OFFER TO PURCHASE
AMERICAN TELECASTING, INC.
OFFER TO PURCHASE FOR CASH
A PORTION OF ITS
SENIOR DISCOUNT NOTES DUE 2004
AND
SENIOR DISCOUNT NOTES DUE 2005
------------
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
OCTOBER 8, 1998, UNLESS EXTENDED (SUCH DATE, AS THE SAME MAY BE EXTENDED,
THE "EXPIRATION DATE"). TENDERS OF NOTES MAY NOT GENERALLY BE WITHDRAWN.
---------------
American Telecasting, Inc., a Delaware corporation ("Purchaser"),
hereby offers to purchase for cash, upon the terms and subject to the
conditions set forth in this Offer to Purchase (this "Offer to Purchase")
and in the accompanying Letter of Transmittal (the "Letter of Transmittal"
and, together with this Offer to Purchase, the "Offer"), a portion of its
Senior Discount Notes due 2004 (the "2004 Notes") and a portion of its
Senior Discount Notes due 2005 (the "2005 Notes" and, together with the
2004 Notes, the "Notes") from Holders (as defined in the related
Indentures) thereof, at a cash price in the case of the 2004 Notes equal to
$280.50 per $1,000 principal amount at maturity of the Notes purchased and
in the case of the 2005 Notes equal to $247.50 per $1,000 principal amount
at maturity of the Notes purchased (the "Offer Consideration"). As of
August 31, 1998, the 2004 Notes had an aggregate principal amount at
maturity of approximately $166.7 million and an accreted value of
approximately $146.0 million and the 2005 Notes had an aggregate principal
amount at maturity of approximately $158.2 million and an accreted value of
approximately $116.0 million. Both the 2004 Notes and the 2005 Notes
accrete at the rate of 14.5% per annum.
The maximum aggregate amount of Offer Consideration available for the
purchase of the Notes pursuant to the Offer is 57% of Net Available
Proceeds (as hereinafter calculated and defined) which is estimated to be
approximately $11,620,000 (the "Available Offer Consideration"). In the
event that the Offer Consideration required to purchase all Notes tendered
pursuant to the Offer would exceed the Available Offer Consideration, all
tenders will be prorated to the extent necessary to limit the aggregate
Offer Consideration to the Available Offer Consideration in accordance with
the following procedures. The proration factor will be established by first
determining the aggregate Offer Consideration that would be payable without
giving effect to proration to the Holders of the 2004 Notes as a group and
to the Holders of the 2005 Notes as a group, based in each case on valid
tenders after giving effect to compliance by tendering Holders with the
guaranteed delivery procedures described below. The aggregate Offer
Consideration payable to each such group will then be reduced
proportionately to the extent necessary for the aggregate payments to be
made to both groups to total the Available Offer Consideration with the
proration factor being the percentage determined by dividing the amount so
determined for a group as described in this sentence by the amount
determined for such group as described in the previous sentence. The amount
purchased from each Holder will be determined by multiplying the proration
factor by the principal amount at maturity of the Notes validly tendered by
such Holder.
PURCHASER'S OBLIGATION TO ACCEPT FOR PURCHASE, AND TO PAY FOR, NOTES
VALIDLY TENDERED PURSUANT TO THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM
TENDER OF EITHER THE 2004 NOTES OR THE 2005 NOTES OR OBTAINING ANY
FINANCING BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. PURCHASER, IN ITS
SOLE DISCRETION, MAY WAIVE ANY OF THE CONDITIONS OF THE OFFER, IN WHOLE OR
IN PART, AT ANY TIME AND FROM TIME TO TIME. SEE SECTION 10.
------------------------
The Dealer Manager for the Offer is:
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
SEPTEMBER 11, 1998
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment) and applicable law and subject to the proration
procedures described on the front cover page of this Offer to Purchase,
Purchaser will purchase, by accepting for payment, all Notes validly
tendered (and not validly withdrawn) pursuant to the Offer promptly after
the Expiration Date. It is anticipated that the proration procedures will
be completed promptly following termination of the three business day
guaranteed delivery period, unless no Notes are tendered using such
guaranteed delivery procedures, in which case such procedures will be
completed promptly following the Expiration Date. Preliminary results of
proration will be announced by press release promptly following the
Expiration Date. Purchaser will make payment for Notes purchased pursuant
to the Offer within two business days after the completion of such
proration procedures.
Tenders of Notes may not generally be withdrawn. If Purchaser reduces
either (a) the principal amount of Notes subject to the Offer or (b) the
Offer Consideration, then previously tendered Notes may be validly
withdrawn until the expiration of ten business days after the date that
notice of any such reduction is first published, given or sent to Holders
by Purchaser. In the event of a termination of the Offer, the Notes
tendered pursuant to the Offer will be returned to the tendering Holders
promptly. If Purchaser makes a material change in the terms of the Offer or
the information concerning the Offer or waives a material condition of the
Offer, Purchaser will disseminate additional Offer materials and extend the
Offer to the extent required by law. See Section 8.
From time to time in the future, Purchaser or its subsidiaries may
acquire Notes, if any, which are not purchased pursuant to the Offer
through open market purchases, privately negotiated transactions, tender
offers, exchange offers or otherwise, upon such terms and at such prices as
they may determine, which may be more or less than the price to be paid
pursuant to the Offer and could be for cash or other consideration.
Alternatively, Purchaser may, subject to certain conditions, redeem any or
all of the Notes not purchased pursuant to the Offer at any time that it is
permitted to do so under the Indentures (as hereinafter defined). There can
be no assurance as to which, if any, of these alternatives (or combinations
thereof) Purchaser or its subsidiaries will choose to pursue in the future.
Any Holder desiring to tender Notes should either (a) complete and
sign the Letter of Transmittal in accordance with the Instructions to the
Letter of Transmittal and deliver it together with any Notes being
tendered, and any other required documents, to State Street Bank and Trust
Company, as depositary (the "Depositary"), or (b) request its broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such Holder. Beneficial owners whose Notes are registered
in the name of a broker, dealer, commercial bank, trust company or other
nominee must contact such broker, dealer, commercial bank, trust company or
other nominee if they desire to tender Notes with respect to Notes so
registered. See Section 7.
Any Holder who desires to tender Notes and whose Notes are not
immediately available, or who cannot complete the procedure for book-entry
transfer on a timely basis, may tender such Notes by following the
procedures for guaranteed delivery set forth in Section 7.
The Depositary and The Depository Trust Company ("DTC") have
confirmed that the Offer is eligible for the DTC Automated Tender Offer
Program ("ATOP"). Accordingly, DTC participants may electronically transmit
their acceptance of the Offer by causing DTC to transfer Notes to the
Depositary in accordance with DTC's ATOP procedures for transfer. DTC will
then send an Agent's Message (as defined in Section 7) to the Depositary.
See Section 7.
Letters of Transmittal, the Notes and any other required documents
should be sent to the Depositary only, and the method of delivery of such
documents to the Depositary is at the election and risk of the Holder
tendering such Notes and delivering such Letter of Transmittal and any
other required documents. Questions and requests for assistance may be
directed to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, the Dealer
Manager for the Offer (the "Dealer Manager" or "DLJ"), at its address and
telephone numbers set forth on the back cover page of this Offer to
Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials
may be obtained from the Dealer Manager. Any Holder whose Notes have been
mutilated, lost, stolen or destroyed should contact the Trustee at its
address and telephone number set forth in Section 7 for further
instructions.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE AN OFFER TO PURCHASE IN
ANY JURISDICTION IN WHICH, OR TO OR FROM ANY PERSON TO OR FROM WHOM, IT IS
UNLAWFUL TO MAKE SUCH OFFER UNDER APPLICABLE SECURITIES OR BLUE SKY LAWS.
THE DELIVERY OF THIS OFFER TO PURCHASE SHALL NOT UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE
IN THE INFORMATION SET FORTH HEREIN OR IN ANY ATTACHMENTS HERETO OR IN THE
AFFAIRS OF PURCHASER OR ANY OF ITS SUBSIDIARIES SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
Purchaser currently files reports and other information with the
Securities and Exchange Commission (the "SEC"). Such reports and other
information can be inspected and copied at the public reference facilities
maintained by the SEC at Room ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, and at the SEC's regional offices at Room
▇▇▇▇, ▇▇▇▇▇▇▇▇ Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such material may be obtained from the Public Reference
Section of the SEC at Judiciary Plaza, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇, at prescribed rates. Such material may also be accessed
electronically by means of the SEC's home page on the Internet at
▇▇▇▇://▇▇▇.▇▇▇.▇▇▇. Such reports and other information concerning Purchaser
also may be inspected at the offices of the Nasdaq Stock Market Report
Section at ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
Purchaser's Annual Report on Form 10-K for the year ended December
31, 1997, its Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998 and June 30, 1998 and its Current Report on Form 8-K dated April
9, 1998 have been filed by Purchaser with the SEC, are incorporated herein
by reference and shall be deemed to be a part hereof.
All documents and reports filed by Purchaser with the SEC after the
date of this Offer to Purchase and prior to the termination of the Offer
shall be deemed incorporated herein by reference and shall be deemed to be
a part hereof from the date of filing of such documents and reports. 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 Offer to Purchase to the extent that a statement contained
herein or in any subsequently filed document or report that also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Offer to Purchase.
Purchaser will provide without charge, upon written or oral request,
to each person to whom a copy of this Offer to Purchase is delivered, a
copy of any of the documents of Purchaser (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference)
incorporated by reference herein.
ALL STATEMENTS CONTAINED HEREIN THAT ARE NOT HISTORICAL FACTS,
INCLUDING BUT NOT LIMITED TO, STATEMENTS REGARDING PURCHASER'S PLANS FOR
FUTURE DEVELOPMENT AND OPERATION OF ITS BUSINESS, ARE BASED ON CURRENT
EXPECTATIONS. THESE STATEMENTS ARE FORWARD-LOOKING IN NATURE AND INVOLVE A
NUMBER OF RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER MATERIALLY.
AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY ARE
THE FOLLOWING: A LACK OF SUFFICIENT CAPITAL TO FINANCE THE PURCHASER'S
BUSINESS PLAN ON TERMS SATISFACTORY TO PURCHASER; PRICING PRESSURES WHICH
COULD AFFECT DEMAND FOR PURCHASER'S SERVICE; CHANGES IN LABOR, EQUIPMENT
AND CAPITAL COSTS; PURCHASER'S INABILITY TO DEVELOP AND IMPLEMENT NEW
SERVICES SUCH AS HIGH-SPEED INTERNET ACCESS, TWO-WAY MULTI-MEDIA SERVICES
AND DIGITAL VIDEO; PURCHASER'S INABILITY TO OBTAIN THE NECESSARY
AUTHORIZATIONS FROM THE FEDERAL COMMUNICATIONS COMMISSION (THE "FCC") FOR
SUCH NEW SERVICES; COMPETITIVE FACTORS, SUCH AS THE INTRODUCTION OF NEW
TECHNOLOGIES AND COMPETITORS INTO THE WIRELESS COMMUNICATIONS BUSINESS; A
FAILURE BY PURCHASER TO ATTRACT STRATEGIC PARTNERS; GENERAL BUSINESS AND
ECONOMIC CONDITIONS; AND THE OTHER RISK FACTORS DESCRIBED FROM TIME TO TIME
IN PURCHASER'S REPORTS FILED WITH THE SEC. PURCHASER WISHES TO CAUTION
READERS NOT TO PLACE UNDUE RELIANCE ON ANY SUCH FORWARD-LOOKING STATEMENTS,
WHICH STATEMENTS ARE MADE PURSUANT TO THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995, AND AS SUCH, SPEAK ONLY AS OF THE DATE MADE.
TABLE OF CONTENTS
Page
1. PURPOSE OF THE OFFER; SUMMARY...................................1
2. CERTAIN INFORMATION CONCERNING PURCHASER........................4
3. CAPITALIZATION OF PURCHASER.....................................4
4. CERTAIN SIGNIFICANT CONSIDERATIONS..............................5
5. TERMS OF THE OFFER..............................................7
6. ACCEPTANCE FOR PURCHASE AND PAYMENT FOR NOTES...................8
7. PROCEDURES FOR TENDERING NOTES..................................9
8. WITHDRAWAL OF TENDERS..........................................13
9. SOURCE AND AMOUNT OF FUNDS.....................................14
10. CONDITIONS TO THE OFFER.......................................14
11. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.......................15
12. THE DEALER MANAGER AND THE DEPOSITARY.........................16
13. FEES AND EXPENSES.............................................16
14. MISCELLANEOUS.................................................16
TO HOLDERS OF AMERICAN TELECASTING, INC.
SENIOR DISCOUNT NOTES DUE 2004 AND
SENIOR DISCOUNT NOTES DUE 2005:
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
1. PURPOSE OF THE OFFER; SUMMARY.
PURPOSE OF THE OFFER. As of August 31, 1998, the 2004 Notes had an
aggregate principal amount at maturity of approximately $166.7 million and
an accreted value of approximately $146.0 million. Also as of August 31,
1998, the 2005 Notes had an aggregate principal amount at maturity of
approximately $158.2 million and an accreted value of approximately $116.0
million. Both the 2004 Notes and the 2005 Notes accrete at the rate of
14.5% per annum. The 2004 Notes have had reported trading prices in 1998 in
the range of 24.0% to 36.0% of principal amount at maturity and the 2005
Notes have had reported trading prices in 1998 in the range of 19.0% to
32.0% of principal amount at maturity.
On March 18, 1997, Purchaser entered into an Asset Purchase
Agreement, dated as of March 18, 1997 (the "BellSouth Agreement"), by and
among certain subsidiaries of Purchaser, BellSouth Corporation
("BellSouth") and BellSouth Wireless (the "BellSouth Agreement") which
provides for the sale of all of Purchaser's operating wireless cable
systems in Orlando, Lakeland, Jacksonville, Daytona Beach and Ft. ▇▇▇▇▇,
Florida and Louisville, Kentucky and wireless cable channel rights in
Naples, Sebring and Miami, Florida to BellSouth Wireless (the "Southeastern
Assets").
On August 12, 1997, ▇▇▇▇▇▇▇▇▇ completed the first sale pursuant
to the BellSouth Agreement, which transferred to BellSouth Wireless
Purchaser's operating systems and channel rights in the Florida markets of
Orlando, Jacksonville, Ft. ▇▇▇▇▇ and Daytona Beach, together with the
Louisville, Kentucky market and certain rights in Miami, Florida. The cash
consideration received and related gain recorded by Purchaser from this
first sale totaled approximately $54 million and $35.9 million,
respectively. Of such proceeds, $7 million was placed in escrow for a
period of twelve months to satisfy any indemnification obligations of
Purchaser. As of June 30, 1998, the balance of escrow funds was
approximately $6.4 million. This balance, plus accrued interest of
approximately $200,000, was released to Purchaser on August 12, 1998.
On July 15, 1998, pursuant to the BellSouth Agreement,
Purchaser completed the sale of its wireless operating system and channel
rights in Lakeland, Florida to BellSouth Wireless (the "Initial Lakeland
Closing"). Purchaser received cash consideration of approximately $12.0
million, of which $2.1 million was placed in escrow. On August 12, 1998,
pursuant to the BellSouth Agreement, Purchaser completed the sale of
additional channels in the Lakeland, Florida market for cash consideration
of approximately $5.0 million. In addition, Purchaser received
approximately $165,000, which represents a portion of the escrow from the
Initial Lakeland Closing.
Pursuant to (i) the Indenture, dated as of June 23, 1994 and as
amended as of August 10, 1995 and as of April 28, 1998 (the "2004
Indenture"), by and between Purchaser, as issuer, and First Trust National
Association, as trustee (in such capacity, the "2004 Trustee"), pursuant to
which the 2004 Notes were issued and (ii) the Indenture, dated as of August
10, 1995 and as amended as of April 28, 1998 (the "2005 Indenture" and,
together with the 2004 Indenture, the "Indentures"), by and between
Purchaser, as issuer, and U.S. Bank Trust National Association, as trustee
(in such capacity, the "2005 Trustee" and, together with its capacity as
the 2004 Trustee, the "Trustee"), pursuant to which the 2005 Notes were
issued, no later than 30 days after the aggregate amount of Net Available
Proceeds first equals or is greater than $10 million, Purchaser is
obligated to utilize 57% of the amount of such Net Available Proceeds to
make an offer to purchase the outstanding Notes, at a purchase price in
cash equal to the greater of (i) $280.50 per $1,000 principal amount at
maturity in the case of the 2004 Notes and $247.50 per $1,000 principal
amount at maturity in the case of the 2005 Notes and (ii) the market value
of the Notes as determined on the date preceding the date of the
commencement of the required offer by DLJ, the financial advisor to
Purchaser. DLJ has advised Purchaser that the market value of the Notes as
determined on the date preceding the date of this Offer to Purchase is less
than the Offer Consideration for both the 2004 Notes and the 2005 Notes. In
addition, any and all financial advisor, legal and other costs and fees
incurred by Purchaser in connection with completing or facilitating any
future disposition pursuant to the BellSouth Agreement, escrow proceeds or
the Offer or any other required offer shall be deemed to reduce the amount
of Net Available Proceeds.
The Initial Lakeland Closing, the closing on additional
channels in Lakeland, Florida and the release of the restricted escrowed
funds, including interest, from the first closing pursuant to the BellSouth
Agreement have provided approximately $21.6 million cash to Purchaser. In
connection with the Lakeland, Florida closings and release of escrow funds,
the Company incurred approximately $900,000 in costs related principally to
financial advisory and legal services and fees paid to perfect certain FCC
licenses and applications in the Lakeland market. Financial advisor, legal,
and other costs payable in connection with the Offer are estimated to be
approximately $300,000. Because the combination of funds from the Lakeland,
Florida closings and released escrow funds, net of such financial advisor,
legal and other costs, are estimated to be approximately $20,400,000 in Net
Available Proceeds, Purchaser was obligated, no later than September 11,
1998 or earlier, to use 57% of such amount, estimated to be approximately
$11,620,000, to make this required Offer.
If the aggregate principal amount of Notes tendered by Holders
thereof pursuant to this required Offer exceeds the amount of the Available
Offer Consideration to be used for the purchase of the Notes, the Notes
shall be selected for purchase on a pro rata basis as described on the
front cover of this Offer to Purchase.
Upon completion of the Offer, the amount of Net Available
Proceeds shall be reset at zero. Thereafter, at such time as the amount of
Net Available Proceeds from subsequent asset dispositions to BellSouth
Wireless together with released escrow proceeds is greater than $5 million,
Purchaser shall be obligated to utilize 57% of the amount of such Net
Available Proceeds to make a subsequent required offer, subject to the same
terms and conditions set forth above applicable to the Offer.
All Net Available Proceeds not to be utilized for the Offer, as
well as the amount of any Available Offer Consideration that is in excess
of the Offer Consideration paid to purchase Notes pursuant to the Offer
(the "Unencumbered Net Available Proceeds"), shall not be subject to any
such tender obligation and shall be freely available for use by Purchaser
as it deems appropriate. The Indentures do not restrict Purchaser from
using Unencumbered Net Available Proceeds for the purchase or other
retirement of Notes on such terms as it determines to be appropriate.
Additional closings are possible through August 1999 pursuant
to the BellSouth Agreement. The BellSouth Agreement contains customary
conditions for each closing, including the satisfaction of all applicable
regulatory requirements. There can be no assurance that all conditions will
be satisfied or that further sales of assets to BellSouth Wireless will be
consummated.
SUMMARY OF THE OFFER.
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO,
AND SHOULD BE READ IN CONJUNCTION WITH, THE INFORMATION APPEARING ELSEWHERE
IN THIS OFFER TO PURCHASE.
The Offer: Purchaser is offering to pay aggregate Offer
Consideration of up to the Available Offer
Consideration to purchase 2004 Notes and 2005
Notes, subject to possible proration as
described on the front cover page of this
Offer to Purchase.
Offer Consideration: For 2004 Notes, $280.50 per $1,000 principal
amount at maturity. For 2005 Notes, $247.50
per $1,000 principal amount at maturity.
Payment will be made within two business days
after the completion of the proration
procedures.
Conditions to the Offer: Purchaser's obligation to accept for purchase
and to pay for the Notes validly tendered
pursuant to the Offer is not conditioned upon
any minimum tender of either the 2004 Notes
or the 2005 Notes or obtaining any financing
but is subject to satisfaction of the General
Conditions (as hereinafter defined) on or
prior to the Expiration Date. Purchaser, in
its sole discretion, may waive any of the
conditions of the Offer, in whole or in part,
at any time and from time to time. See
Section 10.
Expiration Date: 12:00 Midnight, New York City time, on
October 8, 1998, unless extended.
Procedure to Tender: For a Holder to validly tender Notes pursuant
to the Offer, a properly completed and duly
executed Letter of Transmittal, together with
any signature guarantees and any other
documents required by the Instructions to the
Letter of Transmittal, must be received by
the Depositary, together with certificates
evidencing the tendered Notes or confirmed
book-entry transfer of such Notes into the
Depositary's account at a Book-Entry Transfer
Facility (as hereinafter defined), prior to
the Expiration Date. A Holder who desires to
tender Notes but cannot comply with the
delivery requirements may tender such Notes
by following the procedures set forth herein
for guaranteed delivery. Each tendering
Holder will be required to represent and
warrant it has a net long position equal to
or greater than the principal amount at
maturity of Notes tendered by it pursuant to
the Offer. See Section 7.
Withdrawal of Tenders
of Notes: Tenders of Notes may not generally be
withdrawn. If Purchaser reduces either (a)
the principal amount of Notes subject to the
Offer or (b) the Offer Consideration, then
previously tendered Notes may be validly
withdrawn until the expiration of ten
business days after the date that notice of
any such reduction is first published, given
or sent to Holders by Purchaser. In the event
of a termination of the Offer, the Notes
tendered pursuant to the Offer will be
returned to the tendering Holders promptly.
See Section 8.
Certain Considerations: See Section 4, "Certain Significant
Considerations," for a discussion of certain
factors that should be considered in
evaluating the Offer.
Financial Advisor: DLJ is serving as the Dealer Manager for the
Offer. Its address and telephone numbers are
set forth on the back cover page of this
Offer to Purchase.
Depositary: State Street Bank and Trust Company is
serving as the Depositary in connection with
the Offer. Its addresses and telephone number
are set forth on the back cover page of this
Offer to Purchase.
2. CERTAIN INFORMATION CONCERNING PURCHASER.
Purchaser was formed in 1988 to develop wireless cable television
systems in mid-sized markets throughout the United States. As of August 31,
1998, Purchaser provided analog subscription television service to
approximately 116,900 subscribers through 32 operational wireless cable
systems located in selected U.S. markets. Purchaser also has significant
wireless cable (microwave) frequency interests in 19 other U.S. markets. As
of August 31, 1998, Purchaser had approximately 10.0 million Estimated
Households in Service Area in its markets, although some of these
households will be "shadowed" and unable to receive the services offered by
Purchaser due to certain characteristics of the particular market, such as
transmitter height and transmission power, terrain and foliage, that impact
line of sight service requirements.
Wireless cable systems use microwave frequencies licensed by the FCC
to transmit signals over the air from a transmission tower to a microwave
receiver installed at the subscriber's home or business. Licenses for
wireless cable frequencies, which utilize up to approximately 200 megahertz
of radio spectrum, are given a 35 mile protected service area to transmit
signals from their central transmission point, although increases in
transmission power and other factors may expand the coverage area of a
system to approximately 40 to 50 miles from the central transmission point.
Because microwave signals are transmitted over the air, wireless cable
technology does not require the large networks of cable and amplifiers
utilized by franchise cable operators to deliver services. Thus, wireless
cable technology has been developed as a reliable, yet relatively low cost,
medium to provide services to subscribers in single family homes, multiple
dwelling units and commercial properties.
For additional information about Purchaser business, see the Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 and
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and
June 30, 1998 incorporated by reference herein. See "Available
Information."
3. CAPITALIZATION OF PURCHASER.
The following table sets forth the consolidated capitalization of
Purchaser at June 30, 1998 and as adjusted to give effect to the receipt by
Purchaser of Net Available Proceeds following June 30, 1998 and the
repurchase of Notes pursuant to the Offer assuming that $11.6 million in
Offer Consideration is applied 50% to the purchase of 2004 Notes and 50% to
the purchase of 2005 Notes and that transaction fees payable in connection
with the Offer are $300,000. The information presented below should be read
in conjunction with the consolidated financial statements of Purchaser and
the related notes, "Selected Consolidated Financial Data" and "Management's
Discussion and Analysis of Results of Operations and Financial Condition"
included in the Annual Report on Form 10-K of Purchaser for the fiscal year
ended December 31, 1997 and Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998 and June 30, 1998 incorporated by reference herein.
See "Available Information."
June 30, 1998
Actual As Adjusted
--------- ------------
($ in thousands)
Cash $9,438 $18,205
Current Portion of Long-Term Debt 2,065 2,065
2004 Notes 142,929 124,782
2005 Notes 114,184 96,959
Capital Lease Obligations 122 122
--- ---
Total Long Term Debt 257,235 221,863
Total Debt 259,300 223,928
Total Stockholders' Deficit (52,289) (30,125)
--------- --------
Total Capitalization $207,011 $193,803
======== ========
4. CERTAIN SIGNIFICANT CONSIDERATIONS.
THE FOLLOWING CONSIDERATIONS, IN ADDITION TO THE OTHER INFORMATION
DESCRIBED ELSEWHERE HEREIN, SHOULD BE CAREFULLY CONSIDERED BY EACH HOLDER
OF NOTES BEFORE DECIDING WHETHER TO TENDER NOTES PURSUANT TO THE OFFER.
HIGHLY LEVERAGED FINANCIAL POSITION. Purchaser is highly leveraged.
At June 30, 1998, the outstanding amount of indebtedness (excluding trade
payables, accrued liabilities, taxes and deferred rentals) of Purchaser and
its subsidiaries was approximately $259.3 million, or approximately 125.3%
of its capitalization.
Purchaser will remain highly leveraged after the Offer is
consummated. It is expected that Purchaser's amount of indebtedness
(excluding trade payables, accrued liabilities, taxes and deferred rentals)
following the consummation of the Offer will be approximately $223.9
million, representing approximately 115.6% of its capitalization. The level
of Purchaser's indebtedness and restrictions contained in the Indentures
will limit Purchaser's ability to effect future financings in the event
Purchaser should deem it necessary or desirable to raise additional
capital. Furthermore, there can be no assurance that Purchaser will have
sufficient earnings, access to liquidity or cash flow in the future to
adequately meet its debt service obligations under the Notes remaining
outstanding following consummation of the Offer.
For additional information about Purchaser's leverage, capitalization
and financial condition, see the Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 and Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1998 and June 30, 1998 incorporated by reference
herein. See "Available Information."
LIQUIDITY AND CAPITAL RESOURCES. If the Offer is completed and the
full amount of the Offer Consideration is paid to Holders, Purchaser
expects that its remaining cash resources will be insufficient to meet its
obligations through 1999.
Cash interest payments on the 2004 Notes and the 2005 Notes will
commence on December 15, 1999 and February 15, 2001, respectively.
Purchaser does not presently expect to be able to make or sustain such cash
interest payments.
As a result of certain limitations contained in the 2004 Notes and
the 2005 Notes, Purchaser's total borrowing capacity outside the 2004 Notes
and the 2005 Notes is currently limited to $17.5 million (approximately
$2.2 million of which had been utilized as of June 30, 1998). Although
Purchaser had the ability under the 2004 Notes and the 2005 Notes to borrow
an additional $15.3 million as of June 30, 1998, Purchaser does not
presently intend to incur any additional bank or other borrowings because
of the probable high cost of funds. Under current capital market
conditions, Purchaser does not expect to be able to raise significant
capital by issuing equity securities. However, if subsequent closings under
the BellSouth Agreement either do not occur or are insufficient to provide
funds for operations, or if Purchaser exhausts its remaining cash
resources, then Purchaser may be required to seek additional debt financing
prior to a capital restructuring. There can be no assurance that Purchaser
would be able to borrow additional funds on satisfactory terms or at all.
It may be necessary for Purchaser to substantially curtail its
operations, which could include further reductions in Purchaser's
workforce, closing of certain operating businesses or discontinuing certain
activities.
For additional information about Purchaser's liquidity and capital
resources, see the Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998 incorporated by reference herein. See
"Available Information."
CANCELLATION OF INDEBTEDNESS INCOME TO PURCHASER. The purchase of
Notes pursuant to the Offer will result in cancellation of indebtedness
income for income tax purposes to Purchaser to the extent that the cash
paid is less than the adjusted issue price of the Notes that are purchased.
STRATEGIC PARTNER DISCUSSIONS. A central part of Purchaser's strategy
is entering into a relationship with a strategic partner that facilitates
access to service markets, communications networks and capital markets.
Successfully deploying a business using wireless cable spectrum is capital
intensive, and Purchaser will require substantial additional capital to
build a successful business. Purchaser has ongoing discussions with certain
potential strategic partners including large telecommunications and
software companies. Although Purchaser cannot presently forecast the
outcome of any these discussions and no assurance can be given that any of
them will be successfully concluded or that, even if successfully
concluded, will result in an improvement in Purchaser's operating or
financial condition sufficient to provide a source of payment of interest
and principal on the Notes as it becomes due, Purchaser believes that one
or more strategic partners may conclude that wireless cable microwave
spectrum offers attractive business opportunities and may accordingly make
investments in the wireless cable industry, including Purchaser.
PROPOSED FCC RULEMAKING. In March 1997, Purchaser, in a consortium
with several other wireless cable operators and entities, filed a petition
with the FCC for two-way use of its spectrum. In October 1997, the FCC
issued a notice of proposed rulemaking to authorize two-way use, and public
comment periods have followed. Purchaser understands that the FCC will hold
an open meeting on September 17, 1998, to consider action on two-way use of
the spectrum and a streamlined application process for two-way services.
There can be no assurances as to the outcome of such meeting, if and when
the FCC will issue formal rules for two-way use or the ability of Purchaser
to obtain licenses under such rules.
LIMITED TRADING MARKET. The 2004 Notes were issued in June 1994 and
the 2005 Notes were issued in August 1995 and are not listed on any
national or regional securities exchange. To Purchaser's knowledge, the
Notes are traded infrequently in transactions arranged through brokers and
reliable market quotations for the Notes are not available. To the extent
that Notes are tendered and accepted for purchase pursuant to the Offer,
the trading market for Notes that remain outstanding is likely to be more
limited than it is at present. To the extent a market continues to exist
for the Notes, the Notes may trade at a discount compared to present
trading prices depending on prevailing interest rates, the market for debt
instruments with similar credit features, the performance of Purchaser and
its subsidiaries and other factors. The extent of the market for the Notes
and the availability of market quotations will depend upon the number of
Holders of the Notes remaining at such time, the interest in maintaining a
market in the Notes on the part of securities firms and other factors.
There is no assurance that an active market in the Notes will exist and no
assurance as to the prices at which the Notes may trade after the
consummation of the Offer.
A debt security with a smaller outstanding principal amount available
for trading (a smaller "float") may command a lower price than would a
comparable debt security with a larger float. Therefore, the market price
for Notes that are not tendered and accepted for purchase pursuant to the
Offer may be affected adversely to the extent that the principal amount of
Notes purchased pursuant to the Offer reduces the float. A reduced float
may also make the trading price of Notes that are not purchased in the
Offer more volatile.
CONDITIONS TO THE CONSUMMATION OF THE OFFER AND RELATED RISKS. The
consummation of the Offer is subject to the satisfaction of several
conditions. See Section 10. There can be no assurance that such conditions
will be met or that, in the event the Offer is not consummated, the market
value and liquidity of the Notes will not be materially adversely affected.
TREATMENT OF NOTES NOT TENDERED IN THE OFFER. From time to time in
the future, Purchaser or its subsidiaries may acquire Notes, if any, which
are not tendered in response to the Offer through open market purchases,
privately negotiated transactions, tender offers, exchange offers or
otherwise, upon such terms and at such prices as they may determine, which
may be more or less than the price to be paid pursuant to the Offer and
could be for cash or other consideration. Alternatively, Purchaser may,
subject to certain conditions, redeem any or all of the Notes not purchased
pursuant to the Offer at any time that it is permitted to do so under the
Indentures. There can be no assurance as to which, if any, of these
alternatives (or combinations thereof) Purchaser or its subsidiaries will
choose to pursue in the future.
5. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment) and applicable law and subject to the proration
procedures described on the front cover page of this Offer to Purchase, all
Notes which are validly tendered in accordance with the procedures set
forth in Section 7 and not validly withdrawn in accordance with the
procedures set forth in Section 8 prior to the Expiration Date will be
accepted for purchase promptly after the Expiration Date. It is anticipated
that the proration procedures will be completed promptly following
termination of the three business day guaranteed delivery period, unless no
Notes are tendered using such guaranteed delivery procedures, in which case
such procedures will be completed promptly following the Expiration Date.
Preliminary results of proration will be announced by press release
promptly following the Expiration Date. Purchaser will make payment for
Notes purchased pursuant to the Offer within two business days after the
completion of such proration procedures.
PURCHASER'S OBLIGATION TO ACCEPT FOR PURCHASE, AND TO PAY FOR, NOTES
VALIDLY TENDERED PURSUANT TO THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM
TENDER OF EITHER THE 2004 NOTES OR THE 2005 NOTES OR OBTAINING ANY
FINANCING BUT IS SUBJECT TO SATISFACTION OF CERTAIN OTHER CONDITIONS ON OR
PRIOR TO THE EXPIRATION DATE. PURCHASER, IN ITS SOLE DISCRETION, MAY WAIVE
ANY OF THE CONDITIONS OF THE OFFER, IN WHOLE OR IN PART, AT ANY TIME AND
FROM TIME TO TIME. See Section 10, which sets forth the conditions to the
Offer. If any condition to Purchaser's obligation to purchase Notes under
the Offer is not satisfied within the time frame described above, Purchaser
reserves the right (but shall not be obligated) to (i) decline to purchase
any of the Notes tendered and terminate the Offer, (ii) waive such
unsatisfied condition, and purchase all Notes validly tendered, (iii)
extend the Offer and, subject to the right of Holders to withdraw Notes as
provided in Section 8, retain the Notes which have been tendered during the
period or periods for which the Offer is extended or (iv) amend the Offer.
Purchaser expressly reserves the right, at any time or from time to
time, regardless of whether or not any of the events set forth in Section
10 shall have occurred or shall have been determined by Purchaser to have
occurred, (i) to extend the period of time during which the Offer is open
and thereby delay acceptance for payment of, and the payment for, any
Notes, by giving oral followed by written notice of such extension to the
Depositary, and (ii) to amend the Offer in any respect by giving oral
followed by written notice of such amendment to the Depositary. The rights
reserved by Purchaser in this paragraph are in addition to Purchaser's
rights to terminate the Offer described in Section 10. Any extension,
amendment or termination will be followed as promptly as practicable by
public announcement thereof, the announcement in the case of an extension
to be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without
limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser currently intends to make announcements by issuing
a release to the Dow ▇▇▇▇▇ News Service or by sending written notice to
each registered Holder of the Notes.
If Purchaser extends the Offer, or if (whether before or after any
Notes have been accepted for purchase) the purchase of or payment for Notes
is delayed or Purchaser is unable to pay for Notes pursuant to the Offer
for any reason, then, without prejudice to Purchaser's rights under the
Offer, the Depositary may retain tendered Notes on behalf of Purchaser, and
such Notes may not be withdrawn except to the extent tendering Holders are
entitled to withdrawal rights as described in Section 8. However, the
ability of Purchaser to delay the payment for Notes which Purchaser has
accepted for purchase is limited by Rule 14e-1(c) under the Exchange Act,
which requires that a bidder pay the consideration offered or return the
securities deposited by or on behalf of holders of securities promptly
after the termination or withdrawal of a tender offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition to such
Offer, Purchaser will disseminate additional Offer materials and extend the
Offer to the extent required by law. See Section 8.
6. ACCEPTANCE FOR PURCHASE AND PAYMENT FOR NOTES
Upon the terms and subject to the conditions of the Offer (including
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment) and applicable law and subject to proration as
described on the front cover page of this Offer to Purchase, Purchaser will
purchase, by accepting for payment, all Notes validly tendered (and not
withdrawn) pursuant to the Offer promptly after the Expiration Date. It is
anticipated that the proration procedures will be completed promptly
following termination of the three business day guaranteed delivery period,
unless no Notes are tendered using such guaranteed delivery procedures, in
which case such procedures will be completed promptly following the
Expiration Date. Preliminary results of proration will be announced by
press release promptly following the Expiration Date. Purchaser will make
payment for Notes purchased pursuant to the Offer within two business days
after the completion of such proration procedures.
Purchaser expressly reserves the right, in Purchaser's sole
discretion, to delay acceptance for payment of or payment for Notes,
subject to Rule 14e-1(c) under the Exchange Act, in order to comply, in
whole or in part, with any applicable law. See Section 8. In all cases,
payment for Notes purchased pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates representing such
Notes or timely confirmation of a book-entry transfer of such Notes into
the Depositary's account at a Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 7, (ii) a properly completed and duly
executed Letter of Transmittal and (iii) any other documents required by
the Letter of Transmittal.
For purposes of the Offer, tendered Notes will be deemed to have been
accepted for purchase if, as and when Purchaser gives written notice to the
Depositary that (a) all conditions to the Offer have been satisfied or
waived, (b) Purchaser irrevocably accepts all Notes validly tendered (and
not validly withdrawn) for purchase pursuant to the terms of the Offer,
subject to proration as described on the front cover page of this Offer to
Purchase, and irrevocably directs the Depositary to promptly pay the Offer
Consideration to all Holders who have validly tendered (and not validly
withdrawn) Notes pursuant to the Offer and (c) Purchaser has delivered to
the Depositary, or is simultaneously delivering to the Depositary with such
notice, sufficient funds to pay the Offer Consideration to all Holders who
validly tendered (and not validly withdrawn) Notes pursuant to the Offer
after giving effect to proration. In all cases, payment for Notes purchased
pursuant to the Offer will be made by the Depositary, which will act as
agent for tendering Holders for the purpose of receiving payment from
Purchaser and transmitting such payment to tendering Holders. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE OFFER CONSIDERATION BE PAID BY
PURCHASER, THE DEPOSITARY OR THE DEALER MANAGER BY REASON OF ANY DELAY IN
MAKING PAYMENT.
Tenders of Notes may not be withdrawn unless Purchaser reduces either
(a) the principal amount of Notes subject to the Offer or (b) the Offer
Consideration, in which case Purchaser will afford withdrawal rights to
Holders who have previously tendered such Notes. See Section 8. If any
tendered Notes are not purchased pursuant to the Offer because of proration
or for any other reason, such Notes not purchased will be returned, without
expense, to the tendering Holder promptly (or, in the case of Notes
tendered by book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, such Notes will be credited to the account
maintained at such Book-Entry Transfer Facility from which such Notes were
delivered) after the expiration or termination of the Offer.
Tendering Holders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Notes pursuant to the Offer.
Purchaser reserves the right to transfer or assign, in whole or in
part, at any time and from time to time, to one or more of its affiliates,
the right to purchase Notes tendered pursuant to the Offer, but any such
transfer or assignment will not relieve Purchaser of its obligations under
the Offer or prejudice the rights of tendering Holders to receive payment
for Notes validly tendered and accepted for purchase pursuant to the Offer.
7. PROCEDURES FOR TENDERING NOTES.
TENDERS OF NOTES. The tender by a Holder of Notes (and subsequent
acceptance of such tender by Purchaser) pursuant to one of the procedures
set forth below will constitute an agreement between such Holder and
Purchaser in accordance with the terms and subject to the conditions set
forth herein, in the Letter of Transmittal and, if applicable, in the
Notice of Guaranteed Delivery.
The procedures by which Notes may be tendered by beneficial owners
that are not Holders will depend upon the manner in which the Notes are
held.
TENDERS OF NOTES HELD IN PHYSICAL FORM. For a Holder to validly
tender Notes held in physical form pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal, together with any
signature guarantees and any other documents required by the Instructions
to the Letter of Transmittal, must be received by the Depositary at its
address set forth on the back cover page of this Offer to Purchase and
either (i) certificates representing such Notes must be received by the
Depositary at such address or (ii) such Notes must be transferred pursuant
to the procedures for book-entry transfer set forth below and the
book-entry transfer of such Notes into the Depositary's account at a
Book-Entry Transfer Facility must be confirmed, in each case, prior to the
Expiration Date. A Holder who desires to tender Notes and who cannot comply
with the procedures set forth herein for tender on a timely basis or whose
Notes are not immediately available must comply with the procedures for
guaranteed delivery set forth below. LETTERS OF TRANSMITTAL AND ANY NOTES
TENDERED PURSUANT TO THE OFFER SHOULD BE SENT ONLY TO THE DEPOSITARY, NOT
TO PURCHASER, THE TRUSTEE OR THE DEALER MANAGER.
If the Notes are registered in the name of a person other than the
signer of a Letter of Transmittal, then, in order to tender such Notes
pursuant to the Offer, the Notes must be endorsed or accompanied by an
appropriate written instrument or instruments of transfer signed exactly as
the name or names of such Holder or Holders appear on the Notes, with the
signature(s) on the Notes or instruments of transfer guaranteed as provided
below.
TENDER OF NOTES HELD THROUGH A CUSTODIAN. Any beneficial owner whose
Notes are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to tender Notes and deliver
Letters of Transmittal should contact such registered Holder promptly and
instruct such Holder to tender Notes and deliver Letters of Transmittal on
such beneficial owner's behalf. A Letter of Instructions is enclosed in the
solicitation materials provided along with this Offer to Purchase which may
be used by a beneficial owner in this process to instruct the registered
Holder to tender Notes. If such beneficial owner wishes to tender such
Notes himself, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering such Notes, either make
appropriate arrangements to register ownership of the Notes in such
beneficial owner's name or follow the procedures described in the
immediately preceding paragraph. The transfer of record ownership may take
considerable time.
TENDER OF NOTES HELD THROUGH DTC. The Depositary and DTC have
confirmed that the Offers are eligible for ATOP. Accordingly, DTC
participants may electronically transmit their acceptance of the Offer by
causing DTC to transfer Notes to the Depositary in accordance with DTC's
ATOP procedures for transfer. DTC will then send an Agent's Message to the
Depositary.
The term "Agent's Message" means a message transmitted by DTC,
received by the Depositary and forming part of the confirmation of
book-entry transfer, which states that DTC has received an express
acknowledgment from the participant in DTC tendering Notes which are the
subject of such confirmation of book-entry transfer that such participant
has received and agrees to be bound by the terms of the Letter of
Transmittal and that Purchaser may enforce such agreement against such
participant.
BOOK-ENTRY DELIVERY PROCEDURES. The Depositary will establish
accounts with respect to the Notes at DTC and, if necessary, the
Philadelphia Depository Trust Company ("Philadep") (each a "Book-Entry
Transfer Facility" and collectively, the "Book-Entry Transfer Facilities")
for purposes of the Offer within two business days after the date hereof,
and any financial institution that is a participant in either of the
Book-Entry Transfer Facilities systems may make book-entry delivery of the
Notes by causing DTC or Philadep to transfer such Notes into the
Depositary's account in accordance with such Book-Entry Transfer Facility's
procedure for such transfer. Timely book-entry delivery of Notes pursuant
to the Offer, however, requires receipt of a confirmation of book-entry
transfer prior to the Expiration Date. In addition, although delivery of
Notes may be effected through book-entry transfer into the Depositary's
account at a Book-Entry Transfer Facility, the Letter of Transmittal,
together with any required signature guarantees and any other required
documents, must, in any case, be delivered or transmitted to and received
by the Depositary at its address set forth on the back cover page of this
Offer to Purchase prior to the Expiration Date to receive payment for
tendered Notes, or compliance must be made with the guaranteed delivery
procedure described below. Tender will not be deemed made until such
documents are received by the Depositary. DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must
be guaranteed by a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the
Stock Exchange Medallion Program (each of the foregoing being referred to
as an "Eligible Institution"), unless the Notes tendered thereby are
tendered (i) by a registered Holder of Notes (or by a participant in one of
the Book-Entry Transfer Facilities whose name appears on a security
position listing as the owner of such Notes) who has not completed either
the box entitled "Special Delivery Instructions" or "Special Payment or
Issuance Instructions" on the Letter of Transmittal, or (ii) for the
account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal. If the Notes are registered in the name of a person other than
the signer of the Letter of Transmittal or if Notes not accepted for
purchase or not tendered are to be returned to a person other than the
registered Holder, then the signatures on the Letters of Transmittal
accompanying the tendered Notes must be guaranteed by an Eligible
Institution as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
COMPLIANCE WITH "SHORT TENDERING" RULE. It is a violation of Rule
14e-4 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), for a person, directly or indirectly, to tender Notes
for his own account unless the person so tendering (i) has a net long
position equal to or greater than the aggregate principal amount at
maturity of the Notes being tendered and (ii) will cause such Notes to be
delivered in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on
behalf of another person.
A tender of Notes pursuant to any of the procedures described above
will constitute a binding agreement between the tendering Holder and
Purchaser upon the terms and subject to the conditions of the Offer,
including the tendering Holder's acceptance of the terms and conditions of
the Offer, as well as the tendering Holder's representation and warranty
that (i) such Holder has a net long position in the Notes being tendered
within the meaning if Rule 14e-4 under the Exchange Act and (ii) the tender
of such Notes complies with Rule 14e-4.
MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. If a Holder
desires to tender Notes, but the certificates evidencing such Notes have
been mutilated, lost, stolen or destroyed, such Holder should contact the
Trustee to receive information about the procedures for obtaining
replacement certificates for Notes at the following address or telephone
number: U.S. Bank Trust National Association, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Telephone (▇▇▇ ) ▇▇▇-▇▇▇▇ and Fax (▇▇▇) ▇▇▇-▇▇▇▇.
GUARANTEED DELIVERY. If a Holder desires to tender Notes pursuant to
the Offer and time will not permit the Letter of Transmittal, certificates
representing such Notes and all other required documents to reach the
Depositary, or the procedures for book-entry transfer cannot be completed,
prior to the Expiration Date, such Notes may nevertheless be tendered, if
all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by
Purchaser herewith, is received by the Depositary prior to
the Expiration Date, as provided below; and
(iii) the certificates for the tendered Notes, in proper form
for transfer (or confirmation of a book-entry transfer of
such Notes into the Depositary's account at a Book-Entry
Transfer Facility as described above), together with a
Letter of Transmittal, properly completed and duly
executed, with any required signature guarantees and any
other documents required by the Instructions to the Letter
of Transmittal, are received by the Depositary within
three New York Stock Exchange, Inc. trading days after the
date of execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be sent by hand delivery,
telegram, facsimile transmission or mail to the Depositary and must include
a guarantee by an Eligible Institution in the form set forth in the Notice
of Guaranteed Delivery.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY PURCHASER BY REASON
OF ANY DELAY IN MAKING PAYMENT TO ANY PERSON RESULTING FROM SUCH PERSON'S
USE OF THE GUARANTEED DELIVERY PROCEDURES, AND THE OFFER CONSIDERATION FOR
NOTES TENDERED PURSUANT TO THE GUARANTEED DELIVERY PROCEDURES WILL BE THE
SAME AS THAT FOR NOTES DELIVERED TO THE DEPOSITARY PRIOR TO THE EXPIRATION
DATE.
Notwithstanding any other provision hereof, payment for Notes
tendered and accepted for purchase pursuant to the Offer will, in all
cases, be made only after timely receipt by the Depositary of such Notes
(or confirmation of a book-entry transfer of such Notes into the
Depositary's account at a Book-Entry Transfer Facility as described above),
and a Letter of Transmittal with respect to such Notes, properly completed
and duly executed, with any required signature guarantees and any other
documents required by the Letter of Transmittal.
THE METHOD OF DELIVERY OF NOTES AND LETTERS OF TRANSMITTAL, ANY
REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING
DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY AND ANY ACCEPTANCE OR
AGENT'S MESSAGE TRANSMITTED THROUGH ATOP, IS AT THE ELECTION AND RISK OF
THE HOLDER TENDERING NOTES AND DELIVERING A LETTER OF TRANSMITTAL AND,
EXCEPT AS OTHERWISE PROVIDED IN THE LETTER OF TRANSMITTAL, DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF SUCH DELIVERY
IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE
SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE
DEPOSITARY PRIOR TO SUCH DATE.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent backup Federal
income tax withholding, each tendering Holder of Notes must provide the
Depositary with such ▇▇▇▇▇▇'s correct taxpayer identification number and
certify that such Holder is not subject to backup Federal income tax
withholding by completing the Substitute Form W-9 included in the Letter of
Transmittal. See Section 11.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tendered
Notes pursuant to any of the procedures described above will be determined
by Purchaser, in Purchaser's sole discretion exercised in good faith (whose
determination shall be final and binding). Purchaser reserves the absolute
right to reject any or all tenders of any Notes determined by it in good
faith not to be in proper form or, in the case of Notes, if the acceptance
for payment of, or payment for, such Notes may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute
right, in its sole discretion, to waive any of the conditions of the Offer
or any defect or irregularity in any tender with respect to Notes of any
particular Holder, whether or not similar defects or irregularities are
waived in the case of other Holders. Purchaser's good faith interpretation
of the terms and conditions of the Offer (including the Letter of
Transmittal and the Instructions thereto) will be final and binding. None
of Purchaser, the Depositary, the Trustee or any other person will be under
any duty to give notification of any defects or irregularities in tenders
or will incur any liability for failure to give any such notification. If
Purchaser waives its right to reject a defective tender of Notes, the
Holder will be entitled to the Offer Consideration.
8. WITHDRAWAL OF TENDERS.
Tenders of Notes may not generally be withdrawn. If Purchaser reduces
either (a) the principal amount of Notes subject to the Offer or (b) the
Offer Consideration, then previously tendered Notes may be validly
withdrawn until the expiration of ten business days after the date that
notice of any such reduction is first published, given or sent to Holders
by Purchaser. In the event of a termination of the Offer, the Notes
tendered pursuant to the Offer will be returned to the tendering Holders
promptly.
For a withdrawal of a tender of Notes to be effective, a written or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at its address set forth on the back cover page of this Offer to
Purchase. Any such notice of withdrawal must (i) specify the name of the
person who tendered the Notes to be withdrawn relates, (ii) contain the
description of the Notes to be withdrawn relates and identify the
certificate number or numbers shown on the particular certificates
evidencing such Notes (unless such Notes were tendered by book-entry
transfer) and the aggregate principal amount represented by such Notes and
(iii) be signed by the Holder of such Notes in the same manner as the
original signature on the Letter of Transmittal by which such Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee register the transfer
of the Notes into the name of the person withdrawing such Notes. If the
Notes to be withdrawn have been delivered or otherwise identified to the
Depositary, a properly completed and signed notice of withdrawal shall be
effective immediately upon receipt thereof even if physical release is not
yet effected. A withdrawal of Notes can only be accomplished in accordance
with the foregoing procedures.
ALL QUESTIONS AS TO THE FORM AND VALIDITY (INCLUDING TIME OF RECEIPT)
OF NOTICES OF WITHDRAWAL WILL BE DETERMINED BY PURCHASER, IN PURCHASER'S
SOLE DISCRETION (WHOSE DETERMINATION WILL BE FINAL AND BINDING). NONE OF
PURCHASER, THE DEPOSITARY, THE TRUSTEE OR ANY OTHER PERSON WILL BE UNDER
ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN ANY
NOTICE OF WITHDRAWAL OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH
NOTIFICATION.
Any Notes properly withdrawn will be deemed to be not validly
tendered for purposes of the Offer. Withdrawn Notes may be retendered by
following one of the procedures described in Section 7 at any time prior to
the Expiration Date.
9. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by Purchaser to purchase all of
the Notes pursuant to the Offer and pay transaction expenses relating to
the Offer is estimated to be approximately $11.9 million (assuming that
there is a sufficient tender of Notes for the total Available Offer
Consideration to be used to purchase Notes). Purchaser has available to it
all of the funds that will be necessary for such purpose.
10. CONDITIONS TO THE OFFER.
Notwithstanding any other provisions of the Offer and in addition to
(and not in limitation of) Purchaser's rights to extend and/or amend the
Offer at any time in its sole discretion, Purchaser shall not be required
to accept for payment, purchase or pay for, and may delay the acceptance
for payment of, any tendered Notes, in each event subject to Rule 14e-1(c)
under the Exchange Act, and may terminate the Offer, if the General
Conditions (as defined below) shall not have been satisfied on or prior to
the Expiration Date.
For purposes of the foregoing provision, the "General Conditions"
shall be deemed to have been satisfied unless any of the following
conditions shall occur on or after the date of this Offer to Purchase and
prior to the acceptance for purchase of any Notes tendered pursuant to the
Offer:
(a) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities in the United States
securities or financial markets, (ii) a material impairment in the
trading market for debt securities, (iii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (iv) any limitation
(whether or not mandatory) by any governmental authority on, or other
event having a reasonable likelihood of affecting, the extension of
credit by banks or other lending institutions in the United States,
(v) a commencement of a war, armed hostilities or other national or
international crisis involving the United States or (vi) any
significant adverse change in the United States securities or
financial markets generally or in the case of any of the foregoing
existing on the date hereof, a material acceleration or worsening
thereof;
(b) there exists an order, statute, rule, regulation, executive
order, stay, decree, judgment or injunction that shall have been
enacted, entered, issued, promulgated, enforced or deemed applicable
by any court or governmental, regulatory or administrative agency or
instrumentality that, in the reasonable judgment of Purchaser, would
or would be reasonably likely to prohibit, prevent or materially
restrict or delay consummation of the Offer or that is, or is
reasonably likely to be, materially adverse to the business,
operations, properties, condition (financial or otherwise), assets,
liabilities or prospects of Purchaser or its subsidiaries;
(c) there shall have been instituted or be pending any action
or proceeding before or by any court or governmental, regulatory or
administrative agency or instrumentality, or by any other person,
which challenges the making of the Offer or is reasonably likely to
directly or indirectly prohibit, prevent, restrict or delay the
consummation of the Offer or otherwise adversely affect in any
material manner the Offer; or
(d) the Trustee shall have objected in any respect to, or taken
any action that would be reasonably likely to materially and
adversely affect the consummation of the Offer, or shall have taken
any action that challenges the validity or effectiveness of the
procedures used by Purchaser in the making of the Offer or the
acceptance of the Notes or the payment for the Notes.
The foregoing conditions are for the sole benefit of Purchaser and
may be asserted by Purchaser regardless of the circumstances giving rise to
any such condition (including any action or inaction by Purchaser) and may
be waived by Purchaser, in whole or in part, at any time and from time to
time, in the sole discretion of Purchaser. The failure by Purchaser at any
time to exercise any of the foregoing rights will not be deemed a waiver of
any other right and each right will be deemed an ongoing right which may be
asserted at any time and from time to time.
11. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of the principal federal income tax
consequences of the sale of the Notes pursuant to the Offer by Holders who
are United States persons and who hold such Notes as capital assets. This
summary does not address the federal income tax consequences to all
categories of Holders, and certain Holders (including insurance companies,
tax- exempt organizations, financial institutions, brokers, dealers,
nonresident aliens, foreign corporations, foreign partnerships and foreign
estates) may be subject to certain rules not discussed herein. This summary
does not discuss federal tax consequences other than income tax
consequences, and does not discuss foreign, state, or local income or other
tax laws. This summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable Treasury
Regulations promulgated thereunder, judicial authority and current Internal
Revenue Service (the "IRS") rulings and practice, all of which are subject
to change, possibly on a retroactive basis.
The sale of the Notes by a Holder pursuant to the Offer will be a
taxable transaction. A selling Holder will recognize gain or loss upon the
sale equal to the difference between the amount of cash received and the
Holder's adjusted tax basis in the Notes sold. Certain holders of 2004
Notes acquired such notes in a deemed exchange, which occurred in
connection with a consent solicitation that took place in July 1995. In the
deemed exchange, such holders were deemed to have exchanged their original
notes due 2004 (the "Old 2004 Notes") for the revised 2004 Notes, as
modified by the amendments that were adopted as a result of the consent
solicitation. In the case of such holders, the adjusted tax basis of the
2004 Notes generally will equal the adjusted tax basis of the Old 2004
Notes at the time of the deemed exchange, increased by any gain recognized
in the deemed exchange and decreased by the fair market value of "other
property" (i.e., generally, the excess of the principal amount of the
revised 2004 Notes over the principal amount of the Old 2004 Notes)
received by the taxpayer in such deemed exchange, and further increased by
market discount or original issue discount (taking into account any
reduction in such original issue discount attributable to any acquisition
premium) to the extent that any such market discount or original issue
discount was includable in income by the Holder since the date of the
exchange. In the case of other Holders of the Notes, the adjusted tax basis
of a Note generally will equal the price such holder paid for the Note,
increased by the market discount or original issue discount (taking into
account any reduction in such original issue discount attributable to any
acquisition premium) to the extent any such market discount or original
issue discount was includable in income by the Holder.
The gain or loss, if any, realized by a selling Holder generally will
be capital gain or loss and will be long-term capital gain or loss if such
Holder has held its Notes for more than one year at the time of the sale.
However, any Holder who held its Notes with market discount generally will
be required to treat any gain realized pursuant to the Offer as ordinary
income to the extent of the market discount accrued to the date of the
exchange, less any accrued market discount income previously includable as
ordinary income.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. HOLDERS ARE URGED
TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES
OF THE OFFER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS.
12. THE DEALER MANAGER AND THE DEPOSITARY.
DLJ has been engaged to act as the Dealer Manager in connection with
the Offer. In its capacity as Dealer Manager, DLJ has performed certain
investment banking and financial advisory services, including advising
Purchaser with respect to the terms of the Offer. Purchaser has agreed to
pay the Dealer Manager compensation for its services and to reimburse the
Dealer Manager for its reasonable out-of-pocket expense. Purchaser has also
agreed to indemnify the Dealer Manager and its respective affiliates
against certain liabilities, including liabilities caused by, arising out
of or in connection with any untrue statement or alleged untrue statement
of a material fact contained in the Offer. At any given time, the Dealer
Manager may trade the Notes or other debt or equity securities of Purchaser
for its own accounts or for the accounts of customers, and, accordingly,
may hold a long or short position in the Notes or such other securities.
The Dealer Manager may tender any Notes held by it pursuant to the Offer.
In addition, the Dealer Manager has provided in the past certain investment
banking and financial advisory services to Purchaser and certain of its
affiliates for which it has received customary compensation and may do so
in the future.
Any Holder that has questions concerning the terms of the Offer may
contact the Dealer Manager at its address and telephone numbers set forth
on the back cover page of this Offer to Purchase.
State Street Bank and Trust Company has been appointed as Depositary
for the Offer. Letters of Transmittal and all correspondence in connection
with the Offer should be sent or delivered by each Holder or a beneficial
owner's broker, dealer, commercial bank, trust company or other nominee to
the Depositary at the addresses set forth on the back cover page of this
Offer to Purchase.
13. FEES AND EXPENSES.
The Dealer Manager will receive customary fees for its services and
reimbursement for its reasonable out-of-pocket expenses in connection with
the Offer. The Depositary will also receive reasonable and customary fees
for their services and reimbursement for their reasonable out-of-pocket
expenses in connection therewith. Brokerage houses and other custodians,
nominees and fiduciaries will be reimbursed for their reasonable
out-of-pocket expenses incurred in forwarding copies of this Offer to
Purchase and related documents to the beneficial owners of Notes. All such
fees and expenses will be paid by Purchaser.
14. MISCELLANEOUS.
Purchaser is not aware of any jurisdiction in which the making of the
Offer is not in compliance with applicable law. If Purchaser becomes aware
of any jurisdiction in which the making of the Offer would not be in
compliance with applicable law, Purchaser will make a good faith effort to
comply with any such law. If, after such good faith effort, Purchaser
cannot comply with any such law, the Offer will not be made to (nor will
tenders of Notes be accepted from or on behalf of) the Holders residing in
such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Facsimile copies of the Letter of Transmittal will not be accepted.
The Letter of Transmittal, Notes and any other required documents should be
sent or delivered by each Holder or its broker, dealer, commercial bank or
other nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
STATE STREET BANK AND TRUST COMPANY
By Mail By Overnight Courier
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
P.O. Box ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ 02110
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
By Hand in New York (as Drop Agent) By Hand in Boston
State Street Bank and Trust Company, N.A. State Street Bank and Trust Company, N.A.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Concourse Level, Corporate Trust Window Fourth Floor, Corporate Trust Department
New York, New York ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By Facsimile Transmission: Confirm by Telephone:
(For Eligible Institutions Only)
(▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Any questions or requests for assistance or additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Dealer Manager at the telephone numbers and
location listed below. You may also contact your broker, dealer, commercial
bank or trust company or nominee for assistance concerning the Offer.
THE DEALER MANAGER FOR THE OFFER IS:
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
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▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Call (▇▇▇) ▇▇▇-▇▇▇▇ (collect)
or
▇-▇▇▇-▇▇▇-▇▇▇▇ (toll-free)