among other things, there is a Change of Control of
the Company or, for so long as the Company is a subsidiary of Tele-
Communications, Inc. (the "Parent"), a Change of Control of the Parent, at any
time after the date on which the Notes are first issued and on or prior to
maturity. The applicability of this covenant is limited. See "Description of
Debt Securities--Senior Debt Securities--Change of Control" and "--
Definitions" in the accompanying Prospectus. Among other things, it would not
apply to the acquisition of shares of the Company's or the Parent's common
stock by a Controlling Person or by any other person if and for so long as the
shares of such company's common stock beneficially owned by the Controlling
Persons (and, in the case of the Company, by the Parent and subsidiaries of
the Parent) represent in the aggregate thirty percent (30%) or more of the
combined voting power of all shares of such company's common stock calculated
on a fully diluted basis. The term "Controlling Person" includes each of the
Parent's Chairman of the Board, its President and each director of the Parent
as of the date the Indenture was first executed, their respective family
members, estates and heirs and any trust or other investment vehicle for the
primary benefit of such persons or their respective family members or heirs,
Kearns-Tribune Corporation and the trustee under the Parent's Employee Stock
Purchase Plan or any successor plan or any other employee stock ownership or
other employee benefit plan of the Parent or the Company or any subsidiary of
the Parent or the Company. See "Description of Debt Securities--Senior Debt
Securities--Definitions" in the accompanying Prospectus.
The Company's payment obligations with respect to the Notes, including its
obligation to pay the purchase price of a Note that the holder has elected to
require the Company to repurchase following the occurrence of a Put Event, are
unsecured, unsubordinated obligations of the Company and are pari passu
(equally and ratably) with other unsecured, unsubordinated indebtedness of the
Company. There are other issues of senior
S-9
<PAGE>
indebtedness of the Company outstanding in addition to the Notes that would
permit the holders to require the Company to repurchase or repay such
indebtedness upon the occurrence of a Put Event or events similar thereto and
the Company anticipates that it will continue to issue indebtedness with
similar covenants in the future. Approximately $7.86 billion of the Company's
outstanding indebtedness at June 30, 1996 includes 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 or events
similar thereto, which obligation of the Company would rank on a parity with
its repurchase obligation with respect to the Notes. In addition,
approximately $2.94 billion of the outstanding indebtedness of the Company's
subsidiaries at June 30, 1996 includes provisions that require the applicable
subsidiary to repurchase or repay such indebtedness upon a Change of Control
or events similar thereto. 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 Notes and such other indebtedness.
The failure of the Company to repurchase a Note that 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 the Notes and could 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
Notes that would materially adversely affect the rights of any holder of Notes
to require the Company to purchase such Notes upon the occurrence of a Put
Event without the consent of the holders of all of the outstanding Notes.
Subsequent to the occurrence of a Put Event and for so long as the Global
Note is held by the Depositary, the Company shall give notice to the
Depositary, whose nominee is the record holder of all of the Notes, setting
forth details of the right of each holder of the Notes to require the Company
to repurchase such holder's Notes. A Beneficial Owner will obtain such notice
only from its Direct Participant or Indirect Participant, and will be required
to give notice of its election to cause the Company to repurchase such
Beneficial Owner's interest in the Notes to the Depositary through its
Participant.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. The following discussion deals only with Notes held as
capital assets and does not purport to deal with persons in special tax
situations, such as financial institutions, insurance companies, regulated
investment companies, dealers in securities or currencies, persons holding
Notes as a hedge against currency risks or as a position in a "straddle" for
tax purposes, or persons whose functional currency is not the United States
dollar. It also does not deal with holders other than original purchasers
(except where otherwise specifically noted). Persons considering the purchase
of the Notes should consult their own tax advisors concerning the application
of United States Federal income tax laws to their particular situations as
well as any consequences of the purchase, ownership and disposition of the
Notes arising under the laws of any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate or trust the income of which is
subject to United States Federal income taxation regardless of its source or
(iv) any other person whose income or gain in respect of a Note is effectively
connected with the conduct of a United States trade or business. As used
herein, the term "non-U.S. Holder" means a beneficial owner of a Note that is
not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. Under general principles of current United States
Federal income tax law, payments of interest on a debt instrument generally
will be taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or are received (in accordance with the U.S. Holder's
regular method of tax accounting).
S-10
<PAGE>
Disposition of a Note. Under general principles of current United States
Federal income tax law, upon the sale, exchange or retirement of a Note, a
U.S. Holder generally would recognize taxable gain or loss in an amount equal
to the difference, if any, between the amount realized upon the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest)
and such U.S. Holder's adjusted tax basis in its Note. A U.S. Holder's
adjusted tax basis in a Note generally would equal such U.S. Holder's initial
investment in such Note. Any gain or loss realized by a U.S. Holder upon the
sale, exchange or retirement of a Note generally would be long-term or short-
term capital gain or loss, depending upon whether the U.S. Holder had held the
Note for more than one year.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest on a Note, unless such
non-U.S. Holder is a direct or indirect 10% or greater shareholder of the
Company, a controlled foreign corporation related to the Company or a bank
receiving interest described in section 881(c)(3)(A) of the Code. To qualify
for the exemption from taxation, the last United States payor in the chain of
payment prior to payment to a non-U.S. Holder (the "Withholding Agent") must
have received in the year in which a payment of interest or principal occurs,
or in either of the two preceding calendar years, a statement that (i) is
signed by the beneficial owner of the Note under penalties of perjury, (ii)
certifies that such owner is not a U.S. Holder and (iii) provides the name and
address of the beneficial owner. The statement may be made on an IRS Form W-8
or a substantially similar form, and the beneficial owner must inform the
Withholding Agent of any change in the information on the statement within 30
days of such change. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However,
in such case, the signed statement must be accompanied by a copy of the IRS
Form W-8 or the substitute form provided by the beneficial owner to the
organization or institution. The Treasury Department is considering
implementation of further certification requirements aimed at determining
whether the issuer of a debt obligation is related to holders thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a
trade or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the
Company or, at the time of such individual's death, payments in respect of the
Notes would have been effectively connected with the conduct by such
individual of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are
not "exempt recipients" and who fail to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities generally are exempt recipients.
Payments made in respect of the Notes to a U.S Holder must be reported to the
IRS, unless the U.S. Holder is an exempt recipient or establishes an
exemption. Compliance with the identification procedures described in the
preceding section would establish an exemption from backup withholding for
those non-U.S. Holders who are not exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S.
S-11
<PAGE>
Holder, certifies that such seller is a non-U.S. Holder (and certain other
conditions are met). Such a sale must also be reported by the broker to the
IRS, unless either (i) the broker determines that the seller is an exempt
recipient or (ii) the seller certifies its non-U.S. status (and certain other
conditions are met). Certification of the registered owner's non-U.S. status
would be made normally on an IRS Form W-8 under penalties of perjury, although
in certain cases it may be possible to submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
S-12
<PAGE>
UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter") has
agreed, subject to the terms and conditions set forth in the Underwriting
Agreement, to purchase the Notes from the Company.
The Underwriter has advised the Company that it proposes initially to offer
the Notes to the public at the public offering price set forth on the cover
page of this Prospectus Supplement, and to certain dealers at such price less
a concession not in excess of .375% of the principal amount of the Notes. The
Underwriter may allow, and such dealers may reallow, a concession not in
excess of .25% of the principal amount of the Notes. After the initial public
offering, the public offering price and such concessions may be changed.
In the event Notes are redeemed by the Company or repurchased by the Company
as described under "Certain Terms of the Notes--Change of Control," the
Underwriter has agreed it will pay to the Company an amount equal to from
.475% to .0125% of the aggregate principal amount of the Notes so redeemed or
repurchased, depending upon the remaining period to maturity of such Notes.
The Underwriter has informed the Company that it intends to make a market in
the Notes, but is under no obligation to do so and such market making may be
terminated at any time.
The Underwriting Agreement provides that the Company will indemnify the
Underwriter against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriter
may be required to make in respect thereof.
VALIDITY OF THE NOTES
Certain legal matters with respect to the Notes offered hereby will be
passed upon for the Company by Baker & Botts, L.L.P., 599 Lexington Avenue,
New York, New York 10022. Jerome H. Kern, a special counsel of Baker & Botts,
L.L.P. is a director of Tele-Communications, Inc. Certain attorneys with Baker
& Botts L.L.P. hold options to purchase shares of Tele-Communications, Inc.'s
Series A TCI Group Class A Common Stock and hold restricted shares and options
to purchase shares of Tele-Communications, Inc.'s Series A Liberty Media Group
Common Stock. Certain legal matters in connection with the offering will be
passed upon for the Underwriter by Brown & Wood LLP, One World Trade Center,
New York, New York 10048-0557.
S-13
<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NO. 33-63139
PROSPECTUS
TCI COMMUNICATIONS, INC.
DEBT SECURITIES
TCI Communications, Inc. (the "Company") from time to time may offer its
debentures, notes, bonds or other evidences of indebtedness (the "Debt
Securities") for a maximum aggregate initial offering price of $3 billion (or
the equivalent thereof denominated in one or more foreign currencies, foreign
currency units or composite currencies). The Debt Securities may be offered as
separate series in amounts, at prices and on terms to be determined at the
time of sale and to be set forth in supplements to this Prospectus. The Debt
Securities may be offered as convertible Debt Securities which, unless
previously redeemed or otherwise purchased, will be convertible at any time
during the conversion period specified in a supplement to this Prospectus into
shares of Tele-Communications, Inc.'s Series A TCI Group Common Stock, $1.00
par value per share (the "Series A TCI Group Common Stock"). The Debt
Securities may be issued in registered form without coupons attached
("Registered Debt Securities"), in bearer form with or without coupons
attached ("Bearer Debt Securities") and in the form of one or more global
securities ("Global Securities"). See "Description of Debt Securities." Bearer
Debt Securities will be offered only to non-United States persons (subject to
certain exceptions) and to branches, located outside the United States, of
certain United States financial institutions. See "Description of Debt
Securities--Limitations on Issuance of Bearer Debt Securities." The Company
may sell Debt Securities on a negotiated or competitive bid basis to or
through underwriters or dealers designated from time to time, and also may
sell Debt Securities directly to other purchasers or through agents designated
from time to time. See "Plan of Distribution." Prior to the date of this
Prospectus, the Company sold Debt Securities pursuant to the Registration
Statement of which this Prospectus is a part having an aggregate principal
amount of $1,705 million.
Certain terms of the Debt Securities in respect of which this Prospectus is
being delivered, including, where applicable, the specific designation
(including whether senior, senior subordinated or subordinated and whether
convertible), aggregate principal amount, maturity (which may be fixed or
extendible), interest rate or rates (which may be fixed or variable), if any,
and time of payment of interest, if any, authorized denominations, currency or
currencies in which principal, premium, if any, and interest are payable,
initial conversion price or conversion rate and any specific terms relating to
the adjustment thereof that are in addition to or different from those
described herein, the period during which any convertible Debt Securities may
be converted, any terms for a sinking fund or for redemption, purchase or
exchange at the option of the Company or the holder (including the form or
method of payment, which may include cash, Debt Securities of another series
or other forms of consideration), the terms of any guarantee of any Debt
Securities by Tele-Communications, Inc. (the "Parent"), any covenants or
events of default that are in addition to or different from those described
herein, the designation and qualification (to the extent not already
designated and qualified and described herein) of any trustee with respect to
the Debt Securities, and any other specific terms of the Debt Securities, will
be set forth in a Prospectus Supplement accompanying this Prospectus (the
"Prospectus Supplement"). Debt Securities may be issued as Original Issue
Discount Securities to be sold at a substantial discount below their principal
amount and, if issued, certain terms thereof will be set forth in the
Prospectus Supplement related thereto. See "Description of Debt Securities."
The Debt Securities in respect of which this Prospectus is being delivered are
hereinafter referred to collectively as the "Offered Securities." The terms of
the offering and sale of the Offered Securities, including, where applicable,
the name or names of any agents, dealers or underwriters to be utilized in
connection with the offer and sale of the Offered Securities, the principal
amount of Debt Securities to be purchased by underwriters, the purchase price
of the Offered Securities and the proceeds to the Company from such sale, any
applicable commissions, discounts or other items constituting compensation of
such agents or underwriters, any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers, will also be
set forth in the accompanying Prospectus Supplement. The Company reserves the
sole right to accept and, together with its agents, from time to time, to
reject in whole or in part any proposed purchase of the Offered Securities to
be made directly or through agents. See "Plan of Distribution" for possible
indemnification arrangements for agents, dealers and underwriters.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by the Prospectus Supplement applicable to the Offered
Securities being sold.
---------------
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 September 6, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company and the Parent have filed with the Securities and Exchange
Commission (the "Commission"), Washington, D.C., a registration statement on
Form S-3 (Registration No. 33-63139) (together with all amendments and
exhibits, referred to as the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the Debt
Securities, the shares of Series A TCI Group Common Stock that may be issuable
upon conversion of any convertible Debt Securities and the guarantees that may
be issued by the Parent in respect of Debt Securities. 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 pertaining to the
Company, the Parent, the Debt Securities, the Series A TCI Group Common Stock
and the guarantees of the Parent offered hereby, reference is made to the
Registration Statement. Statements contained herein concerning the provisions
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.
Each of the Company and the Parent is subject to the information
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports and other information with
the Commission. Such reports and other information filed with the Commission
under the Exchange Act by the Company and/or the Parent can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and at 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants (including the Company and the Parent) that
file electronically with the Commission. The address of the Commission's Web
site is http://www.sec.gov. Reports, proxy statements, information statements
and other information concerning the Company and the Parent can also be
inspected at the Nasdaq Stock Market at 1735 K Street, N.W., Washington, D.C.
20006.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission by the Company
(File No. 0-5550) and by the Parent (File No. 0-20421) and are incorporated
into this Prospectus by reference and made a part hereof:
1. The Annual Report on Form 10-K of the Parent for the year ended
December 31, 1995.
2. The Annual Report on Form 10-K of the Company for the year ended
December 31, 1995.
3. The Quarterly Reports on Form 10-Q of the Parent for the quarters
ended March 31, 1996 (as amended by Form 10-Q/A (Amendment No. 1)) and
June 30, 1996.
4. The Quarterly Reports on Form 10-Q of the Company for the quarters
ended March 31, 1996 (as amended on Form 10-Q/A (Amendment No. 1)) and
June 30, 1996.
5. The Current Reports on Form 8-K of the Parent dated February 9, 1996,
June 19, 1996, July 2, 1996, August 5, 1996 and September 3, 1996.
6. The Current Reports on Form 8-K of the Company dated February 9, 1996,
February 14, 1996, May 22, 1996, June 7, 1996, June 19, 1996, July 2,
1996, August 5, 1996 and September 3, 1996.
7. The financial statements and notes thereto of Cablevision (a
combination of certain cable television assets of Cablevision S.A.,
Televisora Belgrano S.A., Construred S.A. and Univent's S.A.) as of
December 31, 1994 and 1993, and for each of the years in the three-
year period ended December 31, 1994, which appear in the Current
Report on Form 8-K of the Parent and the Company, dated April 20, 1995
(as amended by Form 8-K/A (Amendment No. 1)).
2
<PAGE>
8. The description of the Series A TCI Group Common Stock included in
Items 3 and 4 of the Parent's registration statement on Form 8-B (as
amended by Form 8-B/A (Amendments No. 1, 2, 3 and 4)) and Item 1 of
the Parent's registration statement on Form 8-A (as amended by Form 8-
A/A (Amendments No. 1 and 2)).
All documents filed by the Company and/or the Parent 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 of the securities
offered 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 previous
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.
The Company and the Parent will provide without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents incorporated by reference herein, other than certain exhibits to
such documents (unless such exhibits are specifically incorporated by
reference into the documents that this Prospectus incorporates). Such requests
should be addressed to Stephen M. Brett, Esq., Senior Vice President, TCI
Communications, Inc., Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado
80111-3000; telephone (303) 267-5500.
3
<PAGE>
THE COMPANY AND THE PARENT
The Company is the largest provider of cable television services in the
United States, based on the number of basic subscribers served by the Company
and its subsidiaries and affiliates at June 30, 1996. At that date, the
Company, through its subsidiaries and affiliates, operated cable television
systems throughout the continental United States and Hawaii. The Parent owns
all of the common stock of the Company.
The Parent, through its subsidiaries (including the Company) and affiliates,
is principally engaged in the construction, acquisition, ownership and
operation of cable television systems and in the provision of satellite-
delivered video entertainment, information and home shopping programming
services to various distribution media, principally cable television systems.
The Parent also has interests in cable and telecommunications operations and
television programming in certain international markets, as well as
investments in companies and joint ventures involved in developing and
providing programming for new television and telecommunications technologies.
The executive offices of the Company and the Parent are located 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
discussion under the caption "Description of Debt Securities," the "Company"
means TCI Communications, Inc. and its consolidated subsidiaries and the
"Parent" means Tele-Communications, Inc. and its consolidated subsidiaries.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Securities, together with
internally generated funds, may be used to repay, redeem or repurchase
outstanding indebtedness of the Company; for general operations of the
Company, including acquisitions, capital expenditures and working capital
requirements; or for such other purposes as may be specified in the Prospectus
Supplement. All or a portion of such proceeds may be advanced to the Parent in
the form of dividends or loans and/or to other affiliates of the Company in
the form of loans or as a contribution to capital. See "Description of Debt
Securities."
A brief description of any indebtedness to be repaid with the proceeds of
the Offered Securities will be set forth in the Prospectus Supplement. The
amount of the Company's future capital expenditures for cable television
operations will be determined by acquisitions of additional cable television
systems, contractual obligations under existing franchises, expansions of
existing systems through rebuilds and upgrades, technological developments and
various other economic factors and market conditions. Specific plans,
arrangements or agreements, written or oral, with respect to any material
acquisitions by the Company by merger or otherwise, or with respect to any
material disposition of assets by the Company, if any, will, to the extent not
disclosed in a document incorporated by reference herein, be disclosed in the
Prospectus Supplement.
Pending application of the net proceeds to the foregoing uses, the net
proceeds will be added to the Company's working capital and invested in short-
term interest-bearing obligations. Such investments will be subject to
fluctuating interest rates which may be lower than the rates applicable to the
Debt Securities.
The Company may borrow additional funds from time to time from public and
private sources on both a long-term and short-term basis any may sell
commercial paper to fund its future capital and working capital requirements
in excess of internally generated funds. Certain of such borrowings may rank
senior in right of payment to the indebtedness represented by the Offered
Securities but only if such Offered Securities are not "Senior Debt
Securities." See "Description of Debt Securities."
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges of the Company was 1.02, 1.22, and
1.21 for the years ended December 31, 1992, 1993 and 1994, respectively. The
ratio of earnings to fixed charges of the Company was less than 1.00 for the
years ended December 31, 1991 and 1995, and for the six months ended June 30,
1995 and 1996; thus, earnings available for fixed charges were inadequate to
cover fixed charges for such periods. The amounts of the coverage deficiencies
were $177 million and $170 million for the years ended December 31, 1991
4
<PAGE>
and 1995, respectively, and $22 million and $283 million for the six months
ended June 30, 1995 and 1996, respectively. For the ratio calculations,
earnings available for fixed charges consists of earnings (losses) before
income taxes plus fixed charges (minus capitalized interest), distributions
from and 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), minority interest in earnings (losses) of consolidated
subsidiaries, the elimination of preferred stock dividend requirements of
consolidated subsidiaries to 50%-owned affiliates, and preferred stock
dividend requirements of 50%-owned affiliates, other than amounts to the
Company. Fixed charges consist of (i) interest (including capitalized
interest) on debt, including interest of less than 50%-owned affiliates with
debt guaranteed by the Company, (ii) the elimination of interest of
consolidated subsidiaries to 50%-owned affiliates, (iii) the Company's
proportionate share of interest of 50%-owned affiliates, (iv) that portion of
rental expense the Company believes to be representative of interest (one-
third of rental expense), (v) amortization of debt expense, (vi) that portion
of minority interests in earnings (losses) of consolidated subsidiaries that
represent the amount of pretax earnings that would be required to cover
preferred stock dividend requirements of consolidated subsidiaries, (vii) the
elimination of preferred stock dividend requirements of consolidated
subsidiaries to 50%-owned affiliates, and (viii) the 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 $1
million, $3 million, $14 million, $5 million and $5 million relating to such
guarantees for the years ended December 31, 1991, 1992, 1993, 1994 and 1995,
respectively, and fixed charges of $7 million and $2 million relating to such
guarantees for the six months ended June 30, 1995 and 1996, respectively, have
not been included in fixed charges. Preferred stock dividend requirements of
the Company, aggregating $15 million and $2 million for the years ended
December 31, 1992 and 1993, respectively, and preferred stock requirements of
the Company aggregating $4 million for the six months ended June 30, 1996,
have also not been included in fixed charges.
DESCRIPTION OF DEBT SECURITIES
The Company may offer Debt Securities consisting of Senior Debt Securities,
Senior Subordinated Debt Securities or Subordinated Debt Securities, any of
which Debt Securities may be issued as Convertible Debt Securities, or any
combination of the foregoing, provided that the aggregate initial offering
price of the Debt Securities offered pursuant to the Registration Statement
will not exceed $3 billion (or the equivalent thereof denominated in one or
more foreign currencies, foreign currency units or composite currencies).
The Debt Securities will represent unsecured general obligations of the
Company. The Senior Debt Securities will be senior to all subordinated
indebtedness of the Company, and pari passu (equally and ratably) with other
unsecured, unsubordinated indebtedness of the Company. The Senior Subordinated
Debt Securities will be subordinate in right of payment to certain other debt
obligations of the Company, pari passu with certain other senior subordinated
indebtedness of the Company and senior to certain other subordinated
indebtedness of the Company. The Subordinated Debt Securities will be
subordinate in right of payment to certain other debt obligations of the
Company and pari passu with certain other subordinated indebtedness of the
Company. At June 30, 1996, the Company had an aggregate of approximately $8.71
billion of total Debt (as defined under "Senior Debt Securities--Definitions")
(including guarantees of indebtedness of others and the unaccreted portion of
indebtedness issued at a discount, but excluding indebtedness owed to
subsidiaries and guarantees of subsidiary debt), substantially all of which
would rank on a parity in right of payment with the Senior Debt Securities. At
that date, the Company and its subsidiaries also had an aggregate of
approximately $900 million in undrawn lines of credit (excluding amounts
related to lines of credit which provide availability to support commercial
paper).
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
Debt Securities, 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 June 30, 1996, the Company's subsidiaries
5
<PAGE>
had total Debt of approximately $3.95 billion (including guarantees of
indebtedness of others and the unaccreted portion of indebtedness issued at a
discount, but excluding indebtedness owed to the Company).
The Debt Securities will be obligations exclusively of the Company. The
Company's ability to service its indebtedness, including the Debt Securities,
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 Debt
Securities 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 Parent is also
a separate and distinct legal entity and it has no obligation, contingent or
otherwise, to pay any amounts due pursuant to the Debt Securities or to make
any funds available therefor, whether by loans or other payments, except for
any Offered Securities which the Parent has specifically elected to guarantee
as set forth in an applicable Prospectus Supplement. See "--Guarantees of Debt
Securities" below.
The Senior Debt Securities will be issued under an Indenture, dated as of
December 20, 1995, executed by the Company and The Bank of New York, as
Trustee (the "Senior Indenture"); the Senior Subordinated Debt Securities will
be issued under an Indenture to be executed by the Company and a trustee
designated in accordance with the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act") (the "Senior Subordinated Indenture"); and the
Subordinated Debt Securities will be issued under an Indenture to be executed
by the Company and a trustee designated in accordance with the Trust Indenture
Act (the "Subordinated Indenture"). In this Prospectus, the Senior Indenture,
the Senior Subordinated Indenture and the Subordinated Indenture are sometimes
collectively referred to as the Indentures and individually as an Indenture
and the Trustee under the Senior Indenture, the Trustee under the Senior
Subordinated Indenture and the Trustee under the Subordinated Indenture are
sometimes collectively referred to as the Trustees and individually as a
Trustee. In the event that any particular series of Debt Securities are
guaranteed by the Parent, the applicable Indenture will be supplemented by a
supplemental indenture among the Company, as issuer, the Parent, as guarantor,
and the Trustee. Any such supplemental indenture will be filed as an exhibit
to a Current Report on Form 8-K to be filed by the Company and Parent
following the issuance of such series of guaranteed Debt Securities. See "--
Guarantees of Debt Securities" below. The terms of the Senior Debt Securities,
the Senior Subordinated Debt Securities and the Subordinated Debt Securities
include those stated in the respective Indentures and in any supplemental
indenture, and those made part of the Indentures by reference to the Trust
Indenture Act, as in effect on the date of the applicable Indenture. The
Indentures (or form thereof, as the case may be) are filed as exhibits to the
Registration Statement. The Debt Securities are subject to all such terms and
holders of Debt Securities are referred to the respective Indentures and the
Trust Indenture Act for a statement of such terms. See "Additional
Information."
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to, and qualified in their entirety by
reference to, all provisions of the Indentures. As used in this section
"Description of Debt Securities," unless the context indicates otherwise, the
term "Company" means TCI Communications, Inc. and does not include any of its
subsidiaries. All other capitalized terms used in this section and not
otherwise defined have the meanings assigned to them in the Indentures.
GENERAL
The Indentures do not limit the amount of Debt Securities which can be
issued thereunder and provide that Debt Securities may be issued in one or
more series, in such form, with such terms and up to the aggregate principal
amount authorized from time to time by the Company. (Sections 2.01 and 2.02 of
the Indentures)
6
<PAGE>
Reference is made to the Prospectus Supplement for the following terms of
the Offered Securities: (i) the designation (including whether they are Senior
Debt Securities, Senior Subordinated Debt Securities or Subordinated Debt
Securities), aggregate principal amount, authorized denominations and currency
or currencies in which principal, premium, if any, and interest on the Offered
Securities are payable; (ii) whether the Offered Securities are to be issuable
initially in temporary global form and whether any of the Offered Securities
are issuable in permanent global form as Global Securities; (iii) whether the
Offered Securities are to be issuable as Registered Debt Securities or Bearer
Debt Securities or both; (iv) the index or indices used to determine the
amount of payments of principal, premium, if any, and interest on the Offered
Securities; (v) the percentage of their principal amount at which such Offered
Securities will be issued; (vi) the date on which the Offered Securities will
mature (which may be fixed or extendible); (vii) the rate or rates (which may
be fixed or variable) per annum, if any, at which the Offered Securities will
bear interest and the date from which such interest will accrue; (viii) the
times at which any such interest will be payable and with respect to
Registered Debt Securities the record date for the interest payable on any
interest payment date; (ix) any mandatory or optional sinking fund or
analogous provisions; (x) the date or dates, if any, on or after which, or the
circumstances under which, and the price or prices (and form or method of
payment thereof) at which the Offered Securities may be redeemed, purchased or
exchanged at the option of the Company or any holder; (xi) the initial
conversion price per share or conversion rate at which Offered Securities that
are convertible will be converted into Series A TCI Group Common Stock, any
specific terms relating to the adjustment thereof that are in addition to or
different from those described herein and the period during which such Offered
Securities may be so converted; (xii) the terms of any guarantee by the Parent
of the payment of principal, premium, if any, or interest on the Offered Debt
Securities; (xiii) any covenants or Events of Default that are in addition to
or different from those described herein; and (xiv) any other specific terms.
Reference is made to the Prospectus Supplement with respect to the designation
and qualification of the Trustee under the Senior Subordinated Indenture and
the Subordinated Indenture.
If the purchase price of any Offered Securities is denominated in one or
more foreign currencies, foreign currency units or composite currencies, or if
the principal, premium, if any, and interest on any Offered Securities are
payable in one or more foreign currencies, foreign currency units or composite
currencies, the restrictions, elections, general tax considerations, specific
terms and other information with respect to such Offered Securities and such
foreign currency or currencies or foreign currency unit or units or composite
currencies will be set forth in the applicable Prospectus Supplement.
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be sold at a substantial discount below their principal
amount ("original issue discount"). The issue price of Offered Securities that
are Original Issue Discount Securities, the amount of the original issue
discount with respect thereto, the manner and rate or rates per annum (which
may be fixed or variable) at which such original issue discount shall accrue,
the yield to maturity represented thereby, the date or dates from or to which
or period or periods during which such original issue discount shall accrue,
the portion of the principal amount of such Offered Securities that will be
payable upon acceleration of the maturity thereof or upon the optional or
mandatory redemption, purchase or exchange thereof, and any other specific
terms thereof will be described in the Prospectus Supplement relating thereto,
together with special federal income tax and other considerations applicable
to such Offered Securities.
SENIOR DEBT SECURITIES
The Senior Indenture contains, among others, the following covenants which
will apply to Offered Securities that are Senior Debt Securities unless
otherwise provided in the Prospectus Supplement for such Offered Securities:
Change of Control. With respect to the Senior Debt Securities of any series,
if both (i) a Change of Control shall occur at any time after the date on
which Senior Debt Securities of such series are first issued and on or prior
to the maturity thereof (or during such other period as may be specified for
such series in the related
7
<PAGE>
Prospectus Supplement) and (ii) on any date which occurs during the period
commencing 90 days before and ending 90 days after the date that 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, two or more
National Rating Agencies shall downgrade their respective ratings of the
Senior Debt Securities of such series from the ratings in effect at the
beginning of such 180-day period (each a "Downgrading Agency") (except that if
a National Rating Agency shall have downgraded its rating of the Senior Debt
Securities of such series during the 90-day period prior to such public
foreclosure disclosure, such National Rating Agency shall not be deemed a
Downgrading Agency if it upgrades its rating of the Senior Debt Securities of
such series, by the close of business on the date of such public disclosure,
to at least the rating (the "Threshold Rating") it had given to the Senior
Debt Securities of such series as of the beginning of such 180-day period and
shall not thereafter downgrade such rating to below the Threshold Rating
during such 180-day period) (the occurrence of the conditions specified in
both (i) and (ii) being a "Put Event") (except that a Put Event shall not be
deemed to have occurred if there are at least two National Rating Agencies
that have ratings of the Senior Debt Securities of such series in effect at
the beginning of such 180-day period that are not Downgrading Agencies), then
each holder of Senior Debt Securities of such series shall have the right to
require the Company to repurchase all or any portion of such holder's Senior
Debt Securities of such series at a purchase price equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (or if the Senior Debt Securities of such series are Original
Issue Discount Securities, 100% of that portion of the principal amount
specified in the terms of that series that would be payable if the maturity
thereof were accelerated pursuant to the Senior Indenture), all as provided
in, and subject to the terms of, the Senior Indenture, as the Senior Indenture
may be supplemented in connection with the issuance of series of Senior Debt
Securities thereunder. Subsequent to the occurrence of a Put Event, the
Company will give a notice to each holder of Senior Debt Securities of such
series setting forth, among other things, details regarding the right of such
holder to require the Company to repurchase such holder's Senior Debt
Securities of such series, the purchase date, and the name and address of the
Paying Agent (which for this purpose will, in the case of Registered
Securities, be the Trustee and, in the case of Bearer Securities, will be a
Paying Agent in a place of payment located outside the United States) to which
such Senior Debt Securities are to be presented and surrendered. The Company
will not be obligated, with respect to the Senior Debt Securities of any
series, to purchase such Senior Debt Securities or give notice to the holders
thereof with respect to more than one Put Event. (Section 4.02 of the Senior
Indenture) The obligation of the Company to purchase Senior Debt Securities
put to it pursuant to this covenant will rank senior to its obligations in
respect of the Senior Subordinated Debt Securities and the Subordinated Debt
Securities. The applicability of this covenant is limited to the circumstances
described above and this covenant is not designed to, and may not, provide
rights to the holders of Senior Debt Securities in all circumstances in which
the market value of the Senior Debt Securities held by them may be adversely
affected, whether as the result of the Company's engaging in a highly
leveraged transaction or otherwise.
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 under this
covenant.
Limitation on Liens. Subject to certain specified exceptions, as long as any
Senior Debt Securities of a series entitled to the benefit of this covenant
are outstanding, the Company will not, and will not permit any Restricted
Subsidiary to, create, incur or assume any Lien on Restricted Property to
secure the payment of Funded Debt of the Company or any Restricted Subsidiary
if immediately after the creation, incurrence or assumption of such Lien, the
aggregate outstanding principal amount of all Funded Debt of the Company and
the Restricted Subsidiaries that is secured by Liens on Restricted Property
would exceed fifteen percent (15%) of the Maximum Funded Debt Amount, unless
effective provision is made whereby the Senior Debt Securities (together with,
if the Company shall so determine, any other Funded Debt ranking equally with
the Senior Debt Securities, whether then existing or thereafter created) are
secured equally and ratably with (or prior to) such Funded Debt (but only for
so long as such Funded Debt is so secured). (Section 4.04 of the Senior
Indenture)
Limitation on Restricted Subsidiary Funded Debt. As long as any Senior Debt
Securities of a series entitled to the benefit of this covenant are
outstanding, the Company will not permit any Restricted Subsidiary to incur or
assume any Funded Debt if immediately after the incurrence or assumption of
such Funded Debt, the
8
<PAGE>
aggregate outstanding principal amount of all Funded Debt of the Restricted
Subsidiaries would exceed fifteen percent (15%) of the Maximum Funded Debt
Amount. Notwithstanding the foregoing, any Restricted Subsidiary may incur
Funded Debt to extend, renew or replace Funded Debt of such Restricted
Subsidiary provided that the principal amount of the Funded Debt so incurred
does not exceed the principal amount of the Funded Debt extended, renewed or
replaced thereby immediately prior to such extension, renewal or replacement
plus any premium, accrued and unpaid interest or capitalized interest payable
thereon. (Section 4.05 of the Senior Indenture) The Senior Indenture does not
limit the incurrence of Funded Debt, or any other debt, secured or unsecured,
by the Company, except as described under "Limitation on Liens," or by any
Unrestricted Subsidiary.
Designation of Restricted Subsidiaries. With respect to the Senior Debt
Securities of any series, the Company may designate an Unrestricted Subsidiary
as a Restricted Subsidiary or designate a Restricted Subsidiary as an
Unrestricted Subsidiary at any time, provided that (1) immediately after
giving effect to such designation, the Leverage Ratio of the Restricted Group
is not greater than 8.0:1 and the Company and the Restricted Subsidiaries are
in compliance with the "Limitation on Liens" and "Limitation on Restricted
Subsidiary Funded Debt" covenants, and (2) 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 the
Company's fiscal year, 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 Senior Debt Securities of any series, and
deliver the required Officers' Certificate with respect thereto to the
Trustee, on or prior to the date of initial issuance of Senior Debt Securities
of such series. (Section 4.03 of the Senior Indenture)
Definitions. The following are certain of the terms defined in the Senior
Indenture (Section 1.01):
"Change of Control" means the occurrence of either of the following events
(to the extent applicable): (A) the acquisition by any person (other than the
Parent, the Company, any Subsidiary or Parent Subsidiary or any Controlling
Person) during any period of twelve (12) consecutive months of beneficial
ownership of shares of the Class A Stock or Class B Stock or both representing
in the aggregate thirty percent (30%) or more of the combined voting power of
all shares of the Class A Stock and Class B Stock, calculated on a fully
diluted basis as of the date immediately prior to the 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 Class A Stock and Class B
Stock beneficially owned by the Parent, the Parent Subsidiaries (other than
the Company and its Subsidiaries) and the Controlling Persons represent in the
aggregate 30% or more of the combined voting power of all shares of the Class
A Stock and Class B Stock calculated on a fully diluted basis, or (B) for so
long as the Company is a Parent Subsidiary, the acquisition by any person
(other than the Parent, any Parent Subsidiary or any Controlling Person)
during any period of twelve (12) consecutive months of beneficial ownership of
shares of common stock of the Parent representing in the aggregate thirty
percent (30%) or more of the combined voting power of all shares of the
Parent's common stock, calculated on a fully diluted basis as of the date
immediately prior to the 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 Parent's common stock beneficially owned by the Controlling Persons
represent in the aggregate 30% or more of the combined voting power of all
shares of the Parent's common stock calculated on a fully diluted basis.
"Class A Stock" means the Class A Common Stock, $1.00 par value, of the
Company as it exists on the date of the Senior Indenture and stock of any
other class into which such Class A Common Stock may thereafter have been
changed.
"Class B Stock" means the Class B Common Stock, $1.00 par value, of the
Company as it exists on the date of the Senior Indenture and stock of any
other class into which such Class B Common Stock may thereafter have been
changed.
9
<PAGE>
"Company" means TCI Communications, Inc., a Delaware corporation, until a
successor replaces it pursuant to the applicable provisions of the Senior
Indenture and thereafter means the successor.
"Controlling Person" means each of (1) the Chairman of the Board of the
Parent as of the date of the Senior Indenture, (2) the President of the Parent
as of the date of the Senior Indenture, (3) each of the directors of the
Parent as of the date of the Senior 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 or heirs,
(5) Kearns-Tribune Corporation, a Delaware corporation, or any successor
thereto by merger or consolidation and (6) the trustee under the Parent's
Employee Stock Purchase Plan or any successor plan or any other employee stock
ownership or other employee benefit plan of the Parent or the Company or of
any Subsidiary or Parent Subsidiary. 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 Parent's Employee Stock Purchase Plan or any
successor plan or any other employee stock ownership or other employee benefit
plan of the Parent or the Company or of any Subsidiary or Parent Subsidiary
shall be deemed to have beneficial ownership of all shares of common stock of
the Parent or the Company held under the plan, whether or not allocated to or
vested in participants' accounts.
"Debt" of any person means:
(1) any indebtedness of such person (i) for borrowed money or (ii) evidenced
by a note, debenture or similar instrument (including a purchase money
obligation) given in connection with the acquisition of any property or
assets, including securities;
(2) any guarantee by such person of any indebtedness of others described in
the preceding clause (1); and
(3) any amendment, extension, renewal or refunding of any such indebtedness
or guarantee.
"Funded Debt" of any person means, as of the date as of which the amount
thereof is to be determined, without duplication, all indebtedness of such
person for borrowed money and all guaranties by such person of any
indebtedness of others for borrowed money, 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, any balance of such
indebtedness which was Funded Debt at the time of its creation maturing within
one year from such date of determination) or which has a final maturity,
duration or payment date within one year from such date of determination but
which by its terms may be renewed or extended at the option of such person for
more than one year from such date of determination, whether or not theretofore
renewed or extended. When used with respect to the Company or any Restricted
Subsidiary, the term "Funded Debt" excludes (1) any indebtedness of the
Company or any Restricted Subsidiary to the Company or another Restricted
Subsidiary, (2) any guarantee by the Company or any Restricted Subsidiary of
indebtedness of the Company or another Restricted Subsidiary, provided that
such guarantee is not secured by a Lien on Restricted Property, and (3) with
respect to any series of Senior Debt Securities, any indebtedness of the
Company or any Restricted Subsidiary to any Unrestricted Subsidiary which
indebtedness is subordinated in right of payment to the prior payment in full
of the outstanding Senior Debt Securities of such series on terms no less
favorable to the holders of such Senior Debt Securities than those contained
in Article Ten of the Subordinated Indenture pursuant to which Subordinated
Debt Securities issued by the Company are subordinated to all Senior Debt of
the Company (as defined therein), without giving effect to any amendment,
modification or supplement to, or discharge of, the Subordinated Indenture
after the date of the Senior Indenture, and which indebtedness is not secured
by a Lien on Restricted Property. For purposes of determining the outstanding
principal amount of Funded Debt at any date, the amount of indebtedness issued
at a price less than the principal amount thereof shall be equal to the amount
of the liability in respect thereof at such date determined in accordance with
generally accepted accounting principles.
"Leverage Ratio" with respect to the Restricted Group means, as of the date
of and after giving effect to any designation of an Unrestricted Subsidiary as
a Restricted Subsidiary and/or any designation of a Restricted Subsidiary as
an Unrestricted Subsidiary, in each case in accordance with the "Designation
of Restricted Subsidiaries" covenant, the ratio of (1) the aggregate
outstanding principal amount of all Funded Debt of the Restricted Group as of
such date to (2) the product of four times the Restricted Group Cash Flow for
the most recent full fiscal quarter for which financial information is
available on such date.
10
<PAGE>
"Lien" means any mortgage, pledge, lien, security interest, or other similar
encumbrance.
"Maximum Funded Debt Amount" means, as of any date of determination thereof,
that amount which is equal to the product of (i) eight and (ii) the product of
(x) the Restricted Group Cash Flow for the most recent full fiscal quarter for
which financial information is available on such date and (y) four.
"National Rating Agency" means any of the following nationally recognized
statistical rating organizations (and, in each case, any successor thereto):
Duff & Phelps Credit Rating Co.; Moody's Investors Service, Inc.; Standard &
Poor's Securities, Inc.; and Fitch Investors Service, L.P.
"Parent" means Tele-Communications, Inc., a Delaware corporation, and any
successor thereof.
"Parent Subsidiary" means a corporation, a majority of whose voting stock is
owned by the Parent and/or one or more Parent Subsidiaries. Voting stock is
capital stock having voting power under ordinary circumstances to elect
directors.
"Principal Property" means, as of any date of determination, any property or
assets owned by any Restricted Subsidiary other than (1) any such property
which, in the good faith opinion of the Board of Directors, is not of material
importance to the business conducted by the Company and its Restricted
Subsidiaries taken as a whole and (2) any shares of any class of stock or any
other security of any Unrestricted Subsidiary.
"Restricted Group" means, as of any date of determination, the Company and
the Restricted Subsidiaries as of such date after giving effect to any
designation being made on such date in accordance with the "Designation of
Restricted Subsidiaries" covenant.
"Restricted Group Cash Flow" for any period means the Restricted Group Net
Income (as defined below) for such period, plus (A) the sum (without
duplication) of the aggregate of each of the following items of the Company
and the Restricted Subsidiaries for such period to the extent taken into
account as charges to Restricted Group Net Income for such period: (i)
interest expense, (ii) income tax expense, (iii) depreciation and amortization
expense and other noncash charges, (iv) extraordinary items and (v) after-tax
losses on sales of assets outside of the ordinary course of business not
otherwise included in extraordinary items in accordance with generally
accepted accounting principles, minus (B) the sum (without duplication) of the
aggregate of each of the following items of the Company and the Restricted
Subsidiaries for such period to the extent taken into account as credits to
Restricted Group Net Income for such period: (i) noncash credits, (ii)
extraordinary items, and (iii) after-tax gains on sales of assets outside of
the ordinary course of business not otherwise included in extraordinary items
in accordance with generally accepted accounting principles.
For purposes of this definition, (1) "Restricted Group Net Income" for any
period means the aggregate of the net income (loss) for such period of the
Company and the Restricted Subsidiaries, determined on a consolidated basis in
accordance with generally accepted accounting principles; provided, however,
that (i) the net income (loss) of any person accounted for by the equity
method of accounting and the net income (loss) of any Unrestricted Subsidiary
shall be excluded, except that the net income of any such person or
Unrestricted Subsidiary shall be included to the extent of the amount of
dividends or distributions paid by such person or Unrestricted Subsidiary to
the Company or a Restricted Subsidiary during such period, and (ii) except as
otherwise provided in clause (2) below, the net income (loss) of any other
person acquired by the Company or any Restricted Subsidiary in a transaction
accounted for as a pooling of interests for any period prior to the date of
such acquisition shall be excluded; and (2) if the Company or any Restricted
Subsidiary consummated any acquisition or deposition of assets during the
period for which Restricted Group Cash Flow is being calculated, or
consummated any acquisition or disposition of assets subsequent to such period
and on or prior to the date as of which the Leverage Ratio or Maximum Funded
Debt Amount, as applicable, is to be determined, then, in each such case, the
Restricted Group Cash Flow for such period shall be calculated on a pro forma
basis as if such acquisition or disposition had occurred at the beginning of
such period.
"Restricted Property" means, as of any date of determination, any Principal
Property and any shares of stock of a Restricted Subsidiary owned by the
Company or a Restricted Subsidiary.
11
<PAGE>
"Restricted Subsidiary" means, as of any date of determination, a
corporation a majority of whose voting stock is owned by the Company and/or
one or more Restricted Subsidiaries, which corporation has been, or is then
being, designated a Restricted Subsidiary in accordance with the "Designation
of Restricted Subsidiaries" covenant, unless and until designated an
Unrestricted Subsidiary in accordance with such covenant.
"Subsidiary" means a corporation a majority of whose voting stock is owned
by the Company and/or one or more Subsidiaries. Voting stock is capital stock
having voting power under ordinary circumstances to elect directors.
"Unrestricted Subsidiary" means, as of any date of determination, any
Subsidiary of the Company that is not a Restricted Subsidiary.
SENIOR SUBORDINATED DEBT SECURITIES
The following provisions will apply to Offered Securities that are Senior
Subordinated Debt Securities unless otherwise provided in the Prospectus
Supplement for such Offered Securities.
Subordination. The indebtedness evidenced by the Senior Subordinated Debt
Securities will be subordinate to the prior payment in full of all Senior Debt
as described below. The Senior Subordinated Indenture does not limit Senior
Debt or any other debt, secured or unsecured, of the Company or any
subsidiary, except as described under "Limitation on Subordinated Debt
Superior to the Senior Subordinated Debt Securities" below. Upon maturity (by
acceleration or otherwise) of any Senior Debt, payment in full must be made on
such Senior Debt (or duly provided for) before any payment is made on or in
respect of the Senior Subordinated Debt Securities (except payments made in
capital stock of the Company or in warrants, rights or options to purchase or
acquire capital stock of the Company, sinking fund payments made in Senior
Subordinated Debt Securities acquired by the Company before the maturity of
such Senior Debt, and payments made through the exchange of other debt
obligations of the Company for such Senior Subordinated Debt Securities in
accordance with the terms of such Senior Subordinated Debt Securities provided
that such Debt obligations are subordinated to Senior Debt at least to the
extent that the Senior Subordinated Debt Securities for which they are
exchanged are so subordinated in accordance with the Senior Subordinated
Indenture). During the continuance of any default in payment of the principal
of, premium, if any, interest on, or other amounts due in respect of, any
Senior Debt, no payment may be made by the Company on, or in respect of, the
Senior Subordinated Debt Securities (except payments made in capital stock of
the Company or in warrants, rights or options to purchase or acquire capital
stock of the Company, sinking fund payments made in Senior Subordinated Debt
Securities acquired by the Company before such default and notice thereof, and
payments made through the exchange of other debt obligations of the Company
for such Senior Subordinated Debt Securities in accordance with the terms of
such Senior Subordinated Debt Securities provided that such debt obligations
are subordinated to Senior Debt at least to the extent that the Senior
Subordinated Debt Securities for which they are exchanged are so subordinated
in accordance with the Senior Subordinated Indenture). Upon any distribution
of assets of the Company in any dissolution, winding up, liquidation or
reorganization of the Company, payment of all amounts due in respect of the
Senior Subordinated Debt Securities will be subordinated, to the extent and in
the manner set forth in the Senior Subordinated Indenture, to the prior
payment in full of all Senior Debt. Such subordination will not prevent the
occurrence of any Event of Default. (Sections 10.01, 10.02, 10.03 and 10.11 of
the Senior Subordinated Indenture) The Indenture for the Senior Debt
Securities contains a cross-acceleration provision that would, among other
things, permit the acceleration of the maturity of any outstanding Senior Debt
Securities in the event that the maturity of any outstanding Senior
Subordinated Debt Securities or Subordinated Debt Securities were accelerated.
See "Defaults and Remedies" below. The instruments and agreements pursuant to
which all or substantially all of the Company's Senior Debt has been incurred
also contain cross-default or cross-acceleration provisions.
Securities Senior to Junior Subordinated Debt. The indebtedness evidenced by
the Senior Subordinated Debt Securities will be superior in right of payment
to all Junior Subordinated Debt as described below. Upon maturity (by
acceleration or otherwise) of the Senior Subordinated Debt Securities of any
series, payment in full must be made thereon, or duly provided for, before any
payment is made on or in respect of any Junior
12
<PAGE>
Subordinated Debt (except payments made in capital stock of the Company or in
warrants, rights or options to purchase or acquire capital stock of the
Company, sinking fund payments made in instruments evidencing Junior
Subordinated Debt of the same issue acquired before the maturity of the Senior
Subordinated Debt Securities of such series, and payments made through the
exchange of other debt obligations of the Company for such Junior Subordinated
Debt in accordance with the terms of such Junior Subordinated Debt provided
that such debt obligations are subordinated to the Senior Subordinated Debt
Securities at least to the extent that the Junior Subordinated Debt for which
they are exchanged is so subordinated in accordance with the Senior
Subordinated Indenture). During the continuance of any default in payment of
the principal of, premium, if any, interest on, or other amounts due in
respect of, the Senior Subordinated Debt Securities of any series, no payment
may be made by the Company on, or in respect of, any Junior Subordinated Debt
(except payments made in capital stock of the Company or in warrants, rights
or options to purchase or acquire capital stock of the Company, sinking fund
payments made in instruments evidencing Junior Subordinated Debt of the same
issue acquired before such default and notice thereof, and payments made
through the exchange of other debt obligations of the Company for such Junior
Subordinated Debt in accordance with the terms of such Junior Subordinated
Debt provided that such debt obligations are subordinated to the Senior
Subordinated Debt Securities at least to the extent that the Junior
Subordinated Debt for which they are exchanged is so subordinated in
accordance with the Senior Subordinated Indenture). Upon any distribution of
assets of the Company in any dissolution, winding up, liquidation or
reorganization of the Company, holders of the Senior Subordinated Debt
Securities will be entitled to receive payment in full of all amounts due in
respect thereof before the holders of any Junior Subordinated Debt are
entitled to receive any payment on account of such Junior Subordinated Debt.
(Section 4.05 of the Senior Subordinated Indenture)
Limitation on Subordinated Debt Superior to the Senior Subordinated Debt
Securities. As long as any Senior Subordinated Debt Securities remain
outstanding, the Company may not create or incur any Debt which is subordinate
or junior in right of payment to any Senior Debt if such Debt is superior in
right of payment to the Senior Subordinated Debt Securities. (Section 4.06 of
the Senior Subordinated Indenture)
Definitions. The following are certain of the terms defined in the Senior
Subordinated Indenture (Sections 4.06 and 10.01):
"Junior Subordinated Debt" means the principal of (premium, if any) and
interest on Debt of the Company created or incurred after the date of the
Senior Subordinated Indenture which by its terms is subordinate in right of
payment to the Senior Subordinated Debt Securities, including any Subordinated
Debt Securities issued under the Subordinated Indenture.
"Senior Debt" means the principal of (premium, if any) and interest on Debt
of the Company outstanding at any time other than (i) the Senior Subordinated
Debt Securities, (ii) the Company's outstanding 11 1/8% senior subordinated
debentures due October 1, 2003, which shall rank pari passu with the Senior
Subordinated Debt Securities, (iii) any Subordinated Debt Securities issued
under the Subordinated Indenture, and (iv) Debt which by its terms is not
superior in right of payment to the Senior Subordinated Debt Securities.
The definition of "Debt" in the Senior Subordinated Indenture is the same as
that in the Senior Indenture.
Nothing in the Senior Subordinated Indenture affords holders of Senior
Subordinated Debt Securities protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving the Company or in the event of a change of control of the Company or
the Parent.
SUBORDINATED DEBT SECURITIES
The following provisions will apply to Offered Securities that are
Subordinated Debt Securities unless otherwise provided in the Prospectus
Supplement for such Offered Securities:
Subordination. The indebtedness evidenced by the Subordinated Debt
Securities will be subordinate to the prior payment in full of all Senior Debt
as described below. The Subordinated Indenture does not limit Senior Debt or
any other debt, secured or unsecured, of the Company or any subsidiary. Upon
maturity (by acceleration or otherwise) of any Senior Debt, payment in full
must be made on such Senior Debt (or duly provided for)
13
<PAGE>
before any payment is made on or in respect of the Subordinated Debt
Securities (except payments made in capital stock of the Company or in
warrants, rights or options to purchase or acquire capital stock of the
Company, sinking fund payments made in Subordinated Debt Securities acquired
by the Company before the maturity of such Senior Debt, and payments made
through the exchange of other debt obligations of the Company for such
Subordinated Debt Securities in accordance with the terms of such Subordinated
Debt Securities provided that such debt obligations are subordinated to Senior
Debt at least to the extent that the Subordinated Debt Securities for which
they are exchanged are so subordinated in accordance with the Subordinated
Indenture). During the continuance of any default in payment of the principal
of, premium, if any, interest on, or other amounts due in respect of, any
Senior Debt, no payment may be made by the Company on, or in respect of, the
Subordinated Debt Securities (except payments made in capital stock of the
Company or in warrants, rights or options to purchase or acquire capital stock
of the Company, sinking fund payments made in Subordinated Debt Securities
acquired by the Company before such default and notice thereof, and payments
made through the exchange of other debt obligations of the Company for such
Subordinated Debt Securities in accordance with the terms of such Subordinated
Debt Securities provided that such debt obligations are subordinated to Senior
Debt at least to the extent that the Subordinated Debt Securities for which
they are exchanged are so subordinated in accordance with the Subordinated
Indenture). Upon any distribution of assets of the Company in any dissolution,
winding up, liquidation or reorganization of the Company, payment of all
amounts due in respect of the Subordinated Debt Securities will be
subordinated, to the extent and in the manner set forth in the Subordinated
Indenture, to the prior payment in full of all Senior Debt. Such subordination
will not prevent the occurrence of any Event of Default. (Sections 10.01,
10.02, 10.03 and 10.11 of the Subordinated Indenture) The Indenture for the
Senior Debt Securities contains a cross-acceleration provision that would,
among other things, permit the acceleration of the maturity of any outstanding
Senior Debt Securities in the event that the maturity of any outstanding
Senior Subordinated Debt Securities or Subordinated Debt Securities were
accelerated. See "Defaults and Remedies" below. The instruments and agreements
pursuant to which all or substantially all of the Company's Senior Debt has
been incurred also contain cross-default or cross-acceleration provisions.
"Senior Debt" means the principal of (premium, if any) and interest on Debt
of the Company outstanding at any time other than (i) the Subordinated Debt
Securities and (ii) Debt which by its terms is not superior in right of
payment to the Subordinated Debt Securities. The definition of "Debt" in the
Subordinated Indenture is the same as that in the Senior Indenture.
Nothing in the Subordinated Indenture affords holders of Subordinated Debt
Securities protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company or in the event of a change of control of the Company or the Parent.
CONVERTIBLE DEBT SECURITIES
In addition to the provisions described under the applicable of "Senior Debt
Securities", "Senior Subordinated Debt Securities" or "Subordinated Debt
Securities" above, the following provisions will apply to Offered Securities
that are convertible Debt Securities unless otherwise provided in the
Prospectus Supplement for such Offered Securities:
For purposes of the conversion provisions of each Indenture, "Parent Stock"
means the Series A TCI Group Common Stock and any other capital stock into
which the Parent Stock may be changed after the date of such Indenture.
(Section 1.01 of the Indentures)
Conversion. The holder of any convertible Debt Security will have the right,
exercisable at any time up to and including the maturity date thereof (or such
shorter period as may be specified for any series of convertible Debt
Securities in the Prospectus Supplement relating thereto), unless previously
redeemed or otherwise purchased, to convert such Debt Security at the
principal amount thereof (or, if such Debt Security is an Original Issue
Discount Security, such portion of the principal amount thereof as is
specified in the terms of such Debt Security) into shares of Parent Stock at
the conversion price or conversion rate set forth in the Prospectus
Supplement, subject to adjustment as described below. The holder of a
convertible Debt Security may convert a portion thereof if the portion to be
converted and the remaining portion of such Debt Security are in
14
<PAGE>
denominations issuable for that series of Debt Securities. (Section 10.01 of
the Senior Indenture and Section 11.01 of the Senior Subordinated and
Subordinated Indentures) In the case of Debt Securities called for redemption,
conversion rights will expire at the close of business on such day on or prior
to the redemption date as may be specified in the Prospectus Supplement.
The conversion price or conversion rate of the convertible Debt Securities,
or the securities or other property to be received on conversion, is subject
to adjustment upon the occurrence of certain events, including (i) the payment
of a dividend or the making of a distribution in shares of Parent Stock to
holders of Parent Stock or the payment of a dividend or the making of a
distribution to holders of Parent Stock payable in shares of the Parent's
capital stock other than Parent Stock; (ii) the subdivision, combination or
reclassification of outstanding shares of Parent Stock; (iii) the issuance to
all holders of Parent Stock of rights or warrants entitling them (for a period
not exceeding 45 days or such other period as may be specified in the
Prospectus Supplement) to purchase shares of Parent Stock (or, unless
otherwise provided in the Prospectus Supplement, securities (other than the
convertible Debt Securities and shares of Tele-Communications, Inc. Series B
TCI Group Common Stock) convertible into Parent Stock) at a price per share
(or, in the case of such convertible securities, having a conversion price per
share after adding thereto an allocable portion of the exercise price of the
right or warrant to purchase such convertible securities) less than the
Average Market Price on the Determination Date (each as defined in the
Indentures) per share of such Parent Stock; (iv) the distribution to all
holders of Parent Stock of evidences of indebtedness or assets (excluding cash
dividends or distributions unless otherwise provided in the Prospectus
Supplement) or certain rights or warrants (other than those referred to
above); and (v) certain mergers, consolidations or sales of assets. In the
case of any such dividend or distribution on the Parent Stock of shares of
capital stock, subdivision, combination or reclassification, the holder of
each outstanding convertible Debt Security will have the right to convert such
Debt Security into the kind and amount of securities which he would have owned
immediately after such event if he had converted such Debt Security
immediately before the record date for or effective date of, as the case may
be, such event. In the case of any such merger, consolidation or sale of
assets, the holder of each outstanding convertible Debt Security will have the
right to convert such Debt Security into the kind and amount of securities,
cash or other assets receivable upon such merger, consolidation or sale by a
holder of the number of shares of Parent Stock into which such Debt Security
could have been converted immediately before the effective date of such
transaction (assuming such holder of Parent Stock failed to exercise any
rights of election and received per share of Parent Stock the kind and amount
of securities, cash or other assets received per share by a plurality of the
non-electing shares.) In the case of any such issuance of rights or warrants
which expire within 45 days (or such other period as may be specified in the
Prospectus Supplement) after the record date for the determination of
stockholders entitled to receive the rights or warrants, or any such
distribution of evidences of indebtedness or assets or other rights or
warrants, the conversion price or conversion rate will be adjusted pursuant to
formulas contained in the Indentures. However, no adjustment to the conversion
price or conversion rate need be made if the holders may participate in the
transaction or in certain other cases.
In addition to the foregoing adjustments, the Company will be permitted to
make such reductions in the conversion price or increases in the conversion
rate as it considers to be advisable. Unless otherwise provided in the
Prospectus Supplement, the Company is not required to make adjustments in the
conversion price or conversion rate of less than 1% of the initial conversion
price or conversion rate, as the case may be, but any adjustment that would
otherwise be required to be made will be taken into account in the computation
of any subsequent adjustment. No adjustment is required in respect of the
issuance of Parent Stock under any dividend or interest reinvestment plan of
the Parent. Fractional shares of Parent Stock will not be issued upon
conversion, but, in lieu thereof, the Company will pay a cash adjustment. No
payment or adjustment will be made upon any conversion on account of any
interest (or, in the case of Original Issue Discount Securities, original
issue discount) accrued on the convertible Debt Securities surrendered for
conversion or on account of any dividends on the Parent Stock issued upon
conversion. Convertible Debt Securities surrendered for conversion between the
record date for an interest payment, if any, and the interest payment date
(except convertible Debt Securities called for redemption on a redemption date
during such period) may be required to be accompanied by payment of an amount
equal to the interest thereon which the registered holder is to receive.
(Article Ten of the Senior Indenture and Article Eleven of the Senior
Subordinated and Subordinated Indentures)
15
<PAGE>
GUARANTEES OF DEBT SECURITIES
The Parent may, at its option, unconditionally guarantee to the holders of
Offered Securities the full and prompt payment of principal, premium, if any,
and interest on such Offered Securities when and as the same shall become due
and payable, whether at maturity, upon redemption or otherwise. The terms of
any such guarantee (a "Guarantee") will be set forth in a supplement to the
applicable Indenture. Any such Guarantee will be an unsecured obligation of
the Parent. Any right of payment of the holders of Senior Debt Securities
under a Guarantee will be prior to any right of payment of the holders of
Senior Subordinated Debt Securities and Subordinated Debt Securities under a
Guarantee, and any right of payment of the holders of Senior Subordinated Debt
Securities under a Guarantee will be prior to any right of payment of the
holders of Subordinated Debt Securities under a Guarantee.
If a Guarantee is issued by the Parent with respect to any Offered
Securities, reference is made to the Prospectus Supplement for such Offered
Securities for a description of the specific terms of such Guarantee,
including events of default relating thereto and, where applicable,
subordination provisions of such Guarantee and covenants of the Parent. Unless
otherwise specified in the applicable Prospectus Supplement, Offered
Securities will not be guaranteed by the Parent.
DENOMINATION AND FORM
Unless otherwise indicated in the Prospectus Supplement, the Offered
Securities will be Registered Debt Securities denominated in U.S. Dollars and
will be issued only in denominations of $1,000 and integral multiples of
$1,000. (Section 2.03 of the Senior Subordinated and Subordinated Indentures
and Sections 2.01 and 2.03 of the Senior Indenture) Under the Senior
Indenture, Debt Securities of any series may be issuable as Registered Debt
Securities, Bearer Debt Securities (with or without coupons attached) or both,
and may be issuable in whole or in part in the form of one or more Global
Securities. In addition, the Senior Indenture provides that Debt Securities
may be denominated or payable in one or more foreign currencies, foreign
currency units or composite currencies. (Sections 2.01 and 2.02 of the Senior
Indenture) Unless otherwise indicated in the applicable Prospectus Supplement,
Bearer Debt Securities denominated in U.S. Dollars will be issued only in the
denomination of $5,000 with coupons attached. (Sections 2.01 and 2.03 of the
Senior Indenture) A Global Security will be issued in a denomination equal to
the aggregate principal amount of outstanding Debt Securities represented by
such Global Security. (Section 2.10 of the Senior Indenture and Section 2.15
of the Senior Subordinated and the Subordinated Indentures) The Prospectus
Supplement relating to a series of Debt Securities denominated other than in
U.S. Dollars will specify the authorized denominations thereof.
During the "restricted period," as defined in Treasury Regulation Section
1.163-5(c)(2)(i)(D)(7), no Bearer Debt Security may be offered or sold (or
resold in connection with its original issuance) in the United States or its
possessions or to a United States person (subject to certain exceptions).
Further, no Bearer Debt Security may be mailed or otherwise delivered to any
location in the United States or its possessions in connection with a sale
that occurred during the restricted period. Offered Securities that are Bearer
Debt Securities will be subject to certification requirements as to the
ownership of such Bearer Debt Security (including beneficial interests in a
Global Security representing such Bearer Debt Security) which will be
described in the applicable Prospectus Supplement. See "Limitations on
Issuance of Bearer Debt Securities."
REGISTRAR, PAYING AGENT, CONVERSION AGENT
The Company will maintain an office or agency where Registered Debt
Securities of each series may be presented for registration of transfer or for
exchange ("Registrar"), an office or agency where Debt Securities of each
series may be presented for payment ("Paying Agent") and an office or agency
where Debt Securities of each series that is convertible may be presented for
conversion ("Conversion Agent"). The Company may have one or more co-
Registrars, one or more additional Paying Agents and one or more additional
Conversion Agents with respect to any series of Debt Securities and the
Company or any of its subsidiaries may act as Paying Agent, Registrar or co-
Registrar or Conversion Agent. Unless otherwise indicated in an applicable
Prospectus Supplement, each Trustee will initially act as Paying Agent and
Registrar for each series of Debt Securities
16
<PAGE>
issued under its respective Indenture and as Conversion Agent for any series
that is convertible. The Company may change any Paying Agent, Registrar or co-
Registrar or Conversion Agent at any time without notice to the holders of
Debt Securities, except as described below with respect to Debt Securities
issued under the Senior Indenture. The Company will promptly notify the
Trustee of the name and address of any such Agent. (Section 2.05 of the
Indentures)
The Senior Indenture also provides that if Debt Securities of a series are
issuable as Bearer Debt Securities, the Company will maintain (i) in the
Borough of Manhattan, The City of New York, an office or agency where any
Registered Debt Securities of that series may be presented or surrendered for
payment and for registration of transfer, where Debt Securities of that series
may be surrendered for exchange and where Bearer Debt Securities of that
series and related coupons may be presented or surrendered for payment in the
circumstances described under "Payment" below, and (ii) subject to any laws or
regulations applicable thereto, in a place of payment for Debt Securities of
that series located outside the United States, an office or agency where any
Registered Debt Securities of that series may be surrendered for registration
of transfer, where Debt Securities of that series may be surrendered for
exchange and where Debt Securities of that series and any related coupons may
be presented and surrendered for payment, provided that if the Debt Securities
of that series are listed on The International Stock Exchange of the United
Kingdom and the Republic of Ireland, the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, the Company will maintain a Paying Agent for the Debt
Securities of that series in London, Luxembourg or any other required city
located outside the United States, as the case may be, so long as the Debt
Securities of that series are listed on such exchange. Any Paying Agents
outside the United States initially designated by the Company for the Offered
Securities will be named in the applicable Prospectus Supplement. The Company
will promptly notify the Trustee and the holders of Senior Debt Securities of
a series of the location and any change in the location of any office or
agency which it is required to maintain for the Senior Debt Securities of such
series. (Section 4.01 of the Senior Indenture)
TRANSFER AND EXCHANGE
Registered Debt Securities of any series (other than a Global Security,
except as provided under "Global Securities") will be exchangeable at the
option of the holder for other Registered Debt Securities of the same series
of any authorized denominations and of a like aggregate principal amount and
tenor. (Section 2.08 of the Indenture) In addition, if Debt Securities of any
series issued under the Senior Indenture are issuable as both Registered Debt
Securities and Bearer Debt Securities, then, if so provided with respect to
the Debt Securities of such series, at the option of the holder and subject to
the terms of such Indenture, Bearer Debt Securities (with, except as provided
below, all related unmatured coupons and all related matured coupons in
default) of such series will be exchangeable for Registered Debt Securities of
the same series of any authorized denominations and of a like aggregate
principal amount and tenor. Bearer Debt Securities surrendered in exchange for
Registered Debt Securities between a regular record date or, in certain
circumstances, a special record date, for an interest payment and the relevant
interest payment date shall be surrendered without the coupon relating to such
interest payment date attached and interest will not be payable on such
interest payment date in respect of the Registered Debt Security issued in
exchange for such Bearer Debt Security, but will be payable only to the holder
of such coupon in accordance with the terms of the Senior Indenture. Unless
otherwise specified in the applicable Prospectus Supplement, Bearer Debt
Securities will not be issued in exchange for Registered Debt Securities.
(Section 2.08 of the Senior Indenture)
Debt Securities of any series may be surrendered for exchange as provided
above, and Registered Debt Securities of any series (other than a Global
Security, except as provided under "Global Securities") may be surrendered for
registration of transfer, at the office or agency designated by the Company
for such purpose with respect to such series of Debt Securities. Bearer Debt
Securities will be transferable by delivery. (Section 2.14 of the Senior
Indenture) Every Registered Debt Security presented or surrendered for
registration of transfer or for exchange shall be duly endorsed or accompanied
by appropriate transfer documents duly executed. No service charge will be
made for any registration of transfer or exchange of Debt Securities, but the
Company may require
17
<PAGE>
payment of a sum sufficient to cover any taxes and other governmental charges
that may be imposed in relation thereto. (Section 2.08 of the Indentures)
The Company and the Registrar need not transfer or exchange any Debt
Securities selected for redemption or purchase (except, in the case of Debt
Securities to be redeemed or purchased in part, the portion thereof not to be
redeemed or purchased) or any Debt Securities in respect of which a notice
requiring the purchase or redemption thereof by the Company at the option of
the holder thereof has been given and not withdrawn by such holder in
accordance with the terms of such Debt Securities (as described, if
applicable, in the Prospectus Supplement) (except, in the case of Debt
Securities to be so purchased or redeemed in part, the portion thereof not to
be so purchased or redeemed). (Section 2.08 of the Indentures) A Bearer Debt
Security so selected for redemption or purchase or in respect of which a
notice requiring the redemption or purchase thereof by the Company at the
option of the holder thereof has been given and not so withdrawn may however,
if so provided with respect to the Debt Securities of such series, be
exchanged for a Registered Debt Security of that series and like tenor,
provided that such Registered Debt Security is simultaneously surrendered for
redemption or purchase, as the case may be. (Section 2.08 of the Senior
Indenture)
The Senior Subordinated Indenture and the Subordinated Indenture also
provide that the Registrar need not transfer or exchange any Debt Securities
of a particular series during a period of 15 days before a selection of Debt
Securities of such series to be redeemed. (Section 2.08 of the Senior
Subordinated and the Subordinated Indentures) The Senior Indenture provides
that the Company shall not be required to issue, register the transfer of or
exchange Debt Securities of any series during a period beginning at the
opening of business 15 days before any selection of Debt Securities of that
series to be redeemed and ending at the close of business on (i) if Debt
Securities of that series are issuable only as Registered Debt Securities, the
date of the mailing of the relevant notice of redemption, and (ii) if Debt
Securities of that series are issuable as Bearer Debt Securities, the date of
the first publication of the relevant notice of redemption or, if Debt
Securities of that series are also issuable as Registered Debt Securities and
there is no publication, the mailing of the relevant notice of redemption.
(Section 2.08 of the Senior Indenture)
Prior to due presentment of a Registered Debt Security for registration of
transfer, the person in whose name such Registered Debt Security is registered
may be treated as the owner of it for all purposes. (Section 2.14 of the
Indentures) The bearer of any Bearer Debt Security and the bearer of any
coupon appertaining thereto may be treated as the owner of such Bearer Debt
Security or coupon for all purposes. (Section 2.14 of the Senior Indenture)
GLOBAL SECURITIES
The Indentures provide that the Debt Securities of any series thereunder may
be issued in whole or in part in the form of one or more Global Securities,
which Global Securities may be issued in registered form (or, in the case of
Senior Debt Securities, bearer form) and in either temporary or permanent
form. (Sections 2.10 and 2.11 of the Senior Indenture and Sections 2.11 and
2.15 of the Senior Subordinated and Subordinated Indentures) Each Global
Security will be deposited with and, if it is issued in registered form, will
be registered in the name of the depositary (or a nominee of the depositary)
identified in the applicable Prospectus Supplement. (Section 2.10 of the
Senior Indenture and Section 2.15 of the Senior Subordinated and Subordinated
Indentures) So long as the depositary for a Global Security in registered
form, or its nominee, is the registered owner of the Global Security, the
depositary or its nominee, as the case may be, will be considered the sole
owner of the Debt Securities represented by such Global Security for all
purposes under the Indenture. (Section 2.14 of the Indentures) Unless and
until it is exchanged in whole or in part for Debt Securities in definitive
form, a Global Security may not be transferred except as a whole by the
depositary for such Global Security to a nominee of such depositary or by a
nominee of such depositary to such depositary or another nominee of such
depositary or by the depositary or any nominee to a successor depositary or
any nominee of such successor. (Section 2.08 of the Indentures) Unless
otherwise specified in the applicable Prospectus Supplement, if the depositary
with respect to any Global Security is at any time unwilling, unable or
ineligible to continue as depositary and a successor
18
<PAGE>
depositary is not appointed by the Company within 90 days of such time, or if
the Company, in its sole discretion, at any time determines that any series of
Debt Securities issued or issuable in the form of a Global Security shall no
longer be represented by such Global Security, then in either such event the
Global Security shall be exchanged for Debt Securities in definitive form
pursuant to the applicable Indenture. Further, if so specified by the Company
with respect to the Debt Securities of a series and described in the
applicable Prospectus Supplement, an owner of a beneficial interest in a
Global Security representing Debt Securities of such series may, on terms
acceptable to the Company and the depositary for such Global Security, receive
Debt Securities of such series in definitive form. In any such instance, an
owner of a beneficial interest in a Global Security will be entitled to
physical delivery in definitive form of Debt Securities in authorized
denominations and of like tenor of the series represented by such Global
Security, equal in principal amount to such beneficial interest, and to have
such Debt Securities registered in its name (if the Debt Securities of such
series are issuable as Registered Debt Securities). (Section 2.08 of the
Indentures) See, however, "Limitations on Issuance of Bearer Debt Securities"
below for a discussion of certain restrictions on the delivery of a Bearer
Debt Security in definitive form in exchange for an interest in a Global
Security. Except as described above, unless otherwise specified in the
applicable Prospectus Supplement, owners of beneficial interests in a Global
Security will not be entitled to have Debt Securities of the series
represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of Debt Securities of such
series in definitive form and will not be considered the owners or holders
thereof under the applicable Indenture.
Any specific terms of the depositary arrangement with respect to a series of
Debt Securities or any part thereof will be described in the applicable
Prospectus Supplement. The Company anticipates that the following provisions
will apply to all depositary arrangements.
Upon the issuance of a Global Security, the depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts
of the Debt Securities represented by such Global Security to the accounts of
participants. Ownership of beneficial interests in a Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the depositary (with respect to beneficial interests of
participants in the depositary), or by participants in the depositary or
persons that may hold interest through such participants (with respect to
beneficial interests of persons other than participants in the depositary).
Ownership of beneficial interests in a Global Security will be limited to
participants or persons that hold interests through participants.
Subject to the restrictions discussed under "Limitations on Issuance of
Bearer Debt Securities" below, payments of the principal of and any premium
and interest on Debt Securities registered in the name of or held by a
depositary or its nominee will be made to the depositary or its nominee, as
the case may be, as the registered owner or the holder of the Global Security
representing such Debt Securities. None of the Company, the Trustee, any
Paying Agent or the Registrar for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Security for such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests. (Section 2.14 of
the Indentures)
The Company expects that the depositary for Debt Securities of a series,
upon receipt of any payment of principal, premium or interest in respect of a
Global Security, will credit immediately participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security as shown on the records of such
depositary. The Company also expects that payments by participants to owners
of beneficial interests in such Global Security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participants. With respect to a Global Security that represents in whole or in
part Debt Securities of a series that are issuable as Bearer Debt Securities,
receipt by owners of beneficial interests in such Global Security of payments
in respect of such Global Security will be subject to the restrictions
discussed under "Limitations on Issuance of Bearer Debt Securities" below.
19
<PAGE>
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Debt Securities (including beneficial interests in a Global Security that
represents Bearer Debt Securities) may not be offered or sold (or resold in
connection with their original issuance) during the "restricted period," as
defined in Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7), in the United
States or its possessions or to United States persons (each as defined below)
other than to (i) a Qualifying Foreign Branch of a United States Financial
Institution (as defined below), (ii) a United States person who acquires and
holds the obligation through the Qualifying Foreign Branch of a United States
Financial Institution, (iii) a United States office of an "exempt
distributor," as defined in Treasury Regulation Section 1.163-
5(c)(2)(i)(D)(5), (iv) the United States office of an international
organization, as defined in Section 7701(a)(18) of the Internal Revenue Code
of 1986, as amended (the "Code") and the regulations thereunder, or (v) the
United States office of a foreign central bank, as defined in Section 895 of
the Code and the regulations thereunder. In addition, Bearer Debt Securities
may not be delivered within the United States or its possessions in connection
with a sale that occurred during the restricted period. Any underwriters,
agents and dealers participating in the offering of Offered Securities must
agree that they will not offer any Bearer Debt Securities for sale or resale
in the United States or its possessions or to United States persons (other
than a person specified in clause (i), (ii), (iii), (iv) or (v) above) or
deliver Bearer Debt Securities within the United States or its possessions.
The term "Qualifying Foreign Branch of a United States Financial Institution"
means a branch located outside the United States of a United States financial
institution (as defined in Treasury Regulation Section 1.165-12(c)(1)(v)) that
provides a certificate within a reasonable time (or a blanket certificate in
the year the Debt Security is issued or either of the preceding two calendar
years) stating that it agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Code and the regulations thereunder. The term
"United States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof and an estate
or trust the income of which is subject to United States federal income
taxation regardless of its source; the term "United States" means the United
States of America (including the States and the District of Columbia), and the
term "possessions" includes, but is not limited to, Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands.
United States federal tax laws and regulations also require that the owner
of an obligation issuable in bearer form or the financial institution (as
defined in the preceding paragraph) or clearing organization through which the
owner directly or indirectly holds such obligation must provide the issuer of
the obligation with a certificate on the earlier of the date of the first
actual payment of interest on the obligation or the date of delivery by the
issuer of the obligation in definitive form stating that on such date the
obligation is owned by (a) a person that is not a United States person, (b) a
person described in clause (i) or (ii) of the preceding paragraph, or (c) a
financial institution for purposes of resale during the restricted period, but
not for resale directly or indirectly to a United States person or to a person
within the United States or its possessions. A certificate described in clause
(a) or (b) above may not be given with respect to an obligation that is owned
by a financial institution for purposes of resale during the restricted
period. When the required certificate is provided by a clearing organization,
the certificate must be based upon statements provided to it by its member
organizations. For purposes of the foregoing, a "temporary global security,"
as defined in Treasury Regulation Section 1.163-5(c)(1)(ii)(B), is not
considered to be an obligation in definitive form. In compliance with the
foregoing, if the Offered Securities are of a series of Debt Securities
issuable as Bearer Debt Securities, the delivery thereof (including delivery
in exchange for an interest in a Global Security) and the payment of interest
thereon, as applicable, will be subject to the satisfaction of certification
requirements that will be specified by the Company in accordance with the
Senior Indenture in connection with the establishment of such series and will
be described in the applicable Prospectus Supplement. (Sections 2.02 and 2.04
of the Senior Indenture) The Senior Indenture also provides that no Bearer
Debt Security (including a Global Security that represents Bearer Debt
Securities) will be mailed or otherwise delivered to any location in the
United States or its possessions. (Section 2.04 of the Senior Indenture)
Bearer Debt Securities and any coupons appertaining thereto will bear a
legend substantially to the following effect: "Any United States person who
holds this obligation will be subject to limitations under the United States
income tax laws, including the limitations provided in Sections 165(j) and
1287(a) of the Internal
20
<PAGE>
Revenue Code." Under Sections 165(j) and 1287(a) of the Code, holders that are
United States persons, with certain exceptions, will not be entitled to deduct
any loss on Bearer Debt Securities and must treat as ordinary income any gain
realized on the sale or other disposition (including the receipt of principal)
of Bearer Debt Securities.
PAYMENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Bearer Debt Securities (other
than a Global Security) will be made, subject to any applicable laws and
regulations, at the offices of such Paying Agent or Paying Agents outside the
United States as the Company may designate from time to time, except that, at
the option of the Company (or, if so specified in the applicable Prospectus
Supplement, at the option of the holder), payment of interest may be made by
check (provided the same is not mailed to an address inside the United States)
or by wire transfer to an account located outside the United States maintained
by the payee. (Sections 2.13 and 4.01 of the Senior Indenture) Unless
otherwise indicated in an applicable Prospectus Supplement, payment of
interest on Bearer Debt Securities on any interest payment date will be made
only against surrender of the coupon relating to such interest payment date.
(Section 2.13 of the Senior Indenture) No payment with respect to any Bearer
Debt Security will be made at any office or agency of the Company in the
United States or by check mailed to any address in the United States or by
transfer to an account maintained in the United States. Notwithstanding the
foregoing, payments of principal of and any premium and interest on Bearer
Debt Securities denominated and payable in U.S. Dollars will be made at the
office of the Company's Paying Agent in the Borough of Manhattan, The City of
New York, if (but only if) payment of the full amount thereof in U.S. Dollars
at all offices or agencies outside the United States is illegal or effectively
precluded by exchange controls or other similar restrictions. (Section 4.01 of
the Senior Indenture)
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Registered Debt Securities
(other than a Global Security) will be made at the office of such Paying Agent
or Paying Agents as the Company may designate from time to time, except that
at the option of the Company payment of any interest may be made by check
mailed to the address of the person entitled thereto as such address shall
appear in the security register or, if so specified with respect to the
Registered Debt Securities of any series issued under the Senior indenture, by
wire transfer to an account designated by such person. Payment of any
installment of interest on Registered Debt Securities will be made to the
person in whose name such Registered Debt Security is registered at the close
of business on the regular record date (or, in the case of defaulted interest,
special record date) for such interest payment. (Section 2.13 of the
Indentures)
All moneys paid by the Company to a Paying Agent for the payment of
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company and the holder
of such Debt Security or any coupon appertaining thereto will thereafter look
only to the Company for payment thereof unless an applicable abandoned
property law designates another person. (Section 8.03 of the Indentures)
AMENDMENT, SUPPLEMENT, WAIVER
Subject to certain exceptions, the Indentures or the Debt Securities may be
amended or supplemented, and any past default or compliance with any provision
may be waived, insofar as the Debt Securities of any series are concerned,
with the consent of the holders of a majority in aggregate principal amount of
the outstanding Debt Securities of such series. (Sections 6.04 and 9.02 of the
Indentures) Without the consent of any holder of Debt Securities, the Company
and the Trustee may amend or supplement the Indentures or the Debt Securities
to cure any ambiguity, defect or inconsistency, to permit or facilitate the
issuance of Debt Securities in bearer form or to provide for uncertificated
Debt Securities in global form in addition to certificated Debt Securities (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) or to
make certain other specified changes or any change that does not materially
adversely affect the rights of any holder of Debt Securities. (Section 9.01 of
the Indentures)
21
<PAGE>
SUCCESSOR CORPORATION
The Company may not consolidate with or merge into, or transfer its
properties and assets substantially as an entirety to, another corporation
unless (i) the successor corporation, which shall be a corporation organized
under the laws of the United States or a State thereof, assumes by
supplemental indenture all the obligations of the Company under the Debt
Securities and the Indentures, and (ii) after giving effect to such
transaction, no Event of Default shall have occurred and be continuing.
Thereafter, unless otherwise specified in the Prospectus Supplement, all such
obligations of the Company terminate. (Section 5.01 of the Indentures)
DEFAULTS AND REMEDIES
An Event of Default with respect to Debt Securities of any series is: (i)
default for 30 days in payment of any interest on the Debt Securities of that
series; (ii) default in payment of principal, premium or any other amount
(other than interest) due in respect of the Debt Securities of that series at
maturity, upon redemption (including default in the making of any mandatory
sinking fund payment), upon purchase by the Company at the option of the
holder or otherwise; (iii) failure by the Company for 30 days after receipt of
written notice as provided in the Indentures to comply with any of its other
agreements in the Indentures (other than agreements expressly included in the
Indentures solely for the benefit of a series of Debt Securities other than
that series or expressly made inapplicable to the Debt Securities of such
series) or the Debt Securities of that series; (iv) (for purposes of the
Senior Indenture only) acceleration of the maturity of any Debt of the Company
(including Senior Debt Securities of any other series) if the aggregate
principal amount (or, if applicable, issue price plus accrued original issue
discount) of the Debt the maturity of which has been accelerated exceeds five
percent (5%) of the aggregate principal amount of the Company's Funded Debt
then outstanding and such Debt is not paid, or such acceleration is not
rescinded or annulled or such acceleration is not contested by appropriate
proceedings and all consequences thereof that would have a material adverse
effect on the Company stayed, within 30 days after receipt of written notice
as provided in the Senior Indenture; provided, however, that if, after the
expiration of such 30-day period, the event of default that resulted in the
acceleration of the maturity of such Debt of the Company is remedied or cured
by the Company or waived by the holders of such Debt in any authorized manner
or otherwise ceases to exist, then the Event of Default described in this
clause (iv) resulting from such acceleration will be deemed cured and not
continuing; and (v) certain events of bankruptcy or insolvency. (Section 6.01
of the Indentures) If an Event of Default occurs with respect to the Debt
Securities of any series and is continuing, the Trustee or the holders of at
least 25% in aggregate principal amount of the Debt Securities of that series
may declare to be due and payable immediately (i) the principal amount of that
series (or, if the Debt Securities of that series are Original Issue Discount
Securities, that portion of the principal amount specified in the terms of
that series) and (ii) accrued interest, if any, thereon. The Indentures
provide for automatic acceleration of the maturity of such amounts upon the
occurrence of certain events of bankruptcy or insolvency. (Section 6.02 of the
Indentures) The Senior Indenture provides that a declaration of acceleration
of the maturity of the Senior Debt Securities of any series as a result of an
Event of Default described in clause (iv) above will be automatically annulled
if (x) the acceleration of the Debt that is the subject of such Event of
Default is declared void ab initio as a result of the Company's contest
thereof or (y) the declaration of acceleration of such Debt is rescinded or
annulled in any manner authorized by the instrument evidencing or creating
such Debt within 90 days of the declaration of acceleration of the Senior Debt
Securities of such series and, in the case of clause (y), the annulment of the
declaration of acceleration under the Senior Indenture would not conflict with
any judgment or decree, and, in the case of either clause (x) or (y), all
other existing Events of Default (other than the non-payment of amounts that
have become due with respect to such Senior Debt Securities solely by such
acceleration) with respect to Senior Debt Securities of that series have been
cured or waived. (Section 6.02 of the Senior Indenture) Holders of Debt
Securities may not enforce the Indentures or the Debt Securities except as
provided in the Indentures. (Section 6.06 of the Indentures) The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Debt Securities. (Section 7.01 of the Indentures) Subject to certain
limitations, holders of a majority in aggregate principal amount of the Debt
Securities of any series may direct the Trustee in its exercise of any trust
or power with respect to the Debt Securities of that series. (Section 6.05 of
the Indentures) The Trustee may withhold from holders of Debt Securities
notice of any continuing default (except a default in payment of principal,
premium, if any, interest or other amounts due) if it determines that
22
<PAGE>
withholding notice is in their interest. (Section 7.05 of the Indentures) The
Company is required to file periodic reports with the Trustee as to the
absence of default. (Section 4.07 of the Senior Indenture and Section 4.03 of
the Senior Subordinated and Subordinated Indentures)
NO PERSONAL LIABILITY
No past, present or future director, officer, employee or stockholder, as
such, of the Company or any successor thereof shall have any liability for any
obligations of the Company under the Debt Securities or the Indentures or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder of Debt Securities by accepting a Debt Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issue of the Debt Securities. (Section 11.11 of the
Senior Indenture and Section 12.11 of the Senior Subordinated and Subordinated
Indentures)
SATISFACTION AND DISCHARGE
The Company's obligations under the Debt Securities of any series and the
applicable Indenture with respect to such series (except for the obligation to
pay the principal of and premium and interest, if any, on the Debt Securities
of such series and certain other specified obligations) will be satisfied and
discharged in accordance with the provisions of the Indenture if either (i)
all Debt Securities of such series and coupons, if any, appertaining thereto
previously authenticated and delivered (other than destroyed, lost or
wrongfully-taken Debt Securities or coupons which have been replaced or paid,
Debt Securities or coupons for whose payment money has theretofore been held
in trust and, after remaining unclaimed for two years, has been repaid to the
Company, and certain coupons appertaining to Bearer Securities surrendered for
exchange, redemption or purchase) have been delivered to the Trustee for
cancellation or (ii) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations (or, in the case of the Senior
Indenture, Government Obligations) sufficient to pay the principal of and
premium and interest, if any, on all Debt Securities of such series and
coupons, if any, appertaining thereto not theretofore cancelled or delivered
to the Trustee for cancellation (other than Debt Securities and coupons
referred to in the parenthetical in clause (i) above) to maturity or
redemption, as the case may be. (Section 2.01 of the Indentures)
THE TRUSTEES
The Trustee under the Senior Indenture is The Bank of New York. The Bank of
New York acts as depositary 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 certain outstanding senior
indebtedness of the Company. The Bank of New York serves as transfer agent and
registrar for each series of the Parent's common stock and for the Parent's
Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock. John C.
Malone, a director of the Company, is a director of The Bank of New York.
Information with respect to the Trustees under the Senior Subordinated
Indenture and the Subordinated Indenture shall be provided in the applicable
Prospectus Supplement.
Any Trustee in its individual or any other capacity may become the owner or
pledgee of Debt Securities 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 7.03 of the
Indentures)
ADDITIONAL INFORMATION
The Indentures (or form thereof, as the case may be) are exhibits to the
Registration Statement. Anyone who receives this Prospectus may obtain copies
of the Indentures (or form thereof, as the case may be) without charge by
writing to Stephen M. Brett, Esq., Senior Vice President of the Company, at
the address set forth under "The Company and the Parent." The foregoing
summaries of certain provisions of the Indentures do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
all provisions of the Indentures, including the definitions of certain terms.
Wherever particular provisions or defined terms of the Indentures are referred
to, such provisions or defined terms are incorporated herein by reference.
23
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities on a negotiated or competitive
bid basis to or through underwriters or dealers, and also may sell the Offered
Securities directly to other purchasers or through agents.
The distribution of the Offered Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed,
or at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If Offered Securities are offered on a competitive bid basis, the Company
will receive bids by telephone or otherwise prior to a designated time. Each
bid will be required to be made for all Offered Securities and the Company
will reserve the right to reject any or all bids. If any bid is accepted, the
Company will accept the qualified bid which in its sole and final
determination will result in the lowest annual cost of money to it for the
Offered Securities. No underwriter will be entitled to submit or participate
as a bidder in more than one bid.
If an underwriter or underwriters are utilized in the sale, the Company will
execute an underwriting agreement with such underwriters and the names of the
underwriters and the terms of the transaction will be set forth in the
Prospectus Supplement, which will be used by the underwriters to make resales
of the Offered Securities. Unless otherwise indicated in the Prospectus
Supplement, the obligations of any underwriters to purchase the Offered
Securities will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all of the Offered Securities if
any are purchased.
If a dealer is utilized in the sale, the Company will sell the Offered
Securities to the dealer as principal. The dealer may then resell the Offered
Securities to the public at varying prices to be determined by such dealer at
the time of resale.
Offers to purchase Offered Securities may be solicited by the Company or
agents designated by the Company from time to time. Unless otherwise indicated
in the Prospectus Supplement, any such agent will be acting on a best efforts
basis for the period of its appointment.
Each underwriter, dealer and agent participating in the distribution of any
Offered Securities which are issuable in bearer form will agree that it will
not, directly or indirectly, offer any Offered Securities in bearer form for
sale or resale in the United States or its possessions or to United States
persons (subject to certain exceptions) or deliver any Offered Securities in
bearer form within the United States or its possessions. See "Description of
Debt Securities--Limitations on Issuance of Bearer Debt Securities."
In connection with the sale of the Offered Securities, underwriters, dealers
and agents may receive compensation in the form of discounts, concessions or
commissions from the Company or from purchasers of the Offered Securities for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of the Offered Securities may be deemed to be underwriters
as that term is defined in the Securities Act, and any discounts or
commissions received by them from the Company and any profits on the resale of
the Offered Securities by them may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such person who may be deemed to be
an underwriter will be identified and any such compensation received from the
Company will be described in the Prospectus Supplement.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain specified institutions to
purchase Offered Securities from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future.
Institutions with whom such contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and other institutions but
shall in all cases be subject to the approval of the Company. Such contracts
will be subject only to those conditions set forth in the Prospectus
Supplement and the Prospectus Supplement will set forth the commission payable
for solicitation of such contracts.
24
<PAGE>
Agents, underwriters and dealers may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the agents, underwriters or
dealers may be required to make
in respect thereof. Agents, underwriters and dealers may be customers of,
engage in transactions with, or perform services for the Company in the
ordinary course of business.
The anticipated place and time of delivery for the Offered Securities will
be set forth in the Prospectus Supplement.
LEGAL MATTERS
The legality of the Debt Securities, the Series A TCI Group Common Stock and
the Guarantees, if any, offered hereby will be passed upon for the Company and
the Parent by Baker & Botts, L.L.P., 599 Lexington Avenue, New York, New York
10022. Jerome H. Kern, a special counsel to Baker & Botts, L.L.P. is a
director of Tele-Communications, Inc. Certain attorneys with Baker & Botts,
L.L.P. hold options to purchase shares of Series A TCI Group Common Stock and
hold restricted shares and options to purchase shares of Tele-Communications,
Inc. Series A Liberty Media Group Common Stock.
EXPERTS
The consolidated balance sheets of Tele-Communications, Inc. and
subsidiaries as of December 31, 1995 and 1994, 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, 1995, and all related
financial statement schedules, which appear in the December 31, 1995 Annual
Report on Form 10-K of Tele-Communications, Inc., have been incorporated by
reference herein in reliance upon the reports, dated March 18, 1996, of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated balance sheets of TCI Communications, Inc. and subsidiaries
as of December 31, 1995 and 1994, and the related consolidated statements of
operations, stockholder's(s') equity, and cash flows for each of the years in
the three-year period ended December 31, 1995, and all related financial
statement schedules, which appear in the December 31, 1995 Annual Report on
Form 10-K of TCI Communications, Inc., have been incorporated by reference
herein in reliance upon the reports, dated March 18, 1996, of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The combined balance sheets of TCI Group as of December 31, 1995 and 1994,
and the related combined statements of operations, equity, and cash flows for
each of the years in the three-year period ended December 31, 1995, which
appear in the December 31, 1995 Annual Report on Form 10-K of Tele-
Communications, Inc., have been incorporated by reference herein in reliance
upon the report, dated March 18, 1996, of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The report of
KPMG Peat Marwick LLP covering the combined financial statements refers to the
effects of not consolidating TCI Group's interest in Liberty Media Group for
the periods subsequent to the mergers of TCI Communications, Inc. and Liberty
Media Corporation on August 4, 1994.
The combined balance sheets of Liberty Media Group as of December 31, 1995
and 1994, and the related combined statements of operations, equity, and cash
flows for each of the years in the three-year period ended December 31, 1995,
which appear in the December 31, 1995 Annual Report on Form 10-K of Tele-
Communications, Inc., have been incorporated by reference herein in reliance
upon the report, dated March 18,
25
<PAGE>
1996, of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The statements of operations, stockholders' equity, and cash flows of
Liberty Media Corporation and subsidiaries for the year ended December 31,
1993, which appear in the December 31, 1995 Annual Report on Form 10-K of
Tele-Communications, Inc., have been incorporated by reference herein in
reliance upon the report, dated March 18, 1994, of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick LLP covering the December 31, 1993 financial
statements refers to a change in method of accounting for income taxes.
The consolidated balance sheet of TeleWest plc and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated statements of
operations and cash flows for each of the years in the three year period ended
December 31, 1995, which appear in the December 31, 1995 Annual Report on Form
10-K of Tele-Communications, Inc., have been incorporated by reference herein
in reliance upon the report, dated March 6, 1996, of KPMG, independent
chartered accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The combined balance sheets of Cablevision (a combination of certain cable
television assets of Cablevision S.A., Televisora Belgrano S.A., Construred
S.A. and Univent's S.A.) as of December 31, 1994 and 1993, and the related
combined statements of operations and deficit and cash flows for each of the
years in the three-year period ended December 31, 1994, which appear in the
Current Report on Form 8-K of Tele-Communications, Inc. dated April 20, 1995,
as amended, have been incorporated by reference herein in reliance upon the
report, dated March 24, 1995, of KPMG Finsterbusch Pickenhayn Sibille,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The combined financial statements of VII Cable which appear in TCI's Current
Report on Form 8-K dated June 19, 1996, have been incorporated by reference
herein in reliance on the report dated February 14, 1996 of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts
in auditing and accounting.
26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors............................................................... S-2
Use of Proceeds............................................................ S-2
Certain Terms of the Notes................................................. S-3
Certain United States Federal Income Tax Considerations.................... S-10
Underwriting............................................................... S-13
Validity of the Notes...................................................... S-13
PROSPECTUS
Available Information...................................................... 2
Incorporation of Documents by
Reference................................................................. 2
The Company and the Parent................................................. 4
Use of Proceeds............................................................ 4
Ratio of Earnings to Fixed Charges......................................... 4
Description of Debt Securities............................................. 5
Plan of Distribution....................................................... 24
Legal Matters.............................................................. 25
Experts.................................................................... 25
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$350,000,000
TCI COMMUNICATIONS, INC.
REMARKETED FLOATING RATE RESET
NOTES DUE SEPTEMBER 15, 2003
---------------
PROSPECTUS SUPPLEMENT
---------------
MERRILL LYNCH & CO.
SEPTEMBER 6, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
