THIS IS NOT A SOLICITATION OF ACCEPTANCES OF THE CHAPTER 11 PLAN JOINTLY
PROPOSED BY UNITED PAN-EUROPE COMMUNICATIONS N.V. AND NEW UPC, INC. IN THIS
CHAPTER 11 CASE. ACCEPTANCES OR REJECTIONS OF THE PLAN MAY NOT BE SOLICITED
UNTIL A DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT. THIS
DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL, BUT HAS NOT YET BEEN
APPROVED BY THE BANKRUPTCY COURT AND IS SUBJECT TO AMENDMENT PRIOR TO SUCH
APPROVAL BEING GRANTED.
THIS DISCLOSURE STATEMENT IN DRAFT FORM DOES NOT CONSTITUTE AN OFFER OF
SECURITIES UPON ISSUE IN OR FROM THE NETHERLANDS.
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- --------------------------------------------x
In re : Chapter 11
:
United Pan-Europe Communications N.V., : Case No. 02-16020 (BRL)
:
Debtor. :
:
- --------------------------------------------x
FIRST AMENDED DISCLOSURE STATEMENT WITH RESPECT
TO FIRST AMENDED CHAPTER 11 PLAN OF REORGANIZATION JOINTLY PROPOSED BY
UNITED PAN-EUROPE COMMUNICATIONS N.V. AND NEW UPC, INC.
-------------------------------------------------------
Dated: New York, New York
December 23, 2002
This Disclosure Statement (the "Disclosure Statement") relates to the
proposed financial restructuring of United Pan-Europe Communications N.V., a
corporation incorporated under the laws of The Netherlands, with its statutory
seat in Amsterdam, The Netherlands (the "Company"), and the issuance of shares
of New UPC Common Stock (as defined herein) and New UPC Equity Purchase Rights
(as defined herein) issued in connection with the Restructuring (as defined
herein). The Company, together with New UPC, Inc., a newly-formed U.S. company
incorporated in the State of Delaware that will become a holding company of the
Company upon consummation of the Restructuring ("New UPC"), jointly propose a
restructuring of the Company's capital structure and other obligations (the
"Restructuring"), as described in this Disclosure Statement, pursuant to which
New UPC intends to issue shares of common stock of New UPC ("New UPC Common
Stock"), including, without limitation, in consideration for the surrender and
transfer to New UPC of:
(i)
all of the Claims (as defined herein) under the US$1,255.0
million 6% Guaranteed Discount Notes due 2007, co-issued by
Belmarken Holding B.V. ("Belmarken") and the Company and
guaranteed by UPC Internet Holding B.V. (the "Belmarken Notes");
(ii) all of the Claims under
the US$200,000,000 10 7/8% Senior Notes due 2007,
the US$800,000,000 10 7/8% Senior Notes due 2009,
the US$735,000,000 12 1/2% Senior Discount Notes due 2009,
the US$252,000,000 11 1/4% Senior Notes due 2009,
the US$478,000,000 13 3/8% Senior Discount Notes due 2009,
the US$600,000,000 11 1/4% Senior Notes due 2010,
the US$300,000,000 11 1/2% Senior Notes due 2010,
the US$1,000,000,000 13 3/4% Senior Discount Notes due 2010,
the (euro)100,000,000 10 7/8% Senior Notes due 2007,
the (euro)300,000,000 10 7/8% Senior Notes due 2009,
the (euro)101,000,000 11 1/4% Senior Notes due 2009,
the (euro)191,000,000 13 3/8% Senior Discount Notes due 2009 and
the (euro)200,000,000 11 1/4% Senior Notes due 2010
issued by the Company (collectively, the "UPC Notes");
(iii) all of the General Unsecured Claims (as defined herein) against
the Company;
(iv) all of the outstanding Series 1 convertible preference shares A
of the Company (the "UPC Preference Shares A");
(v) all of the outstanding priority shares of the Company (the "UPC
Priority Shares");
(vi) all of the outstanding ordinary shares A of the Company (the "UPC
Ordinary Shares A"), including UPC Ordinary Shares A represented
by American Depositary Shares (the "UPC ADSs"); and
(vii) all of the Equity Securities Claims (as defined herein) against
the Company.
For additional information regarding the Restructuring, see "The Restructuring."
The Company, which has been experiencing severe short-term and long-term
liquidity problems and has ceased making interest payments on the UPC Notes, has
proposed this financial restructuring in order to reduce the Company's current
and future financial obligations and to provide the Company with additional
capital to permit the continuation of the Company as a going concern.
In order to effectuate the Restructuring described in this Disclosure
Statement, on December 3, 2002 (the "Petition Date"), the Company filed a
petition for relief under Chapter 11 (the "Chapter 11 Case") of the United
(i)
States Bankruptcy Code (the "U.S. Bankruptcy Code") with the United States
Bankruptcy Court for the Southern District of New York (the "U.S. Bankruptcy
Court") and, on the date hereof, filed the pre-negotiated plan of reorganization
described in this Disclosure Statement (the "Plan") and this Disclosure
Statement. The Plan amends and supersedes the "Chapter 11 Plan of Reorganization
Jointly Proposed by United Pan-Europe Communications N.V. and New UPC, Inc.,"
which was dated and filed with the U.S. Bankruptcy Court on December 3, 2002.
The Company believes that, in order to fully achieve the Restructuring,
including the distributions contemplated by the Plan, it is also necessary to
effect the Restructuring under the laws of certain non-U.S. jurisdictions,
including Dutch law. Accordingly, in conjunction with the commencement of the
Chapter 11 Case, on December 3, 2002, the Company commenced a moratorium of
payments in The Netherlands under Dutch bankruptcy law (the "Dutch Bankruptcy
Case") and filed a proposed plan of compulsory composition, or an Akkoord, with
the Amsterdam Court (Rechtbank) (the "Dutch Bankruptcy Court") under the Dutch
Faillissementswet (the "Dutch Bankruptcy Code"). On the date of this Disclosure
Statement, the Company submitted a revision to the Akkoord that was filed with
the Dutch Bankruptcy Court on December 3, 2002 and this Disclosure Statement
describes the Akkoord as so revised (as amended from time to time, the
"Akkoord").
Unlike the U.S. Bankruptcy Code, the Dutch Bankruptcy Code does not provide
for the Akkoord to reorganize or cancel any of the Equity Interests (as defined
herein) in the Company. Therefore, in order to facilitate implementation of the
Plan with respect to certain of the UPC Ordinary Shares A in accordance with
Dutch law, New UPC shall commence an offer, solely with respect to holders of
UPC Ordinary Shares A who are not U.S. Persons (as defined in Rule 902(k) of
Regulation S promulgated under the U.S. Securities Act of 1933, as amended (the
"U.S. Securities Act"), "U.S. Persons") and are not located or residing within
the United States, to deliver shares of New UPC Common Stock to such holders of
UPC Ordinary Shares A in consideration for the delivery by such holders of their
UPC Ordinary Shares A to New UPC (the "Dutch Implementing Offer").
Similarly, the Dutch Bankruptcy Code does not provide for the Dutch
Bankruptcy Case to exempt compliance from otherwise applicable corporate law.
Therefore, in order to facilitate implementation of the Plan, the Company will
hold an extraordinary meeting of the holders of the UPC Ordinary Shares A, the
UPC Priority Shares and the UPC Preference Shares A (the "Extraordinary General
Meeting") to approve certain amendments to the Company's Articles of Association
and other shareholder proposals (the "Shareholder Proposals") as described
herein under "The Extraordinary General Meeting of Shareholders."
The Plan also provides each Holder (as defined herein) of a Belmarken Notes
Claim, UPC Notes Claim and General Unsecured Claim (each term as defined herein)
with the right (the "New UPC Equity Purchase Rights") to purchase for cash a pro
rata portion of up to (euro)100 million of shares of New UPC Common Stock (the
"Maximum Subscription Amount") at the per share price implied by the Plan (the
"Implied Purchase Price"). The Holders of General Unsecured Claims will be
permitted to participate in the New UPC Equity Purchase Rights based on the
Claim amounts set forth by such Holders in their proofs of claim filed in the
Chapter 11 Case; provided, however, that this right will in no way affect any
determination by either the U.S. Bankruptcy Court or the Dutch Bankruptcy Court
as to the allowability of any Claims asserted by such Holders against the
Company. The New UPC Equity Purchase Rights will only be exercisable on the
Effective Date (as defined herein). The Maximum Subscription Amount will be
reduced on a Euro-for-(euro)basis under the circumstances described in this
Disclosure Statement under "New UPC Equity Subscription--General." Subject to
confirmation of the Plan and the ratified Akkoord becoming final and conclusive
(in kracht van gewijsde gaan), UnitedGlobalCom, Inc. ("UGC"), the indirect
parent company of the Company, has committed to purchase from New UPC, and New
UPC has committed to sell to UGC, on the Effective Date, at the Implied Purchase
Price, an amount of shares of New UPC Common Stock with an aggregate value equal
to the Maximum Subscription Amount less the number of shares of New UPC Common
Stock purchased by holders of Belmarken Notes Claims, UPC Notes Claims and
General Unsecured Claims pursuant to the New UPC Equity Purchase Rights (the
"UGC Subscription Commitment"). The New UPC Equity Purchase Rights (and the
subscription of shares of New UPC Common Stock upon exercise of those New UPC
Equity Purchase Rights) and the UGC Subscription Commitment (and the
subscription of shares of New UPC Common Stock by UGC under this commitment) are
collectively referred to in this Disclosure Statement as the "New UPC Equity
Subscription." The "Effective Date" means the Business Day (as defined herein)
that is no more than 11 Business Days following the date on which all conditions
precedent to the consummation of the Plan and the Akkoord have either been
satisfied or, to the extent permitted in the Plan and the Akkoord, duly waived
and on which day the Plan and the ratified Akkoord become final and conclusive.
(ii)
For additional information regarding the Akkoord, see "The Akkoord." For
additional information regarding the Dutch Implementing Offer, see "The Dutch
Implementing Offer." For additional information regarding the Extraordinary
General Meeting, see "The Extraordinary General Meeting of Shareholders." For
more information regarding the New UPC Equity Purchase Rights, see "New UPC
Equity Subscription."
The terms of the Restructuring have been developed in the course of
discussions and negotiations with (i) representatives of holders (other than UGC
and its subsidiaries (the "UGC Group")) of approximately 25% of the aggregate
principal amount of the outstanding UPC Notes, through the Participating
Noteholders (as defined herein) and (ii) UGC (which, through the UGC Group,
holds all of the outstanding Belmarken Notes, all of the outstanding UPC
Priority Shares, approximately 35% of the aggregate principal amount of the
outstanding UPC Notes, approximately 20% of the outstanding UPC Preference
Shares A and approximately 53.1% of the outstanding UPC Ordinary Shares A), and
such parties have agreed in writing, subject to the terms and conditions of the
Restructuring Agreement (as defined herein), to vote in favor of the Plan and
the Akkoord. As of the date of this Disclosure Statement, UGC has entered into
an agreement to acquire an additional 19.4% of the UPC Preference Shares A. UGC
may acquire additional UPC Preference Shares A, UPC Ordinary Shares A and/or UPC
Notes prior to the Effective Date.
(iii)
DISCLAIMERS
This Disclosure Statement has been prepared pursuant to, and in accordance
with, Section 1125 of the U.S. Bankruptcy Code and Rule 3016(b) of the U.S.
Federal Rules of Bankruptcy Procedure in order to provide adequate information
to enable Holders of Claims against, or Equity Interests in, the Company who are
entitled to vote on the Plan to make a reasonably informed decision with respect
to their vote on the Plan. To that end, this Disclosure Statement describes the
terms and provisions of the Plan, as well as the methods by which the Company
will implement the Restructuring under U.S. and Dutch law. Persons or entities
holding or trading in, or otherwise purchasing, selling or transferring, Claims
against, or Equity Interests in, the Company should evaluate this Disclosure
Statement in light of the purpose for which it was prepared.
[This Disclosure Statement has been approved by order of the U.S.
Bankruptcy Court as containing adequate information of a kind and in sufficient
detail to enable Holders of Claims and Equity Interests to make an informed
judgment with respect to voting to accept or reject the Plan. However, the U.S.
Bankruptcy Court's approval of this Disclosure Statement does not constitute a
recommendation or determination by the U.S. Bankruptcy Court with respect to the
merits of the Plan or the Restructuring.]
--------------
From a Dutch corporate governance perspective, one of the specific purposes
of this Disclosure Statement is to inform Holders of the UPC Preference Shares
A, the UPC Priority Shares and the UPC Ordinary Shares A of the Restructuring
and, in that respect, this Disclosure Statement also serves as an "Explanatory
Memorandum." In The Netherlands, this Disclosure Statement serves as a
prospectus as referred to in Article 3(2)(b) of the Dutch Act on the Supervision
of the Securities Trade 1995 (Wet Toezicht Effectenverkeer 1995) (the "Dutch
Securities Act 1995"). See "Auditors--Auditor's Statement Regarding Dutch
Prospectus."
Certain aspects of the Restructuring are subject to, among other things,
the approval of the general meeting of shareholders of the Company. One of the
purposes of this Disclosure Statement is to set out the background to, and
details of, the Restructuring to enable the Company's shareholders to make an
informed decision when they will be requested to vote on certain aspects of the
Restructuring at the Extraordinary General Meeting to be held at Hotel Okura
Amsterdam, Ferdinand Bolstraat 333, Amsterdam, The Netherlands, on February 19,
2003, at 10:00 a.m. (Central European Time), unless postponed or adjourned.
The information included in the sections entitled "Summary--The Company,"
"The Company" and "Outstanding Securities of the Company" of this Disclosure
Statement has been provided by the Company. The information included in
"Summary--New UPC" and "New UPC" of this Disclosure Statement has been provided
by New UPC. The Company and New UPC have jointly provided the information
included in the other sections and pages of this Disclosure Statement. The
Company and New UPC are responsible for the accuracy of the information they
have provided in this Disclosure Statement, each with respect to such
information it has provided, and together with respect to the information
provided jointly. The Company and New UPC confirm, each with respect to such
information it has provided, that on the date of this Disclosure Statement that
information is, to the best of their respective knowledge, true and accurate and
that there are no other facts the omission of which would make any statement in
this Disclosure Statement misleading in any material respect.
This Disclosure Statement is published in the English language only and
shall not be made available in the Dutch language. This Disclosure Statement
will be made available in print and on the internet at the Company's website at
www.upccorp.com. The Company does not accept any liability for the
non-availability of the Disclosure Statement on the internet or the possible
consequences from reliance on, or action taken in consequence of, information
available on the internet.
(iv)
The information contained on the Company's website address mentioned in
this Disclosure Statement, other than the Disclosure Statement itself, is not
information intended to be incorporated herein by reference or otherwise. No
reliance should be placed on any such information and neither the Company nor
New UPC accepts any liability (in contract or tort, in negligence or otherwise,
except in the case of its own fraud) for any loss suffered as a result of any
reliance placed on, or use made of, any such information in connection with the
distribution of shares of New UPC Common Stock as set out in this Disclosure
Statement.
-------------
This Disclosure Statement was prepared by, and under the responsibility of,
the Company and New UPC in good faith, based upon information available to them,
including the Company's books and records, and is designed to provide adequate
information to enable Holders of Impaired Claims or Impaired Equity Interests to
make an informed judgment on whether to accept or reject the Plan and the
Akkoord, participate in the Dutch Implementing Offer and subscribe for shares of
New UPC Common Stock in the New UPC Equity Subscription, as applicable. All
Holders of Impaired Claims or Impaired Equity Interests are hereby advised and
encouraged to read and carefully consider this Disclosure Statement, the Plan
and the Akkoord in their entirety before voting to accept or reject the Plan and
the Akkoord and determining whether to participate in the Dutch Implementing
Offer and whether to subscribe for shares of New UPC Common Stock in the New UPC
Equity Subscription, as applicable.
This Disclosure Statement may not be relied on for any purpose other than
to determine how to vote on the Plan or the Akkoord, whether to participate in
the Dutch Implementing Offer and whether to subscribe for shares of New UPC
Common Stock in the New UPC Equity Subscription. Nothing contained herein shall
constitute an admission of any fact or liability by any party, or be admissible
in any proceeding involving the Company or any other party.
---------------
In making a decision to accept or reject the Plan and the Akkoord, whether
to participate in the Dutch Implementing Offer and whether to subscribe for
shares of New UPC Common Stock in the New UPC Equity Subscription, as
applicable, each Holder of an Impaired Claim or Impaired Equity Interest must
rely on its own examination of the Company and New UPC as described in this
Disclosure Statement and the terms of the Plan, the Akkoord, the Dutch
Implementing Offer and the New UPC Equity Subscription, as applicable, including
the merits and risks involved. As such, all Holders of Impaired Claims and
Impaired Equity Interests should read and consider carefully the matters
described in this Disclosure Statement as a whole, including the section
entitled "Risk Factors," prior to voting on the Plan and the Akkoord and
determining whether to participate in the Dutch Implementing Offer and whether
to subscribe for shares of New UPC Common Stock pursuant to the New UPC Equity
Subscription.
The Company and New UPC are not (and shall not be construed to be) offering
legal, business, financial or tax advice to any Holder of any Claim or Equity
Interest, and this Disclosure Statement should not be considered to contain any
specific advice or instruction considering such matters with respect to any
Claim or Equity Interest. You should consult with your legal, business,
financial and tax advisors as to any matters concerning this Disclosure
Statement, the Plan, the Akkoord, the Dutch Implementing Offer and the New UPC
Equity Subscription, as applicable, and the transactions contemplated hereby or
thereby.
---------------
The description of the Plan contained herein is intended as a summary only
and is qualified in its entirety by reference to the Plan itself, the exhibits
and schedules to the Plan and the annexes to this Disclosure Statement
(collectively, the "Plan Documents"). A copy of the Plan is attached to this
Disclosure Statement as Annex A. If any inconsistency exists between the Plan
and the Plan Documents, on the one hand, and this Disclosure Statement, on the
other hand, the terms of the Plan and the Plan Documents shall govern. This
Disclosure Statement contains information supplementary to the Plan and the Plan
Documents and is not intended to supplant or substitute for the Plan or the Plan
Documents themselves.
(v)
The description of the Akkoord contained herein is intended as a summary
only and is qualified in its entirety by reference to the Akkoord itself. To the
extent necessary, the Akkoord will be amended before the Akkoord is voted on at
the Dutch Voting Meeting (as defined herein) in order to ensure that the terms
of the Akkoord are consistent with the terms of the Plan. An English translation
of the Akkoord is attached to this Disclosure Statement as Annex B. If any
inconsistency exists between the Akkoord and this Disclosure Statement, the
Akkoord shall govern. This Disclosure Statement contains information
supplementary to the Akkoord and is not intended to supplement or substitute for
the Akkoord itself.
-------------
No party is authorized by the Company or New UPC to give any information or
make any representations with respect to the Company, New UPC, the Company's
assets, the Plan, the securities to be issued under the Plan (including any
shares of New UPC Common Stock issued under the New UPC Equity Subscription),
the Akkoord, the Dutch Implementing Offer or the Restructuring in general other
than that which is contained in this Disclosure Statement and no representations
or information concerning the Company, New UPC, the Company's future business
operations, the nature of the Company's liabilities, the Company's creditors'
claims or the value of its properties have been authorized by the Company or New
UPC other than as set forth herein. As such, you should not rely upon any such
representations or information other than as explicitly set forth in this
Disclosure Statement (including the annexes and exhibits attached hereto and
information incorporated herein by reference).
Unless another time is expressly specified herein, the statements contained
in this Disclosure Statement are made as of the date hereof and neither the
delivery of this Disclosure Statement nor any exchange, redemption,
restructuring, modification, or cancellation of any of the UPC Notes, the
Belmarken Notes, the General Unsecured Claims, the Equity Securities Claims, the
UPC Preference Shares A, the UPC Priority Shares or the UPC Ordinary Shares A
(including the UPC ADSs) made pursuant to the Plan, the Akkoord or the Dutch
Implementing Offer will, under any circumstances, create any implication that
there has been no change in the information contained herein at any time
subsequent to the date hereof or that the information contained herein is
correct at any time subsequent to the date hereof. There can be no assurance
that the information and representations contained herein will continue to be
accurate subsequent to the date hereof. Except as stated herein, all financial
statements contained, or incorporated by reference, in this Disclosure Statement
have been provided by the Company. Certain of the financial statements contained
herein are unaudited.
----------------
This Disclosure Statement and certain of the Annexes hereto contain
projections of, among other things, future results of operations. The Company
does not as a matter of course publicly disclose projections, but the Company
has prepared such information in connection with the Plan solely for purposes of
demonstrating that, as required by Section 1129(a)(11) of the U.S. Bankruptcy
Code, confirmation of the Plan is not likely to be followed by the liquidation,
or the need for further financial reorganization, of the Company, and to assist
in the preparation of a valuation analysis. This information was prepared by the
Company and was not prepared with a view toward compliance with published
guidelines of the U.S. Securities and Exchange Commission (the "SEC"), the
American Institute of Certified Public Accountants or any other regulatory or
professional agency or body, generally accepted accounting principles or
consistency with our audited financial statements. In addition, neither Arthur
Andersen LLP, the Company's predecessor independent auditors, nor KPMG
Accountants N.V. ("KPMG"), the Company's current independent auditors, has
either compiled or examined the estimates and projections and, accordingly,
neither Arthur Andersen LLP nor KPMG express any opinion or any other form of
assurance with respect to, assume no responsibility for, and disclaim any
association with, these estimates and projections. Furthermore, the projections
contained herein are based upon a number of assumptions and estimates presented
with numerical specificity and considered reasonable by us when taken as a
whole. These assumptions and estimates, however, are subject to inherent
uncertainties and to a wide variety of significant known and unknown business,
economic and competitive risks, including, among others, those summarized
herein, that may cause the Company's actual results or performance to be
materially different from those projected. Consequently, this Disclosure
Statement should not be regarded as a representation by the Company or any other
person of results that will actually be achieved. These estimates and
projections should be read
(vi)
together with the information contained under the heading "Risk Factors" of this
Disclosure Statement and the information and financial statements and related
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001, Amendment No. 1 to the Annual Report on Form 10-K for
the year ended December 31, 2001 and the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 2002, attached as Annexes C, D and E,
respectively, hereto.
------------
Certain of the information and statements contained in this Disclosure
Statement are "forward-looking statements" and contain estimates, assumptions
and projections. Such information and statements are subject to inherent
uncertainties and to a wide variety of significant known and unknown
restructuring, business, economic and competitive risks, including, among
others, the following:
o the ability of the Company to continue as a going concern;
o the ability of the Company and its subsidiaries (the "UPC Group") to
operate pursuant to the terms of their existing credit facilities and
arrangements;
o the ability to fund, develop and execute the UPC Group's business
plan;
o the ability of the Company to restructure its outstanding indebtedness
on a satisfactory and timely basis;
o the ability of the Company and New UPC to confirm and consummate the
Plan under the U.S. Bankruptcy Code and consummate the Akkoord under
the Dutch Bankruptcy Code;
o the ramifications of any restructuring;
o risks associated with not completing the Restructuring consistent with
the Company's and New UPC's timetable;
o risks associated with third parties taking actions inconsistent with,
or detrimental to, the consummation of the Plan and the Akkoord;
o potential adverse developments with respect to the UPC Group's
liquidity or results of operations;
o competitive pressures from other companies in the same or similar
lines of business as the UPC Group;
o trends in the economy as a whole which may affect subscriber
confidence and demand for the goods and services supplied by the UPC
Group;
o the ability of the UPC Group to predict consumer demand as a whole, as
well as demand for specific goods and services;
o the acceptance and continued use by subscribers and potential
subscribers of the UPC Group's services;
o changes in technology and competition;
o the UPC Group's ability to achieve expected operational efficiencies
and economies of scale and its ability to generate expected revenue
and achieve assumed margins;
o the ability of the UPC Group to attract, retain and compensate key
executives and other personnel;
(vii)
o the ability of the UPC Group to maintain existing arrangements and/or
enter into new arrangements with third party providers and contract
partners; and
o potential adverse publicity regarding the Restructuring.
See "Risk Factors." To the extent that actual results vary from such
assumptions, recoveries to Holders of Claims against, and Equity Interests in,
the Company may vary from those projected herein and in the Plan and the
Akkoord. When used in this Disclosure Statement, the words "believe,"
"anticipate," "should," "intend," "plan," "will," "expects," "estimates,"
"projects" and similar expressions identify such forward-looking statements.
All forward-looking statements attributable to the Company, New UPC or
persons acting on their behalf are expressly qualified in their entirety by the
cautionary statements contained herein. Except as required by applicable law,
neither the Company nor New UPC undertakes any obligation to update any such
statements, whether as a result of new information, future events or otherwise.
Forward-looking statements are provided in this Disclosure Statement pursuant to
the safe harbor established under Section 1125(e) of the U.S. Bankruptcy Code
and should be evaluated in the context of the estimates, assumptions,
uncertainties and risks described in this Disclosure Statement.
-------------
Consummation of each of the Plan, the Akkoord, the Dutch Implementing Offer
and the New UPC Equity Subscription is subject to conditions precedent that
could lead to delays in consummation of the Plan, the Akkoord, the Dutch
Implementing Offer and the New UPC Equity Subscription. There can be no
assurance that each of these conditions will be satisfied or waived, or that the
Plan, the Akkoord, the Dutch Implementing Offer and the New UPC Equity
Subscription will be consummated. Even after the Effective Date, distributions
under the Plan (including any shares of New UPC Common Stock issued under the
New UPC Equity Subscription), the Akkoord and the Dutch Implementing Offer may
be subject to substantial delays for Holders whose Claims or Equity Interests
are disputed. See "Risk Factors" below.
--------------
Subject to the appointment of the Administrator in accordance with the
Dutch Bankruptcy Code, during the Chapter 11 proceeding, the Company intends to
operate its business in the ordinary course and to pay its critical creditors in
full and without interruption. The Company does not intend that any of its
wholly-owned subsidiaries will commence cases under Chapter 11 of the U.S.
Bankruptcy Code or under the Dutch Bankruptcy Code.
--------------
This Disclosure Statement has not been filed with, or reviewed by, the SEC
or by any state securities commission or similar public, governmental or
regulatory authority and no such entity has passed upon the accuracy or adequacy
of the statements contained herein. The shares of New UPC Common Stock and the
New UPC Equity Purchase Rights to be issued pursuant to the Plan, the Akkoord
and the Dutch Implementing Offer, and the shares of New UPC Common Stock to be
issued under the New UPC Equity Subscription, will not have been the subject of
a registration statement filed with the SEC or any state securities commission.
This Disclosure Statement is not an offer to sell shares of New UPC Common Stock
or the New UPC Equity Purchase Rights or an offer to buy UPC Notes, Belmarken
Notes, UPC Preference Shares A, UPC Priority Shares or UPC Ordinary Shares A
(including UPC ADSs) in any jurisdiction where such offer or sale is not
permitted. This Disclosure Statement seeks only (i) your consent to the Plan and
the Akkoord, (ii) if you are a non-U.S. Person who is a Holder of UPC Ordinary
Shares A outside the United States, your participation in the Dutch Implementing
Offer and (iii) if you are a Holder of Belmarken Notes, UPC Notes Claims and/or
General Unsecured Claims, your subscription for additional shares of New UPC
Common Stock upon exercise of your New UPC Equity Purchase Rights. The exchange
of the UPC Notes, the Belmarken Notes, the General Unsecured Claims, the UPC
Preference Shares A, the UPC Priority Shares, the UPC Ordinary Shares A
(including the UPC ADSs) and the Equity Securities Claims for shares of New UPC
Common Stock pursuant to the Plan and the subscription for additional shares of
New UPC Common Stock
(viii)
upon exercise of the New UPC Equity Purchase Rights will occur only upon
consummation of the Plan, the Akkoord and the Dutch Implementing Offer.
--------------
The Company is trying to ensure that the economic effects of the Akkoord
and the Dutch Implementing Offer are materially the same as the economic effects
of the Plan. To the extent permitted under U.S. and Dutch law, distributions
under the Plan, the Akkoord and the Dutch Implementing Offer will be
coordinated.
(ix)
TABLE OF CONTENTS
Page
SUMMARY........................................................... 1
The Company.................................................. 1
New UPC...................................................... 2
The Restructuring............................................ 2
Chapter 11 Case and the Plan................................. 4
The Akkoord.................................................. 16
The Dutch Implementing Offer................................. 18
The Extraordinary General Meeting of Shareholders............ 19
New UPC Equity Subscription.................................. 20
New UPC Common Stock......................................... 21
Tax Consequences............................................. 21
Use of Proceeds.............................................. 21
RISK FACTORS...................................................... 22
Risks that the Restructuring is Not Successfully Completed... 22
Risks Related to the Restructuring Process................... 22
Risks Related to the Chapter 11 Case......................... 23
Risks Related to the Dutch Bankruptcy Case................... 24
Risks Related to Ownership of the New UPC Common Stock....... 26
Risks Related to Ownership of UPC Ordinary Shares A Upon
Completion of the Restructuring.............................. 29
Risks Related to the UPC Group's Business.................... 30
THE RESTRUCTURING................................................. 38
Purpose of the Restructuring................................. 38
Background of the Restructuring.............................. 38
Description of the Restructuring............................. 43
Conditions to the Restructuring.............................. 46
Operations after the Restructuring........................... 48
CHAPTER 11 CASE AND THE PLAN OF REORGANIZATION.................... 49
Brief Explanation of Chapter 11 Reorganization............... 49
Commencement of the Chapter 11 Case.......................... 49
Significant Events during the Chapter 11 Case................ 49
The Plan..................................................... 50
Voting on, and Confirmation of, the Plan..................... 77
THE AKKOORD....................................................... 85
Introduction................................................. 85
Effects of the Moratorium.................................... 85
Voting on the Akkoord........................................ 85
Conditions to Ratification of the Akkoord.................... 87
Legal Effect of Ratification of the Akkoord.................. 87
THE DUTCH IMPLEMENTING OFFER...................................... 89
Purpose and Terms of the Dutch Implementing Offer; Shares
of New UPC Common Stock to be Distributed.................... 89
No Participation in, into or from the United States
and Other Jurisdictions...................................... 89
Expiration Date.............................................. 89
Conditions for Completion of the Dutch Implementing Offer.... 89
Consequences of Failing to Participate in the Dutch
Implementing Offer........................................... 90
THE EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS................. 91
General...................................................... 91
Proxy Solicitation........................................... 92
No Appraisal Rights.......................................... 92
Information on Ownership of UPC Ordinary Shares A by
Certain Beneficial Owners and Management..................... 92
(x)
NEW UPC EQUITY SUBSCRIPTION....................................... 93
General...................................................... 93
No Recommendation; Need for Independent Financial Advice..... 94
New UPC Equity Purchase Rights............................... 94
Subscription Procedures...................................... 94
Non-Transferability of the New UPC Equity Purchase Rights.... 99
THE COMPANY....................................................... 100
Business..................................................... 100
Investments.................................................. 101
Litigation and Claims........................................ 101
Licenses..................................................... 102
Selected Historical Consolidated Financial Information....... 102
Management's Discussion and Analysis of Financial
Condition and Results of Operation........................... 104
Current Management of the Company............................ 104
Management of the Company On and After the Effective Date.... 104
UNAUDITED PRO FORMA FINANCIAL STATEMENTS OF THE COMPANY
AND NEW UPC....................................................... 106
General...................................................... 106
General Assumptions.......................................... 107
OUTSTANDING SECURITIES OF THE COMPANY............................. 120
The UPC Notes................................................ 120
The Belmarken Notes.......................................... 122
Statutory Purpose of the Company............................. 122
Capital Stock of the Company Prior to the Restructuring...... 123
Capital Stock of the Company After the Restructuring......... 132
NEW UPC........................................................... 134
General...................................................... 134
Description of Shares of New UPC Capital Stock............... 134
Certificate of Incorporation and By-laws..................... 136
Related Party Transaction Committee.......................... 136
Certificate of Incorporation Provisions Relating to
Corporate Opportunities and Interested Directors............. 137
Management of New UPC........................................ 139
Delaware General Corporation Law, Section 203................ 140
Issuance and Resale of the New UPC Common Stock.............. 140
Stockholders Agreement....................................... 141
Agreements with the UGC Group................................ 143
Limited Financial History of New UPC......................... 145
COMPARISON OF RIGHTS OF SHAREHOLDINGS IN NEW UPC AND
THE COMPANY...................................................... 146
Voting Rights................................................ 146
Amendment of Charter Documents............................... 146
Appraisal Rights............................................. 147
Pre-emptive Rights........................................... 147
Action by Written Consent of Shareholders.................... 148
Shareholders' Meetings....................................... 148
Management................................................... 148
Appointment and Removal of Management........................ 149
Shareholder Nominations...................................... 149
Dividends.................................................... 149
Rights of Purchase........................................... 150
Limitation of Directors' Liability/Indemnification of
Officers and Directors....................................... 150
Special Meetings............................................. 151
Shareholder Votes on Certain Reorganizations................. 151
Rights of Inspection......................................... 152
Shareholder Suits............................................ 152
Conflict-of-Interest Transactions............................ 152
Liquidation Rights........................................... 153
(xi)
THE RESTRUCTURING AGREEMENT....................................... 154
The Agreed Restructuring Process............................. 154
Distribution of Shares of New UPC Common Stock under the
Plan and the Akkoord......................................... 154
Treatment of Other Creditors of the Company.................. 156
New UPC Board of Directors and Rights of the Participating
Noteholders.................................................. 157
Pre-emptive Rights of Holders of New UPC Common Stock........ 158
Equity Subscription in New UPC on Effective Date............. 158
TAX CONSEQUENCES.................................................. 159
U.S. Federal Income Tax Consequences......................... 159
Dutch Tax Consequences....................................... 164
REORGANIZATION VALUATION ANALYSIS AND PROJECTED FINANCIAL
INFORMATION....................................................... 170
Reorganization Valuation Analysis............................ 170
Projected Financial Information.............................. 172
LIQUIDATION ANALYSIS.............................................. 174
Best-Interests of Creditors Test............................. 174
Liquidation Analysis......................................... 174
WHERE YOU CAN FIND MORE INFORMATION............................... 176
INCORPORATION BY REFERENCE........................................ 176
AUDITORS.......................................................... 176
Auditor's Statement Regarding Financial Statements and
Consent...................................................... 176
Auditor's Statement Regarding Dutch Prospectus............... 177
Other Information Regarding Auditors......................... 177
VOTING AGENTS AND SUBSCRIPTION AGENT.............................. 178
Voting Agents................................................ 178
Subscription Agent........................................... 178
CONCLUSION AND RECOMMENDATION..................................... 179
CROSS REFERENCES FOR DEFINED TERMS................................ 180
Annex List
- ----------
Annex A Chapter 11 Plan of Reorganization
Annex B English Translation of the Akkoord
Annex C Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2001
Annex D Amendment No. 1 to the Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2001
Annex E Quarterly Report on Form 10-Q for the Fiscal Quarter Ended September 30, 2002
Annex F Projected Financial Information
Annex G Liquidation Analysis
(xii)
SUMMARY
The following summary is intended only to highlight certain information
contained elsewhere in this Disclosure Statement. This summary is qualified in
its entirety by the more detailed information, the financial statements,
including the notes thereto, appearing elsewhere in this Disclosure Statement,
the Annexes hereto and the other documents referenced herein. You should
carefully read the entire Disclosure Statement (including, in particular, the
sections of this Disclosure Statement entitled "Risk Factors," "Liquidation
Analysis," "The Restructuring" and "The Restructuring Agreement") and the other
documents to which it refers before deciding whether to vote in favor of the
Plan or the Akkoord, participate in the Dutch Implementing Offer or subscribe
for shares of New UPC Common Stock in the New UPC Equity Subscription. The date
of this Disclosure Statement is set forth on the cover page of this document.
Unless otherwise defined herein, all capitalized terms used in this
Disclosure Statement shall have the meanings ascribed to such terms in the Plan.
Unless the context clearly requires otherwise, references in this Disclosure
Statement to the "Company" refer to United Pan-Europe Communications N.V.,
references in this Disclosure Statement to the "Reorganized Company" refer to
United Pan-Europe Communications N.V. on and after the Effective Date and
references in this Disclosure Statement to "New UPC" refer to New UPC, Inc., a
newly formed company incorporated in the State of Delaware that will become a
holding company for the Company upon consummation of the Restructuring.
"Business Day" means any day which is not a Saturday, a Sunday, a "legal
holiday" as defined in U.S. Bankruptcy Rule 9006(a) or a day on which banking
institutions located in New York, New York or Amsterdam, The Netherlands are
authorized or obligated by law, executive order or governmental decree to be
closed. The symbol "(euro)" refers to Euros and the symbol "US$" refers to
United States Dollars.
Unless otherwise indicated as United States Dollars or another currency,
all currency amounts used or referred to in the Disclosure Statement are in
Euros. Unless otherwise indicated, all translations from Euros to United States
Dollar amounts, and from United States Dollars to (euro)amounts, are based on
the noon buying rate for Euros announced by the Federal Reserve Bank of New York
on September 30, 2002, which was (euro)1.00 = US$0.9879. However, translations
from Euros to United States Dollar amounts, and from United States Dollars to
Euro amounts, with respect to Claim amounts are based on the noon buying rate
for Euros announced by the Federal Reserve Bank of New York on the Petition Date
(December 3, 2002), which was (euro)1.0000 = US$0.9968. All (euro)amounts
translated into United States Dollars and all United States Dollar amounts
translated into Euros as described above are provided solely for the convenience
of the reader, and no representation is made that the (euro)or United States
Dollar amounts referred to herein could have been, or could be, converted into
Euros or United States Dollars, as the case may be, at any particular rate, the
above rate or at all.
The Company
The Company is a holding company whose principal assets are its ownership
interests in approximately two hundred (200) direct and indirect operating
subsidiaries.
The UPC Group owns and operates broadband communications networks providing
telephone, cable and internet services to both residential and business
customers in 11 countries in Europe. Its subscriber base is one of the largest
of any group of broadband communications networks operated across Europe. In
particular, the UPC Group has approximately 6.6 million subscribers to its basic
tier video services, and approximately an additional 116,200 subscribers for its
digital DTH service in Hungary, the Czech Republic and the Slovak Republic.
Residential telephone services are offered under the brand Priority Telecom over
its Austrian, Dutch, French and Norwegian systems and serve approximately
396,200 residential subscribers. In addition, the UPC Group currently offers
internet access services in nine countries to approximately 611,200 residential
subscribers.
The operations of the UPC Group are organized into three principal
divisions:
(i) UPC Distribution Holding B.V. ("UPC Distribution"), which,
through its local operating systems, delivers video, internet and
telephone services to residential customers;
(ii) UPC Media, which comprises the Company's converging internet
content and programming businesses; and
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(iii) Priority Telecom, which operates the Company's CLEC business and
provides telephone and data network solutions to the business
market. The Priority Telecom brand is also used to offer
telephone services to residential customers through UPC
Distribution.
Historically, the UPC Group has financed its operations and acquisitions
through capital contributions, debt financings, equity offerings, issuance of
debt securities and operating cash flow.
As of September 30, 2002, the Company had total assets of approximately
(euro)7,021.8 million (US$6,936.8 million) and liabilities of approximately Euro
10,130.9 million (US$10,008.3 million). For the fiscal year ended December 31,
2001 and the nine months ended September 30, 2002, the UPC Group generated
approximately (euro)1,378.8 million (US$1,362.1 million) and (euro)1,046.1
million (US$1,033.4 million), respectively, in revenues on a consolidated basis.
As of September 30, 2002, the Company had a shareholders' deficit of
approximately (euro)4,731.1 million (US$4,673.9 million). As of September 30,
2002, the UPC Group had approximately 7,972 employees.
For a further description of the business of the Company and the UPC Group,
see "The Company," "Item 1--Business" and "Item 2--Properties" of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001 attached
to this Disclosure Statement as Annex C and incorporated herein by reference,
and "Item 2--Management's Discussion and Analysis of Financial Condition and
Results of Operations--Description of Business" of the Company's Quarterly
Report on Firm 10-Q for the fiscal quarter ended September 30, 2002 attached to
this Disclosure Statement as Annex E and incorporated herein by reference.
New UPC
New UPC is a newly formed company incorporated in the State of Delaware.
New UPC was formed as an integral component of the Plan to effectuate the
Restructuring through the issuance of shares of New UPC Common Stock to the
Holders of the Claims against, and Equity Interests in, the Company under the
terms of the Plan, the Akkoord and the Dutch Implementing Offer, and to become
the holding company of the Company and the UPC Group upon consummation of the
Restructuring. New UPC has not conducted any operations to date other than the
negotiation and implementation of the Restructuring Agreement, dated September
30, 2002 (the "Restructuring Agreement"), among the Company, UGC, certain
subsidiaries of UGC, New UPC and certain holders of the UPC Notes (the
"Participating Noteholders"). Upon consummation of the Restructuring, New UPC is
expected to own more than 99.0% of the combined classes of UPC Ordinary Shares A
and UPC Ordinary Shares C (as defined herein) ("UPC Ordinary Shares") and will
act as the holding company for the UPC Group. For a description of the UPC
Group, see "--The Company," "The Company--Business," "Item 1--Business" and
"Item 2--Properties" of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2001 attached to this Disclosure Statement as Annex C
and incorporated herein by reference, and "Item 2--Management's Discussion and
Analysis of Financial Condition and Results of Operations--Description of
Business" of the Company's Quarterly Report on Firm 10-Q for the fiscal quarter
ended September 30, 2002 attached to this Disclosure Statement as Annex E and
incorporated herein by reference.
The Restructuring
The Company has incurred significant operating losses and negative cash
flows from operations, which have been driven by continuing development efforts,
including the introduction of new services such as digital video, telephone and
internet and the upgrading of existing services, as well as the acquisitions of
cable television systems and related businesses in both existing and new
markets. As a result of the anticipated lack of available financing, during
2001, the Company reviewed its current and long-range plans for its various
business segments and took a number of actions to reorganize internally. As part
of such review, the Company resolved to change its focus from an aggressive
digital rollout to increasing its sales of products and services which have
better gross margins and are currently profitable.
Due to its funding requirements and possible lack of availability of debt
and equity financing in the near term, the Company determined not to make
required interest payments on the UPC Notes as they fell due. In particular, on
February 1, 2002 and again on May 1, 2002, the Company failed to make interest
payments on certain series of the UPC Notes. The failure to make (or timely
cure) these interest payments constituted an Event of Default under such UPC
Notes and a cross-default under the remaining series of UPC Notes as well as
under certain credit and loan facilities, including the Belmarken Notes and the
(euro)4.0 billion Senior Secured Credit Facility, dated
-2-
October 26, 2000, among UPC Distribution, as borrower, and TD Bank Europe
Limited and Toronto Dominion (Texas) Inc., as Facility Agents (the "UPC
Distribution Facility").
In February 2002, in order to begin the process for restructuring its
balance sheet, the Company entered into a non-binding memorandum of
understanding (the "Memorandum of Understanding") with UGC and UGC Holdings,
Inc. ("UGC Holdings"), which currently holds the Belmarken Notes as well as a
significant portion of the UPC Notes, to enter into negotiations with the
holders of the UPC Notes (other than UGC) in order to attempt to reach an
agreement regarding the restructuring of the Company's indebtedness. The
Memorandum of Understanding proposed a conversion of the UPC Notes, the
Belmarken Notes and the UPC Preference Shares A into UPC Ordinary Shares A in
proportions to be established through further negotiations.
Thereafter, in late February 2002, the Company began discussions with UGC
and the Participating Noteholders regarding the terms of the recapitalization of
the Company, including restructuring of the Company's capital structure. In
addition, from March 2002 through September 2002, UGC and the Participating
Noteholders undertook due diligence with respect to the Company and
representatives of the Company met with representatives of UGC and the
Participating Noteholders to discuss a recapitalization of the Company and the
process for, and the terms of, a restructuring of the UPC Notes, the Belmarken
Notes and the UPC Preference Shares A.
These discussions culminated in the execution, on September 30, 2002, of
the Restructuring Agreement which provides the basis for the Plan (including the
issuance of the New UPC Equity Purchase Rights), the Akkoord and the Dutch
Implementing Offer. In general, the Restructuring Agreement sets forth the
proposed distribution of shares of New UPC Common Stock to the Holders of Claims
against, and Equity Interests in, the Company, as well as the means by which the
Company intends to implement the Restructuring under U.S. and Dutch law. In
general, in consideration for the equity split and other rights set forth
therein, the UGC Group and the Participating Noteholders agreed, subject to the
terms and conditions of the Restructuring Agreement, to, inter alia, (a) vote
their Claims in favor of, and transfer their Claims pursuant to, the Plan and
the Akkoord, (b) vote their Equity Interests in favor of, and transfer their
Equity Interests pursuant to, the Plan and (c) vote any UPC Voting Securities
held by them in favor of the Shareholder Proposals. For a detailed description
of the Restructuring Agreement, see "The Restructuring Agreement" below.
Throughout this period, the bank lenders under the UPC Distribution
Facility (the "UPCD Facility Banks") and UGC executed waivers of the defaults
under the UPC Distribution Facility and the Belmarken Notes, respectively,
arising as a result of the Company's failure to make interest payments under the
UPC Notes. These waivers culminated with the execution, on September 30, 2002,
by UPC Distribution and TD Bank Europe Limited and Toronto Dominion (Texas),
Inc., as Facility Agents, on behalf of the UPCD Facility Banks, of an extension,
through March 31, 2003, of the waivers of default arising as a result of the
Company's failure to make interest payments under the UPC Notes (the "UPCD
Facility Waiver") in order to allow the Company time to consummate the
Restructuring. See "The Restructuring--Background of the Restructuring--UPC
Distribution Facility Waiver and Amendment" below for a description of the terms
of the UPCD Facility Waiver.
The Company believes that in order to fully achieve the Restructuring, it
is necessary to effect the contemplated transfers of the Claims and Equity
Interests under, among others, U.S. and Dutch law. Accordingly, the Company,
through negotiations with the Participating Noteholders and UGC, developed the
following four-prong structure pursuant to which the Company believes the
Restructuring can be consummated efficiently while also maximizing the benefit
to the Company and the Holders of the Claims against, and Equity Interests in,
the Company:
U.S. Structure
In order to implement the Restructuring in the United States, on the
Petition Date the Company commenced the Chapter 11 Case in the U.S. Bankruptcy
Court and, on the date hereof, filed the Plan and this Disclosure Statement. In
general, the Plan provides for the transfer of shares of New UPC Common Stock
for various Claims against, and Equity Interests in, the Company and the
issuance of the New UPC Equity Purchase Rights to Holders of Belmarken Notes
Claims, UPC Notes Claims and General Unsecured Claims. See "Chapter 11 Case and
the Plan of Reorganization" below for a more detailed description of the Chapter
11 Case and the Plan and "New UPC Equity Subscription" for a more detailed
description of the New UPC Equity Purchase Rights.
-3-
Dutch Bankruptcy Structure
Simultaneously with the commencement of the Chapter 11 Case, on the
Petition Date the Company filed a voluntary provisional moratorium petition
under the Dutch Bankruptcy Code as well as a draft plan of compulsory
composition, or an Akkoord, with the Dutch Bankruptcy Court. On the date of this
Disclosure Statement, the Company submitted a revision to the Akkoord that was
filed with the Dutch Bankruptcy Court on December 3, 2002 and this Disclosure
Statement describes the Akkoord as so revised. Pursuant to the Akkoord, the
Company will offer to the holders of non-preferred, unsecured claims under Dutch
law (the "Ordinary Creditors") a number of shares of New UPC Common Stock equal
to the number of shares of New UPC Common Stock that holders of General
Unsecured Claims are entitled to receive under the Plan, either in exchange for
transferring their Allowed Claims to New UPC (as far as the Holders of the UPC
Notes are concerned) or in cancellation of their Allowed Claims (as far as
Ordinary Creditors other than the Holders of the UPC Notes are concerned). See
"The Akkoord" below for a more detailed description of the Dutch moratorium
process.
Dutch Implementing Offer
Unlike the U.S. Bankruptcy Code, the Dutch Bankruptcy Code does not provide
for the Akkoord to reorganize or cancel any of the Equity Interests in the
Company. Therefore, in order to facilitate implementation of the Plan with
respect to certain of the UPC Ordinary Shares A in accordance with Dutch law,
solely with respect to persons who are not U.S. Persons and who are not located
or residing within the United States, New UPC shall commence the Dutch
Implementing Offer, pursuant to which New UPC will offer to deliver a number of
shares of New UPC Common Stock to the Holders of UPC Ordinary Shares A in
consideration for the delivery by such Holders of their UPC Ordinary Shares A to
New UPC. See "The Dutch Implementing Offer" below for a more detailed
description of the Dutch Implementing Offer.
Extraordinary General Meeting of Shareholders
Unlike the U.S. Bankruptcy Code, the Dutch Bankruptcy Code does not provide
for the Dutch Bankruptcy Case to exempt compliance from otherwise applicable
corporate law. Therefore, in order to facilitate implementation of the Plan, the
Company will hold an Extraordinary General Meeting to consider and vote upon
changes to the authorized share capital of the Company and such other proposals
as the Company deems necessary or appropriate to give effect to the
Restructuring and the other transactions contemplated in connection with the
Restructuring. See "The Extraordinary General Meeting of Shareholders" below for
a more detailed description of the Extraordinary General Meeting.
The terms of the Restructuring discussed above are the product of
discussions with UGC, New UPC and the Participating Noteholders and have been
approved by the Board of Management and the Supervisory Board of the Company.
These parties support the Plan, the Akkoord and the Dutch Implementing Offer and
strongly urge you to review this Disclosure Statement, the Plan, the Akkoord and
all annexes and documents incorporated by reference herein, and, as applicable,
to vote in favor of the Plan and the Akkoord, and to participate in the Dutch
Implementing Offer. As the Company's principal shareholder and principal
creditor, and the holder of the Belmarken Notes, UGC will receive a significant
number of shares of New UPC Common Stock and may have interests in the
Restructuring that differ from the other Holders of Claims against, and Equity
Interests in, the Company. The Company has determined that it is in the best
interests of the Company and its stakeholders to implement the Restructuring as
described in this Disclosure Statement. See "The Restructuring--Background of
the Restructuring."
Chapter 11 Case and the Plan
Chapter 11 Case
Chapter 11 of the U.S. Bankruptcy Code is the principal business
reorganization chapter of the U.S. Bankruptcy Code. Under Chapter 11, a debtor
is authorized to reorganize its business. In addition to permitting
rehabilitation of the debtor, another goal of Chapter 11 is to promote equality
of treatment of holders of claims and equity interests of equal rank with
respect to the distribution of a debtor's assets. Formulation, and confirmation
by a U.S. bankruptcy court, of a plan of reorganization is the principal
objective of a Chapter 11 Case.
On the Petition Date, the Company filed its voluntary petition for relief
under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court,
thereby commencing the Chapter 11 Case. Simultaneously
-4-
therewith, the Company also filed the "Chapter 11 Plan of Reorganization Jointly
Proposed by United Pan-Europe Communications N.V. and New UPC, Inc.," dated
December 3, 2002 (which has been amended and superseded by the Plan), the
related disclosure statement and several motions seeking authorization to
continue to conduct its business in the ordinary course as well as to undertake
certain activities which require approval of the U.S. Bankruptcy Court. These
motions include, among others, motions seeking authorization for the Company to
(a) continue to utilize pre-petition bank accounts, business forms and
investment practices and (b) retain various professionals. See "Chapter 11 Case
and the Plan of Reorganization--Significant Events During the Chapter 11
Case--First Day Motions," below, for a more detailed description of these
motions.
Since the Petition Date, the Company, except with respect to the
appointment of the Administrator in accordance with the Dutch Bankruptcy Code,
has continued to operate its business and manage its properties as a
debtor-in-possession pursuant to Sections 1107 and 1108 of the U.S. Bankruptcy
Code and subject to the supervision of the U.S. Bankruptcy Court.
The Plan
The Plan, which was filed on the date hereof, divides Holders of known
Claims against, and known Equity Interests in, the Company into ten Classes, as
follows:
Class 1 - Miscellaneous Secured Claims
Class 2 - Classified Priority Claims
Class 3 - Critical Creditor Claims
Class 4 - Belmarken Notes Claims
Class 5 - UPC Notes Claims and General Unsecured Claims
Class 6 - UPC Preference Shares A
Class 7 - UPC Priority Shares
Class 8 - UPC Ordinary Shares A (including the UPC Ordinary
Shares held in the form of UPC ADSs)
Class 9 - Equity Securities Claims
Class 10 - Old Other Equity Interests
In accordance with the U.S. Bankruptcy Code, Administrative Claims and Priority
Tax Claims are not classified into Classes.
The following chart sets forth, in general, the treatment that Holders of
Allowed Claims, Allowed Equity Interests and Allowed Old Other Equity Interests
will receive under the Plan, unless they were to agree to accept less favorable
treatment by settlement or otherwise. For the convenience of the Holders of the
UPC Notes, the number of shares of New UPC Common Stock allotted to the Holders
of the Allowed UPC Notes Claims is set forth in the chart below based upon each
US$1,000 or (euro)1,000 of principal amount of UPC Notes (or principal amount at
stated maturity in the case of the Senior Discount Notes) (as the case may be)
held by a Holder of UPC Notes rather than being based upon each US$1,000 or Euro
1,000 of Allowed UPC Notes Claims (as the case may be) held by such Holder. This
presentation results in a difference in the number of shares of New UPC Common
Stock allotted to Holders of UPC Notes across the series of UPC Notes (as set
forth in the chart below). However, each Holder of Allowed UPC Notes Claims
(regardless of the series of UPC Notes to which such Allowed UPC Notes Claims
relate) shall receive 5.36382 shares of New UPC Common Stock for each US$1,000
of Allowed UPC Notes Claims and 5.34665 shares of New UPC Common Stock for each
(euro)1,000 of Allowed UPC Notes Claims. With respect to the General Unsecured
Claims (Class 5) and Equity Securities Claims (Class 9), the "Estimated Amount
of Claims" set forth below is based upon the Company's best estimate of its
maximum potential aggregate liability in pending litigation and arbitration
proceedings brought against it. Although the Company has used its best estimate
of its maximum potential liability in connection with these General Unsecured
Claims and Equity Securities Claims for the preparation of the following chart,
there is a possibility that the Allowed amount of these General Unsecured Claims
and Equity Securities Claims will be substantially different than the Company's
estimate of such Claims.
-5-
- ----------------------------------- -------------------------- -----------------------------------------------------
CLASS AND TYPE OF ESTIMATED AMOUNT
CLAIM OR INTEREST OF CLAIMS TREATMENT
- ----------------------------------- -------------------------- -----------------------------------------------------
Class 1-Miscellaneous Approximately Under the Plan, each Holder of an Allowed
Secured Claims US$2.6 million Miscellaneous Secured Claim shall receive, in the
sole discretion of the Company or the Reorganized
Company, as the case may be, in full satisfaction,
settlement, release, extinguishment and discharge
of such Allowed Claim:
(A) Cash equal to the amount of such Allowed
Miscellaneous Secured Claim on or as soon as
reasonably practicable after the later of (i)
the Effective Date and (ii) the date that
such Miscellaneous Secured Claim becomes
Allowed;
(B) treatment such that such Miscellaneous
Secured Claim is Reinstated; or
(C) such other treatment on such other terms and
conditions as may be agreed upon in writing
by the Holder of such Claim and the Company
or Reorganized Company, as the case may be,
or as the U.S. Bankruptcy Court may order.
Estimated Recovery: 100.0%
- ----------------------------------- -------------------------- -----------------------------------------------------
Class 2-Classified Priority Approximately Under the Plan, each Holder of an Allowed
Claims US$3.0 million Classified Priority Claim shall receive in full
satisfaction, settlement, release, extinguishment
and discharge of such Allowed Claim:
(A) the amount of such unpaid Allowed Claim in
Cash on or as soon as reasonably practicable
after the later of (i) the Effective Date,
(ii) the date on which such Claim becomes
Allowed and (iii) a date agreed to by the
Company or the Reorganized Company, as the
case may be, and the Holder of such Claim;
(B) treatment such that such Claim is Reinstated; or
(C) such other treatment on such other terms and
conditions as may be agreed upon in writing
by the Holder of such Claim and the Company
or Reorganized Company, as the case may be,
or as the U.S. Bankruptcy Court may order.
Estimated Recovery: 100.0%
- ----------------------------------- -------------------------- -----------------------------------------------------
Class 3-Critical Creditor Claims Approximately Under the Plan, each Holder of an Allowed Critical
US$1.0 million Creditor Claim shall receive in full satisfaction,
settlement, release, extinguishment and discharge
of such Claim:
(A) payment in full in Cash on the later of (i)
the Effective Date and (ii) the date such
Claim becomes Allowed;
(B) treatment such that such Claim is Reinstated;
or
(C) such other treatment on such other terms and
conditions as may be agreed upon in writing
by the Holder of such Claim and the Company
or the Reorganized Company, as the case may
be, or as the U.S. Bankruptcy Court may order.
-6-
Estimated Recovery: 100.0%
- ----------------------------------- -------------------------- -----------------------------------------------------
Class 4-Belmarken Notes US$937,482,330.51 Under the Plan, on the Effective Date, the Holder
Claims of the Belmarken Notes shall receive, in
consideration for the Belmarken Notes and the
obligations of all other parties under the
Belmarken Notes and the Belmarken Loan Agreements,
23,853,179 shares of New UPC Common Stock (the
"Belmarken Notes Consideration"). The Belmarken
Notes Claims shall be deemed Allowed for all purposes,
including, but not limited to, voting and distributions,
in the aggregate amount of US$937,482,330.51 and the
Allowed Belmarken Notes Claims shall not be subject to
defense, setoff or counterclaim.
Estimated Recovery: 99.0%
- ----------------------------------- -------------------------- -----------------------------------------------------
Class 5-UPC Notes Claims (see below for estimated Under the Plan, on or as soon as practicable after
and General Unsecured Claims amount of UPC Notes the Effective Date, each Holder of an Allowed Class
Claims and General 5 Claim shall receive in consideration for its
Unsecured Claims) Claim, a number of shares of New UPC Common Stock.
In the aggregate, the Holders of all Allowed UPC
Notes Claims shall receive 25,146,821 shares of New
UPC Common Stock, and each Holder of an Allowed UPC
Notes Claim shall receive the number of shares of
New UPC Common Stock equal to such Holder's pro
rata portion of those shares of New UPC Common
Stock. The UPC Notes Claims shall be deemed
Allowed for all purposes, including, but not
limited to, voting and distributions in the
aggregate amount of US$4,688,233,885.90 (which
shall exclude any amounts on account of UPC Notes
held by the Company as set forth on Annex C to the
Restructuring Agreement) and the Allowed UPC Notes
Claims shall not be subject to defense, setoff or
counterclaim. Each Holder of an Allowed Class 5
Claim that is not a UPC Notes Claim shall receive a
number of shares of New UPC Common Stock so that
the number of shares per amount of Allowed Claim
received by such Holder is the same as the number
of shares per amount of Allowed Claim that the
Holders of Allowed UPC Notes Claims receive. The
number of shares of New UPC Common Stock to be
distributed on account of Allowed Class 5 Claims
that are not UPC Notes Claims shall be in addition
to the 25,146,821 shares of New UPC Common Stock to
be distributed on account of the Allowed UPC Notes
Claims. The receipt of such shares of New UPC
Common Stock by the Holders of the Class 5 Claims
shall constitute a full satisfaction, settlement,
release and discharge of such Class 5 Claims;
provided, however, that, notwithstanding anything
in the Plan to the contrary, any UPC Notes acquired
by New UPC through the Plan and the Akkoord shall
remain outstanding and shall not be deemed to be
satisfied, settled, released or discharged.
- ----------------------------------- -------------------------- -----------------------------------------------------
10 7/8% Senior Notes due 2007 US$190,714,890.25 A Holder of 10 7/8% Senior Notes due 2007 will
(United States Dollar) receive 6.02063 shares of New UPC Common Stock per
US$1,000 of principal amount of 10 7/8% Senior Notes
due 2007 held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
10 7/8% Senior Notes due 2009 US$877,954,231.76 A Holder of 10 7/8% Senior Notes due 2009 will
(United States Dollar) receive 6.18275 shares of New UPC Common Stock per
US$1,000 of principal amount of 10 7/8% Senior Notes
due
-7-
- ----------------------------------- -------------------------- -----------------------------------------------------
CLASS AND TYPE OF ESTIMATED AMOUNT
CLAIM OR INTEREST OF CLAIMS TREATMENT
- ----------------------------------- -------------------------- -----------------------------------------------------
2009 held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
12 1/2% Senior Discount Notes US$600,919,401.12 A Holder of 12 1/2% Senior Discount Notes due 2009
due 2009 will receive 4.38533 shares of New UPC Common Stock
(United States Dollar) per US$1,000 of principal amount (at stated
maturity) of 12 1/2% Senior Discount Notes due 2009
held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
11 1/4% Senior Notes due 2009 US$269,862,290.19 A Holder of 11 1/4% Senior Notes due 2009 will
(United States Dollar) receive 6.04406 shares of New UPC Common Stock per
US$1,000 of principal amount of 11 1/4% Senior Notes
due 2009 held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
13 3/8% Senior Discount Notes US$371,663,598.93 A Holder of 13 3/8% Senior Discount Notes due 2009
due 2009 will receive 4.18810 shares of New UPC Common Stock
(United States Dollar) per US$1,000 of principal amount (at stated
maturity) of 13 3/8% Senior Discount Notes due 2009
held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
11 1/4% Senior Notes due 2010 US$658,378,082.21 A Holder of 11 1/4% Senior Notes due 2010 will
(United States Dollar) receive 6.21236 shares of New UPC Common Stock per
US$1,000 of principal amount of 11 1/4% Senior Notes
due 2010 held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
11 1/2% Senior Notes due 2010 US$266,648,907.71 A Holder of 11 1/2% Senior Notes due 2010 will
(United States Dollar) receive 6.23216 shares of New UPC Common Stock per
US$1,000 of principal amount of 11 1/2% Senior Notes
due 2010 held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
13 3/4% Senior Discount Notes US$737,994,370.22 A Holder of 13 3/4% Senior Discount Notes due 2010
due 2010 will receive 4.02406 shares of New UPC Common Stock
(United States Dollar) per US$1,000 of principal amount (at stated
maturity) of 13 3/4% Senior Discount Notes due 2010
held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
10 7/8% Senior Notes due 2007 US$77,387,159.85 A Holder of 10 7/8% Senior Notes due 2007 will
(Euro) receive 6.00137 shares of New UPC Common Stock per
(euro)1,000 of principal amount of 10 7/8% Senior Notes
due 2007 held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
10 7/8% Senior Notes due 2009 US$244,800,169.38 A Holder of 10 7/8% Senior Notes due 2009 will
(Euro) receive 6.16297 shares of New UPC Common Stock per
(euro)1,000 of principal amount of 10 7/8% Senior Notes
due 2009 held by such Holder.
- ----------------------------------- -------------------------- -----------------------------------------------------
-8-
- ----------------------------------- -------------------------- -----------------------------------------------------
CLASS AND TYPE OF ESTIMATED AMOUNT
CLAIM OR INTEREST OF CLAIMS TREATMENT
- ----------------------------------- -------------------------- -----------------------------------------------------
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
11 1/4% Senior Notes due 2009 US$78,767,689.67 A Holder of 11 1/4% Senior Notes due 2009 will
(Euro) receive 6.02472 shares of New UPC Common Stock per
(euro)1,000 of principal amount of 11 1/4% Senior
Notes due 2009 held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
13 3/8% Senior Discount Notes US$143,986,850.74 A Holder of 13 3/8% Senior Discount Notes due 2009
due 2009 will receive 4.17470 shares of New UPC Common Stock
(Euro) per (euro)1,000 of principal amount (at stated maturity)
of 13 3/8% Senior Discount Notes due 2009 held by such
Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
11 1/4% Senior Notes due 2010 US$169,156,243.86 A Holder of 11 1/4% Senior Notes due 2010 will
(Euro) receive 6.19248 shares of New UPC Common Stock per
(euro)1,000 of principal amount of 11 1/4% Senior
Notes due 2010 held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
General Unsecured Creditors Approximately A Holder of an Allowed General Unsecured Claim
(Consideration per (euro)1,000 of US$143.5 million will receive 5.34665 shares of New UPC Common Stock
claim value) per (euro)1,000 of claim value held by such Holder.
Estimated Recovery: 20.9%
- ----------------------------------- -------------------------- -----------------------------------------------------
Class 6--UPC Preference 12,400 UPC Preference Under the Plan, on or as soon as practicable after
Shares A Shares A the Effective Date, and after the sale by New UPC
of the Belmarken Notes to the Company, each Holder
of outstanding Allowed UPC Preference Shares A
shall receive from New UPC a number of shares of
New UPC Common Stock equal to such Holder's pro
rata portion of the 200,000 shares of New UPC
Common Stock (collectively, the "Preference Shares
Consideration"). A Holder of Allowed UPC
Preference Shares A will receive 16.12903 shares of
New UPC Common Stock per Allowed UPC Preference
Shares A held by such Holder. The receipt of the
Preference Shares Consideration by the Holders of
the UPC Preference Shares A shall constitute a full
satisfaction, settlement, release and discharge of
the Claims and Equity Interests of each Holder of
UPC Preference Shares A in respect of such UPC
Preference Shares A; provided, however, that,
notwithstanding anything to contrary contained
herein, any UPC Preference Shares A acquired by New
UPC through the Plan shall remain outstanding and
shall not be deemed to be satisfied, settled,
released or discharged.
Estimated Recovery: 0.5%
- ----------------------------------- -------------------------- -----------------------------------------------------
Class 7--UPC Priority Shares 300 UPC Priority Shares Under the Plan, on or as soon as practicable after
the Effective Date, and after the sale by New UPC
of the Belmarken Notes to the Company, the Holder
of the Allowed UPC Priority Shares shall receive
from New UPC a number of shares of New UPC Common
Stock equal to such Holder's pro rata portion (the
"Priority Shares Consideration") of 800,000 shares
of New UPC Common Stock (the "Ordinary Share
Distribution
-9-
- ----------------------------------- -------------------------- -----------------------------------------------------
CLASS AND TYPE OF ESTIMATED AMOUNT
CLAIM OR INTEREST OF CLAIMS TREATMENT
- ----------------------------------- -------------------------- -----------------------------------------------------
Amount") in a per share amount equal
to the Ordinary Shares Consideration. A Holder of
Allowed UPC Priority Shares will receive 0.00146
shares of New UPC Common Stock per Allowed UPC
Priority Share held by such Holder. The receipt of
the Priority Shares Consideration by the Holder of
the UPC Priority Shares shall constitute a full
satisfaction, settlement, release and discharge of
the Claims and Equity Interests of the Holder of
the UPC Priority Shares in respect of the UPC
Priority Shares; provided, however, that,
notwithstanding anything to contrary contained
herein, any UPC Priority Shares acquired by New UPC
through the Plan shall remain outstanding and shall
not be deemed to be satisfied, settled, released or
discharged.
Estimated Recovery: Inestimable
- ----------------------------------- -------------------------- -----------------------------------------------------
Class 8--UPC Ordinary 443,417,525 UPC Under the Plan, on or as soon as practicable after
Shares A (including UPC Ordinary Shares A the Effective Date, and after the sale by New UPC
Ordinary Shares A represented of the Belmarken Notes to the Company, each Holder
by UPC ADSs) of Allowed UPC Ordinary Shares A shall receive from
New UPC a number of shares of New UPC Common Stock
equal to such Holder's pro rata portion of the
Ordinary Share Distribution Amount (collectively,
the "Ordinary Shares Consideration"). A Holder of
Allowed UPC Ordinary Shares A will receive 0.00146
shares of New UPC Common Stock per Allowed UPC
Ordinary Share A held by such Holder. The receipt
of the Ordinary Shares Consideration by the Holders
of the UPC Ordinary Shares A shall constitute a
full satisfaction, settlement, release and
discharge of the Claims and Equity Interests of
each Holder of UPC Ordinary Shares A; provided,
however, that, notwithstanding anything to contrary
contained herein, any UPC Ordinary Shares A
acquired by New UPC through the Plan shall remain
outstanding and shall not be deemed to be
satisfied, settled, released or discharged.
Estimated Recovery: Inestimable
- ----------------------------------- -------------------------- -----------------------------------------------------
9--Equity Securities Approximately Under the Plan, subject to the Allowance of the
Claims US$122.8 million Equity Securities Claims, each Holder of an Allowed
Equity Securities Claim shall receive, in full
satisfaction, settlement, release, extinguishment
and discharge of its Claim, a number of shares of
New UPC Common Stock equal to such Holder's pro
rata portion of the Ordinary Share Distribution
Amount as if such Holder had (a) purchased, on the
date its Equity Securities Claim first arose, UPC
Ordinary Shares A with a value equal to the amount
of such Holder's Allowed Equity Securities Claim
and (b) retained such shares as of the Effective
Date. A Holder of Allowed Equity Securities Claims
will receive 1.24112 shares of New UPC Common Stock
per US$1,000 of Allowed Equity Securities Claims or
1.23715 shares of New UPC Common Stock per (euro)1,000
of Allowed Equity Securities Claims held by such
Holder.
Estimated Recovery: 4.8%
- ----------------------------------- -------------------------- -----------------------------------------------------
-10-
- ----------------------------------- -------------------------- -----------------------------------------------------
CLASS AND TYPE OF ESTIMATED AMOUNT
CLAIM OR INTEREST OF CLAIMS TREATMENT
- ----------------------------------- -------------------------- -----------------------------------------------------
Class 10--Old Other Equity Options to purchase Under the Plan, all Holders of Old Other Equity
Interests approximately Interests shall not be entitled to, and shall not,
26,484,842 UPC receive or retain any property under the Plan on
Ordinary Shares A account of such Old Other Equity Interests, and, to
the extent permitted under applicable law, such Old
Other Equity Interests shall be cancelled on the
Effective Date
Estimated Recovery: 0.0% .
- ----------------------------------- -------------------------- -----------------------------------------------------
To the extent that the terms of this Disclosure Statement may vary from the
terms of the Plan, the terms of the Plan will control. See "Chapter 11 Case and
the Plan of Reorganization--The Plan--Summary of Distributions Under the Plan,"
below, for more detailed descriptions of the classification and treatment of
Claims, Equity Interests or Old Other Equity Interests under the Plan as well as
for a description of the other terms of the Plan.
Voting on, and Confirmation of, The Plan
Voting on the Plan
This Disclosure Statement is being transmitted to holders of Claims
against, and Equity Interests in, the Company for the purpose of providing
adequate information to enable such Holders who are entitled to vote on the Plan
to make a reasonably informed decision with respect to their vote on the Plan.
In order for the Plan to be confirmed (approved) by the U.S. Bankruptcy Court,
other than through the "cramdown" provisions of Section 1129(b) of the U.S.
Bankruptcy Code, the Company must, among other things, receive approval of the
Plan from:
(i) Holders of at least two-thirds (2/3) in amount, and more than
one-half (1/2) in number, of the Belmarken Notes Claims actually
voted on the Plan;
(ii) Holders of at least two-thirds (2/3) in amount, and more than
one-half (1/2) in number, of the UPC Notes Claims and the General
Unsecured Claims (other than any insiders, including, without
limitation, the UGC Group, in such Class) actually voted on the
Plan;
(iii) Holders of at least two-thirds (2/3) in amount, and more than
one-half (1/2) in number, of the Equity Securities Claims
actually voted on the Plan;
(iv) Holders of at least two-thirds (2/3) in amount of the UPC
Preference Shares A actually voted on the Plan;
(v) Holders of at least two-thirds (2/3) in amount of the UPC
Priority Shares actually voted on the Plan; and
(vi) Holders of at least two-thirds (2/3) in amount of the UPC
Ordinary Shares A and UPC ADSs actually voted on the Plan (the
"Requisite Acceptances").
As indicated above, however, the Plan can be confirmed, notwithstanding the
failure to receive approval of the Plan from certain of the Impaired Classes
listed immediately above, pursuant to the "cramdown" provisions of Section
1129(b) of the U.S. Bankruptcy Code, as described in "Chapter 11 Case and the
Plan of Reorganization--Voting on, and Confirmation of, the Plan--Non-Acceptance
and Cramdown."
Only those Holders as of _________ __, 2003 (the "Voting Record Date") of
the Claims and Equity Interests set forth above are being solicited hereby
(each, a "Voting Party").
However, since the ratification of the Akkoord is a condition precedent to
the consummation of the Plan and the Akkoord must, in accordance with Section
268 of the Dutch Bankruptcy Code, be approved by two-thirds (2/3) of the
admitted and recognized Ordinary Creditors of the Company representing
three-quarters (3/4) in amount of the admitted and recognized claims, the Plan
and the Akkoord will need to be approved by two-thirds (2/3) of the Ordinary
Creditors (including for purposes of Dutch law only, the UGC Group) holding
claims admitted and
-11-
recognized in the Dutch proceeding representing three-quarters (3/4) of the
amount of all such claims to become effective.
As of the Petition Date, the UGC Group owned approximately 35% of the
aggregate principal amount of the outstanding UPC Notes, all of the outstanding
Belmarken Notes, approximately 53.1% of the outstanding UPC Ordinary Shares A,
all of the outstanding UPC Priority Shares and approximately 20% of the
outstanding UPC Preference Shares A, and the Participating Noteholders owned
approximately 25% of the aggregate principal amount of the outstanding UPC
Notes.
See "Chapter 11 Case and the Plan of Reorganization--Voting on, and
Confirmation of, the Plan" below for a complete description of the requirements
for acceptance of the Plan.
The U.S. Bankruptcy Court approved this Disclosure Statement on ________
__, 2003 as containing information of a kind and in sufficient detail to enable
Holders of Claims against, or Equity Interests in, the Company to make an
informed decision whether to accept or reject the Plan. This approval does not,
however, constitute either a guaranty of the accuracy or completeness of the
information contained herein or an opinion by the U.S. Bankruptcy Court
regarding the fairness or merits of the Plan.
THIS DISCLOSURE STATEMENT IS THE ONLY DOCUMENT AUTHORIZED BY THE U.S.
BANKRUPTCY COURT TO BE USED IN CONNECTION WITH THE SOLICITATION OF VOTES ON THE
PLAN.
In light of the concurrent U.S. Bankruptcy Case and Dutch Bankruptcy Case,
the Company proposes to solicit simultaneously from those Holders of Claims
against the Company who are entitled under Dutch law to vote on the Akkoord both
a vote on the Plan and a vote on the Akkoord. The latter will be effected, in
accordance with standard Dutch practice, through the solicitation of irrevocable
proxies or voting instructions and related powers of attorney (with power of
substitution) by such Holders to Mr. Rob Abendroth of Allen & Overy, Amsterdam,
the Company's Dutch counsel, to file such Holder's Claim in the Dutch Bankruptcy
Case and vote such Holder's Claim in favor of the Akkoord. The Dutch Akkoord
claim and voting proxy materials will be distributed in the same solicitation
packages as the Ballots (as defined hereafter). Please note, however, that if an
Ordinary Creditor files a claim in the Dutch Bankruptcy Case, either directly or
by proxy, such Ordinary Creditor's name will be placed on the list of Ordinary
Creditors that will be deposited at the Dutch Bankruptcy Court Clerk's Office
and will be available for inspection by the public.
After carefully reviewing this Disclosure Statement, including the Annexes
hereto, each Holder of a Claim or Equity Interest whose vote is being solicited
on the Plan should vote using the enclosed form of ballot (the "Ballot"), check
the box indicating whether it accepts or rejects the Plan and, except as set
forth below, return the Ballot in the pre-addressed envelope. Ballots (and
Master Ballots cast on behalf of beneficial holders of UPC Notes or UPC ADSs)
must be submitted so that they are actually received by (i) Innisfree M&A
Incorporated (the "Securities Voting Agent") with respect to the Belmarken Notes
Claims, the UPC Notes Claims, the UPC Preference Shares A, the UPC Priority
Shares, the UPC Ordinary Shares A and the UPC ADSs and (ii) Bankruptcy Services
LLC (the "Nonsecurities Voting Agent" and, together with the Securities Voting
Agent, the "Voting Agents") with respect to the General Unsecured Claims and the
Equity Securities Claims, in either case, on or before ______ (New York City
Time) on ________ __, 2003, unless extended by the Company and New UPC in their
sole discretion (subject to court approval, as necessary) (such time and date,
as the same may be extended from time to time, the "Voting Deadline") at the
following addresses:
-12-
Securities Voting Agent Nonsecurities Voting Agent
Innisfree M&A Incorporated Bankruptcy Services LLC
By regular mail, messenger By regular mail:
or overnight courier: United Pan-Europe Communications Ballot Processing
Attn: UPC Ballot Tabulation P.O. Box 5014
501 Madison Avenue, 20th Floor FDR Station
New York, NY 10022 New York, NY 10150-5014
United States of America United States of America
Telephone: By messenger or overnight courier:
1-877-750-2689 United Pan-Europe Communications Ballot Processing
(within the United States) c/o Bankruptcy Services LLC
70 East 55th Street
+1-412-209-1704 New York, NY 10022-3222
(outside the United States) United States of America
Telephone:
1-888-498-7765
(within the United States)
+1-212-376-8998
(outside the United States)
The Company will make a public announcement of any extension of the Voting
Deadline by release to the Dow Jones News Service prior to 9:00 a.m., New York
City Time, on the next Business Day following the previously scheduled Voting
Deadline. The Company will notify the Voting Agents of any extension by oral or
written notice. Any Voting Party, other than those who have signed the
Restructuring Agreement (unless in accordance with the terms thereof), may
change its vote on the Plan at any time prior to the Voting Deadline.
Thereafter, votes on the Plan may not be changed except to the extent authorized
by the U.S. Bankruptcy Court.
To the extent that any such Holder holds Claims or Equity Interests in more
than one Class, such Holder will receive a separate Ballot for each such Claim
or Equity Interest.
The Company does not intend to solicit votes on the Plan from Holders of
Miscellaneous Secured Claims, Classified Priority Claims, Critical Creditor
Claims and Old Other Equity Interests because such Holders are either unimpaired
or deemed to reject the Plan. Therefore Ballots are not being transmitted to
such Holders.
If the Voting Party is a beneficial holder of UPC Notes or UPC ADSs, but
not a registered record holder, and received his or her Ballot from a custodian,
commercial bank, depositary institution, broker, dealer, trust company or other
nominee (each, an "Intermediary") who holds UPC Notes or UPC ADSs on his or her
behalf, he or she should return his or her Ballot to his or her Intermediary in
accordance with the instructions received with his or her Ballot. Each
Intermediary will, in turn, submit a master ballot to the Securities Voting
Agent which reflects the votes of the beneficial holders on whose behalf such
Intermediary holds UPC Notes or UPC ADSs (each, a "Master Ballot"). Master
Ballots also must be returned so that they are actually received by the
Securities Voting Agent at the above address on or before the Voting Deadline.
If any beneficial holder owns UPC Notes or UPC ADSs through more than one
Intermediary, such beneficial holder may receive multiple mailings containing
Ballots. The beneficial holder should execute a separate Ballot for each block
of UPC Notes or UPC ADSs that it holds through any particular Intermediary and
return each Ballot to the respective Intermediary in the return envelope
provided. Beneficial holders who execute multiple Ballots with respect to UPC
Notes or UPC ADSs held through more than one Intermediary must indicate on each
Ballot the names of ALL such other Intermediaries and the additional amounts of
UPC Notes or UPS ADSs held and voted by such beneficial holder. If a beneficial
holder owns a portion of its UPC Notes or UPC ADSs through an Intermediary and
another portion as a record holder, the beneficial holder should, with respect
to the portion held as
-13-
a record holder, complete the appropriate Ballot and return it to the Securities
Voting Agent and, with respect to the portion held through an Intermediary,
complete the appropriate Ballot and return it to the Intermediary.
Subject to any applicable order of the U.S. Bankruptcy Court, the Company
will decide any and all questions affecting the validity of any Ballot or Master
Ballot submitted, which decision will be final and binding. To that end, the
Company may reject any Ballots or Master Ballots that are not in proper form or
that the Company's counsel believes would be unlawful or were submitted in bad
faith. Any Ballot which is executed by a Holder of Claims or Equity Interests
but does not indicate an acceptance or rejection of the Plan or indicates both
an acceptance and rejection of the Plan shall not be counted as a vote on the
Plan. Any Master Ballot which, with respect to a particular Claim or Equity
Interest, indicates neither an acceptance nor a rejection of the Plan or that
indicates both an acceptance and a rejection of the Plan shall not be counted as
to such Claim or Equity Interest.
ONLY ORIGINALLY SIGNED BALLOTS OR MASTER BALLOTS, AS APPLICABLE, WILL BE
COUNTED. NEITHER COPIES OF NOR FACSIMILE BALLOTS OR MASTER BALLOTS WILL BE
ACCEPTED. IF A BALLOT OR MASTER BALLOT, AS APPLICABLE, IS NOT ACTUALLY RECEIVED
BY THE APPROPRIATE VOTING AGENT ON OR BEFORE THE VOTING DEADLINE, SUCH BALLOT OR
MASTER BALLOT WILL NOT BE COUNTED. PLEASE FOLLOW THE DIRECTIONS CONTAINED ON THE
ENCLOSED BALLOT OR MASTER BALLOT CAREFULLY.
If a Holder or an Intermediary has any questions about the Disclosure
Statement, the Plan or the procedure for voting, did not receive a Ballot or
Master Ballot, as applicable, received a damaged Ballot or Master Ballot, as
applicable, lost his or her Ballot or Master Ballot, as applicable, or, in the
case of an Intermediary, requires additional copies of the Disclosure Statement
and/or Ballots for distribution to beneficial holders, he or she should call, as
applicable, (i) the Securities Voting Agent - Innisfree M&A Incorporated at 501
Madison Avenue, New York, NY 10022, United States of America, tel.
1-877-750-2689 or, from outside the United States, tel. + 1-412- 209-1704, (ii)
the Nonsecurities Voting Agent - Bankruptcy Services LLC by regular mail United
Pan-Europe Communications Ballot Processing, P.O. Box 5014, FDR Station, New
York, NY 10150-5014, United States of America, by messenger or overnight courier
at United Pan-Europe Communications Ballot Processing, c/o Bankruptcy Services
LLC, 70 East 55th Street, New York, NY 10022-3222, United States of America, or
tel. 1-888-498-7765, or, from outside the United States, tel. +1-212-376-8998,
or (iii) his or her Intermediary.
If a registered Holder does not hold for its own account, then it is
required to provide promptly copies of this Disclosure Statement and appropriate
Ballots to its customers and beneficial owners. Any beneficial owner who has not
received a Ballot should contact his or her Intermediary or the Securities
Voting Agent, as applicable.
Confirmation of the Plan
In addition to the voting requirements set forth above, in order for a
Chapter 11 plan of reorganization to be confirmed, the plan must meet certain
statutory requirements set forth in the U.S. Bankruptcy Code, including, without
limitation, that:
o the plan has classified claims and equity interests in a permissible
manner;
o the contents of the plan comply with the requirements of the U.S.
Bankruptcy Code;
o the debtor has proposed the plan in good faith;
o the debtor has made disclosures concerning the plan which are adequate
and include information concerning all payments made or promised in
connection with the plan and the Chapter 11 Case;
o the plan is feasible; and
o the plan is in the "best interests" of all dissenting holders of
claims and equity interests in impaired classes.
See "Chapter 11 Case and the Plan of Reorganization--Voting on, and Confirmation
of, the Plan--Confirmation of the Plan" below for a more detailed description of
the these requirements.
-14-
Thus, even if the Plan was accepted by the requisite majorities of the
Holders of Claims against, and Equity Interests in, the Company, the U.S.
Bankruptcy Court would be required to make the findings set forth above before
it can confirm the Plan. The Company believes that all of these conditions have
been or shall be met with respect to the Plan.
In addition, under certain circumstances, a U.S. bankruptcy court may, upon
the request of the proponent of a plan, confirm a plan notwithstanding the lack
of acceptance by one or more impaired classes if the U.S. bankruptcy court finds
that
o the plan does not discriminate unfairly with respect to each
non-accepting impaired class,
o the plan is "fair and equitable" with respect to each
non-accepting impaired class,
o at least one impaired class has accepted the plan (without
counting acceptances by insiders) and
o the plan satisfies the requirements set forth in Section 1129(a)
of the U.S. Bankruptcy Code other than Section 1129(a)(8).
This procedure is commonly referred to as "cramdown." The Company intends, if
necessary, to request confirmation of the Plan pursuant to Section 1129(b) of
the U.S. Bankruptcy Code. See "Chapter 11 Case and the Plan of
Reorganization--Voting on, and Confirmation of, the Plan--Non-Acceptance and
Cramdown," below, for a more detailed description of the requirements for
cramdown.
Confirmation Hearing
The U.S. Bankruptcy Court has scheduled the hearing to consider
confirmation of the Plan (the "Confirmation Hearing") for _____ __, 2003, at
______ (New York City Time), before the Honorable Burton R. Lifland, United
States Bankruptcy Judge, United States Bankruptcy Court, Alexander Hamilton
Custom House, One Bowling Green, Courtroom 623, New York, New York 10004. The
Confirmation Hearing may be adjourned from time to time by the U.S. Bankruptcy
Court without further notice except for an announcement of an adjournment made
at the Confirmation Hearing or any adjournment thereof.
Any objections to confirmation of the Plan must be made in writing,
specifying in detail the name and address of the person or entity objecting, the
grounds for the objection and the nature and amount of the Claim or Equity
Interest held by the objector, and must be served and filed as ordered by the
U.S. Bankruptcy Court on or before _____ (New York City Time) on _______ __,
2003. If an objection to confirmation is not timely served and filed, it will
not be considered by the U.S. Bankruptcy Court.
If the Plan is confirmed, even if a holder of a Claim or Equity Interest
did not vote, or voted against the Plan, the terms of the Plan, including,
without limitation, the transfers set forth therein, will be binding on such
Holder as if such Holder had voted in favor of the Plan. Accordingly, all
Holders of Claims against, or Equity Interests in, the Company are encouraged to
read this Disclosure Statement and its Annexes carefully and in their entirety
before deciding to vote to accept or to reject the Plan.
Pursuant to the Plan, the documents to be executed in connection with
consummation of the Plan, including the Amended and Restated UPC Articles of
Association, the Amended and Restated New UPC Certificate of Incorporation, the
Amended and Restated New UPC By-Laws, the Incentive Plan, the Board of
Management Schedule (as defined herein) the New UPC Management Schedule and the
Stockholders Agreement shall be filed on or before January ____, 2003 (the
"Document Filing Date"). Copies of all such documents will be made available to
all Holders of Claims or Equity Interests entitled to vote on the Plan.
Board Recommendation
The Company's Supervisory Board and Board of Management, and New UPC's
Board of Directors, have unanimously approved the terms of the Restructuring,
including the Plan, the Akkoord and the Dutch Implementing Offer and believe
that it is in the Company's best interests. The Company's Supervisory Board and
Board of Management, and the New UPC's Board of Directors, strongly urge each
Holder of a Claim against, or Equity
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Interest in, the Company to vote in favor of the Plan. However, each Holder of a
Claim against, or Equity Interest in, the Company must make its own decision as
to whether to vote in favor of the Plan. For a discussion of the factors
considered by the Company's Board of Management and Supervisory Board in
supporting the Restructuring, see "The Restructuring--Background of the
Restructuring--Board Consideration and Approval."
The Akkoord
Simultaneously with the commencement of the Chapter 11 proceeding, the
Company commenced the Dutch Bankruptcy Case and filed a draft plan of compulsory
composition, or an Akkoord, with the Dutch Bankruptcy Court. Upon the
commencement of the Dutch Bankruptcy Case, the Dutch Bankruptcy Court appointed
an administrator to oversee the operations of the Company (the "Administrator").
On the date of this Disclosure Statement, the Company submitted a revision to
the Akkoord that was filed with the Dutch Bankruptcy Court on December 3, 2002
and this Disclosure Statement describes the Akkoord as so revised. To the
extent necessary, the Akkoord will be amended before the Akkoord is voted on at
the Dutch Voting Meeting in order to ensure that the terms of the Akkoord are
consistent with the terms of the Plan.
A moratorium of payments affects only the claims of the Ordinary Creditors.
Dutch law operates under the principle of equality of treatment of creditors and
only grants priority to certain specified claims by statutory provision. Types
of claims not specified by statute to have priority do not have priority. In
this context the most important types of claims to have a right of priority
include (a) claims of the tax and social security administrations, (b) pension
rights of, and salaries due to, employees, (c) claims secured by pledge
(pandrecht) or mortgage (hypotheek) and, as a practical matter, (d) estate
creditors (boedelschulden). See "The Akkoord--Effects of the Moratorium," below.
Upon receipt of claims submitted by the Ordinary Creditors, the
Administrator will prepare a list of claims, specifying for each claim whether
the Administrator will admit or dispute it. The claims list merely serves to
determine (i) which Ordinary Creditors will be permitted to vote on the Akkoord
and (ii) in what amount each claim will be admitted. Beneficial holders of UPC
Notes as of the Voting Record Date will be permitted to file claims with the
Administrator and vote on the Akkoord. If the claim has been disputed by the
Administrator, the Company or other Ordinary Creditors, the supervisory judge
decides if, and for what amount, the respective Ordinary Creditor will be
admitted to participate in the vote. In short, the Ordinary Creditors who are
recognized by the Administrator (and undisputed by the Company and/or the other
Ordinary Creditors) and admitted to the vote by the supervisory judge are
permitted to participate in the vote.
To the extent that a claim classified under the Plan is held by an Ordinary
Creditor, such claim is an affected claim in the Dutch Bankruptcy Case and the
holder thereof may file its claim and vote on account of such claim in the Dutch
Bankruptcy Case. However, in the Dutch Bankruptcy Case, claims will not be
categorized by class. Under the Akkoord, Ordinary Creditors shall be offered by
the Company a number of shares of New UPC Common Stock equal to the number of
shares of New UPC Common Stock that holders of general unsecured claims are
entitled to receive under the Plan, either in exchange for transferring their
Allowed Claims to New UPC (as far as the Holders of the UPC Notes are concerned)
or in cancellation of their Allowed Claims (as far as Ordinary Creditors other
than the Holders of the UPC Notes are concerned).
To the extent that the holder of a non-affected claim nonetheless elects to
file a claim in the Dutch Bankruptcy Case and votes on the Akkoord, any security
rights or priority held by such holder will be lost in the Dutch Bankruptcy Case
and unenforceable under Dutch law. Such claims will then be considered affected
claims under the Dutch Bankruptcy Code and receive treatment under the Plan and
the Akkoord in accordance with such election.
Furthermore, holders of equity interests are not treated as creditors under
Dutch law and, as such, no holders of the Company's Equity Interests are
entitled to vote on, or shall be affected by, the Akkoord.
In order to be accepted, the Akkoord must be approved by two-thirds (2/3)
of the admitted and recognized Ordinary Creditors representing three-fourths
(3/4) of the amount of the admitted and recognized claims. As a consequence of
this system, admitted and recognized Ordinary Creditors not present or
represented at the meeting of creditors to vote on the Akkoord (the "Dutch
Voting Meeting") or admitted and recognized Ordinary Creditors who are present
or represented but abstain from voting shall effectively be considered to have
voted against acceptance of the Akkoord.
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If the Akkoord is not approved (as described above) the Dutch Bankruptcy
Court may declare the Company bankrupt. The Company would then be liquidated. If
the Company is declared bankrupt, it may not file a second Akkoord. The Dutch
Bankruptcy Court may terminate the moratorium, in which case the Company's
creditors would then be entitled to exercise their rights against the Company as
a possible alternative to liquidation.
The date of commencement of the Dutch Bankruptcy Case shall be the date for
determining which Ordinary Creditors, other than beneficial holders of the UPC
Notes, are entitled to file claims with the Administrator. With respect to the
beneficial holders of UPC Notes, the Dutch Bankruptcy Court has ordered that the
Voting Record Date (_________ __, 2003) shall be the date for determining which
holders are entitled to file claims with the Administrator and to vote on the
Akkoord. In either case, any Ordinary Creditors who timely file claims with the
Administrator will be eligible to vote on the Akkoord unless such claim is
disputed by the Company, the Administrator or any other Ordinary Creditor who
has been admitted to vote. The Dutch Bankruptcy Court will resolve any such
dispute at the Dutch Voting Meeting.
The Dutch Bankruptcy Court has ordered that all Ordinary Creditors
(including, without limitation, the beneficial holders of the UPC Notes) must
submit their claims to the Administrator by 5:00 p.m. (Central European Time) on
February 14, 2003 (the "Dutch Claims Filing Deadline") and that the Dutch Voting
Meeting will take place on February 28, 2003 at 10:00 a.m. (Central European
Time) at Parnassusweg 220, Amsterdam, The Netherlands. Under certain
circumstances, the Ordinary Creditors can submit their claims after the Dutch
Claims Filing Deadline, but not later than two days prior to the Dutch Voting
Meeting. However, claims filed later than the Dutch Claims Filing Deadline, but
prior to the Dutch Voting Meeting may only be permitted to vote on the Akkoord
if neither the Administrator (or the Company) nor any other Ordinary Creditor
objects thereto. In the event that an Ordinary Creditor who is not located in
The Netherlands files a claim with the Administrator after the Dutch Claims
Filing Deadline, but at or before the Dutch Voting Meeting, such claim may still
be admitted to vote on the Akkoord at the discretion of the Dutch Bankruptcy
Court.
In order to file a Claim in the Dutch Bankruptcy Case and to vote in favor
of the Akkoord, an Ordinary Creditor should complete its Akkoord claim and
voting proxy and return it, together with proof of ownership of such Ordinary
Creditor's Claim against the Company, in the pre-addressed envelope to Mr. Rob
Abendroth of Allen & Overy, Amsterdam, The Netherlands, in time for Mr.
Abendroth to transmit the proxy to the Administrator by the Dutch Claims Filing
Deadline. An Akkoord claim and voting proxy for a Holder of a UPC Notes Claim
may also be sent, together with proof of ownership of such UPC Notes, to the
Securities Voting Agent for transmittal by the Securities Voting Agent to Mr.
Abendroth. However, in order for the Securities Voting Agent to transmit such
Akkoord claim and voting proxy to Mr. Abendroth in time for him to forward it to
the Dutch Administrator by the Dutch Claims Filing Deadline, the Securities
Voting Agent must receive the Akkoord claim and voting proxy by 5:00 p.m. (New
York City Time) on Wednesday, February 12, 2003. If an Ordinary Creditor has any
questions about the Akkoord claim or voting proxy, please contact (i) Allen &
Overy, Apollolaan 15, 1077 AB Amsterdam, The Netherlands, Mr. Rob Abendroth,
tel. +31-20-674-1330, or (ii) Allen & Overy, 1221 Avenue of the Americas, New
York, NY 10020, United States of America, Ms. Helena Sprenger, tel.
+1-212-610-6300. Please note, however, that if an Ordinary Creditor files a
Claim in the Dutch Bankruptcy Court, either directly or by proxy, such Ordinary
Creditor's name will be placed on the list of Ordinary Creditors that will be
deposited at the Dutch Bankruptcy Court Clerk's Office and will be available for
inspection by the public.
If the Akkoord has been approved by the requisite majority of Ordinary
Creditors, the supervisory judge will set a date on which the Dutch Bankruptcy
Court will consider the ratification (homologatie) of the Akkoord in a public
hearing. Before such hearing, the Administrator and the Ordinary Creditors are
entitled to notify the supervisory judge of their positions as to the
ratification of the Akkoord. At such hearing, the Company, the Administrator and
the Ordinary Creditors are permitted to provide their views as to the
ratification of the Akkoord. The supervisory judge or the Dutch Bankruptcy Court
will render a written report on the Akkoord. The Dutch Bankruptcy Court must
refuse to ratify the Akkoord if one or more of the following conditions exist:
o if the liquidation value of the assets of the estate exceeds the
amount made available to creditors in the Akkoord;
o if performance of the Akkoord is not sufficiently guaranteed;
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o if the Akkoord was reached by means of fraudulent acts or the
preference of one or more creditors or by other unfair means,
regardless of whether or not the Company or any party cooperated to
that effect; or
o if the fees and expenses of the experts and the administrator(s) have
not been paid to the administrator(s), or security has not been issued
therefor.
In addition to the foregoing, the Dutch Bankruptcy Court may, in its
discretion, refuse to ratify the Akkoord on other grounds or on its own motion
(ambtshalve). The Dutch Bankruptcy Court may declare the Company bankrupt
simultaneously with its refusal to ratify the Akkoord. If the Dutch Bankruptcy
Court does so, the Company would then be liquidated.
The Akkoord becomes final and binding as soon as the ratification of the
Akkoord is no longer open to appeal. An appeal of either the decision of the
Dutch Bankruptcy Court to ratify the Akkoord or a decision of the Dutch
Bankruptcy Court to refuse to ratify the Akkoord has to be filed within eight
days after the respective decision.
A ratified and final Akkoord will be binding on all creditors that were
affected by the Dutch Bankruptcy Case. This includes the Ordinary Creditors who
(i) voted against the Akkoord, (ii) abstained from voting or (iii) did not
submit their claims with the Administrator. As a consequence of the ratification
of the Akkoord, Ordinary Creditors with claims that are not submitted with the
Administrator can still claim distribution under the Akkoord.
The Dutch Implementing Offer
General
The Dutch Bankruptcy Code does not provide for the Akkoord to reorganize or
cancel any of the Equity Interests in the Company. Therefore, in order to
facilitate implementation of the Plan with respect to certain of the UPC
Ordinary Shares A in accordance with Dutch law, solely with respect to persons
who are not U.S. Persons and who are not located or residing within the United
States, New UPC shall commence an offer to deliver shares of New UPC Common
Stock to such Holders of UPC Ordinary Shares A in consideration for the delivery
by such Holders of their UPC Ordinary Shares A to New UPC. In The Netherlands,
holders of UPC Ordinary Shares A can participate in the Dutch Implementing Offer
until the Dutch Implementing Offer is declared unconditional by New UPC, which
is expected to occur on or around March 24, 2003, as more fully described in the
Offer Memorandum. See "The Dutch Implementing Offer."
No Participation in, into or from the United States and Other Jurisdictions
The Dutch Implementing Offer will not be made, directly or indirectly, in
or into the United States, or by the use of the United States mails, or by any
means or instrumentality (including, without limitation, telephonically or
electronically) of United States interstate or foreign commerce, or any facility
of a United States national securities exchange. Accordingly, copies of the
Offer Memorandum (as defined herein) and related documents are not being, and
must not be, mailed, forwarded, sent, transmitted or otherwise distributed in,
into or from the United States.
The Dutch Implementing Offer is not being made to, and New UPC will not
accept deposits of UPC Ordinary Shares A from, Holders of UPC Ordinary Shares A
in any jurisdiction in which the Dutch Implementing Offer or the participation
in the Dutch Implementing Offer would not be in compliance with the securities
or blue sky laws of that jurisdiction.
Conditions to the Dutch Implementing Offer
The Dutch Implementing Offer is conditioned, among other things, on
confirmation of the Plan and approval of amendments to the Company's Articles of
Association at the Extraordinary General Meeting. New UPC may waive any of the
conditions to the Dutch Implementing Offer, except the condition that no
notification has been received from the Autoriteit Financiele Markten (The
Netherlands Authority for the Financial Markets) that the Dutch Implementing
Offer has been made in conflict with Chapter IIA of the Dutch Securities Act
1995. See "The
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Dutch Implementing Offer--Conditions for Completion of the Dutch
Implementing Offer" for a list of all the conditions to the Dutch Implementing
Offer.
Effects of Completion of the Restructuring and Consummation of the Dutch
Implementing Offer on Non-Participating Holders of UPC Ordinary Shares A
For a discussion of the risks associated with failing to participate in the
Dutch Implementing Offer, see "Risk Factors--Risks Related to Ownership of UPC
Ordinary Shares A Upon Completion of the Restructuring."
The Extraordinary General Meeting of Shareholders
Unlike the U.S. Bankruptcy Code, the Dutch Bankruptcy Code does not provide
for the Dutch Bankruptcy Case to exempt compliance from otherwise applicable
corporate law. Therefore, in order to facilitate implementation of the Plan, the
Company has called an Extraordinary General Meeting.
Date, Time and Place of the Extraordinary General Meeting
The Extraordinary General Meeting will be held at Hotel Okura Amsterdam,
Ferdinand Bolstraat 333, Amsterdam, The Netherlands, on February 19, 2003, at
10:00 a.m. (Central European Time), unless postponed or adjourned. The Company
anticipates that the Extraordinary General Meeting will occur after the Voting
Deadline for the Plan, but before the Expiration Date for the Dutch Implementing
Offer. The Proxy Statement (as defined herein) will be sent to holders of record
of the UPC Preference Shares A, the UPC Priority Shares and the UPC Ordinary
Shares A as of ______, 2003. The Company will make appropriate arrangements to
make the Proxy Statement available to all Holders of the UPC Preference Shares
A, the UPC Priority Shares and the UPC Ordinary Shares A.
Purposes of the Extraordinary General Meeting
The purpose of the Extraordinary General Meeting is to facilitate the
implementation of the Plan by:
o explaining the terms of the Restructuring (including the terms of the
Plan) to the Company's shareholders at the Extraordinary General
Meeting;
o considering and acting upon a proposal to amend the Company's Articles
of Association (the "First Amendment") (effective on the Effective
Date) to
(i) decrease the nominal value of each issued and outstanding
UPC Ordinary Share A from (euro)1.00 to (euro)0.02 without
repayment; and
(ii) decrease the nominal value of each UPC Priority Share and
UPC Preference Share A from (euro)1.00 to (euro)0.02 without
repayment,
which capital reduction will permit the Company to eliminate its
accumulated deficit;
o considering and acting upon a proposal to amend the Company's Articles
of Association (the "Second Amendment") (effective on the Effective
Date) to
(i) change the number of authorized UPC Ordinary Shares A into
450,000,000;
(ii) remove the UPC Preference Shares A from the authorized
capital of the Company;
(iii) authorize a new class of 50,000,000,000 registered Ordinary
Shares C ("UPC Ordinary Shares C") with a nominal value of
(euro)0.02;
(iv) in the event Dutch law allows the issuance of nonvoting
stock, prohibit the issuance of nonvoting stock and prohibit
cooperation in connection with the issuance of depository
receipts; and
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(v) remove the UPC Ordinary Shares B and the UPC Preference
Shares B from the authorized capital of the Company;
o considering and acting upon a proposal to convert the UPC Preference
Shares A on a one-for-one basis into registered UPC Ordinary Shares A,
effective upon the Second Amendment and the Effective Date;
o considering and acting upon a proposal to amend the Company's Articles
of Association (effective on the later to occur of the Effective Date
and the date of the delisting of the UPC Ordinary Shares A from
Euronext Amsterdam N.V. ("Euronext"))(the "Third Amendment") to
effectuate that the Company will have Articles of Association of a
non-listed company, including, inter alia, the following contents:
(i) restrictions on transfers of registered shares;
(ii) amend the management structure of the Company to a one-tier
board (i.e., that the Company's Supervisory Board will be
eliminated and the Company's Board of Management will
consist of one or more members); and
(iii) holders of UPC Ordinary Shares A only to be authorized to
exercise their rights upon delivery of share certificates;
o accepting the resignations of (i) John F. Riordan, (ii) Nimrod J.
Kovacs, (iii) Charles H.R. Bracken, (iv) James S. O'Neill, (v) Gene
Musselman and (vi) Anton M. Tuijten, as managing directors of the
Company with effect on the later to occur of the Effective Date and
the date of the delisting of the UPC Ordinary Shares A from Euronext
and to grant a full and final release from liability with respect to
their management of the Company;
o accepting the resignations of (i) Michael T. Fries, (ii) John P. Cole,
Jr., (iii) Richard J.A. de Lange, (iv) Ellen P. Spangler, (v) Tina M.
Wildes and (vi) John W. Dick, as supervisory directors of the Company
with effect with effect on the later to occur of the Effective Date
and the date of the delisting of the UPC Ordinary Shares A from
Euronext and to grant a full and final release from liability with
respect to their supervision of the Company;
o appointing New UPC as sole managing director of the Company with
effect as of the later to occur of the Effective Date and the
delisting of the UPC Ordinary Shares A from Euronext;
o authorizing the Board of Management of the Company and Allen & Overy,
Amsterdam, The Netherlands, to apply for the ministerial statements of
no objections and to execute deeds of amendment of the Articles of
Association of the Company as set forth in the First Amendment, Second
Amendment and Third Amendment; and
o transacting such other business as may properly come before the
Extraordinary General Meeting or any postponements or adjournments
thereof.
See "The Extraordinary General Meeting of Shareholders."
New UPC Equity Subscription
The Plan provides each Holder of a Belmarken Notes Claim, UPC Notes Claim
and General Unsecured Claim with New UPC Equity Purchase Rights to purchase for
cash a pro rata portion of the Subscription Shares (as defined herein) at the
Implied Purchase Price per share. The Holders of General Unsecured Claims will
be permitted to participate in the New UPC Equity Purchase Rights based on the
Claim amounts set forth by such Holders in their proofs of claim filed in the
U.S. Bankruptcy Case; provided, however, that this right will in no way affect
any determination by either the U.S. Bankruptcy Court or the Dutch Bankruptcy
Court as to the allowability of any Claims asserted by such Holders against the
Company. The New UPC Equity Purchase Rights will only be exercisable on the
Effective Date. The Maximum Subscription Amount will be reduced on a
Euro-for-(euro)basis under the circumstances described in this Disclosure
Statement under "New UPC Equity Subscription--General." Subject to confirmation
of the Plan and the ratified Akkoord becoming final and conclusive (in kracht
van gewijsde gaan), UGC has committed to purchase from New UPC, and New UPC
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has committed to sell to UGC, on the Effective Date, at the Implied Purchase
Price, an amount of shares of New UPC Common Stock with an aggregate value equal
to the Maximum Subscription Amount less the number of shares of New UPC Common
Stock purchased by Holders of Belmarken Notes Claims, UPC Notes Claims and
General Unsecured Claims pursuant to the New UPC Equity Purchase Rights. For a
detailed discussion of the New UPC Equity Purchase Rights, see "New UPC Equity
Subscription."
New UPC Common Stock
General
As of the Petition Date, the total outstanding share capital of New UPC
consists of 1,000 shares of common stock, par value US$0.01 per share, of which
1,000 shares are outstanding. All outstanding shares of New UPC Common Stock on
the Petition Date are, and all of the New UPC Common Stock to be outstanding
upon consummation of the Restructuring will be, fully paid and non-assessable.
On the Effective Date, New UPC's authorized share capital shall consist of
250,000,000 shares of New UPC Common Stock and 50,000,000 shares of preferred
stock and New UPC's issued share capital shall consist of 50,000,000 shares of
New UPC Common Stock. Issuance and Resale of New UPC Common Stock
The Company and New UPC are relying on Section 1145 of the U.S. Bankruptcy
Code to exempt the issuance of the New UPC Common Stock from the registration
requirements of the U.S. Securities Act (and of any state securities or "blue
sky" laws). In The Netherlands, this Disclosure Statement serves as a prospectus
as referred to in Article 3(2)(b) of the Dutch Securities Act 1995. See "New
UPC--Issuance and Resale of the New UPC Common Stock." Except as discussed under
"New UPC--Issuance and Resale of the New UPC Common Stock," the shares of New
UPC Common Stock to be issued to persons other than UGC pursuant to the Plan
will not be subject to any restrictions on transferability.
Listing of the New UPC Common Stock
In the Restructuring Agreement, New UPC has agreed to use its commercially
reasonable efforts to cause the shares of New UPC Common Stock to be issued in
the Restructuring to be listed on the NASDAQ Stock Market ("NASDAQ"), but
obtaining such listing is not a condition to either confirmation or consummation
of the Plan. New UPC may not be able to list the New UPC Common Stock on the
NASDAQ and this may impair the liquidity of the New UPC Common Stock. See "Risk
Factors--Risks Related to Ownership of the New UPC Common Stock--New UPC may not
be able to list the New UPC Common Stock on the NASDAQ and this may impair the
liquidity of the New UPC Common Stock."
Tax Consequences
For a discussion of the tax considerations of the Restructuring, see "Tax
Consequences."
Use of Proceeds
New UPC will not receive any cash proceeds from the issuance of the New UPC
Common Stock in consideration for the surrender and transfer to New UPC of the
Claims and Equity Interests under the Restructuring, as discussed under "The
Restructuring--Description of the Restructuring--Use of Proceeds." New UPC will
receive up to (euro)100 million upon completion of the New UPC Equity
Subscription (less any reduction in the Maximum Subscription Amount under the
circumstances described under the heading "New UPC Equity
Subscription--General"). New UPC intends to use the proceeds from the New UPC
Equity Subscription for general corporate purposes, which may include, without
limitation, contributing all or a portion of the proceeds to the Company to fund
a portion of the Company's capital contribution or subordinated shareholder
loans to UPC Distribution required to be made two business days after
consummation of the Restructuring by the UPCD Facility Waiver. See "The
Restructuring--Background of the Restructuring--UPC Distribution Facility Waiver
and Amendment."
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Risk Factors
Holders of Claims or Equity Interests should carefully consider the factors
set forth below, as well as the other information set forth in this Disclosure
Statement or incorporated herein by reference, prior to determining whether to
vote to accept the Plan or the Akkoord, participate in the Dutch Implementing
Offer or subscribe for shares of New UPC Common Stock under the New UPC Equity
Subscription. The risks and uncertainties described below include all of the
risks and uncertainties which the Company believes to be material at this time
but are not the only ones facing the Company, the UPC Group or New UPC.
Additional risks and uncertainties that the Company does not currently know or
that the Company currently deems immaterial may also impair its or the UPC
Group's business, operations, financial condition, operating results or ability
to successfully consummate the Restructuring. If any of the following risks
actually occur, they could materially adversely affect the Company's or the UPC
Group's business, operations, financial condition, operating results or ability
to successfully consummate the Restructuring.
Risks that the Restructuring is Not Successfully Completed
There are various events that must take place in order for the
Restructuring, and, in particular, the Plan, to be consummated. These include,
among other things, confirmation of the Plan, ratification of the Akkoord and
satisfaction of the various conditions to consummation of the Plan. See "Chapter
11 Case and the Plan of Reorganization--The Plan--Conditions to Confirmation and
Consummation of the Plan" for a description of the conditions to consummation of
the Plan. Although the Company believes that each of these events will occur,
there can be no assurance that such will be the case. If not, the Restructuring,
including the Plan, could not be implemented and it is unclear what Holders of
Claims and Equity Interests would ultimately receive with respect to their
Claims and Equity Interests. The alternatives include, among other things, (i)
liquidation of the Company and (ii) implementation of an alternative
restructuring plan. The Company, however, believes that the Restructuring,
including the Plan, as set forth herein is significantly more attractive than
these alternatives because it could, among other things, significantly shorten
the time required to accomplish the Restructuring, minimize the disruption to
the Company's business and ultimately result in a larger distribution to holders
of Claims against, and Equity Interests in, the Company than would other
alternatives. In particular, if the Restructuring were not consummated and an
alternative reorganization could not be agreed to in a timely manner, it is
possible that the Company would have to liquidate its assets, in which case it
is likely that Holders of Claims and Equity Interests would receive less than
they would have received pursuant to the Restructuring and the Plan as set forth
herein.
Risks Related to the Restructuring Process
The Restructuring may result in a disruption of the UPC Group's business.
It is possible that the Company's filing of the Chapter 11 Case and its
solicitation of acceptances for the Plan and the Akkoord and participations in
the Dutch Implementing Offer could adversely affect the Company's and its
subsidiaries' relationships with their respective suppliers, customers, partners
and employees. If such relationships are adversely affected, the Company's
working capital on a consolidated basis could materially deteriorate. This
deterioration could adversely affect the Company's ability to consummate the
Restructuring, including soliciting acceptances of, and receiving confirmation
of, the Plan. Any disruption in relationships with customers could reduce the
UPC Group's subscriber base which could result in a loss of earnings and, if the
disruption were prolonged, in a material adverse effect on the financial
condition, results of operations and prospects of the Company and the UPC Group.
As described below (see "The Restructuring--Background of the
Restructuring--UPC Distribution Facility Waiver and Amendment"), as part of the
Restructuring, the Company executed the UPCD Facility Waiver. The UPCD Facility
Waiver, by its terms, expires on March 31, 2003. To the extent that consummation
of the Restructuring is delayed beyond March 31, 2003, the UPCD Facility Banks
will have the ability to accelerate the repayment of the amounts outstanding
under the UPC Distribution Facility, unless they agree to extend the terms of
the UPCD Facility Waiver. The Company can provide no assurance that the
Restructuring will be consummated on or before March 31, 2003 or that, if the
Restructuring is not consummated by March 31, 2003, the UPCD Facility Banks will
agree to an extension of the UPCD Facility Waiver.
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The U.S. and Dutch bankruptcy systems differ in various respects.
In order to successfully implement the Restructuring, the Company believes
that it is necessary to do so under, inter alia, U.S. law and Dutch law.
However, there are fundamental differences between the U.S. Bankruptcy Code and
the Dutch Bankruptcy Code. For example, the U.S. Bankruptcy Code and the Dutch
Bankruptcy Code differ in their voting requirements for approval of the
Restructuring, the parties in interest affected by the applicable bankruptcy
law, the treatment of certain claims and equity interests and the ability to
file a revised reorganization document. Thus, although the Company is attempting
to reconcile the disparities between the Chapter 11 Case and the Dutch
Bankruptcy Case, there can be no assurance that these differences can be
sufficiently reconciled so as to avoid any delays or other problems in
consummating the Restructuring.
Risks Related to the Chapter 11 Case
The U.S. Bankruptcy Court may sustain an objection to the classification of
the Claims and Equity Interests.
Section 1122 of the U.S. Bankruptcy Code provides that a plan may place a
claim or an interest in a particular class only if such claim or interest is
substantially similar to the other claims or equity interests of such class. The
Company believes that the classification of the Claims and Equity Interests
under the Plan complies with the requirements set forth in the U.S. Bankruptcy
Code. However, there can be no assurance that the U.S. Bankruptcy Court will
reach the same conclusion. To the extent that the U.S. Bankruptcy Court
disagrees with the classification scheme in the Plan, the Company intends to
modify the Plan to reclassify the Claims and Equity Interests as necessary for
Confirmation. However, there can be no assurance that any such reclassification
would not adversely affect one or more classes under the Plan. Accordingly,
there can be no assurance that the U.S. Bankruptcy Court would confirm the Plan,
as modified, without a resolicitation of votes of any such adversely affected
Holders of Claims or Equity Interests. If the U.S. Bankruptcy Court were to
require such a resolicitation, this would delay consummation of the
Restructuring which, as discussed above, could disrupt the Company's business.
See "Chapter 11 Case and the Plan of Reorganization--The Plan--Classification of
Claims and Equity Interests Under the Plan."
The Holders of Claims and Equity Interests may not approve the Plan.
In order for the Plan to be confirmed, under Section 1129(a)(8) of the U.S.
Bankruptcy Code, each Impaired Class of Claims and Equity Interests must approve
the Plan by the applicable requisite percentages, absent a "cramdown" pursuant
to Section 1129(b) of the U.S. Bankruptcy Code. In addition, under Section
1129(a)(10) of the U.S. Bankruptcy Code, since the Plan contains an Impaired
Class of Claims, the Plan cannot be confirmed unless at least one such Impaired
Class of Claims has voted to accept the Plan (without counting any acceptance of
the Plan by any insiders in such Class). Because Class 4 (Belmarken Notes
Claims), Class 5 (UPC Notes Claims and General Unsecured Claims) and Class 9
(Equity Securities Claims) are the only Impaired Classes of Claims under the
Plan, the affirmative vote of the Holders of at least one such Class of Claims
(without counting any acceptances of the Plan by any insiders in such Class) is
necessary for confirmation of the Plan. However, because UGC, an insider of the
Company, is the only member of Class 4 (Belmarken Notes Claims), approval of the
Plan by this Class cannot count towards the satisfaction of this requirement.
Thus, the affirmative vote of either Class 5 (UPC Notes Claims and General
Unsecured Claims) or Class 9 (Equity Securities Claims) (in either case, without
counting any acceptances of the Plan by any insiders in such Class) is required
for confirmation of the Plan. Although the Plan has been substantially
pre-negotiated with the UGC Group and the Participating Noteholders (which hold
35% and 25%, respectively, of the outstanding UPC Notes) pursuant to the
Restructuring Agreement, these Claims are insufficient, without more, to approve
the Plan, especially since any acceptances of the Plan by members of the UGC
Group do not count for purposes of satisfying Section 1129(a)(10) as the members
of the UGC Group are insiders of the Company. Thus, there can be no assurance
that sufficient Holders of Claims will vote to accept the Plan.
The U.S. Bankruptcy Court may not confirm the Plan.
The Company believes that the Plan meets all of the requirements for
confirmation under the U.S. Bankruptcy Code, including, in particular, that if
the Plan is confirmed it will not be followed by the need for further financial
reorganization of the Company and that the Holders of the UPC Notes, the General
Unsecured Claims, the Belmarken Notes, the UPC Preference Shares A, the UPC
Priority Shares, the UPC Ordinary Shares A (including
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the UPC ADSs) and the Equity Securities Claims, as well as the Holders of Equity
Interests who will be deemed to reject the Plan, will receive value under the
Plan that is greater than the value they would receive if the Company were
liquidated under Chapter 7 of the U.S. Bankruptcy Code. However, there can be no
assurance that the U.S. Bankruptcy Court will conclude that these tests and the
other requirements of Section 1129 of the U.S. Bankruptcy Code have been met
with respect to the Plan, that modifications of the Plan would not be required
for confirmation, or that such modifications would not require a resolicitation
of the Plan. Failure of the U.S. Bankruptcy Court to confirm the Plan would
likely result in a protracted bankruptcy proceeding, which would exacerbate
certain of the factors described in "Risks Related to the Restructuring
Process." Thus, if the Company is unable to confirm the Plan or is unable to
have the Akkoord ratified, there is a significant likelihood that all Holders of
Claims and Equity Interests would ultimately receive far less than what they
would receive under the terms of the Restructuring. See "Risk Factors -- Risks
Related to Dutch Bankruptcy Case -- The Company's Ordinary Creditors may not
approve the Akkoord, which may lead to the Company's liquidation."
The Plan may not be consummated or there may be a delay in the consummation
of the Plan.
The Plan sets forth numerous conditions to consummation of the Plan. There
can be no assurance that the conditions will be satisfied or waived or that any
necessary consent will be obtained. See "Chapter 11 Case and the Plan of
Reorganization--The Plan--Conditions to Confirmation and Consummation of the
Plan." Thus, even if the Plan is confirmed by the U.S. Bankruptcy Court, the
Plan may not be consummated. Similarly, there can be no guarantee as to when
such conditions will be satisfied or waived. Thus, although the Company intends
for the Plan to be consummated within six weeks after Confirmation, no assurance
can be given that this will occur.
Risks Related to the Dutch Bankruptcy Case
It is uncertain how the Dutch Court will apply Dutch bankruptcy law to the
Company.
As Dutch bankruptcy law dates from 1896 (although it has been amended from
time to time), it does not contain provisions that fully take into account
economic developments since that time. In the event Dutch bankruptcy law does
not specifically provide a solution for a legal issue, the outcome is left to
the discretion of the supervisory judge and the Dutch courts. Some of the issues
in this case are issues for which Dutch bankruptcy law does not provide a
resolution. The outcome of these issues is difficult to predict. Furthermore,
Dutch bankruptcy law gives the supervisory judge and the Dutch courts a great
deal of discretion to make decisions in the insolvency proceedings.
The Company's Ordinary Creditors may not approve the Akkoord, which may
lead to the Company's liquidation.
In order to be accepted, the Akkoord must be approved by at least
two-thirds in number of the Company's admitted and recognized Ordinary Creditors
representing three-fourths of the amount of the admitted and recognized claims.
As a consequence of the Dutch Bankruptcy Code, admitted and recognized Ordinary
Creditors not present or represented by proxy at the Dutch Voting Meeting or
admitted or recognized Ordinary Creditors who are present at such meeting but
abstain from voting, shall effectively be considered to have voted against the
Akkoord. In the event the Company's Ordinary Creditors do not accept the
Akkoord, the Dutch Bankruptcy Court may, at its discretion, declare the Company
bankrupt. Such a declaration would put the Company into liquidation. If the
Company's Ordinary Creditors do not accept the Akkoord and the Dutch Bankruptcy
Court does not declare the Company bankrupt, the suspension of payments will
terminate. The Company may then be put in bankruptcy at the request of any
holder of a claim, including claims that are accelerated due to the filing of
the request for suspension of payments or due to the granting of the
(preliminary) suspension of payments and in respect of which the Company has not
obtained a valid waiver.
The Dutch Bankruptcy Court may decide not to ratify the Akkoord, which may
lead to the Company's liquidation.
Even if the Company's Ordinary Creditors approve the Akkoord, the Dutch
Bankruptcy Court may decide not to ratify the Akkoord. At the Dutch Voting
Meeting the supervisory judge will set a date at which the court will consider
ratification (homologatie) of the Akkoord. This date should be between eight and
fourteen days after the Dutch Voting Meeting. However, the Dutch Bankruptcy
Court can postpone the date on which it will consider
-24-
ratification of the Akkoord. Before ratification takes place, the Administrator
and the Ordinary Creditors are entitled to notify the Dutch Bankruptcy Court of
their positions as to the ratification of the Akkoord, and the supervisory judge
will render a written report on the Akkoord. At such hearing, the Company, the
Administrator and the Ordinary Creditors are permitted to provide their views as
to the ratification of the Akkoord.
The Dutch Bankruptcy Court must refuse to ratify the Akkoord if one or more
of the following conditions exist:
o the liquidation value of the Company's assets exceeds the amount
agreed to be paid pursuant to the Akkoord;
o the performance of the Akkoord is not sufficiently guaranteed;
o the Akkoord was reached by means of a fraudulent act or the
preferential treatment of one or more Ordinary Creditors or by other
unfair means, regardless of whether or not the Company or any party
participated in, or facilitated, the fraud, preferential treatment or
other unfair means; or
o the fees and expenses of the expert and the Administrator(s) have not
been paid to the Administrator(s), or security has not been issued for
them.
In addition, the Dutch Bankruptcy Court may also, on other grounds or at
its discretion (ambtshalve), refuse to ratify the Akkoord. It may, for example,
decide that the type and amount of consideration offered is inadequate. The
Dutch Bankruptcy Court may also, at its discretion, declare the Company bankrupt
simultaneously with its refusal to ratify the Akkoord. Such a declaration would
put the Company into liquidation. If the Dutch Bankruptcy Court does not ratify
the Akkoord and does not declare the Company bankrupt, the suspension of
payments will terminate. The Company may then be put in bankruptcy at the
request of any holder of a claim, including claims that are accelerated due to
the filing of the request for suspension of payments or due to the granting of
the (preliminary) suspension of payments and in respect of which the Company has
not obtained a valid waiver.
As a consequence of Dutch bankruptcy law a debtor is only allowed to offer
an Akkoord once. If the Akkoord is not accepted in the suspension of payments
procedure, no Akkoord can be offered in any ensuing subsequent liquidation
proceeding.
The Akkoord may be delayed if any of the Company's Ordinary Creditors
appeal from ratification of the Akkoord or if the Company appeals from a
refusal by the Dutch Bankruptcy Court to ratify the Akkoord.
The ratification of the Akkoord is open to appeal to the Dutch Bankruptcy
Court of Appeal by the Company's Ordinary Creditors who voted against the
Akkoord at the Dutch Voting Meeting or by Ordinary Creditors that were not
present at such meeting within eight days after the date of the ruling
(beschikking) on the ratification by the Dutch Bankruptcy Court. In the event
that the Dutch Bankruptcy Court refuses ratification, both the Company and the
Ordinary Creditors that voted in favor of the Akkoord at the Dutch Voting
Meeting may appeal from the ruling of the Dutch Bankruptcy Court within eight
days after such ruling. The subsequent ruling of the Dutch Bankruptcy Court of
Appeal is open to Supreme Court appeal (cassatie) in the same way and within the
same term after the ruling of the Dutch Bankruptcy Court of Appeal.
It is uncertain whether the Administrator will fully support the
Restructuring.
Together with the granting of a provisional suspension of payments, the
Dutch Bankruptcy Court has appointed an Administrator. The Administrator must be
sufficiently satisfied, and must continue to be satisfied throughout the
Restructuring process, that (i) there is a realistic prospect of successful
completion of the Restructuring and (ii) once so completed, the Restructuring
offers better value to the Company's Ordinary Creditors than liquidation of the
Company. If the Administrator fails to be sufficiently satisfied regarding these
matters, he or she may request that the Dutch Bankruptcy Court declare the
Company bankrupt, which would lead to its liquidation. The Company cannot
provide any assurance that the Administrator will not request the Dutch
Bankruptcy Court to declare the Company bankrupt.
-25-
Risks Related to Ownership of the New UPC Common Stock
An investment in New UPC Common Stock involves significantly different
risks from an investment in the UPC Notes or the holding of a Claim.
If the Plan is confirmed and the Akkoord is ratified, Holders of Claims
against the Company will receive New UPC Common Stock. Upon consummation of the
Restructuring, New UPC will become the parent of the Company. An investment in
New UPC Common Stock involves significantly different risks than an investment
in the debt securities issued by, and creditors' claims against, the Company. If
the Company's operating subsidiaries are unable to successfully pursue their
business objectives following completion of the Restructuring, the value of the
New UPC Common Stock could decline significantly. Moreover, if in the future the
Company's operating subsidiaries are unable to finance their business operations
or refinance their debt as it becomes due, or New UPC chooses or is forced to
liquidate, the rights of holders of New UPC Common Stock would be impaired.
An investment in New UPC Common Stock involves significantly different
risks from an investment in Equity Interests in the Company.
If the Plan is confirmed, the Akkoord is ratified and the Dutch
Implementing Offer is consummated, Holders of Equity Interests will receive New
UPC Common Stock. An investment in New UPC Common Stock involves significantly
different risks than an investment in the equity securities issued by the
Company, including UPC Ordinary Shares A and UPC ADSs.
The Company is a corporation organized under the laws of The Netherlands,
whereas New UPC is a company incorporated in the United States under the laws of
the State of Delaware. The rights of holders of New UPC Common Stock will be
governed by New UPC's Certificate of Incorporation and By-laws which differ in
certain material respects from the Articles of Association of the Company.
Differences between the rights of holders of New UPC Common Stock and Holders of
Equity Interests in the Company arise from differences between the Delaware
General Corporation Law (the "DGCL") and the Dutch Civil Code, as well as from
differences between the governing documents of the respective companies. For a
detailed discussion of the differences between the rights of holders of New UPC
Common Stock and Holders of Equity Interests in the Company, see "Comparison of
Rights of Shareholdings in New UPC and the Company."
As a company incorporated in the United States, New UPC will be subject to
U.S. federal income taxation, whereas the Company was not so subject. For a
detailed discussion of the U.S. federal income tax consequences to New UPC, see
"Tax Consequences--U.S. Federal Income Tax Consequences--U.S. Federal Income Tax
Consequences to New UPC."
New UPC's By-Laws will provide that (i) for a period of three years after
the Effective Date, the Board of Directors of New UPC will be comprised of ten
members, and (ii) a committee of the Board of Directors will have the power to
reject certain related party transactions between New UPC related parties
subject to certain exceptions or if approved by a majority of the disinterested
stockholders of New UPC. See "New UPC--Related Party Transaction Committee."
New UPC will be, and the UPC Group will continue to be, controlled by UGC,
whose interests may be different from those of other holders of shares of
New UPC Common Stock.
As of the date of this Disclosure Statement, the UGC Group owns
approximately 53.1% of the UPC Ordinary Shares A, all of the outstanding UPC
Priority Shares and approximately 20% of the outstanding UPC Preference Shares
A. As a result, UGC is currently able to control the election of all but one of
the members of the Company's Supervisory Board. Royal Philips Electronics N.V.
has had the right to appoint one member of the Company's Supervisory Board since
UGC acquired 50% of the Company's issued shares from Royal Philips Electronics
N.V. in 1997. The Company is currently negotiating with Royal Philips
Electronics N.V. to convert this right into contractual veto rights over the
taking of certain actions by certain of the Company's Austrian subsidiaries. The
UGC Group currently is able to determine the outcome of almost all corporate
actions requiring the approval of the Company's shareholders. The UPC Priority
Shares, which are held solely by United Europe, Inc., a wholly-owned subsidiary
of UGC Holdings (a wholly-owned subsidiary of UGC), give UGC additional
-26-
approval rights over certain of the Company's actions. The following are the
members of the Board of Directors of UGC: Gene W. Schneider (Chairman of the
Board), Michael T. Fries, Mark L. Schneider, Robert R. Bennett, Albert M.
Carollo, John P. Cole, Jr., Gary S. Howard, John C. Malone, John F. Riordan,
Curtis W. Rochelle and Tina M. Wildes. All of the members of the Board of
Directors of UGC, in their capacities as directors of UGC, have the following
business address: 4643 South Ulster Street, 13th Floor, Denver, Colorado 80237.
If the Restructuring is successfully completed on the terms described in
this Disclosure Statement, the UGC Group will own approximately 65.5% of the
outstanding shares of New UPC Common Stock, and New UPC will own over 99% of the
UPC Ordinary Shares of the Company upon completion of the Restructuring. UGC
will control the election of the members of the Board of Directors of New UPC.
New UPC will control the election of all of the members of the Company's
Supervisory Board. Subject to required approvals of a committee of New UPC's
Board of Directors, UGC will be able to determine the outcome of almost all
corporate actions requiring the approval of the holders of the New UPC Common
Stock.
As a result of these levels of control, UGC can, and, following completion
of the Restructuring, will continue to be able to, exercise significant and
determinative influence over the UPC Group's operations, business strategy and
most matters requiring approval of New UPC's shareholders. The UGC Group's
interests may conflict with the interests of other holders of shares of New UPC
Common Stock.
New UPC's Board of Directors will have the power to approve transactions in
which UGC has an interest. This power will be subject to the directors'
fiduciary duties to New UPC's other shareholders. In addition, New UPC's By-Laws
will provide for a committee of the Board of Directors, with the power to reject
certain related party transactions between New UPC and its related parties,
including UGC and subsidiaries of UGC that are not also subsidiaries of New UPC,
subject to certain exceptions or if approved by a majority of the disinterested
shareholders of New UPC. See "New UPC--Related Party Transaction Committee."
Nonetheless, conflicts may arise between the interests of UGC and New UPC's
other shareholders (including the Participating Noteholders). In addition, a
conflict may arise because UGC currently has, and in the future may acquire,
substantial business operations and opportunities apart from the UPC Group's
business.
New UPC may not be able to list the New UPC Common Stock on NASDAQ and this
may impair the liquidity of the New UPC Common Stock.
In the Restructuring Agreement, New UPC has agreed to use its commercially
reasonable efforts to list the shares of New UPC Common Stock on NASDAQ. If New
UPC is unable to list the New UPC Common Stock on NASDAQ, the holders' ability
to trade their shares of the New UPC Common Stock may be adversely affected. In
order to list the New UPC Common Stock on NASDAQ, New UPC will be required to
meet certain threshold requirements. As of the date of this Disclosure
Statement, New UPC has not achieved the threshold criteria. There can be no
assurances that, if the Restructuring is completed, New UPC will be able to list
the New UPC Common Stock on NASDAQ or that any trading market for the New UPC
Common Stock will develop or be sustained. If New UPC is unable to list the New
UPC Common Stock on NASDAQ, it may be difficult to make purchases and sales of
the New UPC Common Stock or obtain timely and accurate quotations with respect
to trading of the New UPC Common Stock. Failure to obtain the listing of the New
UPC Common Stock on NASDAQ could adversely impact the liquidity of the New UPC
Common Stock and may make it difficult to trade shares of the New UPC Common
Stock. This may adversely affect the market price of the New UPC Common Stock.
If New UPC is unable to list the New UPC Common Stock on a U.S. national
securities exchange, the New UPC Common Stock could be a "penny stock" as that
term is defined in the Securities Exchange Act of 1934, as amended (the "U.S.
Exchange Act"). Brokers effecting transactions in a "penny stock" are subject to
additional customer disclosure and record keeping obligations, including
disclosure of the risks associated with low price stocks, stock quote
information and broker compensation. In addition, brokers effecting transactions
in a "penny stock" are subject to additional sales practice requirements under
Rule 15g-9 of the U.S. Exchange Act, including making inquiries into the
suitability of "penny stock" investments for each customer or obtaining a prior
written agreement for the specific "penny stock" purchase. Because of these
additional obligations, some brokers will not effect transactions in "penny
stocks," which could have an adverse effect on the liquidity of the New UPC
Common Stock and make buying or selling it more difficult.
-27-
The price of the New UPC Common Stock will likely be volatile.
If New UPC is successful in listing the New UPC Common Stock on NASDAQ, the
price of the New UPC Common Stock will likely be very volatile. Factors that may
materially adversely affect the market price of the New UPC Common Stock include
the following:
o actual or anticipated variations in the UPC Group's financial results
and earnings;
o announcements of technological innovations, new sales formats or new
products or services by the UPC Group or the UPC Group's competitors;
o changes in financial estimates by securities analysts for the UPC
Group or its competitors;
o fluctuations in the stock prices of the UPC Group's competitors;
o additions or departures of key personnel;
o adverse regulatory actions or decisions;
o announcements of extraordinary events, including material litigation
or changes in pricing policies by the UPC Group, New UPC or the UPC
Group's competitors;
o changes in the market for the UPC Group's cable television or
broadband services;
o changes in the economic performance and/or market valuations of other
cable television and broadband service companies in Europe;
o announcements by the UPC Group, New UPC or the UPC Group's competitors
of significant acquisitions, strategic partnerships, joint ventures or
capital commitments;
o general economic, political and market conditions; and
o additional sales or issuances of shares of New UPC Common Stock.
In addition, stock markets in the United States have experienced
significant price and volume fluctuations in recent years and the market prices
of securities of cable television companies and technology companies in
particular have been highly volatile. Investors in such securities may lose all
or part of their investment. In the past, following periods of volatility in the
market price of a company's securities, securities class action litigation in
the United States has often been instituted against such a company. The
institution of class action litigation against New UPC could result in
substantial costs and a diversion of New UPC's management's attention and
resources, which could materially adversely affect New UPC's and the UPC Group's
business, results of operations and financial condition.
The Restructuring will have a significant impact on the Company's existing
capital structure. Neither the Company nor New UPC can predict how the capital
markets will perceive the prospects for the Company's and the UPC Group's
business operations following the Restructuring and, therefore, what the effect
will be on the trading price of the New UPC Common Stock. Moreover, participants
in the Restructuring may seek to liquidate their holdings of the New UPC Common
Stock, which could have a negative effect on the trading price of the New UPC
Common Stock.
In addition, although the Plan and the Projections (as defined herein) were
prepared based upon a reorganization enterprise value range for the Reorganized
Company, such valuation was not an estimate of the price at which the New UPC
Common Stock may trade in the market, if at all, and neither the Company nor New
UPC have attempted to make any such estimate in connection with the development
of the Plan. See "Reorganization Valuation and Projected Financial Information."
No assurance can be given as to the market price of the New UPC Common Stock
that will prevail following the Effective Date.
-28-
The broad market and industry factors referred to above may adversely
affect the market price of the New UPC Common Stock regardless of New UPC's or
the UPC Group's actual operating performance.
Holders' ability to sell New UPC Common Stock may be limited if they are
deemed to be an underwriter.
Although the Company and New UPC believe that most holders of Claims will
be able to resell the New UPC Common Stock without registration under the U.S.
Securities Act or other federal securities laws, their ability to sell may be
diminished if they are deemed to be an "underwriter" with respect to such
securities within the meaning of Section 1145(b) of the U.S. Bankruptcy Code.
Section 1145(b) of the U.S. Bankruptcy Code defines an "underwriter" for
purposes of the U.S. Securities Act as including a person who is a control
person of the issuer of the securities.
The Company cannot assure holders that they will not be deemed to be a
statutory underwriter and they are advised to consult with their own counsel as
to the availability of exemptions under the U.S. Securities Act.
New UPC does not intend to pay dividends for the foreseeable future.
New UPC does not intend to pay dividends in the foreseeable future. Holders
of shares of New UPC Common Stock should therefore not expect to receive
dividends on the New UPC Common Stock for the foreseeable future.
As a holding company, New UPC will depend on the receipt of dividends from
its operating subsidiaries to meet its payment obligations and to pay dividends
on the New UPC Common Stock. If New UPC's subsidiaries are unable to make any
dividend payments to New UPC (through the Company), New UPC will be unable to
pay any dividends on the New UPC Common Stock. The ability of these subsidiaries
to pay dividends to their shareholders, including the Company and New UPC, is
subject to applicable law and to restrictions contained in the debt instruments
of these subsidiaries, including, in the case of UPC Distribution, the UPC
Distribution Facility.
In addition, any dividends received by New UPC from the Company will be
subject to U.S. federal income tax and any payments of dividends by New UPC on
the New UPC Common Stock are not deductible by New UPC for U.S. federal income
tax purposes. Thus, New UPC's ability to pay dividends on the New UPC Common
Stock may be limited due to U.S. federal income tax constraints.
Risks Related to Ownership of UPC Ordinary Shares A Upon Completion of the
Restructuring
The Holders of the UPC Ordinary Shares A will face substantial dilution of
their UPC Ordinary Shares A following the implementation of the
Restructuring.
The Restructuring will result in significant dilution of the shareholdings
of the Holders of the UPC Ordinary Shares A. The percentage of UPC Ordinary
Shares A available for active trading will substantially decrease. As a result,
the liquidity of the UPC Ordinary Shares A after the Restructuring has been
completed will reduce significantly.
There may be an illiquid market or no public market for the UPC Ordinary
Shares A after the Restructuring is completed.
If the Restructuring is successfully completed, New UPC will hold over 99%
of the outstanding UPC Ordinary Shares (including the UPC Ordinary Shares A). In
such event, the Company intends to seek approval from Euronext for the
termination of the listing of the UPC Ordinary Shares A on Euronext. As a result
of the Company's continuing negative shareholders' equity, in November 2001,
Euronext put the UPC Ordinary Shares A on the so-called "penalty bench"
(strafbankje) and, in February 2002, removed the UPC Ordinary Shares A from the
AEX Index until such time as the Company returns to positive shareholders'
equity. This did not result in a delisting of the UPC Ordinary Shares A from
Euronext, which shares are still freely tradeable on Euronext. By letter dated
February 15, 2002, Euronext confirmed that, once a company has been referred to
the penalty bench, it is Euronext's policy not to remove the company's shares
from the penalty bench until such time as a financial restructuring of a company
has been completed resulting in the shareholders' equity of that company meeting
at least the level required in order to be listed on Euronext, and other
Euronext requirements are satisfied. Euronext has confirmed to
-29-
the Company that the Company would need to satisfy the following conditions in
order for the penalty bench measure imposed on the Company to be lifted: (i) the
Company will need to receive unconditional commitments for a financial
restructuring that will result in the Company having an adequate shareholders
equity to safeguard that its shareholders' equity in the foreseeable future will
not again turn negative, (ii) the consequences for the holders of UPC Ordinary
Shares A now traded on Euronext will need to be known and (iii) the UPC Ordinary
Shares A will need to receive a sufficiently large free float.
The UPC Ordinary Shares A (in the form of UPC ADSs) were delisted from
NASDAQ on May 23, 2002 as a result of the Company's inability to continue to
comply with the minimum bid price requirements for listing. The Company does not
intend to apply for a relisting of the UPC ADSs on NASDAQ or a listing of the
UPC ADSs or UPC Ordinary Shares A on any securities exchange in the United
States.
Since the Company intends to seek to delist the UPC Ordinary Shares A from
Euronext upon successful completion of the Restructuring and the UPC ADSs have
been delisted from NASDAQ, if you are a Holder of UPC Ordinary Shares A and
decide to retain your UPC Ordinary Shares A under the Plan or fail to
participate in Dutch Implementing Offer, you will likely not be able to sell
your UPC Ordinary Shares A through the facilities of any securities exchange. If
Euronext denies the Company's application to delist the UPC Ordinary Shares A
from Euronext upon successful completion of the Restructuring, a trading market
for the UPC Ordinary Shares A will continue to exist following completion of the
Restructuring. However, in that case, the Company does not expect that there
will be active trading in the UPC Ordinary Shares A on Euronext following the
Restructuring. Accordingly, the Company can provide no assurance regarding the
liquidity of your UPC Ordinary Shares A, if you retain your UPC Ordinary Shares
A after the Restructuring has been completed.
The Holders of the UPC Ordinary Shares A may be required to accept a cash
payment in relinquishment of their UPC Ordinary Shares A after the
Restructuring.
If the Restructuring is consummated in the manner contemplated by the Plan,
the Akkoord and the Dutch Implementing Offer, New UPC will have various
mechanisms available under Dutch law to require the holders of the UPC Ordinary
Shares A to accept a cash payment in relinquishment of their UPC Ordinary Shares
A. Therefore, if a non-U.S. Holder of UPC Ordinary Shares A fails to receive
shares of New UPC Common Stock for its UPC Ordinary Shares A under the Plan and
fails to participate in the Dutch Implementing Offer, such Holder would be
required to accept cash for its UPC Ordinary Shares A after the Restructuring if
New UPC decides to proceed with a "squeeze out" of the non-New UPC holders of
the UPC Ordinary Shares A. No assurance can be given as to the amount of cash
such a Holder would receive from New UPC for its UPC Ordinary Shares A. However,
such amount of cash may be less than the value of the shares of New UPC Common
Stock such Holder would have received if it had received shares of New UPC
Common Stock under either the Plan or the Dutch Implementing Offer.
Risks Related to the UPC Group's Business
The UPC Group will need to obtain additional capital in order to expand its
operations to take full advantage of business opportunities.
Upon completion of the Restructuring, the Company expects that its
remaining cash balances, together with anticipated cash flow from operations and
amounts received from the New UPC Common Stock subscription, will provide it
with sufficient capital to fund the UPC Group's existing operations for the
foreseeable future. However, if the Company wishes to expand the UPC Group's
cable television services or broadband communications network to take full
advantage of business opportunities, it will require additional capital. A
failure to acquire additional capital on acceptable terms may seriously and
adversely affect the growth of its business and may have an adverse effect on
the valuation of its tangible and intangible assets.
The Company expects to continue to incur net losses for the foreseeable
future.
The Company has experienced net losses every year since it started business
in July 1995. Through September 30, 2002, the Company had recognized cumulative
losses of approximately (euro)8.0 billion (US$7.9 billion). The Company expects
to incur net losses for at least the foreseeable future.
-30-
At present, the Company's high level of debt and limitations on its
capacity to raise capital and invest could slow down growth in subscribers and
revenue. The Company is undertaking the Restructuring to reduce its
indebtedness.
The Company is currently highly leveraged and, on a consolidated basis,
will continue to be so after the Restructuring. Many of its unconsolidated
subsidiaries and affiliates also have long- and short-term debt. The Company's
high level of debt and limitations on its capacity to raise capital and invest
reduce its financial flexibility. This could reduce the amount of money
available to develop the Company's businesses and result in slower growth in
subscribers and revenues than it plans. As of September 30, 2002, the Company
owed (euro)8.9 billion (US$8.8 billion) in total consolidated debt, including
(euro)3.1 billion (US$3.1 billion) under the UPC Distribution Facility. The
Company may need to seek additional financing in the future which, if available,
could result in it incurring significant additional indebtedness. The covenants
of the Company and our subsidiaries' and affiliates' indentures and debt
facilities may restrict the UPC Group's operations.
The UPC Group may not be able to raise future capital for the substantial
capital expenditures needed to operate its business competitively.
The UPC Group's business is highly capital intensive. The UPC Group needs
to have enough capacity and flexibility to meet its customers' needs. The UPC
Group's ability to accurately plan its expected service capacity may be
inhibited by:
o the pace of technological change;
o availability of financing;
o unpredictable demand variations; and
o the long lead times for product development, requiring major
expenditure commitments well before actual purchase of equipment.
Due to the UPC Group's recent financial performance, it may not be able to
maintain adequate sources of capital to finance its capital expenditures. The
UPC Group does not know when the additional financing will be available to the
UPC Group or available on favorable terms.
Adverse regulation of the UPC Group's video services could limit its
revenues and growth plans and expose it to various penalties.
In most of its markets, regulation of video services takes the form of
price controls and programming content restrictions. Regulations impose other
types of charges on the UPC Group and restrictions on its ownership and
operations, violations of which may lead to monetary penalties or forfeitures of
its rights to provide services or facilities. In The Netherlands and Austria,
local municipalities have contractual rights that restrict its flexibility to
increase prices, change programming and introduce new services. In many
countries the UPC Group may require approval to move channels from its basic
tier of service to other higher-priced tiers, a key component of its strategy.
UPC Polska, Inc., the UPC Group's Polish operating company ("UPC Polska"), is
currently operating in certain areas without the necessary permits. Failure to
obtain these permits could lead to governmental orders requiring UPC Polska to
stop operating in those areas, the imposition of monetary penalties and
forfeiture of the UPC Group's cable networks. Poland also has restrictions with
respect to rights to install and operate cable television and direct-to-home
broadcasting networks by entities in which foreign ownership exceeds certain
limits and in which the majority of governing bodies are not Polish citizens
residing in Poland. UPC Polska may not be deemed to be in full compliance with
these or other restrictions or regulations.
Increased regulatory review may preclude certain arrangements between the
UPC Group's content companies and its operating systems.
The UPC Group has begun facing increased competition regulatory review of
its operations in some countries because it owns interests in both cable
television and internet access systems as well as companies that provide content
for cable television and internet subscribers. Local operators with whom UPC
Media has long term
-31-
content agreements are subject to exclusivity obligations that allow UPC Media
to offer its content products to them to the exclusion of other competing
providers. These exclusivity obligations may attract the interest of European
Union or national regulatory authorities. European Union and national regulatory
agencies or national courts could reduce the period of exclusivity under which
the UPC Group offers its services over the networks of its local operators or
could declare that its agreements are null and void, which may require them to
be renegotiated. The UPC Group's competitors may then be able to provide
services through its local operators on the same terms and conditions as it has
negotiated, or its local operators may offer competing services earlier than it
had anticipated in its agreements. Moreover, an agreement containing exclusivity
provisions could in some cases give rise to substantial fines imposed by the
European Commission and civil liability from third parties. As a result of this
regulatory review, the UPC Group may be precluded from making certain
arrangements between its content companies and its operating systems.
Adverse regulation could require the UPC Group to provide access to its
networks to third parties on economic terms and conditions that may be
adverse to it.
In The Netherlands there are debates ongoing on the question of what rights
should be afforded to third parties in terms of access to cable networks. In the
summer of 2000, The Netherlands government committed to producing a legal
framework on access to cable networks, in line with the future European Union
framework, within two years. In 2001, this culminated in a draft bill, which was
strongly criticized by the Dutch Council of State (Raad van State) for
infringing upon the then-draft European Union communications review framework.
In this light, a slightly modified bill was presented by the Dutch government at
the end of 2001, but was only sent to the Dutch Parliament for adoption in
November 2002. It is possible that the bill may not be adopted by the Dutch
Parliament before the Dutch general elections in January 2003. In that case, the
draft bill will be incorporated into the European Union framework implementation
process. Should, however, the Dutch government pursue the draft bill as a piece
of stand-alone legislation and not send the legislation for approval at the
European Union level, the European Commission would consider initiating an
infringement procedure against The Netherlands.
In addition, in December of 2001 OPTA (The Netherlands communications
regulator) and the NMA (The Netherlands competition authority) presented their
preliminary conclusions of a joint investigation into the Dutch internet access
market and the definition of a narrowband internet (wholesale) access market and
a broadband internet (wholesale) access market. The latter, which OPTA/NMA
considered to be national in scope, consisted of cable and xDSL. It is generally
believed that these market definitions will make it unlikely that cable will be
found to have significant market power in the broadband internet access market,
which would mean that the proposed bill would not enable regulators to impose
access obligations on cable operators. In the event that the UPC Group is
required to offer third parties access to its cable infrastructure, without
being able to specify the terms and conditions of such access, for the delivery
of internet services, internet service providers could potentially provide
services that compete with its services over its network infrastructure.
At the European Union level, specific regulation on access to cable
networks is not covered by the recently adopted Communications Review
directives. These directives prevent European Union member states from imposing
ex-ante access obligations other than on those operators deemed to have
Significant Market Power (re-defined in line with the European Union competition
law concept of dominance) in a particular market. European Union guidance on
national relevant markets, which European Union member states are obliged to
follow as part of their obligations under the new package, does not define a
cable infrastructure nor a broadband internet services market, which reduces the
likelihood of cable access regulation flowing from the European Union level
directives. All European Union member states, including The Netherlands, must
implement the new Communications Review directives by July 2003 and are required
to adapt their current national laws in line with the new European Union
Communications Review directives. This process is not without risk and requires
review in 2003 to ensure national regulators do not deviate from the
non-interventionist European Union framework. Any further review of this revised
European Union level approach is not expected to occur before 2005. However,
adherence to the European Union framework does not restrict the ability of a
national competition authority to require the Company to provide access pursuant
to a competition law complaint. Nor can there be certainty as to the future
requirements of the European Union regulatory regime.
-32-
Regulation may increase the cost of offering internet/data services and
slow demand.
The internet access business has, to date, not been materially restricted
by regulation in the UPC Group's markets. The legal and regulatory environment
of internet access and electronic commerce is uncertain, however, and may
change. New laws and regulations may be adopted for internet service offerings.
Existing laws may be applied to the new forms of electronic commerce.
Uncertainty and new regulation could increase our costs. It could also slow the
growth of electronic commerce on the internet significantly. This could delay
growth in demand for our internet/data services and limit the growth of our
revenues. New and existing laws may cover issues such as:
o user privacy;
o sales and other taxation;
o consumer protection;
o characteristics and quality of products and services;
o cross-border commerce;
o libel and defamation;
o copyright and trademark infringement;
o pornography and indecency; and
o other claims based on the nature and content of internet
materials.
As the UPC Group becomes larger, it is beginning to face increased
competition regulatory review that may preclude certain acquisitions or
other transactions.
Over the last few years, the UPC Group has grown through acquisitions of
other companies and systems. The UPC Group has a substantial presence in some
markets, including The Netherlands. Because of its size and position, it often
has to seek approval from competition regulators for certain acquisitions. The
UPC Group may be precluded from making certain acquisitions or entering into
certain transactions as a result of competition-related regulatory issues. The
UPC Group has begun facing increased competition regulatory review of its
operations in some countries because it owns interests in both cable television
and internet access systems as well as companies that provide content for cable
television and internet subscribers. As a result of this regulatory review, the
UPC Group may be precluded from making certain arrangements between its content
companies and operating systems.
The UPC Group cannot be certain that it will be successful in integrating
acquired businesses with its existing businesses.
The UPC Group's success depends, in part, upon the successful integration
of its recently acquired businesses and any future acquisitions its makes.
Although the UPC Group believes that integration of its new acquisitions will
result in significant benefits and synergies, the integration of these
businesses will also present significant challenges, including:
o realizing economies of scale in interconnection, programming and
network operations, and eliminating duplicate overheads; and
o integrating networks, financial systems and operational systems.
The Company cannot assure Holders, with respect to either the UPC Group's
new acquisitions or future acquisitions, that the UPC Group will realize any
anticipated benefits or will successfully integrate any acquired business with
its existing operations.
-33-
The UPC Group's business is almost entirely dependent on various
telecommunications and media licenses granted and renewed by various
national regulatory authorities in the territories in which it does
business, and without these licenses, a number of its businesses could be
severely curtailed.
Certain licenses are granted for a limited term and they may not be renewed
when they expire. Regulatory authorities may have the power, at their
discretion, to terminate a license (or amend any provisions, including those
related to license fees) without cause. If the UPC Group were to breach a
license or applicable law, regulatory authorities could revoke, suspend, cancel
or shorten the term of a license or impose fines. Regulatory authorities may
grant new licenses to third parties, resulting in greater competition in
territories where the UPC Group is already licensed. New technologies may permit
new competitors to compete in areas where the UPC Group holds exclusive
licenses. National authorities may pass new laws or regulations requiring us to
re-bid or reapply for licenses or interpret present laws against us, adversely
affecting the UPC Group's business. Licenses may be granted on a temporary
basis, and there is no assurance that these licenses will be continued on the
same terms. Licenses may require the UPC Group to grant access to bandwidth,
frequency capacity, facilities or services to other businesses that compete for
its customers. Accordingly, a number of the UPC Group's businesses could be
severely curtailed if those licenses were no longer available or were available
at unfavorable terms.
Low demand, competition, unplanned costs, regulation and difficulties with
interconnection could hinder the profitability of the UPC Group's telephone
services.
The UPC Group's telephone services may not become profitable for a number
of reasons. The UPC Group's strongest competition will come from incumbent
operators. Regulation of the prices charged by the incumbent for the use of
network elements and to end users may be critical to the UPC Group's ability to
compete with the incumbent operator. Generally the UPC Group's services are not
subject to price regulation and the incumbent's are. Also, customer demand could
be low, or the UPC Group may encounter competition and pricing pressure from
incumbent and other telecommunications operators. The UPC Group's network
upgrade may cost more than planned. In addition, the UPC Group's operating
companies need to obtain and retain licenses and other regulatory approvals for
their existing and new services. They may not succeed, and such licenses are
currently unavailable in the Czech Republic and Romania. Furthermore, the UPC
Group's operating systems need to interconnect their networks with those of the
incumbent telecommunications operators in order to provide telephone services.
Problems in negotiating interconnection agreements could delay the introduction
or impede the profitability of the UPC Group's telephone services.
Interconnection agreements have limited duration and may be subject to
regulatory and judicial review. This may involve time-consuming negotiations and
regulatory proceedings. The UPC Group is negotiating interconnection agreements
for its planned telephone markets that do not yet have them. While incumbent
telecommunications operators in the European Union are required by law to
provide interconnection, incumbent telecommunications operators may not agree to
interconnect on a time scale or on terms that will permit the UPC Group to offer
profitable telephone service. After interconnection agreements are concluded,
the UPC Group remains reliant upon the good faith and cooperation of the other
parties to these agreements for reliable interconnection.
The complexities of the operating systems the UPC Group needs to develop
for its new services could increase the costs and slow the introduction of
these services.
The UPC Group only recently began offering digital services and continue to
offer new internet and telephone services in existing and new markets. The UPC
Group may not have planned for or be able to overcome all of the problems in
introducing these services, especially on the large scale that it hopes to
achieve. This would impede the UPC Group's planned revenue growth and harm its
financial condition.
The new services involve many operating complexities. The UPC Group will
need to develop and enhance new services, products and systems, as well as
marketing plans to sell the new services. The UPC Group is in the process of
introducing a comprehensive new billing and customer care system to support its
services. However, until the change to the new system is completed, the UPC
Group will continue to use its existing customer care and billing systems.
Problems with the existing or new systems could delay the introduction of the
new services, increase their costs, or slow successful marketing. These
complexities and others may cause the new services not to meet the UPC Group's
financial expectations. This could impede the UPC Group's planned revenue growth
and harm its financial condition.
-34-
The success of the UPC Group's services depends on continued achievement of
technological advances.
Technology in the cable and telecommunications industry is changing very
rapidly. These changes influence the demand for the UPC Group's products and
services. The UPC Group needs to be able to anticipate these changes and to
develop successful new and enhanced products quickly enough for the changing
market. This will determine whether the UPC Group can continue to increase its
revenues and the number of its subscribers and be competitive.
The UPC Group has introduced new services, including:
o digital services;
o pay-per-view services with frequent starting times, which are known as
"near video-on-demand;"
o high speed data and internet access services; and
o cable telephone services.
The technologies used to provide these services are in operation in some of
the UPC Group's systems as well as systems of other providers. However, the UPC
Group cannot be sure that demand for its services will develop or be maintained
in light of other new technological advances.
The UPC Group expects that new products and technologies will continue to
emerge and that existing products and technologies will further develop. These
new products and technologies may reduce the prices of its services or they may
be superior to, and render obsolete, the products and services it offers and the
technologies it uses. It may be very expensive for the UPC Group to upgrade its
products and technology in order to continue to compete effectively. The UPC
Group's future success depends, in part, on its ability to anticipate and adapt
in a timely manner to technological changes.
Lack of necessary equipment could delay or impair the implementation and
expansion of the UPC Group's new services.
If the UPC Group cannot obtain the equipment needed for its existing and
planned services, its operating results and financial condition may be harmed.
For example, a customer will need a digital set-top computer to access the
internet or receive the UPC Group's other enhanced services through a television
set. These computers are being developed by several suppliers. If there are not
enough set-top computers for subscribers, however, the UPC Group may have to
delay its expansion plans. Further, the UPC Group expects the price for these
computers to decrease. If the price for set-top computers does not decrease from
current levels as expected, it could impair the UPC Group's ability to offer
these services.
Inability to obtain the necessary content could reduce demand for the UPC
Group's services.
The UPC Group's success depends on obtaining or developing affordable and
popular video and internet services for its subscribers. The UPC Group may not
be able to obtain or develop enough competitive content to meet its needs. This
would reduce demand for the UPC Group's digital video and internet services,
limiting their revenues. The UPC Group relies on other programming suppliers for
most of its content although it has committed and will continue to commit
substantial resources to obtaining and developing new content. Where
appropriate, the UPC Group has found partners for obtaining new content, and, as
necessary, it will continue to seek new partners. The UPC Group may not,
however, find appropriate partners, obtain necessary broadcasting licenses or
successfully implement its content plans.
Increased competition in video services could reduce the UPC Group's
revenues.
The cable television industry in many of the UPC Group's markets is
competitive and changing rapidly. Competition could result in the loss of the
UPC Group's customers and a decrease in its revenues. The UPC Group expects that
competition will increase as new entrants, who use multi-channel television
technologies different from the technologies our cable systems use, enter our
markets. These technologies may include direct-to-home satellite
-35-
services, private cable systems used by housing associations and multiple unit
dwellings, and "wireless" cable transmitted by low frequency radio.
The UPC Group may also face competition in video services from other
communications and entertainment media companies. These could include incumbent
telecommunications operators and providers of services over the internet. In
some franchise areas, the UPC Group's rights to provide video services are not
exclusive. The UPC Group currently competes with other cable operators and in
the future may have to compete with additional cable operators.
The competitiveness of the telephone and internet/data services industries
will make it difficult for the UPC Group's new services to enter the
market.
In the provision of its telephone and internet/data services, the UPC Group
faces competition from incumbent telecommunications operators and other new
entrants to these markets. The UPC Group's telephone service also competes with
wireless telephone carriers. In the provision of internet/data services the UPC
Group competes with companies that provide such services using traditional, low
speed telephone lines, and the UPC Group expects to face growing competition
from internet service providers that, like itself, use higher-speed,
higher-capacity cable modems and providers that use other broadband
technologies, such as fiber, microwave, satellite and digital subscriber lines.
Some of the UPC Group's competitors have more experience in providing telephone
and/or internet services than the UPC Group has and others may be able to devote
more capital to these services than the UPC Group can.
Developing a profitable telephone service will depend, among other things,
on whether the UPC Group can attract and retain customers, maintain competitive
prices, and provide high quality customer care and billing services without
incurring significant additional costs. Prices for long distance calls have
decreased significantly in recent years and the UPC Group expects them to
continue to drop. Increased competition may also push prices down for local
telephone services. Regulators may make incumbent telecommunications operators
lower their rates or increase their pricing flexibility. Because these are the
UPC Group's principal competitors, this could force it to lower its rates to
remain competitive.
European use of the internet/electronic commerce and other bandwidth
intensive applications may not increase as the UPC Group expects.
The UPC Group's business plan assumes that European use of the internet,
electronic commerce and other bandwidth intensive applications will continue to
increase substantially in the next few years. The UPC Group's business plan
assumes a less rapid increase in Eastern Europe. If the use of applications
requiring intensive bandwidth does not increase in Europe as anticipated,
subscriptions to chello broadband and other services involving managed bandwidth
could be materially lower than the UPC Group currently anticipates. Reduced
demand for the UPC Group's services may have a negative effect on its revenues
and its financial condition.
The UPC Group may incur financial costs as a result of exchange rate
fluctuations.
The UPC Group's reporting currency is the Euro. For the nine months ended
September 30, 2002, approximately 68% of the UPC Group's revenue was denominated
in Euros. The UPC Group has had, and as it expands it is likely to continue to
have, costs and revenues in currencies other than the local currency in each
market. Changes in foreign currency exchange rates can reduce the value of the
UPC Group's assets and revenues and increase its liabilities and costs. The UPC
Group has not entered into any hedging transactions to reduce its exposure to
these exchange rate risks. The UPC Group may therefore suffer losses solely as a
result of exchange rate differences.
The UPC Group may not always control its operating companies and joint
ventures.
The UPC Group currently holds a controlling ownership interest in most of
its operating companies. From time to time the UPC Group has acquired
non-controlling interests in various companies. In the past the UPC Group has
formed joint ventures by combining certain of its assets with those of its
partners and the UPC Group typically retains an ownership interest in the joint
venture proportionate to the value of the assets it contributed. The UPC Group
expects to continue to enter into these types of transactions in the future. In
addition, the UPC Group may sell interests in certain of its operating companies
in public offerings or private sales. At some point, the UPC
-36-
Group may hold minority voting or economic interests in these joint ventures and
operating companies. While the UPC Group intends to be actively involved in the
management of these minority-owned operating companies, it may be precluded from
affirmatively controlling these operating companies. If the UPC Group does not
control these companies, it may be unable to cause these operating companies and
joint ventures to pay dividends or other distributions to their respective
shareholders and may be unable to implement the strategies that it favors.
The loss of key personnel could weaken the UPC Group's technological and
operational expertise, delay the introduction of new business lines and
lower the quality of service.
The UPC Group may not be able to attract and hold onto key employees. This
could hinder the introduction of new services. There is intense competition for
qualified personnel in the UPC Group's businesses and technologies. The UPC
Group's success and growth strategy depend upon being able to attract and hold
onto key management, technological and operating personnel. Without these, the
UPC Group might make less successful strategic decisions. The UPC Group would
also be less prepared for technological and marketing problems, which could
reduce the UPC Group's ability to serve subscribers and lower the quality of the
UPC Group's services. As a result, the UPC Group's financial condition could
worsen. The UPC Group's key personnel on the date of this Disclosure Statement
include the following:
John F. Riordan Board of Management Member, President, and Chief Executive Officer
Charles H.R. Bracken Board of Management Member and Chief Financial Officer
Gene Musselman Board of Management Member and Chief Operating Officer
Nimrod J. Kovacs Board of Management Member and Executive Chairman, UPC Central Europe
Shane O'Neill Board of Management Member and Chief Strategy Officer
Anton M. Tuijten Board of Management Member, Senior Vice President and General Counsel
Niall Curran Managing Director
Sudhir Isphahani Chief Technology Officer
It is particularly difficult for the UPC Group to keep a successful
management team because many of them must live and work away from their home
countries.
-37-
The Restructuring
Purpose of the Restructuring
The Company has incurred significant operating losses and negative cash
flows from operations, which have been driven by continuing development efforts,
including the introduction of new services such as digital video, telephone and
internet and the upgrading of existing services, as well as the acquisitions of
cable television systems and related businesses in both existing and new
markets. The decision to undertake the Restructuring was prompted in part by a
lack of liquidity resulting from the problems of availability of debt and equity
financing for these activities, due in large measure to depressed conditions in
the global telecom markets generally.
Background of the Restructuring
As a result of the anticipated lack of available financing, during 2001,
the Company reviewed its current and long-range plans for its various business
segments and took a number of actions to reorganize internally. As part of such
review, the Company resolved to change its focus from an aggressive digital
rollout to increasing its sales of products and services which have better gross
margins and are currently profitable. The Company's revised business plan
focuses on average revenue per subscriber and margin improvement, increased
penetration of new service products within existing upgraded homes, efficient
deployment of capital, and products with positive net present values.
Failure to Pay Interest on the UPC Notes
Despite such measures, due to its funding requirements and possible lack of
availability of debt and equity financing in the mid-term, the Company
determined not to make required interest payments on the UPC Notes as they fell
due. In particular, on February 1, 2002, the Company failed to make interest
payments in an aggregate amount of (euro)113.0 million on certain series of the
UPC Notes. The failure to make (or timely cure) these interest payments
constituted an Event of Default under such UPC Notes and a cross-default under
the remaining series of UPC Notes as well as under certain credit and loan
facilities, including the Belmarken Notes and the UPC Distribution Facility.
On May 1, 2002, the Company failed to make interest payments in an
aggregate amount of (euro)38.9 million on certain series of the UPC Notes. The
failure to make (or timely cure) these interest payments constituted an Event of
Default under such UPC Notes and a cross-default under the remaining series of
UPC Notes, as well as under certain credit and loan facilities, including the
Belmarken Notes and the UPC Distribution Facility. However, the waivers provided
by the lenders under, inter alia, the Belmarken Notes and the UPC Distribution
Facility on March 4, 2002 also covered the Company's interest payment defaults
on May 1, 2002.
Memorandum of Understanding with UGC
Accordingly, in February 2002, in order to begin the process for
restructuring its balance sheet, the Company entered into the Memorandum of
Understanding with UGC and UGC Holdings, which currently holds the Belmarken
Notes as well as a significant portion of the UPC Notes, to enter into
negotiations with the holders of the UPC Notes (other than UGC) in order to
attempt to reach an agreement regarding the restructuring of the Company's
indebtedness. The Memorandum of Understanding proposed a conversion of the UPC
Notes, the Belmarken Notes and the UPC Preference Shares A into UPC Ordinary
Shares A in proportions to be established through further negotiations.
Negotiations with UGC and the Participating Noteholders
Subsequent to the execution of the Memorandum of Understanding, in late
February 2002, the Company began discussions with, among others, UGC and the
Participating Noteholders regarding the terms of a debt for equity conversion.
The Participating Noteholders hold, in the aggregate, approximately 25% of the
outstanding principal amount of the UPC Notes. The Participating Noteholders
are: MacKay Shields LLC, Appollo Management, Capital Research & Management Co.,
Everest Capital and Salomon Brothers Asset Management. The Participating
Noteholders retained Paul, Weiss, Rifkind, Wharton & Garrison, as their U.S.
counsel, Van Doorne, as their Dutch counsel, and Greenhill & Co. LLP, as their
financial advisors.
-38-
In late February 2002, the Company met with representatives of UGC and the
Participating Noteholders to begin preliminary discussions regarding a process
for, and the terms of, a recapitalization of the Company, including
restructuring of the UPC Notes, the Belmarken Notes and the UPC Preference
Shares A. From March through September 2002, UGC and the Participating
Noteholders undertook due diligence regarding the Company and its assets and
liabilities. Simultaneously therewith, the advisors for the Company, UGC and the
Participating Noteholders held periodic informal meetings to discuss the
economic terms of the proposed Restructuring of the Company's capital structure,
as well as the process for implementing the Restructuring.
Delisting of the UPC ADSs
On May 24, 2002, the NASDAQ National Market announced that it had delisted
the UPC ADSs. This determination was based upon, among other things, the selling
price for the UPC ADSs. The continued listing standards of the NASDAQ National
Market that were applicable to the Company required maintenance of a minimum
share bid price of US$3.00. On February 14, 2002, the NASDAQ National Market
informed the Company that the UPC ADSs would be delisted on or around May 15,
2002 if the UPC ADSs did not trade for 10 consecutive trading days above US$3.00
during a 90-day period beginning February 15, 2002. Since the Company failed to
satisfy the minimum bid requirement during the 90-day period ending May 15,
2002, the NASDAQ National Market delisted the UPC ADSs and the UPC ADSs began
trading on the "Over The Counter Bulletin Board" ("OTC BB") under the trading
symbol "UPCOY.OB."
Negotiation of the Restructuring Agreement
Throughout July, August and September 2002, the Company held further
meetings with representatives of UGC and the Participating Noteholders to
discuss the process for, and the terms of, a recapitalization of the Company and
a restructuring of the Belmarken Notes, the UPC Notes and the UPC Preference
Shares A. These discussions culminated in the execution, on September 30, 2002,
of the Restructuring Agreement.
Board Consideration and Approval
In considering the terms of the Restructuring and the Restructuring
Agreement for approval, the Board of Management and the Supervisory Board of the
Company implemented certain procedural and substantive steps in respect of the
decision-making process. In their decision to pursue the Restructuring, the
Company's Board of Management and Supervisory Board carefully considered the
interests of the Company and the interests of the Company's constituencies (such
as shareholders, creditors and employees). To ensure a balanced and transparent
decision-making process, an Advisory Committee was formed that reviewed the
various aspects of the Restructuring and possible alternatives. This Advisory
Committee consulted with experts and retained its own outside Dutch counsel,
Schut & Grosheide, to advise it with respect to the legal aspects of the
Restructuring. The Advisory Committee consisted of two members of the
Supervisory Board of the Company who were not affiliated with UGC or any of the
other members of the UGC Group. To enable the Advisory Committee to perform its
duties, the Company provided the Advisory Committee with all requested
information in respect of the various aspects of the Restructuring. After due
consideration the Advisory Committee unanimously endorsed the decision of the
Supervisory Board of the Company to support the Restructuring. The Company's
Supervisory Board and Board of Management unanimously approved the terms of the
Restructuring.
Execution of the Restructuring Agreement
In general, the Restructuring Agreement sets forth the proposed
distribution under the Plan of shares of New UPC Common Stock to the Holders of
the Claims against, and Equity Interests in, the Company, as well as the means
by which the Company intends to implement the Restructuring under U.S. and Dutch
law.
The Restructuring Agreement provides for the exchange of shares of New UPC
Common Stock for Claims against, and Equity Interests in, the Company as
follows:
o 65.5% of the shares of New UPC Common Stock to the UGC Group on
account of its ownership of the Belmarken Notes and certain UPC Notes
on September 30, 2002;
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o 32.5% of the shares of New UPC Common Stock to the holders of the UPC
Notes (other than the UGC Group) on September 30, 2002; and
o 2% of the shares of New UPC Common Stock to the holders (including the
UGC Group) of the UPC Preference Shares A, the UPC Priority Shares,
the UPC Ordinary Shares A and holders of Equities Securities Claims
subordinated under Section 510(b) of the U.S. Bankruptcy Code,
subject, in each case, to dilution on account of any shares of New UPC Common
Stock issuable (i) to holders of General Unsecured Claims or Equities Securities
Claims that are not subordinated under Section 510(b) of the U.S. Bankruptcy
Code, (ii) under the Incentive Plan (as defined herein), (iii) pursuant to the
New UPC Equity Purchase Rights, or (iv) pursuant to the UGC Subscription
Commitment.
In addition to the split of the shares of New UPC Common Stock to be issued
under the Plan, the Restructuring Agreement also provides for, among other
things,
o a management and employee incentive plan (the "Incentive Plan")
pursuant to which, at the discretion of the New UPC Board of
Directors, options with respect to no more than five percent (5%) of
shares of New UPC Common Stock outstanding immediately after the
Effective Date, on a fully diluted basis, can be issued to certain
members of New UPC's and its subsidiaries' management and other
employees during the three year period following the Effective Date,
o various corporate governance rights, including the ability of the
Participating Noteholders to designate a specified number of members
of New UPC's Board of Directors,
o pre-emptive rights for a certain amount of equity or equity-linked
securities issued by New UPC after the Effective Date,
o a stockholders agreement providing for, among other things, tag-along
rights for the Participating Noteholders, and
o the UGC Subscription Commitment.
Finally, in general, in consideration for the equity split and other rights
set forth above, the UGC Group and the Participating Noteholders agreed, subject
to the terms and conditions of the Restructuring Agreement, to, inter alia, (a)
vote their Claims in favor of, and transfer their Claims pursuant to, the Plan
and the Akkoord, (b) vote their Equity Interests in favor of, and transfer their
Equity Interests pursuant to, the Plan and (c) vote any UPC Voting Securities
held by them in favor of the Shareholder Proposals. For a detailed description
of the Restructuring Agreement, see "The Restructuring Agreement" below.
Bank Waivers Granted during the Negotiation Process
On May 31, 2002, the UPCD Facility Banks and UGC extended, until June 17,
2002, the waivers of the defaults under the UPC Distribution Facility and the
Belmarken Notes, respectively, arising as a result of the Company's failure to
make interest payments under the UPC Notes. The waivers were also extended on
June 17, 2002, July 1, 2002, July 15, 2002, July 29, 2002, September 12, 2002
and September 23, 2002. The terms of the waivers were unchanged from those
granted on March 4, 2002.
UPC Distribution Facility Waiver and Amendment
On September 30, 2002, UPC Distribution and TD Bank Europe Limited and
Toronto Dominion (Texas), Inc., as Facility Agents, on behalf of the UPCD
Facility Banks, executed the UPCD Facility Waiver. The UPCD Facility Waiver
provides for extension, through March 31, 2003, of the waivers of default
arising as a result of the Company's failure to make interest payments under the
UPC Notes in order to allow the Company time to consummate the Restructuring.
The following is a summary of the significant terms of the UPCD Facility
Waiver. The summary set forth below does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the detailed
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provisions of the UPCD Facility Waiver. The full text of the UPCD Facility
Waiver is attached as Exhibit 99.3 to a Form 8-K filed by the Company with the
SEC on September 30, 2002.
The UPCD Facility Waiver largely reflects a desire on behalf of the UPCD
Facility Banks to ensure that, post-restructuring, the UPC Group remains a
viable enterprise. The UPCD Facility Waiver amends the UPC Distribution Facility
to
(i) increase the interest margin applicable to outstanding amounts
owed under the UPC Distribution Facility by 1.5% across all
tranches;
(ii) require the Company to pay a fee of 0.25% on the total commitment
amount to the banks five business days after the Effective Date;
(iii) reduce the total commitment amount under the facility to
(euro)3.5 billion, effective October 7, 2002;
(iv) increase headroom under the Company's Senior Debt (as defined in
the UPC Distribution Facility) to Annualised EBITDA (as defined
in the UPC Distribution Facility) covenant by increasing and
extending the maximum ratios to the following:
Test Date Ratio
--------- -----
March 31, 2003 8.25 : 1
June 30, 2003 8.00 : 1
September 30, 2003 7.75 : 1
December 31, 2003 7.00 : 1
March 31, 2004 6.50 : 1
June 30, 2004 6.00 : 1
September 30, 2004 5.25 : 1
December 31, 2004 4.75 : 1
March 31, 2005 4.25 : 1
June 30, 2005 3.75 : 1
September 30, 2005 3.50 : 1
December 31, 2005 3.25 : 1
March 31, 2006 2.75 : 1
June 30, 2006 2.50 : 1
September 30, 2006 2.25 : 1
Thereafter 2.00 : 1
(v) increase headroom under the Company's minimum EBIDTA (as defined
in the UPC Distribution Facility) to Total Cash Interest (as
defined in the UPC Distribution Facility) covenant by lowering
and extending the minimum ratios to the following:
Test Date Ratio
--------- -----
March 31, 2003 1.35 : 1
June 30, 2003 1.35 : 1
September 30, 2003 1.50 : 1
December 31, 2003 1.75 : 1
March 31, 2004 1.75 : 1
June 30, 2004 2.00 : 1
September 30, 2004 2.25 : 1
December 31, 2004 2.50 : 1
March 31, 2005 2.75 : 1
June 30, 2005 3.00 : 1
September 30, 2005 3.25 : 1
Thereafter 3.50 : 1
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(vi) increase headroom under the Company's minimum EBIDTA to Senior
Debt Service (as defined in the UPC Distribution Facility)
covenant by lowering and extending the minimum ratios to the
following:
Test Dates Ratio
--------- -----
December 31, 2003 to December 31, 2004 1.00 : 1
March 31, 2005 to December 31, 2006 1.10 : 1
March 31, 2007 and thereafter 1.50 : 1
(vii) include an additional amount permitted to be drawn under the
facility of (euro)100 million during the restructuring process;
(viii) require the Company to make a capital contribution or
subordinated shareholder loans of (euro)125 million to UPC
Distribution within two business days after the completion of the
Restructuring;
(ix) include all corporate costs (together with the corresponding
asset, as appropriate) for both the Company and UPC Distribution
into the UPC Distribution Facility during 2003;
(x) through an amendment to the definition of "Permitted
Acquisition," (a) reduce the Permitted Acquisitions basket from
(euro)500 million to (euro)100 million and (b) prohibit UPC
Distribution from acquiring the share capital or assets of any
entity owned by New UPC, the Company or any of their respective
subsidiaries with money drawn under the UPC Distribution
Facility;
(xi) add a requirement that the Company use 10% of any net cash
proceeds received by UPC Distribution or any company of which UPC
Distribution is a subsidiary, including New UPC and the Company
(a "Relevant Company"), from the issuance of any equity
securities (or securities convertible or exchangeable into equity
securities) to prepay a corresponding amount of the outstanding
loans under the UPC Distribution Facility, except
(a) if UPC Distribution's ratio of Senior Debt to Annualised
EBITDA is less than or equal to 3.5:1 for the two most
recent Ratio Periods (as defined in the UPC Distribution
Facility),
(b) to the extent that those net proceeds have been previously
treated as net proceeds for purposes of that new section of
the UPC Distribution Facility,
(c) in respect of the (euro)100 million subscription by UGC for
shares of New UPC Common Stock on the Effective Date
pursuant to the terms of the Restructuring Agreement,
(d) in respect of net proceeds received from a new issue of
shares by UPC Holding B.V. (the immediate holding company of
UPC Distribution and wholly-owned subsidiary of Belmarken)
subscribed for by Belmarken, and
(e) in respect of net proceeds relating to any issuance of
shares where all of the shares issued are subscribed for by
New UPC or any of its affiliates (including UGC and Liberty
Media Corporation and their respective subsidiaries);
(xii) restrict each Relevant Company from incurring any debt owed to
any person other than New UPC and its affiliates (including UGC,
Liberty Media Corporation and their respective subsidiaries) on
or before December 31, 2004, and, after December 31, 2004, such
debt may be incurred provided that, unless UPC Distribution's
ratio of Senior Debt to Annualised EBITDA is equal to or less
than 3.5:1 for the two most recent Ratio Periods, UPC
Distribution shall prepay the amount of the facilities equal to
50% of such third party debt incurred; and
(xiii) restrict each Relevant Company from creating any security
interest over all or part of its present or future undertakings,
assets, rights or revenues.
In the UPCD Facility Waiver, the Majority Lenders (as defined in the UPC
Distribution Facility) have confirmed that any waiver granted in respect of any
Restructuring default will become permanent after completion
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of the Restructuring. In addition, UPC Distribution has agreed to provide
certain information to the Majority Lenders regarding the Restructuring,
including monthly updates of the progress of the Restructuring, details of
material changes to, or termination of, the Restructuring Agreement, the
occurrence of Termination Events (as defined in the UPCD Facility Waiver) and
completion of, and post-completion matters related to, the Restructuring.
Description of the Restructuring
The Company believes that in order to fully achieve the Restructuring, it
is necessary to effect the contemplated transfers of the Claims and Equity
Interests under, among others, U.S. and Dutch law. Accordingly, the Company,
through negotiations with the Participating Noteholders and UGC, developed the
four-prong structure discussed immediately below pursuant to which the Company
believes the Restructuring can be consummated efficiently while also maximizing
the benefit to the Company and the Holders of its Claims and Equity Interests.
Formation of New UPC
In connection with the structure set forth below, on September 13, 2002,
New UPC was formed as a Delaware corporation. For a description of New UPC, see
"New UPC" below.
U.S. Structure
In order to implement the Restructuring in the United States, on the
Petition Date, the Company commenced the Chapter 11 Case in the U.S. Bankruptcy
Court and, on the date hereof, filed the Plan and this Disclosure Statement. The
Plan amends and supersedes the "Chapter 11 Plan of Reorganization Jointly
Proposed by United Pan-Europe Communications N.V. and New UPC, Inc.," which was
dated and filed with the U.S. Bankruptcy Court on December 3, 2002. Pursuant to
the Plan, the Company provides varying treatments to the Holders of the Claims
against, and Equity Interests in, the Company and the issuance of the New UPC
Equity Purchase Rights to Holders of Belmarken Notes Claims, UPC Notes Claims
and General Unsecured Claims. In general, the Holders of Allowed Impaired Claims
or Allowed Impaired Equity Interests will be treated under the Plan as follows:
Allowed Belmarken Notes Claims
The Holder of the Allowed Belmarken Notes Claims will receive 23,853,179
shares of New UPC Common Stock from New UPC in consideration for the Belmarken
Notes and the obligations of all other parties under the Belmarken Notes and the
Belmarken Loan Agreements.
Allowed UPC Notes Claims and Allowed General Unsecured Claims
In the aggregate, the Holders of all Allowed UPC Notes Claims shall receive
25,146,821 shares of New UPC Common Stock and the Holders of Allowed General
Unsecured Claims shall receive shares of New UPC Common Stock, which number
shall be in addition to the 25,146,821 shares of New UPC Common Stock to be
distributed on account of the Allowed UPC Notes Claims. For information about a
particular series of UPC Notes or General Unsecured Claims, see
"Summary--Chapter 11 Case and the Plan--The Plan."
Allowed Equity Interests and Allowed Equity Securities Claims
Under the Plan, the Holders of Allowed Equity Interests and Allowed Equity
Securities Claims shall be treated as follows:
o Holders of the UPC Preference Shares A shall receive from New UPC
16.12903 shares of New UPC Common Stock in consideration for each UPC
Preference Share A;
o Holders of the UPC Priority Shares shall receive from New UPC 0.00146
shares of New UPC Common Stock in consideration for each UPC Priority
Share;
o Holders of the UPC Ordinary Shares A and UPC ADSs shall receive from
New UPC 0.00146 shares of New UPC Common Stock in consideration for
each UPC Ordinary Share A or UPC ADS, as the case may be;
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o Holders of Allowed Equity Securities Claims shall receive from New UPC
152,407 shares of New UPC Common Stock in consideration for their
Allowed Equity Securities Claims; and
o Holders of any Old Other Equity Interests (i.e., rights, options and
warrants to acquire UPC Ordinary Shares A) shall not receive or retain
any property under the Plan on account of such Old Other Equity
Interests and, to the extent permitted under applicable law, all Old
Other Equity Interests shall be cancelled on the Effective Date.
See "Chapter 11 Case and the Plan of Reorganization--The Plan--Summary of
Distributions Under the Plan" below for more detailed descriptions of the
classification and treatment of Claims and Equity Interests under the Plan.
Dutch Bankruptcy Structure
Simultaneously with the commencement of the Chapter 11 Case, on the
Petition Date, the Company commenced the Dutch Bankruptcy Case and filed the
Akkoord with the Dutch Bankruptcy Court. The Akkoord will only provide treatment
for Ordinary Creditors, as the Dutch Bankruptcy Code does not apply to, among
others, Holders of Equity Interests. See "The Akkoord" below for a more detailed
description of the Dutch moratorium process. As discussed below, in order to
implement the Plan in compliance with Dutch law, the Holders of Equity Interests
in the Company shall be treated, for purposes of Dutch law, outside of the Dutch
Bankruptcy Case. See "The Dutch Implementing Offer" below.
Pursuant to the Akkoord, the Ordinary Creditors shall receive a number of
shares of New UPC Common Stock equal to the number of shares of New UPC Common
Stock that holders of general unsecured claims are entitled to receive under the
Plan, either in consideration for transferring their Allowed Claims to New UPC
(as far as the Holders of the UPC Notes are concerned) or in cancellation of
their Allowed Claims (as far as Ordinary Creditors other than the Holders of the
UPC Notes are concerned).
Dutch Implementing Offer
The Dutch Bankruptcy Code does not provide for the Akkoord to reorganize or
cancel any of the Equity Interests in the Company. Therefore, in order to
facilitate implementation of the Plan with respect to certain of the UPC
Ordinary Shares A in accordance with Dutch law, solely with respect to persons
who are not U.S. Persons and who are not located or residing within the United
States, New UPC shall commence the Dutch Implementing Offer, pursuant to which
it will undertake to deliver a number of shares of New UPC Common Stock to the
Holders of the UPC Ordinary Shares A in consideration for the delivery of such
Holders of their UPC Ordinary Shares A to New UPC. See "The Dutch Implementing
Offer" below.
Use of Proceeds
Neither the Company nor New UPC will receive any cash proceeds from the
issuance of the New UPC Common Stock in consideration for the surrender and
transfer to New UPC of the Claims and Equity Interests under the Restructuring
or the transfer of shares of New UPC Common Stock in consideration for delivery
of UPC Ordinary Shares A in connection with the Restructuring. However, New UPC
will receive up to (euro)100 million of proceeds from the subscription of
additional shares of New UPC Common Stock pursuant to the New UPC Equity
Subscription (less any reduction in the Maximum Subscription Amount under the
circumstances described under the heading "New UPC Equity--Subscription
General"). See "New UPC Equity Subscription." New UPC intends to use the
proceeds from the New UPC Equity Subscription for general corporate purposes,
which may include, without limitation, contributing all or a portion of the
proceeds to the Company to fund a portion of the Company's capital contribution
or subordinated shareholder loans to UPC Distribution required to be made two
business days after consummation of the Restructuring by the UPCD Facility
Waiver. See "The Restructuring--Background of the Restructuring--UPC
Distribution Facility Waiver and Amendment."
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Other Aspects of the Restructuring
Treatment of the UPC Preference Shares A
Under the Plan, each Holder of outstanding Allowed UPC Preference Shares A
will receive the Preference Shares Consideration in full satisfaction,
settlement, release and discharge of the Claims and Equity Interests of such
Holder of UPC Preference Shares A in respect of such UPC Preference Shares A.
Upon the Second Amendment and the Effective Date, the UPC Preference Shares A
will convert on a one-for-one basis into registered UPC Ordinary Shares A. The
conversion of the UPC Preference Shares A will require (i) a shareholders'
resolution adopted by a simple majority of the share capital of the Company and
(ii) a resolution by the holders of the UPC Preference Shares A to be adopted
with at least a 66 2/3% majority.
Treatment of the UPC Priority Shares
For purposes of Dutch law, the delivery of shares of New UPC Common Stock
in consideration for the surrender of the UPC Priority Shares will be effected
through a contribution, on the Effective Date, of the UPC Priority Shares by UGC
to New UPC. In order to implement the Plan under Dutch law, after the Effective
Date, as soon as the Company becomes a wholly-owned subsidiary of New UPC, New
UPC and the Company shall take such action as is necessary to cause the
cancellation of the Priority Shares under Dutch Law.
Treatment of Old Other Equity Interests
Simultaneously with, and conditional upon the occurrence of, the Effective
Date, all Old Other Equity Interests will be cancelled to the extent permitted
under applicable law.
Contribution of the Belmarken Notes from New UPC to the Company
On the Effective Date, New UPC will sell the Belmarken Notes to the Company
in consideration for a receivable payable by the Company in the aggregate
principal amount of the Belmarken Notes (plus accrued and unpaid interest).
Subsequently, the Company will satisfy its obligations under this receivable
through the issuance to New UPC of a number of UPC Ordinary Shares C equal to
the value of the receivable.
Cancellation of Certain UPC Notes prior to the Effective Date
On or before the Effective Date, the Company will submit the UPC Notes held
by it to the indenture trustee under the indentures related to the UPC Notes for
cancellation. As of September 30, 2002, the aggregate principal amount and
accreted value of UPC Notes held by the Company was (euro)405.6 million
(US$400.7 million).
Costs Relating to the Issuance of New UPC Common Stock
Neither the Company nor New UPC plans to pay any commissions or otherwise
make any payments to financial intermediaries and brokers in connection with the
transfer of shares of New UPC Common Stock in consideration for the transfer of
Claims against, or Equity Interests in, the Company to New UPC. The Company will
pay for its advisors and the advisors to UGC and the Participating Noteholders
and to the advisors to the UPCD Facility Banks, which fees are expected to
aggregate approximately (euro)60 million. UPC Services BV, a subsidiary of the
Company ("UPC Services"), has agreed to pay the portion of these fees and
expenses payable to the advisors to UGC and any other non-estate professionals.
The Company also will pay certain administrative expenses in connection with the
Restructuring which are not expected to exceed US$26 million. For more
information, see "The Restructuring--Description of the Restructuring--Advisors
to the Company, UGC and the Participating Noteholders" and "Chapter 11 Case and
the Plan of Reorganization--The Plan--Administrative Claims."
Extraordinary General Meeting of Shareholders
Unlike the U.S. Bankruptcy Code, the Dutch Bankruptcy Code does not provide
for the Dutch Bankruptcy Case to exempt compliance from otherwise applicable
corporate law. Therefore, in order to facilitate implementation of the Plan, the
Company will hold the Extraordinary General Meeting to consider and vote upon
changes to the authorized share capital of the Company and such other proposals
as the Company deems necessary
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or appropriate to give effect to the Restructuring and the other transactions
contemplated in connection with the Restructuring. See "The Extraordinary
General Meeting of Shareholders."
The terms of the Restructuring discussed above are the product of
discussions with UGC, New UPC and the Participating Noteholders and have been
approved by the Board of Management and the Supervisory Board of the Company.
These parties support the Plan, the Akkoord and the Dutch Implementing Offer and
strongly urge you to review this Disclosure Statement, the Plan, the Akkoord and
all annexes and documents incorporated by reference herein, and, as applicable,
to vote in favor of the Plan and the Akkoord and to participate in the Dutch
Implementing Offer. As the Company's principal shareholder and principal
creditor, and the holder of the Belmarken Notes, UGC will receive a significant
number of shares of New UPC Common Stock and may have interests in the
Restructuring that differ from the other Holders of Claims against, and Equity
Interests in, the Company. The Company has determined that it is in the best
interests of the Company and its stakeholders to implement the Restructuring as
described in this Disclosure Statement.
Advisors to the Company, UGC and the Participating Noteholders
In connection with the Restructuring, the Company has retained White & Case
LLP as its U.S. counsel, Allen & Overy as its Dutch counsel, Lazard Freres & Co.
("Lazard") as its financial advisor, KPMG, as its auditor, and Deloitte & Touche
Belastingadviseurs, as its tax advisors. UGC and New UPC have retained Skadden,
Arps, Slate, Meagher & Flom LLP as their special U.S. counsel, Holme, Roberts &
Owen LLP as their general U.S. counsel and Stibbe as their special Dutch
counsel, and UGC has retained Credit Suisse First Boston Corporation and UBS
Warburg LLC as its financial advisors. UPC Services has agreed to pay the
obligations of the professionals retained by UGC. The Participating Noteholders
have retained Paul, Weiss, Rifkind, Wharton & Garrison, as their U.S. counsel,
Van Doorne, as their Dutch counsel, and Greenhill & Co. LLP, as their financial
advisors. The UPCD Facility Banks have retained Allen & Overy, London, as their
counsel in connection with the UPC Distribution Facility and the UPCD Facility
Waiver. Pursuant to the terms of the Restructuring Agreement, the Company has
agreed to pay the fees and expenses of the legal and financial advisors to UGC
and the Participating Noteholders in connection with the Restructuring. The
aggregate amount of compensation to be paid post-petition by the Company or UPC
Services, to the advisors to the Company, UGC and the Participating Noteholders
and to the advisors to the UPCD Facility Banks under their respective engagement
letters is expected to be approximately (euro)60 million.
JP Morgan PLC ("JP Morgan") has provided financial advisory services to the
Company in connection with the Restructuring and continues to provide financial
advisory services to UPC Services under an engagement letter entered into prior
to the Petition Date. The aggregate amount of compensation payable to JP Morgan
by UPC Services under this engagement letter is (euro)5.2 million. UPC Services
retains, and expects to continue to retain, various advisors that provide
advisory services, including commercial institutions that provide investment
banking, commercial banking and financial advisory services, to the members of
the UPC Group.
Conditions to the Restructuring
In order for the Restructuring to be consummated, the Plan must be
consummated and the Effective Date must occur. For a more detailed description
of the conditions precedent to confirmation and consummation of the Plan, see
"Chapter 11 Case and the Plan of Reorganization--The Plan--Conditions to
Confirmation and Consummation of the Plan" below. The Plan shall be consummated
and the Effective Date shall occur if and only if the following conditions shall
have occurred or shall have been duly waived (if waivable):
o the Confirmation Order (as defined herein) shall be in form and
substance reasonably acceptable to the Company, New UPC, UGC and the
Participating Noteholders; provided that none of UGC, New UPC or the
Participating Noteholders may request that the Confirmation Order
contain a provision that is inconsistent with any of the provisions of
the Restructuring Agreement;
o the Offer Memorandum, which will be comprised of the Disclosure
Statement and an offer memorandum supplement, shall have been
submitted to the Autoriteit Financiele Markten (The Netherlands
Authority for the Financial Markets) ("A-FM") prior to the
commencement of the Dutch Implementing Offer and generally made
available to the Holders of the UPC Ordinary Shares A outside the
United States to effectuate the Restructuring;
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o the order approving confirmation of the Plan (the "Confirmation
Order") shall not have been vacated, reversed, stayed, modified,
amended, enjoined or restrained by order of a court of competent
jurisdiction and shall have become a Final Order;
o the Akkoord shall have been adopted by the requisite majority of
Ordinary Creditors and subsequently ratified by the Dutch Bankruptcy
Court, all conditions to the effectiveness of the Akkoord shall have
been satisfied or duly waived to the extent permitted therein, and the
Dutch Bankruptcy Court's ratification of the Akkoord shall have become
final and binding and no longer subject to appeal;
o the UPC Ordinary Shares A, UPC Priority Shares, UPC Preference Shares
A (if not converted into UPC Ordinary Shares A) and Belmarken Notes
held by the UGC Group shall have been contributed to the capital of
New UPC;
o the Company's shareholders shall have duly authorized the Shareholder
Proposals at the Extraordinary General Meeting;
o New UPC shall have issued sufficient shares of New UPC Common Stock to
effect the Restructuring in accordance with the Plan;
o New UPC shall have sold the Belmarken Notes to the capital of the
Company;
o the Dutch Implementing Offer shall have been declared unconditional;
o all UPC Preference Shares A shall have been registered in the name of
New UPC after giving effect to the consummation of the Restructuring
or, in the event that the UPC Preference Shares A are not transferred
to New UPC under the Plan, shall have been converted on a one-for-one
basis into registered UPC Ordinary Shares A in accordance with Section
9.2(c) of the Plan, provided, however, that this condition shall be
deemed satisfied unless, on or before the date that is ten (10) days
prior to the date of the hearing to ratify the Akkoord, UGC or a
Majority-in-Interest of the Participating Noteholders shall serve
written notice on the other that such condition has not been
satisfied;
o UGC and the Holders of Class 4 Claims and Class 5 Claims shall have
subscribed for and purchased for cash the total number of Subscription
Shares of New UPC Common Stock pursuant to the New UPC Equity Purchase
Rights and the UGC Subscription Commitment;
o the Incentive Plan shall have been adopted by New UPC;
o all documents and agreements required to be executed or delivered
under the Plan, the Akkoord or the Restructuring Agreement on or prior
to the Effective Date, including, without limitation, the Stockholders
Agreement, shall have been executed and delivered by the parties
thereto;
o the U.S. Bankruptcy Court shall have entered an order (contemplated to
be part of the Confirmation Order) authorizing and directing the
Company and the Reorganized Company to take all actions necessary or
appropriate to enter into, implement, and consummate the contracts,
instruments, releases, indentures and other agreements or documents
created, amended, supplemented, modified or adopted in connection with
the Plan;
o the Amended and Restated UPC Articles of Association, the Amended and
Restated New UPC Certificate of Incorporation and the Amended and
Restated New UPC By-Laws shall have been filed with the applicable
authority of each entity's jurisdiction of incorporation or
organization in accordance with such jurisdiction's applicable law;
o all authorizations, consents and regulatory approvals required, if
any, in order to consummate the Plan or the Akkoord shall have been
obtained; and
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o no order of a court shall have been entered and shall remain in effect
restraining the Company from consummating the Plan.
Operations after the Restructuring
The Company expects that the Restructuring will not adversely affect its
operating subsidiaries and that after the Restructuring its operating
subsidiaries will continue to operate their businesses in the same manner as
they did prior to the Restructuring. The Company does not expect the
Restructuring to adversely affect the relationships of the Company's operating
subsidiaries with their suppliers, customers and employees. In addition, the
Company expects that, except as otherwise discussed in this Disclosure
Statement, the assets and liabilities of its operating subsidiaries will not be
adversely affected by the Restructuring.
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Chapter 11 Case and the Plan of Reorganization
Brief Explanation of Chapter 11 Reorganization
Chapter 11 of the U.S. Bankruptcy Code is the principal business
reorganization chapter of the U.S. Bankruptcy Code. Under Chapter 11, a debtor
is authorized to reorganize its business. In addition to permitting
rehabilitation of the debtor, another goal of Chapter 11 is to promote equality
of treatment of holders of claims and equity interests of equal rank with
respect to the distribution of a debtor's assets. Formulation, and confirmation
by a U.S. bankruptcy court, of a plan of reorganization is the principal
objective of a Chapter 11 Case. In general, a Chapter 11 plan of reorganization
(i) divides claims and equity interests into separate classes,
(ii) specifies the property that each class is to receive under the
plan, and
(iii) contains other provisions necessary or desirable for the
reorganization of the debtor.
In general, there are two forms of treatment that may be provided to a
holder of a claim or equity interest under a Chapter 11 plan of
reorganization--"unimpaired" treatment and "impaired" treatment. Unimpaired
treatment means that the legal, equitable and contractual rights of a holder of
a claim or equity interest are unchanged under the plan. Impaired treatment
means that the legal, equitable or contractual rights of a holder of a claim or
equity interest are somehow changed under the plan and can include situations
where a holder of a claim or equity interest does not receive or retain any
property under a plan. Among other things, a plan of reorganization must be
accepted by voters of at least one class of claims that is impaired without
considering the votes of "insiders" within the meaning of the U.S. Bankruptcy
Code.
Commencement of the Chapter 11 Case
On the Petition Date, the Company filed its voluntary petition for relief
under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court,
thereby commencing the Chapter 11 Case. Simultaneously therewith, the Company
also filed the "Chapter 11 Plan of Reorganization Jointly Proposed by United
Pan-Europe Communications N.V. and New UPC, Inc.," dated December 3, 2002 (which
has been amended and superseded by the Plan), the related disclosure statement
and several motions, including those described below, seeking authorization to
continue to conduct its business in the ordinary course as well as to undertake
certain activities which require approval of the U.S. Bankruptcy Court. Since
the Petition Date, except for the appointment of the Administrator in accordance
with the Dutch Bankruptcy Code, the Company has continued to operate its
business and manage its properties as a debtor-in-possession pursuant to
Sections 1107 and 1108 of the U.S. Bankruptcy Code and subject to the
supervision of the U.S. Bankruptcy Court.
Thereafter, on the date hereof, the Company filed the Plan and this
Disclosure Statement. The Plan amends and supersedes the "Chapter 11 Plan of
Reorganization Jointly Proposed by United Pan-Europe Communications N.V. and New
UPC, Inc.," which was dated and filed on December 3, 2002.
An immediate effect of the filing of the bankruptcy petition was the
imposition of the automatic stay under the U.S. Bankruptcy Code, which, with
limited exceptions, enjoins the commencement or continuation of all (i)
collection efforts by holders of claims, (ii) enforcement of liens and (iii)
litigation against the Company. This injunction remains in effect, unless
modified or lifted by order of the U.S. Bankruptcy Court, until consummation of
a plan of reorganization.
Significant Events during the Chapter 11 Case
First Day Motions
As mentioned above, on the Petition Date, the Company submitted numerous
so-called "first day motions," along with corresponding orders, to the U.S.
Bankruptcy Court. These motions include, among others: (i) a motion seeking
authorization for the Company to continue to use its pre-petition bank accounts,
business forms and investment practices, (ii) a motion for an extension of the
period within which the Company is required to file its bankruptcy schedules and
statement of financial affairs, (iii) a motion to establish procedures for the
interim
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compensation and reimbursement of expenses for professionals retained in
the Chapter 11 Case, (iv) a motion seeking to establish a deadline for the
filing of claims against the Company, (v) a motion authorizing the Company to
proceed to judgment in a specified litigation proceeding and granting related
stay relief, (vi) a motion authorizing the Company to proceed to judgment in a
specified arbitration proceeding and granting related stay relief, and (vii) a
motion seeking to schedule a hearing to approve this Disclosure Statement.
Other than (a) the motion seeking authorization for the Company to continue
to use its pre-petition bank accounts, business forms and investment practices,
which was granted by the U.S. Bankruptcy Court on December 4, 2002, and (b) the
motion to establish procedures for the interim compensation and reimbursement of
expenses for professionals retained in the Chapter 11 Case, which will be heard
by the U.S. Bankruptcy Court on January 7, 2003, all of the "first day motions"
filed by the Company were granted by the U.S. Bankruptcy Court on December 3,
2002.
Retention of Professionals
On the Petition Date, the Company also requested that the U.S. Bankruptcy
Court approve the retention of, among others, the following professionals:
o White & Case LLP, as general insolvency counsel for the Company;
o Allen & Overy, as special Dutch counsel for the Company;
o Lazard Freres & Co., as financial advisor for the Company;
o KPMG Accountants N.V., as auditor for the Company; and
o Deloitte & Touche Belastingadviseurs, as tax advisor for the Company.
On December 3, 2002, the U.S. Bankruptcy Court entered orders authorizing
the foregoing retentions on an interim basis, pending notice and a hearing on
the retention of such professionals on a final basis (if any objections to such
retentions are filed on or before 4:00 p.m. (New York City Time) on January 3,
2003).
Copies of these and any other motions filed by the Company in the Chapter
11 Case on or after the Petition Date, may be obtained either (a) over the
internet at the U.S. Bankruptcy Court's website at http:nysb.uscouts.gov
(registration and a password are required) or (b) for review at the office of
the Clerk of the U.S. Bankruptcy Court, One Bowling Green, New York, New York
10004.
Appointment of Creditors' Committee
On December 13, 2002, the United States Trustee appointed an official
committee of unsecured creditors (the "Creditors Committee") in the Chapter 11
Case. The members of the Creditors Committee are: (a) Salomon Brothers Asset
Management, (b) Apollo Management, LP, (c) Everest Capital, (d) Fundamental
Investors, Inc. and (e) Mackay Shields LLC.
The Plan
The following is a summary of the material provisions of the Plan and is
qualified in its entirety by reference to the Plan itself. A copy of the Plan is
attached to this Disclosure Statement as Annex A and is incorporated herein by
reference. Holders of Claims, Equity Interests and Old Other Equity Interests
should carefully read the Plan in its entirety for a full understanding of its
terms.
Classification of Claims and Equity Interests Under the Plan
Section 1123 of the U.S. Bankruptcy Code provides that a plan of
reorganization must classify claims against and equity interests in a debtor.
Under Section 1122 of the U.S. Bankruptcy Code, a plan must classify each right
to payment against the debtor and each right to an equitable remedy for breach
of performance which gives rise to a right to payment, as well as any interest
in the debtor represented by an equity security, into a category or class that
contains substantially similar claims or equity interests. The U.S. Bankruptcy
Code also requires that a plan of
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reorganization provide the same treatment for each claim or equity interest of a
particular class, unless the holder of a particular claim or equity interest
agrees to a less favorable treatment of its claim or equity interest.
The Plan divides Holders of known Claims against, and known Equity
Interests in, the Company into Classes and sets forth the treatment offered each
Class. See "--Summary of Distributions Under the Plan" below. The Company
believes it has classified all Claims, Equity Interests and Old Other Equity
Interests in compliance with the provisions of Section 1122, but it is possible
that a Holder of a Claim, Equity Interest or Old Other Equity Interest may
challenge the classification of Claims, Equity Interests and Old Other Equity
Interests and that the U.S. Bankruptcy Court may find that a different
classification is required for the Plan to be confirmed. In such event, it is
the Company's present intention, to the extent permitted by the U.S. Bankruptcy
Code and the provisions of the Plan, to make modifications to the classification
scheme set forth in the Plan as required by the U.S. Bankruptcy Court for
confirmation.
Except as otherwise provided in the Plan, a Claim, Equity Interest and Old
Other Equity Interest will be deemed classified in a particular Class only to
the extent that such Claim, Equity Interest or Old Other Equity Interest
qualifies within the description of that Class and will be deemed classified in
a different Class to the extent that any remainder of such Claim, Equity
Interest or Old Other Equity Interest qualifies within the description of such
different Class. Further, a Claim, Equity Interest or Old Other Equity Interest
will not be classified in any Class for distribution purposes until such Claim,
Equity Interest or Old Other Equity Interest becomes an Allowed Claim, Allowed
Equity Interest or Allowed Old Other Equity Interest and then only to the extent
that such Claim, Equity Interest or Old Other Equity Interest has not been paid,
released or otherwise satisfied prior to the Effective Date.
Except to the extent that a modification of classification adversely
affects the treatment of a Holder of a Claim, Equity Interest or Old Other
Equity Interest and requires resolicitation, acceptance of the Plan by any
Holder of a Claim, Equity Interest or Old Other Equity Interest pursuant to this
solicitation will be deemed to be a consent to the Plan's treatment of such
Holder of a Claim, Equity Interest or Old Other Equity Interest regardless of
the Class as to which such Holder of a Claim, Equity Interest or Old Other
Equity Interest is ultimately deemed to be a member.
The Plan categorizes the Claims against, and Equity Interests in, the
Company into ten Classes, as follows:
Class 1 -- Miscellaneous Secured Claims
Class 2 -- Classified Priority Claims
Class 3 -- Critical Creditor Claims
Class 4 -- Belmarken Notes Claims
Class 5 -- UPC Notes Claims and General Unsecured Claims
Class 6 -- UPC Preference Shares A
Class 7 -- UPC Priority Shares
Class 8 -- UPC Ordinary Shares A (including the UPC Ordinary
Shares A held in the form of UPC ADSs)
Class 9 -- Equity Securities Claims
Class 10 -- Old Other Equity Interests
However, pursuant to the Plan, any Class that does not contain, as of the
date of the commencement of the Confirmation Hearing, any Allowed Claims,
Allowed Equity Interests or Allowed Old Other Equity Interests or any Claims,
Equity Interests or Old Other Equity Interests temporarily allowed for voting
purposes under U.S. Bankruptcy Rule 3018 shall be deemed to have been deleted
from the Plan for purposes of (i) voting to accept or reject the Plan and (ii)
determining whether it has accepted or rejected the Plan under Section
1129(a)(8) of the U.S. Bankruptcy Code.
In accordance with the U.S. Bankruptcy Code, Administrative Claims and
Priority Tax Claims are not classified into Classes.
Summary of Distributions Under the Plan
Only Claims and Equity Interests
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(i) as to which the Company's liability and the amount thereof are
agreed to by the Company and the Holder of such Claim or Equity
Interest (but only to the extent so agreed),
(ii) as to which the Company's liability and the amount thereof are
determined by Final Order of a court of competent jurisdiction,
(iii) which have been expressly allowed in a liquidated amount under
the provisions of the Plan (but only to the extent so allowed),
(iv) which is a Professional Claim for which a fee award amount has
been approved by Final Order of the U.S. Bankruptcy Court,
(v) which is set forth in the Company's books and records as
liquidated in amount and not disputed or contingent,
(vi) proof of which was filed within the applicable period of
limitation fixed by the U.S. Bankruptcy Court in accordance with
U.S. Bankruptcy Rule 3003(c) as to which no objection to the
allowance thereof has been interposed within the applicable
period of limitation fixed by the Plan, the U.S. Bankruptcy Code
the U.S. Bankruptcy Rules or a Final Order, or
(vii) which is, in the case of an Equity Interest or any portion
thereof held of record as set forth in the books and records
maintained by the Company or on the Company's behalf as of the
Distribution Notification Date
("Allowed Claims" and "Allowed Equity Interests," respectively) are entitled to
receive distributions under the Plan.
If the Plan is confirmed by the U.S. Bankruptcy Court, each Holder of an
Allowed Claim, an Allowed Equity Interest or an Allowed Old Other Equity
Interest in a particular Class will receive the same treatment as the other
Holders of Allowed Claims, Allowed Equity Interests or Allowed Old Other Equity
Interests in such Class, whether or not such Holder voted to accept the Plan.
Such treatment will be in full satisfaction, settlement, release, extinguishment
and discharge of such Holder's respective Claim, Equity Interest or Old Other
Equity Interest, except as otherwise provided in the Plan or the order
confirming the Plan. Upon confirmation of the Plan, Claims, Equity Interests and
Old Other Equity Interests will be modified as, and to the extent, set forth in
the Plan. Upon confirmation, the Plan will be binding on all Holders of the
Company's Claims, Equity Interests and Old Other Equity Interests regardless of
whether such Holders voted to accept the Plan.
The following describes the Plan's classification of Claims against and
Equity Interests and Old Other Equity Interests in the Company, and the
treatment that Holders of Allowed Claims, Allowed Equity Interests and Allowed
Old Other Equity Interests will receive under the Plan, unless they were to
agree to accept less favorable treatment by settlement or otherwise. However,
nothing contained in the Plan shall have any effect on the operation of Section
508 of the U.S. Bankruptcy Code, and such section shall apply in all respects in
the Chapter 11 Case.
The following summary of the proposed distributions under the Plan does not
purport to be complete and is subject to, and qualified in its entirety by, the
Plan.
Administrative Claims
Administrative Claims are Claims constituting a cost or expense of
administration of the Chapter 11 Case under Sections 503, 507(a)(1), 507(b) or
1114(e)(2) of the U.S. Bankruptcy Code. Administrative Claims include, without
limitation, (i) any actual and necessary post-petition cost or expense of
preserving the Estate or operating the businesses of the Company, (ii) any
payment to be made under the Plan to cure a default on an assumed executory
contract or unexpired lease, (iii) any post-petition cost, indebtedness or
contractual obligation duly and validly incurred or assumed by the Company in
the ordinary course of its businesses, (iv) compensation or reimbursement of
expenses of Professionals to the extent Allowed by the U.S. Bankruptcy Court
under Section 330(a) or Section 331 of the U.S. Bankruptcy Code, and (v) all
Allowed Claims that are entitled to be treated as Administrative Claims pursuant
to a Final Order of the U.S. Bankruptcy Court under Section 546(c)(2)(A) of the
Bankruptcy Code; and (b) any fees or charges assessed against the Estate under
Section 1930 of title 28 of the
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United States Code. In accordance with Section 1123(a)(1) of the U.S. Bankruptcy
Code, Administrative Claims are not classified and are excluded from the Classes
designated in the Plan.
Unless otherwise provided for in the Plan, each Holder of an Allowed
Administrative Claim shall receive in full satisfaction, settlement, release,
extinguishment and discharge of such Claim: (A) the amount of such unpaid
Allowed Claim in Cash on or as soon as reasonably practicable after the later of
(i) the Effective Date, (ii) the date on which such Administrative Claim becomes
Allowed and (iii) a date agreed to in writing by the Company or the Reorganized
Company, as the case may be, and the Holder of such Administrative Claim; (B)
treatment such that such Administrative Claim is Reinstated; or (C) such other
treatment on such other terms and conditions as may be agreed upon in writing by
the Holder of such Claim and the Company or the Reorganized Company, as the case
may be, or as the U.S. Bankruptcy Court may order; provided, however, that
Allowed Administrative Claims representing (y) liabilities, accounts payable or
other Claims, liabilities or obligations incurred subsequent to the Petition
Date in the ordinary course of business of the Company consistent with past
practices and (z) contractual liabilities arising under loans or advances to the
Company incurred subsequent to the Petition Date, whether or not incurred in the
ordinary course of business of the Company, shall be paid or performed by the
Company or the Reorganized Company in accordance with the terms and conditions
of the particular transactions relating to such liabilities and any agreements
relating thereto.
All reasonable fees and expenses of the Indenture Trustee including the
reasonable fees and expenses of its counsel and indemnification as set forth in
the Indentures (the "Indenture Trustee Claims") shall be paid by the Company in
full, in Cash, on the Effective Date upon presentation of customary invoices to
the Company; provided, however, that if the Company disputes any Indenture
Trustee Claim and such dispute is not resolved, then such disputed Indenture
Trustee Claim may, solely at the option of the Indenture Trustee, be submitted
to the U.S. Bankruptcy Court for final resolution; provided further, however,
that if the Indenture Trustee does not submit any such unresolved dispute to the
U.S. Bankruptcy Court for final resolution within five (5) Business Days of
receiving notification from the Company of such dispute, then the Indenture
Trustee shall not have any further right to seek payment of such disputed amount
from the Company, but shall only have recourse to its charging liens under the
Indentures with respect to such disputed amount. Any such disputed Indenture
Trustee Claim shall not prevent confirmation of the Plan, the occurrence of the
Effective Date or consummation of the Plan. The Indenture Trustee shall not be
required to file an application for payment of the Indenture Trustee Claims.
Except as set forth above, nothing contained in the Plan shall affect the
Indenture Trustee's charging liens under the Indentures with respect to any
Indenture Trustee Claim that is not paid in full, in Cash, by the Company on the
Effective Date.
Other than as provided in an order of the U.S. Bankruptcy Court, payments
to professionals retained in the Chapter 11 Case by the Company or any official
committee constituted in the Chapter 11 Case for compensation and reimbursement
of expenses, and all payments to reimburse expenses of members of any such
committee, will be made in accordance with the procedures established by the
U.S. Bankruptcy Code and the U.S. Bankruptcy Rules relating to the payment of
interim and final compensation and expenses, as such procedures may be modified
by any order of the U.S. Bankruptcy Court. Other than as provided in an order of
the U.S. Bankruptcy Court, the U.S. Bankruptcy Court will review and determine
all requests for compensation and reimbursement of expenses.
Assuming that neither significant litigation nor objections are filed with
respect to the Plan and assuming the Plan is confirmed by February 21, 2003, the
Company estimates that unpaid Administrative Expenses as of the Effective Date
will not exceed US$26 million.
Priority Tax Claims
Certain Claims for unpaid taxes are entitled to priority in right of
payment under Section 507(a)(8) of the U.S. Bankruptcy Code. In accordance with
Section 1123(a)(1) of the U.S. Bankruptcy Code, Priority Tax Claims are not
classified and are excluded from the Classes designated in the Plan.
Each Holder of an Allowed Priority Tax Claim shall receive, at the option
of the Company or the Reorganized Company, as the case may be, in full
satisfaction, settlement, release, extinguishment and discharge of such Claim:
(A) the amount of such unpaid Allowed Claim in Cash on or as soon as
reasonably practicable after the latest of (i) the Effective
Date, (ii) the date on which such Priority Tax Claim
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becomes Allowed and (iii) a date agreed to by the Company or the
Reorganized Company, as the case may be, and the Holder of such
Priority Tax Claim; or
(B) such other treatment on such other terms and conditions as may be
agreed upon in writing by the Holder of such Claim and the
Company or the Reorganized Company, as the case may be, or as the
U.S. Bankruptcy Court may order; provided, however, that the
Company or the Reorganized Company, as the case may be, shall
have the right, in its sole discretion, to prepay at any time any
Allowed Priority Tax Claim without premium or penalty of any sort
or nature.
Miscellaneous Secured Claims--Class 1
Class 1 consists of all secured Claims against the Company or Claims
against the Company that are subject to set-off under Section 553 of the U.S.
Bankruptcy Code. Under the Plan, each Holder of an Allowed Miscellaneous Secured
Claim shall receive, in the sole discretion of the Company or the Reorganized
Company, as the case may be, in full satisfaction, settlement, release,
extinguishment and discharge of such Allowed Claim:
(A) Cash equal to the amount of such Allowed Miscellaneous Secured
Claim on or as soon as reasonably practicable after the later of
(i) the Effective Date and (ii) the date that such Miscellaneous
Secured Claim becomes Allowed;
(B) treatment such that such Miscellaneous Secured Claim is
Reinstated; or
(C) such other treatment on such other terms and conditions as may be
agreed upon in writing by the Holder of such Claim and the
Company or Reorganized Company, as the case may be, or as the
U.S. Bankruptcy Court may order.
Currently, the Company believes that there are Miscellaneous Secured Claims
in the approximate amount of US$2.6 million.
Class 1 is Unimpaired and the Holders of Miscellaneous Secured Claims are
conclusively presumed to have accepted the Plan pursuant to Section 1126(f) of
the U.S. Bankruptcy Code and are not entitled to vote to accept or reject the
Plan.
Classified Priority Claims--Class 2
Class 2 consists of all Claims against the Company entitled to priority
under Section 507(a) or (b) of the Bankruptcy Code, other than Administrative
Claims and Priority Tax Claims. Under the Plan, each Holder of an Allowed
Classified Priority Claim shall receive in full satisfaction, settlement,
release, extinguishment and discharge of such Allowed Claim:
(A) the amount of such unpaid Allowed Claim in Cash on or as soon as
reasonably practicable after the later of (i) the Effective Date,
(ii) the date on which such Claim becomes Allowed and (iii) a
date agreed to by the Company or the Reorganized Company, as the
case may be, and the Holder of such Claim;
(B) treatment such that such Claim is Reinstated; or
(C) such other treatment on such other terms and conditions as may be
agreed upon in writing by the Holder of such Claim and the
Company or Reorganized Company, as the case may be, or as the
U.S. Bankruptcy Court may order.
Currently, the Company believes that there are Classified Priority Claims
in the approximate amount of US$3.0 million.
Class 2 is Unimpaired and the Holders of Classified Priority Claims are
conclusively presumed to have accepted the Plan pursuant to Section 1126(f) of
the U.S. Bankruptcy Code and are not entitled to vote to accept or reject the
Plan.
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Critical Creditor Claims--Class 3
Class 3 consists of all Allowed Claims of Critical Creditors against the
Company. Under the Plan, each Holder of an Allowed Critical Creditor Claim shall
receive in full satisfaction, settlement, release, extinguishment and discharge
of such Claim:
(A) payment in full in Cash on the later of (i) the Effective Date and (ii)
the date such Claim becomes Allowed;
(B) treatment such that such Claim is Reinstated; or
(C) such other treatment on such other terms and conditions as may be
agreed upon in writing by the Holder of such Claim and the Company or the
Reorganized Company, as the case may be, or as the U.S. Bankruptcy Court may
order.
Currently, the Company believes that there are Critical Creditor Claims in
the approximate amount of US$1.0 million.
Class 3 is Unimpaired and the Holders of Critical Creditor Claims are
conclusively presumed to have accepted the Plan pursuant to Section 1126(f) of
the U.S. Bankruptcy Code and are not entitled to vote to accept or reject the
Plan.
Belmarken Notes Claims--Class 4
Class 4 consists of the Allowed Claims of the Holder(s) of the Belmarken
Notes. Under the Plan, on the Effective Date, the Holder of the Belmarken Notes
shall receive, in consideration for the Belmarken Notes and the obligations of
all other parties under the Belmarken Notes and the Belmarken Loan Agreements,
the Belmarken Notes Consideration.
The Belmarken Notes Claims shall be deemed Allowed in the aggregate amount
of US$937,482,330.51 and shall not be subject to defense, setoff or
counterclaim.
Class 4 is Impaired and the Holder of the Belmarken Notes Claims is
entitled to vote to accept or reject the Plan.
UPC Notes Claims and General Unsecured Claims--Class 5
Class 5 consists of (a) all Allowed Claims of the Holders of the UPC Notes
and (b) all other pre-petition Allowed Claims against the Company, other than
Administrative Claims, Priority Tax Claims, Miscellaneous Secured Claims,
Classified Priority Claims, Belmarken Notes Claims, UPC Notes Claims, Critical
Creditor Claims and Equity Securities Claims.
Under the Plan, on or as soon as practicable after the Effective Date, each
Holder of an Allowed Class 5 Claim shall receive in consideration for its Claim,
a number of shares of New UPC Common Stock. In the aggregate, the Holders of all
Allowed UPC Notes Claims shall receive 25,146,821 shares of New UPC Common
Stock, and each Holder of an Allowed UPC Notes Claim shall receive the number of
shares of New UPC Common Stock equal to such Holder's pro rata portion of those
shares of New UPC Common Stock. The UPC Notes Claims shall be deemed Allowed for
all purposes, including, but not limited to, voting and distributions in the
aggregate amount of US$4,688,233,885.90 (which shall exclude any amounts on
account of UPC Notes held by the Company as set forth on Annex C to the
Restructuring Agreement) and the Allowed UPC Notes Claims shall not be subject
to setoff or counterclaim. Each Holder of an Allowed Class 5 Claim that is not a
UPC Notes Claim shall receive a number of shares of New UPC Common Stock so that
the number of shares per amount of Allowed Claim received by such Holder is the
same as the number of shares per amount of Allowed Claim that the Holders of
Allowed UPC Notes Claims receive. The number of shares of New UPC Common Stock
to be distributed on account of Allowed Class 5 Claims that are not UPC Notes
Claims shall be in addition to the 25,146,821 shares of New UPC Common Stock to
be distributed on account of the Allowed UPC Notes Claims. The receipt of such
shares of New UPC Common Stock by the Holders of the Class 5 Claims shall
constitute a full satisfaction, settlement, release and discharge of such Class
5 Claims; provided, however, that, notwithstanding anything in the Plan to the
contrary, any
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UPC Notes acquired by New UPC through the Plan and the Akkoord shall remain
outstanding and shall not be deemed to be satisfied, settled, released or
discharged.
Class 5 is Impaired and the Holders of the UPC Notes Claims and the General
Unsecured Claims are entitled to vote to accept or reject the Plan.
UPC Preference Shares A--Class 6
Class 6 consists of all UPC Preference Shares A. Under the Plan, on or as
soon as practicable after the Effective Date, and after the sale by New UPC of
the Belmarken Notes to the Company, each Holder of outstanding Allowed UPC
Preference Shares A shall receive from New UPC the Preference Shares
Consideration. The receipt of the Preference Shares Consideration by the Holders
of the UPC Preference Shares A shall constitute a full satisfaction, settlement,
release and discharge of the Claims and Equity Interests of each Holder of UPC
Preference Shares A in respect of such UPC Preference Shares A; provided,
however, that, notwithstanding anything to contrary contained herein, any UPC
Preference Shares A acquired by New UPC through the Plan shall remain
outstanding and shall not be deemed to be satisfied, settled, released or
discharged.
Class 6 is Impaired and the Holders of the UPC Preference Shares A are
entitled to vote to accept or reject the Plan.
UPC Priority Shares--Class 7
Class 7 consists of all UPC Priority Shares. Under the Plan, on or as soon
as practicable after the Effective Date, and after the sale by New UPC of the
Belmarken Notes to the Company, the Holder of the Allowed UPC Priority Shares
shall receive from New UPC the Priority Shares Consideration. The receipt of the
Priority Shares Consideration by the Holder of the UPC Priority Shares shall
constitute a full satisfaction, settlement, release and discharge of the Claims
and Equity Interests of the Holder of the UPC Priority Shares in respect of the
UPC Priority Shares; provided, however, that, notwithstanding anything to
contrary contained herein, any UPC Priority Shares acquired by New UPC through
the Plan shall remain outstanding and shall not be deemed to be satisfied,
settled, released or discharged.
Class 7 is Impaired and the Holder of the UPC Priority Shares is entitled
to vote to accept or reject the Plan.
UPC Ordinary Shares A--Class 8
Class 8 consists of all UPC Ordinary Shares A. Under the Plan, on or as
soon as practicable after the Effective Date, and after the sale by New UPC of
the Belmarken Notes to the Company, each Holder of Allowed UPC Ordinary Shares A
shall receive from New UPC the Ordinary Shares Consideration. The receipt of the
Ordinary Shares Consideration by the Holders of the UPC Ordinary Shares A shall
constitute a full satisfaction, settlement, release and discharge of the Claims
and Equity Interests of each Holder of UPC Ordinary Shares A; provided, however,
that, notwithstanding anything to contrary contained herein, any UPC Ordinary
Shares A acquired by New UPC through the Plan shall remain outstanding and shall
not be deemed to be satisfied, settled, released or discharged.
Class 8 is Impaired and the Holders of the Allowed UPC Ordinary Shares A
are entitled to vote to accept or reject the Plan.
Equity Securities Claims--Class 9
Class 9 consists of any and all Allowed Claims arising from the rescission
of a purchase or sale of an Equity Interest, for damages arising from the
purchase or sale of an Equity Interest, or for reimbursement or contribution
allowed under Section 502 of the U.S. Bankruptcy Code on account of such Claims.
Under the Plan, subject to the Allowance of the Equity Securities Claims, each
Holder of an Allowed Equity Securities Claim shall receive, in full
satisfaction, settlement, release, extinguishment and discharge of its Claim, a
number of shares of New UPC Common Stock equal to such Holder's pro rata portion
of the Ordinary Share Distribution Amount as if such Holder had (a) purchased,
on the date its Equity Securities Claim first arose, UPC Ordinary Shares A with
a
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value equal to the amount of such Holder's Allowed Equity Securities Claim and
(b) retained such shares as of the Effective Date.
Class 9 is Impaired and the Holders of the Equity Securities Claims are
entitled to vote to accept or reject the Plan.
Currently, the Company believes that the following Claims are properly
classified in Class 9, although there can be no assurance that the U.S.
Bankruptcy Court will agree:
(a) the Claims of the plaintiffs in the Derivative Action (as defined
herein) arising out of or in connection with the Registration
Statement and the Prospectus, dated February 11, 1999, for the
issuance and initial public offering of 40,000,000 ordinary shares A
of the Company or the class action lawsuit commenced by Judy Rubin, on
behalf of herself and all others similarly situated, against the
Company, et al. in the United States District Court for the Southern
District of New York, Case No. 01 CV 10744 (the "Derivative Action"),
(b) the Claims of the former shareholders of Cignal Global Communications,
Inc. arising out of or in connection with the Cignal Shareholders
Agreement dated August 11, 2000 among the former Cignal shareholders,
the Company and Priority Telecom N.V. or the lawsuit commenced by the
alleged representative of the former Cignal shareholders and by nine
(9) individual former Cignal shareholders against the Company in the
Court of Amsterdam, entitled George H. Billings, Douglas Allen,
Matthew Allen, Alvin Allen et al. v. United Pan-Europe Communications
NV, Case Number 1317/50048173, Rechtbank te Amsterdam, Tweede
Enkelvoudige Kamer Rolnummer 2002/1083, and
(c) the Claims of InterComm Holdings L.L.C., InterComm France CVOHA,
InterComm France II CVOHA and Reflex Participations (collectively,
"ICH") arising out of or in connection with the arbitration proceeding
commenced by ICH against the Company, Belmarken and UPC France Holding
BV in the International Chamber of Commerce, Court of Arbitration,
Paris, France.
However, to the extent that the U.S. Bankruptcy Court does not agree with
the Company that the Claims set forth above are subject to subordination under
Section 510(b) of the U.S. Bankruptcy Code, such Claims will instead be treated
as Class 5 Claims and, as such, any distributions to the Holders of such Claims
will have a dilutive effect (in terms of percentage ownership of New UPC) on the
recovery to be received by the other Holders of Claims and Equity Interests who
are entitled to receive shares of New UPC Common Stock under the Plan.
Old Other Equity Interests--Class 10
Class 10 consists of any and all Allowed rights, options and warrants to
acquire UPC Ordinary Shares A, including any such rights, options or warrants
held by employees of the Company pursuant to existing equity incentive plans of
the Company, outstanding immediately prior to the Effective Date, including,
without limitation, those set forth on Annex F to the Restructuring Agreement.
Under the Plan, all Holders of Old Other Equity Interests shall not be entitled
to, and shall not, receive or retain any property under the Plan on account of
such Old Other Equity Interests, and, to the extent permitted under applicable
law, such Old Other Equity Interests shall be cancelled on the Effective Date.
Class 10 is Impaired, and the Holders of Old Other Equity Interests are
deemed to have rejected the Plan pursuant to Section 1126(g) of the U.S.
Bankruptcy Code and are not entitled to vote to accept or reject the Plan.
Means for Implementation of the Plan
Continued Corporate Existence
The Company shall, as the Reorganized Company, continue to exist after the
Effective Date in accordance with applicable law of the jurisdiction in which it
is organized, under its organizational documents in effect before the Effective
Date, except as such documents are amended in connection with the Plan.
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Cancellation of Claims, Equity Interests and Old Other Equity
Interests
As of consummation of the Plan, all Claims against, and Equity Interests
in, the Company and, to the extent permitted under applicable law, all Old Other
Equity Interests shall be cancelled and all agreements, notes, instruments,
depositary shares, depositary receipts, indentures, certificates, guaranties and
any other documents evidencing or relating to such Claims, Equity Interests and
Old Other Equity Interests shall be cancelled and deemed terminated, as
permitted by Section 1123(a)(5)(F) of the U.S. Bankruptcy Code, and the Holders
thereof shall have no rights and such notes, instruments, depositary shares,
depositary receipts, indentures, certificates, guaranties and other documents
shall evidence no rights, except the right to receive the Distributions, if any,
to be made to Holders of such Claims, Equity Interests or Old Other Equity
Interests under the Plan; provided, however, that, notwithstanding the foregoing
or anything else to the contrary contained in the Plan, none of the Belmarken
Notes, UPC Notes, UPC Preference Shares A, UPC Priority Shares and UPC Ordinary
Shares A shall be cancelled pursuant to the Plan and such Claims and Equity
Interests shall instead be dealt with as follows:
o Belmarken Notes: On the Effective Date, but subsequent to the transfer
of the Belmarken Notes for shares of New UPC Common Stock pursuant to
Section 4.6 of the Plan, New UPC will sell the Belmarken Notes to the
Company in consideration for a receivable payable by the Company in
the aggregate principal amount of the Belmarken Notes (plus accrued
but unpaid interest). Subsequently, the Company will satisfy its
obligations under such receivable through the issuance to New UPC of a
number of shares of UPC Ordinary Shares C equal to the amount of the
receivable divided by the par value of the UPC Ordinary Shares C.
o UPC Notes: Subsequent to the transfer of the UPC Notes for shares of
New UPC Common Stock pursuant to Section 4.7 of the Plan, the Company
and New UPC shall, conditional upon the occurrence of the Effective
Date, replace the UPC Notes with an intercompany note between the
Company and New UPC and, thereafter, New UPC shall contribute such
intercompany note to the capital of the Company.
o UPC Preference Shares A: Subsequent to the transfer of the UPC
Preference Shares A for shares of New UPC Common Stock pursuant to
Section 4.8 of the Plan, all UPC Preference Shares A shall be
registered in the name of New UPC, provided, however, that in the
event that the UPC Preference Shares A are not transferred to New UPC
under the Plan, the Company shall use reasonable efforts to have the
UPC Preference Shares A converted on a one-for-one basis into
registered UPC Ordinary Shares A.
o UPC Priority Shares: After the Effective Date, as soon as the Company
becomes a wholly-owned subsidiary of New UPC, New UPC and the
Reorganized Company shall take such action as is necessary to cause
the cancellation of the UPC Priority Shares under Dutch law.
o UPC Ordinary Shares A: The UPC Ordinary Shares A shall remain
outstanding.
Extraordinary General Meeting
Because the Dutch Bankruptcy Code does not provide for the Dutch Bankruptcy
Case to avoid compliance with otherwise applicable corporate law, in order to
facilitate implementation of the Plan, the Company shall hold the Extraordinary
General Meeting. The purpose of the Extraordinary General Meeting is to seek
approval of the Shareholder Proposals. See "The Extraordinary General Meeting of
Shareholders."
Amendment of Organizational Documents
A substantially final form of the Amended and Restated UPC Articles of
Association shall be Filed on or before the Document Filing Date and shall
include such provisions as are necessary to satisfy the provisions of the Plan
and the U.S. Bankruptcy Code including, among other things, (i) in the event
Dutch law allows the issuance of nonvoting stock, prohibit the issuance of
nonvoting stock to the extent, and only to the extent, required by Section
1123(a)(6) of the U.S. Bankruptcy Code, and prohibit cooperation in connection
with the issuance of depository receipts and (ii) such provisions as are
necessary to effect the Shareholder Proposals; provided, however, that the
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effectiveness of any such amendments shall be subject to the approval thereof at
the Extraordinary General Meeting as well as to the occurrence of the Effective
Date.
Similarly, a substantially final form of the Amended and Restated New UPC
Certificate of Incorporation and the Amended and Restated New UPC By-Laws shall
each be Filed on or before the Document Filing Date and shall each include those
terms and conditions as are contemplated to be included in such documents
pursuant to the Restructuring Agreement. See "New UPC--Certificate of
Incorporation and By-laws."
Corporate Action
On the Effective Date, subject to any requirements of Dutch law, the
Reorganized Company shall execute and deliver, and is authorized, without any
further corporate action, to execute and deliver all agreements, documents and
instruments (and all exhibits, schedules and annexes thereto) contemplated by
the Plan or the exhibits thereto and take such other action as is necessary or
appropriate to effectuate the transactions provided for in the Plan.
Implementation of the Restructuring Under Dutch Law
In order to facilitate implementation of the Plan, on the Effective Date,
the Company shall consummate, in accordance with and under the provisions of
Dutch Law, all transactions contemplated by the Restructuring, including the
consummation of the Akkoord and the Dutch Implementing Offer.
Contribution of Shares of the Company held by UGC
Simultaneously with, and conditional upon the occurrence of, the Effective
Date, UGC shall contribute, or shall cause the other members of the UGC Group to
contribute, to New UPC any and all UPC Ordinary Shares A, UPC Preference Shares
A and UPC Priority Shares owned by the UGC Group.
New UPC Common Stock
No later than the Effective Date, New UPC shall authorize the New UPC
Common Stock and shall issue a sufficient number of shares of New UPC Common
Stock to implement the Plan. See "New UPC--Description of Shares of New UPC
Capital Stock."
Offer Memorandum
To the extent required by applicable Dutch securities laws and regulations
of the A-FM, New UPC and the Company shall, prior to the Effective Date,
prepare, and, subject to the approval of UGC and after consultation with the
Participating Noteholders, file with the A-FM, and make generally available and
mail to the Holders of UPC Ordinary Shares A in bearer form the Offer Memorandum
in respect of the shares of New UPC Common Stock to be issued in connection with
the Restructuring pursuant to the Plan. The procedures for exchanging shares of
New UPC Common Stock for UPC Ordinary Shares A in bearer form shall be included
in the Offer Memorandum. See "The Dutch Implementing Offer."
Listing of New UPC Common Stock
New UPC shall use its commercially reasonable efforts to cause the shares
of New UPC Common Stock to be issued in the Restructuring to be listed on
NASDAQ, but obtaining such listing shall not be a condition to either
Confirmation or consummation of the Plan. See "Chapter 11 Case and the Plan of
Reorganization--The Plan--Conditions to the Confirmation and Consummation of the
Plan."
Transfers Under the Plan
On the Effective Date, all of the outstanding Belmarken Notes, UPC Notes,
General Unsecured Claims, UPC Preference Shares A, UPC Priority Shares, UPC
Ordinary Shares A and Equity Securities Claims shall be transferred for shares
of New UPC Common Stock, in accordance with Sections 4.6, 4.7, 4.8, 4.9, 4.10
and 4.11 of the Plan, as applicable. The transfers of the Belmarken Notes, the
UPC Notes, the General Unsecured Claims, the UPC Preference Shares A, the UPC
Priority Shares, the UPC Ordinary Shares A and the Equity Securities Claims
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for New UPC Common Stock, shall be in full satisfaction, settlement, release and
discharge of all Allowed Belmarken Notes Claims, all Allowed UPC Notes Claims,
all Allowed UPC Preference Shares A, all Allowed UPC Priority Shares, all
Allowed UPC Ordinary Shares A and all Allowed Equity Securities Claims, other
than any Belmarken Notes, UPC Notes, UPC Preference Shares A, UPC Priority
Shares or UPC Ordinary Shares A held by New UPC on the Effective Date. In
connection with the foregoing, New UPC Common Stock shall be credited to the
accounts maintained on behalf of the Holders of the UPC Notes, the UPC
Preference Shares A, the UPC Priority Shares and the UPC Ordinary Shares A at
the applicable registered record holder. See "Chapter 11 Case and the Plan of
Reorganization--The Plan--Summary of Distributions Under the Plan."
Operations Between the Confirmation Date and the Effective Date
The Company shall continue to operate as debtor in possession, subject to
the supervision of the U.S. Bankruptcy Court during the period from the
Confirmation Date through and until the Effective Date.
Revesting of Assets
Except as otherwise expressly provided in the Plan, pursuant to Sections
1123(a)(5), 1123(b)(3) and 1141(b) of the U.S. Bankruptcy Code, all Property
comprising the Estate, including, but not limited to, all Causes of Action shall
automatically be retained and revest in the Reorganized Company or its
successors or assigns, free and clear of all Claims, Liens,
contractually-imposed restrictions, charges, encumbrances and interests of
Creditors and Equity Interest Holders on the Effective Date, with all such
Claims, Liens, contractually-imposed restrictions, charges, encumbrances and
interests being extinguished except as otherwise provided in the Plan. As of the
Effective Date, the Reorganized Company may operate its business and use,
acquire and dispose of Property and settle and compromise Claims, Equity
Interests or Old Other Equity Interests without supervision of the U.S.
Bankruptcy Court free of any restrictions of the U.S. Bankruptcy Code or the
U.S. Bankruptcy Rules, other than those restrictions expressly imposed by the
Plan, the Akkoord, and the Confirmation Order. Without limiting the foregoing,
the Reorganized Company may pay the charges it incurs for professional fees,
disbursements, expenses, or related support services incurred after the
Effective Date without any application to the U.S. Bankruptcy Court.
Approval of Agreements
Subject to any relevant approvals at the Extraordinary General Meeting,
Confirmation shall constitute approval of all other agreements and transactions
contemplated by the Plan and the Confirmation Order shall so provide.
Incentive Plan
On the Effective Date, New UPC shall adopt the Incentive Plan.
Stockholders Agreement
On or prior to the Effective Date, UGC, New UPC, the Participating
Noteholders and any other Holder of an Allowed Class 5 Claim who elects to
become a party thereto shall enter into the Stockholders Agreement. See "New
UPC--The Stockholders Agreement."
New UPC Equity Purchase Rights
On the Effective Date, New UPC shall provide each Holder of a Class 4 Claim
or Class 5 Claim with the New UPC Equity Purchase Rights. See "New UPC Equity
Subscription."
UGC Subscription Commitment
Subject to confirmation of the Plan and the ratified Akkoord becoming final
and conclusive (in kracht van gewijsde gaan), on the Effective Date, in
accordance with the Restructuring Agreement, New UPC shall sell to UGC on the
terms set forth in the Restructuring Agreement and at the Implied Purchase
Price, the total number of Subscription Shares of New UPC Common Stock that were
not subscribed for by the Holders of Class 4 Claims and Class 5 Claims pursuant
to the New UPC Equity Purchase Rights. See "New UPC Equity Subscription."
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Treatment of UPC Owned UPC Notes
All of the UPC Notes owned by the Company as a result of the settlement and
termination of (i) the swaps transactions documented by the ISDA Master
Agreement, dated as of April 29, 1998, between The Toronto-Dominion Bank, London
Branch and the Company, and the related schedules, annexes and confirmations, as
the same shall have been amended from time to time on the terms contemplated
therein and (ii) the swaps transactions documented by the ISDA Master Agreement,
dated as of May 4, 2000, between The Chase Manhattan Bank and the Company, and
the related schedules, annexes and confirmations, as the same shall have been
amended from time to time on the terms contemplated therein, in each case, which
are set forth on Annex C to the Restructuring Agreement, shall be deemed to be
cancelled on or before the Effective Date without further action by the Company
or the Indenture Trustee and the Company shall not be entitled to receive any
consideration under the Plan on account thereof. The UPC Notes owned by the
Company shall not be included in any calculation of the distributions to be made
to Holders of Allowed UPC Notes Claims under the Plan.
Rights of Action
Except as otherwise provided in the Plan, all Causes of Action, other than
Avoidance Actions, shall automatically be retained and preserved and will revest
in the Reorganized Company or its successors or assigns. Pursuant to Section
1123(b)(3) of the U.S. Bankruptcy Code, the Reorganized Company (as a
representative of the Estate) or its successors or assigns shall retain and have
the exclusive right to enforce and prosecute such Causes of Action against any
Person, that arose before the Effective Date, other than those expressly
released or compromised as part of or pursuant to the Plan.
Operation and Management of the Reorganized Company
Post-Effective Date Operations of Business
From and after the Effective Date, the Reorganized Company will continue to
exist and engage in business, in accordance with the applicable law in the
jurisdiction in which it is incorporated and pursuant to its organizational
documents as amended pursuant to this Plan.
Post-Effective Date Directors and Officers of the Company and New UPC
From and after the Effective Date, the corporate governance of the Company
shall be modified to ensure that the decisions taken by the Board of Directors
of New UPC, subject to the Amended and Restated New UPC Certificate of
Incorporation and the Amended and Restated New UPC By-Laws, will be implemented
by the Company. The members of the Board of Management of the Company as of the
Effective Date shall be those individuals set forth on the Board of Management
Schedule. It is the intention of New UPC and the Company that, upon the later to
occur of the Effective Date and the date on which the Company is delisted from
Euronext, the Board of Management of the Company shall be New UPC. Upon
delisting of the UPC Ordinary Shares A from Euronext, there will be no
Supervisory Board for the Company. The officers and directors of New UPC as of
the Effective Date shall be those individuals set forth on the New UPC
Management Schedule. See "The Company--Management of the Company On and After
the Effective Date."
Provisions Governing Distributions Under the Plan
General
The Company, through the Disbursing Agent, shall make all Distributions
required by the Plan. Furthermore, the Company, New UPC and the Disbursing Agent
are authorized to make distributions required in connection with ratification of
the Akkoord or consummation of the Restructuring. In particular, on the Initial
Distribution Date, the Disbursing Agent shall make a Distribution of New UPC
Common Stock and Cash, as applicable, to the Holders of Allowed Claims and
Allowed Equity Interests in accordance with Article IV of the Plan. Thereafter,
Distributions may be made from time to time in the reasonable discretion of the
Disbursing Agent. Notwithstanding any other provision in the Plan, no
Distributions shall be made to a Holder of a Claim or Equity Interest unless and
until such Claim or Equity Interest is an Allowed Claim or an Allowed Equity
Interest, respectively.
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Delivery of Distributions
Subject to U.S. Bankruptcy Rule 9010, Distributions to Holders of Allowed
Claims or Allowed Equity Interests shall be made by the Disbursing Agent (a) at
the last known addresses of such Holders, (b) at the addresses set forth in any
written notices of address changes delivered to the Disbursing Agent, (c) in the
case of Allowed UPC Notes Claims, to the Indenture Trustee or (d) at the
addresses set forth in any properly completed letters of transmittal
accompanying Certificates properly remitted to, or book-entry transfers made to
the Book-Entry Account of, the Disbursing Agent. If any Holder's Distribution is
returned as undeliverable, no further Distributions to such Holder shall be made
unless and until the Disbursing Agent is notified of such Holder's then current
address, at which time all missed Distributions shall be made to such Holder
without interest and without any dividends that would have been payable on any
equity securities to be distributed. All Distributions pursuant to the Plan
shall be at the Reorganized Company's expense. Nothing contained in the Plan
shall require the Reorganized Company or the Disbursing Agent or New UPC to
attempt to locate any Holder of an Allowed Claim or Allowed Equity Interest
other than by reviewing the records of the Reorganized Company. Notwithstanding
anything to the contrary contained in the Plan, the Reorganized Company and New
UPC shall be entitled to implement additional, supplemental or modified
distribution procedures, upon terms approved by the U.S. Bankruptcy Court after
at least ten (10) days notice to UGC and the Participating Noteholders.
Disbursing Agent
The Disbursing Agent shall fulfill the obligations under the Plan with
respect to the Distributions of Property to the Holders of Allowed Claims and
Allowed Equity Interests, including, without limitation, holding all reserves
and accounts pursuant to the Plan. The identity of the initial Disbursing Agent
shall be disclosed by the Company prior to the Confirmation Hearing and shall be
approved by the U.S. Bankruptcy Court pursuant to the Confirmation Order. The
terms of employment of the Disbursing Agent shall be submitted to the U.S.
Bankruptcy Court for approval at the Confirmation Hearing. In the event of the
resignation of the Disbursing Agent, a replacement shall be appointed by the
Reorganized Company and New UPC, without the need for further U.S. Bankruptcy
Court approval.
Distribution Notification Date
As of the close of business on the Distribution Notification Date, all
transfer ledgers, transfer books, registers and any other records maintained by
the designated transfer agents with respect to ownership of the Belmarken Notes,
the UPC Notes, the UPC Preference Shares A, the UPC Priority Shares and the UPC
Ordinary Shares A will be closed and, for purposes of the Plan, there shall be
no further changes in the record holders of the Belmarken Notes, the UPC Notes,
the UPC Preference Shares A, the UPC Priority Shares or the UPC Ordinary Shares
A. The Disbursing Agent shall have no obligation to recognize the transfer of
any Belmarken Notes, UPC Notes, UPC Preference Shares A, UPC Priority Shares or
UPC Ordinary Shares A occurring after the Distribution Notification Date, and
will be entitled for all purposes to recognize and deal only with those Holders
of Belmarken Notes, UPC Notes, UPC Preference Shares A, UPC Priority Shares and
UPC Ordinary Shares A as of the close of business on the Distribution
Notification Date, as reflected on such ledgers, books, registers or records.
Distributions to Holders of Allowed Claims and Allowed Equity
Interests
Except for Distributions to Holders of Allowed Belmarken Notes Claims,
Allowed UPC Notes Claims, Allowed UPC Preference Shares A, Allowed UPC Priority
Shares and Allowed UPC Ordinary Shares A, which will be made in accordance with
Section 6.5(b) of the Plan, on the Effective Date, the Reorganized Company or
New UPC, as applicable, shall deliver to the Disbursing Agent sufficient Cash
and shares of New UPC Common Stock to make the Distributions to be made on the
Effective Date to the Holders of Allowed Claims. Payments of Cash to be made
pursuant to the Plan will be available from funds held by the Reorganized
Company as of the Effective Date.
Promptly after the later of (i) the Effective Date or (ii) the date of
Allowance of such Claims or Equity Interests, the Reorganized Company shall
cause the Disbursing Agent to mail to the Holders of Allowed Belmarken Notes
Claims, Allowed UPC Notes Claims, Allowed UPC Preference Shares A, Allowed UPC
Priority Shares and Allowed UPC Ordinary Shares A appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the Belmarken Notes and the UPC Notes theretofore evidencing the
Allowed Class 4 Claims and certain of the Allowed Class 5 Claims, respectively,
or any Certificates theretofore representing
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UPC Preference Shares A, UPC Priority Shares and UPC Ordinary Shares A shall
pass, only upon (i) proper physical delivery of Certificates representing such
Belmarken Notes and UPC Preference Shares A to the Disbursing Agent, (ii) proper
delivery of such UPC Notes or UPC Ordinary Shares A held in bearer form through
a book-entry transfer into a Book-Entry Account at the Book-Entry Transfer
Facility for the UPC Notes or UPC Ordinary Shares A held in bearer form in
accordance with the Book-Entry Transfer Facility's procedures for transfer and
(iii) proper entries being made with respect to such UPC Priority Shares or UPC
Ordinary Shares A held in registered form to the register of the Company,
maintained by the Company's Board of Management, containing the names and
addresses of the Holders of the UPC Priority Shares and the UPC Ordinary Shares
A held in registered form). The Disbursing Agent may establish reasonable and
customary rules and procedures in connection with its duties. No distribution of
New UPC Common Stock under the Plan shall be made to Holders of Allowed
Belmarken Notes Claims, Allowed UPC Notes Claims, Allowed UPC Preference Shares
A, Allowed UPC Priority Shares or Allowed UPC Ordinary Shares A until one of the
following occurs: (i) the Holder thereof (A) surrenders any Certificate(s)
representing such Allowed Claim or Allowed Equity Interest, as the case may be,
to the Disbursing Agent or (B) executes and delivers an affidavit of loss and/or
indemnity reasonably satisfactory to the Reorganized Company; (ii) there is a
transfer of such Allowed Claim or Allowed Equity Interest, as the case may be,
in book-entry form to the Book-Entry Account; or (iii) there is an entry made
with respect to such Allowed Claim or Allowed Equity Interest, as the case may
be, in the register of the Company, maintained by the Company's Board of
Management, containing the names and addresses of the Holders thereof; provided,
however, that any Holder of an Allowed Claim or Allowed Equity Interest to which
clause (i) above applies that fails to (y) surrender its Certificate(s) or (z)
execute and deliver an affidavit of loss and/or indemnity reasonably
satisfactory to the Reorganized Company before the later to occur of (I) six (6)
months after the Effective Date and (II) six (6) months following the date such
Holder's Claim or Equity Interest becomes an Allowed Claim or Allowed Equity
Interest, as applicable, shall be deemed to have forfeited all of its rights
against, Claims against and/or Equity Interests in the Company, may not
participate in any distribution under the Plan and shall be forever barred from
asserting any such rights against the Reorganized Company, New UPC or their
respective property.
Disputed Distributions
If any dispute arises as to the identity of any Holder of an Allowed Claim
or Allowed Equity Interest who is to receive a Distribution, the Disbursing
Agent shall, in lieu of making such Distribution to such Holder, delay such
Distribution until the disposition thereof shall be determined by Final Order of
the U.S. Bankruptcy Court or by written agreement among the interested parties
to such dispute.
Distributions of Cash
Any Cash payment to be made pursuant to the Plan may be made by Cash,
draft, check, wire transfer, or as otherwise required or provided in any
relevant agreement or applicable law at the option of the Reorganized Company.
Failure to Negotiate Checks
Checks issued in respect of Distributions under the Plan shall be null and
void if not negotiated within sixty (60) days after the date of issuance. Any
amounts returned to the Reorganized Company in respect of such non-negotiated
checks shall be held by the Reorganized Company, as appropriate. Requests for
reissuance of any such check shall be made directly to the Reorganized Company
by the Holder of the Allowed Claim with respect to which such check originally
was issued. All amounts represented by any voided check will be held until the
later to occur of (i) nine (9) months after the Effective Date and (ii) nine (9)
months after such voided check was issued, and all requests for reissuance by
the Holder of the Allowed Claim in respect of a voided check are required to be
made prior to such date. Thereafter, all such amounts shall be deemed to be
Unclaimed Property, in accordance with Section 6.9 of the Plan, and all Claims
in respect of void checks and the underlying Distributions shall be forever
barred, estopped and enjoined from assertion in any manner against the Company
or its Property or the Reorganized Company or its Property.
Unclaimed Distributions
Any Cash that becomes Unclaimed Property shall revest in the Reorganized
Company and shall no longer be subject to Distribution to Creditors or Equity
Interest Holders. Any New UPC Common Stock that becomes
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Unclaimed Property shall be canceled and shall no longer be subject to
Distribution to Creditors or Equity Interest Holders. All full or partial
payments made by the Disbursing Agent or the Company and received by the Holder
of a Claim or Equity Interest prior to the Effective Date will be deemed to be
payments under the Plan for purposes of satisfying the obligations of the
Company pursuant to the Plan. Pursuant to Section 1143 of the U.S. Bankruptcy
Code, all Claims in respect of Unclaimed Property shall be deemed Disallowed and
the Holder of any Claim or Equity Interest Disallowed in accordance with this
Section 6.9 will be forever barred, expunged, estopped and enjoined from
asserting such Claim or Equity Interest in any manner against the Company or its
Property or the Reorganized Company or its Property.
Limitation on Distribution Rights
If a claimant holds more than one Claim in any one Class, all Claims of the
claimant in that Class may be aggregated into one Claim and one distribution may
be made with respect to the aggregated Claim.
Fractional Euros and Shares
Notwithstanding any other provision of the Plan, Cash distributions of
fractions of Euros will not be made; rather, whenever any payment of a fraction
of a (euro)would be called for, the actual payment made shall reflect a rounding
of such fraction to the nearest whole (euro)(up or down), with half-Euros being
rounded down. To the extent that Cash remains undistributed as a result of the
rounding of such fraction, such Cash shall be treated as Unclaimed Property
pursuant to Section 6.9 of the Plan.
No fractional shares of New UPC Common Stock shall be issued or distributed
under the Plan. Each person entitled to receive New UPC Common Stock shall
receive the total number of whole shares of New UPC Common Stock to which such
Person is entitled. Whenever any Distribution to a particular Person would
otherwise call for Distribution of a fraction of a share of New UPC Common
Stock, the actual Distribution of such shares shall be rounded to the next lower
whole number. The total number of shares of New UPC Common Stock to be
distributed to a Class of Claims or Equity Interests shall be adjusted as
necessary to account for the rounding provided for in this Section 6.12. No
consideration shall be provided in lieu of fractional shares that are rounded
down.
Compliance with Tax Requirements
In connection with each Distribution with respect to which the filing of an
information return (such as an Internal Revenue Service Form 1099 or 1042) or
withholding is required, the Reorganized Company shall file such information
return with the Internal Revenue Service and provide any required statements in
connection therewith to the recipients of such Distribution or effect any such
withholding and deposit all moneys so withheld as required by law. With respect
to any Person from whom a tax identification number, certified tax
identification number or other tax information required by law to avoid
withholding has not been received by the Reorganized Company within thirty (30)
days from the date of such request, the Reorganized Company may, at its option,
withhold the amount required from the Property to be distributed and distribute
the balance to such Person or decline to make such Distribution until the
information is received.
Documentation Necessary to Release Lien
Each Creditor which is to receive a Distribution under the Plan in full
satisfaction of a Miscellaneous Secured Claim shall not receive such
Distribution until such Creditor (a) executes and delivers any documents
necessary to release all Liens arising under any applicable security agreement
or non-bankruptcy law (in recordable form if appropriate) in connection with
such Miscellaneous Secured Claim and such other documents as the Company or the
Reorganized Company, as applicable, may reasonably request or (b) otherwise
turns over and releases any and all property of the Company that secures or
purportedly secures such Claim. Any such Holder that fails to execute and
deliver such release of liens within 120 days of the Effective Date shall be
deemed to have no further Claim against the Company, the Reorganized Company or
their assets or property in respect of such Claim and shall not participate in
any Distribution hereunder on account of such Claim. Notwithstanding the
immediately preceding sentence, any such Holder of a Disputed Claim shall not be
required to execute and deliver such release until such time as the Claim is
Allowed or Disallowed.
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Distributions by Indenture Trustee
Notwithstanding any other provision of the Plan, any Distributions on
account of any Allowed UPC Notes Claims shall be made by the Disbursing Agent to
the Indenture Trustee, which, in turn, shall make any such Distributions to the
Holders of such Allowed Claims under the Plan. Except as expressly provided in
the Plan, Distributions made by any Indenture Trustee shall be in accordance
with and subject to the requirements set forth in the applicable Indenture, and
any Indenture Trustee acting in good faith pursuant to the Plan shall be
entitled to the same indemnification the Disbursing Agent receives from the
Company or the Reorganized Company, as the case may be, and to payment from the
Reorganized Company of its customary fees and expenses for making distributions
under the Plan to Holders of UPC Notes.
Setoffs
The Company or the Reorganized Company, as applicable, may, but shall not
be required to, set off against any Claims and the payments or distributions to
be made pursuant to the Plan in respect of such Claims, any and all debts,
liabilities and claims of every type and nature whatsoever which the Estate, the
Company or the Reorganized Company may have against the Holders of such Claims;
provided, however, that neither the failure to do so nor the allowance of any
such Claims, whether pursuant to the Plan or otherwise, shall constitute a
waiver or release by the Company or the Reorganized Company of any such claims
the Company or the Reorganized Company may have against such Creditors, and all
such claims shall be reserved to and retained by the Reorganized Company.
Treatment of Executory Contracts and Unexpired Leases; Indemnification
Obligations; Benefit Programs
General
On the Effective Date, all of the executory contracts and unexpired leases
that exist between the Company and any Person which (a) have not expired or
terminated pursuant to their own terms, (b) have not previously been assumed,
assumed and assigned, or rejected pursuant to an order of the U.S. Bankruptcy
Court on or prior to the Confirmation Date or (c) are not the subject of pending
motions to assume, assume and assign, or reject as of the Confirmation Date,
will be (i) deemed assumed if listed on the Schedule of Assumed Contracts or
(ii) deemed rejected if listed on the Schedule of Rejected Contracts; provided,
however, that any executory contracts or unexpired leases which are omitted from
both the Schedule of Assumed Contracts and the Schedule of Rejected Contracts
are assumed as of the Effective Date, all in accordance with the provisions and
requirements of Section 365 of the U.S. Bankruptcy Code; provided, however, that
the Company shall have the right, at any time prior to the Confirmation Date, to
amend the Schedule of Assumed Contracts and the Schedule of Rejected Contracts
upon notice to the counterparty to a contract or lease (i) to delete any
executory contract or unexpired lease listed therein or (ii) to add any
executory contract or unexpired lease thereto.
The Confirmation Order (except as otherwise provided therein) shall
constitute an order of the U.S. Bankruptcy Court pursuant to Section 365 of the
U.S. Bankruptcy Code, effective as of the Effective Date, approving such
assumptions and rejections, as applicable. Each contract and lease assumed or
rejected, as the case may be, pursuant to Section 7.1 of the Plan shall be
assumed or rejected, as the case may be, only to the extent that any such
contract or lease constitutes an executory contract or unexpired lease.
Assumption or rejection, as the case may be, of a contract or lease pursuant to
Section 7.1 of the Plan shall not constitute an admission by the Company or the
Reorganized Company that such contract or lease is an executory contract or
unexpired lease or that the Company or the Reorganized Company has any liability
thereunder. All executory contracts and unexpired leases that are assumed will
be assumed under their present terms or upon such terms as are agreed to between
the Company and the other party to the executory contract or unexpired lease.
Each executory contract and unexpired lease that is assumed and relates to the
use, ability to acquire, or occupancy of real property shall include: (y) all
modifications, amendments, supplements, restatements, or other agreements made
directly or indirectly by any agreement, instrument, or other document that in
any manner affect such executory contract or unexpired lease and (z) all
executory contracts or unexpired leases appurtenant to the premises, including
all easements, licenses, permits, rights, privileges, immunities, options,
rights of first refusal, powers, uses, reciprocal easement agreements, vaults,
tunnel or bridge agreements or franchises, and any other interests in real
estate or rights in rem related to such premises, unless any of the foregoing
agreements has been rejected pursuant to an order of the U.S. Bankruptcy Court.
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Cure of Defaults for Assumed Contracts and Leases
All undisputed cure and any other monetary default payments required by
Section 365(b)(1) of the U.S. Bankruptcy Code under any executory contract and
unexpired lease to be assumed pursuant to the Plan which is in default shall be
satisfied by the Reorganized Company (to the extent such obligations are
enforceable under the U.S. Bankruptcy Code and applicable non-bankruptcy law),
pursuant to Section 365(b)(1) of the U.S. Bankruptcy Code, at the option of the
Reorganized Company: (A) by payment of such undisputed cure amount, without
interest, in Cash within sixty (60) days following the Effective Date; (B) such
other amount as ordered by the U.S. Bankruptcy Court; or (C) on such other terms
as may be agreed to by the parties to such executory contract or unexpired
lease. In the event of a dispute, payment of the amount otherwise payable
hereunder shall be made without interest, in Cash (i) on or before the later of
sixty (60) days following the Effective Date or thirty (30) days following entry
of a Final Order liquidating and allowing any disputed amount or (ii) on such
other terms as may be agreed to by the parties to such executory contract or
unexpired lease.
Resolution of Objections to Assumption of Executory Contracts and
Unexpired Leases; Cure Payments
Any party objecting to the Company's proposed assumption of an executory
contract or unexpired lease or the ability of the Reorganized Company to provide
"adequate assurance of future performance" (within the meaning of Section 365 of
the U.S. Bankruptcy Code) under the contract or lease to be assumed shall File
and serve on counsel for the Company a written objection to the assumption of
such contract or lease within thirty (30) days after the service of the notice
of Confirmation. Failure to File an objection within the time period set forth
above shall constitute consent to the assumption and revestment of such contract
or lease, including an acknowledgment that the proposed assumption provides
adequate assurance of future performance. To the extent that any objections to
the assumption of a contract or lease are timely Filed and served and such
objections are not resolved between the Company and the objecting parties, the
U.S. Bankruptcy Court shall resolve such disputes at a hearing to be held on a
date to be determined by the U.S. Bankruptcy Court.
If the counterparty to a contract or lease assumed by the Company believes
that, as of the Confirmation Date, a cure payment is due and owing under such
contract or lease, such counterparty shall File and serve on counsel for the
Company a notification setting forth the amount of the cure payment which such
party believes is due and owing, which notification shall be Filed and served no
later than thirty (30) days after the service of the notice of Confirmation.
Failure to File such a notification within the time period set forth above shall
constitute an acknowledgment that no cure payment is due and owing in connection
with the assumption of such contract or lease and an acknowledgment that no
other defaults exist under said contract or lease. To the extent that any such
notifications are timely Filed and served and are not resolved between the
Company and the applicable counterparty, the U.S. Bankruptcy Court shall resolve
such disputes at a hearing to be held on a date to be determined by the U.S.
Bankruptcy Court. The resolution of such disputes shall not affect the Company's
assumption of the contracts or leases that are subject of such a dispute, but
rather shall affect only the "cure" amount the Company must pay in order to
assume such contract or lease. Notwithstanding the immediately preceding
sentence, if the Company in its discretion determines that the amount asserted
to be the necessary "cure" amount would, if ordered by the U.S. Bankruptcy
Court, make the assumption of the contract or lease imprudent, then the Company
may elect to (i) reject the contract or lease pursuant to Section 7.1 of the
Plan or (ii) request an expedited hearing on the resolution of the "cure"
dispute, exclude assumption or rejection of the contract or lease from the scope
of the Confirmation Order, and retain the right to reject the contract or lease
pursuant to Section 7.1 of the Plan pending the outcome of such dispute.
Claims for Rejection Damages
Objections to the amounts listed on the Schedule of Rejected Contracts for
damages allegedly arising from the rejection pursuant to the Plan or the
Confirmation Order of any executory contract or any unexpired lease shall be
Filed with the U.S. Bankruptcy Court and served on counsel for the Company not
later than thirty (30) days after the service of the earlier of (A) notice of
Confirmation or (B) other notice that the executory contract or unexpired lease
has been rejected. Any Holder of a Claim arising from the rejection of any
executory contract or any unexpired lease that fails to File such Objection on
or before the dates specified in this paragraph shall be forever barred,
estopped and enjoined from asserting any Claims in any manner against the
Company or its Property or the Reorganized Company or its Property for any
amounts in excess of the amount scheduled by the Company on the Schedule of
Rejected Contracts for such contract or lease and the Company and the
Reorganized Company shall be
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forever discharged from all indebtedness or liability with respect to such
Claims for such excess amounts and such Holders shall be bound by the terms of
the Plan.
Treatment of Rejection Claims
The U.S. Bankruptcy Court shall determine any Objections Filed in
accordance with Section 7.4 of the Plan at a hearing to be held on a date to be
determined by the U.S. Bankruptcy Court. Subject to any statutory limitation,
including, but not limited to the limitations contained in Sections 502(b)(6)
and 502(b)(7) of the U.S. Bankruptcy Code, any Claims arising out of the
rejection of executory contracts and unexpired leases shall, pursuant to Section
502(g) of the U.S. Bankruptcy Code, be treated as Class 5 Claims in accordance
with Section 4.7 of the Plan.
Executory Contracts and Unexpired Leases Entered Into and Other
Obligations Incurred After the Petition Date
On the Effective Date, all contracts, leases, and other agreements entered
into by the Company on or after the Petition Date, which agreements have not
been terminated in accordance with their terms or been rejected on or before the
Confirmation Date, shall revest in and remain in full force and effect as
against the Reorganized Company and the other parties to such contracts, leases
and other agreements.
Indemnification Obligations
To the extent not inconsistent with the Plan, any obligations of the
Company or the Reorganized Company, pursuant to their respective organizational
documents, applicable non-bankruptcy law or a specific agreement, to indemnify a
Person with respect to all present and future actions, suits and proceedings
against the Company, the Reorganized Company or such indemnified Person, based
upon any act or omission related to service with, or for or on behalf of, the
Company, the Reorganized Company shall survive Confirmation and shall not be
impaired by Confirmation, except to the extent any such obligation has been
released, discharged or modified pursuant to the Plan. Such indemnification
obligations shall be performed and honored by the Reorganized Company, as
applicable.
Benefit Programs
Notwithstanding anything to the contrary contained in the Plan, nothing in
the Plan shall adversely affect the payment of any "retiree benefits" (as such
term is defined in Section 1114(a) of the U.S. Bankruptcy Code) to the extent
required by Section 1129(a)(13) of the U.S. Bankruptcy Code.
Resolution of Disputed Claims
Preservation of Rights
Except as to applications for allowance of compensation and reimbursement
of expenses under Sections 330 and 503 of the U.S. Bankruptcy Code, the
Reorganized Company shall have the exclusive right to make and file objections
to Administrative Claims, other Claims, Equity Interests and Old Other Equity
Interests, subsequent to the Confirmation Date. Except to the extent that any
Claim, Equity Interest or Old Other Equity Interest is Allowed in the Plan,
nothing, including the failure of the Company or the Reorganized Company to
object to a Claim, Equity Interest or Old Other Equity Interest for any reason
during the pendency of the Chapter 11 Case, shall affect, prejudice, diminish or
impair the rights and legal and equitable defenses of the Company or the
Reorganized Company with respect to any Claim, Equity Interest or Old Other
Equity Interest, including, but not limited to, all rights of the Company or
Reorganized Company (i) to contest or defend themselves against such Claims,
Equity Interests or Old Other Equity Interests in any lawful manner or forum
when and if such Claim, Equity Interest or Old Other Equity Interest is sought
to be enforced by the Holder thereof or (ii) in respect of legal and equitable
defenses to setoffs or recoupments against Claims, Equity Interests or Old Other
Equity Interests. The distributions provided for in Article IV of the Plan shall
at all times be subject to Section 8.1 of the Plan and to Section 502(d) of the
U.S. Bankruptcy Code.
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Objections to and Resolution of Claims, Administrative Claims, Equity
Interests and Old Other Equity Interests
Unless otherwise ordered by the U.S. Bankruptcy Court, the Reorganized
Company shall file all objections to Claims (including Administrative Claims)
that are the subject of proofs of claim or requests for payment filed with the
U.S. Bankruptcy Court (other than applications for allowance of compensation and
reimbursement of expenses under Sections 330 and 503 of the U.S. Bankruptcy
Code) Equity Interests or Old Other Equity Interests and serve such objections
upon the Holder as to which the objection is made as soon as is practicable,
but, with respect to Claims (other than Administrative Claims) Equity Interests
and Old Other Equity Interests, in no event later than one hundred and eighty
(180) days after the Effective Date, or, in either case, such later date as may
be approved by the U.S. Bankruptcy Court upon request made before or after
expiration of such applicable objection period. All objections shall be
litigated to Final Order; provided, however, that the Reorganized Company shall
have the authority to compromise, settle, otherwise resolve or withdraw any
objections without any requirement of approval by the U.S. Bankruptcy Court.
Estimation of Claims
The Company or the Reorganized Company, as applicable, may, at any time,
request that the U.S. Bankruptcy Court estimate any contingent or unliquidated
Claim pursuant to Section 502(c) of the U.S. Bankruptcy Code regardless of
whether or not the Company or the Reorganized Company has previously objected to
such Claim or the U.S. Bankruptcy Court has previously ruled on any such
objection. Claims may be estimated and subsequently compromised, settled,
withdrawn or resolved by any mechanism approved by the U.S. Bankruptcy Court;
provided, however, that commencing on the Effective Date the Reorganized Company
may compromise, settle or resolve any such Claims without further approval of
the U.S. Bankruptcy Court.
Distributions Withheld for Disputed Unsecured Claims and Equity
Interests
Notwithstanding any other provision of the Plan, no payments or
Distributions shall be made with respect to all or any portion of a Disputed
Claim or Disputed Equity Interest unless and until some portion thereof has
become an Allowed Claim or Allowed Equity Interest, respectively.
On each applicable Distribution Date, the Disbursing Agent shall reserve
for the benefit of Holders of Disputed Claims and Disputed Equity Interests (the
"Reserve") the distributions to which the Holders of Disputed Claims and
Disputed Equity Interests as of such Distribution Date would be entitled under
the Plan if such Disputed Claims and Disputed Equity Interests were Allowed
Claims and Allowed Equity Interests in the amounts of their Disputed Claims and
Disputed Equity Interests, respectively, as if the Holders thereof had received
such distributions on the Initial Distribution Date. Such amounts shall be
determined by reference to the aggregate Face Amount of all Disputed Claims or
Disputed Equity Interests as of such date. The Disbursing Agent shall maintain a
register of all Disputed Claims and Disputed Equity Interests, the amounts upon
which to base reserves for such Disputed Claims and Disputed Equity Interests
pursuant to the preceding sentence and, where the property to be reserved is New
UPC Common Stock, the number of shares of New UPC Common Stock to which the
Holders of the Disputed Claims and Disputed Equity Interests would be entitled
if such Disputed Claims and Disputed Equity Interests were Allowed Claims and
Allowed Equity Interests, as applicable.
The Holder of a Disputed Claim or Disputed Equity Interest that becomes an
Allowed Claim or Allowed Equity Interest subsequent to the Initial Distribution
Date shall receive Distributions of the applicable New UPC Common Stock or Cash
previously reserved on account of such Claim or Equity Interest in the Reserve
as soon as reasonably practicable following the allowance of any such Claim or
Equity Interest; provided, however, that neither the Company, the Reorganized
Company, New UPC or the Disbursing Agent shall be required to make a
Distribution if the aggregate Distribution would not exceed (euro)500,000 or
10,000 shares of New UPC Common Stock, as applicable; provided further, however,
that if the aggregate distribution that would be made to the Holders of all
remaining Disputed Claims and Disputed Equity Interests if all such Disputed
Claims and Disputed Equity Interests became Allowed Claims and Allowed Equity
Interests, as applicable, cannot exceed either (euro)500,000 or 10,000 shares of
New UPC Common Stock, as applicable, then the Company, the Reorganized Company,
New UPC or the Disbursing Agent shall make a Distribution to any Holder of a
Disputed Claim or Disputed Equity Interest as soon as reasonably practicable
after the allowance of any such Claim or Equity Interest. Such Distributions
shall be made in accordance with the Plan based upon the Distributions that
would have been made to such holder under the Plan if
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the Disputed Claim or Disputed Equity Interest had been an Allowed Claim or
Allowed Equity Interest, respectively, on or prior to the Effective Date.
Upon any Disputed Claim or Disputed Equity Interest becoming a Disallowed
Claim or Disallowed Equity Interest, respectively, in whole or in part, the
Property, if any, reserved for the payment of or Distribution on the Disallowed
portion of such Disputed Claim or Disputed Equity Interest (i) if in the form of
Cash, shall revest in the Reorganized Company and no longer be subject to
Distribution to Creditors or Equity Interest Holders and (ii) if in the form of
New UPC Common Stock, shall either (A) be cancelled or (B) be returned to New
UPC to be held as treasury shares and no longer be subject to Distribution to
Holders of Claims or Equity Interests.
Dutch Bankruptcy Case
Nothing in the Plan shall impair the rights of the Company or the
Administrator to contest any claim filed or otherwise asserted against the
Company in the Dutch Bankruptcy Case.
Conditions to Confirmation and Consummation of the Plan
Conditions Precedent to Confirmation
Confirmation is subject to the following conditions precedent:
o the Confirmation Order shall be in form and substance reasonably
acceptable to the Company, New UPC, UGC and the Participating
Noteholders; provided that none of UGC, New UPC or the Participating
Noteholders may request that the Confirmation Order contain a
provision that is inconsistent with any of the provisions of the
Restructuring Agreement; and
o the Offer Memorandum, which is comprised of the Disclosure Statement
and an offer memorandum supplement, has been submitted to the A-FM
prior to the commencement of the Dutch Implementing Offer and
generally made available to the Holders of the UPC Ordinary Shares A
outside the United States to effectuate the Restructuring.
Conditions Precedent to Consummation
The Plan shall be consummated and the Effective Date shall occur if and
only if the following conditions shall have occurred or shall have been duly
waived (if waivable) pursuant to Section 11.3 of the Plan:
o the Confirmation Order shall not have been vacated, reversed, stayed,
modified, amended, enjoined or restrained by order of a court of
competent jurisdiction and shall have become a Final Order;
o the Akkoord shall have been adopted by the requisite majority of
Ordinary Creditors and subsequently ratified by the Dutch Bankruptcy
Court, all conditions to the effectiveness of the Akkoord shall have
been satisfied or duly waived to the extent permitted therein, and the
Dutch Bankruptcy Court's ratification of the Akkoord shall have become
final and binding and no longer subject to appeal;
o the UPC Voting Securities and Belmarken Notes held by the UGC Group
shall have been contributed to the capital of New UPC;
o the Company's shareholders shall have duly authorized the Shareholder
Proposals at the Extraordinary General Meeting;
o New UPC shall have issued sufficient shares of New UPC Common Stock to
effect the Restructuring in accordance with the Plan;
o New UPC shall have sold the Belmarken Notes to the capital of the
Company;
o the Dutch Implementing Offer shall have been declared unconditional;
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o all UPC Preference Shares A shall have been registered in the name of
New UPC after giving effect to the consummation of the Restructuring
or, in the event that the UPC Preference Shares A are not transferred
to New UPC under the Plan, shall have been converted on a one-for-one
basis into registered UPC Ordinary Shares A in accordance with Section
9.2(c) of the Plan, provided, however, that this condition shall be
deemed satisfied unless, on or before the date that is ten (10) days
prior to the date of the hearing to ratify the Akkoord, UGC or a
Majority-in-Interest of the Participating Noteholders shall serve
written notice on the other that such condition has not been
satisfied;
o UGC and the Holders of Class 4 Claims and Class 5 Claims shall have
subscribed for and purchased for cash the total number of Subscription
Shares of New UPC Common Stock pursuant to the New UPC Equity Purchase
Rights and the UGC Subscription Commitment;
o the Incentive Plan shall have been adopted by New UPC;
o all documents and agreements required to be executed or delivered
under the Plan, the Akkoord or the Restructuring Agreement on or prior
to the Effective Date, including, without limitation, the Stockholders
Agreement, shall have been executed and delivered by the parties
thereto;
o the U.S. Bankruptcy Court shall have entered an order (contemplated to
be part of the Confirmation Order) authorizing and directing the
Company and the Reorganized Company to take all actions necessary or
appropriate to enter into, implement, and consummate the contracts,
instruments, releases, indentures and other agreements or documents
created, amended, supplemented, modified or adopted in connection with
the Plan;
o the Amended and Restated UPC Articles of Association, the Amended and
Restated New UPC Certificate of Incorporation and the Amended and
Restated New UPC By-Laws shall have been filed with the applicable
authority of each entity's jurisdiction of incorporation or
organization in accordance with such jurisdiction's applicable law;
o all authorizations, consents and regulatory approvals required, if
any, in order to consummate the Plan or the Akkoord shall have been
obtained; and
o no order of a court shall have been entered and shall remain in effect
restraining the Company from consummating the Plan.
Waiver of Conditions to Consummation
The conditions to consummation in Section 11.2 of the Plan may be waived at
any time by a writing signed by an authorized representative of the Company, New
UPC and the Participating Noteholders, without notice or order of the U.S.
Bankruptcy Court or any further action other than proceeding to consummation of
the Plan.
Legal Effect of Confirmation of the Plan
Discharge
To the fullest extent permitted by applicable law (including, without
limitation, Section 105 of the U.S. Bankruptcy Code), and except as otherwise
provided in the Plan or in the Confirmation Order: (A) all property distributed
under the Plan shall be in consideration for, and in complete satisfaction,
settlement, discharge and release of, all Claims of any nature whatsoever
against, Equity Interests in, or Old Other Equity Interests in, the Company, the
Reorganized Company, the Estate or any of their assets or properties and,
regardless of whether any property shall have been distributed or retained
pursuant to the Plan on account of such Claims, Equity Interests or Old Other
Equity Interests, upon the Effective Date, except as otherwise set forth in the
Plan, (i) the Company shall be deemed discharged and released under Section
1141(d)(1)(A) of the U.S. Bankruptcy Code from any and all Claims, including,
but not limited to, demands and liabilities that arose before the Confirmation
Date, debts (as such term is defined in Section 101(12) of the U.S. Bankruptcy
Code), Liens, security interests, and encumbrances of and against all Property
of the Estate, the Company and its Affiliates, that arose before the
Confirmation Date, including
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without limitation, all debts of the kind specified in Sections 502(g), 502(h)
or 502(i) of the U.S. Bankruptcy Code, whether or not (a) such Claim has been
Allowed pursuant to Section 502 of the U.S. Bankruptcy Code, or (b) the Holder
of such Claim has voted to accept the Plan and (ii) all interests of the Holders
of Equity Interests and, to the extent permitted under applicable law, Old Other
Equity Interests shall be terminated; and (B) as of the Confirmation Date, (x)
all Persons, including, without limitation, all Holders of Claims, Equity
Interests or Old Other Equity Interests, shall be barred and enjoined from
asserting against the Company or the Reorganized Company, their successors or
their property any other or further Claims, debts, rights, Causes of Action,
liabilities or Equity Interests relating to the Company based upon any act,
omission, transaction or other activity of any nature that occurred prior to the
Confirmation Date. In accordance with the foregoing, except as provided in the
Plan or the Confirmation Order, the Confirmation Order shall be a judicial
determination of discharge of all such Claims and other debts and liabilities
against the Company and termination of all Equity Interests and, to the extent
permitted under applicable law, Old Other Equity Interests, pursuant to Sections
524 and 1141 of the U.S. Bankruptcy Code, and such discharge and termination
shall void any judgment obtained against the Company at any time, to the extent
that such judgment relates to a discharged Claim or terminated Equity Interest
or Old Other Equity Interest. In particular, Confirmation shall permanently
enjoin all Holders of Claims against, or Equity Interests in, the Company or any
other party in interest from taking any action whatsoever, whether within or
outside of the United States, including, without limitation, in connection with
the Dutch Bankruptcy Case, that in any way is inconsistent with or contrary to
the classification and/or treatment of Claims, Equity Interests or Old Other
Equity Interests under this Plan, and all Holders are bound by the Plan.
Notwithstanding the foregoing, Section 12.1 of the Plan shall not affect the
rights of New UPC with respect to any Belmarken Notes, UPC Notes, UPC Preference
Shares A, UPC Priority Shares or UPC Ordinary Shares A, transferred to it in
accordance with the Plan.
Injunction
Except as otherwise expressly provided for in the Plan or the Confirmation
Order and to the fullest extent authorized or provided by the U.S. Bankruptcy
Code, including Sections 524 and 1141 thereof, Confirmation shall, provided that
the Effective Date occurs, permanently enjoin all Persons that have held,
currently hold or may hold a Claim or other debt or liability that is discharged
or an Equity Interest, Old Other Equity Interest or other right of an equity
security Holder that is Impaired or terminated pursuant to the terms of the Plan
from taking any of the following actions against the Company, the Reorganized
Company or their property on account of any such discharged Claims, debts or
liabilities or such terminated Equity Interests, Old Other Equity Interests or
rights: (a) commencing, conducting or continuing in any manner, directly or
indirectly, any suit, action or other proceeding of any kind; (b) enforcing,
levying, attaching, collecting or otherwise recovering in any manner or by any
means, whether directly or indirectly, any judgment, award, decree or order; (c)
creating, perfecting or enforcing in any manner, directly or indirectly, any
Lien or encumbrance of any kind; (d) asserting any setoff, offset, right of
subrogation or recoupment of any kind, directly or indirectly, against any debt,
liability or obligation due to the Company or the Reorganized Company; and/or
(e) proceeding in any manner in any place whatsoever, including employing any
process, that does not conform to or comply with or is inconsistent with the
provisions of the Plan.
Exculpation
None of UGC, UGC Holdings, the Company, the Reorganized Company, New UPC,
the Committee, any Participating Noteholder, any Indenture Trustee any Holder of
UPC Notes, UPC Preference Shares A, UPC Priority Shares or UPC Ordinary Shares
A, or any of the foregoing's respective current or former officers, directors,
Subsidiaries, Affiliates, members, managers, shareholders, partners,
representatives, employees, attorneys, financial advisors, accountants and
agents, or any of their respective successors and assigns (collectively, the
"Exculpated Parties"), or any of their respective property, shall have or incur
any liability to any Holder of a Claim, an Equity Interest or an Old Other
Equity Interest, or any other party in interest, or any of their respective
officers, directors, Subsidiaries, Affiliates, members, managers, shareholders,
partners, representatives, employees, attorneys, financial advisors and agents,
or any of their respective successors and assigns, and their respective
property, for any act or omission in connection with, relating to, or arising
out of, the Restructuring, the Moratorium Petition, the Chapter 11 Case, the
solicitation of acceptances of the Plan or the Akkoord, the pursuit of
Confirmation or the acceptance of the Akkoord, the consummation of the Plan or
the Akkoord, or the administration of the Plan or the Akkoord or the property to
be distributed under the Plan or the Akkoord, except (i) for their gross
negligence or willful misconduct, (ii) solely in the case of the Company, New
UPC, UGC or any Participating Noteholder, any liability for failure to comply
with, or breach of such Person's obligations, under the Plan, the Akkoord or the
Restructuring Agreement,
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and (iii) solely in the case of the Indenture Trustee, any liability for failure
to comply with, or breach of such Person's obligations under, the Indentures,
and in all respects (x) the Company, New UPC, UGC and the Participating
Noteholders shall be entitled to reasonably rely upon the advice of counsel with
respect to their duties and responsibilities under the Plan, the Akkoord and the
Restructuring Agreement and (y) the Indenture Trustee shall be entitled to
reasonably rely upon the advice of counsel with respect to its duties and
responsibilities under the Indenture.
Furthermore, notwithstanding any other provision of the Plan or the
Akkoord, no Holder of a Claim, Equity Interest or Old Other Equity Interest, no
other party in interest, none of their respective current or former officers,
directors, Subsidiaries, Affiliates, members, managers, shareholders, partners,
representatives, employees, attorneys, financial advisors, accountants and
agents, or any of their respective successors and assigns, and their respective
property, shall have any right of action, demand, suit or proceeding against
UGC, UGC Holdings, the Company, the Reorganized Company, New UPC, each
Participating Noteholder, any Indenture Trustee, each Holder of UPC Notes, the
Belmarken Notes, the UPC Preference Shares A, the UPC Priority Shares or the UPC
Ordinary Shares A and each of the foregoing's respective current or former
officers, directors, Subsidiaries, Affiliates, members, managers, shareholders,
partners, representatives, employees, attorneys, financial advisors and agents,
or any of their respective successors and assigns, and their respective
property, for any act or omission in connection with, relating to, or arising
out of, the Restructuring, the Moratorium Petition, the Chapter 11 Case, the
solicitation of acceptances of the Plan or the Akkoord, the pursuit of
Confirmation or the acceptance of the Akkoord, the consummation of the Plan or
the Akkoord, or the administration of the Plan or the Akkoord or the property to
be distributed under the Plan or the Akkoord, except (i) for their gross
negligence or willful misconduct, (ii) solely in the case of UPC, New UPC, UGC
or any Participating Noteholder, any liability for failure to comply with, or
breach of such Person's obligations under, the Plan, the Akkoord or the
Restructuring Agreement and (iii) solely in the case of the Indenture Trustee,
any liability for failure to comply with, or breach of such Person's obligations
under, the Indentures, and in all respects (x) UPC, New UPC, UGC and the
Participating Noteholders shall be entitled to reasonably rely upon the advice
of counsel with respect to their duties and responsibilities under the Plan, the
Akkoord, and the Restructuring Agreement and (y) the Indenture Trustee shall be
entitled to reasonably rely upon the advice of counsel with respect to its
duties and responsibilities under the Indentures.
Releases
Effective on the Confirmation Date, but subject to the occurrence of the
Effective Date, UGC, UGC Holdings, the Company, the Reorganized Company, New
UPC, each Participating Noteholder, any Indenture Trustee each Holder of UPC
Notes, and each of the foregoing's respective current or former officers,
directors, Subsidiaries, Affiliates, members, managers, shareholders, partners,
representatives, employees, attorneys, financial advisors and agents, or any of
their respective successors and assigns, and their respective property, shall be
released from any and all claims, obligations, rights, causes of action, choses
in action, demands, suits, proceedings and liabilities which the Company or any
Holder of a Claim against, Equity Interest in, or Old Other Equity Interest in,
the Company may be entitled to assert, under the Laws of the U.S. or The
Netherlands or any political subdivision of either of them, whether for fraud,
tort, contract, violations of applicable securities laws, or otherwise, whether
known or unknown, foreseen or unforeseen, existing or hereafter arising,
contingent or non-contingent, based in whole or in part upon any act, omission,
transaction, state of facts, circumstances or other occurrence or failure of an
event to occur, taking place before the Confirmation Date and in any way
relating to the Company, the Reorganized Company, New UPC, the issuance,
purchase or sale of the Belmarken Notes, the UPC Notes, the UPC Preference
Shares A, the UPC Priority Shares or the UPC Ordinary Shares A, the
Restructuring, the Chapter 11 Case, the Moratorium Petition, the Plan, or the
Akkoord; provided, however, that nothing herein shall release any Person from
any claims, obligations, rights, causes of action, choses in action, demands,
suits, proceedings or liabilities based upon any act or omission arising out of
such Person's gross negligence or willful misconduct; provided further that
nothing herein shall release (i) the Company, New UPC, UGC or any Participating
Noteholder from any claims, obligations, rights, causes of action, choses in
action, demands, suits, proceedings or liabilities based upon such Person's
failure to comply with, or breach of such Person's obligations under, the Plan,
the Akkoord or the Restructuring Agreement or (ii) the Indenture Trustee from
any claims, obligations, rights, causes of action, choses in action, demands,
suits, proceedings or liabilities based upon such Person's failure to comply
with, or breach of such Person's obligations under, the Indentures; provided
further that to the extent that, on the Effective Date, New UPC is the holder of
any Belmarken Notes, UPC Notes, UPC Preference Shares A, UPC Priority Shares or
UPC Ordinary Shares A, whether obtained through the Dutch Implementing Offer and
the Plan or otherwise, the Claims
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and Equity Interests represented by such Belmarken Notes, UPC Notes, UPC
Preference Shares A, UPC Priority Shares and UPC Ordinary Shares A held by New
UPC will not be released, but will instead remain outstanding. Effective as of
the Confirmation Date, but subject to the occurrence of the Effective Date, all
holders of Belmarken Notes, UPC Notes, UPC Preference Shares A, UPC Priority
Shares and UPC Ordinary Shares A shall be deemed to release, and shall be
permanently enjoined from bringing, maintaining, facilitating or assisting any
action, demand, suit or proceeding against the Company, the Reorganized Company,
New UPC and their respective current or former officers, directors,
Subsidiaries, Affiliates, members, managers, shareholders, partners,
representatives, employees, attorneys, financial advisors and agents, or any of
their respective successors and assigns, and their respective property, in
respect of any claims, obligations, rights, causes of action, demands, suits,
proceedings and liabilities related to, or arising from, any and all claims or
interests arising under, in connection with, or related to the Belmarken Notes,
the UPC Notes, the UPC Preference Shares A, the UPC Priority Shares, the UPC
Ordinary Shares A, or the issuance, purchase, or sale thereof; provided that
such release and injunction shall not be binding on New UPC to the extent of New
UPC's claims and interests solely against the Company on account of any
Belmarken Notes, UPC Notes, UPC Preference Shares A, UPC Priority Shares or UPC
Ordinary Shares A held by New UPC, whether obtained through the Dutch
Implementing Offer and the Plan or otherwise.
Binding Effect of Plan
The provisions of the Plan shall be binding upon and inure to the benefit
of the Company, the Estate, the Reorganized Company, any Holder of any Claim,
Equity Interest or Old Other Equity Interest treated herein or any Person named
or referred to in the Plan, the Indenture Trustee and each of their respective
heirs, executors, administrators, representatives, predecessors, successors,
assigns, agents, officers and directors, and, to the fullest extent permitted
under the U.S. Bankruptcy Code and other applicable law, each other Person
affected by the Plan.
Indemnification
To the extent not inconsistent with the Plan or the Confirmation Order and
to the fullest extent permitted by applicable law, including, but not limited
to, the extent provided in the Company's, the Reorganized Company's or New UPC's
constituent documents, contracts (including, but limited to, any indemnification
agreements), statutory law or common law, the Reorganized Company and New UPC
shall indemnify, hold harmless and reimburse the Exculpated Parties from and
against any and all losses, claims, Causes of Action, damages, fees, expenses,
liabilities and actions: (A) for any act taken or omission made in good faith in
connection with or in any way related to negotiating, formulating, implementing,
confirming or consummating the Plan, the Akkoord, the Disclosure Statement, the
Restructuring Agreement or any contract, instrument, release or other agreement
or document created in connection with the Plan or the Akkoord or the
administration of the Chapter 11 Case or the Dutch Bankruptcy Case; or (B) for
any act or omission in connection with or arising out of the administration of
the Plan or the Akkoord or the property to be distributed under the Plan or the
Akkoord or the operations or activities of the Company, the Reorganized Company
or New UPC, and any Claims of any such Exculpated Party against the Reorganized
Company or New UPC, as applicable, on account of such indemnification
obligations shall be unaltered and Unimpaired within the meaning of Section
1124(l) of the U.S. Bankruptcy Code, except that neither the Reorganized Company
nor New UPC shall have any obligation to indemnify any Exculpated Party for any
acts or omissions that constitute gross negligence or willful misconduct,
provided, however, that upon request of an Exculpated Party covered by this
section, the Reorganized Company and New UPC shall advance amounts to cover any
and all losses, claims, Causes of Action, damages, fees, expenses, liabilities
and actions; provided further, that if a court of a competent jurisdiction
determines that such Exculpated Party is not entitled to the amounts that were
advanced, such Exculpated Party shall return the funds to the Reorganized
Company or New UPC, as applicable. Such indemnification obligations shall
survive unaffected by Confirmation, irrespective of whether such indemnification
is owed for an act or event occurring before or after the Petition Date.
Term of Injunctions or Stays
Unless otherwise provided herein or in the Confirmation Order, all
injunctions or stays provided for in the Chapter 11 Case under Sections 105(a)
or 362 of the U.S. Bankruptcy Code, or otherwise, and in existence on the
Confirmation Date, shall remain in full force and effect until the Effective
Date.
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Preservation of Insurance
Except as necessary to be consistent with the Plan, the Plan and the
discharge provided in the Plan shall not diminish or impair (A) the
enforceability of insurance policies that may cover Claims against the Company
or any other Person or (B) the continuation of workers' compensation programs in
effect, including self-insurance programs.
Waiver of Subordination Rights
Any distributions under the Plan shall be received and retained free of and
from any obligations to hold or transfer the same to any other Creditor, and
shall not be subject to levy, garnishment, attachment or other legal process by
any Holder by reason of claimed contractual subordination rights, and the
Confirmation Order shall constitute an injunction enjoining any Person from
enforcing or attempting to enforce any contractual, legal or equitable
subordination rights to Property distributed under the Plan, in each case other
than as provided in the Plan.
No Successor Liability
Except as otherwise expressly provided in the Plan, the Company and the
Reorganized Company do not, pursuant to the Plan or otherwise, assume, agree to
perform, pay, or indemnify Creditors or otherwise have any responsibilities for
any liabilities or obligations of the Company relating to or arising out of the
operations or assets of the Company, whether arising prior to, on, or after the
Confirmation Date. The Reorganized Company is not, and shall not be, a successor
to the Company by reason of any theory of law or equity, and shall not have any
successor or transferee liability of any kind or character, except that the
Reorganized Company shall assume the obligations specified therefor in the Plan
and the Confirmation Order.
Retention of Jurisdiction
Continuing Jurisdiction of U.S. Bankruptcy Court
Notwithstanding Confirmation and the occurrence of the Effective Date, the
U.S. Bankruptcy Court shall retain after the Effective Date jurisdiction of all
matters arising out of, arising in or related to, the Chapter 11 Case to the
fullest extent permitted by applicable law, including, without limitation,
jurisdiction to:
o classify or establish the priority or secured or unsecured status of
any Claim, Equity Interest or Old Other Equity Interest (whether Filed
before or after the Effective Date and whether or not contingent,
Disputed or unliquidated) or resolve any dispute as to the treatment
necessary to Reinstate such a Claim pursuant to the Plan;
o allow, disallow, determine, liquidate or estimate any Claim, Equity
Interest or Old Other Equity Interest, including the compromise,
settlement and resolution of any request for payment of any such Claim
and the resolution of any Objections to the allowance of any such
Claims, Equity Interests or Old Other Equity Interests, and to hear
and determine any other issue presented hereby or arising hereunder,
including during the pendency of any appeal relating to any Objection
to such Claims or Equity Interests;
o grant or deny any applications for allowance of compensation or
reimbursement of expenses pursuant to Sections 330, 331 or 503(b) of
the U.S. Bankruptcy Code or otherwise provided for in the Plan, for
periods ending on or before the Effective Date;
o determine and resolve any and all controversies arising in connection
with the Chapter 11 Case relating to the rights and obligations of the
Indenture Trustee, the Disbursing Agent and any voting agent and/or
claims agent retained by the Company in connection with the Chapter 11
Case, including, without limitation, any dispute arising in connection
with the payment of the reasonable fees and expenses of the Indenture
Trustee, the Disbursing Agent, such voting agent and/or claims agent
in connection with their duties in the Chapter 11 Case;
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o enter and implement such orders as are necessary or appropriate if the
Confirmation Order is for any reason modified, stayed, reversed,
revoked or vacated;
o determine such other matters and for such other purposes as may be
provided in the Confirmation Order;
o hear and determine any other matters related hereto and not
inconsistent with Chapter 11 of the U.S. Bankruptcy Code;
o continue to enforce the automatic stay and any stay imposed under
Section 105(a) of the U.S. Bankruptcy Code through the Effective Date;
o hear and determine (i) disputes arising in connection with the
interpretation, implementation or enforcement of the Plan or (ii)
issues presented or arising under the Plan, including disputes among
Holders and arising under agreements, documents or instruments
executed in connection with the Plan;
o enter a final decree closing the Chapter 11 Case or converting it to a
Chapter 7 case;
o determine and resolve any matters related to the assumption,
assumption and assignment or rejection of any executory contract or
unexpired lease to which the Company is a party or with respect to
which the Company may be liable, and to hear, determine and, if
necessary, liquidate any Claims arising therefrom;
o ensure that all payments due under the Plan and performance of the
provisions of the Plan are accomplished as provided herein (including
by the approval of additional, supplemental or modified distribution
procedures or otherwise) and resolve any issues relating to
distributions to Holders of Allowed Claims or Allowed Equity Interests
pursuant to the provisions of the Plan;
o construe, take any action and issue such orders, prior to and
following the Confirmation Date and consistent with Section 1142 of
the U.S. Bankruptcy Code, as may be necessary for the enforcement,
implementation, execution and consummation of the Plan and all
contracts, instruments, releases, indentures and other agreements or
documents created in connection with the Plan, including, without
limitation, the Disclosure Statement and the Confirmation Order, for
the maintenance of the integrity of the Plan and protection of the
Reorganized Company in accordance with Sections 524 and 1141 of the
U.S. Bankruptcy Code following consummation;
o determine any other matters that may arise in connection with or
relating to the Plan, the Disclosure Statement, the Confirmation Order
or any contract, instrument, release, indenture or other agreement or
document created in connection with the Plan, the Disclosure Statement
or the Confirmation Order, except as otherwise provided in the Plan;
o determine and resolve any cases, controversies, suits or disputes that
may arise in connection with the consummation, interpretation,
implementation or enforcement of the Plan (and all Exhibits to the
Plan) or the Confirmation Order, including the indemnification and
injunction provisions set forth in and contemplated by the Plan or the
Confirmation Order, or any Person's rights arising under or
obligations incurred in connection therewith;
o hear any application of the Company, the Reorganized Company or New
UPC to modify the Plan before or after the Effective Date pursuant to
Section 1127 of the U.S. Bankruptcy Code and Section 14.3 of the Plan
or modify the Confirmation Order or any contract, instrument, release,
indenture or other agreement or document created in connection with
the Plan, the Disclosure Statement or the Confirmation Order, or
remedy any defect or omission or reconcile any inconsistency in any
U.S. Bankruptcy Court order, the Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument, release, indenture or
other agreement or document created in connection with the Plan, the
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Disclosure Statement or the Confirmation Order, in such manner as may
be necessary or appropriate to consummate the Plan, to the extent
authorized by the U.S. Bankruptcy Code and the Plan;
o issue injunctions, enter and implement other orders or take such other
actions as may be necessary or appropriate to restrain interference by
any Person with consummation, implementation or enforcement of the
Plan or the Confirmation Order;
o recover all assets of the Company and its Estate, wherever located;
o hear and determine any motions, applications, adversary proceedings,
contested matters and other litigated matters pending on, Filed or
commenced after the Effective Date that may be commenced by the
Company thereafter, including proceedings with respect to the rights
of the Company to recover Property under Section 542, 543 or 553 of
the U.S. Bankruptcy Code or to otherwise collect to recover on account
of any claim or Cause of Action that the Company may have; and
o hear any other matter not inconsistent with the U.S. Bankruptcy Code.
Failure of U.S. Bankruptcy Court to Exercise Jurisdiction
If the U.S. Bankruptcy Court abstains from exercising or declines to
exercise jurisdiction over any matter related to the Company, including with
respect to the matters set forth in Section 13.1 of the Plan, Article XIII of
the Plan shall not prohibit or limit the exercise of jurisdiction by any other
court having competent jurisdiction with respect to such subject matter.
Other Provisions
Revocation or Withdrawal of the Plan
The Company reserves the right, at any time prior to substantial
consummation of the Plan, to revoke or withdraw the Plan, but only to the extent
that the Company could terminate the Restructuring Agreement under Article XI of
the Restructuring Agreement. If the Plan is revoked or withdrawn, if the
Confirmation Date does not occur or if Confirmation occurs, but the Effective
Date does not occur, then the Plan shall be null and void and have no force and
effect. In such event, nothing contained herein shall be deemed to constitute a
waiver or release of any claims by or against the Company or any other Person or
to prejudice in any manner the rights of the Company or any Person in any
further proceedings involving the Company.
Modification of the Plan
The Company and New UPC may alter, amend or modify the Plan in accordance
with Section 1127 of the U.S. Bankruptcy Code or as otherwise permitted;
provided, however, that neither the Company nor New UPC may modify the Plan
without the consent of the other or, to the extent required in Section 5.3(b) of
the Restructuring Agreement, the consent of a Majority-in-Interest of the
Participating Noteholders.
Severability of Plan Provisions
Should the U.S. Bankruptcy Court determine, prior to the Confirmation Date,
that any provision of the Plan is either illegal on its face or illegal as
applied to any Claim, Equity Interest or Old Other Equity Interest, such
provision shall be unenforceable as to all Holders of Claims, Equity Interests
or Old Other Equity Interests or to the specific Holder of such Claim, Equity
Interest or Old Other Equity Interest, as the case may be, as to which such
provision is illegal. Unless otherwise determined by the U.S. Bankruptcy Court,
such a determination of unenforceability shall in no way limit or affect the
enforceability and operative effect of any other provision of the Plan. The
Company reserves the right not to proceed with Confirmation or consummation of
the Plan if any such ruling occurs.
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Payment of Statutory Fees
All U.S. Trustee's Fee Claims, as determined, if necessary, by the U.S.
Bankruptcy Court, shall be paid on or before the Effective Date. All such fees
that arise after the Effective Date, but before the closing of the Chapter 11
Case, shall be paid by the Reorganized Company.
Dissolution of Committees
On the Effective Date, any Committee shall be automatically dissolved and
all members, Professionals and agents of such Committee shall be deemed released
of their duties, responsibilities and obligations, and shall be without further
duties, responsibilities and authority in connection with the Company, the
Chapter 11 Case, the Plan or its implementation.
Continued Confidentiality Obligations
Pursuant to the terms thereof, members of and advisors to any Committee,
any other Holder of a Claim, Equity Interest or Old Other Equity Interest and
their respective predecessors, successors and assigns shall continue to be
obligated and bound by the terms of any confidentiality agreement executed by
them in connection with the Chapter 11 Case or the Company, to the extent that
such agreement, by its terms, may continue in effect after the Confirmation
Date, provided, however, that the confidentiality agreements with the
Participating Noteholders and their advisors shall terminate on the Effective
Date and be of no further force and effect.
Entire Agreement
Upon consummation of the Plan, the Plan and the documents executed and
delivered on the Effective Date and in consummation of the Plan shall be deemed
to set forth the entire agreement and undertakings relating to the subject
matter thereof and shall supersede all prior discussions and documents related
thereto, including the Restructuring Agreement. The Company shall not be bound
by any terms, conditions, definitions, warranties, understandings, or
representations with respect to the subject matter thereof, other than as
expressly provided for therein or as may hereafter be agreed to by the parties
in writing.
Waiver
The Company or the Reorganized Company, as applicable, reserves the right
to waive any provision of the Plan to the extent such provision is for the sole
benefit of the Company and/or its officers or directors.
Bar Date for Professional Claims
Final applications for compensation for services rendered and reimbursement
of expenses incurred by Professionals (a) from the later of the Petition Date or
the date on which retention was approved through the Effective Date or (b)
pursuant to Section 503(b)(4) of the Bankruptcy Code, shall be Filed no later
than sixty (60) days after the Effective Date or such later date as the
Bankruptcy Court approves, and shall be served on (i) counsel to the Company at
the address set forth in Section 14.9 of the Plan, (ii) counsel to New UPC at
the address set forth in Section 14.9 of the Plan, (iii) counsel to the
Participating Noteholders at the address set forth in Section 14.9 of the Plan,
and (iv) the Office of the United States Trustee at the address set forth in
Section 14.9 of the Plan. Any objections to an application for the payment of
Professional Claims must be filed and served on the Reorganized Company and its
counsel and the requesting Professional no later than twenty-five (25) days (or
such longer period as may be granted by order of the Bankruptcy Court) after the
date on which such application was served. Applications that are not timely
Filed will not be considered by the Court. The Reorganized Company may pay any
Professional fees and expenses incurred after the Effective Date without any
application to the Bankruptcy Court.
Voting on, and Confirmation of, the Plan
Overview of Voting in Chapter 11
In Chapter 11, the right to vote on a plan of reorganization is determined
by the treatment that a particular holder of a claim or equity interest receives
under the plan. If the holder of a claim or equity interest is unimpaired under
a plan, the holder is deemed to accept the plan and it is therefore unnecessary
to solicit such holder's vote on
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the plan. Similarly, it is not necessary to solicit a vote from a holder of a
claim or equity interest who is not entitled to receive or retain any property
under a plan and such holder is deemed to reject the plan under the U.S.
Bankruptcy Code. However, if an impaired holder of a claim or equity interest is
entitled to receive property under the plan, then such holder is not deemed to
automatically accept or reject the plan and is entitled to vote thereon.
Chapter 11 of the U.S. Bankruptcy Code, however, does not require each
holder of a claim or equity interest in a voting class to vote in favor of a
plan of reorganization in order for a bankruptcy court to confirm the plan.
Instead, acceptance or rejection of a plan is determined based on whether
classes of claims or equity interests vote to accept or reject the plan. In
order for a plan to be confirmed (a) absent a "cramdown" (as discussed below),
each class of claims or interests must either (i) be unimpaired under the plan
or (ii) vote to accept the plan and (b) at least one class of claims that is
impaired must vote to accept the plan, determined without including any
acceptance of the plan by any insider in such class of impaired claims. In turn,
in order for a particular class to accept a plan, acceptances must be received:
o if such class is a class of claims against a debtor, from the holders
of claims constituting at least two-thirds (2/3) in dollar amount of
the allowed claims actually voted in such class and more than one-half
(1/2) in number of the allowed claims actually voted in such class, or
o if such class is a class of equity interests in a debtor, from the
holders of at least two-thirds (2/3) in amount of the allowed equity
interests actually voted in such class.
Parties Entitled to Vote on the Plan
Unimpaired Classes
Class 1 (Miscellaneous Secured Claims), Class 2 (Classified Priority
Claims) and Class 3 (Critical Creditor Claims) are not impaired under the Plan
and, pursuant to Section 1126(f) of the U.S. Bankruptcy Code, are conclusively
deemed to have accepted the Plan without the necessity of a solicitation of the
members of such Classes.
Non-Voting Impaired Classes
Class 10 (Old Other Equity Interests) is deemed to reject the Plan without
the necessity of a solicitation of the members of such Class pursuant to Section
1126(g) of the U.S. Bankruptcy Code because the Holders in such Class will not
receive or retain any property under the Plan.
Voting Impaired Classes
Classes 4 (Belmarken Notes Claims), 5 (UPC Notes Claims and General
Unsecured Claims), 6 (UPC Preference Shares A), 7 (UPC Priority Shares), 8 (UPC
Ordinary Shares A (including UPC Ordinary Shares A in the form of UPC ADSs)) and
9 (Equity Securities Claims) are the only Impaired Classes under the Plan from
whom the Company believes the solicitation of acceptances is required. As
discussed above, Section 1129(a)(10) of the U.S. Bankruptcy Code provides that
if any classes of claims are impaired under a plan, the plan cannot be confirmed
unless at least one such impaired class of claims has voted to accept the plan
(without counting any acceptances of the plan by any insiders in such class).
Because Class 4 (Belmarken Notes Claims), Class 5 (UPC Notes Claims and General
Unsecured Claims) and Class 9 (Equity Securities Claims) are the only Impaired
Classes of Claims under the Plan, the affirmative vote of the Holders of at
least one such Class of Claims (without counting any acceptances of the Plan by
any insiders, including, without limitation, the UGC Group, in such Class) is
necessary for confirmation of the Plan. However, because UGC, an insider of the
Company, is the only member of Class 4 (Belmarken Notes Claims), approval of the
Plan by this Class cannot count towards the satisfaction of this requirement.
Thus, the affirmative vote of either Class 5 (UPC Notes Claims and General
Unsecured Claims) or Class 9 (Equity Securities Claims) (in either case, without
counting any acceptances of the Plan by any insiders, including, without
limitation, the UGC Group, in such Class) is required for confirmation of the
Plan.
Voting Procedures
In light of the concurrent U.S. Bankruptcy Case and Dutch Bankruptcy Case,
the Company proposes to solicit simultaneously from those Holders of Claims
against the Debtor who are entitled under Dutch law to vote on
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the Akkoord both a vote on the Plan and a vote on the Akkoord. The latter will
be effected, in accordance with standard Dutch practice, through the
solicitation of irrevocable proxies or voting instructions and related powers of
attorney (with power of substitution) by such Holders to Mr. Rob Abendroth of
Allen & Overy, Amsterdam, the Company's Dutch counsel, to file such Holder's
Claim in the Dutch Bankruptcy Case and vote such Holder's Claim in favor of the
Akkoord. The Dutch Akkoord claim and voting proxy materials will be distributed
in the same solicitation packages as the Ballots. Please note, however, that if
an Ordinary Creditor files a Claim in the Dutch Bankruptcy Court, either
directly or by proxy, such Ordinary Creditor's name will be placed on the list
of Ordinary Creditors that will be deposited at the Dutch Bankruptcy Court
Clerk's Office and will be available for inspection by the public.
Each Voting Party received with this Disclosure Statement a Ballot for the
purpose of voting to accept or reject the Plan. After carefully reviewing this
Disclosure Statement, including the Annexes hereto, each such Voting Party that
wishes to vote on the Plan should complete and execute its Ballot, check the box
indicating whether it accepts or rejects the Plan and, except as set forth
below, return such Ballot in the pre-addressed envelope. Ballots (and Master
Ballots cast on behalf of beneficial holders of UPC Notes or UPC ADSs) must be
submitted so that they are actually received by the appropriate Voting Agent on
or before the Voting Deadline (_______ __, 2003 at _____ (New York City Time)
(unless extended by the Company and New UPC) (subject to court approval, as
necessary)) at the following addresses:
Securities Voting Agent Nonsecurities Voting Agent
----------------------- --------------------------
Innisfree M&A Incorporated Bankruptcy Services LLC
By regular mail, messenger By regular mail:
or overnight courier: United Pan-Europe Communications Ballot Processing
Attn: UPC Ballot Tabulation P.O. Box 5014
501 Madison Avenue, 20th Floor FDR Station
New York, NY 10022 New York, NY 10150-5014
United States of America United States of America
Telephone: By messenger or overnight courier:
1-877-750-2689 United Pan-Europe Communications Ballot Processing
(within the United States) c/o Bankruptcy Services LLC
70 East 55th Street
+1-412-209-1704 New York, NY 10022-3222
(outside the United States) United States of America
Telephone:
1-888-498-7765
(within the United States)
+1-212-376-8998
(outside the United States)
The Company will make a public announcement of any extension of the Voting
Deadline by release to the Dow Jones News Service prior to 9:00 a.m., New York
City Time, on the next Business Day following the previously scheduled Voting
Deadline. The Company will notify the Voting Agents of any extension by oral or
written notice. Any Voting Party, other than those who have signed the
Restructuring Agreement (unless in accordance with the terms thereof), may
change its vote on the Plan and the Akkoord at any time prior to the Voting
Deadline. Thereafter, votes may not be changed except to the extent authorized
by the U.S. Bankruptcy Court.
To the extent that any such Holder holds Claims or Equity Interests in more
than one Class, such Holder will receive a separate Ballot for each such Claim
or Equity Interest.
The Company does not intend to solicit votes on the Plan from Holders of
Miscellaneous Secured Claims, Classified Priority Claims, Critical Creditor
Claims and Old Other Equity Interests because the Holders thereof either are
unimpaired or are deemed to reject the Plan. Therefore, Ballots are not being
transmitted to such Holders.
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If the Voting Party is a beneficial holder, but not a registered record
holder, and received his or her Ballot from an Intermediary who holds UPC Notes
or UPC ADSs on his or her behalf, he or she should return his or her Ballot to
his or her Intermediary in accordance with the instructions received with his or
her Ballot. The Intermediaries will, in turn, submit summary Master Ballots to
the appropriate Voting Agent which reflect the votes of the beneficial holders
on whose behalf such Intermediaries hold UPC Notes or UPC ADSs. Any Ballot
returned by a beneficial holder to an Intermediary will not be counted for
purposes of voting on the Plan until such Intermediary properly completes and
delivers a Master Ballot to the Securities Voting Agent that reflects the vote
of such beneficial holder. Master Ballots also must be returned so that they are
actually received by the Securities Voting Agent at the above address on or
before the Voting Deadline.
If any beneficial holder owns UPC Notes or UPC ADSs through more than one
Intermediary, such beneficial holder may receive multiple mailings containing
Ballots. The beneficial holder should execute a separate Ballot for each block
of UPC Notes or UPC ADSs that it holds through any particular Intermediary and
return each Ballot to the respective Intermediary in the return envelope
provided. Beneficial holders who execute multiple Ballots with respect to UPC
Notes or UPC ADSs held through more than one Intermediary must indicate on each
Ballot the names of ALL such other Intermediaries and the additional amounts of
UPC Notes or UPC ADSs held and voted by such beneficial holder. If a beneficial
holder owns a portion of its UPC Notes or UPC ADSs through an Intermediary and
another portion as a record holder, the beneficial holder should, with respect
to the portion held as a record holder, complete the appropriate Ballot and
return it to the Securities Voting Agent and, with respect to the portion held
through an Intermediary, complete the appropriate Ballot and return it to the
Intermediary.
Subject to any applicable order of the U.S. Bankruptcy Court, the Company
will decide any and all questions affecting the validity of any Ballot or Master
Ballot submitted, which decision will be final and binding. To that end, the
Company may reject any Ballots or Master Ballots that are not in proper form or
that the Company's counsel believes would be unlawful or were submitted in bad
faith. Any Ballot which is executed by a Holder of Claims or Equity Interests
but does not indicate an acceptance or rejection of the Plan or indicates both
an acceptance and rejection of the Plan shall not be counted as a vote on the
Plan. Any Master Ballot which, with respect to a particular Claim or Equity
Interest, indicates neither an acceptance nor a rejection of the Plan or that
indicates both an acceptance and rejection of the Plan shall not be counted as
to such Claim or Equity Interest.
Only originally signed Ballots or Master Ballots will be counted. Neither
copies of nor facsimile Ballots or Master Ballots will be accepted. If a Ballot
or Master Ballot, as applicable, is not actually received by the appropriate
Voting Agent on or before the Voting Deadline, such Ballot or Master Ballot will
not be counted. Please follow the directions contained on the enclosed Ballot or
Master Ballot carefully.
If a Holder or an Intermediary has any questions about the Disclosure
Statement, the Plan or the procedure for voting, did not receive a Ballot or
Master Ballot, as applicable, received a damaged Ballot or Master Ballot, as
applicable, lost his or her Ballot or Master Ballot, as applicable, or, in the
case of an Intermediary, requires additional copies of the Disclosure Statement
and/or Ballots for distribution to beneficial holders, he or she should call, as
applicable, (i) the Securities Voting Agent - Innisfree M&A Incorporated at 501
Madison Avenue, New York, NY 10022, United States of America, tel.
1-877-750-2689 or, from outside the United States, tel. +1-412-209-1704, (ii)
the Nonsecurities Voting Agent - Bankruptcy Services LLC by regular mail at
United Pan-Europe Communications Ballot Processing, P.O. Box 5014, FDR Station,
New York, NY 10150-5014, United States of America, by messenger or overnight
courier at United Pan-Europe Communications Ballot Processing, c/o Bankruptcy
Services LLC, 70 East 55th Street, New York, NY 10022-3222, United States of
America, or tel. 1-888-498-7765, or, from outside the United States, tel.
+1-212-376-8998, or (iii) his or her Intermediary.
If a registered Holder does not hold for its own account, then it is
required to provide promptly copies of this Disclosure Statement and appropriate
Ballots to its customers and beneficial owners. Any beneficial owner who has not
received a Ballot should contact his or her Intermediary or Innisfree M&A
Incorporated, as applicable.
Any Voting Party, other than those who have signed the Restructuring
Agreement, may change its vote on the Plan at any time prior to the Voting
Deadline. Thereafter, votes may not be changed except to the extent authorized
by the U.S. Bankruptcy Court.
It is important that all Voting Parties vote because, under the U.S.
Bankruptcy Code, for purposes of determining whether the requisite acceptances
of a particular class have been received, only Holders in such class
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who actually vote will be counted. Accordingly, failure by a Voting Party to
submit a duly completed and signed Ballot will be deemed to constitute an
abstention by such Voting Party with respect to the vote on the Plan.
Abstentions, either as a result of submitting a Ballot that has not been fully
completed or signed or by not submitting a Ballot on a timely basis, shall not
be counted as a vote on the Plan.
Confirmation of the Plan
In addition to a finding as to the receipt of the necessary acceptances of
the Plan, for the Plan to be confirmed, Section 1129 of the U.S. Bankruptcy Code
requires that the U.S. Bankruptcy Court make a series of determinations
concerning the Plan, including, without limitation, that:
(i) the Plan has classified Claims and Equity Interests in a
permissible manner;
(ii) the contents of the Plan comply with the requirements of the U.S.
Bankruptcy Code;
(iii) the Company has proposed the Plan in good faith; and
(iv) the Company has made disclosures concerning the Plan which are
adequate and include information concerning all payments made or
promised in connection with the Plan and the Chapter 11 Case.
The Company believes that all of these conditions have been or shall be met.
In addition, the U.S. Bankruptcy Court must find, among other things, that
the Plan is feasible and is in the "best interest" of all dissenting Holders of
Claims and Equity Interests in Impaired Classes. Thus, even if the Plan was duly
accepted by the Voting Parties, the U.S. Bankruptcy Court would be required to
make an independent finding respecting, among other things, the Plan's
feasibility and whether the Plan is in the best interests of certain Holders of
Claims and Equity Interests before it can confirm the Plan.
The Best Interests Test
The Best Interests Test (as defined in "Liquidation Analysis--Best
Interests of Creditors Test" below) requires that each holder of a claim or
equity interest in an impaired class either accept the plan or receive or retain
under the plan property of a value, as of the effective date of the plan, that
is not less than the value such holder would receive or retain if the debtor
were liquidated under Chapter 7 of the U.S. Bankruptcy Code. For the reasons set
forth below in "Liquidation Analysis," the Company believes that the Plan
satisfies the Best Interests Test.
Feasibility
The U.S. Bankruptcy Code also requires that, to confirm a plan of
reorganization, the U.S. Bankruptcy Court must find that confirmation of such
plan is feasible, meaning that it is not likely to be followed by the
liquidation, or the need for further financial reorganization, of the debtor
(the "Feasibility Test"). For the Plan to meet the Feasibility Test, the U.S.
Bankruptcy Court must find that the Company will possess the resources and
working capital necessary to provide the treatment specified in the Plan and to
continue to operate its business upon and after the consummation of the Plan.
The Company believes the Plan satisfies the Feasibility Test.
Non-Acceptance and Cramdown
Pursuant to Section 1129(b) of the U.S. Bankruptcy Code, a bankruptcy court
may, upon the request of the proponent of a plan, confirm a plan notwithstanding
the lack of acceptance by one or more impaired classes if the U.S. bankruptcy
court finds that
(i) the plan does not discriminate unfairly with respect to each
non-accepting impaired class,
(ii) the plan is "fair and equitable" with respect to each
non-accepting impaired class,
(iii) at least one impaired class has accepted the plan (without
counting acceptances by insiders) and
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(iv) the plan satisfies the requirements set forth in Section 1129(a)
of the U.S. Bankruptcy Code other than Section 1129(a)(8).
This procedure is commonly referred to as "cramdown." The Company intends, if
necessary, to request confirmation of the Plan pursuant to Section 1129(b) of
the U.S. Bankruptcy Code.
The Plan is Fair and Equitable
The U.S. Bankruptcy Code establishes different "fair and equitable" tests
for holders of secured claims, unsecured claims and equity interests.
Secured Claims
With respect to a class of secured claims that does not accept a plan of
reorganization, the debtor must demonstrate to the U.S. bankruptcy court that
either (i) the holders of such claims are retaining the liens securing such
claims and that each holder of a claim in such class will receive on account of
such claim deferred cash payments totalling at least the allowed amount of such
claim, of a value, as of the effective date, of at least the value of such
holder's interest in its collateral, or (ii) the holders of such claims will
realize the indubitable equivalent of such claims under the plan.
Unsecured Claims
With respect to a class of unsecured claims that does not accept a plan of
reorganization, the debtor must demonstrate to the U.S. bankruptcy court that
either (i) each holder of an unsecured claim in the dissenting class will
receive or retain under the plan property of a value, as of the effective date,
equal to the allowed amount of its unsecured claim or (ii) no holder of a claim
or equity interest that is junior to the claims of the holders of the dissenting
class will receive or retain any property under the plan on account of such
junior claim or equity interest.
Equity Interests
With respect to a class of equity interests that does not accept a plan of
reorganization, the debtor must demonstrate to the U.S. bankruptcy court that
either (i) each holder of an equity interest in the dissenting class will
receive or retain on account of such equity interest property of a value equal
to the greatest of the allowed amount of any fixed liquidation preference to
which such holder is entitled, any fixed redemption price to which such holder
is entitled or the value of such interest or (ii) no holder of any equity
interest that is junior to the equity interests of the holders of the dissenting
class of equity interests will receive or retain any property under the plan on
account of such junior equity interest.
The Company believes that the Plan is fair and equitable with respect to
each Class.
The Plan Does Not Discriminate Unfairly
The U.S. Bankruptcy Code requires that a plan not "discriminate unfairly"
with respect to each non-accepting impaired class. Essentially, this means that
each non-accepting impaired class must receive treatment reasonably consistent
with the treatment afforded to other classes with similar legal claims or rights
against the debtor. The Company believes that the Plan does not unfairly
discriminate against any Class.
Confirmation Hearing
Section 1128(a) of the U.S. Bankruptcy Code requires that the bankruptcy
court, after notice, hold a hearing to confirm the Chapter 11 plan. Section
1128(b) of the U.S. Bankruptcy Code provides that any party in interest may
object to confirmation of a Chapter 11 plan.
The U.S. Bankruptcy Court has scheduled the Confirmation Hearing for ______
__, 2003, at _____ (New York City Time), before the Honorable Burton R. Lifland,
United States Bankruptcy Judge, United States Bankruptcy Court, Alexander
Hamilton Custom House, One Bowling Green, Courtroom 623, New York, New York
10004. The Confirmation Hearing may be adjourned from time to time by the U.S.
Bankruptcy Court without further notice except for an announcement of an
adjournment made at the Confirmation Hearing or any adjournment
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thereof. The "Confirmation Date" means the date on which the Clerk of the U.S.
Bankruptcy Court enters the Confirmation Order on the docket of the U.S.
Bankruptcy Court with respect to the Chapter 11 Case.
Any objections to confirmation of the Plan must be made in writing,
specifying in detail the name and address of the person or entity objecting, the
grounds for the objection and the nature and amount of the Claim or Equity
Interest held by the objector, and must be served and filed as ordered by the
Bankruptcy Court on or before ____ (New York City Time) on ______ __, 2003. If
an objection to confirmation is not timely served and filed, it will not be
considered by the U.S. Bankruptcy Court.
If the Plan is confirmed, even if a Holder of a Claim or Equity Interest
did not vote, or voted against the Plan, the terms of the Plan, including,
without limitation, the transfers set forth therein, will be binding on such
Holder as if such Holder had voted in favor of the Plan.
Pursuant to the Plan, the documents to be executed in connection with
consummation of the Plan, including the Amended and Restated UPC Articles of
Association, the Amended and Restated New UPC Certificate of Incorporation, the
Amended and Restated New UPC By-Laws, the Incentive Plan, the Board of
Management Schedule, the New UPC Management Schedule and the Stockholders
Agreement shall be filed on or before the Document Filing Date (January ___,
2003). Copies of all such documents will be made available to all Holders of
Claims or Equity Interests entitled to vote on the Plan.
Notice of the date and time of the Confirmation Hearing, as well as the
procedures for filing objections thereto, is included with this Disclosure
Statement.
Consequences of Failure to Confirm the Plan
Although the Company believes that the Plan meets all of the statutory
requirements for confirmation thereof, there is no guarantee that the U.S.
Bankruptcy Court will agree. Failure of the U.S. Bankruptcy Court to confirm the
Plan would likely result in a more protracted bankruptcy proceeding, which could
have adverse consequences on the Company. In addition, if the Plan is not
confirmed then, under Dutch law, the Company may be forced to liquidate. See
"Risk Factors--Risks Related to Dutch Bankruptcy Case--The Company's Ordinary
Creditors may not approve the Akkoord, which may lead to the Company's
liquidation" above. Thus, if the Plan is not confirmed, there is a significant
likelihood that Holders of Claims and Equity Interests would ultimately receive
far less than what they would receive under the terms of the Restructuring. See
"Risk Factors--Risks Related to the Chapter 11 Case" and "Liquidation Analysis."
Alternatives to Confirmation and Consummation of the Plan
If the Plan is not confirmed and consummated, the alternatives to the Plan
include (i) the proposal of an alternative plan under Chapter 11 of the U.S.
Bankruptcy Code or (ii) the liquidation of the Company under Chapter 7 or
Chapter 11 of the U.S. Bankruptcy Code.
Alternative Plan of Reorganization
If the Plan is not confirmed, the Company, or if its exclusive period in
which to file a plan of reorganization has expired, any other party in interest,
could attempt to formulate a different plan under Chapter 11 of the U.S.
Bankruptcy Code. Such a plan might involve either a reorganization and
continuation of our business or a sale or orderly liquidation of our business.
With respect to an alternative plan, the Company has explored various other
alternatives in connection with the extensive process involved in the
formulation and development of the Plan. The Company believes that the Plan, as
described herein, enables Holders of Claims and Equity Interests to realize the
most value under the circumstances and, as compared to any alternative plan of
reorganization, the Plan has the greatest chance to be confirmed and
consummated, especially in light of the need for the implementation of the
Restructuring under Dutch law.
Liquidation
If no plan of reorganization can be confirmed, the Chapter 11 Case may be
converted to a case under Chapter 7 of the U.S. Bankruptcy Code, pursuant to
which a trustee would be elected or appointed to liquidate the
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Company's ownership interests in its subsidiaries for distribution to creditors
in accordance with the priorities established by the U.S. Bankruptcy Code.
It is impossible to predict exactly how the proceeds of any such
liquidation would be distributed to the Holders of Claims against and Equity
Interests in the Company. However, the Company believes that, before any Holders
of Claims against and Equity Interests in the Company would receive any
distribution in a liquidation under Chapter 7, additional expenses and Claims
arising out of the liquidation, including, without limitation, from the
appointment of a trustee and its advisors, would reduce the amount of property
remaining for distribution to Holders of Claims against and Equity Interests in
the Company. Furthermore, due to various intercompany administrative, financial
and other relationships among the Company's subsidiaries, the Company believes
that there would likely be substantial practical and logistical difficulties in
selling its ownership interests in such subsidiaries separately and, as a
result, such difficulties would, in turn, likely result in a reduced recovery
upon any such sales. Finally, a Chapter 7 liquidation is likely to result in
substantial litigation and delays in ultimate distributions to creditors. Thus,
the Company believes that Holders of Impaired Claims would realize a greater
recovery under the Restructuring, including, without limitation, the Plan, than
would be realized in a Chapter 7 liquidation. In addition, Holders of Equity
Interests would receive nothing in a Chapter 7 liquidation.
A discussion of the effects that a Chapter 7 liquidation would have on the
recoveries of Holders of Claims and Equity Interests is set forth under
"Liquidation Analysis" below.
It is also possible, if the Plan is not confirmed, that the Company could
be liquidated under Chapter 11 of the U.S. Bankruptcy Code. In such a
proceeding, the Company's ownership interests in its subsidiaries could be sold
in a more orderly fashion than under Chapter 7. Although this could potentially
lead to greater recoveries than in a Chapter 7 liquidation, due to the practical
and logistical difficulties in selling such ownership interests separately as a
result of the intercompany administrative, financial and other relationships
among its subsidiaries, the Company believes that the recoveries in a Chapter 11
liquidation still would not equal the recoveries to holders of Claims and Equity
Interests under the Plan and, therefore, that such alternative is less
attractive than the Plan.
Finally, given the nature of the Company, it is likely that any liquidation
of the Company would implicate applicable procedures under Dutch law.
Board Recommendation
The Company's Supervisory Board and Board of Management, and New UPC's
Board of Directors, have unanimously approved the terms of the Plan and believe
that it is in the Company's best interests. The Company's Supervisory Board and
Board of Management, and New UPC's Board of Directors, strongly urge each Holder
of a Claim against, or Equity Interest in, the Company to vote in favor of the
Plan. However, each Holder of a Claim against, or Equity Interest in, the
Company must make its own decision as to whether to vote in favor of the Plan.
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The Akkoord
Introduction
Simultaneously with the commencement of the Chapter 11 Case, the Company
commenced the Dutch Bankruptcy Case and filed a draft plan of compulsory
composition, or an Akkoord, with the Dutch Bankruptcy Court. On the date of this
Disclosure Statement, the Company submitted a revision to the Akkoord that was
filed with the Dutch Bankruptcy Court on December 3, 2002 and this Disclosure
Statement describes the Akkoord as so revised. A copy of the Akkoord as so
revised, translated into English, is attached hereto as Annex B. The English
translation of the Akkoord attached to this Disclosure Statement is an
unofficial translation of the original Dutch text. The Dutch text of the Akkoord
will be decisive.
Effects of the Moratorium
A moratorium of payments affects only the claims of the Ordinary Creditors.
Dutch law operates under the principle of equality of treatment of creditors and
only grants priority to certain specified claims by statutory provision. Types
of claims not specified by statute to have priority do not have priority. In
this context the most important types of claims to have a right of priority are
(i) claims of the tax and social security administrations,
(ii) pension rights of, and salaries due to, employees,
(iii) claims secured by pledge (pandrecht) or mortgage (hypotheek) and
(iv) as a practical matter, estate creditors (boedelschulden).
Estate creditors come into existence either pursuant to explicit provisions in
the Dutch Bankruptcy Code or other law (e.g., certain obligations under lease
agreements and certain obligations under employment agreements) or pursuant to
acting or refraining from acting by the Company and the Administrator jointly.
In principle, a moratorium of payments does not change the validity or the
content of an agreement. If an agreement contains rights and obligations for
both parties and neither of them has completely fulfilled its obligations, the
counterparty (creditor) of the Company is entitled to request both the Company
and the Administrator--in writing--to declare within a reasonable period of time
that they will perform under the agreement. If the Company and the Administrator
fail to reply within a reasonable period of time, they lose their right to
demand performance under the agreement. The Dutch Bankruptcy Code provides
specific rules for the termination of lease, hire-purchase (huurkoop), forward
business (termijnhandel), agency (agentuur) and labor agreements.
Voting on the Akkoord
Upon receipt of claims submitted by the Ordinary Creditors, the
Administrator will prepare a list of claims, specifying for each claim whether
the Administrator will admit or dispute it. The claims on the list prepared by
the Administrator will be in Euros. If an interest-bearing claim (rentedragende
vordering) is placed on the list of admitted claims, only the interest that was
due prior to the commencement of the Dutch Bankruptcy Case will be allowed. A
copy of this list will be deposited for inspection at the court registry and
will remain there for a period of seven days before the Dutch Voting Meeting.
The claims list merely serves to determine (i) which Ordinary Creditors will be
permitted to vote on the Akkoord and (ii) in what amount each claim will be
admitted. Beneficial holders of the UPC Notes as of the Voting Record Date will
be permitted to file claims with the Administrator and vote on the Akkoord. At
the Dutch Voting Meeting the Administrator can still change the list of claims
and the Company and its Ordinary Creditors who appear at the Dutch Voting
Meeting can still dispute each claim. If the claim has been disputed by the
Administrator, the Company or other Ordinary Creditors, the supervisory judge
decides if, and for what amount, the respective Ordinary Creditor will be
admitted to participate in the vote. In short, the Ordinary Creditors who are
recognized by the Administrator (and undisputed by the Company and/or the
Ordinary Creditors) and admitted to the vote by the supervisory judge are
permitted to participate in the vote.
The date of commencement of the Dutch Bankruptcy Case shall be the date for
determining which Ordinary Creditors, other than beneficial holders of the UPC
Notes, are entitled to file claims with the Administrator. With respect to the
beneficial holders of UPC Notes, the Dutch Bankruptcy Court has ordered that the
Voting Record Date (_______ __, 2003) shall be the date for determining which
holders are entitled to file claims with the Administrator and to vote on the
Akkoord. In either case, any Ordinary Creditors who timely file
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claims with the Administrator will be eligible to vote on the Akkoord unless
such claim is disputed by the Company, the Administrator or any other Ordinary
Creditor who has been admitted to vote. The Dutch Bankruptcy Court will resolve
any such dispute at the Dutch Voting Meeting.
The Dutch Bankruptcy Court has ordered that all Ordinary Creditors
(including, without limitation, the beneficial holders of the UPC Notes) must
submit their claims to the Administrator by the Dutch Claims Filing Deadline
(5:00p.m. (Central European Time) on February 14, 2003) and that the Dutch
Voting Meeting will take place at Parnassusweg 220, Amsterdam, The Netherlands
on February 28, 2003 at 10:00 a.m. (Central European Time). Under certain
circumstances, the Ordinary Creditors can submit their claims after the Dutch
Claims Filing Deadline, but not later than two days prior to the Dutch Voting
Meeting. However, claims filed later than the Dutch Claims Filing Deadline, but
prior to the Dutch Voting Meeting may only be permitted to vote on the Akkoord
if neither the Administrator (or the Company) nor any other Ordinary Creditor
objects thereto. In the event that an Ordinary Creditor who is not located in
The Netherlands files a claim with the Administrator after the Dutch Claims
Filing Deadline, but at or before the Dutch Voting Meeting, such claim may still
be admitted to vote on the Akkoord at the discretion of the Dutch Bankruptcy
Court.
In order to file a Claim in the Dutch Bankruptcy Case and to vote in favor
of the Akkoord, an Ordinary Creditor should complete its Akkoord claim and
voting proxy and return it, together with proof of ownership of such Ordinary
Creditor's Claim against the Company, in the pre-addressed envelope to Mr. Rob
Abendroth of Allen & Overy, Amsterdam, The Netherlands, in time for Mr.
Abendroth to transmit the Akkoord claim and voting proxy to the Administrator by
the Dutch Claims Filing Deadline. An Akkoord claim and voting proxy for a Holder
of a UPC Notes Claim may also be sent, together with proof of ownership of such
UPC Notes, to the Securities Voting Agent for transmittal by the Securities
Voting Agent to Mr. Abendroth. However, in order for the Securities Voting Agent
to transmit such Akkoord claim and voting proxy to Mr. Abendroth in time for him
to forward it to the Dutch Administrator by the Dutch Claims Filing Deadline,
the Securities Voting Agent must receive the proxy by 5:00 p.m. (New York City
Time) on Wednesday, February 12, 2003. If an Ordinary Creditor has any questions
about the Akkoord claim and voting proxy, please contact (i) Allen & Overy,
Apollolaan 15, 1077 AB Amsterdam, The Netherlands, Mr. Rob Abendroth, tel.
+31-20- 674-1330, or (ii) Allen & Overy, 1221 Avenue of the Americas, New York,
NY 10020, United States of America, Ms. Helena Sprenger, tel. +1-212-610-6300.
Please note, however, that if an Ordinary Creditor files a Claim in the Dutch
Bankruptcy Court, either directly or by proxy, such Ordinary Creditor's name
will be placed on the list of Ordinary Creditors that will be deposited at the
Dutch Bankruptcy Court Clerk's Office and will be available for inspection by
the public.
To the extent that a claim classified under the Plan is held by an Ordinary
Creditor, such claim is an affected claim in the Dutch Bankruptcy Case and the
holder thereof may file its claim and vote on account of such claim in the Dutch
Bankruptcy Case. However, in the Dutch Bankruptcy Case, claims will not be
categorized by class. Under the Akkoord, Ordinary Creditors shall be offered by
the Company a number of shares of New UPC Common Stock equal to the number of
shares of New UPC Common Stock that holders of general unsecured claims are
entitled to receive under the Plan, either in exchange for transferring their
Allowed Claims to New UPC (as far as the Holders of the UPC Notes are concerned)
or in cancellation of their Allowed Claims (as far as Ordinary Creditors other
than the Holders of the UPC Notes are concerned).
To the extent that the holder of a non-affected claim nonetheless elects to
file a claim in the Dutch Bankruptcy Case and votes on the Akkoord, any security
rights or priority held by such holder will be lost in the Dutch Bankruptcy Case
and unenforceable under Dutch law. Such claims will then be considered affected
claims under the Dutch Bankruptcy Code and receive treatment under the Plan and
the Akkoord in accordance with such election.
Furthermore, holders of equity interests are not treated as creditors under
Dutch law and, as such, no holders of the Company's Equity Interests are
entitled to vote on, or shall be affected by, the Akkoord.
In the Dutch Voting Meeting, the Administrator (and appointed experts, if
any) renders a written report on the Akkoord. In the Dutch Voting Meeting, the
Company can clarify the Akkoord or make minor changes to the Akkoord until the
voting takes place. To the extent necessary, the Akkoord will be amended before
the Akkoord is voted on at the Dutch Voting Meeting (as defined herein) in order
to ensure that the terms of the Akkoord are consistent with the terms of the
Plan.
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In order to be accepted, the Akkoord must be approved by two-thirds (2/3)
of the admitted and recognized Ordinary Creditors representing three-fourths
(3/4) of the amount of the admitted and recognized claims. As a consequence of
this system, admitted and recognized Ordinary Creditors not present or
represented at the Dutch Voting Meeting or admitted and recognized Ordinary
Creditors who are present or represented but abstain from voting shall
effectively be considered to have voted against acceptance of the Akkoord.
The concept of "cramdown" as understood under Section 1129 of the U.S.
Bankruptcy Code does not exist under the Dutch Bankruptcy Code .
If the Akkoord is not approved (as described above) the Dutch Bankruptcy
Court may declare the Company bankrupt. The Company would then be liquidated. If
the Company is declared bankrupt, it may not file a second Akkoord.
Conditions to Ratification of the Akkoord
At the Dutch Voting Meeting, if the Akkoord has been approved by the
requisite majority of Ordinary Creditors, the supervisory judge will set a date
on which the Dutch Bankruptcy Court will consider the ratification (homologatie)
of the Akkoord. The ratification of the Akkoord should take place at least eight
and not later than fourteen days after the Dutch Voting Meeting. The Dutch
Bankruptcy Court can postpone the date on which it will consider the
ratification of the Akkoord. Before such hearing, the Administrator and the
Ordinary Creditors are entitled to notify the supervisory judge of their
positions as to the ratification of the Akkoord. At such hearing, the Company,
the Administrator and the Ordinary Creditors are permitted to provide their
views as to the ratification of the Akkoord. The supervisory judge or the Dutch
Bankruptcy Court will render a written report on the Akkoord.
The Dutch Bankruptcy Court will refuse to ratify the Akkoord if one or more
of the following conditions exist:
o if the liquidation value of the assets of the estate exceeds the
amount made available to creditors in the Akkoord;
o if performance of the Akkoord is not sufficiently guaranteed;
o if the Akkoord was reached by means of fraudulent acts or the
preference of one or more creditors or by other unfair means,
regardless of whether or not the Company or any party cooperated to
that effect; or
o if the fees and expenses of the experts and the administrator(s) have
not been paid to the administrator(s), or security has not been issued
therefor.
In addition to the foregoing, the Dutch Bankruptcy Court may, in its
discretion, refuse to ratify the Akkoord on other grounds or on its own motion
(ambtshalve). The Dutch Bankruptcy Court may declare the Company bankrupt
simultaneously with its refusal to ratify the Akkoord. If the Dutch Bankruptcy
Court does so, the Company would then be liquidated.
The Akkoord becomes final and binding as soon as the ratification of the
Akkoord is no longer open to appeal. An appeal of either the decision of the
Dutch Bankruptcy Court to ratify the Akkoord or a decision of the Dutch
Bankruptcy Court to refuse to ratify the Akkoord has to be filed within eight
days after the respective decision.
Legal Effect of Ratification of the Akkoord
A ratified and final Akkoord will be binding on all creditors that were
affected by the Dutch Bankruptcy Case. This includes the Ordinary Creditors who
(i) voted against the Akkoord, (ii) abstained from voting or (iii) did not
submit their claims with the Administrator.
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As a consequence of the ratification of the Akkoord, creditors with claims
that are not submitted with the Administrator or that were not admitted for
voting purposes, but that were subsequently allowed, can still claim
distribution under the Akkoord.
Holders of Equity Interests in the Company will not be affected by the
Akkoord.
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The Dutch Implementing Offer
Purpose and Terms of the Dutch Implementing Offer; Shares of New UPC Common
Stock to be Distributed
The Dutch Bankruptcy Code does not provide for the Akkoord to reorganize or
cancel any of the Equity Interests in the Company. Therefore, in order to
facilitate implementation of the Plan with respect to certain of the UPC
Ordinary Shares A in accordance with Dutch law, solely with respect to persons
who are not U.S. Persons and who are not located or residing within the United
States, New UPC is undertaking the Dutch Implementing Offer. The Dutch
Implementing Offer will be made through the use of an offer memorandum (the
"Offer Memorandum"), of which this Disclosure Statement forms an integral part.
Each Holder of UPC Ordinary Shares A who decides to participate in the
Dutch Implementing Offer will receive 0.00146 shares of New UPC Common Stock for
each UPC Ordinary Share A in consideration for delivery of its UPC Ordinary
Shares A in the Dutch Implementing Offer. New UPC will not pay any consideration
other than shares of New UPC Common Stock for the UPC Ordinary Shares A. No
fractional shares of New UPC Common Stock will be delivered and the number of
shares of New UPC Common Stock to be delivered to each Holder will be rounded
down to the nearest whole share of New UPC Common Stock.
In the alternative, any Holder of UPC Ordinary Shares A may vote in favor
of the Plan and receive shares of New UPC Common Stock under the Plan without
participating in the Dutch Implementing Offer.
No Participation in, into or from the United States and Other Jurisdictions
The Dutch Implementing Offer will not be made, directly or indirectly, in
or into the United States, or by the use of the United States mails, or by any
means or instrumentality (including, without limitation, telephonically or
electronically) of United States interstate or foreign commerce, or any facility
of a United States national securities exchange. In addition, the Dutch
Implementing Offer is not being made to Holders of UPC ADSs, and New UPC will
not accept deposits of UPC ADSs from Holders of UPC ADSs in connection with the
Dutch Implementing Offer. Accordingly, copies of the Offer Memorandum and
related documents are not being, and must not be, mailed, forwarded, sent,
transmitted or otherwise distributed in, into or from the United States.
The Dutch Implementing Offer is not being made to, and New UPC will not
accept deposits of UPC Ordinary Shares A from, Holders of UPC Ordinary Shares A
in any jurisdiction in which the Dutch Implementing Offer or participation in
the Dutch Implementing Offer would not be in compliance with the securities or
blue sky laws of that jurisdiction.
Expiration Date
The expiration date for the Dutch Implementing Offer is 5:00 p.m. (Central
European Time) on March 21, 2003 (the "Expiration Date") unless New UPC extends
the Dutch Implementing Offer. New UPC, with the Company's consent, may extend
the Expiration Date for any reason. The Expiration Date will be no later than
five trading days of Euronext ("Trading Days") prior to the Effective Date of
the Plan. New UPC will publish the Expiration Date for the Dutch Implementing
Offer in Dutch in two leading newspapers having general circulation in The
Netherlands (which are expected to be NRC Handelsblad and Het Financieele
Dagblad) and in the Official Price List of Euronext. Notice of the Expiration
Date shall be deemed to have been given on the date of publication in such
newspapers. In the event that New UPC elects to extend the Expiration Date, and,
as a consequence, the obligation to announce whether the Dutch Implementing
Offer has become unconditional is postponed, New UPC shall make a public
announcement thereof and of the new Expiration Date no later than the third
Trading Day after the previously scheduled Expiration Date.
Conditions for Completion of the Dutch Implementing Offer
The Dutch Implementing Offer is conditioned on consummation of the Plan.
New UPC may elect not to accept the UPC Ordinary Shares A and may terminate
or not complete the Dutch Implementing Offer if any of the following events or
conditions exist or shall occur and remain in effect or shall be determined by
New UPC in its reasonable judgment to exist or have occurred:
o on or prior to the Expiration Date, notification has been received
from the A-FM that the Dutch Implementing Offer has been made in
conflict with Chapter IIA of the Dutch Securities Act 1995,
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in which case the security institutions pursuant to the provisions of
article 32a of the Decree on the Dutch Act on the Supervision of the
Securities Trade 1995 (Besluit toezicht effectenverkeer 1995) (the
"Dutch Securities Decree 1995") would not be allowed to cooperate with
the settlement of the Dutch Implementing Offer;
o the Plan is not confirmed by the U.S. Bankruptcy Court or the order
approving confirmation of the Plan has been vacated, reversed, stayed,
modified, amended, enjoined or restrained by order of a court of
competent jurisdiction;
o the Akkoord shall not have been adopted by the requisite majority of
Ordinary Creditors and subsequently ratified by the Dutch Bankruptcy
Court, all conditions to the effectiveness of the Akkoord shall not
have been satisfied or duly waived to the extent permitted therein, or
the Dutch Bankruptcy Court's ratification of the Akkoord shall not
have become final and binding and no longer subject to appeal;
o New UPC has determined, in its reasonable judgment, that the
acceptance for payment of, or payment for, some or all of the UPC
Ordinary Shares A would violate, conflict with or constitute a breach
of any order, statute, law, rule, regulation, executive order, decree,
or judgment of any court to which New UPC or the Company may be bound
or be subject;
o any person or entity, other than New UPC or the Company, shall have
proposed, announced or made any tender or exchange offer with respect
to some or all of the Company's outstanding securities or any merger,
acquisition or other business combination proposal involving the
Company;
o either New UPC or the Company has not obtained all waivers, consents,
extensions, approvals, actions or non-actions from any governmental
authority or agency which are necessary for New UPC to issue the
shares of New UPC Common Stock in consideration for the UPC Ordinary
Shares A in connection with the Dutch Implementing Offer or for New
UPC to consummate the Dutch Implementing Offer; or
o any approval, permit, authorization, consent or other action of any
domestic or foreign governmental, administrative or regulatory agency,
authority, tribunal or third party has not been obtained on terms
satisfactory to New UPC, which, in the reasonable judgment of New UPC,
in any such case, and regardless of the circumstances (including any
action or inaction by New UPC, the Company or any of the Company's
subsidiaries) giving rise to any such condition, makes it inadvisable
to proceed with the Dutch Implementing Offer and/or with such
acceptance for delivery of the shares of New UPC Common Stock.
Consequences of Failing to Participate in the Dutch Implementing Offer
If a Holder of UPC Ordinary Shares A is not located or residing in the
United States and fails to participate in either the Dutch Implementing Offer or
the Plan, such Holder will retain its UPC Ordinary Shares A upon completion of
the Restructuring. Such a Holder of UPC Ordinary Shares A would face risks
resulting from holding an interest in the UPC Ordinary Shares A after
consummation of the Restructuring. For instance, the Company intends to seek
approval from Euronext to delist the UPC Ordinary Shares A and expects that
there will be an illiquid trading market or no active trading market for the UPC
Ordinary Shares A upon completion of the Restructuring. In addition, upon
completion of the Restructuring, New UPC will have various mechanisms available
under Dutch law to require the Holders of the UPC Ordinary Shares A to accept a
cash payment in relinquishment of their UPC Ordinary Shares A. Therefore, if an
eligible Holder of UPC Ordinary Shares A decides not to participate in either
the Dutch Implementing Offer or the Plan, it faces a risk upon completion of the
Restructuring that either (i) there will be an illiquid or no active trading
market for the UPC Ordinary Shares A or (ii) it will be required to accept a
cash payment, which is currently indeterminable, to relinquish its UPC Ordinary
Shares A to New UPC. For a discussion of the risks associated with ownership of
the UPC Ordinary Shares A following consummation of the Restructuring, see "Risk
Factors--Risks Related to Ownership of UPC Ordinary Shares A Upon Completion of
the Restructuring."
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The Extraordinary General Meeting of Shareholders
General
Unlike the U.S. Bankruptcy Code, the Dutch Bankruptcy Code does not provide
for the Dutch Bankruptcy Case to exempt compliance from otherwise applicable
corporate law. Therefore, in order to facilitate implementation of the Plan, the
Company will call the Extraordinary General Meeting. The Extraordinary General
Meeting will be held at Hotel Okura Amsterdam, Ferdinand Bolstraat 333,
Amsterdam, The Netherlands, on February 19, 2003, at 10:00 a.m. (Central
European Time). The purpose of the Extraordinary General Meeting is to
facilitate the implementation of the Plan by:
o explaining the terms of the Restructuring (including the terms of the
Plan) to the Company's shareholders at the Extraordinary General
Meeting;
o considering and acting upon the First Amendment (effective on the
Effective Date) to
(i) decrease the nominal value of each issued and outstanding
UPC Ordinary Share A from (euro)1.00 to (euro)0.02 without
any repayment; and
(ii) decrease the nominal value of each UPC Priority Share and
UPC Preference Share A from (euro)1.00 to (euro)0.02 without
any repayment,
which capital reduction will permit the Company to eliminate its
accumulated deficit;
o considering and acting upon the Second Amendment (effective on the
Effective Date) to
(i) change the number of authorized UPC Ordinary Shares A into
450,000,000;
(ii) remove the UPC Preference Shares A from the authorized
capital of the Company;
(iii) authorize a new class of 50,000,000,000 registered UPC
Ordinary Shares C with a nominal value of (euro)0.02;
(iv) in the event Dutch law allows the issuance of nonvoting
stock, prohibit the issuance of nonvoting stock and prohibit
cooperation in connection with the issuance of depository
receipts; and
(v) remove the UPC Ordinary Shares B and the UPC Preference
Shares B from the authorized capital of the Company;
o considering and acting upon a proposal to convert the UPC Preference
Shares A on a one-for-one basis into registered UPC Ordinary Shares A,
effective upon the Second Amendment and the Effective Date;
o considering and acting upon the Third Amendment (effective on the
later to occur of the Effective Date and the date of delisting of the
UPC Ordinary Shares A from Euronext) to effectuate that the Company
will have Articles of Association of a non-listed company, including,
inter alia, the following contents:
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(i) restrictions on transfers of registered shares;
(ii) amend the management structure of the Company to a one-tier
board (i.e., that the Company's Supervisory Board will be
eliminated and the Company's Board of Management will
consist of one or more members); and
(iii) holders of UPC Ordinary Shares A only to be authorized to
exercise their rights upon delivery of share certificates;
and
o accepting the resignations of (i) John F. Riordan, (ii) Nimrod J.
Kovacs, (iii) Charles H.R. Bracken, (iv) James S. O'Neill, (v) Gene
Musselman and (vi) Anton M. Tuijten, as managing directors of the
Company with effect as of the the later to occur of the Efective Date
and the date of delisting of the UPC Ordinary Shares A from Euronext
and to grant a full and final release from liability with respect to
their management of the Company;
o accepting the resignations of (i) Michael T. Fries, (ii) John P. Cole,
Jr., (iii) Richard J.A. de Lange, (iv) Ellen P. Spangler, (v) Tina M.
Wildes and (vi) John W. Dick, as supervisory directors of the Company
with effect as of the later to occur of the Effective Date and the
date of the delisting of the UPC Ordinary Shares A from Euronext and
to grant a full and final release from liability with respect to their
supervision of the Company;
o appointing New UPC as sole managing director of the Company with
effect as of the later to occur of the Effective Date and the
delisting of the UPC Ordinary Shares A from Euronext;
o authorizing the Board of Management of the Company and Allen & Overy,
Amsterdam, The Netherlands, to apply for the ministerial statements of
no objections and to execute deeds of amendment of the Articles of
Association of the Company as set forth in the First Amendment, Second
Amendment and Third Amendment; and
o transacting such other business as may properly come before the
Extraordinary General Meeting or any postponements or adjournments
thereof.
Proxy Solicitation
This Disclosure Statement, together with a Notice of Extraordinary General
Meeting and a Proxy Statement Supplement (collectively, the "Proxy Statement"),
will be furnished to holders of the UPC Preference Shares A, the UPC Priority
Shares and the UPC Ordinary Shares A (including the UPC ADSs) in connection with
the solicitation of proxies by and on behalf of the Company's Supervisory Board
for use at the Extraordinary General Meeting, and at any postponements or
adjournments thereof.
The approximate date on which the Proxy Statement and accompanying
information are first being mailed to shareholders is ______, 2003.
The Shareholder Proposals will each require the affirmative vote of a
majority of the votes cast at the Extraordinary General Meeting in order to be
approved. A resolution to amend the Articles of Association of the Company
requires a proposal of the holder of the UPC Priority Shares. The third proposal
and the Second Amendment will also require the affirmative vote of holders of
UPC Preference Shares A holding at least 66 2/3% of the outstanding UPC
Preference Shares A. An abstention will not be counted as a vote.
No Appraisal Rights
The holders of the UPC Preference Shares A, the UPC Priority Shares and the
UPC Ordinary Shares A (including the UPC ADSs) are not entitled to any appraisal
rights in connection with the matters submitted for their approval.
Information on Ownership of UPC Ordinary Shares A by Certain Beneficial Owners
and Management
For the interests of certain directors and executive officers, and their
associates (as such term is defined in Rule 14a-1(a) of the U.S. Exchange Act),
in the Company, see "Item 12--Security Ownership of Certain Beneficial Owners
and Management" of the Company's Amendment No. 1 to the Annual Report on Form
10-K for the fiscal year ended December 31, 2001, a copy of which is attached
here as Annex D and incorporated herein by reference.
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NEW UPC EQUITY SUBSCRIPTION
General
The Plan provides each holder of a Belmarken Notes Claim, UPC Notes Claim
or General Unsecured Claim with New UPC Equity Purchase Rights to purchase for
cash a pro rata portion of the Subscription Shares at the Implied Purchase Price
per share, as such price may be reduced as described herein. Holders of
Belmarken Notes Claims, UPC Notes Claims and General Unsecured Claims, including
any such Claims which are Disputed on the Effective Date, will be entitled to
subscribe for additional shares of New UPC Common Stock pursuant to the New UPC
Equity Purchase Rights in the amount of such Claims asserted by those Holders in
their claims filed with the U.S. Bankruptcy Court or Dutch Bankruptcy Court.
Notwithstanding the foregoing, Holders asserting an unliquidated claim amount in
filed claims will not be entitled to receive any New UPC Equity Purchase Rights
or to subscribe for any shares of New UPC Common Stock at the Implied Purchase
Price unless they obtain an order from either the U.S. Bankruptcy Court or the
Dutch Bankruptcy Court allowing their claim in a specific amount for such
purpose by the Voting Deadline. The New UPC Equity Purchase Rights are an
integral part of the Plan and will be exercisable only on the Effective Date.
The number of shares of New UPC Common Stock offered pursuant to the New
UPC Equity Subscription (the "Subscription Shares") on the date of this
Disclosure Statement is set at 2,523,341 shares, which has been calculated by
dividing the Maximum Subscription Amount of (euro)100 million on the date of
this Disclosure Statement by the maximum Implied Purchase Price of (euro)39.63
per share. The Implied Purchase Price is the per share price of New UPC Common
Stock implied by the Plan and will be calculated by dividing the implied equity
value of the Reorganized Company (as discussed under "Reorganization Valuation
Analysis and Projected Financial Information--Reorganization Valuation
Analysis") by the number of shares of New UPC Common Stock to be issued under
the Plan on the Effective Date to the Holders of Allowed Belmarken Notes Claims,
Allowed Class 5 Claims, Allowed Class 9 Claims and Allowed Equity Interests
(other than any additional shares of New UPC Common Stock issued under the New
UPC Equity Subscription). Since the amount of Allowed Class 5 Claims is
indeterminate prior to the Effective Date, the maximum Implied Purchase Price
has been calculated by dividing the implied equity value of the Reorganized
Company of US$1.975 billion (converted into Euros at the exchange rate of
(euro)1.0000 = US$0.9968 on the Petition Date) by 50 million shares (being the
number of shares of New UPC Common Stock to be issued under the Plan on the
Effective Date to the Holders of Allowed Belmarken Notes Claims, Allowed UPC
Notes Claims, Allowed Class 9 Claims and Allowed Equity Interests (other than
any additional shares of New UPC Common Stock issued under the New UPC Equity
Subscription)). The final Implied Purchase Price cannot be determined until all
Disputed Class 5 Claims have been resolved. If the final Implied Purchase Price
is less than the maximum Implied Purchase Price described above, Holders of
Belmarken Notes Claims, UPC Notes Claims and General Unsecured Claims who have
exercised their New UPC Equity Purchase Rights on the Effective Date will
receive a distribution of additional shares of New UPC Common Stock, rather than
a refund of part of such Holder's Subscription Amount (as defined herein),
without any further action on the part of such Holder. See "--Subscription
Procedures--Subscription Reserve Shares."
The amount of Subscription Shares that an individual Holder of a Belmarken
Notes Claim, UPC Notes Claim or General Unsecured Claim will be entitled to
subscribe for will be determined through a formula specific to each type of
Class 4 Claim or Class 5 Claim as set forth in the Ballot for such Claim. The
number of Subscription Shares that a Holder of UPC Notes Claims will be entitled
to subscribe for in respect of each US$1,000 or (euro)1,000 of the principal
amount or (principal amount of state of maturity in the case of the UPC senior
discount notes) of such Holder's UPC Notes will vary depending on the series of
UPC Notes held by such Holder as more fully set forth in the Ballot for each
series of UPC Notes. A Holder of a General Unsecured Claim may purchase
Subscription Shares pursuant to its New UPC Equity Purchase Rights in an amount
equal to (i) the amount of its General Unsecured Claim (in Euros) multiplied by
(ii) the ratio of (x) the number of Subscription Shares per (euro)1,000 of
Allowed UPC Notes Claims allotted to the Holders of the UPC Notes Claims to (y)
1,000. Any purchase of Subscription Shares by Holders of General Unsecured
Claims will reduce the number of Subscription Shares that the Holder of the
Class 4 Claims is entitled to purchase pursuant to its New UPC Equity Purchase
Rights until the number of Subscription Shares that the Holder of the Class 4
Claim is entitled to purchase pursuant to its New UPC Equity Purchase Rights is
reduced to zero and, thereafter, will ratably reduce the number of Subscription
Shares that the Holders of UPC Notes Claims are entitled to purchase pursuant to
their New UPC Equity Purchase Rights.
The Maximum Subscription Amount will be reduced on a Euro-for-Euro basis
by an amount equal to
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(i) the net proceeds of any assets sold by the Company prior to the
Effective Date, other than assets sold in the ordinary course of the
Company's business in a manner consistent with its past practices, and
(ii) the net proceeds from any non-dilutive capital raised by the Company
(other than capital received by the Company from UGC or its related
parties).
The Company is currently considering the sale of various non-core assets
which, if effected prior to the Effective Date, would reduce the Maximum
Subscription Amount by an amount corresponding to the net proceeds (calculated
in Euros) of any such sale. No assurance can be given that the Company will
effectuate any sale of assets prior to the Effective Date.
Subject to confirmation of the Plan and the ratified Akkoord becoming final
and conclusive (in kracht van gewijsde gaan), pursuant to the UGC Subscription
Commitment, UGC has committed to purchase from New UPC, and New UPC has
committed to sell to UGC, on the Effective Date and at the maximum Implied
Purchase Price, the aggregate number of Subscription Shares less the number of
Subscription Shares subscribed for by Holders of Belmarken Notes Claims, UPC
Notes Claims and General Unsecured Claims pursuant to the New UPC Equity
Purchase Rights.
The Subscription Shares issued upon exercise of the New UPC Equity Purchase
Rights and upon fulfillment of the UGC Subscription Commitment will be in
addition to any other shares of New UPC Common Stock issued in connection with
the Restructuring.
No Recommendation; Need for Independent Financial Advice
Holders of New UPC Equity Purchase Rights should seek appropriate
independent financial advice. None of the Board of Directors of New UPC nor the
Board of Management or Supervisory Board of the Company nor any of the
respective representatives of, or advisors to, New UPC or the Company makes any
recommendation to holders of New UPC Equity Purchase Rights regarding whether
they should exercise the New UPC Equity Purchase Rights. The New UPC Equity
Purchase Rights will not be listed on any securities exchange or quoted on any
automated quotation system, or otherwise be traded in any market and will only
be exercisable on the Effective Date.
Each holder of New UPC Equity Purchase Rights should consult his or her own
attorney, financial advisor and tax advisor for legal, investment and tax
advice. For a discussion of the risks associated with an investment in New UPC
and shares of New UPC Common Stock, see "Risk Factors--Risks Related to
Ownership of the New UPC Common Stock."
New UPC Equity Purchase Rights
The Plan contemplates that in accordance with the procedures set forth
below and on each Ballot for a Class 4 Claim or Class 5 Claim (the "Subscription
Procedures"), each holder of a Belmarken Notes Claim, UPC Notes Claim or General
Unsecured Claim is entitled to subscribe for Subscription Shares at the maximum
Implied Purchase Price per Subscription Share based on each (euro)1,000 or
US$1,000 of Belmarken Notes, UPC Notes or General Unsecured Claims held by such
Holder. The amount of Subscription Shares that an individual Holder of a
Belmarken Notes Claim, UPC Notes Claim or General Unsecured Claim will be
entitled to subscribe for will be determined through a formula specific to each
type of Class 4 Claim or Class 5 Claim as set forth in the Ballot for such
Claim. The terms of the New UPC Common Stock are described in this Disclosure
Statement under "New UPC--Description of Shares of New UPC Capital Stock."
Subscription Procedures
Subscription Price
The Subscription Price per Subscription Share is (euro)39.63, which is the
maximum Implied Purchase Price per share of New UPC Common Stock.
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No Fractional Subscription Shares
No fractional Subscription Shares will be issued. Instead, the number of
Subscription Shares an individual Holder can subscribe for will be rounded down
to the nearest whole number. No cash in lieu of New UPC Equity Rights will be
issued (or set aside for payment).
Expiration of the New UPC Equity Purchase Rights
The New UPC Equity Purchase Rights will not become exercisable until the
Plan becomes effective and can only be exercised on the Effective Date. After
the Effective Date, any New UPC Equity Purchase Rights not exercised shall be
cancelled and be of no further force and effect.
New UPC will not be obligated to honor any exercise of New UPC Equity
Purchase Rights if the appropriate Voting Agent receives the related Ballot
after the Voting Deadline or the Subscription Agent (as defined herein) receives
the deposit of the Subscription Amount (as defined herein) related to the
exercise after the Subscription Deadline (as defined herein), regardless of when
the Ballot was transmitted or the Subscription Amount was deposited.
Subscription Privilege of the New UPC Equity Purchase Rights
Each Holder of New UPC Equity Purchase Rights is entitled to subscribe for
the maximum number of Subscription Shares allocated to such Holder through the
formula set forth on such Holder's Ballot and upon delivery of the Ballot on or
prior to the Voting Deadline and payment of the Subscription Amount on or prior
to the Subscription Deadline. Each holder of New UPC Equity Purchase Rights may
exercise its New UPC Equity Purchase Rights and subscribe for its allotted
Subscription Shares in part or in full.
Delivery of Subscription Shares that are issuable upon exercise of New UPC
Equity Purchase Rights will be made in electronic form through the book-entry
facilities of The Depository Trust Company ("DTC") or, in certain circumstances,
in registered physical form on the Effective Date and delivered by mail on the
Initial Distribution Date.
Termination of the New UPC Equity Purchase Rights
In the event the U.S. Bankruptcy Court does not confirm the Plan, the
Akkoord is not ratified or the Effective Date does not occur by the first
Business Day that is more than 180 days after the Confirmation Date, the New UPC
Equity Purchase Rights will terminate. In addition, New UPC may terminate the
New UPC Equity Purchase Rights if at any time prior to the Effective Date there
is a judgment, order, decree, injunction, statute, law or regulation entered,
enacted, amended or held to be applicable to the New UPC Equity Purchase Rights
that, in the sole judgment of New UPC, would or might make the New UPC Equity
Purchase Rights or the issuance of the Subscription Shares illegal or otherwise
restrict or prohibit the issuance of the Subscription Shares. If the New UPC
Equity Purchase Rights are terminated pursuant to either of the foregoing
sentences, all New UPC Equity Purchase Rights will expire without value and all
Subscription Amounts received by the Subscription Agent will be returned
promptly by regular mail, without interest.
Subscription Reserve Shares
The New UPC Equity Purchase Rights are intended to allow each Holder of a
Belmarken Claim, a UPC Note Claim or a General Unsecured Claim that has
exercised its New UPC Equity Purchase Rights on the Effective Date in accordance
with the Plan and the Subscription Procedures as described in this Disclosure
Statement and such Holder's Ballot (a "Subscribing Holder") to purchase its
allotted number of Subscription Shares based upon the maximum Implied Purchase
Price. To the extent that there are any Disputed Claims on the Effective Date,
on the Effective Date, New UPC will deposit into an escrow account (the
"Subscription Reserve Account") additional shares of New UPC Common Stock (the
"Subscription Reserve Shares") to be distributed to the Subscribing Holders and
UGC (with respect to the shares of New UPC Common Stock purchased under the UGC
Subscription Commitment) after the Disputed Claims have been resolved in
accordance with the Plan. On a date as soon as reasonably practical after the
end of each calendar quarter following the Effective Date in which any Disputed
Claims are resolved in accordance with the Plan (each such date, a "Subscription
Distribution Date"), the escrow
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agent shall distribute to each Subscribing Holder and UGC a number of
Subscription Reserve Shares equal to the product of the following equation: A=
(B x C) - (C + D). For purposes of this equation, the following values shall be
used:
A= Number of Subscription Reserve Shares to be issued on each
Subscription Distribution Date
B= (X+Y)/X
C= Number of Subscription Shares subscribed for by such Subscribing
Holder or UGC (as the case may be)
D= Number of Subscription Reserve Shares distributed to such Subscribing
Holder or UGC (as the case may be) prior to such Subscription
Distribution Date
X= 50,000,000
Y= Cumulative number of shares of New UPC Common Stock to be issued under
the Plan after the Effective Date to the Holders of Allowed Class 5
Claims in resolution of Disputed Claims
No fractional Subscription Reserve Shares or cash in lieu thereof will be
issued or paid (or set aside for payment). Instead, the number of Subscription
Reserve Shares to be distributed to any Subscribing Holder will be rounded down
to the nearest whole number.
Upon resolution of all Disputed Claims and distribution of all Subscription
Reserve Shares distributable in accordance with the Plan, the escrow agent shall
return all undistributed Subscription Reserve Shares to New UPC.
Reduction of Number of Subscription Shares Allotted to a Subscribing Holder
through a Reduction in the Maximum Subscription Amount
The number of Subscription Shares on the date of this Disclosure Statement
assumes that the Maximum Subscription Amount is (euro)100 million. The Plan
provides that the Maximum Subscription Amount will be reduced on a Euro-for-Euro
basis from the date of this Disclosure Statement until the Effective Date by an
amount equal to the net proceeds of any assets sold by the Company prior to the
Effective Date (other than assets sold in the ordinary course of the Company's
business in a manner consistent with its past practices) and the net proceeds
from any non-dilutive capital raised by the Company (other than capital received
by the Company from UGC or its related parties). If the Maximum Subscription
Amount is reduced after the date of this Disclosure Statement, the number of
Subscription Shares for which a Subscribing Holder will be permitted to
subscribe will be reduced ratably by the same percentage that the Maximum
Subscription Amount was reduced below (euro)100 million, unless otherwise agreed
to by UGC. If the Maximum Subscription Amount is reduced before the date that
the payment invoice for the Subscription Shares (the "Invoice") are distributed
as set forth in "--Method of Payment, " below, the reduced number of
Subscription Shares for which a Subscribing Holder will be permitted to
subscribe will be identified on the Invoice for such Subscribing Holder. If the
Maximum Subscription Amount is reduced on or after the date that the Invoice is
distributed, the funds provided by a Subscribing Holder in excess of the
Subscription Amount for the reduced number of Subscription Shares for which such
Subscribing Holder will be permitted to subscribe will be returned to such
Subscribing Holder at the time the Subscription Shares are distributed to such
Subscribing Holder.
Exemption from U.S. Securities Act Registration
In connection with the consummation of the Plan, the Company and New UPC
will rely on Section 1145 of the U.S. Bankruptcy Code, to the extent it is
applicable, to exempt the issuance of (i) the New UPC Equity Purchase Rights and
(ii) the Subscription Shares issuable upon exercise of the New UPC Equity
Purchase Rights, including any Subscription Reserve Shares, from the
registration requirements of the U.S. Securities Act and of any state securities
or "blue sky" laws. See "New UPC--Issuance and Resale of the New UPC Common
Stock."
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Because of the complex, subjective nature of the question of whether a
particular Holder of New UPC Equity Purchase Rights may be an underwriter,
neither New UPC nor the Company makes any representation or provides any
guidance or instructions concerning the ability of any person to exercise the
New UPC Equity Purchase Rights or to dispose of any Subscription Shares issuable
upon exercise of the New UPC Equity Purchase Rights.
Subscription Procedures for the Exercise of New UPC Equity Purchase Rights
There is a section on the Ballot sent to each Holder of Belmarken Notes
Claims, UPC Notes Claims and General Unsecured Claims enabling such Holder to
indicate, after calculating the maximum number of Subscription Shares such
Holder is entitled to subscribe for, how many Subscription Shares it desires to
subscribe for and instructions on how to subscribe for them (the
"Instructions").
A Subscribing Holder of New UPC Equity Purchase Rights may subscribe for
its allotted Subscription Shares by (i) delivering its Ballot to either the
applicable Voting Agent or its Intermediary, as applicable (see "Chapter 11 Case
and the Plan of Reorganization--Voting on, and Confirmation of, the Plan--Voting
Procedures" for a discussion of the delivery of Ballots by Holders of Claims and
Equity Interests), such that the subscription section of such Subscribing
Holder's Ballot is transmitted to the applicable Voting Agent on or prior to the
Voting Deadline with the section setting forth the number of Subscription Shares
being subscribed for, duly completed and duly executed and (ii) sending full
payment payable to ________, in its capacity as the subscription agent (the
"Subscription Agent") of the Subscription Price for each Subscription Share
multiplied by the total number of Subscription Shares subscribed for by such
Subscribing Holder (the "Subscription Amount") on or prior to the fifth Business
Day prior to the Effective Date (the "Subscription Deadline").
New UPC Equity Purchase Rights will not be considered exercised and
Subscription Shares will not be considered subscribed for on the Effective Date
unless (i) the appropriate Voting Agent receives the Ballot or Master Ballot, as
applicable, with the subscription section completed on or before the Voting
Deadline and (ii) the Subscription Agent receives full payment of the
Subscription Amount ("Payment") on or before the Subscription Deadline. Even if
a Subscribing Holder indicates on its Ballot or Master Ballot, as applicable, of
its decision to subscribe for Subscription Shares in exercise of its New UPC
Equity Purchase Rights, the New UPC Equity Purchase Rights of such Subscribing
Holder shall not be deemed to be exercised on the Effective Date unless the
corresponding Payment of the Subscription Amount from such Subscribing Holder is
also received by the Subscription Agent on or prior to the Subscription
Deadline. Failure by a Subscribing Holder to make the required Payment of its
Subscription Amount to the Subscription Agent by the Subscription Deadline will
result in the cancellation of the New UPC Equity Purchase Rights of such
Subscribing Holder on the Effective Date.
Since the UPC Notes are held through Intermediaries, only those
Intermediaries can exercise the New UPC Equity Purchase Rights and subscribe for
Subscription Shares on behalf of the beneficial owners of such UPC Notes
(including making the Payment of the Subscription Amount on behalf of such
beneficial holders). If a Subscribing Holder is a beneficial owner of UPC Notes
and indicates on its Ballot that it intends to exercise its New UPC Equity
Purchase Rights and subscribe for Subscription Shares, the transfer of its UPC
Notes will be blocked by DTC from the Voting Deadline to the earlier of (i) the
Subscription Deadline in the event such Subscribing Holder fails to pay the
required Subscription Amount on the Subscription Deadline or (ii) the Effective
Date in the event such Subscribing Holder makes the required Payment of the
Subscription Amount on or prior to the Subscription Deadline. If any Ballot is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when executing the Ballot and, unless
waived by New UPC and/or the appropriate Voting Agent, proper evidence
satisfactory to New UPC and/or the appropriate Voting Agent of such person's
authority to so act and to exercise the New UPC Equity Purchase Rights and
subscribe for Subscription Shares on behalf of the person entitled to vote must
be submitted.
Method of Payment
An Invoice setting forth the Subscription Amount for the Subscription
Shares to be subscribed for by each Subscribing Holder will be sent to such
Subscribing Holder promptly after the Confirmation Date. The Invoice will set
forth (i) the number of Subscription Shares to be subscribed for by such
Subscribing Holder, (ii) except to the
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extent set forth in the next sentence, the aggregate Subscription Amount in
Euros for such Subscribing Holder's purchase of such Subscription Shares, (iii)
the Subscription Deadline by which such Subscribing Holder will be required to
make Payment of the Subscription Amount to the Subscription Agent and (iv)
payment instructions. If the Subscribing Holder holds UPC Notes Claims
denominated in United States Dollars, the Subscription Amount set forth in such
Subscribing Holder's invoice will be denominated and payable in United States
Dollars, converted from the corresponding (euro)amount and adjusted to take into
account currency exchange rates at the time the invoice is sent and any
administrative and other costs associated with the currency exchange. The time
within which a Subscribing Holder is required to submit Payment of the
Subscription Amount is expected to be very short. Accordingly, each Subscribing
Holder should be prepared to make Payment of its Subscription Amount promptly
upon receiving its Invoice.
The Subscription Agent will hold funds received for payment of the
Subscription Amount in a segregated non-interest bearing account with payments
received from other Subscribing Holders until the Subscription Shares issuable
upon exercise of the New UPC Equity Purchase Rights are issued, or if the New
UPC Equity Purchase Rights are terminated as described under "-- Termination of
the New UPC Equity Purchase Rights," until repaid by the Subscription Agent.
Delivery of Ballot and Payment
Subscribing Holders should deliver the Ballot to the appropriate Voting
Agent or its Intermediary, as applicable, and Payment to the Subscription Agent
at their respective addresses set forth in the Instructions. Delivery to an
address other than the applicable address set forth in the Instructions will not
constitute valid delivery. The method of delivery of the Ballot and Payment will
be at the election and risk of the Subscribing Holder.
If sent by mail, Subscribing Holders are urged to send the Ballot (duly
completed and executed) by registered mail, properly insured, with return
receipt requested, and to make Payment of the Subscription Amount by wire
transfer to the Subscription Agent as set forth in the invoice and are urged to
allow a sufficient number of days to ensure timely delivery of the Ballot to the
appropriate Voting Agent prior to the Voting Deadline and clearance of the
Subscription Amount prior to the Subscription Deadline.
Calculation of Subscription Shares Subscribed for
If a Subscribing Holder does not forward full Payment of the total
Subscription Amount due for the number of Subscription Shares that the duly
completed Ballot indicates are to be subscribed for, then the Subscribing Holder
will be deemed to have decided to subscribe for the maximum number of
Subscription Shares that such Subscribing Holder may subscribe for with the
aggregate Subscription Amount delivered by such Subscribing Holder to the
Subscription Agent.
If a Subscribing Holder's aggregate Subscription Amount is greater than the
amount it owes for the Subscription for all of the Subscription Shares under
such Subscribing Holder's invoice, the Subscription Agent will return the excess
amount to such Subscribing Holder by regular mail, without interest, promptly
after the Effective Date.
Notice to Intermediaries
Record holders of New UPC Equity Purchase Rights, such as Intermediaries
which hold securities for the accounts of others, should contact the respective
beneficial owners of such New UPC Equity Purchase Rights as soon as possible to
ascertain the beneficial owners' intentions and to obtain instructions with
respect to the New UPC Equity Purchase Rights.
If a beneficial owner so instructs, the record owner of a New UPC Equity
Purchase Right should complete the applicable portion of the Master Ballot and
submit such Master Ballot to the appropriate Voting Agent and submit full
payment of the Subscription Amount to the Subscription Agent. In addition,
beneficial owners of New UPC Equity Purchase Rights held through such a
Intermediary holder should contact the Intermediary and request the Intermediary
to effect the transactions in accordance with the beneficial owner's
instructions.
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Determinations Regarding the Exercise of New UPC Equity Purchase Rights and
Subscriptions for Subscription Shares
Subject to any applicable order of the U.S. Bankruptcy Court, the Company,
New UPC, the Voting Agents and/or the Subscription Agent will decide all
questions concerning the timeliness, validity, form and eligibility of a
Subscribing Holder to exercise its New UPC Equity Purchase Rights on the
Effective Date and subscribe for Subscription Shares pursuant to such New UPC
Equity Purchase Rights and such determinations will be final and binding on all
persons.
Subject to any applicable order of the U.S. Bankruptcy Court, the Company,
New UPC, the Voting Agents and/or the Subscription Agent, in their sole
discretion, may waive any defect or irregularity in connection with the
submission of a completed subscription agreement set forth on a Ballot or Master
Ballot and will not be liable for failure to notify a Subscribing Holder of any
such defect or irregularity. No subscription will be accepted until all defects
and irregularities have been waived or cured within such time as the Company,
New UPC, the Voting Agent and/or the Subscription Agent decides, in their or its
sole discretion.
No Revocation
If a Subscribing Holder has indicated on its Ballot submitted by the Voting
Deadline its intention to subscribe for the Subscription Shares allocated to it
pursuant to its New UPC Equity Purchase Rights and paid, by the Subscription
Deadline, the required Subscription Amount, such Subscribing Holder may not
revoke the exercise of its New UPC Equity Purchase Rights and its subscription
for the indicated number of Subscription Shares on the Effective Date. New UPC
Equity Purchase Rights not exercised on or prior to the Effective Date shall be
cancelled and be of no further force and effect.
Pursuant to the UGC Subscription Commitment and on the terms set forth in
the Restructuring Agreement, UGC has agreed to subscribe for, on the Effective
Date and at the maximum Implied Purchase Price, the aggregate number of
2,523,341 Subscription Shares less the number of Subscription Shares subscribed
for on the Effective Date by Holders of Belmarken Notes Claims, UPC Notes Claims
and General Unsecured Claims pursuant to the New UPC Equity Purchase Rights, on
the Effective Date.
All Other Matters
New UPC will not provide the New UPC Equity Purchase Rights to Holders of
Belmarken Claims, UPC Notes Claims or General Unsecured Claims in any state or
other jurisdiction in which it is unlawful to do so, nor is it selling or
accepting any offers to subscribe for, or purchase, Subscription Shares from
holders of New UPC Equity Purchase Rights that are residents of those states or
other jurisdictions. New UPC may delay providing the New UPC Equity Purchase
Rights in those states or jurisdictions, or change the terms of the provision of
the New UPC Equity Purchase Rights, in order to comply with the securities law
requirements of those states or other jurisdictions. New UPC may decline to make
modifications to the terms of the provision of the New UPC Equity Purchase
Rights requested by those states or other jurisdictions, in which case, holders
of New UPC Equity Purchase Rights which are residents of those states or other
jurisdictions will not receive any New UPC Equity Purchase Rights.
Non-Transferability of the New UPC Equity Purchase Rights
The New UPC Equity Purchase Rights are not transferable.
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THE COMPANY
Business
The Company was incorporated under Dutch law as a limited liability company
(naamloze vennootschap) on December 21, 1990 and has its corporate seat in
Amsterdam, The Netherlands. Its executive offices are located at Boeing Avenue
53, 1119 PE Schiphol-Rijk, The Netherlands.
The Company is a holding company whose principal assets are its ownership
interests in approximately two hundred (200) direct and indirect operating
subsidiaries. Except as set forth below, none of the Company's subsidiaries or
affiliates have commenced insolvency proceedings in the United States and they
continue to operate outside of bankruptcy in the ordinary course of business.
The Company's wholly-owned indirect subsidiary, Bicatobe Investments B.V.,
holds an 80% interest in Tara Television Ltd. ("Tara"), an Irish company. Tara
filed for protection from its creditors under Irish law on March 1, 2002. In
addition, Tevel Israel International Communications Ltd., the Company's 46.6%
owned affiliate, filed for bankruptcy protection in Israel in April 2002. In
addition, on March 29, 2002, an involuntary Chapter 11 proceeding was commenced
in Denver, Colorado against United Australia/Pacific, Inc. ("UAP"), an affiliate
of the Company. Simultaneously therewith, UAP filed a voluntary Chapter 11 Case
in the Southern District of New York. On or about April 10, 2002, the
involuntary case was transferred to the Southern District of New York. The case
is currently pending in the Southern District of New York.
The Company has determined that it may be advisable to restructure the
balance sheet of UPC Polska, the holding company for its operations in Poland.
In this regard, UPC Telecom BV, a wholly-owned subsidiary of the Company that
acts as the holding company for UPC Polska, has begun discussions with the
significant holders of the outstanding 14 1/2% Senior Discount Notes due 2008
and 14 1/2% Senior Discount Notes due 2009 issued by UPC Polska regarding the
possible terms of a restructuring of the UPC Polska notes. The Company expects
that, if successful, these discussions will likely result in a restructuring of
the UPC Polska notes; however, at this time, no definitive agreement has been
reached with the holders of such notes. The Company does not expect that a
restructuring of the UPC Polska notes will have a material effect on the
estimated recovery expected to be received by the Holders of Claims against, and
Equity Interests in, the Company under the Plan and the Akkoord.
The UPC Group owns and operates broadband communications networks providing
telephone, cable and internet services to both residential and business
customers in 11 countries in Europe. Its subscriber base is one of the largest
of any group of broadband communications networks operated across Europe. In
particular, the UPC Group has approximately 6.6 million subscribers to its basic
tier video services, and an additional 116,200 subscribers for its digital DTH
service in Hungary, the Czech Republic and the Slovak Republic. Residential
telephone services are offered under the brand Priority Telecom over its
Austrian, Dutch, French and Norwegian systems and serve approximately 396,200
residential subscribers. In addition, the UPC Group currently offers internet
services in nine countries to approximately 611,200 residential subscribers.
The operations of the UPC Group are organized into three principal
divisions:
UPC Distribution
The distribution division delivers video services, and in many of the UPC
Group's Western European systems, telephone and internet services to the
residential market. The division also offers residential internet and telephone
services in some of the UPC Group's Eastern European systems. Over the past few
years, the distribution division has commenced several significant projects to
upgrade the various services offered to customers. These projects include an
upgrade of the cable television systems to provide high-speed two way capacity
(which will enable it to offer telephone and internet services as well as
enhanced digital video services), the launching of digital video in several of
the group's Western European systems and the upgrading and integrating of the
group's information technology systems.
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UPC Media
The UPC Media division operates the group's converging internet and video
content and programming business, including digital video products. In
particular, UPC Media focuses on five key areas:
(i) chello broadband internet services;
(ii) interactive digital services;
(iii) transactional television services such as pay per view movies;
(iv) digital broadcast and post production services; and
(v) thematic channels for distribution on the Company's network, third
party networks and DTH platforms.
Priority Telecom
Priority Telecom operates a competitive local exchange carrier ("CLEC")
business and provides telephone and data network solutions to the business
market. Priority Telecom N.V. was founded for the purpose of providing telephone
services to business customers and is the primary vehicle for providing
telecommunications services to the UPC Group's business customers. Through
Priority Telecom N.V., the group's CLEC business is currently operating in
metropolitan areas in The Netherlands, Austria and Norway. Additionally, UPC
Distribution's local operating companies provide telephone services to
residential customers using the Priority Telecom brand.
For a further description of the UPC Group, see "Item 1--Business" and
"Item 2--Properties" of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2001 attached to this Disclosure Statement as Annex C
and incorporated herein by reference, and "Item 2--Management's Discussion and
Analysis of Financial Condition and Results of Operations--Description of
Business" of the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2002 attached to this Disclosure Statement as Annex E and
incorporated herein by reference.
Investments
For a discussion of the main investments of the Company, including equity
and debt securities acquired by the Company since January 1, 1999 and
information regarding the financing for, and location of, such investments, see
"Item 1--Business," "Item 2--Properties," "Item 7--Management's Discussion and
Analysis of Financial Condition and Results of Operations" and notes 1, 4 and 6
of the notes to the annual audited consolidated financial statements of the
Company contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2001 attached to this Disclosure Statement as Annex C
and incorporated herein by reference, and "Item 2--Management's Discussion and
Analysis of Financial Condition and Results of Operations" and notes 1 and 5 of
the notes to the quarterly unaudited consolidated financial statements of the
Company contained in the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2002 attached to this Disclosure Statement as Annex
E and incorporated herein by reference.
Litigation and Claims
For a description of the legal proceedings to which the UPC Group is a
party and claims arising out of the UPC Group's operations in the normal course
of business, see the section entitled "Item 3--Legal Proceedings" of the
Company's Annual Report on Form 10-K for the year ended December 31, 2001 and
the section entitled "Item 1--Legal Proceedings" of the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 2002, copies of
which are attached hereto as Annex C and Annex E, respectively, and incorporated
herein by reference.
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Licenses
For a discussion of the importance to the Company and the duration and
effect of all licenses held, see the section entitled "Item 1.
Business--Regulation" of the Company's Annual Report on Form 10-K for the year
ended December 31, 2001, a copy of which is attached hereto as Annex C, and
incorporated herein by reference.
Selected Historical Consolidated Financial Information
The following selected consolidated financial data for the years ended
December 31, 2001, 2000, 1999, 1998, and 1997 have been derived from the
Company's consolidated financial statements, which statements have been audited
by Arthur Andersen, independent auditors, as restated for 1998 and 1997 to
include the financial data of Monor Communications Group, Inc., Tara Television
Limited and Ibercom, Inc. for all periods in which their operations were part of
UGC Holdings' consolidated results. On December 11, 1997, UGC Holdings acquired
the 50% of the Company that it did not already own from Royal Philips
Electronics N.V. As a result of this acquisition and the associated push-down of
UGC Holdings' basis on December 11, 1997, the financial information for the
years ended December 31, 2001, 2000,1999 and 1998 is presented on a
"post-acquisition" basis. The Company adopted the (euro)as the Company's
reporting currency effective December 31,1999. The Company has retroactively
restated financial information for all periods presented using the exchange rate
fixed on January 1, 1999 of (euro)1.0 to 2.20371 Dutch Guilders.
The selected consolidated statement of financial data for the nine months
ended September 30, 2001 and 2002 have been derived from the Company's
consolidated financial statements for such periods. Such selected financial data
are unaudited but, in the opinion of the Company's management, include all
adjustments (consisting only of normally recurring adjustments) necessary for a
fair presentation thereof. Results for the nine months ended September 30, 2002
are not necessarily indicative of the results that may be expected for the full
year.
The selected consolidated financial information set forth below should be
read in conjunction with, and is qualified in its entirety by reference to, the
Company's consolidated financial statements and notes thereto.
SELECTED CONSOLIDATED FINANCIAL DATA
For the Nine Months
Year Ended December 31, Ended September 30,
1997 1998 1999 2000 2001 2001 2002
---- ---- ---- ---- ---- ---- ----
(unaudited)
(In thousands of Euros, except per share data)
Statement of Operations
Data:
Service and other revenue.. 153,040 185,582 447,501 1,000,825 1,378,764 1,033,385 1,046,101
Operating expense.......... (53,777) (62,830) (293,778) (714,906) (931,817) (724,878) (566,952)
Selling, general &
administrative expense.. (54,030) (218,587) (466,260) (569,121) (613,086) (460,808) (297,909)
Depreciation and
amortization............ (60,302) (85,150) (266,070) (718,669) (1,097,822) (767,979) (534,679)
Impairment and
restructuring charges... - - - - (1,687,948) (359,015) (23,635)
--------- --------- --------- --------- ----------- --------- --------
Net operating loss...... (15,069) (180,985) (578,607) (1,001,871) (2,951,909) (1,279,295) (377,074)
Interest income............ 2,955 3,357 20,104 44,345 49,655 44,886 17,309
Interest expense........... (32,100) (47,355) (178,448) (753,231) (919,570) (688,174) (669,088)
Provisions for loss on
investment.............. - - - - (375,923) (375,923) (7,957)
Gain (loss) on sale of
business................ - - 1,501 (3,482) (468,306) - -
Foreign exchange gain
(loss) and other
expense................. (27,205) (1,606) (22,561) (177,803) (172,437) (91,740) 324,678
--------- --------- --------- --------- ----------- --------- ---------
Net loss before
income taxes and
other items............. (71,419) (226,589) (758,011) (1,892,042) (4,838,490) (2,390,246) (712,132)
Share in results of
affiliated
companies,
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For the Nine Months
Year Ended December 31, Ended September 30,
1997 1998 1999 2000 2001 2001 2002
---- ---- ---- ---- ---- ---- ----
(unaudited)
(In thousands of Euros, except per share data)
net..................... (11,552) (28,962) (29,760) (116,690) (186,047) (107,723) (36,913)
Minority interests in
subsidiaries............ 69 523 1,651 23,887 543,092 111,473 (10,387)
Income tax benefit
(expense)............... 748 (551) 1,822 (3,930) 39,616 (529) (1,607)
--------- --------- ---------- ---------- ----------- --------- ------------
Net loss before
cumulative effect of
change in accounting
principle............... (82,154) (255,579) (784,298) (1,988,775) (4,441,829) (2,387,025) (761,039)
Extraordinary gain......... - - - - - - 471,718
Cumulative effect of
change in accounting
principle............... - - - - 21,349 21,349 -
--------- ---------- ---------- ----------- ------------ ----------- ----------
Net loss......... (82,154) (255,579) (784,298) (1,988,775) (4,420,480) (2,365,676) (289,321)
========= ========== ========== =========== ============ =========== ==========
Basic and diluted net
loss attributable to
common shareholders...... (82,154) (255,579) (784,298) (1,996,408) (4,540,791) (2,455,630) (392,128)
Basic and diluted net
loss per ordinary
share before
cumulative effect of
change in accounting
principle................ (0.30) (1.03) (2.08) (4.56) (10.32) (5.40) (1.72)
Basic and diluted net
loss per ordinary
share.................... (0.30) (1.03) (2.08) (4.56) (10.27) (5.35) (0.65)
Weighted average number of ordinary
shares outstanding.......275,421,933 247,915,834 377,969,829 438,041,841 444,226,377 441,829,327 443,417,525
Selected Balance Sheet
Data (period end):
Non-restricted cash and
cash equivalents......... 45,443 13,419 1,025,460 1,590,230 855,001 893,756 301,094
Other current assets........ 38,762 61,735 311,202 402,544 479,172 450,648 356,458
Investments in and
advances to
affiliated companies..... 187,706 223,737 242,847 685,288 193,648 250,712 126,205
Property, plant and
equipment................ 220,075 273,628 1,974,817 3,709,352 3,754,330 3,682,323 3,331,134
Intangible assets........... 313,129 308,585 2,611,413 5,119,892 3,003,503 4,544,526 2,893,382
-------- --------- --------- ---------- ---------- ---------- -----------
Total assets....... 869,309 938,317 6,802,272 11,968,439 8,475,464 10,370,240 7,021,760
======== ========= ========= ========== ========== ========== ===========
Short-term debt and
current portion of
long-term debt (1)....... 116,855 159,664 213,532 69,692 9,274,941 65,148 8,464,431
Other current
liabilities.............. 84,150 110,956 565,207 1,263,107 1,175,463 961,136 934,269
Long-term debt.............. 438,397 533,078 3,966,490 8,244,337 469,990 9,342,998 451,314
Other non-current
liabilities.............. 26,377 156,510 88,028 46,801 243,962 152,185 280,866
-------- --------- --------- ---------- ---------- ---------- ----------
Total liabilities...... 665,779 960,208 4,833,257 9,623,937 11,164,356 10,521,467 10,130,880
======== ========= ========= ========== ========== ========== ==========
Minority interest in
subsidiaries............. 3,955 11,768 11,895 831,132 152,096 588,972 13,723
Convertible preferred
stock.................... - - - 1,392,251 1,505,435 1,474,718 1,608,248
Total shareholders'
equity (deficit)......... 199,575 (33,659) 2,020,200 121,119 (4,346,423) (740,199) (4,731,091)
======== ========== ========= ========== =========== ========== ============
(1) As discussed in Note 2--"Risks and Going Concern Uncertainties" of the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2002, attached as Annex E hereto, since March 3, 2002, the
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Company has been in default under the UPC Notes and the Belmarken Notes and
has received the UPCD Facility Waiver. Accordingly, these borrowings have
been reclassified to the current portion of long-term debt.
Management's Discussion and Analysis of Financial Condition and Results of
Operation
For the management's discussion and analysis of the financial condition and
results of the operations of the Company, "Item 7--Management's Discussion and
Analysis of Financial Condition and Results of Operations" of the Company's
Annual Report on Form 10-K for the year ended December 31, 2001 and the section
entitled "Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations" of the Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2002, copies of which are attached hereto as Annex C
and Annex E, respectively, and incorporated herein by reference.
Current Management of the Company
Board of Management
The following are the members of the Company's Board of Management as of
the date of this Disclosure Statement:
John F. Riordan Board of Management Member, President, and
Chief Executive Officer
Charles H.R. Bracken Board of Management Member and Chief Financial
Officer
Gene Musselman Board of Management Member and Chief Operating
Officer
Nimrod J. Kovacs Board of Management Member and Executive Chairman,
UPC Central Europe
Shane O'Neill Board of Management Member and Chief Strategy
Officer
Anton M. Tuijten Board of Management Member, Senior Vice President
and General Counsel
For more information regarding the members of the Company's Board of
Management, see "Item 10--Directors and Executive Officers of the Registrant" of
the Company's Amendment No. 1 to the Annual Report on Form 10-K for the fiscal
year ended December 31, 2001, a copy of which is attached hereto as Annex D and
incorporated herein by reference.
Supervisory Board
The following are the members of the Company's Supervisory Board as of the
date of this Disclosure Statement:
Michael T. Fries Chairman of the Supervisory Board
John P. Cole, Jr. Supervisory Director
John W. Dick Supervisory Director
Richard de Lange Supervisory Director
Ellen P. Spangler Supervisory Director
Tina M. Wildes Supervisory Director
Gene W. Schneider Advisor to the Supervisory Board
For more information regarding the members of the Company's Supervisory
Board, see "Item 10--Directors and Executive Officers of the Registrant" of the
Company's Amendment No. 1 to the Annual Report on Form 10-K for the fiscal year
ended December 31, 2001, a copy of which is attached hereto as Annex D and
incorporated herein by reference.
Management of the Company On and After the Effective Date
Board of Management
From and after the Effective Date, the corporate governance of the Company
shall be modified to ensure that the decisions taken by the Board of Directors
of New UPC, subject to the Amended and Restated New UPC Certificate of
Incorporation and the Amended and Restated New UPC By-Laws, will be implemented
by the Company.
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It is the intention of New UPC and the Company that, under the Third
Amendment upon the later to occur of the Effective Date and the date on which
the Company is delisted from Euronext, the Board of Management of the Company
shall be New UPC.
Upon the Effective Date, the members of the Board of Management of the
Company shall be those individuals set forth in a schedule to be filed by the
Company with the U.S. Bankruptcy Court and mailed to all holders of Claims or
Equity Interests entitled to vote on the Plan on or before the Document Filing
Date (the "Board of Management Schedule"). The Board of Management Schedule
shall also set forth the proposed compensation for such members of the Board of
Management of the Company.
Supervisory Board
Effective upon the Third Amendment, the two-tier structure of the Company's
management providing for both a Board of Management and a Supervisory Board will
be amended to a one-tier structure, the Company's Supervisory Board will be
dissolved and removed from the Company's Articles of Association and the
Company's management will consist of a Board of Management with one or more
members. New UPC will become the sole managing director of the Company upon the
later to occur of the Effective Date and the delisting of the UPC Ordinary
Shares A from Euronext.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OF THE COMPANY AND NEW UPC
General
The unaudited pro forma condensed consolidated balance sheets and unaudited
pro forma condensed consolidated income statements of the Company and New UPC
set forth below were prepared to illustrate the effect of the Restructuring of
the Reorganized Company at the holding company level as if the Restructuring was
completed as of December 31, 2000, and are derived from the audited historical
consolidated financial statements of the Company for the fiscal year ended
December 31, 2001, as contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 2001, and the unaudited historical consolidated
financial statements of the Company for the nine months ended September 30,
2002, as contained in the Company's Quarterly Report on Form 10-Q for the nine
months ended September 30, 2002.
The historical consolidated financial information of the Company for the
nine-month period ended September 30, 2002 presented below is unaudited, but
contains all adjustments (consisting of normal, recurring accruals) that the
Company's management believes are necessary for a fair presentation of such
information. Historical 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 2002.
The unaudited pro forma financial information presented below is based upon
certain assumptions and adjustments, which the management of the Company
believes are reasonable. These unaudited pro forma adjustments represent the
Company's preliminary determination of such adjustments based upon currently
available information. In preparing the unaudited pro forma condensed
consolidated financial information, New UPC accounted for the Restructuring as a
reorganization of entities under common control at historical cost, similar to a
"pooling of interests." These detailed unaudited pro forma condensed
consolidated financial statements and related notes are included in this
Disclosure Statement to provide further information on the Restructuring and the
related assumptions and adjustments. The unaudited pro forma condensed
consolidated financial statements presented below were not prepared in
accordance with Article 11 of Regulation S-X promulgated by the SEC.
The unaudited pro forma consolidated financial information presented below
is not necessarily indicative of how the Company's consolidated balance sheets
as of December 31, 2001 and September 30, 2002 and the Company's statements of
operations for the fiscal year ended December 31, 2001 and the nine months ended
September 30, 2002 would have been presented had the Restructuring actually been
consummated at the assumed date, nor is it necessarily indicative of the
presentation of the Company's consolidated balance sheet and statement of
operations for any future period. The unaudited pro forma consolidated financial
information set forth below should be read in conjunction with the Company's
audited consolidated financial statements for the fiscal year ended December 31,
2001 as contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2001, and unaudited consolidated financial statements
for the nine months ended September 30, 2002 as contained in the Company's
Quarterly Report on Form 10-Q for the nine months ended September 30, 2002,
which are attached to this Disclosure Statement as Annex C and Annex E,
respectively, and are incorporated herein by reference.
-106-
General Assumptions
The unaudited pro forma financial statements of the Company and New UPC
consist of the unaudited pro forma balance sheets and the unaudited pro forma
statements of operations set forth below and include the following assumptions:
o as if the Restructuring had been completed on December 31, 2000;
o all financial information has been prepared in accordance with
generally accepted accounting principles in the United States;
o the surrender and transfer of all General Unsecured Claims against the
Company are not taken into account in preparing the unaudited pro
forma condensed consolidated financial information; and
o there have been no material transactions concerning the Company or New
UPC, other than the assumptions discussed herein.
Additionally, the unaudited pro forma financial information of the Company and
New UPC as reported does not reflect the following (with all Euro amounts set
forth below in thousands):
Pro Forma Deconsolidation of UPC Germany as of December 31, 2000
Until July 30, 2002, the Company had effective ownership of 51% of EWT/TSS
Group ("EWT") through its 51% owned subsidiary, UPC Germany. In March 2002, the
49% shareholders in UPC Germany exercised a call right with respect to 22.3% of
UPC Germany. Consequently, the Company now owns 28.7% of UPC Germany, with the
former 49% shareholders owning the remaining 71.3%. UPC Germany is governed by a
newly agreed shareholders' agreement and was deconsolidated by the Company
effective August 1, 2002. This transaction resulted in a deferred gain on sale
of assets of (euro)150,300 in the third quarter of 2002. Although it is not the
Company's management's current intention, it may decide to fund UPC Germany
sometime in the future, and, as such, the Company has deferred the gain on sale
of assets, which is the amount of losses recognized in excess of the Company's
cumulative investment in UPC Germany as of September 30, 2002. Included in the
historical condensed consolidated statements of operations of the Company are
revenues of (euro)29,692 and (euro)51,260 and net losses of (euro)3,463 and
(euro)821,206 of EWT for the nine months ended September 30, 2002, and for the
twelve months ended December 31, 2001, respectively.
Application of Statement of Financial Accounting Standards No. 142
The Company has adopted Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets" ("SFAS 142"), effective January 1,
2002. Under SFAS 142, goodwill and intangible assets with indefinite lives are
no longer amortized, but are tested for impairment on an annual basis and
whenever indicators of impairment arise. In addition, goodwill on equity method
investments is no longer amortized, but tested for impairment in accordance with
APB 18, "The Equity Method of Accounting for Investments in Common Stock." The
goodwill impairment test, which is based on fair value, is performed at the
reporting unit level. All recognized intangible assets that are deemed not to
have an indefinite life are amortized over their estimated useful lives. The
Company finalized the process of comparing the fair value of its reporting units
with their respective carrying amounts, including goodwill. This process enabled
the Company to identify any potential goodwill impairment from the adoption of
SFAS 142. If the fair value of a reporting unit exceeds its carrying amount, the
goodwill of such reporting unit is considered not impaired. If the carrying
amount of a reporting unit exceeds its fair value, the second step of the
goodwill impairment test will be performed to measure the amount of impairment
loss. The first step of the goodwill impairment test was performed and the
carrying test of certain reporting units exceed their fair value, including
reporting units in The Netherlands, Sweden, Hungary, the Czech Republic, France,
Slovakia and Poland and Priority Telecom. The Company is currently carrying out
the second step of the test to quantify how much of the total goodwill will be
impaired. The Company currently expects to recognize a substantial cumulative
effect adjustment in the Company's condensed consolidated statements of
operations effective as of January 1, 2002, as a result of this process.
However, the definitive amount of such impairment has not yet been quantified.
Net goodwill of approximately (euro)2.8 billion is included in the accompanying
unaudited condensed consolidated pro forma balance sheet as of September 30,
2002.
-107-
Dutch Capital Gains Taxes
With respect to capital gains taxes in The Netherlands, the Company has
taken the position that certain exemptions will be available.
-108-
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2001
Historical Pro Forma Pro Forma Pro Forma
Company Pro Forma Company New UPC Intercompany New UPC
Consolidated Adjustments Consolidated Standalone Eliminations Consolidated
------------ ----------- ------------ ---------- ------------ ------------
(In thousands of Euros)
Assets:
Current assets
Cash and cash equivalents........ 855,001 26,508 (1) 881,509 - - 881,509
Restricted cash.................. 36,322 - 36,322 - - 36,322
Subscriber receivables, net of
allowance for doubtful
accounts of 39,990............. 142,460 - 142,460 - - 142,460
Costs to be reimbursed by
affiliated companies........... 11,319 - 11,319 - - 11,319
Other receivables................ 77,367 - 77,367 - - 77,367
Deferred financing costs, net.... 147,210 (147,210) (2) - - - -
Prepaid expenses and other
current assets................. 64,494 - 64,494 - - 64,494
------------- ------------ ----------- --------- ------------- ------------
Total current assets.... 1,334,173 (120,702) 1,213,471 - - 1,213,471
Other investments.................. 32,336 - 32,336 - - 32,336
Investments in affiliates.......... 193,648 - 193,648 2,958,351(12) (2,958,351) 193,648
Property, plant and equipment, net. 3,754,330 - 3,754,330 - - 3,754,330
Goodwill and other intangible
assets, net...................... 3,003,503 - 3,003,503 - - 3,003,503
Deferred financing costs, net...... - 71,125 (3) 71,125 - - 71,125
Derivative assets.................. 146,934 (146,934)(4) - - - -
Other assets....................... 10,540 - 10,540 - - 10,540
------------ ------------ ------------ --------- ------------- ------------
Total assets............ 8,475,464 (196,511) 8,278,953 2,958,351 (2,958,351) 8,278,953
============ ============ ============ ========= ============= ============
Liabilities and Shareholders'
Deficit:
Current liabilities
Accounts payable, including
related party payables of 5,065 362,460 - 362,460 - - 362,460
Accrued liabilities.............. 713,449 (103,595) (5) 609,854 - - 609,854
Subscriber prepayments and
deposits....................... 99,554 - 99,554 - - 99,554
Derivative liabilities........... - 47,066 (6) 47,066 - - 47,066
Short-term debt.................. 86,843 - 86,843 - - 86,843
Current portion of long-term debt 9,188,098 (9,103,156) (7) 84,942 - - 84,942
------------- ------------ ------------ --------- ------------- ------------
Total current liabilities.. 10,450,404 (9,159,685) 1,290,719 - - 1,290,719
Long-term debt..................... 469,990 3,163,835 (8) 3,633,825 - - 3,633,825
Deferred gain on sale of assets.... - - - - - -
Other long-term liabilities........ 243,962 - 243,962 - - 243,962
------------- ------------ ------------ --------- ------------- ------------
Total liabilities....... 11,164,356 (5,995,850) 5,168,506 - - 5,168,506
------------- ------------ ------------ --------- ------------- ------------
Minority interests in subsidiaries. 152,096 - 152,096 - - 152,096
Hybrid loan-related party.......... - 100,000 (9) 100,000 - (100,000) -
Convertible preferred stock ....... 1,505,435 (1,505,435)(10) - - - -
Shareholders' equity............... (4,346,423) 7,204,774 (11) 2,858,351 2,958,351 (2,858,351) 2,958,351
------------ ----------- ---------- --------- ------------- -----------
Total liabilities and
shareholders' equity........... 8,475,464 (196,511) 8,278,953 2,958,351 (2,958,351) 8,278,953
============ ============= =========== ========= ============= ===========
- ----------------
Notes to the unaudited pro forma condensed consolidated balance sheet as of
December 31, 2001:
The following unaudited pro forma adjustments have been made to the
condensed consolidated balance sheet of the Company as of December 31, 2001
(Euro amounts in thousands):
(1) Cash and cash equivalents: An increase of (euro)26,508 consisting of
the following two components:
o the estimated expenses for the Restructuring of (euro)73,492 have
been deemed to have been incurred and paid in the year ended
December 31, 2000. The Restructuring expenses of (euro)73,492
have been adjusted, resulting in a decrease in cash and cash
equivalents; and
-109-
o the New UPC Equity Subscription of (euro)100,000 has been deemed
to have taken place on December 31, 2000. New UPC will provide
the Company with a hybrid loan of (euro)100,000 upon the New UPC
Equity Subscription, resulting in a net increase in cash and cash
equivalents.
(2) Net deferred financing costs (current assets): A decrease of
(euro)147,210 was made to net deferred financing costs consisting of
the following two components:
o net deferred financing costs of (euro)76,085 relating to the UPC
Notes and the Belmarken Notes have been expensed in the statement
of operations upon consummation of the Restructuring, resulting
in a decrease in net current assets; and
o as the Company's defaults will be cured by consummation of the
Restructuring, short-term net deferred financing costs that are
not related to the UPC Notes and Belmarken Notes, of
(euro)71,125, have been reclassified as long-term net deferred
financing costs.
(3) Increase in net deferred financing costs (long-term assets): As the
Company's defaults will be cured upon consummation of the
Restructuring, short-term net deferred financing costs that are not
related to the UPC Notes and Belmarken Notes, of (euro)71,125, have
been reclassified as long-term net deferred financing costs, as stated
in Note (2) above.
(4) Derivative assets: A decrease of (euro)146,934 was made to derivative
assets, consisting of the following two components:
o (euro)194,000 of the derivative asset value amount related to
derivative assets connected with the UPC Notes. These derivative
assets were deemed to be unwound and expensed in the statements
of operations in the year ended December 31, 2000 resulting in a
corresponding decrease in derivative assets on the balance sheet
for the year ended December 31, 2001; and
o the remaining derivative liability connected with other
derivative instruments of the Company of (euro)47,066 has been
reclassified to derivative liabilities, resulting in an increase
in derivative assets.
(5) Accrued liabilities: A decrease of (euro)103,595 was made to accrued
liabilities, consisting of the following two components:
o accrued interest outstanding on the UPC Notes of (euro)102,636
has been reclassified to shareholders' equity as this amount will
be included in the intercompany loan with New UPC, and will be
converted into shareholders' equity as part of the Restructuring,
resulting in a decrease in accrued liabilities; and
o the accrued Restructuring expense of (euro)959 resulted in a
decrease in accrued liabilities, as these have been paid upon
consummation of the Restructuring.
(6) Increase in derivative liabilities: The derivative liability of
(euro)47,066 not connected with the UPC Notes has been reclassified
from derivative assets to derivative liabilities, as stated in Note (4)
above.
(7) Current portion long-term debt: A decrease of (euro)9,103,156 was made
in the current portion of long-term debt, consisting of the following
two components:
o The Belmarken Notes of (euro)992,816 and the UPC Notes of
(euro)4,946,505 have been reclassified to shareholders' equity as
part of the Restructuring, resulting in a decrease in the current
portion long-term debt; and
o The UPC Distribution Bank Facility amount of (euro)3,163,835 has
been reclassified from the current portion of long-term debt to
long-term debt, as the Company will no longer be in default upon
consummation of the Restructuring, resulting in a decrease in the
current portion of long-term debt.
-110-
(8) Increase in long-term debt: The UPC Distribution Bank Facility of
(euro)3,163,835 has been reclassified from the current portion of
long-term debt to long-term debt, as the Company will no longer be in
default upon consummation of the Restructuring, as stated in Note (7)
above.
(9) Increase in hybrid loan related party: The New UPC Equity Subscription
of (euro)100,000 has been deemed to have taken place on December 31,
2000. New UPC will provide the Company with a hybrid loan of
(euro)100,000 upon the New UPC Equity Subscription resulting in an
increase in long-term debt related party, as stated in Note (1) above.
(10)Decrease in UPC Preference Shares A: The UPC Preference Shares A
amount of (euro)1,505,435 has been converted into shareholders' equity
as part of the Restructuring.
(11)Shareholders' equity: An increase of (euro)7,204,774 was made in
shareholders' equity, consisting of the following components:
o The Belmarken Notes of (euro)992,816 have been converted into
shareholders' equity, resulting in an increase in shareholders'
equity;
o The UPC Notes of (euro)4,946,505 (included the related current
portion of long-term debt) have been converted into shareholders'
equity, resulting in an increase in shareholders' equity;
o The accrued interest of (euro)102,636 (included in accrued
liabilities) have been converted into shareholders' equity,
resulting in an increase in shareholders' equity;
o The UPC Preference Shares A of (euro)1,505,435 have been
converted into shareholders' equity as part of the Restructuring,
resulting in an increase in shareholders' equity;
o Net deferred financing costs of the Belmarken Notes and UPC Notes
of (euro)76,085 have been expensed through the statement of
operations in the year ended December 31, 2000, resulting in a
decrease in shareholders' equity;
o Derivative assets connected with the UPC Notes of (euro)194,000
have been unwound as of December 31, 2000, resulting in a
decrease in shareholders' equity; and
o Additional restructuring costs of (euro)72,533 have been deemed
to have been incurred in the year ended December 31, 2000,
resulting in a decrease in shareholders' equity.
(12)Concerning the unaudited pro forma condensed consolidated balance
sheets of New UPC (on a standalone basis) as of December 31, 2001, the
following assumptions have been made (Euro amounts in thousands):
New UPC's equity and investments in, and advances to, affiliated companies upon incorporation As of
of New UPC: December 31, 2002
-----------------
New UPC has been deemed to have acquired the UPC Notes, including accrued interest, with a book
value of(euro)4,627,056 as of September 30, 2002, which has been presented as investments and
advances to affiliated companies and shareholders' equity........................................ 4,627,056
New UPC has been deemed to have acquired the Belmarken Notes with a book value of(euro)942,129 as
of September 30, 2002, which has been presented as investments and advances to affiliated
companies and as shareholders' equity............................................................ 942,129
New UPC has been deemed to have acquired the UPC Preference Shares A with a book value of
(euro)1,608,248 as of September 30, 2002, which has been presented as investments and advances
to affiliated companies and as shareholders' equity.............................................. 1,608,248
-111-
New UPC has been deemed to have acquired the UPC Ordinary Shares A and UPC Priority Shares with
a negative book value of(euro)4,731,091 as of September 30, 2002, which has been presented net
of the unaudited pro forma loss of(euro)531,500 for the nine months ended September 30, 2002 and
reflected as investments and advances to affiliated companies and as shareholders' equity........ (4,199,591)
In the unaudited pro forma financial statements of the Company as of September 30, 2002, net
deferred financing costs of(euro)63,388 relating the UPC Notes and the Belmarken Notes and
additional Restructuring expense of(euro)48,643 have been adjusted through the Company's
shareholders' equity; in New UPC these amounts are reflected in investments and advances to
affiliated companies and in shareholders' equity................................................. (112,031)
New UPC has been deemed to have provided the Company with a hybrid loan of(euro)100,000 subsequent
to the New UPC Equity Subscription; in New UPC this has been reflected in investments and
advances to affiliated companies and in shareholders' equity..................................... 100,000
Other movements in the unaudited pro forma balance sheets of negative(euro)7,460 have also been
reflected in investments in advances to affiliated companies and in shareholders' equity......... (7,460)
-----------------
Total shareholders' equity and investments in, and advances to, affiliated companies........... 2,958,351
=================
-112-
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Fiscal Year Ended December 31, 2001
Historical Pro Forma Pro Forma Pro Forma
Company Pro Forma Company New UPC Intercompany New UPC
Consolidated Adjustments Consolidated Standalone Eliminations Consolidated
-------------- ----------- ------------ ---------- ------------ ------------
(In thousands of Euros, except share and per share amounts)
Service and other revenue........ 1,378,764 - 1,378,764 - - 1,378,764
Operating expense (exclusive of
items shown separately below).. (931,817) - (931,817) (931,817)
Selling, general and
administrative expense......... (613,086) - (613,086) - - (613,086)
Depreciation and amortization.... (1,097,822) - (1,097,822) - - (1,097,822)
Impairment and restructuring
charges........................ (1,687,948) 1,281 (1) (1,686,667) - - (1,686,667)
------------- ----------- ------------ ----------- ----------- -----------
Net operating loss.............. (2,951,909) 1,281 (2,950,628) - - (2,950,628)
Interest income.................. 49,655 - 49,655 - - 49,655
Interest expense................. (853,770) 545,056 (2) (308,714) - - (308,714)
Interest expense - related party. (65,800) 65,800 (3) - - - -
Provision for loss on investments (375,923) - (375,923) - - (375,923)
Gain (loss) on sale of business.. (468,306) - (468,306) - - (468,306)
Foreign exchange gain (loss) and
other income
(expense), net................. (172,437) (124,285)(4) (296,722) - - (296,722)
------------- ------------ ------------ ----------- ----------- -----------
Net loss before income taxes and
other items.................... (4,838,490) 487,852 (4,350,638) - - (4,350,638)
Income tax expense............... 39,616 - 39,616 - - 39,616
Minority interests in
subsidiaries................... 543,092 - 543,092 - - 543,092
Share in results (losses) of
affiliated companies, net...... (186,047) - (186,047) - - (186,047)
------------- ------------ ------------ ----------- ----------- -----------
Loss from continuing operations
before extraordinary
gain and cumulative effect of
change in accounting principle. (4,441,829) 487,852 (3,953,977) - - ( 3,953,977)
Extraordinary gain............... - - - - - -
Cumulative effect of change in
accounting principle........... 21,349 (21,349)(5) - - - -
------------- ----------- ------------ ----------- ----------- -----------
Net loss................... (4,420,480) 466,503 (3,953,977) - - (3,953,977)
============= =========== ============ =========== =========== ============
Basic and diluted net loss
attributable to common (4,540,791) (3,953,977) (3,953,977)
shareholders................... ============= ============ ============
Basic and diluted net loss per
ordinary share before
extraordinary gain and
cumulative effect for
accounting principle........... (10.32) (0.08) (74.60)
Basic and diluted net loss per
ordinary share................. (10.27) (0.08) (74.60)
============= ============ ===========
Basic weighted-average number of
ordinary
shares outstanding............. 442,226,377 50,443,417,525 53,000,000
============= =============== ===========
- -----------------
Notes to the unaudited pro forma condensed consolidated statement of operations
of the Company for the fiscal year ended December 31, 2001:
The following unaudited pro forma adjustments have been made to the
condensed consolidated statement of operations of the Company for the fiscal
year ended December 31, 2001 (Euro amounts in thousands):
(1) Restructuring Expense: All Restructuring expenses have been deemed to
have been incurred and paid in the year ended December 31, 2000.
Therefore, Restructuring expenses included in the historical
consolidated statements of operations for the fiscal year ended
December 31, 2001, as filed in the Company's Annual Report on Form 10-K
for the year ended December 31, 2001, amounting to (euro)1,281, have
been eliminated from the unaudited pro forma condensed consolidated
statement of operations for the fiscal year ended December 31, 2001.
(2) Interest Expense: The UPC Notes have been deemed to have been converted
into shareholders' equity as part of the Restructuring, resulting in
the elimination of non-related party interest on the UPC Notes,
amounting to (euro)545,056, from the statement of operations.
-113-
(3) Interest expense - related party: The UPC Notes and the Belmarken Notes
have been deemed to have been converted into shareholders' equity as
part of the Restructuring, resulting in the elimination of the interest
on related party UPC Notes and Belmarken Notes, amounting to
(euro)65,800, from the statement of operations.
(4) Net foreign exchange gain (loss) and other income (expense): The UPC
Notes and the Belmarken Notes have been deemed to have been converted
into shareholders' equity as part of the Restructuring, resulting in
the elimination of the foreign exchange gain on the UPC Notes and
Belmarken Notes, amounting to (euro)124,285, from the statement of
operations.
(5) Cumulative effect of change in accounting principle: The UPC Notes and
the Belmarken Notes have been deemed to have been converted into
shareholders' equity, resulting in the elimination of the cumulative
effect of change in accounting principle from the statement of
operations, amounting to (euro)21,349, relating to the derivative
assets on the UPC Notes.
-114-
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2002
Historical Pro Forma Pro Forma Pro Forma
Company Pro Forma Company New UPC Intercompany New UPC
Consolidated Adjustments Consolidated Standalone Eliminations Consolidated
------------- ----------- ------------ ---------- ------------ ------------
(In thousands of Euros)
Assets:
Current assets
Cash and cash equivalents............ 301,094 39,754 (1) 340,848 - - 340,848
Restricted cash...................... 17,873 - 17,873 - - 17,873
Subscriber receivables, net of
allowance for doubtful accounts of 102,666 - 102,666 - - 102,666
54,366...............................
Costs to be reimbursed by affiliated
companies............................ 4,919 - 4,919 - - 4,919
Other receivables.................... 33,105 33,105 - - 33,105
Deferred financing costs, net........ 126,210 (126,210)(2) - - - -
Prepaid expenses and other current
assets............................... 71,685 - 71,685 - - 71,685
------------ ----------- ------------ ---------- ------------- -------------
Total current assets............. 657,552 (86,456) 571,096 - - 571,096
Other investments...................... 9,277 - 9,277 - - 9,277
Investments in affiliates.............. 126,205 - 126,205 2,434,311 (10) (2,434,311) 126,205
Property, plant and equipment, net..... 3,331,134 - 3,331,134 - - 3,331,134
Goodwill and other intangible assets,
net.................................. 2,893,382 - 2,893,382 - - 2,893,382
Deferred financing costs, net.......... - 62,822 (3) 62,822 - - 62,822
Other assets........................... 4,210 - 4,210 - - 4,210
------------ ----------- ------------ ---------- ------------- ------------
Total assets..................... 7,021,760 (23,634) 6,998,126 2,434,311 (2,434,311) 6,998,126
============ =========== ============ ========== ============= ============
Liabilities and Shareholders' Deficit:
Current liabilities
Accounts payable, including related
party payables of 5,689............ 124,600 - 124,600 - - 124,600
Accrued liabilities.................. 612,406 (305,430)(4) 306,976 - - 306,976
Subscriber prepayments and deposits.. 126,840 - 126,840 - - 126,840
Derivative liabilities............... 70,423 - 70,423 - - 70,423
Short-term debt...................... 6,093 - 6,093 - - 6,093
Current portion of long-term debt.... 8,458,338 (8,403,297)(5) 55,041 - - 55,041
------------ ---------- ----------- ---------- ----------- -------------
Total current liabilities........ 9,398,700 (8,708,727) 689,973 - - 689,973
Long-term debt......................... 451,314 3,127,939 (6) 3,579,253 3,579,253
Deferred gain on sale of assets........ 150,321 - 150,321 - - 150,321
Other long-term liabilities............ 130,545 - 130,545 - - 130,545
------------ ------------ ----------- ---------- ----------- -------------
Total liabilities................ 10,130,880 (5,580,788) 4,550,092 - 4,550,092
------------ ------------ ----------- ---------- ----------- -------------
Minority interests in subsidiaries..... 13,723 - 13,723 - - 13,723
Hybrid loan-related party.............. - 100,000 (7) 100,000 - (100,000) -
Convertible preferred stock ........... 1,608,248 (1,608,248)(8) - - - -
Shareholders' equity................... (4,731,091) 7,065,402 (9) 2,334,311 2,434,311(10) (2,334,311) 2,434,311
------------ ----------- ----------- ---------- ------------ ------------
Total liabilities and 7,021,760 76,366 7,098,126 2,434,311 (2,534,311) 6,998,126
shareholders' equity............. ============ =========== =========== ========== ============ ============
- -----------------
Notes to the unaudited pro forma condensed consolidated balance sheet as of
September 30, 2002:
The following unaudited pro forma adjustments have been made to the
condensed consolidated balance sheet of the Company as of September 30, 2002
(Euros amounts in thousands):
(1) Cash and cash equivalents: An increase of(euro)39,754 was made to cash
and cash equivalents, consisting of the following two components:
o the estimated expenses for the Restructuring of (euro)73,492 have
been deemed to have been incurred and paid in the year ended
December 31, 2000. The Restructuring expenses of (euro)13,246
have been paid as of September 30, 2002, resulting in a decrease
in cash and cash equivalents of (euro)60,246; and
o the New UPC Equity Subscription of (euro)100,000 has been deemed
to have taken place on December 31, 2000. New UPC will provide
the Company with a hybrid loan of (euro)100,000 upon the New UPC
Equity Subscription, resulting in an increase in cash and cash
equivalents.
-115-
(2) Net deferred financing costs (current assets): A decrease of
(euro)126,210 was made to net deferred financing costs, consisting of
the following two components:
o net deferred financing costs of (euro)63,388 relating to the UPC
Notes and the Belmarken Notes have been expensed in the statement
of operations for the nine months ended September 30, 2002 upon
consummation of the Restructuring, resulting in a decrease in net
current assets; and
o as the Company's defaults will be cured upon consummation of the
Restructuring, short-term net deferred financing costs that are
not related to the UPC Notes and Belmarken Notes, of
(euro)62,822, have been reclassified as long-term net deferred
financing costs.
(3) Increase in net deferred financing costs (long-term assets): As the
Company's defaults will be cured upon consummation of the
Restructuring, short-term net deferred financing costs that are not
related to the UPC Notes and Belmarken Notes, of (euro)62,822, have
been reclassified as long-term net deferred financing costs, as stated
in Note (2) above.
(4) Accrued liabilities: A decrease of(euro)305,404 was made in accrued
liabilities, consisting of the following two components:
o accrued interest outstanding on the UPC Notes of (euro)293,827
has been reclassified to shareholders' equity as this amount will
be included in the intercompany loan with New UPC, and will be
converted into shareholders' equity as part of the Restructuring,
resulting in a decrease in accrued liabilities; and
o the accrued Restructuring expense of (euro)11,603 resulted in a
decrease in accrued liabilities, as these have been paid upon
consummation of the Restructuring.
(5) Current portion long-term debt: A decrease of(euro)8,403,297 was made
to the current portion of long-term debt, consisting of the following
two components:
o the Belmarken Notes of (euro)942,129 and the UPC Notes of
(euro)4,333,229 have been converted into shareholders' equity as
part of the Restructuring, resulting in a decrease in current
portion of long-term debt; and
o the UPC Distribution Bank Facility amount of (euro)3,127,939 has
been reclassified from the current portion of long-term debt to
long-term debt, as the Company will no longer be in default upon
consummation of the Restructuring, resulting in a decrease in
current portion of long-term debt;
(6) Long-term debt: The UPC Distribution Bank Facility of (euro)3,127,939
has been reclassified from the current portion of long-term debt to
long-term debt, as the Company will no longer be in default upon
consummation of the Restructuring, as stated in Note (5) above.
(7) Increase in hybrid loan related party: The New UPC Equity Subscription
of (euro)100,000 has been deemed to have taken place on December 31,
2000. New UPC will provide the Company with a hybrid loan of
(euro)100,000 upon the New UPC Equity Subscription resulting in an
increase in long-term debt related party, as stated in Note (1) above.
(8) Decrease in UPC Preference Shares A: The UPC Preference Shares A
amount of (euro)1,608,248 has been converted into shareholders' equity
as part of the Restructuring.
(9) Shareholders' equity: An increase of(euro)7,065,402 was made to
shareholder's equity, consisting of the following components:
o The Belmarken Notes of (euro)942,129 have been converted into
shareholders' equity, resulting in an increase in shareholders'
equity;
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o The UPC Notes of (euro)4,333,229 (included in the current portion
of long-term debt) have been converted into shareholders' equity,
resulting in an increase in shareholders' equity;
o The accrued interest of (euro)293,827 (included in accrued
liabilities) has been converted into shareholders' equity,
resulting in an increase in shareholders' equity;
o The UPC Preference Shares A of (euro)1,608,248 have been
converted into shareholders' equity as part of the Restructuring,
resulting in an increase in shareholders' equity;
o Net deferred financing costs of the UPC Notes and the Belmarken
Notes of (euro)63,388 have been expensed through the statement of
operations in the year ended December 31, 2000; and
o Additional restructuring costs of (euro)48,643 have been deemed
to be incurred in the year ended December 31, 2000, resulting in
a decrease in shareholders' equity.
(10) Concerning the unaudited pro forma balance sheets of New UPC (on a
standalone basis) as of September 30, 2002, the following assumptions
have been made (Euro amounts in thousands):
New UPC's equity and investments in, and advances to, affiliated companies upon As of
incorporation of New UPC: September 30, 2002
------------------
New UPC has been deemed to have acquired the UPC Notes, including accrued interest,
with a book value of(euro)4,627,056 as of September 30, 2002, which has been presented
as investments and advances to affiliated companies and shareholders' equity............ 4,627,056
New UPC has been deemed to have acquired the Belmarken Notes with a
book value of (euro)942,129 as of September 30, 2002, which has
been presented as investments and advances to affiliated companies and
as shareholders' equity................................................................. 942,129
New UPC has been deemed to have acquired the UPC Preference Shares A with a book
value of(euro)1,608,248 as of September 30, 2002, which has been presented as
investments and advances to affiliated companies and as shareholders' equity............ 1,608,248
New UPC has been deemed to have acquired the UPC Ordinary Shares A and UPC Priority
Shares with a negative book value of(euro)4,731,091 as of September 30, 2002, which has
been presented as investments and advances to affiliated companies and as
shareholders' equity.................................................................... (4,731,091)
In the unaudited pro forma financial statements of the Company as of
September 30, 2002, net deferred financing costs of (euro)63,388
relating the UPC Notes and the Belmarken Notes and additional
Restructuring expenses of (euro)48,643 have been adjusted through
the Company's shareholders' equity; in New UPC these amounts are
reflected in investments and advances to affiliated companies and
in shareholders' equity................................................................. (112,031)
New UPC has been deemed to have provided the Company with a hybrid loan of(euro)100,000
subsequent to the New UPC Equity Subscription; in New UPC this has been reflected
in investments and advances to affiliated companies and in shareholders' equity......... 100,000
-----------------------
Total shareholders equity and investments in, and advances to, affiliated
companies................................................................................. 2,434,311
=======================
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Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2002
Historical Pro Forma Pro Forma Pro Forma
Company Pro Forma Company New UPC Intercompany New UPC
Consolidated Adjustments Consolidated Standalone Eliminations Consolidated
------------ ----------- ------------ ---------- ------------ ------------
(In thousands of Euros, except share and per share amounts)
Service and other revenue........... 1,046,101 - 1,046,101 - - 1,046,101
Operating expense (exclusive of
items shown separately below).... (566,952) - (566,952) - - (566,952)
Selling, general and (297,909) - (297,909) - - (297,909)
administrative expense............
Depreciation and amortization....... (534,679) - (534,679) - - (534,679)
Impairment and restructuring charges (23,635) 23,890(1) 255 - - 255
-------------- ---------- ----------- ---------- ---------- -----------
Net operating loss............ (377,074) 23,890 (353,184) - - (353,184)
Interest income..................... 17,309 - 17,309 - - 17,309
Interest expense.................... (486,661) 285,408(2) (201,253) - - (201,253)
Interest expense - related party.... (182,427) 182,427(3) - - - -
Provision for loss on investments... (7,957) - (7,957) - - (7,957)
Foreign exchange gain (loss) and
other income (expense), net....... 324,678 (386,697(4) (62,019) - - (62,019)
-------------- ------------- ----------- ----------- ----------- -------------
Net loss before income taxes (712,132) 105,028 (607,104) - - (607,104)
and other items............
Income tax expense................. (1,607) - (1,607) - - (1,607)
Minority interests in subsidiaries. (10,387) - (10,387) - - (10,387)
Share in results (losses) of (36,913) - (36,913) - - (36,913)
affiliated companies, net.......
-------------- ------------- ---------- ------------ ----------- -------------
Loss from continuing operations
before extraordinary gain and
cumulative effect of change in
accounting principle.............. (761,039) 105,028 (656,011) - - (656,011)
Extraordinary gain.................. 471,718 (347,207(5) 124,511 - - 124,511
Cumulative effect of change in
accounting principle.............. - - - - - -
-------------- ---------- ------------ ------------ ----------- ------------
Net loss...................... (289,321) (242,179) (531,500) - - (531,500)
============== ========== ============ ============= =========== ============
Basic and diluted net loss
attributable to common
shareholders...................... (392,128) (531,500) (531,500)
============== ============= ============
Basic and diluted net loss per ordinary
share before extraordinary gain and
cumulative effect for
accounting principle.................. (1.72) (0.01) (12.38)
Basic and diluted net loss per ordinary (0.65) (0.01) (10.03)
share.................................
============== ================ ============
Basic weighted-average number
of ordinary shares outstanding....... 443,417,525 50,443,417,525 53,000,000
============ ================ ============
Notes to the unaudited pro forma condensed consolidated statement of operations
of the Company for the nine months ended September 30, 2002:
The following unaudited pro forma adjustments have been made to the
condensed consolidated statement of operations of the Company for the nine
months ended September 30, 2002 (Euro amounts in thousands):
(1) Restructuring Expense: All Restructuring expenses have been deemed to
have been incurred and paid in the year ended December 31, 2000.
Therefore, Restructuring expenses included in the historical unaudited
consolidated statement of operations for the nine months ended
September 30, 2002, as filed in the Company's Form 10-Q for the nine
months ended September 30, 2002, amounting to (euro)23,890, have been
adjusted.
(2) Interest Expense: The UPC Notes have been deemed to have been converted
into shareholders' equity as part of the Restructuring, resulting in
the elimination of non-related party interest on the UPC Notes
amounting to (euro)285,408, from the statement of operations.
(3) Interest expense - related party: The UPC Notes and the Belmarken Notes
have been deemed to have been converted into shareholders' equity as
part of the Restructuring, resulting in elimination of related party
interest on the UPC Notes and the Belmarken Notes, amounting to
(euro)182,427, from the statement of operations.
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(4) Net foreign exchange gain (loss) and other income (expense): The UPC
Notes and the Belmarken Notes have been deemed to have been converted
into shareholders' equity as part of the Restructuring, resulting in
the elimination of the foreign exchange gain on the UPC Notes and the
Belmarken Notes amounting to (euro)386,697 from the statement of
operations.
(5) Extraordinary gain: The UPC Notes have been deemed to have been
converted into shareholders' equity as part of the Restructuring,
resulting in the elimination of an extraordinary gain of (euro)347,207,
which related to the unwinding of swaps on the UPC Notes, from the
statement of operations.
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OUTSTANDING SECURITIES OF THE COMPANY
The UPC Notes
The UPC Notes were issued in July 1999, October 1999 and January 2000 in
the transactions described below:
July 1999 Offering
In July 1999, the Company completed an unregistered bond offering
consisting of US$800.0 million and (euro)300.0 million 10 7/8% Senior Notes due
2009 (the "10 7/8% Senior Notes due 2009") and US$735.0 million 12 1/2% Senior
Discount Notes due 2009 (the "12 1/2% Senior Discount Notes due 2009"). The
US$800.0 million 10 7/8% Senior Notes due 2009 were swapped into Euros at a rate
of US$1.06 per (euro)1.00. In December 1999, the Company completed a registered
exchange offer for these U.S. Dollar-denominated and Euro-denominated UPC Notes.
October 1999 Offering
In October 1999, the Company completed an unregistered bond offering
consisting of US$200.0 million and (euro)100.0 million of 10 7/8% Senior Notes
due 2007 (the "10 7/8% Senior Notes due 2007"), US$252.0 million and (euro)101.0
million of 11 1/4% Senior Notes due 2009 (the "11 1/4% Senior Notes due 2009"),
and US$478.0 million and (euro)191.0 million aggregate principal amount at
maturity of 13 3/8% Senior Discount Notes due 2009 (the "13 3/8% Senior Discount
Notes due 2009"). The Company entered into cross-currency swaps, swapping the
interest obligations on the US$252.0 million 11 1/4% Senior Notes due 2009 and
the US$200.0 million 10 7/8% Senior Notes due 2007 into fixed and variable rate
Euro notes at a rate of US$1.049 per (euro)1.00. In April 2000, the Company
completed a registered exchange offer for these U.S. Dollar-denominated and
Euro-denominated UPC Notes.
January 2000 Offering
In January 2000, the Company completed an unregistered bond offering
consisting of US$300.0 million of 11 1/2% Senior Notes due 2010 (the "11 1/2%
Senior Notes due 2010"), US$600.0 million and (euro) 200.0 million of 11 1/4%
Senior Notes due 2010 (the "11 1/4% Senior Notes due 2010") and US$1.0 billion
aggregate principal amount at maturity of 13 3/4% Senior Discount Notes due 2010
(the "13 3/4% Senior Discount Notes due 2010"). The Company entered into
cross-currency swaps, swapping a total of US$300.0 million of the 11 1/2% Senior
Notes due 2010 into a fixed (euro)coupon of 10.0% at a rate of US$1.01 per
(euro)1.00 until August 2008. In April 2000, the Company completed a registered
exchange offer for these U.S. Dollar-denominated and Euro-denominated UPC Notes.
Market for the UPC Notes
The UPC Notes are not listed on any U.S. national or regional stock
exchange or included on NASDAQ. The UPC Notes trade on a limited basis in the
over-the-counter market. For the nine months ended September 30, 2002, the UPC
Notes traded at between 1.5% and 24.9% of their face value. Trading in the UPC
Notes, however, is extremely limited and each Holder of UPC Notes is encouraged
to obtain current information on the market price of any UPC Notes that such
Holder holds.
Terms of the UPC Notes
The UPC Notes were issued pursuant to indentures dated as of July 30, 1999,
in the case of the 10 7/8% Senior Notes due 2009 and the 12 1/2% Senior Discount
Notes due 2009, October 29, 1999 in the case of the 10 7/8% Senior Notes due
2007, the 11 1/4% Senior Discount Notes due 2009 and the 13 3/8% Senior Discount
Notes due 2009 and January 20, 2000 in the case of the 11 1/2% Senior Notes due
2010, the 11 1/4% Senior Notes due 2010 and the 13 3/4% Senior Discount Notes
due 2010 (the "Indentures") by and among the Company and Citibank N.A., as
trustee (the "Trustee").
The following summaries of certain provisions of the Indentures are
summaries only, do not purport to be complete and are qualified in their
entirety by reference to all of the provisions of the Indentures. The Company
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urges each Holder of UPC Notes to read the Indentures because the Indentures,
and not this description, define the rights of the holders of the UPC Notes.
Copies of the Indentures are available from the Company upon request.
Ranking of the UPC Notes
The UPC Notes are (i) unsecured, general obligations of the Company, (ii)
ranked equally in right of payment with all of the Company's existing and future
unsubordinated and unsecured Indebtedness (as defined in the relevant
Indenture); and (iii) ranked senior in right of payment to all of the Company's
existing and future Subordinated Indebtedness (as defined in the relevant
Indenture). The Company's operations are conducted through its subsidiaries and,
therefore, the Company depends on the cash flow of its subsidiaries to meet its
obligations, including its obligations under the UPC Notes. The UPC Notes are
effectively subordinated in right of payment to all Indebtedness and other
liabilities and commitments (including trade payables and lease obligations) and
preferred stock of the Company's subsidiaries. Any right the Company has to
receive assets of any of its subsidiaries upon the subsidiary's liquidation or
reorganization (and the consequent right of the holders of the UPC Notes to
participate in those assets) are effectively subordinated to the claims of that
subsidiary's creditors and preferred interest holders, except to the extent that
the Company is recognized as a creditor of the subsidiary, in which case the
Company's claims would still be subordinate in right of payment to any security
in the assets of the subsidiary and any indebtedness of the subsidiary senior to
that held by the Company.
Principal and Maturity
The following chart shows the aggregate principal amount and scheduled
maturity date of each of the series of UPC Notes:
Series of UPC Notes Aggregate Principal Amount Issued Scheduled Maturity Date
------------------- --------------------------------- -----------------------
10 7/8% Senior Notes due 2007 US$200,000,000 November 1, 2007
(euro)100,000,000
10 7/8% Senior Notes due 2009 US$800,000,000 August 1, 2009
(euro)300,000,000
11 1/4% Senior Notes due 2009 US$252,000,000 November 1, 2009
(euro)101,000,000
12 1/2% Senior Discount Notes due 2009 US$735,000,000 August 1, 2009
13 3/8% Senior Discount Notes due 2009 US$478,000,000 November 1, 2009
(euro)191,000,000
11 1/4% Senior Notes due 2010 US$600,000,000 February 1, 2010
(euro)200,000,000
11 1/2% Senior Notes due 2010 US$300,000,000 February 1, 2010
13 3/4% Senior Discount Notes due 2010 US$1,000,000,000 February 1, 2010
Covenants
The UPC Notes contain covenants requiring the Company to repurchase the UPC
Notes at the option of the holders of the UPC Notes in the event of a Change in
Control (as defined in the Indentures) of the Company. The UPC Notes also
contain covenants restricting or limiting the ability of the Company or any of
its subsidiaries (subject, in each case, to certain exceptions) to
o incur indebtedness and disqualified capital stock;
o make restricted payments;
o impose restrictions on the ability of the Company's subsidiaries to
pay dividends or make other payments to the Company;
o create, incur, assume or suffer to exist any lien on its assets or
properties;
o convey, sell, transfer, assign or otherwise dispose of its property,
business or assets;
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o consolidate with or merge with or into another person or sell, lease,
convey or transfer all or substantially all of its assets; and
o engage to any substantial extent in any line or lines of business
activity other than that which, in the reasonable good faith judgment
of the Company's Supervisory Board, is a related business.
The Indentures also require the Company to provide to the Trustees and each
holder of the UPC Notes identified to the Company annual and quarterly financial
statements and any report filed with the SEC within 15 days of the filing of
such report with the SEC. The Indentures provide for events of default under the
UPC Notes in the event of the Company's failure to pay interest (subject to a 30
day grace period) or principal on the notes, the Company's failure to observe or
perform any covenant or agreement under the UPC Notes or in the Indentures
(subject to a 30 day cure period), the bankruptcy, insolvency or reorganization
of the Company or a default under other indebtedness of the Company or any of
its subsidiaries in excess of US$50 million.
The Belmarken Notes
In May 2001, Belmarken completed the placement with Liberty Media
Corporation ("Liberty Media") of the Belmarken Notes, receiving proceeds of
US$856.8 million. The holder of the Belmarken Notes has the right to exchange
the Belmarken Notes into UPC Ordinary Shares A under certain circumstances at
US$6.85 per share. The Belmarken Notes were transferred to UGC on January 30,
2002, as part of a transaction between Liberty Media, the original holder of the
Belmarken Notes, and UGC. As a result of the transfer, UGC may exchange the
Belmarken Notes for UPC Ordinary Shares A at US$6.85 per share at any time. The
Belmarken Notes are secured by pledges of the stock of Belmarken, its
wholly-owned subsidiary and the subsidiary holding company that owns chello
broadband N.V.
The principal terms of the Belmarken Notes are as follows:
o Exchangeable at any time into UPC Ordinary Shares A at US$6.85 per
share.
o Callable in cash at any time in the first year at accreted value, then
not callable until May 29, 2004, thereafter callable at descending
premiums in cash, UPC Ordinary Shares A or a combination (at the
Company's option) at any time prior to May 29, 2007.
o The Company has the right, at its option, to require exchange of the
Belmarken Notes into UPC Ordinary Shares A at (euro)8.00 per share on
a (euro)1.00 for (euro)1.00 basis for any equity raised by the Company
at a price at or above (euro)8.00 per share during the first two
years, (euro)10.00 per share during the third year, (euro)12.00 per
share during the fourth year, and (euro)15.00 per share during and
after the fifth year.
o The Company has the right, at its option, to require exchange of the
Belmarken Notes into UPC Ordinary Shares A, if on or after November
15, 2002, the UPC Ordinary Shares A trade at or above US$10.28 for at
least 20 out of 30 trading days, or if on or after May 29, 2004, the
UPC Ordinary Shares A trade at or above US$8.91 for at least 20 out of
30 days.
Statutory Purpose of the Company
Prior to the Restructuring
Article 3 of the Articles of Association of the Company, which were last
amended on June 7, 2001, provides that the business activities of the Company
shall include:
o the ownership, operation and development of subscription and
multi-channel television systems and the provision of related
consulting, engineering and programming services and other
communications services,
o the incorporation, management and financing of, and participation in,
other companies and enterprises and
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o the incurrence of loans, the making of investments and the
acquisition, transfer and disposal of claims and assets in general.
After the Restructuring
The Articles of Association of the Company will be amended by the Third
Amendment to provide that the business activities of the Company shall include:
o the incorporation, management and supervision of, and participation
in, businesses and companies,
o the financing of businesses and companies and the borrowing, lending
and raising of funds,
o the rendering of advice and services to businesses and companies with
which it forms a group and on behalf of third parties,
o the granting of guarantees, the binding of itself and the pledging of
its assets for obligations of businesses and companies with which it
forms a group and on behalf of third parties,
o the acquisition, sale and management of property,
o the trading in currencies and securities,
o the development of, and trading in, patents, trademarks, licenses and
other property rights and
o the performance of any and all activities of an industrial, financial
or commercial nature.
Capital Stock of the Company Prior to the Restructuring
The current authorized capital stock of the Company amounts to
1,653,000,000 shares of capital stock, including
(i) 1,000,000,000 UPC Ordinary Shares A with a par value of (euro)1.00
each,
(ii) 300,000,000 UPC Ordinary Shares B with a par value of (euro)0.01
each,
(iii) 300 UPC Priority Shares with a par value of (euro)1.00 each,
(iv) 49,999,700 UPC Preference Shares A with a par value of (euro)1.00
each, and
(v) 600,000,000 UPC Preference Shares B with a par value of (euro)1.00
each.
As of the Petition Date, the Company had outstanding
(i) 443,417,525 UPC Ordinary Shares A;
(ii) no UPC Ordinary Shares B;
(iii) 300 UPC Priority Shares;
(iv) 12,400 UPC Preference Shares A; and
(v) no UPC Preference Shares B.
The following is a brief description of the UPC Ordinary Shares A and
B, the UPC Priority Shares, the UPC Preference Shares A and B and the UPC ADSs:
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UPC Ordinary Shares A and B
General
The Company has two classes of ordinary shares: Ordinary Shares A and
Ordinary Shares B. The Ordinary Shares B have similar rights to the UPC Ordinary
Shares A, except for the following primary differences:
o holders of Ordinary Shares B are entitled to one vote per share and
holders of the UPC Ordinary Shares A are entitled to 100 votes per
share; and
o The Company's Board of Management must obtain the approval of the
meeting of the holders of Ordinary Shares B before cooperating with a
public offer for its shares if the offer is limited to the UPC
Ordinary Shares A or the offer is not made on equal financial terms
for both the UPC Ordinary Shares A and the UPC Ordinary Shares B.
The Ordinary Shares may, at the option of the shareholder, be registered
shares or bearer shares. A shareholder may convert Ordinary Shares in bearer
form into registered Ordinary Shares of the same class at any time, and vice
versa. The UPC Ordinary Shares A in bearer form are listed on Euronext.
UPC Ordinary Shares A in bearer form are embodied in a single global share
certificate, which is lodged with the NECIGEF for safekeeping on behalf of the
parties entitled to such Ordinary Shares A. The UPC Ordinary Shares A in bearer
form can only be transferred through the giro-based securities transfer system
of Nederlands Centraal Insituut voor Giraal Effectenverkeer B.V. ("NECIGEF").
Holders of registered UPC ordinary Shares A are entered in the Company's
shareholders register and share certificates are not issued. At the request of a
registered shareholder, the Company will, without fee, issue a non-negotiable
extract from the shareholders register in the name of the holder. A deed of
transfer, together with the Company's acknowledgment in writing, is required to
transfer registered shares.
Issue of Ordinary Shares; Pre-emptive Rights
Pursuant to the articles of association of the Company, all unissued shares
of the authorized capital may be issued by the Company's Board of Management
upon approval of both the Company's Supervisory Board and United Europe, as
holder of all outstanding UPC Priority Shares. The authority of the Company's
Board of Management to issue ordinary shares will end July 23, 2004, unless
extended by the articles of association or by resolution of the general meeting
of shareholders which requires the approval of the Company's Supervisory Board
and United Europe, as holder of all outstanding UPC Priority Shares, for a
period not exceeding five years in each instance. If no such extension is given,
or any other corporate body of the Company has been designated by the general
meeting of shareholders, any issues of ordinary shares will require a resolution
of the general meeting of shareholders. A resolution of the general meeting of
shareholders to issue any shares in the Company or to designate any other
corporate body of the Company, is subject to the approval by the Company's
Supervisory Board and United Europe, as holder of all outstanding UPC Priority
Shares.
Except for issues of ordinary shares in return for non-cash consideration
and shares issued to the Company's employees or employees of any of the
Company's subsidiaries as defined under Dutch law, holders of ordinary shares
have pre-emptive rights to subscribe for their pro rata amount of all new
ordinary shares and the UPC Preference Shares A which are convertible into
ordinary shares issued by the Company. These rights may be restricted or
excluded by a resolution of the Company's Board of Management subject to
approval of both the Company's Supervisory Board and United Europe, as the
holder of all outstanding UPC Priority Shares. The authority of the Company's
Board of Management to restrict or exclude any pre-emptive rights will end July
23, 2004, unless extended by the articles of association or by resolution of the
general meeting of shareholders which requires the approval of the Company's
Supervisory Board and United Europe, as holder of all outstanding UPC Priority
Shares, for a period not exceeding five years in each instance.
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Dividends
Each UPC Ordinary Share A and Ordinary Share B is entitled to the same
amount of dividend if one is declared in proportion to their respective par
value. The Company may not pay a dividend to holders of UPC Ordinary Shares A
without paying the same dividend to holders of Ordinary Shares B.
Voting Rights
All UPC Ordinary Shares (A and B) vote together on all matters presented at
a general meeting of shareholders. Each UPC Ordinary Share A represents the
right to cast 100 votes at a general meeting of shareholders and each Ordinary
Share B represents the right to cast one vote at a general meeting of
shareholders.
Special Approval Rights for Ordinary Shares B
The Board of Management must obtain the approval of the meeting of the
holders of Ordinary Shares B prior to cooperating with a public offer for the
Company's shares if the offer is limited to UPC Ordinary Shares A or the offer
is not made on equal financial terms for the shares of both classes (A and B) of
the Company's ordinary shares.
UPC Priority Shares
All of the UPC Priority Shares are held indirectly by UGC through United
Europe. Except for the transfer of UPC Priority Shares to the Company, UPC
Priority Shares can only be transferred with the approval of the Company's Board
of Management and Supervisory Board. In addition to holding a controlling
majority of UPC Ordinary Shares A, United Europe, as the holder of the UPC
Priority Shares, has certain specific rights and powers over the Company,
including:
o the right to approve a resolution of the Company's Board of Management
or any other corporate body of the Company for the issuance by the
Company of its shares,
o the right to approve a resolution of the Company's Board of Management
or any other corporate body of the Company for the exclusion or
restriction of the pre-emptive rights of existing shareholders,
o the right to make binding nominations for appointment of members to
the Company's Board of Management and Supervisory Board, which binding
nominations may only be set aside by a resolution of the general
meeting of shareholders adopted by two-thirds of the votes cast
representing more than one-half of the issued nominal capital,
o the right to require decisions of the Company's Board of Management to
be subject to the approval of United Europe, as the holder of the UPC
Priority Shares, and
o the exclusive right to propose amendments to the Company's articles of
association and to propose a merger, split up or dissolution of the
Company.
The UPC Priority Shares are issued in the same way as the UPC Ordinary
Shares A and B. The UPC Priority Shares carry no pre-emptive rights. The UPC
Priority Shares are entitled to a nominal annual dividend of 5% of their par
value, to the extent distributable profits are available.
At such time as the holder(s) of the UPC Priority Shares hold less than 15%
of the issued and outstanding UPC Ordinary Shares A, the holder(s) are required
to transfer all of the UPC Priority Shares to a foundation, the trustees of
which are the Company's Supervisory Directors.
UPC Preference Shares A and B
The Company's articles of association provide for the issuance of class A
and class B preference shares. The UPC Preference Shares A may be issued
exclusively for financing purposes. Upon any voluntary or involuntary
liquidation, winding up or dissolution of the Company that were to become
effective on or before May
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1, 2010, the amount payable with respect to the UPC Preference Shares A would be
equal to the amount that would have been payable on the UPC Ordinary Shares A if
these UPC Preference Shares A had been converted into UPC Ordinary Shares A
immediately prior to such date. Upon the liquidation of the Company after May 1,
2010, holders of the UPC Preference Shares A would not share in the reserves of
the Company although they may be entitled to a share premium reserve if it were
so decided at the time of their first issuance. See "--Liquidation Rights"
below. The UPC Preference Shares A are not listed. The UPC Preference Shares A
are registered shares and share certificates are not issued. The UPC Preference
Shares A carry no pre-emptive rights. Each UPC Preference Share A represents the
right to cast 100 votes at a general meeting of shareholders. The UPC Preference
Shares A are paid an annual dividend, the amount or method of determining of
which will be determined at the time of their first issuance, to the extent
distributable profits are available.
Class B preference shares are designed as a preventive measure against
unfriendly takeover bids. The minimum amount required to be paid on the class B
preference shares upon issuance is 25% of the nominal amount issued. In the
event of a hostile take-over bid, class B preference shares may be issued to a
legal entity charged with caring for the Company's interests and its
stakeholders and preventing influences that may threaten the Company's
continuity, independence or identity. Upon the Company's liquidation, holders of
class B preference shares do not share in the Company's reserves for more than
the par value of their shares and such shares are not listed. The class B
preference shares will be registered shares and share certificates will not be
issued. Class B preference shares can be issued in the same way as ordinary
shares, but carry no pre-emptive rights. Each class B preference share will
represent the right to cast 100 votes at a general meeting of shareholders.
Class B preference shares will be paid a cumulative annual dividend calculated
on the basis of the deposit interest rate of the European Central Bank to be
applied over the paid up part of their par value, to the extent distributable
profits are available.
Class B preference shares may be issued by the UPC Board of Management upon
approval of both the UPC Supervisory Board and UGC Holdings, as the holder of
the UPC Priority Shares. Notwithstanding, if class B preference shares are
proposed to be issued by a corporate body other than the UPC general meeting of
shareholders and such shares would exceed 100% of all of the Company's other
outstanding shares, such issuance will require the prior approval of the general
meeting of shareholders. Where class B preference shares are issued by a
corporate body other than the Company's general meeting of shareholders, and
such shares would not exceed 100% of all of the Company's other outstanding
shares, the reasons for the issuance must be explained within four weeks thereof
at a general meeting of shareholders. Within two years after the first issuance
of class B preference shares, a general meeting of shareholders must be held to
vote on whether the class B preference shares should be repurchased or
cancelled. If such a resolution is not adopted, another meeting is held within
two years of the previous meeting and this procedure is repeated until no more
class B preference shares are outstanding.
Liquidation Rights
In the event that the Company were to be dissolved or liquidated, the
assets remaining after payment of all debts are to be distributed to holders of
the Company's share capital as follows:
o first, to any issued and outstanding class B preference shares in an
amount equal to any previously declared but unpaid dividend and the
nominal paid-up amount of such class B preference shares;
o second, to any issued and outstanding UPC Preference Shares A in an
amount as determined in the resolution by which such UPC Preference
Shares A were issued, which may include, among other things, (1) an
amount equal to the accrued but unpaid dividend, (2) the nominal paid
up amount on such UPC Preference Shares A and the contributed share
premium, (3) a compensation over the paid capital, and/or (4) an
amount equal to the amount the holder of such UPC Preference Shares A
would be entitled to, had he or she converted these shares into UPC
Ordinary Shares A on the day of liquidation provided, however, that if
the Company were to be dissolved or liquidated on or before May 1,
2010, then the amount payable with respect to the UPC Preference
Shares A shall be equal to the amount that would have been payable on
the UPC Ordinary Shares A if the UPC Preference Shares A had been
converted into UPC Ordinary Shares A on the date of dissolution or
liquidation and no amounts shall be paid with respect to the
liquidation preference of the UPC Preference Shares A;
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o third, to the holders of the UPC Priority Shares in an amount equal to
their par value in proportion to the number of UPC Priority Shares
held by them; and
o fourth, any remaining assets shall be distributed to the holders of
the UPC Ordinary Shares A and UPC Ordinary Shares B in proportion to
the number of shares held by them regardless of the class of ordinary
shares.
UPC ADSs
General
Citibank, N.A. ("Citibank"), located at 111 Wall Street, New York, New York
10043 acts as the depositary bank for the UPC ADSs. Citibank, N.A. has appointed
Citibank N.A., Amsterdam, located at Europlaza, Hoogoordreef 54 B, 1101 BE
Amsterdam ZO, The Netherlands, as custodian through which the UPC Ordinary
Shares A on deposit under the UPC ADS program are held.
The Company appointed Citibank as depositary bank pursuant to a deposit
agreement. A copy of the deposit agreement is on file with the SEC under cover
of a Registration Statement on Form F-6. A UPC ADS owner may obtain a copy of
the deposit agreement from the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please refer to Registration Number 333-9850 when
retrieving a copy.
Each UPC ADS represents one UPC Ordinary Share A. The UPC Ordinary Shares A
underlying the UPC ADSs are deposited into accounts maintained by the custodian
with NECIGEF. A UPC ADS also represents any other property received by the
depositary bank or the custodian on behalf of the owner of the UPC ADS but that
has not been distributed to the owners of UPC ADSs because of legal restrictions
or practical considerations.
Each owner of UPC ADSs becomes a party to the deposit agreement and
therefore is bound by its terms as well as to the terms of the American
Depositary Receipt ("ADR") that represents such owner's UPC ADSs. The deposit
agreement and the ADR specify the owner's rights and obligations as well as
those of the depositary bank. A UPC ADS owner appoints the depositary bank to
act on his or her behalf in certain circumstances. The deposit agreement is
governed by New York law. However, the Company's obligations to the holders of
UPC Ordinary Shares A continue to be governed by the laws of The Netherlands,
which may be different from the laws of the United States.
An owner of UPC ADSs may hold UPC ADSs either by means of an ADR registered
in such owner's name or through a brokerage or safekeeping account. If the owner
decides to hold UPC ADSs through a brokerage or safekeeping account, the owner
must rely on the procedures of the owner's broker or bank to assert his or her
rights as a UPC ADS owner. This summary description assumes that the owner has
opted to own the UPC ADSs directly by means of an ADR registered in his or her
name and, as such, the description refers to such owner as the holder.
The following is a summary of the deposit agreement and the UPC ADSs.
Because it is a summary, it does not contain all of the information that may be
important to you. For more complete information, you should read the entire
deposit agreement and the form of ADR included in the deposit agreement.
Dividends and Distributions
A holder of UPC ADSs generally has the right to receive the distributions
the Company makes on the securities deposited with the custodian. Receipt of
these distributions may be limited, however, by practical considerations and
legal limitations. Holders will receive such distributions under the terms of
the deposit agreement in proportion to the number of UPC ADSs held as of a
specified record date.
Distributions of Cash and Shares
Whenever the Company makes a cash distribution, or a free distribution of
UPC Ordinary Shares A, for the securities on deposit with the custodian, the
Company will notify the depositary bank. In the case of a cash distribution,
upon receipt of such notice the depositary bank will arrange for the funds to be
converted into United States Dollars (if practicable) and for the distribution
of the United States Dollars to holders (if transferable to the
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United States). In the case of a distribution of shares, upon receipt of such
notice and subject to applicable law, the depositary bank will either distribute
to holders new UPC ADSs representing the UPC Ordinary Shares A deposited or
modify the UPC ADSs to UPC Ordinary Shares A ratio, in which case each UPC ADS
held by a holder will represent rights and interests in the additional UPC
Ordinary Shares A so deposited.
Distributions of Rights
Whenever the Company intends to distribute rights to purchase additional
UPC Ordinary Shares A, the Company will give prior notice to the depositary bank
and the Company will assist the depositary bank in determining whether it is
lawful and reasonably practicable to distribute rights to purchase additional
UPC ADSs to holders. The depositary bank will establish procedures to distribute
rights to purchase additional UPC ADSs to holders and to enable such holders to
exercise such rights if it is lawful and reasonably practicable to make the
rights available to holders of UPC ADSs, and if the Company provides all of the
documentation contemplated in the deposit agreement, such as legal opinions to
address the legality of the transaction.
The depositary bank will not distribute the rights to holders if:
o the Company does not request that the rights be distributed to holders
or the Company asks that the rights not be distributed to holders;
o the Company fails to deliver satisfactory documents to the depositary
bank; or
o it is either not lawful or not reasonably practicable to distribute
the rights.
Elective Distributions
Whenever the Company intends to distribute a dividend payable at the
election of shareholders either in cash or in additional shares, the Company
will give prior notice thereof to the depositary bank and will indicate whether
the Company wishes the elective distribution to be made available to holders. In
such case, the Company will assist the depositary bank in determining whether
such distribution is lawful and reasonably practicable.
Other Distributions
Whenever the Company intends to distribute property other than cash, UPC
Ordinary Shares A or rights to purchase additional UPC Ordinary Shares A, the
Company will notify the depositary bank in advance and will indicate whether the
Company wishes such distribution to be made to holders. If so, the Company will
assist the depositary bank in determining whether such distribution to holders
is lawful and reasonably equitable and practicable.
If it is reasonably practicable to distribute such property to holders and
if the Company provides all of the documentation contemplated in the deposit
agreement, the depositary bank will distribute the property proportionately to
the holders in a manner it deems practicable.
The depositary bank will not distribute the property to holders and will
sell the property if:
o the Company does not request that the property be distributed to
holders or if the Company asks that the property not be distributed to
holders;
o the Company does not deliver satisfactory documents to the depositary
bank; or
o the depositary bank determines that all or a portion of the
distribution to holders is not reasonably practicable.
The proceeds of such a sale will be distributed to holders as in the case
of a cash distribution.
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Issuance of UPC ADSs upon Deposit of UPC Ordinary Shares A
The UPC Ordinary Shares A to be represented by the UPC ADSs will be
credited to an account maintained by the custodian at NECIGEF. The custodian
will be the holder of record of all of these UPC Ordinary Shares A. Once the
custodian confirms the registration of the UPC Ordinary Shares A on its account
at NECIGEF, the depositary bank may create UPC ADSs on holders' behalf. The
depositary bank will deliver these UPC ADSs to the person holders indicate only
after holders pay any applicable issuance fees and any charges and taxes payable
for the transfer of the UPC Ordinary Shares A. The records maintained by NECIGEF
and the affiliated institutions of NECIGEF will show the ownership of the
deposited UPC Ordinary Shares A and transfers of ownership interests.
The issuance of UPC ADSs may be delayed until the depositary bank or the
custodian receives confirmation that all required approvals have been given and
that the UPC Ordinary Shares A have been duly credited to the custodian's
NECIGEF account. The depositary bank will only issue UPC ADSs in whole numbers.
When holders, through an affiliated institution of NECIGEF, make a deposit
of UPC Ordinary Shares A, holders will be responsible for transferring good and
valid title to the custodian. As such, holders will be deemed to represent and
warrant that:
o the UPC Ordinary Shares A are duly authorized, validly issued, fully
paid, non-assessable and legally obtained;
o all pre-emptive and similar rights, if any, with respect to such UPC
Ordinary Shares A have been validly waived or exercised;
o holders are duly authorized to deposit the UPC Ordinary Shares A;
o the UPC Ordinary Shares A presented for deposit are free and clear of
any lien, encumbrance, security interest, charge, mortgage or adverse
claim, and are not, and the UPC ADSs issuable upon such deposit will
not be, "restricted securities," as defined in the deposit agreement;
and
o the UPC Ordinary Shares A presented for deposit have not been stripped
of any rights or entitlements.
If any of the representations or warranties are incorrect in any way, the
Company and the depositary bank may, at holders' cost and expense, take any and
all actions necessary to correct the consequences of the misrepresentations.
Withdrawal of UPC Ordinary Shares A Upon Cancellation of UPC ADSs
Holders will be entitled to present their UPC ADSs to the depositary bank
for cancellation in order to withdraw the underlying deposited securities. In
order to withdraw the deposited securities, holders will be required to pay to
the depositary the fees for cancellation of UPC ADSs and any charges and taxes
payable upon the transfer of the deposited securities being withdrawn and then
an affiliated institution of NECIGEF holders designate will be entitled to the
delivery of the deposited securities represented by their UPC ADSs. Holders
assume the risk for delivery of all funds and securities upon withdrawal. Once
canceled, holders will not have any rights under the deposit agreement in
respect of the UPC ADSs.
If holders own UPC ADSs registered in their names, the depositary bank may
ask holders to provide proof of identity, the genuineness of any signature and
certain other documents the depositary bank deems appropriate before it will
cancel their UPC ADSs. The withdrawal of the deposited securities represented by
holders' UPC ADSs may be delayed until the depositary bank receives satisfactory
evidence of compliance with all applicable laws and regulations. The depositary
bank will only accept UPC ADSs for cancellation that represent a whole number of
securities on deposit.
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Holders will have the right to withdraw the deposited securities
represented by their UPC ADSs at any time, except for:
o temporary delays that may arise because (1) the transfer books for the
UPC Ordinary Shares A or UPC ADSs are closed or (2) the UPC Ordinary
Shares A are immobilized on account of a shareholders' meeting or a
payment of dividends;
o obligations to pay fees, taxes and similar charges; and
o restrictions imposed because of laws or regulations applicable to UPC
ADSs or the withdrawal of securities on deposit.
The deposit agreement may not be modified to impair holders' right to
withdraw the securities represented by their UPC ADSs except to comply with
mandatory provisions of law.
Voting Rights
Holders generally have the right under the deposit agreement to instruct
the depositary bank to exercise the voting rights for the UPC Ordinary Shares A
represented by their UPC ADSs. The voting rights of the holders of UPC Ordinary
Shares A are described in "UPC Ordinary Shares A and B--Voting Rights."
At the Company's request, the depositary bank will mail to holders any
notice of shareholders' meeting received from the Company together with
information explaining how to instruct the depositary bank to exercise the
voting rights of the securities represented by their UPC ADSs.
If the depositary bank timely receives voting instructions from a holder of
UPC ADSs, it will endeavor to vote the securities represented by the holder's
UPC ADSs in accordance with such voting instructions.
The ability of the depositary bank to carry out voting instructions may be
limited by practical and legal limitations and the terms of the securities on
deposit. the Company cannot assure holders that they will receive voting
materials in time to enable them to return voting instructions to the depositary
bank in a timely manner. Securities for which no voting instructions have been
received will not be voted.
Amendments and Termination
The Company may agree with the depositary bank to modify the deposit
agreement at any time without holders' consent. the Company undertakes to give
holders 30 days prior notice of any modifications that would prejudice any of
their substantial rights under the deposit agreement (except in very limited
circumstances enumerated in the deposit agreement).
Holders will be bound by the modifications to the deposit agreement if they
continue to hold their UPC ADSs after the modifications to the deposit agreement
become effective. The deposit agreement cannot be amended to prevent holders
from withdrawing the UPC Ordinary Shares A represented by their UPC ADSs (except
as permitted by law).
The Company has the right to direct the depositary bank to terminate the
deposit agreement. Similarly, the depositary bank may, in certain circumstances,
on its own initiative, terminate the deposit agreement. In either case, the
depositary bank must give notice to holders at least 30 days before termination.
Upon termination, the following will occur under the deposit agreement:
o For a period of six months after termination, holders will be able to
request the cancellation of their UPC ADSs, the withdrawal of the UPC
Ordinary Shares A represented by their UPC ADSs and the delivery of
all other property held by the depositary bank in respect of those
deposited securities on the terms existing prior to the termination.
During such six-month period, the depositary bank will continue to
collect all distributions received on the UPC Ordinary Shares A on
deposit but will not distribute any such property to holders until
they request the cancellation of their UPC ADSs.
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o After the expiration of such six-month period, the depositary bank may
sell the securities held on deposit. The depositary bank will hold the
proceeds from such sale and any other funds then held for holders in a
non-interest bearing account. At that point, the depositary bank will
have no further obligations to holders other than to account for the
funds then held for the holders still outstanding.
Books of Depositary
The depositary bank will maintain UPC ADS holder records at its depositary
office. Holders may inspect the records at such office during regular business
hours but solely for the purpose of communicating with other holders in the
interest of business matters relating to the UPC ADSs and the deposit agreement.
The depositary bank will maintain facilities in New York to record and
process the issuance, cancellation, combination, split-up and transfer of ADRs.
These facilities may be closed from time to time, to the extent not prohibited
by law.
Limitations on Obligations and Liabilities
The deposit agreement limits the Company's obligations and the depositary
bank's obligations to holders. The following should be noted:
o The Company and the depositary bank are only obligated to take the
actions specifically stated in the deposit agreement, and the Company
must do so without negligence or bad faith.
o The depositary bank disclaims any liability for any failure to carry
out voting instructions, for any manner in which a vote is cast and
the effect of any vote, provided it acts in good faith and in
accordance with the terms of the deposit agreement.
o The depositary bank disclaims any liability for any failure to
determine the lawfulness or practicality of any action, for the
content of any document forwarded to holders on the Company's behalf
or for the accuracy of any translation of such a document, for the
investment risks associated with investing in the UPC Ordinary Shares
A, for the validity or worth of the UPC Ordinary Shares A, for any tax
consequences that result from the ownership of UPC ADSs, for the
creditworthiness of any third party, for allowing any rights to lapse
under the terms of the deposit agreement, for the timeliness of any of
the Company's notices and for the Company's failure to give notice.
o The Company and the depositary bank will not be obligated to perform
any act that is inconsistent with the terms of the deposit agreement.
o The Company and the depositary bank disclaim any liability if the
Company is prevented or forbidden from acting on account of any law or
regulation, any provision of the Company's articles of association,
any provision of any securities on deposit or by reason of any act of
God, war or other circumstances beyond the Company's control.
o The Company and the depositary bank disclaim any liability by reason
of any exercise of, or failure to exercise, any discretion provided
for in the deposit agreement, in the Company's articles of association
or in any provisions of securities on deposit.
o The Company and the depositary bank disclaim any liability for any
action or inaction in reliance on the advice or information received
from legal counsel, accountants, any person presenting UPC Ordinary
Shares A for deposit, any holder of UPC ADSs or authorized
representative thereof, or any other person believed in good faith by
either the Company or the depositary bank to be competent to give such
advice or information.
o The Company and the depositary bank disclaim liability for the
inability of a holder to benefit from any distribution, offering,
right or other benefit which is made available to holders of the
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UPC Ordinary Shares A but is not, under the terms of the deposit
agreement, made available to holders of UPC ADSs.
o The Company and the depositary bank may rely without any liability
upon any written notice, request or other document which the Company
believes to be genuine and to have been signed or presented by the
proper parties.
Listing and Trading of UPC Ordinary Shares A and UPC ADSs
The UPC Ordinary Shares A trade on Euronext. As of September 30, 2001, the
Company had negative shareholders' equity. As a result, on November 14, 2001,
Euronext announced that the UPC Ordinary Shares A were placed in Euronext's
"penalty bench" (strafbankje) until such time that the Company returns to
positive shareholders' equity. Since the UPC Ordinary Shares A remained in the
"penalty bench" for more than three months, they were removed from the AEX Index
on February 14, 2002. Removal of the UPC Ordinary Shares A from the AEX Index
did not, however, result in a delisting of the UPC Ordinary Shares A from
Euronext. The high and low closing sales prices of the UPC Ordinary Shares A
were (euro)0.14 and (euro)0.05, respectively, in the six months ended December
19, 2002. The closing price of the UPC Ordinary Shares A on December 19, 2002
was (euro)0.08 per share.
The UPC ADSs ceased to trade on the NASDAQ National Market on May 24, 2002
and are currently traded on the OTC BB under the symbol "UPCOY.OB." The high and
low bid closing quotations on the OTC BB market of the UPC ADSs were US$0.15 and
US$0.04, respectively, in the period from May 24, 2002 to December 19, 2002. The
reported closing bid quotation of the UPC ADSs on December 19, 2002 was US$0.05
per UPC ADS.
The Company does not intend to seek a relisting of the UPC Ordinary Shares
A on NASDAQ or to seek a listing of the UPC Ordinary Shares A on any other U.S.
national securities exchange.
Capital Stock of the Company after the Restructuring
After effectiveness of the First, Second and Third Amendments and after
completion of the Restructuring, the authorized capital stock of the Company
will consist of
(i) 450,000,000 UPC Ordinary Shares A, par value (euro)0.02 per share;
(ii) 50,000,000,000 UPC Ordinary Shares C, par value (euro)0.02 per share;
and
(iii) 300 UPC Priority Shares, par value (euro)0.02 per share.
The following is a brief description of the UPC Ordinary Shares A and C and
UPC Priority Shares:
UPC Ordinary Shares A
Upon effectiveness of the First Amendment, holders of UPC Ordinary Shares A
will only be entitled to one vote per share. After effectiveness of the Third
Amendment (including delisting of the UPC Ordinary Shares A from Euronext) and
after completion of the Restructuring, holders of UPC Ordinary Shares A will
only be authorized to exercise their rights upon delivery of share certificates
and such UPC Ordinary Shares A will only be transferable with the approval of
the Company's Board of Management. Other than the changes set forth in the
preceding three sentences, there will be no material changes in the rights of
UPC Ordinary Shares A.
UPC Ordinary Shares C
General
After effectiveness of the Second Amendment and after completion of the
Restructuring, the Company will have an additional class of ordinary shares: UPC
Ordinary Shares C. The UPC Ordinary Shares C will have similar rights to the UPC
Ordinary Shares A. The UPC Ordinary Shares C will be registered shares and will
only be transferable with the approval of the Company's Board of Management.
Holders of registered UPC Ordinary Shares
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C will be entered in the Company's shareholders register and share certificates
will not be issued. At the request of a registered shareholder, the Company
will, without fee, issue a non-negotiable extract from the shareholders register
in the name of the holder. A deed of transfer, together with the Company's
acknowledgment in writing, will be required to transfer registered shares.
Dividends
Each UPC Ordinary Share C will be entitled to the same amount of dividend
as each UPC Ordinary Share A if one is declared in proportion to their
respective par value. The Company may not pay a dividend to holders of UPC
Ordinary Shares C without paying the same dividend to holders of Ordinary Shares
A.
Voting Rights
All UPC Ordinary Shares C will vote together with all UPC Ordinary Shares A
and all UPC Priority Shares on all matters presented at a general meeting of
shareholders. Each UPC Ordinary Share C will represent the right to cast one
vote at a general meeting of shareholders.
UPC Priority Shares
Upon effectiveness of the First Amendment, holders of UPC Priority Shares
will only be entitled to one vote per share.
After effectiveness of the Third Amendment and after completion of the
Restructuring, the holder of the UPC Priority Shares will have certain specific
rights and powers over the Company, including
o the right to determine the number of members of the Company's Board of
Management;
o the right to designate one of the members of the Company's Board of
Management as president and one of the members of the Company's Board
of Management as chief executive officer (only if the Company's Board
of Management is constituted by two or more members); and
o the right to establish remuneration and other conditions of employment
for members of the Company's Board of Management.
UPC Priority Shares can only be transferred with the approval of the
Company's Board of Management. Other than the changes set forth in the preceding
two paragraphs, there will be no material changes in the rights of the UPC
Priority Shares.
Delisting of UPC Ordinary Shares A
After completion of the Restructuring, the Company intends to seek approval
from Euronext for the termination of the listing of the Ordinary Shares A on
Euronext. See "Risk Factors--Risks Related to Ownership of UPC Ordinary Shares A
upon Completion of the Restructuring."
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NEW UPC
General
New UPC was incorporated by UGC in the State of Delaware on September 13,
2002 as a corporation with limited liability. As of the Petition Date, New UPC
is a wholly-owned subsidiary of UGC. New UPC, which will become the holding
company for the Company and the UPC Group upon consummation of the
Restructuring, is an integral component of the Plan and was formed to effectuate
the Restructuring through the issuance of shares of New UPC Common Stock to the
Holders of the Claims against, and Equity Interests in, the Company under the
terms of the Plan, the Akkoord and the Dutch Implementing Offer. New UPC has not
conducted any operations to date other than the negotiation and implementation
of the Restructuring Agreement and in connection with implementing the
Restructuring. Upon consummation of the Restructuring, New UPC is expected to
own more than 99% of the outstanding UPC Ordinary Shares and act as the holding
company for the UPC Group. For a description of the share capital of New UPC,
see " -- Description of Shares of New UPC Capital Stock."
The statutory purpose of New UPC is to engage in any lawful act or activity
for which a cooperation may be organized under the DGCL as set out in the third
section of its Certificate of Incorporation. The registered office of New UPC is
located at 1209 Orange Street, Wilmington, Delaware 19801. The executive office
of New UPC is located at 4643 South Ulster Street, 13th Floor, Denver, Colorado
80237.
Description of Shares of New UPC Capital Stock
As of the Petition Date, the authorized share capital of New UPC consists
of 1,000 shares of New UPC Common Stock, par value US$0.01 per share, of which
1,000 shares are issued and outstanding and are held by UGC. All outstanding
shares of New UPC Common Stock are, and the New UPC Common Stock to be
outstanding upon completion of the Restructuring will be, fully paid and
nonassessable.
On the Effective Date, New UPC's authorized capital stock shall consist of:
o 250,000,000 shares of New UPC Common Stock; and
o 50,000,000 shares of preferred stock, all US$0.01 par value per share.
On the date of this Disclosure Statement, New UPC does not hold any shares
of New UPC Common Stock as treasury stock.
Common Stock
Each holder of New UPC Common Stock is entitled to one vote for each share
owned of record on all matters submitted to a vote of the shareholders,
including the election of directors. There are no cumulative voting rights.
Holders of New UPC Common Stock are entitled to receive ratably dividends, if
any, whether payable in cash or otherwise, as may be declared from time to time
by the Board of Directors of New UPC out of legally available funds. Upon a
liquidation, dissolution or winding up of New UPC and after payment of all prior
claims of New UPC, the holders of New UPC Common Stock will be entitled to share
ratably in the net assets legally available for distribution to shareholders
after the payment of all of the debts and other liabilities of New UPC.
On the Effective Date, New UPC's Certificate of Incorporation will provide
that holders of shares of New UPC Common Stock will have pre-emptive rights (the
"Pre-emptive Rights") for the first (euro)1,538.46 million (as determined in
good faith by New UPC's Board of Directors as of the date of each such issuance)
of capital stock or securities convertible into, exchangeable for, or otherwise
linked to any capital stock of New UPC issued by New UPC after the Effective
Date for cash or in exchange for assets (or other consideration) acquired from a
Related Party (as defined herein) of New UPC. The Pre-emptive Rights will
provide that, subject to any approvals required by the New UPC By-Laws, if New
UPC issues shares of New UPC Common Stock in exchange for assets (or other
consideration) acquired from a Related Party of New UPC, the holders of New UPC
Common Stock will have the right to subscribe for additional shares of New UPC
Common Stock on a pro rata basis for cash at the same fair market value as the
assets (or other consideration) received for such shares of New UPC Common
Stock. The Pre-emptive Rights will not be separable from the New UPC Common
Stock and will expire on the fourth anniversary of
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the Effective Date. After the exercise or termination of the Pre-emptive Rights,
holders of New UPC Common Stock will have no rights to purchase or subscribe for
securities of New UPC.
New UPC's Certificate of Incorporation and By-laws will define a "Related
Party" to mean, with respect to any Person (the "First Person"), (1) any other
Person (the "Second Person") having beneficial ownership of 40% or more of the
Voting Securities (as defined in New UPC's Certificate of Incorporation as
discussed below) of such First Person and (2) any other Person, 40% or more of
whose voting securities are owned, controlled or held with power to vote,
directly or indirectly, by that Second Person.
New UPC's Certificate of Incorporation and By-laws will define "Voting
Securities" to mean, with respect to any Person, any equity interest of such
Person having general voting power under ordinary circumstances to participate
in the election of a majority of the governing body of such Person (irrespective
of whether at the time any other class of equity interest of such Person shall
have or might have voting power by reason of the happening of any contingency).
The shares of New UPC Common Stock will be issued in electronic form
through the book-entry facilities of DTC or, in certain circumstances, in
registered physical form on the Effective Date and delivered by mail on the
Initial Distribution Date. For those shares issued through the book-entry
facilities of DTC, the securities will be issued as fully registered securities
registered in the name of Cede & Co. (DTC's partnership nominee) and one fully
registered security certificate will be issued for such shares and will be
deposited with DTC. For those shares held in registered physical form, the names
and addresses of holders of the shares of New UPC Common Stock will be entered
in the shareholders' register for such class of shares which is maintained by a
transfer agent for New UPC. Such register will also include the number of shares
held by each shareholder and the class and number of their shares.
Preferred Stock
On the Effective Date, New UPC will be authorized to issue 50,000,000
shares of preferred stock. New UPC's Board of Directors will be authorized,
without any further action by the stockholders, to determine the following for
any unissued series of preferred stock:
o voting rights;
o dividend rights;
o dividend rates;
o liquidation preferences;
o redemption provisions;
o sinking fund terms;
o conversion or exchange rights;
o the number of shares in the series; and
o other rights, preferences, privileges and restrictions.
In addition, the New UPC preferred stock could have other rights, including
economic rights senior to the New UPC Common Stock, so that the issuance of the
New UPC preferred stock could adversely affect the market value of the New UPC
Common Stock.
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Certificate of Incorporation and By-laws
On the Effective Date, New UPC's Certificate of Incorporation or By-laws
will provide:
o for a classified Board of Directors for a period beginning on the
Effective Date and ending on the third anniversary of the Effective
Date;
-- Classes I and II will each consist of four (4) members;
-- Class III will consist of two (2) members (the "Class III
Directors");
o the Class III Directors will serve for a three year term;
o that, for a period beginning on the Effective Date and ending on the
third anniversary of the Effective Date, nominations to fill vacancies
in the Class III Directors will be made by the remaining Class III
Director, if any, and will be approved by a majority of the Board of
Directors;
o that the stockholders may take action by written consent;
o that, except for the directors in office on the Effective Date, all
directors will be removable by the stockholders with or without cause;
o that, except as specified below with respect to provision relating to
the Related Party Transaction Committee as described below, New UPC's
stockholders may adopt, amend or repeal the By-laws only with the
approval of holders of at least 66 2/3% of the voting power;
o that special meetings of stockholders generally can be called only by
the Board of Directors; and
o for an advance notice procedure for the nomination, other than by the
Board of Directors or a committee of the Board of Directors, of
candidates for election as directors as well as for other stockholder
proposals to be considered at annual meetings of stockholders. In
general, New UPC must receive notice of intent to nominate a director
or raise business at meetings not less than 90 nor more than 120 days
before the meeting, and such notice must contain certain information
concerning the person to be nominated or the matters to be brought
before the meeting and concerning the stockholder submitting the
proposal. The affirmative vote of the holders of at least 66 2/3% of
the voting power is required to amend or repeal these provisions or to
provide for cumulative voting.
Related Party Transaction Committee
For a period beginning on the Effective Date and ending on the third
anniversary of the Effective Date, New UPC's Certificate of Incorporation and
By-laws will to the extent consistent with the rules of NASDAQ, establish a five
(5) member committee with authority to approve related party transactions (the
"Related Party Transaction Committee"). The Related Party Transaction Committee
will consist of the two (2) Class III directors and three (3) of the Class I and
Class II directors, as appointed by a majority of the full Board of Directors.
New UPC will not enter into any Related Party Transaction (as defined herein),
if that Related Party Transaction is not approved by four (4) of the five (5)
members of the Related Party Transaction Committee. Notwithstanding the
foregoing, if the Related Party Transaction Committee does not approve a
proposed Related Party Transaction, a majority of the full Board of Directors
can submit the Related Party Transaction to New UPC's stockholders. If a
majority of New UPC's stockholders, including a majority of the Disinterested
Stockholders (as defined herein), voting with respect to such Related Party
Transaction, New UPC will be able to enter into the Related Party Transaction.
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New UPC's By-laws will define a "Related Party Transaction" as a
transaction by New UPC or the Company with persons (other than subsidiaries of
New UPC) that, at the time of determination, are Related Parties of New UPC and
which transaction has an aggregate value of greater than US$10 million per year,
but excluding
(i) performance of transactions in existence on the date of the
Restructuring Agreement that have been disclosed in the Company's
reports filed with the SEC,
(ii) completion of transactions described in the Disclosure Letter to the
Restructuring Agreement,
(iii) transactions (including, but not limited to, renewals or replacements
of existing transactions) that are consistent with the Company's or
its subsidiaries' past practices, which past practices were disclosed
in the Company's reports filed with the SEC and
(iv) to the extent such transactions would otherwise constitute Related
Party Transactions and are not described in clause (i), (ii) or
(iii), transactions with respect to programming contracts (including,
but not limited to, renewals or replacements of existing
transactions) with any of Liberty Media, its affiliates and/or its
subsidiaries, that, in the case of this clause (iv), (a) are entered
into in the ordinary course of business on commercially reasonable
terms and (b) are consistent with the Company's or its subsidiaries'
past practices.
New UPC's By-laws will define a "Disinterested Stockholder" as, at any time
of determination, with respect to any proposed Related Party Transaction, a
stockholder of New UPC that neither (a) is a Related Party of New UPC or (b) has
a financial interest in the proposed Related Party Transaction that is
materially different from New UPC's stockholders generally.
New UPC's Certificate of Incorporation and By-Laws will provide that, for a
period beginning on the Effective Date and ending on the third anniversary of
the Effective Date, the provisions of New UPC's Certificate of Incorporation and
By-Laws relating to the Related Party Transaction Committee will not be amended
unless, prior to such amendment, the proposed amendment is approved by four (4)
of the five (5) members of the Related Party Transaction Committee.
Certificate of Incorporation Provisions Relating to Corporate Opportunities and
Interested Directors
In order to address potential conflicts of interest between New UPC and its
affiliates, on the one hand, and UGC and its affiliates, on the other hand, New
UPC's Certificate of Incorporation will contain provisions regulating and
defining the conduct of New UPC's and its affiliates' affairs as they may
involve UGC, its affiliates, and its officers and directors, and New UPC's
powers, rights, duties and liabilities and those of New UPC's officers,
directors and shareholders in connection with New UPC's relationship with UGC
and its affiliates. In general, these provisions recognize that New UPC and its
affiliates, on the one hand, and UGC and its affiliates, on the other hand, may
engage in the same or similar business activities and lines of business, have an
interest in the same areas of corporate opportunities and that New UPC and its
affiliates, one hand, and UGC and its affiliates, on the other hand, will
continue to have contractual and business relations with each other, including
service of officers and directors of UGC and its affiliates serving as New UPC's
directors.
New UPC's Certificate of Incorporation will provide that, subject to any
contractual provision to the contrary, UGC and its affiliates will have no duty
to refrain from:
o engaging in the same or similar business activities or lines of
business as New UPC and its affiliates,
o doing business with any of New UPC's and its affiliates' clients or
customers, or
o employing or otherwise engaging any of New UPC's and its affiliates'
officers or employees.
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New UPC's Certificate of Incorporation will provide that neither UGC, its
affiliates, nor any officer or director of UGC or its affiliates, except as
described in the following paragraph, will be liable to New UPC or New UPC's
stockholders for breach of any fiduciary duty by reason of any such activities.
New UPC's Certificate of Incorporation will provide that UGC and its affiliates
are not under any duty to present any corporate opportunity to New UPC which may
be a corporate opportunity for UGC or any of its affiliates, on the one hand,
and New UPC, on the other hand, and UGC and its affiliates will not be liable to
New UPC or New UPC's stockholders for breach of any fiduciary duty as New UPC's
stockholder by reason of the fact that UGC or its affiliates pursues or acquires
that corporate opportunity for itself or themselves, directs that corporate
opportunity to another person or does not present that corporate opportunity to
New UPC or its affiliates.
When one of New UPC's directors or officers who is also a director or
officer of UGC or any of its affiliates learns of a potential transaction or
matter that may be a corporate opportunity for both New UPC and UGC or any of
their respective affiliates, New UPC's Certificate of Incorporation will provide
that the director or officer:
o will have fully satisfied his or her fiduciary duties to New UPC and
New UPC's stockholders with respect to that corporate opportunity,
o will not be liable to New UPC or New UPC's shareholders for breach of
fiduciary duty by reason of UGC's or its affiliates' actions with
respect to that corporate opportunity,
o will be deemed to have acted in good faith and in a manner he or she
believed to be in, and not opposed to, New UPC's and its stockholders'
best interests for purposes of New UPC's Certificate of Incorporation,
and
o will be deemed not to have breached his or her duty of loyalty to New
UPC or New UPC's stockholders and not to have derived an improper
personal benefit therefrom for purposes of New UPC's Certificate of
Incorporation,
if he or she acts in good faith in a manner consistent with the following
policy: a corporate opportunity offered to any of New UPC's or any of its
affiliates' officers or directors who is also an officer or director of UGC or
any of its affiliates will belong to New UPC or New UPC's affiliate, as
applicable, only if such opportunity is expressly offered to that person solely
in his or her capacity as a director or officer of New UPC or its affiliate.
For purposes of New UPC's Certificate of Incorporation, "corporate
opportunities" include business opportunities that New UPC is financially able
to undertake, that are, from their nature, in New UPC's line of business, are of
practical advantage to New UPC and are ones in which New UPC has an interest or
a reasonable expectancy, and in which, by embracing the opportunities, the
self-interest of UGC, its affiliates or its officers or directors will be
brought into conflict with New UPC's self-interest.
New UPC's Certificate of Incorporation will also authorize New UPC and its
affiliates, on the one hand, to enter into contracts, agreements, arrangements
or transactions between New UPC or its affiliates, on the one hand, and UGC or
its affiliates, on the other hand. Subject to the policy described above, except
as otherwise required by law, and except as UGC or their affiliates, on the one
hand, and New UPC or its affiliates, on the other hand, may otherwise agree in
writing, no such agreement, or the performance thereof by New UPC and its
affiliates, or UGC and its affiliates, shall be considered contrary to any
fiduciary duty of any director or officer of New UPC who is also a director,
officer or employee of UGC or any of its affiliates, or to any stockholder
thereof. Subject to the policy described above, to the fullest extent permitted
by law, and except as UGC or its affiliates, on the one hand, and New UPC or its
affiliates, on the other hand, may otherwise agree in writing, none of UGC or
any of its affiliates shall have or be under any fiduciary duty to refrain from
entering into any agreement or participating in any transaction referred to
above and no director, officer or employee of New UPC who is also a director,
officer or employee of UGC or any of its affiliates shall have or be under any
fiduciary duty to New UPC to refrain from acting on behalf of New UPC or of any
of UGC or any of its affiliates in respect of any such agreement or transaction
or performing any such agreement in accordance with its terms.
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Any person purchasing or otherwise acquiring any interest in any shares of
New UPC's capital stock will be deemed to have consented to these provisions of
New UPC's Certificate of Incorporation.
Until the time that UGC ceases to be entitled to 20% or more of the votes
entitled to be cast, the affirmative vote of the holders of 80% of the votes
entitled to be cast is required to alter, amend or repeal, or adopt any
provision inconsistent with the corporate opportunity and interested director
provisions described above; however, after UGC no longer beneficially owns
shares entitling it to cast 20% of the votes entitled to be cast by the then
outstanding common stock, any such alteration, adoption, amendment or repeal
would be approved if a quorum is present and the votes favoring the action
exceed the votes opposing it. Accordingly, until such time, so long as UGC
controls at least 20% of the votes entitled to be cast, it can prevent any such
alteration, adoption, amendment or repeal.
Management of New UPC
New UPC's Board of Directors consists of the following two members as of
the date of this Disclosure Statement:
Gene W. Schneider Chairman of the Board of Directors
Michael T. Fries Director
New UPC's business and affairs are managed by New UPC's officers, under the
direction of New UPC's Board of Directors. New UPC's officers currently consist
of:
Gene W. Schneider Chief Executive Officer
Michael T. Fries President
Valerie L. Cover Vice-President/Secretary
Gene W. Schneider became Chairman and Chief Executive Officer of UGC at its
inception in February 2001. Mr. Schneider has served as Chairman of UGC Holdings
since May 1989 and has served as Chief Executive Officer of that company since
1995. He also serves as an officer and/or director of various direct and
indirect subsidiaries of UGC, including a director of United Latin America since
1998 and an advisor to the Supervisory Board of the Company since 1999. In
addition, from 1995 until 1999, Mr. Schneider served as a member of the
Company's Supervisory Board. Mr. Schneider has been with UGC and UGC Holdings
since their inception in 2001 and 1989, respectively. Mr. Schneider is also the
Chairman of the Board for Advance Display Technologies, Inc. and a director of
Austar United.
Michael T. Fries became President and a director of UGC in February 2001,
and Chief Operating Officer of UGC in September 2001. Mr. Fries has also served
as a director of UGC Holdings since November 1999 and as President and Chief
Operating Officer of that company since September 1998. In March 2002, Mr. Fries
became a member of the Office of the Chairman for UGC and for UGC Holdings. In
addition, he serves as an officer and/or director of various direct and indirect
subsidiaries of UGC, including as a member of the Company's Supervisory Board
since September 1998 and as Chairman thereof since February 1999; a member of
the Priority Telecom Supervisory Board since November 2000; and President of
United Latin America since 1998 and a director thereof since 1999. Through these
positions, Mr. Fries is responsible for overseeing the day-to-day operations of
UGC on a global basis and for the development of UGC's business opportunities
worldwide. Mr. Fries has been with UGC since its inception and with UGC Holdings
since 1990. Mr. Fries is also the Executive Chairman of Austar United.
Valerie L. Cover became Vice President of UGC in February 2001 and
Controller of UGC in September 2001. She has also served as the Controller for
UGC Holdings since October 1990, and as a Vice President of UGC Holdings since
December 1996. Ms. Cover is responsible for the accounting, financial reporting
and information technology functions of UGC and UGC Holdings. In addition, Ms.
Cover is an officer and/or director of various direct and indirect subsidiaries
of UGC. Ms. Cover has been with UGC Holdings since 1990, and with UGC since
inception.
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New UPC's directors and officers currently receive no compensation from New
UPC and New UPC has not made any loans to any of these officers or directors or
guaranteed any loans to these officers or directors.
On or prior to the Effective Date, New UPC's Certificate of Incorporation
and By-laws will be amended to provide that for a period beginning on the
Effective Date and continuing until the third anniversary of the Effective Date,
New UPC's Board of Directors will consist of ten (10) members. See "New
UPC--Certificate of Incorporation and By-laws." In addition to Mr. Gene
Schneider and Mr. Fries, it is expected that New UPC's Board of Directors will
consist of Richard de Lange, John W. Dick, Ellen P. Spangler, Tina M. Wildes,
Mark L. Schneider, John F. Riordan and two other members who will comprise the
Class III Directors. The identity of the members of the Board of Directors will
be filed with the U.S. Bankruptcy Court on or prior to the Document Filing Date.
See "New UPC--Certificate of Incorporation and By-laws" and "New UPC--Related
Party Transaction Committee." On or after the Effective Date, New UPC's Board of
Directors will determine the compensation of members of New UPC's Board of
Directors.
On and after the Effective Date, New UPC expects that its business and
affairs will be managed by its officers, under the direction of its Board of
Directors. These officers will be appointed by New UPC's Board of Directors. New
UPC expects that on the Effective Date these officers will include Mr. Gene
Schneider, Mr. Fries, Mr. Riordan, Mr. Mark Schneider and the other current
members of the Company's Board of Management (upon the resignation of such
members of the Company's Board of Management from the Company's Board of
Management as a result of the appointment of New UPC as sole managing director
of the Company under the Third Amendment). It is expected that certain of these
officers will comprise an executive management committee. On or after the
Effective Date, New UPC's Board of Directors may appoint additional officers,
some of which may be members of this management committee. New UPC's Board of
Directors shall determine the compensation of its officers.
Delaware General Corporation Law, Section 203
New UPC has elected not to be governed by Section 203 of the DGCL.
Issuance and Resale of the New UPC Common Stock
The Company and New UPC are relying on Section 1145 of the U.S. Bankruptcy
Code to exempt the issuance of the New UPC Common Stock from the registration
requirements of the U.S. Securities Act (and of any state securities or "blue
sky" laws). Section 1145 exempts from registration the sale of the securities of
a debtor, a successor to a debtor or an affiliate of a debtor under a Chapter 11
plan if such securities are offered or sold in exchange for a claim against, an
equity interest in, or a claim for an administrative expense in a case
concerning, such debtor. In reliance upon this exemption, (i) the shares of New
UPC Common Stock issued upon exchange of the Allowed Claims against, and Allowed
Equity Interests in, the Company, (ii) the New UPC Equity Purchase Rights and
(iii) the shares issued upon exercise of the New UPC Equity Purchase Rights,
including any Subscription Reserve Shares, generally will be exempt from the
registration requirements of the U.S. Securities Act. Accordingly, recipients
will be able to resell the shares of New UPC Common Stock (including the shares
of New UPC Common Stock issued upon exercise of the New UPC Equity Purchase
Rights) without registration under the U.S. Securities Act or other federal
securities laws, unless the recipient is an "underwriter" with respect to such
securities, within the meaning of Section 1145(b) of the U.S. Bankruptcy Code.
Section 1145(b) of the U.S. Bankruptcy Code defines an "underwriter" for
purposes of the U.S. Securities Act as one who
(i) purchases a claim, equity interest or administrative expense claim
with a view to distribution of any security to be received in exchange
for the claim or equity interest,
(ii) offers to sell securities issued under a plan for the holders of such
securities,
(iii)offers to buy securities issued under a plan from persons receiving
such securities, if the offer to buy is made with a view to
distribution, or
(iv) is a control person of the issuer of the securities.
Notwithstanding the foregoing, statutory underwriters may be able to sell
securities without registration pursuant to the resale limitations of Rule 144
under the U.S. Securities Act, which, in effect, permits the resale of
securities received by statutory
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underwriters pursuant to a Chapter 11 plan, subject to applicable volume
limitations, notice and manner of sale requirements, and certain other
conditions. Parties who believe they may be statutory underwriters as defined in
Section 1145 of the U.S. Bankruptcy Code are advised to consult with their own
counsel as to the availability of the exemption provided by Rule 144 under the
U.S. Securities Act.
Because of the complex, subjective nature of the question of whether a
particular holder may be an underwriter, neither the Company nor New UPC makes
any representation concerning the ability of any person to dispose of the shares
of New UPC Common Stock to be distributed under the Plan or the Dutch
Implementing Offer and to be issued upon exercise of the New UPC Equity Purchase
Rights.
In The Netherlands, this Disclosure Statement serves as a prospectus as
referred to in Article 3(2)(b) of the Dutch Securities Act 1995.
Stockholders Agreement
The following is a summary of the significant terms of the Stockholders
Agreement. The summary set forth below does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the detailed
provisions of the Stockholders Agreement.
Tag-Along Rights For Holders of Class 5 Claims
The Stockholders Agreement provides the Holders of Class 5 Claims with
certain rights (the "Tag-Along Rights") for the sale of their shares of New UPC
Common Stock in the event that members of the UGC Group propose to sell 5% or
more of the outstanding shares of New UPC Common Stock. The Tag-Along Rights
will be available to any Holder of Class 5 Claims that agrees to become party to
the Stockholders Agreement on or prior to the Effective Date (a "Participating
Stockholder").
Tag-Along Sale
If all previous sales of New UPC Common Stock made by the UGC Group after
the Effective Date would, together with any proposed sales, result in the
transfer of at least 5% of the outstanding shares of New UPC Common Stock (such
sale being referred to as a "Tag-Along Sale"), then the UGC Group will afford
each of the Participating Stockholders holding one-half of one percent (1/2%) or
more of the outstanding shares of New UPC Common Stock (the "Tag-Along
Stockholders") the opportunity to participate proportionately in the Tag-Along
Sale. Under the Stockholders Agreement, a Tag-Along Sale will not include:
(i) any sale or other disposition of shares of New UPC Common Stock by and
exclusively among the UGC Group, subsidiaries of UGC and affiliates of
UGC (provided that the transferee agrees to be bound by the terms of
the Stockholders Agreement) or
(ii) pro rata distributions of shares of New UPC Common Stock to the
shareholders of UGC.
The number of shares of New UPC Common Stock that each Tag-Along
Stockholder will be entitled to include in the Tag-Along Sale (the "Tag-Along
Allotment") will be determined by multiplying
(i) the number of shares of New UPC Common Stock held by the Tag-Along
Stockholder on the date of the Stockholders Agreement and that such
Tag-Along Stockholder held as of the close of business on the day
immediately prior to the Tag-Along Notice Date (as defined herein) by
(ii) a fraction, the numerator of which will be equal to the number of
shares of New UPC Common Stock proposed by the UGC Group members to be
sold or otherwise disposed of in the Tag-Along Sale and the
denominator of which will be equal to the total number of shares of
New UPC Common Stock that are beneficially owned by the UGC Group as
of the close of business on the day immediately prior to the Tag-Along
Notice Date (the "Common Shares UGC Fraction").
Tag-Along Sale Notice
The UGC Group will provide each Tag-Along Stockholder and New UPC with
written notice (the "Tag-Along Sale Notice") not more than 60 days and not less
than 15 days prior to the proposed date of the Tag-
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Along Sale (the "Tag-Along Sale Date"). Each Tag-Along Sale Notice is required
to be accompanied by a copy of any written agreement relating to the Tag-Along
Sale and set forth the following information:
(i) the name and address of each proposed transferee of shares of New UPC
Common Stock in the Tag-Along Sale;
(ii) the number of shares of New UPC Common Stock proposed to be
transferred by the UGC Group;
(iii)the proposed amount and form of consideration (including any potential
adjustments to the consideration paid for the shares of New UPC Common
Stock contained in the written agreement relating to the Tag-Along
Sale) to be paid for the shares of New UPC Common Stock and the terms
and conditions of payment offered by each proposed transferee;
(iv) the aggregate number of shares of New UPC Common Stock held of record
by the UGC Group as of the close of business on the day immediately
prior to the date of the Tag-Along Notice (the "Tag-Along Notice
Date");
(v) Common Shares UGC Fraction;
(vi) confirmation that the proposed transferee has been informed of the
Tag-Along Rights and has agreed to purchase shares of New UPC Common
Stock from any Tag-Along Stockholder in accordance with the terms of
the Stockholders Agreement; and
(vii)the Tag-Along Sale Date.
Tag-Along Notice
Under the Stockholders Agreement, any Tag-Along Stockholder wishing to
participate in the Tag-Along Sale is required to provide written notice (the
"Tag-Along Notice") to the UGC Group no more than ten days after the Tag-Along
Sale Notice is given. The Tag-Along Notice is required to set forth (i) the
aggregate number of shares of New UPC Common Stock held of record by such
Tag-Along Stockholder as of the close of business on the day immediately prior
to the Tag-Along Notice Date and (ii) the number of shares that the Tag-Along
Stockholder elects to include in the Tag-Along Sale, which cannot exceed the
Tag-Along Stockholder's applicable Tag-Along Allotment. The Tag-Along Notice
given by any Tag-Along Stockholder will constitute that Tag-Along Stockholder's
binding agreement to sell the shares of New UPC Common Stock specified in the
Tag-Along Notice on the terms and conditions applicable to the Tag-Along Sale.
In the event that there is any material change in the terms and conditions
of the Tag-Along Sale applicable to the Tag-Along Stockholder (including any
decrease in the purchase price that occurs other than pursuant to an adjustment
mechanism set forth in the agreement relating to the Tag-Along Sale but
expressly not including a reduction in the number of shares to be purchased)
after the Tag-Along Stockholder gives its Tag-Along Notice, then the Tag-Along
Stockholder will have the right to withdraw from participation in the Tag-Along
Sale with respect to all of its Shares affected by the change.
If the proposed transferee does not purchase all of the shares of New UPC
Common Stock requested to be included in the Tag-Along Sale by any Tag-Along
Stockholder on the same terms and conditions applicable to the UGC Group, then
the UGC Group will not consummate the Tag-Along Sale of any of its shares of New
UPC Common Stock to the transferee, unless the shares of the UGC Group and the
Tag-Along Stockholders to be sold are reduced or limited pro rata in proportion
to the respective number of shares of New UPC Common Stock actually sold in any
such Tag-Along Sale and all other terms and conditions of the Tag-Along Sale are
the same for the UGC Group and the Tag-Along Stockholders. If the number of
shares of New UPC Common Stock proposed to be sold in any proposed Tag-Along
Sale are reduced or limited such that the proposed sale is no longer a Tag-Along
Sale in accordance with the terms of the Stockholders Agreement, the terms of
the Stockholders Agreement will be inapplicable to the proposed sale and no
Participating Noteholder or other stockholder will have the right to participate
in the proposed transaction as a Tag-Along Stockholder.
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Non-delivery of Tag-Along Notice
Under the Stockholders Agreement, if a Tag-Along Notice from any Tag-Along
Stockholder is not received by the UGC Group within the ten day period specified
above, the UGC Group will have the right to consummate the Tag-Along Sale
without the participation of the Tag-Along Stockholder, but only on terms and
conditions which are no more favorable in any material respect to the UGC Group
(and, in any event, at no greater a purchase price) than as stated in the
Tag-Along Sale Notice and only if the Tag-Along Sale occurs on a date within 90
days of the Tag-Along Sale Date.
If any Participating Stockholder fails to elect to participate in a
Tag-Along Sale within ten days after the Tag-Along Sale Notice is given, the UGC
Group is required to give notice of the failure to the other Tag-Along
Stockholders by telephone (confirmed in writing within two days). The other
Tag-Along Stockholders will have three days following the date the written
notice was given to agree to sell their pro rata share of any unsold portion.
For purposes of the sale, a participating Tag-Along Stockholder's pro rata share
of any unsold portion of shares of New UPC Common Stock will be equal to the
number of shares obtained by multiplying
(i) the Common Shares UGC Fraction times the total number of shares of New
UPC Common Stock that are held by the Participating Stockholders that
are not participating in the Tag-Along Sale by
(ii) the number of shares of New UPC Common Stock held by the participating
Tag-Along Stockholder(s) (divided) by the total number of shares of
New UPC Common Stock held by all Tag-Along Stockholders that are
participating in the Tag-Along Sale.
Certificates
Under the Stockholders Agreement, on the Tag-Along Sale Date, each
Tag-Along Stockholder will deliver a certificate or certificates for the shares
of New UPC Common Stock to be sold by the Tag-Along Stockholder in connection
with the Tag-Along Sale, duly endorsed for transfer with signatures guaranteed,
to the transferee in the manner and at the address indicated in the Tag-Along
Notice against delivery of the purchase price for the shares of New UPC Common
Stock.
Tag-Along Sale Agreement
The Stockholders Agreement requires that any Participating Stockholder
seeking to sell any shares of New UPC Common Stock in connection with a
Tag-Along Sale will enter into an agreement (the "Tag Along Sale Agreement")
containing substantially similar representations, warranties, indemnities and
agreements as made by the UGC Group in connection with the Tag-Along Sale, but
in no case will those representations, warranties, indemnities and agreements be
required to be made by the Participating Stockholder(s) on a joint (as opposed
to several) basis or have the potential of subjecting the Participating
Stockholder(s) to greater liability (on a proportionate basis) than the UGC
Group in connection with the Tag-Along Sale.
Agreements with the UGC Group
Registration Rights
Subject to certain limitations, the UGC Group may require New UPC to file a
registration statement under the U.S. Securities Act with respect to all or a
portion of the shares of the New UPC Common Stock owned by the UGC Group, and
New UPC is required to use its best efforts to effect such registration, subject
to certain conditions and limitations.
New UPC is not obligated to effect more than three of these demand
registrations using forms other than Form S-3. The UGC Group may demand
registration of such securities an unlimited number of times on Form S-3, except
that New UPC is not required to register its shares of New UPC Common Stock
owned by the UGC Group on Form S-3 more than once in any six-month period. The
UGC Group also has the right to have the shares of New UPC Common Stock that it
owns included in any registration statement New UPC proposes to file under the
U.S. Securities Act except that, among other conditions, the underwriters of any
such offering may limit the number of
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shares included in such registration. New UPC has also granted the UGC Group
rights comparable to those described above with respect to the listing or
qualification of the shares of New UPC Common Stock on any exchange and in any
other jurisdiction where the Company previously has taken action to permit the
public sale of its securities.
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Management Services Agreements
The UGC Group incurs certain overhead and other expenses at the corporate
level on behalf of New UPC and the Company and its other operating subsidiaries.
These expenses include costs not readily allocable among the operating
companies, such as accounting, financial reporting, investor relations, human
resources, information technology, equipment procurement and testing expenses,
corporate offices lease payments and costs associated with corporate finance
activities. The UGC Group also incurs direct costs for its operating companies
such as travel expenses and salaries for the UGC Group employees performing
services on behalf of its respective operating companies. New UPC, the Company
and the UGC Group are parties to management services agreements, with an initial
term through 2009, pursuant to which the UGC Group will continue to perform
these services for New UPC and the Company. Under the management services
agreements, New UPC and the Company will pay the UGC Group a fixed amount each
month as its portion of such unallocated expenses. The fixed amount may be
adjusted from time to time by the UGC Group to allocate these corporate level
expenses among the UGC Group's operating companies, including New UPC and the
Company, taking into account the relative size of the operating companies and
their estimated use of the UGC Group's resources. In addition, New UPC and the
Company will continue to reimburse the UGC Group for costs incurred by the UGC
Group that are directly attributable to New UPC or the Company.
Secondment Agreements
The Company and UGC Holdings, a subsidiary of UGC, are also parties to a
secondment agreement that specifies the basis upon which UGC Holdings may second
certain of its employees to the Company. UGC Holdings' secondment of employees
to the Company helps the Company attract and retain U.S. citizens and other
employees. The Company is generally responsible for all costs incurred by UGC
Holdings with respect to any seconded employee's employment and severance. UGC
Holdings may terminate a seconded employee's employment if the employee's
conduct constitutes willful misconduct that is materially injurious to UGC
Holdings.
Non-Compete Agreements
New UPC and the Company have agreed with the UGC Group that so long as the
UGC Group holds 50% or more of New UPC's outstanding common stock or the UPC
Ordinary Shares (i) the UGC Group will not pursue any video services, telephone
or internet access or content business opportunities specifically directed to
the European or Israeli markets, unless it has first presented such business
opportunity to New UPC or the Company and New UPC or the Company has elected not
to pursue such business opportunity, and (ii) New UPC and the Company will not
pursue any video services, telephone or internet access or content business
opportunities in the Kingdom of Saudi Arabia or in other markets outside of
Europe or the Middle East, including Israel, unless New UPC and the Company
first present such business opportunity to the UGC Group and the UGC Group
elects not to pursue such business opportunity. Notwithstanding the foregoing,
any party may pursue any business in the United States and its territories and
possessions without regard to activities of the other parties.
New UPC, the Company and the UGC Group have agreed that the Company will
provide audited financial statements to the UGC Group in such form and with
respect to such periods as are necessary or appropriate to permit UGC, to comply
with its reporting obligations as a publicly-traded company and that New UPC and
the Company will not change their accounting principles without UGC's prior
consent. New UPC and the Company have consented to the public disclosure by UGC
of all matters deemed necessary or appropriate by UGC, in its sole discretion,
to satisfy the disclosure obligations of UGC or any of its affiliates thereof
under the United States federal securities laws or to avoid potential liability
under such laws.
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Limited Financial History of New UPC
Since New UPC was incorporated on September 13, 2002, it has only a limited
financial history. In the period between the date of incorporation and the date
of this Disclosure Statement, New UPC has not conducted any activities other
than the negotiation and implementation of the Restructuring Agreement and has
not incurred any indebtedness. As of the date of this Disclosure Statement, the
total outstanding share capital of New UPC consists of 1,000 shares of New UPC
Common Stock, of which 1,000 shares are issued and outstanding. These shares are
held by UGC and were paid for in cash.
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COMPARISON OF RIGHTS OF SHAREHOLDINGS IN NEW UPC AND THE COMPANY
If the Plan is confirmed, the Akkoord is ratified and no longer subject to
appeal and the Dutch Implementing Offer is consummated, Holders of Equity
Interests in the Company will receive New UPC Common Stock. The rights of
holders of New UPC Common Stock will be governed by New UPC's Certificate of
Incorporation and By-laws which differ in certain material respects from the
articles of association of the Company. The following is a summary of certain
material differences between the rights of holders of shares of New UPC Common
Stock and holders of Ordinary Shares A in the Company. These differences arise
from differences between the DGCL and the Dutch Civil Code, as well as from
differences between the governing documents of the respective companies. This
summary is not, and does not purport to be, complete and does not purport to
identify all differences that may, under given situations, be material to
holders of shares of New UPC Common Stock. This summary is qualified in its
entirety by reference to the corporate laws of Delaware and The Netherlands and
the governing instruments of New UPC and the Company. This summary should be
read in conjunction with "Outstanding Securities of the Company--Capital Stock
of the Company Prior to the Restructuring," "--Capital Stock of the Company
after the Restructuring" and "New UPC--Description of Shares of New UPC Capital
Stock."
Voting Rights
Under Dutch law, each shareholder is entitled to one vote per share, unless
the articles of association of the company provide otherwise. All shareholder
resolutions are taken by an absolute majority of the votes cast, unless the law
or the articles prescribe otherwise. The validity of shareholder decisions is
not dependent on a quorum, unless the law or the articles stipulate otherwise.
The Articles of Association of the Company provide for one vote per share
of UPC Ordinary Shares B and 100 votes per share of each of UPC Ordinary Shares
A, UPC Priority Shares, UPC Preference Shares A and class B preference shares.
Generally, all resolutions may be adopted by an absolute majority of the total
votes cast, and there are no quorum requirements.
Under the DGCL, each shareholder is entitled to one vote per share of
stock, unless the certificate of incorporation provides otherwise. In addition,
the certificate of incorporation may provide for cumulative voting at all
elections of directors of the corporation. Either the certificate of
incorporation or the by-laws may specify the number of shares and/or the amount
of other securities that must be represented at a meeting in order to constitute
a quorum, but in no event will a quorum consist of less than one-third of the
shares entitled to vote at a meeting.
New UPC's Certificate of Incorporation provides for one vote per share of
New UPC Common Stock, but does not provide for cumulative voting. Under New
UPC's By-laws, the presence in person, or by properly executed proxy, of the
holders of a majority of the outstanding shares of New UPC Common Stock is
required to constitute a quorum at shareholder meetings of New UPC.
Amendment of Charter Documents
Under Dutch law, shareholders of a Dutch company may resolve to amend the
company's articles of association, although the prior approval of the Dutch
Ministry of Justice is required for any such amendment.
Under the Company's Articles of Association, the general meeting of
shareholders may pass a resolution for an amendment to the articles only upon a
proposal of United Europe, as the holder of all the outstanding UPC Priority
Shares.
Under the DGCL, amendments to a corporation's certificate of incorporation
require a resolution of the board of directors, followed by a majority vote of
the holders of the outstanding stock entitled to vote on such amendment and, in
certain circumstances, of the holders of a majority of the outstanding stock of
each class entitled to vote on such amendment as a class, unless a greater
number or proportion is specified in the certificate of incorporation or by
other provisions of the DGCL.
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New UPC's Certificate of Incorporation requires the approval of holders of
a majority of the outstanding shares of New UPC Common Stock to make, alter,
amend, change, add to or repeal New UPC's Certificate of Incorporation and the
approval of holders of 66 2/3% of the voting power to adopt, amend, alter or
repeal the By-laws.
Appraisal Rights
Dutch law does not recognize the concept of appraisal or dissenters' rights
and, accordingly, holders of the UPC Ordinary Shares A have no appraisal rights.
The DGCL provides for appraisal rights in connection with certain mergers
and consolidations. Appraisal rights are not available for any shares of stock
of the constituent corporation surviving the merger if the merger did not
require for its approval the vote of the holders of the surviving corporation.
In addition, unless otherwise provided in the charter, no appraisal rights are
available to holders of shares of any class of stock which, as of the record
date, is either: (a) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. (the "NASD") or (b) held of
record by more than 2,000 holders, unless such holders are required by the terms
of the merger to accept anything other than: (i) shares of stock of the
surviving corporation; (ii) shares of stock of another corporation which are or
will be so listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the NASD or held of
record by more than 2,000 holders; (iii) cash in lieu of fractional shares of
such stock; or (iv) any combination thereof. Holders of New UPC Common Stock are
therefore entitled to appraisal rights in the event of certain mergers and
consolidations of New UPC.
Pre-emptive Rights
Under Dutch law, holders of common shares in a Dutch company have
pre-emptive rights with respect to newly issued common shares in proportion to
the aggregate nominal value of their shareholdings (with the exception of shares
to be issued to employees and, unless the articles provide otherwise, the issue
of ordinary shares in return for non-cash consideration). Such pre-emptive
rights in respect of newly issued common shares may be excluded by approval of
the shareholders at the general meeting of shareholders. In addition, if the
authority to issue shares is delegated to another corporate body, like in the
case of the Company where this authority is delegated to the management board,
the authority to exclude the pre-emptive rights also lies with that corporate
body.
The Articles of Association of the Company conform to Dutch law and provide
that, except for issues of ordinary shares in return for non-cash consideration
and shares issued to the Company's employees or employees of any of the
Company's subsidiaries (as defined under Dutch law), holders of UPC Ordinary
Shares A have pre-emptive rights to subscribe for their pro rata amount of all
new UPC Ordinary Shares A and the UPC Preference Shares A which are convertible
into UPC Ordinary Shares A issued by the Company. These rights May be restricted
or excluded by a resolution of the Company's Board of Management subject to
approval of both the Company's Supervisory Board and United Europe, as the
holder of all outstanding UPC Priority Shares. UPC Priority Shares, UPC
Preference Shares A and class B preference shares, however, carry no pre-emptive
rights.
Under the DGCL, shareholders have no pre-emptive rights to subscribe to
additional issues of stock or to any security convertible into such stock
unless, and except to the extent that, such rights are expressly provided for in
the certificate of incorporation.
On or prior to the Effective Date, New UPC's Certificate of Incorporation
will be amended to provide that holders of shares of New UPC Common Stock will
have Pre-emptive Rights for the first (euro)1,538.46 million (as determined in
good faith by New UPC's Board of Directors as of the date of each such issuance)
of capital stock or securities convertible into, exchangeable for, or otherwise
linked to any capital stock of New UPC issued by New UPC during the four years
after the Effective Date for cash or in exchange for assets (or other
consideration) acquired from an affiliate of New UPC. See "New UPC --Description
of Shares of New UPC Capital Stock."
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Action by Written Consent of Shareholders
Under Dutch law, resolutions may be adopted by shareholders in writing
without holding a meeting of shareholders, but only if the resolution is adopted
unanimously by all shareholders entitled to vote. Therefore holders of UPC
Ordinary Shares A can only adopt a written resolution without holding a meeting
if such resolution is signed by all UPC Ordinary Shares A.
The DGCL provides that, unless otherwise provided in a corporation's
certificate of incorporation, any action that may be taken at a meeting of
shareholders may be taken without a meeting, without prior notice and without a
vote, if the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize such action at a meeting
consent in writing. New UPC's Certificate of Incorporation provides that any
action may be effected by written consent of holders of New UPC Common Stock
having not less than the minimum number of votes that would be necessary to
authorize such action at a meeting.
Shareholders' Meetings
Under Dutch law, a company must hold at least one annual general meeting,
to be held not later than six months after the end of the fiscal year. Pursuant
to the Articles of Association of the Company, other general meetings may also
be held as often as the Company's Board of Management or Supervisory Board or
United Europe, as the holder of all outstanding UPC Priority Shares, deems
necessary. In addition, pursuant to Dutch law, holders of shares of the Company
representing at least one-tenth of the issued share capital may request the
Company's Board of Management or Supervisory Board to convene a general meeting
of shareholders. If the Company's Board of Management or Supervisory Board has
not convened a meeting within a certain period, the persons who have made the
request are authorized to convene such a meeting under the specific requirements
of Dutch law. The Articles of Association of the Company specify that general
meetings of shareholders may be held only in the municipalities of Amsterdam,
Rotterdam or The Hague in The Netherlands.
Under the DGCL, an annual meeting of shareholders must be held for the
election of directors on a date and at a time designated by or in the manner
provided in the by-laws. Any other proper business may be transacted at the
annual meeting. New UPC's By-laws provide that an annual meeting of the
stockholders shall be held on the second Thursday in the month of June of each
year or on such other date as may be determined by the Board of Directors. The
annual meeting shall be held at such place, either within or outside Delaware,
as may be designated by the Board of Directors in the notice of meeting or
otherwise at the principal office of the corporation.
Management
Under Dutch law, a company can have a management board and a supervisory
board. The management board is the executive body and is responsible for the
management of the corporation and for its representation (i.e., the actions of
the corporation towards third parties). The Dutch management board combines the
functions of inside managing directors and senior officers in a U.S.
corporation. Consequently, there is no position equivalent to that of chief
executive officer. If the management board has more than one member, each can
have different responsibilities and powers. The members of the Board of
Management of the Company are set forth in "The Company--Current Management of
the Company--Board of Management."
The supervisory board is distinct from the management board and the same
persons cannot serve on both boards. The supervisory duties are not necessarily
similar to the duties of non-executive directors in a U.S. corporation. The
supervisory board has a primarily supervisory and advisory function. The
articles of association may give it more specific powers, but the supervisory
board cannot exercise executive functions. The supervisory board is not
empowered to give specific instructions to the management board, determine the
business policy of the corporation, or appoint or remove managing directors. The
precise duties and responsibilities of the supervisory board may vary, and
depend on the articles of association. The members of the Supervisory Board of
the Company are set forth in "The Company--Current Management of the
Company--Supervisory Board." The effectiveness of the Third Amendment is
contingent upon the delisting of the UPC Ordinary Shares A from Euronext. After
the Third Amendment is effective, the Company will have a one-tier board
structure and will no longer have a Supervisory Board.
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Under the DGCL, the board of directors of a corporation must consist of one
or more members. The number of directors must be fixed by, or in the manner
provided in, the by-laws, unless the certificate of incorporation fixes the
number of directors. Each director shall hold office until his or her successor
is elected and qualified or until his or her earlier resignation or removal. The
directors are elected at the annual meeting of shareholders. The directors may
be divided into one, two or three classes. On the Effective Date, New UPC's
By-laws will provide that for a period beginning on the Effective Date and
ending on the third anniversary of the Effective Date, the Board of Directors of
New UPC will be comprised of ten (10) members and will be divided into three
classes, otherwise the number of directors shall be fixed from time to time by
resolution of the Board of Directors or holders of the New UPC Common Stock.
Appointment and Removal of Management
The provisions on the appointment and removal of members of the Company's
Board of Management and Supervisory Board are set forth in the Amendment No. 1
to the Annual Report on Form 10-K for the fiscal year ended December 31, 2001,
included in this Disclosure Statement as Annex D.
The DGCL provides that vacancies and newly-created directorships may be
filled by a majority of the directors then in office (even though less than a
quorum) unless (i) otherwise provided in the certificate of incorporation or
by-laws of the corporation or (ii) the certificate of incorporation directs that
a particular class of stock is to elect such director, in which case any other
directors elected by such class, or a sole remaining director elected by such
class, shall fill such vacancy. New UPC's By-laws provide that any vacancy may
be filled by a majority of directors then in office, although less than a
quorum, or by the affirmative vote of two directors if there are only two
directors remaining, or by a sole remaining director, or by holders of the New
UPC Common Stock if there are no directors remaining.
Under the DGCL, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors, except (a) if the certificate of
incorporation provides otherwise, in the case of a corporation whose board is
classified, shareholders may effect such removal only for cause, or (b) in the
case of a corporation having cumulative voting, if less than the entire board is
to be removed, no director may be removed without cause if the votes cast
against his removal would be sufficient to elect him if then cumulatively voted
at an election of the entire board of directors, or, if there are classes of
directors, at an election of the class of directors of which he is a part. New
UPC's By-laws provide that, except as otherwise provided in New UPC's
Certificate of Incorporation, any one or more of the directors of New UPC may be
removed at any time, with or without cause, by the holders of a majority of the
outstanding shares of New UPC Common Stock. New UPC's Certificate of
Incorporation provides that, except for New UPC's directors in office on the
Effective Date, New UPC's directors can be removed, with or without cause, by
holders of a majority of the shares of New UPC Common Stock entitled to vote at
an election of directors.
Shareholder Nominations
The Articles of Association of the Company provide that United Europe, as
the holder of all outstanding UPC Priority Shares, is entitled to make binding
nominations for the appointment of members of the Board of Management and
Supervisory Board, which binding nominations may only be set aside by a
resolution of the general meeting of shareholders adopted by at least two-thirds
of the votes cast representing more than one-half of the Company's issued
nominal capital.
New UPC's By-laws have provisions on shareholder nominations for the
appointment of directors, including provisions allowing holders of New UPC
Common Stock to appoint new directors if there are no directors remaining.
Dividends
Dutch law provides that dividends may only be distributed to the extent
that net assets of the company exceed the sum of the amount of issued and
paid-up capital and reserves which must be maintained under the law or
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the articles of association of the company. Interim dividends may be declared as
provided for in the articles of association of the company and may be
distributed to the extent that the net assets requirement above is met.
Each UPC Ordinary Share A and ordinary share B is entitled to the same
amount of dividend if one is declared in proportion to their respective par
value. UPC Priority Shares are entitled to a nominal annual dividend of 5% of
their par value, to the extent distributable profits are available. UPC
Preference Shares A are paid an annual dividend, the amount or method of
determining of which will be determined at the time of their first issuance, to
the extent distributable profits are available. Class B preference shares will
be paid a cumulative annual dividend calculated on the basis of the deposit
interest rate of the European Central Bank to be applied over the paid up part
of their par value, to the extent distributable profits are available.
Under the DGCL, a Delaware corporation may pay dividends out of its surplus
(the excess of net assets over capital), or in case there is no surplus, out of
its net profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year (provided that the amount of the capital of the
corporation is not less than the aggregate amount of the capital represented by
the issued and outstanding stock of all classes having a preference upon the
distribution of assets). In determining the amount of surplus of a Delaware
corporation, the assets of the corporation, including stock of subsidiaries
owned by the corporation, must be valued at their fair market value as
determined by the board of directors, without regard to their historical book
value.
New UPC's By-laws have no specific provisions relating to the determination
of dividends for the New UPC Common Stock. Holders of New UPC Common Stock are
therefore just entitled to receive ratably dividends, if any, whether payable in
cash or otherwise, as may be declared from time to time by the Board of
Directors of New UPC out of legally available funds. Under Delaware law, the
statute of limitations for the payment of any dividends is five years. If a
beneficiary of a dividend has not collected the dividend within the applicable
statutory period, his or her dividend rights will lapse and the State of
Delaware may be entitled to the dividend.
Rights of Purchase
Under Dutch law, a company may not subscribe for newly issued shares using
its own capital. A Dutch company may, subject to certain restrictions, purchase
outstanding shares using its own capital, provided the nominal value of the
shares acquired by the company (or its subsidiaries) does not exceed 10% of the
issued share capital of the company.
Under the DGCL, a corporation may redeem or repurchase its own shares,
except that a corporation cannot generally make such a purchase or redemption if
it would cause impairment of its capital.
Limitation of Directors' Liability/Indemnification of Officers and Directors
The concept of indemnification of directors of a company for liabilities
arising from their actions as members of the management board or supervisory
board is, in principle, accepted in The Netherlands. The Articles of Association
of the Company contains a provision in this respect.
The DGCL permits a corporation to include in its certificate of
incorporation a provision eliminating or limiting a director's personal
liability to the corporation or its shareholders for monetary damages for
breaches of fiduciary duty. However, the DGCL expressly provides that the
liability of a director may not be eliminated or limited for
(i) breaches of his or her duty of loyalty to the corporation or its
shareholders,
(ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
(iii)the unlawful purchase or redemption of stock or unlawful payment of
dividends or
(iv) any transaction from which the director derived an improper personal
benefit.
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The DGCL further provides that no such provision shall eliminate or limit the
liability of a director for any act or omission occurring prior to the date when
such provision becomes effective. New UPC's Certificate of Incorporation
contains a provision eliminating director liability to the extent permitted by
the DGCL.
Generally, the DGCL permits a corporation to indemnify certain persons made
a party to any action, suit or proceeding by reason of the fact that such person
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise provided that such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation. To the extent that person has been successful
in any such matter, that person shall be indemnified against expenses actually
and reasonably incurred by him. In the case of an action by or in the right of
the corporation, no indemnification may be made in respect of any matter as to
which that person was adjudged liable to the corporation unless and only to the
extent that the Delaware Court of Chancery or the court in which the action was
brought determines that despite the adjudication of liability that person is
fairly and reasonably entitled to indemnity for proper expenses. New UPC's
Certificate of Incorporation and By-laws contain provisions permitting New UPC
to indemnify any director, officer or employee of New UPC against liability
incurred in, relating to or as a result of a proceeding by reason of the fact
that he or she is or was a director, officer or employee of New UPC.
Special Meetings
Pursuant to the Articles of Association of the Company, special general
meetings of shareholders may be held whenever the Company's Board of Management
or Supervisory Board or United Europe, as the holder of all outstanding UPC
Priority Shares, calls such meetings. In addition, one or more holders of shares
of the Company, who own together at least 10% (or such lesser amount as is
provided by the articles of association) of the issued capital, can be
authorized by the President of the Court (Rechtbank) in The Netherlands with
competent jurisdiction to call a special general meeting of shareholders.
Under the DGCL, a special meeting of shareholders may be called by the
board of directors or by any other person authorized in the certificate of
incorporation or the by-laws. The DGCL does not provide shareholders with an
automatic right to call special meetings of shareholders. New UPC's By-laws
provide that a special meeting of shareholders may be called by the president,
chief executive officer or chairman of the Board or by the New UPC Board of
Directors pursuant to a resolution approved by the affirmative vote of a
majority of directors then in office.
Shareholder Votes on Certain Reorganizations
Under Dutch law, mergers whereby one or more companies disappear and others
survive are effected by a deed of merger executed by a Dutch civil law notary
which may require a shareholders' vote. In addition, a resolution for an
amendment to the Articles of Association of the Company can only be passed upon
a proposal of United Europe, as the holder of all the outstanding UPC Priority
Shares. Other reorganizations do not require a shareholders' vote.
Under the DGCL, the vote of a majority of the outstanding shares of capital
stock entitled to vote thereon generally is necessary to approve a merger or
consolidation. The DGCL permits a corporation to include in its certificate of
incorporation a provision requiring for any corporate action the vote of a
larger portion of the stock or of any class or series thereof than would
otherwise be required. New UPC's Certificate of Incorporation has no such
provision.
Under the DGCL, no vote of the shareholders of a surviving corporation to a
merger is needed, however, unless required by the certificate of incorporation,
if
(i) the agreement of merger does not amend in any respect the certificate
of incorporation of the surviving corporation,
(ii) the shares of stock of the surviving corporation are not changed in
the merger and
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(iii)the number of shares of common stock of the surviving corporation into
which any other shares, securities or obligations to be issued in the
merger may be converted does not exceed 20% of the surviving
corporation's common shares outstanding immediately prior to the
effective date of the merger.
In addition, shareholders may not be entitled to vote in certain mergers with
other corporations that own 90% or more of the outstanding shares of each class
of stock of such corporation. New UPC's Certificate of Incorporation has no
provision requiring a shareholders' vote in such situations.
Rights of Inspection
Pursuant to Dutch law, the annual accounts of the Company are submitted to
the general meeting of shareholders for their adoption and the shareholders'
register is available for inspection by Holders of Equity Interests in the
Company. Members of the Supervisory Board of the Company are also authorized to
inspect the books and records of the Company and are permitted access to the
buildings and premises of the Company during normal business hours.
Pursuant to the DGCL, any holder of New UPC Common Stock may inspect for
any proper purpose New UPC's stock ledger, shareholders list and other books and
records during New UPC's usual hours for business.
Shareholder Suits
Dutch law does not provide for derivative suits or class actions and
therefore Holders of Equity Interests in the Company cannot bring such actions
against the Company.
Under the DGCL, a shareholder may bring a derivative action on behalf of
the corporation to enforce the rights of the corporation. An individual may also
commence a class action on behalf of himself and other similarly situated
shareholders where the requirements for maintaining a class action under
Delaware law have been met. A person may institute and maintain such a suit only
if such person was a shareholder at the time of the transaction which is the
subject of the suit. Additionally, under Delaware case law, the plaintiff
generally must be a shareholder not only at the time of the transaction which is
the subject of the suit, but also through the duration of the derivative suit.
Delaware law also requires that the derivative plaintiff make a demand on the
directors of the corporation to assert the corporate claim before the suit may
be prosecuted by the derivative plaintiff, unless such demand would be futile.
Therefore it would be possible for holders of New UPC Common Stock to bring
derivative suits or class actions against New UPC if the above requirements are
met.
Conflict-of-Interest Transactions
The current Articles of Association of the Company provide that, in the
event of a conflict of interest between the Company, on the one hand, and a
member of the Board of Management, on the other hand, the Company shall be
represented by such member of the Board of Management or of the Supervisory
Board as the Supervisory Board shall designate for this purpose.
The DGCL generally permits transactions involving a Delaware corporation
and an interested director of that corporation if
(i) the material facts as to his relationship or interest are disclosed
and a majority of disinterested directors consents,
(ii) the material facts are disclosed as to his relationship or interest
and a majority of shares entitled to vote thereon consents or
(iii)the transaction is fair to the corporation at the time it is
authorized by the board of directors, a committee or the shareholders.
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Liquidation Rights
In the event that the Company were to be dissolved or liquidated, the
assets remaining after payment of all debts are to be distributed to Holders of
Equity Interests in the Company as follows:
o first, to any issued and outstanding class B preference shares in an
amount equal to any previously declared but unpaid dividend and the
paid-up amount of such class B preference shares;
o second, to any issued and outstanding UPC Preference Shares A in an
amount as determined in the resolution by which such UPC Preference
Shares A were issued, which may include, among other things,
(1) an amount equal to the accrued but unpaid dividend,
(2) the nominal paid up amount on such UPC Preference Shares A and
the contributed share premium,
(3) a compensation over the paid capital, and/or
(4) an amount equal to the amount the holder of such UPC Preference
Shares A would be entitled to, had he or she converted these
shares into UPC Ordinary Shares A on the day of liquidation
provided, however, that if the Company were to be dissolved or
liquidated on or before May 1, 2010, then the amount payable with
respect to the UPC Preference Shares A shall be equal to the
amount that would have been payable on the UPC Ordinary Shares A
if the UPC Preference Shares A had been converted into UPC
Ordinary Shares A on the date of dissolution or liquidation and
no amounts shall be paid with respect to the liquidation
preference of the UPC Preference Shares A;
o third, to the holders of the UPC Priority Shares in an amount equal to
their par value in proportion to the number of UPC Priority Shares
held by them; and
o fourth, any remaining assets shall be distributed to the holders of
the UPC Ordinary Shares A and UPC Ordinary Shares B in proportion to
the number of shares held by them regardless of the class of ordinary
shares.
As New UPC Common Stock is the only class of shares of New UPC authorized
and outstanding, under the DGCL holders of New UPC Common Stock will be entitled
to share ratably in the net assets legally available for distribution to
shareholders after the payment of all prior claims of New UPC upon a
liquidation, dissolution or winding up of New UPC.
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THE RESTRUCTURING AGREEMENT
The following is a summary of the significant terms of the Restructuring
Agreement. The summary set forth below does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the detailed
provisions of the Restructuring Agreement. The Restructuring Agreement was
attached as Exhibit 99.2 to a Current Report on Form 8-K filed by the Company
with the SEC on September 30, 2002.
Upon consummation of the Plan, the Plan and the documents executed and
delivered on the Effective Date and in consummation of the Plan shall be deemed
to set forth the entire agreement and undertakings relating to the subject
matter thereof and shall supersede all prior discussions and documents related
thereto, including the Restructuring Agreement.
The Agreed Restructuring Process
Under the Restructuring Agreement, the Company, New UPC, UGC (and certain
other members of the UGC Group) and the Participating Noteholders agreed that
(i) the Belmarken Notes, (ii) the UPC Notes, (iii) the UPC Preference Shares A,
(iv) the UPC Priority Shares, (v) the UPC Ordinary Shares A and (vi) the claims
of other unsecured creditors of the Company would be exchanged for shares of New
UPC Common Stock on the terms set forth in the Restructuring Agreement.
Under the Restructuring Agreement, the Company agreed to
(i) file a voluntary case under Chapter 11 of the U.S. Bankruptcy Code and
a plan of reorganization and disclosure statement with the U.S.
Bankruptcy Court and
(ii) file a voluntary provisional moratorium petition and a plan of
compulsory composition (Akkoord) under the Dutch Bankruptcy Code
(Faillissementswet) in the Dutch Bankruptcy Court.
In addition, solely for the purpose of carrying out the Plan in a manner
consistent with Dutch law, to the extent necessary to qualify the Plan under
applicable Dutch securities laws, simultaneously with the proposal of the
Akkoord, New UPC agreed, for purposes of Dutch law and, to the extent permitted
under applicable securities laws, solely with respect to individuals and
entities who are not U.S. Persons to offer to exchange a specified number of
shares of New UPC Common Stock with the noteholders and creditors of the Company
in exchange for transferring their claims against the Company to New UPC.
Distribution of Shares of New UPC Common Stock under the Plan and the Akkoord
Consistent with the terms of the Restructuring Agreement, the Plan and the
Akkoord set forth the number of shares of New UPC Common Stock to be distributed
to
(i) the members of the UGC Group in exchange for the Belmarken Notes and
the UPC Notes held by the members of the UGC Group,
(ii) the holders of the UPC Notes other than the UGC Group,
(iii) the holders of the UPC Preference Shares A, the UPC Ordinary Shares A
and the UPC Priority Shares and
(iv) the other unsecured creditors of the Company.
The Restructuring Agreement contemplated that, under the Plan, each holder
of UPC Notes and of any other claim against the Company to the extent such claim
is in the same class as the UPC Notes would be offered two options: the first
option would have entitled such creditor to receive a specified number of
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shares of New UPC Common Stock per US$1,000 of allowed claim from New UPC in
exchange for transferring its claim against the Company to New UPC ("Option 1")
and the second option would have entitled such creditor to receive a number of
shares of New UPC Common Stock per US$1,000 of allowed claim from the Company
equal to 75% of the number of shares of New UPC Common Stock per US$1,000 of
allowed claim from New UPC offered pursuant to Option 1 in final discharge of
their rights against the Company ("Option 2"). Under the Akkoord, the creditors
of the Company would receive a specified number of shares of New UPC Common
Stock per US$1,000 of allowed claim which will be identical to the number of
shares of New UPC Common Stock that a holder of UPC Notes would receive in final
discharge of its UPC Notes pursuant to Option 2. Solely for the purpose of
carrying out Option 1 in a manner consistent with Dutch law, to the extent
necessary to qualify Option 1 under applicable Dutch securities laws,
simultaneously with the proposal of the Akkoord, New UPC agreed, for purposes of
Dutch law and, to the extent permitted under applicable securities laws, solely
with respect to individuals and entities who are not U.S. Persons, to offer to
exchange a specified number of shares of New UPC Common Stock with the
noteholders and other creditors of the Company in exchange for transferring
their claims against the Company to New UPC which will be identical to the
number of shares of New UPC Common Stock per US$1,000 of allowed claim that
creditors of Company would receive in exchange for their claims against the
Company pursuant to Option 1. Pursuant to the provisions of the Restructuring
Agreement, the Company, New UPC and UGC agreed that, due to further developments
in the Restructuring process, the Plan should not reflect Option 2. Therefore,
the Plan filed with the U.S. Bankruptcy Court on the Petition Date excluded the
structure contemplated by Option 2.
Under the Restructuring Agreement, the Company has agreed to ensure that
the implementation of the Plan, including, without limitation, the distribution
of shares of New UPC Common Stock to the creditors and equity holders of the
Company, will be made in accordance with all applicable laws, including the
applicable securities laws of the United States, The Netherlands and Luxembourg.
Upon consummation of the Plan and the Akkoord, it is anticipated under the
Restructuring Agreement that the following percentages of the total number of
shares of New UPC Common Stock will be distributed to the UGC Group, the holders
of the UPC Notes (other than the UGC Group) (assuming that Option 1 applies to
all UPC Notes) and the holders of the UPC Preference Shares A, the UPC Ordinary
Shares A and the UPC Priority Shares and other claims treated as equity claims
(subject to potential dilution by issuance of additional shares of New UPC
Common Stock as described in "--Treatment of Other Creditors of the Company,"
"--New UPC Board of Directors and Rights of the Participating
Noteholders--Shares of New UPC Common Stock Issuable under the Incentive Plan"
and "--Equity Subscription in New UPC on Effective Date" below):
Percentage of Total Number of Shares
Security Holder of the Company of New UPC Common Stock Distributed
Belmarken Notes and UPC Notes owned by UGC Group on the date
of the Restructuring Agreement 65.5%
UPC Notes (other than the UPC Notes owned by the UGC Group on the
date of the Restructuring Agreement) 32.5%
Holders of UPC Preference Shares A, UPC Ordinary Shares A, UPC
Priority Shares and Equity Securities Claims subordinated
under Section 510(b) of the U.S. Bankruptcy Code 2.0%
Under the Restructuring Agreement, UGC (on its own behalf and on behalf of
the UGC Group) and the Participating Noteholders agreed to vote in favor of the
Plan as part of the Chapter 11 bankruptcy case and the Akkoord and other
Restructuring proposals set forth in the Restructuring Agreement and to take
other actions necessary to effectuate the terms of the Restructuring Agreement.
As of the date of the Restructuring Agreement, the Participating
Noteholders represented approximately 25% of all outstanding UPC Notes
(approximately 38% of all outstanding Notes held by holders other than the UGC
Group). Collectively, as of the date of the Restructuring Agreement, the UGC
Group and the Participating Noteholders held approximately 60% of the
outstanding UPC Notes. In addition, the UGC Group owned
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approximately 20% of all outstanding UPC Preference Shares A, all of the
outstanding UPC Priority Shares and 53.1% of all outstanding UPC Ordinary Shares
A as of the date of the Restructuring Agreement.
Treatment of Other Creditors of the Company
Treatment of Critical Creditors
Under the terms of the Restructuring Agreement, the Company, the UGC Group,
New UPC and the Participating Noteholders acknowledged that certain creditors of
the Company are critical to the operation of the business of the Company as a
going concern ("Critical Creditors"). Accordingly, the parties to the
Restructuring Agreement agreed that the Company will use its commercially
reasonable efforts to pay certain of its Critical Creditors in full prior to the
filing date of its Chapter 11 bankruptcy case and to take other actions to
ensure that the obligations of the Company to its Critical Creditors which
remain unpaid on the Effective Date are unimpaired, assumed and restated under
the Plan and, subject to the consent of the Dutch administrator under the
Akkoord, paid in full in cash on or as soon as practicable after the Effective
Date. The Restructuring Agreement provides that the parties will use their
commercially reasonable efforts to treat the Critical Creditors who are not
permitted to be treated as such in the Chapter 11 Case and Dutch moratorium as
general unsecured creditors of the Company, separately from the UPC Notes, the
Belmarken Notes and all other classes of creditors under the Plan and the
Akkoord and in a manner that is consistent with the treatment afforded to those
creditors which are permitted to be treated as Critical Creditors (to the extent
permitted by applicable law).
Treatment of General Unsecured Creditors
Under the Restructuring Agreement, all general unsecured creditors of the
Company, other than holders of the UPC Notes, the Belmarken Notes and, to the
extent applicable, Litigation Claims (as described below) ("General Unsecured
Creditors"), that will be affected by the Dutch moratorium will be offered the
same proportionate consideration pursuant to Option 1, Option 2, the Akkoord
option and the Dutch exchange offer option described under "Distribution of
Shares of New UPC Common Stock under the Plan and the Akkoord" above as if they
held UPC Notes in the amount of their debt in full redemption of their claims
once final adjudication by the U.S. Bankruptcy Court or the Dutch Court, as the
case may be, has been obtained. Any shares of New UPC Common Stock issued to the
General Unsecured Creditors will be in addition to the total number of shares of
New UPC Common Stock issued to the holders of the UPC Notes, the Belmarken
Notes, the UPC Preference Shares A, the UPC Priority Shares and the UPC Ordinary
Shares A as described under "Distribution of Shares of New UPC Common Stock
under the Plan and the Akkoord" above.
Treatment of Holders of Litigation Claims
The Restructuring Agreement contemplated that the Plan will provide for the
subordination under section 510(b) of the U.S. Bankruptcy Code of certain
litigation claims against the Company (the "Litigation Claims") and, if the U.S.
Bankruptcy Court determines that these Litigation Claims are subject to
subordination under section 510(b) of the U.S. Bankruptcy Code, then the holders
of these Litigation Claims will receive a portion of the shares of New UPC
Common Stock to be issued and exchanged for the UPC Ordinary Shares A and UPC
Priority Shares, pari passu on a pro rata basis with the holders of the UPC
Ordinary Shares A and the UPC Priority Shares based on an allowed interest in an
amount to be determined by the U.S. Bankruptcy Court. If the U.S. Bankruptcy
Court determines that the Litigation Claims are not to be subordinated under
section 510(b) or otherwise, then the holders of the Litigation Claims are
expected to receive the same proportionate consideration on account of the
Litigation Claims as if they held UPC Notes in the amount of their Litigation
Claims in lieu of a cash payment. Any shares of New UPC Common Stock issued to
the holders of Litigation Claims will be in addition to the total number of
shares of New UPC Common Stock issued to the holders of the UPC Notes, the
Belmarken Notes, the UPC Preference Shares A, the UPC Priority Shares and the
UPC Ordinary Shares A as described under "Distribution of Shares of New UPC
Common Stock under the Plan and the Akkoord" above.
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Treatment of Holders of Administrative and Other Priority Claims
Under the Restructuring Agreement, the Plan provides that, on or as soon as
practicable after the Effective Date, each holder of an allowed administrative
or other priority claim under the U.S. Bankruptcy Code will be (i) paid in cash
by the Company for the full amount of its allowed claim, (ii) left unimpaired
and restated or (iii) be accorded such treatment as the Company and the holder
of that claim agree in writing. The Company has agreed to use its best efforts
to ensure that administrative claims in the Chapter 11 Case are treated by the
Company and the Dutch administrator similarly in the moratorium proceedings in
The Netherlands.
Treatment of Holders of Outstanding Rights, Options and Warrants for Shares
of the Company
Under the Restructuring Agreement, the Plan provides that all rights,
options and warrants to acquire UPC Ordinary Shares A, including rights, options
and warrants held by the Company's employees under the Company's existing equity
incentive plans, outstanding immediately prior to the Effective Date may remain
outstanding, unless those rights, options and warrants can be cancelled in
connection with the Restructuring or, in the case of rights, options and
warrants held by Company employees, such rights, options and warrants are
delivered to New UPC, in the discretion of New UPC's Board of Directors, in
exchange for rights, options and warrants permitted to be issued by New UPC as
described under "--Shares of New UPC Common Stock Issuable under Incentive Plan"
below.
New UPC Board of Directors and Rights of the Participating Noteholders
Under the Restructuring Agreement, New UPC, UGC and the Participating
Noteholders agreed to enter into the Stockholders' Agreement that provides that,
for a three year period beginning on the Effective Date,
(i) a majority-in-interest of the Participating Noteholders would have the
right to designate two directors (the "Designated Directors"),
(ii) the Board of Directors of New UPC would be comprised of ten members
and the number of directors cannot be changed without the consent of
the Designated Directors,
(iii) the Designated Directors could not be removed except for cause or upon
written request of a majority-in-interest of the Participating
Noteholders and
(iv) upon removal, resignation or death of a Designated Director, the
Participating Noteholders would have the right to replace that
Designated Director.
The Company, New UPC, UGC and the Participating Noteholders have
implemented these types of protections through New UPC's classified Board of
Directors and the provisions of New UPC's By-laws that require the approval of
the Related Party Transaction Committee, subject to certain exceptions, in order
for New UPC to enter into these types of Related Party Transactions. For a more
detailed description of these provisions, see "New UPC--Related Party
Transaction Committee."
The Restructuring Agreement provided for New UPC's By-Laws to provide the
Designated Directors with the power to reject certain related party transactions
between New UPC and its affiliates (other than subsidiaries of New UPC) subject
to certain exceptions or if approved by a majority of the disinterested
stockholders of New UPC.
Under the Restructuring Agreement, the Stockholders Agreement is to provide
the Participating Noteholders with "tag-along" rights for sale of their shares
of New UPC Common Stock in the event that members of the UGC Group propose to
sell 5% or more of the outstanding shares of New UPC Common Stock.
Under the Restructuring Agreement, the Company, the UGC Group, New UPC and
the Participating Noteholders agreed that, after the Restructuring is completed,
changes will be made to the corporate governance of the Company to ensure that
decisions taken by the Board of Directors of New UPC are implemented by the
Company, as described above, would be applicable to actions taken by the
Company.
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For a more detailed description of the Stockholders Agreement, see "New
UPC--Stockholders Agreement."
Shares of New UPC Common Stock Issuable under the Incentive Plan
Pursuant to the terms of the Restructuring Agreement, the Plan provides
that, at the discretion of New UPC's Board of Directors, options with respect to
no more than five (5) percent of New UPC's common equity outstanding immediately
after the Effective Date, on a fully-diluted basis, can be issued during the
three year period beginning on the Effective Date to certain members of the
management and other employees of New UPC and its subsidiaries subject to
certain limitations on pricing.
Pre-emptive Rights of Holders of New UPC Common Stock
Under the Plan, the holders of shares of New UPC Common Stock will have
pre-emptive rights for the first (euro)1,538.46 million of equity or
equity-linked securities issued by New UPC during the four years after the
Effective Date for cash or in exchange for assets (or other consideration)
acquired from a related party.
Equity Subscription in New UPC on Effective Date
Pursuant to the Restructuring Agreement, the Plan includes a requirement
that, on the Effective Date, New UPC will offer to each holder of UPC Notes and
the Belmarken Notes the right to purchase a pro rata share of up to (euro)100
million of shares of New UPC Common Stock at the per share price implied by the
Plan. This right will be exercisable only on the Effective Date. The (euro)100
million amount will be reduced by the net proceeds of any assets sold by the
Company prior to the Effective Date (other than assets sold in the ordinary
course of the Company's business in a manner consistent with its past practices)
and by the net proceeds from any non-dilutive capital raised by the Company
(other than capital received from UGC). The UGC Group has agreed to subscribe
for its pro rata share of the Maximum Subscription Amount of shares of New UPC
Common Stock to be issued on the Effective Date. In addition, the UGC Group has
agreed to subscribe for the pro rata share of the Maximum Subscription Amount
offered to the holders of the UPC Notes (other than the UGC Group) to the extent
that such holders do not subscribe for their pro rata share of the Maximum
Subscription Amount on the Effective Date. See "New UPC Equity Subscription."
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TAX CONSEQUENCES
U.S. Federal Income Tax Consequences
The following is a summary of certain U.S. federal income tax consequences
that are expected to result from the consummation of the transactions proposed
in the Plan. This summary only applies to Belmarken Notes, UPC Notes, General
Unsecured Claims (a "Creditor Position" and, collectively, the "Creditor
Positions"), UPC Preference Shares A, UPC Priority Shares, UPC Ordinary Shares
A, UPC ADSs, Equity Securities Claims (an "Equity Position" and, collectively,
the "Equity Positions") that are exchanged for New UPC Common Stock, and does
not address aspects of U.S. federal income taxation that may be applicable to
holders that are subject to special tax rules, such as financial institutions,
insurance companies, tax-exempt organizations or dealers or traders in
securities or currencies, or to holders that (i) hold a Creditor Position,
Equity Position, or New UPC Common Stock as part of a straddle, hedge,
conversion, or constructive sale transaction for U.S. federal income tax
purposes, (ii) have a functional currency other than the U.S. Dollar, or (iii)
own (or are deemed to own) 10% or more (by voting power or value) of the stock
of the Company or New UPC. Moreover, this summary does not address state, local,
and foreign income and other tax consequences of the transactions proposed in
the Plan. This summary is provided for informational purposes only and is not
intended to be a complete analysis or listing of all potential tax effects to a
particular Creditor Position or Equity Position or a substitute for the receipt
of tax advice. This summary is based on the Internal Revenue Code of 1986, as
amended (the "IRC"), existing and proposed Treasury regulations, administrative
pronouncements, and judicial decisions, each as available and in effect on the
date hereof. All of the foregoing are subject to change, possibly with
retroactive effect or differing interpretations which could affect the tax
consequences described herein. This summary furthermore does not address the
U.S. federal income tax consequences to holders of claims who are not entitled
to vote. In addition, a substantial amount of time may elapse between the date
of this Disclosure Statement and the receipt of a final distribution under the
Plan. Developments of law subsequent to the date of this Disclosure Statement,
such as additional tax legislation, court decisions, or administrative changes,
could affect the U.S. federal income tax consequences of the Plan and the
transactions contemplated thereunder. The Company and New UPC will not seek a
ruling from the Internal Revenue Service (the "IRS") or an opinion of counsel
with respect to any of the tax aspects of the Plan. The IRS could take positions
concerning the tax consequences of the proposed transactions under the Plan that
are different from those described in this summary, and a court could sustain
any such IRS positions. Each holder is urged to consult its tax advisor with
respect to the U.S. federal, state, local, and foreign tax consequences
resulting from the consummation of the transactions proposed in the Plan.
For purposes of this summary, a "U.S. Holder" is a beneficial owner of a
Creditor Position or an Equity Position that, for U.S. federal income tax
purposes, is (i) a citizen or resident of the United States, (ii) a corporation
or partnership organized in, or under the laws of, the United States or any
State thereof, including the District of Columbia, (iii) an estate the income of
which is subject to U.S. federal income taxation regardless of its source, or
(iv) a trust (x) that has validly elected to be treated as a U.S. person for
U.S. federal income tax purposes or (y) the administration over which a U.S.
court can exercise primary supervision and all of the substantial decisions of
which one or more U.S. persons have the authority to control. If a partnership
(or any other entity treated as a partnership for U.S. federal income tax
purposes) is a holder of a Creditor Position or an Equity Position, the tax
treatment of the partnership and a partner in such partnership will generally
depend on the status of the partner and the activities of the partnership. A
"Non-U.S. Holder" is a beneficial owner of a Creditor Position or an Equity
Position that is not a U.S. Holder.
U.S. Federal Tax Consequences of the Exchange to Holders
New UPC Exchange - General
Tax-Free Exchange Requirements. Whether the transfer by a U.S. Holder or a
Non-U.S. Holder of a Creditor Position or an Equity Position to New UPC in
exchange for New UPC Common Stock pursuant to the Plan (such an exchange, a "New
UPC Exchange") is subject to tax-free treatment for U.S. federal income tax
purposes depends principally upon whether the transferors of Creditor Positions
and Equity Positions, in the aggregate, "control" New UPC "immediately after the
exchange" (the "Control Requirement"). "Control" for this purpose, means the
ownership of at least 80 percent of the total combined voting power of all
classes of stock entitled to vote and at least 80 percent of the total number of
shares of all other classes of stock. While it is not free from doubt, it
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appears that the New UPC Equity Purchase Rights are not "property" for U.S.
federal income tax purposes and that a holder of New UPC Common Stock that has
acquired such New UPC Common Stock pursuant to the exercise of a New UPC Equity
Purchase Right will be considered a transferor of cash to New UPC in exchange
for the New UPC Common Stock pursuant to the Plan. As such, the New UPC Common
Stock so acquired will be taken into account in determining whether the Control
Requirement is satisfied. It is possible, however, that the IRS could determine
that the New UPC Equity Purchase Rights are property received pursuant to the
Plan and thus assert that the New UPC Common Stock acquired through the exercise
thereof should not be taken into account for purposes of determining whether the
Control Requirement is satisfied. In addition, the determination of whether the
Control Requirement will be met depends upon facts and circumstances unknown to
the Company and, as such, is unclear. Certain transferors in a New UPC Exchange
that intend to sell or otherwise transfer the New UPC Common Stock that they
receive in the exchange may not be included in the calculation of control for
purposes of determining whether the Control Requirement will be satisfied.
Because the Company does not have, and anticipates that it will not have, full
knowledge of the facts required to determine whether the Control Requirement
will be met, it cannot give any assurance that the New UPC Exchanges will
qualify for tax-free exchange treatment. Finally, New UPC intends to treat the
exchanges of Creditor Positions and Equity Positions for New UPC Common Stock as
a single transaction for U.S. federal income tax purposes.
References to "Fair Market Value." All references set forth in the
discussion below to the "fair market value" of the New UPC Common Stock and the
New UPC Equity Purchase Rights refer to the fair market value of such stock and
rights, respectively, as determined on the Effective Date.
New UPC Exchange - Tax-Free Exchange Treatment
U.S. Holders. If the New UPC Exchange qualifies for tax-free exchange
treatment, a U.S. Holder that exchanges a Creditor Position or an Equity
Position for New UPC Common Stock (and, if applicable, New UPC Equity Purchase
Rights and assuming that such rights are not classified as "property" for U.S.
federal income tax purposes) pursuant to a New UPC Exchange (i) will not
recognize gain (except to the extent of (x) the lesser of the amount of gain
realized or the amount of accrued but unrecognized market discount on a
Belmarken Note or UPC Note as described below and (y) in the case of a cash
method U.S. Holder, New UPC Common Stock, if any, that is attributable to
accrued but unpaid interest on a Creditor Position) or loss as a result of a New
UPC Exchange, (ii) will have an aggregate tax basis in its New UPC Common Stock
equal to its adjusted tax basis in its Creditor Position (plus any accrued
market discount recognized in the exchange and the fair market value of the New
UPC Common Stock, if any, that is attributable to accrued but unpaid interest as
described in the immediately preceding clause (i)(y)) or Equity Position, as the
case may be, that it transferred to New UPC in exchange therefor, and (iii) will
have a holding period in respect of such New UPC Common Stock, that includes its
holding period of its Creditor Position or Equity Position, as the case may be
(provided that the holding period for the New UPC Common Stock that is
attributable to accrued but unpaid interest as described in the preceding clause
(i)(y) will commence with the Effective Date). In the case of any particular
U.S. Holder of the Belmarken Notes or UPC Notes, such holder may have accrued
but unrecognized market discount if the U.S. Holder (i) purchased such Belmarken
Notes or UPC Notes at a market discount in excess of a statutorily-defined de
minimis amount and (ii) determined not to include market discount in income on a
current basis.
If, in the alternative, the New UPC Equity Purchase Rights are classified
as "property" for U.S. federal income tax purposes, then generally (i)(x) a U.S.
Holder of a Creditor Position that tenders such position in exchange for New UPC
Common Stock and/or New UPC Equity Purchase Rights will recognize gain (but not
loss) in an amount equal to the lesser of (1) the gain "realized" (i.e., the
excess of the fair market value of the New UPC Common Stock (other than, in the
case of a cash method U.S. Holder, New UPC Common Stock that is attributable to
accrued but unpaid interest on a Creditor Position) and the New UPC Equity
Purchase Rights received over the adjusted tax basis of the Creditor Position
surrendered in exchange therefor) or (2) the fair market value of the New UPC
Equity Purchase Rights and (y) a U.S. Holder that receives New UPC Equity
Purchase Rights for no consideration (e.g. holders whose Claim amount ultimately
is not allowed by either the U.S. Bankruptcy Court or the Dutch Bankruptcy
Court) will recognize ordinary income upon such receipt in an amount equal to
the fair market value of such rights, (ii) in the case of a cash method U.S.
Holder, New UPC Common Stock, if any, that is attributable to accrued but unpaid
interest on a Creditor Position will be subject to tax as ordinary interest
income, (iii) the U.S. Holder's tax basis in the New UPC Common Stock received
pursuant to a New UPC Exchange will be equal to the adjusted tax basis of the
Creditor Position tendered in exchange therefor, decreased by the fair market
value of the New UPC Equity Purchase Rights received, and increased by any gain
recognized in the exchange and
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the fair market value of the New UPC Common Stock, if any, that is attributable
to accrued but unpaid interest as described in the immediately preceding clause
(ii), (iv) the U.S. Holder's tax basis in the New UPC Equity Purchase Rights
received pursuant to a New UPC Exchange generally will be the fair market value
of such rights, (v) the U.S. Holder generally will not realize any gain or loss
upon the exercise of the New UPC Equity Purchase Rights, (vi) the U.S. holder's
tax basis in any New UPC Common Stock acquired upon the exercise of the New UPC
Equity Purchase Rights generally would be equal to the exercise price paid for
such New UPC Common Stock plus the holder's tax basis in such New UPC Equity
Purchase Rights so exercised, and (vii) the U.S. Holder will have a holding
period in respect of such New UPC Common Stock, that includes its holding period
of its Creditor Position or Equity Position, as the case may be (provided that
the holding period for the New UPC Common Stock that is Stock acquired upon the
exercise of the New UPC Equity Purchase Rights or that is attributable to
accrued but unpaid interest as described in the preceding clause (ii) will
commence with the Effective Date). Any gain recognized in the exchange will be
capital gain, assuming that the U.S. Holder held such Creditor Position as a
capital asset and except to the extent of any such gain attributable to accrued
but unrecognized market discount on a Belmarken Note or a UPC Note tendered in
the exchange.
Non-U.S. Holders. The potential for gain or income recognition described in
the two preceding paragraphs will not be applicable to a Non-U.S. Holder unless
(i) such gain or income is effectively connected with the conduct by such
Non-U.S. Holder of a trade or business in the United States or (ii) in the case
of any gain realized by an individual Non-U.S. Holder, such holder is present in
the United States for 183 days or more in the taxable year of such sale or
exchange and certain other conditions are met.
New UPC Exchange - Alternative Treatment - Taxable Exchange
U.S. Holders. A U.S. Holder that exchanges a Creditor Position or an Equity
Position for New UPC Common Stock (and, if applicable, New UPC Equity Purchase
Rights) pursuant to a New UPC Exchange that does not meet the requirements for
tax-free exchange treatment discussed above will recognize capital gain or loss
(assuming that such holder held such Creditor Position or Equity Position as a
capital asset and except to the extent of any such gain attributable to accrued
but unrecognized market discount recognized on a Belmarken Note or a UPC Note
tendered in the exchange), equal to the difference between the U.S. Holder's
adjusted tax basis in such Creditor Position or Equity Position and the fair
market value of the New UPC Common Stock (other than, in the case of a cash
method U.S. Holder, New UPC Common Stock that is attributable to accrued but
unpaid interest on a Creditor Position) and, if applicable, New UPC Equity
Purchase Rights received in exchange therefor. In the case of a cash method U.S.
Holder, New UPC Common Stock, if any, that is attributable to accrued but unpaid
interest on a Creditor Position will be subject to tax as ordinary interest
income. The claim of a deduction in respect of a capital loss, for U.S. federal
income tax purposes, is subject to limitations.
Non-U.S. Holders. A Non-U.S. Holder that exchanges (i) a Creditor Position
or an Equity Position for New UPC Common Stock (and, if applicable, New UPC
Equity Purchase Rights) in a New UPC Exchange that does not meet the
requirements for tax-free treatment discussed above generally will not be
subject to U.S. federal income tax on any gain or income realized on the receipt
of New UPC Common Stock (and, if applicable, New UPC Equity Purchase Rights) in
exchange for such Creditor Position or Equity Position unless (i) such gain or
income is effectively connected with the conduct by such Non-U.S. Holder of a
trade or business in the United States or (ii) in the case of any gain realized
by an individual Non-U.S. Holder, such holder is present in the United States
for 183 days or more in the taxable year of such sale or exchange and certain
other conditions are met.
Consequences of Ownership and Disposition of New UPC Common Stock to
Holders
Distributions on New UPC Common Stock. The gross amount of any distribution
by New UPC of cash or property, other than certain distributions, if any, of New
UPC Common Stock distributed pro rata to all shareholders of New UPC, with
respect to New UPC Common Stock will constitute ordinary income dividends to the
extent such distributions are paid out of the positive current or accumulated
earnings and profits of New UPC as determined under U.S. federal income tax
principles. A corporate U.S. Holder will generally be eligible for the dividends
received deduction. The dividends received deduction is subject to certain
limitations and the benefit of such deduction may be reduced by the corporate
alternative minimum tax. To the extent, if any, that the amount of any
distribution by New UPC exceeds New UPC's positive current and accumulated
earnings and profits as determined under U.S. federal income tax principles,
such excess will be treated first as a tax-free return of the U.S. Holder's
adjusted tax basis in the New UPC Common Stock and thereafter as capital gain
(assuming that the shareholder holds such stock as a capital asset).
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In general, distributions of cash or property (other than New UPC Common
Stock, if any, distributed pro rata to all holders of common stock of New UPC)
paid to a Non-U.S. Holder will be subject to withholding of U.S. federal income
tax at a 30% rate or such lower rate as may be specified by an applicable U.S.
income tax treaty. Except as may be otherwise provided in an applicable U.S.
income tax treaty, a Non-U.S. Holder generally will be subject to tax at
ordinary U.S. federal income tax rates (on a net income basis) on the receipt of
dividends that are effectively connected with the conduct of a trade or business
of such Non-U.S. Holder within the United States and such dividends will
generally not be subject to U.S. withholding tax. If such Non-U.S. Holder is a
non-U.S. corporation, it may also be subject to a 30% "branch profits tax"
unless it qualifies for a lower rate under an applicable U.S. income tax treaty.
To claim an exemption from withholding tax because the income is effectively
connected with a United States trade or business, a Non-U.S. Holder must provide
a properly executed Form W-8ECI prior to the payment of dividends.
Sale or Exchange of New UPC Common Stock other than a Redemption. A U.S.
Holder will generally recognize capital gain or loss (assuming that such holder
holds the New UPC Common Stock as a capital asset) on the sale or exchange
(other than a redemption) of New UPC Common Stock equal to the difference
between the amount realized in such sale or exchange and the U.S. Holder's
adjusted tax basis in the New UPC Common Stock disposed of. The claim of a
deduction in respect of a capital loss, for U.S. federal income tax purposes, is
subject to limitations.
Redemption of New UPC Common Stock. If the New UPC Common Stock is redeemed
in a transaction in which the U.S. Holder of the New UPC Common Stock will not
have, or be deemed to have, a continuing, significant equity interest in New UPC
after such redemption, taking into account the attribution and constructive
ownership rules under the IRC, then a U.S. Holder will recognize gain or loss in
accordance with the rules described in the immediately preceding paragraph. If,
on the other hand, the New UPC Common Stock is redeemed in a transaction in
which the U.S. Holder retains a significant equity interest in New UPC after
such redemption, then, depending on the facts and circumstances prevailing at
the time of such redemption, (i) the amount received upon such redemption may be
treated as ordinary dividend income (rather than a return of basis or capital
gain) to the extent of any such U.S. Holder's pro rata share of the positive
current and accumulated earnings and profits of New UPC as determined for U.S.
federal income tax purposes and (ii) a claim in respect of any loss may be
required to be deferred.
In general, a Non-U.S. Holder will not be subject to U.S. federal income or
withholding tax on any gain realized on the sale or exchange (or a redemption
that is subject to treatment as a sale or exchange) of New UPC Common Stock
unless (i) such gain is effectively connected with the conduct by such Non-U.S.
Holder of a trade or business in the United States or (ii) in the case of any
gain realized by an individual Non-U.S. Holder, such holder is present in the
United States for 183 days or more in the taxable year of such sale or exchange
and certain other conditions are met. In the case of a redemption that is not
treated as a sale or exchange under circumstances described in the immediately
preceding paragraph, the receipt of the redemption proceeds will be subject to
tax as a "distribution" as described above under the heading "Consequences of
Ownership and Disposition of New UPC Common Stock to Holders -- Distributions on
New UPC Common Stock."
Backup Withholding Tax and Information Reporting Requirements
Certain payments, including the issuance or transfer of securities in
settlements of claims pursuant to the Plan and distributions on, and a sale,
exchange, or redemption of, New UPC Common Stock, are generally subject to
information reporting by the payor to the IRS. Such reportable payments are,
moreover, subject to backup withholding under certain circumstances. Under the
backup withholding rules of the IRC, a holder of a claim may be subject to
backup withholding at the applicable rate with respect to distributions or
payments made pursuant to the Plan, unless the holder (i) comes within certain
exempt categories (which generally include corporations) and, when required,
demonstrates this fact, (ii) provides a correct taxpayer identification number
and certifies under penalties of perjury that (x) the taxpayer identification
number is correct, (y) the taxpayer is not subject to backup withholding because
of a failure to report all dividend and interest income, and (z) the taxpayer is
a U.S. person.
U.S. Federal Income Tax Consequences to the Company
Exchange of Creditor Positions for New UPC Common Stock. The Company will
realize cancellation of debt income ("COD") for U.S. federal income tax purposes
as a result of the exchange of Creditor Positions for
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New UPC Common Stock pursuant to a New UPC Exchange pursuant to the Plan and the
waiver of any Creditor Positions in connection therewith. The amount of such
COD, which is expected to be substantial, generally will be equal to the excess
of (i) the adjusted issue price of such Creditor Positions taking into account
accrued but unpaid interest on such positions over (ii) their fair market value
as determined on the Effective Date. Under certain provisions of the IRC,
because the COD of the Company will occur in a transaction consummated pursuant
to the Bankruptcy Code, the Company believes that any COD realized by the
Company should be excluded from the Company's earnings and profits as determined
under U.S. income tax principles to the extent that any such COD is applied,
subject to certain limitations and special rules, to (i) reduce the Company's
adjusted tax basis in its assets, as determined under U.S. federal income tax
principles or (ii) the amount of the Company's existing deficit in earnings and
profits as determined for U.S. federal income tax principles. Any COD realized
in excess of these amounts would increase the Company's current year earnings
and profits. The Company anticipates that, after taking into account such
reductions, the exchange should not generate a material amount of earnings and
profits for the Company. The reduction of such basis may have the effect of
increasing the amount of the Company's future earnings and profits which could
adversely impact New UPC's U.S. federal income tax liabilities associated with
income inclusions under U.S. Subpart F rules or investment in U.S. property
rules in future years as is more fully described below.
U.S. Federal Income Tax Consequences to New UPC
Controlled Foreign Corporation Rules. As a wholly, or majority, owned
subsidiary of New UPC, the Company will be a "controlled foreign corporation" (a
"CFC") of New UPC and each of the Company's wholly, or majority, owned non-U.S.
subsidiaries (each a "Subsidiary CFC") will similarly be a CFC of New UPC.
Under the CFC rules, New UPC may be required to include in its income the
average adjusted tax basis of any investment in U.S. property held by the
Company or a Subsidiary CFC to the extent that the Company or such Subsidiary
CFC has positive current or accumulated earnings and profits, as determined
under U.S. federal income tax principles, even though New UPC may not have
received any actual cash distributions from the Company or any such Subsidiary
CFC. In particular, any material amount of earnings and profits generated by the
exchange of Creditor Positions for New UPC Common Stock pursuant to the New UPC
Exchanges as described above under the heading "U.S. Federal Income Tax
Consequences to the Company" may cause New UPC to have a material income
inclusion in respect of the Company's investment in securities of UPC Polska. In
this connection, New UPC anticipates that (i) the exchange should not generate a
material amount of earnings and profits for the Company, and (ii) following the
consummation of the transactions proposed in the Plan, the Company will not have
any remaining, material tax basis in any investment in U.S. property as
determined for U.S. federal income tax purposes by reason of both the
application of certain provisions of the IRC and of certain internal
restructuring efforts the Company and/or UPC Polska intend to undertake. There
can be no assurance that the Company will be able to implement the intended
restructuring efforts in a timely manner. If New UPC is required to recognize
income under the investment in U.S. property rules either as a result of the
exchange described above or in future years or as a consequence of the operating
activities of the Company, the U.S. tax liability arising therefrom could have a
material adverse impact on the financial condition and liquidity of New UPC.
In addition, under the CFC rules, any "Subpart F income" (as described
below) earned by the Company or any particular Subsidiary CFC during a taxable
year when the Company or such Subsidiary CFC, respectively, has positive current
or accumulated earnings and profits, as determined under U.S. federal income tax
principles, will be included in New UPC's income to the extent of such earnings
and profits when the Subpart F income is earned regardless of whether such
Subpart F income is distributed to New UPC. "Subpart F income" generally
includes but is not limited to such items as interest, dividends, royalties,
gains from the disposition of certain property, certain exchange gains in excess
of exchange losses, and certain related party sales and services income. Since
UPC and its Subsidiary CFCs conduct their diversified pan-European businesses in
a number of European countries through multiple ownership and financial
structures, such operations will likely generate Subpart F income on a gross
income basis to New UPC. The Company does not believe, however, that in the case
of any particular taxable year, such gross Subpart F income would result in a
material income inclusion to New UPC. The Company intends to undertake certain
internal restructuring efforts to minimize any material adverse tax impacts to
New UPC associated with this Subpart F income in a manner consistent with the
Company's overall business and strategic objectives. No assurance may be given
as to the impact to New UPC of future Subpart F income recognized by the
Company. Should New UPC be required to recognize any income under these rules,
the U.S. tax liability arising therefrom could have a material adverse impact on
the financial condition and liquidity of New UPC.
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Dutch Tax Consequences
The following discussion, subject to the limitations set forth herein,
describes the material Dutch tax consequences of the exchange of the Claims
against, and Equity Interests in, the Company for shares of New UPC Common Stock
pursuant to the Plan, the Akkoord and the Dutch Implementing Offer and the
ownership of shares of New UPC Common Stock. It is the opinion of Deloitte &
Touche Belastingadviseurs, special Netherlands tax counsel (belastingadviseurs)
to the Company. This opinion represents Deloitte & Touche Belastingadviseurs'
interpretation of existing law and jurisprudence. No assurance can be given that
tax authorities or courts in The Netherlands will agree with such
interpretation. This opinion does not discuss all the tax consequences that may
be relevant to the holders of Claims and Equity Interests in light of their
particular circumstances or to holders that are subject to special treatment
under applicable law and is not intended to be applicable in all respects to all
categories of investors. Changes in the organizational structure of the Company
or the manner in which the Company conducts its business may invalidate this
opinion. The laws upon which this opinion is based are subject to change,
sometimes with retroactive effect. Changes in the applicable laws may invalidate
this opinion and this opinion will not be updated to reflect such subsequent
changes. Holders should consult their tax advisers regarding the particular tax
consequences of their exchange of the Claims against, and Equity Interests in,
the Company pursuant to the Plan, the Akkoord and the Dutch Implementing Offer
and their acquiring, owning and disposing of shares of New UPC Common Stock.
This opinion does not address, except as set forth below, aspects of Dutch
taxation that may be applicable to holders that are subject to special tax
rules, such as but not limited to financial institutions, investment
institutions (beleggingsinstellingen), insurance companies, tax-exempt
organizations and any holder who holds a substantial interest.
Substantial Interest
In The Netherlands, a shareholder that owns, whether or not together with
his/her spouse or registered partner, through shares, warrants, conversion
rights, or options, or certain other rights, for instance a right of usufruct
(which is an arrangement whereby a legal owner of shares transfers the right to
all income deriving from the shares, including capital gains, to another party),
directly or indirectly an interest in 5% or more of the total issued and
outstanding capital of any class of shares, or 5% or more of the total issued
and outstanding share capital of a company (a "substantial interest"), is
subject to a special tax regime. Profit participation rights or certain other
rights, such as a right of usufruct, which give the holder rights to 5% or more
of the annual profit or 5% or more of the liquidation proceeds of the target
company will also qualify as substantial interest. A deemed substantial interest
is present if (part of) a substantial interest has been disposed of, or is
deemed to have been disposed of, on a non-recognition basis. If a person has a
substantial interest in a company, all shares and profit rights in that company
are included in the substantial interest. With respect to individuals, certain
attribution rules exist in determining the presence of a substantial interest.
Unless indicated otherwise, the term "holder," as used herein, includes
individuals and entities as defined under Dutch tax law holding Claims against,
or Equity Interests in, the Company but does not include any such person having
a substantial interest in the Company or New UPC.
Income Tax Consequences of the Exchange of Claims for Residents or Deemed
Residents of The Netherlands
Individual Income Tax
Capital gains/losses derived from the exchange of Claims by an individual
holder of Claims are generally not subject to income tax.
However, capital gains/losses derived from the exchange of Claims by an
individual holder of Claims are subject to tax on a net income basis at the
progressive income tax rates, if the Claims are attributable to a trade or
business carried on by the individual holder by virtue of such individual being
an entrepreneur (ondernemer) or pursuant to a co-entitlement to the net worth of
an enterprise (other than as an entrepreneur or a shareholder), or the
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capital gains/losses qualify as taxable income from miscellaneous activities
with respect to the Claims (belastbaar resultaat uit overige werkzaamheden).
Corporate Income Tax
Capital gains/losses derived from the exchange of Claims by a corporate
holder of Claims that resides, or is deemed to reside, in The Netherlands are
subject to Dutch corporate income tax on a net basis, generally if the Claims
are (deemed) attributable to a trade or business carried on (or deemed to be
carried on) by the holder.
Income Tax Consequences of the Exchange of Claims for Nonresidents of The
Netherlands
Individual Income tax
A nonresident individual holder of Claims will not be subject to Dutch
income tax on capital gains/losses derived from the exchange of the Claims,
provided such individual holder:
o does not carry on and has not carried on a business in The Netherlands
in whole or in part carried on through a permanent establishment or a
permanent representative in The Netherlands to which the Claims are
attributable; and
o does not share and has not shared directly (not through the beneficial
ownership of shares or similar securities) in the profits of an
enterprise managed and controlled in The Netherlands to which
enterprise the Claims are attributable;
o does not carry out and has not carried out nor is deemed to carry out
any activities in The Netherlands which can be qualified as taxable
income from miscellaneous activities with respect to the Claims
(belastbaar resultaat uit overige werkzaamheden)
o does not carry out and has not carried out employment activities in
The Netherlands or serves or served as a director or board member of
any entity resident in The Netherlands, or serves or served as a civil
servant of a Dutch public entity with which the holding of Claims is
or was connected; and
o is not an individual that has opted to be taxed as a resident of The
Netherlands.
Tax Treaty
Under most Dutch tax treaties, the right to tax capital gains/losses
realized by a nonresident individual holder from the exchange of Claims is in
many cases allocated to the individual holder's country of residence, unless the
nonresident individual holder carries on or has carried on a business in The
Netherlands through a permanent establishment or a permanent representative to
which Claims are attributable.
Corporate Income Tax
A nonresident corporate holder of Claims will not be subject to Dutch
corporate income tax on capital gains/losses derived from the exchange of
Claims, provided such corporate holder:
o does not carry on and has not carried on a business in The Netherlands
through a permanent establishment or a permanent representative to
which Claims are attributable; and
o does not have a substantial interest in the Company; or
o does have a substantial interest in the Company, which, however, is
allocable to a business enterprise carried on by the corporate holder.
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Tax Treaty
Under most Dutch tax treaties, the right to tax capital gains/losses
realized by a nonresident corporate holder from the exchange of Claims is
allocated to the corporate holder's country of residence, unless the nonresident
corporate holder carries on or has carried on a business in The Netherlands
through a permanent establishment or a permanent representative to which Claims
are attributable.
Income Tax Consequences for Residents or Deemed Residents of The
Netherlands of Acquiring, Owning and Disposing of Shares of New UPC Common
Stock
Individual Income Tax
The individual resident or deemed resident holder (including an individual
holder who has opted to be taxed as a resident of The Netherlands) will be taxed
on a deemed income from savings and investments (sparen en beleggen), unless:
o the shares are attributable to a trade or business carried on by the
individual shareholder by virtue of such individual being an
entrepreneur (ondernemer) or pursuant to a co-entitlement to the net
worth of an enterprise (other than as an entrepreneur or a
shareholder); or
o the shares form part of a substantial interest; or
o the capital gains/losses realized from the disposition of and/or
income derived from the shares qualify or are deemed to qualify as
taxable income from miscellaneous activities with respect to the
shares (belastbaar resultaat uit overige werkzaamheden) (e.g.,
"regular, active portfolio management" (normaal, actief
vermogensbeheer)).
The deemed benefit from savings and investments amounts to 4% per annum of
the average of the individual's yield basis (rendementsgrondslag) at the
beginning of the calendar year and the individual's yield basis at the end of
the calendar year, insofar this average exceeds a certain threshold
(heffingsvrij vermogen). The (net) yield basis consists of the fair market value
of certain assets and liabilities of the individual, including the fair market
value of the shares.
The income from savings and investments is taxed annually at a flat rate of
30% (rate 2002), regardless whether any interest has been received, capital
gains have been realized or capital losses have been suffered.
Income derived from the shares and capital gains/losses realized from the
sale or exchange of the shares by an individual resident shareholder are subject
to tax on a net income basis at the progressive income tax rates, if the shares
are attributable to a trade or business carried on by the individual shareholder
by virtue of such individual being an entrepreneur (ondernemer) or pursuant to a
co-entitlement to the net worth of an enterprise (other than as an entrepreneur
or a shareholder), or income and the capital gains/losses qualify as taxable
income from miscellaneous activities with respect to the shares (belastbaar
resultaat uit overige werkzaamheden).
Income derived from the shares and capital gains/losses realized from the
sale or exchange of the shares by an individual resident shareholder that holds
a substantial interest are generally subject to income tax at a rate of 25%
(rate 2002) on a net basis.
Tax Treaty
Under the income tax treaty in effect between The Netherlands and the
United States, the right to tax income derived from and capital gains realized
upon alienation of the shares by an individual shareholder that resides or is
deemed to reside in The Netherlands, is allocated to The Netherlands.
Generally, an individual shareholder that resides, or is deemed to reside
in The Netherlands will be allowed a credit against Dutch income tax for U.S.
tax withheld on dividends paid on the shares.
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Corporate Income Tax
Dividends received from the shares and capital gains/losses realized from
the sale or exchange of shares by a corporate shareholder that resides, or is
deemed to reside, in The Netherlands are subject to Dutch corporate income tax
on a net basis, generally if the shares are (deemed) attributable to a trade or
business carried on (or deemed to be carried on) by the holder, unless that
shareholding qualifies for the participation exemption.
To qualify for the participation exemption, the shareholder must generally
hold at least 5% of the nominal paid-in capital and meet other requirements, in
particular the shareholding not qualifying as a portfolio investment (belegging)
Tax Treaty
Under the income tax treaty in effect between The Netherlands and the
United States, the right to tax income from the shares (dividends/capital gains)
realized by a corporate shareholder that resides or is deemed to reside in The
Netherlands, is allocated to The Netherlands. Provided that the Dutch
participation exemption is not applicable, the corporate shareholder that
resides, or is deemed to reside in The Netherlands will be allowed a credit
against Dutch corporate income tax for U.S. tax withheld on dividends paid on
the shares.
Net Wealth Tax
No net wealth tax is levied in The Netherlands.
Gift and Inheritance Tax
Residents or Deemed Residents of The Netherlands
Dutch gift tax or inheritance tax will be due with respect to a gift or
inheritance of shares of New UPC Common Stock from a person who resided, or was
deemed to have resided, in The Netherlands at the time of the gift or his or her
death. Dutch tax will be due in the case of a gift of shares by an individual,
who at the time of the gift, was neither resident nor deemed to be resident in
The Netherlands, if such individual deceases within 180 days after the date of
the gift, while being resident or deemed resident in The Netherlands. An
individual who is of Dutch nationality is deemed to have been resident in The
Netherlands if he or she was a resident in The Netherlands at any time during
the ten years preceding the date of the gift or the date of his or her death.
For gift tax purposes, each person (regardless of nationality) is deemed to
be a Netherlands resident if he or she was a resident in The Netherlands at any
time during the 12-months preceding the date of the gift. The ten-year and
12-month residency rules may be modified by treaty.
Liability for payment of the gift tax or inheritance tax rests with the
donee or heir, respectively. The rate at which these taxes are levied is
primarily dependent on the fair market value of the gift or inheritance and the
relationship between the donor and donee or the deceased and his or her heir(s).
Exemptions may apply under specific circumstances.
Nonresidents of The Netherlands
A gift or inheritance of shares of New UPC Common Stock from a nonresident
holder will not be subject to Dutch gift tax or inheritance tax in the hands of
the donee or heir provided the nonresident donee or heir was not:
o a Dutch national who has been resident in The Netherlands at any time
during the ten (10) years preceding the date of gift or the date of
decease or, in the event that he or she was resident in The
Netherlands during such period, the nonresident donee or heir was not
of the Dutch nationality at the time of gift or death;
o solely for the purpose of the gift tax, a resident of The Netherlands
at any time during the 12 months preceding the time of the gift
(however, in case of a gift by an individual who at the time of the
gift was neither resident nor deemed to be resident in The Netherlands
and such individual
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dies within 180 days after the date of the gift, while being resident
or deemed to be resident in The Netherlands, tax will be due); or
o engaged in a business in The Netherlands through a permanent
establishment or a permanent representative which included in its
assets the shares.
Dutch Tax Position of New UPC
General
As a company incorporated under U.S. law, New UPC will for Dutch corporate
income tax purposes be considered to be a non-resident, unless its effective
management and control is exercised in The Netherlands. Furthermore New UPC will
actively be involved in the management of the UPC Group.
Restructuring
Corporate Income Tax Act. As a non-resident corporate holder of the UPC
Notes and the Belmarken Notes, New UPC will not be subject to Dutch corporate
income tax on capital gains/losses derived from the sale, exchange, waiver or
disposition of the UPC Notes, provided New UPC
o does not carry on and has not carried on a business in The Netherlands
through a permanent establishment or a permanent representative to
which the UPC Notes or Belmarken Notes are attributable; and
o does not have a substantial interest in the Company; or
o does have a substantial interest in the Company, which, however, is
allocable to a business enterprise carried on by New UPC.
In view of the above fact pattern, no Dutch corporate income tax should be
due at the level of New UPC as a result of the Restructuring. This is confirmed
in the tax ruling mentioned below under "Dutch Tax Position of the Company."
Withholding Taxes
The Netherlands does not levy withholding taxes on interest payments in
connection with debts, unless the debt qualifies as a profit sharing debt
instrument or as quasi-equity or the terms of the debt are not at arm's length.
In relation to the UPC Notes and the Belmarken Notes, no withholdings should be
due.
Tax Treaty
Under the U.S.-Netherlands tax treaty, the right to tax income derived from
the UPC Notes (including capital gains/losses) by New UPC is allocated to the
United States, unless New UPC carries on or has carried on a business in The
Netherlands through a permanent establishment or a permanent representative to
which the UPC Notes are attributable.
Shareholding in the Company
Dutch Corporate Income Tax
As a non-resident corporate holder of shares in the Company, New UPC will
not be subject to Dutch corporate income tax on income received from the shares
or capital gains derived from the sale, exchange or disposition of the shares
provided:
o New UPC does not carry on and has not carried on a business in The
Netherlands through a permanent establishment or a permanent
representative to which the shares are attributable; and
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o the substantial interest owned in the Company is allocable to a
business enterprise carried on by New UPC.
In view of the above fact pattern, no Dutch corporate income tax should be
due at the level of New UPC.
Withholding Taxes
In principle 25% Dutch dividend withholding taxes is due over dividend
distributions made from the Company to New UPC. Under U.S.-Netherlands tax
treaty under conditions the rate of Dutch dividend withholding taxes to be
withheld is reduced.
Tax Treaty
Based on the U.S.-Netherlands tax treaty capital gains realized by New UPC
will only be taxable in the United States. Based on the U.S.-Netherlands tax
treaty, the Company will have to withhold 5% Dutch dividend withholding tax from
dividend distributions made from the Company to New UPC.
Dutch Tax Position of the Company
Restructuring
As a result of the Restructuring, the UPC Group realizes a one time gain.
To the extent this gain resides at the level of the Company or one of its Dutch
subsidiaries, this creates Dutch taxable income. However, to the extent the
Company has net operating losses, these net operating losses can be used to
shelter this income.
Tax Ruling
The Company has discussed the Restructuring with the Dutch tax authorities
and has come to an agreement on the treatment for Dutch corporate income tax
purposes. Agreement has been reached on how the gain at the Company level should
be calculated and how the Company's net operating losses can be used to shelter
this gain. In view of the above, the Restructuring will not lead to a cash
outflow for corporate income tax.
Capital Tax
The Restructuring will lead to a capital tax cost of 0.55% on the fair
market value of the contributions made to the Company to the extent that the
Company cannot rely on an exemption.
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REORGANIZATION VALUATION ANALYSIS AND PROJECTED FINANCIAL INFORMATION
Reorganization Valuation Analysis
A bankruptcy court is often requested, as part of confirmation of a plan of
reorganization, to determine the enterprise value of a reorganized debtor after
giving effect to the contemplated restructuring as this is often used to
evaluate the consideration being provided to holders of claims and equity
interests under a plan of reorganization. Accordingly, the Company has requested
that Lazard, its financial advisor, in connection with the negotiation of the
Restructuring, prepare a valuation of New UPC (together with its
post-restructuring consolidated non-Company subsidiaries, the "Reorganized
Entity"), after giving effect to the Restructuring as set forth in the Plan.
The Company has been advised by Lazard with respect to the value of the
Reorganized Entity on a going concern basis. Solely for purposes of this
Disclosure Statement, the estimated range of reorganization enterprise values of
the Reorganized Entity, prior to any dilution pursuant to the Plan, is US$4.6
billion to US$5.4 billion as of an assumed Effective Date of March 31, 2003.
Based on the implied valuation of the Reorganized Entity at which the
reorganization has been negotiated between UGC and the Participating
Noteholders, namely an enterprise valuation of US$5.2 billion, and assuming
estimated net debt at its subsidiaries of approximately US$3.225 billion (which
excludes approximately US$0.35 billion face value of debt of UPC Polska and its
subsidiaries), the implied equity value for the Reorganized Entity is US$1.975
billion. Assuming a base number of shares to be distributed under the Plan of 50
million, the price per common share (before any dilution as provided in the
Plan) of New UPC is US$39.50.
The foregoing estimate of the range of reorganization enterprise values of
the Reorganized Entity relies on a number of assumptions with respect to
economic, market, foreign exchange, regulatory, industry and general business
conditions, the implementation of the Reorganized Entity's business plan, and
the Plan becoming effective in accordance with the estimates and other
assumptions discussed herein.
This valuation analysis reflects work performed by Lazard on the basis of
information in respect of the businesses and assets made available to Lazard by
the Company's management in December 2002. Values have been exchanged from Euros
into United States Dollars at a rate of US$0.9968 per (euro)1.0000.
In conducting this analysis, Lazard: (i) reviewed certain historical
financial information of the Company for recent years and interim periods; (ii)
reviewed certain internal financial and operating data of the Company, including
financial projections prepared and provided by management relating to the
Company's business and its prospects; (iii) discussed the Company's operations
and future prospects with certain members of senior management of the Company;
(iv) reviewed publicly available financial data and considered the market value
of public companies which Lazard deemed generally comparable to the operating
business of the Company; (v) considered certain economic and industry
information relevant to the operating business; and (vi) conducted such other
studies, analyses, inquiries and investigations as it deemed appropriate.
Although Lazard conducted a review and analysis of the Company's business,
operating assets and liabilities and the Reorganized Entity's business plan, it
assumed and relied on the accuracy and completeness of all financial and other
information furnished to it by the Company, and of publicly available
information. In addition, Lazard did not independently verify management's
projections in connection with Lazard's estimates of the reorganization
enterprise value, and no independent valuations or appraisals were sought or
obtained in connection herewith.
Estimates comprising the range of reorganization enterprise values do not
purport to be appraisals or necessarily reflect the values which may be realized
if assets of the Company are sold as a going concern, in liquidation or
otherwise.
The estimated range of reorganization enterprise values prepared by Lazard
represents the range of hypothetical reorganization enterprise values of the
Reorganized Entity as of the Effective Date. These estimates were developed
solely for purposes of the formulation and negotiation of a plan of
reorganization and to estimate the implied recoveries to creditors thereunder.
These estimates do not purport to reflect or constitute an appraisal,
liquidation value or estimate of the actual market value that may be realized
through the sale of any securities to be issued pursuant to the Plan, which may
be significantly different than the amounts set forth herein.
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The enterprise value of any operating business is subject to numerous
uncertainties and contingencies which are difficult to predict, and will
fluctuate with changes in factors affecting the financial condition and
prospects of the business. As a result, the estimated range of reorganization
enterprise values of the Reorganized Entity set forth herein is not necessarily
indicative of actual outcomes, which may be significantly different from those
set forth herein, and none of the Company, New UPC, Lazard or any other person
assumes responsibility for their accuracy. In addition, the value of
newly-issued securities is subject to uncertainties and contingencies, all of
which are difficult to predict. Actual market prices of such securities at
issuance will depend upon, among other things, prevailing conditions in the
financial markets, interest rates, the initial securities holding of prepetition
creditors, some of which may prefer to liquidate their investment rather than
hold it on a long-term basis, and other factors which generally influence the
prices of securities.
New UPC has agreed to use its commercially reasonable efforts to list the
shares of New UPC Common Stock on NASDAQ. If New UPC is unable to list the New
UPC Common Stock on NASDAQ, the ability of the holders of New UPC Common Stock
to trade their shares may be adversely affected. There can be no assurance that
an active trading market in the New UPC Common Stock will develop after
consummation of the Restructuring. See "Risk Factors--Risks Related to Ownership
of the New UPC Common Stock--New UPC may not be able to list the New UPC Common
Stock on NASDAQ and this may impair the liquidity of the New UPC Common Stock"
and "--The price of the New UPC Common Stock will likely be volatile."
Valuation Methodologies
Lazard performed a variety of analyses and considered a variety of factors
in preparing the valuation of the Company's core business. Lazard primarily
relied on three generally accepted methodologies: discounted cash flow analysis,
comparable public company analysis, and precedent transactions analysis. Lazard
made judgments as to the relative significance of each analysis and the
indicated value range reflects the combined conclusions of each analysis.
Discounted Cash Flow Analysis
The discounted cash flow ("DCF") valuation methodology is a
"forward-looking" approach that relates the value of an asset or business to the
present value of expected unlevered after-tax cash flows accruing to debt,
equity and other capital providers of the business. The expected future cash
flows are discounted to the Effective Date at a theoretical rate which
represents the weighted average cost of capital of the business.
This approach relies on the Company's ability to project future cash flows
with some degree of accuracy. The Company's projections reflect assumptions made
by the Company's management concerning anticipated results, and the assumptions
and judgments used in the projections may or may not ultimately prove correct;
therefore no assurance can be provided that the projections are attainable or
correct. Lazard does not and cannot make any representations or warranties as to
the accuracy or completeness of the Company's projections.
Comparable Public Company Analysis
The comparable public company analysis estimates the value of a business
based on a comparison with the financial statistics of public companies in a
similar line of business. It establishes valuation benchmarks by calculating the
enterprise values of comparable companies, as determined by the traded value of
their securities, as multiples of common operating statistics such as revenues,
cash flow and earnings, then applying those multiples to the operating
statistics of the subject company. The analysis involves a detailed multi-year
comparison of each company's income statements, balance sheets and cash flow
statements. In addition, each company's performance, profitability, margins,
leverage and business trends are also examined.
A key factor to this approach is the selection of companies with similar
operational and financial characteristics to the target company. Relevant
criteria for selecting comparable companies include, among other things,
similarity of lines of business, business risks, strategy and growth prospects,
maturity of business, cost structure, market presence, size and scale of
operations. The selection of truly comparable companies is often difficult and
subject to numerous judgments.
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Precedent Transactions Analysis
The precedent transactions analysis provides an estimate of value by
examining the transaction multiples of recent public merger and acquisition and
restructuring transactions. Analysis of the purchase prices and transaction
values of transactions involving comparable companies provides indicative
valuation multiples for the Reorganized Entity.
As with the comparable public company analysis, the precedent transactions
analysis depends on the selection of truly comparable transactions. The
transaction multiples implied in precedent transactions reflect the
circumstances surrounding each transaction which may be specific to each
transaction. In arriving at its conclusions, Lazard made a number of judgments
in this regard.
THE RANGE OF REORGANIZATION ENTERPRISE VALUES DETERMINED BY LAZARD
REPRESENT ESTIMATED VALUES OF THE REORGANIZED ENTITY FOR PURPOSES OF CALCULATING
RECOVERY TO CREDITORS UNDER THE PLAN, AND DO NOT REFLECT VALUES THAT COULD BE
ATTAINED IN A PUBLIC OR PRIVATE SALE. SIMILARLY, THE ESTIMATED RANGE OF
REORGANIZATION EQUITY VALUES DO NOT PURPORT TO BE ESTIMATES OF
POST-REORGANIZATION MARKET PRICE OF THE SHARES OF NEW UPC COMMON STOCK. ANY SUCH
MARKET PRICE OF THE SHARES OF NEW UPC COMMON STOCK MAY BE MATERIALLY DIFFERENT
FROM THE ESTIMATES DESCRIBED HEREIN.
Projected Financial Information
As described in "Chapter 11 Case and the Plan of Reorganization--Voting on,
and Confirmation of, the Plan--Feasibility," in order for the Plan to be
confirmed, the U.S. Bankruptcy Court must find that the Plan is "feasible" as
set forth in Section 1129(a)(11) of the U.S. Bankruptcy Code. Accordingly, in
order to demonstrate that the Plan is feasible, to assist in the preparation of
a valuation analysis and to assist each Holder of a Claim against, or Equity
Interest in, the Company in determining whether to accept or reject the Plan,
the Company's management has prepared the prospective financial information and
other financial projections set forth in Annex F of this Disclosure Statement
(the "Projections").
The Projections are based upon the Company's business plan and should be
read in conjunction with (i) the assumptions, qualifications and footnotes to
the tables containing the Projections, (ii) the historical consolidated
financial information (including the notes and schedules thereto) and the other
information set forth in the Company's Annual Report of Form 10-K for the fiscal
year ended December 31, 2001, attached hereto as Annex C, and the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002,
attached hereto as Annex E and (iii) the information contained under the heading
"Risk Factors" of this Disclosure Statement.
The Projections were prepared exclusively, and in good faith, by the
management of the Company using assumptions believed to be reasonable and
applied in a manner consistent with past practice. Most of the assumptions about
the operations of the Company's and the UPC Group's business after the assumed
Effective Date of March 31, 2003 which are utilized in the Projections are
based, in part, on economic, competitive, and general business conditions
prevailing at the time they were prepared. While, as of the date hereof, such
conditions have not materially changed, any future changes in these conditions
may materially impact the Company's ability to achieve the Projections.
The Projections, while presented with numerical specificity, are
necessarily based on a variety of estimates and assumptions which, though
considered reasonable by the Company's management when taken as a whole, may not
be realized, and are inherently subject to significant known and unknown
business, economic and competitive uncertainties and contingencies, including,
among others, those summarized herein, many of which are beyond the Company's
control and which may cause the Company's actual financial condition, results or
performance to be materially different from those projected. Consequently, this
Disclosure Statement and the Projections contained herein should not be regarded
as a representation by the Company or any other person as to the accuracy of the
Projections or to the Company's ability to achieve the projected results or
performance. In addition, there can be no assurance that the assumptions made by
the Company's management in preparing the Projections will prove accurate. Some
assumptions inevitably will not materialize. Further, events and circumstances
occurring subsequent to the date on which the Projections were prepared may be
different from those assumed or,
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alternatively, may have been unanticipated, and the occurrence of these events
may affect the Company's and the UPC Group's financial results in a material and
possibly adverse manner. The Projections, therefore, are not fact and should not
be relied upon as a guaranty or other assurance of the actual results that will
occur. The inclusion of the Projections in this Disclosure Statement should not
be regarded as an indication that the Company or any of its affiliates,
representatives or advisors consider the Projections to be a reliable prediction
of future events, and the Projections should not be relied upon as such. Readers
of this Disclosure Statement are cautioned not to place undue reliance on the
Projections.
The Company's management has prepared the Projections solely for purposes
of complying with the requirements of the U.S. Bankruptcy Code. The Projections
were not prepared with a view toward compliance with the published guidelines of
the SEC, the American Institute of Certified Public Accountants, or any other
regulatory or professional agency or body, generally accepted accounting
principles or consistency with the Company's historical consolidated financial
statements. Neither Arthur Andersen Amstelveen, The Netherlands ("Arthur
Andersen"), the Company's predecessor independent auditors, nor KPMG, the
Company's current independent auditors, nor Lazard, the Company's financial
advisors, has compiled or examined the Projections or performed any procedures
with respect to the Projections, nor have they expressed any opinion or any
other form of assurance on the Projections or the achievability of the results
or performance indicated by the Projections, and assume no responsibility for,
and disclaim any association with, the Projections.
The Company's management does not, as a matter of course, publicly disclose
financial projections of the Company's or the UPC Groups' expected future
financial condition, results of operations or cash flows. Accordingly, the
Company does not intend, and disclaims any obligation, to (i) furnish updated or
revised projections to reflect circumstances existing after the date of this
Disclosure Statement or to reflect the occurrence of future events (even in the
event that any or all of the assumptions underlying the Projections are shown to
be in error) to Holders of the Claims against, and Equity Interests in, the
Company prior to the Effective Date or to holders of the shares of New UPC
Common Stock or any other party after such Effective Date, (ii) include such
updated or revised information in any documents that may be required to be filed
with the SEC or (iii) otherwise make such updated or revised information
publicly available.
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LIQUIDATION ANALYSIS
Best Interests of Creditors Test
As described in "Voting on, and Confirmation of, the Plan--Confirmation of
the Plan--The Best Interests Test," above, in order to confirm a Chapter 11 plan
of reorganization, the U.S. Bankruptcy Code requires that, among other things,
each holder of a claim or equity interest in an impaired class either:
o accept the plan; or
o receive or retain under the plan cash or property of a value, as of
the effective date of the plan, that is not less than the value such
holder would receive or retain if the debtor were liquidated under
Chapter 7 of the U.S. Bankruptcy Code (the "Best Interests Test").
To calculate what holders of each impaired class of claims and equity
interests would receive in a Chapter 7 liquidation, the U.S. Bankruptcy Court
must determine the "liquidation value" of the debtor, which would consist
primarily of the net proceeds from a forced sale of the debtor's assets by a
Chapter 7 trustee. The proceeds from a Chapter 7 liquidation that would be
available to all unsecured claims would be reduced or diluted by:
o secured claims to the extent of the value of the collateral securing
such claims;
o the costs and expenses of liquidation, including the costs incurred to
sell the assets;
o the administrative expenses of the Chapter 7 case, including the fees
of a trustee, counsel, financial advisors, accountants and other
professionals;
o additional contingent claims and losses arising during the operation
of the debtor's business in Chapter 7, including potential breaches of
contracts as a result of inevitable employee attrition;
o priority claims arising in the Chapter 7 and the prior Chapter 11
case; and
o administrative expenses and claims in the prior Chapter 11 case,
including the fees of counsel, financial advisors, accountants and
other professionals.
In applying the Best Interests Test, the Company believes that the most
likely outcome of a liquidation proceeding under Chapter 7 would be the
application of the rule of absolute priority of distributions under Bankruptcy
Code Section 726. Under that rule, no junior creditor receives any distribution
until all senior creditors are paid in full, and no equity holder receives any
distribution until all creditors are paid in full with interest.
To determine if the Plan satisfies the Best Interests Test as to each
Holder of an Impaired Claim or Impaired Equity Interest, the present value of
such Holder's pro rata share of the net liquidation proceeds available for
distribution to unsecured creditors must be compared with the value of the
property offered to such Holder under the Plan. If present values offered to
each such Holder under the Plan are found by the U.S. Bankruptcy Court to equal
or exceed what each such Holder would realize in a Chapter 7 liquidation, the
Plan will be deemed to satisfy the Best Interests test.
Liquidation Analysis
As set forth in the attached Liquidation Analysis (Annex G), the Company
believes that the confirmation of the Plan will provide each Holder of an
impaired Claim or Equity Interest with a greater recovery than it would receive
if the Company was liquidated under Chapter 7. In addition, in our view, a
Chapter 7 liquidation involves additional uncertainty not fully reflected in the
Liquidation Analysis with respect both to the timing and amount of payments to
each Holder of an impaired Claim or Equity Interest. The Company believes that
the Plan provides as much certainty as is possible regarding these matters.
The Liquidation Analysis, which was prepared by the Company's management
with the assistance of Lazard, is provided solely to disclose to Holders of
Claims and Equity Interests the effects of a hypothetical Chapter
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7 liquidation, subject to the assumptions set forth therein. There can be no
assurance that those assumptions would prove accurate if a Chapter 7 liquidation
was to occur or that our analysis will be accepted by the U.S. Bankruptcy Court.
Members of management and representatives of Lazard will be available to provide
testimony to the U.S. Bankruptcy Court as to the methods used, and conclusions
in, the attached Liquidation Analysis.
The Company has assumed that a liquidation of the Company under Dutch
bankruptcy law would not result in a materially better recovery to the Holders
of Claims against, and Equity Interests in, the Company than a Chapter 7
liquidation.
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WHERE YOU CAN FIND MORE INFORMATION
The Company files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any document the
Company files with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain further information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
Company's SEC filings are also available to the public over the internet at the
SEC's internet website at http://www.sec.gov.
INCORPORATION BY REFERENCE
The Company has attached as Annexes C, D and E hereto, and is incorporating
by reference into this Disclosure Statement, its Annual Report on Form 10-K for
the year ended December 31, 2001 (including the audited consolidated financial
statements of the Company for the years ended December 31, 1999, 2000 and 2001),
its Amendment No. 1 to the Annual Report on Form 10-K for the year ended
December 31, 2001 and its Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2002, respectively. The Company also is incorporating by
reference into this Disclosure Statement its Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 2002, its Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2002, its Current Report on Form 8-K dated
September 30, 2002 and all of its filings with the SEC under Sections 13(a),
13(c), 14 and 15(d) of the U.S. Exchange Act from the date hereof until the
Effective Date.
Any statement contained in this Disclosure Statement or in any of the
documents incorporated by reference in, and forming part of, this Disclosure
Statement shall be deemed to be modified or superseded for the purpose of this
Disclosure Statement to the extent that a statement contained in any document
subsequently incorporated by reference modifies or supersedes such statement.
You may obtain a copy of any of the documents incorporated by reference
into this Disclosure Statement, at no cost, by writing or telephoning the
Company at:
United Pan-Europe Communications N.V.
Boeing Avenue 53
1119 PE Schiphol Rijk
Postbus 79763
1070 BT Amsterdam
The Netherlands
Attn: Ruth Pirie, Investor Relations
Phone: 011-31-20-778-9840
For holders of the UPC Ordinary Shares A, the minutes of the annual general
meeting of shareholders of the Company of June 20, 2002 will be available free
of charge at the offices of the Company referred to above.
In addition, copies of the Amended Articles of Association of the Company,
the Amended Articles of Incorporation of New UPC and the Amended By-laws of New
UPC will be available free of charge at the offices of the Company referred to
above.
The Company will respond to requests for information that is incorporated
by reference into this Disclosure Statement within three business days after
receipt of such request and will send the incorporated documents by first-class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the date of this Disclosure Statement through the
date of responding to the request.
AUDITORS
Auditor's Statement Regarding Financial Statements and Consent
The consolidated financial statements of the Company at December 31, 2000
and 2001 and for each of the years in the three-year period ended December 31,
2001 incorporated into this Disclosure Statement by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001 have been
audited by
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Arthur Andersen, independent auditors, as set forth in their reports thereon
(which contain an explanatory paragraph regarding the ability of the Company to
continue as a going concern).
On June 20, 2002, the Company appointed KPMG to replace Arthur Andersen as
its independent public accountants. Prior to the date of this Disclosure
Statement, Arthur Andersen ceased its operations. After reasonable efforts, the
Company has been unable to obtain Arthur Andersen's updated written consent to
incorporate by reference into this Disclosure Statement Arthur Andersen's audit
report with respect to the annual consolidated financial statements of the
Company contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2001. As a result, the audit report to the Company's
annual consolidated financial statements for the three years ended December 31,
2001 (as incorporated by reference into this Disclosure Statement) is Arthur
Andersen's audit report issued on April 12, 2002. Although Arthur Andersen has
not consented to the incorporation by reference of its audit report into this
Disclosure Statement, it has consented to the inclusion of its audit report in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001. Readers of this Disclosure Statement are advised that the audit report on
the annual consolidated financial statements of the Company for the three years
ended December 31, 2001 is included in this Disclosure Statement by reference to
the copy of the previously issued audit report of Arthur Andersen which has not
been reissued or updated by Arthur Andersen as it has ceased its operations.
Auditor's Statement Regarding Dutch Prospectus
Section 2 of the Dutch Securities Decree 1995 and, in particular, Section
2.4 of Schedule A (Bijlage A) to the Dutch Securities Decree 1995 provide that
the Prospectus contain a statement of an accountant that the prospectus, if and
to the extent applicable, contains the information set forth in the Section 1.1
up until and including 13.7 (of the Schedule) as well as the information
required by the A-FM pursuant to subsection 5 of Section 2 of the Dutch
Securities Decree 1995.
We have established that this Disclosure Statement by New UPC contains the
data which, to the extent applicable, is required to be included herein by the
Dutch Securities Decree 1995 and the Further Regulation on Market Conduct
Supervision of the Securities Trade 2002.
KPMG Accountants N.V.
Amstelveen, ________, 2003
Other Information Regarding Auditors
New UPC has not yet appointed an independent auditor.
The address of KPMG is:
KPMG Accountants N.V.
KPMG Building
Burgmeester Rijnderslaan 10-20
1185 MC Amstelveen
The Netherlands
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VOTING AGENTS AND SUBSCRIPTION AGENT
Voting Agents
Any Holder of Claims or Equity Interests who wishes to accept or reject the
Plan should complete the Ballot and forward it pursuant to the instructions
contained therein. If any Holder has any additional questions, or needs
additional copies of this Disclosure Statement, the Ballot or any other
Restructuring materials, such Holder should contact the applicable Voting Agent
at the address or telephone number as listed below:
Securities Voting Agent Nonsecurities Voting Agent
Innisfree M&A Incorporated Bankruptcy Services LLC
By regular mail, messenger or overnight courier: By regular mail:
Attn: UPC Ballot Tabulation United Pan-Europe Communications Ballot Processing
501 Madison Avenue, 20th Floor P.O. Box 5014
New York, NY 10022 FDR Station
United States of America New York, NY 10150-5014
United States of America
Telephone:
1-877-750-2689 By messenger or overnight courier:
(within the United States) United Pan-Europe Communications Ballot Processing
c/o Bankruptcy Services LLC
+1-412-209-1704 70 East 55th Street
(outside the United States) New York, NY 10022-3222
United States of America
Telephone:
1-888-498-7765
(within the United States)
+1-212-376-8998
(outside the United States)
Subscription Agent
_______ will act as the Subscription Agent for the receipt of the
Subscription Amount upon exercise of New UPC Equity Purchase Rights and
subscription for Subscription Shares. All correspondence in connection with the
Payment of a Subscription Amount for the exercise of New UPC Equity Purchase
Rights and subscription for Subscription Shares should be addressed to the
Subscription Agent at the address or telephone number as listed below:
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CONCLUSION AND RECOMMENDATION
The Company and New UPC believe that confirmation of the Plan is desirable
and in the best interest of the Holders of Claims and Equity Interests as the
Plan, the Akkoord, and the Dutch Implementing Offer provide for an equitable
distribution to the Company's creditors and stockholders. Any alternative to
confirmation of the Plan, such as conversion to a Chapter 7 liquidation or
dismissal of the case, or attempts by another party in interest to file a plan,
could result in significant delays, litigation and costs, and likely would
result in significantly lower recoveries by the Holders of Claims against, and
Equity Interests in, the Company.
In light of the significant benefits to be attained by the Holders of
Claims and Equity Interests pursuant to consummation of the transactions
contemplated by the Plan, the Akkoord, and the Dutch Implementing Offer, the
Company and New UPC recommend that, as applicable, the Holders of Claims and
Equity Interests (a) vote to accept the Plan and the Akkoord and (b) transfer
their UPC Ordinary Shares A to New UPC pursuant to the Dutch Implementing Offer.
The Company and New UPC have reached this decision after considering the
alternatives to the Plan that are available to the Company and their likely
effect on the Company's business operations and creditors. These alternatives
include liquidation of the company under Chapter 7 of the U.S. Bankruptcy Code
or an alternative plan of reorganization under Chapter 11 of the U.S. Bankruptcy
Code. The Company and New UPC determined, after consulting with financial and
legal advisors, that the Plan would result in greater recovery for Holders of
Claims and Equity Interests than would any other Chapter 11 reorganization or
liquidation under Chapter 7. For a comparison of estimated distributions under
Chapter 7 of the U.S. Bankruptcy Code and under the Plan, see "Annex G
- --Liquidation Analysis." For all of these reasons, the Company and New UPC urge
all Holders of Claims and Equity Interests to accept and support the Plan and
the Akkoord, and all non-U.S. Holders of UPC Ordinary Shares A to participate in
the Dutch Implementing Offer.
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By: /s/ Anton M. Tuijten
-----------------------------------------------
Name: Anton M. Tuijten
Title: General Counsel and Member of the Board
of Management
By: /s/ Charles H.R. Bracken
-----------------------------------------------
Name: Charles H.R. Bracken
Title: Chief Financial Officer and Member of
the Board of Management
NEW UPC, INC.
By: /s/ Michael T. Fries
-----------------------------------------------
Name: Michael T. Fries
Title: President
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CROSS REFERENCES FOR DEFINED TERMS
The following table sets forth the page number on which each capitalized
term used in this Disclosure Statement is defined. Capitalized terms not
contained in the cross reference table below are defined in Section 1.1
(Definitions) of the Plan.
Term Page
---- ----
Administrative Claims............................................ 52
Administrator.................................................... 16
ADR.............................................................. 127
A-FM............................................................. 46
Akkoord.......................................................... (ii)
Allowed Claims................................................... 52
Allowed Equity Interests......................................... 52
Annualised EBITDA................................................ 41
Arthur Andersen.................................................. 173
Ballot........................................................... 12
Belmarken........................................................ (i)
Belmarken Notes.................................................. (i)
Belmarken Notes Claims........................................... 55
Belmarken Notes Consideration.................................... 7
Best Interests Test.............................................. 174
Board of Management Schedule..................................... 105
Business Day..................................................... 1
CFC.............................................................. 163
Change in Control................................................ 121
Chapter 11 Case.................................................. (i)
Citibank......................................................... 127
Class III Directors.............................................. 136
CLEC............................................................. 101
COD.............................................................. 162
Common Shares UGC Fraction....................................... 141
Company.......................................................... (i)
Confirmation Date................................................ 60
Confirmation Hearing............................................. 15
Confirmation Order............................................... 47
Control Requirement.............................................. 159
corporate opportunities.......................................... 138
Creditors Committee.............................................. 50
Creditor Position................................................ 159
Critical Creditor Claims......................................... 55
Critical Creditors............................................... 156
DCF.............................................................. 171
Derivative Action................................................ 57
Designated Directors............................................. 157
DGCL............................................................. 26
Disbursing Agent................................................. B-1
Disclosure Statement............................................. (i)
Disinterested Stockholder........................................ 137
Document Filing Date............................................. 15
DTC.............................................................. 95
Dutch Bankruptcy Case............................................ (ii)
Dutch Bankruptcy Code............................................ (ii)
Dutch Bankruptcy Court........................................... (ii)
Dutch Claims Filing Deadline..................................... 17
-180-
Term Page
---- ----
Dutch Implementing Offer......................................... (ii)
Dutch Securities Act 1995........................................ (iv)
Dutch Securities Decree 1995..................................... 90
Dutch Voting Meeting............................................. 16
Effective Date................................................... (ii)
11 1/2% Senior Notes due 2010.................................... 120
11 1/4% Senior Notes due 2010.................................... 120
11 1/4% Senior Notes due 2009.................................... 120
Equity Securities Claims......................................... 56
Equity Position.................................................. 159
(euro) or Euro................................................... 1
Euronext......................................................... 20
EWT.............................................................. 107
Exculpated Parties............................................... 71
Expiration Date.................................................. 89
Extraordinary General Meeting.................................... (ii)
Feasibility Test................................................. 81
First Amendment.................................................. 19
First Person..................................................... 135
forward-looking statements....................................... (vii)
General Unsecured Claim.......................................... 55
General Unsecured Creditors...................................... 156
Holder........................................................... 164
ICH.............................................................. 55
Impaired......................................................... 49
Implied Purchase Price........................................... (ii)
Incentive Plan................................................... 40
Indentures....................................................... 120
Indenture Trustee Claims......................................... 53
Instructions..................................................... 97
Intermediary..................................................... 13
IRC.............................................................. 159
IRS.............................................................. 159
JP Morgan........................................................ 46
KPMG............................................................. (vi)
Lazard........................................................... 46
Liberty Media.................................................... 122
Liquidation Analysis............................................. G-3
Litigation Claims................................................ 156
Majority Lenders................................................. 42
Master Ballot.................................................... 13
Maximum Subscription Amount...................................... (ii)
Memorandum of Understanding...................................... 3
Miscellaneous Secured Claims..................................... 54
NASD............................................................. 147
NASDAQ........................................................... 21
NECIGEF.......................................................... 124
New UPC.......................................................... (i)
New UPC Common Stock............................................. (i)
New UPC Equity Purchase Rights................................... (ii)
New UPC Equity Subscription...................................... (ii)
New UPC Exchange................................................. 159
Nonsecurities Voting Agent....................................... 12
-181-
Term Page
---- ----
Non-U.S. Holder.................................................. 159
Offer Memorandum................................................. 89
Old Other Equity Interests....................................... 57
Option 1......................................................... 154
Option 2......................................................... 155
Ordinary Creditors............................................... 4
Ordinary Shares Consideration.................................... 10
Ordinary Share Distribution Amount............................... 9
OTC BB........................................................... 39
Participating Noteholders........................................ 2
Participating Stockholder........................................ 141
Payment.......................................................... 97
Petition Date.................................................... (i)
Plan............................................................. (ii)
Plan Documents................................................... (v)
Pre-emptive Rights............................................... 134
Preference Shares Consideration.................................. 9
Priority Shares Consideration.................................... 9
Priority Tax Claim............................................... 53
Projections...................................................... 172
Proxy Statement.................................................. 92
Ratio Period..................................................... 42
Related Party.................................................... 135
Related Party Transaction........................................ 137
Related Party Transaction Committee.............................. 136
Relevant Company................................................. 42
Reorganized Company.............................................. 1
Reorganized Entity............................................... 170
Requisite Acceptances............................................ 11
Reserve.......................................................... 68
Restructuring.................................................... (i)
Restructuring Agreement.......................................... 1
SEC.............................................................. (vi)
Second Amendment................................................. 19
Second Person.................................................... 135
Securities Voting Agent.......................................... 12
Senior Debt...................................................... 41
Senior Debt Service.............................................. 42
SFAS 142......................................................... 107
Shareholder Proposals............................................ (ii)
Subscribing Holder............................................... 95
Subscription Agent............................................... 97
Subscription Amount.............................................. 97
Subscription Deadline............................................ 97
Subscription Distribution Date................................... 95
Subscription Procedures.......................................... 94
Subscription Reserve Account..................................... 95
Subscription Reserve Shares...................................... 95
Subscription Shares.............................................. 93
Subsidiary CFC................................................... 163
substantial interest............................................. 164
Tag-Along Allotment.............................................. 141
Tag-Along Notice................................................. 142
Tag-Along Notice Date............................................ 142
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Term Page
---- ----
Tag-Along Rights................................................. 141
Tag-Along Sale................................................... 141
Tag-Along Sale Agreement......................................... 143
Tag-Along Sale Date.............................................. 142
Tag-Along Sale Notice............................................ 141
Tag-Along Stockholders........................................... 141
Tara............................................................. 100
10-7/8% Senior Notes due 2007.................................... 120
10-7/8% Senior Notes due 2009.................................... 120
Third Amendment.................................................. 20
13-3/8% Senior Discount Notes due 2009........................... 120
13-3/4% Senior Discount Notes due 2010........................... 120
Total Cash Interest.............................................. 41
Trading Days..................................................... 89
Trustee.......................................................... 120
12-1/2% Senior Discounts Notes due 2009.......................... 118
UAP.............................................................. 100
U.S. Bankruptcy Code............................................. (ii)
U.S. Bankruptcy Court............................................ (ii)
U.S. Exchange Act................................................ 27
U.S. Holder...................................................... 159
U.S. Persons..................................................... (ii)
U.S. Securities Act.............................................. (ii)
UGC.............................................................. (ii)
UGC Group........................................................ (iii)
UGC Holdings..................................................... 3
UGC Subscription Commitment...................................... (ii)
UPC ADSs......................................................... (i)
UPC Distribution................................................. 1
UPC Distribution Facility........................................ 3
UPC Group........................................................ (vii)
UPC Notes........................................................ (i)
UPC Notes Claim.................................................. 55
UPC Ordinary Shares.............................................. 3
UPC Ordinary Shares A............................................ (i)
UPC Ordinary Shares C............................................ 19
UPC Preference Shares A.......................................... (i)
UPC Priority Shares.............................................. (i)
UPC Services..................................................... 45
UPCD Facility Banks.............................................. 3
UPCD Facility Waiver............................................. 3
US$ or United States Dollars..................................... 1
Voting Agents.................................................... 12
Voting Deadline.................................................. 12
Voting Party..................................................... 11
Voting Record Date............................................... 11
Voting Securities................................................ 135
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Annex A
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- -------------------------------------------------x
In re : Chapter 11
:
United Pan-Europe Communications N.V., : Case No. 02-16020(BRL)
:
Debtor. :
:
- -------------------------------------------------x
FIRST AMENDED CHAPTER 11 PLAN OF
REORGANIZATION JOINTLY PROPOSED BY
UNITED PAN-EUROPE COMMUNICATIONS N.V. AND NEW UPC, INC.
WHITE & CASE LLP SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
Howard S. Beltzer (HSB 5721) Richard Levin (California State Bar No. 66578)
Daniel P. Ginsberg (DPG 5290) Van C. Durrer II (VCD 0689)
1155 Avenue of the Americas 300 South Grand Avenue
New York, New York 10036 Los Angeles, CA 90071
(212) 819-8200 (213) 687-5000
Attorneys for United Pan-Europe Attorneys for New UPC, Inc.
Communications N.V.
Dated: New York, New York
December 23, 2002
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS, INTERPRETATION AND EXHIBITS............................2
Section 1.1 Definitions..............................................2
Section 1.2 Rules of Interpretation.................................18
Section 1.3 Exhibits................................................18
Section 1.4 Administrator Consent...................................18
ARTICLE II ADMINISTRATIVE AND PRIORITY TAX CLAIMS............................18
Section 2.1 Unclassified Claims.....................................18
Section 2.2 Administrative Claims...................................18
Section 2.3 Priority Tax Claims.....................................19
ARTICLE III CLASSIFICATION OF CLAIMS, EQUITY INTERESTS AND OLD OTHER
EQUITY INTERESTS.................................................20
Section 3.1 Generally...............................................20
Section 3.2 Classified Claims Against and Equity Interests in UPC...20
Section 3.3 Elimination of Classes..................................20
ARTICLE IV TREATMENT OF CLAIMS, EQUITY INTERESTS AND OLD OTHER EQUITY
INTERESTS.........................................................21
Section 4.1 Satisfaction of Claims, Equity Interests and Old
Other Equity Interests..................................21
Section 4.2 No Effect on Section 508 of the U.S. Bankruptcy Code....21
Section 4.3 Class 1: Miscellaneous Secured Claims...................21
Section 4.4 Class 2: Classified Priority Claims.....................21
Section 4.5 Class 3: Critical Creditor Claims.......................22
Section 4.6 Class 4: Belmarken Notes Claims.........................22
Section 4.7 Class 5: UPC Notes Claims and General Unsecured Claims..22
Section 4.8 Class 6: UPC Preference Shares A........................23
Section 4.9 Class 7: UPC Priority Shares............................23
Section 4.10 Class 8: UPC Ordinary Shares A.........................24
Section 4.11 Class 9: Equity Securities Claims......................24
Section 4.12 Class 10: Old Other Equity Interests...................24
ARTICLE V ACCEPTANCE OR REJECTION OF THE PLAN; CRAMDOWN......................25
Section 5.1 Unimpaired Classes......................................25
Section 5.2 Impaired Classes........................................25
Section 5.3 Acceptance by Impaired Classes of Claims and Equity
Interests...............................................25
Section 5.4 Cramdown................................................25
(i)
Table of Contents
(continued)
ARTICLE VI PROVISIONS GOVERNING DISTRIBUTIONS UNDER THE PLAN.................26
Section 6.1 General.................................................26
Section 6.2 Delivery of Distributions...............................26
Section 6.3 Disbursing Agent........................................26
Section 6.4 Distribution Notification Date..........................27
Section 6.5 Distributions to Holders of Allowed Claims and Allowed
Equity Interests........................................27
Section 6.6 Disputed Distributions..................................28
Section 6.7 Distributions of Cash...................................28
Section 6.8 Failure to Negotiate Checks.............................28
Section 6.9 Unclaimed Distributions.................................29
Section 6.10 Limitation on Distribution Rights......................29
Section 6.11 Fractional Euros.......................................29
Section 6.12 Fractional Shares......................................29
Section 6.13 Compliance With Tax Requirements.......................29
Section 6.14 Documentation Necessary to Release Liens...............30
Section 6.15 Distributions by Indenture Trustee.....................30
Section 6.16 Setoffs................................................30
ARTICLE VII EXECUTORY CONTRACTS AND UNEXPIRED LEASES; INDEMNIFICATION
OBLIGATIONS; BENEFIT PROGRAMS....................................30
Section 7.1 Treatment of Executory Contracts and Unexpired Leases...30
Section 7.2 Cure of Defaults for Assumed Contracts and Leases.......31
Section 7.3 Resolution of Objections to Assumption of Executory
Contracts and Unexpired Leases; Cure Payments..........32
Section 7.4 Claims for Rejection Damages............................33
Section 7.5 Treatment of Rejection Claims...........................33
Section 7.6 Executory Contracts and Unexpired Leases Entered Into
and Other Obligations Incurred After the Petition
Date....................................................33
Section 7.7 Reorganized Debtor's Indemnification Obligations........33
Section 7.8 Benefit Programs........................................33
ARTICLE VIII RESOLUTION OF DISPUTED CLAIMS...................................34
Section 8.1 Preservation of Rights..................................34
Section 8.2 Objections to and Resolution of Claims, Administrative
Claims, Equity Interests and Old Other Equity
Interests...............................................34
Section 8.3 Estimation of Claims....................................34
Section 8.4 Distributions Withheld For Disputed Unsecured Claims
and Equity Interests....................................35
Section 8.5 Dutch Bankruptcy Case...................................36
(ii)
Table of Contents
(continued)
ARTICLE IX MEANS FOR IMPLEMENTATION OF THE PLAN..............................36
Section 9.1 Continued Corporate Existence...........................36
Section 9.2 Cancellation of Claims, Equity Interests and Old Other
Equity Interests........................................36
Section 9.3 Extraordinary General Meeting...........................37
Section 9.4 Amendment of Organizational Documents...................38
Section 9.5 Corporate Action........................................39
Section 9.6 Implementation of the Restructuring Under Dutch Law.....39
Section 9.7 Contribution of UPC Shares..............................39
Section 9.8 New UPC Common Stock....................................39
Section 9.9 Offer Memorandum........................................39
Section 9.10 Listing of New UPC Common Stock........................40
Section 9.11 Transfers Under Plan...................................40
Section 9.12 Operations Between the Confirmation Date and the
Effective Date.........................................40
Section 9.13 Revesting of Assets....................................40
Section 9.14 Approval of Agreements.................................41
Section 9.15 Incentive Plan.........................................41
Section 9.16 Stockholders Agreement.................................41
Section 9.17 New UPC Equity Purchase Rights.........................41
Section 9.18 UGC Subscription Commitment............................42
Section 9.19 Treatment of UPC Owned UPC Notes.......................42
Section 9.20 Rights of Action.......................................42
ARTICLE X OPERATION AND MANAGEMENT OF THE REORGANIZED DEBTOR.................42
Section 10.1 Post-Effective Date Operation of Business..............42
Section 10.2 Post-Confirmation Directors and Officers of the Debtor
and New UPC............................................43
ARTICLE XI CONDITIONS TO CONFIRMATION AND CONSUMMATION OF THE PLAN...........43
Section 11.1 Conditions Precedent to Confirmation...................43
Section 11.2 Conditions Precedent to Consummation...................43
Section 11.3 Waiver of Conditions to Consummation...................45
ARTICLE XII EFFECTS OF CONFIRMATION..........................................45
Section 12.1 Discharge..............................................45
Section 12.2 Injunction.............................................46
Section 12.3 Exculpation............................................46
Section 12.4 Releases...............................................47
Section 12.5 Binding Effect of Plan.................................49
Section 12.6 Indemnification........................................49
Section 12.7 Term of Injunctions or Stays...........................49
(iii)
Table of Contents
(continued)
Section 12.8 Preservation of Insurance..............................49
Section 12.9 Waiver of Subordination Rights.........................50
Section 12.10 No Successor Liability................................50
ARTICLE XIII RETENTION OF JURISDICTION.......................................50
Section 13.1 Continuing Jurisdiction of U.S. Bankruptcy Court.......50
Section 13.2 Failure of U.S. Bankruptcy Court to Exercise
Jurisdiction...........................................52
ARTICLE XIV MISCELLANEOUS PROVISIONS.........................................53
Section 14.1 Revocation or Withdrawal of the Plan...................53
Section 14.2 Final Order............................................53
Section 14.3 Modification of the Plan...............................53
Section 14.4 Business Days..........................................53
Section 14.5 Severability...........................................53
Section 14.6 Governing Law..........................................53
Section 14.7 Dissolution of Committees..............................54
Section 14.8 Payment of Statutory Fees..............................54
Section 14.9 Notices................................................54
Section 14.10 Time..................................................55
Section 14.11 No Attorneys' Fees....................................55
Section 14.12 No Injunctive Relief..................................55
Section 14.13 Continued Confidentiality Obligations.................55
Section 14.14 No Admissions or Waivers..............................55
Section 14.15 Entire Agreement......................................56
Section 14.16 Waiver................................................56
Section 14.17 Bar Date for Professional Claims......................56
Section 14.18 Compromise of Controversies...........................54
Schedule 1 UPC Notes Schedule
EXHIBIT A Restructuring Agreement
EXHIBIT B Amended and Restated UPC Articles of Association
(iv)
INTRODUCTION
United Pan-Europe Communications N.V., a corporation organized under the
laws of The Netherlands ("UPC" or the "Debtor"), together with New UPC, Inc., a
newly-formed company incorporated under the laws of the State of Delaware that
will become a holding company for the Debtor upon consummation of the
Restructuring (as defined herein) and is an integral component of the Plan ("New
UPC"), hereby jointly propose this first amended plan of reorganization under
Chapter 11 of the U.S. Bankruptcy Code. This Plan, which amends and supersedes
the "Chapter 11 Plan of Reorganization Jointly Proposed by United Pan-Europe
Communications N.V. and New UPC, Inc.," dated and filed with the U.S. Bankruptcy
Court on December 3, 2002, sets forth a restructuring of UPC's capital structure
through the transfer of shares of common stock in New UPC for certain
outstanding debt and equity securities in UPC. The restructuring of UPC's
balance sheet is intended to be implemented in compliance with applicable laws,
including the applicable laws of the United States of America and The
Netherlands. In order to achieve this objective, the restructuring will consist
of several different elements, each of which is an integral part of the
restructuring and, as such, are non-severable. In particular, (a) UPC commenced
a moratorium proceeding in The Netherlands under Dutch law simultaneously with
the commencement of the Chapter 11 Case, and (b) New UPC shall commence the
Dutch Implementing Offer. Together, these steps will allow UPC to complete the
contemplated restructuring of its balance sheet.
Reference is made to the Disclosure Statement accompanying the Plan for a
discussion of the Debtor's history, business, results of operations, historical
financial information, properties, projections for future operations, risk
factors, a summary and analysis of the Plan, and certain related matters,
including a description of the shares of New UPC Common Stock to be issued under
the Plan. The Debtor and New UPC are proponents of the Plan and are
participating in this joint Plan within the meaning of the U.S. Bankruptcy Code.
ALL CREDITORS AND EQUITY INTEREST HOLDERS ARE ENCOURAGED TO READ THE PLAN
AND THE DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT
THE PLAN.
SUBJECT TO CERTAIN RESTRICTIONS AND REQUIREMENTS SET FORTH IN SECTION 1127
OF THE U.S. BANKRUPTCY CODE, U.S. BANKRUPTCY RULE 3019 AND IN THE PLAN, THE
DEBTOR AND NEW UPC RESERVE THE RIGHT TO ALTER, AMEND, MODIFY, REVOKE OR WITHDRAW
THE PLAN PRIOR TO ITS SUBSTANTIAL CONSUMMATION.
Capitalized terms herein shall have the meanings set forth in Article I
hereof.
Claims against, and Equity Interests in, the Debtor (other than
Administrative Claims and Priority Tax Claims) are classified in Article III
hereof and treated in Article IV hereof.
ARTICLE I
DEFINITIONS, INTERPRETATION AND EXHIBITS
Section 1.1 Definitions. Unless the context requires otherwise, the
following terms shall have the following meanings whether presented in the Plan
or the Disclosure Statement with initial capital letters or otherwise. As used
herein:
"A-FM" means the Netherlands Authority for the Financial Markets
(Autoriteit Financiele Markten).
"Administrative Claim" means a Claim for (a) any cost or expense of
administration (including, without limitation, the fees and expenses of
Professionals) of the Chapter 11 Case asserted or arising under Sections 503,
507(a)(1), 507(b) or 1114(e)(2) of the U.S. Bankruptcy Code including, but not
limited to (i) any actual and necessary post-petition cost or expense of
preserving the Estate or operating the businesses of the Debtor, (ii) any
payment to be made under the Plan to cure a default on an assumed executory
contract or unexpired lease, (iii) any post-petition cost, indebtedness or
contractual obligation duly and validly incurred or assumed by the Debtor in the
ordinary course of its businesses, (iv) compensation or reimbursement of
expenses of Professionals to the extent Allowed by the U.S. Bankruptcy Court
under Section 330(a) or Section 331 of the U.S. Bankruptcy Code, (v) all Allowed
Claims that are entitled to be treated as Administrative Claims pursuant to a
Final Order of the U.S. Bankruptcy Court under Section 546(c)(2)(A) of the
Bankruptcy Code, and (vi) the Indenture Trustee Claims as set forth in Section
2.2(b) of the Plan; and (b) any fees or charges assessed against the Estate
under Section 1930 of title 28 of the United States Code.
"Administrator" means the administrator or administrators (bewindvoerders)
appointed by the Dutch Bankruptcy Court to oversee the affairs of UPC during the
period it is subject to a moratorium of payments pursuant to the Dutch
Bankruptcy Code.
"Akkoord" means the draft plan of compulsory composition, consistent in all
material respects with the Restructuring Agreement, which was filed on December
3, 2002 by UPC with the Dutch Bankruptcy Court under the Dutch Bankruptcy Code,
as the same may be altered, amended, supplemented or modified from time to time.
"Allowed" means any Claim or Equity Interest or portion thereof (a) as to
which the liability of the Debtor and the amount thereof are agreed to by the
Debtor or Reorganized Debtor and the Holder of the Claim or Equity Interest (but
only to the extent so agreed), (b) as to which the liability of the Debtor and
the amount thereof are determined by Final Order of a court of competent
jurisdiction, (c) which has been expressly allowed in a liquidated amount under
the provisions of the Plan (but only to the extent so allowed), (d) which is a
Professional Claim for which a fee award amount has been approved by Final Order
of the U.S. Bankruptcy Court, (e) which is set forth in the Debtor's books and
records as liquidated in amount and not Disputed or contingent, (f) proof of
which was filed within the applicable period of limitation fixed by the U.S.
Bankruptcy Court in accordance with U.S. Bankruptcy Rule 3003(c) as to which no
objection to the allowance thereof has been interposed within the applicable
period of limitation fixed by the Plan, the U.S. Bankruptcy Code, the U.S.
Bankruptcy Rules or a Final Order, or (g) which is, in the case of an Equity
Interest or any portion thereof only, held of record as set forth
-2-
in the books and records maintained by or on behalf of the Debtor as of the
Distribution Notification Date.
"Amended and Restated New UPC By-Laws" means the Amended and Restated
By-Laws of New UPC, a substantially final form of which shall have been Filed on
or before the Document Filing Date.
"Amended and Restated New UPC Certificate of Incorporation" means the
Amended and Restated Certificate of Incorporation of New UPC, a substantially
final form of which shall have been Filed on or before the Document Filing Date.
"Amended and Restated UPC Articles of Association" means the Amended and
Restated Articles of Association of UPC, a substantially final form of which
is annexed as Exhibit "B" to the Plan.
"Avoidance Action" means any and all Causes of Action which a trustee,
debtor in possession, the Estate or any other appropriate party in interest may
assert under Sections 502, 510, 522(f), 522(h), 542, 543, 544, 545, 547, 548,
549, 550, 551, 553 and 724(a) of the U.S. Bankruptcy Code including the Debtor's
rights of setoff, recoupment, contribution, reimbursement, subrogation or
indemnity (as those terms are defined by the non-bankruptcy law of any relevant
jurisdiction) and any other indirect claim of any kind whatsoever, whenever and
wherever arising or asserted.
"Belmarken" means Belmarken Holding B.V., a company with limited liability
organized under the laws of The Netherlands and a wholly-owned subsidiary of
UPC.
"Belmarken Loan Agreements" means that certain Loan Agreement, dated as of
May 25, 2001, among Belmarken and UPC, as obligors, UPC Internet Holding B.V.,
as guarantor, and Liberty-Belmarken, Inc., as lender, together with all other
documentation entered into in connection with the issuance of the Belmarken
Notes, as the same may have been amended, supplemented or modified in any
respect.
"Belmarken Notes" means the US$1,255.0 million 6% Guaranteed Discount Notes
due 2007, co-issued by Belmarken and UPC and guaranteed by UPC Internet Holding
B.V.
"Belmarken Notes Claims" means any Claims of the Holder(s) of the Belmarken
Notes against UPC under the Belmarken Loan Agreements.
"Belmarken Notes Consideration" has the meaning set forth in Section 4.6(a)
of the Plan.
-3-
"Beneficial Ownership" has the meaning attributed to such term in Rules
13d-3 and 13d-5 under the Exchange Act (as in effect on the date of the
Restructuring Agreement), whether or not applicable.
"Board of Management Schedule" means that certain schedule, a copy of which
shall have been Filed on or before the Document Filing Date, setting forth the
members of the Board of Management of the Debtor as of the Effective Date as
well as the proposed compensation of such members.
"Book-Entry Account" means an account established by the Disbursing Agent
at a Book-Entry Transfer Facility to effectuate transfers of the UPC Notes, the
UPC Ordinary Shares A or the UPC ADSs to the Disbursing Agent for purposes of
the Plan.
"Book-Entry Transfer Facility" means (i) in the case of the UPC Notes and
the UPC ADSs, DTC and (ii) in the case of the UPC Ordinary Shares A, the
NECIGEF.
"Business Day" means any day which is not a Saturday, a Sunday, a "legal
holiday" as defined in U.S. Bankruptcy Rule 9006(a), or a day on which banking
institutions located in New York, New York or Amsterdam, The Netherlands are
authorized or obligated by law, executive order or governmental decree to be
closed.
"Cash" means money, currency and coins, negotiable checks, balances in bank
accounts and other lawful currency of The Netherlands and their equivalents.
"Causes of Action" means any and all actions, claims, rights, defenses,
third-party claims, damages, executions, demands, cross-claims, counterclaims,
suits, causes of action, choses in action, controversies, agreements, promises,
rights to legal remedies, rights to equitable remedies, rights to payment and
claims whatsoever, whether known, unknown, reduced to judgment, not reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured and whether asserted or assertable
directly, indirectly or derivatively, at law, in equity or otherwise, accruing
to the Debtor or the Estate, including, but not limited to, the Avoidance
Actions.
"Certificates" means any physical instruments, securities or certificates
representing Belmarken Notes, UPC Notes, UPC Preference Shares A, UPC Priority
Shares or UPC Ordinary Shares A.
"Chapter 11 Case" means the case under Chapter 11 of the U.S. Bankruptcy
Code commenced by the Debtor in the U.S. Bankruptcy Court on the Petition Date,
Case No. 02-16020 (BRL).
"Class" means each class, subclass or category of Claims, Equity Interests
or Old Other Equity Interests as classified in Article III of the Plan.
"Class [__] Claim" means a Claim in the particular Class of Claims
identified in Article III of the Plan.
-4-
"Class [__] Equity Interest" means an Equity Interest in the particular
Class of Equity Interests identified in Article III of the Plan.
"Classified Priority Claims" means any and all Claims to the extent
entitled to priority under Section 507(a) or (b) of the U.S. Bankruptcy Code,
other than Administrative Claims and the Priority Tax Claims.
"Committee" means any committee appointed in the Chapter 11 Case pursuant
to Section 1102(a) of the U.S. Bankruptcy Code by the United States Trustee, as
the membership of such committee is from time to time constituted and
reconstituted.
"Confirmation" means the entry by the U.S. Bankruptcy Court of the
Confirmation Order.
"Confirmation Date" means the date on which the Clerk of the U.S.
Bankruptcy Court enters the Confirmation Order on the docket of the U.S.
Bankruptcy Court with respect to the Chapter 11 Case within the meaning of U.S.
Bankruptcy Rules 5003 and 9021.
"Confirmation Hearing" means the hearing held before the U.S. Bankruptcy
Court to consider confirmation of the Plan pursuant to Sections 1128 and 1129 of
the U.S. Bankruptcy Code, as such hearing may be adjourned or continued from
time to time.
"Confirmation Order" means the order entered by the U.S. Bankruptcy Court
confirming the Plan pursuant to Section 1129 of the U.S. Bankruptcy Code.
"Control" means, with respect to any Person, (i) the power, directly or
indirectly by contract, proxy or otherwise, to vote or cause to be voted more
than fifty percent (50%) of the Voting Securities of such Person or (ii) the
power (as general partner, manager or otherwise) to control the management and
affairs of such Person. The words "controlled", "controlling" and "under common
control with" shall have correlative meanings.
"Critical Creditor Claims" means any and all pre-petition Claims of the
Critical Creditors.
"Critical Creditors" means those certain creditors of UPC to be identified
by UPC (with the consent of the Administrator and after consultation with the
Committee) in an exhibit to the Plan to be Filed not less than five (5) Business
Days prior to the Confirmation Hearing, who are critical to the operation of
UPC's business as a going concern and are determined by the Administrator to be
"ransom-suppliers" (dwangcrediteuren).
"Debtor" has the meaning set forth in the Introduction to the Plan.
"Disallowed" means, with respect to any Claim or Equity Interest or portion
thereof, any Claim against or Equity Interest in the Debtor which (a) has been
withdrawn, in whole or in part, by the Holder thereof or (b) has been
disallowed, in whole or part, by Final Order of a court of competent
jurisdiction.
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"Disbursing Agent" means New UPC or such other Person that is designated as
set forth in Section 6.3 of the Plan.
"Disclosure Statement" means the written disclosure statement that relates
to this Plan, including all exhibits, appendices, schedules and annexes, if any,
attached thereto, as the same may be altered, amended, supplemented or modified
from time to time.
"Disputed" means any Claim or Equity Interest, or any portion thereof, that
has neither been Disallowed nor become Allowed.
"Distribution" means any transfer of Cash or other property or instruments
from the Debtor, the Reorganized Debtor or New UPC to the Disbursing Agent or
from the Disbursing Agent to Holders of Allowed Claims or Allowed Equity
Interests.
"Distribution Date" means any date upon which a Distribution is made under
the Plan, including, without limitation, the Initial Distribution Date.
"Distribution Notification Date" means the date established by order of the
U.S. Bankruptcy Court for purposes of determining the Holders of the Belmarken
Notes, the UPC Notes, the UPC Preference Shares A, the UPC Priority Shares, the
UPC Ordinary Shares A and the Equity Securities Claims for the purpose of
mailing documentation relating to Distributions under the Plan.
"Document Filing Date" means January __, 2003.
"DTC" means The Depository Trust Company.
"Dutch Bankruptcy Case" means the moratorium of payments proceeding
commenced on December 3, 2002 by UPC in the Dutch Bankruptcy Court.
"Dutch Bankruptcy Code" means the Dutch Faillissementswet, together with
all related rules and regulations.
"Dutch Bankruptcy Court" means the Amsterdam Court (Rechtbank).
"Dutch Implementing Offer" means the offer, undertaken to facilitate
implementation of the Plan with respect to certain of the UPC Ordinary Shares A
in accordance with Dutch law, solely with respect to Persons who are not U.S.
Persons (as defined in Rule 902(k) of Regulation S promulgated under the U.S.
Securities Act) and who are not located or residing within the United States, by
New UPC to deliver shares of New UPC Common Stock to the Holders of UPC Ordinary
Shares A in consideration for the delivery by such Holders of their UPC Ordinary
Shares A to New UPC.
"Effective Date" means the Business Day identified by the Debtor that is no
more than eleven (11) Business Days following the date on which all conditions
precedent to the consummation of the Plan (set forth in Article XI hereof) and
the Akkoord shall have either been
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satisfied or, to the extent permitted herein and in the Akkoord, duly waived and
on which such day the Plan and the Akkoord shall have become effective.
"11-1/4% Euro Senior Notes due 2009" means the (euro)101.0 million of
11-1/4% Senior Notes due 2009 issued by UPC in October 1999.
"11-1/4% Euro Senior Notes due 2010" means the (euro)200.0 million of
11-1/4% Senior Notes due 2010 issued by UPC in January 2000.
"11-1/4% U.S. Senior Notes due 2009" means the U.S. $252.0 million of
11-1/4% Senior Notes due 2009 issued by UPC in October 1999.
"11-1/4% U.S. Senior Notes due 2010" means the U.S. $600.0 million of
11-1/4% Senior Notes due 2010 issued by UPC in January 2000.
"11-1/2% U.S. Senior Notes due 2010" means the U.S. $300.0 million of
11-1/2% Senior Notes due 2010 issued by UPC in January 2000.
"Employee Options" means any rights, options and warrants to acquire UPC
Ordinary Shares A held by employees of UPC and employees of subsidiaries of UPC
pursuant to existing equity incentive plans of UPC.
"Equity Interests" means any and all equity interests, ownership interests
or shares in the Debtor and issued by the Debtor prior to the Petition Date
(including, without limitation, all capital stock, stock certificates, common
stock, preferred stock, depositary shares, partnership interests, rights,
options, warrants, contingent warrants, convertible or exchangeable securities,
investment securities, subscriptions or other agreements and contractual rights
to acquire or obtain such an interest or share in the Debtor, stock appreciation
rights, conversion rights, repurchase rights, redemption rights, dividend
rights, preemptive rights and liquidation preferences, puts, calls or
commitments of any character whatsoever relating to any such equity, ownership
interests or shares of capital stock of the Debtor or obligating the Debtor to
issue, transfer or sell any shares of capital stock) or any certificate or
receipt evidencing or representing an interest in any such equity interest
whether or not certificated, transferable, voting or denominated "stock" or a
similar security, other than the Old Other Equity Interests.
"Equity Securities Claims" means any and all Claims arising from the
rescission of a purchase or sale of an Equity Interest, for damages arising from
the purchase or sale of such Equity Interest, or for reimbursement or
contribution allowed under Section 502 of the U.S. Bankruptcy Code on account of
such Claims.
"Estate" means the estate of the Debtor created in the Chapter 11 Case
pursuant to Section 541 of the U.S. Bankruptcy Code upon commencement of the
Chapter 11 Case.
"Euronext" means Euronext Amsterdam N.V.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.
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"Exculpated Parties" has the meaning set forth in Section 12.3(a) of the
Plan.
"Extraordinary General Meeting" shall have the meaning set forth in Section
9.3 of the Plan.
"Face Amount" means (a) when used in reference to a Disputed Claim or
Disputed Equity Interest, the full stated amount claimed by the Holder of such
Claim or Equity Interest in any proof of claim or proof of interest timely filed
with the U.S. Bankruptcy Court, (b) when used in reference to a contingent or
unliquidated Claim, the amount of the Claim as estimated by the U.S. Bankruptcy
Court under Section 502(c) of the U.S. Bankruptcy Code and (c) when used in
reference to an Allowed Claim or Allowed Equity Interest, the Allowed amount of
such Claim or Equity Interest.
"File, Filed or Filing" means file, filed or filing with the U.S.
Bankruptcy Court in the Chapter 11 Case.
"Final Decree" means the final decree entered by the U.S. Bankruptcy Court
after the Effective Date pursuant to Section 350(a) of the U.S. Bankruptcy Code
and U.S. Bankruptcy Rule 3022.
"Final Order" means an order, ruling, judgment, or other decree issued and
entered by the U.S. Bankruptcy Court or by any state or other federal court or
other court of competent jurisdiction which has not been reversed, vacated,
stayed, modified or amended and as to which (i) the time to appeal or petition
for review, rehearing, certiorari, reargument or retrial has expired and as to
which no appeal or petition for review, rehearing, certiorari, reargument or
retrial is pending or (ii) any appeal or petition for review, rehearing,
certiorari, reargument or retrial has been finally decided and no further appeal
or petition for review, rehearing, certiorari, reargument or retrial can be
taken or granted.
"First Amendment" has the meaning set forth in Section 9.3(b) of the Plan.
"General Unsecured Claims" means all pre-petition Claims against the Debtor
other than Administrative Claims, Priority Tax Claims, Miscellaneous Secured
Claims, Classified Priority Claims, Critical Creditor Claims, Belmarken Notes
Claims, UPC Notes Claims and Equity Securities Claims.
"General Unsecured Creditors" means the Holders of the General Unsecured
Claims.
"Governmental Entity" means any national, state, provincial, municipal,
local or foreign government, any court, arbitral tribunal, administrative agency
or commission or other governmental or regulatory authority, commission or
agency or any non-governmental, self-regulatory authority, commission or agency.
"Holder" means a Person holding (a) a Claim or a beneficial interest in a
Claim or (b) an Equity Interest or a beneficial interest in an Equity Interest
and, when used in conjunction with a Class or type of Claim or Equity Interest,
means a holder of (i) a beneficial interest in a Claim or (ii) an Equity
Interest in such Class or of such type.
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"Impaired", when used with reference to a Claim or Equity Interest, has the
meaning set forth in Section 1124 of the U.S. Bankruptcy Code.
"Implied Purchase Price" means the per share price of the New UPC Common
Stock implied by the Plan and as set forth in the Disclosure Statement, which
has been calculated by dividing the imputed equity value of the Reorganized
Debtor by the number of shares of New UPC Common Stock to be issued under the
Plan to the Holders of Allowed Belmarken Notes Claims, Allowed Claims 5 Claims,
Allowed Class 9 Claims and Allowed Equity Interests (not including any
additional shares of New UPC Common Stock issued under the New UPC Equity
Purchase Rights or the UGC Subscription Commitment).
"Incentive Plan" means that certain incentive plan, a copy of which shall
have been Filed on or before the Document Filing Date, pursuant to which, at the
discretion of New UPC's board of directors, options with respect to no more than
five percent (5%) of New UPC's common equity outstanding immediately after the
Effective Date, on a fully-diluted basis, can be issued during the period
beginning on the Effective Date and continuing until the third (3rd) anniversary
of the Effective Date to certain members of New UPC's and its Subsidiaries'
management and other employees pursuant to compensation arrangements adopted by
New UPC's board of directors, which options, if any, issued under such incentive
plan on the Effective Date shall have an exercise price no less than the share
price implied by the Plan and as set forth in the Disclosure Statement.
"Indenture(s)" means, individually and collectively, those indentures
pursuant to which the UPC Notes were issued, as such indentures are or have been
amended or supplemented from time to time in accordance with the terms thereof.
"Indenture Trustee" means Citibank, N.A. (London Branch), in its capacity
as indenture trustee, paying agent and registrar under the Indentures.
"Indenture Trustee Claims" means the Claims of the Indenture Trustee for
reasonable fees and expenses, including the reasonable fees and expenses of its
counsel and indemnification as set forth in the Indentures.
"Initial Distribution Date" means the first Business Day following the
Effective Date upon which it is practicable for the Disbursing Agent to make a
Distribution under the Plan.
"Judgment" means any order, writ, injunction, award, judgment, ruling or
decree of any Governmental Entity.
"Law" means any statute, law, code, ordinance, rule or regulation of any
Governmental Entity.
"Liens" means, with respect to any asset or Property (or the rents,
revenues, income, profits or proceeds therefrom), and in each case, whether the
same is consensual or nonconsensual or arises by contract, operation of law,
legal process or otherwise: (a) any and all mortgages, liens, pledges,
attachments, charges, easements, rights-of-way, leases evidencing a
capitalizable lease obligation, conditional sale or other title retention
agreement, call rights, rights of first refusal, "tag"-or-"drag" along rights,
or other security interest or encumbrance or other legally cognizable security
devices of any kind in respect of any asset or Property, or upon the
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rents, revenues, income, profits or proceeds therefrom; or (b) any arrangement,
express or implied, under which any Property is transferred, sequestered or
otherwise identified for the purpose of subjecting or making available the same
for the payment of debt or performance of any other obligation in priority to
the payment of General Unsecured Creditors, but in either case excluding any of
the foregoing created or imposed by or pursuant to the Plan or the Restructuring
Agreement.
"Majority-in-Interest of the Participating Noteholders" means, with respect
to any date of determination, Participating Noteholders holding a majority of
the claims arising under the UPC Notes held by all of the Participating
Noteholders on such date of determination (using for this purpose the prevailing
exchange rate in effect on the Petition Date).
"Maximum Subscription Amount" means (euro)100 million, as such amount may
be reduced on a Euro-for-Euro basis by an amount equal to (a) the net proceeds
of any assets sold by the Debtor prior to the Effective Date, other than assets
sold in the ordinary course of the Debtor's business in a manner consistent with
its past practices, and (b) the net proceeds from any non-dilutive capital
raised by the Debtor (other than capital received by the Debtor from UGC or its
Related Parties).
"Miscellaneous Secured Claims" means any Claim arising before the Petition
Date that is (a) secured in whole or part, as of the Petition Date, by a Lien
which is valid, perfected and enforceable under applicable law on Property in
which the Estate has an interest and is not subject to avoidance under the U.S.
Bankruptcy Code or applicable non-bankruptcy law, or (b) subject to setoff under
Section 553 of the U.S. Bankruptcy Code, but, with respect to both case (a) and
(b), only to the extent of the Estate's interest in the value of the assets or
Property securing any such Claim or the amount subject to setoff, as the case
may be.
"Moratorium Petition" means the voluntary provisional moratorium petition
which was filed on December 3, 2002 by UPC under the Dutch Bankruptcy Code in
the Dutch Bankruptcy Court.
"NASDAQ" means the NASDAQ Stock Market.
"NECIGEF" means Nederlands Centraal Instituut voor Giraal Effectenverkeer
B.V.
"New UPC" has the meaning set forth in the Introduction to the Plan.
"New UPC Common Stock" means the shares of common stock of New UPC, par
value $0.01 per share, some of which will be issued pursuant to the Plan, having
the terms set forth in the certificate of incorporation or other organizational
documents of New UPC.
"New UPC Equity Purchase Rights" has the meaning set forth in Section 9.17
of the Plan.
"New UPC Equity Subscription" means, collectively, the New UPC Equity
Purchase Rights (and the subscription of shares of New UPC Common Stock upon
exercise of the New
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UPC Equity Purchase Rights) and the UGC Subscription Commitment (and the
subscription of shares of New UPC Common Stock by UGC under the UGC Subscription
Commitment).
"New UPC Management Schedule" means that certain schedule, a copy of which
shall have been Filed on or before the Document Filing Date, setting forth the
identity of the officers and directors of New UPC as of the Effective Date as
well as the proposed compensation of such individuals.
"Objection" means any objection, application, motion, complaint or any
other legal proceeding seeking, in whole or in part, to Disallow, determine,
liquidate, classify, reclassify or establish the priority of, expunge,
subordinate or estimate any Claim (including the resolution of any request for
payment of any Administrative Claim) or Equity Interest other than a Claim or an
Equity Interest that is Allowed.
"Offer Memorandum" has the meaning set forth in Section 9.9 of the Plan.
"Old Other Equity Interests" means any and all rights, options and warrants
to acquire UPC Ordinary Shares A, including any Employee Options, outstanding
immediately prior to the Effective Date, including, without limitation, those
set forth on Annex F to the Restructuring Agreement.
"Ordinary Creditors" means the holders of non-preferred, unsecured claims
against the Debtor under Dutch law.
"Ordinary Share Distribution Amount" means 800,000 shares of New UPC Common
Stock.
"Ordinary Shares Consideration" has the meaning set forth in Section
4.10(a) of the Plan.
"Participating Noteholders" means those Holders of the UPC Notes (other
than the UGC Group) who are party to the Restructuring Agreement.
"Person" includes an individual, a corporation, a limited or general
partnership, a joint venture, an association, a joint stock company, a limited
liability company, a limited liability partnership, an estate, a trust, a
trustee, a United States Trustee, an unincorporated organization, a government,
a governmental unit, or any agency, department or political subdivision thereof.
"Petition Date" means December 3, 2002.
"Plan" means this First Amended Chapter 11 Plan of Reorganization, dated
December 23, 2002, together with all exhibits, appendices, schedules and
annexes, if any, hereto, as such Plan may be altered, amended, supplemented or
modified from time to time in accordance with the provisions of the U.S.
Bankruptcy Code, the U.S. Bankruptcy Rules, the Confirmation Order and the terms
and conditions of Section 14.3 of the Plan.
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"Preference Shares Consideration" has the meaning set forth in Section
4.8(a) of the Plan.
"Priority Shares Consideration" has the meaning set forth in Section 4.9(a)
of the Plan.
"Priority Tax Claim" means any and all Claims accorded priority in payment
pursuant to Section 507(a)(8) of the U.S. Bankruptcy Code.
"pro rata" means, except to the extent otherwise specifically provided in
the Plan, at any time, the proportion that the Face Amount of an Allowed Claim
or Allowed Equity Interest in a particular Class bears to the aggregate Face
Amount of all Claims or Equity Interests (including Disputed Claims or Disputed
Equity Interests, but excluding Disallowed Claims or Disallowed Equity
Interests) in that Class; provided, however, that with respect to the UPC
Ordinary Shares A, UPC Priority Shares and Equity Securities Claims, pro rata
means the proportion that the Face Amount of an Allowed UPC Ordinary Share A,
Allowed UPC Priority Share or Allowed Equity Securities Claim bears to the
aggregate Face Amount of all UPC Ordinary Shares A, UPC Priority Shares and
Equity Securities Claims (including Disputed UPC Ordinary Shares A, Disputed UPC
Priority Shares and Disputed Equity Securities Claims, but excluding Disallowed
UPC Ordinary Shares A, Disallowed UPC Priority Shares and Disallowed Equity
Securities Claims); provided further that when used in connection with the
calculation of distributions or reserves to be made under the Plan on account of
a Claim, pro rata shall also include Claims allowed, disputed or disallowed in
connection with the Dutch Bankruptcy Case, as the case may be, to the extent
that such Claims are not duplicative of Claims Allowed, Disputed or Disallowed
in the U.S. Bankruptcy Case.
"Professional" means any professional employed in the Chapter 11 Case
pursuant to Sections 327 or 1103 of the U.S. Bankruptcy Code or to be
compensated pursuant to Sections 327, 328, 330, 331, 503(b)(2) or (4) or 1103 of
the U.S. Bankruptcy Code.
"Professional Claim" means a Claim of a Professional for compensation
and/or reimbursement of expenses pursuant to Sections 327, 328, 330, 331 or
503(b) of the U.S. Bankruptcy Code relating to services incurred on and after
the Petition Date and prior to and including the Effective Date.
"Property" means all assets or property of any nature whatsoever, real or
personal, tangible or intangible, including contract rights, accounts and Causes
of Action.
"Reinstated or Reinstatement" means (i) leaving unaltered the legal,
equitable, and contractual rights to which a Claim entitles the Holder of such
Claim so as to leave such Claim Unimpaired in accordance with Section 1124 of
the U.S. Bankruptcy Code or (ii) notwithstanding any contractual provision or
applicable law that entitles the Holder of such Claim to demand or receive
accelerated payment of such Claim after the occurrence of a default, (a) curing
any such default that occurred before or after the Petition Date, other than a
default of a kind specified in Section 365(b)(2) of the U.S. Bankruptcy Code;
(b) reinstating the maturity of such Claim as such maturity existed before such
default; (c) compensating the Holder of such Claim for any damages incurred as a
result of any reasonable reliance by such Holder on such
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contractual provision or such applicable law; and (d) not otherwise altering the
legal, equitable, or contractual rights to which such Claim entitles the Holder
of such Claim.
"Related Party" means, with respect to any Person (the "First Person"), (a)
any other Person (the "Second Person") having Beneficial Ownership of forty
percent (40%) or more of the Voting Securities of such First Person and (b) any
other Person, forty percent (40%) or more of whose Voting Securities are owned,
controlled or held with power to vote, directly or indirectly, by that Second
Person.
"Reorganized Debtor" means United Pan-Europe Communications N.V. on and
after the Effective Date.
"Reserve" has the meaning set forth in Section 8.4(b) of the Plan.
"Restriction" means, with respect to any capital stock, partnership
interest, membership interest in a limited liability company or other equity
interest or security, any voting or other trust or agreement, option, warrant,
preemptive right, right of first offer, right of first refusal, escrow
arrangement, proxy, buy-sell agreement, power of attorney or other contract (but
excluding the Belmarken Loan Agreements and the Restructuring Agreement), Law,
license, permit or Judgment that, conditionally or unconditionally, (i) grants
to any Person the right to purchase or otherwise acquire, or obligates any
Person to sell or otherwise dispose of or issue, or otherwise results or,
whether upon the occurrence of any event or with notice or lapse of time or both
or otherwise, may result in any Person acquiring, (x) any of such capital stock,
partnership interest, membership interest in a limited liability company or
other equity interest or security; (y) any of the proceeds of, or any
distributions paid or that are or may become payable with respect to, any of
such capital stock, partnership interest, membership interest in a limited
liability company or other equity interest or security; or (z) any interest in
such capital stock, partnership interest, membership interest in a limited
liability company or other equity interest or security or any such proceeds or
distributions; (ii) restricts or, whether upon the occurrence of any event or
with notice or lapse of time or both or otherwise, is reasonably likely to
restrict the transfer or voting of, or the exercise of any rights or the
enjoyment of any benefits arising by reason of ownership of, any such capital
stock, partnership interest, membership interest in a limited liability company
or other equity interest or security or any such proceeds or distributions; or
(iii) creates or, whether upon the occurrence of any event or with notice or
lapse of time or both or otherwise, is reasonably likely to create a Lien or
purported Lien affecting any such capital stock, partnership interest,
membership interest in a limited liability company or other equity interest or
security, proceeds or distributions.
"Restructuring" means the restructuring of UPC's capital structure in
accordance with the terms of the Restructuring Agreement, the Plan, the Akkoord
and any associated documents.
"Restructuring Agreement" means that certain Restructuring Agreement
(including any exhibits and amendments, if any, thereto), dated as of September
30, 2002, by and among UPC, New UPC, UGC, UGC Holdings, United Europe, UUB and
certain holders of the UPC Notes, a copy of which (as the same may have been
amended through the date hereof) is annexed as Exhibit "A" to the Plan.
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"Schedule of Assumed Contracts" means the schedule, as the same may be
amended at any time prior to the Confirmation Hearing, listing certain executory
contracts and unexpired leases to be assumed by the Debtor (along with
associated amounts for cure claims), which schedule is to be served on the
counterparties to such executory contracts and unexpired leases, along with a
motion or motions to approve the assumption thereof under Section 365(a) of the
U.S. Bankruptcy Code, and Filed by the Debtor on or before the Document Filing
Date.
"Schedule of Rejected Contracts" means the schedule, as the same may be
amended at any time prior to the Confirmation Hearing, listing certain executory
contracts and unexpired leases to be rejected by the Debtor (along with the
associated amounts for rejection damage claims), which schedule is to be served
on the counterparties to such executory contracts and unexpired leases, along
with a motion or motions to approve the rejection thereof under Section 365(a)
of the U.S. Bankruptcy Code, and Filed by the Debtor on or before the Document
Filing Date.
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"Second Amendment" has the meaning set forth in Section 9.3(c) of the Plan.
"Shareholder Proposals" has the meaning set forth in Section 9.3 of the
Plan.
"Stockholders Agreement" means that certain stockholders agreement by and
among UGC, New UPC, the Participating Noteholders, and any other Holder of an
Allowed Class 5 Claim who elects to become a party thereto, a copy of which
shall have been Filed on or before the Document Filing Date.
"Subscription Shares" has the meaning set forth in Section 9.17 of the
Plan.
"Subsidiary" means, with respect to any Person, (i) a corporation, a
majority in voting power of whose capital stock with voting power, under
ordinary circumstances, to elect directors is at the time, directly or
indirectly owned by such Person, by a Subsidiary of such Person, or by such
Person and one or more Subsidiaries of such Person, without regard to whether
the voting of such stock is subject to a voting agreement or similar
Restriction, controlled by or under common control with the respective Person,
(ii) a partnership or limited liability company in which such Person or a
Subsidiary of such Person is, at the date of determination, (x) in the case of a
partnership, a general partner of such partnership with the power affirmatively
to direct the policies and management of such partnership or (y) in the case of
a limited liability company, the managing member or, in the absence of a
managing member, a member with the power affirmatively to direct the policies
and management of such limited liability company, or (iii) any other Person
(other than a corporation) in which such Person, a Subsidiary of such Person or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof, has (x) the power to elect or direct the
election of a majority of the members of the governing body of such Person
(whether or not such power is subject to a voting agreement or similar
Restriction) or (y) in the absence of such a governing body, a majority
ownership interest.
"Tax" means any tax, charge, fee, levy, impost or other assessment by any
federal, state, local or foreign governmental authority, including, without
limitation, income, excise, property, sales, transfer, employment, payroll,
franchise, profits, license, use, ad valorem, estimated,
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severance, stamp, occupation and withholding tax, together with any interest,
penalties, fines or additions attributable to, imposed on, or collected by any
such federal, state, local or foreign governmental authority.
"10-7/8% Euro Senior Notes due 2007" means the(euro)100.0 million of
10-7/8% Senior Notes due 2007 issued by UPC in October 1999.
"10-7/8% Euro Senior Notes due 2009" means the (euro)300.0 million of
10-7/8% Senior Notes due 2009 issued by UPC in July 1999.
"10-7/8% U.S. Senior Notes due 2007" means the U.S. $200.0 million of
10-7/8% Senior Notes due 2007 issued by UPC in October 1999.
"10-7/8% U.S. Senior Notes due 2009" means the U.S. $800.0 million of
10-7/8% Senior Notes due 2009 issued by UPC in July 1999.
"Third Amendment" has the meaning set forth in Section 9.3(e) of the Plan.
"13-3/8% Euro Senior Discount Notes due 2009" means the (euro)191.0 million
of 13-3/8% Senior Discount Notes due 2009 issued by UPC in October 1999.
"13-3/8% U.S. Senior Discount Notes due 2009" means the U.S. $478.0 million
of 13-3/8% Senior Discount Notes due 2009 issued by UPC in October 1999.
"13-3/4% U.S. Senior Discount Notes due 2010" means the U.S. $1.0 billion
of 13-3/4% Senior Discount Notes due 2010 issued by UPC in January 2000.
"12-1/2% U.S. Senior Discount Notes due 2009" means the U.S. $735.0 million
of 12-1/2% Senior Discount Notes due 2009 issued by UPC in July 1999.
"UGC" means UnitedGlobalCom, Inc., a corporation organized under the laws
of the State of Delaware and the parent of UGC Holdings.
"UGC Group" means UGC and its Subsidiaries, other than UPC and its
Subsidiaries.
"UGC Holdings" means UGC Holdings, Inc., a corporation organized under the
laws of the State of Delaware and the parent of United Europe.
"UGC Subscription Commitment" has the meaning set forth in Section 9.18 of
the Plan.
"Unclaimed Property" means any Cash or other Property distributed to the
Holder of an Allowed Claim or Allowed Equity Interest pursuant to the Plan that
(a) is returned to the Reorganized Debtor as undeliverable and no appropriate
forwarding address is received within the later of (i) six (6) months after the
Effective Date and (ii) six (6) months after such Distribution is made to such
Holder, (b) was not mailed or delivered because of the absence of a proper
address to which to mail or deliver such Property, or (c) in the case of a
Distribution made in the form of a check, is not negotiated and no request for
reissuance is made as provided for in Section 6.8 of the Plan.
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"Unimpaired" means any Claim that is not Impaired within the meaning of
Section 1124 of the U.S. Bankruptcy Code.
"United Europe" means United Europe, Inc., a corporation organized under
the laws of the State of Delaware and the parent of UPC.
"United States Trustee" means the United States Trustee appointed under
Section 581(a)(3) of title 28 of the United States Code to serve in the Southern
District of New York, or its legally designated and authorized representative.
"UPC" has the meaning set forth in the Introduction to the Plan.
"UPC ADSs" means the American Depositary Shares representing UPC Ordinary
Shares A deposited with Citibank N.A., as depositary under the Deposit
Agreement, dated February 1999, among the Debtor, Citibank N.A., as depositary,
and all holders and beneficial owners of American Depositary Shares evidenced by
American Depositary Receipts thereunder.
"UPC Dollar-Denominated Notes" means, collectively, the following series of
outstanding senior notes and senior discount notes of UPC: (a) the 10-7/8% U.S.
Senior Notes due 2007; (b) the 10-7/8% U.S. Senior Notes due 2009; (c) the
12-1/2% U.S. Senior Discount Notes due 2009; (d) the 11-1/4% U.S. Senior Notes
due 2009; (e) the 13-3/8% U.S. Senior Discount Notes due 2009; (f) the 11-1/4%
U.S. Senior Notes due 2010; (g) the 11-1/2% U.S. Senior Notes due 2010; and (h)
the 13-3/4% U.S. Senior Discount Notes due 2010.
"UPC Euro-Denominated Notes" means, collectively, the following series of
outstanding senior notes and senior discount notes of UPC: (a) the 10-7/8% Euro
Senior Notes due 2007; (b) the 10-7/8% Euro Senior Notes due 2009; (c) the
11-1/4% Euro Senior Notes due 2009; (d) the 13-3/8% Euro Senior Discount Notes
due 2009; and (e) the 11-1/4% Euro Senior Notes due 2010.
"UPC Notes" means the UPC Dollar-Denominated Notes and the UPC
Euro-Denominated Notes, collectively.
"UPC Notes Claims" means any and all Claims of the Holders of the UPC Notes
arising under the Indentures, the UPC Notes or the related transaction documents
pursuant to which the UPC Notes were issued.
"UPC Ordinary Shares A" means all authorized, issued and outstanding
ordinary shares A of UPC, par value (euro)1.00, as of the Petition Date,
including such shares held in the form of UPC ADSs.
"UPC Ordinary Shares C" has the meaning set forth in Section 9.3 of the
Plan.
"UPC Preference Shares A" means all authorized, issued and outstanding
Series 1 convertible preference shares A of UPC, par value (euro)1.00, as of the
Petition Date.
"UPC Priority Shares" means all authorized, issued and outstanding priority
shares of UPC, par value (euro)1.00, as of the Petition Date.
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"UPC SEC Documents" means all forms, reports, schedules, statements and
other documents (including, in each case, exhibits, schedules, amendments or
supplements thereto, and any other information incorporated by reference
therein) required to be filed by UPC since January 1, 1999 under the Exchange
Act or the Securities Act, as such documents have been amended or supplemented
between the time of their respective filing and the date of the Restructuring
Agreement.
"UPC Voting Securities" means all equity securities of UPC, including,
without limitation, all UPC Ordinary Shares A, UPC Priority Shares and UPC
Preference Shares A, entitled to vote at a general meeting of the shareholders
of UPC.
"U.S. Bankruptcy Code" means title 11 of the United States Code, 11 U.S.C.
ss.ss.101-1330, as applicable to the Chapter 11 Case.
"U.S. Bankruptcy Court" means the United States Bankruptcy Court for the
Southern District of New York or, if such court ceases to exercise jurisdiction
over these proceedings, the court or adjunct thereof that exercises jurisdiction
over the Chapter 11 Case.
"U.S. Bankruptcy Rules" means (i) the Federal Rules of Bankruptcy Procedure
and the Official Bankruptcy Forms, as amended and promulgated under Section 2075
of title 28 of the United States Code, (ii) the Local Rules of the U.S.
Bankruptcy Court, and (iii) any standing orders governing practice and procedure
issued by the U.S. Bankruptcy Court, each as in effect on the Petition Date,
together with all amendments and modifications thereto that were subsequently
made applicable to the Chapter 11 Case or proceedings therein, as the case may
be.
"U.S. Securities Act" means the U.S. Securities Act of 1933, as amended
from time to time, and the rules and regulations promulgated thereunder.
"U.S. Trustee's Fee Claims" means any fees assessed against the Estate
pursuant to Section 1930(a)(6) of title 28 of the United States Code.
"UUB" means United Bonds, LLC, a limited liability company organized under
the laws of the State of Delaware and a wholly owned indirect subsidiary of UGC.
"Voting Securities" means, with respect to any Person, any equity interest
of such Person having general voting power under ordinary circumstances to
participate in the election of a majority of the governing body of such Person
(irrespective of whether at the time any other class of equity interest of such
Person shall have or might have voting power by reason of the happening of any
contingency).
Section 1.2 Rules of Interpretation. All references to "the Plan" herein
shall be construed, where applicable, to include references to this document and
all its exhibits, appendices, schedules and annexes, if any (and any amendments
thereto made in accordance with the U.S. Bankruptcy Code). Whenever from the
context it appears appropriate, each term stated in either the singular or the
plural shall include the singular and the plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, feminine and
the neuter. The words "herein," "hereof," "hereto," "hereunder," and other words
of similar import refer to
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the Plan as a whole and not to any particular paragraph, subparagraph, or clause
contained in the Plan. The words "includes" and "including" are not limiting and
mean that the things specifically identified are set forth for purposes of
illustration, clarity or specificity and do not in any respect qualify,
characterize or limit the generality of the class within which such things are
included. The captions and headings in the Plan are for convenience of reference
only and shall not limit or otherwise affect the provisions hereof. To the
extent of a conflict between any matter specifically addressed in the Plan and
any general provision of the Plan, such specific provision shall prevail. Any
term used in the Plan that is not defined in the Plan, either in Article I
hereof or elsewhere, but that is used in the U.S. Bankruptcy Code or the U.S.
Bankruptcy Rules shall have the meaning assigned to that term in (and shall be
construed in accordance with the rules of construction under) the U.S.
Bankruptcy Code or the U.S. Bankruptcy Rules (with the U.S. Bankruptcy Code
controlling in the case of a conflict or ambiguity). Without limiting the
preceding sentence, the rules of construction set forth in Section 102 of the
U.S. Bankruptcy Code shall apply to the Plan, unless superseded herein.
Section 1.3 Exhibits. All Exhibits to the Plan are incorporated into and
are a part of the Plan as if set forth in full herein, regardless of when Filed.
Section 1.4 Administrator Consent. Nothing in this Plan shall relieve the
Debtor of the need to gain the approval of the Administrator for any acts which
require such approval under Dutch Law.
ARTICLE II
ADMINISTRATIVE AND PRIORITY TAX CLAIMS
Section 2.1 Unclassified Claims. In accordance with Section 1123(a)(1) of
the U.S. Bankruptcy Code, Administrative Claims and Priority Tax Claims are not
classified and are excluded from the Classes designated in Article III of the
Plan. The treatment accorded to Holders of Administrative Claims and Priority
Tax Claims, which is set forth below, shall be in full satisfaction, settlement,
release, extinguishment and discharge of their respective Claims against the
Debtor and the Estate, except as otherwise provided in the Plan or the
Confirmation Order.
Section 2.2 Administrative Claims.
(a) Unless otherwise provided for herein, each Holder of an Allowed
Administrative Claim shall receive in full satisfaction, settlement,
release, extinguishment and discharge of such Claim: (A) the amount of such
unpaid Allowed Claim in Cash on or as soon as reasonably practicable after
the later of (i) the Effective Date, (ii) the date on which such
Administrative Claim becomes Allowed and (iii) a date agreed to in writing
by the Debtor or the Reorganized Debtor, as the case may be, and the Holder
of such Administrative Claim; (B) treatment such that such Administrative
Claim is Reinstated; or (C) such other treatment on such other terms and
conditions as may be agreed upon in writing by the Holder of such Claim and
the Debtor or the Reorganized Debtor, as the case may be, or as the U.S.
Bankruptcy Court may order; provided, however, that Allowed Administrative
Claims representing (y) liabilities, accounts payable or other Claims,
liabilities or obligations incurred subsequent to the Petition Date in the
ordinary course of business of the Debtor consistent with past practices
and (z) contractual liabilities arising under loans or advances to the
Debtor incurred subsequent to the Petition Date, whether or not incurred in
the ordinary course of business of the Debtor, shall be paid or performed
by the Debtor or the Reorganized Debtor in accordance with the terms and
conditions of the particular transactions relating to such liabilities and
any agreements relating thereto.
(b) All Indenture Trustee Claims shall be paid by the Debtor in full,
in Cash, on the Effective Date upon presentation of customary invoices to
the Debtor; provided, however, that if the Debtor disputes any Indenture
Trustee Claim and such dispute is not resolved, then such disputed
Indenture Trustee Claim may, solely at the option of the Indenture Trustee,
be submitted to the U.S. Bankruptcy Court for final resolution; provided
further, however, that if the Indenture Trustee does not submit any such
unresolved dispute to the U.S. Bankruptcy Court for final resolution within
five (5) Business Days of receiving notification from the Debtor of such
dispute, then the Indenture Trustee shall not have any further right to
seek payment of such disputed amount from the Debtor, but shall only have
recourse to its charging liens under the Indentures with respect to such
disputed amount. Any such disputed Indenture Trustee Claim shall not
prevent confirmation of the Plan, the occurrence of the Effective Date or
consummation of the Plan. The Indenture Trustee shall not be required to
file an application for payment of the Indenture Trustee Claims. Except as
set forth above, nothing contained herein shall affect the Indenture
Trustee's charging liens under the Indentures with respect to any Indenture
Trustee Claim that is not paid in full, in Cash, by the Debtor on the
Effective Date.
Section 2.3 Priority Tax Claims. Each Holder of an Allowed Priority Tax
Claim shall receive, at the option of the Debtor or the Reorganized Debtor, as
the case may be, in full satisfaction, settlement, release, extinguishment and
discharge of such Claim: (A) the amount of such unpaid Allowed Claim in Cash on
or as soon as reasonably practicable after the latest of (i) the Effective Date,
(ii) the date on which such Priority Tax Claim becomes Allowed and (iii) a date
agreed to by the Debtor or the Reorganized Debtor, as the case may be, and the
Holder of such Priority Tax Claim; or (B) such other treatment on such other
terms and conditions as may be agreed upon in writing by the Holder of such
Claim and the Debtor or the Reorganized Debtor, as the case may be, or as the
U.S. Bankruptcy Court may order; provided, however, that the Debtor or the
Reorganized Debtor, as the case may be, shall have the right, in its sole
discretion, to prepay at any time any Allowed Priority Tax Claim without premium
or penalty of any sort or nature.
ARTICLE III
CLASSIFICATION OF CLAIMS, EQUITY
INTERESTS AND OLD OTHER EQUITY INTERESTS
Section 3.1 Generally. Pursuant to Section 1122 of the U.S. Bankruptcy
Code, set forth below is a designation of Classes of Claims, Equity Interests
and Old Other Equity Interests, other than Administrative Claims and Priority
Tax Claims. A Claim or an Equity Interest is classified in a particular Class
only to the extent that the Claim, Equity Interest or Old Other Equity Interest
qualifies within the description of that Class and is classified in a different
Class to the extent that the balance of such Claim, Equity Interest or Old Other
Equity Interest qualifies within the description of that different Class. A
Claim, Equity Interest or Old Other Equity Interest is placed in a particular
Class for the purpose of receiving distributions pursuant to the Plan only to
the extent that such Claim, Equity Interest or Old Other Equity Interest is an
Allowed Claim, an Allowed Equity Interest or an Allowed Old Other Equity
Interest in that Class and such Claim, Equity Interest or Old Other Equity
Interest has not been paid, released, settled or otherwise satisfied prior to
the Effective Date.
Section 3.2 Classified Claims Against and Equity Interests in UPC.
(a) Class 1: Miscellaneous Secured Claims
(b) Class 2: Classified Priority Claims
(c) Class 3: Critical Creditor Claims
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(d) Class 4: Belmarken Notes Claims
(e) Class 5: UPC Notes Claims and General Unsecured Claims
(f) Class 6: UPC Preference Shares A
(g) Class 7: UPC Priority Shares
(h) Class 8: UPC Ordinary Shares A
(i) Class 9: Equity Securities Claims
(j) Class 10: Old Other Equity Interests
Section 3.3 Elimination of Classes. Any Class that does not contain, as of
the date of the commencement of the Confirmation Hearing, any Allowed Claims,
Allowed Equity Interests or Allowed Old Other Equity Interests or any Claims,
Equity Interests or Old Other Equity Interests temporarily allowed for voting
purposes under U.S. Bankruptcy Rule 3018 shall be deemed to have been deleted
from this Plan for purposes of (i) voting to accept or reject this Plan and (ii)
determining whether it has accepted or rejected this Plan under Section
1129(a)(8) of the U.S. Bankruptcy Code.
ARTICLE IV
TREATMENT OF CLAIMS, EQUITY INTERESTS
AND OLD OTHER EQUITY INTERESTS
Section 4.1 Satisfaction of Claims, Equity Interests and Old Other Equity
Interests. The treatment of and consideration to be received by Holders of
Allowed Claims, Allowed Equity Interests and Allowed Old Other Equity Interests
pursuant to this Article IV and the Plan shall be in full satisfaction,
settlement, release, extinguishment and discharge of their respective Claims,
Equity Interests or Old Other Equity Interests, except as otherwise provided in
the Plan or the Confirmation Order.
Section 4.2 No Effect on Section 508 of the U.S. Bankruptcy Code. Nothing
contained in the Plan shall have any effect on the operation of Section 508 of
the U.S. Bankruptcy Code, and such section shall apply in all respects in the
Chapter 11 Case.
Section 4.3 Class 1: Miscellaneous Secured Claims.
(a) Treatment. Each Holder of an Allowed Miscellaneous Secured Claim
shall receive, in the sole discretion of the Debtor or the Reorganized
Debtor, as the case may be, in full satisfaction, settlement, release,
extinguishment and discharge of such Allowed Claim: (A) Cash equal to the
amount of such Allowed Miscellaneous Secured Claim on or as soon as
reasonably practicable after the later of (i) the Effective Date and (ii)
the date that such Miscellaneous Secured Claim becomes Allowed; (B)
treatment such
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that such Miscellaneous Secured Claim is Reinstated; or (C) such other
treatment on such other terms and conditions as may be agreed upon in
writing by the Holder of such Claim and the Debtor or Reorganized Debtor,
as the case may be, or as the U.S. Bankruptcy Court may order.
(b) Voting. Class 1 is Unimpaired and the Holders of Miscellaneous
Secured Claims are conclusively presumed to have accepted the Plan pursuant
to Section 1126(f) of the U.S. Bankruptcy Code and are not entitled to vote
to accept or reject the Plan.
Section 4.4 Class 2: Classified Priority Claims.
(a) Treatment. Each Holder of an Allowed Classified Priority Claim
shall receive in full satisfaction, settlement, release, extinguishment and
discharge of such Allowed Claim: (A) the amount of such unpaid Allowed
Claim in Cash on or as soon as reasonably practicable after the later of
(i) the Effective Date, (ii) the date on which such Claim becomes Allowed
and (iii) a date agreed to by the Debtor or the Reorganized Debtor, as the
case may be, and the Holder of such Claim; (B) treatment such that such
Claim is Reinstated; or (C) such other treatment on such other terms and
conditions as may be agreed upon in writing by the Holder of such Claim and
the Debtor or Reorganized Debtor, as the case may be, or as the U.S.
Bankruptcy Court may order.
(b) Voting. Class 2 is Unimpaired and the Holders of Classified
Priority Claims are conclusively presumed to have accepted the Plan
pursuant to Section 1126(f) of the U.S. Bankruptcy Code and are not
entitled to vote to accept or reject the Plan.
Section 4.5 Class 3: Critical Creditor Claims.
(a) Treatment. Each Holder of an Allowed Critical Creditor Claim shall
receive in full satisfaction, settlement, release, extinguishment and
discharge of such Claim: (A) payment in full in Cash on the later of (i)
the Effective Date and (ii) the date such Claim becomes Allowed; (B)
treatment such that such Claim is Reinstated; or (C) such other treatment
on such other terms and conditions as may be agreed upon in writing by the
Holder of such Claim and the Debtor or the Reorganized Debtor, as the case
may be, or as the U.S. Bankruptcy Court may order.
(b) Voting. Class 3 is Unimpaired and the Holders of Critical Creditor
Claims are conclusively presumed to have accepted the Plan pursuant to
Section 1126(f) of the U.S. Bankruptcy Code and are not entitled to vote to
accept or reject the Plan.
Section 4.6 Class 4: Belmarken Notes Claims.
(a) Treatment. On the Effective Date, the Holder of the Belmarken
Notes shall receive, in consideration for the Belmarken Notes and the
obligations of all other parties under the Belmarken Notes and the
Belmarken Loan Agreements, 23,853,179 shares of New UPC Common Stock (the
"Belmarken Notes Consideration"). The Belmarken Notes Claims shall be
deemed Allowed for all purposes, including, but not limited to, voting and
distributions, in the aggregate amount of $937,482,330.51 and the Allowed
Belmarken Notes Claims shall not be subject to defense, setoff or
counterclaim.
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(b) Voting. Class 4 is Impaired and the Holder of the Belmarken Notes
Claims is entitled to vote to accept or reject the Plan.
Section 4.7 Class 5: UPC Notes Claims and General Unsecured Claims.
(a) Treatment. On or as soon as practicable after the Effective Date,
each Holder of an Allowed Class 5 Claim shall receive in consideration for
its Claim, a number of shares of New UPC Common Stock. In the aggregate,
the Holders of all Allowed UPC Notes Claims shall receive 25,146,821 shares
of New UPC Common Stock, and each Holder of an Allowed UPC Notes Claim
shall receive the number of shares of New UPC Common Stock equal to such
Holder's pro rata portion of those shares of New UPC Common Stock. The UPC
Notes Claims shall be deemed Allowed for all purposes, including, but not
limited to, voting and distributions for each series in the amounts set
forth on Schedule 1 hereto and for all UPC Notes Claims in the aggregate
amount of $4,688,233,885.90 (which shall exclude any amounts on account of
UPC Notes held by UPC as set forth on Annex C to the Restructuring
Agreement) and the Allowed UPC Notes Claims shall not be subject to
defense, setoff or counterclaim. Each Holder of an Allowed Class 5 Claim
that is not a UPC Notes Claim shall receive a number of shares of New UPC
Common Stock so that the number of shares per amount of Allowed Claim
received by such Holder is the same as the number of shares per amount of
Allowed Claim that the Holders of Allowed UPC Notes Claims receive. The
number of shares of New UPC Common Stock to be distributed on account of
Allowed Class 5 Claims that are not UPC Notes Claims shall be in addition
to the 25,146,821 shares of New UPC Common Stock to be distributed on
account of the Allowed UPC Notes Claims. The receipt of such shares of New
UPC Common Stock by the Holders of the Class 5 Claims shall constitute a
full satisfaction, settlement, release and discharge of such Class 5
Claims; provided, however, that, notwithstanding anything in the Plan to
the contrary, any UPC Notes acquired by New UPC through the Plan and the
Akkoord shall remain outstanding and shall not be deemed to be satisfied,
settled, released or discharged.
(b) Voting. Class 5 is Impaired and the Holders of the UPC Notes
Claims and the General Unsecured Claims are entitled to vote to accept or
reject the Plan.
Section 4.8 Class 6: UPC Preference Shares A.
(a) Treatment. On or as soon as practicable after the Effective Date,
and after the sale by New UPC of the Belmarken Notes to UPC, each Holder of
outstanding Allowed UPC Preference Shares A shall receive from New UPC a
number of shares of New UPC Common Stock equal to such Holder's pro rata
portion of the 200,000 shares of New UPC Common Stock (collectively, the
"Preference Shares Consideration"). The receipt of the Preference Shares
Consideration by the Holders of the UPC Preference Shares A shall
constitute a full satisfaction, settlement, release and discharge of the
Claims and Equity Interests of each Holder of UPC Preference Shares A in
respect of such UPC Preference Shares A; provided, however, that,
notwithstanding anything to contrary contained herein, any UPC Preference
Shares A acquired by New UPC through the Plan shall remain outstanding and
shall not be deemed to be satisfied, settled, released or discharged.
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(b) Voting. Class 6 is Impaired and the Holders of the UPC Preference
Shares A are entitled to vote to accept or reject the Plan.
Section 4.9 Class 7: UPC Priority Shares.
(a) Treatment. On or as soon as practicable after the Effective Date,
and after the sale by New UPC of the Belmarken Notes to UPC, the Holder of
the Allowed UPC Priority Shares shall receive from New UPC a number of
shares of New UPC Common Stock equal to such Holder's pro rata portion of
the Ordinary Share Distribution Amount (the "Priority Shares
Consideration") in a per share amount equal to the Ordinary Shares
Consideration. The receipt of the Priority Shares Consideration by the
Holder of the UPC Priority Shares shall constitute a full satisfaction,
settlement, release and discharge of the Claims and Equity Interests of the
Holder of the UPC Priority Shares in respect of the UPC Priority Shares;
provided, however, that, notwithstanding anything to contrary contained
herein, any UPC Priority Shares acquired by New UPC through the Plan shall
remain outstanding and shall not be deemed to be satisfied, settled,
released or discharged.
(b) Voting. Class 7 is Impaired and the Holder of the UPC Priority
Shares is entitled to vote to accept or reject the Plan.
Section 4.10 Class 8: UPC Ordinary Shares A.
(a) Treatment. On or as soon as practicable after the Effective Date,
and after the sale by New UPC of the Belmarken Notes to UPC, each Holder of
Allowed UPC Ordinary Shares A shall receive from New UPC a number of shares
of New UPC Common Stock equal to such Holder's pro rata portion of the
Ordinary Share Distribution Amount (collectively, the "Ordinary Shares
Consideration"). The receipt of the Ordinary Shares Consideration by the
Holders of the UPC Ordinary Shares A shall constitute a full satisfaction,
settlement, release and discharge of the Claims and Equity Interests of
each Holder of UPC Ordinary Shares A; provided, however, that,
notwithstanding anything to contrary contained herein, any UPC Ordinary
Shares A acquired by New UPC through the Plan shall remain outstanding and
shall not be deemed to be satisfied, settled, released or discharged.
(b) Voting. Class 8 is Impaired and the Holders of the Allowed UPC
Ordinary Shares A are entitled to vote to accept or reject the Plan.
Section 4.11 Class 9: Equity Securities Claims.
(a) Treatment. Subject to the Allowance of the Equity Securities
Claims, each Holder of an Allowed Equity Securities Claim shall receive, in
full satisfaction, settlement, release, extinguishment and discharge of its
Claim, a number of shares of New UPC Common Stock equal to such Holder's
pro rata portion of the Ordinary Share Distribution Amount as if such
Holder had (a) purchased, on the date its Equity Securities Claim first
arose, UPC Ordinary Shares A with a value equal to the amount of such
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Holder's Allowed Equity Securities Claim and (b) retained such shares as of
the Effective Date.
(b) Voting. Class 9 is Impaired and the Holders of the Equity
Securities Claims are entitled to vote to accept or reject the Plan.
Section 4.12 Class 10: Old Other Equity Interests.
(a) Treatment. All Holders of Old Other Equity Interests shall not be
entitled to, and shall not, receive or retain, any property under the Plan
on account of such Old Other Equity Interests, and, to the extent permitted
under applicable law, such Old Other Equity Interests shall be cancelled on
the Effective Date.
(b) Voting. Class 10 is Impaired, and the Holders of Old Other Equity
Interests are deemed to have rejected the Plan pursuant to Section 1126(g)
of the U.S. Bankruptcy Code and are not entitled to vote to accept or
reject the Plan.
ARTICLE V
ACCEPTANCE OR REJECTION OF THE PLAN; CRAMDOWN
Section 5.1 Unimpaired Classes. Classes 1, 2 and 3 are Unimpaired under the
Plan. As such, pursuant to Section 1126(f) of the U.S. Bankruptcy Code, the
Holders of Claims in such Classes are conclusively presumed to have accepted the
Plan in respect of such Claims and, therefore, are not entitled to vote to
accept or reject the Plan. Administrative Claims and Priority Tax Claims are
Unimpaired under the Plan and not classified under the Plan and hence are not
entitled to vote to accept or reject the Plan.
Section 5.2 Impaired Classes. Classes 4, 5, 6, 7, 8 and 9 are Impaired and
are entitled to vote to accept or reject the Plan. Holders in Class 10 are not
receiving or retaining any property on account of their Old Other Equity
Interests in such Class. As such, pursuant to Section 1126(g) of the U.S.
Bankruptcy Code, the Holders in such Class are deemed to have rejected the Plan
in respect of such Old Other Equity Interests and, therefore, are not entitled
to vote to accept or reject the Plan.
Section 5.3 Acceptance by Impaired Classes of Claims and Equity Interests.
(a) Acceptance by an Impaired Class of Claims. Pursuant to Section
1126(c) of the U.S. Bankruptcy Code, an Impaired Class of Claims shall have
accepted the Plan if (a) the Holders of at least two-thirds (2/3) in dollar
amount of the Allowed Claims actually voting in such Class (other than
Claims held by any Holder designated pursuant to Section 1126(e) of the
U.S. Bankruptcy Code) have timely and properly voted to accept the Plan and
(b) more than one-half (1/2) in number of the Holders of such Allowed
Claims actually voting in such Class (other than Claims held by any Holder
designated pursuant to Section 1126(e) of the U.S. Bankruptcy Code) have
timely and properly voted to accept the Plan.
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(b) Acceptance by an Impaired Class of Equity Interests. Pursuant to
Section 1126(d) of the U.S. Bankruptcy Code, an Impaired Class of Equity
Interests shall have accepted the Plan if the Holders of at least
two-thirds (2/3) in amount of the Allowed Equity Interests actually voting
in such Class (other than Equity Interests held by any Holder designated
pursuant to Section 1126(e) of the U.S. Bankruptcy Code) have timely and
properly voted to accept the Plan.
Section 5.4 Cramdown. If all applicable requirements for Confirmation of
the Plan are met as set forth in Section 1129(a)(1) through (13) of the U.S.
Bankruptcy Code except subsection (8) thereof, the Debtor requests that the U.S.
Bankruptcy Court confirm the Plan in accordance with Section 1129(b) of the U.S.
Bankruptcy Code, notwithstanding the requirements of Section 1129(a)(8) thereof,
on the basis that the Plan is fair and equitable, and does not discriminate
unfairly, with respect to each Class of Claims, Equity Interests or Old Other
Equity Interests that is Impaired under, and has not accepted, the Plan.
ARTICLE VI
PROVISIONS GOVERNING DISTRIBUTIONS UNDER THE PLAN
Section 6.1 General. The Debtor, through the Disbursing Agent, shall make
all Distributions required by the Plan. Furthermore, the Debtor, New UPC and the
Disbursing Agent are authorized to make distributions required in connection
with ratification of the Akkoord or consummation of the Restructuring. In
particular, on the Initial Distribution Date, the Disbursing Agent shall make a
Distribution of New UPC Common Stock and Cash, as applicable, to the Holders of
Allowed Claims and Allowed Equity Interests in accordance with Article IV of the
Plan. Thereafter, Distributions may be made from time to time in the reasonable
discretion of the Disbursing Agent. Notwithstanding any other provision in the
Plan, no Distributions shall be made to a Holder of a Claim or Equity Interest
unless and until such Claim or Equity Interest is an Allowed Claim or an Allowed
Equity Interest, respectively.
Section 6.2 Delivery of Distributions. Subject to U.S. Bankruptcy Rule
9010, Distributions to Holders of Allowed Claims or Allowed Equity Interests
shall be made by the Disbursing Agent (a) at the last known addresses of such
Holders, (b) at the addresses set forth in any written notices of address
changes delivered to the Disbursing Agent, (c) in the case of Allowed UPC Notes
Claims, to the Indenture Trustee as set forth in Section 6.15 of the Plan or (d)
at the addresses set forth in any properly completed letters of transmittal
accompanying Certificates properly remitted to, or book-entry transfers made to
the Book-Entry Account of, the Disbursing Agent. If any Holder's Distribution is
returned as undeliverable, no further Distributions to such Holder shall be made
unless and until the Disbursing Agent is notified of such Holder's then current
address, at which time all missed Distributions shall be made to such Holder
without interest and without any dividends that would have been payable on any
equity securities to be distributed. All Distributions pursuant to the Plan
shall be at the Reorganized Debtor's expense. Nothing contained in the Plan
shall require the Reorganized Debtor or the Disbursing Agent or New UPC to
attempt to locate any Holder of an Allowed Claim or Allowed Equity Interest
other than by reviewing the records of the Reorganized Debtor.
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Notwithstanding anything to the contrary contained in the Plan, the Reorganized
Debtor and New UPC shall be entitled to implement additional, supplemental or
modified distribution procedures, upon terms approved by the U.S. Bankruptcy
Court after at least ten (10) days notice to UGC and the Participating
Noteholders.
Section 6.3 Disbursing Agent. The Disbursing Agent shall fulfill the
obligations under the Plan with respect to the Distributions of Property to the
Holders of Allowed Claims and Allowed Equity Interests, including, without
limitation, holding all reserves and accounts pursuant to the Plan. The identity
of the initial Disbursing Agent shall be disclosed by the Debtor prior to the
Confirmation Hearing and shall be approved by the U.S. Bankruptcy Court pursuant
to the Confirmation Order. The terms of employment of the Disbursing Agent shall
be submitted to the U.S. Bankruptcy Court for approval at the Confirmation
Hearing. In the event of the resignation of the Disbursing Agent, a replacement
shall be appointed by the Reorganized Debtor and New UPC, without the need for
further U.S. Bankruptcy Court approval.
Section 6.4 Distribution Notification Date. As of the close of business on
the Distribution Notification Date, all transfer ledgers, transfer books,
registers and any other records maintained by the designated transfer agents
with respect to ownership of the Belmarken Notes, the UPC Notes, the UPC
Preference Shares A, the UPC Priority Shares and the UPC Ordinary Shares A will
be closed and, for purposes of the Plan, there shall be no further changes in
the record holders of the Belmarken Notes, the UPC Notes, the UPC Preference
Shares A, the UPC Priority Shares or the UPC Ordinary Shares A. The Disbursing
Agent shall have no obligation to recognize the transfer of any Belmarken Notes,
UPC Notes, UPC Preference Shares A, UPC Priority Shares or UPC Ordinary Shares A
occurring after the Distribution Notification Date, and will be entitled for all
purposes to recognize and deal only with those Holders of Belmarken Notes, UPC
Notes, UPC Preference Shares A, UPC Priority Shares and UPC Ordinary Shares A as
of the close of business on the Distribution Notification Date, as reflected on
such ledgers, books, registers or records.
Section 6.5 Distributions to Holders of Allowed Claims and Allowed Equity
Interests.
(a) Non-Securities. Except for Distributions to Holders of Allowed
Belmarken Notes Claims, Allowed UPC Notes Claims, Allowed UPC Preference
Shares A, Allowed UPC Priority Shares and Allowed UPC Ordinary Shares A,
which will be made in accordance with Section 6.5(b) of the Plan, on the
Effective Date, the Reorganized Debtor or New UPC, as applicable, shall
deliver to the Disbursing Agent sufficient Cash and shares of New UPC
Common Stock to make the Distributions to be made on the Effective Date to
the Holders of Allowed Claims. Payments of Cash to be made pursuant to the
Plan will be available from funds held by the Reorganized Debtor as of the
Effective Date.
(b) Securities. Promptly after the later of (i) the Effective Date or
(ii) the date of Allowance of such Claims or Equity Interests, the
Reorganized Debtor shall cause the Disbursing Agent to mail to the Holders
of Allowed Belmarken Notes Claims, Allowed UPC Notes Claims, Allowed UPC
Preference Shares A, Allowed UPC Priority Shares and Allowed UPC Ordinary
Shares A appropriate transmittal materials (which shall
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specify that delivery shall be effected, and risk of loss and title to the
Belmarken Notes and the UPC Notes theretofore evidencing the Allowed Class
4 Claims and certain of the Allowed Class 5 Claims, respectively, or any
Certificates theretofore representing UPC Preference Shares A, UPC Priority
Shares and UPC Ordinary Shares A shall pass, only upon (i) proper physical
delivery of Certificates representing such Belmarken Notes and UPC
Preference Shares A to the Disbursing Agent, (ii) proper delivery of such
UPC Notes or UPC Ordinary Shares A held in bearer form through a book-entry
transfer into a Book-Entry Account at the Book-Entry Transfer Facility for
the UPC Notes or UPC Ordinary Shares A held in bearer form in accordance
with the Book-Entry Transfer Facility's procedures for transfer and (iii)
proper entries being made with respect to such UPC Priority Shares or UPC
Ordinary Shares A held in registered form to the register of the Debtor,
maintained by the Debtor's Board of Management, containing the names and
addresses of the Holders of the UPC Priority Shares and the UPC Ordinary
Shares A held in registered form). The Disbursing Agent may establish
reasonable and customary rules and procedures in connection with its
duties. No distribution of New UPC Common Stock under the Plan shall be
made to Holders of Allowed Belmarken Notes Claims, Allowed UPC Notes
Claims, Allowed UPC Preference Shares A, Allowed UPC Priority Shares or
Allowed UPC Ordinary Shares A until one of the following occurs: (i) the
Holder thereof (A) surrenders any Certificate(s) representing such Allowed
Claim or Allowed Equity Interest, as the case may be, to the Disbursing
Agent or (B) executes and delivers an affidavit of loss and/or indemnity
reasonably satisfactory to the Reorganized Debtor; (ii) there is a transfer
of such Allowed Claim or Allowed Equity Interest, as the case may be, in
book-entry form to the Book-Entry Account; or (iii) there is an entry made
with respect to such Allowed Claim or Allowed Equity Interest, as the case
may be, in the register of the Debtor, maintained by the Debtor's Board of
Management, containing the names and addresses of the Holders thereof;
provided, however, that any Holder of an Allowed Claim or Allowed Equity
Interest to which clause (i) above applies that fails to (y) surrender its
Certificate(s) or (z) execute and deliver an affidavit of loss and/or
indemnity reasonably satisfactory to the Reorganized Debtor before the
later to occur of (I) six (6) months after the Effective Date and (II) six
(6) months following the date such Holder's Claim or Equity Interest
becomes an Allowed Claim or Allowed Equity Interest, as applicable, shall
be deemed to have forfeited all of its rights against, Claims against
and/or Equity Interests in the Debtor, may not participate in any
distribution under the Plan and shall be forever barred from asserting any
such rights against the Reorganized Debtor, New UPC or their respective
property.
Section 6.6 Disputed Distributions. If any dispute arises as to the
identity of any Holder of an Allowed Claim or Allowed Equity Interest who is to
receive a Distribution, the Disbursing Agent shall, in lieu of making such
Distribution to such Holder, delay such Distribution until the disposition
thereof shall be determined by Final Order of the U.S. Bankruptcy Court or by
written agreement among the interested parties to such dispute.
Section 6.7 Distributions of Cash. Any Cash payment to be made pursuant to
the Plan may be made by Cash, draft, check, wire transfer, or as otherwise
required or provided in any relevant agreement or applicable law at the option
of the Reorganized Debtor.
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Section 6.8 Failure to Negotiate Checks. Checks issued in respect of
Distributions under the Plan shall be null and void if not negotiated within
sixty (60) days after the date of issuance. Any amounts returned to the
Reorganized Debtor in respect of such non-negotiated checks shall be held by the
Reorganized Debtor, as appropriate. Requests for reissuance of any such check
shall be made directly to the Reorganized Debtor by the Holder of the Allowed
Claim with respect to which such check originally was issued. All amounts
represented by any voided check will be held until the later to occur of (i)
nine (9) months after the Effective Date and (ii) nine (9) months after such
voided check was issued, and all requests for reissuance by the Holder of the
Allowed Claim in respect of a voided check are required to be made prior to such
date. Thereafter, all such amounts shall be deemed to be Unclaimed Property, in
accordance with Section 6.9 of the Plan, and all Claims in respect of void
checks and the underlying Distributions shall be forever barred, estopped and
enjoined from assertion in any manner against the Debtor or its Property or the
Reorganized Debtor or its Property.
Section 6.9 Unclaimed Distributions. Any Cash that becomes Unclaimed
Property shall revest in the Reorganized Debtor and shall no longer be subject
to Distribution to Creditors or Equity Interest Holders. Any New UPC Common
Stock that becomes Unclaimed Property shall be canceled and shall no longer be
subject to Distribution to Creditors or Equity Interest Holders. All full or
partial payments made by the Disbursing Agent or the Debtor and received by the
Holder of a Claim or Equity Interest prior to the Effective Date will be deemed
to be payments under the Plan for purposes of satisfying the obligations of the
Debtor pursuant to the Plan. Pursuant to Section 1143 of the U.S. Bankruptcy
Code, all Claims in respect of Unclaimed Property shall be deemed Disallowed and
the Holder of any Claim or Equity Interest Disallowed in accordance with this
Section 6.9 will be forever barred, expunged, estopped and enjoined from
asserting such Claim or Equity Interest in any manner against the Debtor or its
Property or the Reorganized Debtor or its Property.
Section 6.10 Limitation on Distribution Rights. If a claimant holds more
than one Claim in any one Class, all Claims of the claimant in that Class may be
aggregated into one Claim and one distribution may be made with respect to the
aggregated Claim.
Section 6.11 Fractional Euros. Notwithstanding any other provision of the
Plan, Cash distributions of fractions of Euros will not be made; rather,
whenever any payment of a fraction of a Euro would be called for, the actual
payment made shall reflect a rounding of such fraction to the nearest whole Euro
(up or down), with half-Euros being rounded down. To the extent that Cash
remains undistributed as a result of the rounding of such fraction, such Cash
shall be treated as Unclaimed Property pursuant to Section 6.9 of this Plan.
Section 6.12 Fractional Shares. No fractional shares of New UPC Common
Stock shall be issued or distributed under the Plan. Each person entitled to
receive New UPC Common Stock shall receive the total number of whole shares of
New UPC Common Stock to which such Person is entitled. Whenever any Distribution
to a particular Person would otherwise call for Distribution of a fraction of a
share of New UPC Common Stock, the actual Distribution of such shares shall be
rounded to the next lower whole number. The total number of shares of New UPC
Common Stock to be distributed to a Class of Claims or Equity Interests shall be
adjusted as necessary to account for the rounding provided for in this Section
6.12. No consideration shall be provided in lieu of fractional shares that are
rounded down.
Section 6.13 Compliance With Tax Requirements. In connection with each
Distribution with respect to which the filing of an information return (such as
an Internal Revenue Service Form 1099 or 1042) or withholding is required, the
Reorganized Debtor shall file such information return with the Internal Revenue
Service and provide any required statements in connection therewith to the
recipients of such Distribution or effect any such withholding and deposit all
moneys so withheld as required by law. With respect to any Person from whom a
tax identification number, certified tax identification number or other tax
information required by law to avoid withholding has not been received by the
Reorganized Debtor within thirty (30) days from the date of such request, the
Reorganized Debtor may, at its option, withhold the amount required from the
Property to be distributed and distribute the balance to such Person or decline
to make such Distribution until the information is received.
Section 6.14 Documentation Necessary to Release Liens. Each Creditor which
is to receive a Distribution under the Plan in full satisfaction of a
Miscellaneous Secured Claim shall not receive such Distribution until such
Creditor (a) executes and delivers any documents necessary to release all Liens
arising under any applicable security agreement or non-bankruptcy law (in
recordable form if appropriate) in connection with such Miscellaneous Secured
Claim and such other documents as the Debtor or the Reorganized Debtor, as
applicable, may reasonably request or (b) otherwise turns over and releases any
and all property of the Debtor that secures or purportedly secures such Claim.
Any such Holder that fails to execute and deliver such release of liens within
120 days of the Effective Date shall be deemed to have no further Claim against
the Debtor, the Reorganized Debtor or their assets or property in respect of
such Claim and shall not participate in any Distribution hereunder on account of
such Claim. Notwithstanding the immediately preceding sentence, any such Holder
of a Disputed Claim shall not be required to execute and deliver such release
until such time as the Claim is Allowed or Disallowed.
Section 6.15 Distributions by Indenture Trustee. Notwithstanding any other
provision of the Plan, any Distributions on account of any Allowed UPC Notes
Claims shall be made by the Disbursing Agent to the Indenture Trustee, which, in
turn, shall make any such Distributions to the Holders of such Allowed Claims
under the Plan. Except as expressly provided in the Plan, Distributions made by
any Indenture Trustee shall be in accordance with and subject to the
requirements set forth in the applicable Indenture, and any Indenture Trustee
acting in good faith pursuant to the Plan shall be entitled to the same
indemnification the Disbursing Agent receives from the Debtor or the Reorganized
Debtor, as the case may be, and to payment from the Reorganized Debtor of its
customary fees and expenses for making distributions under the Plan to Holders
of UPC Notes.
Section 6.16 Setoffs. The Debtor or the Reorganized Debtor, as applicable,
may, but shall not be required to, set off against any Claims and the payments
or distributions to be made pursuant to the Plan in respect of such Claims, any
and all debts, liabilities and claims of every type and nature whatsoever which
the Estate, the Debtor or the Reorganized Debtor may have against the Holders of
such Claims; provided, however, that neither the failure to do so nor the
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allowance of any such Claims, whether pursuant to the Plan or otherwise, shall
constitute a waiver or release by the Debtor or the Reorganized Debtor of any
such claims the Debtor or the Reorganized Debtor may have against such
Creditors, and all such claims shall be reserved to and retained by the
Reorganized Debtor.
ARTICLE VII
EXECUTORY CONTRACTS AND UNEXPIRED LEASES;
INDEMNIFICATION OBLIGATIONS; BENEFIT PROGRAMS
Section 7.1 Treatment of Executory Contracts and Unexpired Leases. On the
Effective Date, all of the executory contracts and unexpired leases that exist
between the Debtor and any Person which (a) have not expired or terminated
pursuant to their own terms, (b) have not previously been assumed, assumed and
assigned, or rejected pursuant to an order of the U.S. Bankruptcy Court on or
prior to the Confirmation Date or (c) are not the subject of pending motions to
assume, assume and assign, or reject as of the Confirmation Date, will be (i)
deemed assumed if listed on the Schedule of Assumed Contracts or (ii) deemed
rejected if listed on the Schedule of Rejected Contracts; provided, however,
that any executory contracts or unexpired leases which are omitted from both the
Schedule of Assumed Contracts and the Schedule of Rejected Contracts are assumed
as of the Effective Date, all in accordance with the provisions and requirements
of Section 365 of the U.S. Bankruptcy Code; provided, however, that the Debtor
shall have the right, at any time prior to the Confirmation Date, to amend the
Schedule of Assumed Contracts and the Schedule of Rejected Contracts upon notice
to the counterparty to a contract or lease (i) to delete any executory contract
or unexpired lease listed therein or (ii) to add any executory contract or
unexpired lease thereto. The Confirmation Order (except as otherwise provided
therein) shall constitute an order of the U.S. Bankruptcy Court pursuant to
Section 365 of the U.S. Bankruptcy Code, effective as of the Effective Date,
approving such assumptions and rejections, as applicable. Each contract and
lease assumed or rejected, as the case may be, pursuant to this Section 7.1
shall be assumed or rejected, as the case may be, only to the extent that any
such contract or lease constitutes an executory contract or unexpired lease.
Assumption or rejection, as the case may be, of a contract or lease pursuant to
this Section 7.1 shall not constitute an admission by the Debtor or the
Reorganized Debtor that such contract or lease is an executory contract or
unexpired lease or that the Debtor or the Reorganized Debtor has any liability
thereunder. All executory contracts and unexpired leases that are assumed will
be assumed under their present terms or upon such terms as are agreed to between
the Debtor and the other party to the executory contract or unexpired lease.
Each executory contract and unexpired lease that is assumed and relates to the
use, ability to acquire, or occupancy of real property shall include: (y) all
modifications, amendments, supplements, restatements, or other agreements made
directly or indirectly by any agreement, instrument, or other document that in
any manner affect such executory contract or unexpired lease and (z) all
executory contracts or unexpired leases appurtenant to the premises, including
all easements, licenses, permits, rights, privileges, immunities, options,
rights of first refusal, powers, uses, reciprocal easement agreements, vaults,
tunnel or bridge agreements or franchises, and any other interests in real
estate or rights in rem related to such premises, unless any of the foregoing
agreements has been rejected pursuant to an order of the U.S. Bankruptcy Court.
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Section 7.2 Cure of Defaults for Assumed Contracts and Leases. All
undisputed cure and any other monetary default payments required by Section
365(b)(1) of the U.S. Bankruptcy Code under any executory contract and unexpired
lease to be assumed pursuant to the Plan which is in default shall be satisfied
by the Reorganized Debtor (to the extent such obligations are enforceable under
the U.S. Bankruptcy Code and applicable non-bankruptcy law), pursuant to Section
365(b)(1) of the U.S. Bankruptcy Code, at the option of the Reorganized Debtor:
(A) by payment of such undisputed cure amount, without interest, in Cash within
sixty (60) days following the Effective Date; (B) such other amount as ordered
by the U.S. Bankruptcy Court; or (C) on such other terms as may be agreed to by
the parties to such executory contract or unexpired lease. In the event of a
dispute, payment of the amount otherwise payable hereunder shall be made without
interest, in Cash (i) on or before the later of sixty (60) days following the
Effective Date or thirty (30) days following entry of a Final Order liquidating
and allowing any disputed amount or (ii) on such other terms as may be agreed to
by the parties to such executory contract or unexpired lease.
Section 7.3 Resolution of Objections to Assumption of Executory Contracts
and Unexpired Leases; Cure Payments.
(a) Resolution of Objections to Assumption of Executory Contracts and
Unexpired Leases. Any party objecting to the Debtor's proposed assumption
of an executory contract or unexpired lease or the ability of the
Reorganized Debtor to provide "adequate assurance of future performance"
(within the meaning of Section 365 of the U.S. Bankruptcy Code) under the
contract or lease to be assumed shall File and serve on counsel for the
Debtor a written objection to the assumption of such contract or lease
within thirty (30) days after the service of the notice of Confirmation.
Failure to File an objection within the time period set forth above shall
constitute consent to the assumption and revestment of such contract or
lease, including an acknowledgment that the proposed assumption provides
adequate assurance of future performance. To the extent that any objections
to the assumption of a contract or lease are timely Filed and served and
such objections are not resolved between the Debtor and the objecting
parties, the U.S. Bankruptcy Court shall resolve such disputes at a hearing
to be held on a date to be determined by the U.S. Bankruptcy Court.
(b) Resolution of Cure Payments. If, the counterparty to a contract or
lease assumed by the Debtor believes that, as of the Confirmation Date, a
cure payment is due and owing under such contract or lease, such
counterparty shall File and serve on counsel for the Debtor a notification
setting forth the amount of the cure payment which such party believes is
due and owing, which notification shall be Filed and served no later than
thirty (30) days after the service of the notice of Confirmation. Failure
to File such a notification within the time period set forth above shall
constitute an acknowledgment that no cure payment is due and owing in
connection with the assumption of such contract or lease and an
acknowledgment that no other defaults exist under said contract or lease.
To the extent that any such notifications are timely Filed and served and
are not resolved between the Debtor and the applicable counterparty, the
U.S. Bankruptcy Court shall resolve such disputes at a hearing to be held
on a date to be determined by the U.S. Bankruptcy Court. The resolution of
such disputes shall not affect the Debtor's
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assumption of the contracts or leases that are subject of such a dispute,
but rather shall affect only the "cure" amount the Debtor must pay in order
to assume such contract or lease. Notwithstanding the immediately preceding
sentence, if the Debtor in its discretion determines that the amount
asserted to be the necessary "cure" amount would, if ordered by the U.S.
Bankruptcy Court, make the assumption of the contract or lease imprudent,
then the Debtor may elect to (i) reject the contract or lease pursuant to
Section 7.1 hereof or (ii) request an expedited hearing on the resolution
of the "cure" dispute, exclude assumption or rejection of the contract or
lease from the scope of the Confirmation Order, and retain the right to
reject the contract or lease pursuant to Section 7.1 hereof pending the
outcome of such dispute.
Section 7.4 Claims for Rejection Damages. Objections to the amounts listed
on the Schedule of Rejected Contracts for damages allegedly arising from the
rejection pursuant to the Plan or the Confirmation Order of any executory
contract or any unexpired lease shall be Filed with the U.S. Bankruptcy Court
and served on counsel for the Debtor not later than thirty (30) days after the
service of the earlier of (A) notice of Confirmation or (B) other notice that
the executory contract or unexpired lease has been rejected. Any Holder of a
Claim arising from the rejection of any executory contract or any unexpired
lease that fails to File such Objection on or before the dates specified in this
paragraph shall be forever barred, estopped and enjoined from asserting any
Claims in any manner against the Debtor or its Property or the Reorganized
Debtor or its Property for any amounts in excess of the amount scheduled by the
Debtor on the Schedule of Rejected Contracts for such contract or lease and the
Debtor and the Reorganized Debtor shall be forever discharged from all
indebtedness or liability with respect to such Claims for such excess amounts
and such Holders shall be bound by the terms of the Plan.
Section 7.5 Treatment of Rejection Claims. The U.S. Bankruptcy Court shall
determine any Objections Filed in accordance with Section 7.4 hereof at a
hearing to be held on a date to be determined by the U.S. Bankruptcy Court.
Subject to any statutory limitation, including, but not limited to the
limitations contained in Sections 502(b)(6) and 502(b)(7) of the U.S. Bankruptcy
Code, any Claims arising out of the rejection of executory contracts and
unexpired leases shall, pursuant to Section 502(g) of the U.S. Bankruptcy Code,
be treated as Class 5 Claims in accordance with Section 4.7 of the Plan.
Section 7.6 Executory Contracts and Unexpired Leases Entered Into and Other
Obligations Incurred After the Petition Date. On the Effective Date, all
contracts, leases, and other agreements entered into by the Debtor on or after
the Petition Date, which agreements have not been terminated in accordance with
their terms or been rejected on or before the Confirmation Date, shall revest in
and remain in full force and effect as against the Reorganized Debtor and the
other parties to such contracts, leases and other agreements.
Section 7.7 Reorganized Debtor's Indemnification Obligations. To the extent
not inconsistent with the Plan, any obligations of the Debtor or the Reorganized
Debtor, pursuant to their respective organizational documents, applicable
non-bankruptcy law or a specific agreement, to indemnify a Person with respect
to all present and future actions, suits and proceedings against the Debtor, the
Reorganized Debtor or such indemnified Person, based upon any act or omission
related to service with, or for or on behalf of, the Debtor, the Reorganized
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Debtor shall survive Confirmation and shall not be impaired by Confirmation,
except to the extent any such obligation has been released, discharged or
modified pursuant to the Plan. Such indemnification obligations shall be
performed and honored by the Reorganized Debtor, as applicable.
Section 7.8 Benefit Programs. Notwithstanding anything to the contrary
contained in the Plan, nothing in the Plan shall adversely affect the payment of
any "retiree benefits" (as such term is defined in Section 1114(a) of the U.S.
Bankruptcy Code) to the extent required by Section 1129(a)(13) of the U.S.
Bankruptcy Code.
ARTICLE VIII
RESOLUTION OF DISPUTED CLAIMS
Section 8.1 Preservation of Rights. Except as to applications for allowance
of compensation and reimbursement of expenses under Sections 330 and 503 of the
U.S. Bankruptcy Code, the Reorganized Debtor shall have the exclusive right to
make and file objections to Administrative Claims, other Claims, Equity
Interests and Old Other Equity Interests, subsequent to the Confirmation Date.
Except to the extent that any Claim, Equity Interest or Old Other Equity
Interest is Allowed in the Plan, nothing, including the failure of the Debtor or
the Reorganized Debtor to object to a Claim, Equity Interest or Old Other Equity
Interest for any reason during the pendency of the Chapter 11 Case, shall
affect, prejudice, diminish or impair the rights and legal and equitable
defenses of the Debtor or the Reorganized Debtor with respect to any Claim,
Equity Interest or Old Other Equity Interest, including, but not limited to, all
rights of the Debtor or Reorganized Debtor (i) to contest or defend themselves
against such Claims, Equity Interests or Old Other Equity Interests in any
lawful manner or forum when and if such Claim, Equity Interest or Old Other
Equity Interest is sought to be enforced by the Holder thereof or (ii) in
respect of legal and equitable defenses to setoffs or recoupments against
Claims, Equity Interests or Old Other Equity Interests. The distributions
provided for in Article IV of the Plan shall at all times be subject to this
Section 8.1 of the Plan and to Section 502(d) of the U.S. Bankruptcy Code.
Section 8.2 Objections to and Resolution of Claims, Administrative Claims,
Equity Interests and Old Other Equity Interests. Unless otherwise ordered by the
U.S. Bankruptcy Court, the Reorganized Debtor shall file all objections to
Claims (including Administrative Claims) that are the subject of proofs of claim
or requests for payment filed with the U.S. Bankruptcy Court (other than
applications for allowance of compensation and reimbursement of expenses under
Sections 330 and 503 of the U.S. Bankruptcy Code), Equity Interests or Old Other
Equity Interests and serve such objections upon the Holder as to which the
objection is made as soon as is practicable, but, with respect to Claims (other
than Administrative Claims), Equity Interests and Old Other Equity Interests, in
no event later than one hundred and eighty (180) days after the Effective Date,
or, in either case, such later date as may be approved by the U.S. Bankruptcy
Court upon request made before or after expiration of such applicable objection
period. All objections shall be litigated to Final Order; provided, however,
that the Reorganized
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Debtor shall have the authority to compromise, settle, otherwise resolve or
withdraw any objections without any requirement of approval by the U.S.
Bankruptcy Court.
Section 8.3 Estimation of Claims. The Debtor or the Reorganized Debtor, as
applicable, may, at any time, request that the U.S. Bankruptcy Court estimate
any contingent or unliquidated Claim pursuant to Section 502(c) of the U.S.
Bankruptcy Code regardless of whether or not the Debtor or the Reorganized
Debtor has previously objected to such Claim or the U.S. Bankruptcy Court has
previously ruled on any such objection. Claims may be estimated and subsequently
compromised, settled, withdrawn or resolved by any mechanism approved by the
U.S. Bankruptcy Court; provided, however, that commencing on the Effective Date
the Reorganized Debtor may compromise, settle or resolve any such Claims without
further approval of the U.S. Bankruptcy Court.
Section 8.4 Distributions Withheld For Disputed Unsecured Claims and Equity
Interests.
(a) No Distribution Pending Allowance. Notwithstanding any other
provision of the Plan, no payments or Distributions shall be made with
respect to all or any portion of a Disputed Claim or Disputed Equity
Interest unless and until some portion thereof has become an Allowed Claim
or Allowed Equity Interest, respectively.
(b) Establishment And Maintenance Of Reserve. On each applicable
Distribution Date, the Disbursing Agent shall reserve for the benefit of
Holders of Disputed Claims and Disputed Equity Interests (the "Reserve")
the distributions to which the Holders of Disputed Claims and Disputed
Equity Interests as of such Distribution Date would be entitled under the
Plan if such Disputed Claims and Disputed Equity Interests were Allowed
Claims and Allowed Equity Interests in the amounts of their Disputed Claims
and Disputed Equity Interests, respectively, as if the Holders thereof had
received such distributions on the Initial Distribution Date. Such amounts
shall be determined by reference to the aggregate Face Amount of all
Disputed Claims or Disputed Equity Interests as of such date. The
Disbursing Agent shall maintain a register of all Disputed Claims and
Disputed Equity Interests, the amounts upon which to base reserves for such
Disputed Claims and Disputed Equity Interests pursuant to the preceding
sentence and, where the property to be reserved is New UPC Common Stock,
the number of shares of New UPC Common Stock to which the Holders of the
Disputed Claims and Disputed Equity Interests would be entitled if such
Disputed Claims and Disputed Equity Interests were Allowed Claims and
Allowed Equity Interests, as applicable.
(c) Distributions Upon Allowance Of Disputed Claims and Disputed
Equity Interests. The Holder of a Disputed Claim or Disputed Equity
Interest that becomes an Allowed Claim or Allowed Equity Interest
subsequent to the Initial Distribution Date shall receive Distributions of
the applicable New UPC Common Stock or Cash previously reserved on account
of such Claim or Equity Interest in the Reserve as soon as reasonably
practicable following the allowance of any such Claim or Equity Interest;
provided, however, that neither the Debtor, the Reorganized Debtor, New UPC
or the Disbursing Agent shall be required to make a Distribution if the
aggregate Distribution would not
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exceed(euro)500,000 or 10,000 shares of New UPC Common Stock, as
applicable; provided further, however, that if the aggregate distribution
that would be made to the Holders of all remaining Disputed Claims and
Disputed Equity Interests if all such Disputed Claims and Disputed Equity
Interests became Allowed Claims and Allowed Equity Interests, as
applicable, cannot exceed either (euro)500,000 or 10,000 shares of New UPC
Common Stock, as applicable, then the Debtor, the Reorganized Debtor, New
UPC or the Disbursing Agent shall make a Distribution to any Holder of a
Disputed Claim or Disputed Equity Interest as soon as reasonably
practicable after the allowance of any such Claim or Equity Interest. Such
Distributions shall be made in accordance with the Plan based upon the
Distributions that would have been made to such holder under the Plan if
the Disputed Claim or Disputed Equity Interest had been an Allowed Claim or
Allowed Equity Interest, respectively, on or prior to the Effective Date.
(d) Excess Reserves. Upon any Disputed Claim or Disputed Equity
Interest becoming a Disallowed Claim or Disallowed Equity Interest,
respectively, in whole or in part, the Property, if any, reserved for the
payment of or Distribution on the Disallowed portion of such Disputed Claim
or Disputed Equity Interest (i) if in the form of Cash, shall revest in the
Reorganized Debtor and no longer be subject to Distribution to Creditors or
Equity Interest Holders and (ii) if in the form of New UPC Common Stock,
shall either (A) be cancelled or (B) be returned to New UPC to be held as
treasury shares and no longer be subject to Distribution to Creditors or
Equity Interest Holders.
Section 8.5 Dutch Bankruptcy Case. Nothing in this Plan shall impair the
rights of the Debtor or the Administrator to contest any claim filed or
otherwise asserted against the Debtor in the Dutch Bankruptcy Case.
ARTICLE IX
MEANS FOR IMPLEMENTATION OF THE PLAN
Section 9.1 Continued Corporate Existence. The Debtor shall, as the
Reorganized Debtor, continue to exist after the Effective Date in accordance
with applicable law of the jurisdiction in which it is organized, under its
organizational documents in effect before the Effective Date, except as such
documents are amended in connection with this Plan.
Section 9.2 Cancellation of Claims, Equity Interests and Old Other Equity
Interests. As of consummation of the Plan, all Claims against, and Equity
Interests in, the Debtor and, to the extent permitted under applicable law, all
Old Other Equity Interests shall be cancelled and all agreements, notes,
instruments, depositary shares, depositary receipts, indentures, certificates,
guaranties and any other documents evidencing or relating to such Claims, Equity
Interests and Old Other Equity Interests shall be cancelled and deemed
terminated, as permitted by Section 1123(a)(5)(F) of the U.S. Bankruptcy Code,
and the Holders thereof shall have no rights and such notes, instruments,
depositary shares, depositary receipts, indentures, certificates, guaranties and
other documents shall evidence no rights, except the right to receive the
Distributions, if any, to be made to Holders of such Claims, Equity Interests or
Old Other Equity Interests under the Plan; provided, however, that,
notwithstanding the foregoing or anything else to the contrary contained in the
Plan, none of the Belmarken Notes, UPC Notes, UPC Preference Shares A, UPC
Priority Shares and UPC Ordinary Shares A shall be cancelled pursuant to the
Plan and such Claims and Equity Interests shall instead be dealt with as
follows:
(a) Belmarken Notes. On the Effective Date, but subsequent to the
transfer of the Belmarken Notes for shares of New UPC Common Stock pursuant
to Section 4.6 of the Plan, New UPC will sell the Belmarken Notes to the
Debtor in consideration for a
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receivable payable by the Debtor in the aggregate principal amount of the
Belmarken Notes (plus accrued but unpaid interest). Subsequently, the
Debtor will satisfy its obligations under such receivable through the
issuance to New UPC of a number of shares of UPC Ordinary Shares C equal to
the amount of the receivable divided by the par value of the UPC Ordinary
Shares C.
(b) UPC Notes. Subsequent to the transfer of the UPC Notes for shares
of New UPC Common Stock pursuant to Section 4.7 of the Plan, UPC and New
UPC shall, conditional upon the occurrence of the Effective Date, replace
the UPC Notes with an intercompany note between UPC and New UPC and,
thereafter, New UPC shall contribute such intercompany note to the capital
of UPC.
(c) UPC Preference Shares A. Subsequent to the transfer of the UPC
Preference Shares A for shares of New UPC Common Stock pursuant to Section
4.8 of the Plan, all UPC Preference Shares A shall be registered in the
name of New UPC; provided, however, that in the event that the UPC
Preference Shares A are not transferred to New UPC under the Plan, the
Debtor shall use reasonable efforts to have the UPC Preference Shares A
converted on a one-for-one basis into registered UPC Ordinary Shares A.
(d) UPC Priority Shares. After the Effective Date, as soon as the
Debtor becomes a wholly-owned subsidiary of New UPC, New UPC and the
Reorganized Debtor shall take such action as is necessary to cause the
cancellation of the UPC Priority Shares under Dutch law.
(e) UPC Ordinary Shares A. The UPC Ordinary Shares A shall remain
outstanding.
Section 9.3 Extraordinary General Meeting. Because the Dutch Bankruptcy
Code does not provide for the Dutch Bankruptcy Case to avoid compliance with
otherwise applicable corporate law, in order to facilitate implementation of the
Plan, the Debtor shall hold an extraordinary meeting of the Holders of the UPC
Ordinary Shares A, the UPC Priority Shares and the UPC Preference Shares A (the
"Extraordinary General Meeting"). The purpose of the Extraordinary General
Meeting is to facilitate the implementation of the Plan by:
(a) explaining the terms of the Restructuring (including the terms of
the Plan) to the Debtor's shareholders at the Extraordinary General
Meeting;
(b) considering and acting upon a proposal to amend the Debtor's
Articles of Association (the "First Amendment") (effective on the Effective
Date) to (i) decrease the nominal value of each issued and outstanding UPC
Ordinary Share A from (euro)1.00 to (euro)0.02 without any repayment; and
(ii) decrease the nominal value of each UPC Priority Share and UPC
Preference Share A from (euro)1.00 to (euro)0.02 without any repayment,
which capital reduction will permit the Debtor to eliminate its accumulated
deficit;
(c) considering and acting upon a proposal to amend the Debtor's
Articles of Association (the "Second Amendment") (effective on the
Effective Date) to (i) change the number of authorized UPC Ordinary Shares
A into 450,000,000; (ii) remove the UPC Preference Shares A from the
authorized capital of the Debtor; (iii) authorize a new class of
50,000,000,000 registered ordinary shares C with a nominal value of
(euro)0.02 ("UPC Ordinary Shares C"); (iv) in the event Dutch law allows
the issuance of nonvoting stock, prohibit the issuance of nonvoting stock
and prohibit cooperation in connection with the issuance of depository
receipts; and (v)
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remove the UPC Ordinary Shares B and the UPC Preference Shares B from the
authorized capital of the Debtor;
(d) considering and acting upon a proposal to convert the UPC
Preference Shares A on a one-for-one basis into registered UPC Ordinary
Shares A, effective upon the Second Amendment and the Effective Date;
(e) considering and acting upon a proposal to amend the Debtor's
Articles of Association (effective on the later to occur of the Effective
Date and the date of the delisting of the UPC Ordinary Shares A from
Euronext) (the "Third Amendment") to effectuate that the Debtor will have
Articles of Association of a non-listed company, including, inter alia, the
following contents: (i) restrictions on transfers of registered shares;
(ii) amend the management structure of the Debtor to a one-tier board
(i.e., that the Debtor's Supervisory Board will be eliminated and the
Debtor's Board of Management will consist of one or more members); and
(iii) holders of UPC Ordinary Shares A only to be authorized to exercise
their rights upon delivery of share certificates;
(f) accepting the resignations of (i) John F. Riordan, (ii) Nimrod J.
Kovacs, (iii) Charles H.R. Bracken, (iv) James S. O'Neill, (v) Gene
Musselman and (vi) Anton M. Tuijten, as managing directors of the Debtor
with effect on the later to occur of the Effective Date and the date of the
delisting of the UPC Ordinary Shares A from Euronext and to grant a full
and final release from liability with respect to their management of the
Debtor;
(g) accepting the resignations of (i) Michael T. Fries, (ii) John P.
Cole, Jr., (iii) Richard J.A. de Lange, (iv) Ellen P. Spangler, (v) Tina M.
Wildes and (vi) John W. Dick, as supervisory directors of the Debtor with
effect on the later to occur of the Effective Date and the date of the
delisting of the UPC Ordinary Shares A from Euronext and to grant a full
and final release from liability with respect to their supervision of the
Debtor;
(h) appointing New UPC as sole managing director of the Debtor with
effect as of the later to occur of the Effective Date and the delisting of
the UPC Ordinary Share A from Euronext;
(i) authorizing the Board of Management of the Debtor and Allen &
Overy, Amsterdam, The Netherlands, to apply for the ministerial statements
of no objections and to execute deeds of amendment of the Articles of
Association of the Debtor as set forth in the First, Second and Third
Amendments; and
(j) transacting such other business as may properly come before the
Extraordinary General Meeting or any postponements or adjournments thereof
(collectively, the "Shareholder Proposals")
Section 9.4 Amendment of Organizational Documents.
(a) Amendment of Articles of Association. A substantially final form
of the Amended and Restated UPC Articles of Association is annexed hereto
as Exhibit "B" and shall include such provisions as are necessary to
satisfy the provisions of the Plan and the U.S. Bankruptcy Code including,
among other things, (i) in the event Dutch law allows the issuance of
nonvoting stock, prohibit the issuance of nonvoting stock to the extent,
and only to the extent, required by Section 1123(a)(6) of the U.S.
Bankruptcy Code, and prohibit cooperation in connection with the issuance
of depository receipts and (ii) such provisions as are necessary to effect
the Shareholder Proposals; provided, however, that the effectiveness of any
such amendments shall be subject to the approval thereof at the
Extraordinary General Meeting as well as to the occurrence of the Effective
Date.
(b) New UPC Organizational Documents. A substantially final form of
the Amended and Restated New UPC Certificate of Incorporation and the
Amended and Restated New UPC By-Laws shall each be Filed on or before the
Document Filing Date and shall each include those terms and conditions as
are contemplated to be included in such documents in the Disclosure
Statement.
Section 9.5 Corporate Action. On the Effective Date, subject to any
requirements of Dutch law, the Reorganized Debtor shall execute and deliver, and
is authorized, without any further corporate action, to execute and deliver all
agreements, documents and instruments (and all exhibits, schedules and annexes
thereto) contemplated by the Plan or the exhibits thereto and
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take such other action as is necessary or appropriate to effectuate the
transactions provided for in the Plan.
Section 9.6 Implementation of the Restructuring Under Dutch Law. In order
to facilitate implementation of the Plan, on the Effective Date, UPC shall
consummate, in accordance with and under the provisions of Dutch Law, all
transactions contemplated by the Restructuring, including the consummation of
the Akkoord and the Dutch Implementing Offer.
Section 9.7 Contribution of UPC Shares. Simultaneously with, and
conditional upon the occurrence of, the Effective Date, UGC shall contribute, or
shall cause the other members of the UGC Group to contribute, to New UPC any and
all UPC Ordinary Shares A, UPC Preference Shares A and UPC Priority Shares owned
by the UGC Group.
Section 9.8 New UPC Common Stock. No later than the Effective Date, New UPC
shall authorize the New UPC Common Stock and shall issue a sufficient number of
shares of New UPC Common Stock to implement the Plan.
Section 9.9 Offer Memorandum. To the extent required by applicable Dutch
securities laws and regulations of the A-FM, New UPC and UPC shall, prior to the
Effective Date, prepare, and, subject to the approval of UGC and after
consultation with the Participating Noteholders, file with the A-FM and make
generally available and mail to the Holders of UPC Ordinary Shares A in bearer
form an offer memorandum (together with all materials included therewith and any
amendments or supplements thereto, the "Offer Memorandum") in respect of the New
UPC Common Stock to be issued in connection with the Restructuring pursuant to
the Plan. The procedures for exchanging shares of New UPC Common Stock for the
UPC Ordinary Shares A in bearer form shall be included in the Offer Memorandum.
Section 9.10 Listing of New UPC Common Stock. New UPC shall use its
commercially reasonable efforts to cause the shares of New UPC Common Stock to
be issued in the Restructuring to be listed on NASDAQ, but obtaining such
listing shall not be a condition to either Confirmation or consummation of the
Plan.
Section 9.11 Transfers Under Plan. On the Effective Date, all of the
outstanding Belmarken Notes, UPC Notes, General Unsecured Claims, UPC Preference
Shares A, UPC Priority Shares, UPC Ordinary Shares A and Equity Securities
Claims shall be transferred for shares of New UPC Common Stock, in accordance
with Sections 4.6, 4.7, 4.8, 4.9, 4.10 and 4.11 of the Plan, as applicable. The
transfers of the Belmarken Notes, the UPC Notes, the General Unsecured Claims,
the UPC Preference Shares A, the UPC Priority Shares, the UPC Ordinary Shares A
and the Equity Securities Claims for New UPC Common Stock, shall be in full
satisfaction, settlement, release and discharge of all Allowed Belmarken Notes
Claims, all Allowed UPC Notes Claims, all Allowed UPC Preference Shares A, all
Allowed UPC Priority Shares, all Allowed UPC Ordinary Shares A and all Allowed
Equity Securities Claims, other than any Belmarken Notes, UPC Notes, UPC
Preference Shares A, UPC Priority Shares or UPC Ordinary Shares A held by New
UPC on the Effective Date. In connection with the foregoing, New UPC Common
Stock shall be credited to the accounts maintained on behalf of the Holders
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of the UPC Notes, the UPC Preference Shares A, the UPC Priority Shares and the
UPC Ordinary Shares A at the applicable registered record holder.
Section 9.12 Operations Between the Confirmation Date and the Effective
Date. The Debtor shall continue to operate as debtor in possession, subject to
the supervision of the U.S. Bankruptcy Court during the period from the
Confirmation Date through and until the Effective Date.
Section 9.13 Revesting of Assets. Except as otherwise expressly provided in
the Plan, pursuant to Sections 1123(a)(5), 1123(b)(3) and 1141(b) of the U.S.
Bankruptcy Code, all Property comprising the Estate, including, but not limited
to, all Causes of Action shall automatically be retained and revest in the
Reorganized Debtor or its successors or assigns, free and clear of all Claims,
Liens, contractually-imposed restrictions, charges, encumbrances and interests
of Creditors and Equity Interest Holders on the Effective Date, with all such
Claims, Liens, contractually-imposed restrictions, charges, encumbrances and
interests being extinguished except as otherwise provided in the Plan. As of the
Effective Date, the Reorganized Debtor may operate its business and use, acquire
and dispose of Property and settle and compromise Claims, Equity Interests or
Old Other Equity Interests without supervision of the U.S. Bankruptcy Court free
of any restrictions of the U.S. Bankruptcy Code or the U.S. Bankruptcy Rules,
other than those restrictions expressly imposed by the Plan, the Akkoord, and
the Confirmation Order. Without limiting the foregoing, the Reorganized Debtor
may pay the charges it incurs for professional fees, disbursements, expenses, or
related support services incurred after the Effective Date without any
application to the U.S. Bankruptcy Court.
Section 9.14 Approval of Agreements. Subject to any relevant approvals at
the Extraordinary General Meeting, Confirmation shall constitute approval of all
other agreements and transactions contemplated by the Plan and the Confirmation
Order shall so provide.
Section 9.15 Incentive Plan. On the Effective Date, New UPC shall adopt
the Incentive Plan.
Section 9.16 Stockholders Agreement. On or prior to the Effective Date,
UGC, New UPC, the Participating Noteholders and any other Holder of Allowed
Class 5 Claims who elects to become a party thereto shall enter into the
Stockholders Agreement.
Section 9.17 New UPC Equity Purchase Rights.
(a) On the Effective Date, New UPC shall provide each Holder of a
Class 4 Claim or Class 5 Claim the right (the "New UPC Equity Purchase
Rights") to purchase for Cash a pro rata portion of Subscription Shares (as
defined below) of New UPC Common Stock, at the Implied Purchase Price per
Subscription Share, in addition to the shares of New UPC Common Stock to be
received by the Holders of such Claims under Sections 4.6 and 4.7 of the
Plan. The total number of "Subscription Shares" is equal to (a) the Maximum
Subscription Amount, (b) divided by the Implied Purchase Price.
(b) For the purposes of Section 9.17(a) of the Plan, "pro rata" shall
be based on the number of shares of New UPC Common Stock to be distributed
under the Plan on account of Class 4 Claims and UPC Notes Claims. A Holder
of a General Unsecured Claim may purchase Subscription Shares pursuant to
its New UPC Equity Purchase Rights in an amount equal to (a) the amount of
its General Unsecured Claim (in Euros) multiplied by (b) the ratio of (i)
the number of Subscription Shares per(euro)1,000 of Allowed UPC Notes
Claims allotted to the Holders of the UPC Notes Claims to (ii) 1,000. Any
such purchase shall reduce the number of Subscription Shares that the
Holder of the Class 4 Claims is entitled to purchase pursuant to its New
UPC Equity Purchase Rights until the number of Subscription Shares that the
Holder of the Class 4 Claim is entitled to purchase pursuant to its New UPC
Equity Purchase Rights is reduced to zero and, thereafter, shall ratably
reduce the number of Subscription Shares that the Holders of UPC Notes
Claims are entitled to purchase pursuant to their New UPC Equity Purchase
Rights.
(c) The New UPC Equity Purchase Rights shall be exercisable only on
the Effective Date, but notice of intent to exercise must be given by a
subscribing holder not later than the deadline fixed by the U.S. Bankruptcy
Court for voting to accept or reject the Plan and payment for the
Subscription Shares subscribed for by such subscribing holder must be
received by the subscription agent for New UPC at least five (5) Business
Days prior to the Effective Date. All purchases of Subscription Shares
under the New UPC Equity Purchase Rights shall be in Euros. A payment
invoice will be sent to each subscribing holder promptly after the
Confirmation Date. The invoice will set forth (i) the number of
Subscription Shares to be subscribed for by the subscribing holder, (ii)
the aggregate subscription amount in Euros for such subscribing holder's
purchase of such Subscription Shares and (iii) the payment deadline by
which such subscribing holder will be required to make payment of the
subscription amount to New UPC's subscription agent. If the subscribing
holder holds UPC Notes Claims denominated in United States Dollars, the
subscription amount set forth in such subscribing holder's invoice will be
denominated in United States Dollars, converted from Euros and adjusted to
take account of currency exchange rates at the time the invoice is sent and
any administrative and other costs associated with the currency exchange.
Once notice of exercise is given, the exercise of the New UPC Equity
Purchase Rights is irrevocable, even if the subscribing holder's Claim
becomes a Disallowed Claim or is classified into a different Class after
the exercise.
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Section 9.18 UGC Subscription Commitment. Subject to confirmation of the
Plan and the ratified Akkoord becoming final and conclusive (in kracht van
gewijsde gaan), on the Effective Date, in accordance with the Restructuring
Agreement, New UPC shall sell to UGC on the terms set forth in the Restructuring
Agreement and at the Implied Purchase Price, total number of Subscription Shares
of New UPC Common Stock that were not subscribed for by the Holders of Class 4
Claims and Class 5 Claims pursuant to the New UPC Equity Purchase Rights (the
"UGC Subscription Commitment").
Section 9.19 Treatment of UPC Owned UPC Notes. All of the UPC Notes owned
by UPC as a result of the settlement and termination of (i) the swaps
transactions documented by the ISDA Master Agreement, dated as of April 29,
1998, between The Toronto-Dominion Bank, London Branch and UPC, and the related
schedules, annexes and confirmations, as the same shall have been amended from
time to time on the terms contemplated therein and (ii) the swaps transactions
documented by the ISDA Master Agreement, dated as of May 4, 2000, between The
Chase Manhattan Bank and UPC, and the related schedules, annexes and
confirmations, as the same shall have been amended from time to time on the
terms contemplated therein, in each case, which are set forth on Annex C to the
Restructuring Agreement, shall be deemed to be cancelled on or before the
Effective Date without any further action by UPC or the Indenture Trustee and
UPC shall not be entitled to receive any consideration under the Plan on account
thereof.
Section 9.20 Rights of Action. Except as otherwise provided in the Plan,
all Causes of Action, other than Avoidance Actions, shall automatically be
retained and preserved and will revest in the Reorganized Debtor or its
successors or assigns. Pursuant to Section 1123(b)(3) of the U.S. Bankruptcy
Code, the Reorganized Debtor (as a representative of the Estate) or its
successors or assigns shall retain and have the exclusive right to enforce and
prosecute such Causes of Action against any Person, that arose before the
Effective Date, other than those expressly released or compromised as part of or
pursuant to the Plan.
ARTICLE X
OPERATION AND MANAGEMENT OF THE REORGANIZED DEBTOR
Section 10.1 Post-Effective Date Operation of Business. From and after the
Effective Date, the Reorganized Debtor will continue to exist and engage in
business, in accordance with the applicable law in the jurisdiction in which it
is incorporated and pursuant to its organizational documents as amended pursuant
to this Plan.
Section 10.2 Post-Confirmation Directors and Officers of the Debtor and New
UPC. From and after the Effective Date, the corporate governance of the Debtor
shall be modified to ensure that the decisions taken by the Board of Directors
of New UPC, subject to the Amended and Restated New UPC Certificate of
Incorporation and the Amended and Restated New UPC By-Laws, will be implemented
by the Debtor. The members of the Board of Management of the Debtor as of the
Effective Date shall be those individuals set forth on the Board of Management
Schedule. It is the intention of New UPC and the Debtor that, under the Third
Amendment upon the later to occur of the Effective Date and the date on which
the Debtor is delisted from Euronext, the Board of Management of the Debtor
shall be New UPC. Effective upon the Third Amendment, there will be no
Supervisory Board for
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the Debtor. The officers and directors of New UPC as of the Effective Date shall
be those individuals set forth on the New UPC Management Schedule.
ARTICLE XI
CONDITIONS TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
Section 11.1 Conditions Precedent to Confirmation. Confirmation is subject
to the following conditions precedent:
(a) The Confirmation Order shall be in form and substance reasonably
acceptable to the Debtor, New UPC, UGC and the Participating Noteholders;
provided that none of UGC, New UPC or the Participating Noteholders may
request that the Confirmation Order contain a provision that is
inconsistent with any of the provisions of the Restructuring Agreement; and
(b) the Offer Memorandum, which will be comprised of the Disclosure
Statement and an offer memorandum supplement, shall have been submitted to
the A-FM prior to the commencement of the Dutch Implementing Offer and
generally made available to the Holders of the UPC Ordinary Shares A
outside the United States to effectuate the Restructuring.
Section 11.2 Conditions Precedent to Consummation. The Plan shall be
consummated and the Effective Date shall occur if and only if the following
conditions shall have occurred or shall have been duly waived (if waivable)
pursuant to Section 11.3 below:
(a) the Confirmation Order shall not have been vacated, reversed,
stayed, modified, amended, enjoined or restrained by order of a court of
competent jurisdiction and shall have become a Final Order;
(b) the Akkoord shall have been adopted by the requisite majority of
Ordinary Creditors and subsequently ratified by the Dutch Bankruptcy Court,
all conditions to the effectiveness of the Akkoord shall have been
satisfied or duly waived to the extent permitted therein, and the Dutch
Bankruptcy Court's ratification of the Akkoord shall have become final and
binding and no longer subject to appeal;
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(c) the UPC Voting Securities and Belmarken Notes held by the UGC
Group shall have been contributed to the capital of New UPC;
(d) the Debtor's shareholders shall have duly authorized the
Shareholder Proposals at the Extraordinary General Meeting;
(e) New UPC shall have issued sufficient shares of New UPC Common
Stock to effect the Restructuring in accordance with the Plan;
(f) New UPC shall have sold the Belmarken Notes to the capital of UPC;
(g) the Dutch Implementing Offer shall have been declared
unconditional;
(h) all UPC Preference Shares A shall have been registered in the name
of New UPC after giving effect to the consummation of the Restructuring or;
in the event that the UPC Preference Shares A are not transferred to New
UPC under the Plan, shall have been converted on a one-for-one basis into
registered UPC Ordinary Shares A in accordance with Section 9.2(c) of the
Plan; provided, however, that this condition shall be deemed satisfied
unless, on or before the date that is ten (10) days prior to the date of
the hearing to ratify the Akkoord, UGC or a Majority-in-Interest of the
Participating Noteholders shall serve written notice on the other that such
condition has not been satisfied;
(i) UGC and the Holders of Class 4 Claims and Class 5 Claims shall
have subscribed for and purchased for Cash the total number of Subscription
Shares of New UPC Common Stock pursuant to the New UPC Equity Purchase
Rights and the UGC Subscription Commitment;
(j) the Incentive Plan shall have been adopted by New UPC;
(k) all documents and agreements required to be executed or delivered
under the Plan, the Akkoord or the Restructuring Agreement on or prior to
the Effective Date, including, without limitation, the Stockholders
Agreement, shall have been executed and delivered by the parties thereto;
(l) the U.S. Bankruptcy Court shall have entered an order
(contemplated to be part of the Confirmation Order) authorizing and
directing the Debtor and the Reorganized Debtor to take all actions
necessary or appropriate to enter into, implement, and consummate the
contracts, instruments, releases, indentures and other agreements or
documents created, amended, supplemented, modified or adopted in connection
with the Plan;
(m) the Amended and Restated UPC Articles of Association, the Amended
and Restated New UPC Certificate of Incorporation and the Amended and
Restated New UPC By-Laws shall have been filed with the applicable
authority of each entity's jurisdiction of incorporation or organization in
accordance with such jurisdiction's applicable law;
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(n) all authorizations, consents and regulatory approvals required, if
any, in order to consummate the Plan or the Akkoord shall have been
obtained; and
(p) no order of a court shall have been entered and shall remain in
effect restraining the Debtor from consummating the Plan.
Section 11.3 Waiver of Conditions to Consummation. The conditions to
consummation in Section 11.2 may be waived at any time by a writing signed by an
authorized representative of the Debtor, New UPC and the Participating
Noteholders, without notice or order of the U.S. Bankruptcy Court or any further
action other than proceeding to consummation of the Plan.
ARTICLE XII
EFFECTS OF CONFIRMATION
Section 12.1 Discharge. To the fullest extent permitted by applicable law
(including, without limitation, Section 105 of the U.S. Bankruptcy Code), and
except as otherwise provided in the Plan or in the Confirmation Order: (A) all
property distributed under the Plan shall be in consideration for, and in
complete satisfaction, settlement, discharge and release of, all Claims of any
nature whatsoever against, Equity Interests in, or Old Other Equity Interests
in, the Debtor, the Reorganized Debtor, the Estate or any of their assets or
properties and, regardless of whether any property shall have been distributed
or retained pursuant to the Plan on account of such Claims, Equity Interests or
Old Other Equity Interests, upon the Effective Date, except as otherwise set
forth in the Plan, (i) the Debtor shall be deemed discharged and released under
Section 1141(d)(1)(A) of the U.S. Bankruptcy Code from any and all Claims,
including, but not limited to, demands and liabilities that arose before the
Confirmation Date, debts (as such term is defined in Section 101(12) of the U.S.
Bankruptcy Code), Liens, security interests, and encumbrances of and against all
Property of the Estate, the Debtor and its Affiliates, that arose before the
Confirmation Date, including without limitation, all debts of the kind specified
in Sections 502(g), 502(h) or 502(i) of the U.S. Bankruptcy Code, whether or not
(a) such Claim has been Allowed pursuant to Section 502 of the U.S. Bankruptcy
Code, or (b) the Holder of such Claim has voted to accept the Plan and (ii) all
interests of the Holders of Equity Interests and, to the extent permitted under
applicable law, Old Other Equity Interests shall be terminated; and (B) as of
the Confirmation Date, (x) all Persons, including, without limitation, all
Holders of Claims, Equity Interests or Old Other Equity Interests, shall be
barred and enjoined from asserting against the Debtor or the Reorganized Debtor,
their successors or their property any other or further Claims, debts, rights,
Causes of Action, liabilities, Equity Interests or Old Other Equity Interests
relating to the Debtor based upon any act, omission, transaction or other
activity of any nature that occurred prior to the Confirmation Date. In
accordance with the foregoing, except as provided in the Plan or the
Confirmation Order, the Confirmation Order shall be a judicial determination of
discharge of all such Claims and other debts and liabilities against the Debtor
and termination of all Equity Interests and, to the extent permitted under
applicable law,
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Old Other Equity Interests, pursuant to Sections 524 and 1141 of the U.S.
Bankruptcy Code, and such discharge and termination shall void any judgment
obtained against the Debtor at any time, to the extent that such judgment
relates to a discharged Claim or terminated Equity Interest or Old Other Equity
Interest. In particular, Confirmation shall permanently enjoin all Holders of
Claims against, Equity Interests in or Old Other Equity Interests in the Debtor
or any other party in interest from taking any action whatsoever, whether within
or outside of the United States, including, without limitation, in connection
with the Dutch Bankruptcy Case, that in any way is inconsistent with or contrary
to the classification and/or treatment of Claims, Equity Interests or Old Other
Equity Interests under this Plan, and all Holders are bound by the Plan.
Notwithstanding the foregoing, this Section 12.1 shall not affect the rights of
New UPC with respect to any Belmarken Notes, UPC Notes, UPC Preference Shares A,
UPC Priority Shares or UPC Ordinary Shares A, transferred to it in accordance
with the Plan.
Section 12.2 Injunction. Except as otherwise expressly provided for in the
Plan or the Confirmation Order and to the fullest extent authorized or provided
by the U.S. Bankruptcy Code, including Sections 524 and 1141 thereof,
Confirmation shall, provided that the Effective Date occurs, permanently enjoin
all Persons that have held, currently hold or may hold a Claim or other debt or
liability that is discharged or an Equity Interest, Old Other Equity Interest or
other right of an equity security Holder that is Impaired or terminated pursuant
to the terms of the Plan from taking any of the following actions against the
Debtor, the Reorganized Debtor or their property on account of any such
discharged Claims, debts or liabilities or such terminated Equity Interests, Old
Other Equity Interests or rights: (a) commencing, conducting or continuing in
any manner, directly or indirectly, any suit, action or other proceeding of any
kind; (b) enforcing, levying, attaching, collecting or otherwise recovering in
any manner or by any means, whether directly or indirectly, any judgment, award,
decree or order; (c) creating, perfecting or enforcing in any manner, directly
or indirectly, any Lien or encumbrance of any kind; (d) asserting any setoff,
offset, right of subrogation or recoupment of any kind, directly or indirectly,
against any debt, liability or obligation due to the Debtor or the Reorganized
Debtor; and/or (e) proceeding in any manner in any place whatsoever, including
employing any process, that does not conform to or comply with or is
inconsistent with the provisions of the Plan.
Section 12.3 Exculpation.
(a) None of UGC, UGC Holdings, the Debtor, the Reorganized Debtor, New
UPC, the Committee, any Participating Noteholder, any Indenture Trustee,
any holder of UPC Notes, UPC Preference Shares A, UPC Priority Shares or
UPC Ordinary Shares A, or any of the foregoing's respective current or
former officers, directors, Subsidiaries, Affiliates, members, managers,
shareholders, partners, representatives, employees, attorneys, financial
advisors, accountants and agents, or any of their respective successors and
assigns (collectively, the "Exculpated Parties"), or any of their
respective property, shall have or incur any liability to any Holder of a
Claim, an Equity Interest or an Old Other Equity Interest, or any other
party in interest, or any of their respective officers, directors,
Subsidiaries, Affiliates, members, managers, shareholders, partners,
representatives, employees, attorneys, financial advisors and agents, or
any of their respective successors and assigns, and their respective
property, for any act or omission in
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connection with, relating to, or arising out of, the Restructuring, the
Moratorium Petition, the Chapter 11 Case, the solicitation of acceptances
of the Plan or the Akkoord, the pursuit of Confirmation or the acceptance
of the Akkoord, the consummation of the Plan or the Akkoord, or the
administration of the Plan or the Akkoord or the property to be distributed
under the Plan or the Akkoord, except (i) for their gross negligence or
willful misconduct, (ii) solely in the case of UPC, New UPC, UGC or any
Participating Noteholder, any liability for failure to comply with, or
breach of such Person's obligations under, the Plan, the Akkoord or the
Restructuring Agreement and (iii) solely in the case of the Indenture
Trustee, any liability for failure to comply with, or breach of such
Person's obligations under, the Indentures, and in all respects (x) UPC,
New UPC, UGC and the Participating Noteholders shall be entitled to
reasonably rely upon the advice of counsel with respect to their duties and
responsibilities under the Plan, the Akkoord and the Restructuring
Agreement and (y) the Indenture Trustee shall be entitled to reasonably
rely upon the advice of counsel with respect to its duties and
responsibilities under the Indentures.
(b) Notwithstanding any other provision of the Plan or the Akkoord, no
holder of a Claim, Equity Interest or Old Other Equity Interest, no other
party in interest, none of their respective current or former officers,
directors, Subsidiaries, Affiliates, members, managers, shareholders,
partners, representatives, employees, attorneys, financial advisors,
accountants and agents, or any of their respective successors and assigns,
and their respective property, shall have any right of action, demand, suit
or proceeding against UGC, UGC Holdings, the Debtor, the Reorganized
Debtor, New UPC, each Participating Noteholder, any Indenture Trustee, each
Holder of UPC Notes, the Belmarken Notes, the UPC Preference Shares A, the
UPC Priority Shares or the UPC Ordinary Shares A and each of the
foregoing's respective current or former officers, directors, Subsidiaries,
Affiliates, members, managers, shareholders, partners, representatives,
employees, attorneys, financial advisors and agents, or any of their
respective successors and assigns, and their respective property, for any
act or omission in connection with, relating to, or arising out of, the
Restructuring, the Moratorium Petition, the Chapter 11 Case, the
solicitation of acceptances of the Plan or the Akkoord, the pursuit of
Confirmation or the acceptance of the Akkoord, the consummation of the Plan
or the Akkoord, or the administration of the Plan or the Akkoord or the
property to be distributed under the Plan or the Akkoord, except (i) for
their gross negligence or willful misconduct, (ii) solely in the case of
UPC, New UPC, UGC or any Participating Noteholder, any liability for
failure to comply with, or breach of such Person's obligations under, the
Plan, the Akkoord or the Restructuring Agreement and (iii) solely in the
case of the Indenture Trustee, any liability for failure to comply with, or
breach of such Person's obligations under, the Indentures, and in all
respects (x) UPC, New UPC, UGC and the Participating Noteholders shall be
entitled to reasonably rely upon the advice of counsel with respect to
their duties and responsibilities under the Plan, the Akkoord, and the
Restructuring Agreement and (y) the Indenture Trustee shall be entitled to
reasonably rely upon the advice of counsel with respect to its duties and
responsibilities under the Indentures.
Section 12.4 Releases. Effective on the Confirmation Date, but subject to
the occurrence of the Effective Date, UGC, UGC Holdings, the Debtor, the
Reorganized Debtor, New UPC, each Participating Noteholder, any Indenture
Trustee, each Holder of UPC Notes, and each of the foregoing's respective
current or former officers, directors, Subsidiaries, Affiliates, members,
managers, shareholders, partners, representatives, employees, attorneys,
financial advisors and agents, or any of their respective successors and
assigns, and their respective property, shall be released from any and all
claims, obligations, rights, causes of action, choses in action, demands, suits,
proceedings and liabilities which the Debtor or any Holder of a Claim against,
Equity Interest in, or Old Other Equity Interest in, the Debtor may be entitled
to assert, under the Laws of the U.S. or The Netherlands or any political
subdivision of either of them, whether for fraud, tort, contract, violations of
applicable securities laws, or otherwise, whether known or unknown, foreseen or
unforeseen, existing or hereafter arising, contingent or non-contingent, based
in whole or in part upon any act, omission, transaction, state of facts,
circumstances or other
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occurrence or failure of an event to occur, taking place before the Confirmation
Date and in any way relating to the Debtor, the Reorganized Debtor, New UPC, the
issuance, purchase or sale of the Belmarken Notes, the UPC Notes, the UPC
Preference Shares A, the UPC Priority Shares or the UPC Ordinary Shares A, the
Restructuring, the Chapter 11 Case, the Moratorium Petition, the Plan, or the
Akkoord; provided, however, that nothing herein shall release any Person from
any claims, obligations, rights, causes of action, choses in action, demands,
suits, proceedings or liabilities based upon any act or omission arising out of
such Person's gross negligence or willful misconduct; provided further that
nothing herein shall release (i) UPC, New UPC, UGC or any Participating
Noteholder from any claims, obligations, rights, causes of action, choses in
action, demands, suits, proceedings or liabilities based upon such Person's
failure to comply with, or breach of such Person's obligations under, the Plan,
the Akkoord or the Restructuring Agreement or (ii) the Indenture Trustee from
any claims, obligations, rights, causes of action, choses in action, demands,
suits, proceedings or liabilities based upon such Person's failure to comply
with, or breach of such Person's obligations under, the Indentures; provided
further that to the extent that, on the Effective Date, New UPC is the holder of
any Belmarken Notes, UPC Notes, UPC Preference Shares A, UPC Priority Shares or
UPC Ordinary Shares A, whether obtained through the Dutch Implementing Offer and
the Plan or otherwise, the Claims and Equity Interests represented by such
Belmarken Notes, UPC Notes, UPC Preference Shares A, UPC Priority Shares and UPC
Ordinary Shares A held by New UPC will not be released, but will instead remain
outstanding. Effective as of the Confirmation Date, but subject to the
occurrence of the Effective Date, all holders of Belmarken Notes, UPC Notes, UPC
Preference Shares A, UPC Priority Shares and UPC Ordinary Shares A shall be
deemed to release, and shall be permanently enjoined from bringing, maintaining,
facilitating or assisting any action, demand, suit or proceeding against the
Debtor, the Reorganized Debtor, New UPC and their respective current or former
officers, directors, Subsidiaries, Affiliates, members, managers, shareholders,
partners, representatives, employees, attorneys, financial advisors and agents,
or any of their respective successors and assigns, and their respective
property, in respect of any claims, obligations, rights, causes of action,
demands, suits, proceedings and liabilities related to, or arising from, any and
all claims or interests arising under, in connection with, or related to the
Belmarken Notes, the UPC Notes, the UPC Preference Shares A, the UPC Priority
Shares, the UPC Ordinary Shares A, or the issuance, purchase, or sale thereof;
provided that such release and injunction shall not be binding on New UPC to the
extent of New UPC's claims and interests solely against UPC on account of any
Belmarken Notes, UPC Notes, UPC Preference Shares A, UPC Priority Shares or UPC
Ordinary Shares A held by New UPC, whether obtained through the Dutch
Implementing Offer and the Plan or otherwise.
Section 12.5 Binding Effect of Plan. The provisions of the Plan shall be
binding upon and inure to the benefit of the Debtor, the Estate, the Reorganized
Debtor, any Holder of any Claim, Equity Interest or Old Other Equity Interest
treated herein or any Person named or referred to in the Plan, the Indenture
Trustee and each of their respective heirs, executors, administrators,
representatives, predecessors, successors, assigns, agents, officers and
directors, and, to the fullest extent permitted under the U.S. Bankruptcy Code
and other applicable law, each other Person affected by the Plan.
Section 12.6 Indemnification. To the extent not inconsistent with the Plan
or the Confirmation Order and to the fullest extent permitted by applicable law,
including, but not limited to, the extent provided in the Debtor's, the
Reorganized Debtor's or New UPC's constituent documents, contracts (including,
but limited to, any indemnification agreements), statutory law or common law,
the Reorganized Debtor and New UPC shall indemnify, hold harmless and
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reimburse the Exculpated Parties from and against any and all losses, claims,
Causes of Action, damages, fees, expenses, liabilities and actions: (A) for any
act taken or omission made in good faith in connection with or in any way
related to negotiating, formulating, implementing, confirming or consummating
the Plan, the Akkoord, the Disclosure Statement, the Restructuring Agreement or
any contract, instrument, release or other agreement or document created in
connection with the Plan or the Akkoord or the administration of the Chapter 11
Case or the Dutch Bankruptcy Case; or (B) for any act or omission in connection
with or arising out of the administration of the Plan or the Akkoord or the
property to be distributed under the Plan or the Akkoord or the operations or
activities of the Debtor, the Reorganized Debtor or New UPC, and any Claims of
any such Exculpated Party against the Reorganized Debtor or New UPC, as
applicable, on account of such indemnification obligations shall be unaltered
and Unimpaired within the meaning of Section 1124(l) of the U.S. Bankruptcy
Code, except that neither the Reorganized Debtor nor New UPC shall have any
obligation to indemnify any Exculpated Party for any acts or omissions that
constitute gross negligence or willful misconduct; provided, however, that upon
request of an Exculpated Party covered by this Section 12.6, the Reorganized
Debtor and New UPC shall advance amounts to cover any and all losses, claims,
Causes of Action, damages, fees, expenses, liabilities and actions; provided
further, that if a court of a competent jurisdiction determines that such
Exculpated Party is not entitled to the amounts that were advanced, such
Exculpated Party shall return the funds to the Reorganized Debtor or New UPC, as
applicable. Such indemnification obligations shall survive unaffected by
Confirmation, irrespective of whether such indemnification is owed for an act or
event occurring before or after the Petition Date.
Section 12.7 Term of Injunctions or Stays. Unless otherwise provided herein
or in the Confirmation Order, all injunctions or stays provided for in the
Chapter 11 Case under Sections 105(a) or 362 of the U.S. Bankruptcy Code, or
otherwise, and in existence on the Confirmation Date, shall remain in full force
and effect until the Effective Date.
Section 12.8 Preservation of Insurance. Except as necessary to be
consistent with the Plan, the Plan and the discharge provided herein shall not
diminish or impair (A) the enforceability of insurance policies that may cover
Claims against the Debtor or any other Person or (B) the continuation of
workers' compensation programs in effect, including self-insurance programs.
Section 12.9 Waiver of Subordination Rights. Any distributions under the
Plan shall be received and retained free of and from any obligations to hold or
transfer the same to any other Creditor, and shall not be subject to levy,
garnishment, attachment or other legal process by any Holder by reason of
claimed contractual subordination rights, and the Confirmation Order shall
constitute an injunction enjoining any Person from enforcing or attempting to
enforce any contractual, legal or equitable subordination rights to Property
distributed under the Plan, in each case other than as provided in the Plan.
Section 12.10 No Successor Liability. Except as otherwise expressly
provided in the Plan, the Debtor and the Reorganized Debtor do not, pursuant to
the Plan or otherwise, assume, agree to perform, pay, or indemnify Creditors or
otherwise have any responsibilities for any liabilities or obligations of the
Debtor relating to or arising out of the operations or assets of the Debtor,
whether arising prior to, on, or after the Confirmation Date. The Reorganized
Debtor is not, and shall not be, a successor to the Debtor by reason of any
theory of law or equity, and shall not have any successor or transferee
liability of any kind or character, except that the Reorganized Debtor shall
assume the obligations specified therefor in the Plan and the Confirmation
Order.
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ARTICLE XIII
RETENTION OF JURISDICTION
Section 13.1 Continuing Jurisdiction of U.S. Bankruptcy Court.
Notwithstanding Confirmation and the occurrence of the Effective Date, the U.S.
Bankruptcy Court shall retain after the Effective Date jurisdiction of all
matters arising out of, arising in or related to, the Chapter 11 Case to the
fullest extent permitted by applicable law, including, without limitation,
jurisdiction to:
(a) classify or establish the priority or secured or unsecured status
of any Claim or Equity Interest (whether Filed before or after the
Effective Date and whether or not contingent, Disputed or unliquidated) or
resolve any dispute as to the treatment necessary to Reinstate such a Claim
pursuant to the Plan;
(b) allow, disallow, determine, liquidate or estimate any Claim,
Equity Interest or Old Other Equity Interests, including the compromise,
settlement and resolution of any request for payment of any such Claim and
the resolution of any Objections to the allowance of any such Claims,
Equity Interests or Old Other Equity Interest, and to hear and determine
any other issue presented hereby or arising hereunder, including during the
pendency of any appeal relating to any Objection to such Claims, Equity
Interests or Old Other Equity Interests;
(c) grant or deny any applications for allowance of compensation or
reimbursement of expenses pursuant to Sections 330, 331 or 503(b) of the
U.S. Bankruptcy Code or otherwise provided for in the Plan, for periods
ending on or before the Effective Date;
(d) determine and resolve any and all controversies arising in
connection with the Chapter 11 Case and relating to the rights and
obligations of the Indenture Trustee, the Disbursing Agent and any voting
agent and/or claims agent retained by the Debtor in connection with the
Chapter 11 Case, including, without limitation, any dispute arising in
connection with the payment of the reasonable fees and expenses of the
Indenture Trustee, the Disbursing Agent and such voting agent and/or claims
agent in connection with their duties in the Chapter 11 Case;
(e) enter and implement such orders as are necessary or appropriate if
the Confirmation Order is for any reason modified, stayed, reversed,
revoked or vacated;
(f) determine such other matters and for such other purposes as may be
provided in the Confirmation Order;
(g) hear and determine any other matters related hereto and not
inconsistent with Chapter 11 of the U.S. Bankruptcy Code;
(h) continue to enforce the automatic stay and any stay imposed under
Section 105(a) of the U.S. Bankruptcy Code through the Effective Date;
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(i) hear and determine (i) disputes arising in connection with the
interpretation, implementation or enforcement of the Plan or (ii) issues
presented or arising under the Plan, including disputes among Holders and
arising under agreements, documents or instruments executed in connection
with the Plan;
(j) enter a final decree closing the Chapter 11 Case or converting it
to a Chapter 7 case;
(k) determine and resolve any matters related to the assumption,
assumption and assignment or rejection of any executory contract or
unexpired lease to which the Debtor is a party or with respect to which the
Debtor may be liable, and to hear, determine and, if necessary, liquidate
any Claims arising therefrom;
(l) ensure that all payments due under the Plan and performance of the
provisions of the Plan are accomplished as provided herein (including by
the approval of additional, supplemental or modified distribution
procedures or otherwise) and resolve any issues relating to distributions
to Holders of Allowed Claims or Allowed Equity Interests pursuant to the
provisions of the Plan;
(m) construe, take any action and issue such orders, prior to and
following the Confirmation Date and consistent with Section 1142 of the
U.S. Bankruptcy Code, as may be necessary for the enforcement,
implementation, execution and consummation of the Plan and all contracts,
instruments, releases, indentures and other agreements or documents created
in connection with the Plan, including, without limitation, the Disclosure
Statement and the Confirmation Order, for the maintenance of the integrity
of the Plan and protection of the Reorganized Debtor in accordance with
Sections 524 and 1141 of the U.S. Bankruptcy Code following consummation;
(n) determine any other matters that may arise in connection with or
relating to the Plan, the Disclosure Statement, the Confirmation Order or
any contract, instrument, release, indenture or other agreement or document
created in connection with the Plan, the Disclosure Statement or the
Confirmation Order, except as otherwise provided in the Plan;
(o) determine and resolve any cases, controversies, suits or disputes
that may arise in connection with the consummation, interpretation,
implementation or enforcement of the Plan (and all Exhibits to the Plan) or
the Confirmation Order, including the indemnification and injunction
provisions set forth in and contemplated by the Plan or the Confirmation
Order, or any Person's rights arising under or obligations incurred in
connection therewith;
(p) hear any application of the Debtor, the Reorganized Debtor or New
UPC to modify the Plan before or after the Effective Date pursuant to
Section 1127 of the U.S. Bankruptcy Code and Section 14.3 hereof or modify
the Confirmation Order or any contract, instrument, release, indenture or
other agreement or document created in connection with the Plan, the
Disclosure Statement or the Confirmation Order, or remedy
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any defect or omission or reconcile any inconsistency in any U.S.
Bankruptcy Court order, the Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument, release, indenture or other
agreement or document created in connection with the Plan, the Disclosure
Statement or the Confirmation Order, in such manner as may be necessary or
appropriate to consummate the Plan, to the extent authorized by the U.S.
Bankruptcy Code and the Plan;
(q) issue injunctions, enter and implement other orders or take such
other actions as may be necessary or appropriate to restrain interference
by any Person with consummation, implementation or enforcement of the Plan
or the Confirmation Order;
(r) recover all assets of the Debtor and its Estate, wherever located;
(s) hear and determine any motions, applications, adversary
proceedings, contested matters and other litigated matters pending on,
Filed or commenced after the Effective Date that may be commenced by the
Debtor thereafter, including proceedings with respect to the rights of the
Debtor to recover Property under Sections 542, 543 or 553 of the U.S.
Bankruptcy Code or to otherwise collect to recover on account of any claim
or Cause of Action that the Debtor may have; and
(t) hear any other matter not inconsistent with the U.S. Bankruptcy
Code.
Section 13.2 Failure of U.S. Bankruptcy Court to Exercise Jurisdiction. If
the U.S. Bankruptcy Court abstains from exercising or declines to exercise
jurisdiction over any matter related to the Debtor, including with respect to
the matters set forth above in Section 13.1 hereof, this Article XIII shall not
prohibit or limit the exercise of jurisdiction by any other court having
competent jurisdiction with respect to such subject matter.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
Section 14.1 Revocation or Withdrawal of the Plan. The Debtor reserves the
right, at any time prior to substantial consummation of the Plan, to revoke or
withdraw the Plan, but only to the extent that the Debtor could terminate the
Restructuring Agreement under Article XI thereof. If the Plan is revoked or
withdrawn, if the Confirmation Date does not occur or if Confirmation occurs,
but the Effective Date does not occur, then the Plan shall be null and void and
have no force and effect. In such event, nothing contained herein shall be
deemed to constitute a waiver or release of any claims by or against the Debtor
or any other Person or to prejudice in any manner the rights of the Debtor or
any Person in any further proceedings involving the Debtor.
Section 14.2 Final Order. Except as otherwise expressly provided in the
Plan, any requirement in the Plan for a Final Order may be waived by the Debtor
or, after the Effective Date, the Reorganized Debtor, and New UPC, upon written
notice to the U.S. Bankruptcy Court. No such waiver shall prejudice the right of
any party in interest to seek a stay pending appeal of any order that is not a
Final Order.
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Section 14.3 Modification of the Plan. The Debtor and New UPC may alter,
amend or modify the Plan in accordance with Section 1127 of the U.S. Bankruptcy
Code or as otherwise permitted; provided, however, that neither the Debtor nor
New UPC may modify the Plan without the consent of the other or, to the extent
required in Section 5.3(b) of the Restructuring Agreement, the consent of a
Majority-in-Interest of the Participating Noteholders.
Section 14.4 Business Days. If any payment or act under the Plan is
required to be made or performed on a date that is not a Business Day, then the
making of such payment or the performance of such act may be completed on the
next succeeding Business Day, but shall be deemed to have been completed as of
the required date.
Section 14.5 Severability. Should the U.S. Bankruptcy Court determine,
prior to the Confirmation Date, that any provision of the Plan is either illegal
on its face or illegal as applied to any Claim, Equity Interest or Old Other
Equity Interest, such provision shall be unenforceable as to all Holders of
Claims, Equity Interests or Old Other Equity Interests or to the specific Holder
of such Claim, Equity Interest or Old Other Equity Interest, as the case may be,
as to which such provision is illegal. Unless otherwise determined by the U.S.
Bankruptcy Court, such a determination of unenforceability shall in no way limit
or affect the enforceability and operative effect of any other provision of the
Plan. The Debtor reserves the right not to proceed with Confirmation or
consummation of the Plan if any such ruling occurs.
Section 14.6 Governing Law. EXCEPT AS OTHERWISE SET FORTH HEREIN OR TO THE
EXTENT THAT THE U.S. BANKRUPTCY CODE OR U.S. BANKRUPTCY RULES OR OTHER FEDERAL
LAWS ARE APPLICABLE, AND SUBJECT TO THE PROVISIONS OF ANY CONTRACT, INSTRUMENT,
RELEASE, INDENTURE OR OTHER AGREEMENT OR DOCUMENT ENTERED INTO IN CONNECTION
WITH THE PLAN, THE CONSTRUCTION, IMPLEMENTATION AND ENFORCEMENT OF THE PLAN AND
ALL RIGHTS AND OBLIGATIONS ARISING UNDER THE PLAN SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO CONFLICTS-OF-LAW PRINCIPLES WHICH WOULD APPLY THE LAW
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK OR THE UNITED STATES OF
AMERICA.
Section 14.7 Dissolution of Committees. On the Effective Date, any
Committee shall be automatically dissolved and all members, Professionals and
agents of such Committee shall be deemed released of their duties,
responsibilities and obligations, and shall be without further duties,
responsibilities and authority in connection with the Debtor, the Chapter 11
Case, the Plan or its implementation.
Section 14.8 Payment of Statutory Fees. All U.S. Trustee's Fee Claims, as
determined, if necessary, by the U.S. Bankruptcy Court, shall be paid on or
before the Effective Date. All such fees that arise after the Effective Date,
but before the closing of the Chapter 11 Case, shall be paid by the Reorganized
Debtor.
Section 14.9 Notices. Any notice required or permitted to be provided under
this Plan shall be in writing and served by either (A) certified mail, return
receipt requested, postage
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prepaid, (B) hand delivery or (C) reputable overnight delivery service, freight
prepaid, to be addressed as follows:
If to UPC, to:
United Pan-Europe Communications
N.V. Boeing Avenue
53 Schiphol Rijk 1119
The Netherlands
Attn.: Anton M. Tuijten
With a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attn.: Howard S. Beltzer, Esq.
If to New UPC, to:
New UPC, Inc.
4643 South Ulster Street, 13th Floor
Denver, Colorado 80237
Attn.: President
With a copy to:
Skadden Arps Slate Meagher & Flom, LLP
300 South Grand Avenue
Los Angeles, California 90071
Attn.: Richard Levin, Esq.
If to the Participating Noteholders, to:
Paul, Weiss, Rifkind, Wharton & Garrisson
1285 Avenue of the Americas
New York, New York 10019
Attn.: Jeffrey D. Saferstein, Esq.
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If to the United States Trustee, to:
Office of the United States Trustee
33 Whitehall Street, Suite 2100
New York, New York 10004
Attn.: Paul Schwartzberg, Esq.
Section 14.10 Time. Unless otherwise specified herein, in computing any
period of time prescribed or allowed by the Plan, the provisions of U.S.
Bankruptcy Rule 9006(a) shall apply.
Section 14.11 No Attorneys' Fees. No attorneys' fees will be paid by the
Debtor with respect to any Claim, Equity Interest or Old Other Equity Interest
except as expressly specified herein or Allowed by a Final Order of the U.S.
Bankruptcy Court, and except that the Debtor shall pay the post-petition fees
and expenses of advisors and attorneys in Cash as provided in Section 10.9 of
the Restructuring Agreement to the extent that such fees and expenses are not
paid by UPC Services BV.
Section 14.12 No Injunctive Relief. No Claim, Equity Interest or Old Other
Equity Interest shall under any circumstances be entitled to specific
performance or other injunctive, equitable or other prospective relief.
Section 14.13 Continued Confidentiality Obligations. Pursuant to the terms
thereof, members of and advisors to any Committee, any other Holder of a Claim,
Equity Interest or Old Other Equity Interest and their respective predecessors,
successors and assigns shall continue to be obligated and bound by the terms of
any confidentiality agreement executed by them in connection with the Chapter 11
Case or the Debtor, to the extent that such agreement, by its terms, may
continue in effect after the Confirmation Date; provided, however, that the
confidentiality agreements with the Participating Noteholders and their advisors
shall terminate on the Effective Date and be of no further force and effect.
Section 14.14 No Admissions or Waivers. Notwithstanding anything herein to
the contrary, nothing contained in the Plan shall be deemed an admission or
waiver by the Debtor with respect to any matter set forth herein, including
liability on any Claim, Equity Interest or Old Other Equity Interest or the
propriety of any classification of any Claim, Equity Interest or Old Other
Equity Interest.
Section 14.15 Entire Agreement. Upon consummation of the Plan, the Plan and
the documents executed and delivered on the Effective Date and in consummation
of the Plan shall be deemed to set forth the entire agreement and undertakings
relating to the subject matter thereof and shall supersede all prior discussions
and documents related thereto, including the Restructuring Agreement. The Debtor
shall not be bound by any terms, conditions, definitions, warranties,
understandings, or representations with respect to the subject matter thereof,
other than as expressly provided for therein or as may hereafter be agreed to by
the parties in writing.
Section 14.16 Waiver. The Debtor or the Reorganized Debtor, as applicable,
reserves the right to waive any provision of this Plan to the extent such
provision is for the sole benefit of the Debtor and/or its officers or
directors.
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Section 14.17 Bar Date for Professional Claims. Final applications for
compensation for services rendered and reimbursement of expenses incurred by
Professionals (a) from the later of the Petition Date or the date on which
retention was approved through the Effective Date or (b) pursuant to Section
503(b)(4) of the Bankruptcy Code, shall be Filed no later than sixty (60) days
after the Effective Date or such later date as the Bankruptcy Court approves,
and shall be served on (i) counsel to the Debtor at the address set forth in
Section 14.9 of the Plan, (ii) counsel to New UPC at the address set forth in
Section 14.9 of the Plan, (iii) counsel to the Participating Noteholders at the
address set forth in Section 14.9 of the Plan, and (iv) the Office of the United
States Trustee at the address set forth in Section 14.9 of the Plan. Any
objections to an application for the payment of Professional Claims must be
filed and served on the Reorganized Debtor and its counsel and the requesting
Professional no later than twenty-five (25) days (or such longer period as may
be granted by order of the Bankruptcy Court) after the date on which such
application was served. Applications that are not timely Filed will not be
considered by the Court. The Reorganized Debtor may pay any Professional fees
and expenses incurred after the Effective Date without any application to the
Bankruptcy Court.
Section 14.18 Compromise of Controversies. Pursuant to Bankruptcy Rule
9019, and in consideration for the classification, Distributions and other
benefits provided under the Plan, the provisions of this Plan shall constitute a
good faith compromise and settlement of all Claims or controversies resolved
pursuant to and released by the Plan, including, without limitation, any
Avoidance Actions, and Confirmation shall constitute the Bankruptcy Court's
approval of each of the foregoing compromises or settlements, and all other
compromises and settlements provided for in the Plan.
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CONFIRMATION REQUEST
The Debtor hereby requests confirmation of the Plan pursuant to Section
1129(a) or Section 1129(b) of the Bankruptcy Code.
Dated: December 23, 2002
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By: /s/ Anton M. Tuijten
-----------------------------------------
Name: Anton M. Tuijten
Title: General Counsel and Member
of the Board of Management
By: /s/ Charles H.R. Bracken
-----------------------------------------
Name: Charles H.R. Bracken
Title: Chief Financial Officer and
Member of the Board of
Management
NEW UPC, INC.
By: /s/ Michael T. Fries
-----------------------------------------
Name: Michael T. Fries
Title: President
Submitted by:
WHITE & CASE LLP
Attorneys for United Pan-Europe Communications N.V.
Debtor and Debtor in Possession
By: /s/ Howard S. Beltzer
-----------------------------
Howard S. Beltzer (HSB 5721)
Daniel P. Ginsberg (DPG 5290)
1155 Avenue of the Americas
New York, New York 10036
(212) 819-8200
- and -
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
Attorneys for New UPC, Inc.
By: /s/ Richard Levin
-----------------------------
Richard Levin (California State Bar No. 66578)
Van C. Durrer II (VCD 0689)
300 South Grand Avenue
Los Angeles, California 90071
(213) 687-5000
A-1
Schedule 1
Allowed UPC Notes Claims by Series
Series of UPC Notes Allowed UPC Notes Claims
10 7/8% Senior Notes due 2007 (United States
Dollar) US$190,714,890.25
10 7/8% Senior Notes due 2009 (United States
Dollar) US$877,954,231.76
12 1/2% Senior Discount Notes due 2009 (United
States Dollar) US$600,919,401.12
11 1/4% Senior Notes due 2009 (United States
Dollar) US$269,862,290.19
13 3/8% Senior Discount Notes due 2009 (United
States Dollar) US$371,663,598.93
11 1/4% Senior Notes due 2010 (United States
Dollar) US$658,378,082.21
11 1/2% Senior Notes due 2010 (United States
Dollar) US$266,648,907.71
13 3/4% Senior Discount Notes due 2010 (United
States Dollar) US$737,994,370.22
10 7/8% Senior Notes due 2007 (Euro) US$77,387,159.85
10 7/8% Senior Notes due 2009 (Euro) US$244,800,169.38
11 1/4% Senior Notes due 2009 (Euro) US$78,767,689.67
13 3/8% Senior Discount Notes due 2009 (Euro) US$143,986,850.74
11 1/4% Senior Notes due 2010 (Euro) US$169,156,243.86
Exhibit A
Restructuring Agreement
[To be Inserted]
Exhibit B
Amended and Restated UPC Articles of Association
[To be Inserted]
Annex B
ENGLISH TRANSLATION OF AKKOORD
[This is an informal translation of the original Dutch text. The Dutch text will
be decisive.]
DRAFT COMPOSITION PLAN
(1st amended draft December 23, 2002)
Draft composition plan of United Pan-Europe Communications N.V., with its
registered office in Amsterdam ("UPC").
Whereas:
a. On 3 December 2002 UPC filed a Petition with the District Court of
Amsterdam requesting it to grant a suspension of payment. The present draft
composition plan was annexed as Annex 7 to the Petition. Petitioner also
requested the Court in the Petition that it would refrain from setting a
date on which the creditors would be consulted on the definitive suspension
of payment, but that it instead would set a date on which the creditors
would be consulted on the present draft composition plan. This date has
meanwhile been set and scheduled for February 28, 2002. At this date the
creditors will also be given the opportunity to vote on the present draft
composition plan. The subject amended draft composition plan contains minor
revisions from the draft composition plan filed on December 3, 2002 and the
subject revised composition plan substitutes the previous draft composition
plan in its entirety.
b. The most important group of UPC creditors are the holders of bonds issued
by UPC. Annex 1 to this draft composition plan contains a list of bond
series issued by UPC. Point of departure of the draft composition plan has
been, that all bondholders should be made the offer that they exchange
their claims against UPC pursuant to their bondholding for shares in a
newly incorporated company, New UPC Inc. ("New UPC"). This is a company
incorporated under the laws of the State of Delaware, United States of
America.
c. On 30 September 2002 UPC reached agreement on the restructuring with
holders of approximately 60% of its bonds, including its parent company
United Global Com. ("UGC"). The agreement has been laid down in writing in
a `Restructuring Agreement'. Part of the agreement is that UPC, both in the
United States and in the Netherlands, will offer its creditors a
composition plan, as now embodied in the present plan. With this purpose in
mind UPC has initiated Chapter 11 proceedings in the United States, in
which it has filed a so-termed `Plan of Reorganisation' for the approval of
the US bankruptcy Court and which is to be put to the vote of the creditors
and shareholders of UPC.
d. The reason why UPC, in addition to the present draft composition plan, will
also submit a Plan of Reorganisation in the United States is inter alia
found in the fact that most of the holders of bonds issued by UPC are
located in the United States and that the terms and conditions of the bonds
(indentures) are governed by the laws of the state of New York.
e. The shares in New UPC offered in the draft composition plan will, once both
the `Plan of Reorganisation' and the present draft composition plan have
become definitive, as soon as reasonably possible be transferred to the UPC
creditors, as provided for in this draft composition plan. To do this,
however, a certain number of other conditions must also have been met, as
described in more detailed in the disclosure statement, which will serve as
a prospectus in the Netherlands. The date on which all conditions for the
issue of shares in New UPC have been satisfied will be designated
hereinafter as the Effective Date, in accordance with the definition used
in the US Plan of Reorganisation. If, however, UPC claims are challenged
and no amicable settlement is possible, then the New UPC shares will only
be transferred when the holder of any such claim has obtained a definite
judgment against UPC.
f. The New UPC shares will be transferred through a so-termed Disbursing Agent
(the "Disbursing Agent"), who will pass them on, in exchange for the bonds
held by the relevant bondholder to the relevant bondholders in the numbers
set down below. New UPC has assumed an obligation vis-a-vis UPC to make
available the requisite number of shares for delivery to UPC's creditors.
B-1
g. The creditors will only receive whole numbers of shares in New UPC. If a
creditor, on the basis of the schedule below, on aggregate would be
entitled to a fraction of a share, of New UPC, the number of shares of New
UPC which such creditor shall receive shall be rounded to the next lower
whole number. No consideration shall be provided in lieu of fractional
shares that are rounded down.
h. A prospectus on the New UPC shares (the disclosure statement mentioned
above) will be made generally available. The disclosure statement must
however be approved by the US Bankruptcy Court before it is mailed to
creditors. In any event the disclosure statement will be made generally
available before the date set by the Court for the creditors' meeting. A
copy of the disclosure statement can be obtained at such time, inter alia,
through the following telephone number at UPC: +31 (0)20 778 9959. It is
expected that the disclosure statement will be available on or around
January 10, 2003. UPC informs its creditors that it is in their interest to
review the disclosure statement before taking a decision as regards this
draft composition plan.
OFFER:
In view of the above, UPC makes the following offer to its creditors:
(A conversion rate of EUR 1.0000=USD 0.9968 has been applied.)
A. Bondholders
Once the Effective Date has arrived, the holders of the various bond series will
be entitled to the following numbers of shares in New UPC upon the surrendering
of their bonds with the Disbursing Agent, who will transfer the bonds to New
UPC, these matters as described further in Annex 2 to this draft composition
plan.
(With different bond series, mentioned below, reference is made to the numbering
of annex 1 with this draft composition plan. Interest can only be claimed up to
the date of the suspension of payments. If there is an entitlement to accrued
and unpaid interest, such interest (Senior Notes), which has been calculated in
accordance with the relevant contractual percentage for each series of bonds,
has been taken into account up to the date of the suspension of payments. To the
extent interest is accreted to principal (Senior Discount Notes), the bonds are
taken into consideration for their accreted value as per the date of suspension
of payments.)
Series 1 6.02063 shares in New UPC for USD 1,000 nominally of bonds
Series 2 6.18275 shares in New UPC for USD 1,000 nominally of bonds
Series 3 4.38533 shares in New UPC for USD 1,000 nominally of bonds
Series 4 6.04406 shares in New UPC for USD 1,000 nominally of bonds
Series 5 4.18810 shares in New UPC for USD 1,000 nominally of bonds
Series 6 6.21236 shares in New UPC for USD 1,000 nominally of bonds
Series 7 6.23216 shares in New UPC for USD 1,000 nominally of bonds
Series 8 4.02406 shares in New UPC for USD 1,000 nominally of bonds
Series 9 6.00137 shares in New UPC for EUR 1,000 nominally of bonds
Series 10 6.16297 shares in New UPC for EUR 1,000 nominally of bonds
Series 11 6.02472 shares in New UPC for EUR 1,000 nominally of bonds
B-2
Series 12 4.17470 shares in New UPC for EUR 1,000 nominally of bonds
Series 13 6.19248 shares in New UPC for EUR 1,000 nominally of bonds
B. Other creditors
Once the Effective Date has arrived all other creditors in respect of whom the
moratorium is effective will be entitled to the following number of shares in
New UPC.
5. 34665 shares in New UPC for each EUR 1,000 nominally of claims.
A. + B.
Creditors whose claims are disputed will only be able to effect their
entitlements after, and to the extent that, their claim has been established by
a final judgement, not subject to any appeals, by the relevant court or
arbitration-institution.
Amsterdam, 23 December, 2002
United Pan-Europe Communications N.V.
/s/ Charles Bracken /s/ Anton M. Tuijten
- ------------------------ ---------------------
Charles Bracken Anton M. Tuijten
Chief Financial Officer Senior Vice President and General Counsel
B-3
Annex 1
Different series of bonds
- ------------------------------ --------------------------- --------------------------- ---------------------------
Currency Amount Due Interest Percentage
- ------------------------------ --------------------------- --------------------------- ---------------------------
- ------------------------------ --------------------------- --------------------------- ---------------------------
1. USD 200.000.000 2007 10 7/8%
- ------------------------------ --------------------------- --------------------------- ---------------------------
2. USD 800.000.000 2009 10 7/8%
- ------------------------------ --------------------------- --------------------------- ---------------------------
3. USD 735.000.000 2009 12 1/2%
- ------------------------------ --------------------------- --------------------------- ---------------------------
4. USD 252.000.000 2009 11 1/4%
- ------------------------------ --------------------------- --------------------------- ---------------------------
5. USD 478.000.000 2009 13 3/8%
- ------------------------------ --------------------------- --------------------------- ---------------------------
6. USD 600.000.000 2010 11 1/4%
- ------------------------------ --------------------------- --------------------------- ---------------------------
7. USD 300.000.000 2010 11 1/2%
- ------------------------------ --------------------------- --------------------------- ---------------------------
8. USD 1.000.000.000 2010 13 3/4%
- ------------------------------ --------------------------- --------------------------- ---------------------------
9. EUR 100.000.000 2007 10 7/8%
- ------------------------------ --------------------------- --------------------------- ---------------------------
10. EUR 300.000.000 2009 10 7/8%
- ------------------------------ --------------------------- --------------------------- ---------------------------
11. EUR 101.000.000 2009 11 1/4%
- ------------------------------ --------------------------- --------------------------- ---------------------------
12. EUR 191.000.000 2009 13 3/8%
- ------------------------------ --------------------------- --------------------------- ---------------------------
13. EUR 200.000.000 2010 11 1/4%
- ------------------------------ --------------------------- --------------------------- ---------------------------
B-4
Annex 2
For purposes of distribution of the shares in New UPC to the bondholders of UPC
a record date will be determined and bondholders at such record date will be
entitled to such distribution. As soon as possible after the occurrence of the
Effective Date, all bonds will be transferred to New UPC through book entries
through DTC, Euroclear and Clearstream. Subsequently, DTC will effect the book
entries that will result in the shares in New UPC that are offered through this
draft composition plan being booked to the credit of the bondholders. Thus, the
shares in New UPC will become available to the bondholders of UPC automatically,
through book entries.
Other creditors of UPC, other than bondholders, should inform the company to
which securities account they want the shares in New UPC, to which they will be
entitled through this draft composition plan, to be credited.
B-5
Annex C
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
[To Be Inserted]
C-1
Annex D
AMENDMENT NO. 1 TO THE ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
[To Be Inserted]
D-1
Annex E
QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2002
[To Be Inserted]
E-1
Annex F
PROJECTED FINANCIAL INFORMATION
The Company does not, as a matter of course, make public any forecasts as
to its future financial performance. However, as described under the section of
the Disclosure Statement entitled "Reorganization Valuation Analysis and
Projected Financial Information--Projected Financial Information," in connection
with the filing of its Chapter 11 Case with the U.S. Bankruptcy Court, the
Company has prepared certain projected financial information. The information
set forth below contains a summary of this projected financial information. The
projections set forth below should be read together with (i) the assumptions and
qualifications set forth below and the footnotes in the table below, (ii) the
audited consolidated financial statements of the Company for the three years
ended December 31, 2001 contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 2001 and the unaudited consolidated financial
statements of the Company for the fiscal quarter ended September 30, 2002
contained in the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2002, which have been included in this Disclosure Statement
as Annex C and Annex E, respectively, and (iii) the information contained under
the heading "Risk Factors" of the Disclosure Statement.
The Company's financial forecasts (upon which the projections provided
below are based in part) are, in general, prepared solely for internal use and
capital budgeting and other management decisions and are subjective in many
respects and thus susceptible to multiple interpretations and periodic revisions
based on actual experience and business developments. The projections disclosed
below also reflect numerous assumptions made by management of the Company with
respect to industry performance, general business, economic, market and
financial conditions and other matters. Such assumptions regarding future
events, including, in particular, the effect of income tax exemptions in The
Netherlands, the Company's Restructuring on subscriber growth and other factors
related to the Restructuring, are difficult to predict, and many are beyond the
Company's control. Accordingly, there can be no assurance that the assumptions
made by the Company in preparing the projections will prove accurate. It is
expected that there will be differences between actual and projected results,
and actual results may be materially greater or less than those contained in the
projections. The inclusion of the projections below should not be regarded as an
indication that the Company, New UPC or their respective affiliates,
representatives or advisors consider the projections to be a reliable prediction
of future events, and the projections should not be relied upon as such. None of
the Company, New UPC or any of their respective affiliates, representatives or
advisors makes any representation to any person regarding the projections, and
none of them has or intends to update or otherwise revise the projections to
reflect circumstances existing after the date of this Disclosure Statement or to
reflect the occurrence of future events even in the event that any or all of the
assumptions underlying the projections are shown to be in error.
The Company's management has prepared the projections below solely for
purposes of complying with the requirements of the U.S. Bankruptcy Code. The
projections were not prepared with a view toward compliance with published
guidelines of the SEC, the American Institute of Certified Public Accountants or
any other regulatory or professional agency or body, generally accepted
accounting principles or consistency with the Company's historical consolidated
financial statements. Neither Arthur Andersen, the Company's predecessor
independent auditors, nor KPMG, the Company's current independent auditors, nor
Lazard, the Company's financial advisors, has examined, compiled or performed
any procedures with respect to the projections presented below, nor have any of
them expressed any opinion or provided any other form of assurance regarding
such information or its achievability, and accordingly assume no responsibility
for them.
For more information regarding the projections set forth below, see the
section of the Disclosure Statement entitled "Reorganization Valuation Analysis
and Projected Financial Information--Projected Financial Information."
The forecasts and targets in the table below for the fiscal years indicated
for the Company were prepared on a pro forma consolidated basis. These forecasts
and targets do not take into account any future material dispositions or
acquisitions.
F-1
United Pan-Europe Communications N.V.(1)
Year ended December 31,
2002 2003 2004
---- ---- ----
(in millions of Euros, except for basic
subscribers and revenue generating units)
Pro Forma Consolidated Statement of Operations Data:
Total revenues............................................. 1,394 1,566 1,904
Total Adjusted EBITDA(2)................................... 282 525 714
Operating expense(3)....................................... (426) (385) (400)
Selling, general and administrative expense(3)............. (389) (352) (372)
Depreciation and amortization(4)........................... (700) (674) (656)
Net operating income (loss)................................ (467) (201) 52
Net income (loss) before income taxes and other items...... (983) (684) (255)
Net income (loss)(4)(5)(6)................................. (564) (695) (259)
Pro Forma Consolidated Statement of Cash Flow Data:
Total capital expenditures................................. (333) (329) (331)
Free cash flow before financing(7)......................... (50) 196 383
Net cash flow from (used in) operating activities
(including interest)(8).................................. (304) 320 442
Net cash flows used in investing activities(9)............. (345) (323) (326)
Net cash flow after operating and investing activities
(including interest) (8)(9)................................ (649) (3) 116
Net cash flows from (used in) financing activities(10)..... 34 (78) (120)
Net increase (decrease) in cash and cash equivalents....... (614) (80) (4)
Net borrowings (repayments(11)............................. 34 (5,531) (120)
Pro Forma Balance Sheet Data (year-end):
Total net debt(12)......................................... 8,765 3,436 3,351
Total assets............................................... 6,924 6,436 6,185
Cash and cash equivalents.................................. 241 161 157
Restricted cash............................................ 15 13 13
Property, plant and equipment.............................. 3,312 2,967 2,686
Intangible assets(3)....................................... 2,889 2,889 2,889
Total liabilities and shareholders equity.................. 6,924 6,436 6,185
Short-term debt (including current portion
of long-term debt)....................................... 8,549 --- ---
Long-term debt(13)......................................... 456 3,596 3,508
Convertible preferred stock................................ 1,643 --- ---
Total shareholders equity.................................. (5,035) 1,837 1,592
Pro Forma Operating Data (year-end):
Basic subscribers (in thousands)........................... 6,624 6,684 6,842
Total revenue generating units (in thousands)(14).......... 8,018 8,471 9,189
- --------------------
(1) The projections assume that the Restructuring is completed on March 31,
2003. The figures exclude UPC Germany from August 1, 2002 and Priority
Telecom from January 1, 2003. The interest rate used in calculations (based
upon the European Interbank Offer Rate (EURIBOR)) was assumed to be 3.5%
for all periods forecasted. The U.S. Dollar/Euro exchange rate used in
calculations was assumed to be (euro)1.00 = US$1.00 for all periods
forecasted.
(2) "Adjusted EBITDA" is not a generally accepted accounting principle ("GAAP")
measure. Adjusted EBITDA represents net operating income (loss) before
depreciation, amortization, stock-based compensation expense (including
retention bonuses) and impairment and restructuring charges. Adjusted
EBITDA is one of the primary measures used by the Company's chief operating
and decision-making officers to measure the Company's operating results and
to measure segment profitability and performance. The Company's management
believes that (i) Adjusted EBITDA is meaningful to investors because it
provides an analysis of operating results using the same measures used by
the Company's chief operating and decision-making officers, (ii) Adjusted
EBITDA provides investors with the means to evaluate the financial results
of the Company compared to other companies within the same industry and
(iii) it is common practice for institutional investors and investment
bankers to use various multiples of current or projected Adjusted EBITDA
for purposes of estimating current or prospective enterprise value. The
F-2
Company's calculation of Adjusted EBITDA may or may not be consistent with
the calculation of this measure by other companies in the same industry.
Investors should not view Adjusted EBIDA as an alternative to GAAP income
as a measure of performance, or to cash flows from operating, investing and
financing activities as a measure of liquidity. In addition, Adjusted
EBITDA does not take into account changes in certain assets and
liabilities, as well as interest and income taxes, that can affect cash
flows. Adjusted EBITDA excludes non-cash and cash stock-based compensation
charges, which result from variable plan accounting for certain of the
Company's and its subsidiaries' stock option and phantom stock option
plans.
(3) Operating and selling, general and administrative expenses for the year
ended December 31, 2004 have been apportioned on a pro rata basis using the
amounts in 2003 as the basis of appointment.
(4) Depreciation and amortization does not include potential impairment which
may result through the application of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). The
Company adopted SFAS 142 with effect from January 1, 2002. Under SFAS 142,
goodwill and intangible assets with indefinite lives are no longer
amortized, but are tested for impairment on an annual basis and whenever
indicators of impairment arise. In addition, goodwill on equity method
investments is no longer amortized, but tested for impairment in accordance
with APB 18, "The Equity Method of Accounting for Investments in Common
Stock." The goodwill impairment test, which is based on fair value, is
performed on a reporting unit level. All recognized intangible assets that
are deemed not to have an indefinite life are amortized over their
estimated useful lives. The Company has engaged an external party to
compare the fair value of its reporting units with their respective
carrying amounts, including goodwill. If the fair value of a reporting unit
exceeds its carrying amount, goodwill of the reporting unit is considered
not impaired. If the carrying amount of a reporting unit exceeds its fair
value, the second step of the goodwill impairment test will be performed to
measure the amount of impairment loss. The first step of the goodwill
impairment test was performed and the carrying value of certain reporting
units exceeded their fair value, including reporting units in The
Netherlands, Sweden, Hungary, the Czech Republic, France, Slovakia, Poland
and Priority Telecom. The Company is currently carrying out the second step
of the test to quantify how much of the total goodwill will be impaired. A
substantial cumulative effect adjustment will be required as a result of
this process. The determination of the potential impairment adjustment will
be completed by the end of the year. Net goodwill of approximately
(euro)2.8 billion is included in the Company's consolidated balance sheet
as of September 30, 2002. Amortization of goodwill has not been expensed in
accordance with SFAS 142 for the periods forecasted.
(5) Net income (loss) does not include Dutch capital gain taxes as the Company
has taken the position that exemptions will apply. The Company's tax
planning for the periods noted assumes no material tax exposure.
(6) In the second quarter of 2002, there was an extraordinary gain of
(euro)347.2 million related to the termination of certain swap agreements.
Net losses for 2003 and 2004 are expected to be reduced through improved
operational performance and reduced interest expense as a result of the
Restructuring.
(7) "Free cash flow before financing" represents Adjusted EBITDA less capital
expenditures before debt servicing costs.
(8) "Net cash flow from (used in) operating activities" is net income plus
non-cash operational income statement items and changes in working capital.
(9) "Net cash used in investing activities" consists of capital expenditures,
investments in long-term assets and changes in restricted cash balances.
(10) "Net cash used in financing activities" consists of changes in share
capital and long-term and short-term debt, including accrued interest on
the UPC Notes during the Restructuring.
(11) "Net borrowings" includes the indebtedness restructured in connection with
the Restructuring, including the UPC Notes and the Belmarken Notes. Since
the restructuring of such debt will have no cash impact on the Company, the
conversion of the amounts due under the restructured debt into shares of
New UPC Common Stock is reflected as a repayment of such restructured debt
under "Net borrowings."
(12) "Net debt" represents consolidated gross debt less consolidated cash and
cash equivalents.
(13) As of December 31, 2002, the loans made to UPC Distribution under UPC
Distribution Facility were classified as short-term debt since the
Company's payment defaults under the UPC Notes resulted in a default under
the UPC Distribution Facility. Upon consummation of the Restructuring,
which is expected in March 2003, the indebtedness under UPC Distribution
Facility will be reclassified to long-term debt in the Company's
consolidated balance sheet. Long-term debt also includes the outstanding 14
1/2% Senior
F-3
Discount Notes due 2008 and 14 1/2% Senior Discount Notes due 2009 issued
by UPC Polska and other long-term debt facilities predominately at the
Company's subsidiaries within the UPC Distribution group.
(14) Total revenue generating units represent illustrative revenue generating
units for the Company and its Subsidiaries on a consolidated basis which
the Company may target in order to achieve its total revenue targets. As
noted in previous public announcements, the Company's strategic focus has
shifted toward improving adjusted EBITDA and cash flow.
F-4
Annex G
LIQUIDATION ANALYSIS
LIQUIDATION ANALYSIS
----------------------- ------------------------ ---------------------
STATEMENT OF ASSETS Book Value as of Hypothetical Recovery Estimated Liquidation Note
($ in millions) September 30, 2002 (% of Book Value) Value Reference
----------------------- ------------------------ ---------------------- ------------
(Unaudited)(Note A) Low High Low High
----------------------- ---------- ------------- ----------- ---------- ------------
Cash...................................... 2.6 100.0% 100.0% 2.6 2.6 B
Receivables - Intercompany................ 9,371.8 1.2% 1.7% 114.8 154.8 C
Receivables - Third Party................. 0.3 30.0% 40.0% 0.1 0.1
Investments............................... NA NA NA 39.1 57.1 D
Other Receivables and Investments......... 66.9 15.0% 30.0% 10.0 20.1 E
Property and Equipment, net............... 12.5 25.0% 35.0% 3.1 4.4 F
Intangible Assets......................... 52.5 0.0% 0.0% 0.0 0.0 G
Other Assets.............................. 8.2 12.1% 24.3% 1.0 2.0 H
-------------- --------- ------
Total Assets 9,514.8 1.8% 2.5% 170.7 241.0
-------------- -------------------
Sales and Disposal Costs Associated with Liquidation (20.5) (36.2)
Chapter 7 Trustee Fees (5.1) (7.2)
Chapter 7 Professional Fees (3.0) (5.0)
------------------
Total Liquidation Costs (28.6) (48.4) I
------------------
Net Liquidation Proceeds Available for Distribution 142.1 192.6
------------------
G-1
LIQUIDATION ANALYSIS (cont'd)
---------------------------------
DISTRIBUTION ANALYSIS SUMMARY Estimated Liquidation
($ in millions) Value
---------------------------------
Low High Note
Reference
---------------- --------------- ------------
Net Liquidation Proceeds Available for Distribution 142.1 192.6
Less: Secured Claims (2.6) (2.6) J
Net Liquidation Proceeds After Secured Claims 139.5 190.0
Less: Administrative and Priority Claims (21.0) (21.0) K
-------------- -------------
Net Liquidation Proceeds Available for Unsecured Creditors 118.5 169.0
Less: Unsecured Claims
Belmarken Notes Claims (937.5) (937.5)
UPC Notes Claims (4,688.2) (4,688.2)
General Unsecured Claims (143.5) (143.5)
Critical Creditor Claims (1.0) (1.0)
-------------- -------------
Total Unsecured Claims (5,770.3) (5,770.3) L
---------------- -----------
Net Deficiency to Unsecured Creditors (5,651.7) (5,602.1)
---------------- -----------
Hypothetical Recovery of Unsecured Creditors (%) under
Chapter 7 Liquidation 2.1% 2.9%
Hypothetical Recover of Equity Interests (%) under
Chapter 7 Liquidation 0.0% 0.0%
G-2
NOTES TO LIQUIDATION ANALYSIS
This liquidation analysis (the "Liquidation Analysis") reflects the
Company's and Lazard's estimate of the proceeds that may be realised in a
liquidation of the Company's assets in accordance with Chapter 7 of the U.S.
Bankruptcy Code. These values have not been subject to any review, compilation
or audit by any independent accounting firm. Underlying this Liquidation
Analysis are a number of estimates and assumptions that, although developed and
considered reasonable by the management of the Company and by Lazard, are
inherently subject to significant business, economic and competitive
uncertainties and contingencies beyond the control of Company and its
management, and are thereby subject to change. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE VALUES REFLECTED IN THIS LIQUIDATION ANALYSIS WOULD BE
REALIZED IF THE COMPANY WERE TO UNDERGO SUCH A LIQUIDATION, AND ACTUAL RESULTS
IN A LIQUIDATION COULD VARY MATERIALLY FROM THOSE SHOWN HERE.
1. Assumptions
As the Company is a holding company and its assets consist largely of
direct and indirect investments in its operating subsidiaries in the form of
shareholder loans and share capital, this Liquidation Analysis assumes the
liquidation of these investments and not the liquidation of the operating
companies themselves. In certain cases, these investments are contractually and
structurally subordinated to other claims against the operating assets and
businesses, and would likely receive little or no recovery. This Liquidation
Analysis considers both the possibility of a sale of the assets on a piecemeal
basis and as a combined package, and assumes that the net proceeds would be
similar in both cases. This Liquidation Analysis also considers recent trends in
the market conditions and environment in which these businesses operate.
This Liquidation Analysis contemplates certain negative effects associated
with a Chapter 7 liquidation (as opposed to a Chapter 11 reorganization) on the
ultimate recovery to unsecured creditors. These include: (a) substantial erosion
in the value of assets in the context of the "forced sale" atmosphere that would
prevail in a Chapter 7 case, (b) increased costs and expenses arising from fees
payable to the Chapter 7 trustee and professional advisors to such trustee, and
(c) the adverse impact of negative publicity on the operating companies and on
the saleability of the Company's assets. The Chapter 7 liquidation would also
result in the rejection of all or substantially all of the Company's contracts
and leases which could increase the amount of the General Unsecured Claims
against the Company's estate as contemplated in the Plan. It is also assumed
that, on average, disputed claims and litigation claims would be settled for
higher amounts and proceeds from the disposal of assets would be collected at
lower rates because the Chapter 7 trustee would lack the institutional knowledge
of the facts and circumstances surrounding such claims and assets under
disposal, and no current employees would be available to assist the Chapter 7
trustee in obtaining such knowledge.
This Liquidation Analysis assumes a period of twelve months during which
the liquidation would occur. It is possible that proceeds from the sale of
certain assets would not be distributed immediately following the sale of the
asset but only after resolution of claims and a period of preparation for the
distributions. In the event litigation were necessary to resolve claims asserted
in the Chapter 7 case, the delay could be prolonged and administrative costs
further increased. The effect of these delays and costs have not been
considered. For purposes of this Liquidation Analysis, total proceeds are
assumed to be received at the end of the twelve month period and have been
discounted at a rate of 15%. The amount of proceeds are estimated net of
disposal costs in each case. It is assumed that the Company incurs no capital
gains taxes as a result of the disposal of its assets.
The following notes describe other significant assumptions used in this
Liquidation Analysis:
Note A - Book Values as of September 30, 2002
The book values used in this Liquidation Analysis are unaudited pro forma
book values as of September 30, 2002 and are assumed to be representative of the
Company's unconsolidated assets as of the Effective Date. Values are exchanged
from Euros into U.S. Dollars at a rate of US$0.9968 per (euro)1.0000.
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Note B - Cash
Cash includes projected cash balances as of the Effective Date, including
cash collateral described under Note J below. It is assumed that all cash is
pledged as collateral for building leases and construction projects, and no
portion of the collateralized cash is available for distribution to unsecured
creditors. This Liquidation Analysis assumes no upstreaming of cash generated at
the Company's operating subsidiaries during the liquidation period.
Note C - Intercompany Receivables
Intercompany receivables consist primarily of shareholder loans which were
made to subsidiaries of the Company to fund operations at the operating
subsidiaries and for other corporate purposes. In the case of most receivables
the obligor is a holding company with obligations to parties other than the
Company. The largest receivable in this category is a (euro)6.0 billion loan
receivable from Belmarken. Recovery rates for each intercompany receivable are
based on a case-by-case valuation of the underlying business or asset, on the
relative priority of payment of the intercompany receivable at each entity, and
on the likelihood and difficulty of completing each disposal.
Note D - Investments
Investments consist of shares of various subsidiaries, affiliates and
equity investees of the Company. Book value is shown as "NA" as the only
information available was a negative value. Liquidation values for each
investment are determined based on a case-by-case valuation of each company and
on the likelihood and difficulty of completing each disposal. In certain cases
where the Company advanced loans to a particular subsidiary or affiliate company
in addition to making an equity investment, the equity investment is assumed to
have no value, and value accrues through the Company's (intercompany) loan
receivable.
Note E - Other Receivables and Investments
Other receivables and investments consist of sundry receivables from and
investments in the Company's subsidiaries, affiliated companies, equity
investees and third parties. The estimated recovery rate is 15-30% based on
discussions with the management of the Company regarding likely recoveries.
Note F - Property and Equipment, Net
Property and equipment, net, consists primarily of office equipment,
furniture and fixtures and leasehold improvements of the Company at the holding
company level, and are shown net of depreciation. The assumed recovery rate is
25-35%, consistent with historical market rates for such assets.
Note G - Intangible Assets
Intangible assets consist primarily of unamortized goodwill related to
acquisitions and are assumed to have no realizable value.
Note H - Other Assets
Other assets include sundry affiliate and third-party receivables, prepaid
expenses and value-added tax receivables. The sundry receivables and prepaid
expenses are assumed to be of de minimis value and the value-added tax
receivables are assumed to be 50% recoverable with the remaining 50% offset by
value-added tax payables.
Note I - Liquidation Costs
Sales and disposal costs include marketing and administrative costs and
sales commissions associated with the disposition of the assets, as well as
setup and holding costs associated with the property and equipment. Total costs
are estimated at 12-15% of total cash generated during the liquidation.
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Chapter 7 trustee fees include those fees associated with the appointment
of a Chapter 7 trustee in accordance with Section 326 of the U.S. Bankruptcy
Code. Trustee fees are estimated based on historical experience in other similar
cases and are calculated at 3% of total proceeds generated during the
liquidation.
Chapter 7 professional fees include consulting, legal and accounting fees
and other expenses incurred by professionals employed by the Chapter 7 trustee
during the twelve-month liquidation period. Monthly professional fees are
assumed to be approximately US$250,000 to US$400,000 per month.
It is assumed that liquidation costs would be deducted from the gross
proceeds of the asset disposals.
Note J - Secured Claims
Secured claims consist of claims relating to building leases and
construction projects in progress, and are assumed to be fully secured and paid
in full by the Company's cash deposits. This Liquidation Analysis excludes the
senior secured credit facility which is an obligation of UPC Distribution
Holding BV, an indirect subsidiary of the Company.
Note K - Administrative Claims and Classified Priority Claims
For purposes of this Liquidation Analysis, US$18.0 million of
Administrative Claims and US$3.0 million of Classified Priority Claims are
assumed. The Administrative Claims represent costs incurred during the Company's
Chapter 11 Case, prior to conversion of the Chapter 11 Case to a Chapter 7 case,
including accrued professional fees and other post-petition payables. The
Classified Priority Claims represent specific claims accorded priority under the
U.S. Bankruptcy Code. It is assumed that these claims would be paid in full from
net liquidation proceeds (after liquidation costs) before the balance of those
proceeds would be made available to unsecured claims in accordance with the rule
of absolute priority.
Note L - Unsecured Claims
Unsecured claims include estimates of Allowed Claims relating to the
Critical Creditor Claims, Belmarken Notes Claims, UPC Notes Claims and General
Unsecured Claims. The Critical Creditor Claims are estimated at a maximum value
of US$1.0 million. The estimates of the Belmarken Notes Claims and the UPC Notes
Claims are assumed to be Allowed at the principal amount or accreted value of
those notes as of the Chapter 11 filing date. A total amount of US$143.5 million
was assumed as the maximum amount of the Allowed General Unsecured Claims;
however, the actual amount may be substantially different depending on the
amount of General Unsecured Claims ultimately Allowed by the Court.
2. Conclusion
As this Liquidation Analysis reflects, the Company and Lazard believe that
Holders of the Critical Creditor Claims, the Belmarken Notes Claims (Class 4)
and the UPC Notes Claims and General Unsecured Claims (Class 5) would each
obtain a recovery of no more than approximately 2.8% of the principal amount or
accreted value of their claims in a Chapter 7 liquidation. This recovery to
Holders of the Belmarken Notes Claims is only in respect of their claims against
the Company and does not include recovery from Belmarken Holding BV and from
exercise of their security interests in the common stock of Belmarken Holding BV
and UPC Internet Holding BV. The Company and Lazard also believe that Holders in
Classes 6, 7, 8, 9 and 10 would receive no distribution in a Chapter 7
liquidation. By contrast, under the Plan, (i) Holders of the Belmarken Notes
Claims would receive New UPC Common Stock with a value of approximately 99.0% of
the principal amount of their claims, (ii) Holders of the UPC Notes Claims and
General Unsecured Claims would receive New UPC Common Stock with a value of
approximately 20.9% of the principal amount or accreted value of their claims
and (iii) Holders in Classes 6, 7, 8 and 9 would in the aggregate receive New
UPC Common Stock issued under the Plan worth approximately US$39.5 million.
Holders of Old Other Equity Interests (Class 10) would receive no distribution
under the Plan. These recoveries under the Plan are based on an equity value of
the reorganized Company of US$1.975 billion and are subject to dilution as
provided in the Plan. See "Reorganization Valuation Analysis and Projected
Financial Information--Reorganization Valuation Analysis." The Company and
Lazard believe that Class 1, Class 2 and Class 3 Claims would be unimpaired
under the Plan.
Based on the foregoing, the Company and Lazard believe that the Plan meets
the requirements of Section 1129(a)(7) of the Bankruptcy Code and that each
Holder of an Impaired Claim or Interest will recover at least as much under the
Plan as in a Chapter 7 liquidation.
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