CELLCO FINANCE N.V.
Curacao, Netherlands Antilles
Financial Statements
September 30, 2002
15/11/02
Table of contents
Financial statements
Balance sheets at December 31, 2001 and September 30, 2002 (unaudited) 2
Statements of operations for the three month and nine month periods ended
September 30, 2001 and 2002 (unaudited) 3
Statements of cash flows for the nine month periods ended
September 30, 2001 and 2002 (unaudited) 4
Notes to the financial statements as of December 31, 2001 and
September 30, 2002 (unaudited) and for the three month and
nine month periods ended September 30, 2001 and 2002 (unaudited) 5-14
Balance sheets at December 31, 2001 and September 30, 2002 (unaudited)
- --------------------------------------------------------------------------------------------------
December 31, September 30,
2001 2002
Assets (unaudited)
- -------------------------------------------------------------------------------- ----------------
(in thousands of US dollars)
Current assets
Cash and cash equivalents (note 4) 3 3
Accrued interest receivable (note 5) 40,000 16,000
Deferred financing costs (notes 3 and 5) 3,424 3,424
Other current assets and receivables 242 216
------- -------
Total current assets 43,669 19,643
Loans receivable (notes 4 and 5) 700,000 700,000
Deferred financing costs (notes 3 and 5) 8,817 6,249
------- -------
752,486 725,892
======= =======
- --------------------------------------------------------------------------------------------------
December 31, September 30,
2001 2002
Liabilities and shareholders' equity (unaudited)
- -------------------------------------------------------------------------------- ----------------
(in thousands of US dollars)
Current liabilities
Accrued interest payable (note 5) 40,000 16,000
Taxes payable (notes 3 and 6) 233 207
Unearned financing fee income (notes 3 and 5) 3,424 3,424
------- -------
Total current liabilities 43,657 19,631
Notes payable (notes 4 and 5) 700,000 700,000
Unearned financing fee income (notes 3 and 5) 8,817 6,249
Shareholders' equity
Common stock
Par value US$1.00; authorized 60,000, issued and paid 12,000 12 12
shares (note 1)
Retained earnings - -
------- -------
Total shareholders' equity 12 12
------- -------
752,486 725,892
======= =======
See accompanying notes to the financial statements.
2
Statements of operations for the three month and nine month periods
ended September 30, 2001 and 2002 (unaudited)
- ------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
2001 2002 2001 2002
- ---------------------------------------------- ---------- ---------- ---------- ---------
(in thousands of US dollars, except share data) (unaudited) (unaudited)
Income
Interest income (notes 3 and 5) 24,000 24,000 72,000 72,000
Financing fee income (notes 3 and 5) 856 856 2,568 2,568
------- ------- ------- -------
Total revenue 24,856 24,856 74,568 74,568
Expenses
Interest expense (notes 3 and 5) (24,000) (24,000) (72,000) (72,000)
Financing cost (notes 3 and 5) (856) (856) (2,568) (2,568)
Operating and other expenses re-charged
(note 1) 27 26 91 90
------- ------- ------- -------
Income before taxes 27 26 91 90
Taxes on income (notes 3 and 6) (27) (26) (91) (90)
------- ------- ------- -------
Net income - - - -
======= ======= ======= =======
Basic and diluted earnings per common share - - - -
======== ======== =============== ===============
Weighted average number of common shares
outstanding 12,000 12,000 12,000 12,000
======== ======== =============== ===============
See accompanying notes to the financial statements.
3
Statements of cash flows for the nine month periods
ended September 30, 2001 and 2002 (unaudited)
- ----------------------------------------------------------------------------------------
Nine months ended September 30,
2001 2002
- ---------------------------------------------------------------------- ----------------
(in thousands of US dollars) (unaudited)
Cash flows from operating activities:
Net income - -
Changes in assets and liabilities:
Accrued interest receivable 24,000 24,000
Other current assets and receivables (22) 26
Accrued interest payable (24,000) (24,000)
Accrued income taxes 22 (26)
-------- --------
Net cash used in operating activities - -
Cash flows from financing activities:
Deferred financing costs (2,569) (2,568)
Unearned financing fees 2,569 2,568
-------- --------
Net cash provided by financing activities - -
-------- --------
Net increase in cash and cash equivalents - -
Cash and cash equivalents at the beginning of period 3 3
-------- --------
Cash and cash equivalents at the end of period 3 3
======== ========
Supplemental cash flow information:
Interest paid 96,000 96,000
Taxes paid 69 116
See accompanying notes to the financial statements.
Notes to the financial statements as of December 31, 2001 and September 30, 2002
(unaudited) and for the three month and nine month periods ended September 30,
2001 and 2002 (unaudited)
4
(1) Activities and ownership
Cellco Finance N.V. (the "Company") was incorporated on January 27, 1998 as
a limited liability company under the laws of the Netherlands Antilles. The
Company has its registered office at Caracasbaaiweg 199, Curacao, the
Netherlands Antilles, and is registered with the trade register of the
Chamber of Commerce and Industry in Curacao. The authorized share capital
of the Company is divided into 60,000 ordinary shares with a par value of
one US Dollar each, of which 12,000 fully-paid shares have been issued. The
sole shareholder is Cellco Stichting, a stichting, or foundation, organized
under the laws of the Netherlands Antilles (the "Foundation"). The sole
beneficiary of the Foundation is a Netherlands Antilles charitable
foundation. The Foundation has a single member board of directors,
consisting of Amicorp Curacao N.V., a Netherlands Antilles trust company
(the "Trust Company"). The Company is managed by a Board of Managing
Directors comprised of a single managing director, appointed by the General
Meeting of Shareholders. The Trust Company is also the sole managing
director. The Company has no officers, the managing director carries out
the functions of the executive officers, consistent with the Netherlands
Antilles law.
The Company was formed for the purpose of issuing debt securities and
lending the proceeds thereof to Turkcell Iletisim Hizmetleri A.S.
("Turkcell"). The Company issued US$300,000,000 15% Senior Subordinated
Notes (the "Senior Subordinated Notes") due 2005 and US$400,000,000 12 3/4%
Senior Notes (the "Senior Notes") due 2005, and entered into Issuer Credit
Agreements with Turkcell, under which the proceeds of these Notes were
loaned to Turkcell. The Company has conducted no operations since it was
established other than the issuance of these Notes and will have no
subsidiaries or significant business activities and is not expected to
produce any revenues except payments received from Turkcell under the
Issuer Credit Agreements and under any similar agreements which may be
required upon any additional debt issuances. Pursuant to the Issuer Credit
Agreements, any operating and other expenses of the Company are payable by
Turkcell.
5
Shareholders' equity consists of the following at December 31, 2001 and
September 30, 2002 (unaudited):
- -------------------------------------------------------------------------------------------------
Common stock Total
----------------------------
Shares Amount shareholders'
equity
- --------------------------------------------------------------------------------------------------
(in thousands of US dollars, except share data)
Balance at December 31, 2001 and September 30, 2002 12,000 12 12
------------------------------------------
The Company had no comprehensive income in 2001 and for the three and nine
months ended September 30, 2001 and 2002 (unaudited).
(2) Basis of preparation of financial statements
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America.
The Company's year-end is December 31. These financial statements cover the
three month and nine month periods ended September 30, 2002. The
comparative figures for 2001 in the statements of operations cover the
three month and nine month periods ended September 30, 2001, and in the
statements of cash flows cover the nine month period ended September 30,
2001.
The financial statements and related notes as of September 30, 2002 and for
the three month and nine month periods ended September 30, 2001 and 2002
are unaudited and in the opinion of management, such interim financial
statements include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results for such
periods. The results of operations for the nine months ended September 30,
2002 are not necessarily indicative of the results to be expected for the
full year or any other interim period.
At September 30, 2002, substantially all of the Company's assets represent
amounts receivable from Turkcell. The Company's results of operations and
financial position are largely dependent upon the results of operations and
financial position of Turkcell, whose operations are substantially all
inside Turkey. The Turkish economy has been adversely affected by the
significant economic difficulties that occurred in Turkey at the end of
2000 and in February 2001 and Turkey continues to experience difficulties
following such economic crisis. Consequently, Turkey's currency continue to
devalue, there is a continued volatility in the debt and equity market,
hyperinflation persists while the economic growth was negative 9.4% by the
end of December 2001. However, the rate of devaluation of Turkish Lira has
stabilized during the last nine months after the announcement of new loan
facility amounting to $10 billion from International Monetary Fund ("IMF").
The significant economic difficulties in Turkey include, but are not
limited to, a steep decline in prices of domestic debt and the equity
securities and increasing rates on government and corporate borrowings. In
an attempt to overcome the liquidity crisis in the banking system, on
February 21, 2001, the government allowed Turkish Lira to float freely.
This caused a 28% devaluation of Turkish Lira against US Dollar during the
first day of floatation. As of December 18, 2002, the Turkish Lira has
devalued significantly against major foreign currencies as compared to the
related exchange rates ruling as of December 31, 2000. The US
Dollar/Turkish Lira exchange rate at December 31, 2000 was TL 671,765 where
as at
6
September 30, 2002 it is TL 1,648,669. Confidence in banking sector has yet
to be fully restored and there continues to be general lack of liquidity in
the economy. Turkey's return to economic stability is dependent to a large
extent of the effectiveness of the measures taken by the government,
decisions of international lending organizations, and other factors,
including regulatory and political developments. The financial condition of
Turkcell and its future operations and cash flows could be adversely
affected by continued economic difficulty. At September 30, 2002,
Turkcell's current liabilities exceeded current assets by US$253 million.
As noted in Turkcell's financial statements this matter may raise doubt
about Turkcell's ability to continue as a going concern. The Company's cash
flows and ability to continue as a going concern depend largely on the
ability of Turkcell to service its debt towards the Company. The financial
statements of the Company have been prepared assuming that Turkcell will
continue as a going concern, and that therefore the Company will continue
as a going concern. Turkcell's management believes that Turkcell will
generate sufficient operating cash flows to continue as a going concern. In
addition, on March 5, 2002, Yapi ve Kredi Bankasi A.S., a shareholder of
Turkcell and one of the largest Turkish banks, has committed to provide a
cash loan facility, with market rates, up to US$200 million to Turkcell
over the next twelve months. Also, on March 6, 2002, Vakiflar Bankasi TAO
provided a letter of intent to extend the principal repayments of existing
borrowings amounting to US$42.9 million and US$57.1 million that are due in
2002 and 2003, respectively, for twelve months subsequent to their initial
maturities. Further, on March 7, 2002, Turkiye Garanti Bankasi A.S.
provided a letter of intent to extend the principal repayments of existing
borrowings amounting to US$75 million that are due in 2002 for twelve
months subsequent to their initial maturities. During the first nine months
of 2002, Turkcell did not use the option of these extentions and paid a
total amount of US$66.1 million principal for these two loans. Management
of Turkcell will consider making such extensions for the remaining
principal repayments, if necessary. Furthermore, on May 9, 2002, Turkcell
agreed with Akbank T.A.S. to extend two principal repayments of existing
borrowings totaling US$62.5 million, which were due in 2002, for twelve
months subsequent to their initial maturities.
The Company has continued to receive timely payments from Turkcell on its
Note receivable and believes that Turkcell will continue to be able to
service its debt on a timely basis. Accordingly, the financial statements
of the Company do not include any adjustments that might result from the
outcome of this uncertainty.
(3) Summary of significant accounting policies
Significant accounting policies followed in the preparation of the
financial statements referred to above are set out below:
(a) Revenue and expense recognition
The accrual basis of accounting is followed for the recognition of revenue
and expenses.
7
(b) Deferred financing cost and unearned financing fees
Financing costs incurred in connection with the issuance of the Notes,
which were recharged by the Company to Turkcell, are deferred and are
amortized over the terms of the Notes as an adjustment to financing fee
income and financing costs. Other costs relating to the issuance of the
Notes are paid directly by Turkcell.
(c) Income taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carry forwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(d) Earnings per share
The Company adopted SFAS No. 128, Earnings Per Share. In accordance with
this statement, basic earnings per share are computed by dividing net
earnings by the weighted averaged number of common shares outstanding.
Diluted earnings per share do not differ from basic earnings per share, as
the Company has no common stock equivalents.
(e) Foreign currency transactions
Transactions denominated in currencies other than US Dollars are recorded
at the exchange rates prevailing at the date of the transactions. Assets
and liabilities denominated in currencies other than US Dollars are
converted into US Dollars at the exchange rates ruling at the balance sheet
date with the resulting exchange differences recognized in the
determination of income.
(4) Fair value of financial instruments
The Company's financial instruments consist of cash and cash equivalents,
loans receivable and notes payable.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate that value:
Cash and cash equivalents
The carrying amounts approximate fair value because of the short maturity
of those instruments.
Loans receivable and notes payable
The fair values of loans receivable and notes are estimated based on the
quoted market prices.
8
The estimated fair values of the Company's financial instruments are as follows:
- ----------------------------------------------------------------------------------------------------------------
December 31, 2001 September 30, 2002
(unaudited)
---------------------- -----------------------
Carrying Fair Carrying Fair
amount value amount Value
- ---------------------------------------------------------------------------- ---------- ----------- -----------
(in thousands of US dollars)
Cash and cash equivalents 3 3 3 3
Loans receivable 700,000 618,000 700,000 663,000
Notes payable 700,000 618,000 700,000 663,000
(5) Loans receivable, accrued interest receivable, notes payable and accrued
interest payable
15% Senior Subordinated Notes due 2005
The Company issued US$300,000,000 aggregate principal amount of 15% Senior
Subordinated Notes due 2005 on July 23, 1998.
Under an Issuer Credit Agreement dated July 23, 1998, the Company has
loaned to Turkcell US$300,000,000. Pursuant to such loan, the net proceeds
of the Senior Subordinated Notes were transferred to Turkcell and Turkcell
was deemed to have borrowed the differences of US$9,000,000 (representing
the Senior Subordinated Notes financing costs) between US$300,000,000 and
the amount actually advanced to the Company as a financing fee.
Under the Issuer Credit Agreement, Turkcell issued a note to evidence the
loan from the Company (the "Loan Note") under which amounts are payable by
Turkcell to the Company in order that the Company, upon receipt of such
amounts, is able to satisfy its obligations on the Senior Subordinated
Notes.
The Company and Turkcell completed a registered exchange of the 15% Senior
Subordinated Notes of the Company (the "Old Notes") for 15% Senior
Subordinated Exchange Notes (the "New Notes") registered under the
Securities Act of 1933 with terms identical in all material respects,
except for certain transfer restrictions, interest rate step-ups and
registration rights, to the terms of the Old Notes. Turkcell did not
receive any cash proceeds from the issuance of the New Notes. The Old Notes
surrendered in exchange for the New Notes were retired and canceled and
cannot be reissued. The New Notes have been recorded at the carrying value
of the Old Notes as reflected in the Company's accounting records on the
date of the exchange. Accordingly, no gain or loss for accounting purposes
was recognized by the Company upon the exchange of the New Notes for the
Old Notes. Expenses incurred in connection with the issuance of the New
Notes, were re-charged by the Company to Turkcell.
9
Principal, maturity and interest:
The Senior Subordinated Notes are limited in aggregate amount to
US$400,000,000, US$300,000,000 of which was issued in the offering, and
US$100,000,000 of which may be offered from time to time in the future
subject to certain limitations and restrictions. In the event of such a
future offering, the notes offered thereby would have the same terms as the
Senior Subordinated Notes. The Senior Subordinated Notes mature at par on
August 1, 2005, which is also the maturity date of the loan under the
Issuer Credit Agreement dated July 23, 1998. The Senior Subordinated Notes
and also the loan under the Issuer Credit Agreement are payable as to
principal (and premium, if any), interest, additional amounts, if any, and
additional interest, if any. Interest on the Old Notes and also the loan
under the Issuer Credit Agreement, accrues at the rate of 15% per annum
from their date of original issuance and is payable semi-annually on each
February 1 and August 1 commencing on February 1, 1999, to the persons who
are registered holders at the close of business on the January 15 and July
15 immediately preceding the applicable interest payment date. Each New
Note shall bear interest from the last day on which interest was paid in
respect of the Old Note for which such new note was exchanged.
The Issuer Credit Agreement specifies that Turkcell will pay any amounts to
the Company in order that the Company, upon receipt of such amounts, is
able to satisfy its obligations on the Senior Subordinated Notes.
Redemption:
The Senior Subordinated Notes are redeemable, at the option of the Company,
in whole at any time or in part from time to time, on and after August 1,
2002, upon not less than 30 nor more than 60 days' notice at the following
redemption prices (expressed as percentages of the principal amount
thereof) if redeemed during the twelve month period commencing on August 1
of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, and additional amounts, if any, and additional
interest, if any, to the date of redemption.
Year Percentage
2002 107.50%
2003 103.75%
2004 and thereafter 100.00%
The Senior Subordinated Notes may also be redeemed, at any time, or from
time to time, on or prior to August 1, 2001, if Turkcell opts to use the
net cash proceeds of one or more Equity Offerings or Strategic Equity
Investments to make prepayments under the Issuer Credit Agreement dated
July 23, 1998.
The Company is required to use any such prepayments to redeem up to 35% of
(1) the aggregate principal amount of Senior Subordinated Notes originally
issued in the Offering plus (2) any additional Senior Subordinated Notes
issued after the issue date at a redemption price equal to 115% of the
principal amount thereof plus accrued interest thereon, if any, to the date
of redemption; provided that at least 65% of (1) the aggregate principal
amount of Notes originally issued in the Offering plus (2) any additional
Notes issued after the Issue Date remains outstanding immediately after any
such redemption.
10
The Senior Subordinated Notes may also be redeemed, in whole but not in
part, at the Company's option, upon not less than 30 nor more than 60 days'
notice at a redemption price equal to 100% of the principal amount, plus
accrued interest to the redemption date, if any, if, as a result of any
amendment to, or change in, the laws (or any rules or regulations
thereunder) of Netherlands Antilles or the Republic of Turkey or any
political subdivision or taxing authority thereof or therein or any
amendment to or change in any official interpretation or application of
such laws or rules or regulations or any execution of or amendment to any
treaty affecting taxation to which the Netherlands Antilles or the Republic
of Turkey is a party, which amendment or change or execution is effective
on or after the date of the Indenture, either the Company with respect to
the Senior Subordinated Notes or Turkcell with respect to the Issuer Credit
Agreement has become or will become obligated to pay additional amounts, on
the next date on which any amount would be payable with respect to the
Senior Subordinated Notes or under the Issuer Credit Agreement, and such
obligation can not be avoided by the use of reasonable measures available
to the Company or Turkcell, as the case may be; provided, however, that (1)
no such notice of redemption may be given earlier than 60 days prior to the
earliest date on which the Company or Turkcell, as the case may be, would
be obligated to pay such additional amounts were a payment in respect of
the Senior Subordinated Notes or the Issuer Credit Agreement then due, and
(2) at the time such notice of redemption is given, such obligation to pay
additional amounts remains in effect.
Security:
The Senior Subordinated Notes are general obligations of the Company
secured by an assignment of the Company's right, title and interest in and
to the Issuer Credit Agreement dated July 23, 1998 and are subordinated in
right of payment to all future senior indebtedness. The Issuer Credit
Agreement is a general unsecured obligation of Turkcell and is subordinated
in right of payment to all existing and future senior indebtedness. There
is no collateral for the obligations of Turkcell under the Issuer Credit
Agreement dated July 23, 1998. The Issuer Credit Agreement and the Loan
Note are the only assets of the Company to meet the claims of the holders
of the Senior Subordinated Notes.
Covenants:
The Indenture governing the Senior Subordinated Notes and the Issuer Credit
Agreement dated July 23, 1998 each contain certain covenants that limit the
ability of the Company and Turkcell and its consolidated and unconsolidated
subsidiaries to, among other things, incur additional indebtedness, pay
dividends or make certain other restricted payments, consummate certain
asset sales, enter into certain transactions with related parties, incur
liens, impose restrictions on the ability of a subsidiary to pay dividends
and make certain payments to Turkcell and its consolidated subsidiaries or
the Company, merge or consolidate with any other person, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of
the assets of Turkcell and its consolidated subsidiaries or the Company.
Senior Notes due 2005
The Company issued US$400,000,000 aggregate principal amount of 12 3/4%
Senior Notes due 2005 on December 22, 1999.
11
Under an Issuer Credit Agreement dated December 22, 1999, the Company has
loaned to Turkcell US$400,000,000. Pursuant to such loan, the net proceeds
of the Senior Notes were transferred to Turkcell and Turkcell was deemed to
have borrowed the differences of US$12,000,000 (representing the Senior
Notes financing costs) between US$400,000,000 and the amount actually
advanced to the Company as a financing fee.
Under the Issuer Credit Agreement, Turkcell issued a note to evidence the
loan from the Company under which amounts are payable by Turkcell to the
Company in order that the Company, upon receipt of such amounts, is able to
satisfy its obligations on the Senior Notes.
Turkcell and the Company have agreed, for the benefit of all holders of the
Senior Notes, that, after the issuance of the Senior Notes, they will file
a registration statement to register exchange offer under the Securities
Act of 1933 for 12 3/4% Senior Notes of the Company (the "Old Senior
Notes") secured by an assignment of the Company's right, title and interest
in and to the Issuer Credit Agreement with terms substantially identical to
the terms of the 12 3/4% Senior Exchange Notes (the "New Senior Notes") of
the Company. A registration statement for the exchange offer was declared
effective on July 11, 2000. The exchange was completed on August 14, 2000.
Principal, maturity and interest:
The Senior Notes are limited in aggregate amount to US$500,000,000,
US$400,000,000 of which was issued in the offering, and US$100,000,000 of
which may be offered from time to time in the future subject to certain
limitations and restrictions. In the event of such a future offering, the
notes offered thereby would have the same terms as the Senior Notes. The
Senior Notes mature at par on August 1, 2005, which is also the maturity
date of the loan under the Issuer Credit Agreement dated December 22, 1999.
12
The Senior Notes and also the loan under the Issuer Credit Agreement dated
December 22, 1999 are payable as to principal (and premium, if any),
interest, additional amounts, if any, and additional interest, if any.
Interest on the Senior Notes and also the loan under the Issuer Credit
Agreement, accrues at the rate of 12 3/4% per annum from their date of
original issuance and is payable semi-annually on each February 1 and
August 1 commencing on February 1, 2000, to the persons who are registered
holders at the close of business on the January 15 and July 15 immediately
preceding the applicable interest payment date.
Redemption:
The Senior Notes may be redeemed, at any time, or from time to time, on or
prior to December l, 2002, if Turkcell opts to use the net cash proceeds of
one or more Equity Offerings to make prepayments under the Issuer Credit
Agreement dated December 22, 1999. The Company is required to use any such
prepayments to redeem up to 35% of (1) the aggregate principal amount of
Senior Notes originally issued in the Offering plus (2) any additional
Senior Notes issued after the issue date at a redemption price equal 112
3/4% of the principal amount thereof plus accrued interest thereon, if any,
to the date of redemption; provided that at least 65% of (1) the aggregate
principal amount of Senior Notes originally issued in the Offering plus (2)
any additional Senior Notes issued after the Issue Date remains outstanding
immediately after any such redemption. The Senior Notes may also be
redeemed, in whole but not in part, at the Company's option, upon not less
than 30 nor more than 60 days' notice at a redemption price equal to 100%
of the principal amount, plus accrued interest to the redemption date, if
any, if, as a result of any amendment to, or change in, the laws (or any
rules or regulations thereunder) of Netherlands Antilles or the Republic of
Turkey or any political subdivision or taxing authority thereof or therein
or any amendment to or change in any official interpretation or application
of such laws or rules or regulations or any execution of or amendment to
any treaty affecting taxation to which the Netherlands Antilles or the
Republic of Turkey is a party, which amendment or change or execution is
effective on or after the date of the Indenture, either the Company with
respect to the Senior Notes or Turkcell with respect to the Issuer Credit
Agreement has become or will become obligated to pay additional amounts, on
the next date on which any amount would be payable with respect to the
Senior Notes or under the Issuer Credit Agreement, and such obligation
cannot be avoided by the use of reasonable measures available to the
Company or Turkcell, as the case may be; provided, however, that (1) no
such notice of redemption may be given earlier than 60 days prior to the
earliest date on which the Company or Turkcell, as the case may be, would
be obligated to pay such additional amounts were a payment in respect of
the Senior Notes or the Issuer Credit Agreement then due, and (2) at the
time such notice of redemption is given, such obligation to pay additional
amounts remains in effect.
Security:
The Senior Notes are general obligations of the Company secured by an
assignment of the Company's right, title and interest in and to the Issuer
Credit Agreement dated December 22, 1999. The payment of all obligations
under the Issuer Credit Agreement dated December 22, 1999 is senior in
right of payment to the prior payment of all obligations on subordinated
indebtedness of Turkcell.
13
Covenants:
The Indenture governing the Senior Notes and the Issuer Credit Agreement
each contain certain covenants that limit the ability of the Company and
Turkcell and its consolidated and unconsolidated subsidiaries to, among
other things, incur additional indebtedness, pay dividends or make certain
other restricted payments, consummate certain asset sales, enter into
certain transactions with related parties, incur liens, impose restrictions
on the ability of a subsidiary to pay dividends and make certain payments
to Turkcell and its consolidated subsidiaries or the Company, merge or
consolidate with any other person, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of the assets of Turkcell
and its consolidated subsidiaries or the Company.
(6) Taxes on income
The Company is subject to taxation in the Netherlands Antilles based on the
Profit Tax Ordinance and a tax ruling obtained from the Tax Inspector of
Netherlands Antilles. In accordance with such tax ruling, the Company's
taxable income is equal to 1% of the average daily principal amount of the
notes outstanding during the period. A rate of 0.5% is applicable for
average daily principal amount of notes outstanding in excess of
US$80,000,000.
(7) Management agreement
On January 27, 1998, the Company signed a management agreement with Amicorp
Curacao N.V., a Netherlands Antilles trust company. Under this agreement,
Amicorp Curacao N.V. shall be managing director of the Company and will be
responsible for the operations of the Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereonto duly authorized.
CELLCO FINANCE N.V.
/s/ Jeroen van der Woord
------------------------------
By: AMICORPCORACAO N.V.,
Managing Director
Dated: January 08, 2003