PROSPECTUS FILED PURSUANT TO RULE 424B3
REGISTRATION NO. 333-112787
NTL INCORPORATED
[NTL LOGO]
20,194,285 SHARES OF COMMON STOCK
7,507,103 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF SERIES A WARRANTS
On January 10, 2003, the effective date of the Second Amended Joint
Reorganization Plan of NTL Incorporated and certain subsidiaries, or the
Plan, we emerged from Chapter 11 reorganization. As part of the Plan, we
issued to some of our stockholders 50,000,969 shares of our common stock,
par value $0.01 per share, and 8,750,496 Series A warrants, each of which
entitles the holder to purchase 1.178580 shares of our common stock at an
exercise price of $262.93 per share, which gives effect to an adjustment
for a subsequent issuance of shares. In addition, we issued 500,000 shares
of our common stock to the initial purchasers of our 19% senior secured
notes due in 2010, which we issued in January 2003 and redeemed in full in
November 2003. We refer to these notes in this prospectus as the exit
notes. Pursuant to a registration rights agreement signed on the effective
date of the Plan, some former stockholders who received those securities,
and who are identified as selling stockholders in this prospectus, are
entitled to have the common stock which they received, or which they are
entitled to purchase pursuant to the Series A warrants they received,
registered.
On November 17, 2003, we completed a rights offering pursuant to which
35,568,105 shares of our common stock were issued, including to some of the
selling stockholders.
This prospectus relates to the offer and sale by the selling
stockholders identified in this prospectus of:
o 10,769,468 shares of our common stock issued pursuant to the Plan,
including shares of our common stock owned by persons who may have
been considered underwriters under the Plan, issued in connection with
the exit notes and issuable upon exercise of Series A warrants;
o 9,424,817 shares of our common stock issued to selling stockholders
pursuant to the rights offering; and
o 7,507,103 shares of our common stock issuable to holders of our Series
A warrants upon exercise of their warrants.
The selling stockholders will receive all of the net proceeds from
sales of the shares registered pursuant to this prospectus and will pay all
underwriting discounts and selling commissions, if any, applicable to those
sales. We will not receive any proceeds from sales of any of these shares.
This prospectus contains a general description of the shares of common
stock which may be offered and sold. The selling stockholders may
periodically sell these shares directly or through agents, underwriters or
dealers. If required, each time a selling stockholder sells shares of
common stock, we will provide a prospectus supplement that will contain
specific information about the terms of that transaction. We urge you to
carefully read this prospectus and any accompanying prospectus supplement
before you make an investment decision.
Our common stock is currently listed on the Nasdaq National Market
under the symbol "NTLI." On June 4, 2004, the closing price for our common
stock on the Nasdaq National Market was $61.85.
WE URGE YOU TO CAREFULLY READ THE "RISK FACTORS" SECTION BEGINNING ON
PAGE 4, WHERE WE DESCRIBE RISKS ASSOCIATED WITH OUR COMMON STOCK, BEFORE
YOU MAKE YOUR INVESTMENT DECISION.
Neither the Securities and Exchange Commission, which we refer to in
this prospectus as the SEC, nor any state securities commission has
approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is June 10, 2004.
TABLE OF CONTENTS
Page
About this Prospectus......................................................ii
Where You Can Find More Information; Incorporation of Information
by Reference.............................................................ii
Forward-Looking Statements................................................iii
Presentation of Information................................................iv
Risk Factors................................................................4
Use of Proceeds............................................................15
Selling Stockholders.......................................................16
Plan of Distribution.......................................................19
Legal Matters..............................................................22
Experts....................................................................22
You should rely only on the information contained, or incorporated by
reference, in this prospectus. We have not authorized any other person to
provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. We are
not making an offer of securities in any jurisdiction where the offer or
sale is not permitted. You should assume that the information appearing in
this prospectus is accurate as of the date on the front cover of this
prospectus only. Our business, financial condition, results of operations
and prospects may have changed since that date.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the SEC utilizing a "shelf" registration process. Under this shelf
registration process, some of our stockholders may sell shares of our
common stock under our shelf registration statement. This prospectus
provides you with a general description of the securities any selling
stockholders may offer. Each time a selling stockholder sells securities,
we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may
also add, update or change information contained in this prospectus. You
should read both this prospectus and any prospectus supplement together
with additional information described under the next heading "Where You Can
Find More Information; Incorporation of Information by Reference."
WHERE YOU CAN FIND MORE INFORMATION;
INCORPORATION OF INFORMATION BY REFERENCE
We are currently subject to the information requirements of the
Securities Exchange Act of 1934, as amended, or the Exchange Act. We file
reports, proxy statements and other information under the Exchange Act with
the SEC. This prospectus constitutes part of a registration statement on
Form S-3 which we have filed with the SEC under the Securities Act, but
omits information as permitted by SEC rules. You may read these reports,
proxy statements, the related exhibits and the other materials, including
registration statements, we file with the SEC at the public reference
facilities the SEC maintains at:
The Woolworth Building Judiciary Plaza Northwestern Atrium
233 Broadway Room 1024 Center
New York, NY 10279 450 Fifth Street, N.W. Suite 1400
Washington, D.C. 20549 500 West Madison Street,
Chicago, IL 60661
You may obtain information regarding the operations of the public
reference facilities by calling the SEC at 1-806-SEC-0330. The SEC
maintains a website that contains these documents and other information
regarding us. The address of the SEC's website is http://www.sec.gov.
This prospectus constitutes a part of a registration statement on Form
S-3 which we have filed with the SEC under the Securities Act of 1933, as
amended, or the Securities Act. This prospectus does not contain all of the
information that you may need to make an investment decision. Some parts of
the prospectus are omitted as allowed by the rules and regulations of the
SEC. The SEC also allows us to "incorporate by reference" the information
which we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
later information that we file with SEC will automatically update and
supersede this information. The updated and superseded information does
not, except as so modified or superseded, constitute part of this
prospectus. We incorporate by reference in this prospectus the documents
listed below:
o Annual Report on Form 10-K for the year ended December 31,
2003, filed with the SEC on March 11, 2004;
o Quarterly Report on Form 10-Q for the quarter ended March
31, 2004, filed with the SEC on May 7, 2004;
o Our proxy statement for our 2004 Annual Meeting of
Stockholders held on May 6, 2004, filed with the SEC on
April 8, 2004;
o The description of our common stock contained in our
registration statement on Form 8-A, filed with the SEC on
January 10, 2003, as this description may be updated in any
amendment to Form 8-A;
o Current reports on Forms 8-K:
o dated March 4, 2004, relating to our earnings release
for the three months and the year ended December 31,
2003;
o dated March 19, 2004, relating to our press release
announcing the launch of our recent refinancing
transaction;
o dated April 5, 2004, relating to our press release
announcing the pricing of the(pound)375 million
aggregate principal amount of 9.75% senior notes due
2014, $425 million aggregate principal amount of 8.75%
senior notes due 2014,(euro)225 million aggregate
principal amount of 8.75% senior notes due 2014, and
$100 million aggregate principal amount of floating
rate senior notes due 2012 issued by NTL Cable PLC, or
NTL Cable, as part of our refinancing transaction;
o dated April 7, 2004, relating to our press release
regarding the consolidation of our 13 customer call
centers;
o dated April 16, 2004, relating to our press release
announcing the closing of our refinancing transaction;
o dated April 20, 2004, regarding the filing of copies of
principal agreements relating to our refinancing
transaction with the SEC; and
o dated April 22, 2004, regarding the redemption of the
10% Senior Sterling Notes due 2008 and 9 1/8% Senior
Notes due 2008 of Diamond Holdings Limited, a
wholly-owned subsidiary of Diamond Cable Communications
Limited, and the 11.2% Senior Discount Debentures of
NTL (Triangle) LLC, as part of our refinancing
transaction.
We also incorporate by reference any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until the
selling stockholders sell all the securities offered under this prospectus
or this offering terminates.
Statements contained in this prospectus as to the contents of any
contract or other documents referred to, or incorporated by reference, in
this prospectus are not necessarily complete, and, where the contract or
other document is an exhibit to a registration statement or other SEC
filing, each statement is qualified in all respects by the provisions of
the exhibit, to which reference is now made.
You may request a copy of any of our filings, at no cost, by writing
or telephoning:
Patti Leahy Virginia Ramsden
NTL Incorporated--Investor NTL Incorporated--Investor
Relations Relations
909 Third Avenue 76 Hammersmith Road
Suite 2863 London W14 8UD
New York, New York 10022 United Kingdom
United States Tel: +44 (0) 20 7967 3338
Tel: +1 610 667 5554 Fax: +44 (0) 20 7967 3322
Fax: +1 270 569 2629
For general inquiries concerning us please call:
+44 (0) 12 5675 2000
We also include information on our world wide web site which is
www.ntl.com. The information on our website is not part of this prospectus
and is not incorporated by reference into this prospectus.
FORWARD-LOOKING STATEMENTS
Various statements contained, or incorporated by reference, in this
prospectus constitute "forward-looking statements" as that term is defined
under the Private Securities Litigation Reform Act of 1995. When used, the
words "believe," "anticipate," "should," "intend," "plan," "will,"
"expects," "estimates," "projects," "positioned," "strategy," and similar
expressions identify these forward-looking statements. These
forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or
achievements or industry results to be materially different from those
contemplated, projected, forecasted, estimated or budgeted, whether
expressed or implied, by these forward-looking statements. These factors
include those set forth in the section of this prospectus captioned "Risk
Factors" beginning on page 4, for example:
o potential adverse developments with respect to our liquidity
or results of operations;
o our significant debt payments and other contractual
commitments;
o our ability to fund and execute our business plan;
o our ability to generate cash sufficient to service our debt;
o our ability to attract and retain customers, increase our
overall market penetration and react to competition from
providers of alternative services;
o our ability to integrate our billing systems;
o our significant management changes since our emergence from
Chapter 11 reorganization;
o our ability to develop and maintain back-up for our critical
systems;
o our ability to respond adequately to technological
developments;
o our ability to maintain contracts that are critical to our
operations;
o our ability to continue to design networks, install
facilities, obtain and maintain any required governmental
licenses or approvals and finance construction and
development, in a timely manner at reasonable costs and on
satisfactory terms and conditions;
o interest rate and currency exchange rate fluctuations; and
o the impact of our recent reorganization and subsequent
organizational restructuring.
We assume no obligation to update the forward-looking statements
contained, or incorporated by reference, in this prospectus to reflect
actual results, changes in assumptions or changes in factors affecting
these statements.
PRESENTATION OF INFORMATION
The terms "NTL," the "company," "we," "our" and "us" refer to NTL
Incorporated and all of its consolidated subsidiaries unless the context
suggests otherwise. The term "you" generally refers to a prospective
purchaser of our common stock.
THE COMPANY
We are a leading broadband and communications services company in the
UK and the Republic of Ireland based on total residential subscriber
numbers. We provide our services to our customers through five reportable
segments.
o ntl: home, which provides residential telephone, cable
television and Internet services, as well as wholesale
Internet access solutions to internet service providers in
the UK.
o ntl: business, which provides data, voice and Internet
services to large businesses, public sector organizations
and small- and medium-sized enterprises located near our
existing residential broadband network in the UK.
o ntl: broadcast, which provides digital television, or DTV,
analog television, or ATV, and radio broadcast transmission
services, network management, tower site rental and
satellite and media services, as well as radio
communications to public safety organizations, in the UK.
o ntl: carriers, which provides national and international
communications transport services to communications
companies in the UK and the Republic of Ireland.
o ntl: Ireland, which provides primarily cable television
services, as well as telephone and Internet services, to
residential customers and television, data, voice and
Internet services to business customers in the Republic of
Ireland.
Our reportable segments are supported by various central shared
services, including ntl: networks, which manages our UK national network.
Other shared services include finance, information technology, or IT, and
human resources. ntl: Ireland relies upon these central-shared services to
a lesser extent than our other reportable segments.
RECENT DEVELOPMENTS
REFINANCING TRANSACTION
In April 2004, we completed a refinancing transaction consisting of
the following components:
o the issuance by our indirect, wholly owned subsidiary, NTL
Cable PLC, of the following senior notes, guaranteed by us
and several other of our subsidiaries:
o (pound)375 million in aggregate principal amount of
9.75% senior notes due 2014;
o $425 million in aggregate principal amount of 8.75%
senior notes due 2014;
o (euro)225 million in aggregate principal amount of
8.75% senior notes due 2014; and
o $100 million in aggregate principal amount of floating
rate senior notes due 2012.
We collectively refer to these notes as the senior notes. The senior
notes were offered and sold under Rule 144A and Regulation S.
o the entering into by our indirect, wholly owned subsidiary,
NTL Investment Holdings Limited, of a new fully-underwritten
(pound)2,425 million senior secured credit facility, which
we refer to as our new credit facility, which includes a
(pound)250 million revolving tranche. We initially drew down
(pound)2,175 million of our new credit facility and later
drew down (pound)50 million under the revolving tranche,
(pound)20 million of which has since been repaid;
o the repayment in full of our then existing senior credit
facility; and
o the redemption, on May 13, 2004, of the 10% Senior Sterling
Notes due 2008 and 9 1/8% Senior Notes due 2008 of Diamond
Holdings Limited, a wholly-owned subsidiary of Diamond Cable
Communications Limited, which we refer to as the Diamond
notes and the 11.2% Senior Discount Debentures of NTL
(Triangle) LLC, which we refer to as the Triangle
debentures.
We collectively refer to these transactions in this prospectus as our
refinancing transaction.
As a consequence of our refinancing transaction, other assets of
$121.1 million at March 31, 2004 and the unamortized discount of $170.4
million at March 31, 2004 on the Diamond notes and the Triangle debentures
will be expensed in the three months ended June 30, 2004. In addition, the
premium payable of approximately $11 million on the redemption of the
Diamond notes will also be expensed in the three months ended June 30,
2004.
RESTRUCTURING OF CALL CENTERS
On April 7, 2004, we announced the consolidation over the next 18
months of our 13 customer service call centers, which support our ntl: home
division, into three call centers in the UK equipped for growth. Following
an internal review, three specialist call centers will be retained and
developed and will be supported by four sales and customer support sites,
located throughout the UK. As part of the consolidation, we intend to make
additional investments in technology and training in order to streamline
processes and generate efficiencies. As a result of these investments, we
expect that in the medium term we will be able to deliver a higher level of
customer service with up to 1,500 fewer employees. We expect to incur
approximately (pound)25 million, or $46 million, of costs to execute this
program.
DERIVATIVE FINANCIAL INSTRUMENTS
In April 2004, we issued long-term debt in sterling, U.S. dollars and
euros based on market conditions at the time of financing. We use
derivative financial instruments to manage some of our foreign currency and
interest rate exposures associated with the debt. Our objective is to
offset gains and losses resulting from these exposures with losses and
gains on the derivative financial instruments thereby reducing volatility
in earnings and cash flows. We do not utilize derivative financial
instruments with a level of complexity or with a risk greater than the
exposures to be managed nor do we enter into or hold derivatives for
trading purposes. The use of derivative financial instruments is subject to
internal policies that provide guidelines for control, counterparty risk
and ongoing monitoring and reporting of such activities.
In April 2004, subsequent to our refinancing transaction, we entered
into several derivative financial instruments including interest rate and
foreign currency contracts to modify the cash flow risk exposures in
connection with the issued debt. The following specific transactions were
executed:
1. a U.S. dollar/sterling forward contract to buy $212.5 million in
five years time to manage variability in the future cash flows
resulting from changes in exchange rates associated with the
potential principal repayment of the U.S. dollar denominated
8.75% senior notes referred to above;
2. cross-currency interest swaps to manage the variability in the
future cash flows resulting from changes in exchange rates
associated with all coupon payments on the U.S. dollar
denominated 8.75% senior notes through 2009; and
3. an interest rate swap that converts (pound)1.2 billion of our
senior floating rate debt to fixed-rate debt. This agreement
involves the receipt of floating rate amounts in exchange for
fixed rate interest payments through April 2007.
The above transactions will be accounted for in accordance with
provisions of SFAS No. 133 "Accounting for Derivative Financial Instruments
and Hedging Activities" as amended by SFAS No. 137 "Accounting for
Derivatives and Hedging Activities-Deferral of the Effective Date of SFAS
No. 133, an Amendment of SFAS No.133."
THE OFFERING
Issuer........................... NTL Incorporated
Securities Offered by the
Selling
Stockholders..................... 27,701,388 shares common stock, par
value $0.01 per share, including shares
of common stock issuable upon exercise
of Series A warrants, subject to
adjustment.
Common Stock Outstanding......... 87,271,839 shares as of June 4, 2004.
Voting Rights ................... Holders of our common stock have one
vote per share.
Use of Proceeds.................. We will not receive any proceeds from
the sale of common stock sold pursuant
to this prospectus. The selling
stockholders will receive all the
proceeds from the sale of common stock
sold pursuant to this prospectus.
Nasdaq Symbol.................... Our common stock currently trades under
the symbol "NTLI" on the Nasdaq
National Market.
Risk Factors..................... Please refer to the section of this
prospectus entitled "Risk Factors"
beginning on page 4 for a discussion of
risks that you should consider
carefully before deciding to invest in
shares of our common stock.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the risks described below before deciding to
invest in our common stock. In assessing these risks, you should also refer
to the other information contained, or incorporated by reference, in this
prospectus, including the financial statements and related notes. The
following risks and uncertainties are not the only ones we face. Additional
risks and uncertainties that are not currently known to us or that we
currently consider immaterial could also impair our business, financial
condition and results of operations. Various statements in this prospectus,
including the following risk factors, constitute forward-looking
statements. Please refer to the section of this prospectus entitled
"Forward-Looking Statements."
RISKS RELATED TO OUR COMPANY
WE HAVE HISTORICALLY INCURRED LOSSES AND MAY NOT BE PROFITABLE IN THE FUTURE.
We have incurred substantial losses historically and expect to
continue to incur substantial losses. We had net losses for the three
months ended March 31, 2004 of $120.3 million and net losses for the years
ended December 31:
o 2003 of $954.2 million;
o 2002 of $2,375.8 million; and
o 2001 of $11,837.0 million, which includes an asset
impairment charge of $8,160.6 million.
As of December 31, 2002, our accumulated deficit was $18,568.0
million. On January 10, 2003, we emerged from reorganization under Chapter
11 of the U.S. Bankruptcy Code and adopted fresh-start reporting. At that
time, our assets and liabilities were revalued. As of December 31, 2003,
our accumulated deficit was $954.2 million. As of March 31, 2004, our
accumulated deficit was $1,074.5 million.
We cannot be certain that we will achieve or sustain profitability in
the future. Failure to achieve profitability could diminish our ability to
sustain operations, meet financial covenants, obtain additional required
funds and make required payments on our present or future indebtedness.
WE HAVE ONLY RECENTLY BEGUN TO GENERATE POSITIVE CASH FLOW.
Pursuant to U.S. GAAP, we measure cash flow as all changes affecting
cash in the activities of operations, investments and financing.
Historically, construction costs, operating expenditures and interest costs
have contributed to our negative cash flow. We had negative cash flow of
$429.4 million for the three months ended March 31, 2004, principally due
to the net cash used in financing activities of $431.6 million which mainly
related to our voluntary repayments of debt. We had positive cash flow of
$155.2 million for the year ended December 31, 2003 principally due to the
net proceeds of $1,367 million from our rights offering. We had negative
cash flow of $179.0 million for the three months ended March 31, 2003,
principally due to the purchase of fixed assets. We believe that our cash
on hand, together with cash from operations and, if required, further
drawdowns from the (pound)250 million revolving tranche of our new credit
facility, will be sufficient to meet our cash requirements through March
31, 2005. We cannot be certain that we will sustain positive cash flow in
the future, which could adversely affect our ability to sustain our
business plan.
OUR BUSINESS IS CAPITAL INTENSIVE AND WE MAY NOT HAVE ACCESS TO CASH TO FUND
OUR FUTURE CAPITAL EXPENDITURES.
Our business requires substantial capital expenditures on a continuing
basis for various purposes, including:
o expanding, maintaining and upgrading our network;
o investing in new customer acquisitions; and
o offering new services.
From time to time, we also need to make capital expenditures for
particular projects like integrating our billing and customer service
systems. For the period from April 1, 2004 through March 31, 2005, we
expect to spend between (pound)350 million and (pound)370 million, or
between $640 million and $680 million, on acquiring fixed assets. We
believe that our cash on hand, together with cash from operations and, if
required, drawdowns under the (pound)250 million revolving tranche of our
new credit facility, will be sufficient for our cash requirements through
March 2005.
FAILURE TO CONTROL CUSTOMER CHURN MAY ADVERSELY AFFECT OUR FINANCIAL
PERFORMANCE.
The successful implementation of our business plan depends upon us
controlling our customer churn. Customer churn is a measure of customers
who stop taking our services. An increase in customer churn can lead to
increased costs and reduced revenues. In order to control customer churn,
we aim to improve our customer service. If we fail to deliver a
satisfactory level of customer service, this could contribute to an
increase in customer churn. It will be difficult to improve customer
service without an integrated billing system and customer database across
our entire network, which we do not presently have. Although we are in the
process of integrating our billing systems and customer databases, there
can be no assurance that we will be successful in achieving our goal. The
changeover to a new customer database may cause billing errors which can
lead to customer churn. If we are not successful in integrating these
systems, we could experience an adverse effect on customer service and, in
turn, an increase in our customer churn rate. In addition, our customer
churn rate may also increase if we are unable to deliver our services over
our network without interruption.
Our ability to control customer churn could also be adversely affected
by the availability of competing services in the UK, like the digital
satellite services offered by BSkyB, and digital terrestrial television
services like Freeview, a joint venture owned by the BBC, Crown Castle
International and BSkyB. Competing services also include telephone, dial-up
Internet and broadband Internet services offered by BT Group plc, or BT, or
third parties who resell some of BT's services. BT and BSkyB have regularly
launched joint campaigns to entice our customers to move to these competing
services. As we attempt to migrate customers to our DTV services, it is
possible that some of our customers may move to our competitors. In
addition, as our ATV or dial-up Internet customers choose to migrate to DTV
or broadband Internet services in areas where we do not have an adequate
network, we may lose these customers to competitors that can provide these
services. For example, of the approximately 1.5 million homes passed by our
network in London, we are not able to offer broadband Internet to
approximately 815,000 homes. However, broadband Internet is being offered
in this area by some of our competitors. Some of our customers in this area
currently use our dial-up Internet services, and may also use our telephone
or television services. These customers may discontinue some or all our
services if they decide to use the broadband Internet services provided by
our competitors.
WE COULD EXPERIENCE AN ADVERSE EFFECT ON OUR CUSTOMER SERVICE, CUSTOMER
ACQUISITIONS, CUSTOMER CHURN RATE AND OPERATING COSTS IF WE DO NOT
SUCCESSFULLY INTEGRATE OUR VARIOUS BILLING AND OPERATION PLATFORMS IN A
TIMELY MANNER.
As a result of our growth through acquisitions, we inherited numerous
billing and customer service systems. We are in the process of integrating
our various billing systems and customer databases to improve our customer
service and our collections. It is possible that billing errors and other
customer service problems will occur during this integration, potentially
resulting in increased customer churn. In addition, we cannot be certain
that this integration project will be successful. If the full integration
of our billing and customer service systems is not successful, we could
experience an adverse effect on our customer service, customer
acquisitions, customer churn rate and costs of maintaining these systems
going forward. We have attempted to integrate our billing systems in the
past, but previous integration projects were not completed.
FAILURE TO MARKET BROADBAND INTERNET SERVICES SUCCESSFULLY WILL ADVERSELY
IMPACT OUR REVENUE AND RESULTS OF OPERATIONS.
A significant component of our strategy is to successfully market
broadband Internet services to residential customers. We believe that our
"triple play" offering of telephone service, broadband access to the
Internet and digital television will prove attractive to our existing
customer base and allow us to increase our average revenue per user, or
ARPU. However, broadband Internet usage by residential customers remains a
relatively new and underdeveloped market. As of March 31, 2004, out of
approximately 6.8 million homes currently able to receive broadband
Internet service from us, we had approximately 1.0 million residential
customers receiving this service. In addition, we face significant
competition in these markets through alternative Internet access media,
including digital subscriber line, or DSL, services offered by companies
like BT and Freeserve and dial-up services offered by many companies,
including America Online. If customers are not prepared to pay a premium
for broadband Internet access, compared to less expensive slower speed
services like dial-up Internet access, we may not be able to successfully
market broadband Internet services. If we are unable to charge prices for
broadband Internet services that are anticipated in our business plan in
response to competition or if our competition delivers better services to
our customers, our results of operations will be adversely affected.
WE ARE SUBJECT TO TAXATION IN MULTIPLE JURISDICTIONS.
We are subject to taxation in the U.S., the UK and the Republic of
Ireland. Our effective tax rate and tax liability will be affected by a
number of factors, like the amount of taxable income in particular
jurisdictions, the tax rates in these jurisdictions, tax treaties between
jurisdictions, the extent to which we transfer funds to and repatriate
funds from our subsidiaries, and future changes in the law. Our tax
liability will be dependent upon our operating results and the manner in
which our operations are funded. Generally, the tax liability for each
legal entity is determined either on a non-consolidated basis or on a
consolidated basis only with other entities incorporated in the same
jurisdiction. In either case, our tax liability is determined without
regard to the taxable losses of non-consolidated affiliated entities. As a
result, we may pay income taxes in one jurisdiction for a particular period
even though on an overall basis we incur a net loss for that period.
WE HAVE HISTORICALLY HAD A DEFICIENCY OF EARNINGS TO FIXED CHARGES AND OUR
EARNINGS IN THE FUTURE MAY NOT BE SUFFICIENT TO COVER THOSE FIXED CHARGES.
For the three months ended March 31, 2004, and the years ended
December 31, 2003, 2002, 2001, 2000 and 1999, our earnings were
insufficient to cover fixed charges. The deficiency was approximately
$116.8 million for the three months ended March 31, 2004, $959.6 million
for the year ended December 31, 2003, $2,447.8 million for the year ended
December 31, 2002, $11,786.6 million for the year ended December 31, 2001,
$2,563.1 million for the year ended December 31, 2000 and $785.2 million
for the year ended December 31, 1999. Fixed charges consist of interest
expense, including capitalized interest, amortization of fees related to
debt financing and rent expense deemed to be interest. Our earnings in the
future may not be sufficient to cover those fixed charges.
OUR INTERNAL CONTROLS NEED TO BE IMPROVED.
Following our emergence from Chapter 11 reorganization, we undertook
an examination of a number of our internal controls and procedures. From
that examination, we determined that some of our controls and procedures
should be improved. For example, as a result of our historical growth
through acquisitions, our internal control systems are derived from
disparate businesses. We identified the need to improve the documentation
of our detailed accounting policies and procedures to ensure that they are
consistently applied throughout our business. We also identified the need
to improve our procedures for reconciling between our telephone call data
records and billing systems and the need for a comprehensive disaster
recovery plan.
In addition, we are examining methods for improving management's
control of operations by developing consistent policies for the procurement
and management of contracts with third-party vendors. Furthermore, we are
working to improve our operating practice and procedures relating to
budgeting, authorizing, monitoring and appraising major projects. Although
we have policies in place, we are working to ensure that they are
consistently applied.
Pursuant to the Sarbanes-Oxley Act of 2002, we will be required to
include in our Form 10-K filings, beginning with our Form 10-K for the year
ending December 31, 2004, a report by our management as to the
effectiveness of our internal controls over financial reporting and our
independent auditors will be required to attest to and report on this
evaluation by management. We have set up a project team that is working to
document, evaluate and test our internal controls to enable our management
to report that we have effective internal controls over financial reporting
at December 31, 2004. There can be no assurance that we will achieve this
objective. In particular, if we are unable to complete the integration of
our billing systems and customer databases by December 31, 2004, it may
impact our ability to fully document, evaluate and test the effectiveness
of the internal controls relating to these systems and databases prior to
that date.
WE ARE SUBJECT TO SIGNIFICANT COMPETITION IN EACH OF OUR REPORTABLE SEGMENTS
AND WE EXPECT THAT COMPETITION WILL INTENSIFY.
BT and BSkyB dominate some of the markets in which we operate our
telephone and television services. These competitors each have very large
market shares and generally have fewer financial and operating constraints
than we have. As existing technology develops and new technologies emerge,
we believe that competition will intensify in each of our business areas.
For example, mobile telephone services are becoming increasingly popular as
an alternative to fixed line services like ours. In addition, the
imposition of carrier pre-select on BT is encouraging new companies to
enter the telephone resale market which will increase pricing pressure on
our telephone services. In the digital television market, Freeview is
expected to launch a low-cost pay-TV service that may compete for digital
television customers. Also, BT, or a third party to whom BT resells
capacity may provide program content like video-on-demand over the BT DSL
network. Some of our competitors have substantially greater financial and
technical resources than we have. Moreover, we may be required to reduce
prices if our competitors reduce prices or as a result of any other
downward pressure on prices for telecommunications services. For example,
BT recently announced plans to reduce the price of calls by about 10% for
approximately 6 million of its telephone customers. Any reduction in our
prices could have an adverse effect on our results of operations and
financial condition.
In addition, BSkyB has access to various movie and sports programming
content that is used to create some of the most popular pay-TV channels in
the UK. While we carry several of those channels on our systems, we are
dependent upon BSkyB to provide us with this content. The Office of Fair
Trading, or OFT, has determined that BSkyB was dominant in some wholesale
premium pay-TV markets in the UK, specifically in its offering of various
sports content and premium pay-TV movie channels. Although this
determination of "dominance" could constrain BSkyB in its pricing of these
channels, the current pricing for this content remains unfavorable to us.
We and BSkyB have reached agreement on the main principles of a marketing
incentive scheme that will provide us with improved economic terms based on
increased sales of BSkyB's premium movie and sports channels. Conclusion of
this deal is subject to various matters, including the negotiation of a
long form carriage agreement. There can be no assurance that we will enter
into a definitive agreement with BSkyB, that any changes to the existing
pricing arrangements will be made and if made, that any changes will prove
beneficial to us.
Our contract with BSkyB for the supply of its basic channels expires
in 2006. If it is not renewed, this could result in a loss of present
customers or make it more difficult for us to attract new customers and
this could have a material adverse effect on our business and financial
condition.
WE HAVE EXPERIENCED SIGNIFICANT CHANGES IN OUR SENIOR MANAGEMENT AND OUR
MANAGEMENT TEAM HAS BEEN TOGETHER FOR A LIMITED TIME.
A small number of key executive officers manage our businesses. Since
completion of the Plan, there have been a number of changes in our senior
management team. In March 2003, James F. Mooney, our chairman, and Scott E.
Schubert, our chief financial officer, joined us. In April 2003, Simon P.
Duffy joined us as our chief operating officer. In August 2003, Barclay
Knapp resigned as our president and chief executive officer and was
replaced by Mr. Duffy. The loss of one or more of our executive officers
could have a material adverse effect on us. A number of other executive
officers, who were based in New York, also resigned in 2003. The
responsibilities of these persons were delegated to existing and new
employees.
Because of these management departures, additions and changes in
roles, our current management team has not worked together in their current
positions for a significant length of time and may not be able to work
together effectively in these new positions to successfully develop and
implement our business strategies. In addition, as a result of these
management changes, management may need to devote significant attention and
resources to preserve and strengthen relationships with employees and
customers. All members of our management team will need to overcome the
challenges created by any vacancies in our senior management positions that
remain unfilled. We believe that our future success will depend in large
part on our continued ability to attract and retain highly skilled and
qualified personnel. Although we have entered into employment contracts
with most of our executive officers, those contracts cannot prevent these
individuals from resigning. In most cases, if an individual does resign, he
is bound by non-compete clauses which may or may not discourage the
individual from leaving.
If our new management team is unable to develop successful business
strategies, achieve our business objectives or maintain effective
relationships with employees and customers, our ability to grow our
business and successfully meet operational challenges could be impaired.
A CATASTROPHE AT ONE OR MORE OF THE LOCATIONS WHERE OUR CRITICAL CABLE
NETWORK SYSTEMS ARE HOUSED COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS.
Our business is dependent on many sophisticated critical systems,
which support all of the various aspects of our cable network operations.
The hardware supporting a large number of critical systems for our cable
network is housed in a relatively small number of locations. If one or more
of these locations were to be subject to fire, natural disaster, terrorism
including electronic sabotage, power loss or other catastrophe, we would
not be able to pass transmission signals over our cable network. This would
cause serious harm to our business. Although we have disaster recovery
plans in respect of our ntl: networks and the network of ntl: broadcast
which are designed to prevent or mitigate a potential failure, we cannot
assure you that any disaster recovery, security and service continuity
protection measures we have, or may take, in the future will be sufficient.
In addition, although we build our cable network in resilient rings to
ensure the continuity of network availability in the event of any damage to
our underground fibers, it is likely that no transmission signals will be
able to pass if any ring is cut twice. In particular, a portion of our
Irish operation is dependent upon our Sirius undersea ring connecting the
Republic of Ireland to the UK.
FAILURE IN OUR TECHNOLOGY OR TELECOMMUNICATIONS SYSTEMS COULD SIGNIFICANTLY
DISRUPT OUR OPERATIONS, WHICH COULD REDUCE OUR CUSTOMER BASE AND RESULT IN
LOST REVENUES.
Our success depends, in part, on the continued and uninterrupted
performance of our IT systems as well as our customer service centers. Our
computer systems are vulnerable to damage from a variety of sources,
including telecommunications failures, malicious human acts and natural
disasters. Moreover, despite security measures, our servers are potentially
vulnerable to physical or electronic break-ins, computer viruses and
similar disruptive problems. Despite the precautions we have taken,
unanticipated problems affecting our systems could cause failures in our IT
systems, including systems that are critical for timely and accurate
customer billing, or our customer service centers. Sustained or repeated
system failures that interrupt our ability to provide service to our
customers or otherwise meet our business obligations in a timely manner
would adversely affect our reputation and result in a loss of customers and
net revenue. Although some of our IT systems are covered by a disaster
recovery plan, we are currently developing a comprehensive disaster
recovery plan for all of our IT systems in conjunction with the integration
of our customer and billing databases. We cannot assure you that our
existing disaster recovery plan will be sufficient, nor whether any changes
to that plan could be implemented on a timely basis, or at all, and if
implemented will be sufficient.
WE DO NOT INSURE THE UNDERGROUND PORTION OF OUR CABLE NETWORK AND VARIOUS
PAVEMENT-BASED ELECTRONICS ASSOCIATED WITH OUR CABLE NETWORK.
We obtain insurance of the type and in the amounts that we believe are
customary for similar companies. Consistent with this practice, we do not
insure the underground portion of our cable network or various
pavement-based electronics associated with our cable network. Substantially
all of our cable network is constructed underground. As a result, any
catastrophe that affects our underground cable network or our
pavement-based electronics could prevent us from providing services to our
customers and result in substantial uninsured losses.
THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGES AND
WE CANNOT PREDICT THE EFFECT OF ANY CHANGES ON OUR BUSINESSES.
The services we provide our customers may become outdated due to
technological breakthroughs rendering our services out of date. In
addition, our business plan contemplates the introduction of services using
new technologies. Our investments in those new services, like those related
to the third generation, or 3G, mobile network, may prove premature. We may
not realize anticipated returns on these new products. The cost of
implementation of emerging and future technologies could be significant.
Our ability to fund this implementation may depend on our ability to obtain
additional financing.
OUR PROSPECTS WILL DEPEND, IN PART, ON OUR ABILITY TO CONTROL OUR COSTS WHILE
MAINTAINING AND IMPROVING OUR SERVICE LEVELS.
As a result of capital constraints imposed on our business during our
restructuring, we reduced expenditures in a variety of areas, including a
substantial reduction in capital expenditures, a reduction in the number of
our employees and the outsourcing of some functions. Some of these
expenditures, particularly capital expenditures and employee costs, may
increase in future periods in order to accommodate growth in our business.
Our prospects will depend in part on our ability to continue to control
costs and operate more efficiently, while maintaining and improving our
existing service levels. In particular, in order to reduce costs, we are in
the process of negotiating with several of our vendors for better terms
under existing and future agreements. We cannot be certain that these
negotiations will conclude successfully.
NTL: BROADCAST AND NTL: CARRIERS ARE DEPENDENT UPON ITV AND OTHER CONTRACTS.
ntl: broadcast has contracts for the provision of television
broadcasting transmission services across the UK to 15 regional commercial
television stations, collectively known as ITV, Channel 4/S4C and five,
formerly Channel 5. Although the ITV companies and Channel 4/S4C have
renewed their contracts with us in the past, we cannot assure you that they
will do so upon expiration of their current contracts in 2012. Our contract
with five is up for renewal in 2007. Even if the current contracts are
renewed, the terms of renewal may be on a basis less favorable to us or may
not cover all of the transmission services that we currently provide to
them. The UK government may decide to reallocate the analog spectrum
currently used by these broadcasters, forcing them to migrate to digital
spectrums before the expiration of these contracts. This would result in
the termination of our analog contracts prior to their expiration dates,
which would have an adverse effect on our results of operations.
Other contracts important to ntl: broadcast include a contract for the
provision of communications services to the Metropolitan Police in London.
This contract is subject to renewal in October 2004. We cannot assure you
that the renewal will be on the same basis as the existing contract or that
the Metropolitan Police will not seek other parties to provide some or all
of the services we currently provide for them. The Metropolitan Police in
London is our largest public safety customer.
ntl: carriers has a contract with Orange Personal Communications
Services Limited, or Orange, for the design, construction and operation of
elements of Orange's mobile network in the UK. The minimum term of this
contract is scheduled to expire in 2006 and we cannot assure you that it
will be renewed.
In addition, ntl: carriers currently has a contract with Vodafone
Group Plc, or Vodafone, for the supply of mobile transmission services,
including core inter-switch and backhaul network capacity in the UK. This
contract is scheduled to terminate in October 2004, and we do not expect
that this contract will be renewed.
NTL: BROADCAST IS DEPENDENT UPON SITE SHARING ARRANGEMENTS WITH ITS PRINCIPAL
COMPETITOR.
As a result of various factors, including a natural shortage of
potential transmission sites and the difficulties in obtaining local
planning permission for erection of further masts, we made arrangements
with Crown Castle UK Limited, or Crown, a subsidiary of Crown Castle
International Corp., to share a large number of analog tower sites that are
owned by either us or Crown. We cannot assure you that these site sharing
arrangements will remain in place. Termination of the site sharing
arrangements would have a material adverse effect on us, particularly if we
no longer have the use of transmission sites owned by Crown.
We are negotiating a formal arrangement with Crown pending
finalization of a digital site sharing agreement that is expected to be on
terms similar to our existing analog site sharing agreement. We currently
have an informal arrangement with Crown with respect to sharing digital
sites. We cannot assure you that we will reach a formal arrangement with
Crown with respect to digital site sharing.
OUR BUSINESS IS SUBJECT TO GOVERNMENT REGULATION AND CHANGES IN CURRENT
REGULATIONS MAY ADVERSELY AFFECT US.
Our principal business activities are regulated and supervised by
various governmental bodies. For example, the majority of the prices that
our ntl: broadcast segment may charge the ITV companies and Channel 4/S4C
for transmission services are subject to regulation by our primary
regulator, the Office of Communications, or OFCOM.
In addition, OFCOM launches regulatory initiatives from time to time.
For example, priorities in OFCOM's 2004/5 Annual Plan includes the
promotion of effective and sustainable competition in both the wholesale
and retail broadband markets, addressing the need for greater competition
in fixed-line telephone markets, and reviewing the market for local loop
unbundling. Since BT is the dominant supplier in these markets, OFCOM may
require BT to price its wholesale services so that its network operator
competitors can compete effectively by making sufficient margin on their
activities. While the imposition of this requirement on BT may allow us to
benefit from improved wholesale pricing, it may force retail prices down
generally in these markets, including the charges we make to our customers.
OFCOM initiatives may also require significant expenditures by us. For
example, OFCOM recently increased the amount of the funds that
communications providers must hold to cover any liabilities that they may
incur in installing infrastructure on public land.
Changes in laws, regulations or governmental policy or the
interpretations of those laws or regulations affecting our activities, like
licensing requirements, changes in price or cost regulation and
deregulation of interconnection arrangements, could have a material adverse
effect on us. For example, in the past OFCOM has reserved the right to
impose universal service obligations on communication service providers.
We are also subject to regulatory initiatives of the European Union,
or the EU. Changes in EU directives may reduce our range of programming and
increase the costs of purchasing television programming or require us to
provide access to our cable network infrastructure to other service
providers. Any of these changes could have a material adverse effect on our
results of operations. In addition, EU regulators are proposing the
adoption of a common European standard for set-top boxes used in customer
premises equipment that is not compatible with our set-top boxes. If this
change is adopted, we could incur substantial costs to modify our
equipment.
OUR COMPLETED CHAPTER 11 REORGANIZATION MAY HARM OUR BUSINESS AND OUR BRAND
NAME.
Adverse publicity or news coverage regarding our recent Chapter 11
reorganization and financial condition could have an adverse effect on
parts of our business. We may find it difficult to convince customers to
subscribe for our services and any negative publicity or news coverage may
be used by our competition to convince customers to discontinue our
service, increasing customer churn. Although we have completed the Plan, it
is possible that this negative publicity will have a long-term effect on us
and our brand name. For example, our recent reorganization has had an
adverse impact on our credit standing with our suppliers and other trade
creditors. This increases our costs of doing business and hinders our
negotiating power with our suppliers and other trade creditors. Similarly,
negative press about the financial condition of other cable and pay
television operations and alternative telecom carriers in general may
affect our reputation.
FRESH-START REPORTING MAY MAKE FUTURE FINANCIAL STATEMENTS DIFFICULT TO
COMPARE.
As a result of the completion of the Plan, we are operating our
business under a new capital structure. In addition, we adopted fresh-start
reporting in accordance with SOP 90-7 as of January 1, 2003. Because SOP
90-7 required us to reset our assets and liabilities to current fair
values, our financial condition and results of operations after our
reorganization will not be comparable in some material respects to the
financial condition or results of operations reflected in our historical
financial statements for periods prior to January 1, 2003 included, or
incorporated by reference, in this prospectus. This may make it difficult
to assess our future prospects based on historical performance.
WE ARE SUBJECT TO CURRENCY AND INTEREST RATE RISKS.
We encounter currency exchange rate risks because substantially all of
our revenues and operating expenses are earned and paid primarily in pounds
and, to a lesser extent, euros, but we pay interest and principal
obligations with respect to a portion of our existing indebtedness in U.S.
dollars and euros. To the extent that the pound declines in value against
the U.S. dollar, the effective cost of servicing our U.S. dollar
denominated debt will be higher. To the extent that the pound declines in
value against the euro, the effective cost of servicing our euro
denominated debt will be higher. Changes in the exchange rate result in
foreign currency transaction gains or losses. As of March 31, 2004, $494.3
million, net of unamortized discount of $132.9 million, or 9.0%, of our
long-term debt was denominated in U.S. dollars. Following our refinancing
transaction, $525 million, or approximately 9.6%, of our long-term debt is
denominated in U.S. dollars and approximately 4.9%, or (euro)225 million is
denominated in euros.
Because the revenues and expenses from our principal operations are
denominated primarily in pounds but we report our financial results in U.S.
dollars, our financial results are also impacted by currency fluctuations
which are unrelated to our underlying results of operations.
We are also subject to interest rate risk because we have substantial
indebtedness at variable interest rates. As of March 31, 2004, our interest
was determined on a variable basis on $4,692.0 million, or 85.7%, of our
long-term debt, net of unamortized discount, then outstanding. An increase
in interest rates of 0.25% would have increased our interest expense by
approximately $11.7 million per year. Following our refinancing
transaction, and assuming a drawdown of (pound)50 million of our revolving
tranche, or $87.9 million, approximately $4,012.4 million, or 73.3%, of
total long-term debt is subject to variable interest rates.
We are required under the terms of our new credit facility to enter
into various currency and interest hedging contracts. In April 2004, we
entered into several derivative financial instruments including interest
rate and foreign currency contracts to modify the cash flow risk exposures
in connection with our issued debt. The specific transactions we have
executed are described in "The Company--Recent Developments--Derivative
Financial Instruments." We cannot assure you that these transactions, or
any other hedging transactions we might enter into, will be successful or
that shifts in the currency exchange rates or interest rates will not have
a material adverse effect on us.
PROVISIONS OF OUR DEBT AGREEMENTS, OUR STOCKHOLDER RIGHTS PLAN, OUR
CERTIFICATE OF INCORPORATION AND DELAWARE LAW COULD PREVENT OR DELAY A CHANGE
OF CONTROL OF OUR COMPANY.
We may, under some circumstances involving a change of control of our
company, be obligated to offer to repurchase substantially all of our
outstanding senior notes and repay our outstanding indebtedness under our
new credit facility and other indebtedness. We cannot assure you that we
will have available financial resources necessary to repurchase those notes
or repay that indebtedness in those circumstances.
If we cannot repurchase those senior notes or repay our indebtedness
under our new credit facility or other indebtedness in the event of a
change of control of our company, the failure to do so would constitute an
event of default under the agreements under which that indebtedness was
incurred and could result in a cross-default under other indebtedness that
does not have similar provisions. The threat of this could have the effect
of delaying or preventing transactions involving a change of control of our
company, including transactions in which our stockholders would receive a
substantial premium for their shares over the then current market prices,
or otherwise which they may deem to be in their best interest.
Our stockholder rights plan, some provisions of our amended and
restated certificate of incorporation and our ability to issue additional
shares of common stock or preferred stock to third parties without
stockholder approval may have the effect, alone or in combination with each
other, of preventing or making more difficult transactions involving a
change of control of our company. In addition, we are subject to the
Delaware anti-takeover law that prohibits some Delaware corporations from
engaging in business combinations or other transactions with any
stockholder who owns 15% or more of the corporation's outstanding voting
stock, for three years following the date that the stockholder acquired
that interest.
ONE OF OUR LARGEST STOCKHOLDERS HAS AN INFLUENCE OVER OUR BUSINESS AND
AFFAIRS.
As of June 4, 2004 W.R. Huff Asset Management Co., L.L.C., or W.R.
Huff Asset Management, owned approximately 12.9% of our outstanding common
stock.
William R. Huff is the principal and president of W.R. Huff Asset
Management and serves on our board of directors. Edwin M. Banks is a
portfolio manager for W.R. Huff Asset Management and serves on our board of
directors. As a result of these relationships, when conflicts between the
interests of W.R. Huff Asset Management and the interests of our other
stockholders arise, these directors may not be disinterested. These
stockholders may also from time to time make significant investments in
other telecommunications companies, including their present investment in
Telewest Communications plc, or Telewest. A number of our significant
stockholders and their affiliates, including W.R. Huff Asset Management,
Oaktree Capital Management, LLC, or Oaktree Capital , and Franklin Mutual
Advisers, LLC, or Franklin Mutual Advisers, are creditors of Telewest. On
April 26, 2004, courts in the UK directed that a meeting of creditors of
Telewest be convened for the purpose of considering and approving a scheme
of arrangement relating to the debt for equity swap announced by Telewest
on September 15, 2003. Subject to the creditors' meetings to be held in the
near future and final court approval, W.R. Huff Asset Management, Oaktree
Capital and Franklin Mutual Advisers and their affiliates will become
significant stockholders of Telewest. This may result in conflicts of
interest. In addition, these stockholders may own debt securities of our
subsidiaries, including the senior notes. Actions these stockholders take
relating to these investments may conflict with the interests of our other
stockholders. Under Delaware law, although our directors and officers have
a duty of loyalty to us, transactions that we enter into in which a
director has a conflict of interest are generally permissible so long as
the material facts as to the director's or officer's relationship or
interest as to the transaction are disclosed to our board of directors and
a majority of our disinterested directors approves the transaction, or the
transaction is otherwise fair to us.
Our seven largest stockholders, including W.R. Huff Asset Management,
own approximately 60.0% of our outstanding common stock as of June 4, 2004.
RISKS RELATED TO OUR COMMON STOCK
WE DO NOT EXPECT TO PAY DIVIDENDS ON OUR COMMON STOCK IN THE FORESEEABLE
FUTURE.
We have never paid cash dividends on our common stock and do not
expect to pay dividends on our common stock in the foreseeable future. Our
payment of any dividends in the future will be at the discretion of our
board of directors and will depend upon various factors, including future
earnings, operations, capital requirements, our general financial condition
and the general financial condition of our subsidiaries. In addition, under
Delaware law, unless a corporation has available surplus it cannot declare
or pay dividends on its capital stock.
Furthermore, our various debt agreements impose limitations on the
payment of dividends, the distribution of earnings and the making of other
payments to us by our subsidiaries. These restrictions limit amounts
available for us to pay dividends on our common stock. The terms of any
future indebtedness may contain similar limitations.
THE MARKET PRICE OF OUR COMMON STOCK IS SUBJECT TO VOLATILITY AS WELL AS
TRENDS IN THE TELECOMMUNICATIONS INDUSTRY IN GENERAL.
The current market price of our common stock may not be indicative of
prices that will prevail in the trading markets in the future. The market
price of our common stock could be subject to wide fluctuations in response
to numerous factors, many of which are beyond our control. These factors
include actual or anticipated variations in our operational results and
cash flow, our earnings releases and our competitors' earnings releases,
announcements of technological innovations, changes in financial estimates
by securities analysts, trading volume, market conditions in the industry
and the general state of the securities markets and the market for
telecommunications stocks, changes in capital markets that affect the
perceived availability of capital to communications companies, governmental
legislation or regulation, currency and exchange rate fluctuations, as well
as general economic and market conditions, like recessions. In particular,
valuations of telecommunications companies have generally fallen over the
past few years. Trends in this industry are likely to have a corresponding
impact on the price of our common stock.
SALES OF LARGE AMOUNTS OF OUR COMMON STOCK OR THE PERCEPTION THAT SALES COULD
OCCUR MAY DEPRESS OUR STOCK PRICE.
As of June 4, 2004, there were 87,271,839 shares of common stock
outstanding. At the time of our emergence from Chapter 11, we granted to
the selling stockholders rights to cause us, at our expense, to file one or
more registration statements under the Securities Act covering resales of
shares of our common stock held by them, including upon exercise of the
Series A warrants. In addition, we have granted to some of the selling
stockholders and certain investment funds and accounts managed by Oaktree
Capital similar registration rights covering resales of shares of common
stock acquired by them upon exercise of rights in the rights offering.
These shares may also be sold under Rule 144 under the Securities Act,
depending on their holding period and subject to significant restrictions
in the case of shares held by persons deemed to be our affiliates.
Sales of large blocks of shares of our common stock in the public
market could lower our stock price and impair our ability to raise funds in
future stock offerings.
WE MAY IN THE FUTURE SEEK TO RAISE FUNDS THROUGH EQUITY OFFERINGS, WHICH
COULD HAVE A DILUTIVE EFFECT ON OUR COMMON STOCK.
In the future we may determine to raise capital through offerings of
our common stock, securities convertible into our common stock, or rights
to acquire these securities or our common stock. In any case, the result
would ultimately be dilutive to our common stock by increasing the number
of shares outstanding. We cannot predict the effect this dilution may have
on the price of our common stock.
INTERESTS OF OUR STOCKHOLDERS MAY ALSO BE DILUTED BY POTENTIAL ADJUSTMENTS TO
OUTSTANDING OPTIONS AND WARRANTS AND THE TREATMENT OF OPTIONS MAY HAVE AN
ADVERSE ACCOUNTING IMPACT.
We had outstanding options to purchase 3,231,700 shares at an average
exercise price of $19.01 per share under the Amended and Restated NTL
2004 Stock Incentive Plan, formerly known as the NTL 2003 Stock Option
Plan, as of June 4, 2004. Under the terms of the plan, in the event of a
transaction affecting our capitalization, the compensation committee of our
board of directors shall proportionately adjust the number of shares
covered by outstanding options and the exercise price of these options so
as to, in the committee's judgment and sole discretion, prevent the
diminution or enlargement of the benefits intended by the plan. The
committee has not made any determination at this time whether any
adjustment will be made to the outstanding options. In making this
determination, the committee will take into account various factors. Under
generally accepted accounting principles, there may be adverse accounting
consequences in connection with equity restructurings, including rights
offerings, if these accounting principles require that equitable or other
appropriate adjustments be made to our outstanding options to avoid these
adverse consequences and no adjustments are made. If these adverse
accounting consequences were to occur, we would be required to expense over
the remaining vesting period of our outstanding options the difference
between the market value of our shares after giving effect to the rights
offering and the exercise prices for all outstanding options. Under some
limited circumstances, for each subsequent quarter, we may be required to
take into account in reporting this expense change to the market price of
our shares as of the end of each quarter.
RISKS RELATED TO OUR CAPITAL STRUCTURE
OUR SUBSTANTIAL AMOUNT OF DEBT COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH
AND DIMINISH STOCKHOLDER VALUE.
We are highly leveraged. As of March 31, 2004, our long-term
indebtedness was (pound)3.0 billion, or $5.5 billion. Our substantial
indebtedness could adversely affect us by:
o making it more difficult for us to satisfy our payment and
other obligations under the senior notes and our payment and
other obligations under our new credit facility;
o limiting our ability to borrow money for working capital,
capital expenditures, acquisitions or other purposes, if
needed, and increasing the cost of any of these borrowings;
o requiring us to dedicate a substantial portion of our cash
flow from operations to service our debt, which reduces the
funds available for operations and future business
opportunities;
o limiting our flexibility in responding to changing business
and economic conditions, including increased competition and
demand for new services; and
o placing us at a disadvantage when compared to our
competitors that have less debt.
Under the terms of the indenture governing the senior notes, we could
incur significant additional indebtedness in the future that would
intensify the leverage-related risks described above.
Interest on debt under our new credit facility and interest on the
floating rate senior notes are calculated on a floating rate basis. As of
March 31, 2004, 85.7% of our long-term indebtedness accrues interest at
variable interest rates. Following the refinancing transaction, 73.3% of
our total long-term indebtedness accrues interest at variable interest
rates. An increase in interest rates would increase our interest expense
under our new credit facility to the extent that this debt is not covered
by any hedging instrument, which would reduce the funds available to make
payments on the senior notes and any other debt we have and the funds
available to finance our operations and future business opportunities.
While we are obliged to hedge a portion of the outstanding debt under our
new credit facility against fluctuations in interest rates and may wish to
minimize further our exposure to increases in interest rates through
additional hedging arrangements, we may still be subject to interest rate
increases.
WE MAY NOT HAVE ENOUGH CASH AVAILABLE TO SERVICE OUR DEBT.
Our ability to make payments on the senior notes and meet our other
debt service obligations, and to fund planned capital and development
expenditures or opportunities that may arise, including acquisitions of
other businesses, will depend on our ability to generate sufficient cash in
the future. Our ability to generate cash is affected by our success in
implementing our business strategy, as well as general economic, financial,
competitive, regulatory, technological and other factors that are beyond
our control. If we cannot generate sufficient cash to meet our debt service
requirements, we may:
o be forced to reduce or delay our business activities and
capital expenditures;
o sell assets;
o issue additional debt or equity capital; or
o restructure or refinance all or a portion of our debt.
If we are not able to refinance our debt, obtain additional financing
or sell assets on commercially reasonable terms, or at all, we may not be
able to satisfy our obligations with respect to our debt. The terms of our
existing and future indebtedness may limit our ability to pursue any of
these alternatives or to use any excess cash flow or cash proceeds to
service our debt. Our new credit facility includes terms which require that
excess cash flow and cash generated from some asset sales, equity and debt
issuances must be used to mandatorily prepay the principal amounts
outstanding under our new credit facility. In addition, NTL Cable's
subsidiaries may not have sufficient funds to repay all of their
obligations, including their intercompany loans, and to make payments to
NTL Cable to enable it to make payments on the senior notes. For example,
the indenture governing the senior notes allows subsidiaries of NTL Cable
to incur indebtedness which by its terms limits the ability of these
subsidiaries to pay dividends to NTL Cable. If we default on any of our
debt instruments, borrowings under other debt instruments that contain
cross-default or cross-acceleration provisions may be accelerated or become
payable on demand.
WE ARE A HOLDING COMPANY AND ARE DEPENDENT UPON CASH FLOW FROM OUR
SUBSIDIARIES TO MEET OUR OBLIGATIONS.
We and a number of our subsidiaries are holding companies with no
independent operations or significant assets other than investments in
subsidiaries. We and each of these holding companies depend upon the
receipt of sufficient funds from our subsidiaries to meet our obligations.
The inability to transfer cash among entities within our restricted group
may mean that even though we may have sufficient resources to meet our
obligations, we may not be permitted to make the necessary transfers from
one entity in our restricted group to another entity in our restricted
group in order to make payments to the entity which has the obligations to
be met.
The terms of our new credit facility and the senior notes limit the
payment of dividends, loan repayments and other distributions to or from
these companies under many circumstances. Various agreements governing the
debt that may be issued by our subsidiaries from time to time may restrict
and, in some cases, prohibit the ability of these subsidiaries to move cash
within our restricted group. Under the indenture governing the senior
notes, subsidiaries of NTL Cable are permitted to incur additional
indebtedness which may contain similar restrictions. Some of our
subsidiaries are also dependent on funding from NTL Cable or other holding
companies. In addition, a default by any subsidiary on its debt is likely
to result in reduced dividends or distributions by the defaulting entity to
us. Reduced distributions by any of these subsidiaries could have a
material adverse effect on us.
Applicable law may also limit the amounts that some of our
subsidiaries are permitted to pay as dividends or distributions on their
equity interests.
THE RESTRICTIVE COVENANTS UNDER OUR INDEBTEDNESS MAY LIMIT OUR ABILITY TO
MAKE PAYMENTS ON OUR INDEBTEDNESS OR OTHERWISE OPERATE OUR BUSINESS.
The agreements governing our outstanding indebtedness contain
restrictive covenants that limit the discretion of our management over
various business matters. For example, the covenants restrict our ability
to:
o incur or guarantee additional indebtedness;
o pay dividends or make other distributions, or redeem or
repurchase equity interests or subordinated obligations;
o make investments;
o sell assets, including the capital stock of subsidiaries;
o enter into sale/leaseback transactions;
o create liens;
o enter into agreements that restrict the restricted
subsidiaries' ability to pay dividends, transfer assets or
make intercompany loans;
o merge or consolidate or transfer all or substantially all of
our assets; and
o enter into transactions with affiliates.
These restrictions could materially adversely affect our ability to
finance our future operations or capital needs or to engage in other
business activities that may be in our best interests. We may also incur
other indebtedness in the future that may contain financial or other
covenants more restrictive than those applicable under our existing
indebtedness.
In addition, our new credit facility requires us to comply with
various financial covenants. Events beyond our control may affect our
ability to comply with these financial covenants.
Our failure to comply with these financial covenants and other
obligations could cause an event of default under our new credit facility.
If an event of default occurs, our lenders could elect to declare all
amounts outstanding and accrued and unpaid interest on our new credit
facility to be immediately due, and the lenders could then foreclose upon
the assets securing our new credit facility. A payment default on other
indebtedness may also constitute an event of default under the terms of the
senior notes. If an event of default occurs, we cannot assure you that we
would have sufficient assets to repay all of our obligations.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock
sold by the selling stockholders pursuant to this prospectus. The selling
stockholders will receive all of the proceeds from any of these sales.
SELLING STOCKHOLDERS
The following chart sets forth as of June 4, 2004 information with
respect to the amount of common stock held by each of the selling
stockholders listed in this prospectus. The chart shows the number of
shares of common stock beneficially owned by the selling stockholders as of
the date indicated, the percentage of the class, the maximum number of
shares of common stock being offered, the number of shares of our common
stock owned by each of the selling stockholders after the offering is
completed and the percentage of the class. The chart also indicates the
nature of any position, office or other material relationship which the
selling stockholder has had within the past three years with us or any of
our predecessors or affiliates. An additional 11,363,576 shares of common
stock are registered on the registration statement of which this prospectus
forms a part. We have agreed to register those additional shares pursuant
to agreements with some of our stockholders who are not named as selling
stockholders herein. Those stockholders will need to be named in a
prospectus supplement before they can make sales hereunder. Some of these
shares may already have been sold in transactions which did not require the
delivery of a prospectus.
NUMBER OF SHARES
BENEFICIALLY OWNED
PRIOR TO THE OFFERING(1) NUMBER OF SHARES BENEFICIALLY
----------------------- MAXIMUM NUMBER OWNED AFTER THE OFFERING(3)
NUMBER OF SHARES --------------------------------
OF PERCENTAGE TO BE PERCENTAGE
SELLING STOCKHOLDER SHARES OF CLASS(2) OFFERED HEREBY NUMBER OF SHARES OF CLASS
- ------------------- ------ ----------- --------------- ---------------- ----------
Entities affiliated with
Appaloosa Management LP(4)
Appaloosa Investment
Limited
Partnership I............. 1,056,071(5) 1.2% 26,650 -- --
Palomino Fund Ltd......... 201,304(6) * 23,350 -- --
Entities affiliated with W.R.
Huff Asset Management Co.,
L.L.C.(7) 11,221,589 12.9% 11,221,589 -- --
Fidelity Summer Street Trust:
Fidelity Capital & Income
Fund(8)................. 563,393 * 50,000 -- --
Entities advised by Franklin
Mutual Advisers, LLC(9)
Mutual Shares Fund........ 2,022,748 2.3% 872,276 -- --
Mutual Qualified Fund..... 1,028,482 1.2% 443,332 -- --
Mutual Beacon Fund........ 1,259,295 1.4% 542,874 -- --
Mutual Discovery Fund..... 1,458,722 1.7% 627,046 -- --
Mutual European Fund...... 691,005 * 298,059 -- --
Mutual Shares Securities
Fund.................... 393,766 * 169,343 -- --
Mutual Discovery
Securities Fund........... 70,131 * 30,150 -- --
Mutual Beacon Fund
(Canada)................ 54,959 * 23,672 -- --
Franklin Mutual Beacon
Fund.................... 140,308 * 60,417 -- --
Franklin Mutual European
Fund.................... 101,489 * 21,258 -- --
Franklin Mutual Shares
Fund.................... 2,934 * -- -- --
Franklin Mutual Recovery
Fund.................... 61,520 * 7,320 -- --
Mutual Recovery Fund,
Ltd..................... 12,000 * -- -- --
Masters Select Value
Fund.................... 60,389 * 24,913 -- --
Entities managed by Oaktree
Capital Management, LLC(10)
Gryphon Domestic VI LLC... 78,920 * 1,000 -- --
OCM Opportunities Fund
III, L.P................ 1,415,623 1.6% 17,000 -- --
OCM Opportunities Fund IV,
L.P..................... 2,936,865 3.4% 1,152,657 -- --
OCM Opportunities Fund
IVb, L.P................ 1,747,827 2.0% 685,906 -- --
NUMBER OF SHARES
BENEFICIALLY OWNED
PRIOR TO THE OFFERING(1) NUMBER OF SHARES BENEFICIALLY
----------------------- MAXIMUM NUMBER OWNED AFTER THE OFFERING(3)
NUMBER OF SHARES --------------------------------
OF PERCENTAGE TO BE PERCENTAGE
SELLING STOCKHOLDER SHARES OF CLASS(2) OFFERED HEREBY NUMBER OF SHARES OF CLASS
- ------------------- ------ ----------- --------------- ---------------- ----------
Fiduciary accounts of Salomon
Brothers Asset
Management(11)
Citistreet Diversified
Bond Fund................ 5,359 * 425 -- --
Manulife Strategic Bond
Fund..................... 20,420 * 1,550 -- --
MSMM Global High Yield 750 * 750 -- --
SB Global Horizons Fund:
Global High Yield Bond
Fund..................... 650 * 650 -- --
Citigroup Global Credit
Trust.................... 125 * 125 -- --
The Salomon Brother
Capital Fund............. 760,000 * 15,000 -- --
Salomon Brothers Variable
Strategic Bond........... 2,529 * 225 -- --
Salomon Brothers Variable
High Yield Bond.......... 2,747 * 225 -- --
Salomon Brothers Strategic
Bond..................... 10,813 * 600 -- --
Salomon Brothers Series
High Yield Bond.......... 85,247 * 4,950 -- --
The Salomon Brothers
Institutional High Yield
Bond Fund................ 17,250 * 1,100 -- --
Salomon Brothers High
Income................... 10,209 * 500 -- --
Salomon Brothers High
Income II................ 249,296 * 10,225 -- --
NE England Zenith
Strategic Bond Series.... 6,618 * 475 -- --
Salomon Brothers/JNL High
Yield Bond Series........ 3,541 * 200 -- --
Salomon Brothers/JNL
Global Bond Series....... 7,956 * 450 -- --
Salomon Brothers/Global
Partners Income Fund..... 27,915 * 1,550 -- --
<FN>
* Less than 1%
(1) A person or group of persons is deemed to have "beneficial ownership" of
any shares of our common stock when that person or persons has the right
to acquire them within 60 days after the date of this prospectus. For
purposes of computing the percentage of the outstanding shares of our
common stock held by each person or group of persons named above, any
shares which that person or persons have the right to acquire within 60
days after the date of this prospectus is deemed to be outstanding but
is not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
(2) Applicable percentage of ownership for each selling stockholder is based
on 87,271,839 shares of common stock outstanding as of June 4, 2004.
(3) Because the selling stockholders may offer all or some portion of the
above shares pursuant to this prospectus or otherwise, no estimate can
be given as to the amount or percentage of such securities that will be
held by the selling stockholders upon termination of any such sale. In
addition, the selling security holders identified above may have sold,
transferred or otherwise disposed of all or a portion of such securities
since the date for which beneficial ownership information was provided
to us in transactions exempt from the registration requirements of the
Securities Act. The selling stockholders may sell all, part or none of
the securities listed above.
(4) Based on information provided to us by Appaloosa Management LP and on
Form 13G filed by Appaloosa Management LP with the SEC on December 10,
2003. The beneficial ownership of these selling stockholders is as of
May 28, 2004.
(5) Includes 203,106 shares of our common stock issuable upon exercise of
Series A warrants.
(6) Includes 177,954 shares of our common stock issuable upon exercise of
Series A warrants.
(7) William R. Huff, one of our directors, is the principal and president of
W. R. Huff Asset Management Co., L.L.C. W.R. Huff Asset Management is
an investment manager with discretionary authority over separate
accounts that own the shares. The beneficial ownership of these selling
stockholders is as of June 4, 2004.
(8) Held in nominee name of Cede & Co. Fidelity Summer Street Trust:
Fidelity Capital & Income Fund, or FSST, is either an investment company
or a portfolio of an investment company registered under Section 8 of
the Investment Company Act of 1940, as amended, or a private investment
account advised by Fidelity Management & Research Company, or FMR Co.
FMR Co. is a Massachusetts corporation and an investment advisor
registered under Section 203 of the Investment Advisers Act of 1940, as
amended, and provides investment advisory services to FSST, and to other
registered investment companies and to certain other funds which are
generally offered to a limited group of investors. FMR Co. is a
wholly-owned subsidiary of FMR Corp., a Delaware corporation. The
beneficial ownership of these selling stockholders is as of April 27,
2004.
(9) These selling stockholders are open or closed-end investment companies
or other managed accounts which are advised by Franklin Mutual Advisers,
LLC, or Franklin Mutual Advisers, an investment adviser registered under
the Investment Advisers Act of 1940. Franklin Mutual Advisers is an
indirect wholly-owned subsidiary of Franklin Resources, Inc., or FRI, a
diversified financial services organization. Investment advisory
agreements between Franklin Mutual Advisers, LLC and the selling
stockholder listed above grant to Franklin Mutual Advisers, LLC all
investment and voting power over the common stock listed above. Neither
FRI nor Franklin Mutual Advisers, LLC have any interest in dividends or
proceeds from the sale of the shares and they disclaim beneficial
ownership of any of the shares. The beneficial ownership of these
selling stockholders is as of April 26, 2004.
(10) Although Oaktree Capital Management, LLC is the general partner or
investment manager of the entities listed below its name, it disclaims
beneficial ownership of our common stock except to the extent of its
pecuniary interest in those shares. The beneficial ownership of these
selling stockholders is as of April 26, 2004. One of our former
directors, Brett G. Wyard, is a managing director of Oaktree Capital
Management, LLC.
(11) Salomon Brothers Asset Management Inc. acts as discretionary investment
advisor with respect to the entities listed under the caption "Fiduciary
accounts of Salomon Brothers Asset Management." The beneficial
ownership of these selling stockholders is as of June 4, 2004.
</FN>
PLAN OF DISTRIBUTION
Our common stock is being registered by us to permit public secondary
trading of such common stock by the selling stockholders from time to time
after the date of this prospectus. As used in this plan of distribution,
"selling stockholders" includes donees, pledges, transferees or other
successors-in-interest selling shares from a named selling stockholder as a
gift, pledge, partnership distribution or other non-sale related transfer,
all of whom may be selling stockholders, after the date of this prospectus.
We will not receive any of the proceeds from the sale by the selling
stockholders of the offered common stock. We will bear all costs, fees and
expenses incurred in connection with our obligation to register, and the
registration of, the offered common stock.
The selling stockholders may sell the offered common stock from time
to time on any stock exchange or automated interdealer quotation system on
which the offered common stock may be listed or quoted, in the
over-the-counter market, in privately negotiated transactions or otherwise,
at fixed prices that may be changed, at market prices prevailing at the
time of sale, or at prices otherwise negotiated. The selling stockholders
may sell the offered common stock in one or more transactions by one or
more of the following methods, without limitation:
o block trades in which the broker or dealer so engaged will
attempt to sell the offered common stock as agent but may
position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker or dealer as principal and resale by
the broker or dealer for its own account pursuant to this
prospectus;
o an exchange distribution in accordance with the rules of any
stock exchange on which the offered common stock is listed
or quoted, including the Nasdaq National Market;
o ordinary brokerage transactions and transactions in which
the broker solicits purchases;
o privately negotiated transactions;
o short sales;
o through the writing of put or call options relating to the
offered common stock, whether or not the options are listed
on an options exchange or otherwise;
o through the distribution of the offered common stock by any
selling stockholders to its members or stockholders;
o one or more underwritten offerings on a firm commitment or
best efforts basis; and
o any combination of the above methods of sale or otherwise.
The selling stockholders may also transfer the securities by gift.
The selling stockholders may engage brokers and dealers, and any
brokers or dealers may arrange for other brokers or dealers to participate
in effecting sales of the offered common stock. These brokers, dealers or
underwriters may act as principals, or as an agent of a selling
stockholder. Broker-dealers may agree with a selling stockholder to sell a
specified number of the offered common stock at a stipulated price per
security. If the broker-dealer is unable to sell the offered common stock
acting as agent for a selling stockholder, it may purchase as principal any
unsold offered common stock at the stipulated prices. Broker-dealers who
acquire securities as principals may thereafter resell the offered common
stock from time to time in transactions in any stock exchange or automated
interdealer quotation system on which the offered common stock is then
listed or quoted, including the Nasdaq National Market, at prices and on
terms then prevailing at the time of sale, at prices related to the then
current market price or in negotiated transactions. Broker-dealers may use
block transactions and sales to and through broker-dealers, including
transactions of the nature described above.
In connection with sales of the offered common stock or otherwise, the
selling stockholder may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the offered
common stock in the course of hedging positions they assume with that
selling stockholder, including, without limitation, in connection with
distributions of the offered common stock by those broker-dealers. A
selling stockholder may enter into option or other transactions with
broker-dealers, who may then resell or otherwise transfer that offered
common stock. A selling stockholder may also loan or pledge the offered
common stock to a broker-dealer and the broker-dealer may sell the offered
common stock that is loaned or upon a default may sell or otherwise
transfer the offered common stock that is pledged. The selling stockholder
may also sell short offered common stock and deliver offered common stock
to close out short positions, and in those instances, this prospectus may
be delivered in connection with the short sales and the offered common
stock may be used to cover short sales or loan or pledge offered common
stock to broker-dealers that in turn may sell the offered common stock.
From time to time, one or more of the selling stockholders may pledge,
hypothecate or grant a security interest in some or all of the offered
common stock owned by it. If a selling stockholder defaults in performance
of the secured obligations, pledgees or secured parties may, upon
foreclosure, offer and sell the offered common stock from time to time and
shall, for such purposes, be deemed to be selling stockholders. A selling
stockholder may also transfer and donate the offered common stock in other
circumstances. If a selling stockholder's offered common stock is sold as a
result of a foreclosure or a selling stockholder donates or otherwise
transfers its stock, the number of shares of the offered common stock
beneficially owned by it will decrease when such actions are taken. The
plan of distribution for the offered common stock will otherwise remain
unchanged.
Any underwriters, dealers, brokers or agents participating in the
distribution of the offered common stock may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from a
selling stockholder, for whom they may act as agent or to whom they may
sell as principal, which compensation as to a particular broker-dealer
might be in excess of that which is customary in the types of transactions
involved.
In addition, any common stock covered by this prospectus that
qualifies for sale pursuant to Rule 144 of the Securities Act and/or
Section 1145 of the Bankruptcy Code may be sold in open market transactions
in reliance on Rule 144 or Section 1145 rather than pursuant to this
prospectus.
Our outstanding common stock is listed for trading on the Nasdaq
National Market under the symbol "NTLI."
The selling stockholders and any broker-dealer participating in the
distributions or sale of the offered common stock may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act,
and any commissions paid, or any discounts or concessions allowed to any
such broker-dealer may be deemed to be underwriting commissions or
discounts under the Securities Act.
To the extent required under the Securities Act, the name of the
selling stockholder, the aggregate amount of a selling stockholder's
offered common stock being offered and the terms of the offering, the names
of any agents, brokers, dealers or underwriters and any applicable
commissions paid or discounts or concessions allowed with respect to a
particular offer and the statement that such agent, broker, dealer or
underwriter did not conduct any investigation to verify the information set
out in this prospectus and other facts material to the transaction will be
set forth in an accompany prospectus supplement. In addition, upon a
selling stockholder notifying us that a donee, pledgee, transferee or other
successor-in-interest intends to sell more than 500 shares of the offered
common stock, a supplement to this prospectus will be filed.
Under the securities laws of some states, the offered common stock may
be sold in those states only through registered or licensed brokers or
dealers. In addition, in some states the offered common stock may not be
sold unless the offered common stock has been registered or qualified for
sale in that state or an exemption from registration or qualification is
available and the sale is in compliance with that exemption.
The selling stockholders and any other person participating in the
sale or distribution of the offered common stock will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M of the Exchange
Act, which may limit the timing of purchases and sales of any of the
offered common stock by the selling stockholders and any other such person.
The anti-manipulation rules under the Exchange Act may apply to sales of
offered common stock in the market and to the activities of the selling
stockholders and their affiliates.
Furthermore, Regulation M may restrict the ability of any person
engaged in the sale or distribution of the offered common stock to engage
in market-making activities with respect to the particular offered common
stock being sold or distributed for a period of up to five business days
before the sale or distribution. All of the foregoing may affect the
marketability of the offered common stock and the ability of any person or
entity to engage in market-making activities with respect to the offered
common stock.
The selling stockholders and each other person who participates as an
underwriter in the offering or sale of the offered common stock, if any,
will be indemnified by us against particular civil liabilities, including
particular liabilities under the Securities Act, or will be entitled to
contribution in connection with those liabilities. We will be indemnified
by the selling stockholders in some circumstances against particular civil
liabilities, including particular liabilities under the Securities Act, or
will be entitled to contribution in connection with those liabilities.
We agreed to register the securities under the Securities Act, and to
keep the registration statement of which this prospectus forms a part,
effective until the earlier of the date on which all selling stockholders
could sell the offered common stock free of any volume limitations imposed
by Rule 144 of the Securities Act, the date all selling stockholders have
disposed of all offered common stock or three years from the date on which
the registration statement of which this prospectus forms a part was
declared effective. We have agreed to pay all expenses in connection with
this offering, including the fees and expenses of one counsel to the
selling stockholders, but not including underwriting discount, concessions,
commissions or fees of the selling stockholders.
Upon sale under the registration statement of which this prospectus
forms a part, the offered common stock will be freely tradable in the hands
of persons other than our affiliates.
We cannot assure you that the selling stockholders will sell all or
any portion of the offered common stock.
The term "offered common stock" as used in this plan of distribution
means all stock covered by, and offered in, the registration statement of
which this prospectus forms a part.
LEGAL MATTERS
The validity of the rights and the shares of common stock offered by
this prospectus will be passed upon for us by Fried, Frank, Harris, Shriver
& Jacobson LLP, New York, New York.
EXPERTS
The consolidated financial statements and schedules of NTL
Incorporated, and subsidiaries, and its predecessor appearing in NTL
Incorporated's Annual Report (Form 10-K) for the year ended December 31,
2003, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements and schedules are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU
MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS
PROSPECTUS IS AN OFFER TO SELL ONLY THE SHARES OFFERED HEREBY, BUT ONLY
UNDER CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.
NTL INCORPORATED
COMMON STOCK
NTL: