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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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NYNEX CABLECOMMS GROUP PLC
NYNEX CABLECOMMS GROUP INC.
(NAME OF SUBJECT COMPANY)
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NYNEX CABLECOMMS GROUP PLC
NYNEX CABLECOMMS GROUP INC.
(NAME OF PERSON(S) FILING STATEMENT)
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AMERICAN DEPOSITARY SHARES EVIDENCED BY AMERICAN DEPOSITARY RECEIPTS,
EACH REPRESENTING TEN UNITS, EACH UNIT CONSISTING OF ONE ORDINARY SHARE (PAR
VALUE 10P PER SHARE)
OF NYNEX CABLECOMMS GROUP PLC AND ONE SHARE OF COMMON STOCK (PAR VALUE $0.01 PER
SHARE)
OF NYNEX CABLECOMMS GROUP INC.
(TITLE OF CLASS OF SECURITIES)
UNITS, EACH UNIT CONSISTING OF ONE ORDINARY SHARE (PAR VALUE 10P PER SHARE) OF
NYNEX CABLECOMMS GROUP PLC AND ONE SHARE OF COMMON STOCK
(PAR VALUE $0.01 PER SHARE) OF NYNEX CABLECOMMS GROUP INC.
(TITLE OF CLASS OF SECURITIES)
ORDINARY SHARES (PAR VALUE 10P PER SHARE) OF NYNEX CABLECOMMS GROUP PLC
(TITLE OF CLASS OF SECURITIES)
COMMON STOCK (PAR VALUE $0.01 PER SHARE) OF NYNEX CABLECOMMS GROUP INC.
(TITLE OF CLASS OF SECURITIES)
670764-10-9 (AMERICAN DEPOSITARY SHARES)
(CUSIP NUMBER OF CLASS OF SECURITIES)
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PAUL H. REPP, ESQ.
CHIEF LEGAL AND REGULATORY OFFICER
AND COMPANY SECRETARY
THE TOLWORTH TOWER
EWELL ROAD
SURBITON, SURREY KT6 7ED
UNITED KINGDOM
011-44-181-873-2000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
WITH A COPY TO:
MORTON A. PIERCE, ESQ.
DEWEY BALLANTINE
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6092
(212) 259-8000
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you
are in any doubt as to what action you should take, you are recommended to seek
your own financial advice immediately from your stockbroker, bank manager,
solicitor, accountant or other professional or financial advisor or, if you are
in the United Kingdom, an independent financial advisor authorized under the
Financial Services Act 1986.
If you have sold or transferred all of your holdings of Units of NYNEX
CableComms Group PLC and NYNEX CableComms Group Inc., please forward this
document as soon as possible, together with the accompanying documents, to the
purchaser or transferee or to the stockholder, bank or other agent through whom
the sale or transfer was effected, for delivery to the purchaser or transferee.
However, these documents should not be distributed, forwarded or transmitted in
or into Japan, Canada or Australia.
ITEM 1. SECURITY AND SUBJECT COMPANY.
The names of the subject companies are NYNEX CableComms Group PLC, a public
limited company incorporated under the laws of England and Wales ("NYNEX
CableComms UK"), and NYNEX CableComms Group Inc., a Delaware corporation ("NYNEX
CableComms US", and together with NYNEX CableComms UK, the "Companies"). The
address of the principal executive offices of the Companies is The Tolworth
Tower, Ewell Road, Surbiton, Surrey KT6 7ED, United Kingdom.
The titles of the classes of equity securities to which this statement
relates are (i) the Ordinary Shares, par value 10p per share, of NYNEX
CableComms UK (the "NYNEX CableComms UK Ordinary Shares"), (ii) the shares of
Common Stock, par value $0.01 per share, of NYNEX CableComms US (the "NYNEX
CableComms US Shares of Common Stock"), (iii) the Units of the Companies,
consisting of one NYNEX CableComms UK Ordinary Share and one NYNEX CableComms US
Share of Common Stock (the "Units"), and (iv) the American Depositary Shares
evidenced by American Depositary Receipts, each representing ten Units (the
"ADSs"). The NYNEX CableComms UK Ordinary Shares and the NYNEX CableComms US
Shares of Common Stock are "stapled" and trade together as Units. The Units may
separate only upon "de-stapling", subject to the approval of the shareholders of
NYNEX CableComms UK and NYNEX CableComms US of certain amendments to their
respective constitutional documents and certain actions taken by the Boards of
Directors, of a number of NYNEX CableComms UK Ordinary Shares and NYNEX
CableComms US Shares of Common Stock in an amount not to exceed 20 per cent. of
the outstanding NYNEX CableComms UK Ordinary Shares and NYNEX CableComms US
Shares of Common Stock to permit the Compulsory Acquisition and Merger (each as
defined under "De-stapling of Certain Units" in Item 3(b) below) contemplated by
the bidder after the Offers (as defined in Item 2 below) become or are declared
unconditional, as further described under "De-stapling of Certain Units" in Item
3(b) below. The NYNEX CableComms UK Ordinary Shares, NYNEX CableComms US Shares
of Common Stock, Units and ADSs are collectively referred to herein as the
"Shares".
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer made by Cable & Wireless
Communications plc, a public limited company incorporated under the laws of
England and Wales ("CWC"), to purchase, upon the terms and subject to the
conditions set out in the Offers to Purchase/Prospectus, dated March 21, 1997,
included in CWC's Registration Statement on Form F-4 (the "Prospectus") and the
Letter of Transmittal, the Notice of Guaranteed Delivery and the Form of
Acceptance (together, the "Acceptance Forms") accompanying this Schedule 14D-9,
as disclosed in a Tender Offer Statement on Schedule 14D-1 filed by CWC with the
U.S. Securities and Exchange Commission (the "Commission") on March 24, 1997
(the "Schedule 14D-1"), (i) all NYNEX CableComms UK Ordinary Shares (including
those comprised in Units or represented by ADSs) for 0.330714 ordinary shares,
par value 50p per share, of CWC (the "CWC Ordinary Shares") per NYNEX CableComms
UK Ordinary Share (the "NYNEX CableComms UK Offer") and (ii) all NYNEX
CableComms US Shares of Common Stock (including those comprised in Units or
represented by ADSs) for 0.036746 CWC Ordinary Shares (the "NYNEX CableComms US
Offer") per NYNEX CableComms US Share of Common Stock. The NYNEX CableComms UK
Offer and the NYNEX CableComms US Offer are collectively referred to herein as
the "Offers". The
consideration offered under the Offers is equivalent to 0.36746 CWC Ordinary
Shares per Unit and 3.67460 CWC Ordinary Shares per ADS.
The Schedule 14D-1 provides that:
All the NYNEX CableComms UK Ordinary Shares and NYNEX CableComms US Shares
of Common Stock presently comprise Units and cannot, absent de-stapling, be
traded, transferred or delivered separately. Acceptance of the NYNEX CableComms
UK Offer or the NYNEX CableComms US Offer can only be effective, prior to the
de-stapling of the Units, by acceptance in respect of both the NYNEX CableComms
UK Offer and the NYNEX CableComms US Offer. Acceptance of only the NYNEX
CableComms UK Offer or only the NYNEX CableComms US Offer will not become
effective until immediately after de-stapling of the Units takes effect, if at
all.
Instead of CWC Ordinary Shares, holders of Shares (particularly holders of
ADSs) may elect to receive CWC American Depositary Shares ("CWC ADSs") on the
basis of one CWC ADS for every five CWC Ordinary Shares to which such holders
would otherwise be entitled pursuant to the Offers (the "Alternative
Consideration"). A holder of Shares may elect to receive CWC ADSs only in
respect of all the Shares which he or she tenders in the Offers. Holders of ADSs
will receive the Alternative Consideration unless they otherwise elect.
The Offers will extend to any Shares (including those represented by ADSs)
which are unconditionally allotted or issued while the Offers remain open for
acceptance (or such shorter period as CWC may, subject to the City Code on
Takeovers and Mergers of the United Kingdom (the "City Code"), determine) upon
exercise of options granted under the NYNEX CableComms Limited Revenue Approved
Employee Share Option Plan and the NYNEX CableComms Limited Savings-Related
Share Option Plan (together, the "NYNEX CableComms Option Schemes") or
otherwise. NYNEX CableComms Limited is a wholly-owned subsidiary of the
Companies. According to the Schedule 14D-1, appropriate proposals will be made
to participants in the NYNEX CableComms Option Schemes, in due course, once the
Offers become or are declared unconditional. To the extent that options are not
exercised, and in the event that the Offers become or are declared
unconditional, CWC intends to offer participants in the NYNEX CableComms Option
Schemes the opportunity to exchange outstanding options for options over CWC
Ordinary Shares of an equivalent value.
A Transaction Agreement, dated as of October 22, 1996, as amended and
restated (the "Transaction Agreement"), was entered into among Cable and
Wireless plc ("C&W"), NYNEX Corporation ("NYNEX") and Bell Canada International
Inc. ("BCI"). Pursuant to the terms of the Transaction Agreement and subject to
certain conditions, C&W, NYNEX and BCI agreed to create a provider of integrated
telecommunication, information and entertainment services in the United Kingdom
by combining (a) Mercury Communications Limited ("Mercury"), (b) the Companies
and (c) Bell Cablemedia plc ("BCM"), as enlarged by BCM's acquisition of
Videotron Holdings Plc ("Videotron") (the "Videotron Acquisition"), under the
ownership of CWC, a newly formed holding company and direct wholly-owned
subsidiary of C&W (the "Transactions", including the acquisition by CWC of the
Minority Interests as defined under and set forth under "The Transaction
Agreement" in Item 3 below). The Transaction Agreement provides for the Offers
to be made pursuant to the terms and subject to certain conditions set out in
the Prospectus and the accompanying Acceptance Forms.
In addition to the foregoing, the Schedule 14D-1 states that the principal
executive offices of CWC are located at 26 Red Lion Square, London WC1R 4HQ,
United Kingdom.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Companies, which are the persons
filing this statement, are set forth in Item 1 above.
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(b) Certain contracts, agreements, arrangements and understandings and any
actual or potential conflict of interest between the Companies or their
affiliates and certain of their directors, executive officers or affiliates are
described in the Companies' Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "1996 10-K") under the sections, "Item 11. Executive
Compensation", "Item 12. Security Ownership of Certain Beneficial Owners and
Management", and "Item 13. Certain Relationships and Related Transactions" and
are incorporated herein by reference. A copy of the pertinent sections of the
1996 10-K is filed as Exhibit 1 hereto and is incorporated herein by reference.
The Boards of Directors of NYNEX CableComms UK and NYNEX CableComms US have
appointed the following directors to their respective Offer Committees of
independent directors (the "Offer Committees") to determine whether the Offers
are fair to and in the best interests of the Companies' respective shareholders
other than NYNEX and its subsidiary, NYNEX Network Systems, Inc. (the "Public
Shareholders"): John L. Rennocks (Chairman of each of the Offer Committees), Sir
Michael Checkland and John F. Killian. Other than Mr. Killian, who is President
and Chief Executive Officer of the Companies, none of the directors on the Offer
Committees is employed by either of the Companies or NYNEX.
Messrs. Robert T. Anderson, Richard W. Blackburn, Jeffrey A. Bowden, and
Melvin Meskin are directors of the Companies and also officers of NYNEX or one
or more of its affiliates. In addition, Mr. Blackburn is a member of the Merger
Steering Committee established by C&W, NYNEX and BCI and of a committee
established by CWC in connection with the proposed Transactions. Such directors
did not participate in any of the deliberations and decisions of the Offer
Committees. Mr. Nicholas P. Mearing-Smith is a director of the Companies and,
effective January 30, 1997, has delegated his duties as Chief Financial Officer
of the Companies. Mr. Mearing-Smith was originally appointed on October 29, 1996
as a member of the Offer Committees, but resigned from the Offer Committees on
January 23, 1997 when he was appointed by CWC as Finance Director designate of
CWC. Sir Bryan Victor Carsberg also was originally appointed on October 29, 1996
as a member of the Offer Committees. He resigned from the Offer Committees on
March 13, 1997 following his acceptance and that of Mr. Blackburn of their
respective appointments as non-executive directors of CWC upon the Offers
becoming or being declared unconditional in all respects. See "The Transaction
Agreement--Representation on CWC's Board of Directors" below.
Certain other contracts, agreements and understandings and any actual or
potential conflict of interest between the Companies or their affiliates and
their directors, executive officers and affiliates, and between the Companies or
their affiliates and CWC, its executive officers, directors or affiliates are
set forth below.
THE TRANSACTION AGREEMENT
The Schedule 14D-1 provides substantially the following summary of the
Transaction Agreement. The following discussion of the Transaction Agreement and
the transactions contemplated thereby, including the Offers and the
Transactions, does not purport to be complete and is qualified in its entirety
by reference to the complete text of the Transaction Agreement, a copy of which
has been filed as Exhibit 2 hereto and is incorporated herein by reference.
GENERAL. On October 22, 1996, C&W, BCI and NYNEX announced that they had
entered into the Transaction Agreement pursuant to which they agreed, subject to
certain conditions, to combine: (i) Mercury, (ii) BCM, as enlarged by the
Videotron Acquisition, and (iii) the Companies under a newly-formed holding
company, CWC, in order to create one provider that can offer UK customers local,
national and international voice, data and mobile telecommunications, together
with multichannel television and Internet services.
The parties to the Transaction Agreement have agreed that CWC will seek to
acquire all the outstanding Shares and BCM ordinary shares and american
depositary shares representing such ordinary shares (the "BCM Securities") in
exchange for CWC Ordinary Shares (including those represented by
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CWC ADSs) pursuant to each of (i) the Offers and (ii) the offer by CWC for BCM
Securities (the "BCM Offer") and, as so contemplated, CWC makes the Offers as
set out in, and upon the terms and subject to the conditions set out in, the
Prospectus and accompanying Acceptance Forms (including if the Offers are
revised, varied, extended or renewed, the terms and conditions of any such
revision, variation, extension or renewal).
Subsidiaries of BCI and C&W which hold BCM Securities have given irrevocable
undertakings to accept the BCM Offer in respect of their combined 65.0 per cent.
shareholding in BCM, and a subsidiary of NYNEX has given an irrevocable
undertaking to accept the Offers in respect of its 67.0 per cent. shareholding
in the Companies.
Pursuant to the terms of the Transaction Agreement, and upon the BCM Offer
and the Offers becoming or being declared unconditional, CWC will acquire from
NYNEX its minority interests (including those acquired by NYNEX from certain
third parties) in the cable TV and telephony operations controlled by the
Companies (the "Minority Interests") in exchange for CWC Ordinary Shares
representing approximately 3.317 percent of the issued ordinary share capital of
CWC on a fully diluted basis. The acquisition will be effected by CWC acquiring
the Winston Entities (as defined in the Prospectus), which indirectly hold a
minority interest in the ordinary share capital of the Companies' operating
cable companies. The Winston Entities were established to provide certain
financing arrangements to the Companies' operating cable companies. On or before
completion of this acquisition, and on the simultaneous refinancing by CWC of
the credit facilities granted by the Winston Entities to subsidiaries
undertakings of the Companies, NYNEX will cause all assets of the Winston
Entities (other than the holdings of the Winston Entities in subsidiaries of the
Companies) to be distributed to NYNEX (or at the direction of NYNEX to third
parties) after paying or providing for payment of all known liabilities of the
Winston Entities, other than certain inter-company liabilities (which may be
released, canceled or otherwise terminated without payment) so that following
this distribution the Winston Entities will have no current assets or
liabilities. The Winston Entities will remain responsible for contingent
liabilities in respect of deferred tax which is attributable to the subsidiaries
of the Companies and certain expenses incurred in connection with the
termination of the financing arrangements described in the Prospectus.
Each of the BCM Offer and the Offers are separate offers. Each of the BCM
Offer and the Offers is conditional on the other offer becoming or being
declared unconditional in all respects (other than in respect of any condition
relating to the other offer becoming or being declared so unconditional). Each
of the BCM Offer and the Offers will lapse if the other offer lapses.
TRANSACTION OBLIGATIONS. Pursuant to the Transaction Agreement, the parties
undertook the following obligations:
- C&W agreed to convene an extraordinary general meeting of its shareholders
and to propose at that meeting an ordinary resolution seeking approval of
the BCM Offer, the Offers, the acquisition of Mercury by CWC and the
acquisition of the Minority Interests. That general meeting has been
convened for April 17, 1997.
- C&W agreed, subject to certain conditions, to purchase from a subsidiary
of BCI 47,808 Mercury ordinary shares for L150 million in cash. This
acquisition was completed on January 17, 1997.
- Each of the parties agreed that as long as it is deemed to be acting in
concert with the other parties in relation to BCM, Videotron or the
Companies, it would not acquire or dispose of any shares, rights over
shares or derivatives relating to the shares of BCM, Videotron or the
Companies without the prior consent of the other parties.
Upon the BCM Offer and the Offers becoming or being declared unconditional:
- C&W agreed to amend CWC's articles of association as described in the
Prospectus.
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- C&W agreed to alter the composition of the CWC Board of Directors to
reflect the membership arrangement described in the Prospectus.
- C&W, BCI and NYNEX agreed to enter into a Registration Rights Agreement
(as described below) and it was agreed that CWC would enter into the NYNEX
Tax Agreement and the NYNEX Tax Allocation Agreement with NYNEX (as
described below).
CONDUCT OF BUSINESS COVENANTS FROM C&W, BCI AND NYNEX. C&W agreed that,
until the BCM Offer and the Offers become or are declared unconditional in all
respects, CWC will not engage in or conduct any business or carry on any
activities (other than holding interests in the share capital of Mercury and
certain administrative and other actions contemplated by the Transaction
Agreement) without the prior approval of all parties (such approval not to be
unreasonably withheld or delayed).
C&W and BCI undertook to use reasonable endeavors to procure that, until the
BCM Offer and the Offers become or are declared unconditional in all respects,
BCM carries on the business of the BCM Group (as defined in the Prospectus) in
the ordinary course and does not take any action which would amount to an action
requiring the approval of shareholders in a general meeting or the consent of
CWC under certain provisions of the City Code. NYNEX gave a similar covenant in
relation to the Companies and C&W gave a similar covenant in relation to the
Mercury Group (as defined in the Prospectus).
C&W and BCI covenanted in relation to Mercury, and C&W covenanted in
relation to CWC, that, until the BCM Offer and the Offers become or are declared
unconditional in all respects, the affairs of both Mercury and CWC,
respectively, will be conducted such that:
- neither they nor any of their subsidiaries will enter into or agree to
enter into any transaction which would, were Mercury or CWC, as the case
may be, listed on the London Stock Exchange, require the approval of their
respective shareholders; and
- neither Mercury nor CWC, as the case may be, will enter into any
transaction that, were Mercury or CWC (as the case may be) the subject of
an offer on the same conditions as the BCM Offer and the Offers, would
render such offer incapable of becoming wholly unconditional.
C&W and BCI also undertook to ensure that, until the BCM Offer and the
Offers become or are declared unconditional in all respects, Mercury and CWC, as
the case may be, will not take certain actions without the prior consent of
NYNEX (which may not be unreasonably withheld). Those actions include creating,
allotting or issuing new securities, making any substantial changes in the
nature of its business and making any distribution to shareholders (unless
expressly contemplated in the Transaction Agreement or the agreements relating
to the purchase of Mercury ordinary shares by CWC (the "Mercury Purchase
Agreements")).
C&W and BCI covenanted in relation to BCM, and NYNEX has covenanted in
relation to the Companies, that, until the BCM Offer and the Offers become
unconditional in all respects, they will not vote their shares (and their board
representatives will not vote) in favor of any proposal or resolution involving
the issue of shares other than in respect of options already granted by the
relevant company pursuant to the NYNEX CableComms Option Schemes or the option
schemes of BCM, as the case may be, or which prior to implementation would
require the approval of the shareholders of the relevant company.
C&W, BCI and NYNEX each gave an undertaking that CWC will procure the
release of NYNEX from its L200 million loan facility to the Companies by the
provision of a substitute facility which will be effective from the date on
which the BCM Offer and the Offers become or are declared unconditional in all
respects.
CONDUCT OF THE OFFERS. C&W, BCI and NYNEX agreed that the following
decisions relating to the BCM Offer and the Offers require the approval of all
parties: (a) a change to the form or amount of the consideration being offered
to the holders of BCM Securities and the Shares pursuant to the BCM Offer
5
and the Offers, respectively; (b) an extension, lapse or withdrawal of the BCM
Offer and the Offers; and (c) the waiver of, or exercise of discretion in
relation to, the conditions to each of the BCM Offer and the Offers relating to
the minimum number of acceptances as described below (the "Minimum Acceptance
Condition") or to any condition relating to regulatory clearances.
C&W, BCI and NYNEX also undertook to use reasonable endeavors to reach
unanimous agreement on whether or not to waive or to exercise any discretion in
respect of any breach of any conditions to either the BCM Offer or the Offers
("Breached Condition") or any unfulfilled condition to either the BCM Offer or
the Offers ("Unfulfilled Condition"). In the event unanimous agreement on such
matters cannot be reached by the earlier of (i) two business days after the
parties become aware of the relevant events and (ii) the day before the last
date on which the BCM Offer and the Offers can become or be declared
unconditional in all respects in accordance with the City Code, a Breached
Condition or an Unfulfilled Condition may nonetheless be waived, or a discretion
in respect thereof exercised, under the following circumstances. If the Panel on
Takeovers and Mergers of the United Kingdom (the "Panel") has agreed that the
Breached Condition or Unfulfilled Condition could be invoked to prevent the
relevant offer from becoming or being declared unconditional, then such
condition may be waived or discretion in respect thereof exercised if C&W and
one of the other two parties agree to such a waiver or exercise of such
discretion. If, however, any party would suffer material prejudice as a result
of the waiver or exercise of discretion, no waiver may be effected or discretion
exercised without that party's consent. If the Panel has agreed that the
Breached Condition or Unfulfilled Condition cannot be invoked to prevent the
relevant offer from becoming or being unconditional or has not ruled on the
issue, then such condition must be waived. The Transaction Agreement also
contains similar provisions regarding a Breached Condition or Unfulfilled
Condition of the Mercury Purchase Agreements, except that the procedures do not
include reference to the Panel.
C&W, BCI and NYNEX also agreed that if, prior to the Offers becoming or
being declared unconditional in all respects, NYNEX advises CWC that:
(i) either (a) one or more persons has made certain filings with the
Commission indicating that such person owns 10 percent or more of either the
ordinary shares of the sole shareholders of BCI, C&W, or the common shares
of BCE Inc., the parent of BCI ("BCE"), or (b) NYNEX has knowledge that one
or more persons has acquired an ownership interest in C&W or BCE which will
require a filing described in (a);
(ii) the aggregate indirect ownership interest in CWC shares of all
persons described in (i) above is 15 percent or more; and
(iii) NYNEX reasonably believes that there is a risk that more than 50
percent of the equity of CWC would be considered for US tax purposes to be
owned by US persons that are "five--percent target shareholders" with
respect to the Companies for purposes of certain U.S. Treasury regulations,
or any successor provision relating to the ownership of CWC shares by
holders of Shares;
then NYNEX may request a legal opinion to the effect that certain U.S. Treasury
and tax regulations relating to the ownership of CWC shares by holders of Shares
have been satisfied.
C&W, BCI and NYNEX have also agreed that Additional Condition (F) (as
defined below) to the Offers relating to the legal opinion referred to above
cannot be waived, and no discretion will be exercised in relation to it, without
the prior approval of all the parties.
WARRANTIES. C&W has given representations and warranties in the Transaction
Agreement to BCI and NYNEX relating to the Mercury Group, subject to certain
limitations. C&W's liability is limited in time to June 30, 1999 for non-tax
warranties, and the seventh anniversary of completion of the purchase of Mercury
by CWC for tax warranties. C&W's liability under these representations and
warranties is limited in amount to an aggregate of L348,000,000.
6
BCI has given representations and warranties to C&W and NYNEX in relation to
BCM, subject to certain limitations. BCI's liability is limited in time to June
30, 1998. BCI's liability under these representations and warranties is limited
in amount to an aggregate of L48,161,974.
NYNEX has given representations and warranties to BCI and C&W in relation to
the Companies, subject to certain limitations. NYNEX's liability is limited in
time to June 30, 1998. NYNEX's liability under these representations and
warranties is limited in amount to an aggregate of L147,300,428.
ADVANCE CORPORATION TAX AND CONSORTIUM RELIEF. The Transaction Agreement
provides that (i) dividends paid by CWC will be paid outside any election under
Section 247 of the United Kingdom Income and Corporation Taxes Act 1988
("ICTA"); (ii) C&W will be entitled to surrender to CWC and its subsidiaries
Advance Corporation Tax of the United Kingdom ("ACT") to the fullest extent
permitted by law (for payment); and (iii) all parties are to consider in good
faith any proposal made to structure surrenders of ACT so as to reduce or
eliminate any U.S. tax disadvantage suffered by NYNEX.
ARBITRATION. Any dispute arising in relation to the Transaction Agreement
is to be resolved by arbitration in London conducted in accordance with the
Rules of the London Court of International Arbitration.
CONDITIONS TO THE BCM OFFER AND THE OFFERS. Each of the BCM Offer and the
Offers is subject to the following conditions (the "Conditions"):
(i) the passing at an extraordinary general meeting of C&W (or at any
adjournment thereof) of an ordinary resolution to approve and implement the
BCM Offer and the Offers and the acquisition of all outstanding shares of
Mercury;
(ii) the CWC ADSs being admitted for listing on the New York Stock
Exchange, Inc. subject only to official notice of issuance;
(iii) the London Stock Exchange announcing its decision to admit to the
Official List the CWC Ordinary Shares to be issued pursuant to the BCM Offer
and the Offers and such admission becoming effective in accordance with
paragraph 7.1 of the Listing Rules of the London Stock Exchange;
(iv) no Material Adverse Change (as defined under "Termination" below)
occurring in respect of CWC or Mercury;
(v) the Mercury Purchase Agreements becoming unconditional save in
respect of any condition relating to the BCM Offer and the Offers becoming
unconditional;
(vi) no government or governmental, quasi-governmental, supranational,
statutory or regulatory body, court, trade agency, professional association
or any other regulatory body in any jurisdiction (each a "Relevant
Authority") having announced an intention to take, or having instituted,
implemented or threatened any action, proceedings, suit, investigation or
inquiry, or made, proposed or enacted any statute, regulation or order or
taken any other steps and there not continuing to be outstanding any
statute, regulation or order thereof, which would or might:
(a) make the BCM Offer or the Offers or the acquisition by CWC of BCM
Securities or the Shares or of control of BCM or the Companies void,
illegal, unenforceable or otherwise restrict, restrain, prohibit or
otherwise interfere with the implementation of, or impose additional
conditions or obligations with respect thereto, or otherwise challenge or
interfere therewith in any such case to a materially adverse extent;
(b) result in a material delay in the ability of CWC, or render CWC
unable, to acquire some or all of the BCM Securities and the Shares;
(c) require or prevent the divestiture by any member of the BCM Group
or the NYNEX CableComms Group or the Mercury Group (each as defined in
the Prospectus) of all or any
7
material portion of their respective businesses, assets or properties or
impose any material limitation on the ability of any of them to conduct
all or any material portion of their respective businesses or own all or
any material portion of their respective assets or property the result of
which in any such case is material to the BCM Group, the NYNEX CableComms
Group or the Mercury Group taken as a whole;
(d) impose any limitation on the ability of any member of the BCM
Group, the NYNEX CableComms Group or the Mercury Group to acquire or to
hold or to exercise effectively any rights of ownership of shares or
loans or securities convertible into shares of any member of the BCM
Group, NYNEX CableComms Groups or Mercury Group held or owned by it or to
exercise management control over any member of the BCM Group, NYNEX
CableComms Group or Mercury Group which, in such case, is material to the
BCM Group, NYNEX CableComms Group or the Mercury Group taken as a whole;
(e) require any member of the BCM Group, NYNEX CableComms Group or
Mercury Group to offer to acquire any securities in any member of the BCM
Group or NYNEX CableComms Group owned by any third party where such
acquisition would be material in the context of the CWC Group (as defined
in the Prospectus) taken as a whole or, as the case may be, the BCM Group
or NYNEX CableComms Group taken as a whole; or
(f) otherwise adversely affect in any material respect the business,
profits or prospects of any member of the BCM Group, NYNEX CableComms
Group or Mercury Group;
and all applicable waiting or other time periods during which any such Relevant
Authority could decide to take, institute, implement or threaten any such
action, proceeding, suit, investigation or inquiry having expired, lapsed or
been terminated;
(vii) all necessary filings having been made, and all appropriate waiting
periods under any applicable legislation or regulations of any jurisdiction
having expired, lapsed or been terminated, in each case in respect of the
relevant offer and the acquisition of BCM Securities or the Shares, or of
control of BCM or the Companies, by CWC, and all material authorizations,
orders, recognitions, grants, consents, licenses, confirmation, clearances,
permissions and approvals ("Authorizations") necessary for, or in respect
of, the relevant offer and the proposed acquisition of any BCM Securities or
the Shares, or of control of BCM or the Companies, and to carry on the
business of any member of the CWC Group or of the BCM Group or the NYNEX
CableComms Group having been obtained, in terms and in a form reasonably
satisfactory to CWC, from all appropriate Relevant Authorities and all such
Authorizations remaining in full force and effect and there having been no
intimation or notice of an intention to revoke or not to renew any of the
same and all necessary statutory or regulatory obligations in any
jurisdiction having been complied with;
(viii) there being no provision of any material arrangement, agreement,
license, permit, franchise or other instrument to which any member of the
BCM Group or NYNEX CableComms Group is a party or by or to which any such
member or any of their assets may be bound, entitled or subject and which,
in consequence of the proposed acquisition of any BCM Securities or Shares,
or control of BCM or the Companies, by CWC or otherwise, would or might
reasonably be expected to result in (in each case to an extent which is
material in the context of the BCM Group or NYNEX CableComms Group taken as
a whole except in the case of paragraph (h) below where it shall be to an
extent which is material in the context of the BCM Offer and the Offers):
(a) any moneys borrowed by, or other indebtedness actual or
contingent of, any such member of the BCM Group or NYNEX CableComms Group
being or becoming repayable or being capable of being declared repayable
immediately or prior to its stated maturity date or repayment date or the
ability of such member or associate to borrow moneys or incur any
indebtedness being withdrawn or inhibited;
8
(b) the creation of any mortgage, charge or other security interest
over the whole or any part of the business, property, assets or interests
of any such member or any such security (whenever arising or having
arisen) becoming enforceable;
(c) any such arrangement, agreement, license, permit, franchise or
instrument being terminated or adversely modified or any action being
taken of an adverse nature or any obligation arising thereunder;
(d) any material assets or interests of any such member being or
becoming liable to be disposed of or charged or any right arising under
which any such assets or interest could be required to be disposed of or
charged in each case other than in the ordinary course of business;
(e) the interest or business of any such member in or with any firm,
body or person, or any arrangements relating to such interest or
business, being terminated or materially and adversely modified or
affected;
(f) any such member ceasing to be able to carry on business under any
name under which it presently does so;
(g) the creation of material liabilities by any such member; or
(h) the financial or trading positions or prospects of any member
being prejudiced or adversely affected;
(ix) except as publicly announced by BCM or the Companies prior to the
date of the Prospectus, no member of the BCM Group or the NYNEX CableComms
Group having, since the date of the balance sheet included in the last
published audited accounts of BCM or the Companies, as the case may be:
(a) issued or agreed to issue or authorized or proposed the issue of
additional securities of any class, or securities convertible into, or
rights, warrants or options to subscribe for or acquire, any such
securities or convertible securities (except as between BCM and
wholly-owned subsidiaries of BCM and between the Companies and
wholly-owned subsidiaries of the Companies and except for options
granted, and for any BCM Securities or Shares allotted upon exercise of
options granted under the option schemes of BCM or the NYNEX CableComms
Option Schemes or upon conversion of certain convertible loan notes of
BCM) or redeemed, purchased or reduced any part of its share capital;
(b) declared, paid, made or proposed to declare, pay or make any
bonus in respect of BCM Securities or Shares, dividends or other
distribution other than to other members of the BCM Group or NYNEX
CableComms Group, as the case may be;
(c) authorized or proposed or announced its intention to propose any
merger or demerger or material acquisition or disposal of assets or BCM
Securities or Shares (other than in the ordinary course of trading or as
between members of the BCM Group or NYNEX CableComms Group, as the case
may be);
(d) authorized or proposed or announced its intention to propose any
material change in its share or loan capital except for options granted
pursuant to the option schemes of BCM or the NYNEX CableComms Option
Schemes and for any BCM Securities or Shares allotted upon exercise of
such options and except for intragroup issues;
(e) issued or authorized or proposed the issue of any debentures or
incurred or increased any indebtedness or become subject to any
contingent liability which is material in the context of the BCM Group or
NYNEX CableComms Group taken as a whole;
9
(f) disposed of or transferred, mortgaged, charged, encumbered or
created any security interest over the whole or part of any asset or any
right, title or interest in any asset otherwise than in the ordinary
course of business which is material in the context of the BCM Group or
NYNEX CableComms Group taken as a whole;
(g) entered into any contract or commitment (whether in respect of
capital expenditure or otherwise) which is of a long-term or unusual
nature or involves or could involve an obligation of a nature or
magnitude, in either case, which is material in the context of the BCM
Group or NYNEX CableComms Group taken as a whole;
(h) entered into any reconstruction, amalgamation, transaction or
arrangement (otherwise than in the ordinary course of business) which is
material in the context of the BCM Group or NYNEX CableComms Group taken
as a whole;
(i) taken any corporate action, or had any order made, for its
winding-up, dissolution or reorganization or for the appointment of a
receiver, administrator, administrative receiver, trustee or similar
officer of all or any of its assets and revenues or any analogous
proceedings in any jurisdiction or had any such person appointed;
(j) entered into any agreement which consents to the restriction to a
material extent of the scope of the business of the BCM Group or NYNEX
CableComms Group;
(k) waived or compromised any material claim otherwise than in the
ordinary course of business;
(l) entered into or varied (in any material respect) the terms of any
service agreement with any of the directors of BCM or the Companies; or
(m) entered into any agreement or commitment or passed any resolution
with respect to any of the transactions or events referred to in this
paragraph (ix);
(x) since the date of the balance sheet included in the last published
audited accounts of BCM or the Companies, as the case may be, except as
publicly announced by BCM or the Companies, as the case may be, prior to the
date of the Prospectus:
(a) there having been no adverse change in the business, financial or
trading position or profits or prospects of BCM or the Companies or of
any other member of the BCM Group or NYNEX CableComms Group which in any
such case is material in the context of the BCM Group or NYNEX CableComms
Group taken as a whole;
(b) no litigation, arbitration proceedings, prosecution or other
legal proceedings having been instituted, announced or threatened by or
against or remaining outstanding against any member of the BCM Group or
NYNEX CableComms Group which in any such case could have a material
effect on the BCM Group or NYNEX CableComms Group taken as a whole; and
(c) no contingent liability having arisen which would or might be
likely materially and adversely to affect the BCM Group or NYNEX
CableComms Group;
10
(xi) CWC not having discovered that:
(a) the financial or business or other information concerning the BCM
Group or NYNEX CableComms Group as contained in the information publicly
disclosed at any time by any member of the BCM Group or NYNEX CableComms
Group either contains a material misrepresentation of fact or omits to
state a fact necessary to make the information contained therein not
materially misleading; or
(b) any member of the BCM Group or NYNEX CableComms Group is subject
to any liability, contingent or otherwise, which is not disclosed in the
last published audited accounts of BCM or the Companies, as the case may
be, and which is material in the context of the BCM Group or NYNEX
CableComms Group taken as a whole; and
(xii) CWC not having discovered that:
(a) any past or present member of the BCM Group or NYNEX CableComms
Group or predecessor of any member of such group has not complied with
all applicable laws, statutes, ordinances or regulations of any
jurisdiction or other requirements of any Relevant Authority with regard
to environmental matters, including, without limitation, to the emission,
disposal, discharge, spillage or leak of any waste or hazardous substance
or any substance likely to impair the environment or harm human health,
which non-compliance or any other emission, disposal, discharge, spillage
or leak which has occurred would be likely to give rise to any liability
(whether actual or contingent) on the part of any member of the BCM Group
or NYNEX CableComms Group and which is material in the context of the BCM
Group or NYNEX CableComms Group taken as a whole; and
(b) there is, or is reasonably expected to be, any liability (whether
actual or contingent) to make good, remedy, repair, reinstate or clean up
any property now or previously owned, occupied, made use of or harmed,
contaminated or in any way affected by any past or present member of the
BCM Group or NYNEX CableComms Group or predecessor of any member of such
group under any environmental legislation, regulation, notice, circular
or order of any Relevant Authority or any common law liability
(including, without limitation, contract) and which is material in the
context of such group taken as a whole.
ADDITIONAL CONDITIONS TO THE OFFERS. The Offers are also subject to the
following additional Conditions (the "Additional Conditions"):
(A) (i) in the case of the NYNEX CableComms UK Offer, valid acceptances
being received (and not, where permitted, validly withdrawn) by 2:30 p.m.
(London time), 9:30 a.m. (New York City time), on the Initial Closing Date (as
defined in the Prospectus) (or such later time(s) and/or date(s) as CWC may,
subject to the rules of the City Code, decide) in respect of not less than 90
per cent. (or such lesser percentage as CWC may decide) of the NYNEX CableComms
UK Ordinary Shares to which the NYNEX CableComms UK Offer relates, provided that
this condition will not be satisfied unless CWC shall have acquired or agreed to
acquire, whether pursuant to the NYNEX CableComms UK Offer or otherwise, NYNEX
CableComms UK Ordinary Shares carrying in aggregate more than 50 per cent. of
the voting rights currently exercisable at a general meeting of NYNEX CableComms
UK, including for this purpose, to the extent (if any) required by the Panel,
any such voting rights which will attach on entry of the securities in the
register of members of NYNEX CableComms UK to any NYNEX CableComms UK Ordinary
Shares that may be unconditionally allotted or issued while the NYNEX CableComms
UK Offer remains open for acceptance or such shorter period as CWC may, subject
to the City Code, determine, whether pursuant to the exercise of any outstanding
conversion or subscription rights or otherwise, and for this purpose:
11
(a) the expression "NYNEX CableComms UK Ordinary Shares to which the
NYNEX CableComms UK Offer relates" shall be construed in accordance with
Sections 428 to 430F of the Companies Act 1985, as amended (the
"Companies Act");
(b) NYNEX CableComms UK Ordinary Shares which have been
unconditionally allotted shall be deemed to carry the voting rights which
they will carry upon issue;
(c) for the purpose of this Condition, the expression "NYNEX
CableComms UK Ordinary Shares" shall include NYNEX CableComms UK Ordinary
Shares comprised in Units or represented by ADSs, as the case may be;
(ii) in the case of the NYNEX CableComms US Offer, valid acceptances
being received (and not, where permitted, validly withdrawn) by 2:30 p.m.
(London time), 9:30 a.m. (New York City time), on the Initial Closing Date
(or such later time(s) and/or date(s) as CWC may, subject to the rules of
the City Code, decide) in respect of not less than 90 per cent. (or such
lesser percentage as CWC may decide) of the NYNEX CableComms US Shares of
Common Stock to which the NYNEX CableComms US Offer relates, provided that
this condition will not be satisfied unless CWC shall have acquired or
agreed to acquire, whether pursuant to the NYNEX CableComms US Offer or
otherwise, NYNEX CableComms US Shares of Common Stock carrying in aggregate
more than 50 per cent. of the voting rights currently exercisable at a
shareholders' meeting of NYNEX CableComms US, including for this purpose, to
the extent (if any) required by the Panel, any such voting rights which will
attach on entry of the securities in the register of members of NYNEX
CableComms US to any NYNEX CableComms US Shares of Common Stock that may be
unconditionally allotted or issued while the NYNEX CableComms US Offer
remains open for acceptance or such shorter period as CWC may, subject to
the City Code, determine, whether pursuant to the exercise of any
outstanding conversion or subscription rights or otherwise, and for this
purpose:
(a) the expression "NYNEX CableComms US Shares of Common Stock to
which the NYNEX CableComms US Offer relates" shall be construed in
accordance with Sections 428 to 430F of the Companies Act as if such
provisions were applicable to NYNEX CableComms US Shares of Common Stock;
(b) NYNEX CableComms US Shares of Common Stock which have been
unconditionally allotted shall be deemed to carry the voting rights which
they will carry upon issue;
(c) for the purpose of this Condition, the expression "NYNEX
CableComms US Shares of Common Stock" shall include NYNEX CableComms US
Shares of Common Stock comprised in Units or represented by ADSs, as the
case may be;
(B) receipt by CWC of written indication from the Department of Trade and
Industry of the United Kingdom (the "DTI") and from the Independent Television
Commission (the "ITC"), to the effect that CWC's acquisition of the Companies
will not lead to the revocation of any licenses (issued pursuant to either the
UK Cable and Broadcasting Act 1984 or the UK Broadcasting Act 1990, as amended
by the Broadcasting Act 1996 in the United Kingdom (the "Broadcasting Act")) or
the revocation of the telecommunication licenses (issued by the DTI pursuant to
the UK Telecommunications Act 1984) which are held by any member of the Mercury
Group or any member of the NYNEX CableComms Group;
(C) receipt by CWC of written confirmation from the Office of the Director
General of Telecommunication that the Director General has not (i) issued any
directions to any member of the NYNEX CableComms Group or the Mercury Group in
connection with their telecommunication licenses issued pursuant to the UK
Telecommunications Act 1984, (ii) given notice to any member of the NYNEX
CableComms Group or the Mercury Group of its intention to make modifications to
such license (other than modifications which are to be made to all or
substantially all of the licenses issued pursuant to the UK Telecommunications
Act 1984), or (iii) taken any steps pursuant to Section 16 of the UK
Telecommunications Act 1984 in relation to enforcement of such license;
12
(D) receipt by CWC of written confirmation from the ITC that the ITC has not
(i) issued any directions to any member of the NYNEX CableComms Group in
connection with any license issued pursuant to the UK Cable and Broadcasting Act
1984 or the Broadcasting Act, (ii) given notice to any member of the NYNEX
CableComms Group of its intention to make modifications to any such license
(other than modifications which are to be made to all or substantially all
licenses issued pursuant to the UK Cable and Broadcasting Act 1984 or the
Broadcasting Act, as the case may be), or (iii) taken any steps in relation to
enforcement of any such license;
(E) the BCM Offer becoming or being declared unconditional in all respects
(except in respect of any condition relating to the Offers becoming or being
declared so unconditional);
(F) NYNEX (if it has advised C&W and BCI that it is entitled, and intends,
to request an opinion pursuant to clause 9(L)(i) of the Transaction Agreement)
having received, at or immediately prior to the time at which the Offers would
otherwise become or be declared unconditional in all respects, an opinion of
Chadbourne & Parke LLP or, if Chadbourne & Parke LLP is unable to give such
opinion, an opinion of independent counsel of international standing in the
field of US federal income tax reasonably satisfactory to NYNEX, C&W and BCI to
the effect that, based upon evidence of share ownership which may reasonably be
relied upon pursuant to US Treasury Regulations and the ruling received from the
US Internal Revenue Service pursuant to the Additional Condition (G) below, the
condition set forth in US Treasury Regulations section 1.367(a)-3(c)(1)(ii), or
any successor provision relating to the ownership of the shares of CWC by
holders of Shares, is met; and
(G) NYNEX and the Companies having received the rulings requested from the
US Internal Revenue Service in connection with the US tax treatment of NYNEX and
US holders of Units who accept the Offers, or NYNEX in connection with the
transfer to CWC of the Winston Entities and of the Companies following its
proposed domestication.
The BCM Offer is also subject to additional conditions with respect to BCM
that are similar to the above Additional Conditions to the Offers with respect
to the Companies, except that the BCM Offer does not have a condition relating
to receipt of an opinion or rulings as described in Additional Conditions (F)
and (G), respectively, above.
CWC reserves the right, subject to the provisions of the Transaction
Agreement, to waive, in whole or in part, all or any of Conditions (iv) to (xii)
inclusive as well as the Additional Conditions and the corresponding additional
conditions to the BCM Offer, other than Additional Condition (A) and the
corresponding condition to the BCM Offer, provided that CWC may only waive or
exercise any discretion in relation to Conditions (vi) and (vii), and Additional
Conditions (B), (C) and (D) and the corresponding additional conditions to the
BCM Offer, and, with respect to the Offers only, Additional Conditions (F) and
(G) with the consent of BCI and NYNEX. Reducing the Minimum Acceptance Condition
requires the agreement of each of C&W, BCI and NYNEX.
On March 21, 1997, C&W, NYNEX and BCI agreed that none of the Conditions to
the BCM Offer will be invoked by reason of:
(i) the termination of any bank or other borrowing facilities available
to any member of the BCM Group, or the making of any new borrowings by any
such member to refinance such facilities, by reason or in pursuance of the
implementation of the provisions of the Transaction Agreement; or
(ii) the expenditure of any monies or the incurring of any indebtedness
or any liability to expend monies by any member of the BCM Group for the
purpose of implementing the network buildout program of the BCM Group in the
ordinary course of business.
A similar agreement was reached on March 21, 1997 in relation to the NYNEX
CableComms Group and, in addition, the parties agreed that none of the
Conditions to the Offers will be invoked by reason of
13
any member of the NYNEX Cablecomms Group ceasing to be able to use the NYNEX
name by reason or in pursuance of any provision of the Transaction Agreement.
Subject to the above, CWC shall be under no obligation to waive (where
permitted) or treat as satisfied any of the Conditions by a date earlier than
Monday, May 26, 1997 (or such later date as may be agreed by the Panel)
notwithstanding that the other Conditions of the BCM Offer and the Offers have
been waived or fulfilled and that there are at such earlier date no
circumstances to indicate that any such Conditions may not be capable of
fulfillment. If CWC is required by the Panel to make an offer for any of the BCM
Securities or the Shares under the provisions of Rule 9 of the City Code, CWC
may make such alterations to the above Conditions, including the Minimum
Acceptance Condition, as are necessary to comply with the provisions of Rule 9
provided that CWC will only make such alteration to Conditions (vi) and (vii)
and Additional Conditions (B), (C) and (D) and the corresponding additional
conditions to the BCM Offer and, with respect to the Offers only, Additional
Conditions (F) and (G) with the consent of BCI and NYNEX.
If Additional Condition (G) to the Offers is not satisfied by the latest
date on which in accordance with the City Code and/or with the consent of the
Panel the Offers may become or be declared unconditional, such condition will,
in accordance with the provisions of the Transaction Agreement, be waived unless
NYNEX has previously notified C&W and BCI that such condition must be invoked.
TERMINATION. The Transaction Agreement may be terminated by any party by
written notice to the others during the period from the date of such agreement
to the date upon which the BCM Offer and the Offers are announced in accordance
with Rule 2.5 of the City Code if, in that party's reasonable opinion and having
consulted to the extent practicable with the other parties, a Material Adverse
Change has occurred in respect of any of CWC, the Companies, BCM or Mercury
provided that neither C&W nor BCI may terminate in respect of a Material Adverse
Change in respect of CWC, Mercury or BCM, and NYNEX may not terminate in respect
of a Material Adverse Change in respect of the Companies. "Material Adverse
Change" generally means with respect to any of Mercury, BCM, the Companies, or
CWC, any event, occurrence, fact, condition or change occurring after October
22, 1996 that has a materially adverse effect on the business, operations,
results of operations, financial condition, assets or liabilities of the
relevant person, provided that such effect is sufficiently adverse such as to
alter to a significant extent the relative values of Mercury, BCM, the
Companies, or CWC, as the case may be, reflected in the consideration payable
under the BCM Offer and the Offers or in respect of the acquisition of Mercury
by CWC.
The Transaction Agreement shall terminate automatically (unless the parties
otherwise agree) in the following circumstances: (i) if the BCM Offer and the
Offers have not been announced for the purposes of Rule 2.5 of the City Code by
9:00 a.m. on June 30, 1997; or (ii) if either of the BCM Offer or the Offers
lapses or is withdrawn with the consent of all of the parties to the Transaction
Agreement.
REPRESENTATION ON CWC'S BOARD OF DIRECTORS. The Transaction Agreement
provides that, upon the BCM Offer and the Offers becoming or being declared
unconditional in all respects, C&W will be entitled to appoint six directors to
CWC's Board (including the Chairman and chief executive officer), BCI two
directors and NYNEX two directors. Three directors will be appointed by
agreement among C&W, BCI and NYNEX.
NYNEX has appointed Mr. Blackburn, a director of the Companies and an
officer of an affiliate of NYNEX, and Mr. Frederic V. Salerno, an officer of
NYNEX, as non-executive directors on CWC's Board. Sir Bryan Victor Carsberg, a
director of the Companies, has accepted his appointment as an independent
non-executive director on CWC's Board.
14
DE-STAPLING OF CERTAIN UNITS
Subject to the requisite approvals of holders of NYNEX CableComms UK
Ordinary Shares at the NYNEX CableComms UK extraordinary general meeting and the
holders of NYNEX CableComms US Shares of Common Stock at the NYNEX CableComms US
special meeting, the NYNEX CableComms UK Articles of Association and the NYNEX
CableComms US Restated Certificate of Incorporation will be amended to provide,
among other things, that notwithstanding the provisions therein requiring that
NYNEX CableComms UK Ordinary Shares and NYNEX CableComms US Shares of Common
Stock be transferred together and otherwise treated as Units, the Boards of
Directors of NYNEX CableComms UK and NYNEX CableComms US, respectively, shall be
authorized to permit the transfer or other dealing of a number of NYNEX
CableComms UK Ordinary Shares and the transfer, or conversion by way of merger
or other dealing, of a number of NYNEX CableComms US Shares of Common Stock, in
each case in an amount not to exceed 20 per cent. of the NYNEX CableComms UK
Ordinary Shares or NYNEX CableComms US Shares of Common Stock, as the case may
be, outstanding immediately prior to the commencement of the Offers, free of the
restrictions on transfer or other dealing contained in the NYNEX CableComms UK
Articles of Association and the restrictions on transfer or conversion by way of
merger or other dealing contained in the NYNEX CableComms US Restated
Certificate of Incorporation. These amendments to the NYNEX CableComms UK
Articles of Association (the "UK De-stapling Amendment") and the NYNEX
CableComms US Restated Certificate of Incorporation (the "US De-stapling
Amendment") will allow certain NYNEX CableComms UK Ordinary Shares and NYNEX
CableComms US Shares of Common Stock to be transferred or converted separately
in order to facilitate the Compulsory Acquisition (as defined below) relating to
the NYNEX CableComms UK Offer and the Merger (as defined below).
The "Compulsory Acquisition" means the compulsory purchases, pursuant to
Sections 428 through 430F of the Companies Act, of all NYNEX CableComms UK
Ordinary Shares (including those comprised in Units or represented by ADSs),
which have not been purchased pursuant to the Offers. The "Merger" means the
merger of Cable & Wireless Communications Delaware Inc., a wholly-owned
subsidiary of CWC incorporated in Delaware (the "CWC Merger Sub") with and into
NYNEX CableComms US pursuant and subject to Section 251 of the Delaware General
Corporation Law (the "DGCL"), with NYNEX CableComms US remaining as the
surviving corporation. In the Merger, holders of NYNEX CableComms US Shares of
Common Stock will receive CWC Ordinary Shares or CWC ADSs, as the case may be,
and, as a result of the Merger, NYNEX CableComms US will continue as the
surviving corporation and as a wholly-owned subsidiary of CWC.
The Schedule 14D-1 states that following the Compulsory Acquisition relating
to the NYNEX CableComms UK Offer and the Merger, CWC, as the sole beneficial
shareholder of NYNEX CableComms UK and NYNEX CableComms US, intends to approve
the domestication of NYNEX CableComms UK as a Delaware corporation pursuant to
Section 388 of the DGCL and amendments to the NYNEX CableComms US Restated
Certificate of Incorporation and the NYNEX CableComms UK Articles of Association
to remove completely the restrictions on the NYNEX CableComms UK Ordinary Shares
and the NYNEX CableComms US Shares of Common Stock, including those owned by
CWC, which require the transfer of, or other dealing in, such shares only as
Units. The Schedule 14D-1 further states that thereafter, NYNEX CableComms UK
will file a certificate of domestication and a certificate of incorporation with
the Secretary of State of the State of Delaware and become a Delaware
corporation for purposes of Delaware law. Notwithstanding the domestication in
Delaware, NYNEX CableComms UK will also continue to be governed by the laws of
England and Wales. Following the domestication of NYNEX CableComms UK, NYNEX
CableComms UK and NYNEX CableComms US will file the amendments to the NYNEX
CableComms UK Articles of Association and the NYNEX CableComms US Restated
Certificate of Incorporation, respectively.
COMPULSORY ACQUISITION. The Schedule 14D-1 states that if, on or before
July 27, 1997, as a result of the Offers or otherwise, CWC acquires or contracts
to acquire NYNEX CableComms UK Ordinary Shares
15
(including those comprised in Units or represented by ADSs) representing at
least 90 per cent. of NYNEX CableComms UK Ordinary Shares (including those
comprised in Units or represented by ADSs) to which the NYNEX CableComms UK
Offer relates, then (i) immediately prior to the consummation of the Compulsory
Acquisition relating to the NYNEX CableComms UK Offer, the respective Boards of
Directors of NYNEX CableComms UK and NYNEX CableComms US currently propose,
pursuant to the authority granted to them in the proposed amendments to the
NYNEX CableComms UK Articles of Association and the NYNEX CableComms US Restated
Certificate of Incorporation, if such amendments are approved by the holders of
NYNEX CableComms UK Ordinary Shares and the holders of NYNEX CableComms US
Shares of Common Stock, respectively, to effect the de-stapling of certain Units
in order to facilitate the Compulsory Acquisition relating to the NYNEX
CableComms UK Offer and the Merger; and (ii) (a) CWC will be entitled and
intends to effect a Compulsory Acquisition to compel the purchase of the
remainder of the outstanding NYNEX CableComms UK Ordinary Shares (including
those represented by ADSs) on the same terms as those offered in the NYNEX
CableComms UK Offer in accordance with Sections 428-430F of the Companies Act;
and/or (b) a holder of NYNEX CableComms UK Ordinary Shares (including those
represented by ADSs) may require CWC to purchase his or her NYNEX CableComms UK
Ordinary Shares on the same terms as those offered in the NYNEX CableComms UK
Offer in accordance with Sections 430A and 430B of the Companies Act.
THE MERGER. The Schedule 14D-1 states that subject to the requisite
approvals of the holders of NYNEX CableComms US Shares of Common Stock at the
NYNEX CableComms US special meeting, CWC intends to become the 100 per cent.
owner of all the outstanding NYNEX CableComms US Shares of Common Stock by means
of a merger of the CWC Merger Sub with and into NYNEX CableComms US pursuant and
subject to Section 251 of the DGCL. Following the Merger, the separate corporate
existence of the acquisition subsidiary will cease and NYNEX CableComms US will
continue as the surviving corporation under the name "NYNEX CableComms Group
Inc." In the Merger, NYNEX CableComms US Shares of Common Stock (other than
NYNEX CableComms US Shares of Common Stock held by NYNEX CableComms US as
treasury shares or by its subsidiaries or by CWC and other than NYNEX CableComms
US Shares of Common Stock for which appraisal rights, if any, have been properly
asserted under Section 262 of the DGCL), including those represented by ADSs,
will be converted into the right to receive the same number of CWC Ordinary
Shares as such holders of NYNEX CableComms US Shares of Common Stock would have
received in the NYNEX CableComms US Offer (including those represented by ADSs)
with respect to their NYNEX CableComms US Shares of Common Stock. NYNEX
CableComms US Shares of Common Stock held by NYNEX CableComms US as treasury
shares or by its subsidiaries will be cancelled in the Merger, and NYNEX
CableComms US Shares of Common Stock held by CWC will remain unchanged and
outstanding (upon the election by CWC to forego the conversion of the shares of
the CWC Merger Sub into shares of the surviving corporation). The directors of
the CWC Merger Sub will become the directors of NYNEX CableComms US as the
surviving corporation, and the officers of NYNEX CableComms US will become the
officers of the surviving corporation.
CWC, CWC Merger Sub and NYNEX CableComms US have entered into an Agreement
and Plan of Merger (the "Merger Agreement") in connection with the Merger. The
Merger Agreement provides that the respective obligations of each party to
effect the Merger is subject to the satisfaction at or prior to the effective
time of the Merger of (i) the US De-stapling Amendment, the Merger Agreement and
the Merger having been approved and adopted by the requisite votes of the
shareholders of NYNEX CableComms US; (ii) the UK De-stapling Amendment having
been approved by the requisite votes of the shareholders of NYNEX CableComms UK;
(iii) the Offers becoming or having been declared unconditional in all respects;
and (iv) subject to the approvals of the UK De-stapling Amendment and the US De-
stapling Amendment, the Boards of Directors of NYNEX CableComms UK and NYNEX
CableComms US having taken such action, in their absolute discretion, as is
necessary to permit the de-stapling of up to 20 per cent. of the outstanding
NYNEX CableComms UK Ordinary Shares and NYNEX CableComms US Shares of Common
Stock.
16
The Merger will become effective at the date and time which is the later of
(i) the date and time of the filing of the certificate of merger relating to the
Merger with the Secretary of State of the State of Delaware or (ii) such other
date and time as the parties to the Merger Agreement may agree as is set forth
in such certificate of merger.
Pursuant to the Merger Agreement, the parties have agreed that all rights to
indemnification existing in favor of the directors and officers of NYNEX
CableComms US as provided in the Restated Certificate of Incorporation and
By-laws of NYNEX CableComms US on the date of the Merger Agreement with respect
to actions or omissions occurring at or prior to the effective time of the
Merger, shall survive the Merger and shall continue in full force and effect
without amendment, repeal or modification for a period of six years after the
effective time of the Merger, unless such modification is required by law, and
CWC has agreed to guarantee the obligations of the surviving corporation with
respect thereto. For a period of six years after the effective time of the
Merger, CWC has agreed to cause the surviving corporation to use its reasonable
best efforts to maintain, if available, the existing directors' and officers'
liability insurance policies on terms no less advantageous to such directors and
officers of NYNEX CableComms US who are currently covered by NYNEX' policies,
with respect to matters occurring prior to the effective time of the Merger.
The foregoing summary of the Merger and the Merger Agreement does not
purport to be complete and is qualified in its entirety by reference to the
complete text of the Merger Agreement, a copy of which has been filed as Exhibit
3 hereto and is incorporated herein by reference.
Proxy materials relating to the approval of the UK De-stapling Amendment,
the US De-stapling Amendment and the Merger accompany this Schedule 14D-9. The
Offer Committee of NYNEX CableComms UK has unanimously recommended approval of
the UK De-stapling Amendment to the Board of Directors of NYNEX CableComms UK.
The Offer Committee of NYNEX CableComms US has unanimously recommended approval
of the US De-stapling Amendment and the Merger to the Board of Directors of
NYNEX CableComms US. See Item 4 below. NYNEX has informed the Companies that the
NYNEX subsidiary that holds the NYNEX CableComms UK Ordinary Shares and the
NYNEX CableComms US Shares of Common Stock intends to vote all of its 67.0 per
cent. interest in NYNEX CableComms UK Ordinary Shares and NYNEX CableComms US
Shares of Common Stock owned by it in favor of the UK De-stapling Amendment and
the US De-stapling Amendment, and has informed NYNEX CableComms US that it
intends to cause such subsidiary to vote all of its NYNEX CableComms US Shares
of Common Stock in favor of the Merger to satisfy the shareholder approval
requirements of Section 251 of the DGCL and as required by NYNEX CableComms US'
Restated Certificate of Incorporation. NYNEX also has informed the Companies
that it will cause to be voted the Shares owned, indirectly, by NYNEX in favor
of any resolutions to adjourn the meetings of the Companies in order to permit
the obtaining of such further votes as may be required and further solicitation
of proxies in favor of such resolutions. If approved by the requisite vote, it
is contemplated that the Merger will become effective at the later of (i) the
time as the Compulsory Acquisition relating to the NYNEX CableComms UK Offer
becomes effective (if at all) and (ii) the exercise or lapse of all options
outstanding under the NYNEX CableComms Option Schemes or the exchange of such
options for options over CWC Ordinary Shares. The Schedule 14D-1 states that
these shareholder votes are not conditions to either of the Offers.
CWC SHAREHOLDERS' AGREEMENT
The Schedule 14D-1 provides substantially the following summary of the CWC
Shareholders' Agreement (as defined below). The following discussion of the CWC
Shareholders' Agreement does not purport to be complete and is qualified in its
entirety by reference to the complete text of the CWC Shareholders' Agreement, a
copy of which has been filed as Exhibit 4 hereto and is incorporated herein by
reference.
GENERAL. On March 21, 1997 C&W, BCI, BCM Holdco Limited ("BCMH"), Bell
Canada International Holdings Limited ("BCIH"), NYNEX and CWC entered into an
agreement setting out the terms of the relationship among them in respect of CWC
(the "CWC Shareholders' Agreement"). The CWC
17
Shareholders' Agreement contains the provisions described below which will take
effect upon the BCM Offer and the Offers becoming or being declared
unconditional. For the purposes of the description of the CWC Shareholders'
Agreement below, each of C&W, BCI (together with BCIH and BCMH), NYNEX and each
New Shareholder (as defined below) are referred to as "Shareholders" or a
"Shareholder", and a director of CWC appointed by a Shareholder is referred to
as a Shareholder-Appointed Director. "Group", when used with respect to any
entity, means that entity and its subsidiary undertakings within the meaning of
that expression in the Companies Act; provided, however, that references to or
including the C&W Group exclude the CWC Group. References to the MTSA, the
Secondment Agreement, the Tax Sharing Agreement, the C&W License and the NYNEX
Termination Agreement are defined under "Management and Technical Services
Agreement", "Secondment Agreement", "Tax Agreements," "C&W License" and "NYNEX
Termination Agreement" below.
CWC'S BUSINESS. The parties to the CWC Shareholders' Agreement have agreed
that the business of CWC ("CWC's Business") will be: (i) to carry on in the
United Kingdom businesses consisting of the operation and/or licensing of owned
or leased telecommunication networks (including fixed, mobile and satellite
networks and broadband networks) and cable TV networks, and the supply and/or
licensing of telecommunication services and products in each case irrespective
of the technologies being used (including voice, data, software and image
services and products) and of cable TV services and products, (ii) to carry on
such businesses outside the United Kingdom as are, at the date of the CWC
Shareholders' Agreement, carried on outside the United Kingdom by the CWC Group
and (iii) such other businesses as the CWC Board may decide, subject to the
Shareholder-Appointed Directors' veto rights described under "Reserved Matters"
below.
Certain restrictions relating to mobile, private branch exchanges ("PBXs")
and paging operations in the United Kingdom apply to members of the CWC Group.
In relation to mobile, members of the CWC Group may not, while CWC is a
subsidiary undertaking of C&W and while C&W has an interest in One 2 One, carry
on or have an economic interest in a person which carries on, or has applied for
a license to carry on, as all or part of its business, the activity of running a
mobile radio voice telephony network for the provision of telecommunication
services to the general public within any part of the United Kingdom.
In relation to PBXs, subject to certain exceptions, Mercury and its
subsidiary undertakings may not within three years from October 31, 1995 be
involved in the United Kingdom in a business which sells, rents, distributes,
installs or maintains a PBX involving a private telephone switch located in a
customer's premises that provides switching as well as enhanced features to the
customer's premises (including private automatic branch exchanges), other than
as permitted in a co-operation agreement with the Siemens subsidiary to which
Mercury sold its PBX business.
In relation to paging, subject to certain exceptions, Mercury and its
subsidiary undertakings may not within three years from July 15, 1996 be
involved in owning, operating, selling, marketing, distributing or otherwise
dealing in or with one-way paging or two-way paging provided by means of a
paging system in the United Kingdom, I.E., a telecommunication system operating
through the use of certain radio frequencies, other than as permitted under a
supply and marketing agreement with its former subsidiary, Page One
Communications Limited. In the same period, the restriction extends to selling,
leasing, marketing or distributing in the United Kingdom pagers or other
subscriber equipment commonly used in a paging system or marketing and/or
re-selling one-way paging and/or two-way paging, or carrying on one-way paging
or two-way paging, in any case, to the extent that it involves the use of a
paging system.
C&W, BCI and NYNEX have each agreed that while its Group holds 10 percent or
more of the aggregate issued and outstanding share capital of CWC at the
relevant time, it will, if its board or the board of directors of one of its
subsidiaries decides to establish a business in the United Kingdom which falls
within CWC's Business (a) inform the CWC Board immediately before the earlier of
establishing that business and any public announcement of the same, (b) use its
best endeavors to prevent disclosure to the competing business of any
confidential information relating to CWC's Business, and (c) use its best
18
endeavors to ensure that no director of CWC appointed by it has any executive
involvement or holds any position in the competing business.
No notification or other obligation (as discussed in the preceding
paragraph) will arise in respect of (a) a business which is incorporated and
operating outside the United Kingdom which offers, provides or seeks to provide
services or products to customers in the United Kingdom where those services or
products are offered as part of that business's ordinary business to customers
throughout the world or any part of the world which includes, but is not limited
to, the United Kingdom, (b) the offering of services or products on a global or
international basis covering an area including (but not limited to) the United
Kingdom, (c) acquiring or holding shares in or debentures of a company the
shares of which are listed or dealt in on any stock exchange and which are
shares or debentures, which when aggregated with the holdings of the relevant
Group, confer not more than 10 per cent. of the votes that could be cast in a
general meeting of the relevant company, and (d) the ownership, installation
and/or maintenance of undersea cables. If any Shareholder's Group acquires a
competing business in the United Kingdom then, so long as the main purpose of
the acquisition was not to acquire the competing business and the competing
business is not a major and substantial part of the total activities of the
company, group or business acquired, the notification obligation does not arise
but the obligations described above regarding disclosure of confidential
information and avoiding the involvement of CWC's Directors in the competing
business will apply.
Each of C&W, BCI and NYNEX have agreed that its Group (while such Group owns
10 percent or more of the issued and outstanding ordinary share capital of CWC)
will, if it carries on business outside the United Kingdom, consider, subject to
certain exceptions, using CWC as its preferred agent, representative or carrier
in the United Kingdom in respect of activities falling within CWC's Business.
Equally, CWC will, while any of the C&W, BCI or NYNEX Groups holds 10 percent or
more of the ordinary share capital of CWC, consider using that Shareholder's
Group as its preferred agent, representative or carrier in countries where a
member of that Group offers the relevant services.
C&W has also agreed that while its Group holds 30 per cent. or more of the
aggregate issued and outstanding ordinary share capital of CWC it will not
establish, acquire or carry on any business in the United Kingdom which involves
the ownership or leasing of telecommunications networks or cable television
networks of the nature acquired by CWC pursuant to the Transactions. CWC is not
so acquiring C&W's business of Cable & Wireless Business Networks, Cable &
Wireless Network Services and Cable & Wireless Marine.
The directors of CWC who are not appointed by the Shareholders may by
majority vote approve the acquisition or carrying on by C&W of any business
described in the preceding paragraph (a "Restricted Business").
C&W may also acquire a Restricted Business which CWC has the financial
resources to acquire provided that C&W has offered CWC the opportunity to
acquire the Restricted Business and CWC has decided by a vote of the directors
of CWC not appointed by the Shareholders not to acquire the Restricted Business.
If C&W acquires a business which includes a Restricted Business which CWC
has the financial resources to acquire when the main purpose of the acquisition
is not the acquisition of the Restricted Business and the Restricted Business is
not a major part of the business acquired, then C&W will procure that the
Restricted Business is offered to CWC at the acquisition price for the
Restricted Business. If any decision of CWC not to acquire the Restricted
Business does not include the directors not appointed by the Principal
Shareholders voting against the acquisition, then C&W shall not carry on the
Restricted Business.
C&W may also hold shares or debentures in a Restricted Business if such
shares or debentures are listed or dealt in on any stock exchange and the
holding does not exceed 10 per cent. of the voting capital.
19
SHAREHOLDER-RELATED ARRANGEMENTS. Each Shareholder has agreed that members
of its Group will enter into contracts with CWC on a normal commercial basis and
on arm's length terms. In addition, each Shareholder has agreed that any
agreement or arrangement proposed to be entered into between (a) any member of
the CWC Group and (b) any member of that Shareholder's Group will be submitted
to the CWC Board for approval in accordance with the "disinterested vote
procedure" described below.
The parties to the CWC Shareholders' Agreement have agreed that, after the
BCM Offer and the Offers become or are declared unconditional, the CWC Board
will review existing arrangements, agreements, policies and undertakings (other
than the MTSA, the Secondment Agreement, the C&W License and the NYNEX
Termination Agreement) between (a) members of the CWC Group and (b) members of
any Shareholder's Group. The CWC Board will conduct this review with a view to
determining whether it is in the interests of the relevant member of the CWC
Group to continue with the agreement, arrangement, policy or undertaking (each
an "Arrangement") on the same terms, to terminate it or to seek its amendment to
arm's length terms. Any decision shall be taken by a simple majority of those
directors of CWC in attendance and voting but excluding any directors of CWC
appointed by the Shareholder whose Group includes the party to the Arrangement
in question (the "disinterested vote procedure"). If the CWC Board decides to
terminate an Arrangement, then any costs of the CWC Group arising from such
termination will be borne by the relevant Shareholder.
This review is expected to take place within six months after the BCM Offer
and the Offers become or are declared unconditional in all respects. If an
Arrangement which should be subject to this review comes to the attention of the
CWC Board at a later date, the CWC Board will conduct is review at that point in
accordance with the disinterested vote procedure. If the CWC Board decides to
terminate any such Arrangement at that point, then the relevant Shareholder
will, in addition to termination costs, make a compensation payment to CWC to
the extent that the CWC Group has paid more or received less than an arm's
length amount under the relevant Arrangement after the latest date intended for
the CWC Board review.
The parties to the CWC Shareholders' Agreement have also agreed that the
disinterested vote procedure will apply (a) before a member of the CWC Group
enters into any new Arrangement with any members of any Shareholder's Group and
(b) to any amendment to, or implementation of, any existing Arrangement.
BCI has agreed that if an Arrangement between a member of the CWC Group and
a member of the BCE Group (other than the BCI Group) comes to the CWC Board for
review, the disinterested vote procedure will apply and no director appointed by
BCI will be entitled to vote in respect of that Arrangement. In addition, the
parties have agreed that the disinterested vote procedure will apply to any
decision to be taken by the CWC Board relating to the conduct of any dispute or
the enforcement of any Arrangement between a Shareholder, on the one hand, and
CWC, on the other hand, including the MTSA, the Secondment Agreement, the Tax
Sharing Agreement, the C&W License and the NYNEX Termination Agreement.
The parties have agreed that certain existing Arrangements between the
Companies, BCM, and Mercury, on the one hand, and their current shareholders
and/or such shareholders' subsidiaries, on the other hand, will terminate when
the BCM Offer and the Offers become or are declared unconditional. The parties
have also agreed that, with certain exceptions, any costs which would otherwise
be borne by the CWC Group as a result of such termination will be borne by the
relevant Shareholder.
The parties to the CWC Shareholders' Agreement have agreed that the MTSA,
the Tax Sharing Agreement and the Secondment Agreement will be entered into by
the relevant parties as soon as the BCM Offer and the Offers become or are
declared unconditional. Any subsequent amendment of those agreements as well any
agreements or other documents relating to their implementation will be subject
to the disinterested vote procedure.
C&W has agreed to execute and deliver to CWC the C&W License and NYNEX has
agreed to execute and deliver to CWC the NYNEX Termination Agreement.
20
C&W currently participates, with other companies within its Group (including
Mercury), in group development programs. C&W has agreed that CWC will have the
right, for so long as it is a subsidiary undertaking of C&W, to participate in
existing and future group development programs, either on the terms, from time
to time, set out by the Group Development Board responsible for managing such
programs, or on such other terms as may be agreed between C&W and CWC subject to
the disinterested vote procedure.
TRANSACTION AGREEMENT. The parties to the CWC Shareholders' Agreement have
agreed that certain provisions of the Transaction Agreement will be superseded
by the CWC Shareholders' Agreement and other agreements upon the BCM Offer and
the Offers becoming or being declared unconditional. In all other respects, the
Transaction Agreement will remain in full force and effect.
CWC ARTICLES. The parties to the CWC Shareholders' Agreement have agreed
that the CWC Articles of Association (the "CWC Articles") will come into force
on the date the BCM Offer and the Offers become or are declared unconditional.
The CWC Articles contain rights for the Shareholders to appoint directors and
other matters as described in the Prospectus and is filed as Exhibit 5 hereto
and is incorporated herein by reference. The Shareholders have also agreed that
they will comply with the provisions of the CWC Articles.
RESERVED MATTERS. The CWC Articles and the CWC Shareholders' Agreement
provide and the Shareholders have agreed, subject to the global alliance
provisions described below, that:
(a) the following matters will require approval at a meeting of the CWC
Board and shall not be approved if any Shareholder-Appointed Director votes
against the relevant resolution:
(i) acquisitions and disposals by the CWC Group with a value of more
than L100 million, other than in the ordinary course of business;
(ii) a change in the nature or scope of CWC's Business;
(iii) the issue by CWC or any of its subsidiary undertakings of shares or
other securities or rights to acquire shares or other securities;
(iv) an investment by a strategic partner in CWC or any of its
subsidiary undertakings;
(v) the proposal of any resolution to change the CWC Articles at any
meeting of the shareholders of CWC and any proposal to change the articles
of association or other constitutional documents of any subsidiary
undertaking of CWC at any meeting of the shareholders of that subsidiary
undertaking;
(vi) the adoption or amendment of all or part of the annual capital
expenditure budget for CWC and its subsidiary undertakings;
(vii) the appointment or re-appointment of any director of CWC other than
a Shareholder-Appointed Director, including the proposal of any resolution
so to appoint or re-appoint any such director at a meeting of the
shareholders of CWC and/or any director of a subsidiary undertaking of CWC;
and
(b) no allotment or issue of equity securities (within the meaning of
sections 94(2) and 94(3) of the Companies Act) or voting securities of CWC or
grant of rights in respect of any voting securities of CWC either pursuant to an
offer to Principal Shareholders made by CWC in accordance with the CWC
Shareholders' Agreement or otherwise, shall be made unless both that allotment,
issue or grant and any allotment or issue of equity securities (as so defined)
or voting securities of CWC, pursuant to an offer made to Principal Shareholders
under the CWC Shareholders' Agreement in connection with that allotment, issue
or grant, is approved by resolution of shareholders of CWC in general meeting or
otherwise where such approval is required by the rules of the London Stock
Exchange or otherwise.
The Shareholders have also agreed, subject to the global alliance provisions
described below, that the following matters will require approval at a meeting
of the CWC Board and shall not be approved if either
21
(a) a director appointed by a Shareholder entitled to appoint five or more
directors or (b) at least two Shareholder-Appointed Directors or their Groups,
vote or votes, as the case may be, against the relevant resolutions:
(i) the borrowing of money or granting of any form of security by any
member of the CWC Group if the aggregate amount borrowed or secured by the
CWC Group as a whole exceeds L100 million;
(ii) the adoption or amendment of the whole or any part of the annual
operating budget and annual business plan for CWC and its subsidiary
undertakings; and
(iii) the appointment of any senior manager (not being a director of CWC)
of CWC or any of its subsidiary undertakings and for this purpose a "senior
manager" is any of (a) the Chief Operating Officer, Marketing Director,
Finance Director, Human Resources Director, Information Technology Director,
Legal Director, Company Secretary and Business Development Director, and (b)
the Managing Directors of Consumer Markets, SME Markets, Corporate Markets,
International and Partner Services, Customer Operations and Networks and any
successors to any such function.
POTENTIAL GLOBAL ALLIANCE. The parties to the CWC Shareholders' Agreement
have agreed that CWC management and any of BCI, NYNEX and C&W (in each case
while its Group owns 10 percent, or more of the issued and outstanding CWC
Ordinary Shares at the relevant time) may put a proposal to the board of CWC
that the CWC Group participates in a global alliance involving commercial
co-operation on an international basis between any of BCI, NYNEX or C&W and
another company or group of companies that provide telecommunication or
entertainment services either entirely or in significant part outside the United
Kingdom. If such a proposal is made, the following provisions (the "global
alliance provisions") will apply.
The decision whether or not to participate, and the terms and conditions of
such participation, in such global alliance will be taken by simple majority
vote of the directors of CWC. However, the disinterested vote procedure will
apply in respect of any term or condition of the global alliance, or CWC's
participation in such alliance, that would involve an agreement or arrangement
between any member of the CWC Group on the one hand, and any member of a
Shareholder's Group, on the other hand, pursuant to which goods or services
would be provided between them. If that agreement or arrangement is necessary
for the purposes of the participation by BCI, NYNEX or C&W in the global
alliance and does not include projected or actual billings in any one year of
more than one per cent. of the CWC Group's total revenues or, in the case of a
global alliance proposed prior to the production of CWC's first audited
financial results, or where such results cover a period of six months or less,
more than L20 million, the parties have agreed that the Shareholder-Appointed
Directors entitled to vote under the disinterested vote procedure may not reject
it unless it is not on arm's length terms and/or it involves a transfer of value
out of CWC.
Any term or condition of a global alliance, or CWC's participation in such
global alliance, that involves any matter which is the subject of veto rights
(see "Reserved Matters" above), remains subject to those veto rights except that
those veto rights shall not apply to and a simple majority vote of the directors
of CWC will be sufficient to approve:
(i) a change in the geographic scope of CWC's Business to enable the CWC
Group to participate in the proposed global alliance, subject to certain
restrictions designed to avoid breach of existing contractual restriction
imposed upon the Shareholders and their parent undertakings;
(ii) incremental capital expenditures to be incurred by the CWC Group in
connection with its participation in the global alliance, provided that
neither the projected nor the actual capital expenditure shall exceed L50
million in the aggregate over the five-year period covered by the business
plan presented for that proposed participation;
(iii) the adoption or amendment or any element of the annual operating
budget for the CWC Group, to the extent that such element involves an
increase or decrease in budgeted operating income resulting from
participation in the global alliance, provided that neither the projected
nor the actual
22
decrease in such operating income shall exceed L50 million in the aggregate
for those years (falling within a five-year period covered by the business
plan presented for that proposed participation) during which the global
alliance is projected to or produces a loss for the CWC Group; and
(iv) the adoption or amendment of any element of the annual business
plan for CWC to the extent that it reflects any of (i), (ii) or (iii) above,
and to the extent that any such element reflects any change other than those
which are otherwise subject to the vetoes described under "Reserved Matters"
above.
CWC INFORMATION. The parties to the Shareholders' Agreement have agreed
that Shareholders will have access to necessary financial, accounting, taxation
and other information regarding CWC to allow them to comply with their
obligations in relation to announcements of financial results, audits, tax and
regulatory filings and for the purposes of the conduct of certain types of
litigation. In addition, each Shareholder has certain rights to audit the
financial statements of CWC.
PURCHASES OF CWC SHARES. Each Shareholder has undertaken that, if it wishes
to purchase additional CWC Ordinary Shares, each other Shareholder who, or whose
Group, holds 10 percent or more of the issued and outstanding CWC Ordinary
Shares at the relevant time, will be entitled to sell a proportion of those
shares to that person (the "Purchaser"). The Purchaser will notify the other
Shareholders of the total number of CWC Ordinary Shares it wishes to purchase.
Each other Shareholder may offer to sell CWC Ordinary Shares to the Purchaser
and such offers will be accepted in accordance with the procedures set forth in
the CWC Shareholders' Agreement. The price for any such purchases will be the
price at which the same number of CWC Ordinary Shares could have been purchased
on the market in London at the close of business on the day prior to the date on
which the Purchaser notifies the other Shareholders that it wishes to make a
purchase.
The Purchaser is entitled to buy CWC Ordinary Shares from third parties only
to the extent that the other Shareholders either fail to offer to sell or fail
to tender their shares within certain specified periods. No purchases will be
made otherwise than from other Shareholders to the extent that, following such
purchase, the public shareholdings in CWC would be insufficient to retain a
quotation or trading facility or listing on all stock exchanges or security
markets upon which CWC is, for the time being, quoted, traded or listed.
C&W SALES. C&W has agreed that if, following a disposal of CWC Ordinary
Shares or any direct or indirect interest in such shares, the C&W Group would
own less than 50.1 percent but 10 percent or more, of the total issued ordinary
share capital of CWC, C&W will use all reasonable endeavors to procure that on
that disposal (and any subsequent disposal) either (i) an offer is made to each
of the other Shareholders to purchase the same proportion of their or their
Groups' respective holdings or interests in CWC Ordinary Shares as the number of
CWC Ordinary Shares (or interests in them) disposed of by the C&W Group
represents of its total holding before such disposal, on the same terms and
conditions as are applicable to that disposal, or (ii) the purchaser of such CWC
Ordinary Shares makes a takeover offer for CWC on the terms set out in Rule 9 of
the City Code, whether or not such rule would normally be applicable under the
relevant circumstances. This right will remain available to a Shareholder even
if it and its Group ceases to hold 10 percent of CWC's issued and outstanding
ordinary share capital.
NEW SHARE ISSUES. The parties to the CWC Shareholders' Agreement have
agreed the following in relation to any allotment by CWC of equity securities
(within the meaning of section 94(2) of the Companies Act) or other securities
which confer on the holder the right to vote at general meetings of CWC on all,
or substantially all matters.
Where such securities are to be paid up in cash, CWC will first offer each
Shareholder, on the same terms, the right to subscribe for up to such number of
those securities as will leave its Group holding such proportion of the equity
or voting share capital in CWC as it held immediately prior to the allotment or
issue (assuming that each Shareholder's Group takes up its entitlement in full).
Where such securities are to be paid up otherwise than in cash, each Shareholder
will be entitled to subscribe in cash at the value
23
attributable to those securities by reference to that non-cash consideration for
up to such number of those securities as will leave its Group holding such
proportion of the equity or voting share capital of CWC as it held immediately
prior to that allotment or issue (assuming that each Shareholder's Group takes
up its entitlement in full). If the Shareholders and CWC are unable to agree the
value attributable to equity securities for the purposes of the above
provisions, then the matter may be submitted to an independent merchant bank for
final determination.
In addition, each Shareholder has an option to elect to subscribe for
whatever number of additional securities it wishes in the event that any of the
other Shareholders do not subscribe their PRO RATA entitlement in full. If such
elections are made, as between competing Shareholders, securities will be
allocated, to the extent possible, PRO RATA by reference to each electing
Shareholder Group's holdings of relevant securities of CWC at the date of the
offer to subscribe.
The above provisions will continue to apply for the benefit of a Shareholder
even if its Group ceases to hold 10 percent of CWC's issued and outstanding
ordinary share capital. The provisions do not apply to the issue of shares
pursuant to the exercise of any options granted under any CWC employee share
option schemes.
NYNEX PROTECTION. The Shareholders have agreed that they will take all
steps open to them to procure that CWC does not, at any time before the expiry
of the two year period following the consummation of the merger of NYNEX and
Bell Atlantic Corporation or, if earlier, such time as NYNEX ceases to account
for the financial results of CWC and its subsidiary undertakings using the
equity method in NYNEX's consolidated accounts, issue any share or grant any
options over its shares if the effect would reasonably be expected in NYNEX's
judgment, supported by the opinion of its independent auditors (addressed to
each of the Shareholders), to prejudice its and Bell Atlantic Corporation's
accounting treatment of their merger as a pooling of interests under applicable
US accounting rules. NYNEX has agreed that it will notify the other Shareholders
of the consummation of the merger of NYNEX and Bell Atlantic Corporation and
NYNEX ceasing to account for the financial results of CWC using the equity
method in NYNEX's consolidated accounts.
The parties to the CWC Shareholders' Agreement have agreed that, for so long
as CWC remains an affiliate of NYNEX (for the purposes of the US Communications
Act of 1934 as amended by the US Telecommunications Act of 1996 (the "US
Telecommunications Act")), CWC will not do anything which would result in it or
NYNEX being in breach of the US Telecommunications Act. In addition, the
Shareholders and CWC have agreed to put in place certain compliance, monitoring
and reporting procedures in respect of the US Telecommunications Act.
SHAREHOLDER INDEMNITIES. Each of C&W, BCI, NYNEX has given an indemnity to
CWC and each other (for its own benefit and for the benefit of certain other
companies within each of their Groups and their respective directors, officers
and employees) relating to information contained in the Prospectus and other
documents. Each indemnitor has agreed to indemnify each indemnified person
against all claims and losses which the indemnified person may suffer as a
result of any such document containing any untrue statement (or any allegedly
untrue statement) of a material fact about the indemnitor, its Group or its
Relevant Target (as defined below) or omitting or allegedly omitting to state
therein, a material fact about the indemnitor, its Group or its Relevant Target
required to be stated therein or necessary to make the statements therein about
it, its Group or its Relevant Target, in the light of the circumstances in which
they were made, not misleading in any material respect. For this purpose,
"Relevant Target" means (a) in the case of C&W, Mercury, its subsidiaries and
associates and CWC, (b) in the case of NYNEX, the Companies, its subsidiaries
and associates and the Winston Entities and (c) in the case of BCI, BCM and its
subsidiaries and associates.
DURATION OF AGREEMENT. Unless expressly stated otherwise in the CWC
Shareholders' Agreement, the provisions of the CWC Shareholders' Agreement apply
to a Shareholder Group for so long as its Group holds 10 percent or more of the
CWC Ordinary Shares.
24
The parties have agreed that any New Shareholder (as defined below) will be
entitled to join in and adhere to the CWC Shareholders' Agreement and, if it
does so, it will have the same rights and be subject to the same restrictions as
any other Shareholder who is party to the CWC Shareholders' Agreement. For this
purpose a "New Shareholder" means any of:
(i) a person who is not a company and who holds 10 percent or more of
the issued and outstanding ordinary share capital of CWC (a "Qualifying
Holding");
(ii) a company which has no parent undertaking and which (alone or
together with subsidiary undertakings) holds a Qualifying Holding; and
(iii) the parent undertaking of a company or companies which together or
alone hold a Qualifying Holding;
provided that, in each case, the Qualifying Holding was acquired directly or
indirectly from any member or members of (a) the C&W Group, (b) the BCI Group,
or (c) the NYNEX Group or any successor in title to their CWC Ordinary Shares.
OTHER. The parties have agreed that, save in certain limited circumstances,
none of their rights or obligations under the CWC Shareholders' Agreement may be
assigned or transferred.
The parties to the CWC Shareholders' Agreement have given confidentiality
undertakings in respect of the confidential information of or relating to each
of the other parties.
Disputes arising in relation to the CWC Shareholders' Agreement are to be
resolved by arbitration in London conducted in accordance with the rules of the
London Court of International Arbitration. The parties are not, however,
precluded from seeking injunctive relief in respect of any matter arising under
the CWC Shareholders' Agreement in any court of competent jurisdiction.
MANAGEMENT AND TECHNICAL SERVICES AGREEMENT
The Schedule 14D-1 provides that:
BCI, NYNEX or C&W (together the "Principal Shareholders") and CWC will, as
soon as the BCM Offer or the Offers become or are declared unconditional, enter
into a management and technical services agreement (the "MTSA"). Pursuant to the
terms of the MTSA, each of the Principal Shareholders will provide various
services to CWC at CWC's request including tax, legal, treasury and corporate
finance and human resource services. Under the MTSA, the services which may be
provided by CWC to each of the Principal Shareholders include payroll and
accounting, car fleet management and VAT services. The terms and conditions of
any services requested will be negotiated and agreed on an arm's length basis,
subject to the disinterested vote procedure described under "Shareholder Related
Arrangements" above. Each of the parties will be free to obtain services from
third parties in respect of matters covered in the MTSA.
The MTSA can be terminated with respect to a Principal Shareholder (i) on
one year's notice in the event that the voting rights of that Principal
Shareholder together with its Group in CWC fall below 10 per cent., or (ii) at
any time in the event of a material breach of the MTSA or in the provision of
services under the MTSA.
The foregoing summary of the MTSA does not purport to be complete and is
qualified in its entirety by reference to the complete text of the form of the
MTSA to be entered into among the Principal Shareholders and CWC, a copy of
which has been filed as Exhibit 6 hereto and is incorporated herein by
reference.
SECONDMENT AGREEMENT
The Schedule 14D-1 provides that:
The Principal Shareholders and CWC will also, as soon as the BCM Offer and
the Offers become or are declared unconditional, enter into the Secondment
Agreement pursuant to which each of the Principal Shareholders, on the one hand,
and CWC, on the other hand, will, subject to certain conditions, be able to
25
second their employees or employees of their subsidiary undertakings to each
other, respectively, or to companies within their respective Groups. The fee for
any such secondment will broadly be based on the employee's salary, remuneration
and other benefits paid or provided to the employee by the providing company.
The Secondment Agreement is expressed to be for an initial two year term and
shall continue thereafter, with respect to a party, unless three months' written
notice is given by CWC, with respect to all or any of the Principal
Shareholders, or by all or any of the Principal Shareholders with respect to
CWC. It is terminable immediately with respect to a Principal Shareholder if
that Principal Shareholder is subject to any insolvency proceedings or with
respect to all parties if CWC is subject to any insolvency proceeding.
The foregoing summary of the Secondment Agreement does not purport to be
complete and is qualified in its entirety by reference to the complete text of
the form of Secondment Agreement to be entered into among C&W, BCI, NYNEX and
CWC, a copy of which has been filed as Exhibit 7 hereto and is incorporated
herein by reference.
TAX AGREEMENTS
The Schedule 14D-1 provides that:
TAX SHARING AGREEMENT. Under the Tax Sharing Agreement entered into on March
21, 1997 among C&W, BCI, BCMH, BCIH, NYNEX and CWC (i) the tax affairs of CWC
will be managed on a "stand alone" basis; (ii) dividends paid by CWC will be
paid outside of any election under Section 247 of the ICTA; (iii) C&W will be
entitled to surrender to CWC ACT to the fullest extent permitted by law (such
surrender to be for payment); (iv) the Shareholders will consider proposals to
structure such surrenders in such a way as to reduce any tax disadvantage for
NYNEX; (v) CWC will make, at the request of NYNEX, certain elections with regard
to its subsidiaries for the purposes of reducing US tax disadvantages to NYNEX,
unless such elections would have a detrimental effect on the affairs of CWC, its
subsidiaries, or the other Shareholders; and (vi) CWC will consult generally
with the Shareholders regarding its tax affairs.
NYNEX TAX AGREEMENT. Under this agreement entered into on March 21, 1997
between NYNEX and CWC, CWC undertakes to NYNEX not to take certain actions which
would result in NYNEX realizing a taxable gain under section 367 of the US
Internal Revenue Code. CWC also agrees to cause its subsidiaries to join with
NYNEX in requesting the US Internal Revenue Service to enter a US tax closing
agreement assuring that an exchange of shares by NYNEX or the Winston Entities
pursuant to the Transaction Agreement will not constitute a "triggering event"
in respect of certain dual consolidated losses which have previously been
claimed by NYNEX. In this respect, CWC also agrees not to take certain actions
which would result in loss recapture for NYNEX.
NYNEX TAX ALLOCATION AGREEMENT. This agreement entered into on March 21,
1997 between NYNEX and CWC provides for various undertakings to be given by
NYNEX to CWC in respect of the taxation affairs of the Winston Entities
including various indemnities in relation to the same.
The foregoing summaries of the Tax Sharing Agreement, NYNEX Tax Agreement
and NYNEX Tax Allocation Agreement do not purport to be complete and are
qualified in their entirety by reference to the complete text of the forms of
the respective agreements, copies of which have been filed as Exhibits 8, 9 and
10 respectively, hereto and are incorporated herein by reference.
C&W LICENSE
The Schedule 14D-1 provides that:
C&W has agreed to grant to CWC, effective from the date on which the Mercury
Purchase Agreements are completed, the right to use the "Cable & Wireless",
"C&W" and Globe Device trade marks (together with other trade marks relating to
C&W products currently offered by Mercury) in the United Kingdom on a royalty
free basis. In particular, CWC will be able to use "Cable & Wireless" as part
26
of its corporate name. CWC's use of the trade marks must be in accordance with
the guidelines issued by C&W.
CWC will also be licensed by C&W to use those marks in any territories into
which the CWC Board intends CWC to expand, unless the trade marks have already
been exclusively licensed to a third party within that territory. CWC may not
sub-license the use of the marks other than to its own subsidiary undertakings.
Either party may terminate the license in the event of certain breaches or
if the other becomes insolvent. C&W can also terminate when its shareholding in
CWC falls below 10 per cent. (or if CWC challenges the validity of the trade
marks).
The foregoing summary of the C&W License does not purport to be complete and
is qualified in its entirety by reference to the complete text of the form of
C&W License, a copy of which has been filed as Exhibit 11 hereto and is
incorporated herein by reference.
NYNEX TERMINATION AGREEMENT
The Schedule 14D-1 provides that under the NYNEX Trade Mark Termination
Agreement (the "NYNEX Termination Agreement") to become effective on the Offers
becoming or being declared unconditional, among NYNEX, the Companies and NYNEX
CableComms Limited, the parties agree to terminate an earlier Trade Mark
Agreement dated May 15, 1995, between NYNEX ("the Licensor") and the other
parties to the NYNEX Transitional License (the "Licensees"). The effect of the
NYNEX Termination Agreement is to provide that the Licensees cease use of the
NYNEX trade mark in accordance with the termination provisions of the original
license, within 180 days of the date of the NYNEX Termination Agreement and
that, despite early termination of the license, no further royalties shall be
payable (with the exception of royalties due in the month that the NYNEX
Termination Agreement is signed). The foregoing summary of the NYNEX Termination
Agreement does not purport to be complete and is qualified in its entirety by
reference to the complete text of the form of NYNEX Termination Agreement, a
copy of which has been filed as Exhibit 12 hereto and is incorporated herein by
reference.
REGISTRATION RIGHTS AGREEMENT
The Schedule 14D-1 provides that the Principal Shareholders and CWC have
agreed, effective upon completion of the BCM Offer and the Offers, that, subject
to certain exceptions, each Principal Shareholder will have the right, at CWC's
expense, (i) to require CWC to include all or any portion of the CWC Ordinary
Shares beneficially owned by them in any registered offering by CWC of CWC
Ordinary Shares or CWC ADSs under the US Securities Act of 1933, as amended and
(ii) after completion of the BCM Offer and the Offers, to cause CWC to prepare
and file a registration statement with the Commission under the Securities Act,
and to comply with applicable state securities laws, for an offering in the U.S.
of all or any part of the CWC Ordinary Shares beneficially owned by the
Principal Shareholders ("Demand Registration") representing not less than 2
percent of the outstanding CWC Ordinary Shares. Certain costs associated with
Demand Registrations will be borne by CWC; PROVIDED, HOWEVER, that CWC shall
have no obligation to pay costs for more than five consummated Demand
Registrations for any Principal Shareholder. The foregoing summary of the
Registration Rights Agreement does not purport to be complete and is qualified
in its entirety by reference to the complete text of the form of the
Registration Rights Agreement among the Principal Shareholders and CWC, a copy
of which has been filed as Exhibit 13 hereto and is incorporated herein by
reference.
INTERCONNECTION AGREEMENT
The Companies entered into an interconnection agreement with Mercury on
November 11, 1996, as amended of February 11, 1997 (the "Interconnection
Agreement"), pursuant to which the Companies' digital switches interconnect with
the networks of Mercury for national and international calls, and for
27
local calls where only one party is a customer of the Companies. The
Interconnection Agreement expires on March 31, 1998. The foregoing summary of
the Interconnection Agreement does not purport to be complete and is qualified
in its entirety by reference to the complete text of the Interconnection
Agreement and amendment thereto, entered into by the Companies and Mercury,
copies of which have been filed as Exhibit 14 and Exhibit 15 hereto and are
incorporated herein by reference.
COST ALLOCATION POLICY
C&W, BCI and NYNEX have agreed among themselves to bear their own respective
costs in connection with the Transactions, except that costs (including certain
costs of the Companies) relating to the listing of CWC securities, the
preparation of CWC's Registration Statement on Form F-4 and the integrated
offering documents will be borne by CWC. All costs in excess of L50,000 which
will be borne by CWC are subject to approval by CWC's Merger Steering Committee,
which consists of a representative from each of C&W, NYNEX and BCI.
In the event the Transactions do not take place, (i) C&W, BCI and NYNEX will
be liable for their PRO RATA portion of the costs of forming CWC based on their
respective equity stakes as if the Transactions had been consummated (excluding
the proportion of shares to be publicly listed); (ii) C&W, BCI and NYNEX will
bear costs related to their respective subsidiaries in connection with the due
diligence investigation undertaken; and (iii) BCM and the Companies will bear
their respective costs associated with their respective financial and legal
advisors in connection with the consideration of the BCM Offer and the Offers,
respectively. The foregoing summary of the Cost Allocation Policy does not
purport to be complete and is qualified in its entirety by reference to the
complete text of the Cost Allocation Policy, a copy of which has been filed as
Exhibit 16 hereto and is incorporated herein by reference.
INDEMNIFICATION AND INSURANCE
NYNEX CableComms US' Restated Certificate of Incorporation provides that no
director of NYNEX CableComms US shall be liable to NYNEX CableComms US or its
stockholders for monetary damages resulting from a breach of his fiduciary duty
as a director except as may otherwise be required by the General Corporation Law
of the State of Delaware.
In addition, NYNEX CableComms US' By-Laws generally provide that NYNEX
CableComms US shall indemnify directors and officers (a) against expenses,
judgments, fines and amounts paid in settlement in connection with any action,
suit or proceeding involving such person by reason of his capacity as such if,
other than in an action by or in the right of NYNEX CableComms US, such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of NYNEX CableComms US and, with respect to
any criminal action or proceeding, such person had no reasonable cause to
believe such person's conduct was unlawful, or (b) against expenses in
connection with any action or suit involving such person by reason of his
capacity as such if, in any action or suit by or in the right of NYNEX
CableComms US, such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of NYNEX CableComms US,
and except that no indemnification shall be made where such person has been
adjudged to be liable to NYNEX CableComms US unless and only to the extent that
the Court of Chancery of the State of Delaware or the court in which such action
or suit was brought determines upon application that such person is fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper.
28
Pursuant to the Merger Agreement, CWC has agreed to keep the indemnification
arrangements of NYNEX CableComms US in place for a period of six years after the
effective time of the Merger. See "De-Stapling of Certain Units--The Merger"
above.
NYNEX CableComms UK's Articles of Association provide that NYNEX CableComms
UK, subject to the Companies Act, shall indemnify every director, alternate
director, auditor, secretary or other officer of NYNEX CableComms UK all costs,
charges, losses, expenses and liabilities incurred by such person in the
execution and discharge of his or her duties or in relation thereto, including
any liability incurred by such person in defending any proceedings, civil or
criminal, which relate to anything done or omitted or alleged to have been done
or omitted by such person as an officer or employee of NYNEX CableComms UK and
in which judgment is given in such person's favor (or the proceedings were
otherwise disposed of without any finding or admission of any material breach of
duty on such person's part) or in which such person is acquitted or in
connection with any application under any statute for relief from liability in
respect of any such act or omission in which relief is granted by the relevant
court.
Except as described above, to the best knowledge of the Companies, as of the
date hereof, there is no material contract, agreement, arrangement or
understanding and no actual or potential conflict of interest between the
Companies or their affiliates and (i) the Companies' executive officers,
directors or affiliates or (ii) CWC, its executive officers, directors or
affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION; BACKGROUND.
On October 22, 1996, C&W, BCI and NYNEX announced that they had entered into
the Transaction Agreement. On October 29, 1996, the Boards of Directors of the
Companies met to discuss the implications of the proposed Transactions and
potential Offers. At the meeting, the Boards and certain members of the
Companies' management met with representatives from the financial advisors and
legal counsel to NYNEX and with representatives of SBC Warburg, a division of
Swiss Bank Corporation ("SBC Warburg"). NYNEX's financial advisors provided a
detailed review of the structure of the proposed Transactions and potential
Offers and a summary of the perceived benefits of the proposed Transactions from
the perspective of NYNEX. In connection with such review the Board was informed,
in response to a question raised by SBC Warburg, that no cash alternative would
be available for holders of Shares. The Boards then excused NYNEX's financial
advisors and legal counsel from the meeting and discussed further with SBC
Warburg and management of the Companies the potential implications of the
proposed Transactions and potential Offers and the various legal and regulatory
implications resulting therefrom. Following the discussions, the Boards
established their respective Offer Committees, and the Offer Committees met with
SBC Warburg to discuss the status of the proposed Transactions and the
timetable. On October 29, 1996, the Boards authorized SBC Warburg to act solely
on behalf of the Offer Committees in connection with its consideration of the
Offers and any other proposal, subject to subsequent negotiation of an
appropriate fee arrangement and formal engagement agreement. Simmons & Simmons
were engaged as independent U.K. legal counsel and Dewey Ballantine as
independent U.S. legal counsel.
On December 5, 1996 and January 23, 1997, the Offer Committees met with SBC
Warburg and management of the Companies to discuss the status of and timetable
for the proposed Transactions, the terms and conditions of the Offers and the
Transaction Agreement, the due diligence being undertaken with respect to the
proposed Transactions and the responsibilities of the Offer Committees in
forming their recommendations. On February 18, 1997, the Offer Committees met
with SBC Warburg, U.K. and U.S. legal counsel, Coopers & Lybrand, the Companies'
independent accountants, and management of the Companies to discuss the progress
of the due diligence investigation undertaken with respect to the proposed
Transactions and the responsibilities of the Offer Committees in forming their
recommendation. Coopers & Lybrand presented to the Offer Committees a report on
the due diligence undertaken by Coopers & Lybrand, in consultation with
management of the Companies, with respect to the Companies
29
and their operations and prospects, and the methodologies used in connection
with such due diligence. SBC Warburg presented the Offer Committees with the
status of its financial due diligence investigation with respect to the
Companies, CWC, Mercury, BCM and Videotron in connection with its assessment of
the fairness, from a financial point of view, of the Offers. U.K. counsel to the
Companies also summarized the legal due diligence performed by them with respect
to the Companies and their review of legal due diligence reports prepared with
respect to Mercury, BCM and Videotron. Between February 18, 1997 and March 13,
1997, members of the Offer Committees and management of the Companies
participated with SBC Warburg and U.K. legal counsel in meetings and on
conference calls, and on March 3, 1997, there was a working session among the
Offer Committees, SBC Warburg, U.K. legal counsel, independent accountants of
the Companies, and management of the Companies to discuss further the work being
undertaken in relation to the Offers, including their respective due diligence
investigations, the responsibilities of the Offer Committees in forming their
recommendation and the status of the documentation relating to the Offers. A
further working session of the Offer Committees and SBC Warburg, independent
accountants of the Companies and management of the Companies, took place on
March 11, 1997. During the course of the preparation of the Offers, financial
advisors to CWC reiterated in discussions with SBC Warburg that no cash
alternative would be available to holders of Shares and the Offers would not be
subject to renegotiation.
The Offer Committees met on March 13, 1997 with their financial and U.K. and
U.S. legal advisors, the independent accountants of the Companies and management
of the Companies to discuss the status of the proposed Transactions and the
terms and conditions of the Offer. The Offer Committees reviewed (i) with their
U.K. and U.S. legal advisors the terms and conditions of the Offers and the
responsibilities of the Offer Committees in forming their recommendations, (ii)
with U.K. and U.S. legal advisors to the Offer Committees the proposed UK
De-stapling Amendment and US De-stapling Amendment and the impact of the
de-stapling, Compulsory Acquisition and Merger on the proposed Transactions and
the expected benefits to be achieved therefrom, (iii) with their independent
accountants the due diligence undertaken with respect to the Companies and their
operations and prospects, and their review of due diligence reports prepared
with respect to Mercury, BCM and Videotron; (iv) with U.K. legal counsel the
legal due diligence undertaken by them with respect to the Companies, and their
review of legal due diligence reports prepared with respect to Mercury, BCM and
Videotron, and (v) with SBC Warburg certain financial information relating to
the business combination contemplated by the Offers prepared by SBC Warburg in
connection with its assessment of the fairness of the Offers. In connection with
their consideration of such matters, the Offer Committees discussed with SBC
Warburg concerning its financial presentation and analyses including, among
other things, (a) the methods used by SBC Warburg to analyze the Offers,
including a discounted cash flow analysis of the Companies, CWC, Mercury, BCM
and Videotron, (b) the assumptions and bases considered and used by SBC Warburg
in such analyses, including certain financial forecasts supplied to it by the
Companies, CWC, Mercury, BCM and Videotron, (c) SBC Warburg's investigation of
the proposed Transactions and the Companies, CWC, Mercury, BCM and Videotron and
interviews with the management of the Companies, CWC, Mercury, BCM and
Videotron, (d) information regarding comparable companies and transactions, and
(e) the terms and conditions of the Offers and the Transaction Agreement.
On March 21, 1997, the Offer Committees met in person and by teleconference
with their financial and U.K. and U.S. legal advisors, and management of the
Companies to review the status of the proposed Transactions and the terms and
conditions of the Offers and to discuss any further developments that occurred
since their previous meeting of March 13, 1997. SBC Warburg, U.K. and U.S. legal
counsel, and management of the Companies provided an update of the information
provided to the Offer Committees at the previous meeting of March 13, 1997. SBC
Warburg confirmed that there was no material change to the analyses presented to
the Offer Committees at the previous meeting and delivered its opinion that the
consideration to be received by the Public Shareholders pursuant to the Offers
is fair to such shareholders from a financial point of view. A copy of SBC
Warburg's opinion accompanies this Schedule 14D-9 and is filed herewith as
Exhibit 17. Following receipt of the SBC Warburg opinion and after extensive
discussion
30
and consideration, the Offer Committees unanimously determined (i) that the
Offers were fair to, and in the best interests of, the Public Shareholders, and
(ii) to recommend that the Public Shareholders accept the Offers and tender
their Shares pursuant to the Offers. The Offer Committee of NYNEX CableComms UK
then unanimously determined to recommend to the Board of Directors of NYNEX
CableComms UK the approval of the UK De-stapling Amendment, and the Offer
Committee of NYNEX CableComms US unanimously determined to recommend to the
Board of Directors of NYNEX CableComms US the approval of the US De-stapling
Amendment and the Merger.
At meetings held immediately thereafter, based in part upon the
presentation, findings, conclusions and unanimous recommendations of the Offer
Committees in relation to the Offers and the unanimous recommendation of the
Offer Committee of NYNEX CableComms UK to approve the UK De-stapling Amendment,
and the unanimous recommendation of the Offer Committee of NYNEX CableComms US
to approve the US De-stapling Amendment and the Merger, the Board of Directors
of NYNEX CableComms UK determined to recommend that holders of NYNEX CableComms
UK Ordinary Shares vote in favor of the UK De-stapling Amendment, and the Board
of Directors of NYNEX CableComms US determined to recommend that holders of
NYNEX CableComms US Shares of Common Stock vote in favor of the US De-stapling
Amendment and the Merger.
(b) REASONS FOR RECOMMENDATION; OPINION OF FINANCIAL ADVISOR.
In reaching their conclusions set forth in paragraph (a), the Offer
Committees considered a number of factors, including, without limitation, the
following:
(i) the presentation by SBC Warburg, described above, as to the various
financial considerations deemed relevant to the Offer Committees' evaluation
of the Offers, including SBC Warburg's financial due diligence concerning
the Companies, CWC, Mercury, BCM and Videotron in connection with its
assessment of the fairness of the Offers, and the opinion of SBC Warburg,
described below, to the effect that the consideration to be received by the
Public Shareholders in the Offers is fair, from a financial point of view,
to the Public Shareholders;
(ii) the Offer Committees' knowledge of the Companies' business,
including its financial condition, results of operations, prospects and the
Companies' industry in general;
(iii) a review of, and presentation by management to the Offer Committees
regarding, the financial condition, results of operations, business and
prospects of the Companies, and current industry, economic and market
conditions and trends;
(iv) presentations made by the Companies' independent accountants to the
Offer Committees regarding the due diligence undertaken with respect to the
Companies and their review of due diligence reports prepared with respect to
Mercury, BCM and Videotron;
(v) a review of the reports prepared by U.S. and U.K. legal advisors to
NYNEX regarding the legal due diligence undertaken with respect to the
Companies;
(vi) a review of the reports and presentations made by U.K. legal
advisors to the Offer Committees regarding the legal due diligence
undertaken by them with respect to the Companies, and their presentations
regarding their review of due diligence reports prepared with respect to
Mercury, BCM and Videotron;
(vii) the terms and conditions of the Transaction Agreement and the
Offers, including, among other things, the fact that the Offers are subject
to a minimum acceptance condition;
(viii) the relationship between the consideration to be received by
holders of Shares as a result of the Offers and the value of their existing
Shares in the Companies, assessed by reference to a number of factors,
including the historical market prices and recent trading activity of the
Units and ADSs;
31
(ix) the strategic fit among Mercury, the Companies and BCM (including
Videotron), which would create a leading provider of integrated
telecommunications, information and entertainment services, creating a
larger, more strategically positioned company with potential economies of
scale;
(x) the potential for reduced volatility in the cash flow and earnings
of CWC, as compared to the Companies, were the Companies to remain
independent;
(xi) the fact that CWC should have the ability to borrow funds on more
favorable credit terms and to access additional sources of capital as
compared to the Companies, were the Companies to remain independent;
(xii) the ability to enhance the contiguity and demographics of existing
operations and to realize synergies and operational benefits from increasing
the scale and scope of operations;
(xiii) the challenge of growing the Companies' business as stand-alone
companies in light of existing competition, the significant capital required
by the Companies to complete the build-out of cable systems in its existing
franchise and to complete the build-out of cable systems in its existing
franchise areas and the risks to the Companies of remaining as stand-alone
companies;
(xiv) SBC Warburg's discussion of the views of the investment community
on the proposed Transactions and the potential negative effect on the market
prices of the Units and ADSs if the Offers were not to proceed;
(xv) a review of the preliminary pro forma financial information of CWC
assuming consummation of the proposed Transactions;
(xvi) certain consequences of the Offers, including the reduced liquidity
of the Shares, the possibility of de-listing the Units on the London Stock
Exchange and the cessation of quotation of the ADSs on the National Nasdaq
Market and the reduction in publicly available information regarding the
Companies;
(xvii) the fact that there can be no assurance as to the level of growth
or profits to be attained by CWC in the future, or as to the ability of CWC
to integrate the Companies, Mercury, BCM and Videotron or to respond to
future regulatory, competitive and technological developments;
(xviii) the fact that no public market exists currently for CWC Ordinary
Shares or CWC ADSs and, therefore, the trading prices of such securities
cannot be predicted;
(xix) the opportunity for the Public Shareholders to maintain an
investment in the UK cable television and telecommunications industry by
receiving publicly traded CWC Ordinary Shares or CWC ADSs pursuant to the
Offers;
(xx) a review of the possible alternatives to the Offers and the
Transactions, including, among others, the possibility of continuing to
operate the Companies as an independent entity;
(xxi) the presentation given to the Boards of Directors of the Companies
by the financial advisors to NYNEX on October 29, 1996 with respect to the
perceived benefits of the proposed Transactions from the perspective of
NYNEX and its impact on the Companies;
(xxii) the fact that, although the Companies are not a party to the
Transaction Agreement, NYNEX owns approximately 67 percent of the
outstanding Shares and, as a practical matter, effecting any strategic
alternative to the Offers and the Transactions would require the support of
NYNEX; and the fact that, since the announcement of the proposed
Transactions on October 22, 1996, no person has approached the Offer
Committees or the Companies proposing a strategic alternative to the Offers
or the Transactions;
(xxiii) the potential impact of the Offers and the Transactions on the
Companies' employees and customers, while noting CWC's intentions in respect
of the Companies and existing employment
32
rights, including pension rights of the management and employees of the
Companies which CWC intends to fully safeguard, as stated in the Schedule
14D-1;
(xxiv) the intent of CWC that, and the terms of the Merger Agreement (with
respect to the NYNEX CableComms US Shares of Common Stock) pursuant to
which, holders of NYNEX CableComms UK Ordinary Shares and NYNEX CableComms
US Shares of Common Stock not purchased in the Offers will receive the same
form and amount of consideration as such shares purchased in the Offers
pursuant to the Compulsory Acquisition and Merger contemplated by CWC;
(xxv) a review of the impact of the UK De-stapling Amendment, the US
De-stapling Amendment, the Compulsory Acquisition and the Merger on the
proposed Transactions and the expected benefits to be achieved by the
de-stapling, Compulsory Acquisition and Merger; and
(xxvi) based on the written advice of U.S. legal counsel to NYNEX and the
Companies, the expected tax-free nature of the proposed Transactions to the
holders of Shares.
In view of the wide variety of factors considered in connection with its
evaluation of the Offers, the Offer Committees did not find it practicable to,
and did not, quantify or otherwise attempt to assign relative weight to the
specific factors considered in reaching its determination.
OPINION OF FINANCIAL ADVISOR
As described above under "Recommendation; Background", at the meeting of the
Offer Committees held on March 21, 1997, SBC Warburg delivered its opinion to
the effect that, based upon the assumptions made, matters considered and limits
of the review undertaken, as set forth in such opinion, the consideration of CWC
Ordinary Shares to be received by the Public Shareholders in the Offers is fair
to such holders from a financial point of view. The full text of SBC Warburg's
opinion, dated March 21, 1997, accompanies this Schedule 14D-9 and is filed as
Exhibit 17 hereto. Holders of Shares are urged to read the opinion in its
entirety for the assumptions made, matters considered and limits of the review
undertaken by SBC Warburg.
SBC Warburg has given and not withdrawn its written consent to the inclusion
of the reference to its name and opinion in this Schedule 14D-9 in the form and
context in which it is included.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Companies retained SBC Warburg on an exclusive basis to render financial
advisory services for the Offer Committees with respect to the proposed
Transactions. Under the engagement letter, SBC Warburg (i) received an
engagement fee of L50,000 upon its execution of the engagement letter, (ii)
received a retainer fee of L50,000 per calendar month or part of a month, from
and including December 1996 up to the date of publication of the Prospectus, and
(iii) will receive a publication fee of L150,000 upon the printing of the
Prospectus. Upon the Offers being declared or becoming unconditional in all
respects, SBC Warburg will receive a completion fee of L1,000,000, whereby all
fees paid under (i) to (iii) above will be credited against the amount of the
completion fee so that the total fee will not exceed L1,000,000. The Companies
also agreed to reimburse SBC Warburg for its reasonable out-of-pocket expenses
subject to a maximum of L50,000 and to indemnify SBC Warburg and certain related
persons against certain liabilities arising out of its engagement, including
liability under the federal securities laws.
In the ordinary course of business, members of the Swiss Bank Corporation
group may, subject to the Rules of the United Kingdom Code on Takeovers and
Mergers, actively trade, make a market or act as principal in transactions
relating to the securities (or related options, warrants, or rights to or
interests in, such securities) of the Companies, NYNEX, C&W, CWC, BCI and BCM
for their own account and for the accounts of customers and, accordingly, may at
any time hold long or short positions in such securities. In the past, SBC
Warburg has provided certain financial advisory services to the Companies,
NYNEX, and their affiliates and has received customary fees for the rendering of
such services.
33
SBC Warburg, which is regulated in the United Kingdom by the Securities and
Futures Authority Limited, is acting as financial advisor to the Offer
Committees and no one else in connection with the matters described in this
document and will not be responsible (under UK law) to anyone other than the
Offer Committees for providing the protections afforded to its customers or for
providing advice in relation to the matters described in this document.
The Companies and CWC have appointed D.F. King & Co., Inc. to aid in the
solicitation of proxies (or obtaining of proxy votes) in the United States in
connection with the UK De-stapling Amendment, US De-stapling Amendment and
Merger, at a cost of approximately $15,000, plus an additional fee of $3.00 for
each shareholder contact and line charges, plus reimbursement of reasonable
out-of-pocket expenses.
Neither the Companies nor any person acting on either of their behalves
intends to employ, retain or compensate any other person to make solicitations
or recommendations to the holders of Shares of the Companies in connection with
the Offers.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Companies' knowledge, no transactions in Shares have
been effected within the past 60 days by either of the Companies or by any
executive officer, director, affiliate or subsidiary of either of the Companies
except for the allotment of (i) 148,549 Units to Mr. Nicholas Mearing-Smith on
January 30, 1997 and (ii) 191,692 Units to Mr. John F. Killian on January 30,
1997, in each case pursuant to the vesting of their respective allocation rights
to acquire such Units.
(b) To the best of the Companies' knowledge, all of the Companies' executive
officers, directors and affiliates currently intend to tender their Shares
pursuant to the Offers.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.
(a) Except as described in Item 3(b) and Item 4 above, no negotiation is
being undertaken or is underway by the Companies in response to the Offers which
relates to or would result in (i) an extraordinary transaction such as a merger
or reorganization, involving the Companies or any subsidiary of either of the
Companies; (ii) a purchase, sale or transfer of a material amount of assets by
the Companies or any subsidiary of either of the Companies; (iii) a tender offer
for, or other acquisition of, securities by or of the Companies; or (iv) any
material change in the present capitalization or dividend policy of the
Companies.
(b) Except as set forth in Items 3(b) and 4 above, there are no
transactions, Board resolutions, agreements in principle or signed contracts in
response to the Offers which relate to or would result in one or more of the
matters referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits will be filed with the U.S. Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and will be on
display during the course of the Offers during the normal business hours on any
business day at the offices of Simmons & Simmons, U.K. legal advisors to the
Companies, at 21 Wilson Street, London EC2M 2TX, England.
(1) Pages 38 to 52 of the Companies' Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 containing the pertinent sections
thereof referred to in Item 3(b) of this Schedule 14D-9.
34
(2) Transaction Agreement, dated as of October 22, 1996, as amended and
restated, among C&W, NYNEX and BCI (incorporated by reference to Exhibit 2.1
to CWC's Registration Statement on Form F-4 filed with the U.S. Securities
and Exchange Commission on March 21, 1997 (File No. 333-6672) (the "CWC
Registration Statement on F-4")).
(3) Agreement and Plan of Merger, dated March 21, 1997, among NYNEX
CableComms US, CWC and the CWC Merger Sub (incorporated by reference to
Exhibit 2.2 to the CWC Registration Statement on Form F-4).
(4) CWC Shareholders' Agreement, dated as of March 21, 1997, among C&W,
BCI, BCMH, BCIH, NYNEX and CWC (incorporated by reference to Exhibit 9.1 to
the CWC Registration Statement on Form F-4).
(5) Form of Articles of Association of CWC to be adopted upon the Offers
becoming or being declared unconditional (incorporated by reference to the
Articles of Association of CWC filed as part of Exhibit 3.1 to the CWC
Registration Statement on Form F-4)
(6) Form of Management and Technical Services Agreement among C&W, BCI,
NYNEX and CWC (incorporated by reference to Exhibit 10.12 to the CWC
Registration Statement on Form F-4).
(7) Form of Secondment Agreement among C&W, BCI, NYNEX and CWC
(incorporated by reference to Exhibit 10.6 to the CWC Registration Statement
on Form F-4).
(8) Form of Tax Sharing Agreement among C&W, BCI, BCMH, BCIH, NYNEX and
CWC (incorporated by reference to Exhibit 10.9 to the CWC Registration
Statement on Form F-4).
(9) Form of NYNEX Tax Agreement between NYNEX and CWC (incorporated by
reference to Exhibit 10.10 to the CWC Registration Statement on Form F-4).
(10) Form of NYNEX Tax Allocation Agreement between NYNEX and CWC
(incorporated by reference to Exhibit 10.11 to the CWC Registration
Statement on Form F-4).
(11) Form of C&W License between C&W and CWC (incorporated by reference
to Exhibit 10.7 to the CWC Registration Statement on Form F-4).
(12) Form of NYNEX Termination Agreement among NYNEX, the Companies and
NYNEX CableComms Limited (incorporated by reference to Exhibit 10.8 to the
CWC Registration Statements on Form F-4).
(13) Principal Shareholders Registration Rights Agreement, dated March
21, 1997, among C&W, NYNEX, BCI and CWC (incorporated by reference to
Exhibit 10.5 to the CWC Registration Statement on Form F-4).
(14) Interconnection Agreement, dated as of November 11, 1996, between
Mercury and NYNEX CableComms Limited (incorporated by reference to Exhibit
10.12 to the Companies' Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).
(15) Amendment to Interconnection Agreement, dated as of February 11,
1997, between Mercury and NYNEX CableComms Limited (incorporated by
reference to Exhibit 10.12(c) to the Companies' Annual Report on Form 10-K
for the fiscal year ended December 31, 1996).
(16) Cost Allocation Policy among CWC, BCI and NYNEX.
(17) Opinion of SBC Warburg dated March 21, 1997.*
(18) Letter to holders of Units and ADSs of the Companies dated March 24,
1997.*
(19) Press release issued by the Companies on March 24, 1997.
- ------------------------
* Included in copies of this Schedule 14D-9 mailed to holders of Shares.
35
Other than in respect of
(i) information contained in the recommendations of the Offer Committees
of the Boards of Directors of NYNEX CableComms UK and NYNEX CableComms US
(which shall be information for which the respective Offer Committees accept
responsibility);
(ii) information contained in this Schedule 14D-9 which is extracted
from the Schedule 14D-1, including the information incorporated by reference
to the Prospectus therein, for which persons other than NYNEX CableComms UK
and NYNEX CableComms US and their directors are taking responsibility in
accordance with its terms; and
(iii) information relating to CWC and CWC Merger Sub and all other
information contained in this Schedule 14D-9 which has been compiled from
publicly available sources (including the Schedule 14D-1 and the information
incorporated by reference to the Prospectus therein) and in respect of which
the directors have ensured that such information has been accurately
reproduced or presented,
the directors of NYNEX CableComms UK and NYNEX CableComms US, whose names are
set out in paragraph 2(3) of Part III of the Prospectus, accept responsibility
for the information contained in this Schedule 14D-9.
To the best of the knowledge and belief of the directors of NYNEX CableComms
UK and NYNEX CableComms US (who have taken all reasonable care to ensure that
such is the case), such information contained in this document for which they
accept responsibility is in accordance with the facts and does not omit anything
likely to affect the import of such information.
The foregoing statements of responsibility are included solely to comply
with Rule 19.2 of the City Code and shall not be deemed to establish or expand
or limit liability under the US federal securities laws or under the laws of any
state of the US.
36
SIGNATURE
After reasonable inquiry and to the best of the knowledge and belief of the
undersigned, the undersigned certify that the information set forth in this
statement is true, complete and correct.
NYNEX CABLECOMMS GROUP PLC
By: /s/ PAUL H. REPP
-----------------------------------------
Name: Paul H. Repp
Title: CHIEF LEGAL AND REGULATORY OFFICER
AND COMPANY SECRETARY
Dated: March 24, 1997
NYNEX CABLECOMMS GROUP INC.
By: /s/ PAUL H. REPP
-----------------------------------------
Name: Paul H. Repp
Title: CHIEF LEGAL AND REGULATORY OFFICER
AND COMPANY SECRETARY
Dated: March 24, 1997
37
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
(1) Pages 38 to 52 of the Companies' Annual Report on Form 10-K for the fiscal year ended December 31, 1996
containing the pertinent sections thereof referred to in Item 3(b) of this Schedule 14D-9.
(2) Transaction Agreement, dated as of October 22, 1996, as amended and restated, among C&W, NYNEX and BCI
(incorporated by reference to Exhibit 2.1 to CWC's Registration Statement on Form F-4 filed with the
U.S. Securities and Exchange Commission on March 21, 1997 (File No. 333-6672) (the "CWC Registration
Statement on F-4")).
(3) Agreement and Plan of Merger, dated March 21, 1997, among NYNEX CableComms US, CWC and the CWC Merger
Sub (incorporated by reference to Exhibit 2.2 to the CWC Registration Statement on Form F-4).
(4) CWC Shareholders' Agreement, dated as of March 21, 1997, among C&W, BCI, BCMH, BCIH, NYNEX and CWC
(incorporated by reference to Exhibit 9.1 to the CWC Registration Statement on Form F-4).
(5) Form of Articles of Association of CWC to be adopted upon the Offers becoming or being declared
unconditional (incorporated by reference to the Articles of Association of CWC filed as part of Exhibit
3.1 to the CWC Registration Statement on Form F-4)
(6) Form of Management and Technical Services Agreement among C&W, BCI, NYNEX and CWC (incorporated by
reference to Exhibit 10.12 to the CWC Registration Statement on Form F-4).
(7) Form of Secondment Agreement among C&W, BCI, NYNEX and CWC (incorporated by reference to Exhibit 10.6 to
the CWC Registration Statement on Form F-4).
(8) Form of Tax Sharing Agreement among C&W, BCI, BCMH, BCIH, NYNEX and CWC (incorporated by reference to
Exhibit 10.9 to the CWC Registration Statement on Form F-4).
(9) Form of NYNEX Tax Agreement between NYNEX and CWC (incorporated by reference to Exhibit 10.10 to the CWC
Registration Statement on Form F-4).
(10) Form of NYNEX Tax Allocation Agreement between NYNEX and CWC (incorporated by reference to Exhibit 10.11
to the CWC Registration Statement on Form F-4).
(11) Form of C&W License between C&W and CWC (incorporated by reference to Exhibit 10.7 to the CWC
Registration Statement on Form F-4).
(12) Form of NYNEX Termination Agreement among NYNEX, the Companies and NYNEX CableComms Limited
(incorporated by reference to Exhibit 10.8 to the CWC Registration Statements on Form F-4).
(13) Principal Shareholders Registration Rights Agreement, dated March 21, 1997, among C&W, NYNEX, BCI and
CWC (incorporated by reference to Exhibit 10.5 to the CWC Registration Statement on Form F-4).
(14) Interconnection Agreement, dated as of November 11, 1996, between Mercury and NYNEX CableComms Limited
(incorporated by reference to Exhibit 10.12 to the Companies' Annual Report on Form 10-K for the fiscal
year ended December 31, 1996).
(15) Amendment to Interconnection Agreement, dated as of February 11, 1997, between Mercury and NYNEX
CableComms Limited (incorporated by reference to Exhibit 10.12(c) to the Companies' Annual Report on
Form 10-K for the fiscal year ended December 31, 1996).
(16) Cost Allocation Policy among CWC, BCI and NYNEX.
(17) Opinion of SBC Warburg dated March 21, 1997.
(18) Letter to holders of Units and ADSs of the Companies dated March 24, 1997.
(19) Press release issued by the Companies on March 24, 1997.