SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JULY 6, 1995
HOUSTON INDUSTRIES INCORPORATED
(Exact name of registrant as specified in its charter)
TEXAS 1-7629 74-1885573
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
5 POST OAK PARK
4400 POST OAK PARKWAY
HOUSTON, TEXAS 77027
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 713/629-3000
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 6, 1995, TWI Cable Inc., a Delaware corporation (formerly
known as TW KBLCOM Acquisition Corp.) ("Sub") and a wholly owned subsidiary of
Time Warner Inc., a Delaware corporation ("Parent"), merged with and into KBLCOM
Incorporated, a Delaware corporation ("KBLCOM") and a wholly owned subsidiary of
Houston Industries Incorporated (the "Company"), pursuant to the Agreement and
Plan of Merger dated as of January 26, 1995 (the "Merger Agreement"), among
KBLCOM, the Company, Parent and Sub. As a result of such merger (the "Merger"),
the separate corporate existence of Sub ceased and KBLCOM continued as the
surviving corporation, became a wholly owned subsidiary of Parent and changed
its name to TWI Cable Inc.
In connection with the Merger, Parent issued to the Company (i)
1,000,000 fully paid and nonassessable shares of common stock, par value $1.00
per share, of Parent ("TW Common Stock") and (ii) 11,000,000 fully paid and
nonassessable shares of Series D Convertible Preferred Stock, par value $1.00
per share, of Parent (the "Series D Preferred"). Based on the closing price of
TW Common Stock on July 6 ($43.25 per share) and the estimated present value of
the incremental dividend on the Series D Preferred, the Company valued such
securities at approximately $1.1 billion on July 6, 1995. In addition, at the
closing, Parent purchased from the Company for cash approximately $621 million
of KBLCOM's outstanding intercompany indebtedness and assumed approximately $650
million of KBLCOM's external debt and other liabilities.
The Series D Preferred may be converted into approximately 22.9
million shares of TW Common Stock. Until the earlier of conversion or July 6,
1999, the terms of the Series D Preferred provide for the payment of an annual
dividend of at least $3.75 per share. After four years, Parent will have the
right to exchange the Series D Preferred for TW Common Stock at the stated
conversion rate. After five years, Parent will have the right to redeem all or
part of the Series D Preferred at its liquidation preference of $100 per share,
plus accrued and unpaid dividends thereon to the date fixed for redemption. Each
share of Series D Preferred is entitled to vote together with the holders of TW
Common Stock as a single class and is entitled to two votes, subject to
adjustment.
In anticipation of the Merger, effective as of January 1, 1995, the
operations of KBLCOM were accounted for as discontinued and prior periods were
restated for consistency in reflecting KBLCOM as a discontinued operation. For
additional information concerning the accounting treatment of the Merger, see
the combined Quarterly Report on Form 10-Q of the Company and Houston Lighting &
Power Company ("HL&P") (File Nos. 1-7629 and 1-3187) and the combined Current
Report on Form 8-K of the Company and HL&P dated May 12, 1995 (File Nos. 1-7629
and 1-3187).
In conjunction with the Merger, the Company and Parent entered into
a Stockholder's Agreement and a Registration Rights Agreement, each dated as of
July 6, 1995. The Stockholder's Agreement, with limited exceptions, prohibits
the Company, its affiliates and associates, from acquiring securities of Parent
and from taking certain actions in relation to Parent or its assets. The
Stockholder's Agreement also contains certain restrictions on the ability of the
Company (and its affiliates and associates) to transfer the shares of TW Common
Stock and Series D Preferred. The term of the Stockholder's Agreement is ten
years, except that the agreement may terminate earlier upon the occurrence of
certain events, including a change of control of Parent or a default by Parent
in the payment of dividends on the Series D Preferred.
-2-
The Registration Rights Agreement covers the shares of TW Common
Stock issued at the time of the Merger as well as shares of TW Common Stock into
which the Series D Preferred is converted, any shares of TW Common Stock issued
in connection with indemnification obligations under the Merger Agreement and
any shares received by way of dividends or distributions. The Company may make
four demands for registration during the term of the Registration Rights
Agreement, one of which may be a shelf registration statement. Parent may delay
filing a registration statement or suspend its use under certain circumstances.
The Company also will have the right to "piggy-back" onto other registration
statements of Parent under certain circumstances.
The foregoing descriptions of the Stockholder's Agreement and the
Registration Rights Agreement are summaries only and are qualified in their
entirety by reference to the applicable agreements, which are incorporated
herein by reference as Exhibits 99(a) and 99(b).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro forma financial information.
Financial information with respect to the Merger and the
treatment of KBLCOM as a discontinued operation has been
"previously reported" (as such term is defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended) in the
combined Quarterly Report on Form 10-Q of the Company and HL&P
for the quarterly period ended March 31, 1995 and the combined
Current Report on Form 8-K of the Company and HL&P dated May
12, 1995. Such information is not included in this report in
reliance on General Instruction B.3. to Form 8-K.
(c) Exhibits.
2(a) - Agreement and Plan of Merger dated as of January
26, 1995 among KBLCOM Incorporated, Houston
Industries Incorporated, Time Warner Inc. and TWI
Cable Inc., including certain exhibits and a list
of schedules and exhibits thereto, incorporated by
reference to Exhibit 2(a) of the Current Report on
Form 8-K of Houston Industries Incorporated (File
No. 1-7629), dated January 26, 1995.
99(a) - Stockholder's Agreement dated as of July 6, 1995
between Houston Industries Incorporated and Time
Warner Inc., incorporated by reference to Exhibit
2 to the Schedule 13D of Houston Industries
Incorporated relating to Time Warner Inc. common
stock (File No. 5-19351) dated July 6, 1995.
-3-
99(b) - Registration Rights Agreement dated as of July 6,
1995 between Houston Industries Incorporated and
Time Warner Inc., incorporated by reference to
Exhibit 3 to the Schedule 13D of Houston
Industries Incorporated relating to Time Warner
Inc. common stock (File No. 5-19351) dated July 6,
1995.
99(c) - Certificate of the Voting Powers, Designations,
Preferences and Relative, Participating, Optional
or Other Special Rights, and Qualifications,
Limitations or Restrictions Thereof, of Series D
Convertible Preferred Stock of Time Warner Inc.,
incorporated by reference to Exhibit 4 to the
Schedule 13D of Houston Industries Incorporated
relating to Time Warner Inc. common stock (File
No. 5-19351) dated July 6, 1995.
*99(d) - Press release issued by Houston Industries
Incorporated dated July 6, 1995.
________________________
*Filed herewith.
-4-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOUSTON INDUSTRIES INCORPORATED
Date: July 21, 1995 By: /S/ MARY P. RICCIARDELLO
---------------------------
Mary P. Ricciardello
COMPTROLLER
-5-
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
2(a) Agreement and Plan of Merger dated as of January
26, 1995 among KBLCOM Incorporated, Houston
Industries Incorporated, Time Warner Inc. and TWI
Cable Inc., including certain exhibits and a list
of schedules and exhibits thereto, incorporated by
reference to Exhibit 2(a) of the Current Report on
Form 8-K of Houston Industries Incorporated (File
No. 1-7629), dated January 26, 1995.
99(a) Stockholder's Agreement dated as of July 6, 1995
between Houston Industries Incorporated and Time
Warner Inc., incorporated by reference to Exhibit
2 to the Schedule 13D of Houston Industries
Incorporated dated relating to Time Warner Inc.
common stock (File No. 5-19351) July 6, 1995.
99(b) Registration Rights Agreement dated as of July 6,
1995 between Houston Industries Incorporated and
Time Warner Inc., incorporated by reference to
Exhibit 3 to the Schedule 13D of Houston
Industries Incorporated relating to Time Warner
Inc. common stock (File No. 5-19351) dated July 6,
1995.
99(c) Certificate of the Voting Powers, Designations,
Preferences and Relative, Participating, Optional
or Other Special Rights, and Qualifications,
Limitations or Restrictions Thereof, of Series D
Convertible Preferred Stock of Time Warner Inc.,
incorporated by reference to Exhibit 4 to the
Schedule 13D of Houston Industries Incorporated
relating to Time Warner Inc. common stock (File
No. 5-19351) dated July 6, 1995.
*99(d) Press release issued by Houston Industries
Incorporated dated July 6, 1995.
_______________________
*Filed herewith.
-6-