UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 21, 2004
TELEWEST GLOBAL, INC.
(Exact name of registrant as specified in its charter)
Delaware File No. 000-50886 59-3778247
(State of incorporation) (Commission File Number) (IRS Employer
Identification No.)
160 Great Portland Street
London W1W 5QA, United Kingdom
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: +44-20-7299-5000
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION
On December 21, 2004, Telewest UK Limited and Telewest Communications
Networks Ltd. ("TCN") and certain of its direct and indirect subsidiaries
and associated partnerships (together, the "TCN Group") entered into a
pound 1,550,000,000 Senior Facilities Agreement (the "Senior Facilities
Agreement") and a pound 250,000,000 Second Lien Facilities Agreement (the
"Second Lien Facility Agreement", and together with the Senior Facilities
Agreement, the "Facilities Agreements"). Barclays Capital, BNP Paribas,
Citigroup Global Markets Limited, Credit Suisse First Boston, Deutsche Bank
AG London and Royal Bank of Scotland acted as bookrunners. Barclays Bank
plc acted as Facility Agent, Security Trustee and US Paying Agent in
connection with the Facilities Agreements and GE Capital Structured Finance
Group Limited acted as Administrative Agent in connection with the Senior
Facilities Agreement. All capitalized terms not defined herein have the
meaning given to them in the Senior Facilities Agreement and the Second
Lien Facility Agreement, as applicable.
The proceeds of the Term Facilities and the Second Lien Facility
(described below) are intended to finance the repayment of amounts due and
payable under Telewest's existing senior facilities (including without
limitation, by way of principal, interest, break costs, fees and expenses,
commission and any other premiums) and any fees, costs and expenses due and
payable in connection with this financing. The Revolving Facility
(described below) is intended to finance the general working capital
requirements and the general corporate purposes of the TCN Group.
It is anticipated that Telewest will draw down all of the Facilities,
except the Revolving Facility, on [30] December. The Facilities remain
subject to normal closing conditions.
TRANCHES, AVAILABILITY AND AMORTIZATION
The Facilities under the Facilities Agreements comprise the following
tranches:
(a) A 7-year amortizing term loan facility of pound 700,000,000, available
in Sterling in a single drawing ("Tranche A"). Tranche A amortizes
semi-annually starting with a pound 5 million payment on June 30, 2005
and increasing incrementally to pound 80 million for the last five
payments;
(b) An 8-year multi-currency term loan facility of pound 425,000,000,
available in Euro, U.S. Dollars and/or Sterling in a single drawing,
payable in two equal instalments 7 1/2 and 8 years after the date of
the Senior Facilities Agreement (the "Closing Date") ("Tranche B");
(c) A 9-year multi-currency term loan facility of pound 325,000,000,
available in Euro, U.S. Dollars and/or Sterling in a single drawing,
payable in two equal instalments 8 1/2 and 9 years after the Closing
Date ("Tranche C" and, together with Tranche A and Tranche B, the
"Senior Term Facilities");
(d) A 7-year revolving loan facility in a maximum amount of pound
100,000,000, available in Sterling (the "Revolving Facility" and,
together with the Senior Term Facilities, the "Senior Facilities");
and
(e) A 9 1/2 year second lien term loan facility of pound 250,000,000,
available in Sterling in a single drawing, payable 9 1/2 years after
the date of the Second Lien Facility Agreement (the "Second Lien
Facility" and, together with the Senior Facilities, the "Facilities").
INTEREST
Tranches A, B and C and the Revolving Facility will bear interest at a
rate of (a) EURIBOR (for any Euro-denominated advance) or LIBOR (for any
advance denominated in another currency) plus (b) the applicable cost of
complying with any reserve requirements plus an applicable margin. The
applicable margin for Tranche A and the Revolving Facility is 2.25% per
annum, for Tranche B, in case of an Euro-denominated advance, 2.375% per
annum, in case of a Dollar-denominated advance, 2.25% per annum, and in
case of a Sterling-denominated advance, 2.50% per annum, for Tranche C, in
case of an Euro-denominated advance, 2.875% per annum, in case of a
Dollar-denominated advance, 2.75% per annum, and in case of a
Sterling-denominated advance, 3.00% per annum, and for the Second Lien
Facility 4.00% per annum.
In addition, the applicable margin for Tranche A and the Revolving
Facility is subject to a margin ratchet from and after the first quarter
date occurring at least 6 months after the Closing Date based upon the
ratio of Consolidated Net Borrowings to Consolidated Annualized TCN Group
Net Operating Cash Flow ranging between 1.50% and 2.25%. The applicable
margin for the Tranche B is subject to a margin ratchet such that, from and
after the first quarter date occurring at least 6 months after the Closing
Date on which the ratio of Consolidated Net Borrowings to Consolidated
Annualized TCN Group Net Operating Cash Flow is less than or equal to 3.0
to 1.0, the Tranche B margin shall be reduced by 25 basis points.
MANDATORY PREPAYMENTS
The TCN Group is subject to certain customary mandatory prepayment
events under the Facilities Agreements, including:
o To the extent Excess Cash Flow exceeds pound 10 million, 50% of such
Excess Cash Flow in the event that the ratio of Consolidated Total
Debt to Consolidated Annualised TCN Group Net Operating Cash Flow is
greater than 3.5 to 1.0, or 25% of such Excess Cash Flow in the event
such ratio is 3.5 to 1.0 or less but more than 2.75 to 1.0. No
mandatory prepayment from Excess Cash Flow is required if the ratio of
Consolidated Total Debt to Consolidated Annualised TCN Group Net
Operating Cash Flow is 2.75 to 1.0 or less.
o Net Proceeds received by any member of the TCN Group from Disposals
and Insurance Recoveries, subject to certain exemptions, to the extent
such Net Proceeds exceed, in each case, pound 6 million.
o Subject to certain exemptions, 50% of the Net Proceeds in excess of
pound 10 million of any Financial Indebtedness raised by the Ultimate
Parent, Telewest UK or any member of the TCN Group in connection with
any single raising of Financial Indebtedness.
o Subject to certain exemptions and to the extent Equity Proceeds
(proceeds from certain public equity offerings) exceed pound 10
million, 50% of such Equity Proceeds in respect of any single raising
of equity in the event that the ratio of Consolidated Total Debt to
Consolidated Annualised TCN Group Net Operating Cash Flow is more than
3.5 to 1.0, or 25% of such Equity Proceeds in respect of any single
raising of equity, in the event such ratio is 3.5 to 1.0 or less but
is more than 3.0 to 1.0. No mandatory prepayment from Equity Proceeds
is required if the ratio of Consolidated Total Debt to Consolidated
Annualised TCN Group Net Operating Cash Flow is 3.0 to 1.0 or less.
COVENANTS
Affirmative Covenants
The Facilities Agreements contain a number of affirmative covenants,
including requirements on each party to own the assets necessary and
material in the conduct of its business. In addition, the TCN Group is
subject to financial maintenance tests, including the following liquidity,
coverage and leverage ratio tests:
o The ratio of the TCN Group's Consolidated Net Borrowings as at the
relevant test date to Consolidated Annualised TCN Group Net Operating
Cash Flow for the Semi-Annual Period ending on that test date cannot
exceed a stated ratio which decreases each quarter from 4.40 for the
quarter ending March 21, 2005 to 2.50 for the quarter ending June 30,
2010 and thereafter;
o The ratio of the TCN Group's Consolidated Annualised TCN Group Net
Operating Cash Flow for the Semi-Annual Period ending on the relevant
test date to Total Interest Charges calculated on an annualised basis
based on the Total Interest Charges for such Semi-Annual Period,
cannot be less than a stated ratio, which increases each quarter from
2.35 for the quarter ending March 31, 2005 to 4.50 for the quarter
ended June 30, 2010 and thereafter;
o The ratio of TCN Group's Consolidated TCN Group Cash Flow in respect
of the twelve month period ending on each relevant testing date
commencing with 30 June 2005 to Consolidated Debt Service for such
twelve month period, cannot be less than 1.0; and
o The total amount of Capital Expenditure during each financial year of
the TCN Group cannot exceed the aggregate of the Capital Expenditure
Allowance plus up to 25% of the Capital Expenditure Allowance for the
immediately preceding financial year. The Capital Expenditure
Allowance for the financial year ending 31 December 2005 is pound 315
million, for the financial year ending December 31, 2006 is pound 330
million; thereafter such allowance decreases each financial year to
pound 285 million for the financial year ending on December 31, 2011.
Negative Covenants
The TCN Group is further subject to customary negative covenants
including, among other things, limitations on Indebtedness, Encumbrances,
Asset Dispositions, Restricted Payments, Affiliate Transactions, Change of
Business, Dividends, Distributions and increases in Share Capital.
The covenants contained in the Facilities Agreements could affect
Telewest's ability to operate its business and may limit its ability to
take advantage of potential business opportunities as they arise.
EVENTS OF DEFAULT
The Facilities Agreements are subject to acceleration, after the
passage of any applicable grace period, by written notice to TCN upon the
occurrence of an event of default. Events of default under the Facilities
Agreements include:
o Non-Payment of sums due under any of the relevant finance documents;
o Failure of an entity to comply with certain of the covenants
applicable to it;
o Failure by any member of the borrowing group to perform or comply with
any obligations in any of the relevant finance documents;
o Any material misrepresentation by any member of the borrowing group
(or, prior to its accession, Telewest Global Finance LLC) in any
applicable finance document or other document delivered pursuant
thereto;
o Non-payment of certain indebtedness of any TCN Group member, or
cancellation of any commitments for any of that indebtedness, if the
aggregate amount of such indebtedness is more than pound 35 million;
o The insolvency of certain entities;
o The winding-up, dissolution, reorganization of certain entities or the
appointment of a liquidator or receiver of such entities' revenues and
assets;
o Any execution, distress or diligence being levied against certain
entities, or an encumbrancer taking possession of property or assets
having an aggregate value of more than pound 1 million;
o The occurrence of events under the laws of any jurisdiction which
would have a similar effect to certain entities being insolvent,
wound-up or under distress;
o Any member of the borrowing group repudiating any of the finance
documents to which it is party;
o The unlawfulness for any member of the borrowing group to perform or
comply with its obligations under the relevant finance documents;
o The failure by any member of the borrowing group to comply with the
applicable intercreditor deeds;
o The revocation of certain authorizations which is reasonably likely to
have a material adverse effect, as defined in the Facilities
Agreements (a "Material Adverse Effect");
o The occurrence of any event or circumstances which would have a
Material Adverse Effect;
o The resignation of Telewest's auditors of their appointment as
auditors to the Group or the TCN Group as a result of the
investigation detailed in Telewest's press release dated December 15,
2004, under circumstances which, in the opinion of the Facility Agent,
acting on the instructions of lenders to whom in aggregate more than
66 2/3% of the aggregate amount of outstandings are owed, are
materially adverse to the credit of the lenders (taken as a whole);
and
o The commencement of any material litigation, arbitration or
administrative proceeding which is reasonably likely to have a
Material Adverse Effect.
As a result of a default, Telewest's senior lenders could cause all of
the outstanding indebtedness under the Facilities to become due and
payable, require Telewest to apply all of its cash to repay the
indebtedness or prevent Telewest from making debt service payments on any
other indebtedness that its owes. If Telewest's indebtedness is
accelerated, it may not be able to repay its debt or borrow sufficient
funds to refinance that debt. In addition, any default under the
Facilities, or agreements governing Telewest's other existing or future
indebtedness, is likely to lead to an acceleration of indebtedness under
any other debt instruments that contain cross-acceleration or cross-default
provisions. If the indebtedness under the Facilities is accelerated as a
result of a default, Telewest is unlikely to have sufficient assets to
repay that debt, and/or other indebtedness then outstanding.
CALL PROTECTION ON THE SECOND LIEN FACILITY
Any prepayment of the Second Lien Facility within 12 months after the
Closing Date ("Non-Call Period") will be subject to payment of a Make Whole
Premium. Such Make Whole Premium is calculated on the basis of the greater
of (a) 1.00 % of the Outstandings to be repaid and (b) the difference on
the proposed prepayment date between (i) the present value of 102.00% of
the relevant Outstandings and any interest that would have accrued on such
Outstandings from the proposed prepayment date to and including the last
day of the Non-Call Period, computed using a discount rate equal to the
Gilt Rate plus 0.50%, and (ii) the principal amount of the relevant
Outstandings. After the end of the Non-Call Period, prepayment may be made
in whole or in part, subject to a Prepayment Premium equal to the following
percentages of the principal amount of the Outstandings under the Second
Lien Facility being prepaid: (i) 2.00% prior to the second anniversary of
the Closing Date, (ii) 1.00% after the second anniversary of the Closing
Date but prior to the third anniversary of the Closing Date, and (iii)
0.00% thereafter.
ITEM 9.01 EXHIBITS
Exhibit 99.1 Press release issued by Telewest Global, Inc. on December
21, 2004 announcing that on December 21, 2004 its subsidiary
Telewest Networks Communications Limited has executed a
pound 1,550,000,000 Senior Facilities Agreement and a pound
250,000,000 Second Lien Facilities Agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TELEWEST GLOBAL, INC.
Dated: December 22, 2004 By: /s/ Clive Burns
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Name: Clive Burns
Title: Company Secretary