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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 16, 2001
REGISTRATION NO. 333-45378
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE
AMENDMENT NO. 3
TO FORM F-1
ON FORM F-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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GT GROUP TELECOM INC.
(Exact name of Registrant as specified in its charter)
CANADA 4813 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
20 BAY STREET, 7TH FLOOR, TORONTO, ONTARIO, CANADA M5J 2N8 (416) 848-2000
(Address and telephone number of Registrant's principal executive offices)
CT CORPORATION SYSTEM, 111 EIGHTH AVENUE, 13TH FLOOR, NEW YORK, NY 10011
(212) 894-8940
(Name, address, including zip code and telephone number, including area code, of
Agent for Service)
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Copies to:
BRICE T. VORAN, ESQ.
SHEARMAN & STERLING
Commerce Court West
199 Bay Street, Suite 4405
Toronto, Ontario M5L 1E8
(416) 360-8484
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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[GT Group Telecom Logo]
GT GROUP TELECOM INC.
4,198,563 Class B Non-Voting Shares
855,000 Warrants to Purchase Class B Non-Voting Shares
All of our class B non-voting shares and warrants to purchase class B
non-voting shares offered hereby are being offered by shareholders and warrant
holders of GT Group Telecom Inc. (collectively referred to as the selling
shareholders). We will not receive any proceeds from the sale of the shares and
the warrants.
We have been advised by the selling shareholders that they may sell all or a
portion of the shares from time to time on any national securities exchange or
quotation service on which the shares may be listed or quoted at the time of the
sale. The selling shareholders may also make private sales of the shares or the
warrants to purchasers directly. Alternatively, the selling shareholders may
from time to time offer the shares or the warrants through underwriters,
brokers, dealers or agents, who may receive compensation in the form of
underwriting discounts, commissions or concessions.
Our class B non-voting shares are currently quoted on the Nasdaq National
Market under the symbol "GTTLB" and listed on the Toronto Stock Exchange under
the symbol "GTG.B". The warrants are not listed on any exchange.
See "Risk Factors" beginning on page 1 to read about factors you should
consider before buying the class B non-voting shares or the warrants.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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Prospectus dated April 16, 2001.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form F-3 that we
filed with the Securities and Exchange Commission, the SEC, using a "shelf"
registration process. Under this process, the selling shareholders may, from
time to time, sell any combination of the offered securities described in this
prospectus in one or more offerings up to 4,198,563 class B non-voting shares
and up to 855,000 warrants. This prospectus does not contain all of the
information included in the registration statement and the exhibits thereto.
Statements included in this prospectus as to the contents of any contract or
other document that is filed as an exhibit to the registration statement are not
necessarily complete and you should refer to that agreement or document for a
complete description of these matters. You should read both this prospectus and
any prospectus supplement together with the additional information described
below under the heading "Where You Can Obtain More Information About Us."
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. This prospectus is an
offer to sell or to buy only the securities referred to in this prospectus, and
only under circumstances and in jurisdictions where it is lawful to do so. The
information contained in this prospectus and any prospectus supplement is
current only as of the date on the front page of those documents. Neither the
delivery of this prospectus or any prospectus supplement, nor any distribution
of securities made hereunder or thereunder shall under any circumstances create
any implication that there has not been any change in the facts set forth in
this prospectus or the applicable prospectus supplement or in the affairs of
Group Telecom since the date hereof.
WHERE YOU CAN OBTAIN MORE INFORMATION ABOUT US
We are currently subject to the information and periodic reporting
requirements of the Securities Exchange Act of 1934, as amended, and, file
periodic reports and other information with the Commission through its
Electronic Data Gathering, Analysis and Retrieval (or EDGAR) system. Our SEC
filings, including the registration statement, of which this prospectus is a
part, and the exhibits thereto, are available for inspection and copying at the
public reference facilities maintained by the Commission in Room 1024, 450 Fifth
Street, N.W. Washington, D.C. 20549, and the Commission's regional offices
located in New York, New York and Chicago, Illinois. Copies of all or any part
of the registration statement may be obtained from these offices after payment
of fees prescribed by the Commission. Please call the Commission at
1-800-SEC-0330 for further information on the public reference rooms. The
Commission also maintains a Web site at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
As a foreign private issuer, we are exempt from the rules under the
Securities Exchange Act of 1934, as amended, prescribing the furnishing and
content of proxy statements to shareholders. Because we are a foreign private
issuer, we, our directors and our officers are also exempt from the shortswing
profit recovery and disclosure regime of section 16 of the Exchange Act.
The SEC allows us to "incorporate by reference" the information that we
file with it. This means that we can disclose important information to you by
referring you to those documents that are considered part of this prospectus.
The information incorporated by reference is an important part of this
prospectus. Our subsequent filings of similar documents with the SEC will
automatically update and supersede this information. Our SEC file number is
0-30594.
The following documents have been filed with the SEC pursuant to the
Securities Exchange Act of 1934 and are hereby incorporated by reference:
- our annual report on Form 20-F for the fiscal year ended September 30,
2000, filed on February 20, 2001, and
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- our report on Form 6-K, filed on February 6, 2001, which includes our
results for the three months ended December 31, 2000.
All subsequent annual reports filed by us on Form 20-F, Form 40-F or Form
10-K and all subsequent filings on Form 10-Q and Form 8-K pursuant to the
Exchange Act subsequent to the date of this prospectus and before the
termination of the offering shall be deemed to be incorporated by reference and
a part of this prospectus from the date such documents are filed. We may
incorporate by reference any reports submitted by us on Form 6-K by identifying
on such forms that they are being incorporated by reference into this
prospectus.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus has been delivered, on the written or
oral request of such person, a copy of any or all documents referred to above
which have been or may be incorporated by reference in this prospectus (not
including exhibits to such incorporated information that are not specifically
incorporated by reference into such information). Requests for such copies
should be directed to us at the following address: GT Group Telecom Inc., 20 Bay
Street, 7th Floor, Toronto, Ontario, Canada M5J 2N8, Attention: Secretary,
telephone number: (416) 848-2433.
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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY ANY UNITED
STATES FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE QUALIFIED FOR
PUBLIC DISTRIBUTION UNDER THE SECURITIES LAWS OF ANY PROVINCE OR TERRITORY OF
CANADA. THE SECURITIES ARE NOT BEING OFFERED FOR SALE AND MAY NOT BE OFFERED OR
SOLD, DIRECTLY OR INDIRECTLY, IN CANADA OR TO ANY RESIDENT THEREOF EXCEPT IN
ACCORDANCE WITH THE SECURITIES LAWS OF THE PROVINCES AND TERRITORIES OF CANADA.
THE SECURITIES OFFERED HEREBY HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION
FROM THE PROSPECTUS REQUIREMENTS OF THE APPLICABLE CANADIAN PROVINCIAL AND
TERRITORIAL SECURITIES LAWS AND MAY BE SOLD IN CANADA ONLY PURSUANT TO AN
EXEMPTION THEREFROM.
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FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements. These statements relate to future
events or our future financial performance. You can generally identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "plans," "intends," "anticipates," "believes," "estimates,"
"projects," "predicts," "potential," or "continue" or the negative of these
terms or other comparable terminology. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors, including the
risks outlined under "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to differ materially
from any future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, we do not assume and no other
person assumes responsibility for the accuracy and completeness of these
statements. We undertake no obligation to publicly update or revise any
forward-looking information to reflect actual results or changes in assumptions.
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PRESENTATION OF OUR FINANCIAL AND OTHER INFORMATION
Unless we indicate otherwise, financial information in this prospectus has
been prepared in accordance with Canadian generally accepted accounting
principles. Canadian GAAP differs in some respects from U.S. GAAP and thus our
financial statements may not be comparable to the financial statements of U.S.
companies. The principal differences as they apply to us are summarized in the
notes to the audited consolidated financial statements of Group Telecom
incorporated by reference into this prospectus and note 10 to the audited
financial statements of Shaw FiberLink beginning on page F-2.
We present our financial information in Canadian dollars. In this
prospectus, except where we indicate, all dollar amounts are in Canadian
dollars. References to "$" or "Cdn$" are to Canadian dollars and references to
"US$" are to U.S. dollars. This prospectus contains a translation of some
Canadian dollar amounts into U.S. dollars at specified exchange rates solely for
your convenience. Unless we indicate otherwise, U.S. dollar amounts have been
translated from Canadian dollars at US$0.6678 per Cdn$1.00, which was the
inverse of the buying rate for transfers in Canadian dollars as quoted by
Reuters on December 31, 2000.
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RISK FACTORS
An investment in our class B non-voting shares or warrants involves a high
degree of risk. You should carefully consider the risks described below and all
other information contained in this prospectus before purchasing our class B
non-voting shares or warrants.
THE COSTS OF DEPLOYING OUR NETWORK AND EXPANDING OUR BUSINESS MAY EXCEED
THE CAPITAL AVAILABLE TO US. IF THIS HAPPENS, WE MAY HAVE TO DELAY OR ABANDON
OUR BUSINESS PLAN.
We used substantial capital to fund our acquisitions of the businesses of
Shaw FiberLink and Videon FiberLink, our acquisition of the Cable Atlantic
competitive local exchange carrier and commercial telecommunications operations
and our acquisitions from 360networks, and will have significant capital
expenditures, working capital, debt service and cash flow deficits during the
period in which we are expanding our business and deploying our network,
services and systems. The actual amount and timing of our future capital
requirements may differ materially from our estimates as a result of prevailing
economic conditions and financial, business and other factors, many of which are
beyond our control. We cannot assure you that the capital actually required for
this expansion and deployment will not exceed our expectations. If demand in the
targeted markets exceeds current expectations, capital requirements may increase
materially. In addition, we may identify new markets in the future and, as
opportunities develop, we may be required to make additional investments in our
network and facilities or pursue strategic alliances to consummate those
opportunities.
If required, we expect to raise additional capital through the sale of debt
and equity and through vendor financing. We cannot assure you that we will be
able to raise sufficient capital or that such funding will be available on a
timely basis or on terms acceptable to us, if at all. If we fail to raise
additional funds when and if required, we may have to delay or abandon our
planned expansion of our network, services and systems, which could cause us to
lose revenue and would hinder our ability to compete in the telecommunications
industry.
IF WE ARE UNABLE TO NEGOTIATE ACCESS RIGHTS TO THE PROPERTY OF A VARIETY OF
THIRD PARTIES, WE WOULD BE DELAYED IN EXECUTING OUR BUSINESS PLAN.
Most of our target customers are tenants within large buildings. To execute
our business plan, we will need to obtain additional building license agreements
with several different building management companies. We may not be able to
secure additional building license agreements on a timely basis or on acceptable
terms. If we cannot obtain building license agreements, our operating results
will be harmed and we may be required to delay or abandon some of our planned
future expansion.
To build our network, we must obtain rights and other permits, which
include, but are not limited to, rights-to-use underground conduit and aerial
pole space and other rights-of-way from entities such as utilities, railroads,
long distance providers, provincial highway authorities, local governments and
transit authorities. We cannot assure you that we will be successful in either
obtaining or maintaining these permits and rights-of-way on commercially
reasonable terms and conditions. Certain permits and rights-of-way may require
regulatory filings or may be subject to legal challenge by municipal
governments, land and building owners or other third parties. For example, there
is a public notice proceeding that was initiated by Canada's telecommunications
regulatory authority, the Canadian Radio-television and Telecommunications
Commission (commonly known as the "CRTC") in which interested parties were
invited to comment on the terms and conditions of access to municipal rights-
of-way in the city of Vancouver. Loss of substantial permits or rights-of-way or
the failure to enter into or maintain required arrangements could cause us to
lose revenue or abandon certain markets.
If we cannot enter into agreements for access rights or purchase or lease
fiber with accompanying access rights, our business and our operating results
may be harmed and we may be required to delay or abandon some of our business
plan.
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WE ARE DEPENDENT ON OTHER PARTIES IN RESPECT OF THE FIBER WHICH CONSTITUTES
A SIGNIFICANT PART OF OUR NETWORK.
In connection with our acquisition of the business of Shaw FiberLink we
received an indefeasible right to use Shaw FiberLink's fiber for 60 years. Shaw
FiberLink has, in turn, a one-year indefeasible right to use fiber of various
cable companies which are owned by Shaw Communications, renewable annually by
Shaw FiberLink during the term of our indefeasible right to use Shaw FiberLink's
fiber. As a result, in order to have access to the fiber provided by the
indefeasible right to use, we are dependent on Shaw FiberLink's ability to
maintain its indefeasible right to use agreements with the Shaw cable companies.
In addition, the terms of our agreements with Shaw FiberLink, Videon FiberLink,
Cable Atlantic and 360networks provide, and the terms of any similar agreements
we enter into in the future are likely to provide, that our rights under those
agreements are limited if the underlying rights associated with the fiber that
is the subject of the indefeasible rights to use have any limitations or
prohibitions. We entered into performance assurance agreements with Shaw
Communications and Moffat Communications to support our rights under our
agreement with Shaw FiberLink and Videon FiberLink. If we discover that
indefeasible right to use rights are not passed to us as anticipated, or if we,
Shaw FiberLink, Videon FiberLink, Cable Atlantic or 360networks do not obtain
and maintain the necessary underlying rights, or if Shaw Communications or
Moffat Communications do not comply with the performance assurance agreements,
we may not have access to the fiber provided by the indefeasible right to use
agreement and this could substantially impair our ability to carry on business.
SOME OF OUR CUSTOMERS ARE ALSO OUR COMPETITORS AND, GIVEN OUR COMPETITION
WITH THEM, MAY REDUCE THE LEVEL OF BUSINESS THEY DO WITH US.
We provide data services to and derive revenue from other
telecommunications carriers, even though we also compete with some of them for
customers. A large portion of the revenues of the businesses we have recently
acquired are also derived from services to other telecommunications carriers.
These carriers may not wish to use our services to this extent given our
competition with them and they may reduce the level of business they do with us.
WE HAVE EXPERIENCED AND ANTICIPATE THAT WE WILL CONTINUE TO EXPERIENCE NET
LOSSES.
For the three months ended December 31, 2000 and for the year ended
September 30, 2000 we had net losses of $79.3 million and $138.0 million and
negative cash flow from operating activities of $39.1 million and $49.2 million,
respectively. We expect to incur significant additional expenditures in
connection with the development and expansion of our network and service
offerings. As a result, we expect to continue to incur significant future net
losses and negative cash flow. If our revenues do not increase significantly or
the increase in our expenses is greater than expected, we may not achieve or
sustain profitability or generate positive cash flow in the future.
GROUP TELECOM'S LIMITED HISTORY OF OPERATIONS MAY MAKE IT DIFFICULT TO
EVALUATE OUR PROSPECTS.
Group Telecom was incorporated in 1996. Our short operating history permits
us to provide you with only limited operating and financial data which you can
use to evaluate our performance.
IF WE DO NOT CONTINUALLY ADAPT TO TECHNOLOGICAL CHANGE, WE COULD LOSE
CUSTOMERS AND MARKET SHARE.
The telecommunications industry is subject to rapid and significant changes
in technology, and we rely on outside vendors for the development of and access
to new technology. The effect of technological changes on our business cannot be
predicted. We believe our future success will depend, in part, on our ability to
anticipate or adapt to such changes and to offer, on a timely basis, services
that meet customer demands. In addition, we rely on vendors with whom we have
financing agreements to anticipate and adapt to new technology and to make
products that incorporate such technology available to us. We cannot assure you
that we will obtain access to new technology on a
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timely basis or on satisfactory terms. If we fail to obtain new technology, we
may lose customers and market share which could harm our business and operating
results.
OUR SUBSTANTIAL DEBT OBLIGATIONS MAY HINDER OUR GROWTH AND PUT US AT A
COMPETITIVE DISADVANTAGE.
We have a significant amount of debt. As of December 31, 2000, we had
approximately $1,102.3 million of long-term debt outstanding. In addition, we
could incur an additional $482.6 million under our bank facility and our vendor
facilities, including those with Cisco and Lucent, assuming we could incur debt
in compliance with covenants set forth in these facilities. We may need to incur
additional debt in the future. Our substantial debt obligations could have
important consequences to you. For example, they could:
- require us to use a substantial portion of our operating cash flow to
pay interest, which reduces funds available to expand our network and
for other purposes;
- place us at a competitive disadvantage compared to our competitors that
have less debt;
- make us more vulnerable to economic and industry downturns and reduce
our flexibility in responding to changing business and economic
conditions;
- limit our ability to pursue business opportunities; and
- limit our ability to borrow more money for operations or capital in the
future.
A 1 percent interest rate change on our floating interest rate long-term
debt outstanding at December 31, 2000, would have an annual impact of $3.4
million on our interest cost.
WE REQUIRE A SIGNIFICANT AMOUNT OF CASH TO PAY OUR DEBT. IF WE FAIL TO
GENERATE SUFFICIENT CASH FLOW FROM OPERATIONS, WE MAY NEED TO REFINANCE OUR
DEBT, OBTAIN ADDITIONAL FINANCING OR POSTPONE CAPITAL EXPENDITURES.
We cannot assure you that we will generate sufficient cash flow from
operations to make scheduled payments on our debt. Our ability to meet our debt
obligations will depend on whether we can successfully implement our strategy,
as well as on economic, financial, competitive, legal and technical factors.
Some of the factors are beyond our control, such as economic conditions in the
different local markets where we operate or intend to operate, and pressure from
existing and new competitors. If we cannot generate sufficient cash flow from
operations to make scheduled payments on our debt obligations, we may need to
refinance our debt, obtain additional financing, delay planned capital
expenditures or sell assets. Our ability to refinance our debt or obtain
additional financing will depend on, among other things:
- our financial condition at the time;
- restrictions in agreements governing our debt; and
- other factors, including market conditions.
DUE TO RESTRICTIONS IN OUR FINANCING AGREEMENTS, WE MAY NOT BE ABLE TO
OPERATE OUR BUSINESS AS WE DESIRE.
The financing agreements under which our long-term debt was incurred
contain a number of conditions and limitations on the way in which we can
operate our business, including limitations on our ability to raise debt, sell
or acquire assets and pay dividends as well as various covenants that require us
to maintain specific financial ratios. These limitations may force us to pursue
less than optimal business strategies or forego business arrangements which
could have been financially advantageous to us and our shareholders.
Our failure to comply with the covenants and restrictions contained in our
financing agreements could lead to a default under the terms of one of these
agreements. If a default occurs in one of these agreements, the parties to our
other financing agreements could declare all amounts borrowed and all
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amounts due under these other agreements due and payable.
WE FACE POTENTIAL CONFLICTS OF INTEREST CAUSED BY INVESTOR INFLUENCE WHICH
COULD BE DETRIMENTAL TO HOLDERS OF OUR CLASS B NON-VOTING SHARES AND OUR
WARRANTS.
As a result of an amended and restated shareholders agreement entered into
by shareholders on February 16, 2000 then holding approximately 88.0% of our
fully-diluted equity in connection with our acquisition of the business of Shaw
FiberLink, two of our institutional investors (which are affiliates of Goldman
Sachs and CIBC World Markets) and Shaw Communications, were able to nominate a
majority of our directors. As of the date of this prospectus, affiliates of
Goldman Sachs and CIBC World Markets hold approximately 31% of our equity and
are entitled to nominate 4 of 11 directors on our board of directors. In
addition, Shaw Communications holds approximately 24% of our equity and is
entitled to nominate 3 directors on our board of directors. Each of Shaw
Communications and Goldman Sachs has a right to consent to:
- specified major transactions by us, including acquisitions and
investments in excess of $300 million and mergers or business
combinations, for a period of 18 months after February 16, 2000; and
- our annual operating budget, for a period of 24 months after February
16, 2000.
Decisions concerning our operations or financial structure may present
conflicts of interest between these investors, our management and other holders
of our securities. In addition, these investors or their affiliates currently
have significant investments in other telecommunications companies, including
entities that compete with us, and may in the future invest in other entities
engaged in the telecommunications business or in related businesses. Conflicts
may also arise in the negotiation or enforcement of arrangements entered into by
us and entities in which these investors have an interest.
SOME OF OUR COMPETITORS HAVE GREATER FINANCIAL, TECHNICAL AND OTHER
RESOURCES THAN WE DO, AND WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY.
The Canadian telecommunications market is highly competitive. We face, and
expect to continue to face, intense competition in all of our target markets
from the incumbent local exchange carriers, cable companies, competitive long
distance providers, wireless providers, new local exchange carriers, and
resellers. Many of our current and potential competitors, including the Bell
companies, Aliant, BCT.TELUS, AT&T Canada and Call-Net, have longer operating
histories in the telecommunications industry and substantially greater
financial, marketing, technical, personnel, regulatory and other resources,
including greater brand name recognition. The emergence in Canada of a
competitive market for local telecommunications services has resulted in price
competition among market participants, and this pricing pressure may be more
intense than we expect, which could harm our business and our financial
condition. Also, as communications technologies develop, new classes of
competitors will emerge.
OUR BUSINESS STRATEGY DEPENDS ON SECURING AND MAINTAINING INTERCONNECTION
AGREEMENTS WITH OTHER PROVIDERS.
We provide some local services to our customers using facilities that we
lease or purchase from the incumbent local exchange carriers. We must enter into
agreements for the interconnection of our network with the networks of the
incumbent local exchange carriers and other carriers covering each market in
which we intend to offer service. We have entered into interconnection
agreements in a number of jurisdictions. However, we cannot assure you that we
will successfully renegotiate these agreements as they become due to expire, or
negotiate additional agreements as we enter new markets. Although the incumbent
local exchange carriers are not entitled to unjustly discriminate against
telecommunications carriers like us in respect of the rates or services they
provide to us or to disrupt the access of competitors to their respective
facilities, we are vulnerable to changes in our
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lease and interconnection arrangements with the incumbent local exchange
carriers, such as rate increases and changes in rules and policies of the CRTC.
WE DEPEND ON OUR SUPPLIERS OF SWITCHES AND OTHER EQUIPMENT AND MAY
EXPERIENCE DELAYS IN RECEIVING REQUIRED COMPONENTS.
We rely on other companies to supply key components of our network
infrastructure, primarily switching and data routing equipment. These components
are only available in the quantities and quality we require from limited
sources. We may experience delays in receiving components or may not be able to
obtain these components on the scale and within the time frames required by us
at an affordable cost, or at all.
IF OUR BILLING, CUSTOMER SERVICE AND INFORMATION SYSTEMS DO NOT OPERATE AS
WE EXPECT OR IF WE FAIL TO UPGRADE SYSTEMS AS NECESSARY, WE WILL NOT BE ABLE TO
CONDUCT OUR BUSINESS EFFICIENTLY.
Integrated management information and processing systems are vital to our
growth and our ability to monitor costs, process customer orders, bill customers
and operate efficiently. The cost of implementing these systems has been, and we
expect will continue to be, substantial.
We are in the final stages of developing and testing our operational
support system to integrate important facets of our operations. The development
and implementation of this system relies in part on the products and services of
third party vendors, over which we have no control. Unanticipated problems with
our system may harm our business and operating results.
In addition, any of the following developments could harm us:
- our failure to adequately identify and integrate all of our information
and processing needs;
- failure of our processing or information systems to perform as expected;
and
- our failure to upgrade systems as necessary and on a timely basis.
IF WE LOSE KEY PERSONNEL OR ARE UNABLE TO ATTRACT AND RETAIN ADDITIONAL
PERSONNEL, OUR BUSINESS AND OUR PROSPECTS COULD BE HARMED.
We are dependent on the continued service of a small number of key
executives and operations personnel, including Daniel Milliard, our chief
executive officer, Robert Wolfe, our president, Stephen Shoemaker, our chief
financial officer and Eric Demirian, our executive vice president, corporate
development. The loss of services of one or more of our key executives,
particularly Messrs. Milliard, Wolfe, Shoemaker and Demirian, could harm our
business and our prospects. We do not maintain key person life insurance for any
of our executive officers.
REGULATIONS RELATING TO CANADIAN OWNERSHIP AND CONTROL OF OUR VOTING SHARES
PREVENTS A FOREIGN INVESTOR FROM ACQUIRING US, WHICH COULD LIMIT THE VALUE OF
YOUR CLASS B NON-VOTING SHARES AND YOUR WARRANTS TO PURCHASE CLASS B NON-VOTING
SHARES.
As a competitive local exchange carrier, we are subject to regulations
which require that not less than 66 2/3% of our issued and outstanding voting
shares be beneficially owned by "Canadians" (as defined in these regulations).
To ensure compliance with these regulations, we have placed restrictions on the
transfer of our class A voting shares to non-Canadians. These restrictions
effectively limit the number of potential acquirors of our business and
therefore a takeover bid for us is less likely and you are less likely to
receive the change of control premium that generally comes with such bids.
OUR ABILITY TO COMPETE IN THE CANADIAN LOCAL TELECOMMUNICATIONS MARKET IS
SUBJECT TO EXTENSIVE GOVERNMENT REGULATION WHICH MAY BE CHANGED IN A MANNER
HARMFUL TO OUR BUSINESS.
We are subject to regulation by the CRTC pursuant to the provisions of the
Canadian Telecommunications Act. We are also subject to radio spectrum
regulation by the Canadian Federal
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Department of Industry (commonly known as Industry Canada) pursuant to the
provisions of the Radiocommunication Act. Since 1994, the stated policy of the
CRTC has been to recognize the importance of competition in the local switched
services market. As a relatively new entrant into the Canadian
telecommunications market, we benefit from this policy and these decisions.
However, we cannot assure you that the CRTC's policy to foster the development
of competition in the local switched services market will not change or that the
CRTC will react quickly and efficiently to anti-competitive practices or effects
resulting from the dominant position of Canada's incumbent local exchange
carriers. Any change in the CRTC's policies or regulations could harm our
business, operating results and prospects.
CRTC decisions are subject to review and variance by the CRTC at any time.
CRTC decisions can also be appealed to the Canadian Federal Court of Appeal and
may also be challenged by petition to the Federal Cabinet. We cannot assure you
that the local competition decisions of the CRTC, or other decisions relating to
the telecommunications markets in which we compete will not be reviewed and
varied by the CRTC or by the Federal Court or Cabinet on appeal. Any variance of
these decisions or other rules and regulations of the CRTC could harm our
business.
OUR NEED TO COMPLY WITH EXTENSIVE GOVERNMENT REGULATION CAN INCREASE OUR
COSTS AND SLOW OUR GROWTH.
Because we are subject to extensive government regulation, delays in
receiving required regulatory approvals may slow our growth. In addition, the
enactment of new adverse regulations or regulatory requirements may increase our
costs, which could have a harmful effect on us. We also cannot assure you that,
as we expand our business, the CRTC and Industry Canada will continue to grant
us the authority we need to conduct our business or will not take action against
us if we are found to have provided services without obtaining the necessary
authorizations or to have violated other requirements of their rules or orders.
The CRTC, Industry Canada or others could challenge our compliance with
applicable rules and orders, which could cause us to incur substantial legal and
administrative expenses. Lengthy administrative hearings might also delay the
deployment of our network, which could slow our growth.
OUR CLASS B NON-VOTING SHARES HAVE A LIMITED TRADING HISTORY AND THEIR
PRICE MAY BE VOLATILE. WE CANNOT ASSURE YOU THAT OUR SHARE PRICE WILL NOT
DECLINE IN THE FUTURE.
There has only been a public market for our class B non-voting shares since
March 2000. The market price of our class B non-voting shares could be subject
to significant fluctuation. Among the factors that could affect our share price
are:
- quarterly variations in our operating results;
- changes in revenue or earnings estimates or publication of research
reports by analysts;
- strategic decisions by us or our competitors, such as acquisitions or
restructurings or changes in business strategy;
- actions by institutional stockholders;
- speculation in the press or investment community;
- general market conditions; and
- economic factors unrelated to our performance.
Recently, stock markets in the United States have experienced significant
price and volume fluctuations and the market prices of securities of
telecommunications services providers and technology companies, particularly
Internet-related companies, have been highly volatile. Investors may not be able
to resell their class B non-voting shares at or above the current price reported
on the Nasdaq National Market. 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
6
12
a company. The institution of such litigation against us could result in
substantial costs and a diversion of our management's attention and resources,
which could harm our business and financial condition.
WE DO NOT INTEND TO LIST THE WARRANTS ON ANY STOCK EXCHANGE.
The warrants have not been listed on any stock exchange and we do not
intend to list the warrants on any stock exchange in the future. The absence of
a listing on a stock exchange may cause the warrants to trade at a price lower
than the price for the underlying class B non-voting shares that are traded on
the Nasdaq National Market.
SINCE OUR REVENUE IS IN CANADIAN DOLLARS AND MOST OF OUR DEBT IS IN U.S.
DOLLARS, WE ARE SUBJECT TO FLUCTUATIONS IN THE EXCHANGE RATE BETWEEN CANADIAN
AND U.S. DOLLARS.
As of December 31, 2000 we had debt outstanding denominated in U.S. dollars
of approximately US$599.5 million. Since the majority of our revenue is in
Canadian dollars, we are, and will continue to be, exposed to fluctuations in
the exchange rate between Canadian and U.S. dollars and the uncertainty of the
amount of Canadian dollars that will be required to service the principal and
interest payments under our U.S. dollar denominated debt. In order to minimize
these effects, as at December 31, 2000, we had entered into certain cross
currency swaps to hedge approximately 78% of our outstanding U.S. dollar
denominated debt. Based on our December 31, 2000 balances, a 1 percent change in
the foreign currency exchange rate between the Canadian and U.S. dollar would
have an impact of $1.9 million on the unhedged portion of our long-term debt.
Any substantial increase in the U.S. dollar relative to the Canadian dollar
could affect our results of operations and our ability to meet our future
payment obligations on our debt.
IF OUR FORWARD-LOOKING STATEMENTS IN THIS PROSPECTUS ARE INCORRECT, OUR
RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THESE
FORWARD-LOOKING STATEMENTS.
This prospectus contains forward-looking statements. These statements
relate to future events or our future financial performance. You can generally
identify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "plans," "intends," "anticipates," "believes," "estimates,"
"projects," "predicts," "potential," or "continue" or the negative of these
terms or other comparable terminology. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors, including the
risks outlined under "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to differ materially
from any future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, we do not assume and no other
person assumes responsibility for the accuracy and completeness of these
statements.
7
13
USE OF PROCEEDS
All class B non-voting shares and warrants offered hereby are being offered
by the selling shareholders. We will not receive any of the proceeds from the
sale of the class B non-voting shares or the warrants. The class B non-voting
shares offered hereby include up to 4,198,563 class B non-voting shares issuable
upon the exercise of the warrants currently held by the selling shareholders. As
of the date of this prospectus, each warrant entitles the holder thereof to
purchase 4.9106 shares. No consideration will be paid to us by any holder in
connection with the exercise of such holder's warrants.
In February 2000 we sold units, which consisted of our senior discount
notes and these warrants to purchase our class B non-voting shares. Our net
proceeds from the sale of the units were approximately US$436.9 million, after
deducting underwriting discounts and commissions and estimated offering
expenses, of which approximately US$140.0 million was used to fund our
acquisition of the business of Shaw FiberLink.
Consistent with our business strategy, we continually consider acquisition
opportunities that will enhance our business. As of the date of this prospectus,
we have not entered into any definitive agreements to make any acquisitions
except for those discussed herein.
DIVIDEND POLICY
We have not paid any dividends on our class B non-voting shares and do not
intend to pay any dividends on our class B non-voting shares in the foreseeable
future. We currently intend to retain future earnings, if any, to finance the
future growth of our business. In addition, our ability to pay cash dividends is
currently restricted under the terms of financing agreements related to our long
term debt. For a further description of these restrictions, see the description
of our financing arrangements in Item 10.C. of our annual report on Form 20-F,
which is incorporated by reference into this prospectus, and the exhibits
contained in the registration statement of which this prospectus is a part.
Future dividends, if any, will be determined by our board of directors.
8
14
CAPITALIZATION
The following table sets forth our actual capitalization as of December 31,
2000. You should read this table together with the information contained in the
documents incorporated by reference into this prospectus, including our
financial statements and the notes thereto.
DECEMBER 31, 2000
-----------------
ACTUAL
-----------------
(IN THOUSANDS)
Cash and cash equivalents................................... $ 365,960
==========
Long-term debt (including current portion):
Bank facility(1).......................................... $ 99,112
13 1/4% Senior Discount Notes due 2010.................... 692,777
Vendor financing(1)....................................... 239,268
Long-term lease arrangement(2)............................ 60,229
Note payable(3)........................................... 749
Capital leases............................................ 10,123
----------
Total long-term debt................................... 1,102,258
----------
Shareholders' equity
Class A voting shares..................................... 463,480
Class B non-voting shares................................. 496,646
Warrants.................................................. 57,500
Additional paid-in-capital................................ 255
Loans to officers......................................... (3,868)
Deficit................................................... (230,353)
----------
Total shareholders' equity................................ 783,660
----------
Total capitalization................................... $1,885,918
==========
- ---------------
(1)For a description of the terms of the bank facility, the Lucent facility and
the Cisco facility, see the description of our financing arrangements in Item
10.C. of our annual report on Form 20-F, which is incorporated by reference
into this prospectus.
(2)For a description of this long-term lease arrangement, see Item 10.C of our
annual report on Form 20-F, which is incorporated by reference into this
prospectus.
(3)Represents an amount payable pursuant to a right to purchase the building
that houses our central office in Burnaby, British Columbia.
9
15
BUSINESS
You will find a complete description of our business in our most recent
annual report on Form 20-F. Important recent events that have occurred since the
filing of most recent annual report are described in our quarterly and current
reports filed by us with the SEC. See "Where You Can Obtain More Information".
DESCRIPTION OF THE WARRANTS
The warrants that are being offered were issued by Group Telecom on
February 1, 2000. The warrants have been issued pursuant to a warrant agreement
(the "Warrant Agreement"), as of the same date, between Group Telecom and The
Chase Manhattan Bank, as warrant agent (the "Warrant Agent"). On February 1,
2000, Group Telecom issued and sold 855,000 units consisting of US$855,000,000
in stated amount at maturity of 13 1/4% senior discount notes due 2010 and
855,000 warrants to purchase an aggregate 4,198,563 shares. The notes and
warrants became separately transferable in July 2000. As of March 9, 2001,
50,275 of the outstanding warrants have been exercised. If all the 855,000
outstanding warrants were exercised at the Exercise Rate (as defined below) in
effect at the date of this prospectus, such exercise would result in the
issuance by Group Telecom of 4,198,563 class B non-voting shares. The following
summary of certain provisions of the Warrant Agreement does not purport to be
complete and is qualified in its entirety by reference to the provisions of the
Warrant Agreement relating thereto, a copy of which may be obtained upon request
from Group Telecom.
GENERAL
As of the date of this prospectus, each warrant, when exercised, will
entitle the holder thereof to receive 4.9106 class B non-voting shares (the
"Exercise Rate") of Group Telecom at no additional cost to the holder of the
warrant. The warrants became exercisable upon the effectiveness of the shelf
registration statement, of which this prospectus forms a part. Unless earlier
exercised, the warrants will expire on February 1, 2010. The number of class B
non-voting shares issuable upon exercise of a warrant is subject to adjustment
in the circumstances described below under "-- Adjustments."
No service charge will be made for registration of transfer or exchange
upon surrender of any warrant certificate at the office of the Warrant Agent
maintained for that purpose. Group Telecom may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with an registration or transfer or exchange of warrant certificates.
The holders of the warrants have no right to vote on matters submitted to
the shareholders of Group Telecom or to receive notice of meetings of
shareholders or any other rights of shareholders of Group Telecom, including any
right to receive cash dividends. The holders of the warrants have no preemptive
rights and are not entitled to share in the assets of Group Telecom in the event
of the liquidation, dissolution or winding up of Group Telecom's affairs.
EXERCISE
The warrants may be exercised by surrendering to Group Telecom the warrant
certificates evidencing such warrants, if any, with the accompanying form of
election to purchase, properly completed and executed. Upon surrender of the
warrant certificate, the Warrant Agent will deliver or cause to be delivered, to
or upon the written order of such holder, stock certificates representing the
number of class B non-voting shares or other securities or property to which
such holder is entitled under the warrants and Warrant Agreement, including,
without limitation, at Group Telecom's option, any cash payable to adjust for
fractional interests in class B non-voting shares issuable upon such exercise.
If less than all of the warrants evidenced by a warrant certificate are to be
exercised, a new warrant certificate will be issued for the remaining number of
warrants.
10
16
At Group Telecom's option, fractional class B non-voting shares may not be
issued upon exercise of the warrants. If any fraction of a class B non-voting
share would, except for the foregoing provision, be issuable upon the exercise
of any such warrants (or specified portion thereof), Group Telecom will pay an
amount in cash equal to the Current Market Value per class B non-voting share as
determined on the day immediately preceding the date the warrant is presented
for exercise, multiplied by such fraction, computed to the nearest whole cent.
ADJUSTMENTS
The number of class B non-voting shares that may be purchased upon the
exercise of the warrants will be subject to adjustment in certain events
including:
(1) the payment by Group Telecom of dividends or other distributions
on class A voting or class B non-voting shares of Group Telecom payable in
such class A voting or class B non-voting shares or other shares of Group
Telecom's capital stock,
(2) subdivisions, combinations and certain reclassifications of class
A voting or class B non-voting shares,
(3) sales by Group Telecom of class A voting or class B non-voting
shares, or of securities convertible into or exchangeable or exercisable
for, class A voting or class B non-voting shares of the Company at less
than the Current Market Value of such shares (provided that no adjustment
shall be made with respect to our issuance, after the date of the
Indenture, of series B first preference shares to Shaw Communications in
connection with our acquisition of the business of Shaw FiberLink), and
(4) the distribution to all holders of class A voting or class B
non-voting shares of any of Group Telecom's assets, debt securities or any
rights or warrants to purchase securities (excluding those rights and
warrants referred to in clause (3) above and excluding cash dividends or
other cash distributions from current or retained earnings).
In the event of a taxable distribution to holders of class B non-voting
shares which results in an adjustment to the number of class B non-voting shares
or other consideration for which a warrant may be exercised, the holders of the
warrants may, in certain circumstances, be deemed to have received a
distribution subject to United States Federal Income tax as a dividend.
In the case of certain reclassifications, redesignations, reorganizations
or change in the number of outstanding shares of class B non-voting shares or
amalgamations, consolidations or mergers of Group Telecom or the sale of all or
substantially all of the assets of Group Telecom, each warrant shall thereafter
be exercisable for the right to receive the kind and amount of shares of stock
or other securities or property to which such holder would have been entitled as
a result of such amalgamation, consolidation, merger or sale had the warrants
been exercised immediately prior thereto.
AMENDMENT
From time to time, Group Telecom and the Warrant Agent, without the consent
of the holders of the warrants, may amend or supplement the Warrant Agreement
for certain purposes, including, without limitation, curing defects or
inconsistencies or making any change that does not adversely affect the rights
of any holder. Any amendment or supplement to the Warrant Agreement that has an
adverse effect on the interests of the holders of the warrants shall require the
written consent of the holders of a majority of the then outstanding warrants.
The consent of each holder of the warrants affected shall be required for an
amendment pursuant to which the number of class B non-voting shares purchasable
upon exercise of warrants would be decreased (other than pursuant to adjustments
provided in the Warrant Agreement).
11
17
REPORTS
Whether or not required by the rules and regulations of the Commission, so
long as any of the warrants remain outstanding, Group Telecom shall cause copies
of the reports and other documents, which it would have been required to file
with the Commission pursuant to Section 13(a) or 15(d) of the Securities and
Exchange Act if it was subject to those rules, to be filed with the Warrant
Agent and mailed to the holders at their addresses appearing in the register of
warrants maintained by the Warrant Agent.
CERTAIN DEFINITIONS
"Current Market Value" per class B non-voting share or any other security
of Group Telecom at any date means
(1) if the security is not registered under the Exchange Act,
(a) the value of the security, determined in good faith by the
Board of Directors of Group Telecom and certified in a Board resolution
filed with the Warrant Agent, based on the most recently completed
arms-length transaction between Group Telecom and a person other than an
Affiliate of Group Telecom and the closing of which occurs on such date
or shall have occurred with the six-month period preceding such date, or
(b) if no such transaction shall have occurred on such date or
within such six-month period, the fair market value of the security as
determined by a nationally recognized independent financial expert
(provided that, in the case of the calculation of Current Market Value
for determining the cash value of fractional shares, any such
determination within six months that is, in the good faith judgement of
the Board of Directors, a reasonable determination of value, may be
utilized), or
(2)(a) if the security is registered under the Exchange Act, the average
of the daily closing sales prices of the securities for the 20
consecutive days immediately preceding such date, or (b) if the
securities have been registered under the Exchange Act for less than 20
consecutive trading days before such date, then the average of the daily
closing sales prices for all of the trading days before such date for
which closing sales prices are available, in the case of each of (2)(a)
and (2)(b), as certified to the Warrant Agent by the President, the
Chief Executive Officer or the Chief Financial Officer of Group Telecom.
The closing sales price for each such trading day shall be (A) in the
case of a security listed or admitted to trading on any United States
national securities exchange or quotation system, the closing sales
price, regular way, on such day, or if no sale takes place on such day,
the average of the closing bid and asked prices on such day, (B) in the
case of a security not then listed or admitted to trading on any
national securities exchange or quotation system, the last reported sale
price on such day, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day, as reported by a reputable
quotation source designated by Group Telecom, (C) in the case of a
security not then listed or admitted to trading on any national
securities exchange or quotation system and as to which no such reported
sale price or bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported by a
reputable quotation service, or a newspaper of general circulation in
the Borough of Manhattan, City and State of New York, customarily
published on each business day, designated by Group Telecom, or, if
there shall be no bid and asked prices on such day, the average of the
high bid and low asked prices, as so reported, on the most recent day
(not more than 30 days prior to the date in question) for which prices
have been so reported and (D) if there are not bid and asked prices
reported during the 30 days prior to the date in question, the Current
Market Value shall be determined as if the securities were not
registered under the Exchange Act.
12
18
If clause (1) of the preceding paragraph is applicable, the Board of
Directors of Group Telecom is required to select an independent financial expert
not more than five business days following an event requiring a valuation.
Within five days after its selection of the independent financial expert, Group
Telecom must deliver to the Warrant Agent a notice setting forth the name of
such independent financial expert. Group Telecom must use its best efforts
(including by selecting another independent financial expert) to cause the
independent financial expert to deliver to Group Telecom, with a copy to the
Warrant Agent, a value report which states the relevant value of the class B
non-voting shares or warrants or other securities being valued as of the
valuation date and contains a brief statement as to the nature and scope of the
methodologies upon which the determination was made. The Warrant Agent will have
no duty with respect to the value report of any independent financial expert,
except to keep it on file and available for inspection by the holders of the
warrants. The determination of the independent financial expert as to the
relevant value in accordance with the provisions of the warrant agreement will
be conclusive on all persons.
REGISTRATION COVENANT
Group Telecom entered into a registration rights agreement (the "Warrants
Registration Rights Agreement") pursuant to which Group Telecom agreed, for the
benefit of the holders of the warrants, to file with the Commission the shelf
registration statement (the "Class B Registration Statement"), of which this
prospectus forms a part, under the Securities Act relating to the resale of the
warrants and the class B non-voting shares issuable upon the exercise of the
warrants upon the earlier to occur of
(1) the 180th day following the initial public offering of the class B
non-voting shares of Group Telecom; or
(2) December 31, 2001,
and to use its best efforts to cause such registration statement to become
effective within 90 days following its filing.
Group Telecom agreed to use its best efforts to keep the Class B
Registration Statement effective until the earlier to occur of (i) the second
anniversary of the effective date of the registration statement or (ii) such
time as there are no longer outstanding any warrants or class B non-voting
shares issuable upon exercise of the warrants; provided that Group Telecom may
postpone the filing of, or suspend the effectiveness of, any registration
statement or amendment thereto, suspend the use of any prospectus and shall not
be required to amend or supplement the Class B Registration Statement, any
related prospectus or any document incorporated therein by reference in the
event that, and for a period (a "Suspension Period") not to exceed an aggregate
of 60 days,
(1) an event or circumstance occurs and is continuing as a result of
which the Class B Registration Statement, any related prospectus
or any document incorporated therein by reference as then
supplemented or proposed to be filed would, in Group Telecom's
good faith judgment, contain an untrue statement of material fact
or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading, and
(2) Group Telecom determines in its good faith judgment that the
disclosure of such an event at such time would have a material
adverse effect on the business, operations or prospects of Group
Telecom or the disclosure otherwise relates to a material business
transaction that has not yet been publicly disclosed.
13
19
If the Class B Registration Statement is not declared effective by the
earlier to occur of (1) the 270th day following the initial public offering of
the class B non-voting shares of Group Telecom or (2) March 31, 2002, and the
class B non-voting shares are not at that time listed on a stock exchange
prescribed for Canadian income tax purposes, Group Telecom will be required to
make an offer to purchase all of the outstanding warrants at a price at least
equal to the Current Market Value of the warrants.
14
20
SELLING SHAREHOLDERS
All warrants offered hereby by the selling shareholders were originally
issued by Group Telecom as part of a unit which also consisted of our 13 1/4%
senior discount notes. Any class B non-voting shares offered hereby by the
selling shareholders will be issued to the selling shareholders upon the
exercise by the selling shareholders of the warrants held by such selling
shareholder. The following table sets forth certain information that has been
provided to us as of the date hereof by the selling shareholders. Accordingly,
transfers that take place after the date of this prospectus of the warrants and
the underlying class B non-voting shares acquired upon exercise of the warrants
will not be reflected in this table. Information regarding their beneficial
ownership of the class B non-voting shares assumes that all warrants currently
owned by the selling shareholders have been exercised by the selling
shareholders as of the date hereof.
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
AEGON USA Pension Plan 2,000 9,821 * 2,000(9) 9,821 0 *
c/o AEGON USA
4333 Edgewood Road NE
Cedar Rapids, IA 52499-5112
AUSA Life Insurance Company 6,000 29,463 * 6,000(9) 29,463 0 *
c/o AEGON USA
4333 Edgewood Road NE
Cedar Rapids, IA 52499-5112
Life Investors Insurance 2,000 20,870 * 2,000(9) 20,870 0 *
Company of America
c/o AEGON USA
4333 Edgewood Road NE
Cedar Rapids, IA 52499-5112
Veterans Life Insurance Company 4,250 9,821 * 4,250(9) 9,821 0 *
c/o AEGON USA
4333 Edgewood Road NE
Cedar Rapids, IA 52499-5112
AIM High Yield Fund 28,900 141,916 * 28,900 141,916 0 *
c/o AIM Capital Management
11 Greenway Plaza #100
Houston, TX 77046
AIM High Yield Fund II 3,000 32,731 * 3,000 14,731 18,000 *
c/o AIM Capital Management
11 Greenway Plaza #100
Houston, TX 77046
AIM Canadian Bond Fund 100 491 * 100 491 0 *
c/o AIM Capital Management
11 Greenway Plaza #100
Houston, TX 77046
AIM V.I. High Yield Fund 500 2,455 * 500 2,455 0 *
c/o AIM Capital Management
11 Greenway Plaza #100
Houston, TX 77046
Shell Canada Pension Trust 2,000 9,821 * 2,000 9,821 0 *
c/o Altamira Management Limited
The Exchange Tower
130 King Street West, Suite 900
Toronto, Ontario
Canada M5X 1K9
15
21
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Altamira Balanced Fund 400 1,964 * 400 1,964 0 *
c/o Altamira Management Limited
The Exchange Tower
130 King Street West, Suite 900
Toronto, Ontario
Canada M5X 1K9
Altamira Growth and Income Fund 500 2,455 * 500 2,455 0 *
c/o Altamira Management Limited
The Exchange Tower
130 King Street West, Suite 900
Toronto, Ontario
Canada M5X 1K9
Altamira High Yield Bond Fund 1,200 5,892 * 1,200 5,892 0 *
c/o Altamira Management Limited
The Exchange Tower
130 King Street West, Suite 900
Toronto, Ontario
Canada M5X 1K9
Ares Leveraged Investment 9,800 48,123 * 9,800 48,123 0 *
Fund II, L.P.
1999 Avenue of the Stars
Suite 1900
Los Angeles, CA 90067
Ares Leveraged Investment 4,450 21,852 * 4,450 21,852 0 *
Fund, L.P.
1999 Avenue of the Stars
Suite 1900
Los Angeles, CA 90067
AXP Variable Portfolio -- 750 3,682 * 750 3,682 0 *
Managed Fund
c/o American Express Financial
Corporation
50592 AXP Financial Center
Minneapolis, MN 55474
AXP Variable Portfolio -- 4,110 20,182 * 4,110 20,182 0 *
Extra Income Fund
c/o American Express Financial
Corporation
50592 AXP Financial Center
Minneapolis, MN 55474
High Yield Portfolio 20,915 102,705 * 20,915 102,705 0 *
c/o American Express Financial
Corporation
50592 AXP Financial Center
Minneapolis, MN 55474
Total Return Portfolio 275 1,350 * 275 1,350 0 *
c/o American Express Financial
Corporation
50592 AXP Financial Center
Minneapolis, MN 55474
16
22
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
American Express Retirement Plan 300 1,473 * 300 1,473 0 *
- -- High Yield Fixed Income
c/o American Express Asset
Management Group
50189 AXP Financial Center
Minneapolis, MN 55474
BMO CBO Portfolio G7117 4,750 23,325 * 4,750 23,325 0 *
c/o Bank of Montreal
First Canadian Place, 10th Floor
Toronto, Ontario
Canada M5X 1A1
Capital Guardian U.S. 8,500 41,740 * 8,500 41,740 0 *
Fixed-Income
Master Fund
c/o Capital International, Inc.
11100 Santa Monica Blvd.,
15th Floor
Los Angeles, CA 90025
Capital Guardian U.S. High-Yield 7,000 34,374 * 7,000 34,374 0 *
Fixed Income Fund
c/o Capital International, Inc.
11100 Santa Monica Blvd., 15th
Floor
Los Angeles, CA 90025
Capital Guardian Global 975 4,787 * 975 4,787 0 *
High-Yield
Fixed Income Fund
Semi-Monthly Valued
c/o Capital International, Inc.
11100 Santa Monica Blvd., 15th
Floor
Los Angeles, CA 90025
Capital International Global 500 2,455 * 500 2,455 0 *
High Yield Fund
c/o Capital International, Inc.
11100 Santa Monica Blvd., 15th
Floor
Los Angeles, CA 90025
American High-Income Trust 22,525 110,611 * 22,525 110,611 0 *
c/o Capital Research &
Management Company
135 South State College Blvd
Brea, California 92821
The Bond Fund of America, Inc. 9,500 46,650 * 9,500 46,650 0 *
c/o Capital Research &
Management Company
135 South State College Blvd
Brea, California 92821
The Income Fund of America, Inc. 24,750 121,537 * 24,750 121,537 0 *
c/o Capital Research &
Management Company
135 South State College Blvd
Brea, California 92821
17
23
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Capital World Bond Fund, Inc. 1,000 4,910 * 1,000 4,910 0 *
c/o Capital Research &
Management Company
135 South State College Blvd
Brea, California 92821
American Variable Insurance 2,250 11,048 * 2,250 11,048 0 *
Series -- Asset Allocation
Fund
c/o Capital Research &
Management Company
135 South State College Blvd
Brea, California 92821
American Variable Insurance 2,000 9,821 * 2,000 9,821 0 *
Series -- Bond Fund
c/o Capital Research &
Management Company
135 South State College Blvd
Brea, California 92821
American Variable Insurance 6,500 31,918 * 6,500 31,918 0 *
Series -- High Yield Bond Fund
c/o Capital Research &
Management Company
135 South State College Blvd
Brea, California 92821
CIBC World Markets Corp.(2) 8,455 41,519 * 8,455 41,519 0 *
425 Lexington Avenue
New York, NY 10017
Signature High Income Fund 4,050 19,887 * 4,050 19,887 0 *
c/o CI Mutual Funds
151 Yonge Street, 8/F
Toronto, Ontario
Canada M5C 2W7
Signature Corporate Bond Fund 700 3,437 * 700 3,437 0 *
c/o CI Mutual Funds
151 Yonge Street, 8/F
Toronto, Ontario
Canada M5C 2W7
Insight Canadian High Yield 100 491 * 100 491 0 *
Income Pool
c/o CI Mutual Funds
151 Yonge Street, 8/F
Toronto, Ontario
Canada M5C 2W7
Keystone High Income Fund 500 2,455 * 500 2,455 0 *
c/o CI Mutual Funds
151 Yonge Street, 8/F
Toronto, Ontario
Canada M5C 2W7
DLJ High Yield Bond Fund 6,750 33,146 * 6,750 33,146 0 *
c/o Custodial Trust Co.
101 Carnegie Center
Princeton, NJ 08540
18
24
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Triax Diversified High Yield 10,650 52,297 * 10,650 52,297 0 *
Trust
c/o Deans Knight Capital
Management
999 West Hastings Street Suite
730
Vancouver, B.C.
Canada V6C 2W2
West Fraser Timber 500 2,455 * 500 2,455 0 *
c/o Deans Knight Capital
Management
999 West Hastings Street Suite
730
Vancouver, B.C.
Canada V6C 2W2
Kingsway Reinsurance (Bermuda) 650 3,191 * 650 3,191 0 *
Limited
c/o Deans Knight Capital
Management
999 West Hastings Street Suite
730
Vancouver, B.C.
Canada V6C 2W2
DFC Active Fixed Income Fund 2,550 12,522 * 2,550 12,522 0 *
c/o Deans Knight Capital
Management
999 West Hastings Street Suite
730
Vancouver, B.C.
Canada V6C 2W2
Navigator Canadian Income Fund 650 3,191 * 650 3,191 0 *
c/o Deans Knight Capital
Management
999 West Hastings Street Suite
730
Vancouver, B.C.
Canada V6C 2W2
Falcon Bridge Bond Fund #2 1,750 8,593 * 1,750 8,593 0 *
c/o Deans Knight Capital
Management
999 West Hastings Street Suite
730
Vancouver, B.C.
Canada V6C 2W2
Deans Knight Bond Fund 8,000 39,284 * 8,000 39,284 0 *
c/o Deans Knight Capital
Management
999 West Hastings Street
Suite 730
Vancouver, B.C., CanadaV6C 2W2
Colonial First State North 1,900 9,330 * 1,900 9,330 0 *
American High Yield Fund
c/o Deans Knight Capital
Management
999 West Hastings Street Suite
730
Vancouver, B.C.
Canada V6C 2W2
19
25
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Eaton Vance High Income 13,900 68,257 * 13,900(10) 68,257 0 *
Portfolio
c/o Eaton Vance Management
High Yield Group
255 State Street
Boston, MA 02109
Eaton Vance Income Fund of 5,650 27,744 * 5,650(11) 27,744 0 *
Boston
c/o Eaton Vance Management
High Yield Group
255 State Street
Boston, MA 02109
First Investors Fund for Income, 3,500 17,187 * 3,500 17,187 0 *
Inc.
95 Wall Street, 22nd Floor
New York, NY 10005
First Investors Special Bond 250 1,227 * 250 1,227 0 *
Fund, Inc.
95 Wall Street, 22nd Floor
New York, NY 10005
Primus Multi-Sector Credit 1,500 7,365 * 1,500 7,365 0 *
Master Fund, Inc.(3)
c/o Goldman, Sachs & Co.
85 Broad Street
New York, N.Y. 10004
Guardian Life Insurance Co/ 8,000 39,284 * 8,000 39,284 0 *
High Yield Securities
c/o Guardian Life Insurance Co.
of America
7 Hanover Square/20-D
New York, NY 10004
Guardian High Yield Bond Fund 2,100 10,312 * 2,100 10,312 0 *
c/o Guardian Life Insurance Co.
of America
7 Hanover Square/20-D
New York, NY 10004
Guardian VC High Yield Bond Fund 900 4,419 * 900 4,419 0 *
c/o Guardian Life Insurance Co.
of America
7 Hanover Square/20-D
New York, NY 10004
ING Funds Trust -- ING High 500 2,455 * 500 2,455 0 *
Yield Bond Fund
c/o ING Funds Trust
1475 Dunwoody Drive
West Chester, PA 19380
INVESCO Variable Investment Fund 400 1,964 * 400 1,964 0 *
Inc. -- High Yield Fund
7800 E. Union Avenue, Suite 501
Denver, CO 80237
INVESCO Bond Funds, Inc. -- 5,600 27,499 * 5,600 27,499 0 *
High Yield Fund
7800 E. Union Avenue, Suite 501
Denver, CO 80237
20
26
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
John Hancock High Income Account 200 982 * 200 982 0 *
101 Huntington Avenue
Boston, MA 02199
SG/Russell Funds PLC 65 319 * 65 319 0 *
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
City of New York Employees 2,020 9,919 * 2,020 9,919 0 *
Ret. Sys Fix Account
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
Souther Company Strategic Yield 640 3,142 * 640 3,142 0 *
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
BP Amoco Global Strategic Yield 185 908 * 185 908 0 *
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
HSBC Republic Investments 5 24 * 5 24 0 *
Limited
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
AGF High Yield Fund 215 1,055 * 215 1,055 0 *
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
Felra & Ufcw Pension Fund 1,295 6,359 * 1,295 6,359 0 *
High Yield
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
Gen Retirement Sys for City of 135 662 * 135 662 0 *
Detroit
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
Lazard Strategic Yield Portfolio 775 3,805 * 775 3,805 0 *
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
21
27
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Lazard Global Strategic Yield 290 1,424 * 290 1,424 0 *
Fund
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
Triax Strategic Yield Management 65 319 * 65 319 0 *
World SY Fund
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
Lazard High Yield Portfolio 1,160 5,696 * 1,160 5,696 0 *
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
Lazard Asset Management 350 1,718 * 350 1,718 0 *
Investment Trust
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
Frank Russell Investment Mgt 35 171 * 35 171 0 *
Fixed Income
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
Frank Russell Investment Mgt 40 196 * 40 196 0 *
Multi Strategy
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
Lazard Freres Global Strategic 225 1,104 * 225 1,104 0 *
Yield
c/o Lazard Asset Management
30 Rockefeller Plaza,
49(th) Floor
New York, NY 10112-6300
Lutheran Brotherhood High Yield 7,500 36,829 * 7,500 36,829 0 *
Fund RF06
c/o Lutheran Brotherhood
625 Fourth Avenue South
Minneapolis, MN 55415
LB Series Fund, Inc. High Yield 13,500 66,293 * 13,500 66,293 0 *
Portfolio RF03
c/o Lutheran Brotherhood
625 Fourth Avenue South
Minneapolis, MN 55415
22
28
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Atlas Canadian High Yield Bond 3,000 14,731 * 3,000 14,731 0 *
Fund
c/o Merrill Lynch Investment
Managers
P.O. Box 9011
Princeton, NJ 08543-9011
Merrill Lynch Variable Series 7,750 38,057 * 7,750 38,057 0 *
Funds, Inc. High Current Income
Fund
c/o Merrill Lynch Investment
Managers
P.O. Box 9011
Princeton, NJ 08543-9011
Corporate High Yield Fund III, 7,000 34,374 * 7,000 34,374 0 *
Inc.
c/o Merrill Lynch Investment
Managers
P.O. Box 9011
Princeton, NJ 08543-9011
Corporate High Yield Fund II, 1,500 7,365 * 15,000 7,365 0 *
Inc.
c/o Merrill Lynch Investment
Managers
P.O. Box 9011
Princeton, NJ 08543-9011
Corporate High Yield Fund, Inc. 4,500 22,097 * 4,500 22,097 0 *
c/o Merrill Lynch Investment
Managers
P.O. Box 9011
Princeton, NJ 08543-9011
MFS Series III: MFS High Yield 750 3,682 * 750 3,682 0 *
Opportunities Fund
c/o MFS Investment Management
500 Boylston Street
Boston, MA 02116
MFS/Sun Life High Yield Series 2,900 14,240 * 2,900 14,240 0 *
c/o MFS Investment Management
500 Boylston Street
Boston, MA 02116
MFS High Yield Variable Account 1,050 5,156 * 1,050 5,156 0 *
c/o MFS Investment Management
500 Boylston Street
Boston, MA 02116
MFS Fund: VS High Yield Bond Fund 100 491 * 100 491 0 *
c/o MFS Investment Management
500 Boylston Street
Boston, MA 02116
MFS High Income Fund 11,625 57,085 * 11,625 57,085 0 *
c/o MFS Investment Management
500 Boylston Street
Boston, MA 02116
MFS High Yield Fund 25 122 * 25 122 0 *
c/o MFS Investment Management
500 Boylston Street
Boston, MA 02116
23
29
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
MFS Meridian VS High Yield Fund 2,525 12,399 * 2,525 12,399 0 *
c/o MFS Investment Management
500 Boylston Street
Boston, MA 02116
MFS High Income Series 550 2,700 * 550 2,700 0 *
c/o MFS Investment Management
500 Boylston Street
Boston, MA 02116
MFS Institutional Advisors, 475 2,332 * 475 2,332 0 *
Inc.(4)
500 Boylston Street
Boston, MA 02116
MAS High Yield Portfolio 12,000 58,927 * 12,000 58,927 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
University of Pennsylvania High 2,550 12,522 * 2,550 12,522 0 *
Yield
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
Multi-Asset Class Portfolio 140 687 * 140 687 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
Offshore Leveraged Fixed Income 2,500 12,276 * 2,500 12,276 0 *
Fund Ltd.
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
High Yield Portfolio 1,850 9,084 * 1,850 9,084 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
Morgan Stanley SICAV High Yield 4,290 21,066 * 4,290 21,066 0 *
Bond Fund
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
Morgan Stanley Global 240 1,178 * 240 1,178 0 *
Opportunity Bond Fund, Inc.
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
24
30
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
MS High Yield Fund c/o Morgan 2,145 10,533 * 2,145 10,533 0 *
Stanley Dean Witter Investment
Management
One Tower Bridge
West Conshohocken, PA 19428
Van Kampen Worldwide High Income 950 4,665 * 950 4,665 0 *
Fund
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
SunAmerica Series Trust 700 3,437 * 700 3,437 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
Van Kampen High Yield & Total 375 1,841 * 375 1,841 0 *
Return Fund
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
MSUF -- High Yield Portfolio 650 3,191 * 650 3,191 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
Manufacturers Life Insurance 2,640 12,963 * 2,640 12,963 0 *
Company of New York
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
Forthought Life Insurance 1,800 8,839 * 1,800 8,839 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
Risk Capital Reinsurance 400 1,964 * 400 1,964 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
MS Monthly Income Fund (Wako) 3,400 16,696 * 3,400 16,696 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
GE Investment Management 375 1,841 * 375 1,841 0 *
Incorporation
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
25
31
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
ITM Worldwide High Income Fund 575 2,823 * 575 2,823 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
MSDW SICAV European High Yield 5,000 24,553 * 5,000 24,553 0 *
Fund
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
The University of Chicago 475 2,332 * 475 2,332 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
LGT Capital Invest Ltd of Grand 560 2,749 * 560 2,749 0 *
Cayman
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
Gemini High Yield 500 2,455 * 500 2,455 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
SBLI High Yield 535 2,627 * 535 2,627 0 *
c/o Morgan Stanley Dean Witter
Investment Management
One Tower Bridge
West Conshohocken, PA 19428
The Northwestern Mutual Life 2,100 10,312 * 2,100 10,312 0 *
Insurance Company(5)
720 East Wisconsin Avenue
Milwaukee, WI 53202
Northwestern Mutual Series Fund, 1,650 8,102 * 1,650 8,102 0 *
Inc.(6)
720 East Wisconsin Avenue
Milwaukee, WI 53202
Mason Street Funds, Inc.(7) 500 2,455 * 500 2,455 0 *
720 East Wisconsin Avenue
Milwaukee, WI 53202
OZ Master Fund, Ltd. 48,500 238,164 * 48,500 238,164 0 *
9 West 57th Street
New York, NY 10019
OZF Credit Opportunities Master 3,000 14,731 * 3,000 14,731 0 *
Fund, Ltd.
9 West 57th Street
New York, N.Y. 10019
26
32
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Pacific Life Insurance Company 3,750 18,414 * 3,750 18,414 0 *
700 Newport Center Drive
2nd Floor -- Securities
Operations
Newport Beach, CA 92660
Phoenix Goodwin High Yield Fund 5,450 26,762 * 5,450 26,762 0 *
c/o Phoenix Investment Partners
56 Prospect Street
Hartford, CT 06115
Phoenix Goodwin Multi-Sector 4,000 19,642 * 4,000 19,642 0 *
Fixed Income Fund
c/o Phoenix Investment Partners
56 Prospect Street
Hartford, CT 06115
Phoenix Edge Multi Sector Fixed 3,000 14,731 * 3,000 14,731 0 *
Income Fund
c/o Phoenix Investment Partners
56 Prospect Street
Hartford, CT 06115
The Prudential Series Fund, Inc., 6,725 33,023 * 6,725 33,023 0 *
High Yield Bond Portfolio
c/o Prudential Investments
Two Gateway Center, 3rd Floor
Newark, NJ 07102
Prudential High Yield Fund, Inc. 13,825 68,489 * 13,825 67,889 600 *
c/o Prudential Investments
Two Gateway Center, 3rd Floor
Newark, NJ 07102
Prudential High Yield Total 1,170 8,545 * 1,170 5,745 2,800 *
Return Fund, Inc.
c/o Prudential Investments
Two Gateway Center, 3rd Floor
Newark, NJ 07102
The Prudential Insurance Company 6,520 32,017 * 6,520 32,017 0 *
of America
c/o Prudential Investments
Two Gateway Center, 3rd Floor
Newark, NJ 07102
The Prudential Life Insurance 260 1,276 * 260 1,276 0 *
Company of Arizona
c/o Prudential Investments
Two Gateway Center, 3rd Floor
Newark, NJ 07102
PW Managed High Yield Plus Fund 7,750 38,057 * 7,750 38,057 0 *
c/o Mitchell Hutchins
51 West 52nd Street, 21st Floor
New York, NY 10019
Smith Barney Diversified 2,750 13,504 * 2,750 13,504 0 *
Strategic Income Fund
388 Greenwich Street, 23rd Floor
New York, NY 10013
27
33
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Greenwich St. Series -- 85 417 * 85 417 0 *
Diversified Strategic Income
Portfolio
388 Greenwich Street, 23rd Floor
New York, NY 10013
Global Horizons: Diversified 50 245 * 50 245 0 *
Strategic Income
388 Greenwich Street, 23rd Floor
New York, NY 10013
Smith Barney High Income Fund 5,215 25,608 * 5,215 25,608 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013
High Income Opportunity Fund, 2,490 12,227 * 2,490 12,227 0 *
Inc.
388 Greenwich Street, 23rd Floor
New York, NY 10013
Managed High Income Fund 1,500 7,365 * 1,500 7,365 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013
Smith Barney Balanced Fund 740 3,633 * 740 3,633 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013
SB/Travelers High Income 695 3,412 * 695 3,412 0 *
Portfolio
388 Greenwich Street, 23rd Floor
New York, NY 10013
Smith Barney USA High Yield Fund 230 1,129 * 230 1,129 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013
Zenix Income Fund 495 2,430 * 495 2,430 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013
Spinnaker Offshore Ltd. 2,000 9,821 * 2,000 9,821 0 *
c/o ING Ghent Asset Management
LLC
230 Park Avenue
New York, NY 10169
The Surdna Foundation 612 3,005 * 612 3,005 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
UMASS Memorial Health Care, Inc. 175 859 * 175 859 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
New Century Energies Inc. 1,050 5,156 * 1,050 5,156 0 *
Master Retirement Trust
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
The Havican Insurance Co. 325 1,595 * 325 1,595 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
28
34
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Father Flanagans Boys Home 475 2,332 * 475 2,332 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Ford Motor Co. 7,625 37,443 * 7,625 37,443 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Retirement Plan for the Employees 2,050 10,066 * 2,050 10,066 0 *
of Texas Utilities Co. System
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Bell Atlantic Master Trust 10,300 50,579 * 10,300 50,579 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Standish World High Yield 575 2,823 * 575 2,823 0 *
Portfolio
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Multi-Style, Multi-Manager Funds 1,698 8,338 * 1,698 8,338 0 *
PLC-High Yield Fund
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
MAFCO Holdings Master Trust 295 1,448 * 295 1,448 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Pneumo Abex Corp Retirement 165 810 * 165 810 0 *
Income Master Trust
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
PCFG Long Term Investment Co. 840 4,124 * 840 4,124 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Worcester Memorial Hospital, Inc. 175 859 * 175 859 0 *
Retirement Plan
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Holy Cross Health System Corp. 975 4,787 * 975 4,787 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Holy Cross Employees Retirement 625 3,069 * 625 3,069 0 *
Trust
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
29
35
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Fieldcrest Cannon Inc. 400 1,964 * 400 1,964 0 *
Retirement Plan for Salaried
Employees
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Fieldcrest Cannon Inc. 150 736 * 150 736 0 *
Retirement Plan for Hourly
Employees
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
William Penn Foundation 1,075 5,278 * 1,075 5,278 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Northeastern University 925 4,542 * 925 4,542 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
The Board of Pensions of the 2,825 13,872 * 2,825 13,872 0 *
Presbyterian Church (USA)
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Wellesley College Endowment 600 2,946 * 600 2,946 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Frank Russell Insurance Funds -- 365 1,792 * 365 1,792 0 *
Core Bonds
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Emerson Electric Co. Retirement 1,100 5,402 * 1,100 5,402 0 *
Master Trust
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Frank Russell -- Fixed III 1,200 5,892 * 1,200 5,892 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
Frank Russell -- Multi Strategy 1,475 7,243 * 1,475 7,243 0 *
Bond
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
AT & T Long Term Investment Trust 3,875 19,028 * 3,875 19,028 0 *
c/o Standish, Ayer & Wood
One Financial Center
Boston, MA 02111
30
36
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
GM Employers Domestic Group 2,000 9,821 * 2,000 9,821 0 *
Pension Trust
c/o State Street Bank and Trust
1776 Heritage Drive
N. Quincy, MA 02171
Stein Roe High Yield Fund 1,750 8,593 * 1,750 8,593 0 *
c/o Stein, Roe & Farnham
1 South Wacker Drive
Chicago, IL 60606
The Sumitomo Trust & 575 2,823 * 575 2,823 0 *
Banking Co. Ltd.
c/o Sumitomo Trust &
Banking Co. (USA)
527 Madison Avenue
New York, NY 10022
Sun America Inc. 38,000 186,602 * 38,000 186,602 0 *
1 Sun America Center
Los Angeles, CA 90025
Sun America High Income Fund 1,500 7,366 * 1,500 7,366 0 *
733 3rd Avenue
New York, NY 10017
Sun America Series Trust High 2,250 11,048 * 2,250 11,048 0 *
Yield Portfolio
733 3rd Avenue
New York, NY 10017
TCW Group, Inc. 81,749 401,436 * 81,749 401,436 0 *
865 South Figueroa Street,
21st Floor Los Angeles, CA 90017
TD Securities (USA), Inc. 19,325 94,897 * 19,325 94,897 0 *
31 West 52nd Street
New York, NY 10019-6101
USAA High Yield Opportunities 2,750 324,504 * 2,750 13,504 311,000 *
Fund
c/o State Street Corporation/
USAA Fund Group
1776 Heritage Drive
North Quincy, MA 02171
Van Kampen High Income Trust 1,260 6,187 * 1,260 6,187 0 *
c/o Van Kampen Investments, Inc.
1 Parkview Plaza
Oakbrook Terrace, IL 60181
Van Kampen Trust, on behalf of 5,270 25,878 * 5,270 25,878 0 *
its series Van Kampen High Yield
Fund
c/o Van Kampen Investments, Inc.
1 Parkview Plaza
Oakbrook Terrace, IL 60181
Van Kampen Income Corporate Bond 12,010 58,976 * 12,010 58,976 0 *
Fund
c/o Van Kampen Investments, Inc.
1 Parkview Plaza
Oakbrook Terrace, IL 60181
31
37
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Van Kampen High Income Trust II 960 4,714 * 960 4,714 0 *
c/o Van Kampen Investments, Inc.
1 Parkview Plaza
Oakbrook Terrace, IL 60181
Waddell & Reed Advisors Fund, 6,250 30,691 * 6,250 30,691 0 *
Inc. -- High Income Fund
c/o Waddell & Reed
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
Waddell & Reed Advisors Fund, 2,250 11,048 * 2,250 11,048 0 *
Inc. -- High Income Fund II
c/o Waddell & Reed
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
Target/United Funds, Inc. -- 1,000 4,910 * 1,000 4,910 0 *
High Income Portfolio
c/o Waddell & Reed
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
Agway Employees Retirement Plan 750 3,682 * 750 3,682 0 *
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
Housing Authority Risk Retention 85 417 * 85 417 0 *
Group
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
Illinois Municipal Retirement 500 2,455 * 500 2,455 0 *
Fund
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
High Yield Bond Portfolio, a 180 883 * 180 883 0 *
series of John Hancock Variable
Series Trust
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
Lexmark International Group, Inc. 260 1,276 * 260 1,276 0 *
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
32
38
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
Teachers' Retirement System of 750 3,682 * 750 3,682 0 *
Louisiana
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
North American Security Life 150 736 * 150 736 0 *
Series Trust Investment Quality
Bond
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
The John & Mary R. Markle 100 491 * 100 491 0 *
Foundation
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
Oregon Public Retirement Fund 1,000 4,910 * 1,000 4,910 0 *
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
Multi-Managed Income Portfolio 15 73 * 15 73 0 *
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
Multi-Managed Income/ Equity 20 98 * 20 98 0 *
Portfolio
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
Multi-Managed Growth Portfolio 20 98 * 20 98 0 *
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
Multi-Managed Moderate Growth 25 122 * 25 122 0 *
Portfolio
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
State Boston High Yield Plus 500 2,455 * 500 2,455 0 *
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
33
39
BEFORE THE OFFERING AFTER THE OFFERING
-------------------------------------- ---------------------------
NUMBER OF
CLASS B PERCENT OF CLASS B NUMBER OF PERCENT OF
NON- CLASS B NON-VOTING CLASS B CLASS B
NUMBER OF VOTING NON-VOTING WARRANTS SHARES NON-VOTING NON-VOTING
WARRANTS SHARES SHARES BEING BEING SHARES SHARES
NAME OWNED OWNED OUTSTANDING(1) OFFERED OFFERED OWNED OUTSTANDING(1)
- ---- --------- --------- -------------- -------- ---------- ---------- --------------
WTC-CIF II Core Bond Plus/ 25 122 * 25 122 0 *
High Yield Plus
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
SBL Fund Series K 40 196 * 40 196 0 *
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
Anchor Series High Yield Fund 100 491 * 100 491 0 *
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
Anchor Series Aggressive 100 491 * 100 491 0 *
Multi-Asset
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
The High Yield Plus Fund 850 4,174 * 850 4,174 0 *
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
New England Zenith 75 368 * 75 368 0 *
Balanced Series
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
Tate & Lyle Reinsurance Limited 100 491 * 100 491 0 *
High Yield
c/o Wellington Management
Company, LLP
75 State Street
Boston, MA 02109
All other warrant holders 115,751 568,406 1.37% 115,751 568,406 0 *
combined(8)
- ---------------
* Less than 1.0%
(1) Based on the 41,352,643 class B non-voting shares that were issued and
outstanding as of March 15, 2001. All shares issuable upon exercise of the
currently outstanding warrants are deemed outstanding for the purpose of
calculating the percentage ownership of the person holding such Warrants
but are not deemed outstanding for calculating the percentage ownership of
any other person.
(2) To our knowledge, as of the date of this prospectus, an affiliate of CIBC
World Markets Inc. beneficially owns more than 5% of our issued and
outstanding class A voting shares. The Canadian Imperial Bank of Commerce,
which is also an affiliate of this selling shareholder, acted as lead
arranger and administrative agent under our bank facility. See the
description of our
34
40
financing arrangements in Item 10.C. of our annual report on Form 20-F, which is
incorporated by reference into this prospectus. In addition, in the ordinary
course of its business, this selling shareholder and its affiliates have engaged
in, and may in the future engage in, investment banking transactions
with us.
(3) An affiliate of Goldman, Sachs & Co. indirectly holds more than a 5%
interest in this selling shareholder. This affiliate of Goldman, Sachs &
Co. has no control over the warrants and underlying class B non-voting
shares being offered by this selling shareholder. See Item 7 and Item 10.C.
of our annual report on Form 20-F, which is incorporated by reference into
this prospectus, for a description of certain material relationships that
this affiliate has had with us within the past three years. In addition, in
the ordinary course of its business, this selling shareholder and its
affiliates have engaged in, and may in the future engage in, investment
banking transactions with us.
(4) Of which, 200 warrants are held for its Endeavor High Yield Fund, 175
warrants are held for its Members High Income Fund and 100 warrants are
held for its Jefferson Pilot Variable High Yield Fund.
(5) These warrants are held for its Group Annuity Separate Account.
(6) These warrants are held for its High Yield Bond Portfolio.
(7) Of which, 100 warrants are held for its Asset Allocation Fund and 400
warrants are held for its High Yield Bond Fund.
(8) As of the date of this prospectus, these warrant holders have not returned
to us the documentation required for them to be included within, and to
sell their warrants and class B non-voting shares pursuant to, this
prospectus. Consequently, none of warrants or class B non-voting shares
listed here are currently being offered by this prospectus. Each of these
warrant holders will be entitled to be named in, and sell their warrants
and class B non-voting shares pursuant to, this prospectus or a supplement
to this prospectus upon returning to us the documentation required by the
Warrants Registration Rights Agreement.
(9) As of January 19, 2001, these warrants have been exercised in full.
(10) As of January 19, 2001, 13,250 of these warrants have been exercised.
(11) As of January 19, 2001, 5,300 of these warrants have been exercised.
DESCRIPTION OF OUR CLASS B NON-VOTING SHARES
For a description of our class B non-voting shares, see Item 10.B. of our
annual report on Form 20-F, which is incorporated by reference into this
prospectus.
PLAN OF DISTRIBUTION
We have been advised by the selling shareholders that the class B
non-voting shares or warrants may be sold from time to time to purchasers
directly by the selling shareholders. Alternatively, the selling shareholders
may from time to time offer the shares or warrants to or through underwriters,
broker/dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling shareholders
or the purchasers of such securities for whom they may act as agents. The
selling shareholders and any underwriters, broker/dealers or agents that
participate in the distribution of the shares or warrants may be deemed to be
"underwriters" within the meaning of the Securities Act and any profit on the
sale of such securities and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker/dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
The shares or warrants may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. Such
prices will be determined by the selling stockholders or by agreement between
such selling stockholders and underwriters or dealers who receive fees or
commissions in
35
41
connection therewith. The sale of the shares or warrants may be effected in
transactions (1) on any national securities exchange or quotation service on
which the shares may be listed or quoted at the time of the sale, (2) in the
over-the-counter markets, (3) in transactions otherwise than on such exchange or
in the over-the-market or (4) through the writing of options. Shares also may be
delivered in connection with the issuance of securities by issuers other than
Group Telecom that are exchangeable for (whether optional or mandatory) or
payable in, such shares or pursuant to which such shares may be distributed. At
the time a particular offering of the shares is made, a prospectus supplement,
if required, will be distributed which will set forth the aggregate amount and
type of the securities being offered and the terms of the offering, including
the name or names of any underwriter, broker/dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
shareholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker/dealers. This prospectus also may be used by transferees of
the selling shareholders or by other persons acquiring securities, including
brokers who borrow the securities to settle short sales of stock. In addition,
the securities which qualify for sale under an applicable exemption from
registration under the Securities Act may be sold pursuant to such exemption
rather than this prospectus.
To comply with the securities laws of certain jurisdictions, if applicable,
the securities will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the securities may not be offered or sold unless they have been registered or
qualified for sale in such jurisdictions or any exemption from registration or
qualification is available and is complied with.
The selling shareholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provision may limit
the timing of purchases and sales of any of the securities by the selling
shareholders. The foregoing may affect the marketability of such securities.
We have agreed to bear all expenses (other than any commissions or
discounts of underwriters, dealers or agents or brokers' fee and the fees and
expenses of their counsel) in connection with the registration of the securities
being offered by the selling shareholders hereby.
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities
offered hereby will be passed upon by:
- Shearman & Sterling, our United States counsel, on matters of United
States and New York law; and
- Goodmans LLP, our Canadian counsel, on matters of Canadian law.
EXPERTS
Our consolidated financial statements as of September 30, 2000, 1999 and
1998 incorporated by reference into this prospectus have been audited by
PricewaterhouseCoopers LLP, independent public accountants, as stated in their
report thereon incorporated by reference into this prospectus and are
incorporated in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing. Shaw FiberLink's financial statements as
of August 31, 1999 and 1998 and for the three year period ended August 31, 1999
included in this prospectus have been audited by Ernst & Young LLP, independent
public accountants, as stated in their report appearing in this prospectus and
are included in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
36
42
REGISTRARS AND TRANSFER AGENTS
The registrar and transfer agent for the class B non-voting shares in
Canada is CIBC Mellon Trust Company at its principal offices in Toronto and in
the United States is ChaseMellon Shareholder Services at its principal offices
in New York.
ENFORCEABILITY OF CIVIL LIABILITIES
We are a Canadian corporation. Some of our directors, controlling persons
and officers, and the experts named in this prospectus, are residents of Canada,
and a substantial portion of their assets and all of our assets are located
outside the United States. As a result, it may be difficult for you to effect
service of process within the United States upon the directors, controlling
persons, officers and experts who are not residents of the United States or to
enforce against them judgements of courts of the United States based upon the
civil liability under the federal securities laws of the United States. There is
doubt as to the enforceability in Canada against us or against any of our
directors, controlling persons, officers or experts, who are not residents of
the United States, in original actions or in actions for enforcement of
judgements of United States courts, of liabilities based solely upon the federal
securities laws of the United States.
37
43
INDEX TO FINANCIAL STATEMENTS
Report of Independent Public Accountants of Shaw FiberLink
Ltd. -- FiberLink Division................................ F-2
Financial Statements of Shaw FiberLink Ltd. -- FiberLink
Division.................................................. F-3
Notes to Financial Statements of Shaw FiberLink Ltd. --
FiberLink Division........................................ F-6
Unaudited Pro Forma Condensed Consolidated Financial
Information............................................... F-13
Notes to Pro Forma Condensed Consolidated Statement of
Operations................................................ F-15
F-1
44
AUDITORS' REPORT
To the Directors of
SHAW FIBERLINK LTD.
We have audited the balance sheets of SHAW FIBERLINK LTD. -- FIBERLINK
DIVISION (the "Division") as at August 31, 1999 and 1998 and the statements of
income and net investment by Shaw FiberLink Ltd. and cash flows for each of the
years in the three year period ended August 31, 1999. These financial statements
are the responsibility of the Division's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in Canada. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Division as at August 31, 1999 and 1998
and the results of its operations and its cash flows for each of the years in
the three year period ended August 31, 1999 in accordance with accounting
principles generally accepted in Canada.
As disclosed in note 1, the Division is a segment of Shaw FiberLink Ltd.
and has no separate legal status or existence.
Calgary, Canada /s/ ERNST & YOUNG LLP
December 23, 1999 Independent Public Accountants
(except as to Note 11
which is at February 16, 2000)
F-2
45
SHAW FIBERLINK LTD. -- FIBERLINK DIVISION
BALANCE SHEETS
SEE BASIS OF PRESENTATION -- NOTE 1
(thousands of Canadian dollars)
AUGUST 31,
NOVEMBER 30, ------------------
1999 1999 1998
------------ ------- -------
(UNAUDITED)
ASSETS
CURRENT
Accounts receivable (net of allowance for doubtful
accounts of $86; August 31, 1999 -- $79; 1998 --
$84)................................................. $ 6,264 $ 7,336 $ 2,188
Prepaids and other..................................... 183 289 65
------- ------- -------
6,447 7,625 2,253
Property and equipment [note 3]........................ 78,422 70,472 46,793
------- ------- -------
$84,869 $78,097 $49,046
======= ======= =======
LIABILITIES AND NET INVESTMENT BY
SHAW FIBERLINK LTD.
CURRENT
Accounts payable and accrued liabilities............... $ 1,905 $ 1,974 $ 7,613
Income taxes payable................................... 92 116 148
Unearned revenues...................................... 1,273 1,330 161
------- ------- -------
3,270 3,420 7,922
Commitments and contingency [notes 7 and 8]
Net investment by Shaw FiberLink Ltd................... 81,599 74,677 41,124
------- ------- -------
$84,869 $78,097 $49,046
======= ======= =======
On behalf of the Board:
(Signed) PETER J. BISSONNETTE (Signed) MARGOT M. MICALLEF
Director Director
See accompanying notes.
F-3
46
SHAW FIBERLINK LTD. -- FIBERLINK DIVISION
STATEMENTS OF INCOME AND NET INVESTMENT BY SHAW FIBERLINK LTD.
(thousands of Canadian dollars)
THREE MONTHS ENDED
NOVEMBER 30, YEAR ENDED AUGUST 31,
------------------- ---------------------------
1999 1998 1999 1998 1997
-------- -------- ------- ------- -------
(UNAUDITED)
REVENUES................................. $13,197 $ 7,876 $38,815 $22,324 $11,631
Cost of sales (exclusive of items shown
separately below)...................... 6,503 3,529 17,800 10,174 3,965
------- ------- ------- ------- -------
6,694 4,347 21,015 12,150 7,666
------- ------- ------- ------- -------
Selling, general and administrative
expenses............................... 3,004 1,999 8,893 7,498 5,227
Depreciation............................. 2,109 1,347 6,565 3,832 1,954
Depreciation charge allocated by Shaw for
use of distribution network assets
[note 6(c)]............................ 1,648 1,259 5,649 4,394 3,073
------- ------- ------- ------- -------
6,761 4,605 21,107 15,724 10,254
------- ------- ------- ------- -------
LOSS BEFORE INCOME TAXES................. (67) (258) (92) (3,574) (2,588)
Income taxes [note 4].................... 25 23 92 50 25
------- ------- ------- ------- -------
Net loss................................. (92) (281) (184) (3,624) (2,613)
Net investment by Shaw FiberLink Ltd.,
beginning of the year.................. 74,677 41,124 41,124 23,208 14,137
Investment by Shaw FiberLink Ltd.
during the year........................ 7,014 11,117 33,737 21,540 11,684
------- ------- ------- ------- -------
NET INVESTMENT BY SHAW FIBERLINK LTD.,
END OF THE YEAR........................ $81,599 $51,960 $74,677 $41,124 $23,208
======= ======= ======= ======= =======
See accompanying notes.
F-4
47
SHAW FIBERLINK LTD. -- FIBERLINK DIVISION
STATEMENTS OF CASH FLOWS
(thousands of Canadian dollars)
THREE MONTHS ENDED
NOVEMBER 30, YEAR ENDED AUGUST 31,
------------------- ------------------------------
1999 1998 1999 1998 1997
-------- -------- -------- -------- --------
(UNAUDITED)
OPERATING ACTIVITIES [note 1]
Net loss............................ $ (92) $ (281) $ (184) $ (3,624) $ (2,613)
Non-cash items:
Depreciation........................ 2,109 1,347 6,565 3,832 1,954
-------- -------- -------- -------- --------
CASH FLOW FROM OPERATIONS........... 2,017 1,066 6,381 208 (659)
Net change in non-cash working
capital balances related to
operations [note 9]............... 1,028 (6,988) (9,874) 5,697 1,064
-------- -------- -------- -------- --------
3,045 (5,922) (3,493) 5,905 405
-------- -------- -------- -------- --------
INVESTING ACTIVITIES
Additions to property and
equipment......................... (10,059) (5,195) (30,244) (27,445) (12,089)
-------- -------- -------- -------- --------
FINANCING ACTIVITIES
Investment by Shaw FiberLink Ltd.
during the year................... 7,014 11,117 33,737 21,540 11,684
-------- -------- -------- -------- --------
CHANGE IN CASH DURING THE YEAR AND
CASH AT BEGINNING AND
END OF YEAR....................... -- -- -- -- --
======== ======== ======== ======== ========
See accompanying notes.
F-5
48
SHAW FIBERLINK LTD. -- FIBERLINK DIVISION
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The Shaw FiberLink Ltd. -- FiberLink Division (the "Division" or
"FiberLink") operates high capacity fiber optic telecommunications networks in
various Canadian markets including: Greater Metropolitan Toronto, Calgary,
Edmonton, Winnipeg, Vancouver Island, Central British Columbia, Saskatoon,
Lethbridge and Red Deer. FiberLink also operates several strategically-located
inter-city networks and two international gateways into the United States.
FiberLink provides its customers with a wide range of telecommunications
services including dedicated voice services, switched data transmission and
Business Internet services.
While the Division owns certain of the assets required to carry on the
business, a number of assets, including distribution network assets (see note
6), administrative facilities and maintenance operations are owned by Shaw
Communications Inc.
These financial statements represent the business operations identified as
the FiberLink Division of Shaw FiberLink Ltd. Accordingly, there is no share
capital or retained earnings in the Division's accounts. The net investment by
Shaw FiberLink Ltd. represents the capital employed in the Division in the form
of investments and advances. Shaw FiberLink Ltd. is a wholly owned subsidiary of
Shaw Communications Inc. Investments and advancements by Shaw FiberLink Ltd. in
the Division are funded by Shaw Communications Inc. to Shaw FiberLink Ltd.
The Division has relied extensively upon Shaw FiberLink Ltd. and Shaw
Communications Inc. for ongoing financial support and accordingly, these
divisional financial statements are not necessarily indicative of the results of
operations, cash flows or financial position had the Division operated as an
independent entity as at or for the dates and periods presented. Should Shaw
FiberLink Ltd. or Shaw Communications Inc. cease to provide such financial
support, the Division would require alternative ongoing financing from other
sources. Shaw Communications Inc. has allocated corporate, overhead and
technical costs to the Division based on an estimate of the services provided,
and charges for the use of distribution network assets based on Shaw
Communications Inc.'s annual depreciation charge related to these assets (see
note 6). The management of Shaw Communications Inc. have estimated the
incremental costs of the Division as a stand-alone entity for corporate
expenses, other than taxes or interest, would be approximately $1,532,000
annually. Management believes this to be reasonable.
The information presented as at and for the interim periods ended November
30, 1999 and 1998 is unaudited. These unaudited financial statements reflect all
adjustments which are in the opinion of management necessary to a fair statement
of the results for the interim periods presented; all such adjustments are of a
normal recurring nature.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared by management in accordance
with Canadian generally accepted accounting principles consistently applied
within the framework of the accounting policies described below. The policy with
respect to accounting for income taxes described below differs from that used in
the preparation of the consolidated financial statements of Shaw Communications
Inc.
REVENUE RECOGNITION
FiberLink provides telecommunication services to its customers and earns
both recurring and installation revenues. Recurring revenues are recognized on a
monthly basis as the services are provided to customers. Unearned recurring
revenues are deferred and recognized as earned. Revenues earned on installation
contracts are recorded when the installation of an operational link is completed
unless such revenues exceed the related direct cost of the installation in which
case the excess is recognized over the contract period.
F-6
49
SHAW FIBERLINK LTD. -- FIBERLINK DIVISION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is recorded on a
straight-line basis over the estimated useful lives of the assets as follows:
ASSET ESTIMATED USEFUL LIFE
- ----- ---------------------
Towers and headends................................... 10 years
Distribution network.................................. 10 years
Subscriber equipment.................................. 15 years
Computer equipment and software....................... 4 years
Other equipment....................................... 4-10 years
INCOME TAXES
The liability method of tax allocation is used in accounting for income
taxes. Under this method, future tax assets and liabilities are determined based
on differences between the financial reporting and tax bases of assets and
liabilities, and measured using the substantially enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Valuation
allowances are established when necessary to reduce future income tax assets to
the amount expected to be realized.
SEGMENTED INFORMATION
FiberLink's business of providing local high speed telecommunications and
Internet access services is one operating segment.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the year.
Actual results could differ from those estimates.
3. PROPERTY AND EQUIPMENT
AUGUST 31,
NOVEMBER 30, -----------------------------------------------
1999 1999 1998
---------------------- ---------------------- ----------------------
ACCUMULATED ACCUMULATED ACCUMULATED
COST DEPRECIATION COST DEPRECIATION COST DEPRECIATION
------- ------------ ------- ------------ ------- ------------
(UNAUDITED) (THOUSANDS OF CANADIAN DOLLARS)
Towers and headends.... $60,901 $11,612 $55,060 $10,163 $35,206 $5,649
Distribution network... 2,945 467 2,945 394 2,463 123
Subscriber equipment... 25,657 2,327 21,546 1,934 12,734 790
Computer equipment and
software............. 1,440 465 1,395 377 777 106
Other equipment........ 3,156 806 3,094 700 2,615 334
------- ------- ------- ------- ------- ------
$94,099 $15,677 $84,040 $13,568 $53,795 $7,002
------- ------- ------- ------- ------- ------
NET BOOK VALUE......... $78,422 $70,472 $46,793
========= ========= =========
F-7
50
SHAW FIBERLINK LTD. -- FIBERLINK DIVISION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Labour and other costs attributable to construction and installation are
capitalized as part of towers and headends. For the three months ended November
30, 1999 the amount capitalized was $1,818,000 (unaudited) (August 31, 1999 --
$5,641,000; 1998 -- $4,200,000).
4. INCOME TAXES
Future income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Division's future tax liabilities and assets are as follows:
AUGUST 31,
NOVEMBER 30, ------------------
1999 1999 1998
------------ ------- -------
(THOUSANDS OF
(UNAUDITED) CANADIAN DOLLARS)
FUTURE TAX LIABILITIES:
Property and equipment................................... (7,844) $(6,590) $(1,026)
------ ------- -------
FUTURE TAX ASSETS:
Non-capital losses carried forward....................... 13,257 12,236 6,639
Valuation allowance...................................... (5,413) (5,646) (5,613)
------ ------- -------
7,844 6,590 1,026
------ ------- -------
NET FUTURE TAXES......................................... -- -- --
====== ======= =======
The Division has incurred losses for income tax purposes that are available
to be applied against future years' taxable income expiring as follows:
(THOUSANDS OF
CANADIAN DOLLARS)
-----------------
2002..................................................... $ 1,143
2003..................................................... 2,459
2004..................................................... 6,019
2005..................................................... 8,652
2006..................................................... 8,918
Period ending November 30, 2007 (unaudited).............. 2,268
-------
$29,459
=======
F-8
51
SHAW FIBERLINK LTD. -- FIBERLINK DIVISION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Differences between income taxes calculated at Canadian statutory rates and
the income tax provision made in the Divisional accounts are as follows:
THREE MONTHS
ENDED
NOVEMBER 30, YEAR ENDED AUGUST 31,
------------- ---------------------------------
1999 1998 1999 1998 1997
----- ----- ------- ---------- ----------
(UNAUDITED) (THOUSANDS OF CANADIAN DOLLARS)
Income taxes (recovery) at Canadian
statutory rates........................... $ (30) $(116) $ (41) $ (1,608) $ (1,165)
Differences from statutory rates relating
to:
Large corporations tax...................... 25 23 92 50 25
Benefit of tax losses not recognized........ 30 116 33 1,612 1,118
Other, including items not deductible for
tax purposes.............................. -- -- 8 (4) 47
----- ----- ----- -------- --------
INCOME TAX PROVISION........................ $ 25 $ 23 $ 92 $ 50 $ 25
===== ===== ===== ======== ========
The components of the income tax provision are as follows:
THREE MONTHS
ENDED
NOVEMBER 30, YEAR ENDED AUGUST 31,
------------- ---------------------
1999 1998 1999 1998 1997
----- ----- ----- ----- -----
(THOUSANDS OF
(UNAUDITED) CANADIAN DOLLARS)
Current................................................ $ 25 $ 23 $ 92 $ 50 $ 25
Future................................................. -- -- -- -- --
---- ---- ---- ---- ----
$ 25 $ 23 $ 92 $ 50 $ 25
==== ==== ==== ==== ====
5. FINANCIAL INSTRUMENTS
Financial instruments recognized in the balance sheets have fair values
approximating their carrying values.
CREDIT RISK
At November 30, 1999 (unaudited), approximately 34% of the accounts
receivable represents amounts due from five customers (August 31, 1999 -- 55%
from six customers; 1998 -- 45% from six customers).
Revenues from customers (excluding related parties described in note 6)
which exceed ten percent of total revenues for the year are as follows:
THREE MONTHS
ENDED YEAR ENDED AUGUST 31,
NOVEMBER 30, ---------------------
1999 1999 1998 1997
------------ ----- ----- -----
(THOUSANDS OF
(UNAUDITED) CANADIAN DOLLARS)
Customer A................................................ 7% 11% 17% 26%
Customer B................................................ 5% 8% 11% 7%
F-9
52
SHAW FIBERLINK LTD. -- FIBERLINK DIVISION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. RELATED PARTY TRANSACTIONS
(a) The Division provides high speed Internet services to Shaw
Communications Inc. In 1998 and 1997, the divisions of Shaw Communications Inc.
negotiated rates and margins on these services which are reflected in the
accounts. Subsequent to 1998, the FiberLink Division only passed along to Shaw
Communications Inc. the external costs incurred by the Division to provide these
services to Shaw Communications Inc. Intercompany revenues, expenses and margins
reflected in these financial statements for the provision of Internet services
to Shaw Communications Inc. are as follows:
THREE MONTHS
ENDED
NOVEMBER 30, YEAR ENDED AUGUST 31,
--------------- ------------------------
1999 1998 1999 1998 1997
------ ------ ------ ------ ------
(THOUSANDS OF
(UNAUDITED) CANADIAN DOLLARS)
Revenues....................................... $2,691 $1,242 $6,627 $3,090 $ 985
Cost of sales.................................. 2,691 1,242 6,627 2,115 153
------ ------ ------ ------ ------
Margin......................................... $ -- $ -- $ -- $ 975 $ 832
====== ====== ====== ====== ======
(b) These Divisional financial statements reflect corporate allocations
from Shaw Communications Inc. for administrative and technical services provided
to the Division of $534,000 and $400,000 respectively for the three months ended
November 30, 1999 and $85,000 and $225,000 for 1998 (unaudited) (August 31, 1999
- -- $340,000 and $900,000 respectively; 1998 -- $180,000 and $900,000
respectively; 1997 -- $90,000 and $24,000 respectively). Allocation of
administrative and technical charges are based on the estimated level of
services provided to the Division in proportion to Shaw Communications Inc.'s
total costs, a method of allocation management believes to be reasonable. Of the
corporate allocations from Shaw Communications Inc., $574,000 have been
reflected in selling, general and administrative expenses and $360,000 has been
capitalized to towers and headends in the three months ended November 30, 1999
and $107,000 and $203,000 respectively for 1998 (unaudited) (see note 3) (August
31, 1999 -- $430,000 and $810,000 respectively; 1998 -- $270,000 and $810,000
respectively; 1997 -- $92,000 and $22,000 respectively).
(c) The Division utilizes certain distribution network assets owned by Shaw
Communications Inc. (see note 1) in the provision of services to its customers.
These Divisional financial statements reflect corporate allocations for the
utilization of the distribution network assets of $1,648,000 for the three
months ended November 30, 1999 and $1,259,000 for 1998 (unaudited) (August 31,
1999 -- $5,649,000; 1998 -- $4,394,000; 1997 -- $3,073,000). The allocation of
these corporate charges is based upon FiberLink's estimated proportion of Shaw
Communications Inc.'s annual depreciation charge related to these distribution
network assets. Management believes this method of allocation to be reasonable.
F-10
53
SHAW FIBERLINK LTD. -- FIBERLINK DIVISION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. COMMITMENTS
The Division has various long-term operating lease agreements for the use
of transmission facilities and premises in each of the next five years as
follows:
(THOUSANDS OF
CANADIAN DOLLARS)
-----------------
2000..................................................... $ 9,501
2001..................................................... 7,690
2002..................................................... 6,590
2003..................................................... 6,342
2004..................................................... 691
Thereafter............................................... 721
-------
$31,535
=======
8. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
entity, including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
9. STATEMENTS OF CASH FLOWS
Additional disclosures with respect to the Statements of Cash Flows are as
follows:
(i) Changes in non-cash working capital balances related to operations
include the following:
THREE MONTHS ENDED
NOVEMBER 30, YEAR ENDED AUGUST 31,
------------------ -------------------------------
1999 1998 1999 1998 1997
------- -------- --------- -------- --------
(UNAUDITED) (THOUSANDS OF CANADIAN DOLLARS)
Accounts receivable.......................... $1,072 $ (744) $(5,148) $ (90) $ (22)
Prepaids and other........................... 106 (253) (224) (45) 68
Accounts payable and accrued liabilities..... (69) (6,040) (5,639) 5,733 110
Income taxes payable......................... (24) (21) (32) (37) 898
Unearned revenues............................ (57) 70 1,169 136 10
------ ------- ------- ------ ------
$1,028 $(6,988) $(9,874) $5,697 $1,064
====== ======= ======= ====== ======
(ii) Interest and income taxes paid
Shaw Communications Inc. does not allocate interest on debt to Shaw
FiberLink Ltd. and the Division does not have any separate legal existence for
purposes of remitting income taxes. Accordingly, amounts included in these
Divisional statements for taxes represent allocations only and are included in
changes in advances to and from Shaw FiberLink Ltd.
F-11
54
SHAW FIBERLINK LTD. -- FIBERLINK DIVISION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
10. UNITED STATES ACCOUNTING PRINCIPLES
The financial statements of the Division are prepared in Canadian dollars
in accordance with accounting principles generally accepted in Canada ("Canadian
GAAP"). No additional adjustments have been identified in order to present these
financial statements in accordance with accounting policies generally accepted
in the United States ("U.S. GAAP"). The following disclosure would be required
in order to present these financial statements in accordance U.S. GAAP.
Recent developments
The Financial Accounting Standards Board in the United States issued a
pronouncement entitled "Accounting for Derivative Instruments and Hedging
Activities" which the Division is required to adopt in the year ending August
31, 2001. The impact of this pronouncement on these financial statements has not
been determined.
11. SUBSEQUENT EVENT
On December 22, 1999, Shaw Communications Inc. and Shaw FiberLink Ltd.
entered into an asset purchase and subscription agreement ("Purchase Agreement")
with GT Group Telecom Inc. ("GT"). This transaction closed on February 16, 2000.
Under the Purchase Agreement, Shaw FiberLink Ltd. sold to GT all of the property
and assets of FiberLink used in connection with the high speed data and
competitive access business and granted to GT an indefeasible right to use the
distribution network assets owned by Shaw Communications Inc. (see notes 1 and
6). The assets sold include equipment, computer hardware, fixed assets,
replacement parts, operational contracts, equipment contracts, supply contracts,
interconnect agreements, co-location agreements, customer contracts, software
licenses, broadband wireless licenses, vehicles, intellectual property, permits,
prepaid expenses, goodwill related to the FiberLink assets and certain other
fiber assets. Under the Indefeasible Right to Use agreement, GT was granted an
indefeasible right to use certain specifically identified existing fibers in the
fiber optic cable networks of Shaw Communications Inc. for 60 years. In
addition, Shaw FiberLink Ltd. granted GT an indefeasible right to use fibers to
be built over the next three years in mutually agreed regions.
Consideration for this transaction amounts to $760 million, consisting of
$360 million in cash, and sufficient series B first preference shares of GT to
provide Shaw FiberLink Ltd. with a 28.5% fully diluted interest in GT, subject
to adjustments for certain GT transactions relating to financing and employee
options and warrants.
F-12
55
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated statement of
operations is based on the historical financial statements of GT Group Telecom
Inc. ("Group Telecom") and the historical financial statements of Shaw FiberLink
Ltd. -- FiberLink Division ("Shaw FiberLink") prepared to give effect to Group
Telecom's acquisition of the business of Shaw FiberLink and the grant, by Shaw
FiberLink, of an indefeasible right to use certain identified fibers in the
fiber optic cable networks of Shaw Communications Inc. ("Shaw Communications")
to Group Telecom. The pro forma financial statements give effect to financing
required to complete the acquisition, consisting of senior bank debt of $220
million and additional financing of $140 million in debt and share purchase
warrants.
The unaudited pro forma condensed consolidated statements of operations for
the year ended September 30, 2000 gives effect to such transactions as if they
occurred at the beginning of the year then ended. The pro forma adjustments are
described in the accompanying notes and are based upon available information and
certain assumptions that management believes are reasonable.
The pro forma statements do not purport to represent what the Company's
results of operations would actually have been had these transactions in fact
occurred on such dates or to project the Company's results of operations for any
future date or period. The pro forma financial statements should be read in
conjunction with the consolidated financial statements and related notes and
Item 5 of our annual report on Form 20-F presented elsewhere in, or incorporated
by reference into, this prospectus.
F-13
56
GT GROUP TELECOM INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED) FOR THE YEAR ENDED SEPTEMBER 30, 2000
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
SHAW
GT GROUP FIBERLINK
TELECOM INC. FOUR MONTHS
YEAR ENDED ENDED
SEPTEMBER 30, DECEMBER 31, PRO FORMA
2000 1999 ADJUSTMENTS NOTES PRO FORMA
------------- ------------ ----------- ------- ---------
REVENUE.......................... $ 73,251 $18,045 -- $ 91,296
COST OF SERVICES................. 51,336 8,872 -- 60,208
--------- ------- -------- ---------
21,915 9,173 -- 31,088
--------- ------- -------- ---------
Selling, general and
administrative expenses........ 100,959 3,933 500 2(iii) 105,392
Amortization..................... 43,055 2,831 3,788 2(i) 55,492
3,620 2(ii)
2,198 2(i)
Charge allocated by Shaw
Communications for use of
distribution network assets.... -- 2,198 (2,198) 2(i) --
Interest and finance items,
net............................ 54,354 -- 7,700 2(iv) 69,576
6,953 2(v)
569 2(vi)
--------- ------- -------- ---------
198,368 8,962 21,130 230,460
--------- ------- -------- ---------
INCOME (LOSS) BEFORE INCOME
TAXES.......................... (176,453) 211 (23,130) (199,372)
PROVISION FOR (RECOVERY OF)
INCOME TAXES................... (38,467) 25 -- (38,442)
--------- ------- -------- ---------
NET INCOME (LOSS) FOR THE YEAR... $(137,986) $ 186 $(23,130) $(160,930)
========= ======= ======== =========
PRO FORMA LOSS PER SHARE......... (1.82)
=========
PRO FORMA WEIGHTED AVERAGE NUMBER
OF COMMON SHARES (IN
THOUSANDS)..................... 88,639
=========
See accompanying notes to pro forma condensed consolidated financial
information.
F-14
57
GT GROUP TELECOM INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED) SEPTEMBER 30, 2000
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
The pro forma condensed consolidated statement of operations has been
prepared to give effect to the acquisition of the assets of Shaw FiberLink Ltd.
- -- FiberLink Division ("Shaw FiberLink") by GT Group Telecom Inc. ("Group
Telecom") and the grant by Shaw FiberLink of an Indefeasible Right to Use
("IRU") certain specifically identified fibers in the fiber optic cable networks
of Shaw Communications Inc. ("Shaw Communications") to Group Telecom as of
October 1, 1999. The pro forma financial statements give effect to financing
consisting of senior bank debt of $220 million and an additional amount of $140
million representing a portion of the proceeds from the company's issuance of
Units consisting of Senior Discount Notes and Warrants to purchase Class B
Non-Voting Shares. Such proceeds have only been included in these pro-forma
financial statements to the extent of $140 million required to complete the
funding of the acquisition of the business of Shaw FiberLink.
On February 16, 2000, Group Telecom purchased from Shaw Communications Inc.
("Shaw Communications") and Shaw FiberLink Ltd. ("Shaw FiberLink") all of the
property and assets of Shaw FiberLink used in connection with the high-speed
data and competitive access business. Group Telecom and Shaw FiberLink also
entered into an indefeasible right to use agreement which grants the company an
indefeasible right to use certain specifically identified existing fibers in the
fiber optic cable networks of Shaw Communications for 60 years. Certain of the
existing fibers located in New Brunswick Canada under the indefeasible right to
use the agreement will be available for use in 2003. In addition, Group Telecom
will receive an indefeasible right to use fibers to be built over the next three
years in mutually agreed regions (refer to note 3 in the audited consolidated
financial statements of Group Telecom).
The pro forma condensed consolidated statement of operations for the year
ended September 30, 2000 is based on the audited consolidated statement of
operations of Group Telecom for the year ended September 30, 2000 and the
unaudited statement of operations of Shaw FiberLink for the four months ended
December 31, 1999, as Group Telecom and Shaw FiberLink had non-coterminous
year-ends.
A pro forma condensed consolidated balance sheet has not been prepared as
the acquisition of Shaw FiberLink is reflected in the audited consolidated
balance sheet of Group Telecom as at September 30, 2000.
The pro forma condensed consolidated statements do not purport to represent
what Group Telecom's results of operations would actually have been, had these
transactions in fact occurred on such dates or to project Group Telecom's
results of operations for any future date or period. The pro forma condensed
consolidated statement of operations should be read in conjunction with the
consolidated financial statements and related notes of Group Telecom and Shaw
FiberLink, including the descriptions of significant accounting policies, and
Item 5 of our annual report on Form 20-F presented elsewhere in, or incorporated
by reference into, this prospectus.
2. PRO FORMA ASSUMPTIONS
The pro forma condensed consolidated statement of operations gives effect
to the above acquisition as if it had occurred effective October 1, 1999.
(i) The additional amortization expense relates to the increase of $429
million in property, plant and equipment and is based on the estimated useful
life of the equipment and the fiber optic networks acquired which are amortized
on a straight line basis over 10 and 20 years respectively.
F-15
58
GT GROUP TELECOM INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS -- (CONTINUED)
(UNAUDITED) SEPTEMBER 30, 2000
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
(ii) The additional amortization expense relates to the allocation of the
purchase price of $120 million to goodwill and $29 million to other intangible
assets. The amortization is based on the estimated useful life of 20 years for
goodwill, 10 years for license rights and 3 years for the amount recorded as a
non-compete agreement.
(iii) The increase in selling, general and administration expense is an
annual fiber maintenance fee as set out in the IRU agreement.
(iv) The increase in interest expense is based on the senior bank financing
of $220 million obtained to finance part of the acquisition of Shaw FiberLink.
The interest expense was calculated using an interest rate of 10.50%.
(v) The increase in interest expense is based on additional financing of
$140 million in debt and share purchase warrants. The interest expense was
calculated using an interest rate of 13.25% plus debt discount amortization.
(vi) The deferred financing costs of $14.5 million relating to the debt
issuances described in (iv) and (v) are amortized over the term of the related
debts, assumed to be 7 and 10 years.
3. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GAAP
The pro forma condensed consolidated financial information has been
prepared in accordance with Canadian GAAP which differ in some respects from the
principles and practices that Group Telecom would have followed had the pro
forma financial information been prepared in accordance with U.S. GAAP. Refer to
note 20 of Group Telecom consolidated financial statements for a reconciliation
of differences impacting the Company.
Pro forma loss under Canadian GAAP.......................... $(160,930)
Group Telecom adjustments:
Amortization of purchase price adjustment................... (617)
Deferred charges............................................ (15)
Stock-based compensation.................................... (11,430)
Deferred foreign exchange................................... (1,655)
Recovery of future income taxes............................. 11,055
---------
Pro forma loss under U.S. GAAP.............................. $(163,592)
=========
Pro forma loss per share.................................... (1.85)
=========
Pro forma weighted average number of common shares (in
thousands)................................................ 88,639
=========
F-16
59
APPENDIX A
FORM OF NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
[FOR THE TRANSFER OF WARRANTS, ADDRESS TO:
THE CHASE MANHATTAN BANK
GT GROUP TELECOM INC.
C/O CHASE NATIONAL CORPORATE SERVICES INC.
1301 FIFTH AVENUE, SUITE 3410
SEATTLE, WASHINGTON 98101
ATTENTION: MR. MICHAEL A. JONES]
[FOR THE TRANSFER OF CLASS B NON-VOTING SHARES, ADDRESS TO:
CIBC MELLON TRUST COMPANY
CHASEMELLON SHAREHOLDER SERVICES
GT GROUP TELECOM INC.
C/O CIBC MELLON TRUST COMPANY
1066 WEST HASTINGS STREET, SUITE 1600
VANCOUVER, B.C. V6E 3X1
ATTENTION: MS. TRICIA MURPHY
Re: GT Group Telecom Inc. (the "Company")
Warrants and Class B Non-Voting Shares
Dear Sirs:
Please be advised that _____________________ has transferred
_____________________ of the above-referenced [WARRANTS] [CLASS B NON-VOTING
SHARES] pursuant to an effective Registration Statement on Form F-3 (File No.
333- ____________ ) filed by the Company.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the [WARRANTS] [CLASS B NON-VOTING SHARES] is named as a
"Selling Shareholder" in the Prospectus dated [DATE] or in supplements thereto,
and that the [WARRANTS] [CLASS B NON-VOTING SHARES]transferred are the
[WARRANTS] [CLASS B NON-VOTING SHARES] listed in such Prospectus opposite such
owner's name.
Dated:
Very truly yours,
--------------------------------------
(Name)
By:
--------------------------------------
(Authorized Signature)
A-1
60
- ---------------------------------------------------------
- ---------------------------------------------------------
No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the securities offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
------------------
TABLE OF CONTENTS
Page
----
About This Prospectus....................... i
Where You Can Obtain More Information About
Us........................................ i
Forward-Looking Statements.................. ii
Presentation of Our Financial and Other
Information............................... iii
Risk Factors................................ 1
Use of Proceeds............................. 8
Dividend Policy............................. 8
Capitalization.............................. 9
Business.................................... 10
Description of the Warrants................. 10
Selling Shareholders........................ 15
Description of Our Class B Non-Voting
Shares.................................... 35
Plan of Distribution........................ 35
Legal Matters............................... 36
Experts..................................... 36
Registrars and Transfer Agents.............. 37
Enforceability of Civil Liabilities......... 37
Index to Financial Statements............... F-1
Appendix A.................................. A-1
- ---------------------------------------------------------
- ---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
[GT Group Telecom Logo]
4,198,563 Class B Non-Voting Shares
855,000 Warrants to Purchase
Class B Non-Voting Shares
------------------------------------
PROSPECTUS
------------------------------------
---------------------------------------------------------
---------------------------------------------------------
61
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 8. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Canada Business Corporations Act (the "CBCA"), a corporation may
indemnify a present or former director or officer to such corporation or a
person who acts or acted at the corporation's request as a director or officer
of another corporation of which the corporation is or was a shareholder or
creditor, and his heirs and legal representatives, against all costs, charges
and expenses, including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him in respect of any civil, criminal or
administrative action or proceeding to which he is made a party by reason of his
being or having been a director or officer of such corporation and provided that
the director or officer acted honestly and in good faith with a view to the best
interests of the corporation, and, in the case of a criminal or administrative
action or proceeding that is enforced by a monetary penalty, had reasonable
grounds for believing that his conduct was lawful. Such indemnification may be
made in connection with a derivative action only with court approval. A director
or officer is entitled to indemnification from the corporation as a matter of
right in respect of all costs, charges and expenses reasonably incurred by him
in connection with the defense of a civil, criminal or administrative action or
proceeding to which he is made a party by reason of being or having been a
director or officer of the corporation if he was substantially successful on the
merits and fulfilled the conditions set forth above.
In accordance with the CBCA, the by-laws of the Registrant, a copy of which
is filed as Exhibit 3.2 to this Registration Statement, indemnify a director or
officer of the Registrant, a former director or officer of the Registrant or any
person who acts or acted at the Registrant's request as a director or officer of
a body corporate of which the Registrant is or was a shareholder or creditor and
his heirs and legal representatives against all costs, charges and expenses
including an amount paid to settle an action or satisfy a judgment reasonably
incurred by him in respect of any civil, criminal or administrative action or
proceeding to which he has been made a party by reason of being or having been a
director or officer of the Registrant or such body corporate if (i) he acted
honestly and in good faith with a view to the best interests of the Registrant,
and (ii) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, he had reasonable grounds for believing that
his conduct was lawful.
The Registrant will also indemnify such directors or officers who have been
substantially successful in the defence of any civil, criminal or administrative
action or proceeding to which he is made a party by reason of being or having
been a director of the Registrant or body corporate against all costs, charges
and expenses reasonably incurred by him in respect of such action or proceeding.
A policy of directors' and officers' liability insurance is maintained by
the Registrant which insures directors and officers for losses as a result of
claims based upon the acts or omissions as directors and officers of the
Registrant, including liabilities arising under the Securities Act of 1933, and
also reimburses the Registrant for payments made pursuant to the indemnity
provisions under the Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers or persons controlling the Registrant pursuant to the foregoing
provisions, the Registrant has been informed that, in the opinion of the U.S.
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
II-1
62
ITEM 9. EXHIBITS
*2.1 Asset Purchase and Subscription Agreement dated December 22,
1999 among Shaw Communications Inc., Shaw FiberLink Ltd., GT
Group Telecom Inc. and GT Group Telecom Services Corp.
*2.2 Indefeasible Right of Use Agreement dated February 16, 2000
between Shaw FiberLink Ltd. and GT Group Telecom Inc.
*2.3 Non-competition Agreement in favour of Group Telecom dated
February 16, 2000 among Shaw Communications Inc., Shaw
FiberLink Ltd. and GT Group Telecom Inc.
*2.4 Non-competition Agreement in favour of Shaw dated February
16, 2000 among Shaw Communications Inc., Shaw FiberLink Ltd.
and GT Group Telecom Inc.
*2.5 Transitional Services Agreement dated February 16, 2000
among Shaw Communications Inc., Shaw FiberLink Ltd., GT
Group Telecom Inc. and GT Group Telecom Services Corp.
*2.6 Performance Assurance Agreement dated February 16, 2000
among Shaw Communications Inc., GT Group Telecom Inc. and GT
Group Telecom Services Corp.
+**2.7 Fiber Sale Agreement dated May 24, 2000 among Worldwide
Fiber (F.O.T.S.) Ltd., Worldwide Fiber (F.O.T.S.) No. 3,
Ltd., WFI-CN Fibre Inc. and GT Group Telecom Services Corp.
+**2.8 Capacity Lease Agreement dated May 24, 2000 by and between
Worldwide Fiber Network Services Ltd. and Worldwide Fiber
Network Services, Inc. and GT Group Telecom Services Corp.
and GT Group Telecom Services (USA) Corp.
+**2.9 IRU Agreement dated May 24, 2000 by and between Worldwide
Fiber Network Services, Inc. and GT Group Telecom Services
(USA) Corp.
*3.1 Articles of Incorporation of GT Group Telecom Inc.
*3.2 By-laws of GT Group Telecom Inc.
*4.1 Warrant Agreement dated February 1, 2000 between GT Group
Telecom Inc. and The Chase Manhattan Bank
*4.2 Registration Rights Agreement dated February 1, 2000 among
GT Group Telecom Inc. and Goldman, Sachs & Co., CIBC World
Markets Corp., Credit Suisse First Boston Corporation, RBC
Dominion Securities Corporation, Scotia Capital (USA) Inc.
and TD Securities (USA) Inc.
***5.1 Opinion of Goodman Phillips & Vineberg, Canadian counsel to
GT Group Telecom Inc., as to the legality of the Class B
non-voting shares and the warrants being registered
***5.2 Opinion of Shearman & Sterling as to the legality of the
warrants being registered
*10.1 Preference Share Purchase Agreement dated May 7, 1999 among
GT Group Telecom Inc., GS Capital Partners III L.P., DSE Fin
B.V., W9 Blanche Eight 10 B.V., CIBC Capital (SFC) Inc.,
First Marathon Capital Corporation and MGN Group LLC
***10.2 Credit Agreement, as amended and restated, dated February 3,
2000, as amended and restated as of September 29, 2000, with
Lucent Technologies Canada Inc.
***10.3 Senior Credit Facility dated February 3, 2000, as amended
and restated as of September 29, 2000, among GT Group
Telecom Inc., CIBC World Markets Inc., Goldman Sachs Credit
Partners, Royal Bank of Canada and Toronto Dominion Bank
*10.4 Exchange and Registration Rights Agreement dated February 1,
2000 among GT Group Telecom Inc. and Goldman, Sachs & Co.,
CIBC World Markets Corp., Credit Suisse First Boston
Corporation, RBC Dominion Securities Corporation, Scotia
Capital (USA) Inc. and TD Securities (USA) Inc.
*10.5 Indenture dated February 1, 2000 between GT Group Telecom
Inc. and The Chase Manhattan Bank
**10.6 First Supplemental Indenture dated July 11, 2000 between GT
Group Telecom Inc. and The Chase Manhattan Bank
***10.7 Credit Agreement, dated as of September 29, 2000, with Cisco
Systems Capital Corporation
**21.1 Subsidiaries of GT Group Telecom Inc.
II-2
63
23.1 Consent of PricewaterhouseCoopers LLP, Chartered Accountants
23.2 Consent of Ernst & Young LLP, Chartered Accountants
***23.3 Consent of Goodman Phillips & Vineberg (included in Exhibit
5.1)
***23.4 Consent of Shearman & Sterling (included in Exhibit 5.2)
***24.1 Powers of Attorney (contained on the signature pages of the
Registration Statement)
- ---------------
* Incorporated by reference to the Registrant's Registration Statement on Form
F-1 (File No. 333-11506)
** Incorporated by reference to the Registrant's Registration Statement on Form
F-4 (File No. 333-38058).
*** Previously filed
+ Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
ITEM 10. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (i) and (ii) above shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) As long as the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any financial
statements required by Item 8.A. of Form 20-F at the start of any delayed
offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided that the registrant includes in the prospectus, by means of
a post-effective amendment, financial statements required pursuant to this
paragraph (4) and other information necessary to ensure that all other
information in
II-3
64
the prospectus is at least as current as the date of those financial statements.
Not withstanding the foregoing, if this registration statement is on Form F-3, a
post-effective amendment need not be filed to include financial statements and
information required by Section 10(a)(3) of the Act or Item 8.A of Form 20-F if
such financial statements and information are contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the Form F-3.
(5) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
65
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form F-3 and has duly caused this
Post-Effective Amendment No. 3 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Province of
Ontario, Canada, on this 16th day of April, 2001.
GT GROUP TELECOM INC.
(Registrant)
/s/ STEPHEN H. SHOEMAKER
By:
--------------------------------------
Name: Stephen H. Shoemaker
Title: Executive Vice President
and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 3 to the Registration Statement has been
signed by or on behalf of the following persons in the capacities and on the
dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman and Director April 16, 2001
- ---------------------------------------------
James G. Matkin
Director and Chair of Executive
- --------------------------------------------- Committee
James M. Mansour
* Chief Executive Officer and Director April 16, 2001
- --------------------------------------------- (principal executive officer)
Daniel R. Milliard
* President, Chief Operating Officer and April 16, 2001
- --------------------------------------------- Director
Robert G. Wolfe
* Executive Vice President and Chief April 16, 2001
- --------------------------------------------- Financial Officer (principal financial
Stephen H. Shoemaker officer and principal accounting
officer)
Director
- ---------------------------------------------
Ronald D. Rogers
* Director April 16, 2001
- ---------------------------------------------
Michael D'Avella
* Director April 16, 2001
- ---------------------------------------------
George Estey
66
SIGNATURE TITLE DATE
--------- ----- ----
Director
- ---------------------------------------------
Leo J. Hindery
* Director April 16, 2001
- ---------------------------------------------
P. Kenneth Kilgour
* Director April 16, 2001
- ---------------------------------------------
Robert R. Gheewalla
* Director April 16, 2001
- ---------------------------------------------
Jim Shaw
Pursuant to the requirements of the Securities Act of 1933, as amended, the
undersigned certifies that it is the duly authorized United States
representative of GT Group Telecom Inc. and has duly caused this Post-Effective
Amendment No. 3 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Toronto, on this 16th day
of April, 2001.
GT GROUP TELECOM SERVICES (USA) CORP.
(Authorized U.S. Representative)
/s/ ROBERT M. FABES
By:
--------------------------------------
Name: Robert M. Fabes
Title: Senior Vice-President,
General Counsel and
Treasurer
/s/ STEPHEN H. SHOEMAKER
*By:
- --------------------------------------
Stephen H. Shoemaker,
Attorney-in-fact
67
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
*2.1 Asset Purchase and Subscription Agreement dated December 22,
1999 among Shaw Communications Inc., Shaw FiberLink Ltd., GT
Group Telecom Inc. and GT Group Telecom Services Corp.
*2.2 Indefeasible Right of Use Agreement dated February 16, 2000
between Shaw FiberLink Ltd. and GT Group Telecom Inc.
*2.3 Non-competition Agreement in favour of Group Telecom dated
February 16, 2000 among Shaw Communications Inc., Shaw
FiberLink Ltd. and GT Group Telecom Inc.
*2.4 Non-competition Agreement in favour of Shaw dated February
16, 2000 among Shaw Communications Inc., Shaw FiberLink Ltd.
and GT Group Telecom Inc.
*2.5 Transitional Services Agreement dated February 16, 2000
among Shaw Communications Inc., Shaw FiberLink Ltd., GT
Group Telecom Inc. and GT Group Telecom Services Corp.
*2.6 Performance Assurance Agreement dated February 16, 2000
among Shaw Communications Inc., GT Group Telecom Inc. and GT
Group Telecom Services Corp.
+**2.7 Fiber Sale Agreement dated May 24, 2000 among Worldwide
Fiber (F.O.T.S.) Ltd., Worldwide Fiber (F.O.T.S.) No. 3,
Ltd., WFI-CN Fibre Inc. and GT Group Telecom Services Corp.
+**2.8 Capacity Lease Agreement dated May 24, 2000 by and between
Worldwide Fiber Network Services Ltd. and Worldwide Fiber
Network Services, Inc. and GT Group Telecom Services Corp.
and GT Group Telecom Services (USA) Corp.
+**2.9 IRU Agreement dated May 24, 2000 by and between Worldwide
Fiber Network Services, Inc. and GT Group Telecom Services
(USA) Corp.
*3.1 Articles of Incorporation of GT Group Telecom Inc.
*3.2 By-laws of GT Group Telecom Inc.
*4.1 Warrant Agreement dated February 1, 2000 between GT Group
Telecom Inc. and The Chase Manhattan Bank
*4.2 Registration Rights Agreement dated February 1, 2000 among
GT Group Telecom Inc. and Goldman, Sachs & Co., CIBC World
Markets Corp., Credit Suisse First Boston Corporation, RBC
Dominion Securities Corporation, Scotia Capital (USA) Inc.
and TD Securities (USA) Inc.
***5.1 Opinion of Goodman Phillips & Vineberg, Canadian counsel to
GT Group Telecom Inc., as to the legality of the class B
non-voting shares and the warrants being registered
***5.2 Opinion of Shearman & Sterling as to the legality of the
warrants being registered
*10.1 Preference Share Purchase Agreement dated May 7, 1999 among
GT Group Telecom Inc., GS Capital Partners III L.P., DSE Fin
B.V., W9 Blanche Eight 10 B.V., CIBC Capital (SFC) Inc.,
First Marathon Capital Corporation and MGN Group LLC
***10.2 Credit Agreement, as amended and restated, dated February 3,
2000, as amended and restated as of September 29, 2000, with
Lucent Technologies Canada Inc.
***10.3 Senior Credit Facility dated February 3, 2000, as amended
and restated as of September 29, 2000, among GT Group
Telecom Inc., CIBC World Markets Inc., Goldman Sachs Credit
Partners, Royal Bank of Canada and Toronto Dominion Bank
68
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
*10.4 Exchange and Registration Rights Agreement dated February 1,
2000 among GT Group Telecom Inc. and Goldman, Sachs & Co.,
CIBC World Markets Corp., Credit Suisse First Boston
Corporation, RBC Dominion Securities Corporation, Scotia
Capital (USA) Inc. and TD Securities (USA) Inc.
*10.5 Indenture dated February 1, 2000 between GT Group Telecom
Inc. and The Chase Manhattan Bank
**10.6 First Supplemental Indenture dated July 11, 2000 between GT
Group Telecom Inc. and The Chase Manhattan Bank
***10.7 Credit Agreement, dated as of September 29, 2000, with Cisco
Systems Capital Corporation
**21.1 Subsidiaries of GT Group Telecom Inc.
23.1 Consent of PricewaterhouseCoopers LLP, Chartered Accountants
23.2 Consent of Ernst & Young LLP, Chartered Accountants
***23.3 Consent of Goodman Phillips & Vineberg (included in Exhibit
5.1)
***23.4 Consent of Shearman & Sterling (included in Exhibit 5.2)
***24.1 Powers of Attorney (contained on the signature pages of the
Registration Statement)
- ---------------
* Incorporated by reference to the Registrant's Registration Statement on Form
F-1 (File No. 333-11506)
** Incorporated by reference to the Registrant's Registration Statement on Form
F-4 (File No. 333-38058).
*** Previously filed
+ Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.