APRECIACION DE LOS RESULTADOS DEL APPRENDIZAJE EN EL DOMINIO COGNOSCITIVO
6. APRECIACION DE LOS RESULTADOS DE APRENDIZAJE EN EL NIVEL DE SINTESIS
The Senior Debentures and the Senior Discount Debentures, which are described below, were issued to finance working capital, capital expenditure, foreign currency swap and options to hedge against adverse fluctuations in exchange rates, and additional investments in affiliated companies. A portion of the net proceeds of the issue also was used to repay the £157.9 million indebtedness outstanding under the loan facility held by SBCC CableComms (UK) at the date that it was acquired by the Company.
The indenture under which the Senior Debentures were issued contains various covenants which, among other things, restrict the ability of the Company to incur additional indebtedness, pay dividends, create certain liens, enter into certain transactions with shareholders or affiliates, or sell certain assets. The Company was in compliance with the covenants at December 31, 2000.
The Company has entered into two foreign currency swaps to reduce its exposure to adverse fluctuations in exchange rates on the principal amount which will be outstanding on October 1, 2002, and the associated interest payments of the Senior Debentures. The terms of the foreign currency swaps are described in note 4 to the consolidated financial statements.
The Senior Debentures are unsecured liabilities of the Company.
Senior Discount Debentures 2007
In October 1995, the Company issued $1,536.4 million principal amount at maturity of Senior Discount Debentures with a yield to maturity of 11%. The cash consideration received at the date of issue was £566.1 million ($900.0 million). The Senior Discount Debentures mature on October 1, 2007. The discounted amount of the Senior Discount Debentures has accreted at an annual rate of 11% compounded semi-annually to October 1, 2000. Thereafter, interest on the Senior Discount Debentures accrues semi-annually and is payable in arrears on April 1 and October 1 of each year at a rate of 11% per annum. The Senior Discount Debentures are redeemable, in whole or in part, at the option of the Company at any time at the redemption price of 100% of the principal amount plus accrued and unpaid interest.
The indenture under which the Senior Discount Debentures were issued contains various covenants as set out for the Senior Debentures above and the Company was in compliance with such covenants at December 31, 2000.
As described in note 4, the Company entered into various foreign exchange forwards to reduce its exposure to adverse fluctuations in exchange rates on the principal amount which will be outstanding at various dates to October 1, 2003. The terms of these foreign currency contracts are described in note 4 to the consolidated financial statements.
The Senior Discount Debentures are unsecured liabilities of the Company.
Senior Notes 2008
On November 9, 1998 the Company issued $350.0 million principal amount of Senior Notes (the “Senior Notes”) with a yield to maturity of 11.25%. Cash consideration received at the date of issue was £210.3 million. The Senior Notes mature on November 1, 2008. Interest on the Senior Notes accrues semi-annually and is payable in arrears on May 1 and November 1 each year. The Senior Notes are redeemable, in whole or in part, at the option of the Company at any time on or after November 1, 2003 at the redemption price of 107.625% of the principal amount during the year commencing November 1, 2003, 106.100% of the principal amount during the year commencing November 1, 2004, 104.575% of the principal amount during the year commencing November 1, 2005, 103.050% of the principal amount during the year commencing November 1, 2006, 101.525% of the principal amount during the year commencing November 1, 2007, and thereafter at 100% of the principal amount plus accrued and unpaid interest.
The Senior Notes were issued primarily to finance repayment of Bridge Notes which were issued on October 28, 1998 to fund the acquisition of the outstanding 27.4% of shares in Birmingham Cable not already owned by the Company. A portion of the net proceeds was also raised to fund general corporate purposes.
The indenture under which the Senior Notes were issued contains various covenants which, among other things, restrict the ability of the Company to incur additional indebtedness, pay dividends, create certain liens, enter into certain transactions with shareholders or affiliates, or sell certain assets. The Company was in compliance with the covenants at December 31, 2000.
The Company has entered into a series of forward exchange contracts to hedge its exposure to adverse fluctuations in exchange rates on interest payment dates. The Company has also entered into two forward exchange contracts to purchase $350.0 million on November 3, 2003 to reduce its exposure to adverse fluctuations in exchange rates on the principal amounts of the Senior Notes 2008. The terms of these contracts are described in note 4 to the consolidated financial statements.
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14 DEBT CONTINUED
Senior Convertible Notes 2007
On February 19, 1999 the Company issued £300.0 million principal amount of Senior Convertible Notes (the “Convertible Notes”) with a yield to maturity of 5.25%. The Convertible Notes mature on February 19, 2007 with interest accruing semi- annually payable in arrears. The Convertible Notes are convertible into the ordinary shares of the Company after May 1, 1999 and up to the close of business on February 2, 2007 at a conversion price of 325p per ordinary share. The Convertible Notes are redeemable, in whole (but not in part) at the option of the Company at 100% of their principal amount plus accrued interest at any time on or after March 9, 2003 or at any time when at least 90% of the notes issued have been purchased by the Company and cancelled or converted.
To date £0.5 million principal amount has been converted into 0.1 million ordinary shares.
The Convertible Notes were issued to temporarily repay indebtedness under certain revolving credit facilities. The indentures under which the Senior Convertible Notes were issued contain various covenants which, amongst other things, restrict the ability of the Company to incur additional indebtedness, pay dividends, create certain liens, enter into certain transactions with shareholders or affiliates or sell certain assets. The Company was in compliance with the covenants at December 31, 2000.
The Convertible Notes are unsecured liabilities of the Company.
Senior Discount Notes 2009
On April 15, 1999, the Company issued £325.0 million principal amount at maturity of Senior Discount Notes with a yield to maturity of 9.875% and US$500.0 million principal amount at maturity of Senior Discount Notes with a yield to maturity of 9.25%. The cash consideration received at the date of issue was £390.3 million (US$625.4 million). At December 31, 2000, the unamortized portion of the discount on issue was £171.7 million. The Senior Discount Notes mature on April 15, 2009. The discounted amount of the Senior Discount Notes accretes at an annual rate of 9.875% and 9.25% for sterling and US dollars respectively, compounded semi-annually to April 15, 2004. Thereafter, interest on the Senior Discount Notes accrues semi-annually and is payable in arrears on April 15 and October 15 of each year. The Senior Discount Notes are redeemable, in whole or in part, at the option of the Company at any time on or after April 15, 2004.
The Senior Discount Notes were issued to temporarily repay indebtedness under certain revolving credit facilities.
The indentures under which the Senior Discount Notes were issued contain various covenants which, amongst other things, restrict the ability of the Company to incur additional indebtedness, pay dividends, create certain liens, enter into certain transactions with shareholders or affiliates or sell certain assets. The Company was in compliance with the covenants at December 31, 2000.
The Company has entered into foreign exchange forward contracts to reduce its exposure to adverse fluctuations in exchange rates on the principal amount of the Senior Discount Notes that will be outstanding on April 15, 2004, the earliest redemption date. The terms of the foreign currency forward contracts are described in note 4 to the consolidated financial statements.
The Senior Discount Notes are unsecured liabilities of the Company.
Senior Notes and Senior Discount Notes 2010
On January 25, 2000, the Company issued £180.0 million principal amount of Senior Notes with a yield to maturity of 9.875%, US$350.0 million principal amount of Senior Notes with a yield to maturity of 9.875%, and US$450.0 million principal amount at maturity of Senior Discount Notes with a yield to maturity of 11.375%. The cash consideration received at the date of issue was £543.5 million (US$879.7 million). The Senior Notes and Senior Discount Notes mature on February 1, 2010. The discounted amount of the Senior Discount Notes accretes at an annual rate of 11.375%, compounded semi-annually to February 1, 2005. Thereafter, interest on the Senior Discount Notes accrues semi-annually and is payable in arrears on February 1 and August 1 of each year. At December 31, 2000 the unamortized portion of the discount on issue was £111.2 million. Interest on the Senior Notes accrues semi-annually and is payable in arrears commencing August 1, 2000. The Senior Notes and Senior Discount Notes are redeemable, in whole or in part, at the option of the Company at any time on or after February 1, 2005.
The Senior Notes and Senior Discount Notes were issued to finance the accelerated roll-out of the digital platform and high speed internet projects, and also to repay the Senior Secured Facility acquired as part of the Cable London transaction.
The indentures under which the Senior Notes and Senior Discount Notes were issued contain various covenants which, amongst other things, restrict the ability of the Company to incur additional indebtedness, pay dividends, create certain liens, enter into certain transactions with shareholders or affiliates or sell certain assets. The Company was in compliance with the covenants at December 31, 2000.
The Company has entered into foreign exchange forward contracts to reduce its exposure to adverse fluctuations in exchange rates on the principal amount of the Senior Notes and Senior Discount Notes which will be outstanding on February 1, 2005,
98
US GAAP
Notes to the Consolidated Financial Statements
(YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998)14 DEBT CONTINUED
the earliest redemption date. The terms of the foreign exchange forward contracts are described in note 4 to the consolidated financial statements.
The Senior Notes and Senior Discount Notes are unsecured liabilities of the Company.
Senior Convertible Notes 2005
On July 7, 2000 the Company issued US$500.0 million principal amount of Senior Convertible Notes (the “Convertible Notes”) with a yield to maturity of 6.0% for consideration of £330.2 million. The Convertible Notes mature on July 7, 2005 with interest accruing semi-annually payable in arrears on July 7 and January 7 each year. The Convertible Notes are convertible into the ordinary shares of the Company after September 15, 2000 and up to the close of business on June 22, 2005 at a conversion price of 288p per ordinary share. The Convertible Notes are redeemable, in whole (but not in part) at the option of the Company at 100% of their principal amount plus accrued interest at any time on or after July 7, 2003 or at any time when at least 90% of the notes issued have been purchased by the Company and cancelled or converted.
The Convertible Notes were issued to temporarily repay revolving bank debt and for general corporate purposes. The indentures under which the Senior Convertible Notes were issued contained various covenants which, amongst other things, restrict the ability of the Company to incur additional indebtedness, pay dividends, create certain liens, enter into certain transactions with shareholders or affiliates or sell certain assets. The Company was in compliance with the covenants at December 31, 2000.
The Company has entered into a series of forward exchange contracts to hedge its exposure to adverse fluctuations in exchange rates on interest payment dates of the Convertible Notes. The terms of these contracts are described in note 4 to the consolidated financial statements. The Company has decided not to hedge the principal amount of the Convertible Notes as the expectation is that the Notes will convert before or on the maturity date or refinanced in US Dollars before the maturity date.
The Convertible Notes are unsecured liabilities of the Company.
Accreting Convertible Notes 2003
On November 1, 2000 the Company issued £220.0 million initial principal amount of Accreting Convertible Notes (the “Accreting Convertible Notes”) with a yield to maturity of 5.0%. The Accreting Convertible Notes were issued to finance the purchase of Eurobell (Holdings) PLC (“Eurobell”), from Deutsche Telekom. In consideration the Company received Eurobell’s entire issued share capital, £71.7 million, the assignment of an inter-company loan previously owed by Eurobell to Deutsche Telekom, £128.3 million, and a cash payment remitted to Eurobell by Deutsche Telekom shortly after the acquisition, £20.0 million. Subsequently, on January 15, 2001 Deutsche Telekom remitted a further cash payment, £30.0 million, to Eurobell and the Company issued an additional Accreting Convertible Note for the same amount. In addition under the terms of the acquisition, the Company is obliged to provide deferred consideration, contingent on Eurobell’s turnover for the year ended December 31, 2000 exceeding a certain target. As a result, an additional £3.5 million Accreting Convertible Note will be issued to Deutsche Telekom in April 2001.
The Accreting Convertible Notes are convertible into ordinary shares of the Company at an initial conversion price of 156.56p per ordinary share. Conversion of the shares is at maturity at the holder’s option but the Company can elect to settle in cash, in whole (but not in part) at the option of the Company at any time at 100% of the accreted value thereof provided that for a certain 10 day period prior to redemption, the price per ordinary share has been at least 130% of the average conversion price in effect on each day during the 10 day period.
The Accreting Convertible Notes are unsecured liabilities of the Company.
Senior Secured Facility
At December 31, 2000 the Company had a £1.5 billion senior secured credit facility (the “Senior Secured facility”) with a syndicate of banks. On March 16, 2001 the Company entered into a new Senior Secured credit facility with a syndicate of banks for £2.0 billion. The first drawdown under the facility was used to repay the old Group facility and the Flextech facility. There is also the ability under the terms of the loan agreement to raise a further £250.0 million from institutional investors.
Borrowings under the new Senior Secured credit facility are secured on the assets of the Company, including the partnership interests and shares of subsidiaries, and bear interest at between 0.5% and 2.25% above LIBOR (depending on the ratio of borrowings to quarterly annualized consolidated net operating cash flow.
The terms of the old and new facilities restrict transfers or disposals of assets from certain subsidiary companies. These restrictions relate to the type and value of the consideration that can be accepted.
The Company’s ability to borrow under the facility is subject to, among other things, its compliance with the financial and other covenants and borrowing conditions contained therein. Whilst at the end of 2000 the Company was not in compliance with certain of its covenants, a waiver was granted by the Company’s bankers.
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Interest rate risk on the Senior Secured facility is managed with the use of interest rate swaps. The effective dates of the interest rate swap agreements are between December 23, 1996 and December 19, 2000, and the agreements mature between
December 31, 2001 and March 31, 2004. The aggregate notional principal amount of the swaps is a maximum of £1,127 million. In accordance with the swap agreements, the Group receives interest at the six-month LIBOR rate and pays a fixed interest rate in the range of 7.175%-7.910%.
Flextech Facility
Following the Group’s acquisition of Flextech, the Group took over an existing Senior Secured credit facility of up to
£200.0 million with a syndicate of banks. The amount outstanding under the facility at December 31, 2000 was £116.0 million. On March 16, 2001, all borrowings under the facility were repaid from the proceeds of the new £2.0 billion Senior Secured credit facility, and the facility was cancelled.
In July 2000, Telewest Communications Networks Limited assigned an interest rate swap to Flextech in order to manage interest rate risk on the Flextech bank facility. The effective date of the interest rate swap is December 23, 1996 and the agreement matures on December 23, 2001. The aggregate notional principal amount of the swap is £128.0 million.
In accordance with the swap agreements, Flextech receives interest at the three month LIBOR rate and pays a fixed interest of 7.7825% semi-annually.
Other debt
Other debt includes property loans which are secured on freehold land and buildings held by the Company which mature from 2001 onwards. The property loans bear interest at a rate of between 1.00% and 2.25% above LIBOR.
On May 25, 2000 the General Cable Limited preference share scheme was wound up. £90.0 million which had been deposited with the parent company of the preference shareholder (an authorized banking institution) was repaid to the Company and £100.0 million of 6.0568% preference shares were redeemed.
In addition, a subsidiary has a standby credit facility of £2.0 million made available by Vivendi S.A., a former shareholder of General Cable Limited, which is due to be repaid on April 19, 2001. The loan carries interest at 1% over LIBOR.
The Maturity Profile of the Company’s long-term debt is as follows:
2000 £M 2001 834.5 2002 – 2003 225.3 2004 – 2005 334.3 2006 AND THEREAFTER 2,859.6 4,253.7 15 INCOME TAXES
Loss before income taxes is solely attributable to the UK: 2000 1999 1998
The provisions for income taxes follow: £M £M £M
INCOME TAX BENEFIT/(EXPENSE) – – –
DEFERRED TAX BENEFIT 5.8 – –
5.8 – –
A reconciliation of income taxes determined using the statutory UK rate of 30.0% (1999: 30.25%) to the effective rate of income tax is as follows:
YEAR ENDED DECEMBER 31
2000 1999 1998
% % %
CORPORATE TAX AT UK STATUTORY RATES (30.0) (30.25) (31.0)
PERMANENT DIFFERENCES (0.5) 0.3 –
CHANGE IN VALUATION ALLOWANCE 31.3 29.95 31
100
US GAAP