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PURSUANT TO RULE 424(b)(3)
REGISTRATION No. 33-83740
REGISTRATION No. 33-98374
PROSPECTUS SUPPLEMENT NO. 2 TO PROSPECTUS DATED SEPTEMBER 17, 1996
DIAMOND CABLE COMMUNICATIONS PLC
13 1/4% SENIOR DISCOUNT NOTES DUE SEPTEMBER 30, 2004
11 3/4% SENIOR DISCOUNT NOTES DUE DECEMBER 15, 2005
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Interest will not accrue on the 13 1/4% Senior Discount Notes due September
30, 2004 (the "Initial Senior Notes") prior to September 30, 1999. Interest on
the Initial Senior Notes will be payable on March 31 and September 30 of each
year, commencing March 31, 2000, at a rate of 13 1/4% per annum. See
"Description of Initial Senior Notes" in the accompanying Prospectus. The
Initial Senior Notes are redeemable, in whole or in part, at the option of the
Company at any time on or after September 30, 1999, at the redemption prices set
forth herein plus accrued interest to the date of redemption. The Initial Senior
Notes are also redeemable in whole, but not in part, at the option of the
Company at any time at 100% of the principal amount plus accrued interest to the
date of redemption (or, prior to September 30, 1999, at 100% of Accreted Value)
in the event of certain tax law changes requiring the payment of additional
amounts as described herein. In addition, in the event that the Company (i)
sells certain Equity Securities in a Public Offering or (ii) consummates a Trade
Sale, prior to March 31, 1997, the Company may, at its option, redeem up to a
maximum of $71,275,250 in aggregate principal amount at maturity of Initial
Senior Notes at a redemption price of 113.25% of Accreted Value. The Company is
required to offer to repurchase all outstanding Initial Senior Notes at 101% of
principal amount plus accrued interest to the date of repurchase (or, prior to
September 30, 1999, at 101% of Accreted Value on the date of repurchase) after
the occurrence of a Change of Control. See "Description of the Initial Senior
Notes -- Redemption" in the accompanying Prospectus. There can be no assurance
that the Company will have the financial resources necessary or otherwise be
able to repurchase the Initial Senior Notes under such circumstances.
Interest will not accrue on the 11 3/4% Senior Discount Notes due December
15, 2005 (the "New Senior Notes" and, together with the Initial Senior Notes,
the "Senior Notes") prior to December 15, 2000. Interest on the New Senior Notes
will be payable on June 15 and December 15 of each year, commencing June 15,
2001 at a rate of 11 3/4% per annum. See "Description of the New Senior Notes"
in the accompanying Prospectus. The New Senior Notes are redeemable, in whole or
in part, at the option of the Company at any time on or after December 15, 2000,
at the redemption prices set forth in the accompanying Prospectus plus accrued
interest to the date of redemption. The New Senior Notes are also redeemable in
whole, but not in part, at the option of the Company at any time at 100% of the
principal amount plus accrued interest to the date of redemption (or, prior to
December 15, 2000, at 100% of Accreted Value) in the event of certain tax law
changes requiring the payment of additional amounts as described herein. Upon
the occurrence of a Change of Control the Company is required to offer to
repurchase all outstanding New Senior Notes at 101% of principal amount plus
accrued interest to the date of repurchase (or, prior to December 15, 2000, at
101% of Accreted Value on the date of repurchase) after the occurrence of a
Change of Control. In addition, upon the occurrence of an Asset Disposition, the
Company may be obligated to make an Offer to Purchase all or a portion of the
outstanding New Senior Notes at 100% of the principal amount plus accrued
interest to the date of repurchase (or, prior to December 15, 2000, at 100% of
Accredited Value on the date of repurchase). See "Description of the New Senior
Notes -- Redemption" in the accompanying Prospectus. There can be no assurance
that the Company will have the financial resources necessary or otherwise be
able to repurchase the New Senior Notes under such circumstances.
The Senior Notes constitute unsecured senior indebtedness of the Company.
In August 1996, certain of the Company's subsidiaries entered into a senior bank
lending facility of up to pounds sterling 340 million. In February 1997, the
senior bank lending facility was amended to reduce the aggregate amount
available for borrowing to pounds sterling 220 million and to revise certain
covenants and conditions. Indebtedness under the senior bank lending facility is
effectively senior to the Senior Notes as such indebtedness will be incurred by
a subsidiary of the Company, guaranteed by certain of the Company's other
subsidiaries and secured by liens on the assets of certain of the Company's
subsidiaries and a pledge of the issued shares of certain of the Company's
subsidiaries other than Jewel Holdings Limited. At September 30, 1996, the
Company had approximately pounds sterling 334 million of indebtedness
outstanding, including approximately pounds sterling 124 million and pounds
sterling 210 million in accreted value of Initial Senior Notes and the New
Senior Notes, respectively. Total Group indebtedness at such date was pounds
sterling 345 million. The Company has not issued, and does not have any current
plans to issue, any significant indebtedness that will be subordinated to the
Senior Notes. The Company is a holding company which conducts substantially all
of its business through subsidiaries, all of which are wholly-owned. The Senior
Notes effectively rank junior to any indebtedness of the Company's subsidiaries
to the extent of the assets of such subsidiaries and to any secured indebtedness
of the Company to the extent of the assets securing such indebtedness. The New
Senior Notes rank pari passu with the Initial Senior Notes.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus Supplement, together with the Prospectus dated September 17,
1996 and Prospectus Supplement No. 1 thereto dated November 14, 1996, is to be
used by Goldman, Sachs & Co. in connection with offers and sales of the Senior
Notes related to market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. The Company will not receive any
of the proceeds of such transactions. Goldman, Sachs & Co. may act as a
principal or agent in such transactions. See "Plan of Distribution" in the
accompanying Prospectus.
GOLDMAN, SACHS & CO.
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The date of this Prospectus Supplement is February 12, 1997.
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GENERAL
This Prospectus Supplement should be read in conjunction with the
Prospectus dated September 17, 1996 and the Prospectus Supplement No. 1 thereto
dated November 14, 1996 (collectively, the "Prospectus"). The Prospectus has
been used by Goldman, Sachs & Co. in connection with offers and sales related to
market-making transactions in the Senior Notes. This Prospectus Supplement,
together with the Prospectus, is to be used by Goldman, Sachs & Co. in
connection with such transactions and unsolicited purchases and sales.
Capitalized terms used in this Prospectus Supplement and not otherwise
defined have the same meanings as in the Prospectus.
RECENT DEVELOPMENTS
SENIOR BANK FACILITY
In August 1996 certain of the Company's subsidiaries entered into a pounds
sterling 340 million senior bank loan and guarantee facility. This senior bank
facility has been amended (as amended, the "Senior Bank Facility") to reduce the
aggregate amount available for borrowing to pounds sterling 220 million and to
revise certain covenants and borrowing conditions. The Company intends to raise
debt financing in an amount necessary to replace the reduction in the Senior
Bank Facility. To date, no funds have been drawn under the Senior Bank Facility.
Indebtedness under the Senior Bank Facility will be incurred by DCL,
guaranteed by certain of the Company's other subsidiaries and secured by a lien
on the assets of Jewel and its subsidiaries (together, the "Borrower Group") and
a pledge of the issued shares of certain of the Company's subsidiaries other
than Jewel but including DCL and LCL.
DCL will be able to draw on the amended facility provided certain
conditions are met, including (i) that the Borrower Group must be in compliance
with its obligations in respect of the aggregate build milestones for all
franchise areas as set forth in its telecommunications licenses and/or LDLs, as
described under the caption "Business -- Milestones" in the accompanying
Prospectus, and that each member of the Borrower Group must be in compliance
with all of its other license obligations, (ii) the receipt by the Company of
additional equity of pounds sterling 25 million, (iii) the existence of pounds
sterling 312,000,000 of aggregate cash equity, defined to equal the sum of all
called up share capital and share premium balances of the Borrower Group and
intra-Group indebtedness of the Borrower Group to the Company which has been or
will be used to fund qualifying expenditure (as defined) and (iv) reported
annualized cash flow (as defined) of the Borrower Group of at least pounds
sterling 15,000,000 (which condition is not currently met). DCL will be able to
draw on the amended facility in amounts up to specified multiples of the
Borrower Group's reported annualized cash flow.
In addition, the Senior Bank Facility contains various covenants, including
(i) financial covenants relating to leverage, bank debt loan charges coverage
ratios, cash interest coverage ratios and annualized EBITDA levels (as defined);
(ii) requirements that the Borrower Group maintain interest rate protection
agreements in relation to a portion of the loans expected to be outstanding for
the period January 1, 1998 to June 30, 2001; and(iii) restrictions on the
payment of dividends and on intra-Group debt.
In addition to certain customary events of default, the following events
constitute events of default which may trigger acceleration under the Senior
Bank Facility: (i) failure of the Borrower Group to comply with aggregate build
milestones set forth in the terms of its telecommunications licenses and/or
LDLs, (ii) failure of a Borrower Group member to comply with (A) its build
milestones for individual franchise areas if OFTEL or the ITC has served a
notice on such Borrower Group member of its intent to make an order under
Section 17 of the Telecommunications Act (a "Notice Event") or equivalent in
relation to the ITC with respect to such failure to comply, or (B) any other
obligation in respect of such license, the breach of which (x) results in a
Notice Event or (y) is reasonably likely to have a material adverse effect
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on the financial condition of the Borrower Group taken as a whole or on the
Group's telecommunication systems; and (iii) certain change of control events,
including certain persons or entities ceasing to control specified percentages
of the total voting and economic power of the Borrower Group.
Borrowings will bear interest at adjusted sterling LIBOR plus a margin that
varies depending upon the leverage ratio (the ratio of aggregate loans and bank
guarantees outstanding under the facility to annualized net operating cash flow)
of the Borrower Group, such that a leverage ratio of 3.5:1 or more results in a
margin of 1.5%, a leverage ratio that is 3.0:1 or more but less than 3.5:1
results in a margin of 1%, and a leverage ratio of less than 3.0:1 results in a
margin of 0.75%. Quarterly repayment of outstanding principal amounts is
required beginning in the fourth quarter of 2000, with final payment in 2004.
The Senior Bank Facility will restrict the amount of funds that the
Borrower Group can transfer to the Company in order for the Company to service
its debt obligations. This amount is set in pounds sterling based on a specified
exchange rate. Therefore, a weakening of the pound sterling against the dollar
below this specified rate would reduce the dollar-equivalent amount of funds
that could be transferred to the Company to service its obligations under the
Initial Senior Notes and the New Senior Notes.
CERTAIN OPERATING DATA.
The following table sets forth certain data concerning the Group's
franchises at and for the years ended December 31, 1994, 1995 and 1996 and at
and for the nine-month period ended September 30, 1996. The combined operating
data at and for the year ended December 31, 1995 reflects the acquisition of LCL
on a pro-forma basis as if it had been completed at the beginning of 1995.
Revenue data for the year ended December 31, 1996 has not yet been published.
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DECEMBER 31,
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SEPT. 30, DEC. 31,
1994 1996 1996
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1995
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DIAMOND LCL COMBINED
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Homes passed by civils
construction(1)............ 55,919 222,335 58,976 281,311 420,358 453,496
Homes activated(2)........... 32,033 105,951 51,955 157,906 306,861 347,246
Homes marketed(3)............ 31,330 77,657 48,950 126,607 217,066 252,601
CABLE TELEVISION
Basic service subscribers.... 8,936 20,261 10,488 30,749 50,181 59,242
Penetration rate of homes
marketed(4)................ 28.5% 26.1% 21.4% 24.3% 23.1% 23.5%
Average monthly revenue per
subscriber(5).............. L14.71 L16.80 L18.89 L17.62 L17.97 N/A
Churn(6)..................... 28.5% 35.5% 31.0% 33.8% 40.4% 40.9%
RESIDENTIAL TELEPHONE
Residential lines
connected.................. 14,150 36,122 16,576 52,698 89,954 104,460
Penetration rate of homes
marketed(4)................ 45.2% 46.5% 33.9% 41.6% 41.4% 41.4%
Average monthly revenue per
line(7)(8)................. L18.83 L18.68 L22.19 L19.88 L18.78 N/A
Pro-forma average monthly
revenue per line(8)........ L18.83 L18.27 L21.56 L19.39 L19.03 N/A
Churn(6)..................... 13.8% 13.9% 17.2% 15.0% 20.7% 20.6%
BUSINESS TELECOMMUNICATIONS
Business customer accounts... 979 1,627 772 2,399 3,587 3,935
Business lines connected..... 3,928 7,036 2,843 9,879 17,261 18,932
Private circuits(9).......... 70 151 10 161 225 226
Average lines per
business(10)............... 4.0 4.3 3.7 4.1 4.8 4.8
Average monthly revenue per
line(8)(11)................ L88.68 L74.60 L59.60 L70.23 L53.15 N/A
Pro-forma average monthly
revenue per line(8)........ L88.68 L72.73 L57.57 L68.32 L54.28 N/A
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(1) Homes passed by civils construction is the number of homes that have had
ducting buried outside.
(2) Homes activated is the number of homes that are capable of receiving cable
service without further extension of transmission lines, apart from the
final connection to the home.
(3) Homes marketed is the number of homes activated for which the initial
marketing phase has been completed.
(4) Penetration rate of homes marketed is calculated by dividing the number of
homes receiving basic cable television or the number of residential lines
connected, as the case may be, on the given date by the total number of
homes marketed for the given service as of such date, expressed as a
percentage.
(5) The average monthly revenue per cable television subscriber is calculated by
dividing total cable television subscriber revenues (excluding installation
revenues) for the period by the average number of cable television
subscribers (calculated as a simple average of the number of basic service
subscribers at the end of each month during the period) and dividing that
amount by 12 (for the years ended December 31, 1994 and 1995) or by 9 (for
the nine months ended September 30, 1996).
(6) Churn is calculated by dividing net disconnections (total disconnections
less the number of disconnected accounts for which service is later
restored) in a period by the average number of subscribers in the period
(calculated as a simple average of the number of subscribers at the end of
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each month during the period). Churn for the nine months ended September
30, 1996 is annualized by multiplying the amount as calculated above by
1 1/3.
(7) The average monthly revenue per residential telephone line is calculated by
dividing (i) line and equipment rental, outgoing call charges and incoming
call termination revenues for the period by (ii) the average number of
residential telephone lines (calculated as a simple average of the number
of subscribed lines at the end of each month during the period) and
dividing that amount by 12 (for the years ended December 31, 1994 and 1995)
or by 9 (for the nine months ended September 30, 1996).
(8) The calculation of the average monthly revenue per line (for both
residential telephone and business telecommunications revenues) for the
nine-month period to September 30, 1996 reflects the reduction in revenues
stemming from rebates to BT on incoming termination revenues relating in
part to prior periods but recorded in full against revenues in the third
quarter of 1996. The rebates were calculated in accordance with recently
revised interconnect agreements and interim rates with BT that were made
effective retroactively from April 1995. The pro-forma average monthly
revenue per line (for both residential telephone and business
telecommunications revenues) gives effect to the revised interconnect
agreements and interim rates as if they had been in effect from April 1995
and allocates to each period the portion of the rebates that relates to
such period.
(9) Private circuits are point-to-point customer specific connections for which
a fixed annual rental charge is made.
(10)Average lines per business account is calculated by dividing the number of
business lines connected on the given date by the number of business
customer accounts on such date.
(11)The average monthly business telecommunications revenue per line is
calculated by dividing (i) business telecommunications line and equipment
rental, outgoing call charges and incoming call termination revenues
(including revenue from private circuits) for the period by (ii) the
average number of business telecommunications lines and private circuits
(calculated as a simple average of the number of subscribed lines and
private circuits at the end of each month during the period) and dividing
that amount by 12 (for the years ended December 31, 1994 and 1995) or by 9
(for the nine months ended September 30, 1996).
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