As filed with the Securities and Exchange Commission on May 14, 2001
Registration No. 333-59852
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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American Tower Corporation
(Exact name of Registrant as specified in its charter)
Delaware 4899 65-072387
(Primary Standard (I.R.S. Employer
(State or other Industrial Identification Number)
jurisdiction of Classification Number)
incorporation or
organization)
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Steven B. Dodge
Chief Executive Officer
American Tower Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
(617) 375-7500
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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Copies to:
David E. Redlick, Esq.
Matthew J. Gardella, Esq.
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telephone: (617) 526-6000
Telecopy: (617) 526-5000
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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PROSPECTUS
$1,000,000,000
[LOGO OF AMERICAN TOWER]
9 3/8% Senior Notes Due 2009
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We are offering to exchange 9 3/8% senior notes due 2009 that we have
registered under the Securities Act of 1933 for all outstanding 9 3/8% senior
notes due 2009. We refer to these registered notes as the new notes and all
outstanding 9 3/8% senior notes due 2009 as the old notes.
The Exchange Offer
. We will exchange an equal principal amount of new notes that are
freely tradeable for all old notes that are validly tendered and not
validly withdrawn.
. You may withdraw tenders of outstanding old notes at any time prior
to the expiration of the exchange offer.
. The exchange offer is subject to the satisfaction of limited,
customary conditions.
. The exchange offer expires at 5:00 p.m., New York City time, on June
29, 2001, unless extended.
. The exchange of old notes for new notes in the exchange offer
generally will not be a taxable event for U.S. federal income tax
purposes.
. We will not receive any proceeds from the exchange offer.
The New Notes
. We are offering the new notes in order to satisfy our obligations
under the registration rights agreement entered into in connection
with the private placement of the old notes.
. The terms of the new notes to be issued in the exchange offer are
substantially identical to the terms of the old notes, except that
the new notes are registered under the Securities Act and have no
transfer restrictions, rights to additional interest or registration
rights except in limited circumstances.
See "Risk Factors" beginning on page 13 to read about factors you should
consider in connection with the exchange offer.
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If you are a broker-dealer that receives new notes for your own account as a
result of market-making or other trading activities, you must acknowledge that
you will deliver a prospectus in connection with any resale of the new notes.
The letter of transmittal accompanying this prospectus states that by so
acknowledging and by delivering a prospectus, you will not be deemed to admit
that you are an "underwriter" within the meaning of the Securities Act. You may
use this prospectus, as we may amend or supplement it in the future, for your
resales of new notes. We will make this prospectus available to any broker-
dealer for use in connection with any such resale for a period of 180 days
after the date of expiration of this exchange offer.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the new notes or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is May 14, 2001
TABLE OF CONTENTS
Page
----
Where You Can Find More Information........................................ i
Note to Readers............................................................ ii
Summary.................................................................... 1
Risk Factors............................................................... 13
Cautionary Note Regarding Forward-Looking Statements....................... 21
Use of Proceeds............................................................ 21
Capitalization............................................................. 22
Unaudited Pro Forma Condensed Consolidated Financial Statements............ 23
The Exchange Offer......................................................... 30
Description of the New Notes............................................... 40
Description of Indebtedness................................................ 80
Summary of United States Federal Tax Consequences.......................... 83
Plan of Distribution....................................................... 88
Legal Matters.............................................................. 89
Experts.................................................................... 89
Exchange Agent............................................................. 90
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WHERE YOU CAN FIND MORE INFORMATION
We are "incorporating by reference" in this prospectus some of the documents
we file with the SEC. This means that we can disclose important information to
you by referring you to those documents. The information in the documents
incorporated by reference is considered to be part of this prospectus.
Information in specified documents that we file with the SEC after the date of
this prospectus will automatically update and supersede information in this
prospectus. We incorporate by reference the documents listed below and any
future filings we may make with the SEC under Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 after the date of filing of the initial
registration statement relating to this exchange offer and prior to the
termination of any offering of securities offered by this prospectus:
. our Annual Report on Form 10-K for the fiscal year ended December 31,
2000, and
. our Current Reports on Form 8-K dated January 17, 2001, January 19,
2001, January 22, 2001, January 29, 2001, February 1, 2001, February 16,
2001, March 29, 2001 and April 17, 2001.
Information contained in this prospectus supplements, modifies or
supersedes, as applicable, the information contained in earlier-dated documents
incorporated by reference. Information contained in later-dated documents
incorporated by reference supplements, modifies or supersedes, as applicable,
the information contained in this prospectus or in earlier-dated documents
incorporated by reference.
We will provide a copy of the documents we incorporate by reference, at no
cost, upon written request or oral request of any person who receives this
prospectus. To request a copy of any or all of these documents, you should
write or telephone us at: 116 Huntington Avenue, Boston, Massachusetts 02116,
(617) 375-7500, Attention: Director of Investor Relations. If you would like to
request any documents, please do so by no later than June 22, 2001 in order to
receive them before the expiration of the exchange offer.
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at the public reference facilities the SEC maintains at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the SEC's regional offices located at
Northwestern Atrium Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. You may also obtain copies of these materials by mail from the
i
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. The SEC also
maintains a web site, the address of which is http://www.sec.gov. That site
contains our annual, quarterly and current reports, proxy statements and other
information. You may also read our annual, quarterly and current reports, proxy
statements and other documents relating to us at the offices of the New York
Stock Exchange at 20 Broad Street, New York, New York 10005.
We have filed this prospectus with the SEC as part of a registration
statement on Form S-4 under the Securities Act. This prospectus does not
contain all of the information set forth in the registration statement because
some parts of the registration statement are omitted in accordance with the
rules and regulations of the SEC. The registration statement and its exhibits
are available for inspection and copying as set forth above.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized any other person to
provide you with different or additional information. If anyone provides you
with different or additional information, you should not rely on it. The
information contained or incorporated by reference in this prospectus is
accurate only as of the date on the front cover of this prospectus or the date
of the document incorporated by reference. Our business, financial condition,
results of operations and prospects may have changed since then. We are not
making an offer to sell the new notes in any jurisdiction where the offer or
sale is not permitted.
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NOTE TO READERS
Throughout this prospectus, we present information about us that reflects
important adjustments to historical information. We have made these adjustments
because we believe that the adjusted information will enable you to better
evaluate our business and operations in light of the significant acquisitions
and financing transactions that we have effected since January 1, 2000. The
adjustments that we have made are as follows:
. we present financial information about our financial position and
results of operations on a pro forma basis to reflect the most
significant, but not all, of our acquisitions and financing transactions
during, after or as of the beginning or end of, the applicable periods.
We identify this information by referring to it as being pro forma or
reflecting the pro forma transactions. The basis on which we have
prepared this information is described under "Unaudited Pro Forma
Condensed Consolidated Financial Statements", and
. in describing our business, such as the number of towers that we own and
operate and the scope of our Verestar operations, we generally provide
information on a basis that gives effect to completed acquisitions and
pending acquisitions that are covered by legally binding contracts, even
though they have not yet closed. This information includes the pro forma
transactions as well as other transactions that are not part of the pro
forma transactions.
ii
SUMMARY
This summary highlights selected information about us. This summary is not
complete and does not contain all of the information that you should consider
before participating in this exchange offer. You should read this entire
prospectus carefully, including "Risk Factors", and the documents that we have
filed with the SEC and incorporated by reference into this prospectus.
AMERICAN TOWER
We are a leading wireless and broadcast communications infrastructure company
operating in three business segments.
. Rental and management. Our primary business is renting antenna space to
wireless and broadcast companies on multi-tenant communications towers.
We operate the largest network of wireless communications towers in
North America and are the largest independent operator of broadcast
towers in North America, based on number of towers. Our growth strategy
focuses on both the acquisition and construction of towers. We use our
own extensive tower network development capabilities, which include site
acquisition and tower construction services, to construct our own build-
to-suit and other towers. These capabilities enable us to construct
towers at costs that are generally lower than the cost of acquiring
towers.
. Network development services. Through ATC Integrated Services, we
provide the full-range of tower-related services necessary to establish,
develop and maintain wireless and broadcast tower networks. Theses
services include:
. radio frequency engineering consulting;
. site acquisition and network design;
. zoning and other governmental approvals;
. tower construction;
. antenna installation;
. tower component part sales; and
. site monitoring and maintenance.
. Satellite and fiber network access services. Our Verestar subsidiary is
a leading provider of integrated satellite and fiber network access
services, based on the number of our teleport antennae and facilities.
We provide these services to telecommunications companies, Internet
service providers, which are often referred to as ISPs, broadcasters and
maritime customers, both domestic and international. Verestar's
teleports and other facilities enable its customers to transmit Internet
traffic, voice, video and other data through the integration of
satellites, high-speed fiber connections and communications switches.
Our pro forma operating revenues for the year ended December 31, 2000 were
$783.3 million. We estimate that our three business segments accounted for the
following percentages of our pro forma operating revenues for the year ended
December 31, 2000:
. Rental and management--42%;
. Network development services--40%; and
. Satellite and fiber network access services--18%.
Our principal executive offices are located at 116 Huntington Avenue, Boston,
Massachusetts 02116. Our telephone number is (617) 375-7500.
1
THE OFFERING
Summary of Terms of the Exchange Offer
Background.................. On January 31, 2001, we completed a private
placement of our outstanding, unregistered
old notes. In connection with that private
placement, we entered into a registration
rights agreement in which we agreed to
deliver this prospectus to you and to make an
exchange offer.
The Exchange Offer.......... We are offering to exchange up to $1.0
billion aggregate principal amount of our new
notes which have been registered under the
Securities Act for up to $1.0 billion
aggregate principal amount of our old notes.
You may tender old notes only in integral
multiples of $1,000 principal amount.
Resale of New Notes......... Based on interpretive letters of the SEC
staff to third parties, we believe that you
may resell and transfer the new notes issued
pursuant to the exchange offer in exchange
for old notes without compliance with the
registration and prospectus delivery
provisions of the Securities Act, if:
. you are acquiring the new notes in the
ordinary course of your business,
. you have no arrangement or understanding with
any person to participate in the distribution
of the new notes, and
. you are not our affiliate as defined under
Rule 405 of the Securities Act.
If you fail to satisfy any of these
conditions, you must comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with a resale of the new notes.
Broker-dealers that acquired old notes
directly from us, but not as a result of
market-making activities or other trading
activities, must comply with the registration
and prospectus delivery requirements of the
Securities Act in connection with a resale of
the new notes.
Each broker-dealer that receives new notes
for its own account pursuant to the exchange
offer in exchange for old notes that it
acquired as a result of market-making or
other trading activities must deliver a
prospectus in connection with any resale of
the new notes and provide us with a signed
acknowledgement of this obligation.
Consequences If You Do Not
Exchange Your Old Notes.... Old notes that are not tendered in the
exchange offer or are not accepted for
exchange will continue to bear legends
restricting their transfer. You will not be
able to offer or sell the old notes unless:
. an exemption from the requirements of the
Securities Act is available to you,
2
. we register the resale of old notes under the
Securities Act, or
. the transaction requires neither an exemption
from nor registration under the requirements
of the Securities Act.
After the completion of the exchange offer,
we will no longer have an obligation to
register the old notes, except in limited
circumstances.
Expiration Date.............
5:00 p.m., New York City time, on June 29,
2001, unless we extend the exchange offer.
Conditions to the The exchange offer is subject to limited,
Exchange Offer............. customary conditions, which we may waive.
Procedures for Tendering If you wish to accept the exchange offer, you
Old Notes.................. must deliver to the exchange agent:
. either a completed and signed letter of
transmittal or, for old notes tendered
electronically, an agent's message from
Depository Trust Company, which we refer
to as DTC, Euroclear or Clearstream
stating that the tendering participant
agrees to be bound by the letter of
transmittal and the terms of the exchange
offer,
. your old notes, either by tendering them
in physical form or by timely confirmation
of book-entry transfer through DTC,
Euroclear or Clearstream, and
. all other documents required by the letter
of transmittal.
These actions must be completed before the
expiration of the exchange offer.
If you hold old notes through DTC, Euroclear
or Clearstream, you must comply with their
standard procedures for electronic tenders,
by which you will agree to be bound by the
letter of transmittal.
By signing, or by agreeing to be bound by the
letter of transmittal, you will be
representing to us that:
. you will be acquiring the new notes in the
ordinary course of your business,
. you have no arrangement or understanding
with any person to participate in the
distribution of the new notes, and
. you are not our affiliate as defined under
Rule 405 of the Securities Act.
See "Exchange Offer--Procedures for
Tendering".
Guaranteed Delivery
Procedures for Tendering If you cannot meet the expiration deadline or
Old Notes.................. you cannot deliver your old notes, the letter
of transmittal or any other documentation to
comply with the applicable procedures under
DTC, Euroclear or
3
Clearstream standard operating procedures for
electronic tenders in a timely fashion, you
may tender your notes according to the
guaranteed delivery procedures set forth
under "The Exchange Offer--Guaranteed
Delivery Procedures".
Special Procedures for
Beneficial Holders......... If you beneficially own old notes which are
registered in the name of a broker, dealer,
commercial bank, trust company or other
nominee and you wish to tender in the
exchange offer, you should contact that
registered holder promptly and instruct that
person to tender on your behalf. If you wish
to tender in the exchange offer on your own
behalf, you must, prior to completing and
executing the letter of transmittal and
delivering your old notes, either arrange to
have the old notes registered in your name or
obtain a properly completed bond power from
the registered holder. The transfer of
registered ownership may take considerable
time.
Withdrawal Rights........... You may withdraw your tender of old notes at
any time before the exchange offer expires.
Tax Consequences............
The exchange pursuant to the exchange offer
generally will not be a taxable event for
U.S. federal income tax purposes. See
"Summary of United States Federal Tax
Consequences".
Use of Proceeds............. We will not receive any proceeds from the
exchange or the issuance of new notes in
connection with the exchange offer.
Exchange Agent..............
The Bank of New York is serving as exchange
agent in connection with the exchange offer.
The address and telephone number of the
exchange agent are set forth under "The
Exchange Offer--Exchange Agent".
4
Summary Description of the New Notes
The form and terms of the new notes are the same as the form and terms of
the old notes, except that:
. the new notes will be registered under the Securities Act and will
therefore not bear legends restricting their transfer, and
. specified rights under the registration rights agreement, including the
provisions providing for registration rights and the payment of
additional interest in specified circumstances will be limited or
eliminated.
The new notes will evidence the same debt as the old notes and will rank
equally with the old notes. The same indenture will govern both the old notes
and the new notes. We refer to the old notes and the new notes together as the
"notes."
New Notes Offered........... $1,000,000,000 in aggregate principal amount
of 9 3/8% Senior Notes Due 2009.
Maturity.................... February 1, 2009.
Interest.................... 9 3/8% per annum on the principal amount,
payable semiannually in arrears in cash on
February 1 and August 1 of each year,
beginning August 1, 2001. Interest accrued
through the expiration date of the exchange
offer on old notes that are exchanged will be
paid to holders of record of the new notes on
the next regular payment date.
Ranking..................... The notes will rank equally with our senior
unsecured indebtedness. As of December 31,
2000, our senior unsecured indebtedness
included $920.9 million principal amount of
convertible notes due in 2009 and 2010. Our
subsidiaries will not guarantee the notes.
The notes will effectively rank junior to all
indebtedness of our subsidiaries.
Indebtedness under our existing domestic
credit facilities is issued by our
subsidiaries and is secured by the assets of
most of our subsidiaries. We have also
guaranteed indebtedness under our domestic
credit facilities and secured our guaranty by
most of our assets. As of December 31, 2000,
after giving pro forma effect to the pro
forma transactions described in this
prospectus, $1.6 billion of indebtedness
would have been outstanding under our
domestic credit facilities, our ATC Mexico
loan agreement and other long-term subsidiary
debt, and $650.0 million of unused
commitments would have existed under our
existing domestic credit facilities.
Change of Control........... If we experience a change of control, we must
give holders of the notes the opportunity to
sell us their notes at 101% of the principal
amount plus accrued and unpaid interest. We
might not be able to pay you the required
price for notes you present to us at the time
of a change of control because:
. we might not have enough funds at that time,
or
. the terms of our credit facilities may prevent
us from paying you.
5
Optional Redemption......... We may redeem the notes at our option prior
to maturity as follows:
. before February 1, 2004, we may redeem up to
35% of the notes at 109.375% of their
principal amount with the net proceeds of
specified equity offerings;
. before February 1, 2005, we may redeem the
notes, in whole or in part, at 100% of the
principal amount plus an applicable make-whole
premium; and
. on or after February 1, 2005, we may redeem
the notes, in whole or in part, at a
redemption price initially of 104.688% of the
principal amount. The redemption price
declines ratably immediately after February 1
of each following year to 100% of the
principal amount in 2008.
We are also required to pay accrued and
unpaid interest on all such redemptions.
Restrictive Covenants....... The indenture governing the notes limits what
we may do. The provisions of the indenture
limit our ability to:
. incur more debt, guarantee indebtedness and
issue preferred stock,
. create liens,
. pay dividends or make distributions or other
restricted payments,
. make specified types of investments,
. merge, consolidate or sell assets,
. enter into transactions with affiliates,
. enter into sale-leaseback transactions, and
. issue stock of some types of subsidiaries.
These covenants are subject to a number of
important exceptions. If the notes receive
and maintain investment grade ratings, we
will not be required to comply with most of
the covenants contained in the indenture. In
addition, Verestar and its subsidiaries are
unrestricted subsidiaries under the terms of
the indenture and are not subject to many of
these covenants.
6
SUMMARY PRO FORMA FINANCIAL AND OTHER DATA
The unaudited pro forma financial and other data set forth below have been
derived from the pro forma financial statements included under "Unaudited Pro
Forma Condensed Consolidated Financial Statements". The pro forma financial
statements do not reflect all of our consummated or pending acquisitions or
pending construction.
The pro forma balance sheet data give effect, as of December 31, 2000, on a
pro forma basis to the following transactions that had not been completed at
that date: the ALLTEL transaction, the remaining portions of the AirTouch
transaction, the sale of 10.0 million shares of Class A common stock in January
2001, the private placement of the old notes in January 2001 and borrowings by
our Mexican subsidiary under its credit facility as described under
"Description of Indebtedness--ATC Mexico Loan Agreement". The pro forma
statement of operations data and other operating data give effect to the pro
forma transactions as if each had occurred on January 1, 2000. We use the term
pro forma transactions to mean the following major acquisitions and financings:
. our agreement with ALLTEL to acquire up to 2,193 communications towers
through a sublease arrangement and our agreement with AirTouch to lease
on a long-term basis up to 2,100 communications towers. The closings on
towers in each of these transactions occurs in periodic installments,
. our Class A common stock offerings in January 2001 and June 2000,
. our convertible notes private placement in February 2000,
. the private placement of the old notes in January 2001, and
. borrowings under our ATC Mexico loan agreement.
You should read the pro forma data set forth below in conjunction with the
historical financial statements incorporated by reference into this prospectus
and the unaudited pro forma condensed consolidated financial statements
presented in this prospectus. Although the ALLTEL and AirTouch transactions do
not involve the acquisition of businesses, we have provided pro forma
information related to these transactions, as we believe such information is
material to your investment decision.
The pro forma financial information may not reflect our financial condition
or our results of operations had the pro forma transactions actually occurred
on the dates specified. This information also may not reflect our future
financial condition or results of operations.
We do not consider divisional cash flow or EBITDA as a substitute for other
measures of operating results or cash flow from operating activities or as a
measure of our profitability or liquidity. We do not calculate divisional cash
flow or EBITDA in accordance with accounting principles generally accepted in
the United States. However, we have included them because they are used in the
communications site industry as a measure of a company's operating performance.
More specifically, we believe these measures can assist in comparing company
performances on a consistent basis without regard to depreciation and
amortization. Our concern is that depreciation and amortization can vary
significantly among companies depending on accounting methods, particularly
where acquisitions or non-operating factors including historical cost bases are
involved. We believe divisional cash flow is useful because it enables you to
compare our divisional performance before the effect of tower separation,
development and corporate general and administrative expenses that do not
relate directly to such performance.
Where we present data for the restricted group, we are presenting the data
for American Tower Corporation and its subsidiaries which comprise the
restricted group under the indenture governing the notes. All of our
subsidiaries are part of this restricted group, except Verestar and its
subsidiaries, whose operations constitute all of our satellite and fiber
network access services business segment. This restricted group data is not
intended to represent an alternative measure of operating results, financial
position or cash flow from operations, as determined in accordance with
generally accepted accounting principles.
7
Year Ended
December 31, 2000
-----------------------------
Consolidated Restricted Group
Pro Forma Pro Forma(1)
------------ ----------------
(Dollars in thousands)
Statement of Operations Data:
Operating revenues.............................. $ 783,300 $ 638,099
---------- ----------
Operating expenses:
Operating expenses(2).......................... 550,243 440,178
Depreciation and amortization.................. 339,869 312,795
Development expense(3)......................... 14,517 14,433
Corporate general and administrative expense... 14,958 14,958
---------- ----------
Total operating expenses........................ 919,587 782,364
---------- ----------
Loss from operations............................ (136,287) (144,265)
Interest expense................................ 252,512 250,679
Interest income and other, net.................. (13,018) (12,661)
Interest income TV Azteca, net(4)............... (12,679) (12,679)
Premium on note conversion (5).................. 16,968 16,968
Minority interest in net earnings of
subsidiaries(6)................................ 202 202
---------- ----------
Loss before income taxes and extraordinary
losses......................................... $ (380,272) $ (386,774)
========== ==========
Other Data:
EBITDA(7)....................................... $ 216,261 $ 181,209
EBITDA margin(7)................................ 27.6% 28.4%
Divisional cash flow(8)......................... 245,736 210,600
Tower Data:
Towers operated at end of period(9)............. 13,600 13,600
December 31, 2000
-----------------------------
Consolidated Restricted Group
Pro Forma Pro Forma(1)
------------ ----------------
Balance Sheet Data:
Cash and cash equivalents....................... $ 730,950 $ 715,459
Restricted cash(10)............................. 139,786 139,786
Property and equipment, net..................... 2,296,670 2,013,270
Total assets.................................... 7,118,491 6,948,863
Long-term obligations, including current
portion........................................ 3,563,223 3,450,911
Net debt(11).................................... 2,692,487 2,595,666
Total stockholders' equity...................... 3,239,842 3,239,842
--------
(1) Corporate overhead allocable to Verestar and interest expense related to
intercompany borrowings by Verestar (unrestricted subsidiary) have not
been excluded from results shown for the restricted group.
(2) Consists of operating expenses other than depreciation and amortization,
development and corporate general and administrative expenses.
(3) Development expense means uncapitalized acquisition costs, costs to
integrate acquisitions, costs associated with new business initiatives,
abandoned acquisition costs and costs associated with tower site
inspections and related data gathering. We record these costs as
expenses in the periods in which we incur them.
(4) Interest income TV Azteca, net of interest expense of $1.0 million in
2000.
(5) Premium on note conversion represents the fair value of incremental
stock issued to noteholders to induce them to convert their holdings
prior to the first scheduled redemption date.
(6) Represents the minority interest in net earnings of our non-wholly-owned
subsidiaries.
(7) EBITDA means income from operations before depreciation and
amortization, plus interest income TV Azteca, net. EBITDA margin means
EBITDA divided by operating revenues.
(8) Divisional cash flow means income from operations before depreciation
and amortization, development expense, and corporate general and
administrative expense, plus interest income TV Azteca, net.
(9) Includes information with respect to our company only and assumes
completion of all pending transactions as of December 31, 2000,
including those not in the pro forma transactions. Excludes towers under
construction.
8
(10) Includes at December 31, 2000 approximately $46.0 million of restricted
funds required under our domestic credit facilities to be held in escrow
to make scheduled interest payments on our outstanding convertible notes
and approximately $93.7 million required to be held in escrow to make
scheduled interest payments on the notes. We are required to maintain
the escrow for the convertible notes through 2001 and for the notes
through February 2002. See "Description of Indebtedness--Credit
Facilities".
(11) Net debt represents long-term debt, including current portion, less cash
and cash equivalents and restricted cash.
9
SUMMARY HISTORICAL FINANCIAL DATA
We have derived the following summary financial data from our historical
consolidated financial statements. You should read the summary financial data
in conjunction with our historical consolidated financial statements and the
related notes to those consolidated financial statements incorporated by
reference into this prospectus. Prior to our separation from our former parent
on June 4, 1998, we operated as a subsidiary of American Radio Systems
Corporation and not as an independent company. Therefore, our results of
operations for that period may be different from what they would have been had
we operated as a separate, independent company.
We have acquired and constructed many towers during the periods that we
present. These activities, coupled with acquisitions that we consummated in our
other segments, significantly affect year-to-year comparisons. We describe our
principal acquisitions during these periods in the notes to our historical
consolidated financial statements which we have incorporated by reference into
this prospectus.
We do not consider divisional cash flow or EBITDA as a substitute for other
measures of operating results or cash flow from operating activities or as a
measure of our profitability or liquidity. We do not calculate divisional cash
flow or EBITDA in accordance with accounting principles generally accepted in
the United States. However, we have included them because they are used in the
communications site industry as a measure of a company's operating performance.
More specifically, we believe these measures can assist in comparing company
performances on a consistent basis without regard to depreciation and
amortization. Our concern is that depreciation and amortization can vary
significantly among companies depending on accounting methods, particularly
where acquisitions or non-operating factors including historical cost bases are
involved. We believe divisional cash flow is useful because it enables you to
compare our divisional performance before the effect of tower separation,
development and corporate general and administrative expenses that do not
relate directly to such performance.
10
AMERICAN TOWER CORPORATION
SUMMARY HISTORICAL FINANCIAL DATA
Year Ended December 31,
-------------------------------------------------------
1996 1997 1998 1999 2000
------- --------- --------- ----------- -----------
(in thousands)
Statements of Operations
Data:
Operating revenues...... $ 2,897 $ 17,508 $ 103,544 $ 258,081 $ 735,275
------- --------- --------- ----------- -----------
Operating expenses:
Operating expenses(1).. 1,362 8,713 61,751 155,857 524,074
Depreciation and
amortization.......... 990 6,326 52,064 132,539 283,360
Tower separation
expense(2)............ 12,772
Development
expense(3)............ 1,607 14,517
Corporate general and
administrative
expense............... 830 1,536 5,099 9,136 14,958
------- --------- --------- ----------- -----------
Total operating
expenses............... 3,182 16,575 131,686 299,139 836,909
------- --------- --------- ----------- -----------
(Loss) income from
operations............. (285) 933 (28,142) (41,058) (101,634)
Interest expense........ (3,040) (23,229) (27,492) (156,839)
Interest income and
other, net............. 36 251 9,217 17,695 13,018
Interest income TV
Azteca, net(4)......... 1,856 12,679
Premium on note
conversion(5).......... (16,968)
Minority interest in net
earnings of
subsidiaries(6)........ (185) (193) (287) (142) (202)
------- --------- --------- ----------- -----------
Loss before income taxes
and extraordinary
losses................. (434) (2,049) (42,441) (49,141) (249,946)
Benefit (provision) for
income taxes........... (45) 473 4,491 (214) 59,656
------- --------- --------- ----------- -----------
Loss before
extraordinary losses... $ (479) $ (1,576) $ (37,950) $ (49,355) $ (190,290)
======= ========= ========= =========== ===========
Basic and diluted loss
per common share before
extraordinary
losses(7).............. $ (0.01) $ (0.03) $ (0.48) $ (0.33) $ (1.13)
======= ========= ========= =========== ===========
Basic and diluted
weighted average common
shares outstanding(7).. 48,732 48,732 79,986 149,749 168,715
======= ========= ========= =========== ===========
Other Data:
EBITDA(8)............... $ 705 $ 7,259 $ 36,694 $ 91,481 $ 194,405
EBITDA margin(8)........ 24.3% 41.5% 35.4% 35.4% 26.4%
Divisional cash
flow(9)................ 1,535 8,795 41,793 102,224 223,880
Capital expenditures.... 20,614 126,455 294,242 548,991
Cash provided by (used
for) operating
activities............. 2,230 9,913 18,429 97,011 (25,041)
Cash used for investing
activities............. (216,783) (350,377) (1,137,700) (2,010,680)
Cash provided by
financing activities... 132 209,092 513,527 879,726 2,092,547
Ratio of earnings to
fixed charges(10)...... -- -- -- -- --
December 31,
-----------------------
1997 1998 1999 2000
---- ----- ----- ------
Tower Data:
Towers operated at end of period(11).................... 700 2,500 5,100 11,000
Towers constructed during period(12).................... 100 500 1,000 1,700
December 31,
-------------------------------------------------
1996 1997 1998 1999 2000
------- -------- ---------- ---------- ----------
(in thousands)
Balance Sheet Data:
Cash and cash equivalents... $ 2,373 $ 4,596 $ 186,175 $ 25,212 $ 82,038
Restricted cash(13)......... 46,036
Property and equipment,
net........................ 19,710 117,618 449,476 1,092,346 2,296,670
Total assets................ 37,118 255,357 1,502,343 3,018,866 5,660,679
Long-term obligations,
including current portion.. 4,535 90,176 281,129 740,822 2,468,223
Net debt(14)................ 2,162 85,580 94,954 715,610 2,340,149
Total stockholders' equity.. 29,728 153,208 1,091,746 2,145,083 2,877,030
11
--------
(1) Consists of operating expenses other than depreciation and amortization,
tower separation, development and corporate general and administrative
expenses.
(2) Tower separation expense refers to the one-time expense incurred as a
result of our separation from American Radio.
(3) Development expense means uncapitalized acquisition costs, costs to
integrate acquisitions, costs associated with new business initiatives,
abandoned acquisition costs and costs associated with tower site
inspections and related data gathering. We record these costs as expenses
in the periods in which we incur them. Development expense prior to 1999
was immaterial.
(4) Interest income TV Azteca, net of interest expense of $1.0 million in
2000.
(5) Premium on note conversion represents the fair value of incremental stock
issued to noteholders to induce them to convert their holdings prior to
the first scheduled redemption date.
(6) Represents the minority interest in net earnings of our non-wholly-owned
subsidiaries.
(7) We computed historical basic and diluted loss per common share before
extraordinary losses using the weighted average number of shares
outstanding during each period presented. Shares outstanding following
the separation from American Radio are assumed to be outstanding for all
periods presented prior to June 4, 1998. We have excluded shares issuable
upon exercise of options and other common stock equivalents from the
computations as their effect is anti-dilutive.
(8) EBITDA means income from operations before depreciation and amortization
and tower separation expense, plus interest income TV Azteca, net in
2000. EBITDA margin means EBITDA divided by operating revenues.
(9) Divisional cash flow means income from operations before depreciation and
amortization, tower separation expense, development expense, and
corporate general and administrative expense, plus interest income TV
Azteca, net in 2000.
(10) For purposes of calculating this ratio, "earnings" consist of loss before
income taxes and extraordinary losses and fixed charges. "Fixed charges"
consist of interest expense, amortization of debt discount and related
issuance costs and the component of rental expense believed by management
to be representative of the interest factor thereon. We had a deficiency
in earnings to fixed charges in each period as follows (in thousands):
1996--$434; 1997--$2,507; 1998--$43,844; 1999--$52,520; and 2000--
$261,311.
(11) Includes information with respect to our company only and excludes towers
under construction. See note (12) below.
(12) Includes towers constructed in each period by us; excludes towers
constructed by acquired companies prior to acquisition.
(13) Includes at December 31, 2000 approximately $46.0 million of restricted
cash required under our domestic credit facilities to be held in escrow
to make scheduled interest payments on our outstanding convertible notes.
We are required to maintain the escrow for the convertible notes through
2001.
(14) Net debt represents long-term debt, including current portion, less cash
and cash equivalents and restricted cash.
12
RISK FACTORS
You should consider the following risk factors, in addition to the other
information presented or incorporated by reference into this prospectus, in
evaluating us, our business and your participation in the exchange offer. Any
of the following risks as well as other risks and uncertainties could seriously
harm our business and financial results and cause the value of the new notes to
decline, which in turn could cause you to lose all or part of your investment.
Risks Related to the Exchange Offer
IF YOU FAIL TO EXCHANGE YOUR OLD NOTES, THEY WILL CONTINUE TO BE RESTRICTED
SECURITIES AND MAY BECOME LESS LIQUID
Old notes which you do not tender or we do not accept will, following the
exchange offer, continue to be restricted securities. You may not offer or sell
untendered old notes except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. We
will issue new notes in exchange for the old notes pursuant to the exchange
offer only following the satisfaction of procedures and conditions described
elsewhere in this prospectus. These procedures and conditions include timely
receipt by the exchange agent of the old notes and of a properly completed and
duly executed letter of transmittal.
Because we anticipate that most holders of old notes will elect to exchange
their old notes, we expect that the liquidity of the market for any old notes
remaining after the completion of the exchange offer may be substantially
limited. Any old note tendered and exchanged in the exchange offer will reduce
the aggregate principal amount of the old notes outstanding. Following the
exchange offer, if you did not tender your old notes you generally will not
have any further registration rights and your old notes will continue to be
subject to transfer restrictions. Accordingly, the liquidity of the market for
any old notes could be adversely affected.
OUR SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR
CASH FLOW AND OUR ABILITY TO MAKE PAYMENTS ON OUR SENIOR NOTES
We have a substantial amount of outstanding indebtedness. After giving
effect to our sale of 10.0 million shares of Class A common stock in January
2001, our sale of $1.0 billion of old notes in January 2001 and borrowings that
we assume we would have made to close the pro forma transactions, we would have
had approximately $3.6 billion of consolidated debt and a debt to equity ratio
of 1.10 to 1.00. Our substantial level of indebtedness increases the
possibility that we may be unable to generate cash sufficient to pay when due
the principal of, interest on or other amounts due in respect of our
indebtedness. We may also obtain additional long-term debt and working capital
lines of credit to meet future financing needs. This would have the effect of
increasing our total leverage.
Our substantial leverage could have significant negative consequences,
including:
. increasing our vulnerability to general adverse economic and industry
conditions;
. limiting our ability to obtain additional financing;
. requiring the dedication of a substantial portion of our cash flow from
operations to service our indebtedness, thereby reducing the amount of
our cash flow available for other purposes, including capital
expenditures;
. requiring us to sell debt or equity securities or to sell some of our
core assets, possibly on unfavorable terms, to meet payment obligations;
. limiting our flexibility in planning for, or reacting to, changes in our
business and the industries in which we compete; and
. placing us at a possible competitive disadvantage with less leveraged
competitors and competitors that may have better access to capital
resources.
A significant portion of our outstanding indebtedness bears interest at
floating rates. As a result, our interest payment obligations on such
indebtedness will increase if interest rates increase.
13
OUR HOLDING COMPANY STRUCTURE RESULTS IN STRUCTURAL SUBORDINATION OF THE NOTES
AND MAY AFFECT OUR ABILITY TO MAKE PAYMENTS ON THE NOTES
The notes are obligations exclusively of our company and not of our
subsidiaries. However, all of our operations are conducted through our
subsidiaries. Our cash flow and our ability to service our debt, including the
notes, is dependent upon distributions of earnings, loans or other payments by
our subsidiaries to us. Our subsidiaries are separate and distinct legal
entities and have no obligation to pay any amounts due on the notes or to
provide us with funds for our payment obligations, whether by dividends,
distributions, loans or other payments. Payments to us by our subsidiaries are
contingent upon our subsidiaries' earnings and business considerations. In
addition, in the case of our subsidiaries that are borrowers under, or
guarantors of, our domestic credit facilities or our ATC Mexico loan agreement,
which includes virtually all of our subsidiaries, substantial contractual
limitations exist on the payment of dividends, distributions, loans or other
amounts to us.
Our principal domestic operating subsidiaries are parties to our $2.0
billion credit facilities. We have the option to increase the capacity of our
domestic credit facilities by up to an additional $500.0 million, subject to
lender approval. Most of our other domestic subsidiaries are guarantors of debt
under those credit facilities. Our payment of principal and interest on the
notes will effectively rank junior to all existing and future debt under our
domestic credit facilities. This is so because the debt under our domestic
credit facilities is issued or guaranteed by our subsidiaries and secured by
their assets. As of December 31, 2000, after giving effect to the pro forma
transactions described in this prospectus, our subsidiaries would have had $1.6
billion of indebtedness outstanding under our domestic credit facilities, our
ATC Mexico loan agreement and other long-term subsidiary debt. We have also
guaranteed the debt under our domestic credit facilities and secured our
guaranty with most of our assets, including the stock of most of our
subsidiaries. In the event of our insolvency, liquidation or reorganization, or
should any of the debt under our domestic credit facilities be accelerated
because of a default, we must pay that debt in full before we can make any
payment on the notes.
The notes will also effectively rank junior to all other existing and future
claims of creditors of our subsidiaries, including the lenders under our ATC
Mexico loan agreement.
RESTRICTIVE COVENANTS IN OUR DOMESTIC CREDIT FACILITIES AND THE NOTES COULD
ADVERSELY AFFECT OUR BUSINESS BY LIMITING FLEXIBILITY
The indenture for the notes and our domestic credit facilities contain
restrictive covenants that limit our ability to take various actions and engage
in various types of transactions. These restrictions include:
. paying dividends and making distributions or other restricted payments;
. incurring more debt, guaranteeing indebtedness and issuing preferred
stock;
. issuing stock of some types of subsidiaries;
. making specified types of investments;
. creating liens;
. entering into transactions with affiliates;
. entering into sale-leaseback transactions; and
. merging, consolidating or selling assets.
These covenants could have an adverse effect on our business by limiting our
ability to take advantage of financing, merger and acquisition or other
corporate opportunities.
VERESTAR AND ITS SUBSIDIARIES ARE UNRESTRICTED SUBSIDIARIES AND ARE NOT SUBJECT
TO MANY OF THE COVENANTS IN THE INDENTURE FOR THE NOTES
Verestar and its subsidiaries, whose operations constitute all of our
satellite and fiber network access services business segment, are unrestricted
subsidiaries under the indenture for the notes. Unrestricted subsidiaries, such
as Verestar, are not subject to various restrictive covenants in the indenture.
For example,
. the restrictions upon asset sales do not apply to any sale by us of the
capital stock of Verestar; and
. the restrictions on the incurrence of indebtedness by Verestar are
different than those that apply to us and our restricted subsidiaries.
14
Further, Verestar is treated in some respects differently than other
unrestricted subsidiaries. For example,
. Verestar may continue to be a co-borrower under our domestic credit
facilities even while being treated as an unrestricted subsidiary;
. if we were to make a distribution to our stockholders in the form of
Verestar capital stock, only a specified amount of our investments in
Verestar since the issue date of the old notes would be considered a
restricted payment under the indenture and the 7.5 times leverage test
would not have to be met; and
. investments by us in Verestar are allowed, and are not deducted from the
amount allowed for investments permitted under the indenture, in an
amount up to $100.0 million at any time outstanding, plus any proceeds
from a substantially concurrent sale of our capital stock.
See "Description of the New Notes" for a summary of the provisions that
apply to restricted and unrestricted subsidiaries.
WE MAY BE UNABLE TO REPAY THE NOTES WHEN DUE OR REPURCHASE THE NOTES WHEN WE
ARE REQUIRED TO DO SO
At final maturity of the notes or in the event of acceleration of the notes
following an event of default, the entire outstanding principal amount of the
notes will become due and payable. In addition, if a change of control occurs
or in the event of specified types of asset sales by us, holders of the notes
may require us to repurchase all or a portion of their notes. We may not have
sufficient funds or may be unable to arrange for additional financing to pay
these amounts when they become due, particularly since part or all of our
other indebtedness will become due upon the occurrence of these events.
Our existing domestic credit facilities prohibit us from redeeming or
repurchasing any of the notes for cash. As a result, we would not be able to
make any of the required payments on the notes described in the prior
paragraph without obtaining the consent of the lenders under our domestic
credit facilities with respect to such payment. If we are unable to make the
required payments or repurchases of the notes, it would constitute an event of
default under our domestic credit facilities and under other indebtedness of
ours, including the notes and our convertible notes. In such circumstances,
the structural subordination of the notes and the fact that our domestic
credit facilities are secured by substantially all of our assets would result
in the debt under our domestic credit facilities being paid prior to any
payment on the notes.
The notes will rank equally with our convertible notes due in 2009 and
2010. As of December 31, 2000, approximately $920.9 million principal amount
of our convertible notes was outstanding. In the event of our insolvency,
liquidation or reorganization, the notes will be paid, if at all, on a pro
rata basis with equally ranked debt, such as any then outstanding convertible
notes.
NO PUBLIC MARKET EXISTS FOR THE NOTES AND YOU MAY NOT BE ABLE TO RESELL YOUR
NOTES
There has been no public market for any of the notes. Despite our
registration of the issuance of the new notes that we are offering in the
exchange offer, we cannot assure you as to
. the liquidity of any such market that may develop,
. your ability to sell your notes, or
. the price at which you may be able to sell your notes.
If such a market were to exist, the notes could trade at prices that may be
lower than the principal amount or purchase price, depending on many factors,
including prevailing interest rates, the market for similar notes and our
financial performance. The initial purchasers of the old notes are not
obligated to make a market in the notes and may discontinue any market-making
at any time at their sole discretion. We do not intend to apply for listing of
the notes on any securities exchange.
15
Risks Related to Our Business
DECREASE IN DEMAND FOR TOWER SPACE WOULD MATERIALLY AND ADVERSELY AFFECT OUR
OPERATING RESULTS AND WE CANNOT CONTROL THAT DEMAND
Many of the factors affecting the demand for tower space, and to a lesser
extent our services business, affect our operating results. Those factors
include:
. consumer demand for wireless services;
. the financial condition of wireless service providers and their
preference for owning rather than leasing antenna sites;
. the growth rate of wireless communications or of a particular wireless
segment;
. the number of wireless service providers in a particular segment,
nationally or locally;
. governmental licensing of broadcast rights;
. increased use of roaming and resale arrangements by wireless service
providers. These arrangements enable a provider to serve customers
outside its license area, to give licensed providers the right to enter
into arrangements to serve overlapping license areas and to permit
nonlicensed providers to enter the wireless marketplace. Wireless
service providers might consider such roaming and resale arrangements as
superior to constructing their own facilities or leasing antenna space
from us;
. zoning, environmental and other government regulations;
. any new legislation, or interpretation of existing federal
communications laws, that would give wireless service providers the
right to place their antennae on public utility poles and other
structures at regulated rates; and
. technological changes.
The demand for antenna space is dependent, to a significantly lesser extent,
on the needs of television and radio broadcasters. Among other things,
technological advances, including the development of satellite-delivered radio,
may reduce the need for tower-based broadcast transmission. We could also be
affected adversely should the development of digital television be delayed or
impaired, or if demand for it were to be less than anticipated because of
delays, disappointing technical performance or cost to the consumer.
The slow down in the economy could negatively affect the foregoing factors
influencing demand for tower space and tower related services. For example,
such a slow down could reduce consumer demand for wireless services, thereby
causing providers to delay implementation of new systems and technologies. We
believe that the economic slow down in 2001 has already harmed, and may
continue to harm, the financial condition of some wireless service providers.
BUILD-TO-SUIT CONSTRUCTION PROJECTS AND MAJOR ACQUISITIONS FROM WIRELESS
SERVICE PROVIDERS INCREASE OUR DEPENDENCE ON A LIMITED NUMBER OF CUSTOMERS, THE
LOSS OF WHICH COULD MATERIALLY DECREASE REVENUES, AND MAY ALSO INVOLVE LESS
FAVORABLE TERMS
Our focus on major build-to-suit projects for wireless service providers and
related acquisitions entail several unique risks. First is our greater
dependence on a limited number of customers and the risk that customer losses
could materially decrease revenues. Another risk is that our agreements with
these wireless service providers have lease and control terms that are more
favorable to them than the terms we give our tenants generally. In addition,
although we have the benefit of an anchor tenant in build-to-suit projects, we
may not be able to find a sufficient number of additional tenants. In fact, one
reason wireless service providers may prefer build-to-suit arrangements is to
share or escape the costs of an undesirable site. A site may be undesirable
because it has high construction costs or may be considered a poor location by
other providers.
OUR EXPANDED CONSTRUCTION PROGRAM INCREASES OUR EXPOSURE TO RISKS THAT COULD
INCREASE COSTS AND ADVERSELY AFFECT OUR EARNINGS AND GROWTH
Our expanded construction activities involve substantial risks. These risks
include:
. increasing our debt and the amount of payments required on it;
16
. increasing competition for construction sites and experienced tower
construction, companies, resulting in significantly higher costs and
failure to meet time schedules;
. failing to meet time schedules, which could result in our paying
significant penalties to prospective tenants, particularly in build-to-
suit situations; and
. possible lack of sufficient experienced personnel to manage an expanded
construction program.
IF WE ARE UNABLE TO CONSTRUCT OR ACQUIRE NEW TOWERS AT THE PACE, IN THE
LOCATIONS AND AT THE COSTS WE DESIRE, OUR BUSINESS WOULD BE ADVERSELY AFFECTED
Our growth strategy depends in part on our ability to construct and acquire
towers in locations and on a time schedule that meets the requirements of our
customers. If our tower construction and acquisition projects fail to meet the
requirements of our customers, or fail to meet their requirements at our
projected costs, our business would be adversely affected. If we are unable to
build new towers where and when our customers require them, or where and when
we believe the best opportunity to add tenants exists, we could fail to meet
our contractual obligations under build-to-suit agreements, thereby incurring
substantial penalties and possibly contract terminations. In addition, we could
lose opportunities to lease space on our towers. Our ability to construct a
tower at a location, on a schedule, and at a cost we project can be affected by
a number of factors beyond our control, including:
. zoning, and local permitting requirements and national regulatory
approvals;
. environmental opposition;
. availability of skilled construction personnel and construction
equipment;
. adverse weather conditions; and
. increased competition for tower sites, construction materials and labor.
INCREASING COMPETITION IN THE SATELLITE AND FIBER NETWORK ACCESS SERVICES
MARKET MAY SLOW VERESTAR'S GROWTH AND ADVERSELY AFFECT ITS BUSINESS
In the satellite and fiber network access services market, Verestar competes
with other satellite communications companies that provide similar services, as
well as other communications service providers. Some of Verestar's existing and
potential competitors consist of companies from whom Verestar currently leases
satellite and fiber network access in connection with the provision of
Verestar's services to its customers. Increased competition could result in
Verestar being forced to reduce the fees it charges for its services and may
limit Verestar's ability to obtain, on economical terms, services that are
critical to its business. We anticipate that Verestar's competitors may develop
or acquire services that provide functionality that is similar to that provided
by Verestar's services and that those competitive services may be offered at
significantly lower prices or bundled with other services. Many of the existing
and potential competitors have financial and other resources significantly
greater than those available to Verestar.
IF WE CANNOT KEEP RAISING CAPITAL, OUR GROWTH WILL BE IMPEDED
Without additional capital, we would need to curtail our acquisition and
construction programs that are essential for our long-term success. We expect
to use borrowed funds to satisfy a substantial portion of our capital needs.
However, we must continue to satisfy financial ratios and to comply with
financial and other covenants in order to do so. If our revenues and cash flow
do not meet expectations, we may lose our ability to borrow money or to do so
on terms we consider to be favorable. Conditions in the capital markets also
will affect our ability to borrow, as well as the terms of those borrowings.
All of these factors could also make it difficult or impossible for us
otherwise to raise capital, particularly on terms we would consider favorable.
IF WE CANNOT SUCCESSFULLY INTEGRATE ACQUIRED SITES OR BUSINESSES OR MANAGE OUR
OPERATIONS AS WE GROW, OUR BUSINESS WILL BE ADVERSELY AFFECTED AND OUR GROWTH
MAY SLOW OR STOP
A significant part of our growth strategy is the continued pursuit of
strategic acquisitions of independent tower operators and consolidators,
wireless service providers and service and teleport businesses. We cannot
17
assure you, however, that we will be able to integrate successfully acquired
businesses and assets into our existing business. During 2000, we consummated
more than 60 transactions involving the acquisition of more than 4,600
communications sites and related businesses and several satellite and fiber
network access services businesses. Our growth has placed, and will continue to
place, a significant strain on our management and our operating and financial
systems. Successful integration of these and any future acquisitions will
depend primarily on our ability to manage these assets and combined operations
and, with respect to the services and satellite and fiber network access
services businesses, to integrate new management and employees into our
existing operations.
IF OUR CHIEF EXECUTIVE OFFICER LEFT, WE WOULD BE ADVERSELY AFFECTED BECAUSE WE
RELY ON HIS REPUTATION AND EXPERTISE, AND BECAUSE OF OUR RELATIVELY SMALL
SENIOR MANAGEMENT TEAM
The loss of our chief executive officer, Steven B. Dodge, has a greater
likelihood of having a material adverse effect upon us than it would on most
other companies of our size because of our comparatively smaller executive
group and our reliance on Mr. Dodge's expertise. Our growth strategy is highly
dependent on the efforts of Mr. Dodge. Our ability to raise capital also
depends significantly on the reputation of Mr. Dodge. You should be aware that
we have not entered into an employment agreement with Mr. Dodge. The tower
industry is relatively new and does not have a large group of seasoned
executives from which we could recruit a replacement for Mr. Dodge.
EXPANDING OPERATIONS INTO FOREIGN COUNTRIES COULD CREATE EXPROPRIATION,
GOVERNMENTAL REGULATION, FUNDS INACCESSIBILITY, FOREIGN EXCHANGE EXPOSURE AND
MANAGEMENT PROBLEMS
Our expansion into Mexico, Canada and Brazil and other possible foreign
operations in the future, could result in adverse financial consequences and
operational problems not experienced in the United States. We have made a
substantial loan to a Mexican company and have acquired and are constructing a
sizable number of towers in that country. We have invested in a Canadian joint
venture that intends to acquire and construct towers in that country. We also
acquired the rights to 156 communications towers in Brazil and entered into a
build-to-suit agreement for an additional 400 towers. As a result of recent
acquisitions by Verestar, we have network operation centers in Europe, Asia,
South America and Africa. We may also engage in comparable transactions in
other countries in the future. Among the risks of foreign operations are
governmental expropriation and regulation, inability to repatriate earnings or
other funds, currency fluctuations, difficulty in recruiting trained personnel,
and language and cultural differences, all of which could adversely affect
these operations.
NEW TECHNOLOGIES COULD MAKE OUR TOWER ANTENNA LEASING SERVICES LESS DESIRABLE
TO POTENTIAL TENANTS AND RESULT IN DECREASING REVENUES
The development and implementation of signal combining technologies, which
permit one antenna to service two different transmission frequencies and,
thereby, two customers, may reduce the need for tower-based broadcast
transmission and hence demand for our antenna space.
Mobile satellite systems and other new technologies could compete with land-
based wireless communications systems, thereby reducing the demand for tower
lease space and other services we provide. The Federal Communications
Commission has granted license applications for several low-earth orbiting
satellite systems that are intended to provide mobile voice or data services.
In addition, the emergence of new technologies could reduce the need for tower-
based transmission and reception and have an adverse effect on our operations.
The growth in delivery of video services by direct broadcast satellites could
also adversely affect demand for our antenna space.
WE COULD HAVE LIABILITY UNDER ENVIRONMENTAL LAWS
As the owner, lessee and operator of real property and facilities, we are
subject to federal, state and local and foreign environmental laws relating to
the management, use, storage, disposal, emission and remediation
18
of, and exposure to, hazardous and non-hazardous substances, materials and
waste. We are also subject to related registration, permitting, record keeping
and financial assurance requirements. In April 2001, the District Attorney for
the County of Santa Clara, California filed a civil complaint against us
alleging record keeping, registration, hazardous materials management and
filing violations under California environmental laws. The complaint seeks
substantial monetary fines and injunctive relief from any further violations.
The complaint does not allege any environmental contamination occurred as a
result of the alleged violations. We believe that the towers and associated
facilities that are the subject of this complaint are currently in compliance
with applicable environmental laws and that the resolution of the violations
alleged in the complaint will not have a material adverse effect on our
financial condition or results of operations.
Various environmental laws require us to investigate, remove or remediate
soil and groundwater contaminated by hazardous substances or wastes on property
we own or lease or which is associated with tower operations, and may subject
us to penalties and fines for violations of those environmental laws. Some of
those laws impose cleanup responsibility and liability without regard to
whether the owner, lessee or operator of the property or facility knew of or
was responsible for the contamination, or whether operations at the property
have been discontinued or the property has been transferred. The owner, lessee
or operator of contaminated property also may be subject to common law claims
by third parties based on damages and costs resulting from off-site migration
of the contamination. In connection with our former and current ownership,
lease or operation of our properties, we may be liable for those types of
environmental costs. Fines or penalties resulting from any failure to comply
with those environmental laws and addressing claims or obligations arising
under them could have a material adverse effect on our financial condition,
results of operations and liquidity.
OUR BUSINESS IS SUBJECT TO GOVERNMENT REGULATIONS AND CHANGES IN CURRENT OR
FUTURE LAWS OR REGULATIONS COULD HARM OUR BUSINESS
We are subject to federal, state and local and foreign regulation of our
business. Both the FCC and the FAA regulate towers used for wireless
communications and radio and television antennae. In addition, the FCC
separately regulates wireless communication devices operating on towers and
licenses and regulates television and radio stations broadcasting from towers.
Similar regulations exist in Mexico, Canada and other foreign countries
regarding wireless communications and the operation of communications towers.
Failure to comply with applicable requirements may lead to monetary penalties
and other sanctions, including being disqualified from holding licenses for our
Verestar business or registrations for our towers and may require us to
indemnify our customers against any such failure to comply. New regulations may
impose additional costly burdens on us, which may affect our revenues and cause
delays in our growth.
In January 2001, the FCC concluded investigations of several operators of
communications towers, including us. The FCC sent us a Notice of Apparent
Liability for Forfeiture preliminarily determining that we had failed to file
specified informational forms, had failed to properly post specified
information at various tower sites and on one occasion had failed to properly
light a tower. The FCC has proposed a fine of $212,000 and intends to undertake
an additional review of our overall procedures for and degree of compliance
with the FCC's regulations. The proposed fine represents a significant increase
from the amount that otherwise might be imposed in similar situations because
of the number of violations and the FCC's negative perception of our
compliance. Depending on the outcome of the further investigation, the FCC
could take additional adverse action against us. We are conducting our own
internal investigation into our regulatory compliance policies. As permitted by
the FCC's regulations, on March 1, 2001 we filed a response to the Notice of
Apparent Liability for Forfeiture requesting that the forfeiture be reduced.
The matter remains under consideration by the FCC. We intend to cooperate with
any further investigation to resolve these matters.
The construction and reconstruction of a substantial number of antennae
needed to deliver digital television service to our customers may require state
and local regulatory approvals. The FCC has indicated that it may adopt
preemptive guidelines. If adopted, these regulations may be more or less
restrictive than existing state and local regulations and may increase our
construction costs.
19
OUR COSTS COULD INCREASE AND OUR REVENUES COULD DECREASE DUE TO PERCEIVED
HEALTH RISKS FROM RADIO EMISSIONS, ESPECIALLY IF THESE PERCEIVED RISKS ARE
SUBSTANTIATED
Public perception of possible health risks associated with cellular and
other wireless communications media could slow the growth of wireless
companies, which could in turn slow our growth. In particular, negative public
perception of, and regulations regarding, these perceived health risks could
slow the market acceptance of wireless communications services.
If a connection between radio emissions and possible negative health
effects, including cancer, were established, our operations, costs and revenues
would be materially and adversely affected. We do not maintain any significant
insurance with respect to these matters.
20
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made and incorporated by reference forward-looking statements in
this prospectus. Forward-looking statements include those regarding our goals,
beliefs, plans or current expectations and other statements regarding matters
that are not historical facts. For example, when we use words such as
"project," "believe," "anticipate," "plan," "expect," "estimate," "intend,"
"should," "would," "could," or "may," or other words that convey uncertainty of
future events or outcome, we are making forward-looking statements. Forward-
looking statements include statements concerning:
. the outcome of our growth strategy,
. future results of operations,
. liquidity and capital expenditures,
. construction and acquisition activities,
. debt levels and the ability to obtain financing and make payments on our
debt,
. regulatory developments and competitive conditions in the communications
site and wireless carrier industries,
. projected growth of the wireless communications and wireless carrier
industries,
. dependence on demand for satellites for Internet data transmission, and
. general economic conditions.
Our forward-looking statements are subject to risks and uncertainties. You
should note that many important factors, some of which are discussed elsewhere
in this prospectus or in the documents we have incorporated by reference, could
affect us in the future and could cause our results to differ materially from
those expressed in our forward-looking statements. For a discussion of some of
these factors, please read carefully the information under "Risk Factors". We
do not undertake any obligation to update forward-looking statements we make.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. In consideration
for issuing the new notes, we will receive old notes from you in like principal
amount. The old notes surrendered in exchange for the new notes will be retired
and canceled and cannot be reissued. Accordingly, issuance of the new notes
will not result in any change in our indebtedness.
21
CAPITALIZATION
The historical column in the following table shows our actual historical
capitalization as of December 31, 2000. The second column shows our
capitalization as adjusted to show the effect of the then pending pro forma
transactions as if we had completed them on December 31, 2000. These
transactions are described under "Unaudited Pro Forma Condensed Consolidated
Financial Statements". The exchange offer will have no effect on our
outstanding indebtedness. The old notes surrendered in exchange for the new
notes in the exchange offer will be retired and cancelled and cannot be
reissued.
We believe that the assumptions used provide a reasonable basis on which to
present our pro forma capitalization. You should read the capitalization table
below in conjunction with our consolidated financial statements and the related
notes to those consolidated financial statements that are incorporated by
reference into this prospectus and the information presented under "Unaudited
Pro Forma Condensed Consolidated Financial Statements". The pro forma financial
information included in the capitalization table below is not necessarily
indicative of our capitalization or financial condition had we completed the
transactions and events referred to above on the date assumed. It is also not
necessarily indicative of our future capitalization or future financial
condition.
December 31, 2000
----------------------
Historical Pro Forma
---------- ----------
(in thousands)
Cash and cash equivalents........................... $ 82,038 $ 730,950
========== ==========
Long-term debt, including current portion:
Credit facilities(1).............................. $1,350,000 $1,445,000
Senior notes...................................... 1,000,000
Convertible notes, net of discount(2)............. 920,908 920,908
Other long-term debt, including current portion... 197,315 197,315
---------- ----------
Total long-term debt............................ 2,468,223 3,563,223
---------- ----------
Stockholders' equity:
Common stock(3)................................... $ 1,805 $ 1,905
Additional paid-in capital........................ 3,174,622 3,537,334
Accumulated deficit............................... (295,057) (295,057)
Treasury stock.................................... (4,340) (4,340)
---------- ----------
Total stockholders' equity...................... 2,877,030 3,239,842
---------- ----------
Total capitalization................................ $5,345,253 $6,803,065
========== ==========
--------
(1) The pro forma borrowings include:
. borrowings under our domestic credit facilities consisting of fully
drawing on the Term Loan A ($850.0 million) and the Term Loan B ($500.0
million), and
. $95.0 million of indebtedness under our ATC Mexico loan agreement. See
"Description of Indebtedness--ATC Mexico Loan Agreement".
(2) As of December 31, 2000, we had outstanding the following principal
amounts of convertible notes:
. $212.7 million principal amount of 6.25% convertible notes due 2009,
which are convertible into shares of our Class A common stock at a
conversion price of $24.40 per share,
. $258.2 million principal amount of 2.25% convertible notes due 2009,
which are convertible into shares of our Class A common stock at a
conversion price of $24.00 per share, and
. $450.0 million principal amount of 5.0% convertible notes due 2010,
which are convertible into shares of our Class A common stock at a
conversion price of $51.50 per share.
(3) Consists of common stock, par value $.01 per share, 560,000,000 shares
authorized; shares outstanding 180,398,770 (historical) and 190,398,770
(pro forma).
22
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
We have included on the following pages our unaudited pro forma condensed
consolidated balance sheet as of December 31, 2000 and our unaudited pro forma
condensed consolidated statement of operations for the year ended December 31,
2000. These pro forma condensed consolidated financial statements reflect
adjustments for the pro forma transactions, which consist of:
. the ALLTEL and AirTouch transactions,
. our Class A common stock offerings in January 2001 and June 2000,
. our convertible notes private placement in February 2000,
. the private placement of the old notes in January 2001, and
. borrowings under our ATC Mexico loan agreement.
The pro forma financial statements do not reflect all of our consummated or
pending acquisitions. The adjustments assume that all pro forma transactions
were consummated on January 1, 2000, in the case of the unaudited pro forma
condensed consolidated statement of operations. The adjustments assume that the
pro forma transactions that had not been consummated as of December 31, 2000
were consummated on that date in the case of the unaudited pro forma condensed
consolidated balance sheet. You should read the pro forma financial statements
in conjunction with the historical financial statements for the year ended
December 31, 2000 that are incorporated by reference into this prospectus.
Although the ALLTEL and AirTouch transactions do not involve the acquisition of
businesses, we have provided pro forma information related to these
transactions, as we believe such information is material to your investment
decision.
The pro forma financial statements may not reflect our financial condition
or our results of operations had the pro forma transactions actually occurred
on the dates specified. Finally, they may not reflect our future financial
condition or results of operations.
23
AMERICAN TOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2000
(in thousands)
Condensed Pro Forma Consolidated
Historical Adjustments (a) Pro Forma (b)
---------- --------------- -------------
ASSETS
Cash and cash equivalents............ $ 82,038 $ 648,912 $ 730,950
Restricted cash...................... 46,036 93,750 139,786
Accounts receivable, net............. 194,011 194,011
Prepaid and other current assets..... 149,067 149,067
Notes receivable..................... 123,945 123,945
Property and equipment, net.......... 2,296,670 2,296,670
Unallocated purchase price........... 683,150 683,150
Goodwill and other intangible assets,
net................................. 2,505,681 2,505,681
Deferred tax asset................... 140,395 140,395
Deposits and other assets............ 122,836 32,000 154,836
---------- ---------- ----------
Total.............................. $5,660,679 $1,457,812 $7,118,491
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities, excluding
current portion of long-term debt... $ 286,608 $ 286,608
Other long-term liabilities.......... 12,472 12,472
Credit facilities ................... 1,350,000 $ 95,000 1,445,000
Senior notes......................... 1,000,000 1,000,000
Convertible notes, net of discount... 920,908 920,908
Other long-term debt, including
current portion .................... 197,315 197,315
Minority interest.................... 16,346 16,346
Stockholders' equity................. 2,877,030 362,812 3,239,842
---------- ---------- ----------
Total.............................. $5,660,679 $1,457,812 $7,118,491
========== ========== ==========
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
24
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We have prepared our unaudited pro forma condensed consolidated balance
sheet as of December 31, 2000 to give effect, as of such date, to the ALLTEL
transaction, the remaining portions of the AirTouch transaction, our Class A
common stock offering and private placement of the old notes in January 2001,
and borrowings under our ATC Mexico loan agreement, the only pro forma
transactions that had not been completed at that date.
(a) The following table sets forth the components of the pro forma balance
sheet adjustments as of December 31, 2000 (in thousands):
January 2001
----------------------- ATC Mexico Total
ALLTEL AirTouch Equity Old Notes Loan Pro Forma
Transaction Transaction Offering(1) Offering(2) Agreement(3) Adjustments
----------- ----------- ----------- ----------- ------------ -----------
ASSETS
Cash and cash
equivalents............ $360,800 $194,112 $94,000 $ 648,912
Restricted cash......... 93,750 93,750
Unallocated purchase
price(4)............... $657,900 $25,250 683,150
Deposits and other
assets................. 31,000 1,000 32,000
-------- ------- -------- ---------- ------- ----------
Total................. $657,900 $25,250 $360,800 $318,862 $95,000 $1,457,812
======== ======= ======== ========== ======= ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Credit facilities....... $657,900 $23,238 $ (681,138) $95,000 $ 95,000
Senior notes............ 1,000,000 1,000,000
Stockholders' equity.... 2,012 $360,800 362,812
-------- ------- -------- ---------- ------- ----------
Total................. $657,900 $25,250 $360,800 $318,862 $95,000 $1,457,812
======== ======= ======== ========== ======= ==========
The following table sets forth the remaining purchase prices and related pro
forma financing for the ALLTEL and AirTouch transactions (in millions):
Purchase Price Borrowings
-------------- ----------
ALLTEL transaction(5).............................. $657.9 $657.9
AirTouch transaction(6)............................ 25.3 23.2
--------
(1) On January 23, 2001, we consummated the sale of 10.0 million shares of
Class A common stock resulting in net proceeds of approximately $360.8
million.
(2) On January 31, 2001, we consummated the sale of $1.0 billion in
principal amount of our old notes resulting in net proceeds of
approximately $969.0 million. For purposes of the pro forma
presentation, we have assumed that a portion of the proceeds was
utilized to repay borrowings under our domestic credit facilities.
(3) In February 2001, our Mexican subsidiary consummated a loan agreement
providing for borrowings of $95.0 million (U.S. dollars). If additional
lenders are made party to the agreement, the size of the facility may
increase to $140.0 million. We have committed to loan our Mexican
subsidiary up to $45.0 million if additional lenders are not made party
to the agreement. Our committment will be reduced on a dollar-for-
dollar basis if additional lenders join the agreement. This agreement
requires the maintenance of various covenants and ratios and is
guaranteed and collateralized by all of the assets of the Mexican
subsidiary. Interest rates on the loan are determined at the Mexican
subsidiary's option at either LIBOR plus margin or the base rate plus
margin as defined in the agreement. Amounts borrowed under the loan are
due in 2003.
(4) Upon completion of our evaluation of the purchase price allocations, we
expect that the average life of the assets should approximate 15 years.
(5) In December 2000, we entered into an agreement with ALLTEL Corporation
to acquire the rights to up to 2,193 communications towers through a
15-year agreement to sublease. Under the agreement, we will sublease up
to 2,193 towers for consideration of up to $657.9 million in cash. As
of May 1, 2001, we had leased 597 towers and paid ALLTEL an aggregate
of $179.1 million in cash. We expect the remaining closings to occur
during the remainder of 2001.
(6) As of December 31, 2000, we had closed on 1,801 of the 2,100 towers
included in the original AirTouch lease agreement, paid $686.1 million
in cash, and issued warrants to purchase 3.0 million shares of Class A
common stock at a price of $22.00 per share. On May 1, 2001, we
completed our final acquisition of towers under this agreement. In
total, we acquired 1,862 towers under the agreement for an aggregate of
$709.3 million in cash and the warrants.
25
(b) The following table summarizes the unaudited pro forma condensed
consolidated balance sheet for the restricted group under the indenture
for the notes, and is presented solely to address specified reporting
requirements contained in the indenture. Where we present data for the
restricted group, we are presenting the data for us and our
subsidiaries which comprise the restricted group under the indenture.
All of our subsidiaries are part of this restricted group, except
Verestar and its subsidiaries, whose operations constitute all of our
satellite and fiber network access services business segment. The
information in the following table is not intended as an alternative
measure of financial position as determined in accordance with
generally accepted accounting principles.
December 31, 2000
-----------------------------------
Restricted
Consolidated Exclusion Group
Pro Forma of Verestar Pro Forma
------------ ----------- ----------
(in thousands)
Assets
Cash and cash equivalents................. $ 730,950 $ (15,491) $ 715,459
Restricted cash........................... 139,786 139,786
Accounts receivable, net.................. 194,011 (48,862) 145,149
Prepaid and other current assets.......... 149,067 (12,603) 136,464
Notes receivable.......................... 123,945 (420) 123,525
Property and equipment, net............... 2,296,670 (283,400) 2,013,270
Unallocated purchase price................ 683,150 683,150
Goodwill and other intangible assets,
net...................................... 2,505,681 (271,475) 2,234,206
Deferred tax asset........................ 140,395 140,395
Investment in and advances to unrestricted
subsidiaries............................. 471,285 471,285
Deposits and other assets................. 154,836 (8,662) 146,174
---------- --------- ----------
Total................................... $7,118,491 $(169,628) $6,948,863
========== ========= ==========
Liabilities and Stockholders' Equity
Current liabilities, excluding current
portion of long-term debt................ $ 286,608 $ (52,361) $ 234,247
Other long-term liabilities............... 12,472 (4,955) 7,517
Credit facilities......................... 1,445,000 1,445,000
Senior notes.............................. 1,000,000 1,000,000
Convertible notes, net of discount........ 920,908 920,908
Other long-term debt, including current
portion.................................. 197,315 (112,312) 85,003
Minority interest......................... 16,346 16,346
Stockholders' equity...................... 3,239,842 3,239,842
---------- --------- ----------
Total................................... $7,118,491 $(169,628) $6,948,863
========== ========= ==========
26
AMERICAN TOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
Year Ended December 31, 2000
(in thousands, except per share data)
Condensed Pro Forma Consolidated
Historical Adjustments(a) Pro Forma(g)
---------- -------------- ------------
Operating revenues.............................................. $ 735,275 $ 48,025 $ 783,300
Operating expenses excluding depreciation and amortization,
development and corporate general and administrative
expenses....................................................... 524,074 26,169 550,243
Depreciation and amortization................................... 283,360 56,509 339,869
Development expense............................................. 14,517 14,517
Corporate general and administrative expense.................... 14,958 14,958
--------- --------- ---------
Loss from operations............................................ (101,634) (34,653) (136,287)
Other (income) expense:
Interest expense.............................................. 156,839 95,673 252,512
Interest income and other, net................................ (13,018) (13,018)
Interest income TV Azteca, net of interest expense of $1,047.. (12,679) (12,679)
Premium on note conversion.................................... 16,968 16,968
Minority interest in net earnings of subsidiaries............. 202 202
--------- --------- ---------
Total other expense............................................. 148,312 95,673 243,985
--------- --------- ---------
Loss before income taxes and extraordinary losses............... (249,946) (130,326) (380,272)
Benefit for income taxes(b)..................................... 59,656 48,220 (b) 107,876
--------- --------- ---------
Loss before extraordinary losses................................ $(190,290) $ (82,106) $(272,396)
========= ========= =========
Basic and diluted loss per common share before extraordinary
losses......................................................... $ (1.13) N/A $ (1.56)
========= ========= =========
Basic and diluted common shares outstanding..................... 168,715 6,079 (c) 174,794
========= ========= =========
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
27
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 2000 gives effect to the pro forma transactions as
if they had occurred on January 1, 2000.
(a) To record the results of operations for the pro forma transactions. We
have adjusted the results of operations to record an increase in net interest
expense of $95.7 million for the year ended December 31, 2000 as a result of
the increase in debt after giving effect to the proceeds of the February 2000
notes placement, the June 2000 offering and the January 2001 old notes private
placement and borrowings under our ATC Mexico loan agreement. We are amortizing
debt issuance costs on a straight-line basis over the term of the obligations.
We have included amortization of issuance costs within interest expense. There
are no adjustments to the pro forma statement of operations associated with the
January 2001 equity offering due to the proceeds being applied to cash.
Accordingly, we have not adjusted the share data for this equity offering.
We have also adjusted the results of operations to record depreciation and
amortization expenses of $56.5 million for the year ended December 31, 2000
based on estimated allocations of purchase prices. With respect to unallocated
purchase prices, we have determined pro forma depreciation and amortization
expense based on an expected average life of 15 years.
The table below sets forth the detail for the pro forma transactions for the
year ended December 31, 2000 (in thousands).
ATC
Mexico Other
Loan Pro Forma Total
February June January 2001 Agreement Adjustments Adjustments
2000 2000 ------------------ --------- ----------- for
ALLTEL AirTouch Notes Equity Equity Old Notes Pro Forma
Transaction Transaction Placement Offering Offering Offering Transactions
----------- ----------- --------- -------- -------- --------- ------------
Operating
revenues........ $37,914(d) $10,111(e) $ 48,025
Operating
expenses
excluding
depreciation and
amortization.... 22,070(f) 4,099(f) 26,169
Depreciation and
amortization.... $ 56,509 56,509
------- ------- ------- -------- --- -------- ------- --------- ---------
Income (loss)
from
operations...... 15,844 6,012 (56,509) (34,653)
Interest expense
(income), net... $(1,439) $(23,675) $ 32,917 $ 9,595 78,275 95,673
------- ------- ------- -------- --- -------- ------- --------- ---------
Income (loss)
before income
taxes and
extraordinary
losses.......... $15,844 $ 6,012 $ 1,439 $ 23,675 $(32,917) $(9,595) $(134,784) $(130,326)
======= ======= ======= ======== === ======== ======= ========= =========
(b) To record the tax effect of the pro forma adjustments and impact on our
estimated effective tax rate. The actual effective tax rate may be different
once we determine the final purchase price allocations.
(c) Includes adjustment for the 12.5 million shares of Class A common stock
issued pursuant to the June 2000 offering.
(d) Includes additional revenues recognized on a straight-line basis in
accordance with terms stipulated in the ALLTEL lease agreement. We have not
included approximately $7.4 million of annual third party lease revenues
existing as of the date the agreement was signed.
28
(e) Includes additional revenues recognized on a straight-line basis in
accordance with terms stipulated in the AirTouch lease agreement, assuming the
closing of 1,862 towers. We have not included approximately $3.5 million of
annual third party lease revenues existing as of the date the agreement was
signed.
(f) The towers involved in each of these acquisitions were operated as part
of the wireless service divisions of ALLTEL and AirTouch. Accordingly, separate
financial records were not maintained and financial statements were never
prepared for the operation of these towers. In addition to land leases that we
have assumed or will assume, we have estimated operating expenses we would
expect to incur based on our own experience with comparable towers and with
AirTouch towers acquired to date. Such estimates include expenses related to
utilities, repairs and maintenance, insurance and real estate taxes. We have
based these operating expenses on management's best estimate, and, as such the
actual expenses may be different than the estimates presented.
(g) The following table summarizes the unaudited pro forma results of
operations for the restricted group under the indenture, and is presented
solely to address specified reporting requirements contained in the indenture.
Where we present data for the restricted group, we are presenting the data for
us and our subsidiaries which comprise the restricted group under the
indenture. All of our subsidiaries are part of this restricted group, except
Verestar and its subsidiaries, whose operations constitute all of our satellite
and fiber network access services business segment. Amounts included in the
"Exclusion of Verestar" column do not contain an allocation of corporate
overhead or interest expense related to intercompany borrowings. The
information in the following table is not intended as an alternative measure of
the operating results as would be determined in accordance with generally
accepted accounting principles.
Year Ended
December 31, 2000
-----------------------------------------
Consolidated Exclusion of Restricted
Pro Forma Verestar Group Pro Forma
------------ ------------ ---------------
(in thousands)
Operating revenues................... $ 783,300 $(145,201) $ 638,099
Operating expenses excluding
depreciation and amortization,
development and corporate general
and administrative expenses....... 550,243 (110,065) 440,178
Depreciation and amortization...... 339,869 (27,074) 312,795
Development expense................ 14,517 (84) 14,433
Corporate general and
administrative expense............ 14,958 14,958
--------- --------- ---------
Loss from operations................. (136,287) (7,978) (144,265)
Other (income) expense:
Interest expense................... 252,512 (1,833) 250,679
Interest income and other, net..... (13,018) 357 (12,661)
Interest income TV Azteca, net of
interest expense of $1,047........ (12,679) (12,679)
Premium on note conversion......... 16,968 16,968
Minority interest in net earnings
of subsidiaries................... 202 202
--------- --------- ---------
Total other expense.................. 243,985 (1,476) 242,509
--------- --------- ---------
Loss before income taxes and
extraordinary losses................ $(380,272) $ (6,502) $(386,774)
========= ========= =========
29
THE EXCHANGE OFFER
Purpose and Effect of Exchange Offer; Registration Rights
We sold the old notes on January 31, 2001 in an unregistered private
placement to a group of investment banks that served as the initial purchasers.
The initial purchasers then resold the old notes under an offering circular,
dated January 24, 2001, in reliance on Rule 144A and Regulation S under the
Securities Act.
As part of this private placement, we entered into a registration rights
agreement with the initial purchasers on January 31, 2001. Under the
registration rights agreement, we agreed to file this registration statement
relating to our offer to exchange the old notes for new notes in an offering
registered under the Securities Act. We also agreed:
. to use our reasonable best efforts to cause the exchange offer
registration statement to be declared effective under the Securities Act
on or before July 30, 2001,
. to keep the exchange offer open for not less than 30 business days and
not more than 45 business days after we mail the notice of exchange
offer to the holders of the old notes, and
. to use our reasonable best efforts to keep the exchange offer
registration statement continuously effective under the Securities Act
for a period of 180 days following the completion of the exchange offer.
Under the circumstances described below, we also agreed to use our
reasonable best efforts to cause the SEC to declare effective a shelf
registration statement with respect to the resale of the old notes. We agreed
to keep the shelf registration statement effective until the earlier of the
date on which all the old notes covered by the shelf registration are sold or
the date on which such notes may be sold under Rule 144(k) of the Securities
Act. These circumstances include:
. if any change in law or applicable interpretations of those laws by the
SEC do not permit us to effect the exchange offer as contemplated by the
registration rights agreement,
. if for any other reason the exchange offer registration statement is not
declared effective on or prior to July 30, 2001, or if the exchange
offer is not consummated on or prior to September 13, 2001,
. if any initial purchaser of the old notes so requests with respect to
any old notes that are not eligible to be exchanged for new notes in the
exchange offer, or
. if any holder of the old notes, other than any initial purchaser, is not
eligible to participate in the exchange offer or does not receive freely
tradeable new notes in the exchange offer other than by reason of such
holder being our affiliate. For this purpose, the requirement that a
broker-dealer comply with the prospectus delivery requirements in
connection with the sale of new notes does not result in the new notes
not being "freely tradeable".
If we fail to comply with specified obligations under the registration
rights agreement, we must pay additional interest to the holders of the notes.
By participating in the exchange offer, holders of the old notes will
receive new notes that are freely tradeable and not subject to restrictions on
transfer, subject to the exceptions described below under "Resale of New
Notes". In addition, holders of new notes will not be entitled to additional
interest.
Resale of New Notes
We believe that the new notes issued in exchange for the old notes may be
offered for resale, resold and otherwise transferred by any new note holder
without compliance with the registration and prospectus delivery provisions of
the Securities Act if the conditions set forth below are met. We base this
belief solely on interpretations of the federal securities laws by the SEC set
forth in several no-action letters issued to third
30
parties unrelated to us. A no-action letter is a letter from the SEC responding
to a request for its views as to whether a particular matter complies with the
federal securities laws or whether the SEC would refer the matter to the SEC's
enforcement division for action. We have not obtained, and do not intend to
obtain, our own no-action letter from the SEC regarding the resale of the new
notes. Instead, holders will be relying on the no-action letters that the SEC
has issued to third parties in circumstances that we believe are similar to
ours. Based on these no-action letters, the following conditions must be met:
. the holder must acquire the new notes in the ordinary course of its
business,
. the holder must have no arrangements or understanding with any person to
participate in the distribution of the new notes within the meaning of
the Securities Act, and
. the holder must not be an "affiliate", as defined in Rule 405 of the
Securities Act, of ours.
Each holder of old notes that wishes to exchange old notes for new notes in the
exchange offer must represent to us that it satisfies all of above listed
conditions. Any holder who tenders in the exchange offer who does not satisfy
all of the above listed conditions:
. cannot rely on the position of the SEC set forth in the no-action
letters referred to above, and
. must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a resale of the new notes.
The SEC considers broker-dealers that acquired old notes directly from us,
but not as a result of market-making activities or other trading activities, to
be making a distribution of the new notes if they participate in the exchange
offer. Consequently, these holders must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
resale of the new notes.
Each broker-dealer that receives new notes for its own account in exchange
for old notes acquired by such broker-dealer as a result of market-making
activities or other trading activities must deliver a prospectus in connection
with a resale of the new notes and provide us with a signed acknowledgement of
this obligation. A broker-dealer may use this prospectus, as amended or
supplemented from time to time, in connection with resales of new notes
received in exchange for old notes where the broker-dealer acquired the old
notes as a result of market-making activities or other trading activities. The
letter of transmittal states that by acknowledging and delivering a prospectus,
a broker-dealer will not be considered to admit that it is an "underwriter"
within the meaning of the Securities Act. We have agreed that for a period of
180 days after the expiration date of the exchange offer, we will make this
prospectus available to broker-dealers for use in connection with any such
resale of the new notes.
Except as described in the prior paragraph, holders may not use this
prospectus for an offer to resell, resale or other retransfer of new notes. We
are not making this exchange offer to, nor will we accept tenders for exchange
from, holders of old notes in any jurisdiction in which the exchange offer or
the acceptance of it would not be in compliance with the securities or blue sky
laws of that jurisdiction.
Terms of the Exchange
Upon the terms and subject to the conditions set forth in this prospectus
and the accompanying letter of transmittal, which we refer to together in this
prospectus as the "exchange offer", we will accept any and all old notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the expiration date. The date of acceptance for exchange of the old notes, and
completion of the exchange offer, is the exchange date, which will be the first
business day following the expiration date, unless extended as described in
this prospectus. We will issue, on or promptly after the exchange date, an
aggregate principal amount of up to $1.0 billion of new notes for a like
principal amount of outstanding old notes tendered and accepted in connection
with the exchange offer. The new notes issued in connection with the exchange
offer will be delivered as soon
31
as practicable following the exchange date. Holders may tender some or all of
their old notes in connection with the exchange offer, but only in integral
multiples of $1,000. The exchange offer is not conditioned upon any minimum
amount of old notes being tendered for exchange.
The terms of the new notes are identical in all material respects to the
terms of the old notes, except that:
. we have registered the new notes under the Securities Act and therefore
these notes will not bear legends restricting their transfer, and
. specified rights under the registration rights agreement, including the
provisions providing for payment of additional interest in specified
circumstances relating to the exchange offer, will be limited or
eliminated.
The new notes will evidence the same debt as the old notes. The new notes
will be issued under the same indenture and entitled to the same benefits
under that indenture as the old notes being exchanged. As of the date of this
prospectus, $1.0 billion in aggregate principal amount of the old notes were
outstanding. Old notes accepted for exchange will be retired and cancelled and
not reissued.
In connection with the issuance of the old notes, we arranged for the old
notes originally purchased by qualified institutional buyers and those sold in
reliance on Regulation S under the Securities Act to be issued and
transferable in book-entry form through the facilities of The Depository Trust
Company, or DTC, acting as depositary. Except as described under "Description
of the New Notes--Form, Denomination, Transfer, Exchange and Book-Entry
Procedures", we will issue the new notes in the form of a global note
registered in the name of DTC or its nominee and each beneficial owner's
interest in it will be transferable in book-entry form through DTC.
Holders of old notes do not have any appraisal or dissenters' rights in
connection with the exchange offer. We intend to conduct the exchange offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the SEC.
We shall be considered to have accepted validly tendered old notes if and
when we have given oral or written notice to that effect to the exchange
agent. The exchange agent will act as agent for the tendering holders for the
purposes of receiving the new notes from us.
If we do not accept any tendered old notes for exchange because of an
invalid tender, the occurrence of the other events described in this
prospectus or otherwise, we will return these old notes, without expense, to
the tendering holder as quickly as possible after the expiration date of the
exchange offer.
Holders who tender old notes will not be required to pay brokerage
commissions or fees or, subject to the instructions in the letter of
transmittal, transfer taxes on exchange of old notes in connection with the
exchange offer. We will pay all charges and expenses, other than the
applicable taxes described in the section "Fees and Expenses" below, in
connection with the exchange offer.
If we successfully complete the exchange offer, any old notes which holders
do not tender or which we do not accept in the exchange offer will remain
outstanding and continue to accrue interest. The holders of old notes after
the exchange offer in general will not have further rights under the
registration rights agreement, including registration rights and any rights to
additional interest. Holders of the old notes wishing to transfer would have
to rely on exemptions from the registration requirements of the Securities
Act.
Expiration Date; Extensions; Amendments
The expiration date for the exchange offer is 5:00 p.m., New York City
time, on June 29, 2001. We may extend this expiration date in our sole
discretion, but in no event to a date later than July 18, 2001. If we so
extend the expiration date, the term "expiration date" shall mean the latest
date and time to which we extend the exchange offer.
32
We reserve the right, in our sole discretion:
. to delay accepting any old notes,
. to extend the exchange offer,
. to terminate the exchange offer if, in our sole judgment, any of the
conditions described below shall not have been satisfied, or
. to amend the terms of the exchange offer in any manner.
We will give oral or written notice of any delay, extension or termination
to the exchange agent. In addition, we will give, as promptly as practicable,
oral or written notice regarding any delay in acceptance, extension or
termination of the offer to the registered holders of old notes. If we amend
the exchange offer in a manner that we determine to constitute a material
change, or if we waive a material condition, we will promptly disclose the
amendment or waiver in a manner reasonably calculated to inform the holders of
old notes of the amendment, and extend the offer if required by law.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination, amendment or
waiver regarding the exchange offer, we shall have no obligation to publish,
advertise, or otherwise communicate any public announcement, other than by
making a timely release to a financial news service.
Interest on the New Notes
Interest on the new notes will accrue at the rate of 9 3/8% per annum on the
principal amount, payable semiannually in arrears on February 1 and August 1,
commencing on August 1, 2001. In order to avoid duplicative payment of
interest, all interest accrued on old notes that are accepted for exchange
before August 1, 2001 will be superseded by the interest that is deemed to have
accrued on the new notes from January 31, 2001 through the date of the
exchange.
Conditions to the Exchange Offer
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or exchange new notes for, any old notes and we may
terminate the exchange offer as provided in this prospectus before the
acceptance of the old notes, if:
. the exchange offer, or the making of any exchange by a holder, violates,
in our good faith determination, any applicable law, rule or regulation
or any applicable interpretation of the staff of the SEC,
. any action or proceeding shall have been instituted or threatened with
respect to the exchange offer which, in our judgment, would impair our
ability to proceed with the exchange offer, or
. we have not obtained any governmental approval which we, in our sole
discretion, consider necessary for the completion of the exchange offer
as contemplated by this prospectus.
The conditions listed above are for our sole benefit and we may assert them
regardless of the circumstances giving rise to any of these conditions. We may
waive these conditions in our sole discretion in whole or in part at any time.
A failure on our part to exercise any of the above rights shall not constitute
a waiver of that right, and that right shall be considered an ongoing right
which we may assert at any time and from time to time.
33
If we determine in our sole discretion that any of the events listed above
has occurred, we may, subject to applicable law:
. refuse to accept any old notes and return all tendered old notes to the
tendering holders,
. extend the exchange offer and retain all old notes tendered before the
expiration of the exchange offer, subject, however, to the rights of
holders to withdraw these old notes, or
. waive unsatisfied conditions relating to the exchange offer and accept
all properly tendered old notes which have not been withdrawn.
Any determination by us concerning the above events will be final and binding.
In addition, we reserve the right in our sole discretion to:
. purchase or make offers for any old notes that remain outstanding
subsequent to the expiration date, and
. to the extent permitted by applicable law, purchase old notes in the
open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers may differ from the terms of the
exchange offer. Any such purchase would require the consent of the lenders
under our domestic credit facilities.
Procedures for Tendering
Except in limited circumstances, only a Euroclear participant, Clearstream
participant or DTC participant listed on a DTC securities position listing with
respect to the old notes may tender old notes in the exchange offer. To tender
old notes in the exchange offer:
. holders of old notes that are DTC participants may follow the procedures
for book-entry transfer as set forth below under "Book-Entry Transfer"
and in the letter of transmittal; or
. Euroclear participants and Clearstream participants on behalf of the
beneficial owners of old notes are required to use book-entry transfer
pursuant to the standard operating procedures of Euroclear or
Clearstream. These procedures include the transmission of a computer-
generated message to Euroclear or Clearstream, in lieu of a letter of
transmittal. See the description of "agent's message" below under "Book-
Entry Transfer".
In addition, you must comply with one of the following:
. the exchange agent must receive, before expiration of the exchange
offer, a timely confirmation of book-entry transfer of old notes into
the exchange agent's account at DTC, Euroclear or Clearstream according
to their respective standard operating procedures for electronic tenders
and a properly transmitted agent's message as described below, or
. the exchange agent must receive any corresponding certificate or
certificates representing old notes along with the letter of
transmittal, or
. the holder must comply with the guaranteed delivery procedures described
below.
The tender by a holder of old notes will constitute an agreement between
such holder and us in accordance with the terms and subject to the conditions
set forth in this prospectus and in the letter of transmittal. If less than all
the old notes held by a holder are tendered, the tendering holder should fill
in the amount of old notes
34
being tendered in the specified box on the letter of transmittal. The entire
amount of old notes delivered or transferred to the exchange agent will be
deemed to have been tendered unless otherwise indicated.
The method of delivery of old notes, the letter of transmittal and all other
required documents or transmission of an agent's message, as described under
"Book-Entry Transfer", to the exchange agent is at the election and risk of the
holder. Instead of delivery by mail, we recommend that holders use an overnight
or hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery to the exchange agent prior to the expiration of the
exchange offer. No letter of transmittal or old notes should be sent to us,
DTC, Euroclear or Clearstream. Delivery of documents to DTC, Euroclear or
Clearstream in accordance with their respective procedures will not constitute
delivery to the exchange agent.
Any beneficial holder whose old notes are registered in the name of his or
its broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on its behalf. If such beneficial holder
wishes to tender on its own behalf, such beneficial holder must, prior to
completing and executing the letter of transmittal and delivering its old
notes, either:
. make appropriate arrangements to register ownership of the old notes in
such holder's name, or
. obtain a properly completed bond power from the registered holder.
The transfer of record ownership may take considerable time and may not be
completed prior to the expiration date.
Signatures on a letter of transmittal or a notice of withdrawal, as
described in "-- Withdrawal of Tenders" below, must be guaranteed by a member
firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an "eligible
guarantor institution", within the meaning of Rule 17Ad-15 under the Exchange
Act, which we refer to in this prospectus as an "eligible institution", unless
the old notes are tendered:
. by a registered holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" on the
letter of transmittal; or
. for the account of an eligible institution.
If the letter of transmittal is signed by a person other than the registered
holder of any old notes listed therein, the old notes must be endorsed or
accompanied by appropriate bond powers which authorize the person to tender the
old notes on behalf of the registered holder, in either case signed as the name
of the registered holder or holders appears on the old notes. If the letter of
transmittal or any old notes or bond powers are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should so
indicate when signing and, unless waived by us, evidence satisfactory to us of
their authority to so act must be submitted with the letter of transmittal.
We will determine in our sole discretion all questions as to the validity,
form, eligibility, including time of receipt, and acceptance and withdrawal of
tendered old notes. We reserve the absolute right to reject any and all old
notes not properly tendered or any old notes whose acceptance by us would, in
the opinion of our counsel, be unlawful. We also reserve the right to waive any
defects, irregularities or conditions of tender as to any particular old notes
either before or after the expiration date. Our interpretation of the terms and
conditions of the exchange offer, including the instructions in the letter of
transmittal, will be final and binding on all parties. Unless waived, holders
must cure any defects or irregularities in connection with tenders of old notes
within a period we will determine. Although we intend to request the exchange
agent to notify holders of defects or irregularities relating to tenders of old
notes, neither we, the exchange agent nor any other person will have any duty
or incur any liability for failure to give this notification. We will not
consider tenders of old notes to have
35
been made until these defects or irregularities have been cured or waived. The
exchange agent will return any old notes that are not properly tendered and as
to which the defects or irregularities have not been cured or waived to the
tendering holders, unless otherwise provided in the letter of transmittal, as
soon as practicable following the expiration date.
In addition, we reserve the right, as set forth above under the caption
"Conditions to the Exchange Offer," to terminate the exchange offer.
By tendering, each holder represents to us, among other things, that:
. the holder acquired new notes pursuant to the exchange offer in the
ordinary course of its business,
. the holder has no arrangement or understanding with any person to
participate in the distribution of the new notes within the meaning of
the Securities Act, and
. the holder is not our "affiliate," as defined in Rule 405 under the
Securities Act.
If the holder is a broker-dealer which will receive new notes for its own
account in exchange for old notes acquired by such broker-dealer as a result of
market-making activities or other trading activities, such holder must
acknowledge that it will deliver a prospectus in connection with any resale of
the new notes.
Book-Entry Transfer
We understand that the exchange agent will make a request promptly after the
date of this prospectus to establish accounts with respect to the old notes at
DTC, Euroclear and Clearstream for the purpose of facilitating the exchange
offer. Any financial institution that is a participant in DTC's system may make
book-entry delivery of old notes by causing DTC to transfer such old notes into
the exchange agent's DTC account in accordance with DTC's Automated Tender
Offer Program procedures for such transfer. Any participant in Euroclear or
Clearstream may make book-entry delivery of Regulation S old notes by causing
Euroclear or Clearstream to transfer such old notes into the exchange agent's
account in accordance with established Euroclear or Clearstream procedures for
transfer. The exchange of new notes for tendered old notes will only be made
after a timely confirmation of a book-entry transfer of the old notes into the
exchange agent's account and timely receipt by the exchange agent of an agent's
message.
The term "agent's message" means a message, transmitted by DTC, Euroclear or
Clearstream, and received by the exchange agent and forming part of the
confirmation of a book-entry transfer, which states that DTC, Euroclear or
Clearstream has received an express acknowledgment from a participant tendering
old notes that such participant has received an appropriate letter of
transmittal and agrees to be bound by the terms of the letter of transmittal,
and that we may enforce such agreement against the participant. Delivery of an
agent's message will also constitute an acknowledgment from the tendering DTC,
Euroclear or Clearstream participant that the representations contained in the
letter of transmittal and described under "Resale of New Notes" above are true
and correct.
Guaranteed Delivery Procedures
The following guaranteed delivery procedures are intended for holders who
wish to tender their old notes but:
. their old notes are not immediately available,
. the holders cannot deliver their old notes, the letter of transmittal,
or any other required documents to the exchange agent prior to the
expiration date, or
. the holders cannot complete the procedure under the respective DTC,
Euroclear or Clearstream standard operating procedures for electronic
tenders before expiration of the exchange offer.
The conditions that must be met to tender old notes through the guaranteed
delivery procedures are as follows:
. the tender must be made through an eligible institution,
36
. before expiration of the exchange offer, the exchange agent must receive
from the eligible institution either a properly completed and duly
executed notice of guaranteed delivery in the form accompanying this
prospectus, by facsimile transmission, mail or hand delivery, or a
properly transmitted agent's message in lieu of notice of guaranteed
delivery:
. setting forth the name and address of the holder, the certificate
number or numbers of the old notes tendered and the principal amount
of old notes tendered;
. stating that the tender offer is being made by guaranteed delivery;
and
. guaranteeing that, within five business days after expiration of the
exchange offer, the letter of transmittal, or facsimile of the
letter of transmittal, together with the old notes tendered or a
book-entry confirmation, and any other documents required by the
letter of transmittal will be deposited by the eligible institution
with the exchange agent; and
. the exchange agent must receive the properly completed and executed
letter of transmittal, or facsimile of the letter of transmittal, as
well as all tendered old notes in proper form for transfer or a book-
entry confirmation, and any other documents required by the letter of
transmittal, within five business days after expiration of the exchange
offer.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their old notes according to the guaranteed
delivery procedures set forth above.
Withdrawal of Tenders
Your tender of old notes pursuant to the exchange offer is irrevocable
except as otherwise provided in this section. You may withdraw tenders of old
notes at any time prior to 5:00 p.m., New York City time, on the expiration
date.
For a withdrawal to be effective:
. the exchange agent must receive a written notice, which may be by
telegram, telex, facsimile transmission or letter, of withdrawal at the
address set forth below under "Exchange Agent", or
. for DTC, Euroclear or Clearstream participants, holders must comply with
their respective standard operating procedures for electronic tenders
and the exchange agent must receive an electronic notice of withdrawal
from DTC, Euroclear or Clearstream.
Any notice of withdrawal must:
. specify the name of the person who tendered the old notes to be
withdrawn,
. identify the old notes to be withdrawn, including the certificate number
or numbers and principal amount of the old notes to be withdrawn,
. be signed by the person who tendered the old notes in the same manner as
the original signature on the letter of transmittal, including any
required signature guarantees, and
. specify the name in which the old notes are to be re-registered, if
different from that of the withdrawing holder.
If old notes have been tendered pursuant to the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC, Euroclear or Clearstream to be credited with the
withdrawn old notes and otherwise comply with the procedures of the applicable
facility. We will determine in our sole discretion all questions as to the
validity, form and eligibility, including time of receipt, for such withdrawal
notices, and our determination shall be final and binding on all parties. Any
old notes so withdrawn will be deemed not to have been validly tendered for
purposes of the exchange offer and no new notes will be issued with respect to
them unless the old notes so withdrawn are validly retendered. Any
37
old notes which have been tendered but which are not accepted for exchange
will be returned to the holder without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the
exchange offer. Properly withdrawn old notes may be re-tendered by following
the procedures described above under "Procedures for Tendering" at any time
prior to the expiration date.
Exchange Agent
We have appointed The Bank of New York as exchange agent in connection with
the exchange offer. Holders should direct questions, requests for assistance
and for additional copies of this prospectus, the letter of transmittal or
notices of guaranteed delivery to the exchange agent addressed as follows:
By Mail, Hand Delivery or
Overnight Courier:
By Facsimile Transmission:
The Bank of New York The Bank of New York
Reorganization Department Reorganization Department
101 Barclay Street Attention: Santino Ginocchietti
Floor 7E (212) 815-6339
New York, NY 10286
Attention: Santino Ginocchietti For Information or Confirmation by
Telephone:
The Bank of New York
Reorganization Department
Attention: Santino Ginocchietti
(212) 815-6331
Delivery of a letter of transmittal to any address or facsimile number
other than the one set forth above will not constitute a valid delivery.
Fees and Expenses
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We will, however, pay the
exchange agent reasonable and customary fees for its services and will pay the
exchange agent for its related reasonable out-of-pocket expenses, including
accounting and legal fees. We may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this prospectus, letters of
transmittal and related documents to the beneficial owners of the old notes
and in handling or forwarding tenders for exchange.
Holders who tender their old notes for exchange will not be obligated to
pay any transfer taxes. If, however:
. new notes are to be delivered to, or issued in the name of, any person
other than the registered holder of the old notes tendered, or
. tendered old notes are registered in the name of any person other than
the person signing the letter of transmittal, or
. a transfer tax is imposed for any reason other than the exchange of old
notes in connection with the exchange offer,
then the tendering holder must pay the amount of any transfer taxes due,
whether imposed on the registered holder or any other persons. If the
tendering holder does not submit satisfactory evidence of payment of these
taxes or exemption from them with the letter of transmittal, the amount of
these transfer taxes will be billed directly to the tendering holder.
38
Consequences of Failures to Properly Tender Old Notes in the Exchange
We will issue the new notes in exchange for old notes under the exchange
offer only after timely receipt by the exchange agent of the old notes, a
properly completed and duly executed letter of transmittal and all other
required documents. Therefore, holders of the old notes desiring to tender old
notes in exchange for new notes should allow sufficient time to ensure timely
delivery. We are under no duty to give notification of defects or
irregularities of tenders of old notes for exchange. Old notes that are not
tendered or that are tendered but not accepted by us will, following completion
of the exchange offer, continue to be subject to the existing restrictions upon
transfer under the Securities Act. Upon completion of the exchange offer,
specified rights under the registration rights agreement, including
registration rights and any right to additional interest, will be either
limited or eliminated.
Participation in the exchange offer is voluntary. In the event the exchange
offer is completed, we will not be required to register the remaining old
notes. Remaining old notes will continue to be subject to the following
restrictions on transfer:
. holders may resell old notes only if we register the old notes under the
Securities Act, if an exemption from registration is available, or if
the transaction requires neither registration under nor an exemption
from the requirements of the Securities Act, and
. the remaining old notes will bear a legend restricting transfer in the
absence of registration or an exemption.
We do not currently anticipate that we will register the remaining old notes
under the Securities Act. To the extent that old notes are tendered and
accepted in connection with the exchange offer, any trading market for
remaining old notes could be adversely affected.
39
DESCRIPTION OF THE NEW NOTES
General
You can find the definitions of the terms used in the following summary under
the subheading "-- Certain Definitions". In this summary, "American Tower",
"we" or "us" do not refer to any of our Subsidiaries.
We issued the old notes, and will issue the new notes, under an indenture
between us and The Bank of New York, as trustee. The terms of the notes include
those stated in the indenture and those made part of that indenture by
reference to the Trust Indenture Act of 1939, as amended. The new and old notes
will be identical in all material respects, except that the new notes have been
registered under the Securities Act and are free of any obligation regarding
registration, including the payment of additional interest upon failure to file
or have declared effective an exchange offer registration statement or to
consummate an exchange offer by specified dates. Accordingly, unless
specifically stated to the contrary, the following description applies equally
to the old notes and the new notes.
The following description is a summary of the material provisions of the
indenture. It does not restate the indenture in its entirety. We urge you to
read the indenture, because it, and not this description, defines your rights
as Holders of the notes. A copy of the proposed form of indenture was filed as
an exhibit to our Annual Report on Form 10-K for the fiscal year ended December
31, 2000 and may be obtained by contacting us as described below under "--
Additional Information". See also "Where You Can Find More Information".
Brief Description of the Notes
The notes:
. are our general obligations;
. rank equally with all of our existing and future senior unsecured debt;
. accrue interest from the date they are issued at a rate of 9 3/8%, which
is payable semi-annually; and
. mature on February 1, 2009.
We have covenanted that we will offer to repurchase notes under the
circumstances described in the indenture upon:
. a Change of Control of American Tower; or
. an Asset Sale by us or any of our Restricted Subsidiaries.
The indenture also contains the following covenants:
. Restricted Payments;
. incurrence of Indebtedness and issuance of preferred stock;
. Liens;
. dividend and other payment restrictions affecting Subsidiaries;
. merger, consolidation or sale of assets;
. transactions with Affiliates;
. sale and leaseback transactions;
. limitation on issuances and sales of Capital Stock of Restricted
Subsidiaries;
. limitation on issuances of Guarantees of Indebtedness; and
. reports.
40
We conduct our operations through our Subsidiaries and, therefore, depend on
the cash flow of our Subsidiaries to meet our obligations, including our
obligations under the notes. Our Subsidiaries will not be guarantors of the
notes and the notes will be effectively subordinated to all Indebtedness,
including all borrowings under the Senior Credit Facility and other liabilities
and commitments, including trade payables and lease obligations, of our
Subsidiaries. Any right we have to receive assets of any of our Subsidiaries
upon the liquidation or reorganization of the Subsidiaries, and the consequent
right of the Holders of the notes to participate in those assets, will be
effectively subordinated to the claims of that Subsidiary's creditors, except
to the extent that we are recognized as a creditor of such Subsidiary. If we
are recognized as a creditor of such Subsidiary, our claims would still be
subordinate in right of payment to any security in the assets of that
Subsidiary and any indebtedness of that Subsidiary senior to that held by us.
We have pledged to the lenders under the Senior Credit Facility the shares of
most of our Subsidiaries and any indebtedness of those Subsidiaries owed to us.
As of December 31, 2000, after giving effect to the pro forma transactions
reflected in the table under "Capitalization", our Subsidiaries would have had
$1.6 billion of Indebtedness outstanding, and would have had $650.0 million of
unused commitments under the Senior Credit Facilities. The provisions of the
Senior Credit Facility contain substantial restrictions on the ability of those
Subsidiaries to dividend or distribute cash flow or assets to us. See "Risk
Factors--Risks Related to the Exchange Offer--Our holding company structure
results in substantial structural subordination of the notes and may affect our
ability to make payments on the notes" and "Description of Indebtedness". We
have also guaranteed payments under the Senior Credit Facility.
As of January 31, 2001, all of our Subsidiaries are Restricted Subsidiaries
other than Verestar and its Subsidiaries. However, under specified
circumstances, we will be able to designate current or future Subsidiaries as
Unrestricted Subsidiaries. Unrestricted Subsidiaries are not subject to many of
the restrictive covenants set forth in the indenture.
Principal, Maturity and Interest
We are offering to exchange new notes in the aggregate principal amount of
$1.0 billion for old notes. The notes will mature on February 1, 2009. We will
issue the notes in denominations of $1,000 and integral multiples of $1,000.
Interest on the notes will accrue at the rate of 9 3/8% per annum from
January 31, 2001 and will be payable in U.S. dollars semiannually in arrears on
February 1 and August 1, commencing on August 1, 2001. We will make each
interest payment to Holders of record on the immediately preceding January 15
and July 15.
We will calculate interest on the basis of a 360-day year comprised of twelve
30-day months.
Methods of Receiving Payments on the Notes
If the notes cease to be held as global notes and a Holder has given wire
transfer instructions to us, we will make all payments of principal, premium
and interest, if any, on that Holder's notes in accordance with those
instructions. We will make all other payments on the notes at the office or
agency of the paying agent and registrar for the notes within the City and
State of New York unless we elect to make interest payments by check mailed to
the Holders at their address set forth in the register of Holders. As long as
the notes remain in global form, we will make all payments to the depositary or
its nominee as described below under "--Form, Denomination, Transfer, Exchange
and Book-Entry Procedures".
Paying Agent and Registrar for the Notes
The trustee under the indenture will initially act as the paying agent and
registrar for the notes. We may change the paying agent or registrar under the
indenture without prior notice to the Holders of the notes. We or any of our
Subsidiaries may act as paying agent or registrar under the indenture.
41
Transfer and Exchange
A Holder may transfer or exchange notes in accordance with the indenture. The
registrar and the trustee may require a Holder to furnish appropriate
endorsements and transfer documents in connection with a transfer of notes.
Holders will be required to pay all taxes due on transfer. We are not required
to transfer or exchange any notes selected for redemption. Also, we are not
required to transfer or exchange any notes for a period of 15 days before a
selection of notes to be redeemed.
Form, Denomination, Transfer, Exchange and Book-Entry Procedures
New notes will be represented by one or more notes in registered, global form
without interest coupons (collectively, the "Global Notes"). We will deposit
the Global Notes upon issuance with the trustee as custodian for The Depository
Trust Company ("DTC"), as the depositary, in New York, New York, and registered
in the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant in DTC as described below.
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to DTC or its nominee, or to a successor of DTC or its
nominee. You may not exchange beneficial interests in the Global Notes for
notes in certificated form except in the limited circumstances described below
under "--Exchanges of Book-Entry Notes for Certificated Notes". Transfers of
beneficial interests in the Global Notes will be subject to the applicable
rules and procedures of DTC and its direct or indirect participants (including,
if applicable, those of Euroclear and Clearstream), which may change from time
to time.
Exchanges of Book-Entry Notes for Certificated Notes
You may not exchange a beneficial interest in a Global Note for a note in
certificated form unless:
. DTC notifies us that it is unwilling or unable to continue as depositary
for the Global Note or has ceased to be a clearing agency registered
under the Exchange Act and in either case we thereupon fail to appoint a
successor depositary,
. we, at our option, notify the trustee in writing that we elect to cause
the issuance of the notes in certificated form, or
. an Event of Default with respect to the notes shall have occurred and be
continuing.
In all cases, certificated notes delivered in exchange for any Global Note
or beneficial interests therein will be registered in the names, and issued in
any approved denominations, requested by or on behalf of the depositary (in
accordance with its customary procedures).
Book-Entry Procedures for Global Notes
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream that follow are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them from time to time. We
take no responsibility for these operations and procedures and urge investors
to contact the system or their participants directly to discuss these matters.
DTC has advised us that DTC is:
. a limited purpose trust company organized under the laws of the State of
New York,
. a member of the Federal Reserve System,
42
. a "clearing corporation" within the meaning of the Uniform Commercial
Code, and
. a "Clearing Agency" registered pursuant to the provisions of Section 17A
of the Exchange Act.
DTC holds securities for its participants. DTC also facilitates the
clearance and settlement of securities transactions among participants through
electronic book-entry changes in the accounts of its participants, thereby
eliminating the need for physical transfer and delivery of certificates. DTC's
direct participants include securities brokers and dealers, banks, trust
companies and clearing corporations and may include other organizations.
Indirect access to the DTC system is available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a direct participant.
Purchases of securities under DTC's system must be made by or through a
direct participant, which will receive a credit for such securities on DTC's
records. The ownership interest of each actual purchaser, and beneficial owner,
of such securities is in turn recorded on the records of direct and indirect
participants. Beneficial owners will not receive written confirmation from DTC
of their purchases, but they should receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the participants through which they entered into the transactions. DTC has
no knowledge of the actual beneficial owners of the securities. DTC's records
reflect only the identity of the direct participants to whose accounts such
securities are credited, which may or may not be the beneficial owners. The
participants are responsible for keeping account of the holdings of their
customers. Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements that may be in
effect.
As long as DTC, or its nominee, is the registered Holder of a Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner and
Holder of the notes represented by such Global Note for all purposes under the
indenture and the notes.
Except in the limited circumstances described above under "--Exchanges of
Book-Entry Notes for Certificated Notes", owners of beneficial interests in a
Global Note will not be entitled to have any portions of such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of notes in definitive form and will not be considered the owners or
Holders of the Global Note, or any notes represented thereby, under the
indenture or the notes.
Investors who are not "United States persons", as defined under the
Securities Act, who purchased old notes in reliance on Regulation S hold their
interests in old notes through Clearstream or Euroclear, if they are
participants in such systems, or indirectly through organizations which are
participants in such systems. Euroclear and Clearstream are direct participants
in the DTC system. We understand that Euroclear and Clearstream each maintain
records of the beneficial interests of their account holders and facilitate the
clearance and settlement of securities transactions by electronic book-entry
transfer among their respective account holders.
The laws of some states require that some persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Note to such persons may be limited
to that extent. Because DTC can act only on behalf of its direct participants,
which in turn act on behalf of indirect participants and certain banks, the
ability of a person having beneficial interests in a Global Note to pledge such
interest to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests.
43
We will make payments of the principal of, premium, if any, and interest on
Global Notes to DTC or its nominee as the registered owner thereof. We expect
that DTC or its nominee, upon receipt of any payment of principal or interest
in respect of a Global Note representing any notes held by it or its nominee,
will immediately credit participants' accounts with payments. DTC will credit
each relevant participant with an amount proportionate to its respective
beneficial interest in the principal amount of such Global Note for such notes
as shown on the records of DTC or its nominee. We also expect that payments by
participants to owners of beneficial interests in such Global Note held through
such participants will be governed by standing instructions and customary
practice, as is the case with securities held for the accounts of customers
registered in "street name". These payments will be the responsibility of such
participants and will not be the responsibility of us, DTC or the trustee.
Neither we, the trustee nor any of our respective agents will have any
responsibility or liability for:
. any aspect of the records relating to or payments made on account of
beneficial ownership interests in the Global Notes or for maintaining,
supervising or reviewing any records relating to the beneficial
ownership interests in the Global Notes, or
. any other matter relating to the actions and practices of DTC or any of
its participants or indirect participants.
Except for trades involving only Euroclear and Clearstream participants,
interests in the Global Notes will trade in DTC's settlement system and
secondary market trading activity in such interests will therefore settle in
immediately available funds, subject in all cases to the rules and procedures
of DTC and its participants. Transfers between participants in DTC will be
effected in accordance with DTC's procedures, and will be settled in same-day
funds. Transfers between participants in Euroclear and Clearstream will be
effected in accordance with their respective rules and operating procedures.
Subject to compliance with any applicable transfer and exchange
restrictions, cross-market transfers of interests in the Global Notes between
DTC participants, on the one hand, and Euroclear or Clearstream participants,
on the other hand, will be effected by DTC in accordance with DTC's rules on
behalf of Euroclear or Clearstream, as the case may be, by its respective
depositary. However, these cross-market transactions will require delivery of
instructions to Euroclear or Clearstream, by the counterparty in the applicable
system in accordance with the rules and procedures and within the established
deadlines of the applicable system. Euroclear or Clearstream, as the case may
be, will, if the transaction meets its settlement requirements, deliver
instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the relevant
Global Note in DTC, and making or receiving payment in accordance with normal
procedures or same-day funds settlement applicable to DTC. Euroclear
participants and Clearstream participants may not deliver instructions directly
to the depositaries for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a Global Note from a DTC
participant will be credited, and any such crediting will be reported to the
relevant Euroclear or Clearstream participant, during the securities settlement
processing day (which must be a business day for Euroclear and Clearstream)
immediately following the DTC settlement date. Cash received in Euroclear or
Clearstream as a result of sales of interests in a Global Note by or through a
Euroclear or Clearstream participant to a DTC participant will be received with
value on the DTC settlement date but will be available in the relevant
Euroclear or Clearstream cash account only as of the business day for Euroclear
or Clearstream following the DTC settlement date.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes only at the direction of one or more participants to whose
account DTC has credited the interests in the Global Notes and only in respect
of such portion of the aggregate principal amount of the Global Notes in which
such participant or participants have an interest. However, if there is an
Event of Default under the notes, DTC reserves the right to exchange the Global
Notes for notes in certificated form, and to distribute these notes to its
participants.
44
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures in order to facilitate transfers of beneficial ownership interests
in the Global Notes among participants of DTC, Euroclear and Clearstream, they
are under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither we, the trustee nor
any of our respective agents will have any responsibility for the performance
by DTC, Euroclear and Clearstream, their participants or indirect participants
of their respective obligations under the rules and procedures governing their
operations, including maintaining, supervising or reviewing the records
relating to, or payments made on account of, beneficial ownership interests in
Global Notes.
Optional Redemption
At any time until February 1, 2004, we may on any one or more occasions
redeem up to 35% of the aggregate principal amount of notes originally issued
at a redemption price of 109.375% of the principal amount of the notes to be
redeemed on the redemption date with the net cash proceeds of one or more
Public Equity Offerings and/or Strategic Equity Investments; provided that:
(1) at least 65% of the aggregate principal amount of notes originally
issued remains outstanding immediately after the occurrence of such
redemption, excluding notes held by us or any of our Subsidiaries; and
(2) the redemption occurs within 60 days of the date of the closing of
the Public Equity Offering or Strategic Equity Investment.
At any time prior to February 1, 2005, we may redeem all or part of the
notes, upon not less than 30 nor more than 60 days' notice, at a redemption
price equal to 100% of the principal amount plus the Applicable Premium as of,
and accrued and unpaid interest, if any, to, the date of redemption.
On or after February 1, 2005, we may redeem all or a part of the notes, upon
not less than 30 nor more than 60 days' notice, at the redemption prices
expressed as percentages of principal amount set forth below plus accrued and
unpaid interest, if any, on the notes redeemed to the applicable redemption
date, subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date, if redeemed during
the twelve-month period beginning on February 1, of the years indicated below:
Year Percentage
---- ----------
2005........................................................... 104.688%
2006........................................................... 103.125
2007........................................................... 101.562
2008 and thereafter............................................ 100.000
Selection and Notice
If less than all of the notes are to be redeemed at any time, the trustee
under the indenture will select notes for redemption as follows:
(1) if the notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities
exchange, if any, on which the notes are listed; or
(2) if the notes are not listed on any national securities exchange, on
a pro rata basis.
We may not redeem notes of $1,000 principal amount at maturity or less in
part. We will mail notices of redemption by first class mail at least 30 but
not more than 60 days before the redemption date to each Holder of notes to be
redeemed at its registered address. Notices of redemption may not be
conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to such note shall state the portion of the principal amount of that
note to be redeemed. A new note in principal amount equal to the unredeemed
portion of the original note presented for redemption will be issued in the
name of the Holder thereof upon cancellation of the original note. Notes called
for redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on notes or portions of them called
for redemption.
45
Mandatory Redemption
We are not required to make mandatory redemption or sinking fund payments
with respect to the notes.
Repurchase at the Option of Holders
Change of Control
If a Change of Control occurs, each Holder will have the right to require us
to repurchase all or any part, equal to $1,000 or an integral multiple of
$1,000, of its notes pursuant to the offer described below (the "Change of
Control Offer"). The offer price in any Change of Control Offer will be payable
in cash and will be 101% of the aggregate principal amount of any notes
repurchased plus any accrued and unpaid interest on the notes, subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date, to the date of purchase (the "Change of
Control Payment"). Within 30 days following any Change of Control, we will mail
a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase notes on the date
specified in the notice (the "Change of Control Payment Date"). The Change of
Control Payment Date will be no earlier than 30 days and no later than 60 days
from the date the notice is mailed, pursuant to the procedures required by the
indenture and described in such notice.
On the Change of Control Payment Date, we will, to the extent lawful:
(1) accept for payment all notes or portions of the notes properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all notes or portions of notes properly
tendered; and
(3) deliver or cause to be delivered to the trustee the notes so
accepted together with an officers' certificate stating the aggregate
principal amount of notes or portions of the notes being purchased by us.
The paying agent will promptly mail to each Holder of notes properly
tendered the Change of Control Payment for such notes, and the trustee will
promptly authenticate and mail, or cause to be transferred by book entry, to
each Holder a new note equal in principal amount to any unpurchased portion of
the notes surrendered. However, any new note that is issued will be in a
principal amount of $1,000 or an integral multiple of $1,000.
The Change of Control provisions described above will be applicable whether
or not any other covenants or similar provisions of the indenture are
applicable. We will comply with the requirements of Section 14(e) of the
Exchange Act and any other securities laws or regulations to the extent those
laws and regulations are applicable to any Change of Control Offer. If the
provisions of any of the applicable securities laws or securities regulations
conflict with the provisions of the covenant described above, we will comply
with the applicable securities laws and regulations and will not be deemed to
have breached our obligations under the covenant described above by virtue of
that compliance.
The Change of Control purchase feature is a result of negotiations between
us and the initial purchasers of the old notes. Management has no present
intention to engage in a transaction involving a Change of Control, although it
is possible that we would decide to do so in the future. Subject to the
limitations discussed below, we could, in the future, enter into transactions,
including acquisitions, refinancings or other recapitalizations, that would not
constitute a Change of Control under the indenture, but that could increase the
amount of Indebtedness outstanding at such time or otherwise affect our capital
structure. Restrictions on our ability to incur additional Indebtedness are
contained in the covenants described under "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock", "--Certain Covenants--Liens" and
"--Sale and Leaseback Transactions". The consent of the Holders of a majority
in principal amount of the notes then outstanding is required to waive any of
these restrictions. Except for the limitations contained in the covenants,
however, the indenture will not contain any covenants or provisions that may
afford Holders of the notes protection in the event of some highly leveraged
transactions.
46
The Credit Facilities limit our access to the cash flow of our Subsidiaries
and will, therefore, restrict our ability to purchase any notes. The Senior
Credit Facility also provides that the occurrence of specified change of
control events with respect to us constitutes a default under the Senior
Credit Facility. In the event that a Change of Control occurs at a time when
our Subsidiaries are prohibited from making distributions to us to purchase
notes, we could cause our Subsidiaries to seek the consent of the lenders
under the Credit Facilities to allow the distributions or could attempt to
refinance the borrowings that contain the prohibition. If we do not obtain a
consent or repay such borrowings, we will remain prohibited from purchasing
notes. In this case, our failure to purchase tendered notes would constitute
an Event of Default under the indenture that would, in turn, constitute a
default under the Senior Credit Facility.
Future indebtedness of us and our Subsidiaries may also contain
prohibitions on the occurrence of specified events that would constitute a
Change of Control or require the indebtedness to be repurchased if a Change of
Control occurs. Moreover, the exercise by the Holders of their right to
require us to repurchase the notes could cause a default under such
indebtedness, even if the Change of Control itself does not, due to the
financial effect of such repurchase on us. Finally, our ability to pay cash to
the Holders of notes following the occurrence of a Change of Control may be
limited by our then existing financial resources, including our ability to
access the cash flow of our Subsidiaries. See "Risk Factors--Risks Related to
the Exchange Offer--Our holding company structure results in substantial
structural subordination of the notes and may affect our ability to make
payments on the notes". We cannot assure you that we will have sufficient
funds when necessary to make any required repurchases.
Our convertible notes also require their repurchase at the holders' option
upon a change of control. We may elect to make repurchase payments of the
convertible notes in our common stock. If we do not make this election, our
inability to obtain sufficient cash for this repurchase would result in a
default under the convertible notes, which would in turn trigger a Default
under the notes and defaults under the Senior Credit Facility or other
Indebtedness.
We will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in the
indenture applicable to a Change of Control Offer made by us and purchases all
notes properly tendered and not withdrawn under such Change of Control Offer.
The Holders of a majority in principal amount of the notes then outstanding
may waive or modify by written consent the provisions under the indenture
relating to our obligation to make an offer to repurchase the notes as a
result of a Change of Control.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of our assets and the assets of our Restricted Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
exists under applicable law. Accordingly, the ability of a Holder of notes to
require us to repurchase the notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of our assets and the assets
of our Subsidiaries taken as a whole to another Person or group may be
uncertain.
Asset Sales
We will not, and will not permit any of our Restricted Subsidiaries to,
consummate an Asset Sale unless:
(1) we or the applicable Restricted Subsidiary receive consideration at
the time of the Asset Sale at least equal to the fair market value of the
assets or Equity Interests issued or sold or otherwise disposed of;
(2) fair market value is determined by our board of directors and
evidenced by its resolution set forth in an officers' certificate delivered
to the trustee under the indenture; and
47
(3) except in the case of a Tower Asset Exchange, a Surplus Asset Sale,
an Excluded International Sale or an Excepted Verestar Sale, at least 75%
of the consideration received in such Asset Sale by the Issuer or such
Restricted Subsidiary is in the form of cash or Cash Equivalents.
For purposes of the above provision, each of the following shall be deemed
to be cash:
(a) any liabilities, as shown on our or the selling Restricted
Subsidiary's most recent balance sheet, of us or any Restricted Subsidiary
(other than contingent liabilities and liabilities that are by their terms
subordinated to the notes or any guarantee of the notes) that are assumed
by the transferee of any assets pursuant to a customary novation agreement
that releases us or the Restricted Subsidiary from further liability; and
(b) any securities, notes or other obligations received by us or any
Restricted Subsidiary from the transferee that we or the Restricted
Subsidiary convert into cash within 20 days of the applicable Asset Sale,
to the extent of the cash received in that conversion.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale by
us or one of our Restricted Subsidiaries, we or the Restricted Subsidiary may
apply those Net Proceeds to:
(1) reduce Indebtedness under a Credit Facility;
(2) reduce other Indebtedness of any of our Restricted Subsidiaries;
(3) acquire assets other than Voting Stock;
(4) acquire Voting Stock or other Equity Interests of a Person that is
not our Subsidiary; provided that, after giving effect to the acquisition,
such Person becomes a Subsidiary of us or one of our Restricted
Subsidiaries; or
(5) make a capital expenditure.
Pending the final application of any Net Proceeds, we may temporarily reduce
revolving credit borrowings or otherwise invest the Net Proceeds in any manner
that is not prohibited by the indenture.
Any Net Proceeds from Asset Sales that we or a Restricted Subsidiary do not
apply or invest as provided in the preceding paragraph will be deemed to
constitute "Excess Proceeds". When the aggregate amount of Excess Proceeds
exceeds $10.0 million, we will be required to make an offer to all Holders of
notes and all holders of our other unsubordinated Indebtedness containing
provisions similar to those set forth in the indenture relating to the notes
with respect to offers to purchase or redeem with the proceeds of sales of
assets (an "Asset Sale Offer"), to purchase the maximum principal amount of
notes and such other of our unsubordinated Indebtedness that may be purchased
out of the Excess Proceeds. The offer price in any Asset Sale Offer will be
payable in cash and will be 100% of the principal amount of any notes, plus
accrued and unpaid interest to the date of purchase. In the case of any other
unsubordinated Indebtedness, the offer price must be 100% of the principal
amount (or accreted value, as applicable) of the Indebtedness plus accrued and
unpaid interest thereon, if any, to the date of purchase. Each Asset Sale Offer
will be made in accordance with the procedures set forth in the indenture and
our other unsubordinated Indebtedness. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, we may use the remaining Excess Proceeds
for any purpose not otherwise prohibited by the indenture. If the aggregate
principal amount of notes and our other unsubordinated indebtedness tendered
into the Asset Sale Offer exceeds the amount of Excess Proceeds, the trustee
will select the notes and such other unsubordinated Indebtedness to be
purchased on a pro rata basis. Upon completion of the Asset Sale Offer, the
amount of Excess Proceeds will be reset at zero.
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Certain Covenants
Covenant Suspension
During any period of time that:
(a) the notes have Investment Grade Ratings from both Rating Agencies
and
(b) no Default has occurred and is continuing,
We and our Restricted Subsidiaries will not be subject to the following
provisions of the indenture:
. ""--Repurchase at the Option of Holders--Asset Sales",
. ""--Restricted Payments",
. ""--Incurrence of Indebtedness and Issuance of Preferred Stock",
. ""--Dividend and Other Payment Restrictions Affecting Subsidiaries",
. ""--Limitation on Issuances and Sales of Capital Stock of Restricted
Subsidiaries",
. ""--Limitation on Issuances of Guarantees of Indebtedness",
. clause (2)(d) of "--Merger, Consolidation or Sale of Assets",
. clause (1)(a) of "--Sale and Leaseback Transactions", and
. clause (1) of the proviso to the last paragraph of the definition of
"Unrestricted Subsidiary" under "--Certain Definitions".
We refer to the above covenants as the "Suspended Covenants". In the event that
we and our Restricted Subsidiaries are not subject to the Suspended Covenants
for any period of time as a result of the preceding sentence and, subsequently,
one or both of the Rating Agencies withdraws its ratings or downgrades the
ratings assigned to the notes below the required Investment Grade Ratings or a
Default occurs and is continuing, then we and our Restricted Subsidiaries will
thereafter again be subject to the Suspended Covenants for all periods during
the continuance of that withdrawal, downgrade or Default. Furthermore,
compliance with the provisions of the covenant described in "--Restricted
Payments" with respect to Restricted Payments made during the continuance of
the withdrawal, downgrade or Default will be calculated in accordance with the
terms of that covenant as though that covenant had been in effect during the
entire period of time from the Issue Date, provided that there will not be
deemed to have occurred a Default with respect to the Suspended Covenants
during the time that we and our Restricted Subsidiaries were not subject to the
Suspended Covenants, or after that time based solely on events that occurred
during that time.
Restricted Payments
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of our or any of our Restricted Subsidiaries'
Equity Interests (including, without limitation, any payment in connection
with any merger or consolidation involving us or any of our Restricted
Subsidiaries) or to the direct or indirect holders of our or any of our
Restricted Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable (i) in our Equity Interests (other
than Disqualified Stock) or (ii) to us or any of our Restricted
Subsidiaries);
(2) purchase, redeem or otherwise acquire or retire for value (including
without limitation, in connection with any merger or consolidation
involving us) any Equity Interests of ours or of any Person of which we are
a Subsidiary (other than any such Equity Interests owned by us or any of
our Restricted Subsidiaries);
(3) make any payment on or with respect to, or purchase, redeem, defease
or otherwise acquire or retire for value any Indebtedness that is
subordinated to the notes, except a payment of interest or principal at
Stated Maturity (other than payments to us or payments by a Restricted
Subsidiary of ours to us or to another Restricted Subsidiary); or
(4) make any Restricted Investment
49
(all such payments and other actions restricted by these clauses (1) through
(4) collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default has occurred and is continuing or would occur as a
consequence of the Restricted Payment; and
(2) we would have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Debt to Adjusted Consolidated Cash Flow Ratio
test set forth in the first paragraph of the covenant described below under
the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock";
provided that we and our Restricted Subsidiaries will not be required to
comply with this clause (2) in order to make any Restricted Investment or
to declare or pay any Excepted Verestar Dividend; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by us and our Restricted Subsidiaries after
the Issue Date (excluding Restricted Payments permitted by clauses (2), (3)
and (4) of the paragraph of exceptions below), is less than the sum,
without duplication, of:
(a) 100% of our Consolidated Cash Flow for the period (taken as one
accounting period) from the beginning of the fiscal quarter during
which the Issue Date falls to the end of our most recently ended fiscal
quarter for which internal financial statements are available at the
time of such Restricted Payment (or, if the Consolidated Cash Flow for
such period is a deficit, less 100% of the deficit), less 1.40 times
our Consolidated Interest Expense since the beginning of the fiscal
quarter during which the Issue Date falls to the end of our most
recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment; plus
(b) (i) 100% of the aggregate net cash proceeds plus (ii) 70% of the
aggregate value, as reflected on our balance sheet in accordance with
GAAP using purchase accounting, of any Qualified Proceeds, in each case
as of the date our Equity Interests were issued, sold or exchanged
therefor, received by us since the Issue Date as a contribution to our
common equity capital or from the issue, sale or exchange of our Equity
Interests (other than Disqualified Stock and except to the extent such
net cash proceeds are used to support the incurrence of new
Indebtedness pursuant to clause (9) of the second paragraph of the
covenant described below under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock" or from the issue or sale
(whether before or after the Issue Date) of our Disqualified Stock or
debt securities (including the Convertible Notes) that have been
converted after the Issue Date into Equity Interests (other than Equity
Interests (or Disqualified Stock or convertible debt securities) sold
to or held by a Subsidiary of ours and other than Disqualified Stock or
convertible debt securities that have been converted into Disqualified
Stock); plus
(c) to the extent that any Restricted Investment that was made after
the Issue Date is sold for cash or otherwise liquidated or repaid for
cash, the lesser of:
(A) the cash return of capital with respect to the Restricted
Investment (less the cost of disposition, if any), and
(B) the initial amount of the Restricted Investment; plus
(d) to the extent that any Unrestricted Subsidiary of us and all of
our Subsidiaries is designated as or become Restricted Subsidiaries
after the Issue Date, the lesser of:
(A) the fair market value of our Investments in such Subsidiaries
as of the date they are designated or become Restricted
Subsidiaries, or
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(B) the sum of:
(x) except in the case of Verestar and its Subsidiaries
becoming Restricted Subsidiaries from Unrestricted Subsidiaries
at a time when they have not previously been Restricted
Subsidiaries, the fair market value of our Investments in such
Subsidiaries as of the date on which such Subsidiaries were most
recently designated as Unrestricted Subsidiaries, and
(y) the amount of any Investments made in such Subsidiaries
subsequent to such designation as Unrestricted Subsidiaries (and
treated as Restricted Payments or excluded from clause (3)(b)
pursuant to the second proviso of clause (2) of the next
paragraph) by us or any Restricted Subsidiary; plus
(e) 100% of any dividends or other distributions received by us or a
Restricted Subsidiary after the Issue Date from an Unrestricted
Subsidiary of ours, to the extent that such dividends were not
otherwise included in our Consolidated Net Income for such period.
The preceding provisions will not prohibit:
(1) the payment of any dividend or the making of any distribution within
60 days after the date of declaration of that dividend or distribution, if
at said date of declaration such payment or distribution would have
complied with the provisions of the indenture;
(2) (a) the making of any Investment (including pursuant to clause (a)
or (b) in the first sentence of the definition of Verestar Net Investment)
or (b) the redemption, repurchase, retirement, defeasance or other
acquisition of any of our subordinated Indebtedness or Equity Interests, in
the case of (a) or (b), in exchange for, or out of the net cash proceeds
(or in the case of an Investment in Verestar or its Subsidiaries, other
assets) from the substantially concurrent sale after the Issue Date (other
than to a Subsidiary of American Tower) of our Equity Interests (other than
any Disqualified Stock); provided that the net cash proceeds (or other
assets, as applicable) are not used to incur new Indebtedness pursuant to
clause (9) of the second paragraph of the covenant described below under
the caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock"); and provided further that, in each case, the amount of any net
cash proceeds (or other assets, as applicable) that are so utilized will be
excluded from clause (3)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary to the
Holders of its Equity Interests on a pro rata basis; or
(5) the repurchase, redemption or other acquisition or retirement for
value of any of our or any of our Restricted Subsidiaries' Equity Interests
held by any member of our or any of our Restricted Subsidiaries' management
pursuant to any management equity subscription agreement, stockholder
agreement, stock option agreement or restricted stock agreement in effect
as of the Issue Date. However, the aggregate price paid for all of the
repurchased, redeemed, acquired or retired Equity Interests may not exceed:
(a) $500,000 in any twelve-month period, and
(b) $5.0 million in the aggregate since the Issue Date.
Our board of directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all of our and our Restricted
Subsidiaries' outstanding Investments (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of the designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All of those outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of the
51
Investments at the time of such designation. Such designation will only be
permitted if the Restricted Payment would be permitted at the time and if the
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. Our board of directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary if the designation would not cause a Default.
The amount of all Restricted Payments (other than cash) will be the fair
market value on the date of the Restricted Payment of the assets or securities
proposed to be transferred or issued by us or the applicable Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment, except as
described in the next sentence. In the event we declare or pay an Excepted
Verestar Dividend, the amount of the Restricted Payment will be the product of
(a)(i) the Verestar Net Investment then outstanding that has been made in
reliance on clause (10) of the definition of "Permitted Investment", reduced by
(ii) the amount of Restricted Payments previously made in reliance on this
sentence, and (b) the percentage of the outstanding common stock or similar
Capital Stock of Verestar we own that is the subject of such dividend or
distribution. The fair market value of any property, assets or Investments
required by this covenant to be valued will be valued by our board of directors
whose resolution with respect to the determination will be delivered to the
trustee.
Incurrence of Indebtedness and Issuance of Preferred Stock
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively, "incur") any Indebtedness (including Acquired Debt) and we
will not issue any Disqualified Stock and will not permit any of our Restricted
Subsidiaries to issue any shares of preferred stock. However, we may incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock
and our Restricted Subsidiaries may incur Indebtedness (including Acquired
Debt) or issue preferred stock if, in each case, our Debt to Adjusted
Consolidated Cash Flow Ratio at the time of incurrence of the Indebtedness or
the issuance of the preferred stock, after giving pro forma effect to such
incurrence or issuance as of such date and to the use of proceeds from such
incurrence or issuance as if the same had occurred at the beginning of the most
recently ended four full fiscal quarter period for which internal financial
statements are available, would have been no greater than 7.5 to 1.
The first paragraph of this covenant will not prohibit the incurrence of any
of the following items of Indebtedness or the issuance of any of the following
items of Disqualified Stock or preferred stock (collectively, "Permitted
Debt"):
(1) the incurrence by us or any of our Restricted Subsidiaries of
Indebtedness under the Credit Facilities (including Credit Facilities also
constituting Excepted Verestar Debt) in an aggregate principal amount (with
letters of credit being deemed to have a principal amount equal to the
maximum potential liability of us and our Restricted Subsidiaries
thereunder) at any one time outstanding not to exceed the greater of
(a) $2.65 billion less any amount applied to reduce Indebtedness
under a Credit Facility pursuant to clause (1) of the third paragraph
of the covenant described above under "--Asset Sales", and
(b) the sum of
(x) the product of $150,000 times the number of Completed Towers
on the date of such incurrence; plus
(y) the product of $1,000,000 times the number of Completed
Broadcast Towers on the date of such incurrence; provided that the
amount of Indebtedness permitted by this clause (y) does not exceed
25% of the cost of acquiring or constructing such Completed
Broadcast Towers; plus
(z) the product of 6.0 times Non-Tower Cash Flow on the date of
such incurrence;
(2) the incurrence by us and our Restricted Subsidiaries of the Existing
Indebtedness;
52
(3) the incurrence by us or any of our Restricted Subsidiaries of
Indebtedness since the Issue Date
(a) represented by Capital Lease Obligations incurred (i) in
connection with the lease or other use of space or time on
satellites or (ii) for the purpose of financing all or any part
of the purchase price or cost of construction or improvement of
property, plant or equipment, in each case used in the Teleports
Business of us or the applicable Restricted Subsidiary or
(b) represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for the purpose
of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used
in any business of ours or the applicable Restricted Subsidiary,
in an aggregate principal amount for purposes of this clause
(3)(b), including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace any other Indebtedness incurred
pursuant to this clause (3)(b), not to exceed $50.0 million at
any one time outstanding;
(4) the incurrence by us or any of our Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund our
Indebtedness or that of any of our Restricted Subsidiaries or our
Disqualified Stock (other than intercompany Indebtedness) that was
permitted by the indenture to be incurred under the first paragraph of this
covenant or clause (2) or (3) or this clause (4) of this paragraph;
(5) the incurrence by us or any of our Restricted Subsidiaries of
intercompany Indebtedness between or among us and any of our Restricted
Subsidiaries and the issuance by any of our Restricted Subsidiaries of
shares of preferred stock to us or to another Restricted Subsidiary of ours
provided, however, that if we are the obligor on such Indebtedness, that
Indebtedness is expressly subordinated to the prior payment in full in cash
of all obligations with respect to the notes and that:
(a) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness or preferred stock being held by a
Person other than us or a Restricted Subsidiary, and
(b) any sale or other transfer of any such Indebtedness or preferred
stock to a Person that is not either us or a Restricted Subsidiary
shall be deemed, in each case, to constitute an incurrence of the
Indebtedness by us or the Restricted Subsidiary or issuance of the shares
of preferred stock by the Restricted Subsidiary, as the case may be;
(6) the incurrence by us or any of our Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of the indenture to be outstanding or currency
exchange risk;
(7) the guarantee by us or any of our Restricted Subsidiaries of our
Indebtedness or that of a Restricted Subsidiary that was permitted to be
incurred by another provision of the indenture;
(8) the incurrence by us or any of our Restricted Subsidiaries of
Acquired Debt in connection with a merger with or into a Restricted
Subsidiary, or the acquisition of assets or a new Subsidiary and the
incurrence by our Restricted Subsidiaries of Indebtedness as a result of
the designation of an Unrestricted Subsidiary as a Restricted Subsidiary;
provided that, in the case of the incurrence of Acquired Debt, it was
incurred by the prior owner of the assets or the Restricted Subsidiary
prior to such acquisition by us or one of our Restricted Subsidiaries and
was not incurred in connection with, or in contemplation of, the
acquisition by us or one of our Restricted Subsidiaries; and provided
further that, in the case of any incurrence pursuant to this clause (8), as
a result of such acquisition by us or one of our Restricted Subsidiaries,
our Debt to Adjusted Consolidated Cash Flow Ratio at the time of incurrence
of such Acquired Debt, after giving pro forma effect to such acquisition
and incurrence as if the same had occurred at the beginning of our most
recently ended four full fiscal quarter period for which internal financial
statements are available, would have been less than our Debt to Adjusted
Consolidated Cash Flow Ratio for the same period without giving pro forma
effect to the incurrence;
53
(9) the incurrence by us of Indebtedness or Disqualified Stock not to
exceed, at any one time outstanding, the sum of:
(i) 2.0 times the aggregate net cash proceeds, plus
(ii) 1.0 times the fair market value of non-cash proceeds (evidenced
by a resolution of our board of directors set forth in an officers'
certificate delivered to the trustee),
in each case, from the issuance and sale, other than to a Subsidiary,
of our Equity Interests (other than Disqualified Stock and excluding
conversion of the Convertible Notes) since the Issue Date (less the
amount of such proceeds used to make Restricted Payments as provided in
clause (3)(b) of the first paragraph or clause (2) of the second
paragraph of the covenant described above under the caption "--
Restricted Payments");
(10) the incurrence by us or any of our Restricted Subsidiaries since
the Issue Date of additional Indebtedness or the issuance by us of
Disqualified Stock in an aggregate principal amount, accreted value or
liquidation preference, as applicable, at any time outstanding, not to
exceed $25.0 million; and
(11) the incurrence by our Restricted Subsidiaries of Excepted Verestar
Debt as a result of Verestar's and its Subsidiaries' becoming Restricted
Subsidiaries, but only to the extent such Indebtedness could not have been
incurred under any other provision of this covenant.
The indenture also provides that:
(1) we will not incur any Indebtedness that is contractually
subordinated in right of payment to any of our other Indebtedness unless
such Indebtedness is also contractually subordinated in right of payment to
the notes on substantially identical terms; provided, however, that no
Indebtedness will be deemed to be contractually subordinated in right of
payment to any other Indebtedness solely by virtue of being unsecured;
(2) we will not permit Verestar and its Subsidiaries, at any time when
they have Special Verestar Status, to incur any Indebtedness other than
Excepted Verestar Debt; and
(3) we will not permit any of our Unrestricted Subsidiaries (including
Verestar and its Subsidiaries at a time when they are Unrestricted
Subsidiaries but do not have Special Verestar Status) to incur any
Indebtedness other than Non-Recourse Debt or Indebtedness owed to us or our
Restricted Subsidiaries.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
of Permitted Debt described in clauses (1) through (11) above or is entitled to
be incurred pursuant to the first paragraph of this covenant, we will, except
as otherwise provided in clause (11) above, in our sole discretion classify (or
later reclassify in whole or in part) such item of Indebtedness in any manner
that complies with this covenant. Accrual of interest, accretion or
amortization of original issue discount and the payment of interest in the form
of additional Indebtedness will not be deemed to be an incurrence of
Indebtedness for purposes of this covenant.
Liens
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Indebtedness or trade payables on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey as security
any right to receive income therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:
54
(1) pay dividends or make any other distributions to us or any of our
Restricted Subsidiaries on its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits;
(2) pay any Indebtedness owed to us or any of our Restricted
Subsidiaries;
(3) make loans or advances to us or any of our Restricted Subsidiaries;
or
(4) transfer any of our properties or assets to us or any of our
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the Issue Date, and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof. However, amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings may be no more restrictive, taken as a whole,
with respect to such dividend and other payment restrictions than those
contained in the applicable series of Existing Indebtedness as in effect on
the Issue Date;
(2) Indebtedness of any Restricted Subsidiary under any Credit Facility
that is permitted to be incurred pursuant to the covenant under the caption
"--Incurrence of Indebtedness and Issuance of Preferred Stock". However,
the Credit Facility and Indebtedness may contain only such encumbrances and
restrictions on the Restricted Subsidiary's ability to engage in the
activities set forth in clauses (1) through (4) of the preceding paragraph
as are, at the time the Credit Facility is entered into or amended,
modified, restated, renewed, increased, supplemented, refunded, replaced or
refinanced, ordinary and customary for a Credit Facility of that type as
determined in the good faith judgment of our board of directors (and
evidenced in a board resolution), which determination shall be conclusively
binding;
(3) encumbrances and restrictions applicable to any Unrestricted
Subsidiary, as the same are in effect as of the date on which the
Subsidiary becomes a Restricted Subsidiary, and as the same may be amended,
modified, restated, renewed, increased, supplemented, refunded, replaced or
refinanced. However, the amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings may be no
more restrictive, taken as a whole, with respect to the dividend and other
payment restrictions than those contained in the applicable series of
Indebtedness of the Subsidiary as in effect on the date on which the
Subsidiary becomes a Restricted Subsidiary;
(4) any Indebtedness incurred in compliance with the covenant under the
heading "--Incurrence of Indebtedness and Issuance of Preferred Stock" or
any agreement pursuant to which such Indebtedness is issued if the
encumbrance or restriction applies only in the event of a payment default
or default with respect to a financial covenant contained in the
Indebtedness or agreement and we determine (a) the encumbrance or
restriction is not materially more disadvantageous to the Holders of the
notes than is customary in comparable financings and (b) the encumbrance or
restriction will not materially affect our ability to pay interest or
principal on the notes;
(5) the indenture governing the notes;
(6) applicable law;
(7) any instrument governing Indebtedness or Capital Stock of a Person
acquired by us or any of our Restricted Subsidiaries as in effect at the
time that Person is acquired by us (except to the extent the Indebtedness
was incurred in connection with or in contemplation of the acquisition),
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired and as the instrument may be amended,
modified, restated, renewed, increased, supplemented, refunded, replaced or
refinanced, provided that, in the case of Indebtedness, the Indebtedness
was permitted by the terms of the indenture to be incurred and, provided
further, that the amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing is no more restrictive,
taken as a whole, with respect to the dividend and other payment
restrictions than those contained in the instrument as in effect on the
date on which the Person was acquired by us;
55
(8) customary non-assignment provisions in leases or licenses entered
into in the ordinary course of business;
(9) purchase money obligations for property acquired in the ordinary
course of business of the nature described in clause (3) in the second
paragraph of the covenant described above under the caption "--Incurrence
of Indebtedness and Issuance of Preferred Stock" on the property so
acquired;
(10) any agreement for the sale of a Restricted Subsidiary that
restricts that Restricted Subsidiary pending its sale;
(11) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing the Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(12) Liens permitted to be incurred pursuant to the provisions of the
covenant described under the caption "--Liens" that limit the right of the
debtor to transfer the assets subject to such Liens;
(13) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar
agreements; and
(14) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
Merger, Consolidation or Sale of Assets
We may not:
(1) consolidate or merge with or into (whether or not we are the
surviving corporation), or
(2) sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of our properties or assets in one or more related
transactions, to another corporation, Person or entity, unless
(a) either:
(A) we are the surviving corporation, or
(B) the entity or the Person formed by or surviving any such
consolidation or merger (if not us) or to which the sale,
assignment, transfer, lease, conveyance or other disposition shall
have been made is a corporation organized or existing under the laws
of the United States, any state thereof or the District of Columbia;
(b) the entity or Person formed by or surviving any such
consolidation or merger (if not us) or the entity or Person to which
the sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all of our obligations under the notes and
the indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the trustee;
(c) immediately after such transaction no Default exists; and
(d) except in the case of (A) our merger with or into a Wholly Owned
Restricted Subsidiary of ours, and (B) a merger entered into solely for
the purpose of our reincorporating in another jurisdiction:
(x) in the case of a merger or consolidation in which we are the
surviving corporation, at the time of the transaction, after giving
pro forma effect to the transaction as of such date for balance
sheet purposes and as if the transaction had occurred at the
beginning of our most recently ended four full fiscal quarter period
for which internal financial statements are available for income
statement purposes, we (i) would have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the first
paragraph of the covenant described under "--Incurrence of
Indebtedness and Issuance of Preferred Stock" or (ii) would have had
a Debt to Adjusted Cash Flow Ratio that was not greater than our
Debt to Adjusted Consolidated Cash Flow Ratio for the same period
without giving pro forma effect to such transaction, or
56
(y) in the case of any other such transaction, the entity or
Person formed by or surviving any such consolidation or merger (if
not us), or to which the sale, assignment, transfer, lease,
conveyance or other disposition shall have been made, at the time of
the transaction, after giving pro forma effect to the transaction as
of such date for balance sheet purposes and as if such transaction
had occurred at the beginning of the most recently ended four full
fiscal quarter period of such entity or Person for which internal
financial statements are available for income statement purposes,
(i) would have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of the covenant
described under "--Incurrence of Indebtedness and Issuance of
Preferred Stock" or (ii) would have had a Debt to Adjusted
Consolidated Cash Flow Ratio that was not greater than our Debt to
Adjusted Consolidated Cash Flow Ratio for the same period without
giving pro forma effect to such transaction. For purposes of
determining the amount of Indebtedness permitted to be incurred or
the Debt to Adjusted Consolidated Cash Flow Ratio of any entity or
Person for purposes of this clause (y) the entity or Person will be
substituted for us in the covenant described under "--Incurrence of
Indebtedness and Issuance of Preferred Stock", the definition of
Debt to Adjusted Consolidated Cash Flow Ratio and the defined terms
included therein under the caption "--Certain Definitions".
Transactions with Affiliates
We will not, and will not permit any of our Restricted Subsidiaries to, make
any payment to, or sell, lease, transfer or otherwise dispose of any of our
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless:
(1) the Affiliate Transaction is on terms that, in the aggregate, are no
less favorable to us or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by us or the
Restricted Subsidiary with an unrelated Person; and
(2) we deliver to the trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, an officers' certificate certifying that the Affiliate
Transaction complies with clause (1) above;
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, a resolution of our board of directors set forth in an
officers' certificate certifying that the Affiliate Transaction
complies with clause (1) above and that the Affiliate Transaction has
been approved by a majority of the members of our board of directors
having no personal stake in such Affiliated Transaction (or, if there
are no such members, by all of the directors and by the procedure
described in clause (c) below); and
(c) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$25.0 million, other than a Permitted Investment, an opinion as to the
fairness to the Holders of the Affiliate Transaction from a financial
point of view issued by an accounting, appraisal or investment banking
firm of national standing.
Notwithstanding the foregoing, the following items will not be deemed to be
Affiliate Transactions:
(1) any employment arrangements with any of our executive officers or
those of a Restricted Subsidiary that is entered into by us or any of our
Restricted Subsidiaries in the ordinary course of business and
substantially consistent with compensation arrangements of similarly
situated executive officers at comparable companies engaged in Permitted
Businesses;
(2) transactions between or among us and/or our Restricted Subsidiaries;
57
(3) payment of directors' fees (in cash or other property) in an
aggregate annual amount per Person that is substantially consistent with
directors' fees at comparable companies engaged in Permitted Businesses;
(4) Restricted Payments that are permitted by the provisions of the
indenture described above under the caption "--Restricted Payments";
(5) the issuance or sale of our Equity Interests (other than
Disqualified Stock); and
(6) transactions pursuant to the Tax Sharing Agreement.
Sale and Leaseback Transactions
We will not, and will not permit any of our Restricted Subsidiaries to,
enter into any sale and leaseback transaction. However, we or any of our
Restricted Subsidiaries may enter into a sale and leaseback transaction if:
(1) we or such Restricted Subsidiary, as applicable, could have:
(a) incurred Indebtedness in an amount equal to the Attributable
Debt relating to the sale and leaseback transaction pursuant to the
Debt to Adjusted Consolidated Cash Flow Ratio test set forth in the
first paragraph of the covenant described above under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock";
(b) incurred a Lien to secure such Indebtedness pursuant to the
covenant described above under the caption "--Liens";
(2) the gross cash proceeds of the sale and leaseback transaction are at
least equal to the fair market value (as determined in good faith by our
board of directors) of the property that is the subject of the sale and
leaseback transaction; and
(3) the transfer of assets in the sale and leaseback transaction is
permitted by, and we apply the proceeds of the transaction in compliance
with, the covenant described above under the caption "--Repurchase at the
Option of Holders--Asset Sales."
Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries
We:
(1) will not, and will not permit any of our Restricted Subsidiaries to,
transfer, convey, sell, lease or otherwise dispose of any Equity Interests
in any of our Restricted Subsidiary of ours to any Person (other than us or
a Wholly Owned Restricted Subsidiary of ours); and
(2) will not permit any of our Restricted Subsidiaries to issue any of
its Equity Interests (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to us
or a Wholly Owned Restricted Subsidiary of ours,
unless, in each such case:
(a) as a result of such transfer, conveyance, sale, lease or other
disposition or issuance the Restricted Subsidiary no longer constitutes
a Subsidiary; and
(b) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition or issuance are applied in accordance with
the covenant described above under the caption "--Repurchase at the
Option of Holders--Asset Sales."
Notwithstanding the foregoing, the issuance or sale of shares of Capital
Stock of any of our Restricted Subsidiaries will not violate the provisions of
the immediately preceding sentence if such shares are issued or sold in
connection with:
(w) an Excepted Verestar Sale or an Excluded International Sale,
(x) the formation or capitalization of a Restricted Subsidiary,
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(y) a single transaction or a series of substantially contemporaneous
transactions whereby the Restricted Subsidiary becomes a Restricted
Subsidiary of ours by reason of the acquisition of securities or assets
from another Person, or
(z) the issuance by a Restricted Subsidiary of Capital Stock to the
holders of its Capital Stock pursuant to pre-emptive or similar rights
(i) under applicable law or regulation, (ii) contained in the instrument
governing such Capital Stock or (iii) pursuant to an agreement entered into
in connection with a transaction exempted pursuant to clauses (x) or (y)
above.
Limitation on Issuances of Guarantees of Indebtedness
We will not permit any Restricted Subsidiary, directly or indirectly, to
Guarantee or pledge any assets to secure the payment of any of our other
Indebtedness (other than Indebtedness relating to a Credit Facility) unless the
Subsidiary simultaneously executes and delivers a supplemental indenture to the
indenture providing for the Guarantee of the payment of the notes by the
Subsidiary, which Guarantee shall be senior to or pari passu with the
Subsidiary's Guarantee of or pledge to secure such other Indebtedness.
Notwithstanding the foregoing, any Guarantee by a Subsidiary of the notes shall
provide by its terms that it shall be automatically and unconditionally
released and discharged upon any sale, exchange or transfer, to any Person
other than a Subsidiary of ours, of all of our stock in, or all or
substantially all the assets of, the Subsidiary, which sale, exchange or
transfer is made in compliance with the applicable provisions of the indenture.
The form of Guarantee is attached as an exhibit to the indenture.
Reports
Whether or not required by the SEC, so long as any notes are outstanding, we
will furnish to the Holders of notes:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
we were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of us and our
Consolidated Subsidiaries showing in reasonable detail in the footnotes to
the financial statements and in "Management's Discussion and Analysis of
Financial Condition and Results of Operations", in each case to the extent
not prohibited by the SEC's rules and regulations:
(a) the financial condition and results of operations of us and our
Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of ours; and
(b) the Tower Cash Flow for the most recently completed fiscal
quarter and the Adjusted Consolidated Cash Flow and Non-Tower Cash Flow
for the most recently completed four-quarter period and, with respect
to the annual information only, a report thereon by our certified
independent accountants; and
(2) all current reports that would be required to be filed with the SEC
on Form 8-K if we were required to file such reports, in each case within
the time periods specified in the SEC's rules and regulations.
In addition, whether or not required by the rules and regulations of the
SEC, we will file a copy of all such information and reports with the SEC for
public availability within the time periods specified in the SEC's rules and
regulations, unless the SEC will not accept such a filing, and make such
information available to securities analysts and prospective investors upon
request.
Events of Default and Remedies
Each of the following constitutes an Event of Default under the indenture:
(1) default for 30 days in the payment when due of interest on the
notes;
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(2) default in payment when due of the principal of or premium, if any,
on the notes;
(3) failure by us or any of our Subsidiaries to comply with the
provisions described under the caption "--Certain Covenants--Merger,
Consolidation or Sale of Assets" or failure by us to consummate a Change of
Control Offer or Asset Sale Offer in accordance with the provisions of the
indenture applicable to the offers;
(4) failure by us or any of our Subsidiaries for 30 days after notice to
comply with any of its other agreements in the indenture or the notes;
(5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by us or any of our Significant
Subsidiaries, or the payment of which is guaranteed by us or any of our
Significant Subsidiaries, whether the Indebtedness or guarantee now exists,
or is created after the date of the indenture, which default:
(a) is caused by a failure to pay principal of or premium, if any,
or interest on the Indebtedness prior to the expiration of the grace
period provided in that Indebtedness on the date of the default (a
"Payment Default"); or
(b) results in the acceleration of that Indebtedness prior to its
express maturity
and, in each case referred to in clause (a) and (b) above, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated,
aggregates $20.0 million or more;
(6) failure by us or any of our Significant Subsidiaries to pay final
judgments aggregating in excess of $20.0 million, which judgments are not
paid, discharged or stayed for a period of 60 days; or
(7) certain events of bankruptcy or insolvency described in the
indenture with respect to us or any of our Significant Subsidiaries.
If any Event of Default occurs and is continuing, the trustee under the
indenture or the Holders of at least 25% in principal amount at maturity of the
then outstanding notes may declare all the notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to us or
any of our Significant Subsidiaries, all outstanding notes will become due and
payable without further action or notice. Holders of the notes may not enforce
the indenture or the notes except as provided in the indenture. Subject to
limitations, Holders of a majority in principal amount at maturity of the then
outstanding notes may direct the trustee under the indenture in its exercise of
any trust or power.
The Holders of a majority in aggregate principal amount at maturity of the
notes then outstanding by notice to the trustee under the indenture may on
behalf of the Holders of all notes waive any existing Default or Event of
Default and its consequences under the indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the notes.
The indenture provides that if a Default occurs and is continuing and is
known to the trustee, it must mail to each Holder of the notes notice of the
Default within 90 days after it occurs. Except in the case of a Default in the
payment of principal of or interest on any note, the trustee may withhold
notice if and so long as a committee of its trust officers determines that
withholding notice is not opposed to the interest of the Holders of the notes.
In addition, we are required to deliver to the trustee, within 90 days after
the end of each fiscal year, a certificate indicating whether the signers
thereof know of any Default that occurred during the previous year. We are also
required to deliver to the trustee, promptly after the occurrence thereof,
written notice of any event that would constitute a Default, the status thereof
and what action we are taking or propose to take in respect thereof.
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No Personal Liability of Directors, Officers, Employees and Stockholders
None of our directors, officers, employees, incorporators or stockholders,
as such, shall have any liability for any of our obligations under the notes,
the indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of notes by accepting a note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the notes. The waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
Legal Defeasance and Covenant Defeasance
We may, at our option and at any time, elect to have all of our obligations
discharged with respect to the notes outstanding ("Legal Defeasance") except
for:
(1) the rights of Holders of outstanding notes to receive payments in
respect of the principal of, premium, if any, and interest on the notes
when such payments are due from the trust referred to below;
(2) our obligations with respect to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost or
stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee,
and our obligations in connection therewith; and
(4) the Legal Defeasance provisions of the indenture.
In addition, we may, at our option and at any time, elect to have our
obligations released with respect to some covenants that are described in the
indenture ("Covenant Defeasance") and thereafter any omission to comply with
such obligations shall not constitute a Default or Event of Default with
respect to the notes. In the event Covenant Defeasance occurs, specified events
described under "--Events of Default and Remedies", but not including non-
payment and bankruptcy, receivership, rehabilitation and insolvency events with
respect to us, will no longer constitute an Event of Default with respect to
the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) we must irrevocably deposit with the trustee, in trust, for the
benefit of the Holders of the notes, cash in United States Dollars, non-
callable Government Securities, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any,
and interest on the outstanding notes on the stated maturity or on the
redemption date. We must specify whether the notes are being defeased to
maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, we shall have delivered to the
trustee under the indenture an opinion of counsel in the United States
reasonably acceptable to the trustee confirming that:
(a) we have received from the Internal Revenue Service, or it has
published, a ruling, or;
(b) since the date of the indenture, a change in the applicable
federal income tax law has occurred,
in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the Holders of the outstanding notes will not
recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, we shall have delivered to the
trustee under the indenture an opinion of counsel in the United States
reasonably acceptable to the trustee confirming that the Holders
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of the outstanding notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
either:
(a) on the date of such deposit, other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit, or
(b) insofar as Events of Default from bankruptcy or insolvency
events with respect to us are concerned, at any time in the period
ending on the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument, other than the indenture, to which we or any of
our Restricted Subsidiaries are a party or by which we or any of our
Restricted Subsidiaries are bound;
(6) we must have delivered to the trustee an opinion of counsel to the
effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) we must deliver to the trustee under the indenture an officers'
certificate stating that the deposit was not made by us with the intent of
preferring the Holders of the notes over our other creditors with the
intent of defeating, hindering, delaying or defrauding creditors of
American Tower or others; and
(8) we must deliver to the trustee under the indenture an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Amendment, Supplement and Waiver
Except as described in the two paragraphs below, the Holders of a majority
in principal amount at maturity of the notes outstanding can, with respect to
the notes:
(1) consent to any amendment or supplement to the indenture or the
notes;
(2) waive any existing default under, or the compliance with any
provisions of, the indenture or the notes; and
(3) waive or modify an obligation to make a repurchase of notes in
connection with an Asset Sale Offer or Change of Control Offer.
Without the consent of each Holder affected, an amendment or waiver with
respect to any notes held by a non-consenting Holder may not:
(1) reduce the principal amount of notes whose Holders must consent to
an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note or
alter the provisions with respect to the redemption, other than any
required repurchase in connection with an Asset Sale Offer or Change of
Control Offer, of the notes;
(3) reduce the rate of or change the time for payment of interest on any
note;
(4) waive an uncured Default or Event of Default in the payment of
principal of or premium, if any, or interest on the notes, excluding a
rescission of acceleration of the notes by the Holders of at least a
majority in aggregate principal amount of the notes then outstanding and a
waiver of the payment default that resulted from such acceleration;
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(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of Holders of notes to receive
payments of principal of or premium, if any, or interest on the notes;
(7) waive a redemption payment, other than any payment upon a required
repurchase in connection with an Asset Sale Offer or Change of Control
Offer, with respect to any note;
(8) except as provided under the caption "--Legal Defeasance and
Covenant Defeasance" or in accordance with the terms of any Subsidiary
Guarantee, release a Subsidiary Guarantor from its obligations under its
Subsidiary Guarantee or make any change in a Subsidiary Guarantee that
would adversely affect the Holders of the notes; or
(9) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of notes,
we and the trustee may amend or supplement the indenture or the notes to:
(1) cure any ambiguity, defect or inconsistency,
(2) provide for uncertificated notes in addition to or in place of
certificated notes,
(3) provide for the assumption of our obligations to Holders of notes in
the case of a merger or consolidation,
(4) make any change that would provide any additional rights or benefits
to the Holders of notes or that does not adversely affect the legal rights
under the indenture of any such Holder, or
(5) comply with requirements of the SEC in order to effect or maintain
the qualification of the indenture under the Trust Indenture Act.
Concerning the Trustee
The indenture contains limitations on the rights of the trustee, should it
become a creditor of ours, to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security
or otherwise. The trustee will be permitted to engage in other transactions.
However, if it acquires any conflicting interest, as defined in the indenture
or the Trust Indenture Act, it must eliminate such conflict within 90 days,
apply to the SEC for permission to continue, or resign. An affiliate of the
trustee is one of the purchasers of the notes. The trustee is also one of the
lenders under our Senior Credit Facility. If there is a default under the
notes, this affiliation with a purchaser of notes may be considered a
conflicting interest, and this lender relationship would be considered a
conflicting interest if we had an outstanding balance under the Senior Credit
Facility. The trustee is also the trustee under each of the indentures under
which our convertible notes have been issued.
The Holders of a majority in principal amount at maturity of the notes then
outstanding will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the trustee
under the indenture, subject to some exceptions. The indenture provides that if
an Event of Default occurs and is not cured, the trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to these provisions, the trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request of any Holder of notes, unless that Holder shall have offered to
the trustee security and indemnity satisfactory to it against any loss,
liability or expense.
Additional Information
Anyone who receives this prospectus may obtain a copy of the indenture
without charge by writing to us at 116 Huntington Avenue, Boston, Massachusetts
02116, Attention: Director of Investor Relations.
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Certain Definitions
Set forth below are defined terms used in the indenture. Reference is made
to the indenture for a full disclosure of all such terms, as well as any other
capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of the specified
Person, including Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of the specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Adjusted Consolidated Cash Flow" means, as of any date of determination,
the sum of:
(1) our Consolidated Cash Flow for the four most recent full fiscal
quarters ending immediately prior to such date for which internal financial
statements are available, less our Tower Cash Flow for such four- quarter
period; plus
(2) the product of four times our Tower Cash Flow for the most recent
fiscal quarter for which internal financial statements are available.
For purposes of making the computation referred to above:
(1) acquisitions that have been made by us or any of our Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the reference period or subsequent
to such reference period and on or prior to the calculation date shall be
deemed to have occurred on the first day of the reference period and
Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (2) of the proviso set forth in the
definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses
disposed of prior to the calculation date, shall be excluded; and
(3) the corporate development expense of us and our Restricted
Subsidiaries calculated in a manner consistent with our audited financial
statements incorporated by reference in this prospectus shall be added to
Consolidated Cash Flow to the extent it was included in computing
Consolidated Net Income.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise. However, beneficial
ownership of 10% or more of the Voting Stock of a Person shall be deemed to be
control. No natural person who is an executive officer or director of a Person
shall, solely by virtue of such position, be deemed to control such Person.
"Applicable Premium" means, with respect to any note on any redemption date,
the greater of:
(a) 1.0% of the principal amount of the note and
(b) the excess of (1) the present value at such redemption date of (A)
the redemption price of the note at February 1, 2005 (such redemption price
being set forth in the table appearing above under the caption "--Optional
Redemption") plus (B) all required interest payments on the note during the
period from such redemption date through February 1, 2005 (excluding
accrued but unpaid interest), computed using a discount rate equal to the
Treasury Rate as of such redemption date plus 50 basis points over (2) the
principal amount of the note, if greater.
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"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights (including, without limitation, by way of a sale and leaseback or
merger). However, the sale, lease, conveyance or other disposition of all
or substantially all of our assets and the assets of our Subsidiaries taken
as a whole will be governed by the provisions of the indenture described
above under the caption "--Repurchase at the Option of Holders--Change of
Control" and/or the provisions described above under the caption "--
Repurchase at the Option of Holders--Merger, Consolidation or Sale of
Assets" and not by the provisions of the Asset Sale covenant; and
(2) the issue or sale by us or any of our Restricted Subsidiaries of
Equity Interests of any of our Restricted Subsidiaries (other than
directors' qualifying shares or shares required by applicable law to be
held by a Person other than us or a Restricted Subsidiary),
in the case of either clause (1) or (2), whether in a single transaction or
a series of related transactions:
(a) that have a fair market value in excess of $1.0 million; or
(b) for net proceeds in excess of $1.0 million.
Notwithstanding the foregoing, Asset Sales shall not include:
(1) a transfer of assets by us to a Restricted Subsidiary or by a
Restricted Subsidiary to us or to another Restricted Subsidiary;
(2) an issuance of Equity Interests by a Subsidiary to us or to another
Restricted Subsidiary;
(3) a Restricted Payment that is permitted by the covenant described
above under the caption "--Certain Covenants--Restricted Payments";
(4) a transfer of Equity Interests of an Unrestricted Subsidiary or an
issue of Equity Interests by an Unrestricted Subsidiary;
(5) grants of leases or licenses, or the sale or other disposition of
inventory, in the ordinary course of business;
(6) dispositions of Cash Equivalents; and
(7) the issuance of our Equity Interests.
"Asset Sale Offer" has the meaning set forth above under the caption "--
Repurchase at the Option of Holders--Asset Sales."
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
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(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company, general
or limited partnership or membership interests; and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means:
(1) marketable, direct obligations of the United States of America, its
agencies and instrumentalities maturing within 365 days of the date of
purchase;
(2) commercial paper and other short-term obligations of business
savings accounts issued by corporations, each of which shall have a
combined net worth of at least $100,000,000 and each of which conducts a
substantial part of its business in the United States of America, maturing
within 270 days from the date of original issue thereof, and whose issuer
is, at the time of purchase, rated "P-2" or better by Moody's or "A-2" or
better by S&P;
(3) repurchase agreements, bankers' acceptances and domestic and
Eurodollar certificates of deposit maturing within 365 days of the date of
purchase which are issued by, or time deposits maintained with:
(a) a United States national or state bank (or any domestic branch
of a foreign bank) subject to supervision and examination by federal or
state banking or depository institution authorities and having capital,
surplus and undivided profits totaling more than $100,000,000 and rated
"A" or better by Moody's or S&P,
(b) a broker/dealer (acting as principal) registered as a broker or
a dealer under Section 15 of the Exchange Act, the unsecured short-term
debt obligations of which are rated "P-1" by Moody's and at least "A-1"
by S&P at the date of purchase, or
(c) an unrated broker/dealer, acting as principal, that is a Wholly
Owned Restricted Subsidiary (but substituting "Subsidiary" for
"Restricted Subsidiary" in the definition thereof) of a non-bank or
bank holding company, the unsecured short-term debt obligations of
which are rated "P-1" by Moody's and at least "A-1" by S&P at the date
of purchase; and
(4) money market funds having a rating from Moody's and S&P in the
highest investment category granted thereby.
"Change of Control" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of our assets and the assets of
our Restricted Subsidiaries, taken as a whole, to any "person" (as such
term is used in Section 13(d)(3) of the Exchange Act) other than the
Principal or a Related Party of the Principal;
(2) the adoption of a plan relating to our liquidation or dissolution;
(3) the consummation of any transaction (including any merger or
consolidation) the result of which is that any "person" (as defined above),
other than the Principal and his Related Parties, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire,
whether such right is currently exercisable or is exercisable only upon the
occurrence of a subsequent condition), directly or indirectly, of more than
50% of our Voting Stock (measured by voting power rather than number of
shares). However, transfers of our Equity Interests between or among the
beneficial owners of our Equity Interests, as of the Issue Date, will not
be deemed to cause a Change of
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Control under this clause (3) so long as no single Person together with its
Affiliates acquires a beneficial interest in more of our Voting Stock than
is at the time collectively beneficially owned by the Principal and his
Related Parties;
(4) the first day on which a majority of the members of our board of
directors are not Continuing Directors; or
(5) we consolidate with, or merge with or into, any Person, or any
Person consolidates with, or merges with or into, us, in any such event
pursuant to a transaction in which any of our outstanding Voting Stock is
converted into or exchanged for cash, securities or other property, other
than any such transaction where:
(a) our Voting Stock outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting
a majority of the outstanding shares of such Voting Stock of such
surviving or transferee Person (immediately after giving effect to such
issuance); or
(b) the Principal and his Related Parties own a majority of such
outstanding shares after such transaction.
"Change of Control Offer" has the meaning set forth above under the caption
"--Repurchase at the Option of Holders--Change of Control."
"Change of Control Payment" has the meaning set forth above under the
caption "--Repurchase at the Option of Holders--Change of Control."
"Change of Control Payment Date" has the meaning set forth above under the
caption "--Repurchase at the Option of Holders--Change of Control."
"Completed Broadcast Tower" means any communications transmission tower of
at least 500 feet owned or managed by us or any of our Restricted Subsidiaries
that, as of any date of determination:
(1) has at least one broadcast tenant that has executed a definitive
lease with us or any of our Restricted Subsidiaries, which lease is
producing revenue with respect to the tower as of the date of
determination; and
(2) has capacity for at least one tenant in addition to the tenant
referred to in clause (1) of this definition.
"Completed Tower" means any communications transmission tower, other than a
Completed Broadcast Tower, owned or managed by us or any of our Restricted
Subsidiaries that, as of any date of determination:
(1) has at least one wireless communications or broadcast tenant that
has executed a definitive lease with us or any of our Restricted
Subsidiaries, which lease is producing revenue with respect to the tower as
of the date of determination; and
(2) has capacity for at least two tenants in addition to the tenant
referred to in clause (1) of this definition.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period; plus
(1) provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was included in computing such Consolidated Net Income;
plus
(2) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment
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obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letters of credit or bankers' acceptance financings,
and any net payments pursuant to Hedging Obligations), to the extent that
any such expense was deducted in computing such Consolidated Net Income;
plus
(3) depreciation, amortization (including amortization of goodwill and
other intangibles) and other non-cash expenses (including write-offs or
write-downs of goodwill and other intangible assets but excluding any such
non-cash expense to the extent that it represents an accrual of or reserve
for cash expenses in any future period) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income; minus
(4) non-cash items increasing such Consolidated Net Income for such
period (excluding any items that were accrued in the ordinary course of
business),
in each case on a consolidated basis and determined in accordance with
GAAP.
"Consolidated Indebtedness" means, with respect to any Person as of any date
of determination, the sum, without duplication, of:
(1) the total amount of Indebtedness of that Person and its Restricted
Subsidiaries; plus
(2) the total amount of Indebtedness of any other Person, to the extent
that such Indebtedness has been Guaranteed by the referent Person or one or
more of its Restricted Subsidiaries; plus
(3) the aggregate liquidation value of all Disqualified Stock of that
Person and all preferred stock of Restricted Subsidiaries of such Person,
in each case, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period:
(1) the consolidated interest expense of that Person and its Restricted
Subsidiaries for that period determined in accordance with GAAP, whether
paid or accrued and whether or not capitalized (including amortization of
debt issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and any net
payments, pursuant to Hedging Obligations); plus
(2) all preferred stock dividends paid or accrued in respect of our and
our Restricted Subsidiaries' preferred stock to Persons other than us or a
Wholly Owned Restricted Subsidiary, other than preferred stock dividends
paid by us in shares of preferred stock that is not Disqualified Stock.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of the Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that:
(1) the Net Income of any Person other than us that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted
Subsidiary thereof and shall not be included if a net loss;
(2) the Net Income (and net loss) of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition
shall be excluded;
(3) the cumulative effect of a change in accounting principles shall be
excluded; and
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(4) the Net Income (and net loss) of any Unrestricted Subsidiary shall
be excluded whether or not distributed to us or one of our Restricted
Subsidiaries.
"Consolidated Tangible Assets" means, with respect to us, our total
consolidated assets and our Restricted Subsidiaries, less our total intangible
assets and those of our Restricted Subsidiaries, as shown on the most recent
internal consolidated balance sheet of us and our Restricted Subsidiaries
calculated on a consolidated basis in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member of
our board of directors who:
(1) was a member of our board of directors on the Issue Date;
(2) was nominated for election or elected to our board of directors with
the approval of a majority of the Continuing Directors who were members of
such board of directors at the time of such nomination or election; or
(3) is a designee of the Principal or was nominated by the Principal.
"Convertible Notes" means up to $300.0 million aggregate principal amount of
our 6.25% convertible notes due 2009 issued pursuant to the Indenture, dated as
of October 4, 1999, between us and The Bank of New York, as trustee, up to
$425.5 million aggregate principal amount of our 2.25% convertible notes due
2009 issued pursuant to the Indenture, dated as of October 4, 1999, between us
and The Bank of New York, as trustee, and up to $450.0 million aggregate
principal amount of our 5.0% convertible notes due 2010 issued pursuant to the
Indenture, dated as of February 15, 2000, between us and The Bank of New York,
as trustee.
"Covenant Defeasance" has the meaning set forth above under the caption "--
Legal Defeasance and Covenant Defeasance".
"Credit Facilities" means one or more debt facilities (including the Senior
Credit Facility) or commercial paper facilities with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Debt to Adjusted Consolidated Cash Flow Ratio" means, as of any date of
determination, the ratio of:
(1) our Consolidated Indebtedness as of such date to
(2) our Adjusted Consolidated Cash Flow as of such date.
"Default" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable, in each case, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the notes mature. However, any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require us to repurchase such Capital Stock upon the occurrence of a Change
of Control or an Asset Sale shall not constitute Disqualified Stock if the
terms of such Capital Stock provide that we may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with the covenant described above in the caption "--Certain
Covenants--Restricted Payments".
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"Eligible Indebtedness" means:
(1) Indebtedness under the Credit Facilities, and
(2) any other Indebtedness other than:
(a) Indebtedness in the form of, or represented by, bonds or other
securities or any guarantee thereof; and
(b) Indebtedness that is, or may be, quoted, listed or purchased and
sold on any stock exchange, automated trading system or over-the-
counter or other securities market (including the market for securities
eligible for resale pursuant to Rule 144A under the Securities Act).
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock other than any debt security that is
convertible into, or exchangeable for, Capital Stock.
"Event of Default" has the meaning set forth above under the caption "--
Events of Default and Remedies."
"Excepted Verestar Debt" means Indebtedness of Verestar and its Subsidiaries
at a time when Verestar and its Subsidiaries have Special Verestar Status that
constitutes
(1) Capital Lease Obligations not constituting Indebtedness of us or our
Restricted Subsidiaries,
(2) Acquired Debt not constituting Indebtedness of us or our Restricted
Subsidiaries in an aggregate principal amount of up to $20.0 million at any
one time outstanding,
(3) Indebtedness owed to us or our Restricted Subsidiaries,
(4) Indebtedness owed to Verestar or its Subsidiaries, or
(5) Indebtedness under a Credit Facility that also constitutes
Indebtedness of us or our Restricted Subsidiaries (but not of any other
Person).
"Excepted Verestar Dividend" means a dividend or distribution on our Capital
Stock consisting of common stock or similar Capital Stock of Verestar at a time
when Verestar and its Subsidiaries are not Restricted Subsidiaries.
"Excepted Verestar Sale" means an issue, sale or other disposition of common
stock or similar Voting Stock of Verestar at a time when it is a Restricted
Subsidiary, so long as after giving effect thereto Verestar would remain our
Subsidiary.
"Excess Proceeds" has the meaning set forth above under the caption "--
Repurchase at the Option of Holders--Asset Sales."
"Excluded International Sale" means an issue, sale or other disposition of
Capital Stock of a Restricted Subsidiary, the principal operations of which are
conducted, and the principal assets of which are located, outside the United
States, so long as after giving effect thereto such Restricted Subsidiary would
remain a Restricted Subsidiary.
"Existing Indebtedness" means Indebtedness of us and our Subsidiaries (other
than Indebtedness under the Senior Credit Facility) in existence on the Issue
Date, until such amounts are repaid.
"GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of the indenture.
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"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, by way of a pledge of assets or through
letters of credit or reimbursement agreements in respect thereof), of all or
any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates or currency exchange rates.
"Holder" means a Person in whose name a note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
Indebtedness of others secured by a Lien on any asset of such Person whether
or not such Indebtedness is assumed by such Person (the amount of such
Indebtedness as of any date being deemed to be the lesser of the value of such
property or assets as of such date or the principal amount of such
Indebtedness of such other Person so secured) and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other
Person. The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(2) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's and BBB- (or the equivalent) by S&P.
"Investments" means, with respect to any Person, all investments by that
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If we or any of our Restricted Subsidiaries sell or otherwise dispose of any
Equity Interests of any direct or indirect Restricted Subsidiary of ours or a
Restricted Subsidiary of the Issuer issues any of its Equity Interests such
that, in each case, after giving effect to the sale, disposition or issuance,
that Person is no longer a Restricted Subsidiary of ours, we shall be deemed
to have made an Investment on the date of the sale, disposition or issuance
equal to the fair market value of the Equity Interests of the Subsidiary not
sold or disposed of in an amount determined as provided in the final paragraph
of the covenant described above under the caption "--Certain Covenants--
Restricted Payments."
"Issue Date" means the date on which the old notes were originally issued.
"Legal Defeasance" has the meaning set forth above under the caption "--
Legal Defeasance and Covenant Defeasance."
"Licenses" means, collectively, any telephone, microwave, radio
transmissions, personal communications or other license, authorization,
certificate of compliance, franchise, approval or permit, whether for the
71
construction, the ownership or the operation of any communications tower
facilities, granted or issued by the Federal Communications Commission (or
other similar or successor agency of the federal government administering the
Communications Act of 1934 or any similar or successor federal statute) and
held by us or any of our Restricted Subsidiaries.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Moody's" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes on
such gain or loss, realized in connection with:
(a) any Asset Sale (including dispositions pursuant to sale and
leaseback transactions); or
(b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain or loss, together with any related provision
for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by us or any of
our Restricted Subsidiaries in respect of any Asset Sale (including any cash
received upon the sale or other disposition of any non-cash consideration
received in any Asset Sale), net of:
(1) the direct costs relating to the Asset Sale (including, without
limitation, legal, accounting and investment banking fees, sales
commissions and finders', brokers' or similar fees) and any relocation or
severance expenses incurred as a result of the Asset Sale;
(2) taxes paid or payable as a result of the Asset Sale after taking
into account any available tax credits or deductions and any tax sharing
arrangements;
(3) amounts required to be applied to the repayment of Indebtedness,
other than Indebtedness under a Credit Facility, secured by a Lien on the
asset or assets that were the subject of the Asset Sale;
(4) all distributions and other payments required to be made to minority
interest holders in Restricted Subsidiaries as a result of the Asset Sale;
(5) the deduction of appropriate amounts provided by the seller as a
reserve in accordance with GAAP against any liabilities associated with the
assets disposed of in the Asset Sale and retained by us or any Restricted
Subsidiary after the Asset Sale; and
(6) without duplication, any reserves that our board of directors
determines in good faith should be made in respect of the sale price of
such asset or assets for post closing adjustments.
However, in the case of any reversal of any reserve referred to in clause (5)
or (6) above, the amount so reversed shall be deemed to be Net Proceeds from
an Asset Sale as of the date of the reversal.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither we nor any of our Restricted Subsidiaries:
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness); or
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(b) is directly or indirectly liable (as a guarantor or otherwise);
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit, upon notice, lapse of time or both, any holder of
any other Indebtedness of ours or any of our Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof
to be accelerated or payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to our stock or assets or the stock or assets at any
of our Restricted Subsidiaries.
"Non-Tower Cash Flow" means, as of any date of determination, our
Consolidated Cash Flow for the four most recent full fiscal quarters ending
immediately prior to such date for which internal financial statements are
available that is not included in Tower Cash Flow, all determined on a
consolidated basis and in accordance with GAAP. Non-Tower Cash Flow will not
include revenues derived from asset sales, other than sales or other
dispositions of inventory in the ordinary course of business.
"Payment Default" has the meaning set forth above under the caption "--
Events of Default and Remedies."
"Permitted Business" means any business of the type conducted by us or our
Restricted Subsidiaries on the Issue Date and, at such time as Verestar and its
Subsidiaries become Restricted Subsidiaries, any business of the type conducted
by them on the Issue Date, and any other business related, ancillary or
complementary to any such business.
"Permitted Debt" has the meaning set forth above under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock."
"Permitted Investment" means:
(1) any Investment in us or in a Restricted Subsidiary of ours;
(2) any Investment in Cash Equivalents;
(3) any Investment by us or any of our Restricted Subsidiaries in a
Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary; or
(b) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is
liquidated into, us or a Restricted Subsidiary;
(4) any Investment by us or any of our Restricted Subsidiaries that
(a) is in substance the acquisition of a class of Capital Stock of a
Restricted Subsidiary (the "Target"),
(b) increases the percentage of one or more classes of Capital Stock
of the Target beneficially owned by us and our Restricted Subsidiaries,
(c) does not decrease the percentage of the total voting power of
shares of Capital Stock of the Target entitled, without regard to the
occurrence of any contingency, to vote in the election of directors,
managers or trustees of the Target that is owned by us and our
Restricted Subsidiaries, and
(d) does not decrease the percentage of stockholders' equity,
including stock subject to mandatory redemption, of the Target, as
reflected on its most recent internal balance sheet prepared in
accordance with GAAP, available upon liquidation of the Target to
Capital Stock of the Target owned by us and our Restricted
Subsidiaries;
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(5) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "--
Repurchase at the Option of Holders--Asset Sales";
(6) any acquisition of assets solely in exchange for the issuance of our
Equity Interests, other than Disqualified Stock;
(7) receivables created in the ordinary course of business;
(8) loans or advances to employees made in the ordinary course of
business since the date of the Issue Date not to exceed $5.0 million at any
one time outstanding;
(9) securities and other assets received in settlement of trade debts or
other claims arising in the ordinary course of business;
(10) the Verestar Net Investment up to an aggregate of $100.0 million at
any one time outstanding;
(11) Investments since the Issue Date, other than Investments in
Verestar or its Subsidiaries, of up to an aggregate of $100.0 million at
any one time outstanding, each such Investment being measured as of the
date made and without giving effect to subsequent changes in value; and
(12) other Investments in Permitted Businesses since the Issue Date not
to exceed an amount equal to $10.0 million plus 10% of our Consolidated
Tangible Assets at any one time outstanding, each such Investment being
measured as of the date made and without giving effect to subsequent
changes in value.
"Permitted Liens" means:
(1) Liens securing our Indebtedness under one or more Credit Facilities
that was permitted by the terms of the indenture to be incurred;
(2) Liens securing any Indebtedness of any of our Restricted
Subsidiaries that was permitted by the terms of the indenture to be
incurred;
(3) Liens in our favor;
(4) Liens existing on the Issue Date and renewals and replacements
thereof to the extent they secure Permitted Refinancing Indebtedness;
(5) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, if we
make any reserve or other appropriate provision required in conformity with
GAAP for them.
(6) Liens of carriers, warehousemen, mechanics, vendors (solely to the
extent arising by operation of law), laborers and materialmen incurred in
the ordinary course of business for sums not yet due or being diligently
contested in good faith, if reserves or appropriate provisions shall have
been made for them;
(7) Liens incurred in the ordinary course of business in connection with
worker's compensation and unemployment insurance, social security
obligations, assessments or government charges which are not overdue for
more than 60 days;
(8) Restrictions on the transfer of Licenses or our assets or those of
any of our Restricted Subsidiaries imposed by any of the Licenses as in
effect on the Issue Date or imposed by the Communications Act of 1934, any
similar or successor federal statute or the rules and regulations of the
Federal Communications Commission, or other similar or successor agency of
the federal government administering such Act or successor statute,
thereunder, all as the same may be in effect from time to time;
(9) Liens arising by operation of law in favor of purchasers in
connection with the sale of an asset if the Lien only encumbers the
property being sold;
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(10) Liens to secure performance of statutory obligations, surety or
appeal bonds, performance bonds, bids or tenders;
(11) judgment Liens which do not result in an Event of Default under the
indenture;
(12) Liens in connection with escrow deposits made in connection with
any acquisition of assets;
(13) Liens securing Indebtedness permitted to be incurred under clauses
(3) and (6) of the second paragraph of the covenant described above under
the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock";
(14) Easements, rights-of-way, zoning restrictions, licenses or
restrictions on use and other similar encumbrances on the use of real
property that:
(a) are not incurred in connection with the borrowing of money or
the obtaining of advances or credit, other than trade credit in the
ordinary course of business, and
(b) do not in the aggregate materially detract from the value of the
property or materially impair the use thereof in the operation of
business by us and our Restricted Subsidiaries;
(15) Liens on our property or property of a Restricted Subsidiary at the
time we or such Restricted Subsidiary acquired the property, including
acquisition by means of a merger or consolidation with or into us or any
Restricted Subsidiary if the Liens are not created, incurred or assumed in
connection with or in contemplation of such acquisition and do not extend
to any other property owned by us or any Restricted Subsidiary; and
(16) Liens securing Indebtedness in an aggregate principal amount at any
time outstanding that, together with any Attributable Debt, does not exceed
10% of:
(a) Consolidated Tangible Assets, reduced by
(b) the amount of our current liabilities (excluding current
maturities of long-term debt) and that of our Restricted Subsidiaries,
further reduced by
(c) appropriate adjustments on account of minority interests in our
Restricted Subsidiaries held by Persons other than us and our
Restricted Subsidiaries,
all as shown on our and such Restricted Subsidiaries' most recent internal
consolidated balance sheet calculated on a consolidated basis in accordance
with GAAP.
"Permitted Refinancing Indebtedness" means any Indebtedness of ours or any
of our Restricted Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of ours or any of our Restricted Subsidiaries (other than
intercompany Indebtedness); provided that:
(1) the principal amount (or initial accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal
amount of (or accreted value, if applicable), plus accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of expenses and prepayment premiums incurred in
connection therewith);
(2) the Permitted Refinancing Indebtedness has a final maturity date not
earlier than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the notes, the
Permitted Refinancing Indebtedness is subordinated in right of payment to
the notes on terms at least as favorable to the holders of notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
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(4) the Indebtedness is incurred either by us or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Principal" means Steven B. Dodge and any Related Party of Steven B. Dodge.
"Public Equity Offering" means an underwritten primary public offering of
our common stock pursuant to an effective registration statement under the
Securities Act.
"Qualified Proceeds" means assets that are used or useful in, or Capital
Stock of any Person engaged in, a Permitted Business.
"Rating Agencies" mean Moody's and S&P.
"Related Party" with respect to the Principal means:
(1) any Person that is a Subsidiary of the Principal; or
(2) any trust, corporation, partnership, limited liability company or
other entity, the beneficiaries, stockholders, members, partners, owners or
Persons beneficially holding an over-50% controlling interest of which
consists of the Principal and/or such other Persons referred to in the
immediately preceding clause (1).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Service or any successor to the
rating agency business thereof.
"Senior Credit Facility" means the Amended and Restated Loan Agreement,
dated as of January 6, 2000, by and among The Toronto Dominion Bank, New York
Branch, as Issuing Bank, Toronto Dominion (Texas), Inc., as Administrative
Agent, the several Lenders and other agents party thereto and American Tower,
L.P., American Towers, Inc. and ATC Teleports, Inc., as borrowers, including
any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time.
"Significant Subsidiary" means, with respect to any Person, any Restricted
Subsidiary of that Person that would be a "significant subsidiary" of such
Person as defined in Article 1, Rule 1-02 of Regulation S-X promulgated
pursuant to the Act, as that Regulation is in effect on the date of the
indenture, except that all references to "10 percent" in Rules 1-02(w)(1), (2)
and (3) shall mean "5 percent" and that all of our Unrestricted Subsidiaries
shall be excluded from all calculations under Rule 1-02(w).
"Special Verestar Status" means that Verestar and its Subsidiaries are not
Restricted Subsidiaries of ours, that none has previously been our Restricted
Subsidiary, and that Verestar or its Subsidiaries have since the Issue Date
continuously had outstanding Indebtedness under clause (5) of the definition
of "Excepted Verestar Debt."
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing that Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
"Strategic Equity Investment" means a cash contribution to our common
equity capital or a purchase from us of common Equity Interests, other than
Disqualified Stock, in either case by or from a Strategic Equity Investor and
for aggregate cash consideration of at least $50.0 million.
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"Strategic Equity Investor" means a Person engaged in a Permitted Business
whose Total Equity Market Capitalization exceeds $1.0 billion.
"Subsidiary" means, with respect to any Person:
(1) any corporation, limited liability company, association or other
business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled, without regard to the occurrence of any
contingency, to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and
(2) any partnership:
(a) the sole general partner or the managing general partner of which
is that Person or a Subsidiary of that Person; or
(b) the only general partners of which are that Person or of one or
more Subsidiaries of that Person (or any combination thereof).
"Surplus Asset Sale" means (a) an Asset Sale of communications transmission
towers that were acquired from AT&T Corporation and its Affiliates, have an
aggregate book value on our GAAP balance sheet at September 30, 2000 and at
the Issue Date of not more than $20.0 million, and that are shown on our GAAP
accounting records and those of our Restricted Subsidiaries at September 30,
2000 and at the Issue Date as being held for disposal, and (b) Asset Sales in
any one-year period for aggregate net proceeds of up to $5.0 million.
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of
January 1, 2000, among us, Verestar and any other of our or Verestar's
Subsidiaries as in effect on the Issue Date.
"Teleports Business" means the business of providing domestic and
international satellite and internet protocol network transmission services.
"Teleports Company" means Verestar and its Subsidiaries, or any successor
Person and that Person's Subsidiaries through which we conduct the Teleports
Business.
"Total Equity Market Capitalization" of any Person means, as of any date of
determination, the sum of:
(1) the product of:
(a) the aggregate number of outstanding primary shares of common
stock of such Person on such date (which shall not include any options
or warrants on, or securities convertible or exchangeable into, shares
of common stock of such person); multiplied by
(b) the average closing price of such common stock listed on a
national securities exchange or the Nasdaq National Market System over
the 20 consecutive business days immediately preceding such date; plus
(2) the liquidation value of any outstanding shares of preferred stock
of such Person on such date.
"Tower Asset Exchange" means any transaction in which we or one or more of
our Restricted Subsidiaries exchanges assets for, or issues its Capital Stock
in exchange for, Tower Assets and/or cash or Cash Equivalents where the fair
market value (evidenced by a resolution of our board of directors set forth in
an officers' certificate delivered to the trustee) of the Tower Assets and
cash or Cash Equivalents received by us and our Restricted Subsidiaries in
such exchange is at least equal to the fair market value of the assets
disposed of, or the Capital Stock issued, in such exchange.
"Tower Assets" means wireless transmission or broadcast towers and related
assets that are located on the site of a wireless transmission or broadcast
tower.
"Tower Cash Flow" means, for any period, our and our Restricted
Subsidiaries' Consolidated Cash Flow for such period that is directly
attributable (including related expenses) to (a) site rental revenue or
license fees (including space reservation payments) paid to lease, sublease or
retain space on communications sites owned or leased by us or our Restricted
Subsidiaries, (b) fees paid to us or our Restricted Subsidiaries for
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management of communications sites and (c) real estate lease and similar
payments (whether or not related to communications sites) paid to us or our
Restricted Subsidiaries to the extent included in the same operating
segment for GAAP reporting purposes as site rental revenue, all determined on a
consolidated basis and in accordance with GAAP. Tower Cash Flow will not
include revenue or expenses attributable to non-site rental services provided
by us or any of our Restricted Subsidiaries to lessees of communication sites
or revenues derived from the sale of assets.
"Treasury Rate" means, as of any redemption date in respect of the notes,
the yield to maturity as of such redemption date of United States Treasury
securities with a constant maturity (as compiled and published in the most
recent Federal Reserve Statistical Release H.15(519) that has become publicly
available at least two business days prior to the redemption date (or, if such
Statistical Release is no longer published, any publicly available source of
similar market data)) most nearly equal to the period from the redemption date
to February 1, 2005. However, that if the period from the redemption date to
February 1, 2005 is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one
year shall be used.
"Unrestricted Subsidiary" means any of our Subsidiaries that is designated
by our board of directors as an Unrestricted Subsidiary; but only to the extent
that, other than pursuant to Excepted Verestar Debt, such Subsidiary:
(1) has no Indebtedness to any Person other than:
(a) Non-Recourse Debt; or
(b) Indebtedness owed to us or any of our Restricted Subsidiaries;
(2) is not party to any agreement, contract, arrangement or
understanding with us or any of our Restricted Subsidiaries unless the
terms of any such agreement, contract, arrangement or understanding are no
less favorable to us or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not our Affiliates;
(3) is a Person with respect to which neither we nor any of our
Restricted Subsidiaries have any direct or indirect obligation:
(a) to subscribe for additional Equity Interests; or
(b) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of ours or any of our Restricted
Subsidiaries; and
(5) if such Subsidiary is Verestar or one of its Subsidiaries, is a
Subsidiary through which we conduct the Teleports Business.
If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the indenture and any
Indebtedness of that Subsidiary shall be deemed to be incurred by any of our
Restricted Subsidiaries as of such date. If such Indebtedness is not permitted
to be incurred as of such date under the covenant described above under the
caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock", we shall be in default of the covenant.
Our board of directors may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary. However, that designation shall be deemed to be
an incurrence of Indebtedness by a Restricted Subsidiary of ours of any
outstanding Indebtedness of such Unrestricted Subsidiary and the designation
shall only be permitted if:
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(1) The Indebtedness is permitted under the covenant described above
under the caption "--Certain Covenants--Incurrence of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if the
designation had occurred at the beginning of the four-quarter reference
period; and
(2) no Default would occur or be in existence following such
designation.
If while Verestar or any of its Subsidiaries has Special Verestar Status,
the Verestar Net Investment shall exceed an aggregate of $100.0 million at any
one time outstanding, Verestar and its Subsidiaries shall thereafter cease to
be Unrestricted Subsidiaries for purposes of the indenture, and any
Indebtedness of Verestar and its Subsidiaries shall be deemed to be incurred by
any of our Restricted Subsidiaries as of such date. However, under those
circumstances Excepted Verestar Debt shall be deemed to have been permitted to
be incurred by clause (11) of the second paragraph of the covenant under the
heading "--Incurrence of Indebtedness and Issuance of Preferred Stock" to the
extent not otherwise permitted.
"Verestar" means Verestar, Inc. , a Delaware corporation.
"Verestar Net Investment" means our Investment and that of our Restricted
Subsidiaries since the Issue Date in Verestar and its Subsidiaries, each
Investment being measured as of the date made and without giving effect to
subsequent changes in value. Verestar Net Investment does not include:
(a) any Investment made with the net cash proceeds of a substantially
concurrent sale after the Issue Date by us of our Equity Interests, other
than Disqualified Stock,
(b) any transaction resulting in the acquisition or receipt whether by
merger, capital contribution or otherwise by Verestar or its Subsidiaries
of assets and accompanied by the substantially concurrent issuance after
the Issue Date by us of our Equity Interests, other than Disqualified
Stock, having a fair market value, as determined in good faith by our board
of directors, equal to the fair market value of those assets, or
(c) any Restricted Investment in Verestar or its Subsidiaries that was
made in compliance with the covenant described above under the caption "--
Restricted Payments".
The receipt by Verestar or its Subsidiaries of proceeds from the incurrence
of Indebtedness under a Credit Facility described in clause (5) of the
definition of "Excepted Verestar Debt" while they have Special Verestar Status
shall be treated as an Investment by us in Verestar or its Subsidiaries in an
amount equal to those proceeds. The amount of any Investment in Verestar and
its Subsidiaries shall not include interest accrued on loans or advances to
Verestar or its Subsidiaries, but payment of any interest in cash shall be
considered, at our election (but only to the extent not otherwise included in
our Consolidated Net Income), either a reduction of the Investment in Verestar
or a distribution from an Unrestricted Subsidiary for purposes of clause (3)(e)
of the first paragraph of the covenant described above under the caption "--
Restricted Payments".
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the board of
directors or equivalent of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying:
(a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof; by
(b) the number of years (calculated to the nearest one-twelfth) that
will elapse between such date and the making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of that Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of that Person or by that Person and one or more Wholly Owned
Restricted Subsidiaries of that Person.
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DESCRIPTION OF INDEBTEDNESS
As of December 31, 2000, we had outstanding the indebtedness described
below. We have previously filed copies of the loan agreement and amendments
governing our credit facilities, the indentures governing our convertible notes
and the indenture governing the notes as exhibits to the reports filed by us
with the SEC. We have incorporated by reference these documents into this
prospectus and they qualify this summary in its entirety.
Domestic Credit Facilities
General. The description below summarizes the more important terms of our
domestic bank borrowing arrangements. We refer to these arrangements as our
credit facilities. Our principal operating subsidiaries have entered into the
credit facilities with a group of lenders. Our principal operating subsidiaries
have borrowed and expect to continue to borrow under these credit facilities.
We refer to those borrowers collectively as the "borrower subsidiaries".
Our credit facilities provide for up to $2.0 billion of loans, subject to
various borrowing base restrictions based on factors such as operating cash
flows and construction cost levels. In addition, we have the option to increase
the capacity of our credit facilities by up to an additional $500.0 million,
subject to lender approval. As of December 31, 2000, the total amount
outstanding under the credit facilities was approximately $1.35 billion.
Our credit facilities are made up of three separate loans:
. a $650.0 million reducing revolving credit facility maturing on June 30,
2007. This revolving credit facility was fully available on December 31,
2000, subject to the borrowing base restrictions.
. a $850.0 million multiple-draw term loan maturing on June 30, 2007,
which we refer to as Term Loan A. The Term Loan A was fully drawn on
December 31, 2000.
. a $500.0 million term loan maturing on December 31, 2007, which we refer
to as Term Loan B. The Term Loan B was fully drawn on December 31, 2000.
Borrowing Base Restrictions. Borrowing under our credit facilities is
limited by
. the cash flow of the borrower subsidiaries and of our subsidiaries which
guarantee the indebtedness under the credit facilities. We refer to the
subsidiaries that guarantee the indebtedness as restricted subsidiaries.
See "-- Guaranty",
. the construction costs of developing towers, as defined in the credit
facilities, and
. the aggregate number of developing towers and towers that we acquired in
our transaction with AirTouch.
We are required to reduce the revolving credit commitments and to amortize
the term loans quarterly, commencing on March 31, 2003, in increasing amounts
designed to repay the loans by maturity. We are also required to repay the
loans and reduce the commitments out of the proceeds of specified asset sales
and sales of equity or debt securities by us or our subsidiaries and out of
cash flow. We can repay the loans voluntarily at any time without penalty.
Interest Rates. Interest rates for the revolving credit facility and Term
Loan A are determined, at the option of the borrower subsidiaries, at either
1.5% to 2.75% above the defined LIBOR Rate or 0.5% to 1.75% above the defined
base rate. Interest rates for the Term Loan B are determined at either 3.0% to
3.25 % above the defined LIBOR Rate or 2.0% to 2.25% above the defined base
rate.
Financial Covenants. Our credit facilities require compliance with financial
coverage ratios that measure annualized operating cash flow against each of
total debt, interest expense, pro forma debt service and fixed charges. These
terms have special meanings that are defined in the credit facilities. Our
credit facilities contain other financial and operational covenants and other
restrictions with which the borrower subsidiaries and the restricted
subsidiaries must comply, whether or not there are borrowings outstanding.
These include restrictions
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on some types of acquisitions, other than towers and communications sites,
indebtedness, liens, capital expenditures, investments in unrestricted
subsidiaries, and the ability of the borrower subsidiaries and the restricted
subsidiaries to pay dividends or make other distributions.
Our credit facilities include provisions that restrict us the parent
company, including:
. we cannot have any indebtedness for money borrowed outstanding other
than, with limited exceptions:
. the notes, and
. our outstanding convertible notes.
. we are required to invest the net cash proceeds of any issue of capital
stock, other than pursuant to permitted acquisitions and up to $2.0
million under stock option plans or indebtedness, other than permitted
interest reserves for the notes and the convertible notes, as equity in
the borrower subsidiaries.
Guaranty. We and the restricted subsidiaries have guaranteed all of the
loans under our credit facilities. We have secured the loans by liens on
substantially all assets of the borrower subsidiaries and the restricted
subsidiaries and all outstanding capital stock and other debt and equity
interest of our direct and indirect subsidiaries.
Interest Reserve. Under our credit facilities, we are required to maintain
an interest reserve for our convertible notes and the notes. As of December 31,
2000, we had approximately $46.0 million of restricted funds required under our
domestic credit facilities to be held in escrow to make scheduled interest
payments on our outstanding convertible notes. In addition, we are required to
maintain an escrow to make scheduled interest payments on the notes. As of
December 31, 2000, we had on a pro forma basis approximately $93.7 million
restricted funds for the notes. We are required to maintain the escrow for the
convertible notes through 2001 and for the notes through February 2002.
ATC Mexico Loan Agreement
In December 2000, our Mexican subsidiary, American Tower Corporation de
Mexico, S. de R.L. de C.V., or ATC Mexico, and two of its subsidiaries entered
into an agreement with a group of banks to provide one or more term loans up to
an initial aggregate amount of $95.0 million. If additional lenders are made
parties to the agreement, the size of the facility may increase to $140.0
million. We have committed to ATC Mexico to loan up to $45.0 million if
additional lenders are not made party to the agreement. Our commitment will be
reduced on a dollar-for-dollar basis if additional lenders join the agreement.
The agreement requires maintenance of various financial covenants and ratios
and is guaranteed and collateralized by substantially all of the assets of ATC
Mexico and its subsidiaries. All amounts borrowed under this loan are due on
September 30, 2003. The lenders' commitment to make loans under the agreement
expires on March 31, 2002. Interest rates on the loans are determined, at the
option of the borrowers, at either LIBOR plus 3.50% for the first year of the
loan, plus 4.00% for the second year and plus 4.50% for the third year, or the
base rate plus 2.50% for the first year of the loan, plus 3.00% for the second
year and plus 3.50% for the third year. As of March 31, 2001, an aggregate of
$95.0 million was outstanding under the agreement.
October 1999 Convertible Notes
In October 1999, we issued 6.25% convertible notes due 2009 in an aggregate
principal amount of $300.0 million and 2.25% convertible notes due 2009 at an
issue price of $300.1 million, representing 70.52% of their principal amount at
maturity of $425.5 million. These convertible notes constitute our senior
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indebtedness. The difference between the issue price and the principal amount
at maturity of the 2.25% convertible notes will be accreted each year as
interest expense in our financial statements. The 6.25% convertible notes are
convertible into shares of Class A common stock at a conversion price of $24.40
per share. The 2.25% convertible notes are convertible into shares of Class A
common stock at a conversion price of $24.00 per share. The indentures under
which the convertible notes are outstanding do not contain any restrictions on
the payment of dividends, the incurrence of debt or liens or the repurchase of
our equity securities or any financial covenants.
We may not redeem the 6.25% convertible notes prior to October 22, 2002.
Thereafter, we may redeem the 6.25% convertible notes, at our option, in whole
or in part at a redemption price initially of 103.125% of the principal amount.
The redemption price declines ratably immediately after October 15 of each
following year to 100% of the principal amount in 2005. We may not redeem the
2.25% convertible notes prior to October 22, 2003. Thereafter, we may redeem
the 2.25% convertible notes, at our option, in whole or in part at increasing
redemption prices designed to reflect the accrued original issue discount. We
are also required to pay accrued and unpaid interest in all redemptions of
convertible notes.
Holders may require us to repurchase all or any of their 6.25% convertible
notes on October 22, 2006 at their principal amount, together with accrued and
unpaid interest. Holders may require us to repurchase all or any of their 2.25%
convertible notes on October 22, 2003 at $802.93, which is the issue price plus
accreted original issue discount, together with accrued and unpaid interest. We
may, at our option, elect to pay the repurchase price of each series in cash or
shares of Class A common stock, or any combination of cash and shares. Our
credit facilities restrict our ability to repurchase the convertible notes for
cash.
During the second quarter of 2000, holders of $87.3 million of our 6.25%
convertible notes and $73.1 million of our 2.25% convertible notes elected to
convert such notes into an aggregate of 5,724,180 shares of Class A common
stock as provided in the applicable indenture. We issued an aggregate of
402,414 additional shares of Class A common stock to the holders of these
convertible notes to induce them to elect to make these conversions. The total
amount outstanding under both series of convertible notes was approximately
$470.9 million as of December 31, 2000.
February 2000 Convertible Notes
In February 2000, we issued 5% convertible notes due 2010 in an aggregate
principal amount of $450.0 million. These convertible notes also constitute
part of our senior indebtedness. The 5% convertible notes are convertible into
shares of our Class A common stock at a conversion price of $51.50 per share.
The indenture under which the 5% convertible notes are outstanding does not
contain any restrictions on the payment of dividends, the incurrence of debt or
the repurchase of our equity securities or any financial covenants.
We may not redeem the 5% convertible notes prior to February 20, 2003.
Thereafter, we may redeem the 5% convertible notes, at our option, in whole or
in part, at a redemption price initially of 102.50% of the principal amount.
The redemption price declines ratably immediately after February 15 of each
following year to 100% of the principal amount in 2006. We are also required to
pay accrued and unpaid interest in all redemptions of notes.
Holders may require us to repurchase all or any of the 5% convertible notes
on February 20, 2007 at their principal amount, together with accrued and
unpaid interest. We may, at our option, elect to pay the repurchase price in
cash or shares of Class A common stock or any combination of cash and shares.
Our credit facilities restrict our ability to repurchase the notes for cash.
The total amount outstanding under the 5% convertible notes was approximately
$450.0 million as of December 31, 2000.
Other Long-Term Debt
As of December 31, 2000, our subsidiaries had approximately $197.3 million
of other long-term debt, including capital lease obligations and mortgage
indebtedness.
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SUMMARY OF UNITED STATES FEDERAL TAX CONSEQUENCES
This discussion of U.S. federal income and estate tax consequences applies
to you if you acquired old notes at original issue for cash in the amount of
the issue price, exchange your old notes for new notes pursuant to the terms
set forth in this prospectus and hold the new notes as capital assets within
the meaning of Section 1221 of the Internal Revenue Code of 1986, which we
refer to as the Code. This discussion is a summary for general information only
and does not consider all aspects of U.S. federal income tax that may be
relevant to the purchase, ownership and disposition of the notes. This
discussion also does not address all of the U.S. federal income tax
consequences of ownership of notes that may be relevant to you or the U.S.
federal income tax consequences to you if you are subject to special treatment
under the U.S. federal income tax laws. Special treatment applies to, among
others:
. a bank, thrift, insurance company, regulated investment company, or
other financial institution or financial service company,
. a broker or dealer in securities or foreign currency,
. a person that has a functional currency other than the U.S. dollar,
. a partnership or other flow-through entity,
. a subchapter S corporation,
. a person subject to alternate minimum tax,
. a person who owns the notes as part of a straddle, hedging transaction,
conversion transaction, constructive sale transaction or other risk-
reduction transaction,
. a tax-exempt entity,
. a person who has ceased to be a United States citizen or to be taxed as
a resident alien, or
. a person who acquires the notes in connection with employment or other
performance of services.
This discussion is based upon the Code, regulations of the Treasury
Department, IRS rulings and pronouncements and judicial decisions now in
effect, all of which are subject to change, possibly on a retroactive basis, or
to different interpretations which could result in federal income tax
consequences different from those described below. We have not and will not
seek any rulings or opinions from the IRS or counsel regarding the matters
discussed below. There can be no assurance that the IRS will not take positions
concerning the tax consequences of the purchase, exchange, ownership or
disposition of the notes that are different from those discussed below.
In addition, the following summary does not address all possible tax
consequences. In particular, except as specifically provided, it does not
discuss any estate, gift, generation-skipping, transfer, state, local or
foreign tax consequences. For all these reasons, we urge you to consult with
your tax advisor about the federal income tax and other tax consequences of the
acquisition, ownership and disposition of the notes.
PERSONS CONSIDERING THE EXCHANGE OF OLD NOTES FOR NEW NOTES SHOULD CONSULT
THEIR OWN ADVISERS CONCERNING THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS,
AS WELL AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION, TO
THEIR PARTICULAR SITUATIONS.
As explained below, the federal income tax consequences of acquiring, owning
and disposing of the notes depend on whether or not you are a U.S. holder. For
purposes of this summary, you are a U.S. holder if you are a beneficial owner
of the notes and for federal income tax purposes are:
. a citizen or resident of the United States, including an alien
individual who is a lawful permanent resident of the United States or
who meets the substantial presence residency test under the federal
income tax laws,
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. a corporation, partnership or other entity treated as a corporation or
partnership for federal income tax purposes, that is created or
organized in or under the laws of the United States, any of the fifty
states or the District of Columbia, unless otherwise provided by
Treasury regulations,
. an estate the income of which is subject to federal income taxation
regardless of its source, or
. a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions
of the trust,
and if your status as a U.S. holder is not overridden under the provisions of
an applicable tax treaty. Conversely, you are a non-U.S. holder if you are a
beneficial owner of the notes and are not a U.S. holder.
If a partnership holds notes, the tax treatment of a partner will generally
depend upon the status of the partner and upon the activities of the
partnership. If you are a partner in such partnership, you should consult your
tax advisor.
U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a U.S. holder.
Payment of Interest on Notes
Interest paid or payable on a note will be taxable to a U.S holder as
ordinary interest income, generally at the time it is received or accrued, in
accordance with such holder's regular method of accounting for U.S. federal
income tax purposes. The notes have not been issued with original issued
discount.
In some circumstances, we may be obligated to pay you amounts in excess of
stated interest or principal on the notes. For example, we would have to pay
additional interest in specified circumstances if we did not satisfy our
obligation under the registration rights agreement. In addition, in some cases
we will be able to call the notes for redemption at a price that may include
an additional amount in excess of the principal of the notes. See "Description
of the New Notes--Optional Redemption". According to Treasury regulations, the
possibility of additional interest or premiums being paid to you will not
affect the amount of interest income you recognize, in advance of the payment
of such amounts, if there is only a remote chance as of the date the notes
were issued that you will receive such payments. We believe that the
likelihood that we will pay additional interest is remote. Therefore, we do
not intend to treat the potential payment of such amounts as part of the yield
to maturity of any notes.
Similarly, we intend to take the position that the likelihood of a
redemption or repurchase of the notes is remote and likewise do not intend to
treat the possibility of any premium payable on a redemption or repurchase as
affecting the yield to maturity of any notes. Our determination that these
contingencies are remote is binding on you unless you disclose your contrary
position in the manner required by applicable Treasury regulations. Our
determination is not, however, binding on the IRS. In the event a contingency
occurs, it would affect the amount and timing of the income that you must
recognize. If we pay additional interest on the notes, you will be required to
recognize additional income. If we pay a redemption premium, the premium could
be treated as capital gain under the rules described under "--Sale, Exchange
or Redemption of Notes".
Sale, Exchange or Redemption of Notes
Except as described below under "Exchange Offer", you generally will
recognize gain or loss upon the sale, exchange, redemption, retirement or
other disposition of notes measured by the difference between:
. the amount of cash proceeds and the fair market value of any property
you receive (except to the extent attributable to accrued interest
income, which will generally be taxable as ordinary income, or
attributable to accrued interest previously included in income, which
amount may be received without generating further income), and
. your adjusted tax basis in the notes.
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Your adjusted tax basis in the notes generally will equal your acquisition
cost of the notes after reduction for amounts allocated to prior accrued stated
interest, and reduced by any principal payments you received. The capital gain
or loss will be long-term if your holding period is more than 12 months.
Exchange Offer
The exchange of new notes for old notes pursuant to the exchange offer will
not constitute a taxable event for U.S. federal income tax purposes. As a
result, a holder of the old notes will not recognize taxable gain or loss as a
result of the exchange of these notes for new notes, the holding period of the
new notes will include the holding period of the old notes surrendered in
exchange therefor and a holder's adjusted tax basis in the new notes will be
the same as such holder's adjusted tax basis in the old notes immediately prior
to the surrender of such old notes pursuant to the exchange offer.
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply to "reportable
payments" to non-corporate U.S. holders of principal and interest on a note,
and the proceeds of the sale of a note. If you are a non-corporate U.S. holder
you may be subject to backup withholding at a 31% rate when you receive
interest with respect to the notes, or when you receive proceeds upon the sale,
exchange, redemption, retirement or other disposition of the notes. In general,
you can avoid this backup withholding by properly executing under penalties of
perjury an IRS Form W-9 or substantially similar form that provides:
. your correct taxpayer identification number, and
. a certification that (a) you are exempt from backup withholding because
you are a corporation or come within another enumerated exempt category,
(b) you have not been notified by the IRS that you are subject to backup
withholding, or (c) you have been notified by the IRS that you are no
longer subject to backup withholding.
If you do not provide your correct taxpayer identification number on the IRS
Form W-9 or substantially similar form, you may be subject to penalties imposed
by the IRS.
Backup withholding will not apply, however, with respect to payments made to
some holders, including corporations, tax exempt organizations and some foreign
persons, provided their exemptions from backup withholding are properly
established.
Amounts withheld are generally not an additional tax and may be refunded or
credited against your federal income tax liability, provided you furnish the
required information to the IRS.
We will report to the U.S. holders of notes and to the IRS the amount of any
"reportable payments" for each calendar year and the amount of tax withheld, if
any, with respect to these payments.
U.S. holders of notes should consult their tax advisers as to their
qualification for exemption from backup withholding and the procedure for
obtaining such exemption.
NON-U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a note that is not a U.S. holder (a "Non-
U.S. holder").
Under present United States federal income tax law, and subject to the
discussion of backup withholding below, we and other U.S. payors generally will
not be required to deduct United States withholding tax from payments of
principal and interest to you if, in the case of payments of interest:
. you do not actually or constructively own 10% or more of the total
combined voting power of all of our classes of stock entitled to vote,
85
. you are not a controlled foreign corporation that is related to us,
actually or constructively, through stock ownership, and
. the U.S. payor does not have actual knowledge or reason to know that you
are a United States person and either:
. you furnish to the U.S. payor Internal Revenue Service Form W-8BEN
or an acceptable substitute form upon which you certify, under the
penalties of perjury, that you are a Non-U.S. holder, or
. the U.S. payor receives (i) a withholding certificate from an
intermediary payee such as a withholding foreign partnership,
qualified intermediary or U.S. branch of a non-United States bank or
of a non-United States insurance company, and such intermediary
obtains appropriate certification with respect to your Non-U.S.
holder status and, if required, provides a copy of such
certification to the U.S. payor or (ii) if the payee is a securities
clearing organization, bank or other financial institution that
holds securities for its customers in the ordinary course, a
statement signed under penalties or perjury that the institution has
received a withholding certificate from the beneficial owner (or
that it has received a similar statement from another financial
institution), listing the name and address of the beneficial owner
and attaching a copy of the beneficial owner's withholding
certificate.
If you are a Non-U.S. holder that does not qualify for exemption from
withholding under the preceding paragraph generally (except as provided in the
following paragraph) you will be subject to withholding of U.S. federal income
tax at the rate of 30% (or lower applicable treaty rate) on payments of
interest on a note.
If the payments of interest on a note are effectively connected with the
conduct by a Non-U.S. holder of a trade or business in the United States (and,
if the Non-U.S. holder can claim the benefit of an income tax treaty, the
interest is attributable to a U.S. permanent establishment), such payments will
be subject to U.S. federal income tax on a net basis at the rates applicable to
U.S. persons generally, and, if paid to a corporate holder, may also be subject
to a 30% branch profits tax. If payments are subject to U.S. federal income tax
on a net basis in accordance with the rules described in the preceding
sentence, such payments will not be subject to U.S. withholding tax so long as
the holder provides us or the paying agent with a properly executed
Form W-8ECI.
Non-U.S. holders should consult any applicable income tax treaties, which
may provide for a lower rate of withholding tax, exemption from or reduction of
branch profits tax, or other rules different from those described above. To
claim the protection of an income tax treaty for withholding tax, a Non-U.S.
holder must provide a properly executed Form W-8BEN prior to the payment of
interest and must periodically update Form W-8BEN, or, if necessary, provide us
with the applicable successor form. New regulations that became effective on
January 1, 2001 require a Non-U.S. holder to obtain a U.S. taxpayer
identification number and provide documentary evidence of residence in order to
claim treaty benefit.
Sale, Exchange or Retirement of Notes
Subject to the discussion of backup withholding below, any gain realized by
a Non-U.S. holder on the sale, exchange, retirement or other disposition of a
note generally will not be subject to U.S. federal income tax, unless:
. such gain is effectively connected with the conduct by such Non-U.S.
holder of a trade or business within the United States, and, if the Non-
U.S. holder can claim the benefit of an income tax treaty, the gain is
attributable to a U.S. permanent establishment,
. the Non-U.S. holder is an individual who is present in the United States
for 183 days or more in the taxable year of the disposition and other
requirements are satisfied or
. the Non U.S. holder is subject to tax under the provisions of U.S.
federal tax law applicable to some U.S. expatriates.
86
Federal Estate Tax
Notes held or treated as held by an individual who is a Non-U.S. holder at
the time of his or her death will not be subject to U.S. federal estate tax
provided that:
. the individual does not actually or constructively own 10% or more of
the total voting power of all our voting stock, and
. income on the note is not effectively connected with the conduct by such
Non-U.S. holder of a trade or business within the United States.
Information Reporting and Backup Withholding
We must report annually to the IRS and to each Non-U.S. holder any interest
that is subject to withholding or that is exempt from U.S. withholding tax.
Copies of those returns may also be made available, under the provisions of a
specific treaty or agreement, to the tax authorities of the country in which
the Non-U.S. holder resides.
The regulations provide that backup withholding, which generally is a
withholding tax imposed at the rate of 31% on payments to persons that fail to
furnish required information, and information reporting will not apply to
payments made on notes by us to a Non-U.S. holder if the holder certifies as to
its non-U.S. status under penalty of perjury or otherwise establishes an
exemption, provided that neither we nor any paying agent has actual knowledge
that the holder is a U.S. person or that the conditions of any other exemption
are not, in fact, satisfied.
The payment of the proceeds from the disposition of notes to or through the
U.S. office of any broker, U.S. or foreign, will be subject to information
reporting and possibly backup withholding unless the owner certifies as to its
non-U.S. status under penalty of perjury or otherwise establishes an exemption,
provided that the broker does not have actual knowledge that the holder is a
U.S. person or that the conditions of any other exemption are not, in fact,
satisfied. The payment of the proceeds from the disposition of a note to or
through a non-U.S. office of a non-U.S. broker that is not a U.S. related
person will not be subject to information reporting or backup withholding. For
this purpose, a "U.S. related person" is:
. a "controlled foreign corporation" for U.S. federal income tax purposes
or
. a foreign person 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year
preceding the payment, or for such part of any shorter period that the
broker has been in existence, is derived from activities that are
effectively connected with the conduct of a U.S. trade or business, or
. a foreign partnership doing business in the United States or in which
U.S. persons own more than 50% of the income or capital investment.
In the case of the payment of proceeds from the disposition of notes to or
through a non-U.S. office of a broker that is either a U.S. person or a U.S.
related person, the regulations require information reporting on the payment
unless the broker has documentary evidence in its files that the owner is a
Non-U.S. holder and the broker has no knowledge to the contrary. Backup
withholding will not apply to payments made through foreign offices of a broker
that is a U.S. person or a U.S. related person, absent actual knowledge that
the payee is a U.S. person.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. holder will be allowed as a refund or a credit against such Non-U.S.
holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.
87
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account in connection
with the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of those new notes. A broker-dealer may use this
prospectus, as amended or supplemented from time to time, in connection with
resales of new notes received in exchange for old notes where such broker-
dealer acquired old notes as a result of market-making activities or other
trading activities. We have agreed that for a period of 180 days after the
expiration date of the exchange offer, we will make available a prospectus, as
amended or supplemented, meeting the requirements of the Securities Act to any
broker-dealer for use in connection with those resales.
We will not receive any proceeds from any sale of new notes by broker-
dealers. Broker-dealers may sell new notes received by them for their own
account pursuant to the exchange offer from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the new notes or a combination of those
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any broker-
dealer or the purchasers of any new notes.
Any broker-dealer that resells new notes that were received by it for its
own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act. A profit on any such
resale of new notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that, by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration date of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests these
documents in the letter of transmittal. We have agreed to pay all expenses
incident to the exchange offer, including the expenses of one counsel for the
holders of the old notes, other than commissions or concessions of any brokers
or dealers and will indemnify the holders of the old notes, including any
broker-dealers, against specified liabilities, including liabilities under the
Securities Act.
88
LEGAL MATTERS
Hale and Dorr LLP, Boston, Massachusetts, will pass upon the validity of the
new notes for us. Partners of Hale and Dorr LLP own options to purchase 7,200
shares of our Class A common stock at $18.75 per share and own 10,000 shares of
our Class A common stock.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from American Tower Corporation's Annual Report on Form 10-K for the
year ended December 31, 2000, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein
by reference, and has been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
89
EXCHANGE AGENT
We have appointed The Bank of New York as exchange agent in connection with
the exchange offer. Holders should direct questions, requests for assistance
and for additional copies of this prospectus, the letter of transmittal or
notices of guaranteed delivery to the exchange agent addressed as follows:
By Mail, Hand Delivery or
Overnight Courier:
By Facsimile Transmission:
The Bank of New York The Bank of New York
Reorganization Department Reorganization Department
101 Barclay Street Attention: Santino Ginocchietti
Floor 7E (212) 815-6339
New York, NY 10286
Attention: Santino Ginocchietti For Information or Confirmation by
Telephone:
The Bank of New York
Reorganization Department
Attention: Santino Ginocchietti
(212) 815-6331
90
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 102 of the Delaware General Corporation Law allows a corporation
to eliminate the personal liability of directors of a corporation to the
corporation or its stockholders for monetary damages for a breach of fiduciary
duty as a director, except where the director breached his duty of loyalty,
failed to act in good faith, engaged in intentional misconduct or knowingly
violated a law, authorized the payment of a dividend or approved a stock
repurchase in violation of Delaware corporate law or obtained an improper
personal benefit. The Registrant has included such a provision in Article Sixth
of its restated certificate of incorporation.
Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify a director, officer, employee or agent
of the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if such person shall have acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, in any criminal proceeding, if such
person had no reasonable cause to believe his conduct was unlawful; provided
that, in the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such
person shall have been adjudged to be liable to the corporation unless and only
to the extent that the adjudicating court determines that such indemnification
is proper under the circumstances.
Article XII of the Registrant's By-Laws provides that the Registrant shall
indemnify each person who is or was an officer or director of the Registrant to
the fullest extent permitted by Section 145 of the Delaware General Corporation
Law.
The Registrant has purchased directors' and officers' liability insurance
which would indemnify its directors and officers against damages arising out of
certain kinds of claims which might be made against them based on their
negligent acts or omissions while acting in their capacity as such.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
Below are the exhibits which are included, either by being filed herewith
or by incorporation by reference, in this registration statement. Pursuant to
Item 601(4)(iii) of Regulation S-K, the Registrant has omitted to file as
exhibits to this registration statement the indentures for its convertible
notes. Each of these indentures represents long-term debt not exceeding 10% of
the total assets of the Registrant. The Registrant has previously filed these
indentures as exhibits to its other SEC filings and agrees, upon request of the
Commission, to furnish copies of these indentures to the Commission.
Exhibit No. Description of Exhibit
----------- ----------------------
2.1 Lease and Sublease by and among ALLTEL Communications, Inc., the
other ALLTEL entities named therein, American Towers, Inc. and
American Tower Corporation, dated , 2001 (incorporated by
reference to Exhibit 2.1 from the Registrant's Annual Report on
Form 10-K (File No. 001-14195) filed on April 2, 2001).
2.2 Agreement to Sublease by and among ALLTEL Communications, Inc.,
the ALLTEL entities named therein, American Towers, Inc. and
American Tower Corporation, dated December 19, 2000 (incorporated
by reference to Exhibit 2.2 from the Registrant's Annual Report on
Form 10-K (File No. 001-14195) filed on April 2, 2001).
II-1
Exhibit No. Description of Exhibit
----------- ----------------------
2.3 Build to Suit Agreement by and among ALLTEL Communications, Inc., the ALLTEL
entities named therein, American Towers, Inc. and American Tower Corporation,
dated December 19, 2000 (incorporated by reference to Exhibit 2.3 from the
Registrant's Annual Report on Form 10-K (File No. 001-14195) filed on April 2,
2001).
4.0 Indenture, by and between the Registrant and The Bank of New York as Trustee,
for the 9 3/8% Senior Notes due 2009, dated as of January 31, 2001, including
the form of 9 3/8% Senior Note (incorporated by reference to Exhibit 4.9 from
the Registrant's Annual Report on Form 10-K (File No. 001-14195) filed on April
2, 2001).
4.1 Registration Rights Agreement, by and between the Registrant and the Initial
Purchasers named therein, dated as of January 31, 2001 (incorporated by
reference to Exhibit 4.10 from the Registrant's Annual Report on Form 10-K (File
No. 001-14195) filed on April 2, 2001).
5 Opinion of Hale and Dorr LLP (incorporated by reference to Exhibit 5 from the
original filing of this Registration Statement on April 30, 2001).
10.1 Amended and Restated Loan Agreement dated as of January 6, 2000, by and among
American Tower, L.P., American Towers, Inc. and ATC Teleports, Inc., as
Borrowers, and Toronto Dominion (Texas) Inc., as Administrative Agent, and the
banks party thereto (incorporated by reference to Exhibit 10.1 from the
Registrant's Current Report on Form 8-K (File No. 001-14195) filed on January
28, 2000).
10.2 First Amendment and Waiver Agreement, dated as of February 9, 2000, by and among
American Tower, L.P., American Towers, Inc. and ATC Teleports, Inc., as
Borrowers, and Toronto Dominion (Texas) Inc., as Administrative Agent, and the
banks party thereto (incorporated by reference to Exhibit 10.1 from the
Registrant's Quarterly Report on Form 10-Q (File No. 001-14195) filed on
November 13, 2000).
10.3 Second Amendment to Amended and Restated Loan Agreement, dated as of May 11,
2000, by and among American Tower, L.P., American Towers, Inc. and ATC
Teleports, Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as
Administrative Agent, and the banks party thereto (incorporated by reference to
Exhibit 10.2 from the Registrant's Quarterly Report on Form 10-Q (File No. 001-
14195) filed on November 13, 2000).
10.4 Waiver and Third Amendment to Amended and Restated Loan Agreement, dated as of
October 13, 2000, by and among American Tower, L.P., American Towers, Inc. and
ATC Teleports, Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as
Adminstrative Agent, and the banks party thereto (incorporated by reference to
Exhibit 10.3 from the Registrant's Quarterly Report on Form 10-Q (File No. 001-
14195) filed on November 13, 2000).
10.5 Fourth Amendment to Amended and Restated Loan Agreement, dated as of January 23,
2001, by and among American Tower, L.P., American Towers, Inc. and Verestar,
Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as Adminstrative Agent,
and the banks party thereto (incorporated by reference to Exhibit 10.5 from the
original filing of this Registration Statement on April 30, 2001)
10.6 Fifth Amendment and Waiver to Amended and Restated Loan Agreement, dated as of
March 26, 2001, by and among American Tower, L.P., American Towers, Inc. and
Verestar, Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as
Administrative Agent, and the banks party thereto (incorporated by reference to
Exhibit 10.6 from the original filing of this Registration Statement on April
30, 2001).
10.7 Credit Agreement, dated December 22, 2000, by and among American Tower
Corporation de Mexico, S. de R.L. de C.V., MATC Holdings Mexico, S. de R.L. de
C.V., MATC TV, S. de R.L. de C.V. and Toronto Dominion (Texas), Inc.
(incorporated by reference to Exhibit 10.7 from the original filing of this
Registration Statement on April 30, 2001).
II-2
Exhibit No. Description of Exhibit
----------- ----------------------
12 Statement Regarding Computation of Ratios of Earnings to Fixed Charges
(incorporated by reference to Exhibit 12 from the Registrant's Annual Report on
Form 10-K (File No. 001-14195) filed on April 2, 2001).
23.1 Consent of Deloitte & Touche LLP. (incorporated by reference to Exhibit 23.1
from the original filing of this Registration Statement on April 30, 2001).
23.2 Consent of Hale and Dorr LLP (incorporated by reference to Exhibit 5 from the
original filing of this Registration Statement on April 30, 2001).
24 Powers of Attorney (incorporated by reference to page II-5 of the original
filing of this Registration Statement on April 30, 2001).
25.1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939
of The Bank of New York, as Trustee, on Form T-1, relating to the 9 3/8% Senior
Notes Due 2009 (incorporated by reference to Exhibit 25.1 from the original
filing of this Registration Statement on April 30, 2001).
99.1 Form of Letter of Transmittal (incorporated by reference to Exhibit 99.1 from
the original filing of this Registration Statement on April 30, 2001).
99.2 Form of Notice of Guaranteed Delivery (incorporated by reference to Exhibit 99.2
from the original filing of this Registration Statement on April 30, 2001).
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other
Nominees (incorporated by reference to Exhibit 99.3 from the original filing of
this Registration Statement on April 30, 2001).
99.4 Form of Letter to Clients (incorporated by reference to Exhibit 99.4 from the
original filing of this Registration Statement on April 30, 2001).
99.5 Form of Tax Guidelines (incorporated by reference to Exhibit 99.5 from the
original filing of this Registration Statement on April 30, 2001).
(b) Financial Statement Schedules
Schedules not listed above have been omitted because they are not
applicable or because the required information is contained in the financial
statements or notes thereto.
Item 22. Undertakings
The undersigned Registrant hereby undertakes:
(a) 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 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
II-3
(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 a(i) and a(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is 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
registration statement.
(b) 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 intitial bona
fide offering thereof.
(c) 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.
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 Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 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 of 1933 and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This undertaking also includes documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
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 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference into the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
undersigned undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
II-4
The undersigned Registrant hereby undertakes that every prospectus: (i)
that is filed pursuant to the immediately preceding paragraph or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Securities Act of
1933 and is used in connection with an offering of securities subject to Rule
415, will be filed as a part of an amendment to the registration statement and
will not be used until such amendment is effective, and that, for purposes 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 that
time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Boston, Commonwealth of Massachusetts , on this 14th day of May 2001.
AMERICAN TOWER CORPORATION
By: /s/ Steven B. Dodge*
-------------------------------
Steven B. Dodge
Chairman of the Board, President
and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to its Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
Chairman, President, Chief Executive May 14, 2001
/s/ Steven B. Dodge * Officer and Director (Principal
-------------------------- Executive Officer)
Steven B. Dodge
/s/ Joseph L. Winn * Chief Financial Officer and Treasurer May 14, 2001
-------------------------- (Principal Financial Officer)
Joseph L. Winn
/s/ Justin D. Benincasa Senior Vice President and Corporate May 14, 2001
-------------------------- Controller (Principal Accounting
Justin D. Benincasa Officer)
/s/ Alan L. Box * Executive Vice President and Director May 14, 2001
--------------------------
Alan L. Box
/s/ Arnold L. Chavkin * Director May 14, 2001
--------------------------
Arnold L. Chavkin
/s/ David W. Garrison * Director May 14, 2001
--------------------------
David W. Garrison
II-5
Signatures Title Date
---------- ----- ----
/s/ J.Michael Gearon, Jr.* Executive Vice President and Director May 14, 2001
--------------------------
J. Michael-Gearon, Jr.
/s/ Fred R. Lummis* Director May 14, 2001
--------------------------
Fred R. Lummis
/s/ Thomas H. Stoner* Director May 14, 2001
--------------------------
Thomas H. Stoner
/s/ Maggie Wilderotter* Director May 14, 2001
--------------------------
Maggie Wilderotter
--------
*Indicates signature by Power-of-Attorney
II-6