Supplemental Disclosure Material - Ono

Investor release
Update to ONO Disclosure
MADRID, 30 May 2012—In a separate press release earlier today, ONO announced an intended offering of
U.S.$300 million of Senior Secured Notes due 2018.
The notes will be issued by a special purpose independent orphan vehicle, Nara Cable Funding Limited, which will
use the gross proceeds of the offering of the Notes to make a U.S. dollar denominated secured loan to Cableuropa pursuant to
a new tranche of Cableuropa’s New Senior Facility.
Attached hereto are selected extracts from the preliminary Offering Memorandum prepared in connection with the
offering. The attached document also contains: (i) as Annex A, a copy of Cableuropa’s Amended and Restated New Senior
Facility (excluding the schedules thereto) substantially in the form in which it is expected to be executed upon the closing of
the offering, subject to completion; and (ii) as Annex B, a copy of the New Intercreditor Agreement dated May 24, 2012
between, among others, Cableuropa, the lenders under Cableuropa’s New Senior Facility, Société Générale, S.A., London
Branch, as agent for the lenders under the New Senior Facility, security agent and intercreditor agent, ONO Finance II, as
issuer of the certain subordinated notes guaranteed by Cableuropa, and the trustee of such subordinated notes.
Important Information
These materials do not constitute or form a part of any offer or solicitation to purchase or subscribe for
securities in the United States. The Notes referred to herein have not been and will not be registered under the United
States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States or
to US persons unless the Notes are registered under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act. There will be no public offer of securities in the United States.
This document is only directed at (i) persons who are outside the United Kingdom or (ii) to investment
professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order
2005 (the “Order”) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated,
falling within Article 49(2)(a) to (d) of the Order (all such persons in (i), (ii) and (iii) above together being referred to
as “relevant persons”). The securities offered are only available to, and any invitation, offer or agreement to subscribe,
purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a
relevant person should not act or rely on this document or any of its contents.
Further information
Investor Relations
E-mail: investor.relations@ono.es
Website: http://www.ono.es/sobreono/

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This offering memorandum contains forward-looking statements. These forward-looking statements include all
matters that are not historical facts, including the statements under the headings “Summary”, “Risk Factors”, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations of ONOMidco”, “Business” and elsewhere
regarding future events or prospects. Statements containing the words “believe”, “expect”, “intend”, “anticipate”, “will”,
“positioned”, “project”, “risk”, “plan”, “may”, “estimate” or, in each case, their negative and words of similar meaning are
forward-looking statements.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend
on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees
of future performance and that our actual financial condition, results of operations and cash flows, and the development of the
industry in which we operate, may differ materially from those made in or suggested by the forward-looking statements
contained in this offering memorandum. In addition, even if our financial condition, results of operations and cash flows, and
the development of the industry in which we operate, are consistent with the forward-looking statements contained in this
offering memorandum, those results or developments may not be indicative of results or developments in subsequent periods.
Important facts that could cause our actual results of operations, financial condition or cash flows to differ from our current
expectations include, but are not limited to:
• the challenging macroeconomic environment in Spain and the ongoing Eurozone crisis;
• our substantial leverage and ability to service our debts;
• a significant portion of our existing debt maturing prior to the Notes;
• our exposure to changes in interest rates;
• our incurrence of substantially more debt;
• our failure to meet our financial covenants under the New Senior Facility (as described under “Description of
Other Indebtedness”);
• restrictions imposed by our debt obligations and their limitation on our ability to take certain actions;
• our exposure to currency fluctuations as a result of US dollar denominated debt, including the Notes;
• the effect of a further deterioration of economic conditions in Spain;
• our failure to generate sufficient cash flow to fund our operations or capital expenditures;
• competition from other companies in our industry and our ability to retain or increase our market share;
• the difficulty of predicting future demand for our services;
• our failure to introduce successfully enhanced products and services;
• our failure to control customer churn;
• our failure to maintain a positive brand image;
• our exposure to rapid technological change;
• our dependence on others to provide premium programming;
• our reliance on others to provide us with mission critical hardware and software;
• our ability to avoid unanticipated network downtime;
• our failure to retain key employees;
• potential employee or labor relations issues;
• our failure to maintain and upgrade our network;
• the ability of Telefónica de España, S.A.U. (“Telefónica”), the incumbent telecommunications operator, to set
standards and precedents in our market that may adversely affect our business;
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• increases in operating costs and the effects of inflation;
• the failure of capital expenditure to produce a positive return;
• the effect of changes in the regulatory environment on the telecommunications and television industries in
Spain; and
• risks relating to the structure and terms of the New Notes and legal and other considerations in connection
therewith.
Consequently, our current business plan, anticipated actions and future financial condition, results of operations and
cash flows, as well as the anticipated development of the industry in which we operate, may differ from those expressed in
any forward-looking statements made by us. These forward-looking statements are uncertain and we cannot assure you that
any such statements will prove to be correct. Actual results and developments may be materially different from those
expressed or implied by such statements. We urge you to read this offering memorandum, including the sections entitled “Risk
Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations of ONOMidco”,
“Industry” and “Business” for a more complete discussion of the factors that could affect our future performance and the
industry in which we operate.
ONOMidco is currently subject, with respect to the Existing Notes and the Subordinated Notes (each as defined
herein), to the ongoing reporting requirements of the Luxembourg Stock Exchange.
Apart from any requirements pursuant to the laws and regulations discussed above, we have no obligation to, and do
not intend to, update publicly or revise any forward-looking statements in this offering memorandum, whether as a result of
new information, future events or otherwise. You are cautioned not to rely unduly on forward-looking statements when
evaluating the information presented in this offering memorandum.
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PRESENTATION OF FINANCIAL AND OTHER DATA
In this offering memorandum, references to the “ONO Group”, “ONO”, “we”, “us” and “our” are, as the context
requires, to ONOMidco (as defined below), Cableuropa, its predecessors and subsidiaries. References to “Nara Cable
Funding” are to Nara Cable Funding Limited, the Issuer of the New Notes. References to “GCO” are to Grupo Corporativo
ONO, S.A., our ultimate parent company.
Financial Information
Use of ONOMidco Financial Statements
Cableuropa is a wholly owned subsidiary of ONOMidco, S.A.U. (“ONOMidco”). We present in this offering
memorandum ONOMidco’s audited consolidated financial statements as of and for the years ended December 31, 2010 and
2009 (the “2010 and 2009 Audited Financial Statements”) and ONOMidco’s audited consolidated annual accounts as of and
for the year ended December 31, 2011 (the “2011 Audited Annual Accounts” and, together with the 2010 and 2009 Audited
Financial Statements, the “Audited Financial Statements”) and its unaudited interim condensed consolidated financial
statements as of and for the three months ended March 31, 2012, including comparative information for the three months
ended March 31, 2011 (the “Unaudited Interim Financial Statements”).
The Audited Financial Statements and the Unaudited Interim Financial Statements have been prepared in
accordance with IFRS as adopted for use in the European Union (“EU IFRS”). The audit report for the audited consolidated
financial statements as of and for the year ended December 31, 2010 also cover the comparative information as of and for the
year ended December 31, 2009.
The 2010 and 2009 Audited Financial Statements are the first consolidated financial statements of ONOMidco
prepared in accordance with EU IFRS. Until the year ended December 31, 2010, ONOMidco prepared its consolidated annual
accounts in accordance with Spanish GAAP. For further information about ONOMidco’s transition to EU IFRS, see Note 5 to
the 2010 and 2009 Audited Financial Statements.
ONOMidco wholly owns Cableuropa and ONOMidco does not engage, and under the terms of current indebtedness
is not allowed to engage, in any business activities. ONOMidco’s consolidated financial statements are substantially the same
as those of Cableuropa’s consolidated financial statements, with the exception of certain immaterial administrative expenses.
Sources of Financial Information
Unless otherwise stated herein:
• All financial information has been prepared in accordance with EU IFRS;
• All financial information as of and for the three months ended March 31, 2012 and 2011 has been derived from
the Unaudited Interim Financial Statements;
• All financial information as of and for the year ended December 31, 2011 has been derived from the 2011
Audited Annual Accounts; and
• All financial information as of and for each of the years ended December 31, 2010 and 2009 has been derived
from the 2010 and 2009 Audited Financial Statements.
Currency References
Unless otherwise indicated or otherwise required by the context, all references in this offering memorandum to
“euro”, “€” or “EUR” are to the lawful currency of the participating member states, including Spain, in the third stage of
European Economic and Monetary Union of the Treaty establishing the European Community, as amended from time to time
and all references to “U.S. dollars”, “dollars”, “U.S.$” or “$” are to the lawful currency of the United States of America.
Non-GAAP Financial Measures
EBITDA, operating free cash flow and free cash flow as well as other data and certain ratios (including for the
twelve months ended March 31, 2012) presented in this offering memorandum are supplemental measures of our performance
and liquidity that are not required by, or presented in accordance with EU IFRS. EBITDA, operating free cash flow and free
cash flow are not measures of our financial performance or liquidity under EU IFRS and should not be considered as an
alternative to net income, operating profit or any other performance measures derived in accordance with EU IFRS or as an
alternative to cash flow from operating, investing and financing activities as a measure of our liquidity.
We believe that EBITDA, operating free cash flow and free cash flow facilitate comparisons of operating
performance from period to period and company to company by eliminating potential differences caused by variations in
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capital structures (affecting interest expense), tax positions (such as the impact on periods or companies of changes in
effective tax rates or net operating losses), the age and booked depreciation and amortization of assets (affecting relative
depreciation and amortization of expense), non-recurring items and minority interests. We also present EBITDA, operating
free cash flow and free cash flow because we believe that they are frequently used by securities analysts, investors and other
interested parties in evaluating similar companies in our industry, many of whom present such non-GAAP financial measures
when reporting their results. Finally, we present EBITDA, operating free cash flow and free cash flow as a supplemental
measure of our ability to service our debt.
Nevertheless, EBITDA, operating free cash flow and free cash flow have limitations as analytical tools, and you
should not consider them in isolation from, or as a substitute for analysis of, our financial condition or results of operations, as
reported under EU IFRS. Some of these limitations are:
• EBITDA, operating free cash flow and free cash flow do not reflect our future requirements for capital
expenditures or contractual commitments;
• EBITDA and operating free cash flow do not reflect changes in, or cash requirements for, our working capital
needs;
• EBITDA and operating free cash flow do not reflect the interest expense, or the cash requirements necessary to
service interest or principal payments, on our debt;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will
often have to be replaced in the future, and EBITDA, operating free cash flow and free cash flow do not reflect
any cash requirements for such replacements;
• EBITDA, operating free cash flow and free cash flow do not reflect non-recurring income/expense or any other
non-cash items; and
• other companies in our industry may calculate these measures differently than we do, limiting their usefulness
as a comparative measure.
Because of these limitations, EBITDA, operating free cash flow and free cash flow should not be considered as
measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by
relying primarily on our EU IFRS results and using EBITDA, operating free cash flow and free cash flow measures only
supplementally. For reconciliation of EBITDA, operating free cash flow and free cash flow to our consolidated net profit for
the years ended December 31, 2009, 2010 and 2011 and for the three months ended March 31, 2011 and 2012, see
“Summary—Summary Financial Information and Operating Data”.
Total Homes and Businesses Data
Total homes for each of our franchise areas are derived from the 2001 Spanish national census published by the
National Statistics Institute of Spain (Instituto Nacional de Estadística, or “INE”). Total businesses for each of our areas of
operation are derived from the 2007 businesses central directory which is also published by INE. Although we accept
responsibility for the accurate extraction of such data, we accept no further responsibility in respect of such data.
Presentation of Market, Market Share, Industry and Other Data
The market, market share, industry and certain other data contained in this offering memorandum have been taken
from industry reports, including reports of the Spanish Telecommunications Market Commission (Comisión del Mercado de
Telecomunicaciones, or “CMT”), INE, the State Secretariat for Telecommunications and the Information Society (Secretaría
de Estado de Telecomunicaciones y para la Sociedad de la Información, or “SETSI”) and Eurostat of the European
Commission (“Eurostat”), as well as publicly available reports from telecommunications operators. Industry surveys and
publications generally state that the information contained therein has been obtained from sources believed to be reliable, but
that the accuracy and completeness of such information is not guaranteed. We believe that these industry publications, surveys
and forecasts are reliable but we have not independently verified them and cannot guarantee their accuracy or completeness.
Certain Operational Definitions
In this offering memorandum, the following defined terms have the meanings indicated below:
“ADSL” means Asymmetric Digital Subscriber Line, a data communications technology that enables faster data
transmission over copper telephone lines than a conventional voiceband modem can provide by utilizing frequencies not used
by a voice telephone call.
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“ARPU” means monthly average revenue per user, and is calculated by dividing total revenues generated from our
internet, television and telephony services provided to customers that are directly connected to our network in the last quarter
of the relevant period by the average number of customers in that quarter, the result of which is divided by three. The average
number of customers for any period is calculated by adding the number of customers at the beginning of the period to the
number of customers at the end of the period and dividing by two.
“Homes released to marketing” refers to homes to which we can provide broadband internet, television and
telephony services within an average of four days, which occurs after the customer tap and drop have been installed.
“Net churn” means the percentage obtained by dividing the number of residential cable customers (without the
customers moving from one ONO home to another ONO home) who cease to receive any of our services (either voluntarily or
involuntarily) in the last quarter of the relevant period by the average total number of residential cable customers during that
quarter, multiplied by four. The average number of residential cable customers for any period is calculated by adding the
number of residential cable customers at the beginning of the period to the number of residential cable customers at the end of
the period and dividing by two.
“Penetration” is the percentage of customers over homes released to marketing in our areas of operation, and with
respect to any particular service, penetration is the percentage of RGUs of that service over homes released to marketing in
our areas of operation.
“RGUs” are revenue-generating units where each customer is counted as a revenue generating unit for each service
for which such customer subscribes, regardless of the number of services that customer receives from us. Thus a single
customer who receives internet, television and telephony services from us would account for three RGUs.
“ULL” means unbundled local loop, a technology whereby the incumbent operator grants other operators access to
the communications circuits between the equipment of the local exchange and the customer’s equipment (known as the local
loop).
Other
Certain numerical figures included herein have been rounded. Therefore, discrepancies in tables between totals and
the sums of the amounts listed may occur due to such rounding. In addition, when describing the change in a percentage
between two periods, the term “pp” means percentage points.
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SUMMARY
The following summary highlights selected information from this offering memorandum. It is not complete and does
not contain all of the information that you should consider before investing in the New Notes. Before you decide to invest in
the New Notes, you should read the entire offering memorandum carefully, including the “Risk Factors”, “Selected Historical
Consolidated Financial Information of ONOMidco”, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations of ONOMidco”, “Industry”, “Business”, “Description of Other Indebtedness”, “Description of the
Notes” and the financial statements of ONOMidco and the notes thereto.
Overview
Our Business
We are the second largest provider of broadband internet, pay television and fixed telephony services in Spain.
Through our proprietary state-of-the-art network, we offer our services to over 7 million homes across Spain, including the
nine largest cities. We are the only fiber operator in Spain with national coverage. As of March 31, 2012, we provide over
4.4 million services under the ONO brand to 1.9 million residential (fiber and ADSL) customers and more than 95 thousand
small and medium-sized enterprises (“SMEs”) in Spain. We also offer products and services to large corporations and public
sector entities as well as to the wholesale market. We are the principal competitor to the incumbent telecommunications and
pay television operators in Spain and, through our recently upgraded network, we believe we are able to offer the most
advanced broadband internet and pay television services in the Spanish market. For the twelve months ended March 31, 2012,
we generated net revenues of €1,504 million, EBITDA of €756 million and an EBITDA margin of 50.3%. In the same period,
our residential services generated net revenues of €1,172 million (accounting for 77.9% of our total net revenues), and our
business and other services generated net revenues of €332 million (accounting for 22.1% of our total net revenues).
Residential Services
As of March 31, 2012, our residential fiber customers totaled approximately 1.8 million, representing approximately
95.2% of our total residential customer base. We offer customers the opportunity to subscribe to a variety of “bundled”
packages, which provides them with multiple services (broadband internet, pay television and telephony) charged in a single
bill. “Double-play” packages bundle two of our services together, whereas “triple-play” packages allow customers to utilize
each of our broadband internet, pay television and telephony services. As of March 31, 2012, 85% of our residential fiber
customers subscribed to a bundled package. The following is a summary of our services for residential fiber customers:
Broadband Internet: We are a leading provider of residential broadband internet services in our areas of operation.
As of March 31, 2012, we had over 1.4 million internet customers, representing 79.7% of our total residential fiber customer
base. We were the first Spanish operator to launch broadband speeds of 50 Mbps and 100 Mbps on a nation-wide basis and,
with the implementation of Docsis 3.0 technology, we have made these broadband speeds available in full throughout our
network. As of March 31, 2012, over 530 thousand customers subscribed to our high-speed internet packages (30 Mbps and
higher), representing approximately 37% of our residential broadband customer base, which we believe makes us the leading
provider of ultra-high speed residential internet in Spain. We intend to continue focusing on marketing and deriving the
commercial benefits from this service.
Television: We are a leading provider of pay television services in Spain with 906 thousand customers as of
March 31, 2012, representing 50.6% of our total residential fiber customers. We offer a wide selection of digital television
programming from basic to premium packages. Each of our TV packages also provides easy access to our pay-per-view and
video-on-demand (“VoD”) services, where available. In June 2010, we signed a strategic agreement with TiVo (a U.S. digital
video company) to deploy an innovative set of next generation TV services on an exclusive basis, which we believe provides
a seamless convergence between internet and traditional television content. In October 2011, we officially launched our next
generation TV service (TiVo) to customers in Madrid and Barcelona and since then we have made this service available in
areas that represent around 62% of our network coverage areas. We expect to further extend this innovative TV service to the
remaining regions within our network coverage areas in the coming quarters. As of March 31, 2012, this product had been
available for five months, and during this period we gained over 16 thousand customers.
Telephony: We provide local, national and international telephony services to approximately 1.7 million
customers, representing 94.8% of our total residential fiber customer base, as of March 31, 2012. This service is showing
some resistance to the decrease in the customer base and minutes of use, with national fixed-to-fixed calls volumes remaining
broadly stable; although fixed-to-mobile and international call volumes remain weak. In June 2010, we signed a strategic
agreement with Huawei to upgrade and outsource our voice network. We expect it to reduce our operating costs while
maintaining the quality of our telephony service.
We also offer services through ADSL and other technologies, such as indirect access. As of March 31, 2012, we had
approximately 91 thousand ADSL customers taking 171 thousand services from us.
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In addition, we offer mobile voice and broadband services to residential customers. As of March 31, 2012, we had
approximately 189 thousand residential mobile lines.
Business Services
Spain.
We also provide telecommunication services to SMEs, large accounts and corporations and the wholesale market in
SME: We provide voice and data telecommunication services to small and medium-sized enterprises. As of
March 31, 2012, we had over 95 thousand SME customers taking 185 thousand services from us.
Large Accounts & Corporations: We provide a range of customized solutions (voice, internet, data and
equipment) to corporations, institutions and public sector entities.
Wholesale & Other: We provide carrier services, voice traffic services, leased and dedicated lines and circuits and
ISP solutions to other telecommunications operators. In addition, we provide intelligent network services.
Our History
Formation
Before commencing operations in 1998, we participated in a number of competitive public bids further to the
adoption of Spain’s Law 42/1995 on Cable Telecommunications. Between 1996 and 1998, we were awarded licenses to
provide cable television and telecommunications services in the following nine regions: Valencia, Alicante, Castellón,
Murcia, Cádiz, Huelva, Cantabria, Mallorca and Albacete. In 2003, we were awarded a license to operate in Castilla-La
Mancha. In 2004, we acquired the telecommunications operator Retecal, covering the Castilla y Leon region.
In November 2005, we acquired Auna Telecommunications, S.A.U. (“Auna”), a wireline and cable operator. The
acquisition consolidated our presence in Spain and extended our coverage to seven additional regions, which included Spain’s
largest cities, Madrid and Barcelona. Following the Auna acquisition, we continued to pursue an expansion strategy of
extending our network and acquiring new customers. Between 2006 and 2008 we invested substantially in expanding the
footprint of our network infrastructure, with the number of homes released to marketing increasing by 1.2 million to over
7 million.
Transformation Process
Towards the end of 2008, faced with weakening international economic conditions, we commenced a
transformation process. The transformation focused on adjusting our business model to the changed economic environment
and stabilizing our operations following a period of rapid expansion, with the aim of creating a more efficient platform for
future growth. This process also coincided with significant changes in our senior management. Largely completed by the end
of 2009, the transformation process included a wide range of initiatives focused on maximizing cash flow, implementing cost
efficiencies, reshaping our organization and attracting and retaining high-quality customers. As a result of the transformation,
we believe we have become a more resilient and efficient company. Our EBITDA increased from €645 million (Spanish
GAAP) in 2007 to €748 million in 2011, our EBITDA margin increased from 39.9% (Spanish GAAP) in 2007 to 50.4% in
2011 and operating free cash flow increased from €91 million (Spanish GAAP) in 2007 to €456 million in 2011. During the
transformation process, we focused primarily on:
Optimizing returns from assets: Having already invested to establish a network reach of over 7 million homes, we
ceased our network expansion activities and focused on maintaining and enhancing our existing network. We have undertaken
several platform upgrades, such as our implementation of Docsis 3.0 (deployment completed in February 2012), the
improvement of our next generation television service (TiVo) with almost 62% of our network upgraded as of March 31,
2012, and the ongoing upgrade and outsourcing of our voice platform. Other initiatives included improving our receivables
collection cycle.
Reshaping our organization: We centralized our business operations, eliminating duplicate regional functions and
reducing headcount. A shift towards internet sales and other more cost efficient sales channels led to a reduction of our direct
sales force. In the first quarter of 2012, 30% of our sales were through the internet, compared to 0.2% in 2007. The average
number of our employees has declined from 4,618 for 2007 to 2,893 for the three months ended March 31, 2012. In addition,
in April 2010 we sold our loss-making content aggregator, Teuve.
Cost efficiencies: We implemented a wide range of cost efficiency initiatives, resulting in our cost of sales, staff
costs and other operating expenses (less capitalized costs) declining from €971 million (Spanish GAAP) in 2007 to
€737 million in 2011, or 24%. In addition to the organizational changes described above, other key initiatives included
selective outsourcing, a new procurement model, continued renegotiation of contracts and migrating our customers to an
e-billing system.
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Focusing on high-quality customers: We placed a strong emphasis on attracting and retaining high-quality
customers. We introduced a credit scoring initiative and increased activation and installation fees in order to reduce the
number of new early-churn customers. In addition, we improved our customer care processes and offered our existing
customers add-on services, such as next generation TV (TiVo), voice and mobile broadband and the Gol TV channel, in order
to increase their loyalty. Despite these successful initiatives, the unfavorable economic environment impacted on our churn
levels, which have increased since 2009. We also shifted our marketing focus to promote double- and triple-play packages,
which we believe can help us achieve higher ARPUs and greater loyalty. We also launched a new marketing campaign
emphasizing the superiority of fiber versus ADSL in terms of speed and quality of service. As a result of these and other
measures, the percentage of our customers subscribing to triple-play services increased from 31.2% as of December 31, 2007
to 40% as of March 31, 2012 and our RGUs per customer increased from 2.03x in the last quarter of 2007 to 2.25x in the three
months ended March 31, 2012.
Refinancing
In the beginning of 2010, we initiated a multi-stage refinancing process seeking to extend the maturity of our
existing indebtedness beyond 2013. The May 2012 Refinancing (as defined herein) is the final stage of that refinancing
process and, upon its completion, we will have extended the maturities of substantially all of our financial indebtedness, with
no significant maturities before 2017.
Refinancing prior to May 2012
In May 2010, we completed the first step of our refinancing process as part of which we amended our 2005 Senior
Facility to extend the maturities of certain existing financing tranches and allow for additional financing tranches to facilitate
future refinancings. As part of the refinancing process, we also received additional support from our shareholders in the form
of a deeply-subordinated participative loan, that amounted to €125 million.
In October 2010, we completed the second step of our refinancing process, which consisted of (i) the issuance of
€700 million aggregate principal amount of 8.875% Senior Secured Notes due 2018 (the “2010 Notes”) by Nara Cable
Funding, the gross proceeds of which were on-lent to Cableuropa pursuant to a new tranche under the 2005 Senior Facility,
(ii) the repayment of €700 million of existing bank tranches under the 2005 Senior Facility from the gross proceeds of the new
tranche and (iii) the use of available cash to pay expenses related to the transaction (together, the “October 2010
Refinancing”).
In January 2011, we completed the third step of our refinancing process, which consisted of (i) the issuance of
€295 million aggregate principal amount of 11.125% Senior Notes due 2019 and $225 million aggregate principal amount of
10.875% Senior Notes due 2019 (together, the “Subordinated Notes”) by ONO Finance II and the use of the gross proceeds
therefrom plus available cash to (ii) redeem €450 million then-existing subordinated notes guaranteed by Cableuropa and
ONOMidco, (iii) repay a €10 million ICO participative loan, and (iv) pay expenses related to the transaction (together, the
“January 2011 Refinancing”).
In July 2011, we completed the fourth step of our refinancing process which consisted of (i) the issuance of
€300 million aggregate principal amount of 8.875% Senior Secured Notes due 2018 by Nara Cable Funding (the “2011
Notes”), the gross proceeds of which were on-lent to Cableuropa pursuant to a new tranche under the 2005 Senior Facility,
(ii) the repayment of €300 million of existing bank tranches under the 2005 Senior Facility from the gross proceeds of the new
tranche and (iii) the use of available cash to pay expenses related to the transaction (together, the “July 2011 Refinancing”).
In February 2012, we completed the fifth step of our refinancing process which consisted of (i) the issuance of $1
billion (€749 million equivalent, as of March 31, 2012) aggregate principal amount of 8.875% Senior Secured Notes due 2018
by Nara Cable Funding (the “February 2012 Notes”), the gross proceeds of which were on-lent to Cableuropa pursuant to a
new tranche under the 2005 Senior Facility, (ii) the repayment of €738 million of existing bank tranches under the 2005
Senior Facility from the gross proceeds of the new tranche and (iii) the use of available cash to pay expenses related to the
transaction (together, the “February 2012 Refinancing”).
May 2012 Refinancing
On May 24, 2012, we executed our New Senior Facility which permits term loan borrowings of up to
€2,400 million and U.S.$1,000 million (including a €100 million Revolving Facility and a €224 million Bridge Tranche).
Borrowings under the New Senior Facility (including the Bridge Tranche), together with available cash, will be sufficient to
refinance in full the 2005 Senior Facility. On the New Notes Issue Date, we will complete the refinancing of the 2005 Senior
Facility (the “May 2012 Refinancing”) utilizing:
• €891 million in borrowing under Facility A of the New Senior Facility (“Facility A”);
• €185 million in borrowings under Facility B of the New Senior Facility (“Facility B”);
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• €1,000 million in borrowings under the Euro Note Tranches (which will refinance the relevant tranches of the
2005 Senior Facility funded with the proceeds of the Euro Notes);
• U.S.$1,000 million (€749 million equivalent as of March 31, 2012) in borrowings under the February 2012
Notes Tranche (which will refinance the relevant tranche of the 2005 Senior Facility funded with the proceeds
of the February 2012 Notes);
• €224 million euro equivalent in U.S. dollar borrowings under the New Notes Tranche (funded with the gross
proceeds from the issue of the New Notes, assuming the New Notes are issued with no original issue discount);
and
• available cash of €162 million.
The Revolving Facility in the amount of €100 million under the New Senior Facility is expected to remain undrawn
on the New Notes Issue Date.
Under the New Senior Facility, the Bridge Tranche will not be drawn if the offering of the New Notes is completed.
The following table summarizes the sources and uses of funds on the New Notes Issue Date as a result of the May
2012 Refinancing:
Sources and uses of funds
(unaudited)
Source: € m Uses: € m
Facility A ................................... 891 Repay 2005 Senior Facility ................. 3,147 (1)(2)
Facility B ................................... 185 Estimated transaction costs .................. 64 (4)
Euro Notes Tranches .......................... 1,000 (1)
February 2012 Notes Tranche ................... 749 (1)(2)
New Notes Tranche ........................... 224 (3)
Cash on balance sheet ......................... 162 (3)
Total sources of funds ........................ 3,211 Total uses of funds ....................... 3,211
(1) The Euro Notes Tranches and the February 2012 Notes Tranche under the 2005 Senior Facility will be replaced by
the Euro Notes Tranches and the February 2012 Notes Tranche under the New Senior Facility without any funds
flow required.
(2) For the purpose of the table, U.S. dollar amounts are translated into euro at the exchange rate on March 31, 2012 of
€1 = U.S.$1.3356.
(3) For presentation purposes, we have assumed that the New Notes will be issued with no original issue discount. If
the New Notes are issued with original issue discount, each 1.0% of original issue discount would result in a €2.2
million euro equivalent decrease in proceeds for the New Notes Tranche. In such circumstances, we expect to
generate €224 million euro equivalent of gross proceeds either by using cash on the balance sheet or by increasing
the size of the offering of the New Notes.
(4) Including deferred fees in relation to the July 2011 Refinancing and the February 2012 Refinancing.
See “Use of Proceeds”, “Description of Other Indebtedness” and “Description of the Notes”.
Our Key Strengths
Our key strengths are:
• Proprietary technologically-advanced network. Our hybrid fiber coaxial network provides a high-speed,
high-capacity, two-way communications pathway with direct access to our customers. By owning our own
network, we believe we can offer higher quality and more reliable services and roll out new products more
quickly. Being an infrastructure based provider also allows us to offer multiple services and improved services,
such as higher broadband speeds and our recently launched next generation TV service (TiVo). As we own our
entire access network, we enjoy superior economics in terms of gross margin per subscriber compared to
ADSL-based competition.
• Proven ability to upgrade our network and services. During 2010 and 2011, we implemented a series of
network upgrades that have enabled us to improve the product offerings to our residential and SME customers.
These network upgrades have included the nationwide deployment of Docsis 3.0 technology (completed in
February 2012), the upgrading of our TV platform, completed in almost 62% of our network as of March 31,
2012, and the upgrading and outsourcing of our voice platform, with the migration process to the new voice
4

Our Strategy
switches already initiated. On the back of these network upgrades, we have been able to successfully develop a
series of new and enhanced products and services offerings that we believe have positioned us at the forefront of
the Spanish telecommunication industry. These offerings have included the development of high-speed internet
packages with speeds ranging between 30 Mbps and 100 Mbps (and 200 Mbps for SMEs), making us the only
telecommunication company in the Spanish market able to offer these speeds on a nation-wide basis and our
recently launched next generation TV service (TiVo), which enable us to offer a variety of content that integrates
broadcast and broadband television in a way that goes beyond the confines of traditional pay television.
• Superior product and service offering. We provide our customers with the fastest broadband internet service
in the market with current speeds of up to 100 Mbps (and 200 Mbps for SMEs). According to a study
published on March 16, 2012 (Q4 2011 Report) by SETSI, part of the Spanish Ministry of Industry, Energy
and Tourism, our average real speed for 15 Mbps and 50 Mbps subscriptions were better than promised (15.2
Mbps and 50.3 Mbps, respectively), which stands in contrast to the rest of the market. Our attractive television
offering comprises up to 125 channels (including the Gol TV and Canal+ channels) and video-on-demand
availability and interactivity. In addition, through our recently launched next generation TV service (TiVo), we
are able to provide our TV customers with a best in class experience and a wide variety of content that
integrates broadcast and broadband television in a way that goes beyond traditional pay television. As of
March 31, 2012, we had deployed our TiVo service in regions that represent almost 62% of our network
coverage areas and we expect to further expand this service in the remaining regions within our network
coverage areas in the coming quarters. We provide our products in a variety of bundles offering customers the
convenience of having a single provider for their fixed-line communication, entertainment and information
needs. We believe that the combination of fast internet speeds, high number of channels, innovative features,
excellent quality of service and competitive pricing represents a superior offering to others available in the
Spanish marketplace today. We believe our bundled offering results in increased penetration, higher customer
loyalty and increased revenues from our customers.
• Scale and potential for growth. We are the second largest provider of broadband internet, pay television and
fixed telephony services in Spain, with approximately 1.8 million residential fiber subscribers as of March 31,
2012. Our state-of-the-art network gives us access to over 7 million homes across Spain, including the nine
largest cities. We believe that our relatively low penetration rate for residential services of 25.4% as of
March 31, 2012 indicates significant potential for growth without the need to further expand our network
coverage.
• High-quality and loyal customer base. We believe we have a high-quality and loyal customer base due to our
selective customer acquisition strategy, superior product and service offerings and excellent customer service.
We continue to focus on improving our customer service and enhancing our product offerings to existing and
new customers.
• Resilient business. Despite the challenging macroeconomic environment of recent years, we have been able
to limit the decline in our net revenue from €1,616 million (Spanish GAAP) million in 2007 to 1,472 million in
2010 and have been able to grow our net revenues in 2011 to reach €1,485 million. We believe this is the result
of our customer care, our competitive and innovative service offering, our focus on high-quality customers
through a selective customer acquisition strategy based on credit scoring, the implementation of activation and
installation fees, selective application of customer acquisition promotions and a change in marketing strategy
to focus on more targeted campaigns. At the same time we increased our EBITDA from €645 million (Spanish
GAAP) in 2007 to €748 million in 2011, improving our EBITDA margins from 39.9% in 2007 (Spanish
GAAP) to 50.4% in 2011, primarily by implementing operational efficiencies, which reduced our cost of sales,
staff costs and other operating expenses (less capitalized costs) from €971 million in 2007 (Spanish GAAP) to
€737 million in 2011, a decrease of 24%. We expect that a continuing focus on growing and retaining our
customer base as well as controlling costs will enable us to maintain or improve our EBITDA margins over
time.
• Shareholder support and highly experienced management team. Since we commenced operations in 1998,
our shareholders have consistently supported the ONO Group, with contributions of €2 billion to GCO prior to
May 2010. In May 2010, our shareholders made an additional contribution to enhance the liquidity of the
business (with €125 million contributed to us in the form of a deeply subordinated participative loan, which
was ultimately capitalized into equity in Cableuropa in January 2011). Our management team has extensive
experience in managing telecommunications and media businesses in Spain, other countries in Europe and the
United States. In addition, our management has a proven track record of delivering growth in the
telecommunications business in a cost-efficient manner.
Our strategy is to leverage our existing superior network infrastructure, to maintain and enhance our position as a
leading provider of integrated broadband internet, television and telephony services and to improve our financial profile. In
5

order to achieve these targets, we are continuing to focus on further developing our customer base and product offering, as
well as implementing initiatives with the objective of improving profitability, maximizing liquidity and reducing leverage:
• Provide the best internet service in the market. Our strategy is to position ourselves as a high-quality,
innovative service provider with competitive prices, taking advantage of our own state-of-the-art network. We
strive for high quality of service and believe we compare favorably to competitors. The steps we have taken to
implement this strategy include the delivery of “real” (i.e., as advertised) internet speeds and the Docsis 3.0
system upgrade which was completed in February 2012. The upgrade enables us to provide faster and more
reliable internet services with speeds significantly higher than our currently commercialised speeds of
100 Mbps for residential customers and 200 Mbps for SMEs (we are currently the only provider in Spain to
offer this speed on a nation-wide basis). As of March 31, 2012, over 530 thousand customers subscribed to our
high-speed internet packages (30 Mbps and higher), representing approximately 37% of our residential
broadband customer base, which we believe makes us the leading provider of ultra-high speed internet in
Spain. We intend to continue focusing on marketing and deriving the commercial benefits from this service.
• Provide the best TV experience in the market. In June 2010, we established an alliance with U.S. digital video
company TiVo in order to offer a next generation TV service, using set-top boxes manufactured by Cisco, which
we believe provides a seamless convergence between internet and traditional television content. In October
2011, we officially launched our next generation TV service (TiVo) to customers in Madrid and Barcelona. We
have made this service available in regions that represent almost 62% of our network as of March 31, 2012. We
expect to further extend this innovative TV service to the remaining regions within our network coverage areas
in the coming quarters. As of March 31, 2012, this product had been available for five months, and during this
period we gained over 16 thousand customers. We believe this innovative TV product will help us to grow our
TV customer base, strengthen customer loyalty and increase revenues. We also believe it differentiates and
significantly upgrades our television offerings compared to others in the market by providing users with a
“best-in-class” experience and a wide variety of content that integrates broadcast and broadband television in a
way that goes beyond the confines of traditional pay television.
• Increase the number of high-quality customers. We are undertaking a more focused customer acquisition
strategy while at the same time protecting our customer base with loyalty initiatives. Our main strategy is to
grow market share of our residential services, but we are particularly focused on higher-quality customers,
which we believe can help us achieve higher ARPUs and lower net churn. Actions to implement this strategy
include the use of credit scoring, the implementation of activation and installation fees, selective application of
customer acquisition promotions and a change in marketing strategy to focus on more targeted campaigns. Our
advertising highlights the quality of our products in addition to the competitive prices at which we offer them.
• Expand up-selling and cross-selling initiatives. We seek to sell additional products and services to our
existing customers, a practice to which we refer as cross-selling, or transfer them to higher value services, a
practice to which we refer as up-selling. In particular, we intend to encourage our customers to subscribe for
additional services by offering bundled services, at prices lower than those provided by our competitors or by
us on an individual basis, or to transfer customers to higher broadband speeds and broader TV packages,
including our recently launched TiVo product, at similar or slightly higher prices. We believe that providing
existing customers with a variety of new and enhanced services with tiered pricing options encourages them to
take more than one of our services. Bundling and new pricing options are expected to increase the number of
our double- and triple-play customers and thereby increase our RGUs per customer and protect ARPU stability.
We also intend to continue developing customer loyalty by offering value-added services such as mobile voice
and broadband internet and internet security software.
• Grow our mobile voice and broadband customer base. We believe there is opportunity to grow our mobile
voice and broadband customer base which comprises mostly customers taking triple and quadruple-play
services from us. As of March 31, 2012, we had 189 thousand mobile residential lines and 13 thousand mobile
SME lines, which represents a relatively low penetration rate compared to our overall customer base. We
would like to grow our mobile services customer base because we believe that mobile services contribute to
greater customer loyalty and lower churn levels, contributing to higher revenues.
• Grow our SME business. We believe there is opportunity to grow our SME business and gain market share in
this business area. Different types of SME customers have different telecommunications service needs and
respond to different sales and marketing approaches. Quality is of paramount importance for SME customers
and we believe that we are well-positioned to deliver a quality service by utilizing our established proprietary
state-of-the-art network and by offering competitive solutions.
• Maintain cost discipline and maximize cash generation. We achieved positive free cash flow for the first time
in 2009. We increased our free cash flow by €89 million between 2009 and 2011, and we aim to continue to
improve free cash flow generation through the marketing and product development initiatives described above
6

as well as through continuous cost control. In addition, we are continuing to identify specific projects to
improve the overall level of efficiency in all our activities, such as our ongoing focus on more cost efficient
internet sales and marketing, which accounted for only 11% of our sales in the first quarter of 2009 but
increased to 30% in the first quarter of 2012.
• Reduce our leverage. We believe that by focusing on the strategies above, we are continuing to generate
positive cash flows and intend to use such cash flows primarily to reduce our indebtedness as evident by our
reduction in net leverage from 5.2x in 2009 to 4.5x in 2011 and 4.4x as of March 31 2012.
The Issuer
The Issuer, Nara Cable Funding, was incorporated on October 5, 2010, as a private limited company with limited
liability under the laws of Ireland. Nara Cable Funding has no subsidiaries or significant business other than the issuance of
debt securities. Nara Cable Funding’s registered office is located at Block C, Second Floor, Maynooth Business Campus,
Maynooth, Co. Kildare, Ireland, and is registered as a company with the Registrar of Companies in Ireland with company
number 489807. See “The Issuer”.
Recent Developments
• Current trading: We have not yet finalized our financial information or operational data in respect of April
2012; accordingly, such data is preliminary in nature and is subject to change. Based on the current available
information, we estimate that our revenues continued to perform well in April 2012 and increased as compared
to the same month of 2011. We estimate our profitability also continued to improve in April 2012, evidenced
by higher EBITDA and continued cash flow generation.
April in 2012 continued to be challenging on the commercial front. The negative macroeconomic environment
and the slowdown in the number of broadband additions experienced in the market, as well as the new market
dynamics by which most operators have continued to focus on initiatives to increase the loyalty of their
customer base, has continued to negatively impact our residential services and customer numbers leading to
marginal negative net additions in April 2012. In an effort to reverse this negative trend, in February we
launched a set of commercial initiatives with the aim of (i) increasing customer value perception, (ii) reducing
churn, (iii) reducing retention calls and (iv) preserving ARPU. We believe there are signs that these initiatives
are having a positive impact, as evidenced by improved churn figures experienced in April 2012 as compared
to March 2012. We believe that our high speed broadband offering will continue to experience success in the
second quarter of 2012, both with respect to our existing customer base and the acquisition of new customers,
and that our new TiVo product will continue to gain traction in the market. In addition, we estimate that
residential fiber ARPU for April 2012 will be higher than that experienced in the same period of 2011. We also
expect the performance of the SME segment to continue to show a positive evolution on the back of our
improved product portfolio with broadband speeds of up to 200 Mbps.
The above information is not intended to be a comprehensive statement of our financial or operational results
for the relevant period. This preliminary information was prepared based on a number of assumptions and
estimates that are subject to inherent uncertainties and subject to change. Accordingly, it is possible that our
actual results for the relevant period will vary from our preliminary results, and such variations could be
material. See “Information Regarding Forward-Looking Statements” and “Risk Factors” for a more complete
discussion of the factors that could affect our future performance and results of operations.
• Further advances in high-speed Internet: In February 2012, we completed the deployment of Docsis 3.0
technology in the Canary Islands and currently we have the capacity to deliver high-speed Internet to over
7 million homes within our network coverage areas, representing our entire fiber customer base. In addition, in
February 2012, we further improved our Internet offerings with a 200 Mbps Internet package for Small and
Medium Enterprises (SMEs). We believe that this package is unique in the Spanish market, with our
competitors currently offering Internet speeds of up to 100 Mbps in limited areas.
As of March 31, 2012, over 530 thousand customers subscribed to our high-speed Internet packages (30 Mbps
and higher), which represents approximately 37% of our broadband customer base. We believe that these
commercial results position ONO as the market leader in high-speed Internet in Spain.
• Further advances in next generation TV (TiVo): In October 2011, we officially launched our next
generation TV service (TiVo) to customers in Madrid and Barcelona. We have made this service available in
regions that represent almost 62% of our network as of March 31, 2012. We expect to further extend this
service to the remaining regions within our network coverage areas in the coming quarters. As of March 31,
2012, this product had been available for five months and during this period, we gained over 16 thousand
customers. We expect that TiVo will help us to provide our customers with a best in class experience and a
7

wide variety of content that integrates broadcast and broadband television in a way that goes beyond traditional
pay television features. We believe these unique functionalities will help us to increase the number of our TV
customers and revenues going forward.
• Success of our +15 Mbps loyalty campaign: In February 2012, we officially launched a commercial
campaign to further improve Internet offerings to our high-end Internet customers. As part of this initiative,
customers subscribing to our 6 to 100 Mbps Internet packages are offered extra 15 Mbps at no cost in exchange
for a minimum contract term of 12 months. Although this initiative was launched only recently, there are early
signs of good market acceptance. We believe this commercial campaign, which showcases the relevance highspeeds
have in ONO’s strategy, will help us increase customer satisfaction and preserve ARPUs while reducing
churn.
• Settlement of legal disputes with Prisa TV: On March 9, 2009, our competitor Prisa TV (formerly
Sogecable) was ordered to pay compensation in the amount of €51.7 million plus interest to ONO for abuse of
dominant position in relation to the 2003/2004 to 2008/2009 football content contracts. This compensation was
in addition to the €43.9 million in compensation awarded on December 1, 2009 for a contractual breach on the
Gran Via and Cablesport channel distribution. On May 18, 2012, ONO and Prisa TV reached an agreement
pursuant to which Prisa TV would end the appeal process in exchange for ONO repaying to Prisa TV
€54.4 million (representing 50% of the amounts already collected by ONO pursuant to these lawsuits). This
agreement eliminates uncertainties related to the future development of, and potential cash outflows in
connection with, the Prisa TV legal disputes. As of March 31, 2012, our balance sheet included the full amount
received from Prisa TV as deferred income. The €54.4 million has now been paid to Prisa TV and we will
recognize the remaining deferred income of €54.4 million as income in the second quarter of 2012.
• Impact of new tax legislation: On August 20, 2011, Royal Decree Law 9/2011 came into effect which,
among other things, provided for certain changes to the Spanish Corporate Income Tax Law in relation to tax
loss carry forward rules. On March 31, 2012, Royal Decree Law 12/2012 came into effect with the objective of
reducing the Spanish public deficit. According to our preliminary internal analysis, we believe that these laws
will have no impact on our income statement and that the maximum tax related cash impact will amount to
€15 million in each of the years 2012 and 2013. Assuming no further changes in tax law, we believe that in
future years we will be able to fully offset any profit tax with our approximately €1 billion of tax credits and
therefore we do not expect any further tax related cash outflows from 2014 onwards. For more information
regarding these laws, see “Business—Other Legal and Regulatory Matters”.
• Capitalization of PIK Loan and settlement of VAL litigation: As a condition to the amendment of the
2005 Senior Facility in May 2010, the senior lenders of Cableuropa required the shareholders of GCO to
contribute up to €200 million to Cableuropa and, as a result, GCO entered into a profit participating PIK loan
agreement with its shareholders for a maximum amount of €200 million (the “PIK Loan”). The PIK Loan was
partially drawn in May 2010 in the amount of €125 million, which was loaned to Cableuropa in the form of
deeply subordinated shareholder indebtedness (the “2010 Downstream Loan”). The 2010 Downstream Loan is
independent from the PIK Loan and the proceeds under the 2010 Downstream Loan were applied by
Cableuropa to reduce the amount drawn under the 2005 Senior Facility. The remaining €75 million was
contributed to GCO and held in escrow, to be drawn and loaned to Cableuropa on the same terms if certain
liquidity and refinancing conditions were not met. The €75 million was subsequently released from escrow and
returned by GCO to shareholders in two installments (€50 million in November 2010 and €25 million in
January 2012) as the required conditions were met. In January 2011, the 2010 Downstream Loan was
capitalized into equity in Cableuropa.
On April 24, 2012, the Board of Directors of GCO agreed to propose the capitalization of the remaining
€125 million PIK Loan plus any accrued interest until June 30, 2011 to the GCO’s General Shareholders
meeting. This capitalization of the PIK Loan is expected to be completed before September 30, 2012. As a
result, GCO has agreed with one of GCO’s shareholders to withdraw the lawsuit challenging the creation of the
PIK Loan upon the completion of the capitalization of the PIK Loan. See “Shareholders and Beneficial
Owners—PIK Loan and 2010 Downstream Loan”.
• ONO enters into New Senior Facility: On May 24, 2012, we entered into a New Senior Facility which is
expected to be funded as part of the May 2012 Refinancing on or about the New Notes Issue Date. The May
2012 Refinancing will result in the refinancing of the 2005 Senior Facility in full and will extend the maturity
of substantially all of our financial indebtedness, with no significant maturities before 2017. See “—Our
History—Refinancing—May 2012 Refinancing”. Under the New Senior Facility, Notes Tranches have full
voting rights in enforcement actions with respect to the enforcement of security and are entitled to vote pro rata
with the rest of the lenders under the New Senior Facility. This represents a contrast with the 2005 Senior
Facility where the voting rights of Notes Tranches were capped at 40% of total outstanding and available
indebtedness.
8

RISK FACTORS
An investment in the New Notes involves a high degree of risk. You should carefully consider the following risks,
together with other information provided to you in this offering memorandum, before deciding whether to invest in the New
Notes. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. There
may also be other risks of which we are currently unaware or that we do not currently believe are material that could harm our
business, financial condition or results of operations. In any of such cases, the value of the New Notes could decline, and we
may not be able to pay all or part of the interest or principal on the New Notes and you may lose all or part of your investment.
This offering memorandum contains “forward-looking” statements that involve risks and uncertainties. Our actual
results may differ significantly from the results discussed in the forward looking statements. Factors that might cause such
differences are discussed below and elsewhere in this offering memorandum. See “Information Regarding Forward Looking
Statements”.
Risks Relating to Our Financial Profile
The challenging macroeconomic environment in Spain and the ongoing Eurozone crisis could endanger our ability to
complete our refinancing of the 2005 Senior Facility and to repay our indebtedness in the future.
The ongoing deterioration in the markets for sovereign debt of several countries, including Greece, Italy, Ireland,
Spain and Portugal, together with the risk of contagion to other countries has exacerbated the global economic crisis. This
situation has also raised a number of uncertainties regarding the stability of the European Monetary Union. Currently the
possibility of one or more countries leaving the euro, including Spain, is being discussed in the press and by politicians. The
uncertainty surrounding the Eurozone crisis has resulted in frequent and significant disruptions in financial markets. If the
crisis worsens and/or one or more countries leave the euro before the New Notes Issue Date, there is a risk that one or more
lenders may be unable to fund their commitments under the New Senior Facility. In such circumstances, the May 2012
Financing (including the offering of the New Notes) may not be completed. In addition, if any such events occur after the
New Notes Issue Date, there is a risk that lenders may be unable to fund their commitment under the Revolving Facility,
which would adversely affect our ability to fund our working capital needs. Furthermore, if Spain were to leave the euro in the
future, our ability to repay our euro and dollar denominated indebtedness (which comprises substantially all of our
indebtedness) is likely to be significantly and adversely affected. Any of the foregoing risks could materially and adversely
affect our business, results of operation and financial condition.
Our current leverage is substantial, which may have an adverse effect on our available cash flow, our ability to obtain
additional financing if necessary in the future, our flexibility in reacting to competitive and technological changes and our
operations.
We are a highly leveraged company with significant debt service requirements. As of March 31, 2012 on a pro
forma basis after giving effect to the May 2012 Refinancing, our third party indebtedness would have been approximately
€3,526 million (in nominal value, and not including €51 million of accrued interest payable). In addition, as of March 31,
2012, on a pro forma basis, we would have had €86 million in cash and cash equivalents and €107 million of undrawn
available funds under our existing financing agreements available for, among other things, future working capital needs,
capital investments and servicing our debt.
Our financial leverage could have important consequences, including:
• Inability to satisfy our financial obligations, including those under the New Senior Facility (including the Notes
Tranches), the Notes, the Existing Notes and the Subordinated Notes (including the guarantees thereof);
• Increases in the cost of, or inability to obtain, additional debt or equity financing;
• Inability to upgrade and maintain our network;
• Inability to compete with other providers of broadband internet, pay television, telephony and data services that
are less leveraged than we are;
• Inability to bid for, or be awarded, licenses or new franchises, make strategic acquisitions, exploit business
opportunities and react to significant changes in our business and in general economic conditions; and
• Adverse impact on public perception of us and our brand.
Following the May 2012 Refinancing, a significant portion of our debt will mature prior to the maturity of the Notes in
2018. We may be unable to generate sufficient cash flow to repay those of our other debt obligations at maturity and, to the
extent we cannot repay such debt, we may not be able to refinance these debt obligations or may be able to refinance only
on terms that will increase our cost of borrowing.
Following the May 2012 Refinancing, a significant portion will mature prior to the final maturity of the Notes on
December 1, 2018. As of March 31, 2012, on a pro forma basis after giving effect to the May 2012 Refinancing, approximately
9

€1,076 million under the Bank Tranches of the New Senior Facility would mature prior to the maturity of the Notes in 2018.
Facility A loans totaling €891 million commence amortizing on June 30, 2013 and matures on June 30, 2017. Facility B loans
totaling €185 million mature on March 31, 2018.
Our ability to make payments on our debt or to refinance any such debt will depend on our ability to generate cash.
Our ability to generate cash is dependent on many factors, including, among others:
• Our future operating performance;
• The level of our capital expenditures;
• The demand and price levels for our products and services;
• General economic conditions and conditions affecting customer spending;
• Competition;
• The ability to improve our business processes and procedures;
• Our ability to use our carry-forward tax losses;
• The availability of financing in the capital markets at attractive rates; and
• Legal, tax, litigation, regulatory and other factors affecting our business.
We achieved positive free cash flow for the first time in 2009, after experiencing negative free cash flow every year
since we commenced operations in 1998. Nonetheless, we do not expect that our business will generate sufficient cash flow to
fulfill our debt obligations, and we expect to have to raise additional capital or refinance all or a portion of our debt on or
before maturity in order to fund operations and to meet our debt service.
Our ability to raise capital or refinance our debt depends on a number of factors, including the liquidity of the
capital markets, and we may not be able to do so on satisfactory terms, or at all. In the event that we cannot raise additional
capital or refinance our debt, we expect not to be able to meet our debt repayment obligations. In addition, the terms of any
refinancing indebtedness may be materially more burdensome to us than the indebtedness it refinances. Such terms, including
additional restrictions on our operations and higher interest rates, could have an adverse effect on our results of operations and
financial condition and could have a material adverse effect on the value of the Notes.
Furthermore, our inability to meet repayment obligations under the existing agreements could trigger various default
provisions, accelerate a substantial portion (if not all) of our debt and materially adversely affect our business, results of
operations, financial position and prospects.
A substantial portion of our debt bears variable interest rates.
As of March 31, 2012, on a pro forma basis after giving effect to the May 2012 Refinancing, 30.6% of our
outstanding debt would have borne interest at floating rates. If market interest rates increase, our variable rate debt will result
in higher debt service requirements, which could adversely affect our results of operations and financial condition. Currently,
all our interest rate hedge agreements have expired and, though we are evaluating whether to enter into further hedging
arrangements, there is no guarantee that we will enter into additional hedge agreements on satisfactory terms or at all.
Subject to certain restrictions, we may be able to incur substantially more debt, which would increase the leverage-related
risks described in this offering memorandum.
Subject to the restrictions in the New Senior Facility, the Indenture, the Euro Notes Indenture, the Subordinated
Notes Indenture and other outstanding debt that is subject to a number of significant qualifications and exceptions, we may
incur substantial additional debt in the future. Furthermore, the New Senior Facility, the Indenture, the Euro Notes Indenture
and the Subordinated Notes Indenture permit us to issue additional series of notes or other indebtedness that will share in the
security for the Notes and the New Senior Facility, subject to certain conditions. See “Description of Other Indebtedness—
New Senior Facility”.
To the extent new debt is incurred, the risks described in “—Our current leverage is substantial, which may have an
adverse effect on our available cash flow, our ability to obtain additional financing if necessary in the future, our flexibility in
reacting to competitive and technological changes and our operations” and “—Following the May 2012 Refinancing, a
significant portion of our existing debt will mature prior to the maturity of the Notes in 2018. We may be unable to generate
sufficient cash flow to repay those of our other debt obligations at maturity and, to the extent we cannot repay such debt, we
may not be able to refinance these debt obligations or may be able to refinance only on terms that will increase our cost of
borrowing” could become more significant.
10

The New Senior Facility and other agreements governing our outstanding and any future indebtedness contain financial
covenants that we could fail to meet.
The New Senior Facility requires us to satisfy specified financial tests and maintain specified financial ratios
regarding, maximum total debt to consolidated LTM EBITDA, minimum EBITDA to total interest expense, minimum debt
service cover and maximum capital expenditures, each as defined in the credit agreement for the New Senior Facility.
Our ability to comply with these ratios and to meet these tests may be affected by events beyond our control and, as
a result, we cannot assure you that we will continue to meet these tests. Our failure to comply with these obligations could
lead to a default under the New Senior Facility unless we can obtain waivers or consents in respect of any breaches of these
obligations under the New Senior Facility. We cannot assure you that these waivers or consents will be granted. In the event
of any default under the New Senior Facility, the lenders under the Bank Tranches under the New Senior Facility could refuse
to lend any additional amounts to us and could elect to declare all outstanding borrowings, together with accrued interest, fees
and other amounts due thereunder, to be immediately due and payable. In the event of a default, the lenders under the relevant
debt agreements could also require us to apply all available cash to repay the borrowings. If the debt under the New Senior
Facility or our other debt were to be accelerated, we cannot assure you that our assets would be sufficient to repay such debt
in full.
Restrictions imposed by our debt obligations limit our ability to take certain actions.
The terms of the New Senior Facility, the Indenture, the Euro Notes Indenture and the Subordinated Notes
Indenture contain a number of restrictive covenants and other provisions that limit our ability to operate our business. For
example, some of these provisions limit our ability to, among other things:
• pay dividends or make other distributions;
• make certain investments or acquisitions;
• engage in certain transactions with affiliates and other related parties;
• merge or consolidate with other companies;
• engage in certain types of business;
• make capital expenditures;
• sell or dispose of assets other than in the ordinary course of business or assets that are a part of non-core
businesses;
• incur additional debt; and
• create certain liens.
These covenants could adversely affect our ability to finance our future operations and capital needs, pursue
acquisitions and engage in other business activities that may be in our best interest. In addition to limiting our ability to
operate our business, a failure to comply with these obligations could lead to a default under the terms of the relevant debt
agreements, which would prevent us from borrowing any additional amounts thereunder or the lender declaring all
outstanding principal and interest becoming immediately due and payable. This would lead to a default under our other debt
agreements and, as a result, much of our other debt could be accelerated. If this were to occur, we can give no assurance that
we would have sufficient funds to repay our debt.
As a result of the issuance of the Notes and the Dollar Denominated Subordinated Notes, we are subject to currency
fluctuation risk.
While the vast majority of our business is conducted in euro, all payments in respect of the Notes, and the Dollar
Denominated Subordinated Notes are denominated in U.S. dollars. On a pro forma basis after giving effect to the May 2012
Refinancing, we would have $ million of U.S. dollar denominated indebtedness (approximately € million at current
exchange rates). This exposes us to the risk of currency fluctuation to the extent that we do not hedge against such risk. If the
value of the euro relative to the U.S. dollar declines, payments on the Notes and the Dollar Denominated Subordinated Notes
will effectively become more expensive for us, and our results of operations and financial condition could be materially
affected. To reduce this exposure, we have entered into currency hedge arrangements with respect to the interest payments
under the Dollar Denominated Subordinated Notes due through January 15, 2014 (the first optional redemption date) and the
total amount of the principal payment obligation under the Dollar Denominated Subordinated Notes. We have also entered into
currency hedge agreement with respect to the interest payments under the February 2012 Notes until December 1, 2013 (the
first optional redemption date) and 50% of the aggregate principal amount of the $1,000 million Senior Secured Notes due 2018
until December 1, 2013.
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In addition, we expect to enter into hedging arrangements with respect to payments of interest and a portion of the
principal under the New Notes. Subject to certain conditions, we are required under the New Senior Facility to enter into
hedging arrangements with respect to all interest payments until December 1, 2013 (the first optional redemption date) and
50% of the aggregate principal amount of the New Notes. We are currently evaluating such hedging arrangements, though
there can be no assurance that we will enter into such arrangements or what the terms thereof may be. New hedging
arrangements to manage the risk of currency fluctuations may be costly and may not insulate us completely from such
exposure.
Risks Relating to Our Business
We may be affected by a further deterioration of economic conditions in Spain.
Our financial results are substantially dependent upon the overall economic conditions in Spain. After a period of
economic growth, Spain entered into a recession in the third quarter of 2008. The effects of the global economic downturn
were exacerbated by a real estate crisis and pressures from a relatively high fiscal deficit and foreign indebtedness. Spain’s
gross domestic product (“GDP”) declined by 3.1% from 2008 to 2009, although GDP grew by 1.0% in 2010 and is expected
to have grown by 0.7% in 2011 according to Eurostat. However, according to the European Commission, GDP is expected to
decline by 1.7% in 2012 and, according to INE, unemployment in Spain reached 24.4% in March 2012. Spain’s public debt
experienced a series of downgrades in recent years, including most recently a downgrade in April 2012. An extended
recession, or public perceptions of declining economic conditions, could substantially decrease the demand for our services
and adversely affect our business. The ongoing crisis in the Eurozone may also adversely affect the Spanish economy and our
business. During periods with deteriorating economic conditions and high unemployment, consumers have less discretionary
spending to purchase services, including telecommunications services. For example, as a result of the economic downturn, in
2008-2009 we experienced decreased demand for our services and our revenues declined from €1,616 million in 2007 (in
accordance with Spanish GAAP) to €1,472 million in 2010. In 2011, our revenue increased slightly to €1,485 million but has
not returned to 2007 levels. During the 2009-2011 period, our residential fiber customer numbers declined by 19 thousand.
While the impact of a continued economic slowdown or recession on our business is uncertain, it could result in declines in
revenue without a corresponding decrease in expenses and adversely affect our results of operations and financial condition.
We may not generate sufficient cash flow to fund our operations or capital expenditures.
The operation, maintenance and upgrade of our network, as well as the costs of sales and marketing of our products
and services, require substantial upfront financing. We have major capital resource requirements relating to, among other
things, the following:
• Developing and deploying new products and services, such as next generation TV;
• Implementing new technologies;
• Maintaining the quality of our network;
• Consolidating our brand in the market;
• Increasing the loyalty of our customer base; and
• Continuously improving our processes and procedures through the implementation of systems and
technologies.
Our ability to fund our ongoing operations depends on our ability to generate cash. Our ability to generate cash
depends on many factors. For a discussion of these factors see “—Risks Relating to our Financial Profile”. In addition, our
liquidity and capital resource requirements may increase if we expand into additional areas of operation or if we make future
acquisitions. We may not generate sufficient cash flow or have access to sufficient funding to meet these requirements. If we
fail to meet these requirements, our operations could be significantly adversely affected and future growth could be
significantly curtailed.
The Spanish fixed and mobile residential broadband internet, television and telephony markets as well as the business
telecommunications market are highly competitive and may become more competitive in the future, which could result in
lower prices for our products and the loss of current and potential subscribers, which would result in reduced revenues
and could materially adversely affect our profitability.
We face significant competition from established and new competitors that provide fixed and mobile residential
broadband internet, television and telephony services as well as business telecommunications services in Spain. We also face
potential competition from new entrants. In some instances, we compete against companies with fewer regulatory burdens,
larger financial resources, more comprehensive products and services, greater personnel resources, wider geographical
coverage, greater brand name recognition and more established relationships with regulatory authorities and customers.
Broadband Internet: Telefónica (operating under the Movistar brand) is our principal competitor with respect to
broadband internet services. Telefónica is the former monopoly provider of most telecommunications services in Spain.
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Telefónica has, among other competitive advantages, significantly greater financial resources, brand recognition and market
presence than we do. Telefónica has recently taken aggressive pricing measures for broadband internet services, including
packages which combine these broadband internet and mobile offerings. In addition to Telefónica, there are various providers
of digital subscriber line (“DSL”) broadband internet services that offer broadband services using Telefónica’s network on a
bundled and unbundled basis, such as Orange, Vodafone and Jazztel. These operators have also recently taken aggressive
pricing measures in response to Telefónica pricing actions. We may also face increased competition from internet offerings by
the mobile service providers as this service is becoming more popular.
Television: Our television services compete against Spain’s free digital terrestrial television nationwide, regional
and local channels. In addition, in the pay television market, we compete against the satellite platform of Prisa TV (formerly
Sogecable), Digital+. Digital+ has greater market presence than we do, and has exclusive access to certain premium television
content. In addition to established competitors such as Prisa TV, we experience competition from providers utilizing new
technologies such as “Imagenio”, Telefónica’s commercial pay television service which uses DSL technology that includes
VoD services. Other DSL operators, such as Orange, have also launched pay television over DSL technology. In addition,
mobile operators offering pay television services and the pay digital terrestrial television may also represent a threat to our
business.
Telephony: In the telephony market, our principal competitor is Telefónica (operating under the Movistar brand).
We also compete with other operators such as Orange, Vodafone and Jazztel that provide their customers with ADSL services
through Telefónica’s local loop. In addition, we compete with four mobile telephony infrastructure-based operators:
Telefónica, Vodafone, Orange and Yoigo that may threaten the competitive position of our networks, particularly if charges
for calls on mobile networks continue to decrease. We also face a threat from the Mobile Virtual Network Operators
(“MVNO”).
Bundled Residential Services: We also compete with the various competitors mentioned above, including
Telefónica, whose double- and triple-play bundled services compete with our bundled service offering. Bundled service
offerings are increasingly competitive and important to attracting and retaining customers.
Business Services: Telefónica and its affiliates are our principal competitors in providing business
telecommunications services, followed by Vodafone, BT, COLT and Orange, among others. We also compete with other
operators including wireless local loop operators.
Competition from the companies identified above, as well as from new entrants and new technologies (including but
not limited to internet-based telephony) could create downward pressure on prices across all our business lines, resulting in a
decrease in our residential and business ARPUs, a loss of customers and a decrease in our revenues and profitability. In
addition, technological developments are increasing cross-competition in certain markets, such as that between mobile and
fixed-line telephony. Our success in the marketplace is affected by the actions of our competitors. In particular, our business
may be adversely affected if our competitors:
• Offer lower prices, more attractive bundled services or higher quality services, features or content;
• More rapidly develop and deploy new or improved products and services; or
• More rapidly enhance their networks.
To compete effectively, we need to successfully design and market our services, and anticipate and respond to
various competitive factors affecting all our markets, such as the introduction of new products and services by our
competitors, pricing strategies adopted by our competitors (including aggressive long-term promotions that we may be unable
to match), changes in consumer preferences and general economic and social conditions. If we are unable to compete
effectively with our competitors or effectively anticipate or respond to consumer sentiment, we could lose existing and
potential customers, which could result in reduced operating margins and our results of operations could fall substantially
short of our current expectations.
Our growth prospects depend on demand for broadband Internet, pay television, telephony services and business
telecommunications services as well as economic developments in Spain.
The use of telecommunications products in Spain has increased sharply in recent years. We have benefited from this
development and our future growth and profitability depend, in part, on demand for these services in Spain in the coming
years. If demand for triple-play products in general does not increase as expected, this could have a material adverse effect on
our business, financial condition and results of operations.
Moreover, we operate exclusively in the Spanish market and our success is therefore closely tied to general
economic developments in Spain and cannot be offset by developments in other markets. Negative developments in, or the
general weakness of, the Spanish economy, in particular the increasing levels of unemployment, may have a direct negative
impact on the spending patterns of retail consumers and businesses, both in terms of the products they subscribe for and usage
levels.
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Because we derive a substantial portion of our revenue from residential customers, who may be impacted by these
conditions, it may be (i) more difficult to attract and retain new and existing subscribers, (ii) more likely that certain of our
customers will downgrade or disconnect their services and (iii) more difficult to maintain ARPUs at existing levels. In
addition, we can provide no assurances that a further deterioration of the economy will not lead to a higher number of
non-paying customers or generally result in service disconnections.
Therefore, a weak economy and negative economic development may jeopardize our development and may have a
material adverse effect on our business, financial condition and results of operations.
Demand in future periods is difficult to predict. If demand is lower than anticipated, we may not realize the expected
benefits of providing enhanced services to the Spanish marketplace. Alternatively, if demand is greater than expected, we
may not be able to keep up with it and lose market share.
Bundling broadband internet, television and telephony services is an important part of our strategy. Moreover, if one
of our bundled offerings no longer appeals to our customers, they may discontinue using our bundled or stand-alone services
altogether. In addition, the broadband internet, television and telephony markets are very competitive and any of our new,
enhanced or planned products or services, including residential broadband internet with speeds of up to 100 Mbps and next
generation TV, may fail to achieve market acceptance and the new or enhanced products or services introduced by our
competitors may be more appealing to customers.
Furthermore, in connection with the roll out of broadband internet access enhancements, we rely on third-party
subcontractors. Similarly, we rely on suppliers for our television services, including for our next generation TV platform. We
have contracted with TiVo to be the exclusive software supplier and with Cisco to be the exclusive set-top box supplier.
Customer demand for our product offerings depends on customer satisfaction with the services provided by our subcontractors
and suppliers over which we may have limited control.
If we fail to introduce new or enhanced products and services successfully, our revenues and margins could be lower than
expected.
Part of our business strategy is based on the introduction of new or enhanced products and services. Any of the new
or enhanced products or services we introduce may fail to achieve market acceptance or products or services introduced by
our competitors may be more appealing to customers. If our new product or service offerings are not successful, our
subscribers may decide to discontinue using our services and choose other distribution platforms.
Our strategy includes the nationwide roll-out of high broadband internet speeds (using Docsis 3.0) and the
introduction of next generation TV and we cannot guarantee that these new services, or any other new products that we may
develop in the future, will perform as expected when first introduced in the market. Should these or other new products and
services fail to perform as expected or should they fail to gain market acceptance, our results of operations may be negatively
affected.
Failure to control customer churn may adversely affect our financial performance.
The successful implementation of our business plan depends on our ability to control customer churn. Customer
churn is a measure of customers who stop using our services. Customer churn could increase as a result of:
• Dissatisfaction with the quality of our customer service, including billing errors;
• Customers moving to areas where we cannot offer services;
• Interruptions to the delivery of services to customers over our network and poor fault management; and
• The availability of competing services, some of which may, from time to time, be less expensive or
technologically superior to those offered by us or offer content or features that we do not offer.
Our inability to further decrease churn or an increase in churn as a result of any of these factors can lead to a
reduction in revenue. We have experienced increased levels of churn in recent periods, primarily as a result of the difficult
economic environment in Spain and the competitive environment in the Spanish telecommunications market. There can be no
assurance that this trend will not continue in future periods.
Any negative impact on the reputation of and value associated with our brand could adversely affect our business.
The “ONO” brand is an important asset of our business. Maintaining the reputation of and value associated with this
brand is central to the success of our business, but our business strategy and its execution may not accomplish this objective.
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Our reputation may be harmed if we encounter difficulties in the provision of new or existing services, whether due to
technical faults, lack of necessary equipment, changes to our traditional product offerings, financial difficulties, disagreements
among shareholders or otherwise.
The sectors in which we compete are subject to rapid and significant changes in technology and the results of
technological changes are difficult to predict, and could potentially have a material adverse effect on our ability to provide
competitive services.
The fixed and mobile broadband internet, television, telephony and business telecommunications markets are
characterized by rapid and significant changes in technology. The effect of future technological changes on our business
cannot be predicted. It is possible that products or other technological breakthroughs, such as VoIP (over fixed and mobile
technologies), mobile instant messaging, wireless fidelity, or WiFi, WiMax (i.e., the extension of local WiFi networks across
greater distances) or internet protocol television, may result in our core offerings becoming less competitive and render our
existing products and services obsolete. There is no guarantee that we will successfully anticipate the demands of the
marketplace with regard to new technologies. This failure could affect our ability to attract and retain customers and generate
revenue growth, which in turn could have a material adverse effect on our financial condition and results of operations.
Conversely, we may overestimate the demand in the marketplace for certain new technologies and services. If any new
technology or service that we introduce fails to achieve market acceptance, our revenues, margins and cash flows may be
adversely affected, and as a result we may not recover any investment made to deploy such new technology.
Our future success depends on our ability to anticipate and adapt in a timely manner to technological changes. This
may require us to invest in new technologies in order to compete effectively with our competitors. However, there is no
guarantee that we will be able to fund the capital expenditures for such technological developments through operating cash
flow. If our cash flows from operations are insufficient, we will have to seek additional financing to fund our capital
expenditures. Given our current substantial debt and the restrictions on our ability to raise additional capital, we may not be
able to obtain the funding or other resources required to adopt and deploy such new technology in a timely manner.
We depend on others to provide premium programming for our television service.
Our ability to compete in the television market is, in part, dependent on our ability to obtain attractive programming
at reasonable prices. However, a relatively small number of companies, produce and control access to programming. If we are
unable to purchase content at commercially reasonable prices or at all, our ability to retain and grow our customer base could
be adversely affected.
Prisa TV (formerly Sogecable), through its satellite TV platform branded Digital+, controls a very significant
portion of the Spanish pay television market, especially for movies through agreements with major Hollywood studios. This
significant market power may provide Prisa TV with competitive advantages over our pay television operations, such as the
ability to extend its range of preferential or exclusive agreements with providers of content, exert increased pricing power
with respect to suppliers and the ability to eventually benefit from cross marketing with Telefónica (a significant shareholder
in Prisa TV). As such, Prisa TV may prevent us from accessing certain programming or force us to pay substantial amounts to
access programming for our subscribers. Likewise, Mediapro owns virtually all of the football rights of the Spanish football
league until June 2012 and our ability to provide attractive football content, which is increasingly important in our industry to
retain and attract customers, depends on our capacity to pay for those services as and when they are available to us since we
do not currently produce our own content. Moreover, the cost of acquiring football programming has risen significantly in
recent years and may continue to rise. Our football contract with Mediapro expires in June 2012 and the renegotiation
conditions are uncertain at this moment. An absence of football content in our pay TV service could have a negative impact in
the quality of our pay TV offering. For additional information regarding our access to content, see “Business—Our Products
and Services”.
Our business depends on equipment and service suppliers who may fail to provide necessary equipment and services on a
timely basis, discontinue their products or seek to charge us prices that are not competitive, any of which could adversely
affect our business or profitability.
We depend upon a small number of major suppliers, including Alcatel, Ericsson, Cisco, TiVo, Motorola and
Huawei, among others, for essential products and services relating, among other things, to our network infrastructure. These
suppliers may, among other things, extend delivery times, supply unreliable equipment, raise prices and limit or discontinue
supply due to their own shortages, business requirements or otherwise.
In most cases, we have made substantial investments in the equipment or software of a particular supplier, making it
difficult for us to rapidly change such relationships if a current supplier is unable or unwilling to offer us reasonable prices or
ceases to produce equipment or provide the services we require.
If our suppliers are unable or unwilling to deliver products and services on a timely basis and at reasonable prices or
their products are found to be faulty, our ability to provide products and services to our customers at competitive prices might
be adversely affected, which could negatively impact our growth, financial condition and results of operations.
In 2010, we entered into an agreement with Huawei, a leading provider of telecommunication equipment, to
outsource our voice network. This agreement includes engineering, planning and quality management and we believe that it
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will allow us to update our voice network and increase the quality of our services while reducing operating expenses. Our
business operations and revenues could be adversely affected if Huawei does not fulfill its obligations to us or if we
experience difficulties implementing our agreement with Huawei.
We currently depend on Motorola’s technology for the operation of our conditional access system, which we use to
transmit encrypted digital programs. In connection therewith, we entered into an agreement with Motorola under which
Motorola agreed to sell and install parts of the conditional access system (including hardware equipment such as set-top
boxes), to grant licenses for the respective intellectual property rights for the conditional access system, and to provide
maintenance, support and security services.
In 2010, we entered into an exclusive agreement with U.S. digital video company TiVo in order to offer next
generation TV services in Spain, providing a seamless convergence between internet and traditional television content. As
part of this strategy, we have committed to using Cisco set-top boxes. Our television operations going forward are therefore
dependent on TiVo’s know-how and software and Cisco’s hardware. We are in a transition period where we are phasing out
the use of Motorola’s software and hardware and commencing the introduction of Cisco’s hardware and TiVo’s software.
Our business operations and revenues could be adversely affected if (i) Motorola no longer maintains our
conditional access system during the transition period and if we are not able to replace the existing conditional access system
with the system required for next generation TV at a reasonable cost; (ii) the Motorola or Cisco conditional access system is
compromised by illegal piracy and access of non-subscribers to the system; and/or (iii) the Motorola or Cisco conditional
access system is incompatible with future broadband fiber technologies or products we intend to use. Furthermore, our
business operations and revenues could be adversely affected if TiVo and Cisco (either directly or through their
subcontractors) do not fulfill their obligations to us or if we experience difficulties implementing our agreements with them
into our product portfolio. In addition, we received our last shipment of Motorola set top boxes in 2010 and Motorola has
ceased production of these boxes. Going forward, we will have to rely on existing stock and refurbished units until we have
migrated our entire TV customer base to Cisco set-top boxes. If we experience delays in this migration, we may be unable to
meet client demand for set-top boxes which could adversely affect our operations and revenues.
We rely on Telefónica’s network to carry the traffic relating to our mobile telephony and broadband internet services.
We rely on our agreement with Telefónica for voice, data and other telecommunications services we provide to our
mobile customers. Our current agreement expires in 2013 and will have to be renegotiated. If the agreement with Telefónica is
not renewed or terminated, if Telefónica fails to deploy and maintain its network, or if Telefónica fails to provide the services
as required under the terms of our agreement and we are unable to find a replacement network operator on a timely and
commercial basis (or at all) we could be prevented from carrying on our mobile business altogether, or on less favorable terms
or with less desirable services. Additionally, any migration of all or some of our customer base to a new operator would be in
part dependent on Telefónica and could entail technical and commercial risks. Telefónica is also a commercial counterparty in
interconnection with us. Any disagreements with Telefónica may affect our commercial relationship with it.
Unanticipated network interruptions and events beyond our control may adversely affect our ability to deliver our products
and services.
Our business is dependent on the continued and uninterrupted performance of our network. System, network,
hardware and software failures have occurred before and could occur in the future and affect the quality of, or cause an
unexpected interruption in our service. These failures could result in costly repairs and affect customer satisfaction, thereby
reducing our customer base and revenues and damaging our brand image.
Moreover, if any part of our network or system infrastructure is affected by flood, fire or other natural disaster,
computer virus, terrorism, power loss or other unforeseen events, our operations and customer relations could be materially
adversely affected. Our disaster recovery, security and service continuity and protection measures may not be sufficient to
prevent loss of data or prolonged network downtime.
In addition, our business is dependent on certain sophisticated critical systems, including our switches and customer
service systems. The hardware supporting those systems is housed in a relatively small number of locations and if damage
were to occur to any of these locations or if those systems develop other problems, there could be a material adverse effect on
our business. For example, we depend on our customer billing system, to enable us to conduct our business and interact with
our customers. Any significant delays or interruptions in providing services could negatively impact our reputation as an
efficient and reliable telecommunications provider and consequently impair our ability to obtain and retain customers.
We depend on the ability to attract and retain key personnel without whom we may not be able to manage our business
effectively.
Our operations are currently managed by a number of key executives and employees. The loss of any key employee
could significantly impede our financial plans, product development, network completion, marketing and other plans, which
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could affect our ability to comply with our financing arrangements. In addition, competition for qualified executives in the
telecommunications industry is intense. Our growth and success in implementing our business plans largely depends on our
continued ability to attract and retain experienced senior executives as well as highly skilled employees. We cannot assure
you that we will be successful in hiring and retaining such qualified personnel. If any of our senior executives or other key
personnel ceases their employment with us, our business, results of operations, financial position and prospects could be
harmed.
We may experience employee or labor relations problems.
Many of our employees are members of unions. Our collective bargaining agreement with our unions expired on
December 31, 2011 and we are currently in discussion with our unions regarding a new agreement. Although we believe that
our relations with our employees have generally been satisfactory, we have on occasion had disputes with our unions and
employees, particularly in connection with headcount reductions. Our inability to negotiate an acceptable agreement with our
unions could result in strikes or work stoppages by the affected workers and increased operating costs as a result of higher
wages or benefits paid to union members. If the unionized workers were to engage in a strike or other work stoppage, or other
employees were to become unionized, we could experience a significant disruption in operations or higher labor costs, which
could have a material adverse effect on our business.
Our business may be adversely affected if we fail to carry out continuous maintenance and improvement of our network,
systems and operations.
We must continuously maintain and improve our networks in a timely and cost-effective manner in order to sustain
and expand our customer base, service offerings and quality of service, enhance our operating and financial performance and
satisfy regulatory requirements. The maintenance and improvement of our existing networks depends on our ability to:
• Enhance the functionality of our network in order to offer increasingly customized services to our customers;
• Upgrade our existing network and systems with new technology;
• Expand the capacity of our networks to cope with increased bandwidth usage;
• Expand and maintain customer service, network management and administrative systems;
• Modify network infrastructure for new products and services; and
• Finance our maintenance costs and future network upgrades
If we fail to maintain and improve our network, our services may be less attractive to existing and potential
customers and we may lose customers to competitors who are able to provide higher quality services than we are. This could
impact our financial condition and make it more difficult for us to fund our operations and meet our substantial debt
obligations.
We require information technology enhancements in order to continue providing a high quality customer service.
Failure to implement such enhancements may result in reduced quality of customer service, leading to an increase in customer
churn, which may in turn result in decreases in revenue, otherwise impact on our financial condition and make it more
difficult for us to fund our operations and meet our substantial debt obligations.
Telefónica, the incumbent telecommunications operator, has the ability to set standards and precedents in this market,
which may adversely affect our business.
Telefónica, the incumbent telecommunications operator in the Spanish market and one of our main competitors, has
the ability to set standards and precedents in this market, which may adversely affect our business. In addition to its
significant market presence and power in the Spanish broadband internet and telephony markets, in the area of broadband
internet, Telefónica is currently in the process of deploying FTTH technology, which allows it to offer broadband internet
speeds of 50 Mbps and higher. Some progress has been made in the deployment of this technology in Madrid and Barcelona,
and Telefónica is expected to roll out this technology on a wider basis throughout its areas of operation in the short to medium
term. If Telefónica is able to offer 100 Mbps on a wider basis, this could erode our competitive advantage in the high-speed
broadband internet market and have an adverse effect on our revenues and ability to acquire and retain high-quality
customers. If as a result of this widespread deployment, Telefónica is required by the CMT to open up its FTTH network to
third-party operators, this could further increase competition in the high-speed broadband internet market and could also have
an adverse effect on our revenues and ability to acquire and retain high-quality customers.
Telefónica also has a significant market share in the Spanish pay television market. Telefónica’s relationship with
existing and potential customers and suppliers may impact our ability to negotiate contracts with them on terms commercially
favorable to us or at all. Suppliers may insist on terms and conditions secured in negotiations with Telefónica that are
favorable to the supplier and Telefónica but detrimental to us. In addition, Telefónica may use its substantial capital resources
and dominant market presence to reduce prices charged to customers in order to meet its particular objectives. There can be
no assurance that their actions will not adversely affect us.
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We are subject to increasing operating costs and inflation risks, which may adversely affect our earnings.
While we attempt to offset increases in operating costs through a variety of measures focused on increasing
revenues, there is no assurance that we will be able to do so. Therefore, operating costs may rise faster than associated
revenue, resulting in a material negative impact on our cash flow and net profit.
We are also impacted by inflationary increases in salaries, wages, benefits and other administrative costs. In
addition, a number of our contracts are indexed to the consumer price index (“CPI”). Increases in the CPI could significantly
impact our payment obligations with respect to our suppliers.
Our capital expenditures may not generate a positive return.
The broadband internet, television and telephony markets in which we operate are capital intensive. Significant
capital expenditures are required to attract and retain customers to our networks, including expenditures for equipment and
installation costs and the implementation of new technologies such as Docsis 3.0 and next generation TV (TiVo). No
assurance can be given that our current or future upgrades will generate a positive return or that we will have adequate capital
available to finance future upgrades. If we are unable to, or elect not to, pay for costs associated with adding new customers,
expanding or upgrading our networks or making our other planned or unplanned capital expenditures, our growth could be
limited and our competitive position could be harmed.
We operate in a highly regulated market as a result of which we may be required to make additional expenditures or limit
our revenues.
We operate in a highly regulated market subject to the supervision of various regulatory bodies, including local,
regional, national and European Union authorities. Changes in these regulations may increase our administrative and
operational expenses or limit our revenues. We are subject to, among other things:
• Rules governing the interconnection between different networks and the interconnection rates that we can
charge and pay for fixed and mobile line connections;
• Regulations relating to accessing Telefónica’s network for offering fiber to the home (“FTTH”), ADSL and
indirect access services and regulations relating to accessing mobile network operators for the provision of
mobile line services to end-customers;
• Rules for authorization of renewals and transfers;
• Regulations on universal service obligations including recent developments on the National Universal Service
Fund and contributions to it with respect to previous year. (See “Regulation—Regulation of Electronic
Communications Services—Universal Service, Public Service Obligations and Other Obligations of Public
Character”);
• Regulations relating to customer privacy and data protection and other consumer rights;
• Regulations on intelligent network services;
• Taxes such as under the RTVE Financing Law as defined in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations of ONOMidco—Factors Affecting Our Business During the
Period Under Review—Regulatory Costs” and regulations requiring us to invest in content;
• Regulation and taxes on the use of the spectrum;
• Other requirements covering a variety of operational areas such as land use and environmental protection,
technical standards and subscriber service requirements and legal interception obligations;
• Significant market power regulations and other restrictions relating to competition;
• Changes in Telefónica’s regulatory rate (in light of which we determine the rate for our wholesale services);
• Regulations on television and other audiovisual communication services;
• Regulations relating to accessing content in the audiovisual market; and
• Other regulations.
One of our regulators, the CMT, is required under current regulations to define the retail and wholesale
telecommunications markets in Spain that are not competitive. The CMT has concluded all market reviews and adopted a
substantial number of decisions whereby, in compliance with the EU Network Regulation Framework and the General Law on
18

Telecommunications, it has defined relevant markets, identified operators with significant market power and, consequently,
imposed certain regulatory obligations both on the traditional fixed telecommunications incumbent (Telefónica) and other
operators, such as mobile and cable companies. In 2012 the CMT will initiate a new round of market analysis. For more
information, see “Regulation”.
Changes in applicable law, regulations, governing policy, or the interpretation and application of existing laws or
regulations, including recent developments on universal service (see “Regulation”), could adversely affect our business,
financial condition and ability to introduce new products and services. Our business could be materially adversely affected by
any changes in relevant laws or regulations or their interpretation regarding, for example, authorization requirements, access
and price regulation, interconnection arrangements, the imposition of universal service obligations or any change in policy
allowing more favorable conditions for our competitors. Our ability to introduce new products and services may also be
affected if we cannot predict how existing or future laws and regulations or policies would apply to such products or services.
Many of our suppliers, particularly content providers and suppliers of equipment and services, are also subject to
extensive regulation, which could adversely impact their ability to satisfy their obligations to us and thereby indirectly expose
us to additional risk.
19

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF ONOMIDCO
The selected historical consolidated financial information presented below has been derived from ONOMidco’s
Audited Financial Statements and Unaudited Interim Financial Statements which are included elsewhere in this offering
memorandum. See “Presentation of Financial and other Data”.
For a discussion of how ONOMidco’s financial statements differ from Cableuropa’s financial statements, see the
section entitled “Presentation of Financial and Other Data”.
You should also read the following financial information together with the section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations of ONOMidco”, “Capitalization of ONOMidco”
and ONOMidco’s financial statements and notes thereto included elsewhere in this offering memorandum.
As of and
for the three months
ended March 31,
As of and for the year
ended December 31,
2009 2010 2011 2011 2012
(euro in millions)
(unaudited)
Summary Income Statement Data:
Revenues:
Residential ................................................. 1,158 1,159 1,168 288 292
Residential fiber .............................................. 1,124 1,120 1,125 278 281
Residential ADSL ............................................ 34 39 43 10 11
Business, wholesale and other .................................. 334 302 310 74 89
SMEs ...................................................... 70 73 77 19 21
Large Accounts/Corporations ................................... 166 142 129 32 31
Wholesale and other .......................................... 98 87 104 23 37
Indirect access and other ...................................... 10 8 7 2 2
Revenues from disposed assets (Teuve) .......................... 10 3 — — —
Total net revenues ........................................... 1,512 1,472 1,485 364 383
Operating expenses:
Cost of sales ................................................. (328) (310) (317) (77) (90)
Staff costs ................................................... (171) (161) (159) (39) (39)
Other operating expenses ....................................... (344) (342) (323) (86) (83)
Work carried out by the company for its assets ...................... 61 65 62 17 15
Depreciation and amortization ................................... (390) (385) (379) (95) (94)
Over provisions .............................................. — — 9 — —
Impairment and gains or losses on disposal of fixed assets ............. (11) (2) (10) — (2)
Total operating expenses ...................................... (1,183) (1,135) (1,117) (280) (293)
Operating result ............................................... 329 337 368 84 90
Net financial result .............................................. (245) (233) (247) (65) (58)
Result before income tax ........................................ 84 104 121 19 32
Income tax .................................................... (31) (62) (46) (6) (10)
Result for the year/ period ...................................... 53 42 75 13 22
Attributable to owners of the parent ................................ 57 42 75 13 22
Attributable to non-controlling interest .............................. (4) — — — —
Summary Balance Sheet Data:
Non-current assets ............................................ 5,613 5,389 5,279 5,237
Property, plant and equipment ................................... 4,387 4,243 4,113 4,075
Deferred tax assets ............................................ 1,151 1,077 1,049 1,045
Current assets and assets of disposal Group classified as held for sale .... 385 202 352 404
Inventory, trade and other receivables ............................. 122 119 148 131
Cash and cash equivalents ...................................... 238 59 185 248
Total assets ................................................. 5,998 5,590 5,631 5,641
Total liabilities .............................................. 4,845 4,233 4,179 4,168
Trade and other payables ....................................... 404 355 316 303
Long-term debt (1) ............................................. 3,545 3,550 3,394 3,513
Total net equity .............................................. 1,153 1,358 1,452 1,473
Shareholders’ contributions (2) ................................... 963 1,088 18 18
Share reserve premium ........................................ — — 1,088 1,088
Total equity and liabilities ..................................... 5,998 5,590 5,631 5,641
(1) Long-term debt includes the 2005 Senior Facility (including the Existing Notes Tranches) as well as payment obligations relating to the
Subordinated Notes, derivatives and other financial long-term debt. Long-term debt does not include subordinated participative loans
from GCO.
(2) Shareholders’ contributions represent subordinated participative loans from GCO to Cableuropa. In January 2011, €1,088 million of
these loans were capitalized into share premium reserve.
20

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF ONOMIDCO
The discussion below is based on the Audited Financial Statements and the Unaudited Interim Financial Statements
of ONOMidco. For a discussion of how ONOMidco’s financial statements differ from Cableuropa’s financial statements, see
the section entitled “Presentation of Financial and Other Data”.
You should also read the following commentary together with the sections entitled “Selected Historical
Consolidated Financial Information of ONOMidco”, “Risk Factors”, “Business” and the Audited Financial Statements and
the Unaudited Interim Financial Statements of ONOMidco and the related notes thereto included elsewhere in this offering
memorandum.
The following discussion contains forward-looking statements, including those described in the “Information
Regarding Forward-Looking Statements” section above, that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a result of, among others, the factors described
below and elsewhere in this offering memorandum, including in “Risk Factors”. Except as may be required by applicable
law, we will not publicly update any forward-looking statements for any reason, even if new information becomes available or
other events occur in the future.
Overview
We are the second largest provider of broadband internet, pay television and fixed telephony services in Spain.
Through our proprietary state-of-the-art network, we offer our services to over 7 million homes across Spain, including the
nine largest cities. We are the only fiber operator in Spain with national coverage. As of March 31, 2012, we provide over
4.4 million services under the ONO brand to 1.9 million residential (fiber and ADSL) customers and more than 95 thousand
small and medium-sized enterprises (“SMEs”) in Spain. We also offer products and services to large corporations and public
sector entities as well as to the wholesale market. We are the principal competitor to the incumbent telecommunications and
pay television operators in Spain and, through our recently upgraded network, we believe we are able to offer the most
advanced broadband internet and pay television services in the Spanish market. For the twelve months ended March 31, 2012,
we generated net revenues of €1,504 million, EBITDA of €756 million and an EBITDA margin of 50.3%. In the same period,
our residential services generated net revenues of €1,172 million (accounting for 77.9% of our total net revenues), and our
business and other services generated net revenues of €332 million (accounting for 22.1% of our total net revenues).
Factors Affecting Our Business During the Periods Under Review
The following table sets forth certain information with respect to our network and services and the percentage
change from period to period for each of the periods indicated:
As of and for the year
ended December 31,
As of and for
the three months
ended March 31,
Percentage change
2009 2010 2011 2011 2012
2009/
2010
2010/
2011
3m 2011/
3m 2012
(unaudited unless stated otherwise)
Residential (fiber and ADSL):
Customers (in thousands) ..................... 1,902 1,898 1,900 1,913 1,881 (0.2%) 0.1% (1.7%)
Fiber customers (in thousands) ................. 1,825 1,811 1,807 1,822 1,791 (0.8%) (0.2%) (1.7%)
Net Revenue (euro in millions) ................. 1,158 (7) 1,159 (7) 1,168 (7) 288 292 0.1% 0.8% 1.4%
Residential fiber:
Homes released to marketing (1)
(in thousands) ............................ 7,004 7,030 7,043 7,033 7,049 0.4% 0.2% 0.2%
Penetration (percentage) (2) .................... 26.1% 25.8% 25.7% 25.9% 25.4% (0.3)pp (0.1)pp (0.5)pp
ARPU (in euro; most recent quarter) (3) ........... 51.0 51.5 52.4 51.0 52.1 1.0% 1.7% 2.2%
RGUs (in thousands) (4) ....................... 3,967 4,019 4,060 4,072 4,031 1.3% 1.0% (1.0%)
RGUs per customer .......................... 2.17x 2.22x 2.25x 2.23x 2.25x 0.05x 0.03x 0.02x
Net churn (percentage) (5) ...................... 13.9% 15.5% 18.8% 14.8% 18.4% 1.6pp 3.3pp 3.6pp
Net Revenue (euro in millions) ................. 1,124 (7) 1,120 (7) 1,125 (7) 278 281 (0.4%) 0.4% 1.1%
Business (6) :
SME customers (in thousands) ................. 67 72 89 74 95 6.9% 23.6% 28.4%
Total business net revenue (euro in millions) ...... 334 (7) 302 (7) 310 (7) 74 89 (9.6%) 2.6% 20.3%
(1) “Homes released to marketing” means a home to which we can provide either broadband internet, television or telephony services
within four days, which occurs after the customer tap and drop have been installed.
(2) “Penetration” is the percentage of customers over homes released to marketing in our franchise areas, and with respect to any particular
service, penetration is the percentage of RGUs of that service over homes released to marketing in our franchise areas.
(3) “ARPU” is the monthly average revenue per user, and is calculated by dividing total revenues generated from our internet, television and
telephony services provided to customers that are directly connected to our network in the last quarter of the relevant period by the average
number of customers in that quarter, the result of which is divided by three. The average number of customers for any period is calculated
by adding the number of customers at the beginning of the period to the number of customers at the end of the period and dividing by two.
21

(4) “RGUs” are revenue generating units where each customer is counted as a revenue generating unit for each service for which such
customer subscribes, regardless of the number of services that customer receives from us. Thus a single customer who receives internet,
television and telephony services from us would account for three RGUs.
(5) “Net churn” means the percentage obtained by dividing the number of customers who cease to receive any of our services (either
voluntarily or involuntarily) in the last quarter of the relevant period by the average total number of customers during that quarter,
multiplied by four. The average number of customers for any period is calculated by adding the number of customers at the beginning of
the period to the number of customers at the end of the period and dividing by two. Excluded from net churn are customers who move
locations and terminate their subscription at their old location but resubscribe at their new location.
(6) We do not report numbers of customers in the “large accounts & corporations” and “wholesale & other” business segments because such
data are not meaningful.
(7) Audited.
The following are key factors affecting our results during the periods under review:
Transformation Process
Towards the end of 2008, faced with weakening international economic conditions, we commenced a
transformation process. The transformation focused on adjusting our business model to the changed economic environment
and stabilizing its operations following a period of rapid expansion, with the aim of creating a more efficient platform for
future growth. This process also coincided with significant changes in our senior management. Largely completed by the end
of 2009, the transformation process included a wide range of initiatives focused on maximizing cash flow, implementing cost
efficiencies, reshaping our organization and attracting and retaining high-quality customers. As a result of the transformation,
we believe we have become a more resilient and efficient company. Our EBITDA increased from €730 million in 2009 to
€748 million in 2011, our EBITDA margin increased from 48.3% in 2009 to 50.4% in 2011 and operating free cash flow
decreased from €510 million in 2009 to €456 million in 2011.
Customer Focus and Effects of Recession
As part of our transformation process, we developed and began to implement a new strategy focused on the
acquisition and retention of high-quality customers and on product superiority (including our high-speed internet packages
and our next generation TV service—TiVo). Previously our focus had been on customer acquisition, which included the use
of short-term promotions and mass market advertising, resulted in relatively high levels of net churn at the end of the
promotion period. Our new strategy involves focusing our marketing and customer care efforts on attracting and retaining
more creditworthy customers whom we judge less likely to churn and to whom we believe we can successfully market our
double- and triple-play bundled packages. We believe that the success of this new strategy is reflected in our improved ARPU
and RGU numbers during 2009, 2010 and 2011 in the residential and SME segments.
However, the economic recession in Spain that resulted from the financial and economic crisis started in 2008 has
significantly impacted our financial and operational performance, partially offsetting the effect of our revised customer focus
strategy in the periods under review. In this sense, although certain operational metrics have improved during the periods
under review, largely as a result of our new strategy and despite the adverse economic climate, our revenues were essentially
unchanged between 2009 and 2010. Revenues recorded positive growth in 2011 and increased by 0.9% as compared to 2010.
The combined effect of our new customer strategy and the impact of the adverse economic climate in Spain on our
residential fiber customer numbers, net churn, ARPU and RGUs is described below:
Residential fiber customers: Our residential fiber customer base decreased by 0.8% in 2010, by 0.2% in 2011 and
by 1.7% in the twelve months ended March 31, 2012, to reach approximately 1.8 million customers. The slight decline in our
residential fiber customer numbers between 2009 and 2011 was primarily driven by the shift in our focus to more
creditworthy customers through the introduction of a credit scoring system, additional activation and installation fees and
reductions in promotions, as well as by the challenging economic and industry environments in Spain. The decrease
experienced in the twelve months ended March 31, 2012 was primarily driven by the slowdown in the number of broadband
additions experienced in the market coupled with the new dynamics experienced in the Spanish telecom market by which
most operators shifted from aggressive customer acquisition strategies to strategies focused on customer retention.
Residential fiber net churn: Our net churn (based on the last quarter of each period) for our residential fiber
business increased from 13.9% in 2009 to 18.8% in 2011. This increase was primarily driven by some customers dropping
their telecommunication services to preserve their disposable incomes, along with the increased promotional activity
experienced in the Spanish telecommunication market that has impacted a portion of our most price sensitive customers
(mainly single play customers). In the quarter ended March 31, 2012, our residential fiber net churn increased by 3.6% as
compared to the same quarter of the previous year to reach 18.4%. This increase was primarily driven by some customers
dropping their telecommunication services to preserve their disposable incomes, along with the increased promotional activity
experienced in the market that impacted a portion of our most price sensitive customers (mainly single play customers). Going
forward we intend to continue focusing on stabilizing net churn with the implementation of a series of initiatives to promote
22

customer loyalty (such as our recently launched 15 Mbps upgrade campaign), the development of better products (such as
high speed internet, TiVo, mobile), improved customer care, customer segmentation tools and tactical promotions.
Residential fiber ARPU: ARPU is a measure we use to evaluate how effectively we are obtaining revenues from
each of our customers. Since 2009 our ARPU has increased to reach €52.4 as of December 31, 2011 and €52.1 as of
March 31, 2012 in spite of the challenging macroeconomic and industry environment in which we have operated. The fixed
part of our ARPU performed well throughout the period under review mainly as a consequence of: (i) the success of our
bundling strategy with almost 98% of our new customers subscribing to a bundled service, (ii) the higher quality of our
customer base with 37% of our broadband customers taking ultra-high Internet speeds packages from us and 90% of our Pay
TV customers subscribing to our premium TV packages (Extra and Total), and (iii) our strategic pricing management
(including the €1 price increase to our customer base implemented in July 2011). The variable component of our ARPU has
performed poorly, reflecting a decrease in overall consumption by Spanish households which in turn led to reduced fixed-line
to mobile and fixed-line to international traffic and reduced demand for pay-per-view and VoD services. Other ARPU
components that include incoming interconnection and mobile revenues have performed well in the period under review
mainly as a consequence of the good performance of our mobile business. Over 86% of ARPU in the three months ended
March 31, 2012 came from monthly fees which has proven beneficial in the current environment in which consumption based
products are heavily affected. The remaining 14% of our ARPU reflects more variable charges for VoD, TV and telephony
services.
Residential fiber RGUs: RGUs per customer is another measure of how effectively we are realizing potential
revenues from each customer. We provide subscribers with a variety of bundled service offerings, at a price that is generally
lower than the aggregate price of these services purchased on an individual basis from us in order to increase revenues from each
of our customers. Our residential fiber bundled services comprise a combination of our fiber television packages of up to 125
channels, VoD, broadband internet services up to 100 Mbps for residential customers and 200 Mbps for SMEs and telephony
services, offering our customers the convenience of having a single provider for their wireline communication, entertainment and
information needs. Our residential fiber RGUs has remained constant at 4.0 million as of March 31, 2012 as compared to
4.0 million as of March 31, 2009, and we have experienced an increase in the percentage of total residential fiber customers who
receive triple-play services (40.0% as of March 31, 2012, compared to 34.2% as of March 31, 2009). Most of our remaining
customers receive at least double-play services because we no longer promote any of our services on a stand-alone basis. The
steady trend in residential fiber RGUs and the relatively small decline in the number of our residential fiber customers have
resulted in an increase in the ratio of RGUs per residential fiber customer from 2.17x as of December 31, 2009 to 2.25x as of
March 31, 2012.
Optimization of our Capital Expenditure
In light of the financial crisis which made funding the expansion of our network difficult to finance, we elected in
the second half of 2008 to cease network expansion activity. As a result, our capital expenditure has been significantly
reduced and we are now focused on upgrading our existing network, customer installations and the quality of our products and
services. Examples of our investment in improving the quality of our products and services include our introduction of
residential broadband speeds of up to 100 Mbps, the next generation TV services and the outsourcing and upgrading of our
voice platform (Huawei). In the first three months of 2012, our capital expenditure amounted to €61 million. Our capital
expenditure amounted to €220 million, €244 and €292 million in 2009, 2010 and 2011, respectively. See “—Liquidity and
Capital Resources—Capital Expenditures”.
Reduction in Operational Expenditure
As part of our transformation strategy we have also taken steps to reduce our operational expenditure, including
undertaking an internal reorganization, reducing our headcount, introducing a new and enhanced procurement model,
renegotiating certain of our contracts to improve their terms, using more cost efficient sales channels, such as the internet (and
thereby reducing our reliance on direct sales efforts) and reducing our advertising and marketing expenses, in part by adopting
more carefully targeted marketing campaigns. For the quarter ended March 31, 2012, 30% of our sales were made through the
internet, compared to 11% for the same period in 2009. As part of our business reorganization, we have consolidated our
regional operations, reducing the number of our regional areas of operation from ten to four.
We also began to reduce our headcount in 2008 and reduced our total headcount from an average of 4,594 in 2008,
3,549 in 2009, 3,283 in 2010, to 3,025 in 2011 and 2,893 as of a March 31, 2012. We continue to monitor overall headcount
to ensure adequate staffing levels.
Regulatory Costs
The Spanish Parliament has adopted tax legislation requiring telecommunications operators, including Cableuropa,
to help fund Spain’s publicly-owned broadcasting company, RTVE Law 8/2009, of August 28, for the financing of the
Spanish Radio and Television Corporation, imposed a 1.5% tax derived from our television and other audiovisual
communications revenues from September 1, 2009 and a 0.9% tax on our telecommunications revenue from January 1, 2010
(the “RTVE Financing Law”). These taxes are assessed on a yearly basis and resulted in additional operating expenses of
23

€10.5 million and €13.4 million in 2010 and 2011, respectively. For the three months ended March 31, 2012, these taxes
added €3.3 million to operating expenses, as compared to €3.0 million in the first quarter of 2011. See “Business—Other
Legal and Regulatory Matters”.
Furthermore, since May 2010, we have become legally required, in certain circumstances, to invest 5% of a
significant portion of the revenues we derive from the provision of our television and audiovisual services into the production
of new Spanish or European television and other audiovisual content. We expect this obligation will result in a cash
expenditure of €5 million to €8 million per year which will be accounted for as a capital expenditure. In 2011, we made an
investment of €7.6 million relating to this obligation. We expect that we will earn revenues from such investments in future
years.
Recent Developments
• Current trading: We have not yet finalized our financial information or operational data in respect of April
2012; accordingly, such data is preliminary in nature and is subject to change. Based on the current available
information, we estimate that our revenues continued to perform well in April 2012 and increased as compared
to the same month of 2011. We estimate our profitability also continued to improve in April 2012, evidenced
by higher EBITDA and continued cash flow generation.
April in 2012 continued to be challenging on the commercial front. The negative macroeconomic environment
and the slowdown in the number of broadband additions experienced in the market, as well as the new market
dynamics by which most operators have continued to focus on initiatives to increase the loyalty of their
customer base, has continued to negatively impact our residential services and customer numbers leading to
marginal negative net additions in April 2012. In an effort to reverse this negative trend, in February we
launched a set of commercial initiatives with the aim of (i) increasing customer value perception, (ii) reducing
churn, (iii) reducing retention calls and (iv) preserving ARPU. We believe there are signs that these initiatives
are having a positive impact, as evidenced by improved churn figures experienced in April 2012 as compared
to March 2012. We believe that our high speed broadband offering will continue to experience success in the
second quarter of 2012, both with respect to our existing customer base and the acquisition of new customers,
and that our new TiVo product will continue to gain traction in the market. In addition, we estimate that
residential fiber ARPU for April 2012 will be higher than that experienced in the same period of 2011. We also
expect the performance of the SME segment to continue to show a positive evolution on the back of our
improved product portfolio with broadband speeds of up to 200 Mbps.
The above information is not intended to be a comprehensive statement of our financial or operational results
for the relevant period. This preliminary information was prepared based on a number of assumptions and
estimates that are subject to inherent uncertainties and subject to change. Accordingly, it is possible that our
actual results for the relevant period will vary from our preliminary results, and such variations could be
material. See “Information Regarding Forward Looking Statements” and “Risk Factors” for a more complete
discussion of the factors that could affect our future performance and results of operations.
• Further advances in high-speed Internet: In February 2012, we completed the deployment of Docsis 3.0
technology in the Canary Islands and currently we have the capacity to deliver high-speed Internet to over
7 million homes within our network coverage areas, representing our entire fiber customer base. In addition, in
February 2012 we further improved our Internet offerings with a 200 Mbps Internet package for Small and
Medium Enterprises (SMEs). We believe that this package is unique in the Spanish market, with our
competitors currently offering Internet speeds of up to 100 Mbps in limited areas.
As of March 31, 2012, over 530 thousand customers subscribed to our high-speed Internet packages (30 Mbps
and higher), which represents approximately 37% of our broadband customer base. We believe that these
commercial results position ONO as the market leader in high-speed Internet in Spain.
• Further advances in next generation TV (TiVo): In October 2011, we officially launched our next
generation TV service (TiVo) to customers in Madrid and Barcelona. We have made this service available in
regions that represent almost 62% of our network as of March 31, 2012. We expect to further extend this
service to the remaining regions within our network coverage areas in the coming quarters. As of March 31,
2012, this product had been available for five months and during this period, we gained over 16 thousand
customers. We expect that TiVo will help us to provide our customers with a best in class experience and a
wide variety of content that integrates broadcast and broadband television in a way that goes beyond traditional
pay television features. We believe these unique functionalities will help us to increase the number of our TV
customers and revenues going forward.
• Success of our +15 Mbps loyalty campaign: In February 2012, we officially launched a commercial
campaign to further improve Internet offerings to our high-end Internet customers. As part of this initiative,
customers subscribing to our 6 to 100 Mbps Internet packages are offered extra 15 Mbps at no cost in exchange
24

for a minimum contract term of 12 months. Although this initiative was launched only recently, there are early
signs of good market acceptance. We believe this commercial campaign, which showcases the relevance highspeeds
have in ONO’s strategy, will help us increase customer satisfaction and preserve ARPUs while reducing
churn.
• Settlement of legal disputes with Prisa TV: On March 9, 2009, our competitor Prisa TV (formerly
Sogecable) was ordered to pay compensation in the amount of €51.7 million plus interest to ONO for abuse of
dominant position in relation to the 2003/2004 to 2008/2009 football content contracts. This compensation was
in addition to the €43.9 million in compensation awarded on December 1, 2009 for a contractual breach on the
Gran Via and Cablesport channel distribution. On May 18, 2012, ONO and Prisa TV reached an agreement
pursuant to which Prisa TV would end the appeal process in exchange for ONO repaying to Prisa TV €54.4
million (representing 50% of the amounts already collected by ONO pursuant to these lawsuits). This
agreement eliminates uncertainties related to future development of, and potential cash outflows in connection
with, the Prisa TV legal dispute. As of March 31, 2012, our balance sheet included the full amount received
from Prisa TV as deferred income. The €54.4 million has now been paid to Prisa TV and we will recognize the
remaining deferred income of €54.4 million as income in the second quarter of 2012.
• Impact of new tax legislation: On August 20, 2011, Royal Decree Law 9/2011 came into effect which,
among other things, provided for certain changes to the Spanish Corporate Income Tax Law in relation to tax
loss carry forward rules. On March 31, 2012 Royal Decree Law 12/2012 came into effect with the objective of
reducing the Spanish public deficit. According to our preliminary internal analysis, we believe that these laws
will have no impact on our income statement and that the maximum tax related cash impact will amount to
€15 million in each of the years 2012 and 2013. Assuming no further changes in tax law, we believe that in
future years we will be able to fully offset any profit tax with our approximately €1 billion of tax credits and
therefore we do not expect any further tax related cash outflows from 2014 onwards. For more information
regarding these laws, see “Business—Other Legal and Regulatory Matters”.
• Capitalization of PIK Loan and settlement of VAL litigation: As a condition to the amendment of the
2005 Senior Facility in May 2010, the senior lenders of Cableuropa required the shareholders of GCO to
contribute up to €200 million to Cableuropa and, as a result, GCO entered into a profit participating PIK loan
agreement with its shareholders for a maximum amount of €200 million (the “PIK Loan”). The PIK Loan was
partially drawn in May 2010 in the amount of €125 million, which was loaned to Cableuropa in the form of
deeply subordinated shareholder indebtedness (the “2010 Downstream Loan”). The 2010 Downstream Loan is
independent from the PIK Loan and the proceeds under the 2010 Downstream Loan were applied by
Cableuropa to reduce the amount drawn under the 2005 Senior Facility. The remaining €75 million was
contributed to GCO and held in escrow, to be drawn and loaned to Cableuropa on the same terms if certain
liquidity and refinancing conditions were not met. The €75 million was subsequently released from escrow and
returned by GCO to shareholders in two installments (€50 million in November 2010 and €25 million in
January 2012) as the required conditions were met. In January 2011, the 2010 Downstream Loan was
capitalized into equity in Cableuropa.
On April 24, 2012, the Board of Directors of GCO agreed to propose the capitalization of the remaining
€125 million PIK Loan plus any accrued interest until June 30, 2011 to the GCO’s General Shareholders
meeting. This capitalization of the PIK Loan is expected to be completed before September 30, 2012. As a
result, GCO and one of GCO’s shareholders have agreed to withdraw the lawsuit challenging the creation of
the PIK Loan upon the completion of the capitalization of the PIK Loan. See “Shareholders and Beneficial
Owners—PIK Loan and 2010 Downstream Loan”.
• ONO enters into New Senior Facility: On May 24, 2012, we entered into a New Senior Facility which is
expected to be funded as part of the May 2012 Refinancing on or about the New Notes Issue Date. The May
2012 Refinancing will result in the refinancing of the 2005 Senior Facility in full and will extend the maturity
of substantially all of our financial indebtedness, with no significant maturities before 2017. See “Summary—
Our History—Refinancing—May 2012 Refinancing”. Under the New Senior Facility, Notes Tranches have full
voting rights in enforcement actions with respect to the enforcement of security and are entitled to vote pro rata
with the rest of the lenders under the New Senior Facility. This represents a contrast with the 2005 Senior
Facility where the voting rights of Notes Tranches were capped at 40% of total outstanding and available
indebtedness.
25

Results of Operations for the Three Months Ended March 31, 2011 and 2012
The following table sets forth certain summary financial information and the percentage change from period to
period for each of the periods indicated.
For the three months
ended March 31,
2011 2012
(euro in millions)
(unaudited)
Percentage
change
Net revenues .......................................................... 364 383 5.2%
Other revenue ......................................................... — — —
Operating expenses ..................................................... (280) (293) 4.6%
Operating result ...................................................... 84 90 7.1%
Net financial result ..................................................... (65) (58) (10.8)%
Result before income tax ............................................... 19 32 68.4%
Income tax ........................................................... (6) (10) 66.7%
Result for the period ................................................... 13 22 69.2%
Attributable to owners of the parent ........................................ 13 22 69.2%
Attributable to non-controlling interest ..................................... — — n.a.
Net Revenues
Our net revenues are derived primarily from residential services, which involve providing our customers with a
combination of internet, pay television and telephony services, either through our fiber network or through ADSL, business
services, which involve providing SMEs, large corporations and public entities with voice and data services, as well as other
value-added services, and providing other telecommunications operators with wholesale access to our excess capacity and
certain other products and services, such as carrier services, voice traffic services, leased and dedicated lines and internetservice
provider solutions.
The following table sets forth our net revenues derived from our different activities, their proportion of total
revenues and the percentage change from period to period for each of the periods indicated.
For the three months ended
March 31,
2011
% of net
revenues 2012
% of net
revenues
Percentage
change
(euro in millions, except percentages)
(unaudited)
Residential ................................................... 288 79.1% 292 76.3% 1.4%
Residential fiber .............................................. 278 76.4% 281 73.4% 1.1%
Residential ADSL ............................................ 10 2.7% 11 2.9% 10.0%
Business, wholesale & other ..................................... 74 20.3% 89 23.3% 20.3%
SMEs ...................................................... 19 5.2% 21 5.5% 10.5%
Large accounts & corporations .................................. 32 8.8% 31 8.1% (3.1)%
Wholesale & other ............................................ 23 6.3% 37 9.7% 60.9%
Indirect access & other ......................................... 2 0.6% 2 0.4% —
Indirect access and other (1) ..................................... 2 0.6% 2 0.4% —
Total net revenues ............................................. 364 383 5.2%
(1) Technology in the process of being phased out.
Overall net revenues for the three months ended March 31, 2012 increased by €19 million, or 5.2%, to €383 million
from €364 million for the three months ended March 31, 2011, primarily reflecting the increases in business and residential
revenues.
Residential Services
Residential revenues are mainly comprised of monthly fees, initial connection charges, usage charges from our
residential telephony services, sales of cable modems from our internet services and set-top box rental charges and variable
fees for pay-per-view events from our fiber television services, as well as from our mobile services. Most of our customers
receive our products and services through our fiber network; however an increasing number receive bundled telephony and
internet services through ADSL technology.
Residential revenues, which represented 76.3% of our revenues in the three months ended March 31, 2012,
increased by €4 million, or 1.4%, to €292 million for the three months ended March 31, 2012 from €288 million for the three
months ended March 31, 2011. Our strategy of acquiring customers through a bundled offer has led to an overall increase in
the number of services we provide to our residential customers. The service upgrade campaigns implemented throughout the
26

period under review have resulted in customers subscribing to higher internet speeds and premium TV packages. The €1 price
plan increase to existing and new customers implemented in July 2011 and the higher quality of our customer base with 37%
of our broadband customers ordering ultra-high internet speed packages and 90% of our Pay TV customers subscribing to non
Essential DTV packages, have had a positive impact in net monthly fee revenues. In addition, the increase of customers taking
mobile services from us has also had a positive impact in our revenues during the quarter under review. This increase has
enabled us to offset the decrease in variable revenues derived from the lower number of minutes of fixed-to-mobile and
fixed-to-international calls, and the decrease in pay-per-view and pay VoD events. Having over 86% of ARPU coming from
monthly fee has proven to be useful in the current environment in which consumption-based products and acquisition and
retention promotions are adversely affected.
Residential Fiber
Fiber services provide us with revenues from monthly fees and initial activation and connection charges from
residential bundled and individual services; usage charges from residential telephony services; customer premise equipment
rental charges; incoming interconnection; variable fees for pay-per-view and pay VoD services from television services;
revenues from our mobile service and other minor items. We currently offer our residential customers double- and triple-play
packages of services which consist of telephony and either internet or television, or both services.
period:
The following table sets forth information on residential fiber services, and the percentage change from period to
As of and for the three months
ended March 31, Percentage
2011 2012 change
(unaudited)
Homes released to marketing (in thousands) ............................... 7,033 7,049 0.2%
Customers (in thousands) ............................................. 1,822 1,791 (1.7%)
Penetration (percentage) .............................................. 25.9% 25.4% (0.5)pp
Net churn (percentage; most recent quarter) ............................... 14.8% 18.4% 3.6pp
ARPU (euro; most recent quarter) ....................................... 51.0 52.1 2.2%
Total RGUs (in thousands) ............................................ 4,072 4,031 (1.0%)
Internet ........................................................ 1,406 1,428 1.5%
Television ..................................................... 959 906 (5.5%)
Telephony ..................................................... 1,708 1,697 (0.6%)
RGUs per customer .................................................. 2.23x 2.25x 0.02x
Revenue (euro in millions, except percentage) ............................. 278 281 1.1%
Residential fiber revenues, which represented 73.4% of our revenues in the three months ended March 31, 2012,
increased by €3 million, or 1.1%, to €281 million from €278 million as compared to the same period of the previous year. The
increase in the quality of our customer base, the good performance of our mobile business as well as, to a lesser extent, the
€1 price plan increase to existing and new customers implemented in July 2011, have helped us to increase net monthly fee
revenues within the residential fiber segment. Nevertheless, this increase was partially offset by the decrease in variable
revenues derived from the lower number of minutes of fixed-to-mobile and fixed–to-international calls and the decrease in
pay-per-view and pay VoD events.
We have continued with our selective customer acquisition strategy through credit scoring and other measures that
we implemented to acquire fewer early churning customers and to improve our profitability. Nevertheless, our net churn
levels increased to 18.4% in the first quarter of 2012 from 14.8% in the first quarter of 2011. This increase was primarily
driven by some customers dropping their telecommunication services to preserve their disposable incomes, along with the
increased promotional activity experienced in the market that impacted a portion of our most price sensitive customers
(mainly single play customers).
Customer numbers decreased by 1.7% in the twelve months ended March 31, 2012 to reach 1.8 million, whereas
RGUs decreased by 1.0% in the same period down to 4.0 million as of March 31, 2012. The slowdown in the number of
broadband additions experienced in the market during the previous quarters together with the new market dynamics by which
most operators have shifted from an aggressive customer acquisition strategy to one based on increasing the loyalty level of
their customer base, has impacted our customer and services numbers in the quarter. In the first quarter of 2012, 98% of our
new customers purchased double- and triple-play bundles from us, compared to 96% in the first quarter of 2011. ARPU
increased to €52.1 in the first quarter of 2012 as compared to €51.0 in the first quarter of 2011. Penetration decreased by 0.5
percentage point to 25.4% as of March 31, 2012 from 25.9% as of March 31, 2011.
Broadband Internet: Broadband internet customers increased by 22 thousand or 1.5%, to 1,428 thousand as of
March 31, 2012 from 1,406 thousand as of March 31, 2011. Broadband internet customers as a proportion of total residential
fiber customers increased by 2.6 percentage points to 79.7% as of March 31, 2012 from 77.2% as of March 31, 2011. Our
residential broadband internet penetration increased by 0.3 percentage point to 20.3% at the end of March, 2012 compared to
20.0% at the end of March 2011.
27

In February 2012, we completed the deployment of Docsis 3.0 technology in the Canary Islands and currently we
have the capacity to deliver high-speed Internet (30 Mbps and higher) to over 7 million homes within our network coverage
areas, representing our entire fiber customer base. As of March 31, 2012, over 530 thousand customers subscribed to our
high-speed internet packages (30 Mbps and higher), which represents approximately 37% of our broadband customer base. In
addition, in February 2012, we officially launched a commercial campaign to further improve internet offerings to our
high-end internet customers. Customers subscribing to our 6 to 100 Mbps Internet packages are offered extra 15 Mbps for free
in exchange for a minimum contract term of 12 months.
Television: Television customers decreased by 52 thousand, or 5.5%, to 906 thousand as of March 31, 2012 from
959 thousand as of March 31, 2011. Television customers as a proportion of total residential fiber customers decreased by 2.0
percentage points to 50.6% as of March 31, 2012 from 52.6% at the same date in 2011. The penetration of television services
decreased by 0.8 percentage points to 12.9% at the end of March 2012 compared to 13.6% at the end of March 2011. Our
television customer base has been negatively impacted by several factors: the difficult macroeconomic environment forcing
some customers to drop television services to conserve disposable income; our decision to discontinue the promotion of this
product on a stand-alone basis (in order to encourage the purchase of our bundled packages), and the increased focus on
acquiring customers with telephony and broadband bundles, which enjoy lower churn rates.
In October 2011, we officially launched our next generation TV service (TiVo) to customers within Madrid and
Barcelona and we have made this service available in regions that represent almost 62% of our network as of March 31, 2012.
We expect to further extend this innovative TV service to the remaining regions within our network coverage areas in the
coming quarters. As of March 31, 2012, this product had only been launched for five months and during this period, we
gained over 16 thousand customers.
Telephony: Telephony customers decreased by 11 thousand, or 0.6%, to 1,697 thousand as of March 31, 2012
from 1,708 thousand as of March 31, 2011. Telephony customers as a proportion of total residential fiber customers increased
by 1.1 percentage points to 94.8% as of March 31, 2012 from 93.7% as of March 31, 2011. This service has been relatively
resilient despite the ongoing economic crisis in terms of both customer base (where our telephony penetration decreased by
only 0.2% to 24.1% at the end of March 2012 compared to 24.3% at the end of March 2011) and minutes of use (where
national fixed-to-fixed calls volumes remaining broadly stable, although fixed-to-mobile and international call volumes
remain weak).
Residential ADSL
Residential ADSL services are comprised of services offered through full unbundling of the local loop. These
services provide us with revenues from monthly fees from telephony and broadband internet services and usage charges from
telephony services.
The following table sets forth customers, RGU and revenue from our residential ADSL services and percentage
change over the period.
As of and for the three months
ended March 31, Percentage
2011 2012 change
(unaudited)
Customers (in thousands, except percentage) ............................. 91 91 (0.1%)
RGUs (in thousands, except percentage) ................................. 169 171 1.2%
Revenue (euro in millions, except percentage) ............................ 10 11 10.0%
Residential ADSL revenues increased by €1 million, or 10.0%, to €11 million in the first three months of 2012 from
€10 million in the first three months of 2011, reflecting increases in RGUs, offset in part by declines in variable usage fees
due to the challenging macroeconomic environment. ADSL customers remained flat at 91 thousand as of March 31, 2012
from March 31, 2011. RGUs increased by 2 thousand, or 1.2%, to 171 thousand as of March 31, 2012 from 169 thousand as
of March 31, 2011.
Business Services
revenue.
Business services revenues comprise revenues from SMEs, large accounts, corporations, wholesale and other
Business services revenues, which represented 23.3% of our revenues in the three months ended March 31, 2012,
increased by €15 million, or 20.3%, to €89 million for the three months ended March 31, 2012 from €76 million for the three
months ended March 31, 2011, primarily as a result of the increase in SME and wholesale revenues.
SME services
Revenues from SME services are derived from fees paid by small- and medium-sized enterprises, for voice and data
services, offered individually or as a bundle and incoming interconnection revenues of this segment. We offer SME services
over fiber and ADSL.
28

The following table sets forth customers, RGUs and revenues from SME services and the percentage change over
the period:
As of and for the three months
ended March 31, Percentage
2011 2012 change
(unaudited)
Customers (in thousands, except percentage) ............................. 74 95 28.4%
RGUs (in thousands, except percentage) ................................. 141 185 31.2%
Revenue (euro in millions, except percentage) ............................ 19 21 10.5%
SME revenues, which represented 5.5% of our revenues in the three months ended March 31, 2012, increased by
€2 million, or 10.5%, to €21 million in the three months ended March 31, 2012 from €19 million in the three months ended
March 31, 2011. SME customers increased by 21 thousand, or 28.4%, in the twelve months ended March 31, 2012 to reach
95 thousand customers. RGUs increased by 44 thousand, or 31.2%, in the twelve months ended March 31, 2012 to reach
185 thousand despite the adverse macroeconomic environment. The good performance in the SME segment has been mainly
driven by: (i) our continued focus in this business segment, (ii) the development of new sales channels through the year,
(iii) our competitive price plans, and (iv) our renewed product portfolio including mobile offers.
Large Accounts & Corporations
Revenues from large accounts and corporations are derived from customized solutions designed to satisfy the
communications needs (voice, internet, data solutions and equipment) of large corporate groups, institutions and central and
autonomous government agencies and other public sector entities, through an integrated range of tailored services.
Revenues from large accounts and corporations decreased by €1 million, or 3.1%, to €31 million in the three months
ended March 31, 2012 from €32 million in the three months ended March 31, 2011. A lower level of variable revenues
associated with reduced usage, and contract renegotiations that often involved material reductions in agreed volumes and
prices, negatively impacted this segment during the period.
Wholesale & Other
Revenues from wholesale are derived from carrier services, voice traffic services, leased and dedicated lines and
ISP solutions, provided to other telecommunications operators and from the provision of intelligent network services.
Revenues from wholesale and other services increased by €14 million, or 60.9%, to €37 million in the three months
ended March 31, 2012 from €23 million in the three months ended March 31, 2011. This performance was the result of a set
of initiatives launched in the last two years to boost voice services revenues. In 2010 we laid the foundations for growth by
setting up a VoIP platform to help us manage the prepaid services, implementing a LCR tool (Least-Cost Routing) and
reengineering the delivery processes to make it leaner and faster. During 2011 we added new IP traffic termination providers
to improve our commercial offer and we strengthened the team by hiring an experienced sales representative and a routing
manager.
Indirect Access & Other
Indirect access comprises telephony and data services we provide using Telefónica’s network and equipment.
Indirect access is a service provided to customers of Auna, a company we acquired on November 4, 2005. Our indirect access
customers have been steadily declining in all periods under review, which is a trend we expect to continue in light of our
focus on other business activities. Indirect access and other revenue remained flat at €2 million in the first three months of
2012 compared to the first three months of 2011.
Operating Expenses
Our operating expenses are comprised of cost of sales; staff cost; other operating expenses; work carried out by the
company for its assets; depreciation and amortization; and impairments and gains or losses on disposal of fixed assets. The
following table sets forth our operating expenses and the percentage change from period to period for each of the periods
indicated:
For the three months
ended March 31,
2011 2012
(euro in millions)
(unaudited)
Percentage
change
Cost of sales ........................................................... (77) (90) 16.9%
Staff costs ............................................................. (39) (39) —
Other operating expenses ................................................. (86) (83) (3.5)%
Work carried out by the company for its assets ................................ 17 15 (11.8)%
Depreciation & amortization .............................................. (95) (94) (1.1)%
Impairments and gains or losses on disposals of fixed assets ..................... — (2) n.a.
Total operating expenses ................................................ (280) (293) 4.6%
29

Our operating expenses increased by 4.6% during the three months ended March 31, 2012, to €293 million, as
compared with €280 million during the three months ended March 31, 2011. The increase in our operating expenses mainly
reflects the increase in the cost of sales associated with our wholesale activities as well as our growing mobile business. In
addition, the increased price pressures resulting from the higher CPI level have also impacted our operating expenses.
Cost of Sales: Cost of sales principally consists of interconnection and backbone network costs for
telecommunications services, internet connectivity costs, the cost of the cable modems we sell, fiber, circuit and duct renting
expenses and programming fees for television programming services. Interconnection costs for telephony services are
generated by calls made by our customers that terminate outside our network. Internet connectivity costs mainly consist of
fees for the bandwidth used for our internet transit outside of Spain. Television programming fees consist primarily of fees
paid to television content owners to distribute their television content and fees paid to distribute movies and soccer on a
pay-per-view basis. Cost of sales increased by €13 million, or 16.9%, to €90 million in the first three months of 2012 from
€77 million in the first three months of 2011. This increase was driven mainly by increased interconnection costs related to
our increased wholesale activity as well as costs related with our growing mobile business (host, interconnection and
equipment). As a percentage of total revenues, cost of sales increased 2.3% to 23.5% in the three months ended March 31,
2012 from 21.2% in the three months ended March 31, 2011.
Staff Costs: Staff costs consist principally of expenses related to wages and salaries for our employees, employer’s
social security contributions, other employee expenses and severance payments. Staff costs remained flat in €39 million in the
first three months of 2012 compared to the first three months of 2011. In the first three months of 2012, the average number of
our employees was 2,893 compared with 3,067 in the first three months of 2011.
Other Operating Expenses: Other operating expenses consist principally of leases, local taxes, professional
services, marketing and selling expenses, network operation and maintenance, information systems, administrative overheads,
billing costs and impairments of trade receivables. Other operating expenses decreased by €3 million, or 3.5%, to €83 million
in the first three months of 2012 from €86 million in the first three months of 2011. Cost control initiatives implemented in
the organization have led to savings in other operating expenses.
Work Carried Out By the Company for Its Assets: We capitalize direct labor costs associated with the
development and construction of our network and installations carried out at our customer premises. Capitalized costs
decreased by €2 million, or 11.8%, to €15 million in the first three months of 2012 from €17 million in the first three months
of 2011.
Depreciation & Amortization: Depreciation and amortization expense is principally related to the depreciation of
our network, customer premise equipment and installation costs incurred in connection with the addition of new subscribers,
and to the amortization of intangible assets. Depreciation and amortization decreased by €1 million, or 1.1%, to €94 million in
the first three months of 2012 from €95 million in the first three months of 2011.
Operating Result
We calculate operating result as revenues minus operating expenses. Operating result in the three months ended
March 31, 2012 increased by €6 million, or 7.1%, to €90 million from €84 million in the three months ended March 31, 2011.
The increase in our revenues during the first three months of 2012 has led to the improvement in operating result. Our
operating profit margin increased to 23.5% in the first three months of 2012 as compared to 23.1% in the first three months of
2011, as result of the changes in revenues and operating expenses discussed above.
Net Financial Result
The following table sets forth our net financial result and the percentage change for the periods indicated:
For the three months
ended March 31, Percentage
2011 2012 change
(euro in millions)
(unaudited)
Financial income ...................................................... — 1 n.a.
Interest expense ....................................................... (68) (68) —
Fair value losses on financial instruments ................................... — (4) n.a.
Exchange differences ................................................... 7 13 85.7%
Impairment and results from financial instruments disposals .................... (4) — n.a.
Net financial result .................................................... (65) (58) (10.8%)
Our net financial result is mainly comprised of interest expense from our financing, offset in part by interest income
from cash balances and exchange gains in the current situation favorable to the Euro. Net financial result decreased by
€7 million, or 10.8%, to €58 million in the three months ended March 31, 2012 from €65 million incurred in the three months
ended March 31, 2011 as a result of exchange rate gains.
30

Interest expense is expected to increase in the future as a result of the higher interest rates associated with the May
2012 Refinancing.
Income Tax
Our income tax increased by €4 million to €10 million in the three months ended March 31, 2012 from €6 million
for the three months ended March 31, 2011, reflecting higher result before income tax for the period.
On August 20, 2011, the Spanish official Gazzette (Boletín Oficial del Estado) published Royal Decree Law 9/2011
concerning measures to improve the quality and cohesion of the national health system, contributions to fiscal consolidation,
and provisions to increase the maximum amount of state guarantees for 2011. Article 9 of said Royal Decree-Law 9/2011
provides certain changes in the Spanish Corporate Income Tax Law in relation to tax loss carry forward rules which are
relevant for the tax position of the ONO Group. For tax periods beginning in 2011, 2012 and 2013, companies with turnover
for the preceding 12-month period of at least €60 million may use tax losses generated in prior periods to offset a maximum of
50% of their taxable income (before application of the carry forward). In addition, effective for tax periods beginning as of
January 1, 2012, Article 25.1 of the Corporate Income Tax Law (as amended) extends the tax losses carry forward period
from 15 to 18 years.
On March 31, 2012 Royal Decree-Law 12/2012 came into effect with the objective of reducing the public deficit.
Although there are still some questions and interpretations that need to be clarified by the Tax Authorities, the main terms of
the new law that will impact the Group are the following: (i) the amount of net deductible financial expenses in the tax period
is generally reduced to 30% of operating profit (applying certain adjustments), with any excess net financial expenses
available to be used over the next 18 years; (ii) unrestricted depreciation of investments in new tangible fixed assets and
investment property has been repealed, with a transitional regime provided for investments made prior to 31 March 2012;
(iii) the deductibility of goodwill is reduced from 5% to 1%; (iv) deductions are reduced from 35% to 25% of gross tax
payable, with the period for applying deductions not applied owing to insufficient tax payable being extended from 10 to 15
years; and (v) advance tax payments are increased to at least 8% of the accounting profit.
We have tax credits of €952 million as of March 31, 2012. In this regard, Royal Decree-Law 9/2011 and Royal
Decree-Law 12/2012 establish important restrictions on our ability to use our tax credits to offset our tax profits for fiscal
years 2012 and 2013. While historically we have not been required to pay cash taxes, as a result of these new laws, we expect
to pay cash taxes in 2012 and 2013 as described below.
According to our preliminary internal analysis, we believe that these laws will have no impact in our income
statement, and that the maximum tax related cash impact would amount to €15 million in each of the years 2012 and 2013.
Assuming no further changes in tax law, we believe that in future years we will be able to fully offset any profit tax with
approximately €1 billion of tax credits and therefore we do not expect any further tax related cash outflows from 2014
onwards.
Results of Operations for the Years Ended December 31, 2009, 2010 and 2011
The following table sets forth certain summary financial information and the percentage change from period to
period for each of the periods indicated.
Year ended December 31, Percentage change
2009 2010 2011 2009/2010 2010/2011
(euro in millions)
Total net revenues ....................................... 1,512 1,472 1,485 (2.6)% 0.9%
Other revenue ............................................ — — — n.a n.a
Operating expenses ....................................... (1,183) (1,135) (1,117) (4.1)% (1.6)%
Operating result ......................................... 329 337 368 2.4% 9.2%
Net financial result ........................................ (245) (233) (247) (4.9)% 6.0%
Result before income tax .................................. 84 104 121 23.8% 16.3%
Income tax .............................................. (31) (62) (46) 100.0% (25.8)%
Result for the year ....................................... 53 42 75 (20.8)% 78.6%
Attributable to owners of the parent .......................... 57 42 75 (26.3)% 78.6%
Attributable to non controlling interest ........................ (4) — — n.a n.a
Net Revenues
Our net revenues are derived primarily from residential services, which involve providing our customers with a
combination of internet, pay television and telephony services, either through our fiber network or through ADSL, business
services, which involve providing SMEs, large corporations and public entities with voice and data services, as well as other
value-added services, and providing other telecommunications operators with wholesale access to our excess capacity and
certain other products and services, such as carrier services, voice traffic services, leased and dedicated lines and internetservice
provider solutions.
31

The following table sets forth details of our net revenues and the percentage change from period to period for each
of the periods indicated:
Year ended December 31, Percentage change
2009 2010 2011 2009/2010 2010/2011
(euro in millions)
Residential ............................................. 1,158 1,159 1,168 0.1% 0.8%
Residential fiber ........................................ 1,124 1,120 1,125 (0.4)% 0.4%
Residential ADSL ...................................... 34 39 43 14.7% 10.3%
Business, wholesale & other ............................... 334 302 310 (9.6)% 2.6%
SMEs ................................................ 70 73 77 4.3% 5.5%
Large Accounts/Corporations ............................. 166 142 129 (14.5)% (9.2)%
Wholesale and other ..................................... 98 87 104 (11.2)% 19.5%
Indirect Access and other ................................. 10 8 7 (20.0)% (12.5)%
Revenues from disposed assets ............................. 10 3 — (70.0)% n.a.
Total net revenues ....................................... 1,512 1,472 1,485 (2.6)% 0.9%
Overall net revenues in 2011 increased by €13 million, or 0.9%, to €1,485 million from €1,472 million in 2010,
reversing the negative trend of the last years on the back of our new strategy. This is noticeable given the challenging industry
and macroeconomic environment in which we have operated.
Overall net revenues in 2010 decreased by €40 million, or 2.6%, to €1,472 million from €1,512 million in 2009,
reflecting the decrease in business and other revenues partially offset by the slight increase in residential revenues.
Residential Services
Residential revenues are mainly comprised of monthly fees, initial connection charges, usage charges from our
residential telephony services, sales of cable modems from our internet services and set-top box rental charges and variable
fees for pay-per-view events from our fiber television services, as well as from our mobile services. Most of our customers
receive our products and services through our fiber network; however an increasing number receive bundled telephony and
internet services through ADSL technology.
In 2011, residential revenues, which represented 78.6% of our revenues, increased by €9 million, or 0.8%, to
€1,168 million from €1,159 million in 2010.
In 2010, residential revenues, which represented 78.7% of our revenues in 2010, increased by €1 million, or 0.1%,
to €1,159 million from €1,158 million in 2009.
Residential Fiber
Residential fiber services provide us with revenues from monthly fees and initial activation and connection charges
from residential bundled and individual services; usage charges from residential telephony services; customer premise
equipment rental charges; incoming interconnection; variable fees for pay-per-view and VoD services from fiber television
services and other minor items. We currently offer our residential customers double- and triple-play packages of services
which consist of telephony and either internet or television, or both services.
period:
The following table sets forth information on residential fiber services, and the percentage change from period to
Year ended December 31, Percentage change
2009 2010 2011 2009/2010 2010/2011
(unaudited unless stated otherwise)
Homes released to marketing (in thousands) .................... 7,004 7,030 7,043 0.4% 0.2%
Customers (in thousands) ................................... 1,825 1,811 1,807 (0.8)% (0.2)%
Penetration (percentage) ................................... 26.1% 25.8% 25.7% (0.3pp) (0.1pp)
Net churn (percentage; most recent quarter) .................... 13.9% 15.5% 18.8% 1.6pp 3.2pp
ARPU (euro; most recent quarter) ............................ 51.0 51.5 52.4 1.1% 1.6%
Total RGUs (in thousands) ................................. 3,967 4,019 4,060 1.3% 1.0%
Internet ............................................. 1,326 1,380 1,429 4.1% 3.6%
Television ........................................... 975 953 923 (2.2)% (3.2)%
Telephony .......................................... 1,666 1,686 1,708 1.2% 1.3%
RGUs per customer ....................................... 2.17x 2.22x 2.25x 0.05x 0.03x
Revenues (euro in millions, except percentages) (audited) ......... 1,124 1,120 1,125 (0.4)% 0.4%
32

In 2011, residential fiber revenue, which represented 75.8% of our revenues, increased by €5 million, or 0.4%, to
€1,125 million from €1,120 million in 2010. Net monthly fee revenues continued to perform well mainly as a consequence of
(i) the success of our bundling strategy with almost 98% of our new customers subscribing to a bundled service, (ii) the higher
quality of our customer base with 30% of our broadband customers taking high-speed Internet packages from us and 90% of
our Pay TV customers subscribing to non Essential DTV packages, and (iii) the €1 price plan increase to existing and new
customers implemented in July 2011. This increase has enabled us to offset the decrease in variable revenues derived from the
lower number of minutes of fixed-to-mobile and fixed-to-international calls, and the decrease in pay-per-view (PPV) and pay
video-on-demand (VoD) events. In addition, the performance of our residential mobile business has also positively impacted
revenues in the residential fiber segment during 2011. Having over 86% of ARPU coming from the monthly fee has proven
beneficial in the current environment in which consumption based products are heavily affected and the market dynamics in
acquisition and retention promotions are playing a more important role. In 2010, residential fiber revenue, which represented
76.1% of our revenues, decreased by €4 million, or 0.4%, to €1,120 million from €1,124 million in 2009 as a consequence of
the difficult macroeconomic environment that negatively impacted our customer figures and variable revenues derived from
telephony and pay television variable consumption.
Residential fiber RGUs and RGU per customer increased in both periods, reflecting increased double- and tripleplay
customers. As of December 31, 2011, 39.9% of our customers subscribed to triple-play bundle, compared to 39.0% at the
end of 2010 and 35.8% at the end of 2009. ARPU increased to €52.4 in the fourth quarter of 2011 as compared to €51.5 in the
fourth quarter of 2010. The increase in ARPU in the periods under review primarily reflected an increase in double- and
triple-play customers, the positive uptake of higher broadband and TV services and our strategic pricing management.
Penetration decreased by 0.1 percentage point to 25.7% as of December 31, 2011, from 25.8% as at December 31, 2010 and
26.1% as at December 31, 2009. Total residential fiber customers decreased by 0.2% in 2011 to 1,807 thousand and by 0.8%
in 2010 to 1,811 thousand.
Our net churn (based on the last quarter of each period) for our residential fiber business increased from 13.9% in
2009, to 15.5% in 2010 and to 18.8% in 2011. This increase was primarily driven by some customers dropping their
telecommunication services to preserve their disposable incomes, along with the increased promotional activity experienced
in the Spanish telecommunication market that has impacted a portion of our most price sensitive customers (mainly single
play customers). Going forward we intend to continue focusing on stabilizing net churn with the implementation of a series of
initiatives to promote customer loyalty (such as our recently launched 15 Mbps upgrade campaign), the development of better
products (such as Docsis 3.0, TiVo, mobile), improved customer care, customer segmentation tools and tactical promotions.
Broadband Internet: In 2011, broadband internet customers increased by 49 thousand, or 3.6%, to 1,429 thousand
as of December 31, 2011. Broadband internet customers as a proportion of total residential fiber customers increased by 2.9
percentage points to 79.1% in 2011. Our residential broadband internet penetration increased to 20.3% at the end of 2011
from 19.6% at the end of 2010. The increase was a result of our efforts to acquire customers with this service combined with
telephony or on a triple-play basis as well as our focus in high-speed internet offerings. As of December 31, 2011, over
424 thousand customers subscribed to our high-speed internet packages (30, 50 or 100 Mbps), which represents
approximately 30% of our broadband customer base. We believe these excellent commercial results position ONO as the
market leader in high-speed Internet in Spain. In February 2012, we completed the deployment of DOCSIS 3.0 technology in
the Canary Islands and currently we have the capacity to deliver high-speed Internet of up to 100 Mbps to over 7 million
homes within our network coverage areas, representing our entire fiber customer base.
In 2010, broadband internet customers increased by 54 thousand, or 4.1%, to 1,380 thousand as of December 31,
2010. Broadband internet customers as a proportion of total residential fiber customers increased by 3.6 percentage points to
76.2% in 2010. Our residential broadband internet penetration increased to 19.6% at the end of 2010 from 18.9% at the end of
2009.
Television: In 2011, fiber television customers decreased by 31 thousand, or 3.2%, to 923 thousand as of
December 31, 2011. Fiber television customers as a proportion of total residential fiber customers decreased by 1.6 percentage
points in 2011 to 51.1% as of December 31, 2011. The penetration of fiber television services decreased by 0.5 percentage
point to 13.1% at the end of 2011. The decrease in television customers was mainly derived from the negative macroeconomic
environment under which we have operated in that has forced our most price sensitive customers to drop the television service
to preserve their disposable incomes.
In 2010, fiber television customers decreased by 22 thousand, or 2.2%, to 953 thousand as of December 31, 2010.
Fiber television customers as a proportion of total residential fiber customers decreased by 0.8 percentage points in 2010 to
52.7% as of December 31, 2010. The penetration of fiber television services decreased by 0.4 percentage point to 13.6% at the
end of 2010 from 13.9% at the end of 2009. During 2010, the decrease in television customers was mainly due to the fact that
we ceased offering this product on a stand-alone basis and focused on acquiring customers with telephony and broadband
bundles, which enjoy lower net churn rates, and a discontinuation of promotions relating to “TV Esencial”, a low-cost
television package.
Telephony: In 2011, the number of telephony customers increased by 22 thousand, or 1.3% to 1,708 thousand as
of December 31, 2011. Telephony customers as a proportion of total residential fiber customers increased by 1.5 percentage
33

points to 94.6% at the end of 2011. This increase was primarily due to our efforts to acquire customers taking bundles with
telephony and the lower net churn experienced in customers taking this service. This service is showing resistance to the
decrease in the customer base and minutes of use, remaining strong in terms of national fixed-to-fixed calls; although
fixed-to-mobile and international call volumes remain weak.
In 2010, the number of telephony customers increased by 20 thousand, or 1.2% to 1,686 thousand as of
December 31, 2010. Telephony customers as a proportion of total residential fiber customers increased by 1.8 percentage
points to 93.1% at the end of 2010.
Residential ADSL Services
Residential ADSL services are comprised of services offered through full unbundling of the local loop. These
services provide us with revenues from monthly fees from telephony and broadband internet services and usage charges from
telephony services. The following table sets forth customers, RGU and revenue from our residential ADSL services and
percentage change over the period.
As of and for
December 31, Percentage change
2009 2010 2011 2009/2010 2010/2011
(unaudited)
Customers (in thousands, except percentages) ........................... 77 88 94 14.2% 6.8%
RGUs (in thousands, except percentages) ............................... 136 162 176 18.8% 9.0%
RGUs per customers ............................................... 1.77x 1.84x 1.88x 0.07x 0.04x
In 2011, residential ADSL revenues increased by €4 million, or 10.3%, to €43 million from €39 million in 2010,
reflecting increased focus on this business segment, which resulted in an increase in the number of our ADSL customers,
offset in part by a decrease in variable fee revenues. ADSL customers increased by 6 thousand, or 6.8%, to 94 thousand at the
end of 2011 from 88 thousand at the end of 2010.
In 2010, residential ADSL revenues increased by €5 million, or 14.7%, to €39 million from €34 million in 2009.
ADSL customers increased by 11 thousand, or 14.2%, to 88 thousand at the end of 2010 from 77 thousand at the end of 2009.
Business Services
revenue.
Business services revenues comprise revenues from SMEs, large accounts, corporations, wholesale and other
In 2011, business services revenues, which represented 21.0% of our revenues, increased by €8 million, or 2.6%, to
€310 million from €302 million in 2010, primarily as a result of the good performance in the SME and wholesale segments.
SMEs
Revenues from SMEs services are derived from fees paid by small- and medium-sized enterprises, for voice and
data services, offered individually or as a bundle and incoming interconnection revenues of this segment. We offer SME
services over fiber and ADSL.
The following table sets forth revenues and customers from SMEs services and the percentage change from period
to period:
Percentage change
2009 2010 2011 2009/2010 2010/2011
(unaudited unless stated otherwise)
Customers (in thousands, except percentages) ........................... 67 72 89 6.9% 24.4%
RGUs (in thousands, except percentages) ............................... 111 132 174 18.4% 32.5%
RGUs per customers ............................................... 1.66x 1.83x 1.95x 0.17x 0.12x
Revenues (euro in millions, except percentages) (audited) .................. 70 73 77 4.3% 5.5%
In 2011, SME revenues, which represented 5.2% of our revenues, increased by €4 million, or 5.5%, to €77 million.
SMEs customers increased by 24.4%, to 89 thousand as of December 31, 2011. The good performance in the SME segment is
mainly driven by: (i) our continued focus in this business segment, (ii) the development of new sales channels through the
year, (iii) our competitive price plans and, (iv) our renewed product portfolio including mobile offers.
In 2010, SME revenues, which represented 5.0% of our revenues, increased by €3 million, or 4.3%, to €73 million.
SMEs customers increased by 6.9%, to 72 thousand as of December 31, 2010. The increase in revenue primarily reflects the
effort carried out by the company in this segment despite the difficult macroeconomic environment and the difficulty in
acquiring new customers.
34

Large Accounts & Corporations
Revenues from large accounts and corporations are derived from customized solutions designed to satisfy the
communications needs (voice, internet, data solutions and equipment) of large corporate groups, institutions and central and
autonomous government agencies and other public sector entities, through an integrated range of tailored services.
In 2011, our large accounts and corporations revenues decreased by €13 million, or 9.2%, to €129 million from
€142 million in 2010. The lower level of variable revenues as well as contract renegotiations that often involve material
reductions in prices have continued impacting this business unit. Nevertheless, as margins for these services are relatively
low, the overall contribution of this business unit has not been greatly impacted.
In 2010, our large accounts and corporations revenues decreased by €24 million, or 14.5%, to €142 million from
€166 million in 2009.
Wholesale & Other
Revenues from wholesale and other are derived from carrier services, voice traffic services, leased and dedicated
lines and ISP solutions, provided to other telecommunications operators and from the provision of intelligent network
services.
In 2011, revenues from wholesale and other services increased by €17 million, or 19.5%, to €104 million from
€87 million in 2010. This strong performance was the results of a carefully planned set of initiatives launched in the last two
years to boost voice services revenues. In 2010 we laid the foundations for growth by setting up a VoIP platform to help us
manage the prepaid services, implementing a LCR tool (Least-Cost Routing) and re-engineering the whole delivery processes
to make it lean and faster. During 2011 we added new IP traffic termination providers to improve our commercial offer and
we strengthened the team by hiring an experienced sales representative and a routing manager. All these initiatives resulted in
a 19.5% growth in our wholesale revenues in 2011. In 2010, revenues from wholesale and other services decreased by
€11 million, or 11.2%, to €87 million from €98 million in 2009. This decline was mainly due to the progressive migration by
Orange and the decline in the consumption in STA services.
Indirect Access Services & Other
Indirect access comprises telephony and data services we provide using Telefónica’s network and equipment.
Indirect access is a service provided to a certain customer segment of Auna Telecomunicaciones, S.A.U. (“Auna”), a company
we acquired on November 4, 2005. Our indirect access customers have been steadily declining in all periods under review,
which is a trend we expect to continue in light of our focus on other business activities.
In 2011, indirect access and other revenues decreased by €1 million, or 12.5%, to €7 million from €8 million in
2010. In 2010, indirect access and other revenues decreased by €2 million, or 20.0%, to €8 million from €10 million in 2009.
Operating Expenses
Our operating expenses are comprised of cost of sales; staff cost; other operating expenses; work carried out by the
company for its assets; depreciation and amortization; impairments and gains of losses on disposal of fixed assets; and other.
The following table sets forth our operating expenses and the percentage change from period to period for each of
the periods indicated:
For the year ended
December 31, Percentage change
2009 2010 2011 2009/2010 2010/2011
(euro in millions)
Cost of sales ................................................. (328) (310) (317) (5.5)% 2.3%
Staff costs ................................................... (171) (161) (159) (5.8)% (1.2)%
Other operating expenses ....................................... (344) (342) (323) (0.6)% (5.6)%
Work carried out by the company for its assets ...................... 61 65 62 6.6% (4.6)%
Depreciation and amortisation ................................... (390) (385) (379) (1.3)% (1.6)%
Over provisions .............................................. — — 9 n.a. n.a.
Impairment and gains or (losses) on disposal of fixed assets ........... (11) (2) (10) (81.8)% n.a.
Total operating expenses ...................................... (1,183) (1,135) (1,117) (4.1)% (1.6)%
In 2011, our operating expenses decreased by €18 million, or 1.6%, to €1,117 million from €1,135 million in 2010
mainly driven by our strict cost control policies coupled with continuous optimization and restructuring initiatives (revised
procurement model, real estate optimization, on line digital transformation, etc) have led to sustained Opex savings across the
35

entire organization. These savings have been partially offset by the increased price pressures resulting from the higher CPI
level experienced in the quarter as well as by the introduction of Law 8/2009 on 28 August 2009 which requires Cableuropa
to contribute 1.5% of its television revenues and 0.9% of its telecommunication revenues, to subsidize the sustainability of the
Spanish public broadcasting entity RTVE.
In 2010, our operating expenses decreased by €48 million, or 4.1%, to €1,135 million from €1,183 million in 2009
mainly driven by (i) the new sales strategy with focus on cost-efficient sales channels; (ii) other organizational initiatives; and
(iii) several content contract renegotiations.
Cost of Sales: Cost of sales principally consists of interconnection and backbone network costs for
telecommunications services, internet connectivity costs, the cost of the cable modems we sell, fiber, circuit and duct renting
expenses and programming fees for fiber television programming services. Interconnection costs for telephony services are
generated by calls made by our customers that terminate outside our network. Internet connectivity costs mainly consist of
fees for the bandwidth used for our internet transit outside of Spain. Fiber television programming fees consist primarily of
fees paid to television content owners to distribute their fiber television content and fees paid to distribute movies and soccer
on a pay-per-view basis. In 2011, our cost of sales increased by €7 million, or 2.3%, to €317 million from €310 million in
2010. As a percentage of total revenues, our cost of sales increased to 21.3% in 2011 as compared to 21.1% in the previous
year. In 2010, our cost of sales decreased by €18 million, or 5.5%, to €310 million from €328 million in 2009. As a
percentage of total revenues, our cost of sales decreased to 21.1% in 2010 as compared to 21.7% in the previous year.
Staff Costs: Staff costs consist principally of expenses related to wages and salaries for our employees, employer’s
social security contributions, other employee expenses and severance payments. In 2011, our staff costs decreased by
€2 million, or 1.2%, to €159 million from €161 million in 2010. The decrease in staff costs was driven primarily by the
reduction in our average headcount as a result of the optimization of our organizational structure and processes. In 2010, our
staff costs decreased by €10 million, or 5.8%, to €161 million from €171 million in 2009. The decrease in staff costs was
driven primarily by the reduction in our average headcount as a result of the optimization of our organizational structure and
processes.
Other Operating Expenses: Other operating expenses consist principally of leases, local taxes, professional
services, marketing and selling expenses, network operation and maintenance, information systems, administrative overheads,
billing costs and impairments of trade receivables
The following table sets forth our other operating expenses and the percentage change from period to period for
each of the periods indicated:
For the year ended
December 31, Percentage change
2009 2010 2011 2009/2010 2010/2011
(euro in millions)
Leases and canons ............................................ (54) (51) (49) (5.6)% (3.9)%
Repairs and maintenance ...................................... (64) (62) (58) (3.1)% (6.5)%
Service of independent professionals ............................. (90) (92) (91) 2.2% (1.1)%
Advertising ................................................. (42) (43) (39) 2.4% (9.3)%
Other services ............................................... (40) (36) (34) (10.0)% (5.6)%
Taxes ...................................................... (19) (32) (36) 68.4% 12.5%
Impairment of trade receivables ................................. (34) (26) (17) (23.5)% (34.6)%
Total other operating expenses ................................ (344) (342) (323) (0.6)% (5.6)%
In 2011, other operating expenses decreased by €19 million, or 5.6%, to €323 million from €342 million in 2010.
The stability in other operating expenses was mainly a result of the reduction in impairment of trade receivables of 34.6%, the
reduction in other services of 5.6%, the reduction in advertising of 9.3% and the reduction in repairs and maintenance of 6.5%
which were offset by the increase in taxes of 12.5% that was primarily the result of the RTVE Financing Law, which resulted
in expenses of €13.4 million in 2011. In 2010, other operating expenses decreased by €2 million, or 0.6%, to €342 million
from €344 million in 2009. The stability in other operating expenses was mainly a result of the reduction in impairment of
trade receivables of 23.5%, the reduction in other services of 10.0% and the reduction in leases and canons of 5.6% which
were offset by the increase in taxes of 68.4% that was primarily the result of the RTVE Financing Law, which resulted in
expenses of €10.5 million in 2010.
Work carried out by the company for its assets: We capitalize direct labor costs associated with the development
and construction of our network and installations carried out at our customer premises. In 2011, capitalized costs decreased by
€3 million, or 4.6%, to €62 million from €65 million in 2010. In 2010, capitalized costs increased by €4 million, or 6.6%, to
€65 million from €61 million in 2009. This increase was primarily the result of increased installation activity related to
upgrading equipment for existing customers.
Depreciation and Amortization: Depreciation and amortization expense is principally related to the depreciation
of our network, customer premise equipment and installation costs incurred in connection with the addition of new
subscribers, and to the amortization of intangible assets. In 2011, depreciation, amortization and impairment charges
36

decreased by €6 million, or 1.6%, to €379 million from €385 million in 2010. The decrease was mainly due to the cancellation
of network expansion activities since mid-2008 until 2009. In 2010, depreciation, amortization and impairment charges
decreased by €5 million, or 1.3%, to €385 million from €390 million in 2009.
Over Provisions: In 2011, we reversed provisions in the amount of €9 million. In prior years we had recognized
certain provisions in connection with contributions to the National Universal Service Fund. In connection with a review of
such provisions following a CMT decision, we reversed a portion of the provisions.
Impairment and Gains or Losses on Disposal of Fixed Assets: In 2011, we increased the recognition of
impairments and gains and losses on disposal of fixed assets to €10 million from €2 million in 2010.
Operating Result
We calculate operating result as revenues minus operating expenses. Our operating result increased by €31 million,
or 9.2%, to €368 million in 2011 from €337 million in 2010 and by €8 million, or 2.4%, to €337 million in 2010 from
€329 million in 2009. Our operating profit margin was 21.8% in 2009, 22.9% in 2010 and 24.8% in 2011. The increases in
our operating result and operating profit margin are the result of the factors discussed above.
Net Financial Result
Our net financial result is mainly comprised of interest expense from our financing and hedge agreements, offset in
part by interest income from cash balances.
The following table sets forth our net financial expense and the percentage change for the periods indicated:
As and for the year
ended December 31, Percentage change
2009 2010 2011 2009/2010 2010/2011
(euro in millions)
Financial income .................................................. 3 1 2 (66.7)% 100%
Interest expense ................................................... (230) (209) (229) (9.1)% 9.6%
Other financial charges ............................................. (30) (26) (20) (13.3)% (23.1)%
Changes in fair value of financial instruments ........................... 7 — — n.a n.a.
Impairment and results from financial instrument disposal ................. 4 1 (3) (75.0)% (400)%
Exchange differences .............................................. — — 3 n.a. n.a.
Net financial result ............................................... (245) (233) (247) (4.9)% 6.0%
In 2011, net financial result increased by €14 million, or 6.0%, to €247 million in 2011 from €233 million in 2010.
This increase was mainly driven by: (i) the increase in interest expense was primarily due to the higher Euribor rates over the
course of 2011, (ii) the increased interest expenses derived from the €461 million (equivalent) Senior Notes and the
€300 million Senior Secured Notes issued in January and July 2011 respectively and (iii) the refinancing charges derived from
the above capital market transactions.
In 2010, net financial result decreased by €12 million, or 4.9%, to €233 million from €245 million in 2009. The
reduction in interest expense was primarily due to the decline in Euribor rates over the course of 2009 and into 2010 as well as
the positive impact of the expiration of €2,065 million of interest rates swaps in July 2010, offset in part by amortized costs
incurred to amend the Senior Facility in May 2010 (which was treated as a refinancing for accounting purposes) and the issue
of €700 million Senior Secured Notes in October 2010, which will also have an impact going-forward as the costs are further
amortized.
Income Tax
In the year ended December 31, 2011, we recognized €46 million of income tax, including €9 million of income tax
reflecting the write off of certain tax credits which had expired. We have tax credits of €953 million as of December 31, 2011.
Under Spanish corporate income tax law, tax losses can generally be carried forward for up to 18 years from the date such
losses were incurred.
In the year ended December 31, 2010, we recognized €62 million of income tax, reflecting the impact of the tax
revision carried out in that year.
Liquidity and Capital Resources
Overview
Our liquidity requirements arise primarily to meet our ongoing debt service obligations and to fund working capital
and capital expenditure requirements. Our principal sources of funds have been cash flow from operations, cash and cash
37

equivalents on our balance sheet, borrowings under our credit facilities and borrowings under other financing agreements. As
of March 31, 2012, on a pro forma basis (after taking into account the May 2012 Refinancing, we would have had
approximately €86 million of cash and cash equivalents and €107 million available lines under undrawn credit facilities
(including the €100 million Revolving Facility under the New Senior Facility), for a total pro forma liquidity as of March 31,
2012 of €193 million.
As a result of the May 2012 Refinancing, the maturity profile of our debt has been significantly improved. As of
March 31, 2012, on a pro forma basis and after taking into account the May 2012 Refinancing, €1,076 million of our debt
(comprising debt under Facility A, Facility B and the Revolving Facility (if drawn) of the New Senior Facility) will mature in
June 2017 and March 2018, with amortization payments on Facility A commencing in June 2013. We expect the maturities of
the Bank Tranches to be met through available cash and cash equivalents and operating cash flow. However, we expect that
we will be required to refinance a substantial portion of the indebtedness under the Notes Tranches of the New Senior Facility
on or before their maturity in 2018. For a discussion of the risks related to our borrowings, see “Risk Factors—Risks Relating
to Our Financial Profile”.
Cash Flow
Year ended
December 31,
Three months
ended March 31,
2009 2010 2011 2011 2012
(euro in millions) (euro in millions)
(unaudited)
Summary Cash Flow Statement Data:
Cash flow used in/(provided by) operating activities ......................... 312 392 457 116 131
Cash flow used in/(provided by) investing activities ......................... (223) (238) (289) (62) (68)
Cash flow used in/(provided by) financing activities ......................... (192) (333) (42) (32) —
Net increase/(decrease) in cash and cash equivalents ......................... (104) (178) 126 22 63
Cash from operating activities: In the three months ended March 31, 2012, cash flows from operating activities
increased by €15 million, or 12.9%, to €131 million from €116 million in the three months ended March 31, 2011 reflecting
both improved operating performance and working capital improvements driven by improved collection processes and the
change in law referred to below which reduced the average collection period and a reduction in our operating expenses and
investments, which in turn led to a reduction in cash payments to suppliers.
In year ended December 31, 2011 cash flows from operating activities increased by €65 million, or 16.6%, to
€457 million from €392 million in the year ended December 31, 2010 primarily due to working capital improvements driven
by improved collection processes which reduced the average collection period, the receipt of €51.2 million from Prisa TV as
part of a court ruling during 2011, and a reduction in our operating expenses and investments, which in turn led to a reduction
in cash payments to suppliers.
In year ended December 31, 2010 cash flows from operating activities increased by €80 million, or 25.6%, to
€392 million from €312 million in the year ended December 31, 2009 primarily due to working capital improvements driven by
improved collection processes which reduced the average collection period, the receipt of €46.6 million from Prisa TV as part
of a court ruling during 2010, and a reduction in our operating expenses and investments, which in turn led to a reduction in
cash payments to suppliers, and due to the fact that the first nine months of 2009 included costs related to our redundancy plan.
Changes to Spanish law with respect to invoicing mean that our typical payment period of 85 days will be first
reduced to 75 days as of January 2012 and then 60 days as of January 2013. Each of these reductions have negative impacts
on our working capital.
Cash flows used in/(provided by) investing activities: In the three months ended March 31, 2012, cash flows used
in investing activities increased by €6 million, or 9.7%, to €68 million from €62 million in the three months ended March 31,
2011. The disposal of a technical building resulted in positive cash flow in the three months ended March 31 2011 that
partially offset the increased investments carried out during that period in relation with the nationwide deployment of Docsis
3.0 technology in our entire network. Cash flows used in investment activities decreased in the three months ended March 31,
2012 once the deployment of Docsis 3.0 technology was completed.
In the year ended December 31, 2011 cash flows used in investing activities increased by €51 million, or 21.4%, to
€289 million from €238 million in the year ended December 31, 2010 due to: (i) additional investments in installations and
customer premise equipments carried out in 2011; (ii) investments carried out in relation with the deployment of Docsis 3.0
technology in our entire network; (iii) investments carried out in relation with the development of the Next Generation TV;
(iv) the upgrade of our telephony voice platform; and (v) an expenditure of €13.3 million in connection with the acquisition of
2.6 GHz mobile frequencies licenses in July 2011. This increase was offset in part by approximately €15.7 million in one-off
real estate disposals carried out in the first quarter of 2011.
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Cash flows used in investing activities increased by €15 million, or 6.7%, to €238 million in the year ended
December 31, 2010 from €223 million in the year ended December 31, 2009 due to the ongoing deployment of Docsis 3.0
technology.
Cash flows from financing activities: During the three months ended March 31, 2012, we issued the February
2012 Notes with the net proceeds used to repay an equal amount of indebtedness under the 2005 Senior Facility. The net
result of these transactions was nil cash flow from financing activities.
Cash flows from financing activities for December 31, 2011 were a negative €42 million, mainly due to cash flows
from operating activities and available cash to reduce borrowings under our Senior Facility and short-term credit lines.
Cash flows from financing activities for December 31, 2010 were a negative €333 million, mainly due to the
reduction in the borrowings under the revolving tranche of our Senior Facility and short-term credit lines and the final
deferred payment relating to the acquisition of Auna.
Cash flows from financing activities for the year ended December 31, 2009 were a negative €192 million, reflecting
the use of cash flows from operations and available cash to make a deferred payment relating to the Auna acquisition,
repayment of borrowings under certain of our short-term credit lines and the first amortization payments required under our
Senior Facility.
Capital Expenditures
Our capital expenditures primarily relate to set-top box purchases and other customer capital expenditures,
installations, network build-out, upgrades, maintenance and other investments, computer hardware and software and content
rights. Approximately 59% of our capital expenditure is variable and linked to the number of our customers, with the
remaining 25% relating to capitalized costs and other expenses and 16% relating to network upgrade and maintenance.
Capital expenditures amounted to €61 million for the three months ended March 31, 2012 as compared to
€72 million for the three months ended March 31, 2011 mainly as a consequence of the completion of the deployment of
Docsis 3.0 technology in our entire network.
Capital expenditures amounted to €292 million for the year ended December 31, 2011 compared to €244 million for
the year ended December 31, 2010. The increase in our overall capital expenditure levels mainly derived from: (i) additional
investments in installations and customer premise equipments carried out in 2011; (ii) investments carried out in relation with
the deployment of Docsis 3.0 technology in our entire network; (iii) investments carried out in relation with the development
of the Next Generation TV; (iv) the upgrade of our telephony voice platform; and (v) an expenditure of €13.3 million in
connection with the acquisition of 2.6 GHz mobile frequencies licenses in July 2011.
We incurred capital expenditures of €244 million for the year ended December 31, 2010 compared to €220 million
for the year ended December 31, 2009. The increase in our overall capital expenditure levels mainly derived from our
decision to deploy Docsis 3.0 technology as well.
We expect that our total capital expenditure in 2012 will be towards the higher end of the range of €250 million to
€300 million. The level and timing of capital expenditures we actually make will depend on the nature of network
investments, maintenance and upgrades and the number of installations affected by such activities, among other things.
Financing Arrangements
As of March 31, 2012, on a pro forma basis after giving effect to the May 2012 Refinancing, we would have had
€3,049 million outstanding under the New Senior Facility. In addition, we had €463 million equivalent in Subordinated Notes
and an additional €2 million in short-term credit, mortgages and leases. In addition to the foregoing indebtedness, as of
March 31, 2012, we had €12 million of Spanish state subsidized financing outstanding. This subsidized financing is backed by
guarantees under bilateral agreements with certain banks. As of March 31, 2012, on a pro forma basis after giving effect to the
May 2012 Refinancing we had €107 million of undrawn availability under our credit facilities (including €100 million under
the Revolving Facility under the New Senior Facility).
We may incur additional indebtedness in the future principally to fund our interest expenses, working capital needs
and, to the extent not covered by operating cash flows, capital expenditures. Any drawings under the Senior Facility are
subject to the satisfaction of certain conditions precedent and compliance with covenants, including the maintenance of
certain ratios. See “Description of Other Indebtedness”.
39

The maturity calendar of our outstanding debt as of March 31, 2012, on a pro forma basis after giving effect to the
May 2012 Refinancing, is summarized in the following table:
Expected Maturity Date
2012 2013 2014 2015 2016 2017 2018 ≥2019
Total
borrowings
(euro in millions)
(unaudited)
Debt with credit entities
New Senior Facility (1) ..................... — 39 77 128 246 401 2,158 — 3,049
Facility A ........................... — 39 77 128 246 401 — — 891
Facility B ........................... — — — — — — 185 — 185
Euro Notes Tranches .................. — — — — — — 1,000 — 1,000
February 2012 Notes Tranche (2) .......... — — — — — — 749 — 749
New Notes Tranche (lending the proceeds
of the Notes offered hereby) (2)(3) ....... — — — — — — 224 — 224
Other credit facilities (1) ..................... 1 1 1 — — — — — 3
Total debt with credit entities .............. 1 40 78 128 246 401 2,158 — 3,052
Other debt
Subordinated Notes (1) .................. — — — — — — — 463 463
State subsidies & other ................. 8 1 — — — — — 2 11
Total other debt ......................... 8 1 — — — — — 465 474
Total debt .............................. 9 41 78 128 246 401 2,158 465 3,526
(1) In nominal value and not including €51 million of accrued interest payable (€40 million related to the New Senior Facility and other
credit facilities and €11 million related to Subordinated Notes). As of March 31, 2012, on a pro forma basis after giving effect to the
May 2012 Refinancing we would have had €100 million of undrawn availability under the Revolving Facility under the New Senior
Facility and we had €7 million of undrawn availability under other credit facilities.
(2) The U.S. dollar amounts of the Dollar Notes Tranches are translated into euro at the exchange rate on March 31, 2012 of
€1=U.S.$1.3356.
(3) For presentation purposes, we have assumed that the New Notes will be issued with no original issue discount.
Contractual Obligations
Our estimated contractual obligations (excluding the outstanding financial debt discussed above and the other
financial obligations discussed below) as of March 31, 2012, are shown in the table below:
Before
December 31,
2012
Between 1-2
years from
December 31,
2012
Between 2-5
years from
December 31,
2012
Between 5-8
years from
December 31,
2012
More than
8 years from
December 31,
2012 Total
(euro in millions)
(unaudited)
Building lease obligations (1) ......... 8 14 15 8 4 49
TV content purchase obligations (2) .... 21 41 14 — — 76
Other contract purchase
obligations (3) ................... 177 109 120 127 127 660
Total ........................... 206 164 149 135 131 785
(1) Office and network related real estate leases.
(2) Television content purchase obligations.
(3) Fiber optic network rental obligations (including ENDESA, Iberdrola and ADIF), purchase commitments with network equipment
suppliers (including Ericsson) and purchase commitments with customer premises equipments suppliers (including TiVo, Cisco and
Huawei) and certain other purchase orders and provisions.
Set forth below is a description of our other contractual financial obligations, excluding financial debt and interest
rate hedges.
Guarantees
We have secured guarantees from certain Spanish credit institutions that guarantee our compliance with specific
performance commitments under our television and telecommunications licenses, as well as our repayment of the subsidized
loans. These guarantees were granted to, among others, the Spanish Ministry of Industry, Energy and Tourism, City Councils
and other organizations. We have entered into bilateral agreements with certain banks, pursuant to which the banks guarantee
our subsidized loan obligations.
40

Quantitative and Qualitative Disclosure about Market Risk
Market risk represents the risk of changes in the value of financial instruments, derivative or non-derivative, caused
by fluctuations in interest rates or currencies.
It is our treasury policy to monitor and manage exposure to variable interest rate risk by managing the amount of
our outstanding variable interest bearing debt. In order to reduce such interest rate risk, and as market conditions warrant, we
may vary our position on interest rate hedging transactions and may purchase or trade the Notes, the Subordinated Notes or
other financial debt from time to time in privately negotiated or open market transactions using funds available to us.
Interest Rate Risk
As of March 31 2012, on a pro forma basis after giving effect to the March 2012 Refinancing, borrowings under our
New Senior Facility (other than the Notes Tranches) bear interest at a floating rate determined by reference to Euribor plus a
margin, which ranged from 4.5% to 5.25% depending on the tranche. In addition, our other outstanding debt with credit
entities typically bears interest at Euribor plus a margin. As of March 31, 2012 on a pro forma basis after giving effect to the
May 2012 Refinancing, our total outstanding debt exposed to floating interest rate risk would have amounted to €1,079
million.
All our floating rate indebtedness is unhedged and we are therefore exposed to the risk of interest rate increases. See
“Risk Factors—Risks Relating to Our Financial Profile—A substantial portion of our debt bears variable interest rates”. We
are evaluating whether to enter into any new hedging arrangements.
Currency Risk
While the vast majority of our business is conducted in euro, all payments in respect of the Notes and the Dollar
Denominated Subordinated Notes are denominated in U.S. dollars. This exposes us to the risk of currency fluctuation to the
extent that we do not hedge against such risk. If the value of the euro relative to the U.S. dollar declines, payments on the
Notes and the Dollar Denominated Subordinated Notes will effectively become more expensive for us, and our results of
operations and financial condition could be materially affected.
To reduce this exposure, we have entered into currency hedge arrangements with respect to all the coupon payments
under the U.S.$225 million Dollar Denominated Subordinated Notes through January 2014 (the first optional redemption
date) and the total amount of the principal payment obligation thereunder. In addition, we have entered into currency hedge
arrangements with respect to all the coupon payments under the U.S.$1,000 million February 2012 Notes until 1 December
2013 (the first optional redemption date) and 50% of the principal amount thereunder.
We expect to enter into hedging arrangements with respect to payments of interest and a portion of the principal
amount under the New Notes. Subject to certain conditions, we are required under the New Senior Facility to enter into
hedging arrangements with respect to all interest payments until December 1, 2013 (the first optional redemption date) and
50% of the aggregate principal amount of the New Notes. We are currently evaluating such hedging arrangements, though
there can be no assurance that we will enter into such arrangements or what the terms thereof may be. New hedging
arrangements to manage the risk of currency fluctuations may be costly and may not insulate us completely from such
exposure. See “Risk Factors—Risks Relating to Our Financial Profile—As a result of the issuance of the Notes and the Dollar
Denominated Subordinated Notes, we are subject to currency fluctuation risk.”
Critical Accounting Estimates
The preparation of financial statements under IFRS requires the use of certain estimates and judgments in relation to
the future that are continuously assessed and are based on historical experience and other factors, including expectations of
future events deemed reasonable under the current circumstances. Actual results could differ from estimated ones. The
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are outlined below.
Fixed Assets
The accounting treatment of investment in property, plant and equipment and intangible assets means that estimates
must be made to determine their useful lives for the purposes of depreciation or amortization.
The determination of useful lives requires estimates regarding expected technological evolution and alternative uses
of the assets. Assumptions regarding the technological environment and its future development imply a significant degree of
judgment, inasmuch as the time and the nature of future technological changes are difficult to predict.
When impairment of fixed assets is identified, a value adjustment is recognized and charged to the income statement
for the period. The determination of the need to recognize an impairment loss implies making estimates that include, among
41

others, an analysis of the causes of the possible impairment and the time and the expected amount thereof. Likewise, factors
such as technological obsolescence, the suspension of certain services and other changes in circumstances that create the need
to assess possible impairment are taken into account.
Fair Value of Derivatives and Other Financial Instruments
The fair value of financial instruments that are not traded in an active market is determined by using valuation
techniques. We select a variety of methods and make assumptions that are mainly based on market conditions existing at each
balance sheet date. We have used discounted cash flow analysis as well as third party valuations to determine the fair value of
the derivatives and other financial assets and liabilities.
Deferred Income Tax and Tax Credits
We assess the recoverability of deferred income tax assets and tax credits on the basis of estimates of future results.
The recoverability will, in the final analysis, depend on our ability to generate taxable profits during the period in which the
deferred income tax assets may be deducted. The analysis takes into account the taxable profits estimated on the basis of
internal projections that are updated to reflect the most recent trends, assumptions and information. Actual flows of amounts
received and paid for income tax may differ from our estimates as a result of changes in tax legislation or unforeseen future
transactions that might affect the tax balances.
Provisions
Provisions are recognized when we have a present obligation as a result of past events, it is probable that an outflow
of resources will be required to settle the obligation, and the amount has been reliably estimated. The obligation may be legal
or constructive, derived from, among other factors, regulations, contracts, normal practices or public commitments that create
a valid expectation for third parties that we will accept certain liabilities. The provision is measured by the best estimate of the
payment that will be necessary to settle the relevant obligation, taking into consideration all the information available on the
closing date for the financial statements, including the opinions of independent experts, such as legal advisors or consultants.
Due to the unpredictability inherent in estimating the amount of provisions, the actual payments may differ from the amounts
initially recognized on the basis of the estimates made.
42

INDUSTRY
Certain information set forth in this section has been derived from external sources, including reports of the
Spanish Telecommunications Market Commission (“CMT”), the Spanish National Statistics Institute (“INE”), State
Secretariat for Telecommunications and the Information Society (“SETSI”) and Eurostat of the European Commission, as
well as publicly available reports from telecommunications operators. Industry surveys and publications generally state that
the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness
of such information is not guaranteed. We believe that these industry publications, surveys and forecasts are reliable but we
have not independently verified them and cannot guarantee their accuracy or completeness.
Overview
Spain’s economy is the fifth largest in the European Union measured by a GDP of €1.1 trillion in 2010 according to
Eurostat. Spain is also the fifth most populous country in the European Union, with an estimated 46.1 million inhabitants as of
April 1, 2011, according to INE. Like the majority of developed economies, the Spanish population is mostly concentrated in
urban areas. According to INE, 52% of the population lived in city centers with more than 50 thousand inhabitants as of
January 2010. However, with 91 inhabitants per square kilometer as of April 1, 2011, the Spanish population density is lower
than in other major Western Europe economies. Population density and distribution are key factors for ONO and other
telecom operators not subject to universal service obligation when deciding whether to concentrate infrastructure investments
in particular areas.
The Spanish telecoms and TV market generated revenues of €39.8 billion in 2010, according to CMT. The largest
sector is mobile telephony with €14.0 billion (35.2% of total), followed by fixed telephony with €5.9 billion (14.8% of total).
ONO operates mostly in five sectors of the telecoms and television market: internet, pay-TV, fixed telephony, business
communication and fixed wholesale. These sectors in total generated revenues of €15.8 billion in 2010, which represents
39.7% of the total telecoms market. These sectors showed growth of 0.1% per year in the period between 2004 and 2010,
mainly driven by strong growth in internet usage. However, the recent economic downturn led to a 4.2% decrease in 2010
revenues partly due to customers reducing discretionary spending, such as fixed to mobile and international telephone calls
and pay-TV services, and partially due to companies renegotiating contracts with significant reductions in tariffs.
Market revenue development in ONO’s main markets
CAGR
’04-’10
YoY
’09-’10
2004 2005 2006 2007 2008 2009 2010
(in euro billion, unless stated)
Fixed telephony ...................... 8.3 8.3 7.5 7.2 7.1 6.5 5.9 (5.5)% (9.0)% 14.8%
Internet ............................. 1.8 2.3 2.8 3.5 3.8 3.9 4.0 14.2% 0.9% 10.1%
Pay-TV ............................. 1.7 1.8 1.9 2.0 2.1 1.8 1.7 — (5.6)% 4.3%
Business communications .............. 1.2 1.3 1.3 1.3 1.5 1.5 1.5 3.8% 1.8% 3.8%
Wholesale (fixed) ..................... 2.7 3.1 2.5 2.7 2.8 2.8 2.7 — (3.6)% 6.8%
Subtotal ............................ 15.7 16.8 16.0 16.8 17.3 16.5 15.8 0.1% (4.2)% 39.7%
% YoY growth ....................... 6.8% (4.8)% 5.0% 2.9% (4.5)% (4.2)%
Mobile telephony ..................... 10.4 12.1 13.3 14.9 15.1 14.5 14.0 5.1% (3.0)% 35.2%
TV advertising ....................... 2.8 3.1 3.3 3.6 3.3 2.6 2.6 (1.2)% 0.2% 6.5%
Other TV (non-pay TV) ................ 0.1 0.1 0.1 0.2 0.2 0.2 0.1 — (52.2)% 0.3%
Wholesale (mobile, TV, other) ........... 4.4 4.6 4.9 4.7 4.4 3.9 3.6 (3.3)% (7.7)% 9.1%
Other ............................... 3.7 4.2 4.4 3.8 4.0 4.2 3.7 — (11.9)% 9.3%
Total market ........................ 37.0 40.9 42.1 43.9 44.2 41.8 39.8 1.2% (4.7)%100.0%
%YoY growth ........................ 10.3% 3.0% 4.2% 0.7% (5.4)% (4.7)%
Source: CMT, 2010 Annual Report
The Spanish telecoms market has a relatively long history of competition. Deregulation of the market was a
necessary consequence of Spanish accession into the European Union and the obligation to abide by EU free competition
principles and traces back to Law 31/1987, which commenced the process of deregulation. Law 42/1995 on Cable
Telecommunications contributed to further deregulation of the sector. However, the incumbent operator Telefónica retained a
monopoly of fixed-line services until 1997, when the Telecommunications Liberalization Act (Law 12/1997) permitted other
participants to begin offering their own services at a national basis. The Spanish telecommunications regulator (CMT) was
also created in 1997. Acknowledging that effective competition would not be possible without measures intended to offset
Telefónica’s dominance, the regulator has been active in preventing Telefónica from abusing its dominant position. As a
consequence of the drive to increase competition in the market, Telefónica was fully privatized in 1999 after a partial
privatization in 1995. Following the passage of Law 12/1997, Spain’s national radio and television utility Retevisión obtained
a license in the fixed-line telephony market and commenced operations in January 1998. In May 1998, LINCE (mainly owned
by France Telecom) became the third participant to enter the market. With Law 11/1998 General on Telecommunications, the
%of
total
2010
43

provision of telecommunication services were liberalized and telecommunication networks could be exploited under free
competition. Competition then increased as additional participants entered the market and challenged Telefónica’s dominance.
Additional alternative players entered the market in the late 1990s and early 2000s. As a consequence of the adoption of the
EU telecoms package in 2002, Law 11/1998 was replaced by Law 32/2003, General on Telecommunications, with the aim to
increase competition in the sector reducing market regulatory barriers and allowing competition law to provide effective
competition to the extent possible.
The development of fiber as an alternative technology added more competition in the telecommunications market
and provided consumers with an alternative to legacy copper technology. Spain’s fiber industry is relatively young compared
to other European countries. Commercial networks were first constructed in the mid 1990s, as compared to most other
European countries where fiber networks launched services in the 1970s and 1980s. ONO launched commercial services in
1998. The industry has already undergone a period of consolidation, with ONO emerging as a market leader after its
acquisition of Auna in 2005.
The Spanish telecoms market is now moving towards convergence of voice, data and video networks and services.
Telecom operators are rapidly introducing new products and services and trying to leverage their infrastructure by bundling
services for consumers. The convergence process is driven by operators bundling services such as broadband internet access,
television, fixed-line telephony and increasingly mobile into integrated offers (double, triple and quadruple play). In 2010, the
number of bundled customers in the market increased by 782 thousand, which implies an 8.5% annual growth, to 10.0 million,
according to CMT. At the end of 2010, approximately 49% of fixed telephony lines, 91% of internet services and 49% of
pay-TV contracts were bundled with at least one other service. Spain is relatively more advanced than the EU average in the
convergence process. The number of bundled packages (either double or triple play) in Spain, according to the Fifteenth
Progress Report on the Single European Electronic Communications Market, reached 19.2% of the population in July 2009,
which is higher than most other European countries. ONO is relatively advanced, with 40% of its fiber customers subscribing
to a triple-play bundle as of March 31, 2012.
Bundled offers per type as % of population, July 2009
28.6%
27.1%
22.4% 21.8%
19.2% 18.8%
15.5%
13.9% 13.2%
9.2% 9.0% 8.5% 8.1% 8.0% 6.9%
3.4% 3.2%
1.2%
Netherlands
Germany
France
Luxembourg
Spain
UK
Estonia
Italy
Ireland
Finland
Belgium
Greece
Slovenia
Sweden
Poland
Cyprus
Czech Republic
Bulgaria
Double play
Triple play
Source: Fifteenth Progress Report on the Single European Electronic Communications Market, 2010
Technologies
Telecommunication and television needs of the consumers in the Spanish market are mainly addressed through
PSTN (Public Switched Telephone Network), fiber, satellite, DTT (Digital Terrestrial Television) and mobile technologies.
PSTN
Telefónica, as the incumbent operator, has a PSTN network that covers the majority of Spain for fixed-line services
and fixed broadband (xDSL) services. Telefónica is also upgrading parts of its network to VDSL, allowing it to offer higher
speed broadband services.
The General Law on Telecommunications (Law 32/2003, of November 3) and accompanying regulations impose
obligations on Telefónica to unbundle its PSTN local loops. Alternative telecom operators are allowed to use Telefónica’s
copper-based network to provide their own services through a process referred to as “unbundling of the local loop” (“ULL”).
ONO uses ULL (ADSL) as a complement to its fiber network in those areas where it does not have fiber coverage. Other
alternative telecom operators using ULL (ADSL) in Spain include Vodafone, Orange and Jazztel. ULL (ADSL) operators
44

depend on Telefónica’s network, which reduces the control such operators have over the customer experience. Telefónica
offers ULL (ADSL) operators broadband speeds of up to 30 Mbps. Telefónica and ONO are currently the only operators able
to provide broadband speeds higher than 30 Mbps, within ONO’s footprint.
In addition to voice and broadband services, Telefónica’s PSTN network is used to offer TV services via IPTV.
IPTV is a technology through which digital TV services are delivered via internet protocol (IP) instead of traditional
broadcasting methods like fiber or satellite. IPTV, as is the case with fiber, allows for interactivity, a difference that operators
are focusing on when competing with satellite and DTT, both of which do not allow for interactive services. Growth in the
pay-TV market for telecom operators could be one means to partly offset stagnating or declining fixed line revenues.
Moreover, the development of fiber networks should facilitate the delivery of high quality network pay-TV services.
Fiber/Cable
Fiber operators have direct customer relationships and serve their clients via end-to-end networks without the
necessity of using the incumbent’s last mile access. Therefore, fiber operators can directly influence the quality of service and
the products offered to their customers. Fiber infrastructure in Spain is, partly as a function of the relatively late build-out, in
most cases fully able to bundle digital and interactive services. Furthermore, due to the use of hybrid fiber coax (HFC; fiber
up to the terminal node and coax cable from the terminal node to the home), fiber operators are generally able to offer higher
bandwidth broadband services than PSTN-based telecom operators (twisted copper pair from central office to the home) and a
greater choice of TV channels than offered via IPTV.
Reflecting the economics of network build-outs, fiber coverage is better in denser urban areas than in rural areas.
Until recently, operators continued to focus on increasing network coverage, but following the financial crisis, operators have
substantially slowed or ceased network build-outs. Instead, operators are focused now on increasing subscriber penetration
and leveraging their existing network infrastructure. When comparing market shares, it has to be taken into account that fiber
operators do not cover all Spanish households and therefore their market shares within their coverage footprint are higher than
their market shares on a national level.
ONO is the largest fiber operator in Spain and the only fiber operator with national coverage. As of March 31, 2012,
ONO’s network had access to over 7 million homes in Spain and over approximately 1.8 million residential fiber customers
subscribe to ONO’s services. The other fiber operators, EUSKATEL (Basque Region), Telecable de Asturias (Asturias) and R
Cable (Galicia), are smaller regional operators and only compete with ONO on a limited basis. In addition, Telefonica and
other DSL resellers are deploying their own “fiber to the home” network but on a limited basis.
Satellite
Satellite in Spain has traditionally been the dominant alternative technology for pay-TV distribution. At the end of
2010, there were 1.8 million households subscribing to satellite pay-TV services, down from 2.0 million in 2006. After the
2003 merger of Vía Digital and Canal Satellite Digital, Prisa TV’s Digital+ is the only participant in the market using satellite
as a technological alternative for the distribution of pay-TV services. Telefónica owns 22% of Digital+.
Unlike its competitors, Prisa TV (formerly Sogecable) cannot offer interactive or bundled services using only
satellite technology. In order to compete with bundled offers from fiber and other telecom operators or to provide services that
require a return path, Prisa TV has entered into agreements with telecom operators. For example Prisa TV’s agreement with
Orange allows for the expanded distribution of Prisa TV’s Digital+ Móvil (mobile) service, in addition to a joint triple-play
offer. Prisa TV has also reached an agreement with Jazztel to offer a bundled internet and TV services package. Moreover,
Prisa TV also offers the possibility of watching up to five channels of Canal + through Internet to pay-TV customers under its
brand Canal + Yomvi.
DTT
In its current form, DTT in Spain was launched in November 2005. The Spanish government supported the planned
replacement of analog terrestrial television, which was previously the main form of free TV reception in the market.
Furthermore, the government prepared a package of measures to prepare for an analog switch-off that was completed in April
2010. Alongside, the government obliged DTT operators to extend DTT coverage to 96% of the population by 2010 (98% for
public TV networks) and required operators to use fully interoperable decoders in order to avoid customer lock-in risk. As a
consequence of this transition process, customers now have a broader choice of channels they can access via DTT.
Pay-DTT became a reality in Spain after the government passed legislation in August 2009 (Royal Decree-Law
11/2009) and March 2010 (Law 7/2010, of March 31, General on Audiovisual Communication). According to the legislation
currently in force, national DTT broadcasters are allowed to provide total or partial pay-TV channels using up to 50% of the
radio spectrum assigned.
Mobile
At the end of 2011, there were 53.1 million mobile telephony subscribers (excluding mobile broadband data cards) in
Spain, implying a penetration rate of 115.0% of the population. The Spanish market is mainly served by four network operators:
Telefónica, Vodafone, Orange and Yoigo. Mobile Virtual Network Operators (MVNOs) have a relatively small presence in the
45

market, accounting for 6.8% of mobile subscribers in 2011. Traditionally focused on voice, the importance of data in the
revenue mix of mobile operators has grown in the last three years. Whereas only 3.5% of mobile telephony revenues came from
data in 2006, the share of data revenues grew to 20.6% in 2011. Conversely, voice has declined from 81.7% of the mobile
telephony revenues in 2006 to 56.2% in 2011, with the remainder of revenues being handset and other revenues.
Telefónica’s Movistar market share equaled 39.7%, followed by Vodafone and Orange with mobile subscriber shares of
27.9% and 20.4%, respectively, as of December 31, 2011. In line with the development of the fixed line market, low cost operators
have greatly benefited during the economic recession. Yoigo has experienced a compounded average growth rate (CAGR) of
47.3% from 2009 to 2011, although from a low base of active mobile subscribers, to reach 2.8 million by the end of 2011.
Competition
There is significant competition in Spain from established and new companies that provide broadband internet, pay
television and telephony services to residential customers, data telecommunications and telephony services to SMEs, large
accounts and corporations, as well as carrier services to other telecommunication operators. The level of competition in each
of these businesses is expected to increase.
The key considerations for consumers selecting a telecoms provider include the ability to offer bundled services, the
speed and reliability of broadband internet service and features such as interactive TV, as well as price. The following table
provides a comparison of the offered services among the main competitors:
ONO Telefónica Digital+
ADSL
Operators
Free and Pay
Digital
Terrestrial
Television
Broadband internet ...................................... X X — X —
Television ............................................. X X X X X
Telephony ............................................. X X — X —
Bundled Services ........................................ X X X (1) X —
Business Services ....................................... X X — X —
(1) Digital+ offers a bundled package in partnership with Orange.
The following table below sets forth the market share for ONO and other operators in the residential internet,
pay-TV and residential telephony markets in Spain as of December 31, 2011.
Residential Internet Pay-TV Residential Telephony
% market share % market share % market share
1. Telefónica ................. 43.9 1. Digital+ ................. 39.9 1. Telefónica ............... 58.2
2. ONO ..................... 16.9 2. ONO ................... 21.1 2. ONO ................... 14.2
3. Orange .................... 13.0 3. Telefónica ............... 18.8 3. Jazztel .................. 8.3
4. Jazztel .................... 11.8 4. Other Cable .............. 8.9 4.Vodafone ............... 7.2
5. Vodafone .................. 7.9 5.GolTV ................. 8.7 5.Orange ................. 7.1
Source: CMT Q4, 2011 Report
Our competitors, such as Telefónica, have started to make convergent offers to its fixed and mobile customers due
to the pressures of a more competitive market environment.
We have been growing our mobile business unit, reaching 189 thousand residential lines and 13 thousand SME lines
as of March 31, 2012. In December 2011, subscribers of mobile virtual network operators (“MVNOs”) such as ONO
accounted for 6.8% of the Spanish mobile market, as compared with 1.9% in the first quarter of 2009 according to CMT. This
would give MVNO operators (such as ONO) approximately 3.6 million subscribers in Spain. This is a combined share that
exceeds the market presence of Yoigo, the fourth biggest mobile network operator. It appears that MVNO subscriber numbers
have increased faster than subscriber numbers to Yoigo.
Residential Telephony
According to CMT, the Spanish retail fixed line telephony market generated revenues of approximately €5.9 billion
in 2010, down from €6.5 billion in 2009. In line with the general trend across Western Europe, this largely saturated market is
declining due to substitution with mobile communication and VoIP-based technology. Moreover, price competition has
intensified as price-sensitive customers migrate to low-priced competitors and the commoditization of the service has become
more evident. Fixed-line participants are becoming increasingly dependent on the quality of their broadband offering and
telephony services are increasingly bundled with broadband offerings (double-play).
Fixed-line telephony in Spain is primarily based on the analog and digital access lines of the incumbent telephone
network and the access lines of fiber operators. At the end of 2011, there were 15.6 million fixed-line subscribers, a number
that decreased by 1.2% on average per year from 16.6 million in 2006. The 15.6 million subscribers correspond to
19.7 million fixed lines in service as some subscribers, especially in the business segment, have more than one active line in
service. The 15.6 million subscribers were split between 14.8 million direct and 0.8 million indirect subscribers.
46

Telefónica is the primary provider of direct access telephony services to residential customers and the only
infrastructure operator to widely offer direct access telecommunications services to residential customers. As of December 31,
2011, Telefónica had 58.2% market share in residential telephony according to CMT.
Other competitors include ONO (14.2% market share as of December 31, 2011) and other operators, including
ADSL providers (also known as alternative operators) such as Orange, Vodafone and Jazztel, among others. The alternative
operators increased their market share during the recent economic crisis by offering lower cost packages. The aggregate
market share of Vodafone, Orange and Jazztel grew from 1.3% in 2006 to 18.2% in 2010 and to 22.6% as of December 31,
2011 based on total fixed line telephony customers.
ONO has defended its market position partly due to its state-of-the-art local network, whereby ONO can offer high
quality services at competitive prices. Spain has yet to see a significant increase in internet based telephony (or voice over
internet protocol, “VoIP”) traffic in the residential market, though the market share of VoIP may increase in the future.
Broadband Internet
Fixed Broadband
According to CMT, the number of broadband subscribers in Spain totaled 11.0 million in 2011, of which 9.0 million
were residential and 2.0 million were attributable to the business segment. The broadband penetration rate in 2010 was
approximately 57% of Spanish households according to Eurostat, which was slightly below the EU average of 61%. The
following table presents data on broadband penetration rates for selected European countries in 2010.
83%
83%
80%
80%
76%
75%
70%
70%
69%
67%
64%
62%
61%
58%
57%
57%
54%
53%
52%
50%
49% 49%
Sweden
Norway
Denmark
Netherlands
Finland
Germany
Belgium
Luxembourg
United Kingdom (i)
France
Austria
Slovenia
European Union (27 countries)
Ireland
Spain
Poland
Czech Republic
Latvia
Hungary
Portugal
Italy
Slovakia
Source: Eurostat, 2010
(i) United Kingdom data is for 2009, as no reliable data exists for 2010.
Spain lags behind other advanced European economies in broadband penetration partially due to relatively high
broadband prices. Comparing the cheapest alternative, low tier subscriptions (with download speeds of less than 2 Mbps) are
on average 38% more expensive in Spain than the EU average. A significant price differential remains for mid (32%) and
high tier (50%) subscriptions. When bundled with voice, prices are more in line with the EU average based on the best
available prices. According to a CMT study published in December 2010, stand-alone broadband prices in Spain are
significantly higher than the EU average.
Regarding the overall split of the market among the different alternative technologies, DSL’s market share has
slightly increased from 78.0% in 2006 to 78.2% in 2011. Conversely, fiber’s market share (including both cable and FTTx)
has declined to 20.3% from 21.5% partly due to broadband growth in areas that are not covered by fiber networks and partly
due to competition. Most importantly, both DSL and fiber have taken advantage of strong market growth to achieve double
digit subscriber growth over the period. FTTx connections only account for a negligible share of the market. However, the
importance of FTTx is likely to increase as telecom operators are looking for methods to supply broadband connections with
higher speeds in an effort to defend market shares against fiber operators.
Spanish fixed-line broadband subscribers
development
Subscribers
Market share
2006 2011 Change CAGR 2006 2011
xDSL ...................................................... 5,219 8,670 3,451 10.7% 78.0% 78.2%
Cable ...................................................... 1,436 2,083 647 7.7% 21.5% 18.8%
FTTx ...................................................... 0 171 171 n/a 0.0% 1.5%
Other ...................................................... 35 159 124 35.4% 0.5% 1.4%
Total fixed broadband ....................................... 6,690 11,084 4,394 10.6% 100% 100%
Source: CMT Q4 2011 Report
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Telefónica is the leading provider of internet access in Spain and is the principal competitor for broadband internet
services, with a 43.9% market share of residential broadband lines as of December 31, 2011. ONO’s market share equaled
16.9% as of December 31, 2011. Other DSL internet service providers such as Orange, Vodafone and Jazztel offer high-speed
internet services either through indirect access over Telefónica’s network (thus with lower control over the quality of their
services) or through their own ADSL infrastructures (thus allowing the ADSL providers to control the quality provided to
their customers to a large extent).
The broadband market in Spain has experienced a substantial increase in the level of competition since September
2011, when Telefónica launched new commercial initiatives in response to its continuous decline in its market share of
broadband subscribers. In November, Telefónica stepped up its commercial actions and launched an aggressive campaign
with special focus on its offer of telephony plus up to 10 Mbps Internet product for €19.9 plus line rental for life to its contract
mobile customers, to which other operators such Jazztel and Orange responded in December 2011. In February 2012, ONO
responded to these developments by launching a loyalty campaign whereby it increased the internet speeds of certain
customers by 15 Mbps at no cost in exchange for a minimum contract term of 12 months.
Mobile Broadband
As broadband connectivity becomes a ubiquitous service and customers increasingly value flexibility, the
importance of mobile broadband is expected to increase in the coming years. The Spanish mobile broadband market is
relatively young. Orange, Telefónica and Vodafone all launched HSDPA (high-speed downlink packet access) services in
June or July 2006. Since its inception, this segment has experienced strong growth. In 2010, the number of mobile broadband
subscribers reached 3.3 million, a 71% year-on-year growth. This implies a population penetration of 7.1%. Although the
strategies followed by telecom operators to serve this market vary, operators are generally looking to mobile broadband as a
means of compensating for diminishing voice and SMS revenues and declining ARPUs.
There are several ways to obtain mobile internet connectivity in Spain. Through datacards, users can obtain
connectivity on computers, notebooks or other portable devices. However, the most widely used mobile broadband devices
are smartphones and tablets. In 2010, 73.9% of Spanish mobile devices were mobile broadband-ready according to CMT.
Mobile operators are deploying aggressive campaigns to increase the uptake of this service in their customer base.
Mobile broadband is mostly priced at flat rates. However, there tends to be a cap on the maximum broadband consumption
due to limited mobile network and spectrum capacity and speeds are lower than for fixed broadband. Significant increases in
mobile broadband coverage have been hindered so far by Spain’s complicated geography. The variety of terrains and
significant differences in population density increase network infrastructure costs considerably. Mobile operators will need to
find a way to reduce infrastructure investments and improve coverage in order to encourage wider adoption of mobile
broadband services. In that context, Telefónica announced in March 2010 that its subscribers would soon enjoy a substantial
increase in their current mobile broadband speed. Telefónica also announced an upgrade of its 3G network to HSPA+ (also
known as Evolved High Speed Packet Access) within three years to enable an increase of data downloads speeds.
Spectrum Auctions
Pursuant to Royal Decree 458/2011, in April 2011 the Spanish MIET announced three different public bidding
procedures, including two tenders and one auction, in order to grant concessions in the 800 MHz, 900 MHz, 1800 MHz, and
2.6 GHz bands.
According to the MIET’s press release, in the tenders concluded on June 2011, Orange and Yoigo received
technology-neutral concessions in the 900 MHz and 1,800 MHz band. Orange received a 2x5 MHz block in the 900 MHz
band for €126 million fee and a €433 million investment commitment in telecoms infrastructure, whereas Yoigo received
two blocks of 2x5 MHz and one block of 2x4.8 MHz, all in the 1,800 MHz band, for €42 million and a €300 million
investment commitment.
The results of the auction were announced by the MIET on August 1, 2011. According to the MIET’s press release,
a total of €1,647 million were raised for 51 frequency blocks, with the following split:
• Telefónica España invested €668 million for 5 blocks with a total of 70 MHz (2x10 MHz in the 800 MHz
band; 2x5 MHz in the 900 MHz band; 2x20 MHz in the 2.6 GHz band)
• Vodafone España invested €518 million for 4 blocks with a total of 60 MHz (2x10 MHz in the 800 MHz band
and 2x20 MHz in the 2.6 GHz band)
• Orange invested €437 million for 4 blocks with a total of 60 MHz (2x10 MHz in the 800 MHz band and
2x20 MHz in the 2.6 GHz band)
• Other operators which obtained mobile spectrum in the auction making limited investments (i.e., below
€10 million) included Jazztel; Euskaltel; R Cable; Telecable and Telecom Castilla La Mancha.
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We were granted concessions in the 2.6GHz mobile spectrum in nine Spanish regions (Madrid, Catalunya,
Comunidad Valenciana, Murcia, Navarra, La Rioja, Cantabria, Ceuta and Melilla) which represent 47% of the Spanish
households and 60% of ONO’s homes released to marketing, for a total one-off consideration of €13.3 million. While this
development does not represent a change in our core strategy and we currently have not made any plans to utilize them, the
recently acquired licenses enable us to: (i) benefit from a license on 4G that runs until 2030 which we obtained for a limited
cash consideration; (ii) potentially provide high speed services for additional fixed residential and SMEs customers in areas
close to our cable footprint; and (iii) potentially improve our suite of mobile service offerings reducing host dependence and
increasing the quality of our 4P services.
In September 2011, the MIET announced that it had launched a new auction aimed at allocating the spectrum that
had not been sold in the initial sale (50 MHz in the 900 MHz and 2.6 GHz bands). The auction concluded on November 10,
2011, with seven (including Telefónica, Vodafone and Orange) out of the eight bidders being granted frequencies in exchange
of a total of €185 million.
Broadband Speeds
Broadband speed and quality of service are key criteria for customers when selecting a broadband provider. The
speed factor is likely to weigh more in the consumer decision process as data consumption grows in the future. Whereas in
2006, 74% of broadband subscriptions in Spain were classified as low-tier (less than or equal to 3 Mbps), in 2010 only 30% of
subscriptions were included in this group. In 2010 the majority of subscriptions were classified as mid-tier (between 3 and
10 Mbps) and in the future high-tier subscriptions (more than 10 Mbps) are likely to increase.
This is a positive trend for fiber operators, given their technological advantage over DSL participants. After the
deployment of Euro Docsis 3.0 (also referred to as Docsis 3.0), fiber operators will be able to offer speeds well above
50 Mbps, which DSL providers will not be able to match without investing in FTTx. However, the deployment of fiber over a
significant share of the Spanish territory is likely to be a lengthy process, giving operators such as ONO an important
temporal advantage. ONO completed the final stage of the deployment of Docsis 3.0 technology in February 2012, and is now
able to offer Docsis 3.0 related services across all of its network. Data from 2010 suggests that consumers already perceive
fiber as being superior in delivering high speeds. While fiber operators only account for 11.0% of the low-tier segment, their
combined market share in the high-tier segment is 50.0%.
Spanish fixed-line broadband subscriber development
Subscribers Change CAGR Split Fiber Market
2006 2010 ‘06-’10 ‘06-’10 2006 2010 2010 share
(in thousands, unless stated)
3 Mbps 10 Mbps .................................. 243 2,053 1,810 70.5% 3.6% 19.3% 1,026 50.0%
Total fixed broadband ....................... 6,676 (1) 10,646 3,965 12.3% 100.0%100.0%2,080 19.5%
Source: CMT, 2010 Annual Report
(1) Excludes approximately 14 thousand broadband connections classified as “other”.
In addition, fiber is more reliable than xDSL in delivering promised speeds to the customer. According to SETSI’s
data published on March 16, 2012, ONO’s average real speed for 15 Mbps and 50 Mbps subscriptions was actually slightly
higher than promised (15.2 Mbps and 50.3 Mbps, respectively). In contrast, the rest of the operators delivered lower than
promised speeds. Telefónica’s average speed for the 6 Mbps and 10 Mbps offer was 5.0 Mbps and 8.4 Mbps, respectively. As
the gap between promised and delivered speeds widens for high-tier subscriptions, fiber capabilities should be an even more
important competitive factor in the context of increasing demand for faster broadband connections.
Customer care is another important criterion for consumers selecting their broadband provider. The table below
compares ONO against the incumbent Telefónica and an industry average in several customer service metrics as well as
broadband speeds.
ONO Telefónica Industry average
Average speed for 6 Mbps offer (Mbps) ..................................... 6.1 5.0 5.6
Average speed for 15 Mbps offer (Mbps) .................................... 15.2 n.a. 13.9
Average time to access fixed telephony (days) ................................ 15 21 22
Average time to access internet (days) ....................................... 8 10 15
Customer complaints (%) (1) ............................................... 1.87% 4.08% 3.69%
(1) Number of customer complaints divided by average number of active customers in Q4 2011.
Source: SETSI, Q4 2011 Report (Informe de seguimiento de calidad en los servicios)
Fiber Deployment
Aiming to foster investment in fiber networks, the CMT published a study on the deployment of FTTx networks in
Spain in May 2009. According to the study, the payback of fiber deployment investments in cities with over 50 thousand
inhabitants will be around 9 to 12 years. The payback period in smaller cities or rural areas is usually longer.
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Telefónica is likely to have an advantage in deploying a FTTx network. In order to incentivize Telefónica to invest
in FTTx, the CMT has given Telefónica freedom in the use of its fiber network, cancelling CMT’s previous decision to grant
access to Telefónica’s competitors. However, the incumbent is obliged to offer bitstream services that enable competitors to
replicate products with speeds of up to 30 Mbps. Telefónica will be required to provide competitors with wholesale access to
its ducts and passive infrastructure. Furthermore, the first operator to deploy a fiber network inside a building will have to
offer in-building wiring at reasonable wholesale prices to any other operator wishing to access the building in order to offer
FTTx services.
Although Telefónica is currently the most advanced operator in terms of deployment of fiber networks, other
competitors are planning to join in order to counter Telefónica’s scale advantages. In March 2009, Orange announced its
intention to share the deployment of its fiber network with Jazztel and Vodafone to compete with Telefónica. However, those
operators are expected to limit their network deployment efforts only to the most-densely populated areas (mainly Madrid and
Barcelona), at least in the first stage of development. In April 2011, Telefónica announced its intention to be “selective”
regarding fiber deployment in Spain (only 45% of homes will be enabled for equal to or greater than 25 Mbps speed by 2013)
and to look for co-investment opportunities for fiber deployment inside buildings. Due to the lack of private investment in
FTTx deployment in some areas, public-led municipal projects are being developed by several local and regional authorities.
Television
The primary competitors in the television segment are public and private television broadcast companies, including
free and pay digital terrestrial television providers. Additional competitors include, to varying degrees, other forms of
communications and entertainment media, principally the internet, home cinema, movie theatres and video stores.
Pay-TV distribution platforms in Spain mainly consist of satellite, fiber and IPTV, with the addition of DTT in
2009. The 5.1 million pay-TV subscribers (including mobile television) generated total pay-TV revenues of €1.7 billion in
2010, down by 4.9% from €1.8 billion in 2009, according to CMT. Based on subscriber numbers of 4.6 million, as of the end
of 2011 satellite pay-TV services (excluding mobile TV) held a share of 39.9%, fiber 30.7%, IPTV 20.7% and DTT 8.7%.
The total market has shown substantial growth over the last four years, with total pay-TV subscribers increasing from
3.8 million in 2007 to 4.4 million in 2011 (excluding mobile television), a CAGR of 3.7%.
Spanish pay-TV subscribers development
Subscribers
Market share
2006 2011 Change CAGR 2006 2011
Satellite ..................................................... 2,044 1,756 (288) (3.0)% 54.6% 39.9%
Fiber ....................................................... 1,304 1,353 49 0.7% 34.8% 30.7%
IPTV ....................................................... 397 913 516 18.1% 10.6% 20.7%
DTT ....................................................... 0 383 383 n/a n/a 8.7%
Total Pay-TV ............................................... 3,745 4,406 661 3.3% 100% 100%
Source: CMT Q4 2011 Report
The most significant competitor in the Spanish pay-TV market is Prisa TV which offers Canal+, the direct-to-home
satellite multi-channel television service. Digital+ currently offers a wide range of channels in a variety of price packages
holding exclusive ownership of certain premium content. Since direct-to-home services are satellite based, Digital+ does not
need a terrestrial network to provide services to its customers. However, direct-to-home customers need a satellite dish and a
set-top box. Furthermore, direct-to-home providers such as Digital+ can only offer limited interactivity using a telephone
return path, and do not currently have the technical capability to offer VoD services.
Telecom operators have gradually entered the pay-TV market over the last several years via IPTV offerings. IPTV has
shown substantial growth over the past four years, doubling subscriber numbers to 0.9 million in 2011, accounting for the majority
of the pay-TV market growth. IPTV at the end of 2011 accounted for 20.7% of the total pay-TV market. In 2005, Telefónica
launched its “Imagenio” service, offering television services via DSL. This development allows Telefónica to offer bundled
services to its customers and in December 2011, Telefónica announced that it had 830 thousand subscribers, representing a 18.8%
market share. Due to Telefónica’s past and present links with satellite leader Prisa TV, Spanish regulatory authorities have been
proactive in monitoring that access to Prisa TV’s owned content is not granted to Imagenio at preferential conditions over other
IPTV operators. Other operators, such as Orange, have also launched video over DSL and are starting to market bundled services to
their customers. Orange entered the Spanish IPTV market in July 2007 when Orange acquired Deutsche Telekom’s internet service
provider Ya.com, including its IPTV service. Initially restricted to a basic package of 24 TV channels, Orange has benefited from a
content agreement with Prisa TV. Orange reached a pay-TV market share of 1.5%, with 68 thousand subscribers, at the end of
2011. Jazztel operated an IPTV service named Jazztelia, which failed to gain traction in the market. As a result, Jazztel stopped
offering the service to new customers in 2010, and reached an agreement with Digital+ to offer its pay TV product bundled with
telephony and broadband services. Vodafone recently announced the launch of IPTV operations. According to CMT, Vodafone is
currently the second largest mobile TV operator in the Spanish market with 72 thousand subscribers at the end of 2011. It remains
to be seen if Vodafone can leverage its mobile TV capabilities, coupled with its strong mobile franchise in Spain, to be a serious
competitor in the pay-TV market via IPTV. Moreover, Prisa TV also offers the possibility of watching up to five channels of Canal
+ through Internet to pay-TV customers under its brand Canal + Yomvi.
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In addition, national digital terrestrial television (“DTT”) providers, such as RTVE, Antena 3, Telecinco, Cuatro, la
Sexta, NET TV and Veo TV, exert a competitive pressure on the Spanish television marketplace. Some of these providers
have recently launched pay DTT channels. Mediapro, for example, offers the popular Gol TV football channel as a pay-DTT
channel. Furthermore, other participants have started offering AXN and Canal+ 2 via DTT. Furthermore, certain regional
digital terrestrial television providers, such as TV3 in Catalunya, also exert certain competitive pressure on the Spanish
television marketplace.
Content Rights
Traditionally, satellite television leader Prisa TV has been the owner of the majority of pay-TV content rights,
including rights for key content such as movies and sport events. Prisa TV was formed by the merger of Canal Satellite
Digital (participated in by Prisa) and Vía Digital (participated in by Telefónica) in 2003. Given the implications of this merger
for the pay-TV market structure, the Spanish competition regulator imposed several conditions that had to be met before
approval was granted. Among them, Prisa TV must grant access to its content to third party providers of pay-TV services on
fair, transparent and equitable terms, with special emphasis on not discriminating in favor of Telefónica’s own IPTV venture.
In fact, a content distribution agreement between Telefónica and Prisa TV (Trio) was restricted by the Spanish regulator based
on competition concerns, whereas similar agreements of Prisa TV with other operators (Orange) have been allowed.
Access to content rights has been affected by the most recent round of bidding for Spanish football rights. Initially
focused on the free-to-air market, Mediapro entered the pay-TV market through Gol TV. While outbidding AVS (80%
participated by Prisa TV) in securing broadcasting rights for most Spanish football clubs, Mediapro was deemed to have
breached AVS rights and was ordered to pay €104 million in June 2010.
Uncertainty regarding content distribution rights for Spanish football pay-TV decreased after an agreement between
Prisa TV and Mediapro was reached for the 2010/2011 season. Telecom operators offering pay-TV services may be indirectly
affected by who owns the football broadcasting rights. However, it is likely that resale obligations will persist regardless of
who ends up controlling the rights to broadcast Spanish football. In addition, content owners have an economic interest to
monetize their rights across as many platforms as possible regardless of resale obligations.
Business Services
There are different ways to define the business customer market. The CMT definition of the business segment
includes data transmission to final clients, circuit lease to final clients and corporate communications. This definition largely
relates to ONO’s SME and Large Accounts & Corporations segments. As of the end of 2010, ONO accounted for 6.1% of the
revenues in the business segment, with Telefónica leading the market with a 61.6% market share, according to CMT data.
SME Services
Small- and medium- sized enterprises (“SMEs”) tend to receive a portfolio of services similar to that of residential
customers (such as fixed and mobile telephony and broadband). They also receive additional services based on their specific
needs, such as PC maintenance or data solutions. SMEs form the vast majority of Spanish companies so they are an important
market as a whole. According to the European Commission, companies are qualified as SMEs when they fulfill at least two of
the following three criteria: (i) fewer than 250 employees; (ii) less than €50 million annual turnover; and (iii) total assets of
less than €43 million.
Telefónica is the principal competitor in providing business telecommunications services to SMEs. ONO, BT,
COLT, Jazztel, Orange and Vodafone are also competitors. Like ONO, Telefónica relies on its own infrastructure to offer
such services.
Large Accounts and Corporations
Large accounts require tailored solutions to meet their specific needs. Telecom operators tend to employ a group of
highly skilled account managers that look after a limited number of key accounts. In order to develop innovative and
comprehensive solutions and improve the quality and breadth of the services offered to large corporations, some operators
partner with consultants and other companies.
Telefónica is the principal competitor in providing data services to large corporations and public sector entities.
ONO, BT, COLT, Vodafone and Orange also are competitors. Large corporations and public sector entities continue to
demand more bandwidth to accommodate ever increasing data needs, and are demonstrating a strong preference for unified
voice and data infrastructures.
Wholesale and Other
Telefónica is the principal competitor in providing carrier services and circuit rental, both national and international,
using its own network. Other competitors include ONO, BT, COLT and Orange. As of the end of 2010, Telefónica had a
64.04% share of total revenues of €2.4 billion in the relevant wholesale markets where ONO is present. These markets include
fixed interconnection, circuit lease and data transmission services. ONO’s market share stood at 5.2% at the end of 2010.
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BUSINESS
Overview
We are the second largest provider of broadband internet, pay television and fixed telephony services in Spain.
Through our proprietary state-of-the-art network, we offer our services to over 7 million homes across Spain, including the
nine largest cities. We are the only fiber operator in Spain with national coverage. As of March 31, 2012, we provide over
4.4 million services under the ONO brand to 1.9 million residential (fiber and ADSL) customers and more than 95 thousand
small and medium-sized enterprises (“SMEs”) in Spain. We also offer products and services to large corporations and public
sector entities as well as to the wholesale market. We are the principal competitor to the incumbent telecommunications and
pay television operators in Spain and, through our recently upgraded network, we believe we are able to offer the most
advanced broadband internet and pay television services in the Spanish market. For the twelve months ended March 31, 2012,
we generated net revenues of €1,504 million, EBITDA of €756 million and an EBITDA margin of 50.3%. In the same period,
our residential services generated net revenues of €1,172 million (accounting for 77.9% of our total net revenues), and our
business and other services generated net revenues of €332 million (accounting for 22.1% of our total net revenues).
Residential Services
As of March 31, 2012, our residential fiber customers totaled approximately 1.8 million, representing approximately
95.2% of our total residential customer base. We offer customers the opportunity to subscribe to a variety of “bundled”
packages, which provides them with multiple services (broadband internet, pay television and telephony) charged in a single
bill. “Double-play” packages bundle two of our services together, whereas “triple-play” packages allow customers to utilize
each of our broadband internet, pay television and telephony services. As of March 31, 2012, 85% of our residential fiber
customers subscribed to a bundled package. The following is a summary of our services for residential fiber customers:
Broadband Internet: We are a leading provider of residential broadband internet services in our areas of operation.
As of March 31, 2012, we had over 1.4 million internet customers, representing 79.7% of our total residential fiber customer
base. We were the first Spanish operator to launch broadband speeds of 50 Mbps and 100 Mbps on a nation-wide basis and,
with the implementation of Docsis 3.0 technology, we have made these broadband speeds available in full throughout our
network. As of March 31, 2012, over 530 thousand customers subscribed to our high-speed internet packages (30 Mbps and
higher), representing approximately 37% of our residential broadband customer base, which we believe makes us the leading
provider of ultra-high speed residential internet in Spain. We intend to continue focusing on marketing and deriving the
commercial benefits from this service.
Television: We are a leading provider of pay television services in Spain with 906 thousand customers as of
March 31, 2012, representing 50.6% of our total residential fiber customers. We offer a wide selection of digital television
programming from basic to premium packages. Each of our TV packages also provides easy access to our pay-per-view and
video-on-demand (“VoD”) services, where available. In June 2010, we signed a strategic agreement with TiVo (a U.S. digital
video company) to deploy an innovative set of next generation TV services on an exclusive basis, which we believe provides
a seamless convergence between internet and traditional television content. In October 2011, we officially launched our next
generation TV service (TiVo) to customers in Madrid and Barcelona and since then we have made this service available in
areas that represent around 62% of our network coverage areas. We expect to further extend this innovative TV service to the
remaining regions within our network coverage areas in the coming quarters. As of March 31, 2012, this product had been
available for five months, and during this period we gained over 16 thousand customers.
Telephony: We provide local, national and international telephony services to approximately 1.7 million
customers, representing 94.8% of our total residential fiber customer base, as of March 31, 2012. This service is showing
some resistance to the decrease in the customer base and minutes of use, with national fixed-to-fixed calls volumes remaining
broadly stable; although fixed-to-mobile and international call volumes remain weak. In June 2010, we signed a strategic
agreement with Huawei to upgrade and outsource our voice network. We expect it to reduce our operating costs while
maintaining the quality of our telephony service.
We also offer services through ADSL and other technologies, such as indirect access. As of March 31, 2012, we had
approximately 91 thousand ADSL customers taking 171 thousand services from us.
In addition, we offer mobile voice and broadband services to residential customers. As of March 31, 2012, we had
approximately 189 thousand residential mobile lines.
Business Services
Spain.
We also provide telecommunication services to SMEs, large accounts and corporations and the wholesale market in
SME: We provide voice and data telecommunication services to small and medium-sized enterprises. As of
March 31, 2012, we had over 95 thousand SME customers taking 185 thousand services from us.
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Large Accounts & Corporations: We provide a range of customized solutions (voice, internet, data and
equipment) to corporations, institutions and public sector entities.
Wholesale & Other: We provide carrier services, voice traffic services, leased and dedicated lines and circuits and
ISP solutions to other telecommunications operators. In addition, we provide intelligent network services.
Our History
Formation
Before commencing operations in 1998, we participated in a number of competitive public bids further to the
adoption of Spain’s Law 42/1995 on Cable Telecommunications. Between 1996 and 1998, we were awarded licenses to
provide cable television and telecommunications services in the following nine regions: Valencia, Alicante, Castellón,
Murcia, Cádiz, Huelva, Cantabria, Mallorca and Albacete. In 2003, we were awarded a license to operate in Castilla-La
Mancha. In 2004, we acquired the telecommunications operator Retecal, covering the Castilla y Leon region.
In November 2005, we acquired Auna Telecommunications, S.A.U. (“Auna”), a wireline and cable operator. The
acquisition consolidated our presence in Spain and extended our coverage to seven additional regions, which included Spain’s
largest cities, Madrid and Barcelona. Following the Auna acquisition, we continued to pursue an expansion strategy of
extending our network and acquiring new customers. Between 2006 and 2008 we invested substantially in expanding the
footprint of our network infrastructure, with the number of homes released to marketing increasing by 1.2 million to over
7 million.
Transformation Process
Towards the end of 2008, faced with weakening international economic conditions, we commenced a
transformation process. The transformation focused on adjusting our business model to the changed economic environment
and stabilizing our operations following a period of rapid expansion, with the aim of creating a more efficient platform for
future growth. This process also coincided with significant changes in our senior management. Largely completed by the end
of 2009, the transformation process included a wide range of initiatives focused on maximizing cash flow, implementing cost
efficiencies, reshaping our organization and attracting and retaining high-quality customers. As a result of the transformation,
we believe we have become a more resilient and efficient company. Our EBITDA increased from €645 million (Spanish
GAAP) in 2007 to €748 million in 2011, our EBITDA margin increased from 39.9% (Spanish GAAP) in 2007 to 50.4% in
2011 and operating free cash flow increased from €91 million (Spanish GAAP) in 2007 to €456 million in 2011. During the
transformation process, we focused primarily on:
Optimizing returns from assets: Having already invested to establish a network reach of over 7 million homes, we
ceased our network expansion activities and focused on maintaining and enhancing our existing network. We have undertaken
several platform upgrades, such as our implementation of Docsis 3.0 (deployment completed in February 2012), and the
improvement of our next generation television service (TiVo) with almost 62% of our network upgraded as of March 31,
2012, and the ongoing upgrade and outsourcing of our voice platform. Other initiatives included improving our receivables
collection cycle.
Reshaping our organization: We centralized our business operations, eliminating duplicate regional functions and
reducing headcount. A shift towards internet sales and other more cost efficient sales channels led to a reduction of our direct
sales force. In the first quarter of 2012, 30% of our sales were through the internet, compared to 0.2% in 2007. The average
number of our employees has declined from 4,618 for 2007 to 2,893 for the three months ended March 31, 2012. In addition,
in April 2010 we sold our loss-making content aggregator, Teuve.
Cost efficiencies: We implemented a wide range of cost efficiency initiatives, resulting in our cost of sales, staff
costs and other operating expenses (less capitalized costs) declining from €971 million (Spanish GAAP) in 2007 to
€737 million in 2011, or 24%. In addition to the organizational changes described above, other key initiatives included
selective outsourcing, a new procurement model, continued renegotiation of contracts and migrating our customers to an
e-billing system.
Focusing on high-quality customers: We placed a strong emphasis on attracting and retaining high-quality
customers. We introduced a credit scoring initiative and increased activation and installation fees in order to reduce the
number of new early-churn customers. In addition, we improved our customer care processes and offered our existing
customers add-on services, such as next generation TV (TiVo), voice and mobile broadband and the Gol TV channel, in order
to increase their loyalty. Despite these successful initiatives, the unfavorable economic environment impacted on our churn
levels, which have increased since 2009. We also shifted our marketing focus to promote double- and triple-play packages,
which we believe can help us achieve higher ARPUs and greater loyalty. We also launched a new marketing campaign
emphasizing the superiority of fiber versus ADSL in terms of speed and quality of service. As a result of these and other
measures, the percentage of our customers subscribing to triple-play services increased from 31.2% as of December 31, 2007
to 40% as of March 31, 2012 and our RGUs per customer increased from 2.03x in the last quarter of 2007 to 2.25x in the three
months ended March 31, 2012.
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Refinancing
In the beginning of 2010, we initiated a multi-stage refinancing process seeking to extend the maturity of our
existing indebtedness beyond 2013. The May 2012 Refinancing is the final stage of that refinancing process and, upon its
completion, we will have extended the maturities of substantially all of our financial indebtedness, with no significant
maturities before 2017.
Refinancing prior to May 2012
In May 2010, we completed the first step of our refinancing process as part of which we amended our 2005 Senior
Facility to extend the maturities of certain existing financing tranches and allow for additional financing tranches to facilitate
future refinancings. As part of the refinancing process, we also received additional support from our shareholders in the form
of a deeply-subordinated participative loan, that amounted to €125 million.
In October 2010, we completed the second step of our refinancing process, which consisted of (i) the issuance of
€700 million aggregate principal amount of 8.875% Senior Secured Notes due 2018 (the “2010 Notes”) by Nara Cable
Funding, the gross proceeds of which were on-lent to Cableuropa pursuant to a new tranche under the 2005 Senior Facility,
(ii) the repayment of €700 million of existing bank tranches under the 2005 Senior Facility from the gross proceeds of the new
tranche and (iii) the use of available cash to pay expenses related to the transaction (together, the “October 2010
Refinancing”).
In January 2011, we completed the third step of our refinancing process, which consisted of (i) the issuance of
€295 million aggregate principal amount of 11.125% Senior Notes due 2019 and $225 million aggregate principal amount of
10.875% Senior Notes due 2019 (together, the “Subordinated Notes”) by ONO Finance II and the use of the gross proceeds
therefrom plus available cash to (ii) redeem €450 million then-existing subordinated notes guaranteed by Cableuropa and
ONOMidco, (iii) repay a €10 million ICO participative loan, and (iv) pay expenses related to the transaction (together, the
“January 2011 Refinancing”).
In July 2011, we completed the fourth step of our refinancing process which consisted of (i) the issuance of
€300 million aggregate principal amount of 8.875% Senior Secured Notes due 2018 by Nara Cable Funding (the “2011
Notes”), the gross proceeds of which were on-lent to Cableuropa pursuant to a new tranche under the 2005 Senior Facility,
(ii) the repayment of €300 million of existing bank tranches under the 2005 Senior Facility from the gross proceeds of the new
tranche and (iii) the use of available cash to pay expenses related to the transaction (together, the “July 2011 Refinancing”).
In February 2012, we completed the fifth step of our refinancing process which consisted of (i) the issuance of $1
billion (€749 million equivalent, as of March 31, 2012) aggregate principal amount of 8.875% Senior Secured Notes due 2018
by Nara Cable Funding (the “February 2012 Notes”), the gross proceeds of which were on-lent to Cableuropa pursuant to a
new tranche under the 2005 Senior Facility, (ii) the repayment of €738 million of existing bank tranches under the 2005
Senior Facility from the gross proceeds of the new tranche and (iii) the use of available cash to pay expenses related to the
transaction (together, the “February 2012 Refinancing”).
May 2012 Refinancing
On May 24, 2012, we executed our New Senior Facility which permits term loan borrowings of up to
€2,400 million and U.S.$1,000 million (including a €100 million Revolving Facility and a €224 million Bridge Tranche).
Borrowings under the New Senior Facility (including the Bridge Tranche), together with available cash, will be sufficient to
refinance in full the 2005 Senior Facility. On the New Notes Issue Date, we will complete the refinancing of the 2005 Senior
Facility (the “May 2012 Refinancing”) utilizing:
• €891 million in borrowing under Facility A of the New Senior Facility (“Facility A”);
• €185 million in borrowings under Facility B of the New Senior Facility (“Facility B”);
• €1,000 million in borrowings under the Euro Note Tranches (which will refinance the relevant tranches of the
2005 Senior Facility funded with the proceeds of the Euro Notes);
• U.S.$1,000 million (€749 million equivalent as of March 31, 2012) in borrowings under the February 2012
Notes Tranche (which will refinance the relevant tranche of the 2005 Senior Facility funded with the proceeds
of the February 2012 Notes);
• €224 million euro equivalent in U.S. dollar borrowings under the New Notes Tranche (funded with the gross
proceeds from the issue of the New Notes, assuming the New Notes are issued with no original issue discount);
and
• available cash of €162 million.
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The Revolving Facility in the amount of €100 million under the New Senior Facility is expected to remain undrawn
on the New Notes Issue Date.
Under the New Senior Facility, the Bridge Tranche will not be drawn if the offering of the New Notes is completed.
Our Key Strengths
Our key strengths are:
• Proprietary technologically-advanced network. Our hybrid fiber coaxial network provides a high-speed,
high-capacity, two-way communications pathway with direct access to our customers. By owning our own
network, we believe we can offer higher quality and more reliable services and roll out new products more
quickly. Being an infrastructure based provider also allows us to offer multiple services and improved services,
such as higher broadband speeds and our recently launched next generation TV service (TiVo). As we own our
entire access network, we enjoy superior economics in terms of gross margin per subscriber compared to
ADSL-based competition.
• Proven ability to upgrade our network and services. During 2010 and 2011, we implemented a series of
network upgrades that have enabled us to improve the product offerings to our residential and SME customers.
These network upgrades have included the nationwide deployment of Docsis 3.0 technology (completed in
February 2012), the upgrading of our TV platform, completed in almost 62% of our network as of March 31,
2012, and the upgrading and outsourcing of our voice platform, with the migration process to the new voice
switches already initiated. On the back of these network upgrades, we have been able to successfully develop a
series of new and enhanced products and services offerings that we believe have positioned us at the forefront of
the Spanish telecommunication industry. These offerings have included the development of high-speed internet
packages with speeds ranging between 30 Mbps and 100 Mbps (and 200 Mbps for SMEs), making us the only
telecommunication company in the Spanish market able to offer these speeds on a nation-wide basis and our
recently launched next generation TV service (TiVo), which enable us to offer a variety of content that integrates
broadcast and broadband television in a way that goes beyond the confines of traditional pay television.
• Superior product and service offering. We provide our customers with the fastest broadband internet service
in the market with current speeds of up to 100 Mbps (and 200 Mbps for SMEs). According to a study
published on March 16, 2012 (Q4 2011 Report) by SETSI, part of the Spanish Ministry of Industry, Energy
and Tourism, our average real speed for 15 Mbps and 50 Mbps subscriptions were better than promised (15.2
Mbps and 50.3 Mbps, respectively), which stands in contrast to the rest of the market. Our attractive television
offering comprises up to 125 channels (including the Gol TV and Canal+ channels) and video-on-demand
availability and interactivity. In addition, through our recently launched next generation TV service (TiVo), we
are able to provide our TV customers with a best in class experience and a wide variety of content that
integrates broadcast and broadband television in a way that goes beyond traditional pay television. As of
March 31, 2012, we had deployed our TiVo service in regions that represent almost 62% of our network
coverage areas and we expect to further expand this service in the remaining regions within our network
coverage areas in the coming quarters. We provide our products in a variety of bundles offering customers the
convenience of having a single provider for their fixed-line communication, entertainment and information
needs. We believe that the combination of fast internet speeds, high number of channels, innovative features,
excellent quality of service and competitive pricing represents a superior offering to others available in the
Spanish marketplace today. We believe our bundled offering results in increased penetration, higher customer
loyalty and increased revenues from our customers.
• Scale and potential for growth. We are the second largest provider of broadband internet, pay television and
fixed telephony services in Spain, with approximately 1.8 million residential fiber subscribers as of March 31,
2012. Our state-of-the-art network gives us access to over 7 million homes across Spain, including the nine
largest cities. We believe that our relatively low penetration rate for residential services of 25.4% as of
March 31, 2012 indicates significant potential for growth without the need to further expand our network
coverage.
• High-quality and loyal customer base. We believe we have a high-quality and loyal customer base due to our
selective customer acquisition strategy, superior product and service offerings and excellent customer service.
We continue to focus on improving our customer service and enhancing our product offerings to existing and
new customers.
• Resilient business. Despite the challenging macroeconomic environment of recent years, we have been able
to limit the decline in our net revenue from €1,616 million (Spanish GAAP) million in 2007 to 1,472 million in
2010 and have been able to grow our net revenues in 2011 to reach €1,485 million. We believe this is the result
of our customer care, our competitive and innovative service offering, our focus on high-quality customers
through a selective customer acquisition strategy based on credit scoring, the implementation of activation and
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Our Strategy
installation fees, selective application of customer acquisition promotions and a change in marketing strategy
to focus on more targeted campaigns. At the same time we increased our EBITDA from €645 million (Spanish
GAAP) in 2007 to €748 million in 2011, improving our EBITDA margins from 39.9% in 2007 (Spanish
GAAP) to 50.4% in 2011, primarily by implementing operational efficiencies, which reduced our cost of sales,
staff costs and other operating expenses (less capitalized costs) from €971 million in 2007 (Spanish GAAP) to
€737 million in 2011, a decrease of 24%. We expect that a continuing focus on growing and retaining our
customer base as well as controlling costs will enable us to maintain or improve our EBITDA margins over
time.
• Shareholder support and highly experienced management team. Since we commenced operations in 1998,
our shareholders have consistently supported the ONO Group, with contributions of €2 billion to GCO prior to
May 2010. In May 2010, our shareholders made an additional contribution to enhance the liquidity of the
business (with €125 million contributed to us in the form of a deeply subordinated participative loan, which
was ultimately capitalized into equity in Cableuropa in January 2011). Our management team has extensive
experience in managing telecommunications and media businesses in Spain, other countries in Europe and the
United States. In addition, our management has a proven track record of delivering growth in the
telecommunications business in a cost-efficient manner.
Our strategy is to leverage our existing superior network infrastructure, to maintain and enhance our position as a
leading provider of integrated broadband internet, television and telephony services and to improve our financial profile. In
order to achieve these targets, we are continuing to focus on further developing our customer base and product offering, as
well as implementing initiatives with the objective of improving profitability, maximizing liquidity and reducing leverage:
• Provide the best internet service in the market. Our strategy is to position ourselves as a high-quality,
innovative service provider with competitive prices, taking advantage of our own state-of-the-art network. We
strive for high quality of service and believe we compare favorably to competitors. The steps we have taken to
implement this strategy include the delivery of “real” (i.e., as advertised) internet speeds and the Docsis 3.0
system upgrade which was completed in February 2012. The upgrade enables us to provide faster and more
reliable internet services with speeds significantly higher than our currently commercialised speeds of
100 Mbps for residential customers and 200 Mbps for SMEs (we are currently the only provider in Spain to
offer this speed on a nation-wide basis). As of March 31, 2012, over 530 thousand customers subscribed to our
high-speed internet packages (30 Mbps and higher), representing approximately 37% of our residential
broadband customer base, which we believe makes us the leading provider of ultra-high speed internet in
Spain. We intend to continue focusing on marketing and deriving the commercial benefits from this service.
• Provide the best TV experience in the market. In June 2010, we established an alliance with U.S. digital video
company TiVo in order to offer a next generation TV service, using set-top boxes manufactured by Cisco, which
we believe provides a seamless convergence between internet and traditional television content. In October
2011, we officially launched our next generation TV service (TiVo) to customers in Madrid and Barcelona. We
have made this service available in regions that represent almost 62% of our network as of March 31, 2012. We
expect to further extend this innovative TV service to the remaining regions within our network coverage areas
in the coming quarters. As of March 31, 2012, this product had been available for five months, and during this
period we gained over 16 thousand customers. We believe this innovative TV product will help us to grow our
TV customer base, strengthen customer loyalty and increase revenues. We also believe it differentiates and
significantly upgrades our television offerings compared to others in the market by providing users with a
“best-in-class” experience and a wide variety of content that integrates broadcast and broadband television in a
way that goes beyond the confines of traditional pay television.
• Increase the number of high-quality customers. We are undertaking a more focused customer acquisition
strategy while at the same time protecting our customer base with loyalty initiatives. Our main strategy is to
grow market share of our residential services, but we are particularly focused on higher-quality customers,
which we believe can help us achieve higher ARPUs and lower net churn. Actions to implement this strategy
include the use of credit scoring, the implementation of activation and installation fees, selective application of
customer acquisition promotions and a change in marketing strategy to focus on more targeted campaigns. Our
advertising highlights the quality of our products in addition to the competitive prices at which we offer them.
• Expand up-selling and cross-selling initiatives. We seek to sell additional products and services to our
existing customers, a practice to which we refer as cross-selling, or transfer them to higher value services, a
practice to which we refer as up-selling. In particular, we intend to encourage our customers to subscribe for
additional services by offering bundled services, at prices lower than those provided by our competitors or by
us on an individual basis, or to transfer customers to higher broadband speeds and broader TV packages,
including our recently launched TiVo product, at similar or slightly higher prices. We believe that providing
existing customers with a variety of new and enhanced services with tiered pricing options encourages them to
56

take more than one of our services. Bundling and new pricing options are expected to increase the number of
our double- and triple-play customers and thereby increase our RGUs per customer and protect ARPU stability.
We also intend to continue developing customer loyalty by offering value-added services such as mobile voice
and broadband internet and internet security software.
• Grow our mobile voice and broadband customer base. We believe there is opportunity to grow our mobile
voice and broadband customer base which comprises mostly customers taking triple and quadruple-play
services from us. As of March 31, 2012, we had 189 thousand mobile residential lines and 13 thousand mobile
SME lines subscribed to mobile services from us, which represents a relatively low penetration rate compared
to our overall customer base. We would like to grow our mobile services customer base because we believe
that mobile services contribute to greater customer loyalty and lower churn levels, contributing to higher
revenues.
• Grow our SME business. We believe there is opportunity to grow our SME business and gain market share in
this business area. Different types of SME customers have different telecommunications service needs and
respond to different sales and marketing approaches. Quality is of paramount importance for SME customers
and we believe that we are well-positioned to deliver a quality service by utilizing our established proprietary
state-of-the-art network and by offering competitive solutions.
• Maintain cost discipline and maximize cash generation. We achieved positive free cash flow for the first time
in 2009. We increased our free cash flow by €89 million between 2009 and 2011, and we aim to continue to
improve free cash flow generation through the marketing and product development initiatives described above
as well as through continuous cost control. In addition, we are continuing to identify specific projects to
improve the overall level of efficiency in all our activities, such as our ongoing focus on more cost efficient
internet sales and marketing, which accounted for only 11% of our sales in the first quarter of 2009 but
increased to 30% in the first quarter of 2012.
• Reduce our leverage. We believe that by focusing on the strategies above, we are continuing to generate
positive cash flows and intend to use such cash flows primarily to reduce our indebtedness as evident by our
reduction in net leverage from 5.2x in 2009 to 4.5x in 2011 and 4.4x as of March 31, 2012.
Our Products and Services
We currently provide a broad array of broadband internet, television and telephony services to our residential
customers as well as broadband internet services and telephony to SMEs, large accounts and corporations, and the wholesale
market. The following table sets out certain information with respect to our residential and business customers as at March 31,
2012:
As at
(in thousands of customers)
March 31, 2012
(unaudited)
Total Residential ........................................................................ 1,881
Residential fiber ...................................................................... 1,791
Residential ADSL .................................................................... 91
Business (1)
SME............................................................................... 95
Indirect Access Customers ................................................................ 18
(1) We do not report numbers of customers in the “large accounts & corporations” and “wholesale & other” business segments because such
data are not meaningful.
Residential Fiber Services
Overview
As of March 31, 2012, our proprietary state-of-the-art network gave us fiber access to over 7 million homes with
coverage across Spain, including the nine largest cities. Currently, our customers enjoy the same service offering irrespective
of their geographic location.
In October 2008, we became the first operator to launch 50 Mbps broadband speeds, and in October 2010 we
became the first operator to launch 100 Mbps broadband speeds. At present, we offer a number of residential internet access
services, including speeds of 6, 15, 30, 50 and 100 Mbps and three television packages: “Esencial” (with 69 channels),
“Extra” (with 105 channels) and “Total” (with 125 channels). All these television offers include VoD in the areas where this
service is available.
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The table below sets out certain information with respect to our residential fiber broadband internet, television and
telephony services:
As of and for the three months ended
March 31, 2012
(unaudited)
Residential Fiber
Homes released to marketing (thousands) ..................................... 7,049
Fiber customers (thousands) ................................................ 1,791
Penetration (percentage) ................................................... 25.4%
Net churn (percentage) .................................................... 18.4%
ARPU (euro; most recent quarter) ........................................... 52.1
RGUs (thousands) ........................................................ 4,031
Internet ............................................................ 1,428
Television .......................................................... 906
Telephony .......................................................... 1,697
RGUs per customer ....................................................... 2.25x
Bundled Services
In order to maximize revenues from each home released to marketing, we actively encourage customers to subscribe
to more than one service by offering cost savings and the convenience of having a single supplier and a single point of contact
and billing for all communication, entertainment and information needs. As of March 31, 2012, 85.0% of our residential fiber
customers had a bundled service (40.0% triple-play and 45.0% double-play).
We have adopted an aggressive triple-play strategy, using a tiered offer of bundled products. Customers who
subscribe for more than one service enjoy a significant discount compared to the price of the corresponding services on an
individual basis.
We offer the following bundled services (all of which include telephony) to new customers across the whole of
Spain as of March 31, 2012:
Broadband (1) /TV (2) No TV TV Esencial TV Extra TV Total
No broadband ................................................... — € 35.90 € 40.90 € 45.90
6 Mbps/300 Kbps ................................................ € 40.90 € 45.90 € 50.90 € 55.90
15 Mbps/1 Mbps ................................................. € 50.90 € 55.90 € 60.90 € 65.90
30 Mbps/1 Mbps ................................................. € 46.90 — € 56.90 € 61.90
50 Mbps/3 Mbps ................................................. € 54.90 — € 64.90 € 69.90
100 Mbps/10 Mbps ............................................... € 80.90 — € 85.90 € 90.90
(1) Download/upload speeds.
(2) Since the launch of our digital television services in 2003, we have discontinued the marketing of our analog television services in
areas where we have digital television capabilities. We continue to provide bundled services with analog television programming to
existing analog television customers.
Note: The table presents monthly final prices (VAT excluded) as of March 31, 2012 and the figures correspond to the final price following
the expiration of sign-up incentives and discounts. Promotional activity may affect these prices. We also offer, at no extra cost, basic
telephony services which include free local and national fixed line calls.
In addition to monthly charges, customers also pay variable charges related to telephony usage, pay-per-view
television programs, VoD and other value-added services and one-off charges, such as installation when it is not promoted.
The final prices paid by customers for their service plans can be impacted from time to time by acquisition and
retention promotions. Such promotions take a variety of forms and usually last between three and twelve months. We manage
such promotions on a proactive basis with the aim of maximizing our cash flows while using appropriate price points for the
acquisition and retention of customers in light of the then-prevailing macroeconomic and industry landscape.
Broadband Internet
Our broadband internet service connects our customers to our local networks via cable modems at a variety of
different speeds and prices. We offer unlimited downloads with all our packages.
In February 2012 we completed the deployment of Docsis 3.0 technology across our network, which allows us to
offer our customers greater quality and high internet speeds. With the deployment of Docsis 3.0 we became the first operator
in Spain offering 50 Mbps and 100 Mbps residential internet packages. The 50 Mbps service was launched on a wide scale in
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August 2010. In October 2010, we launched a pilot program offering 100 Mbps download speed in certain areas. In August
2011, we started offering this speed on a wider scale and we currently have the capacity to deliver high-speed Internet of up to
100 Mbps to approximately 7 million homes within our network coverage areas, representing virtually all of our customer
base (in addition SMEs are offered a 200 Mbps broadband package). As of March 31, 2012, over 530 thousand customers
subscribed to our high-speed residential internet packages (30 Mbps or higher), which we believe makes us the leading
provider of ultra-high speed internet in Spain. We intend to continue focusing on marketing and deriving the commercial
benefits from this service.
We seek to upgrade our customers to higher speeds from time to time and offer upgrade promotions. For example,
during 2010 we offered to double the upload and download speeds to our current customer base for an additional monthly cost
of €2 per month. Therefore, our 3 Mbps customer base was able to enjoy 6 Mbps, while our 6 Mbps customer base was able
to enjoy 12 Mbps, providing a substantial increase in value with only a small increase in costs. In September 2011, we
provided an upgrade to existing customers using 12 Mbps by offering them 15 Mbps without an increase in price.
Furthermore, in February 2012, we launched a commercial campaign to further improve Internet offering to our high-end
Internet customers. As part of this initiative, customers subscribing to our 6 Mbps to 100 Mbps Internet packages are offered
extra 15 Mbps for free in exchange for a minimum contract term of 12 months.
We offer all our broadband customers “Centinela”, a security program for internet navigation including antivirus
and firewall software as well as other value-added services such as electronic mail, with an unlimited number of email
accounts, and anti-spam services. We also offer other value-added services for an additional fee, including “Easy Broadband
Internet”, which facilitates internet access configuration, a comprehensive security software package and remote assistance for
problems and questions about computing and internet browsing.
Fiber television
We provide our television customers with a multi-channel pay television ranging from basic to premium packages.
In addition, we offer all our television customers pay-per-view and VoD service, broadcasting movie premieres and live
football programming. To avoid piracy, we provide the television content encrypted. Therefore, a decoder is required to
receive the service, which is rented to customers for a rental fee that is usually included in the monthly fee of the respective
customers bundle services. As with our other services, customers can subscribe to our television services as part of a bundled
package.
Following the launch of digital television services in 2003, we discontinued the marketing of analog services to new
customers despite continuing to provide analog services to existing customers. Currently over 92% of our fiber television
customers enjoy our digital offering. The introduction of digital television has allowed us to increase our channel line-up as
well as the ratio of use of our pay-per-view and VoD services. We provide customers with up to 125 digital channels, as well
as an electronic programming guide. From our digital television centers in Madrid, we broadcast to all of our customers using
our national network.
In December 2005, we launched a full VoD service, named “Videoclub”. As of March 31, 2012, “Videoclub” had
almost 708 thousand active customers. Using this service, our customers viewed more than 69 million events in the last
twelve months ending March 31, 2012 (including both paid and free events).
We are currently developing a set of innovative solutions that we believe will help us increase TV customers and
revenues. In June 2010, we established an alliance with U.S. digital video company TiVo in order to offer a next generation
TV service, using set-top boxes manufactured by Cisco, which we believe provides a seamless convergence between internet
and traditional television content. Under the contract, we are the exclusive distributor in Spain of advanced television services
from TiVo. In October 2011, we officially launched our next generation TV service (TiVo) to customers in Madrid and
Barcelona and we have made this service available in regions that represent 62% of our network as of 31 March 2012. We
expect to further extend this innovative TV service to the remaining regions within our network coverage areas in the coming
quarters. As of March 31, 2012, this product has been available for five months, and during that period we gained over
16 thousand customers. We believe this innovative TV product in the Spanish television market will help us to grow our TV
customer base, strengthen customer loyalty and increase revenues. We also believe it differentiates and significantly upgrades
our television offerings compared to others in the market by providing users with a “best-in-class” experience and a wide
variety of content that integrates broadcast and broadband television in a way that goes beyond the confines of traditional pay
television.
We offer our television services in a range of packages at different price levels in order to address the broadest
possible television audience. The programming offered to our customers contains a wide selection of television series,
movies, sports, news, music, documentaries and children’s channels, including, among others, the following: AXN, Discovery
channel, Disney channels, Eurosport, Fox, MTV and Paramount Comedy. We also offer VoD movies from Hollywood
studios, U.S. independent producers, and Spanish and other European producers. In July 2009, we signed a contract with
Mediapro, the new owner of the Spanish football league content, to provide us with a premier football channel (Gol TV) with
matches from the Spanish football league, the European Champions League and the main leagues in Europe and South
America. As of March 31, 2012, we reached almost 96 thousand customers with the Gol TV channel. Mediapro also provides
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additional content that is not included in the Gol TV channel on a pay-per-view basis, including Spanish league and King’s
Cup football matches. Our Mediapro contract expired after the end of the 2011-2012 football season. Mediapro does not yet
own the rights for subsequent seasons; however, due to the substantial size of our customer base, we expect to be able to
negotiate access to premium football with the future rights owners. In November 2010, we signed a contract with DTS to
provide us with Canal+ channel. We believe that this premium channel, which is included in all of our television packages on
a pay-per-view basis, offers some of the best sports and cinema content available in the Spanish market.
The table below shows the number and type of channels currently available to subscribers of our digital television
service packages:
Digital offer
TV Esencial
TV
Extra TV Total
Standard channels ........................................................ 62 98 118
Pay-per-view channel (1) .................................................... 7 7 7
VoD service (Videoclub) (2) ................................................. Included Included Included
Total channels .......................................................... 69 105 125
(1) Includes seven thematic channels (Baby, Barça, Canal+, Cazavisión, Cinepremier, Gol TV and Playboy).
(2) VoD services are provided on a free and pay basis. Programming includes music, feature films, TV series and adult content.
Telephony
Our residential telephony service offers direct access connectivity to our customers in our areas of operation. We
seek to maximize the use of our own network when routing calls in order to minimize interconnection costs and capitalize on
our control over quality of service. Currently our networks interconnect directly with the networks of Telefónica (operating
under the Movistar brand), Orange and Vodafone, among others.
We also seek to attract new customers from other networks by allowing customers to maintain their existing
telephone number. Like other Spanish operators, we charge a portability fee for transferring a number to the ONO network,
but we routinely offer this service at a reduced promotional rate.
We offer an “all included” direct access telephony service with all our packages, which includes free calls to any
standard fixed-line telephone number in Spain. In contrast, other operators charge for line rentals and do not offer flat rates.
For all our customers, we also offer a range of add-on services to our basic telephony service including a second line, second
home phone line, vouchers for international calls and vouchers for mobile phones providing savings for those customers with
intensive voice service usage to ensure their loyalty. Additionally, all our customers are offered a number of value-added
services (on a basic or premium plan). These include voicemail, call waiting, call return, short code dialing, caller
identification, selective barring of outgoing and some incoming calls, call return and an alarm clock service. We also offer
telephone handsets for sale or rental.
We also offer all our customers our information service number at a competitive price. This service allows
customers to inquire about the location and telephone numbers of restaurants, cinemas and theatres. Our competitors typically
charge premium rates for this service.
We monitor the tariffs and services offered by our competitors and adjust pricing and the type of services we offer
on a regular basis to maintain our competitive position. Our tariffs are usually priced competitively against those of other
operators.
Mobile Broadband and Voice Services
In June 2008, we launched mobile broadband services for our residential fiber customers. This service offers speeds
of up to 7.2 Mbps through the mobile network so customers can enjoy wireless broadband, anywhere at any time. This
product is bundled together with the ONO broadband internet service and includes the SIM cards and USB modems for
mobile and regular broadband connection.
In September 2009, we launched a mobile voice service for our residential fiber customers. We offer several
different tariffs including flat fee and pay-per-use, in order to better meet market needs. In addition, we recently started
offering handsets as a complement to our SIM card. We believe this could help make our mobile voice service offering more
attractive to our existing and potential customers. As of March 31, 2012 over 189 thousand residential lines as compared to
131 thousand lines as of March 31, 2011.
On July 29, 2011, we were granted concessions in the 2.6GHz mobile spectrum in nine Spanish regions (Madrid,
Catalunya, Comunidad Valenciana, Murcia, Navarra, La Rioja, Cantabria, Ceuta and Melilla), which represent approximately
47% of Spanish households and approximately 60% of ONO’s homes released to marketing, for a total one-off consideration
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of €13.3 million. While this development does not represent a change in our core strategy, the recently acquired licenses will
enable us to: (i) benefit from a license on 4G that runs until 2030 which we obtained for a limited cash consideration;
(ii) potentially provide high speed services for additional fixed residential and SMEs customers in areas close to our cable
footprint; and (iii) potentially improve our suite of mobile service offerings, reducing host dependence and increasing the
quality of our 4P services.
Residential ADSL
We also market our broadband, internet services and telephony through Telefónica’s ADSL. As of March 31, 2012,
we had over 91 thousand ADSL customers taking 171 thousand services from us. Our ADSL operations are focused primarily
in Madrid and Catalunya and we view them as a complement to our core fiber business.
Business Services
Small and Medium Enterprises (SMEs)
We provide our SME customers with a wide range of voice and data communications services. The experience that
we have gained since the launch of operations has provided us with insights into the needs of SME customers. This
knowledge led us to develop new services and to redesign sales and marketing processes in order to fulfill the needs of SME
customers (such as mobile products or our 200 Mbps broadband package). As of March 31, 2012, we had approximately
95 thousand SME customers taking 185 thousand services from us.
SME businesses demand simple and understandable products and services that provide them with effective solutions
to their communications requirements, generally at flat rate prices. To this end, we offer a wide and varied portfolio of
products and services, ranging from simple fixed telephony line services to the most advanced corporate data networking, flatrate
packages for voice and internet services, mobile voice and data services, leased lines, VoIP, voice portals, hosting and
housing, security and on-line backup.
We also address the specific telephony needs of our customers with various value-added services contained in our
product portfolio, such as voicemail, call waiting, call return, short code dialing, caller identification and selective barring of
outgoing calls. We also offer our customers the possibility to outsource equipment, applications and technical tasks.
We currently offer our SME customers a comprehensive range of services, including:
• Telephony (including voicemail, call forwarding, three-way calling and last call identification) for both digital
and analog direct lines and switchboard connections and Integrated Services Digital Network (ISDN);
• Premium-rate numbers;
• PBX (private branch exchange) related services;
• Infrastructure services such as housing of servers; and
• Other value-added services such as domain name registration, e-mail accounts and web hosting.
• Mobile services
We also provide our SME customers with service level agreements and on-line billing information.
Large Accounts & Corporations
We also offer telecommunications solutions to larger corporations and public sector entities. We develop and
manage customized solutions for our customers’ client base through an integrated range of networks.
Corporate accounts demand more specific and sophisticated services than SME customers. Because
communications are becoming increasingly integrated in the business processes of larger companies, the quality of the
services provided is a key factor. For this reason, all the services we offer to our corporate customers are supported by specific
service level agreements.
We also use telecommunications consultants who assess our customers’ needs and provide innovative
communication solutions, which are adapted to each customer. In addition, we have established strategic alliances with large
corporations such as Cisco, Avaya, Microsoft and Indra, which help us to improve the quality and breadth of the services we
offer.
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We have developed dedicated provisioning, installation and customer attention teams and have set up an account
management system to give these customers a single direct point of contact within ONO. With this system, we assign each
large customer a specific person within ONO, which allows us to provide customized solutions on a proactive basis to our
large customers’ communications requirements. Currently, we provide a wide range of customized services to our corporate
clients, including:
Wholesale & Other
• Multiprotocol Label Switching (“MPLS”) Virtual Private Networks, with a wide variety of access technologies
including mobile and additional features;
• Virtual Private LAN Service (“VPLS”) networks using Ethernet access technology;
• Complete voice solutions, including corporate telephony services over IP and the most sophisticated solutions
on intelligent network services;
• Internet access;
• Firewall management and virtual ISP; and
• Business Platform services, including hosting, messaging and video streaming.
Through our wholesale and other segment, we offer services to other operators aiming to use the excess capacity on
our nationwide network. These services include infrastructure (carrier services) and traffic management services (voice traffic,
prepayment and intelligent network).
• Our carrier services provide other operators with leased circuit lines on our network. We provide guaranteed
bandwidth of all capacities, PDH, SDH, Ethernet and Lambdas.
• Our traffic management services provide national and international traffic services for the termination and
reception of other operators’ traffic. In addition, we offer prepayment services and intelligent network services.
Sales and Marketing
The “ONO” Brand
All our telecommunication and television services in the residential and business markets are offered under the
“ONO” brand. The ONO brand is used in all advertising, sales materials, customer contracts, bills, employee uniforms,
installation vans and elsewhere in our business. In addition, the ONO brand and services are promoted extensively to
customers through a monthly magazine (which includes television programming schedules).
We conduct extensive advertising to support our brand, including through billboards, the regional and national
press, radio television outlets and internet as well as other innovative methods. In addition, we support our local radio and
television advertising with sponsorship of regional cultural events, sports teams, trade shows and festivals.
We believe that the ONO brand is a strong marketing tool and a well-recognized brand in our areas of operation. In
August 2010 we launched our enhanced brand image. We want to communicate to our current and potential customers that
ONO is the only telecommunication operator in the Spanish market which is able to offer nationwide high-speed broadband
internet at “real” speeds through its proprietary state-of-the-art network, and that this differentiates us from our competitors.
This new visual branding campaign emphasizes the speed and quality of our modern fiber optic network which we
believe differentiates us from our competitors. Starting from the premise that the definition of optical fiber is “transmission
via light impulses”, we have integrated the concept of “light” in our visual identity and in our marketing materials. To better
differentiate ourselves from our competitors many of whom have a recognizable color, we have also introduced purple as our
“official” color. This represents the most thorough update in our visual identity since we commenced operations.
Quality and Customer Service
Installation Services
During 2011, we began implementing a renewed installation services strategy whereby we reduced the number of
contracts from 23 to 12 and renegotiated the main terms and conditions of these agreements. We believe that this initiative has
helped us to increase the quality and efficiency of the installation process while providing savings in operating expenses. In
2011, we have serviced over 363 thousand new residential customers and 38 thousand new SME customers as well
as performed over 86 thousand service upsells and 171 thousand service upgrades. The average installation time was 4.8 days.
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The installation process is the first contact we have with our customers once they have subscribed for our services
and very often it is the only face to face contact between them and ONO. During 2010 and 2011, we increased our efforts to
improve the quality delivered by our technicians through a technician quality program. We do this by monitoring complaints
and service failures within a short period following installation as well as the results of order closure calls. The
implementation of these actions, among others, has led to a significant improvement in all our installation quality parameters,
as well as an improvement in the productivity of our technicians, which has enabled significant reductions in installation
costs.
Additionally, in 2010, we consolidated our fiber and ADSL support teams. We have seen the efficiency of our
installation process increase on the back of this initiative.
As a benchmark, a report published by the Spanish Ministry of Industry, Energy and Tourism for the fourth quarter
of 2011 lists ONO as one of the best telecom operators in the Spanish market in all parameters related to provision and
installation processes, consistently performing above our competitors. In addition, this report lists ONO as one of the telecom
operators with the fewest customer claims: the average rate of claims for the entire telecom sector was 3.69% whereas ONO’s
rate was 1.87%.
Billing Process
We have a single corporate billing system. Our billing system, called Infinys Rating and Billing, is widely used in
the telecommunications industry and we believe it provides us with sufficient flexibility and functionality to enhance our
customer service in the future.
Furthermore, as part of a digital transformation initiative, the use of electronic billing has been increased in the
SMEs segment from 5.6% in the fourth quarter 2010 up to 67.4% in the fourth quarter 2011 and up to 71.1% in the first
quarter 2012 with the wide launch of e-billing this past year. In the residential segment, the use of electronic billing has
increased from 61.8% in the fourth quarter 2010 up to 64.8% in the fourth quarter 2011 and up to 69.5% in the first quarter
2012. These figures have helped reduce operating expenses.
Customer Care Platform
Our customer care platform is composed of ten call centers, three in-house and seven outsourced, of which three are
in Spain and four are in Latin America.
In 2010, we launched a number of strategic initiatives to improve customer care and customer satisfaction metrics.
These initiatives have delivered positive results during 2010 and 2011 and we believe that they will continue to do so in the
coming years. For example, in June 2010, we developed the “automatic satisfaction survey” initiative in our residential
segment to monitor the level of satisfaction with calls received in our call centers. Since we implemented this initiative, we
have seen the level of satisfaction increase 6 points from 2010.
In 2010, we also implemented a new customer care program by which we have started to link the activity of our
suppliers with the volume of sales of our products and services and the level of satisfaction of our customers. To date this
initiative has proven to be successful as it has helped us to further improve the quality of our services while also increasing the
profitability of our business.
We have also renewed the ISO 9001:2008 certification for the services of residential and SME clients’ contact
management, complaints management and trouble ticketing management.
Customer Loyalty and Retention
Customer loyalty and retention is a high priority for us given its high impact on churn. We analyze on a regular
basis the performance of this indicator and implement a wide range of initiatives to improve customer satisfaction metrics.
Initiatives implemented during 2010 and 2011 include:
• consolidating ONO as the leading provider of high speed internet in the Spanish market (with over
530 thousand customers taking 30 Mbps or higher residential internet packages from us as of March 31, 2012);
• offering an additional 15 Mbps to our 6-100 Mbps clients with no extra cost (with a 12-month commitment
period);
• increasing the quality and variety of our television content (including our recently launched TiVo product);
• increasing our focus on the mobile business and improving our handsets offering;
• implementing a proactive communication campaign with the aim of customers upgrading their products and
services; and
• strengthening the dedication to customer service in the ONO culture.
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Sales Platform and Marketing
Since 2010, we have been updating our mix of sales channels with the aim of optimizing the process of customer
acquisition and reducing costs. Currently, we sell our products using the following channels:
Telephone channel. A total of approximately 175 employees respond to calls from customers interested in our
services and make proactive calls to potential customers to inform them of our products and services. In addition, we have
implemented a project to market additional services and products to those customers who call our customer service centre,
once their original request has been satisfactorily resolved.
Physical channel. The physical channel comprises personal sales, owned stores and franchises and indirect
channels. In the area of personal sales, we have approximately 60 employees across the country who are in charge of carrying
out personal sales. These efforts complement local commercial actions. We also have 59 owned stores and 54 franchises
distributed across the country. These stores, located in main retail streets, have been designed to showcase our products and
transmit ONO’s values to our customers. Finally, we have over 500 indirect points of sale in large stores (e.g., El Corte Inglés,
Mediamarkt), mobile telephone stores (e.g., the Phone House) and other independent points of sale.
Online channel. Since 2010, we have proactively worked to strengthen our online channel, which is attractive
because it has low levels of churn and cancellations and a tight cost structure. In the three months ended March 31, 2012,
approximately 30.3% of our sales were through the internet, compared to approximately 20.6% in the same period of 2010.
Our Areas of Operation
Our business areas cover approximately 14.7 million homes and approximately 2.8 million businesses. Since the
end of 2008, our business is organized around four different regional clusters: Center, East, North and South. The following
table sets out certain information relating to our regional clusters in Spain as of March 31, 2012:
Geographical Area Total Homes (1) Homes Released to
Marketing (2)
(in thousands)
Central Cluster Comunidad de Madrid, Región de Murcia and
Total
Businesses (3)
Castilla-La Mancha ........................ 3,479 1,703 728
East Cluster Catalunya, Comunitat Valenciana and Illes
Balears .................................. 5,290 2,529 1,052
North Cluster Cantabria, Castilla y León, Navarra, La Rioja and
Aragón .................................. 2,370 1,330 366
South Cluster Andalucía and Canary Islands ................ 3,602 1,488 635
Total ................................................... 14,741 7,049 2,779
(1) Total homes in each cluster. These figures are derived from the 2001 Spanish national census.
(2) As of March 31, 2012.
(3) Total business in each cluster has been obtained from the business central directory published by the National Statistics Institute of
Spain (Instituto Nacional de Estadística-INE) as of January 1, 2011.
Central cluster: The Central cluster covers 98,803 square kilometers with a total of 3.5 million homes and
727,533 businesses and a total population of approximately 9.9 million. The Central cluster covers the regions of Madrid,
Murcia and Castilla la Mancha. The principal cities in the cluster, all of which we cover, are Madrid, Murcia, Ciudad-Real,
Cuenca, Guadalajara, Toledo, Albacete, Talavera de la Reina and the port city of Cartagena.
East cluster: The East cluster covers 60,360 square kilometers with a total of 5.3 million homes and 1,051,598
businesses and a total population of approximately 13.6 million. The East cluster covers the regions of Catalunya, Comunitat
Valenciana and Illes Balears. The main cities in the cluster, all of which we cover, are Barcelona, Valencia, Alicante and
Castellón de la Plana.
North cluster: The North cluster covers 162,702 square kilometers with a total of 2.4 million homes and 365,738
businesses and a total population of approximately 5.4 million. The North cluster covers the regions of Cantabria, Castilla y
León, Navarra, La Rioja and Aragón. This cluster also includes Galicia and Asturias with ADSL services. The main cities in
the cluster, all of which we cover, are Valladolid, Burgos, León, Zamora, Santander, Pamplona and Logroño.
South cluster: The South cluster covers 95,044 square kilometers with a total of 3.6 million homes and 634,533
businesses and a total population of approximately 10.4 million. The South cluster covers the regions of Andalucía and the
Canary Islands. The principal cities in the cluster are Sevilla and Córdoba, both of which we cover.
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Network Architecture
Access Networks
Our local access networks have been designed using a high-speed fiber optic based system, capable of providing a
full range of analog and digital services. The local networks are capable of supporting broadband internet, fiber television
services and telephony. All our services are provided through the same distribution system thus creating economies of scale.
Fiber routing is designed to provide route diversity to the fiber junctions, or nodes, thereby protecting against loss of service
resulting from fiber damage.
The broadband internet and fiber television networks use a hybrid fiber coaxial transmission system (HFC). Our
fiber optic ring architecture is used to transport signals from local operations centers to primary nodes, or hub points, serving
20 thousand to 60 thousand homes in urban areas. The local operations centers generally house a fiber television head-end, a
digital regional head-end and a telephony and data switch.
The television head-end assembles the fiber television signals for transmission to the customers. The primary nodes,
which house the fiber modem head-end to provide internet service, wrap together both the TV signal and IP signal for
broadband internet service multiplexed in the fiber. Primary nodes are connected to secondary nodes along a secondary fiber
optic ring network. These secondary nodes are optical distribution points each serving between 2 thousand to 6 thousand
homes, which distribute fiber to the home terminal nodes or final nodes. The home terminal nodes serve around 500 homes.
For telephony service in most of the territory, a copper Overlay Access Network is used, in which the final points
for distribution to homes and small businesses are cross connect boxes located in secondary nodes, in terminal nodes or in
intermediate points, depending on the deployment zone, from which the final connection to a customer’s home is made using
twisted-pair copper wire.
For broadband internet and TV services, both optical signals are transformed, in the final nodes back into electrical
format and transmitted onwards to the customer’s premises in coaxial cable format. Coaxial cables are used to transport the
signals to homes, and amplifiers are used to boost the signal levels. Customer taps are used to serve individual dwellings.
These typically serve four to eight homes per tap. Amplifiers are mounted in sealed units, generally on the façades of
buildings. The final connection to the home, known as the drop, generally uses a combination of coaxial (carrying the
broadband and fiber television signals) and copper pair cable (carrying telephony services), except for Castilla y León and
some municipalities where we use just coaxial cable, with voice over IP technology for the telephony service distribution.
Additionally, two copper pairs are also incorporated in each drop to allow for second lines. The networks are constructed with
excess fiber and duct capacity in order to allow for future upgrades.
The diagram below provides a high-level, graphical depiction of our local network topology:
Headend TV
Fiber Network up
to Final Node
Coaxial Access
Network
Internet
PSTN
Network
Backbone
DVB - C
DOCSIS 1.1 / 3.0
CMTS
Primary Node
SDH
DVB-C & DOCSIS
Telephony
MUX
Base Band
Telephony
Final Node
Amplifier
Overlay Access
Network (pairs)
Tap
Set-Top Box
Cable
Modem
Home Network
Fiber
Copper Pairs
Coaxial
Our entire HFC network uses 862 MHz. The forward (downlink) path uses the range from 86 MHz to 862 MHz, and
is capable of carrying voice, data, video, and television channels. The segment from 88 to 258 MHz is currently used for
analog fiber TV, but only in the Canary Islands and in old Tenaria (Logroño and Navarra), as the rest of the country has
evolved to digital technology, although depending on ONO areas, digital television is broadcast over the range from 702 to
862 MHz. The range between 638 and 702 MHz is used for VoD service (in some areas the band is also used from 550 to 582
MHz). The band from 542 up to 638 MHz is currently used for broadband internet using Docsis 1.1 and Docsis 3.0. The
analog segment (after migration to digital) is reserved for future usage, as HDTV or other services. The network is also
designed to support reverse path operations on bandwidths of up to 65 MHz, allowing interactivity between individual homes
and the head-ends.
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The diagram below shows the possible uses of HFC technology as compared to DSL:
HCF
DSL
5
65
88
UPSTREAM
30
MHz
Free capacity
Equivalent: 288 SD
Channels or
90 HD Channels
or a mix
DTV
(150 ch. SD)
DOCSIS 3.0
(2 x 8 ch. bonding)
DOWNSTREAM
User VCR
VoD
NGTV
150 SD & 12 HD
channels
862
MHz
Free
capacity
Source: Cableuropa
The digital television system collects all contributions centrally in Madrid (except for local channels which are
inserted locally), digitalizes the content and distributes it (via our national backbone network) to the regional head-ends,
which act as the insertion points for the digital contents into the metropolitan network.
The analog fiber television service is distributed through an analog platform with head-ends located in each of our
franchise areas. The programming material is collected at each head-end (not centrally), reconfigured to meet our
specifications, and transmitted through fiber optics.
Complementary to TV service there is a VoD infrastructure split between National Headends (storage) and regional
headends or primary nodes (storage & playout). We are planning to evolve our TV service to a Next Generation model, over
which we could offer advanced services like PVR and HDTV, as well as a new generation of access-agnostic technology
services (Over The Top TV, hybrid STBs, etc.).
To complement the main access network, we have deployed ADSL in order to complete coverage in those areas
where the deployment of our own fiber infrastructure was not possible, mainly in parts of Madrid and Barcelona. ONO has
DSL access equipment (DSLAMs) in up to 132 Central Offices of Telefónica providing ADSL services (voice and internet
ADSL), and also has up to 106 regional points of interconnection (POIs) enabled to provide Indirect Access (internet ADSL).
ONO also has an extensive fixed wireless access network, using wireless point to point to bring dedicated high
capacity services to enterprise. Finally, we have complemented our enterprise deployment with different Fiber to the Building
(“FTTB”) connections mainly in Madrid, Barcelona, Sevilla and Valencia.
There are more than 700 customers connected with SDH equipment and several more with Gigabit Ethernet Access.
Both Point to Point and FTTB connections have been deployed on an on-demand basis.
Backbone Networks
Optical and SDH Transmission Layer
ONO’s network is built with around 45 thousand kilometers Fiber Optic (“FO”) cables, about 15 thousand
kilometers of which belong to the national and regional backbone. More specifically, ONO’s FO network can be divided into
national links (across the country) and metropolitan areas. The FO network for the national backbone is approximately 80%
rented from public utilities (gas, electricity and railway) for a long term and the metropolitan FO network is mainly property
of ONO, laid through ONO’s infrastructure.
Our optical backbone already supports 10 Gbps wavelengths all around the national backbone and also in some
metropolitan links. This deployment was finished in 2006 with state-of-the-art wave division multiplex equipment.
For TDM services, a Synchronous Digital Hierarchy (“SDH”) network is widely deployed across the country using
SDH classical ring topology improved with a Multiplex Section-Shared Protection Ring (“MSSPRING”) usage scheme. ONO
also introduced Automatic Switched Transport Network (“ASTN”) technology as the core of the national SDH backbone.
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L2/L3 Packet Transport Layer
ONO’s packet transport layer carries services across the country providing connectivity among ONO’s residential
customers and between them and the gateways towards international sites or other Spanish SPs. In addition, for business
customers, the packet transport layer provides connectivity among their spread locations through state-of-the-art Virtual
Private LAN Service (“VPLS”) technology.
Multiprotocol Label Switching (“MPLS”) technology is used in the whole network at aggregation and core parts,
allowing for wire speed services. High resilience is achieved based on restoration mechanisms like Fast Re-Route and on the
usage of redundant routers with double homing when possible.
The high amount of traffic carried at this layer (more than 186 Gbps carried through the national network to our
customers, metropolitan packet traffic is higher) has driven the deployment of high speed interfaces (10 Gbps) lighting the
L1- Dense Wavelength Division Multiplexing (“DWDM”) links.
Switching Network
Switching network offers national coverage and it is composed of 68 exchanges (Local, Toll and International)
uniformly distributed along the whole national territory, offering in addition to basic voice service, a wide set of value added
services such as voice mails, Intelligent Network access (indirect access, premium-rate numbers, virtual private network and
local number portability), Voice Portal, etc. Additionally, we have IP telephony services through TWO soft switches, as well
as an IP Centrex service.
Mobile Network
ONO, as a full MVNO service provider, has developed a complete switching and service layer to offer mobility
services, using Telefónica’s (Movistar’s) mobile (“TME”) access network to provide coverage. In 2008, we focused the
mobile offer in 3.5G Internet Access Services (Broadband mobile). In 2009, we launched SIM-only services using GSM and
UMTS unlocked mobile handsets. In 2010, we have launched layer 3 VPN services over mobile, and new devices are
planned.
Our mobile Network is distributed in two sites (Madrid and Barcelona) and can be summarized as:
• Access Layer: GSM/GPRS (including HSDPA and HSUPA) access from TME network.
• Control (Switching) Layer: Circuit Core infrastructure (HLR, MSC) in both sites. Voice connection to host at
MSC level. Packet Core infrastructure (such as SGSN and GGSN) mainly in Madrid.
• Service Layer: Prepaid and IN services (VPN and twin card), IVR, convergent (fixed/mobile) Voice Mail,
SMS, MMS, WAP Gateway, OTA platform for terminal configuration, centralized in Madrid.
Fixed Voice Network
In July 2010, we signed an agreement with Huawei, a leading provider of telecommunication equipments, to
outsource our voice network. This agreement includes engineering, planning and quality management and we believe that will
allow us to reduce operating expenses while updating our voice network and maintaining the quality of our services.
Principal Suppliers
Equipment Suppliers
We rely on different suppliers depending on the business and product area. The table set forth below presents our
main suppliers:
Supplier
Network
Equipment
Next Generation
TV
Voice
Switching
Mobile
Network
Digital
TV
Set-top
Boxes
Data & CM
Headend
Cisco .............................. X X X X
Alcatel-Lucent ....................... X X
Arris .............................. X X
Ericsson ............................ X X X
Nokia-Siemens ...................... X
Italtel ..............................
X
TiVo ..............................
X
Huawei ............................
X
NAGRA ...........................
X
NDS...............................
X
Juniper .............................
X
Motorola ........................... X X X
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Content Suppliers
We rely on external content suppliers and currently have contracts with, among others, Disney, Mediapro, Sony,
Turner, Universal and Viacom. Please see “Risk Factors—Risks Relating to Our Business — We depend on others to provide
premium programming for our television service” for more information.
Properties
We lease and own certain properties for administrative and sales offices, hubs, stores, switches, head-end sites and
warehouses. A significant portion of the properties are used for both administrative and technical purposes. Our main network
operations centers are located in Madrid and Barcelona and our call centers are located in Valencia, Barcelona, Sevilla,
Madrid, Valladolid, Santiago de Chile and Bogotá. We believe that our properties are suitable and adequate for the purposes
for which they are intended, however, we are currently streamlining our property portfolio.
Employees
The table below sets forth our average number of total employees for each of the periods indicated:
Year ended December 31, Three months ended
2009 2010 2011 March 31, 2012
(unaudited)
Average total employees ....................... 3,549 3,283 3,025 2,893
During the quarter ended March 31, 2012, we had an average of 2,893 fixed and temporary full time equivalent
employees, a decrease of 3,025 as compared to the full year 2011 average. As of December 31, 2011, 92% of our employees
were covered by our collective bargaining agreement. The 8% of employees not covered by the collective bargaining
agreement were managers and Directors.
Environmental Matters
We are subject to a variety of laws and regulations relating to land use and environmental protection in connection
with our ownership of real property and other operations, including our use of fuels, coolants and batteries. While we could
incur costs, such as clean-up costs, fines and third-party claims for property damage or personal injury, as a result of
violations of or liabilities under environmental laws or regulations, we believe we substantially comply with the applicable
requirements of such laws and regulations and follow standardized procedures to manage environmental risks.
Legal Proceedings
We are engaged in litigation arising in the ordinary course of our business. We do not believe that the adverse
determination of any pending litigation against us could have a material adverse effect on our business or financial condition.
Other Legal and Regulatory Matters
The following legal and regulatory matters may have an impact on our business and financial condition:
• To date we have not been required by the CMT to contribute to the financing of universal service in Spain. The
CMT has required other competitors, including Orange and Vodafone, to contribute to such costs in previous
years and in certain cases these competitors are appealing the CMT’s decision. We believe that we may be
required to contribute to universal service costs for future years and potentially for past years if such appeals
are successful. In November 2010, the first judgment in a case filed by Vodafone on cost distribution for the
2003-2005 period was published and it upheld the CMT criteria. Applying the holding of the court to our
circumstances, we would not be required to contribute to the financing of universal service in Spain for the
2003-2005 period. This judgment has been appealed by Vodafone before the Spanish Supreme Court. Orange
lost a case on the same matter in June 2011 on technical procedural grounds not related to the regulations on
the financing of universal service. We have provisions in our financial accounts for these contingencies which
we believe are adequate. For more information on universal service, see “Regulation—Regulation of Electronic
Communications Services—Universal Service, Public Service Obligations and Other Obligations of Public
Character”.
• On March 9, 2009 our competitor Prisa TV (formerly Sogecable) was ordered to pay a compensation in the
amount of €51.7 million plus interest to ONO for abuse of dominant position in relation to the 2003/2004 to
2008/2009 football content contracts. This compensation was in addition to the compensation was in addition
to the €43.9 million in compensation awarded on December 1, 2009 for a contractual breach on the Gran Via
and Cablesport channel distribution. On May 18, 2012, ONO and Prisa TV reached an agreement pursuant to
which Prisa TV would end the appeal process in exchange for ONO repaying to Prisa TV 50% of the amounts
already collected by ONO pursuant to these lawsuits (€54.4 million). As of March 31, 2012, our balance sheet
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includes the full amount received from Prisa TV as deferred income. The €54.4 million has now been paid to
Prisa TV and we will recognize the remaining deferred income of €54.4 million as income in the second
quarter of 2012.
• Pursuant to the RTVE Financing Law, we are required on a yearly basis to contribute 1.5% of our television
revenues and other audiovisual communication revenues (since September 2009) and 0.9% of our
telecommunication revenues (since January 2010) to subsidize the sustainability of the Spanish public
broadcasting entity, RTVE. However, the RTVE Financing Law has been the subject of a number of legal and
regulatory proceedings. In particular, in March 2011 the European Commission decided to refer France and
Spain to the European Court of Justice because they continue to impose specific charges on the turnover of
telecommunications operators in breach of EU law. The Commission considers the “telecoms taxes” in France
and Spain (amounting to 0.9%) to be incompatible with EU telecommunications rules, which require specific
charges on operators to be directly related to covering the costs of regulating the telecommunications sector.
Meanwhile, operators, including ONO, are challenging certain aspects of the 0.9% and 1.5% contribution
requirements before the Spanish Supreme Court.
• On August 20, 2011, the Spanish Official Gazette (Boletín Oficial del Estado) published Royal Decree-Law
9/2011. Article 9 of Royal Decree-Law 9/2011 provides certain changes in the Spanish Corporate Income Tax
Law in relation to tax loss carry forward rules which are relevant for the tax position of the ONO Group. For
tax periods beginning in 2011, 2012 and 2013, companies with turnover for the preceding 12-month period of
at least €60 million may use tax losses generated in prior periods to offset a maximum of 50% of their taxable
income (before application of the carry forward). In addition, effective for tax periods beginning as of
January 1, 2012, Article 25.1 of the Corporate Income Tax Law (as amended) extends the tax losses carry
forward period from 15 to 18 years.
On March 31, 2012 Royal Decree-Law 12/2012 came into effect with the objective of reducing the public
deficit. Although there are still some questions and interpretations that need to be clarified by the Tax
Authorities, the main terms of the new law that will impact the Group are the following: (i) the amount of net
deductible financial expenses in the tax period is generally reduced to 30% of operating profit (applying certain
adjustments), with any excess net financial expenses available to be used over the next 18 years;
(ii) unrestricted depreciation of investments in new tangible fixed assets and investment property has been
repealed, with a transitional regime provided for investments made prior to 31 March 2012; (iii) the
deductibility of goodwill is reduced from 5% to 1%; (iv) deductions are reduced from 35% to 25% of gross tax
payable, with the period for applying deductions not applied owing to insufficient tax payable being extended
from 10 to 15 years; and (v) advance tax payments are increased to at least 8% of the accounting profit.
According to our preliminary internal analysis, we believe that these laws will have no impact on our income
statement and that the maximum tax related cash impact would amount to €15 million in each of the years
2012 and 2013. Assuming no further changes in tax law, we believe that in future years we will be able to fully
offset any profit tax with approximately €1 billion of tax credits and therefore we do not expect any further tax
related cash outflows from 2014 onwards.
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REGULATION
Set forth below is a summary discussion of the current European and Spanish regulatory environments relating to
telecommunications and audiovisual communication services. This discussion is intended to provide a general outline of the
most relevant applicable regulations and is not intended as a comprehensive discussion of such regulations. You should
consider the regulatory environment discussion below as it could have a material impact on our business and results of
operations in the future.
Regulation of Electronic Communications Services
European Union Overview
Over the past decade, the telecommunications market in the European Union (“EU”) has gradually been liberalized.
In March 2002, with the aim of adopting a harmonized regulatory framework amongst Member States, the EU approved a
Regulatory Framework (the “RF”) for electronic communications. The RF consists of five directives (the “Directives”):
• Framework Directive: A common regulatory framework for electronic communications networks and
services which sets up the general principles of the RF as well as the procedure to be followed by national
regulatory authorities in order to impose ex ante obligations on operators holding significant market power
(“SMP”);
• Universal Service Directive: Regulates universal service and users’ rights relating to electronic
communications networks and services;
• Access Directive: Regulates access to and interconnection of electronic communications networks and
associated facilities;
• Authorization Directive: Regulates authorization of electronic communications networks and services; and
• Directive on Privacy and Electronic Communications: Regulates the processing of personal data and privacy
protection in electronic communications.
This regulatory package also included three important pieces of “soft” law: the European Commission’s
recommendation on relevant markets susceptible to ex ante regulation (the “2003 Market Recommendation”); the guidelines
on market analysis and the assessment of SMP (the “Guidelines”); and the decision on a regulatory framework for radio
spectrum policy. The EU RF Directives were transposed into Spanish law on November 3, 2003 by Law 32/2003 on General
Telecommunications (the “General Law on Telecommunications”).
In November 2009, the electronic communications regulatory package was revised following a two-year review
carried out by the European Commission, the Parliament and the Council. The main changes relate to enhancing Commission
powers to coordinate the use of the radio spectrum. The Commission now has the power to impose obligations on operators
with SMP via national regulatory authorities when they are suspected of creating a barrier to the single market or violating EU
Law. The modified Directives also contain a number of provisions relating to new generation networks, consumer rights and
(as an exceptional measure) the introduction of functional separation of vertically integrated undertakings. This measure is
taken where the national regulatory authority concludes that the obligations imposed by the national regulatory authorities on
operators with SMP according to applicable SMP legislation has not achieved effective competition compliance and that there
are important and persisting competition problems and/or market failures identified in relation to the wholesale provision of
certain access markets.
In November 2009, Parliament and the Council Regulation created the Body of European Regulators for Electronic
Communications (“BEREC”), a European body of national regulatory authorities acting as a high advisory board to the
Commission. The BEREC came into force in January 2010 and the modified Directives in December 2009. As part of the
review, a new market recommendation (the “2007 Market Recommendation”) was adopted by the Commission in December
2007 (repealing and replacing the former 2003 Market Recommendation) reducing the markets potentially subject to ex ante
regulation from 18 to 7. This reduction included most retail markets, wholesale access to mobile networks and the
broadcasting market.
The revised electronic communications regulatory package has been transposed into Spanish law by Royal
Decree-Law 13/2012, March 30, amending the General Law on Telecommunications in this regard.
National Regulatory Authorities in Spain
The Ministry of Industry, Energy and Tourism (Ministerio de Industria, Energía y Turismo) (“MIET”) regulates and
oversees electronic communication services and networks in addition to the audiovisual communication services in Spain (the
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latter only until the future “National Commission on Markets and Competition” is created). The MIET’s principal role is to set
policy, issue regulations and sanction electronic communications and television operators where necessary. Under the General
Law on Telecommunications, among other things, the MIET appoints the operator (or operators) in charge of providing
universal service, monitors their compliance with public service obligations, approves certain standard contracts with users
(such as those submitted to public services obligations and related to premium rate services), and holds certain powers on
guaranteeing user’s rights. It also manages equipment and device conformity and the public domain radio spectrum.
An additional independent oversight body, the CMT, was created in 1996. The CMT supervises electronic
communications operators in Spain. It is expected that audiovisual communication services in Spain will be supervised by the
future “National Commission on Markets and Competition”. In the meantime the MIET through SETSI is the supervisory
authority (for a further discussion on the audiovisual media national regulatory authorities, please see “—Regulation of
Audiovisual Communication Services” below).
The CMT carries out reviews of markets identified by the 2007 Market Recommendation as susceptible to ex ante
regulation. The CMT establishes and supervises operators, promotes competition in the electronic communications and
audiovisual markets, solves conflicts between operators and (as the case may be) arbitrates operator disputes at the request of
the parties. The CMT has certain additional powers to safeguard the plurality of service offerings and to access networks and
network interconnection. The CMT also holds powers of inspection and sanction in connection with matters such as price
policy, specific market definition, declaration of SMP operators (upon whom the CMT is entitled to impose obligations) and
merger control.
The Spanish Government intends to prepare a bill in order to create the above referred “National Commission on
Markets and Competition”. After the relevant law creating this entity being passed, it is expected that it will assume the
powers of existing regulators, including, amongst others, the CMT and will assume the supervision of audiovisual
communication services in Spain.
sector.
The authorities of the relevant autonomous Spanish communities also have certain powers over the audiovisual
General Law on Telecommunications of 2003
The General Law on Telecommunications establishes the new regulatory framework for electronic communications
services in accordance with applicable EU directives. Except for certain provisions, this repealed and replaced the General
Law on Telecommunications of 1998 which liberalized the provision of telecommunications services in Spain. It is the
primary legislation governing the provision of electronic communications services and networks and transposes the European
RF (see above). The General Law on Telecommunications aims, among other things, to enhance effective competition in the
telecommunications sector, safeguard operator compliance with public service obligations (especially those related to
universal service), promote development of the telecommunications sector, ensure an efficient use of scarce resources (such as
numbering and radio spectrum), defend users’ rights, promote, to the extent possible, technological neutrality in regulations,
promote the development of the industry of telecommunications products and services, guarantee integrity and security of
electronic communications networks and services, facilitate access to terminal equipment for disabled users and contribute to
the development of the internal electronic communications market within the EU.
According to the General Law on Telecommunications, telecommunications are considered services of general
interest to be provided under free competition regardless of the fact that certain public service obligations are imposed upon
the operators. Measures taken regarding end-users’ access to, or use of, services and applications through electronic
communications networks shall respect the fundamental rights and freedoms of natural persons, as guaranteed by the
European Convention for the Protection of Human Rights and Fundamental Freedoms and general principles of Community
law.
The General Law on Telecommunications grants universal rights of access to basic services and contains provisions
with which an individual or legal entity must comply in order to be considered an electronic communications operator. It
governs the privacy of communications, the protection of personal data, the configuration of networks and services,
interconnection and access, public service obligations, users’ protection, market definitions and SMP operators. Additionally,
it provides rules and procedures for the certification of devices used for providing telecommunications services.
Its provisions are implemented through several regulations. The following are the most important approved
regulations to date:
• Regulation providing the conditions necessary for electronic communications services, universal service and
user’s protection (approved by means of Royal Decree 424/2005, of April 15, as amended) (“Services
Regulation”);
• Regulation providing for conditions of electronic communication services (approved by means of Ministerial
Order ITC/912/2006, of March 29, developing Royal Decree 424/2005);
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• User’s rights and premium rate service regulation (approved by Ministerial Order PRE 361/2002, of
October 14, as amended by Ministerial Order PRE 2410/2004, of July 20). In May 2009, the Spanish
government approved the user’s Rights Letters through Royal Decree 899/2009, of May 22;
• Regulation of the electronic communications market, network access and numbering (approved by means of
Royal Decree 2296/2004, of December 10, as amended) (“Markets and Access Regulation”); and
• Regulation of the use of the radio spectrum (approved by means of Royal Decree 863/2008, of May 23).
The General Law on Telecommunications establishes that the CMT will define the relevant markets (following the
European Commission’s Market Recommendation and the Guidelines), determine whether markets are competitive and, if
they are deemed not competitive, impose proportional and appropriate obligations on SMP operators.
In order to conform to the provisions of the EU Directives which were revised in December 2009 (see—Regulation
of Audiovisual Communication Services—European Union Overview), the General Law Telecommunications has been
amended by Royal Decree-Law 13/2012, March 30 whereby the 2009 EU Directives have been transposed.
Market Definition and Operators with SMP
Since the last quarter of 2005 and during 2006, the CMT concluded its first round of market reviews and adopted a
substantial number of decisions which (in compliance with the RF and the General Law on Telecommunications) defined
relevant markets and identified operators with SMP. The CMT consequently imposed certain regulatory obligations both on
the traditional fixed telecommunications incumbent (Telefónica, operating under the Movistar brand), mobile network
operators and alternative fixed-line telecommunications operators (such as, amongst others, cable companies).
In the second half of 2008, the CMT engaged in a second round of market analysis (see the outcome of these
analyses for a number of relevant electronic communications markets below). The Commission’s Market Recommendation of
2007 reduced the list of markets potentially subject to ex ante regulation. However, the CMT, in its second round of market
analysis, determined that due to lack of competition in the relevant markets, some of them should still be subject to ex ante
regulation. In 2012, the CMT has initiated a new round of market analysis, which according to its 2012 working plan, is due
to be completed by end year. Within this new round, in May 2012 the CMT approved the analysis of mobile wholesale
termination markets and the new glide path for termination rates. ONO, together with other mobile operators, has been
considered an operator with SMP in its wholesale termination market and been required to comply with the conditions set
forth by the CMT for full mobile virtual network operators, including offering cost oriented termination prices and attending
reasonable network access requests, pursuant to the terms established by the CMT. See “—Network Access for Virtual Mobile
Network Operators”.
Principal Operators
According to Article 34 of Royal Decree-Law 6/2000 of June 23 on urgent measures to improve competition in the
goods and services markets, individuals and legal entities holding (directly and indirectly) more than 3% of the total share
capital/voting rights of two or more principal operator companies in, among other markets, the fixed-line and mobile-line
telephony markets are not allowed to exercise their voting rights in excess of 3% of the total in more than one company,
except with the prior authorization of the CMT. Principal operators are defined as one of the five operators with the largest
market share in the relevant market (“Principal Operators”). In addition, no individual or legal entity is allowed to appoint,
directly or indirectly, members of the management body of more than one Principal Operator in, among others, the fixed-line
or mobile-line telephony markets, except with the prior authorization of the CMT. Additionally, individuals or legal entities
considered Principal Operators are neither allowed to exercise more than 3% of the voting rights of another Principal Operator
nor to appoint, directly or indirectly, members of the management body of any Principal Operator, except in both cases with
the prior authorization of the CMT.
In July 2002, June 2003, October 2004, September 2006, October 2007 and October 2008, the CMT declared the
ONO Group as Principal Operator in fixed-line telephony. In September 2009 and October 2010 the CMT declared
Cableuropa, S.A.U. as Principal Operator in the fixed-line telephony market together with Telefónica de España S.A.U.,
France Telecom España S.A., Vodafone España S.A.U. and Euskatel S.A. Additionally, in October 2010 Telefónica Moviles
España S.A.U., Vodafone España S.A.U, France Telecom España S.A., Xfera Móviles S.A. (currently operating under the
Yoigo brand) and Lebara Limited UK were declared the Principal Operators in the mobile market. Lastly, in October 2011,
the CMT also declared Cableuropa, S.A.U. as Principal Operator in the fixed-line telephony market together with Telefónica
de España, S.A.U., Vodafone España, S.A.U., France Telecom, S.A. and Jazz Telecom, S.A.U.
Status of Electronic Communications Operator
Under the General Law on Telecommunications, EU individuals, legal entities, and nationals of other non-EU
member states (if so established by the relevant international treaty signed by Spain or in other cases prior government
authorization) are allowed to provide electronic communications services and to utilize electronic communications networks
in Spain. The General Law on Telecommunications provides this right and a set form of notice to be delivered to the CMT.
The MIET grants private rights for use of the radio spectrum.
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CMT notification must declare compliance with the applicable rules of the service or utilization of the network. The
CMT has 15 days to oppose such notification if it does not comply with the requirements established in the General Law on
Telecommunications and the Services Regulation. If the requirements are met, the CMT records the operator at the Registry
of Operators. Operators can provide electronic communications services and install and utilize electronic communications
networks after the notification takes place.
Pursuant to the General Law on Telecommunications, individual licenses and general authorizations granted under
the former General Law on Telecommunications of 1998 were extinguished. Their holders were automatically authorized to
render the same services under the new Law, provided that they met the requirements of the General Law on
Telecommunications and are recorded at the Registry of Operators ex officio by the CMT. These operators are now subject to
the obligations and conditions established by the General Law on Telecommunications and the Services Regulation. The
Services Regulation establishes general and specific obligations and conditions for operators utilizing public electronic
communications networks and for operators providing fixed and mobile telephony services to the public.
The companies of the ONO Group are duly registered at the CMT as operators entitled to provide certain electronic
communications services and to install and utilize certain electronic communications networks (among others, fixed-line
telephony services to the public, leased lines, reselling of fixed-line telephony services to the public, data transmission
services such as internet access, frame relay, interconnection of local area networks, mobile virtual network operator
(“MVNO”) and electronic communication network operator).
The right to provide electronic communications services and to utilize electronic communications networks is
extinguished upon occurrence of any of the following circumstances:
Interconnection
• Definitive suspension of activity (the operator must notify the CMT);
• Extinction of the legal personality of the operator;
• Sanction imposed (after available appeals have been exhausted) by the relevant authority; or
• Failure to notify the CMT of the operator’s intention to continue providing service or utilizing the network
prior to filing the relevant administrative procedure where the CMT obtains evidence that the operator is
effectively not providing service or utilizing any network. In October 2011, the companies of ONO Group gave
notice of their intention to continue providing the services and utilizing the network.
In order for our customers to communicate with other operators’ customers, we need to interconnect our networks
with such other networks. The Access Directive, within the terms of the Framework Directive, harmonizes the way in which
EU Member States regulate access to and interconnection with electronic communications networks and associated facilities.
Its aim is to establish a regulatory framework (in accordance with internal market principles) to govern relationships between
suppliers of networks and services that will result in sustainable competition, interoperability of electronic communications
services and consumer benefits. This Access Directive and the General Law on Telecommunications establish rights and
obligations for operators and undertakings seeking access to or interconnection with their networks or associated facilities.
The Access Directive sets out national regulatory authority objectives for access and interconnection.
According to the General Law on Telecommunications, operators of public electronic communications networks
have the right and (when so requested by other operators) obligation to negotiate mutual interconnection for the provision of
electronic communications services to the public in order to guarantee the provision of services and their interoperability. The
MIET shall be entitled, in justified cases and to the extent that is necessary, to impose obligations on undertakings that control
access to end-users to make their services interoperable.
The Markets and Access Regulation governs interconnection, access to public networks and numbering. It
establishes that, unless the parties agree otherwise, interconnection and access agreements must be reached within four
months from the date of any request to start negotiations. There shall be no restrictions preventing operators from negotiating
interconnection or access agreements among themselves. The CMT will decide the terms of the interconnection or access
agreement in the event that the parties do not reach an agreement. The CMT is also entitled to solve other interconnection and
access conflicts between operators and between operators and other entities that benefit from access and interconnection
obligations, in the terms of the General Law on Telecommunications. Access and interconnection conditions or obligations
imposed on operators must be objective, transparent, proportional and non-discriminatory.
As a result of the first market review process, envisaged by the RF and the General Law on Telecommunications,
the CMT approved a decision on call termination on individual public telephone networks provided at a fixed location
according to which some fixed network operators (ONO included), in addition to Telefónica, were declared to have SMP. The
CMT distinguished the obligations to be imposed on Telefónica, as an operator with SMP, from those to be imposed on the
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est of fixed network operators (ONO included). The CMT imposed on alternative operators with SMP the obligation to set
reasonable prices for call termination services offered to other operators (as opposed to Telefónica, subject to cost oriented
prices). According to this decision, the CMT construed “reasonable prices” to be up to 30% higher than those applied by
Telefónica, the incumbent, for local call termination on a “per minute” basis, resulting from its approved reference
interconnection offer (“RIO”) or the relevant regulated prices that would replace them.
The second market review took place in 2008. Despite the EU’s opposition, the CMT, in a decision adopted on
December 18, maintained the same market position on call termination on individual public telephone networks provided at a
fixed location. This review maintained the set price (maximum of 30% greater than Telefónica’s) for alternative networks
with SMP and declared ONO (among other things) an operator with SMP.
Telefónica is obliged to publish a RIO. The last amendment to the RIO was approved by the CMT on November 18,
2010. This RIO set up the charges for fixed network termination service. These charges were modified in order to reduce the
prices of single transit and double transit termination and to increase the price corresponding to local termination. Other
relevant changes apply to the structure of time periods (peak/off-peak) which have been phased out so that only an average
cost is set up. In addition, changes relating to Intelligent Network services (901 and 902) have been introduced. In July 2011,
the CMT approved the consolidated version of Telefónica’s standard interconnection agreement reflecting the amendments
approved on November 18, 2010.
Network Access and Regulation of Next Generation Access Networks
Telefónica’s wholesale bitstream access was introduced in 1999 and a regulation was enacted in 2000 through the
incorporation of two new methods: shared access and local loop unbundling. On this basis, Telefónica had the obligation to
publish an access reference offer which regulates the economical and technical conditions of these wholesale services. Under
the RF and the General Telecommunications Law, the CMT set up the regulatory regime for access to SMP operators, after
carrying out a market analysis which took into account (among other things) the feasibility of alternative network
deployments and the competition problems that may result from denying access.
In January 2009, the CMT defined the market for wholesale (physical) network infrastructure access (including
shared or fully unbundled access) at a fixed location and the market for wholesale broadband access, declaring Telefónica as
the operator with SMP in both markets and imposing specific obligations on Telefónica to operate in the same. The CMT
imposed an obligation on Telefónica to provide access to its copper local loops and infrastructure ducts (wholesale physical
network infrastructure access) and a bitstream service (wholesale broadband access) of up to 30 MB in the whole national
territory (no geographic segmentation) both at cost-oriented prices. In November 2009, the CMT approved Telefónica’s offer
to provide alternative operators access to its civil infrastructure with respect to the market for wholesale (physical) network
infrastructure access (including shared or fully unbundled access) at a fixed location. In November 2011, the CMT approved
the new wholesale bitstream service that Telefonica will have to offer to alternative operators in the last quarter of 2012,
according to a recent decision of the CMT amending the initial calendar. This wholesale services NEBA (new Ethernet
Broadband Access), will allow operators to contract this service to access all Telefónica’s network and technologies ADSL,
VDSL, FTTN and FITH.
In February 2009, the CMT approved a decision to impose mutual obligations to provide third party access to new
in-building fiber optic infrastructure deployed by operators (not just the incumbent) as part of the next generation network
roll-out. The obligations set forth in this decision only affect new fiber optic deployment and do not affect access to building
existing common telecommunications infrastructure such as cable (coax and copper pair).
Network Access for Virtual Mobile Network Operators
ONO is a MVNO with the capability to switch traffic. In order for ONO to provide mobile telephony services to the
public as a MVNO, it needs to enter into a network access agreement with a mobile network operator. Telefónica is the host
network operator in this case until February 2013.
On May 10, 2012, the CMT approved the analysis of mobile wholesale termination markets and the new glide path
for termination rates. ONO, together with other MVNOs are obliged to set cost oriented termination prices for call termination
services offered to other operators. In order to implement this decision, the CMT has also approved a glide-path on mobile
termination rates to be effective as of April 16, 2012. This new glide path has to reach a rate of 1.09 €cent per minute in July
2013, and that price will be maintained until it is revised by the CMT. Since April 2012, the price for mobile termination is set
at 3.42 €cent per minute (except Yoigo which maintains a higher price).
Use of the Spectrum
In April 2011, Royal Decree 458/2011 on actions related to the spectrum for the purposes of the information society
development was approved by the Spanish Council of Ministers. The purpose of Royal Decree 458/2011 is (i) the introduction
of the principle of technological neutrality in the 900 MHz and 1800 MHz bands; (ii) the granting of the relevant concessions
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to use the spectrum in the referred bands and in the bands of 800 MHz and 2.6 GHz, in which the principle of technological
neutrality may also be applied; and (iii) the establishment of the relevant measures on spectrum intended to promote the
development of the information society, such as the enlargement of the frequency bands where the transfer or assignment of
rights and titles to use the spectrum may be allowed. The Spanish MIET has recently awarded concessions in the 800 MHz,
900 MHz, 1800 MHz and 2.6 GHz bands, prior to calling the relevant public bidding procedures, pursuant to Royal Decree
458/2011. Telefónica, Vodafone and Orange obtained concessions of national scope in the 2.6 GHz band. ONO obtained
concessions of regional scope in the same frequency band (Catalunya, Cantabria, Comunidad Valenciana, Madrid, Murcia,
Navarra, La Rioja, Ceuta and Melilla). Vodafone, JazzTelecom and other cable operators also obtained concessions of
regional scope in the 2.6 GHz band. Telefonica, Vodafone and France Telecom obtained concessions of national scope in the
800 MHz and Telefonica and France Telecom in the 900 MHz bands.
These recently obtained concessions will enable us to (i) benefit from a concession on 4G that runs until 2030 for a
limited cash consideration; (ii) potentially provide high speed services for additional fixed residential and SEMs customers in
areas close to our cable footprint; and (iii) potentially improve our mobile proposition reducing host dependence and
increasing the quality of our 4P services. The concessions allow the use of the frequencies through any type of technology, in
compliance with the principal of technological neutrality. They must be used to provide, amongst other things, fixed-line and
mobile electronic communication services. Prior to providing electronic communication services using these frequencies, we
must inform MIET about the technology that we will use. For any change of technology, the MIET must also receive
advanced notice.
As holders of spectrum concessions we are mainly subject to specific obligations set forth in the General Law on
Telecommunications, the regulation of the use of the radio spectrum and the relevant concession documents. Among others,
we are subject to the following obligations:
(i)
(ii)
(iii)
(iv)
(v)
to obtain the relevant functioning authorization for each of the radio stations installed prior to operating
the spectrum network;
to use the frequency right in the terms set forth in the concession documents and for the purpose identified
in the same;
not to cause interferences that would be considered harmful;
not to exceed the radioelectrical emission levels set forth in the relevant laws and regulations and the
concession document; and
use the spectrum effectively and efficiently.
Our spectrum concessions expire on December 31, 2030.
Spectrum concession are extinguished upon occurrence, amongst others, of any of the following circumstances:
(i)
(ii)
(iii)
(iv)
extinction of the legal personality of the operator;
disqualification as electronic communications operator;
lack of concession renewal; and
revocation by the granting authority, which will occur, amongst others, in the following circumstances:
breach of technical terms and conditions established for the use of the spectrum; failure to pay the stamp
duty; inefficient or ineffective use of the spectrum; and unauthorized use of the spectrum.
Our spectrum concessions may be transferred or assigned in the terms of the General Law on Telecommunications,
the regulation of the use of the radio spectrum and the corresponding concession document.
Wholesale Services
ONO is also a provider of wholesale terminating segments of leased lines and wholesale trunk segments of leased
lines. Through these wholesale services, ONO provides telecommunication services to fixed and mobile carriers, traffic
resellers and premium rate services providers. Telefónica is the current operator with SMP in both markets, as per resolutions
dated July 23, 2009 and July 2, 2009. According to the same, Telefónica is obligated to publish a reference offer for the
provision of these wholesale services, on terms established by the CMT. This offer is known as ORLA. In December 2010,
the CMT approved the new ORLA regulating the wholesale terminating segments of leased lines.
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Numbering and Operator Selection
In order to provide telecommunications services, operators need to be furnished with public numbering resources,
i.e., the ability to allocate phone numbers among subscribers or users of telephony services in accordance with the applicable,
government-approved, National Numbering Plan. The CMT has the authority to allocate numbers and is generally obliged to
issue the relevant resolution allocating the numbers within a maximum period of three weeks from the date of the relevant
application.
The General Law on Telecommunications and the Markets and Access Regulation address operator selection.
“Operator Selection” is the ability of the subscriber or user to select a given operator for all or certain calls and to access the
services of any operator interconnected with the user’s operator that provides access to the public telephony network. The
operator can be chosen ahead of time or on a call-by-call basis. Operators with SMP in the provision of connection to and use
of the public telephony network at fixed locations (currently Telefónica) are obliged to provide Operator Selection to
operators of fixed telephony services to the public interconnected with them. The Government is allowed to impose Operator
Selection obligations on other types of networks.
Circular 2/2009, approved on June 18 by the CMT, implements the General Law on Telecommunications and the
Markets and Access Regulation with respect to Operator Selection, superseding past Circulars issued by the CMT on this
matter. It sets forth the instructions to implement the mechanisms necessary to provide Operator Selection in the fixed-line
public telephony networks.
Number Portability
Under the General Law on Telecommunications and the Markets and Access Regulation, users or subscribers to
telephony service to the public have the right to keep their existing telephone numbers when changing operators, service or
physical location, or when any of these circumstances occur simultaneously. Operators of public telephony networks and
those providing telephony services to the public are obliged to provide users with number portability right if so requested, in
the terms of the applicable regulations. The General Law on Telecommunications and the Markets and Access Regulation
require the operators to share some of the costs associated with this service. According to the Markets and Access Regulation
the following types of number portability must be available:
• change of operator for the provision of fixed telephony services to the public, as long as the service and the
geographical location do not change;
• change of operator for the provision of mobile telephony services to the public, even in the event of the type of
mobile telephony service changing; and
• change of operator for special rate services and personal numbering, as long as the service does not change.
The CMT has approved Circulars 1/2008 and 3/2009 establishing the principles intended to guarantee number
portability to users. In December 2009, the CMT began proceedings to modify portability operations with the objective of
reducing the time for a customer to change its telephony operator. The new portability term will be 24 hours instead of the
current term of five days. This new term will apply to mobile telephony as of June 2012. In April 2012, the CMT approved
the new procedure for fixed telephony number portability before July 1, 2012, establishing that the term must be 24 hours
rather than the current term of five days. In February 2011, the CMT published a decision on the regulation about portability
cost for fixed telephony. With respect to geographic numbering, the decision reduced the cost from €8.78 to €2.78 per
portability request. The same decision also sets the price for intelligent network number portability.
Occupancy Rights
Electronic communications operators deploying networks have the right to occupy the public domain, benefit from
expropriation procedures and be granted rights of way or easements over the property of third parties, subject to certain
conditions. The General Law on Telecommunications also governs the shared use of public and private property for the
purposes of deploying public electronic communications networks and the shared use of infrastructure and associated
resources, being the MIET entitled to imposed it. The shared use of location or infrastructure shall be will be formalized
through an agreement between the interested operators. In the event such agreement is not reached, the CMT is entitled to
solve the conflict.
Payments
Telecommunications operators are required to make certain payments. Most importantly, they are required to pay to
the CMT a maximum annual fee of 0.20% (amounting to 0.10% as of January 1, 2012) of their gross telecommunications
revenue less certain interconnection, connectivity and other related costs. Operators also pay a separate annual municipal fee
(obtained in each Municipality) of, initially, 1.5% of gross revenue in order to use the local public domain and certain other
local fees and taxes.
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Holders of spectrum concessions are required to pay on an annual basis to the MIET the spectrum fee in the terms
set forth in the General Law on Telecommunications, implementing regulations on this matter and the Budget Act for the
relevant year. As a consequence of being granted the spectrum concessions in the 2.6 GHz. frequency band in the regions of
Catalunya, Cantabria, Comunidad Valenciana, Madrid, Murcia, Navarra, La Rioja, Ceuta and Melilla, we are subject to the
spectrum fee. For year 2012, the expected aggregate spectrum fee paid by ONO amounts to approximately €632 thousand.
In addition, pursuant to the RTVE Financing Law, we are required on a yearly basis to contribute 1.5% of our
television revenues and other audiovisual communication revenues (since September 2009) and 0.9% of our
telecommunication revenues (since January 2010) to subsidize the sustainability of the Spanish public broadcasting entity,
RTVE. However, the RTVE Financing Law has been the subject of a number of legal and regulatory proceedings. In
particular, in March 2011 the EU Commission decided to refer France and Spain to the European Court of Justice because
they continue to impose specific charges on the turnover of telecoms operators in breach of EU law. The European
Commission considers the “telecoms taxes”‘ in France and Spain (0.9%) to be incompatible with EU telecommunications
rules, which require specific charges on operators to be directly related to covering the costs of regulating the telecoms sector.
Meanwhile, operators, including ONO, are challenging certain aspects of the 0.9% and 1.5% contribution requirements before
the Spanish Supreme Court.
Telephony Customer Charges
Telephony operators, other than operators with SMP, are generally free to set end-user prices.
In its second round of market analysis, the CMT issued a Decision in March 2009 defining the retail market for
access to the public telephone network at a fixed location for residential and non-residential customers. It declared Telefónica
an operator with SMP and imposed on Telefónica certain specific obligations. Among other things, the CMT obliged
Telefónica to provide line Operator Selection and retail access to users. Access prices are subject to control by the CMT. In
particular, Telefónica’s line rental is regulated under an IPC-X mechanism whereby IPC refers to the consumer price index
and X (a factor which will be set by the CMT 12 months before implementation). Telefónica is not allowed to apply
geographically differentiated line rental fees. According to a decision dated September 2011 for the fiscal year 2012 factor X
is equal to IPC, which means that Telefónica is not allowed to increase access prices. Telefónica is obliged to inform the CMT
of retail offers 21 days in advance so that the CMT can assess whether they are anticompetitive. This does not apply to the
so-called “customized offers” to customers spending over €12,000 per year. Retail call prices are altogether deregulated, as is
Telefónica’s one-off connection fee.
A general provision against anticompetitive prices has also been adopted by the CMT in connection with
Telefónica’s retail offers when they include voice line rental and internet broadband access. In this regard, the criteria and
methodology adopted by the CMT in a decision dated July 2007 (to assess when and under which conditions individual price
offers, as well as double and triple-play bundles, might be considered anticompetitive) are still applicable.
Universal Service, Public Service Obligations and Other Obligations of Public Character
The General Law on Telecommunications, coupled with the Service Regulation, provides that electronic
communications operators may be requested to provide certain universal services, comply with other public service
obligations to be imposed for general interest reasons or with obligations of public character.
Universal service covers a range of electronic communications services which must be provided to all users at a
reasonable price and determined quality, regardless of their geographical location. This includes access to the fixed telephony
network and to the provision of telephony services to the public (including functional access to the internet, allowing
bandwidth communications at a downlink speed of 1 Mbit per second), availability of directory information (excluding
telephone directory enquiry services), sufficient provision of public pay phones and access to fixed telephony for the disabled
and those with special social needs (who will be offered different options or bundled tariffs than those offered under normal
commercial conditions). The General Law on Telecommunications provides that the MIET shall designate the operator(s)
entrusted to ensure the universal service. The operator(s) may be different in each region and different services included
within the scope of the universal service may be provided by different operators. Should other operators be interested in
rendering these services, the General Law on Telecommunications provides for a public bidding procedure to designate the
operator(s) in charge. With respect to the provision of directory services a recent amendment of the Service Regulation
establishes that if the provision of the service is not guaranteed by the market, the MIET will designate the operator entrusted
to provide it, in the terms set forth in the same.
Telefónica is still considered the sole operator providing universal service across the entire territory of Spain until
December 31, 2016. Other operators, besides Telefónica, may be required to provide universal service in the future.
The CMT may determine that providing universal service imposes a competitive disadvantage on the operators that
provide these services and that the net cost of these services should be allocated among certain operators in accordance with
criteria to be determined by the CMT. The mechanism to compensate for these costs will be the National Universal Service
Fund. Contributions to the National Universal Service Fund must be made by the operators in accordance with the Services
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Regulation. It provides that a National Fund for Universal Service will be created and that the costs will eventually be
allocated among operators on the basis of gross ordinary revenue. Contributions are required to be proportional to the activity
carried out by the relevant operator obliged to contribute to the financing of the universal service and will be determined by
the CMT pursuant to the rules established in the Services Regulation.
The CMT has calculated the cost of universal service in Spain for years 2003-2005 and has also established the
criteria that will be used to distribute this cost among electronic communications operators, including Telefónica itself. In
September 2008, the CMT confirmed that the net cost of universal service (€182.77 million in the aggregate for years 2003-
2005) is to be paid by Telefónica, Movistar, Vodafone and Orange. The CMT decision on the cost of universal service was
appealed by Telefónica, Orange and Vodafone. The Court has already rendered its decision on this appeal partially accepting
Telefónica’s claim, requiring the CMT to review the valuation of certain costs. The CMT decision on universal service cost
distribution has also been appealed by Orange and Vodafone. In November 2010, the Court ruled against Vodafone’s position
and upheld the CMT distribution criteria. Applying the holding of the court to our circumstances, we would not be required to
contribute to the financing of universal service in Spain for the 2003–2005 period. This judgment has been appealed before
the Spanish Supreme Court. Orange lost a case on the same matter in June 2011 on technical procedural grounds not related to
the regulations on the financing of universal service, which also has been appealed before the Spanish Supreme Court
The CMT had also approved a decision in March 2009 whereby the net cost of universal service provided by
Telefónica in 2006 is set at €75.34 million. This cost is to be paid by Telefónica (38.89%), Movistar (30.50%), Vodafone
(19.95%) and France Telecom (10.66%). In December 2009, the CMT has set the universal service cost for 2007 at
€71.09 million and according to a decision dated July 2010, the cost is to be paid by Telefónica (38.20%), Movistar (30.38%),
Vodafone (20.93%) and France Telecom (10.50%). Vodafone has also appealed the CMT Resolution on cost distribution for
the years 2006 and 2007. In addition, Orange has appealed the CMT Resolution on cost distribution for the year 2006. Finally,
in December 2010, the CMT set the universal service cost for 2008 at €74.85 million. This cost is to be paid by Telefónica de
España, S.A.U. (37.37%), Telefónica Móviles España. S.A.U. (30.32%), Vodafone España, S.A.U. (22.14%) and France
Telecom España, S.A. (10.17%), pursuant to a decision of the CMT dated September 2011. Vodafone and Orange have also
appealed this CMT decision. Lastly, in December 2011, the CMT approved a decision whereby the net cost of universal
service provided by Telefónica in 2009 will be set at €46.78 million. Vodafone España, S.A.U. and France Telecom España,
S.A. have appealed this decision of December 2011 before the CMT, which denied the appeal in April 2012. It is likely that
they will appeal it before the relevant Court.
The above decisions on distribution of the cost of universal service do not preclude the regulator changing the terms
of distribution in the future, including requiring other operators to finance the cost of universal service.
In addition to universal service, the Government may impose other public service obligations on operators to assist
with public safety or national defense. The Government may impose other public service obligations (pending a report from
the CMT) for the following reasons: territorial cohesion, extending the use of new technologies and services, facilitating
communications for groups with special circumstances and increasing availability of message notification services.
In the event of a breach by the relevant operator of its public service obligations, the Government is entitled to
directly assume the provision of the relevant services or the utilization of the relevant networks as an exceptional temporary
measure. Likewise, the State Administration is also entitled to directly assume (subject to prior Government decision) the
provision of certain electronic communications services or the utilization of certain electronic communications networks to
guarantee public safety and national defense as an exceptional temporary measure.
Regulation of Audiovisual Communication Services
European Union Overview
Audiovisual Europe has seen a tremendous change since 1989 when the Television Without Frontiers Directive
defined the first set of rules for television broadcasting in the European Union.
In November 2007, the European Parliament and the Council approved the revision of the EU Directive “Television
Without Frontiers” of 1989. The new framework offers a solution that preserves the core principles of the existing European
rules for television and adapts them to the new audiovisual environment. The Directive covers both traditional television
broadcasting and new on-demand services like on-demand films and news. The distinction between the two depends on who
decides when a specific program is transmitted and whether a schedule exists and is independent of the method of
broadcasting. Television services are “linear” because they follow a schedule arranged by the broadcaster, while on-demand
(or “non-linear”) services leave users to decide when to watch a particular program. While these services differ in how they
are made available, they are both addressed to the general public. The Directive treats linear and on-demand services
differently, taking into account the degree of user control over the service. On-demand services are thus subject to lighter
regulation. Additionally, the Directive extends to all audiovisual media services the country of origin principle. It means that
each service must comply with the rules of the country in which its provider is located. The enforcement of the rules is the
responsibility of that Member State. At the same time, the principle promotes media pluralism by opening up national markets
to competition from other EU countries.
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Finally, in order to protect viewers, the Directive:
• introduces a set of rules for commercial communications and updates the rules on television advertising;
• sets rules for the so called product placement technique which is used to include or to refer to products in film
scenes or as part of certain audiovisual programs;
• extends the existing ban on tobacco advertising to on-demand services (the same applies to the portrayal of
alcohol, thus giving special consideration to the protection of minors); and
• addresses, for the first time, the issue of “fatty foods” in commercials linked to children’s programs.
In May 2010, the European Parliament and the Council approved a consolidated version of the EU Directive
“Television Without Frontiers”, called “Directive for Audiovisual Media Services” since the amendment approved in 2007.
This consolidated Directive repeals and replaces the original Television Without Frontiers Directive and its subsequent
amendments of 1997 and 2007 (without prejudice to Member States’ obligations relating to time limits for transposition into
national law of former Directives).
The Directive for Audiovisual Media Services has been implemented in Spain through the General Law on
Audiovisual Communication that became effective in May 2010, save for certain provisions on audiovisual commercial
communication, which came into force on August 1, 2010.
For a discussion of the media audiovisual national regulatory authorities, please see “—Regulation of Electronic
Communications Services—National Regulatory Authorities in Spain” above. Although the General Law on Audiovisual
Communication introduces the State Council for Audiovisual Media (Consejo Estatal de Medios Audiovisuales), it is expected
that the powers granted to the same will be assume by the future “National Commission on Markets and Competition”.
General Law on Audiovisual Communication
The General Law on Audiovisual Communication is the primary law governing the provision of audiovisual
communication services, regardless of the technology used for broadcasting, without prejudice to the powers held by the
Spanish Autonomous Communities on audiovisual matters within the boundaries of their corresponding territory.
Audiovisual communication services (including both linear and on-demand services) are considered to be services
of general interest provided under competition and in the terms of the obligations corresponding to services of general
interest.
The General Law defines audiovisual communication services as those over which editorial responsibility
corresponds to a service provider and which have as their primary purpose the provision, through electronic communications
networks, of programs and content in order to inform and entertain the general public and to broadcast commercial
communications. The provider of audiovisual communication services is the individual or legal entity having effective control
(editorial direction) over the selection of programs, content and their organization (either in a chronological schedule, in the
case of television broadcasts, or in a catalogue, in the case of on-demand audiovisual communication services). These
definitions are of utmost importance because electronic communications operators broadcasting television channels or
providing on-demand audiovisual services over which they do not hold editorial responsibility will not be considered
audiovisual communication providers pursuant to the General Law on Audiovisual Communication with respect to the
relevant television channels or catalogues.
The General Law on Audiovisual Communication establishes the right to provide audiovisual communication
services. Service providers only have to notify the relevant authority of their intention to provide services prior to the start of
the activity. As an exception in the case of services rendered through hertzian terrestrial waves, the relevant operator needs to
obtain from the MIET an audiovisual license which will include the corresponding frequency right. Notifications and
audiovisual licenses will be recorded at the State Registry for Audiovisual Communication Services Providers, incorporated in
June 2010 by the CMT as a temporary measure, until the effective incorporation of the State Council for Audiovisual Media
(the entity in charge of running it in accordance with the General Law on Audiovisual Communication).
According to the interim regime of the General Law on Audiovisual Communication, former administrative
authorizations allowing the provision of cable radio and television services have been extinguished. Former title-holders are to
be duly registered ex officio by the CMT at the State Registry for Audiovisual Communication Service Providers.
The General Law on Audiovisual Communication has been recently implemented by Royal Decree 1624/2011 on
certain aspects of television commercial communication (self-promotion, telepromotion and sponsorship).
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Cableuropa was granted authorization to provide cable radio and television services under the former cable
television regulatory framework superseded by the General Law on Audiovisual Communication. Cableuropa is also
authorized to provide pay-per-view, nearly VoD and VoD services which are currently considered audiovisual communication
services pursuant to the new EU audiovisual framework and the General Law on Audiovisual Communication (although prior
to its coming into force, they were considered electronic communication services provided under the General Law on
Telecommunications). At present, Cableuropa is registered at the State Registry for Audiovisual Communication Services
Providers as a nationwide television broadcaster with respect to the channels over which it holds editorial responsibility
(television, nearly VoD and pay-per-view channels) and as a nationwide on-demand audiovisual service provider (VoD
services over which it holds editorial responsibility).
Ownership Restrictions
The General Law on Audiovisual Communication sets forth the following ownership restrictions on operators
providing national television audiovisual communication services:
Obligations
• Individuals or legal entities are forbidden from holding a significant stake (that is, holding directly or indirectly
5% of the share capital or 30% of the voting rights, or a lower percentage if such percentage is to be used to
appoint, in the 24 months following the acquisition, a number of members to the board of directors
representing more than half of the total) in more than one operator providing television audiovisual
communication services of national scope, if the average audience of the television channels broadcast by the
audiovisual communication service providers concerned exceeded 27% of the total audience in the past
12 consecutive months;
• Stake participation and voting rights of non-EEA individuals or legal entities in television audiovisual
communication services providers are subject to the reciprocity principle. In the event of an increase in the
existing participation by said non-EEA individuals or legal entities in a television audiovisual communication
service provider after the entering into force of the General Law on Audiovisual Communication, such increase
cannot exceed 50%; and
• Individuals and legal entities are not allowed to acquire a significant stake or voting rights in more than one
provider of television audiovisual communication services:
• when national providers in aggregate hold rights to use the spectrum exceeding the technical capacity
corresponding to two multiplex channels;
• when regional providers in aggregate hold rights to use the spectrum exceeding the technical capacity
corresponding to one multiplex channel; and
• no individuals or legal entities holding a stake in a national provider of television audiovisual
communication services are entitled to acquire a significant stake or voting rights in another provider of
the same service, if the acquisition prevents the existence of at least three different private providers of
national television audiovisual communication services, because otherwise pluralism of information is not
guaranteed.
According to the General Law on Audiovisual Communication and its implementing regulation, Cableuropa (and
others) are subject to the following primary obligations:
• Respect the rights of viewers set forth in the General Law on Audiovisual Communication;
• With respect to the television channels (including pay-per-view) over which it holds editorial responsibility,
Cableuropa must reserve 51% of its channels for European audiovisual production (50% out of the 51%
reserve must be reserved for European audiovisual productions in any of the Spanish languages and 10% of the
total quota shall be reserved for independent producers of which 10% must have been produced in the last five
years);
• With respect to on-demand audiovisual services over which it holds editorial responsibility, 30% of the
catalogue of programs must be reserved for European audiovisual productions and half of the said 30% for
European audiovisual productions in any of the Spanish languages;
• To contribute on a yearly basis 5% of the total income accrued for the preceding fiscal year, according to its
exploitation account, to the pre-financing of the production of certain audiovisual works such as, amongst
others, full-length feature films, television films and series and documentaries and animated series and short
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movies, as long as Cableuropa (either in chronological schedule or in a catalogue) or the channels it broadcasts
without bearing editorial responsibility over them include full-length feature films, television films and series,
as well as documentaries and animated series and movies of recent productions, that are less than seven years
old as of their production date. This 5% contribution has to comply with the following rules:
• 60% out of the referred 5% must be devoted to works whose original language is one of the existing
official languages in Spain;
• 50% out of the referred 5% must be devoted to works of independent producers;
• 60% out of the referred 5% must be devoted to full-length feature films; and
• 40% out of the referred 5% can be devoted to television films or television series or miniseries.
Despite not providing audiovisual communication services, Tenaria is also subject to the above 5% quota, as
per the General Law on Audiovisual Communication.
This 5% quota obligation was also included in the former Spanish Law on Television Without Frontiers
(currently replaced by the General Law on Audiovisual Communication). In April 2010, the Spanish
Constitutional Court accepted the filing of a constitutional claim against the 5% quota obligation set forth in
the former Spanish Law on Television Without Frontiers. A final decision is still pending;
• To comply with the rules regarding programming, advertising, teleshopping, sponsorships and programming
legislation should be aimed at protecting children and people with vision and hearing disabilities; and
• To comply with EU provisions and national legislation on intellectual property.
In order to maintain informational and audiovisual pluralism, the public broadcaster RTVE must provide cable
television operators with its radio and television channels for free broadcasting through their network. Nationwide digital
terrestrial television operators must provide cable television operators with their main free-to-air television channels for
broadcasting through their network, subject to negotiating the relevant price to be paid by cable television operators for such
carrier service.
Payments
According to the RTVE Financing Law, since September 2009 pay television and audiovisual communication
services operators are required to pay 1.5% of their television and other audiovisual communication services revenue on a
yearly basis for the financing of public broadcaster RTVE. This contribution cannot exceed 20% of the total income
anticipated for the relevant year in RTVE. ONO is challenging certain aspects of the contribution requirement before the
Spanish Supreme Court. ONO has challenged the revenue calculation and classification methodology used by the CMT to
determine the amount of ONO’s 1.5% contribution for 2009.
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MANAGEMENT
Directors and Senior Management
All decisions regarding our business, which are required to be taken at the Board of Directors level, are made by the
Board of Directors of GCO, our ultimate corporate parent.
Description of GCO’s Shareholders’ Agreement
GCO’s Shareholders’ Agreement dated July 29, 2005, as amended (“the GCO’s Shareholders’ Agreement” or the
“Shareholder Agreement”), provides that GCO’s Board of Directors will consist of 13 directors. Pursuant to the Shareholders’
Agreement, there must be two executive directors, the President (since November 2008, José María Castellano) and the Chief
Executive Officer (since May 2009, Rosalía Portela). In addition, two of the directors must be independent directors, one of
whom will be appointed by the shareholders who were shareholders of GCO prior to the date of the Shareholders’ Agreement
(the “Prior Shareholders”) and approved by the shareholders who became shareholders following the date of effectiveness of
the Shareholders’ Agreement that is November 2005 (the “New Shareholders”). The other independent director will be
appointed by the New Shareholders and approved by the Prior Shareholders. With respect to the remaining nine directors,
owners of each stake of 11.11% of the share capital in GCO will be permitted to appoint one director. If the Board cannot be
fully appointed in this manner, then shareholders with stakes or remaining portions less than 11.11% shall have the right to
appoint directors in descending order of their stake or remaining portion of their stake.
While the GCO Board of Directors may delegate many of its powers to the President and the Chief Executive
Officer, certain actions will require the prior approval of the Board of Directors. Certain corporate decisions (mainly
amendments to the by-laws, merger, spin-off, liquidation, winding-up, issuance of convertible securities, dividend policy and
treasury stock) require the favorable vote of the holders of at least two-thirds of GCO’s voting shares.
Administration Agreement
On March 30, 2002, Cableuropa signed an Administration Agreement with GCO, which was amended on March 28,
2003 and replaced by a new Administration Agreement dated December 22, 2011. Pursuant to the Administration Agreement,
the GCO Board of Directors must approve all significant decisions affecting the business and corporate affairs of the ONO
Group. In addition, GCO appoints the directors to Cableuropa’s Board of Directors. Cableuropa’s Chief Executive Officer and
President, if necessary, execute all decisions that are not subject to a formal approval by the Board of Directors.
Directors of GCO
As of March 31, 2012, the Directors of GCO were as follows:
Name Age Title
Member of Board
of Directors since
Terms
Expires
José María Castellano .......................... 64 Chairman and President 2006 2012
Rosalía Portela ............................... 61 Director and CEO 2009 2012
John Hahn (1) ................................. 53 Director, First Vice Chairman 2005 2014
Val Telecomunicaciones Cartera, S.L. represented by
Diego L. Lozano (2) .......................... 52 Director, Second Vice Chairman 2009 2012
Alejandro Valencia (3) .......................... 47 Director 2009 2012
Soren Oberg (4) ................................ 41 Director 2005 2014
Tom Walker (5) ................................ 50 Director 2005 2014
Peter Ezersky (6) ............................... 51 Director 2012 2015
Felipe Blanco (7) ............................... 40 Director 2011 2014
Eduardo Serra (8) .............................. 65 Director 2009 2012
Particitel International Limited Partnership
represented by Robert Coallier (9) ............... 55 Director 2010 2013
Tony Ball (10) ................................. 56 Director 2006 2012
José Luis Nueno (8) ............................ 52 Director 2009 2012
(1) Appointed as proposed by Providence Equity Partners.
(2) Appointed as proposed by Val Telecomunicaciones.
(3) Appointed as proposed by Grupo Multitel.
(4) Appointed as proposed by Thomas H. Lee Partners.
(5) Appointed as proposed by CCMP Capital Advisors.
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(6) Appointed as proposed by Quadrangle Capital Partners. Joshua L. Steiner was replaced by Peter Ezersky on February 8, 2012 in
representation of Quadrangle Capital Partners. Peter Ezersky’s appointment is contingent on approval at the General Shareholders
meeting of GCO on June 20, 2012.
(7) Appointed as proposed by GE Structured Finance.
(8) Independent Director.
(9) Appointed as proposed by CDPQ.
(10) Appointed as proposed by Providence, Thomas H. Lee, CCMP Capital and Quadrangle.
José María Castellano is the Chairman of the Board and President of GCO since November 2008 and Executive
Director and Chairman of the Board of Directors of Novacaixagalicia (NCG) Bank since June 2011. He served on the Board
of Directors of Inditex from 1985 to 2005 and was appointed Vice President and CEO in 1997. Previously, he worked at
Aegon España, S.A. as IT Manager and was General Manager and Chief Financial Officer of Conagra España, S.A. He served
on the Board of Directors of Fadesa, S.A. from June 2002 until 2005. Between 2005 and 2008 he joined the board of directors
of several companies such as ONO, TOUS and Rothschild. Mr. Castellano holds a PhD in Economics and Business Studies
and is also Professor of Financial Economy and Accounting at the University of La Coruña. Additionally, he is member of the
Academy of Economics.
Rosalía Portela is the Chief Executive Officer of Cableuropa since May 2009, and member of the Board of
Directors of DIA Discount, S.A. since July 2011. She held the Managing Director position for the residential segment at
Telefónica España for six years. Previously, she worked for the U.S. multinational Kimberly Clark, first as head of the retail
market area for Spain and Portugal and later as Europe’s Vice-President. Ms. Portela has also held senior positions in
marketing in companies such as Repsol and Procter & Gamble, where she worked for over 14 years. She holds a bachelors
degree in Economics from the Universidad Complutense of Madrid and a Masters in Economics from the University of
Memphis.
John Hahn is the First Vice Chairman of GCO. Mr. Hahn is also a Managing Director of Providence Equity
Partners Ltd (“Providence”) and is responsible for Providence’s European investment activities. He is currently a director of
Digital Platform İletişim Hizmetleri (Digiturk) and UFO Moviez India (UMI). Prior to joining Providence, Mr. Hahn was a
Managing Director at Morgan Stanley & Co. Prior to Morgan Stanley, Mr. Hahn worked with Price Waterhouse and Federal
Data Corporation. He received a Master of Business Administration from the Anderson School at the University of California
at Los Angeles and a Bachelor of Business Administration from the University of Notre Dame.
Diego L. Lozano studied Law at Universidad Complutense. In 1984, he joined the Corps of State Lawyers and in
1991, was appointed Technical General Secretary for the Ministry for Public Work, Transport and Environment. After leaving
public service in 1995, he practiced Law and was General Vice Secretary and Vice-Secretary of the Board of Directors of
Group Telefónica from 1997 until 2001. Since 2006, he has been a partner of the law firm Ramon y Cajal Abogados. Prior to
joining Ramon y Cajal, he occupied various positions at other law firms.
Alejandro Valencia joined Grupo Multitel, S.A. in 2004 as Managing Director. Since then, he has been actively
involved in corporate transactions with regard to Grupo Corporativo ONO. Prior to joining Multitel, he was Managing
Director Spain & Portugal of Genesys Iberia for five years, a company he managed from its startup to becoming the leading
conferencing company in Spain. During his 24 year long career, he has also held different sales and marketing management
positions in companies including British Telecom and IBM. Alejandro holds a Telecommunications Engineer degree from the
Universidad Politécnica of Madrid and an MBA by IESE. He speaks five languages.
Soren Oberg is a Managing Director at Thomas H. Lee Partners (“THL”), where he worked from 1993 to 1996 and
rejoined in 1998. Prior to THL, he worked at Morgan Stanley & Co. Incorporated in the Merchant Banking Division, and at
Hicks, Muse, Tate & Furst. Mr. Oberg is currently a Director of Ceridian Corporation, Systems Maintenance Services, Inc.
and West Corporation. Mr. Oberg received an A.B. cum laude in Applied Mathematics from Harvard College and an M.B.A.
from Harvard Business School. Mr. Oberg presently serves as a founding Board Member of the Canada Wide Virtual Science
Fair and is active in various private and non-profit institutions.
Tom Walker is a Senior Member of the CCMP Capital Advisors (UK), LLP and is a member of the Investment
Committee. Prior to joining CCMP in July 2002, Mr. Walker was Managing Director and European Head of Financial
Sponsor Coverage for JPMorgan in London. Previously, Mr. Walker worked in the New York Investment Banking divisions
of JPMorgan, Credit Suisse First Boston and Drexel, Burnham, Lambert. Mr. Walker holds a B.A. from the University of
Wisconsin and an M.B.A. from the University of Chicago.
Peter Ezersky is a Managing Principal at Quadrangle Group LLC. Mr. Ezersky currently serves on the Boards of
Directors of Cequel Communications, Cinemark, Dice Holdings, Get AS and Grupo Corporativo ONO. Among other
activities, Mr. Ezersky has been actively involved in implementing the growth and acquisition strategies of both Dice and Get,
enhancing the management teams at several of Quadrangle’s portfolio companies and executing a variety of financings to
fund acquisitions and realizations. Prior to joining Quadrangle at its inception, Mr. Ezersky ran the Worldwide Media and
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Communications group at Lazard Frères & Co., which he joined after starting his investment banking career at First Boston.
He received a B.A., summa cum laude, in political science from Amherst College, where he was a member of Phi Beta
Kappa, and a J.D. from the Yale Law School, where he was an editor of the Yale Law Journal. Following law school, he was
a Law Clerk for Judge Ralph K. Winter, Jr. of the United States Court of Appeals for the Second Judicial Circuit.
Felipe Blanco joined GE Capital in 2003 and is currently Executive Director. Previously he held a number of senior
positions at PricewaterhouseCoopers, Roland Berger and Accenture. He is also a member of the Board of Elipso Finance and
Vesta Finance. He graduated from ESADE Business School with a B.S. in Business Administration and from HEC School
with MSc in Management. He also holds an M.B.A. from London Business School and the Wharton School.
Eduardo Serra studied Law at ICADE and the Universidad Complutense of Madrid (UCM). In 1974, he joined the
Corps of State Lawyers. Half of his professional life has been devoted to public services and he is the only Spaniard to hold
public office with all three governing parties within democratic Spain. With Presidents Suarez and Calvo Sotelo of UCD
(Union of Democratic Centre), he was Cabinet Minister of the Ministry of Industry and Energy (1977-1979), General
Secretary of INI (National Institute of Industry) (1979-1982) and Under Secretary of Defense. With President González of
PSOE (Spanish Socialist Party), he held the post of Under Secretary of Defense (1982-1984) and Secretary of State of
Defense (1984-1987). With President Aznar of PP (Popular Party), he was Minister of Defense (1996–2000). In the private
sector, he has held different senior management positions. He is currently President and founder of Eduardo Serra y
Asociados, Vice President of Everis and is a member of the Board of Directors to Zeltia. He is also a member of the advisory
board of several companies.
Robert Coallier is the Chief Executive Officer of Agropur Cooperative. He also serves on the boards of Averna
Technologies, Sanimax and Industrielle Alliance. He served as Senior Vice President and CFO of Dollarama from 2005 to
2009. Prior to this, he spent a number of years working in Molson, C-Mac Industries and Caisse de Dépôt et Placement du
Québec where he held different senior management positions in Canada and Brazil. Mr. Coallier has a degree in Economics
from McGill University and an MBA from Concordia University.
Tony Ball is Chairman of Kabel Deutschland GmbH. He is a board member of the Olympic Delivery Authority for
the 2012 London Olympic Games and a non-executive director of BT Group plc. He is also chairman of the Advisory Board
of Portland PR and a Senior Adviser at Providence Equity LLP. He served as CEO of BSkyB plc from 1999 to 2003. Prior to
this, he spent a number of years working in the United States where he was the CEO of FOX-LIBERTY Networks, which
included the FX Networks, Fox Sports Net and over 20 Regional Sports Channels throughout the United States. He also
served as President of Fox Sports International. Before going to the United States, he held a number of senior positions in UK
broadcasting and television production. He is a former non-executive director of Marks and Spencer plc and BAA plc. He has
an MBA from Kingston Business School. He is a Fellow of the Royal Television Society and holds an Honorary Doctorate
from both Middlesex University and Kingston University.
José Luis Nueno is a Professor in the Marketing department at IESE. He received his Doctorate of Business
Administration (Marketing) at Harvard University, Master of Business Administration at IESE and Degree in Law at the
Universidad of Barcelona. He has published a number of marketing related articles and taught at several business schools and
management programs. He was a visiting professor at the University of Michigan and in joint programs with the University of
Michigan and IESE in Switzerland and China. In 2003, he was part of the faculty team for the Harvard Business School, AMP
Middle East Program and the Strategic Program for Retail Managers. He is a member of the boards of directors of a number
of leading international companies. He is also a corporate consultant and advises national and international corporations in the
area of marketing and strategy.
Directors of ONOMidco and Cableuropa
The Directors of ONOMidco and Cableuropa as of March 31, 2012 were as follows:
Name Age Title
Member of
Board of
Directors since
José María Castellano ........................................... 64 Director and President 2008
Rosalía Portela ................................................. 61 Chief Executive Officer 2009
Carlos Sagasta ................................................. 40 Director 2010
Board Practices
GCO’s Board of Directors established a Remuneration and Appointments Committee and an Audit and Compliance
Committee that perform their functions for all the companies in the ONO Group.
Remuneration and Appointments Committee
GCO’s Remuneration and Appointments Committee comprises of five members of its Board of Directors and ruled
by the Committee’s Regulations as approved in December 2005. Its purpose is to oversee the ONO Group’s remuneration,
recruitment and human resource policies. Decisions taken by this committee are then recommended to the Board of Directors
of GCO for their approval or amendment.
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2012:
The following table shows the members of GCO’s Remuneration and Appointments Committee as of March 31,
Name
John Hahn ..................................................................................
Peter Ezersky ................................................................................
Robert Coallier (representing Particitel International Limited Partnership) ................................
Tony Ball ...................................................................................
Eduardo Serra ...............................................................................
Juan Luis Delgado ............................................................................
José María Castellano .........................................................................
Rosalía Portela ...............................................................................
Title
Chairman
Member
Member
Member
Member
Secretary
Observer
Observer
Audit and Compliance Committee
GCO’s audit and compliance committee is comprised of five members of its Board of Directors and ruled by the
Committee’s Regulations as approved in December 2005. It meets regularly and its purpose is to oversee the ONO Group’s
internal controls and audit policies, among others. Decisions taken by this committee are then recommended to the Board of
Directors of GCO for their approval or amendment.
The following table shows the members of GCO’s Audit and Compliance Committee as of March 31, 2012:
Name
Diego L. Lozano (representing Val Telecomunicaciones) .............................................
Soren Oberg .................................................................................
Tom Walker .................................................................................
Felipe Blanco ................................................................................
José Luis Nueno .............................................................................
José Antonio Fernández Fernández ...............................................................
José María Castellano .........................................................................
Rosalía Portela ...............................................................................
Title
Chairman
Member
Member
Member
Member
Secretary
Observer
Observer
Senior Management of GCO, Cableuropa and ONOMidco
The following table lists certain members of our senior management team as of the date hereof.
Name Age Title
Member of
Management since
José María Castellano ................. 64 President 2008
Rosalía Portela ....................... 61 Chief Executive Officer 2009
Carlos Sagasta ....................... 41 Chief Financial Officer 2010
Guillermo Mercader .................. 41 Director of Residential 2010
Víctor Guerrero ...................... 42 Director of Business 2006
Paul Kearney ........................ 48 Director of Networks and Technology 2007
Carlos Moreno ....................... 43 Director of Information Systems 2000
Rafael Brull ......................... 45 Director of Innovation and On-Line Channel 2010
Antonio de la Fuente .................. 40 Director of Human Resources 2009
Juan Luis Delgado .................... 43 General Counsel & Secretary of the Board 1997
Set forth below are the biographies of each of these senior managers, other than those provided above:
Carlos Sagasta is our Chief Financial Officer. Prior to joining Cableuropa in April 2010, Mr. Sagasta held the
position of Financial Director and Controller of Abertis Telecom for over five years. In 2003, he assumed the role of Planning
and Control Director at Retevisión Audiovisual (the main business unit of Abertis Telecom). Mr. Sagasta holds a degree in
Business Administration and Finance from the University of Saint Louis (Missouri) and an MBA in Finance and Strategy
from The Anderson School of UCLA (California).
Guillermo Mercader is our Director of Residential and has held this position since January 2010. He was Chief
Executive Officer of Ya.com, where he worked for seven years. Subsequently, when Ya.com was incorporated to Orange,
Guillermo held the position of Managing Director of Home. He has also held senior positions in other companies, such as
Wella and Coopers & Lybrand. He holds a bachelor’s in Business, Law and a Masters in Financial Markets from the
Universidad Autónoma of Madrid.
Víctor Guerrero is our Director of Business. From July 2006 to January 2009, Mr. Guerrero was our Regional
Director for the Andalucía Oriental cluster. Previously, he was International Controller, Director of Portugal and of the
United Kingdom, and Managing Director of the international business of Telepizza, a fast food company in Spain. He holds a
degree in Economics from ETEA—Universidad de Córdoba, Spain and an MBA from Instituto de Empresa, Madrid.
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Paul Kearney is our Director of Networks and Technology. Mr. Kearney joined ONO in June 2007 from Netia
(a fixed line operator in Poland), where he was Chief Technology Officer. Previously, he held various management positions
in the telecommunications sector in the United Kingdom and Spain and has 25 years of experience in the sector. He holds a
Diploma in Engineering from the Dundalk Institute of Technology and a MSc in Telecommunications Business from
University College London.
Carlos Moreno is our Director of Information Systems and has held this position since 2000. Prior to joining ONO,
he worked as internet Consulting Area Director and as project consultant in the Defense sector for Thomson-CSF. Previously,
he worked as a consultant in Spain and Portugal and as a project development engineer in Paris for Marben (Grupo ATOS).
He holds a Master of Science in Communications Systems from University College of Swansea.
Rafael Brull is our Director of Innovation and On-Line Channel. Mr. Brull was Director of Portals, Services and
Operations at Ya.com and continued in such position after the company merged with Orange. Previously, he also held several
positions in different internet companies. He holds a Bachelors in Philosophy and an executive degree in e-business from the
Universidad of Alcalá de Henares.
Antonio de la Fuente is our Director of Human Resources. Mr. De la Fuente joined ONO in 2004 as Labor
Relations and Risks Prevention Director. Prior to joining ONO, he worked in the Legal Advisory Department of Vodafone
Spain where he was Labor Manager. He also worked as Labor Advisor in DLF Consultants. He is a graduate in Law from the
Universidad Complutense of Madrid, has a post graduate diploma in Labor, Social Security Law and Labor Risk Prevention
and is a member of the Royal Academy of Jurisprudence and Legislation.
Juan Luis Delgado is the Secretary of the Board of ONO since 2009 and our General Counsel since 2012.
Mr. Delgado joined the company in November 1997 as manager for corporate development within the General Counsel area.
Subsequently, Juan Luis was deputy General Counsel for over five years until being appointed Secretary of the Board.
Previously, he worked as a lawyer specializing in commercial affairs in a private law firm in Madrid. Mr. Delgado holds a
Bachelors in Law from the University of Salamanca and a Masters in legal assessment from the I.E. Business School.
Compensation
The total compensation paid to the GCO Board of Directors in 2011 amounted to €2.3 million. The total
compensation accrued by senior management in 2011 amounted to €2.4 million.
There are no service contracts or severance benefits for any of our directors with GCO or the ONO Group upon
termination of employment (other than service contracts customarily provided with respect to directors).
Share Ownership
None of our other directors and members of our administrative, supervisory or management bodies directly holds
any ordinary shares of Cableuropa, ONOMidco or GCO.
Senior Management Incentive Plan
In May 2011, we introduced a long-term incentive plan for certain members of our senior management (the
“Incentive Plan”). The Incentive Plan provides for cash payments to Incentive Plan participants upon the occurrence of certain
events, including a sale of a substantial stake in the ONO Group to a third party, a flotation of shares of a company that is part
of the ONO Group or a change of control. The amount of payments under the Incentive Plan are calculated based on formulas
tied to increases in the valuation of the ONO Group. The Incentive Plan expires on December 31, 2017 or upon the
occurrence of the last payment due thereunder.
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SHAREHOLDERS AND BENEFICIAL OWNERS
Cableuropa Shareholder
As of March 31, 2012, Cableuropa’s authorized share capital was €262,901,802, consisted of 43,816,967 ordinary
shares, of €6.00 par value each. All of Cableuropa’s ordinary shares are held by ONOMidco, its sole shareholder.
ONOMidco Shareholder
As of March 31, 2012, ONOMidco’s share capital was €131,464,343, consisting of 43,817,066 ordinary shares, of
€3.0003 par value each. All of ONOMidco’s ordinary shares are held by GCO, its sole shareholder.
GCO Shareholders
As of March 31, 2012, the GCO share capital was €1,648,524,524, consisting of 1,648,524,524 ordinary shares, of
€1.00 par value each. GCO’s current shareholders are as follows:
Total percentage of shares
Name and address of Beneficial Owner
beneficially owned over total capital
CCMP Capital Advisors, LLC (1) ............................................ 14.996%
245 Park Avenue, New York, New York 10167, USA
Thomas H. Lee Partners, L.L.P. (1) .......................................... 14.996%
100 Federal Street, Boston, Massachusetts 02110, USA
Providence Equity Partners Inc. (1) .......................................... 14.996%
50 Kennedy Plaza, Providence, Rhode Island 02903, USA
Quadrangle Capital Partners (1) ............................................. 8.960%
375 Park Avenue, New York, New York 10152, USA
Global Telecom Investments, LCC (2) ........................................ 8.827%
1209 Orange Street, Wilmington, Delaware 19801, USA
Caisse de Dépôt et Placement du Québec (4) ................................... 6.640%
Centre CDP Capital, 1000, Place Jean-Paul Riopelle, Montréal, Québec H2Z 2B3
Canada .................................................................
Grupo Multitel, S.A. (3) .................................................... 6.339%
Calle Juan de Mena 19, Madrid, 28014, Spain
Val Telecomunicaciones ................................................... 5.398%
Calle Juan de Mena 19, Madrid, 28014, Spain
Ontario Teachers Pension Plan ............................................. 4.715%
5650 Yonge Street, Toronto, ON M2M, Canada
Capital Riesgo Global, SRC S.A. (5) .......................................... 4.424%
Avenida de Cantabria, S/n Ciudad Banco Santander, S.A., Boadilla del Monte, Madrid,
Spain
Sodinteleco, S.L. (6) ........................................................ 4.266%
Francisco Hernández Pacheco, 14, Valladolid, Spain
Northwestern Mutual Life Insurance Company ............................... 2.262%
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, USA
Bregal Co-Invest ......................................................... 1.375%
48, Rue de Bragance L-1255, Luxembourg
Other minority shareholders and treasury shares ............................. 1.806%
Total ................................................................... 100.000%
(1) Each of CCMP Capital Advisors, LLC, Providence Equity Partners Inc., Thomas H. Lee Partners, L.P. and Quadrangle Capital Partners
is the beneficial owner of GCO shares held by various funds and investment vehicles formed or managed by them.
(2) Entity in which General Electric holds an interest.
(3) Grupo Multitel, S.A. includes Multitel Alfa and Telco Investment Europe shares.
(4) CDPQ’s interest is held by said company itself and another company belonging to its group, Particitel International Limited.
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(5) Entity wholly owned by Banco Santander, S.A.
(6) Entity into which most of the former shareholders of Retecal were integrated.
The amounts and percentages of shares beneficially owned by each shareholder are reported on the basis of SEC
rules governing the determination of beneficial ownership, and the information is not necessarily indicative of beneficial
ownership for other purposes. Under such rules, a person is deemed to be a beneficial owner of a security if that person has or
shares voting power, which includes the power to vote or direct the voting of a security, or investment power, which includes
the power to dispose of or direct the disposition of a security, and includes securities for which a person holds the right to
acquire beneficial ownership within 60 days. Except as noted otherwise hereinafter, we believe, but are not in a position to
verify, that each beneficial owner named in the table above has sole voting or investment power with respect to all shares
beneficially owned by that owner.
The following is a brief description of each of the beneficial shareholders of GCO:
CCMP Capital Advisors, LLC (“CCMP”) is a leading global private equity firm specializing in buyouts and
growth equity investments in companies ranging from $500 million to more than $3 billion in size. CCMP Capital focuses on
five primary industries: Consumer/Retail; Industrial; Energy; Healthcare; and Media. Selected investments under management
include: ARAMARK Corporation, Chaparral Energy, Edwards Limited, Francesca’s Collections, Generac Power Systems,
Infogroup, Jetro Holdings, LHP Hospital Group and Warner Chilcott. CCMP Capital’s founders have invested over $13
billion since 1984. CCMP Capital’s latest fund, CCMP Capital Investors II, L.P., closed in September 2007 with
commitments of $3.4 billion. CCMP Capital has offices in New York, Houston and London. Through active management, its
global resources and its powerful value creation model, CCMP Capital has established a reputation as a world-class
investment partner.
Thomas H. Lee Partners, L.P. (“Thomas H. Lee”) is one of the oldest private equity firms in the U.S., focused on
identifying and acquiring substantial ownership positions in growth companies. Founded in 1974, Thomas H. Lee has raised
approximately $22 billion of equity capital and invested in more than 100 businesses. Notable transactions sponsored by the
firm include: American Media Inc., Houghton Mifflin, Michael Foods, Nortek, ProSieben Sat.1 Media, Rayovac,
Transwestern Holdings, Warner Chilcott, Dunkin’ Brands and Warner Music Group.
Providence Equity Partners Inc. (“Providence”) is a private investment firm specializing in equity investments in
communications and media companies around the world. The principals of Providence manage funds with over $22 billion in
equity commitments, and have invested in more than 100 companies globally since its inception in 1989. Providence’s
significant investments include: Bresnan Communications, Com hem, Hallmark International, Digiturk, Kabel Deutschland,
Metro Goldwyn Mayer, Recoletos, TDC, Warner Music Group and Hulu.
Quadrangle Capital Partners (“Quadrangle”) based in New York, is the private equity business of Quadrangle
Group LLC, a private investment firm with over $3 billion in assets under management which also invests in distressed debt
and public equity. Quadrangle invests in media and communications companies and its strategy focuses primarily on buyouts
and growth stage investments. Quadrangle was founded in 2000 and has sponsored investments in ProSieben Sat.1 Media,
Protection One, Inc., NTELOS, Inc, Metro Goldwyn Mayer, Cablevision and DataNet Communications.
GE Structured Finance, Inc. is a leading equity and debt investor and provider of structured financing for
companies in communications, energy, commercial and industrial and transportation industries, as well as the project and
trade finance markets. GE Structured Finance, Inc. is a unit of GE Commercial Finance, a financial services business of
General Electric Company, a diversified manufacturing, technology and services company with worldwide operations.
Grupo Multitel is a holding company that was created by Eugenio Galdón, the former President of ONO in order to
provide support in the definition, launching, management and control of Spanish telecommunications and media projects. In
1992, Multitel Group was the first company to launch cable activities in the telecommunications market in Spain.
Caisse de Dépôt et Placement du Québec (“CDPQ”) is one of the largest financing institutions in Canada and
North America, managing funds for public and private pension and insurance funds. Through certain subsidiaries, CDPQ
offers private investment funds and real estate management services to external institutional investors. The leading
institutional fund manager in Canada, CDPQ invests in the main liquid markets as well as in private equity and real estate.
Val Telecomunicaciones is a holding company which groups most of the former local shareholders of the original
regional affiliates of Cableuropa.
Ontario Teachers Pension Plan (“OTPP”) is Canada’s largest single-profession pension plan. It was created for
Ontario’s teachers in 1917 and until 1990 was administered by the Teachers’ Superannuation Commission of Ontario, with
the pension fund investing in non-marketable Ontario debentures. The Ontario government established the Ontario Teachers’
Pension Plan Board as an independent corporation in 1990.
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Banco Santander, S.A. is Spain’s largest bank, one of the major European financial institutions and the largest
provider of financial services in Latin America. Banco Santander is the parent bank of Grupo Santander, which operates
principally in Spain, the United Kingdom, Portugal, other European countries, Brazil, other Latin American countries and the
United States, offering a wide range of financial products. Grupo Santander’s main business areas are: Retail Banking, Global
Wholesale Banking and Asset Management and Insurance.
Sodinteleco, S.L. is a holding company owned by most of the former shareholders of Retecal including: Caja
España, Grupo Begar, Caja Segovia and Caja Ávila. Sodinteleco became a shareholder of GCO following the acquisition of
Retecal in 2004.
Northwestern Mutual helps its policyowners and clients achieve financial security. The company offers a holistic
approach to financial security solutions to help people in the areas of financial protection, wealth accumulation and estate
preservation and distribution. As a mutual company with no shareholders, Northwestern Mutual seeks to share its gains with
policyowners and deliver consistent and dependable value to clients over time.
Bregal Co-Invest (“Bregal”) was formed as the private equity investment division of a European family business.
Bregal’s mission is to identify and partner with innovative high quality private equity teams in the U.S. and Europe. Bregal is
constantly looking for the right mix of established top quartile funds and innovative new strategies, teams and opportunities.
Bregal was established in 2002 to give added focus and scope to family private equity activities that stretch back over
20 years in Europe and North America.
GCO Shareholders’ Agreement
GCO’s shareholders entered into the GCO Shareholders’ Agreement, dated July 29, 2005 (with effect from the date
of closing of the Auna acquisition—November 4, 2005), which addresses matters relating to our corporate governance,
including the election of the GCO Board of Directors, managing director and other senior managers of the ONO Group, major
corporate decisions, change of control issues and voting rights. Under this agreement, the voting rights of each shareholder
and the companies within its group have been capped to one-third of the total voting rights.
Each of GCO’s current shareholders has agreed to launch an offer to the remaining shareholders for the acquisition
of the total share capital of GCO if, either directly or indirectly, any such shareholder acquires or controls one-third or more of
GCO’s shares or voting rights.
Under the by-laws of GCO, each of the shareholders and GCO enjoy a preemptive right in the event of any share
transfers, except those share transfers representing, together with any other transfers effected by the shareholders within one
year, less than 1.5% of the total share capital of GCO, may be effected freely, up to a global limit (considering all share
transfers by shareholders making use of this rule) of 5% of GCO’s share capital annually.
The parties to the shareholders’ agreement expressly agree that the Shareholders’ Agreement takes precedence,
between the parties, over the by-laws. The Shareholders’ Agreement expires at the earlier of (i) November 4, 2013, (ii) an
initial public offering of GCO stock, or (iii) an agreed sale of GCO.
PIK Loan and 2010 Downstream Loan
As a condition to the amendment of the 2005 Senior Facility in May 2010, the senior lenders of Cableuropa required
the shareholders of GCO to contribute up to €200 million in Cableuropa. For these purposes, the Board of Directors of GCO
passed certain resolutions on March 8 and 24, 2010 (the “Resolutions”) authorizing GCO to enter into a profit participating
PIK loan agreement with its shareholders for a maximum amount of €200 million (the “PIK Loan”). The PIK Loan was
partially drawn in May 2010 in the amount of €125 million, which has been loaned to Cableuropa in the form of deeply
subordinated shareholder indebtedness (the “2010 Downstream Loan”). The 2010 Downstream Loan is independent from the
PIK Loan and the proceeds under the 2010 Downstream Loan were applied by Cableuropa to reduce the amount drawn under
the Senior Facility. The remaining €75 million was contributed and held in escrow, to be drawn and loaned to Cableuropa on
the same terms if certain liquidity and refinancing conditions were not met.
On October 22, 2010, the Issuer completed the offering of the 2010 Notes and on-lent the gross proceeds therefrom,
€700 million, to Cableuropa as part of the October 2010 Refinancing. Cableuropa used the loan proceeds to reduce debt under
the 2005 Senior Facility. As a result, on November 2, 2010, €50 million of the €75 million held in escrow was released to the
shareholders.
In January 2011, the 2010 Downstream Loan was capitalized into equity in Cableuropa. On January 5, 2012, the
remaining €25 million held in escrow was released to the shareholders, as Cableuropa had complied with all conditions for
such release.
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Dispute with VAL
A minority shareholder (Val Telecomunicaciones, S.L., “VAL”) of GCO has challenged in court the Resolutions
despite the fact that it has subscribed for a substantial portion of its pro rata entitlement of the PIK Loan. The lawsuit seeks to
invalidate the Resolution on the basis that the PIK Loan should have been authorized by a shareholders’ meeting of GCO and
that various Board members of GCO had a conflict of interest in adopting the Resolutions. Furthermore, VAL claims that the
interest rate agreed in the PIK Loan, in addition to other ancillary terms, is unlawful, contrary to the by-laws of GCO and
detrimental to the interests of GCO. In its lawsuit VAL is not currently making any claims in relation to the Downstream Loan
nor is it making any claims against Cableuropa.
The VAL lawsuit has been contested by GCO, which believes the VAL lawsuit to be without merit. The preliminary
hearing on the case took place on February 8, 2011. The trial was initially called to take place on October 18, 2011, but the
judge adjourned it in order to consider new documentation. Recently, a judicial expert witness report has been included in the
judicial filing and the court has to evaluate all reports included in the filing. The new date of the trial was scheduled for
May 31, 2012. The decision of the first instance court deciding the case (a Madrid Commercial Court) would be expected
within an estimated period of 2-3 months after the trial is held, depending on the workload of the court. This first instance
decision would be subject to appeal by either party before the Madrid Provincial Appeals Court, and eventually before the
Supreme Court, all of which could add approximately four additional years to the duration of the VAL lawsuit.
On April 24, 2012, the Board of Directors of GCO agreed to propose the capitalization of the PIK loan plus any
accrued interest until June 30, 2011 to the GCO’s General Shareholders meeting. As a result of this proposal, on May 11,
2012, GCO and VAL have agreed to withdraw the lawsuit challenging the Resolutions described above within two business
days of the completion of the capital increase in GCO capitalizing the PIK Loan and accrued interest until June 30, 2011.
The General Shareholders meeting of GCO has been convened to be held on June 20, 2012. As a result of such
convening, GCO and VAL have requested from the court, and the court has accepted, a suspension of the trial scheduled for
May 31, 2012. All the lenders under the PIK Loan have agreed to the proposed capitalization and to that end on May 11, 2012
have executed with GCO an amendment to the PIK Loan enabling its capitalization and an agreement where each of them
undertake to effectively capitalize the PIK Loan.
The approval of the capital increase for the capitalization of the PIK Loan by the General Shareholders meeting of
GCO requires that shareholders representing more than two thirds of the share capital of GCO vote in favor. Given that the
PIK Lenders that have committed to capitalize the PIK Loan are related to shareholders that represent a higher percentage
than the two thirds required, we expect that the General Shareholders meeting will approve the capital increase.
The capitalization of the PIK Loan in the terms agreed is expected to be completed before September 30, 2012.
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DESCRIPTION OF OTHER INDEBTEDNESS
The following is a summary of certain provisions of the documents listed below which govern our principal
indebtedness and does not purport to be complete.
New Senior Facility
On May 24, 2012 we entered into a new senior facility (the “New Senior Facility”) in an aggregate amount of
€2,400 million and $1,000 million in order to refinance our 2005 Senior Facility.
To complete the May 2012 Refinancing, we intend to draw funds under the New Senior Facility on the New Notes
Issue Date sufficient, together with the gross proceeds of the offering of the New Notes and cash on hand, to refinance the
2005 Senior Facility in full. See “Business—Our History—Refinancing” and “Use of Proceeds”.
As of March 31, 2012, on a pro forma basis after giving effect to the May 2012 Refinancing, we would have an
outstanding balance of €3,049 million under our New Senior Facility (including the Euro Notes Tranches and the euro
equivalent of the Dollar Note Tranches). In addition, we would have €100 million available under the Revolving Facility
tranche of the New Senior Facility.
Cableuropa’s obligations under the New Senior Facility (including the Existing Notes Tranches, the New Notes
Tranches and any Additional Notes Tranches) are senior to those under the proceeds loans and guarantees relating to the
Subordinated Notes.
The Facilities:
There are seven separate tranches under the New Senior Facility:
• Facility A is a term loan facility in a maximum aggregate amount of €891 million, which is made available to
partially refinance indebtedness under the 2005 Senior Facility and to pay fees, costs and expenses under and
in connection with the New Senior Facility and related documents;
• Facility B is a term loan facility in a maximum aggregate amount of €185 million, and is available for the same
purposes as Facility A. Facility B may be increased by an amount not exceeding the amount committed under
the Bridge Tranche (provided that no such increase can occur following a successful completion of the offering
of the New Notes).
• The Revolving Facility is a revolving credit facility in a maximum aggregate amount of €100 million, which is
available to finance our general corporate purposes and ordinary activities including permitted acquisitions
(provided that any borrowing to fund a permitted acquisition must be repaid within six months). The overall
size of the Revolving Facility may be increased by an amount not exceeding €50 million.
• The 2010 Notes Tranche is a term loan facility with a maximum aggregate amount of €700 million. This
tranche will refinance the corresponding tranche in the 2005 Senior Facility which had been incorporated
therein from the proceeds from the issuance by the Issuer of the 2010 Notes.
• The 2011 Notes Tranche is a term loan facility with a maximum aggregate amount of €300 million. This
tranche will refinance the corresponding tranche in the 2005 Senior Facility which had been incorporated
therein from the proceeds from the issuance by the Issuer of the 2011 Notes.
• The February 2012 Notes Tranche is a U.S. dollar term loan facility with a maximum aggregate amount of
$1,000 million. This tranche will refinance the corresponding tranche in the 2005 Senior Facility which had
been incorporated therein from the proceeds from the issuance by the Issuer of the February 2012 Notes.
• The Bridge Tranche is a term loan facility with a maximum aggregate amount of €224 million, which is
available for the same purposes as Facility A. However, the Bridge Tranche will not be drawn and will cease to
be available upon the successful completion of the offering of the New Notes.
The New Senior Facility facilitates future debt refinancing by permitting the creation in the future of additional term
loan tranches under which the proceeds from debt capital markets instruments raised by a special purpose vehicle (such as the
New Notes) or new bank debt will be on-lent to Cableuropa to refinance existing Bank Tranches and Notes Tranches under
the New Senior Facility. See “—New Senior Facility—Additional Notes Tranches and Bank Tranches” below. Additionally,
the Revolving Facility may be replaced by a replacement revolving credit facility (subject to the amount of such replacement
not exceeding €250 million).
The total amount outstanding and available under the New Senior Facility is currently €2,400 million and $1,000
million. The total amount outstanding will be amended from time to time in order to include the amounts made available to us
through new tranches (including the New Notes Tranche), subject to certain limitations set forth in the New Senior Facility.
Maturity: Facility A and the Revolving Facility mature on June 30, 2017. Facility B matures on March 31, 2018.
The Existing Notes Tranches mature on December 1, 2018.
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Interest: Facility A, Facility B and the Revolving Facility bear interest at a rate equal to the aggregate of a margin,
Euribor and mandatory costs (if any).
In respect of Facility A and the Revolving Facility, margin is adjusted quarterly, as the case may be, pursuant to the
following grid:
Total Debt to LTM EBITDA Ratio
Greater than or equal to 4.50 ...................................................................
Greater than or equal to 4.00 but less than 4.50 .....................................................
Greater than or equal to 3.00 but less than 4.00 .....................................................
Less than 3.00 ..............................................................................
Margin
4.50% p.a.
4.25% p.a.
4.00% p.a.
3.75% p.a.
In respect of Facility B, margin is adjusted quarterly, as the case may be, pursuant to the following grid:
Total Debt to LTM EBITDA Ratio
Greater than or equal to 4.00 ...................................................................
Less than 4.00 ..............................................................................
Margin
5.25% p.a.
5.00% p.a.
The maximum margin set forth above will apply during the first 12 months following the New Notes Issue Date.
The 2010 Notes Tranche bears interest at a rate of 8.875143% per annum. The 2011 Notes Tranche bears interest at
a rate of 8.87533% per annum. The February 2012 Notes Tranche bears interest at a rate of 8.87515% per annum.
There is also a commitment fee payable on the Revolving Facility which accrues on a daily basis and is payable
quarterly in arrears and is calculated on the undrawn and uncancelled portion of the Revolving Facility for its availability
period.
Repayment: Advances under the Revolving Facility must be repaid on the last day of the relevant interest period,
provided that if a notification is not made to repay such an advance, such advance shall automatically be rolled over into the
next interest period. Advances under Facility B and the Notes Tranches must be repaid on their final maturity date. Advances
under Facility A must be repaid in accordance with an agreed repayment schedule as set forth below:
Percentage of
Facility A to be
Date
repaid
June 30, 2013 ............................................................................ 2.17%
December 31, 2013 ....................................................................... 2.17%
June 30, 2014 ............................................................................ 4.33%
December 31, 2014 ....................................................................... 4.33%
June 30, 2015 ............................................................................ 7.17%
December 31, 2015 ....................................................................... 7.17%
June 30, 2016 ............................................................................ 13.83%
December 31, 2016 ....................................................................... 13.83%
June 30, 2017 ............................................................................ 45.00%
Financial Covenants: The financial covenants under the New Senior Facility require, among other things:
maintenance of a minimum total interest cover ratio, maintenance of a maximum consolidated leverage ratio (on a last twelve
months basis), maintenance of a debt service cover ratio (at a level of 1.00x) and limitations on maximum capital expenditure.
The tables below set forth the minimum interest cover ratio, the maximum consolidated leverage ratio and the
maximum capital expenditure under the New Senior Facility. The interest cover ratio will be recalculated following the
issuance of the New Notes to reflect the amendment of the New Senior Facility in connection with the New Notes Tranche.
Interest cover ratio:
Date
Ratio
June 30, 2012 ................................................................................... 2.00x
September 30, 2012 .............................................................................. 2.00x
December 31, 2012 .............................................................................. 2.00x
March 31, 2013 ................................................................................. 2.00x
June 30, 2013 ................................................................................... 2.00x
September 31, 2013 .............................................................................. 2.00x
December 31, 2013 .............................................................................. 2.00x
March 31, 2014 ................................................................................. 2.00x
June 30, 2014 ................................................................................... 2.00x
September 30, 2014 .............................................................................. 2.00x
December 31, 2014 .............................................................................. 2.00x
March 31, 2015 ................................................................................. 2.00x
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Date
June 30, 2015 ................................................................................... 2.00x
September 30, 2015 .............................................................................. 2.10x
December 31, 2015 .............................................................................. 2.15x
March 31, 2016 ................................................................................. 2.20x
June 30, 2016 ................................................................................... 2.25x
September 30, 2016 .............................................................................. 2.35x
December 31, 2016 .............................................................................. 2.40x
March 31, 2017 ................................................................................. 2.50x
June 30, 2017 ................................................................................... 2.60x
September 30, 2017 .............................................................................. 2.80x
December 31, 2017 and thereafter ................................................................... 2.80x
Total debt/Consolidated LTM EBITDA:
Date
Ratio
June 30, 2012 ................................................................................... 5.95x
September 30, 2012 .............................................................................. 5.95x
December 31, 2012 .............................................................................. 5.95x
March 31, 2013 ................................................................................. 5.95x
June 30, 2013 ................................................................................... 5.95x
September 30, 2013 .............................................................................. 5.95x
December 31, 2013 .............................................................................. 5.85x
March 31, 2014 ................................................................................. 5.75x
June 30, 2014 ................................................................................... 5.75x
September 30, 2014 .............................................................................. 5.50x
December 31, 2015 .............................................................................. 5.50x
March 31, 2015 ................................................................................. 5.25x
June 30, 2015 ................................................................................... 5.25x
September 30, 2015 .............................................................................. 5.00x
December 31, 2015 .............................................................................. 4.75x
March 31, 2016 ................................................................................. 4.50x
June 30, 2016 ................................................................................... 4.25x
September 30, 2016 .............................................................................. 4.00x
December 31, 2016 .............................................................................. 3.95x
March 31, 2017 ................................................................................. 3.75x
June 30, 2017 ................................................................................... 3.50x
September 30, 2017 .............................................................................. 3.25x
December 31, 2017 and thereafter ................................................................... 3.25x
Maximum Capex (euro in millions):
Year ending
Limit
December 31, 2012 ............................................................................... 362
December 31, 2013 ............................................................................... 330
December 31, 2014 ............................................................................... 335
December 31, 2015 ............................................................................... 324
December 31, 2016 ............................................................................... 314
December 31, 2017 ............................................................................... 316
In addition to the maximum Capex level above, (i) in the event that in any financial year (the “Original Financial
Year”), the maximum level of permitted cumulative Capex according to the table above has not been reached, the maximum
Capex level for the following financial year shall be increased by an amount equal to the unused Capex (which is assumed to
be spent last); and (ii) in any Original Financial Year an amount equal to the higher of 10% of the permitted Capex for the
following two financial years or €50 million may be carried back to that Original Financial Year (with a corresponding
reduction for the Capex amounts permitted for those two financial years).
The interest cover ratio will be adjusted to reflect the interest rate on the New Notes Tranche in connection with the
Notes and, in addition, the New Senior Facility contains a mechanism to adjust the minimum interest cover ratio to reflect the
interest rate payable on any future Additional Notes Tranche, additional Bank Tranche or any future subordinated bank or
capital market financing, so as to maintain the equivalent level of headroom in each period. Notwithstanding the foregoing,
the interest cover ratio must not be lower than 2.00x.
Guarantees: Cableuropa, as borrower, is currently the only guarantor and has jointly and severally guaranteed all
amounts owed under the New Senior Facility on a senior basis.
Ratio
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Material Subsidiaries: The New Senior Facility also provides that Cableuropa will cause any new “Material
Subsidiaries” (as defined in the New Senior Facility) to become guarantors under the New Senior Facility with similar terms
to the existing guarantors. Subsequently, these companies may request the release of the relevant guarantees should they cease
to be “Material Subsidiaries”. There were no “Material Subsidiaries” as at the date of the New Senior Facility.
Security: The New Senior Facility is secured by first-ranking pledges over (i) all the share capital of Cableuropa;
(ii) the credit rights arising under insurance policies owned by Cableuropa; (iii) the credit rights arising under the insurance
account, the asset transfer account and the mandatory prepayment account owned by Cableuropa; (iv) the credit rights arising
under the loans by virtue of which ONO Finance II plc has advanced to Cableuropa the proceeds of the Subordinated Notes
(or under loans by virtue of which any future issuer or borrower of subordinated debt advances the proceeds thereof to
Cableuropa or another obligor); and (v) the credit rights of GCO arising from certain intercompany loans granted to
Cableuropa (or those of any holding company of Cableuropa arising from other intercompany loans granted to Cableuropa or
its subsidiaries). The New Senior Facility will also be secured by a first-ranking pledge over the share capital of any
subsidiary that becomes a “Material Subsidiary” (as defined in the New Senior Facility) during the time that any amounts are
outstanding under the New Senior Facility. In addition, Cableuropa has also agreed to grant a first ranking chattel mortgage
over the telecommunications network owned by it, at the request of the senior lenders upon the occurrence of an event of
default under the terms of the New Senior Facility that is not remedied or otherwise waived by the senior lenders.
Release Event: Under the terms of the New Senior Facility, upon the occurrence of a “Release Event” (i) certain
positive and negative covenants will cease to apply (basically eliminating restrictions to prepay subordinated debt and to
upstream funds to shareholders); (ii) the mandatory prepayment obligations in connection with insurance proceeds and asset
sales will cease to apply; and (iii) all the security granted in connection with the New Senior Facility will be released except
for the pledge over all the share capital of Cableuropa and the pledges of credit rights arising under shareholder loans
(excluding those which proceeds have been obtained from subordinated debt).
For these purposes, “Release Event” means the occurrence of one of the following: (a) Cableuropa presents to the
facility agent of the senior lenders two consecutive certificates of compliance with financial covenants stating that the result of
the Total Debt to Consolidated LTM EBITDA covenant has been less than 3.0x and the auditors certify compliance with such
financial covenants for both consecutive quarters; or (b) Cableuropa, ONO Finance II or any issuer of future high yield notes
(and to the extent that issues are only guaranteed by the group or by a holding company, provided that in this case such
holding company is only guaranteed or counter-guaranteed by ONOMidco or the group) achieve a credit rating provided by
one of the following two agencies which is equal to or higher than: (i) BBB- from Standard & Poor’s Rating Group; or
(ii) Baa3 from Moody’s Investor Service Inc.
A Release Event shall have no effect as from the date on which the circumstance triggering its occurrence (i.e.,
either of the circumstances mentioned in (a) and (b) above) ceases to occur until the date on which any circumstance triggers
it again.
Majorities Regime: The terms and conditions of the New Senior Facility may be modified by means of an
agreement among the borrowers and a 66.66% majority of lenders (based on the principal amount of outstanding borrowings)
under the New Senior Facility, including the Issuer (as lender under the Notes Tranches). Notwithstanding the foregoing, the
prior consent of all the lenders shall be required for amendments to the New Senior Facility or for any waiver thereunder
which affects any of the issues listed below:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
amendments that amount to an advantage or disadvantage for one or more lenders with respect to one or
more of the other lenders in the same facility in respect of any payment obligations and means of
payment, unless the consent of the affected lender or lenders is obtained;
amendments that impose new or additional restrictions to the credit rights of any lender or to the means of
collection of such credit rights, unless the consent of the affected lender or lenders is obtained;
increases of the amount of each tranche (except in the case of the addition of new tranches or the
replacement of the Revolving Credit Facility in accordance with the terms of the New Senior Facility);
amendments to clauses of the New Senior Facility regarding “Increased Costs and Change in Legal
Circumstances”, “Indemnification” or “Changes to Lenders”;
changes in the definition of “majority of lenders” or “borrowers”;
amendments or waivers to permit any Material Subsidiary incorporated outside of Spain to become a
borrower under the New Senior Facility;
any change amounting to (i) an extension to the due date or a reduction in the amount of any payment of
principal, interest or other amounts under the security agreements, (ii) an amendment to the currency in
which any amount is payable under the security agreements or (ii) the total or partial release of any asset
which is subject to the security agreements (other than as permitted under the New Senior Facility); and
any amendment to the unanimity regime.
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Notwithstanding the foregoing, the following amendments and waivers to the New Senior Facility and the other
finance documents may be approved with the consent of each lender with a commitment and/or participation under the facility
affected by such amendment or waiver and a 66.66% majority of lenders:
(i)
(ii)
(iii)
(iv)
(v)
extensions to the repayment schedule for any facility (including changes in the repayment dates and
repayment percentages for Facility A), or to the termination date applicable to any facility or the final
maturity date of the New Senior Facility;
a reduction in the amount of any amount payable under a finance document;
extensions to the date or length of the availability period of any facility or to the dates set for the payment
of interest or fees under any finance document;
changes in the interest rate or the margin or in the method of calculation and/or payment thereof, or
changes in the amount of fees or in the method for the calculation and/or payment thereof; and
changes in the currency for payment of any amount under a finance document,
provided further that any amendment under (i) above which constitutes an extension to a repayment schedule for
any facility or to the termination date applicable to any facility, and any amendment under (iv) above which
constitutes a decrease in margin shall only require the consent of each lender with a commitment and/or
participation under the facility affected thereby (and no consent of a 66.66% majority of lenders shall be required).
Other: The New Senior Facility also contains other terms, including terms providing for: voluntary prepayment
(subject to payment of breakage costs if prepayment is not made at the end of an interest period); mandatory prepayment in
certain circumstances, including certain asset sales, an initial public offering and the generation of consolidated excess cash
flow; covenants to, among other things, limit the incurrence of additional indebtedness, asset sales, sale and leaseback
arrangements, acquisitions, the making of loans and guarantees, prepayment of other indebtedness, investments, dividends
and future capital expenditures; covenants to, among other things, require the obligors to maintain their existence, comply
with laws and regulations and maintain insurances; and events of default in certain circumstances, including a cross-default to
certain other debt of Cableuropa and its subsidiaries.
2010 Notes Tranche: Pursuant to the offering of the 2010 Notes, the Issuer loaned the gross proceeds from the
sale of the 2010 Notes to Cableuropa as a term loan pursuant to a specific tranche in the 2005 Senior Facility in an aggregate
principal amount equal to the aggregate principal amount of the 2010 Notes offered thereby. This tranche will be refinanced in
whole by the 2010 Notes Tranche under the New Senior Facility. See “—2010 Notes—2010 Notes Tranche”.
2011 Notes Tranche: Pursuant to the offering of the 2011 Notes, the Issuer loaned the gross proceeds from the
sale of the 2011 Notes to Cableuropa as a term loan pursuant to a specific tranche in the 2005 Senior Facility in an aggregate
principal amount equal to the aggregate principal amount of the 2011 Notes offered thereby. This tranche will be refinanced in
whole by the 2011 Notes Tranche under the New Senior Facility. See “—2011 Notes —2011 Notes Tranche”.
February 2012 Notes Tranche: Pursuant to the offering of the 2011 Notes, the Issuer loaned the gross proceeds
from the sale of the February 2012 Notes to Cableuropa as a term loan pursuant to a specific tranche in the 2005 Senior
Facility in an aggregate principal amount equal to the aggregate principal amount of the February 2012 Notes offered thereby.
This tranche will be refinanced in whole by the February 2012 Notes Tranche under the New Senior Facility. See
“—February 2012 Notes—February 2012 Notes Tranche”.
New Senior Facility—New Notes Tranche
As explained above, the lenders under the New Senior Facility agreed to allow the creation of new term loan
tranches under which the proceeds from debt capital market instruments raised by a special purpose vehicle can be on-lent to
Cableuropa.
Therefore, the gross proceeds obtained by the Issuer under the New Notes will be immediately on-lent by the Issuer
to Cableuropa through a New Notes Tranche to be named “SPV Tranche 4”, which will be incorporated into the New Senior
Facility.
Incorporation of the New Notes Tranche into the New Senior Facility
The incorporation of the New Notes Tranche into the New Senior Facility will be made through an amendment
agreement to the New Senior Facility (the “New Amendment Agreement”), which will have attached an amended and restated
facility to take account of the changes required to incorporate the New Notes Tranche (the “Amended and Restated New
Senior Facility”). As part of these changes, the interest cover covenant will be amended to reflect the interest rate on the New
Notes Tranche. A copy of the Amended and Restated New Senior Facility (excluding the schedules thereto and certain
information relating to the bridge facility) substantially in the form in which it will be executed on or about the Issue Date,
subject to completion, is attached to this offering memorandum as Annex A.
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Under the New Amendment Agreement (which will be executed on or about the Notes Issue Date by the Senior
Agent of the senior lenders, Cableuropa and the Issuer):
• the New Notes Tranche will become a new tranche under the New Senior Facility;
• the Issuer will, as a senior lender, accede to and become a “Senior Creditor” under the New Intercreditor
Agreement (as defined below); and
• the single advance of the New Notes Tranche will be effected and will be used to partially refinance existing
indebtedness under the 2005 Senior Facility as part of the May 2012 Refinancing.
Summary of the New Notes Tranche
The lender under the New Notes Tranche will be the Issuer.
The maturity of the New Notes Tranche will be December 1, 2018.
Interest will be fixed and will match the interest payable under the Notes (plus a small margin to account for any
required profit to be retained at the Issuer level for tax or legal reasons).
Interest periods will match those of the Notes.
There will be the same obligations requiring voluntary prepayment (including payment of the same applicable
premium) as those contained in the Indenture in respect of optional redemption of the Notes. For further details, see
“Description of the Notes—Optional Redemption”. Cableuropa will be entitled to make prepayments in case of a change of
control or asset sale (in each case, as defined in the New Senior Facility). However, because the definition of change of
control and asset sale in the New Senior Facility will not match the equivalent definitions in the Indenture for the Notes, there
is a risk that payments under the New Notes Tranche may not be made to the Issuer in circumstances where the Issuer has
payment obligations under the Indenture. See “Risk Factors—Risks Relating to the Notes—If we experience a change of
control, we may not have enough funds to meet our payment obligations under the Indenture”.
The Issuer, as lender under the New Notes Tranche, will waive its right to receive certain private non-public
information that the other lenders under the New Senior Facility will normally receive. The information to be received by the
Issuer will essentially be the information required to be provided under the Indenture.
Voting Rights of the Issuer under the New Senior Facility
• Voting on acceleration of the New Senior Facility: The Issuer will have full voting rights and will be entitled to
vote pro rata with the rest of the lenders under the New Senior Facility if acceleration is based on an event of
default which, other than through cross-acceleration, would also constitute a default under the Indenture. If
acceleration is based on any other event of default, the Issuer will effectively not have any voting rights, as it
will be deemed to vote alongside the vote cast by the lenders under the other tranches (other than the Existing
Notes Tranches, the New Notes Tranche or any Additional Notes Tranches (as defined below)) in a proportion
identical to such lenders’ split of votes.
Acceleration of the New Notes will result in the immediate acceleration of the New Senior Facility (i.e., there
will be no voting).
• Voting on enforcement of the security: Enforcement of security requires the vote of a 66.66% majority of
lenders under the New Senior Facility (based on the principal amount in euros of outstanding borrowings). The
vote of the Issuer (in its role as lender under the New Notes Tranche and the Existing Notes Tranches and
together with the lenders under any additional term loan tranche (“Additional Notes Tranche”) funded from the
proceeds from debt capital instruments raised by a special purpose vehicle) will be counted pro rata with the
other lenders.
• Voting on matters affecting the New Notes Tranche: In any matter affecting or varying the terms of the New
Notes Tranche, the Issuer will have full voting rights and will be entitled to vote pro rata with the rest of the
lenders under the New Senior Facility. Although the majority of matters require the consent of only a 66.66%
majority of lenders (based on the principal amount in euros of outstanding borrowings), certain matters require
unanimity (see “—New Senior Facility—Majorities Regime” above).
• Voting on matters not affecting the New Notes Tranche: In any matter not affecting the terms of the New Notes
Tranche, the Issuer will effectively not have any voting rights, as it will be deemed to vote alongside the vote
cast by the lenders under the other tranches (other than the Notes Tranches or Additional Notes Tranches) in a
proportion identical to such lenders’ split of votes.
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For the purposes of calculating the majority of lenders, whenever the vote of the New Notes Tranche is to be
counted pursuant to the New Senior Facility, the Agent shall use the average exchange rate corresponding to the foreign
exchange derivative transactions to be made on or about the Notes Issue Date.
For information regarding how votes of Noteholders will be allocated in any vote required under the New Senior
Facility, see “Description of the Notes— New Notes Tranche—Voting Rights and Enforcement Actions under the New Senior
Facility”.
New Senior Facility—Additional Notes Tranches and New Bank Tranches
Under the terms of the New Senior Facility, Cableuropa is entitled in the future to incorporate into the New Senior
Facility Additional Notes Tranches to be on-lent to Cableuropa for the purposes of prepaying existing Bank Tranches. The
issuers of the debt capital market instrument underlying such Additional Notes Tranches will become lenders under the New
Senior Facility with the same rights and restrictions described above for the New Notes Tranche.
Furthermore, Cableuropa is entitled to incorporate into the New Senior Facility new tranches consisting of term
loans made available to Cableuropa by any banks or institutions active in the bank and institutional loan markets (“New Bank
Tranches”) for the purposes of prepaying the existing Bank Tranches. These New Bank Tranches will not be subject to the
voting restrictions described above.
2010 Notes
On October 22, 2010, the Issuer completed the offering of €700 million aggregate principal amount of 8.875%
Senior Secured Notes due 2018 (the “2010 Notes”) under the Euro Notes Indenture. The 2010 Notes are not direct obligations
of Cableuropa; however, the 2010 Notes benefit indirectly from Cableuropa’s obligations under the Euro Notes Tranches of
the New Senior Facility which are held by Nara Cable Funding and which are pledged for the benefit of holders of the Euro
Notes.
Euro Notes Covenant Agreement: Contemporaneously with the signing of the Indenture, Cableuropa entered into
the Euro Notes Covenant Agreement whereby it agreed to comply with certain covenants in the Indenture.
2010 Notes Tranche: Pursuant to the offering of the 2010 Notes, Nara Cable Funding loaned the gross proceeds
from the sale of the 2010 Notes to Cableuropa as a term loan under a specific tranche in the 2005 Senior Facility in an
aggregate principal amount equal to the aggregate principal amount of the 2010 Notes offered thereby. This tranche is being
refinanced in whole by the 2010 Notes Tranche under the New Senior Facility as part of the May 2012 Refinancing.
Terms of the 2010 Notes: Nara Cable Funding will pay interest on the 2010 Notes on June 1 and December 1 of
each year, beginning on June 1, 2011 payable in arrears. The 2010 Notes will mature on December 1, 2018. Prior to
December 1, 2013, Nara Cable Funding may redeem all or part of the 2010 Notes at a redemption price of 100% of the
principal amount of such 2010 Notes plus accrued and unpaid interest and a “make whole” premium. Nara Cable Funding
may redeem some or all of the 2010 Notes at any time on or after December 1, 2013 at a set redemption price which decreases
with the passage of time until the redemption price is 100% of the principal amount of the 2010 Notes on December 1, 2016,
plus accrued and unpaid interest. Prior to December 1, 2013 Nara Cable Funding may redeem up to 35% of the 2010 Notes
with the net proceeds of certain public equity offerings by us. Holders of the 2010 Notes may require Nara Cable Funding to
repurchase their 2010 Notes upon a change of control, if we sell certain of our assets or under certain other circumstances.
The 2010 Notes are subject to certain customary high-yield covenants contained in the Euro Notes Indenture which
apply indirectly to Cableuropa through the terms of the Euro Notes Covenant Agreement.
The 2010 Notes are senior obligations of Nara Cable Funding and rank pari passu in right of payment with all its
existing and future senior indebtedness that is not subordinated to the 2010 Notes, and are secured by a pledge of Nara Cable
Funding’s credit rights in the Euro Notes Tranches and certain other agreements, as well as a pledge over the share capital of
the Nara Cable Funding and charges over certain of its bank accounts. The 2010 Notes are admitted for trading on the Euro
MTF market and listed on the Official List of the Luxembourg Stock Exchange.
2011 Notes
On July 14, 2011, the Issuer completed the offering of €300 million aggregate principal amount of 8.875% Senior
Secured Notes due 2018 (the “2011 Notes”) under the Euro Notes Indenture. The 2011 Notes are not direct obligations of
Cableuropa; however, the 2011 Notes benefit indirectly from Cableuropa’s obligations under the Euro Notes Tranches of the
New Senior Facility which are held by Nara Cable Funding and which are pledged for the benefit of holders of the Euro
Notes.
Covenant Agreement: The 2011 Notes have the benefit of the Existing Notes Covenant Agreement.
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2011 Notes Tranche: Pursuant to the offering of the 2011 Notes, Nara Cable Funding loaned the gross proceeds
from the sale of the 2011 Notes to Cableuropa as a term loan under a specific tranche in the 2005 Senior Facility in an
aggregate principal amount equal to the aggregate principal amount of the 2011 Notes offered thereby. This tranche is being
refinanced in whole by the 2011 Notes Tranche under the New Senior Facility as part of the May 2012 Refinancing.
Terms of the 2011 Notes:
the 2010 Notes.
The 2011 Notes are fully fungible with, have the same terms as, and share security with,
February 2012 Notes
On February 2, 2011, the Issuer completed the offering of $1,000 million aggregate principal amount of 8.875%
Senior Secured Notes due 2018 (the “February 2012 Notes”) under the Indenture. The February 2012 Notes are not direct
obligations of Cableuropa; however, the February 2012 Notes benefit indirectly from Cableuropa’s obligations under the
Dollar Notes Tranches of the New Senior Facility which are held by Nara Cable Funding and which are pledged for the
benefit of holders of the Notes.
Covenant Agreement:
The February 2012 Notes have the benefit of the Covenant Agreement.
February 2012 Notes Tranche: Pursuant to the offering of the February 2012 Notes, Nara Cable Funding loaned
the gross proceeds from the sale of the February 2012 Notes to Cableuropa as a term loan under a specific tranche in the 2005
Senior Facility in an aggregate principal amount equal to the aggregate principal amount of the February 2012 Notes offered
thereby. This tranche is being refinanced in whole by the February 2012 Notes Tranche under the New Senior Facility as part
of the May 2012 Refinancing.
Terms of the February 2012 Notes: Nara Cable Funding will pay interest on the February 2012 Notes on June 1
and December 1 of each year, beginning on June 1, 2012 payable in arrears. The February 2012 Notes will mature on
December 1, 2018. Prior to December 1, 2013, Nara Cable Funding may redeem all or part of the 2010 Notes at a redemption
price of 100% of the principal amount of such February 2012 Notes plus accrued and unpaid interest and a “make whole”
premium. Nara Cable Funding may redeem some or all of the February 2012 Notes at any time on or after December 1, 2013
at a set redemption price which decreases with the passage of time until the redemption price is 100% of the principal amount
of the February 2012 Notes on December 1, 2016, plus accrued and unpaid interest. Prior to December 1, 2013 Nara Cable
Funding may redeem up to 35% of the February 2012 Notes with the net proceeds of certain public equity offerings by us.
Holders of the February 2012 Notes may require Nara Cable Funding to repurchase their February 2012 Notes upon a change
of control, if we sell certain of our assets or under certain other circumstances.
The February 2012 Notes are subject to certain customary high-yield covenants contained in the Indenture which
apply indirectly to Cableuropa through the terms of the Covenant Agreement.
The February 2012 Notes are senior obligations of Nara Cable Funding and rank pari passu in right of payment with
all its existing and future senior indebtedness that is not subordinated to the February 2012 Notes, and are secured by a pledge
of Nara Cable Funding’s credit rights in the Dollar Notes Tranches and certain other agreements, as well as a pledge over the
share capital of the Nara Cable Funding and charges over certain of its bank accounts. The February 2012 Notes are admitted
for trading on the Euro MTF market and listed on the Official List of the Luxembourg Stock Exchange.
Subordinated Notes
In January 2011, ONO Finance II plc issued €461 million (equivalent) aggregate principal amount of Senior Notes
due 2019 (comprising €295 million aggregate principal amount of 11.125% Senior Notes and $225 million aggregate
principal amount of 10.875% Senior Notes) (the “Subordinated Notes”) as part of the January 2011 Refinancing. The
Subordinated Notes are guaranteed on a senior basis by ONOMidco and on a senior subordinated basis by Cableuropa.
The Subordinated Notes mature on July 15, 2019 at their principal amount plus accrued and unpaid interest to the
maturity date unless redeemed prior thereto. Interest on the Subordinated Notes is paid semi-annually on January 15 and
July 15 of each year. The Subordinated Notes are redeemable, at ONO Finance II’s option, in whole or in part, at any time on
or after January 15, 2014, the euro-denominated Notes at 111.125% of their principal amount, plus accrued interest and the
dollar-denominated notes at 110.875% of their principal amount, plus accrued interest, declining to 100% of their principal
amount, plus accrued interest, on or after January 15, 2017.
The Subordinated Notes are senior unsecured obligations of ONO Finance II and rank junior to all of its future
secured indebtedness and equally with all of its future senior unsecured indebtedness and senior to any of its future
subordinated indebtedness. The guarantees of the Subordinated Notes given by ONOMidco, according to the subordination
structure, are senior subordinated obligations and rank junior to all of our existing and future senior indebtedness and equally
with all of our existing and future senior subordinated indebtedness.
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New Intercreditor Agreement
Cableuropa entered into a new intercreditor agreement on May 24, 2012 (the “New Intercreditor Agreement”),
between, among others, the lenders under the New Senior Facility, Société Générale, S.A., London Branch, as agent for the
lenders under the New Senior Facility, as security agent and as intercreditor agent (the “Intercreditor Agent”), certain hedge
entities, ONO Finance II as issuer of the Subordinated Notes and the trustee of the Subordinated Notes. The New Intercreditor
Agreement establishes the relative rights of, among others, the holders of the Subordinated Notes and the creditors under the
New Senior Facility.
The terms of the New Intercreditor Agreement are substantially similar to the terms of the intercreditor agreement
previously in effect. A copy of the New Intercreditor Agreement is attached to this offering memorandum as Annex B.
Order of Priority and Application of Proceeds
The New Intercreditor Agreement provides for the following order of priority to apply to the satisfaction of the
obligations of Cableuropa, ONO Finance II, and any future obligors under indebtedness that is subject to terms of the New
Intercreditor Agreement (each a “Debtor”):
• First, in payment of all amounts payable to the security agent, the agent of the senior lenders and the
Intercreditor Agent (for its own account and in such capacity) pursuant to the New Senior Facility and the New
Intercreditor Agreement, including certain agent/trustee administration and costs payments;
• Second, in payment of the following, on a pari passu basis: (a) debt owed to the lenders under the New Senior
Facility and (up to an aggregate amount of €200 million) to certain hedge entities in respect of certain hedging
debt (together, the “Senior Debt”), (b) any amounts owed to the trustee of any existing subordinated notes
(including the Subordinated Notes), (c) any amounts owed to the agent of any existing subordinated facilities
and (d) certain other administrative expenses relating to debt which is subordinated to Senior Debt;
• Third, in payment of certain hedging amounts (in excess of the amount referred to in (a) of the paragraph
above) to certain hedge entities;
• Fourth, on a pro rata basis, in payment of debt owed to the lenders under the Subordinated Notes and creditors
under other subordinated indebtedness (together, the “Subordinated Debt”); and
• Fifth, in payment of the surplus to the Debtors.
In the event of the bankruptcy of any Debtor, each creditor will be required to pay any sum received or recovered by
it from any of the Debtors or any third party on account of any Senior Debt or Subordinated Debt to a bank account specified
by the Intercreditor Agent, and such sums will be applied in accordance with the order of priority described above.
In the event of the bankruptcy of any Obligor, the order of priority described above will apply among the creditors,
regardless of the payment distribution provided by trustees in bankruptcy, the creditors, the general meeting or any
composition agreement. In the event that any creditor’s rights are declared subordinated for purposes of insolvency
proceedings, however, the creditors that are parties to the New Intercreditor Agreement agree that, in respect of their internal
relations, such creditor so subordinated shall not receive amounts that would otherwise be required to re-establish its relative
position under the New Intercreditor Agreement.
Payment Blockage
Certain payment blockage provisions apply, including (and subject to certain limitations):
• Prohibitions on payment in respect of any Subordinated Debt if a payment default under the Senior Debt has
occurred and is continuing beyond any applicable grace periods; and
• Prohibitions on payments in respect of any Subordinated Debt if any other default occurs and is continuing
under the Senior Debt that permits the creditors thereunder (the “Senior Creditors”) to accelerate its maturity
and such Senior Creditors provide the creditors of the Subordinated Debt (the “Subordinated Creditors”) with a
payment blockage notice.
Such prohibitions on payment will terminate at such time as (x) in the case of a payment default, when such default
is cured or waived, or (y) in the case of a non-payment default, the earlier of (i) the date on which such non-payment default is
cured or waived, (ii) the date of discharge of the Senior Debt, (iii) the date when the Subordinated Creditors receive notice
that the payment blockage notice has been revoked, and (iv) 179 days after the date the payment blockage notice is received,
unless the maturity of any Senior Debt has been accelerated.
99

At the end of the payment blockage period, the Obligors may resume paying the Subordinated Debt. Not more than
one payment blockage notice with respect to the same default, or any other events of default existing and known to the person
giving the payment blockage notice at the time of such notice, or any other events of default resulting from the occurrence
which gave rise to the first event of default, may be given during any consecutive 360-day period unless such event of default
or other events of default have been cured or waived for a period of at least 90 consecutive days.
Turnover of Senior Debt and Subordinated Debt
If (i) any Senior Creditor or Subordinated Creditor (each a “Creditor”) receives or recovers a payment or
distribution of any kind in respect or on account of any Senior Debt or, as the case may be, Subordinated Debt which is
prohibited pursuant to the New Intercreditor Agreement, or which exceeds the amount such Creditor is properly entitled to,
pursuant to the application of proceeds provisions of the New Intercreditor Agreement, (ii) any Creditor receives or recovers
proceeds pursuant to any enforcement action which is not permitted under the New Intercreditor Agreement, (iii) any
company of the ONO Group makes any payment or distribution of any kind whatsoever in relation to the purchase or other
acquisition of any Senior Debt or Subordinated Debt that is not permitted by the New Intercreditor Agreement, or (iv) any
Senior Debt or Subordinated Debt is discharged by set-off, combination of accounts or otherwise which is not permitted by
the New Intercreditor Agreement, and such Creditors have actual knowledge that such payment is prohibited by the New
Intercreditor Agreement, then the recipient or beneficiary of such payment will hold the payment on account and for the
benefit of the New Intercreditor Agent on behalf of all of the Creditors thereunder, and upon written request, will deliver the
amounts so held to the New Intercreditor Agent for application of such proceeds in accordance with the order of priority
provisions of the New Intercreditor Agreement. If no sums are due for payment in respect of the Senior Debt at such time, but
such amounts may fall due in the future, the funds will be placed in a blocked account for future application towards the
repayment of Senior Debt.
Release of Subordinated Guarantees and Accession of ONOMidco as Borrower
Each Obligor (other than ONOMidco) which is a guarantor under any Subordinated Debt (a “Subordinated
Guarantor”) will be automatically and unconditionally released from all obligations under its guarantee thereunder (a
“Subordinated Guarantee”), and such Subordinated Guarantee will be terminated and discharged and of no further force and
effect, concurrently with any sale by way of enforcement by the Senior Creditors of a security interest (an “Enforcement
Sale”) of (i) all the capital stock of such Subordinated Guarantor or any parent company of such Subordinated Guarantor, or
(ii) all or substantially all of the assets of such Subordinated Guarantor, in each case so long as:
• The proceeds of such Enforcement Sale are in cash (or substantially all in cash) and are applied in accordance
with the New Intercreditor Agreement;
• Such Subordinated Guarantor is released from its obligations in respect of all other debt that is subordinated or
junior in right of payment to the Subordinated Debt (subject to certain exceptions); and
• Such Enforcement Sale is made pursuant to either a public auction or a competitive bid process to obtain the
best price reasonably available, given the then-current condition, earnings, business, assets and prospect of
such Subordinated Guarantor and its subsidiaries.
After the release of its Subordinated Guarantees and concurrently with an Enforcement Sale of the capital stock of
Cableuropa or all (or substantially all) of the assets of Cableuropa, Cableuropa’s obligations under certain Subordinated Debt
(including the Subordinated Notes issued in January 2011, the guarantees thereunder and the proceeds loans in respect
thereof) will be automatically and unconditionally assumed by ONOMidco and Cableuropa will cease to be the borrower
thereunder (subject to certain requirements).
Petition for Bankruptcy of the Obligors
Prior to the filing of a petition for bankruptcy of any of the Obligors by any Creditor (a “filing creditor”) that is a
party to the New Intercreditor Agreement:
• Such creditor shall communicate its intention to the Intercreditor Agent five business days prior to the filing of
such petition;
• The Intercreditor Agent shall promptly notify the other Creditors party to the Intercreditor Agreement; and
• If other Creditors receiving notice of the proposed petition notify the filing Creditor, such filing creditor shall
make its filing together with any other creditors that want to join such filing.
100

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTH PERIOD
ENDED 31 MARCH 2012 AND 2011
(Thousands of Euros)
Three month period
ended 31 March
Note 2012 ( * ) 2011 ( * )
Net revenue ................................................................... 8 382,765 364,433
Work carried out by the Company for its assets ....................................... 14,949 16,418
Other revenue .................................................................. 85 111
Cost of sales ................................................................... (89,623) (76,700)
Staff costs ..................................................................... (39,148) (39,552)
Other operating expenses ......................................................... (82,810) (86,028)
Depreciation and amortization ..................................................... 9 (94,235) (95,114)
Impairment and gains or losses on disposal of fixed assets ............................... (1,508) 488
OPERATING RESULT ......................................................... 90,475 84,056
Finance income ................................................................ 714 223
Finance expenses ............................................................... (68,237) (68,180)
Fair value losses on financial instruments ............................................ (3,934) —
Impairment and results from financial instruments disposals ............................. — (3,842)
Exchange differences ............................................................ 12,552 7,175
NET FINANCIAL RESULT ..................................................... (58,905) (64,624)
CONSOLIDATED RESULT FOR THE PERIOD BEFORE INCOME TAX ............ 31,570 19,432
Income tax .................................................................... (9,535) (6,489)
RESULT FOR THE PERIOD ................................................... 22,035 12,943
Attributable to:
Owners of the parent ............................................................ 21,895 12,792
Non-controlling interest .......................................................... 140 151
(*) Unaudited
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
F-1

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE
MONTH PERIOD ENDED 31 MARCH 2012 AND 2011
(Thousands of Euros)
A) INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE
THREE MONTH PERIOD ENDED 31 MARCH 2012 AND 2011
(Thousands of Euros)
Three month period
ended 31 March
2012 ( * ) 2011 ( * )
Result for the period ................................................................ 22,035 12,943
Other comprehensive income
Cash flow hedges ................................................................ (1,375) (361)
Other comprehensive income for the period, net of tax .................................... (1,375) (361)
Total comprehensive income for the period ............................................. 20,660 12,582
Attributable to:
Owners of the parent ................................................................. 20,520 12,431
Non-controlling interest ............................................................... 140 151
(*) Unaudited
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
F-2

T SKYLAB
MENTARY DISCLO
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360644 FIN 3
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2*
1C
ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2012 AND 2011
(Thousands of Euros)
B) INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2012 AND 2011
(Thousands of Euros)
Attributable to owners of the parent
Other shareholders
contributions Other Reserves Retained earnings Total
Non-controlling
interest Total Equity
Capital Share Premium
Balance at 31 December 2010 ............................ 131,464 — 1,087,718 (1,051) 135,733 1,353,864 3,959 1,357,823
Comprehensive income
Profit or (loss) .......................................... — — — — 12,792 12,792 151 12.943
Other comprehensive income
Cash flow hedges ....................................... — — — (361) — (361) — (361)
Total other comprehensive income ........................ — — — (361) — (361) — (361)
Total comprehensive income ............................. — — — (1,412) 12,792 12,431 151 12,582
Transactions with shareholders
Capital increases / (decreases) ............................. — 1,087,769 (1,087,718) — — 51 — 51
Others ................................................ — — 18,449 — — 18,449 — 18,449
Transactions with shareholders .......................... — 1,087,769 (1,069,269) — — 18,500 — 18,500
Balance at 31 March 2011 ( * ) ............................. 131,464 1,087,769 18,449 (1,412) 148,525 1,384,795 4,110 1,388,905
Balance at 31 December 2011 ............................ 131,464 1,087,769 18,449 (775) 210,515 1,447,422 4,573 1,451,995
Comprehensive income
Profit or (loss) .................................... — — — — 21,895 21,895 140 22,035
Other comprehensive income
Cash flow hedges .................................. — — — (1,375) — (1,375) — (1,375)
Total other comprehensive income ........................ — — — (1,375) — (1,375) — (1,375)
Total comprehensive income ............................. — — — (1,375) 21,895 20,520 140 20,660
Balance at 31 March 2012 ( * ) ............................. 131,464 1,087,769 18,449 (2,150) 232,410 1,467,942 4,713 1,472,655
(*) Unaudited
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
F-3

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH-FLOWS FOR THE THREE MONTH
PERIOD ENDED 31 MARCH 2012 AND 2011
(Thousands of Euros)
Three month period
ended 31 March
2012 ( * ) 2011 ( * )
CASH FLOWS FROM OPERATING ACTIVITIES:
Result for the three month period before tax ............................................ 31,570 19,432
Adjustments for
Depreciation and amortization ...................................................... 94,235 95,114
Fixed Assets Disposals ............................................................ 1,508 (488)
Finance Income ................................................................. (714) (223)
Finance Expense ................................................................ 72,171 68,180
Exchange differences ............................................................. (12,552) (7,175)
Impairment and results from financial instruments disposals .............................. — 3,842
Other income and expenses ........................................................ (85) (111)
Changes in working capital
Inventories ..................................................................... 178 471
Trade and other receivables ........................................................ 16,283 14,394
Trade and other payables .......................................................... (20,368) (21)
Other current liabilities ........................................................... (6,952) (8,313)
Cash flows from operating activities ................................................... 175,274 185,102
Interest paid ........................................................................ (44,488) (69,311)
Interest received ..................................................................... 708 179
Net cash generated from operating activities ............................................ 131,494 115,970
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment .............................................. (51,434) (61,782)
Acquisition of intangible assets ......................................................... (9,896) (10,373)
Proceed from sale of property, plant and equipment ......................................... 157 —
Proceeds from assets classified as held for sale ............................................. — 15,654
Payments for other financial assets ...................................................... (6,677) (5,267)
Proceeds from other financial assets ..................................................... 73 —
Net cash used in investing activities .................................................... (67,777) (61,768)
CASH FLOWS FROM FINANCING ACTIVITIES:
Reimbursement from Senior Bank Facility ................................................ (737,926) (330,000)
Proceeds from Senior Secured Notes ..................................................... 738,274 300,000
Proceeds from Senior Subordinated Notes ................................................ — 460,575
Reimbursement from Senior Subordinated Notes ........................................... — (450,000)
Reimbursement from ICO participative loan ............................................... — (10,000)
Reimbursement from other credit lines ................................................... (512) (569)
Reimbursement from other debts ........................................................ (274) (2,499)
Net cash used in financing activities .................................................... (438) (32,493)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS .................... 63,279 21,709
Cash and cash equivalents at beginning of period ........................................... 184,883 59,329
Cash and cash equivalents at end of period ................................................ 248,162 81,038
(*) Unaudited
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
F-4

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012
(Thousands of Euros)
1. General information
The main activity of ONO Midco, S.A.U. and its subsidiaries (hereinafter, “the Group” or “ONO Midco Group”) is
constructing and operating fibre networks in order to provide integrated television and telecommunications services in Spain
by means of the transmission of images, voice and data.
ONO Midco, S.A.U. is the sole shareholder of Cableuropa, S.A.U. and does not engage any other activity than
holding Cableuropa, S.A.U. shares.
The Group, which operates in the market under the trade mark ONO, mainly comprises operating companies that
are legally authorised to provide telecommunications and audiovisual services.
ONO MIDCO, S.A.U. (hereinafter, “the Parent Company”) was incorporated on 3 May 2006 in Madrid for an
indefinite term. The Company has its registered offices and tax address at Edificio Belagua, calle Basauri, 7-9, Urbanización
La Florida, Aravaca, Madrid.
The consolidated financial statements for the year ended 31 December 2011 were duly drawn up by the Board of
Directors on 8 March 2012.
2. Basis of presentation
These interim condensed consolidated financial statements for the three months ended 31 March 2012 have been
prepared in accordance with IAS 34, “Interim financial reporting”. The interim condensed consolidated financial statements
should be read in conjunction with the annual accounts for the year ended 31 December 2011, which have been prepared in
accordance with IFRS as adopted by the European Union.
The Group presented negative working capital as of 31 March 2012 as well as of 31 December 2011, which is a
regular circumstance of the Group’s business and financial structure, and does not offer any impediment for the business from
being carried out normally.
At 31 March 2012 and 31 December 2011 all short term commitments had been settled within their periods, and it is
expected that all debt maturities within the next twelve months will be settled in the required periods.
The Directors consider that the following factors reasonably mitigate any uncertainty on the capacity of the Group
to generate enough resources in order to operate under a going concern basis:
• The telecommunications sector has a short average collection period (approximately 30 days) when average
payment period is longer, which enables to generate operating cash to settle payments to suppliers.
• The Group is generating positive operating cash flow.
• During 2009, 2010, 2011 and 2012 the Group has carried out a refinancing process.
• The Group has the shareholders financial support. During 2010, the Group received a participative loan of
€125 million from the shareholders. Additionally, at 31 December 2011, there was a deposit of €25 million,
subject to the fulfillment of certain liquidity conditions. This deposit has been released to the shareholders in
January 2012.
• The Group has cash and financing facilities available to cover any payments arising in the normal course of its
business.
Accordingly, the Directors have prepared these interim condensed consolidated financial statements based on the
principle of going concern.
The figures shown in the documents that comprise this interim condensed consolidated financial information are in
thousands of Euros, unless otherwise stated.
F-5

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
3. Accounting policies
The accounting policies adopted in the preparation of these interim condensed consolidated financial statements for
the three month period ended 31 March 2012 are consistent with those of the consolidated annual accounts for the year ended
31 December 2011 (note 2) and have been uniformly applied by all the companies in ONO Midco Group.
There is no accounting principle that may have a significant effect on the interim condensed consolidated financial
statements has not been applied on its preparation.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total
annual profit or loss.
Amendments and interpretations under IFRS-EU that are mandatory applicable in both the interim condensed
consolidated financial statements and in our next consolidated annual accounts on 31 December 2012 are:
Effective for annual
periods beginning on
or after
Amendments Description
IAS 12 ( * ) Income taxes on deferred tax 1 January 2012
(*) Not yet adopted by the European Union.
The adoption of the standards listed above has not resulted on a significant impact in the interim condensed
consolidated financial statements.
New and revised standards, amendments and interpretations that have been issued but are not yet effective and
applicable in the interim condensed consolidated financial statements, although ONO Midco Group is currently assessing the
impact:
Effective for annual
periods beginning on
or after
Amendments
IAS 1 ( * )
Presentation of financial statements—presentation of items of other
comprehensive income 1 July 2012
IFRS 7 ( * ) Financial instruments: Disclosures 1 January 2013
New standards
IAS 19 (revised) ( * ) Employee benefits 1 January 2013
IAS 27 (revised) ( * ) Separate financial statements 1 January 2013
IAS 28 (revised) ( * ) Associates and joint ventures 1 January 2013
IFRS 10 ( * ) Consolidated financial statements 1 January 2013
IFRS 11 ( * ) Joint arrangements 1 January 2013
IFRS 12 ( * ) Disclosures of interests in other entities 1 January 2013
IFRS 13 ( * ) Fair value measurement 1 January 2013
IAS 32 ( * ) Financial instruments: presentation 1 January 2014
IFRS 9 ( * ) Financial instruments—classification of financial assets and financial liabilities 1 January 2015
(*) Not yet adopted by the European Union.
The Group is analysing the possible impact that application of the new IFRS will have on the entity’s interim
condensed consolidated financial statements in the period of initial application and is not likely to be significant.
4. Estimates
The preparation of interim condensed consolidated financial statements requires management to make judgments,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities,
income and expense. Actual results may differ from these estimates.
In preparing these interim condensed consolidated financial statements, the significant judgements made by
management in applying the Group’s accounting policies and the key sources of estimation of uncertainty were the same as
those that applied to the consolidated annual accounts for the year ended 31 December 2011, with the exception of changes in
estimates that are required in determining the provision for income taxes.
F-6

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
5. Financial risk management
5.1. Financial risk factors
The Group’s activities are exposed it to a variety of financial risks: market risk (including foreign exchange risk,
cash flow and fair value interest rate risk), credit risk and liquidity risk.
The interim condensed consolidated financial statements do not include all financial risk management information
and disclosures required in the annual accounts, and should be read in conjunction with the ONO Midco Group’s annual
accounts as at 31 December 2011.
There have been no changes in the risk management function since year end or in any risk management policies,
except for the foreign exchange risk.
Foreign Exchange risk arises from the monetary nature of financial assets or liabilities which are designated against
their functional currency.
On 26 January 2012, the Group completed the issuance of $1,000 million Senior Secured Notes due 2018. To
reduce the exposure to the risk of currency fluctuation, the Group has entered into currency hedge agreements with respect to
all the coupon payment until 1 December 2013 and a collar option with respect to the 50% of the principal amount of $1,000
million due 2018 until 31 December 2013.
At 31 March 2012, the sensitivity in equity and profit and loss of a variation in the foreign exchange rates with
respect to all the coupon payment does not represent a significant effect due to the effectiveness of hedge agreement. The
collar option with respect to the 50% of the principal amount has been classified as held for trading as does not meet the
criteria to be accounted for as an effective hedging instrument.
The sensitivity in the result, of exchange rate fluctuations on the debt related to the issuance of $1,000 million
Senior Secured Notes, is as follows:
Impact on result before income tax
Gain/(Loss)
Exchange rates
increase 10%
Exchange rates
decrease -10%
Thousands of Euros
Currency
EUR/USD ................................................................ 68,066 (83,192)
5.2. Liquidity risks
It is the Group policy to match the schedule for its debt maturity payments to its capacity to generate cash flows to
meet these maturities. In particular, the Group’s Management attempts to ensure that the operations over the next 12 months
are always fully financed without the need to substantially modify the conditions and structure of the Group’s debt.
The following table contains a breakdown of the Group’s financial liabilities (including interest) that will be settled
in the net amount, grouped together by maturity date based on the period from the balance sheet date to the maturity date
stipulated in each contract. The amounts shown in the table relate to undiscounted cash flows.
Maturities
Until March
From April to
December
Subsequent
2012 2013 2013 2014 2015 2016 years
Thousands of Euros
At 31 March 2012 ( * )
Borrowings ..................... 63,990 177 1,392,168 167 20 — —
Debt related to the issuance of
Notes ........................ 171,034 25,527 182,448 206,330 206,343 206,343 2,669,398
Subsidised loans ................. 7,569 — 1,424 397 357 268 1,515
Trade and other payables .......... 291,411 — — — — — 953
534,004 25,704 1,576,040 206,894 206,720 206,611 2,671,866
(*) Unaudited
F-7

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
Maturities
2012 2013 2014 2015 2016
Subsequent
years
Thousands of Euros
At 31 December 2011
Borrowings ................................... 235,418 2,012,448 167 20 — —
Debt related to the issuance of Notes ............... 139,697 139,827 140,174 140,482 140,482 1,789,539
Subsidised loans ............................... 7,569 1,424 397 357 268 1,515
Trade and other payables ......................... 305,817 — — — — 953
688,501 2,153,699 140,738 140,859 140,750 1,792,007
5.3. Fair value estimation
The different levels for estimating fair value have been defined as follows:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly or indirectly (level 2).
• Inputs for the asset or liability that are not based on observable market data (level 3).
The following table presents the Group’s assets and liabilities that are measured at fair value:
Level 1 Level 2 Level 3 Total
Thousands of Euros
At 31 March 2012
Assets
—Derivatives used for hedging ............................................. — 6,338 — 6,338
—Trading derivatives .................................................... — 1,066 — 1,066
— 7,404 — 7,404
Liabilities
—Derivatives used for hedging ............................................. — 3,039 — 3,039
— 3,039 — 3,039
At 31 December 2011
Assets
—Derivatives used for hedging ............................................. — 11,321 — 11,321
— 11,321 — 11,321
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market
data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value
an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
6. Transition to International Financial Reporting Standards—IFRS
The consolidated annual accounts at 31 December 2011 were the Group’s first consolidated annual accounts
prepared in accordance with IFRS. Those consolidated annual accounts were prepared based on the consolidated financial
statements for the year ended 31 December 2010, performed on a voluntary basis under IFRS and approved by the Board of
Directors on 8 March 2012.
Such consolidated financial statements at 31 December 2010 were the Group’s first consolidated financial
statements prepared in accordance with IFRS, establishing 1 January 2009 as the transition date. IFRS 1 was applied in
F-8

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
preparing the consolidated financial statements for the year ended 31 December 2010, the comparative information presented
in the financial statements for the year ended 31 December 2009 and in the preparation of an opening balance sheet at
1 January 2009 (the Group’s date of transition), applying all the exemptions and exceptions in the conversion. For further
details, refer to the consolidated annual accounts for the year ended 31 December 2011 (note 5).
Accordingly, the comparative information in these interim condensed consolidated financial statements for the
period ended 31 March 2011, is presented applying all the exemptions and exceptions in the conversion.
7. Seasonality of operations
The historical consolidated results do not indicate that ONO Midco Group’s transactions, taken as a whole, are
subject to significant variations between the different periods of the year.
8. Operating segment information
Management has defined the operative segments based on reports previously reviewed by the Board of Directors
and they are used for taking strategic decisions, monitoring of changes in results and resources assignment. The Board of
Directors monitors the business in an operating income basis by client typology. Given the nature of the services rendered by
the Group, consisting of rendering telecommunication services through own and other’s network, it is not possible neither
separate assets and liabilities by client nor allocate operating or financial results and taxes, following this criteria.
The Group only provides services to the Spanish market, and therefore there is only one geographical segment.
The information provided by the Group is as follows:
Three month period ended
31 March
2012 ( * ) 2011 ( * )
Thousands of Euros
Net Revenue
Services to the residential market ................................................. 292,409 288,793
—Residencial fibre .............................................................. 281,191 277,900
—Residencial ADSL ............................................................ 10,642 10,223
—Indirect access ............................................................... 476 670
—Other ....................................................................... 100 —
Business and operators .......................................................... 89,413 74,527
—SME’s ...................................................................... 21,196 18,697
—Businesses ................................................................... 31,217 32,622
—Operators ................................................................... 37,000 23,208
Other ........................................................................ 943 1,113
Net Revenue .................................................................. 382,765 364,433
(*) Unaudited
There are no differences from the last annual accounts in the basis of segmentation.
F-9

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
9. Property, plant and equipment and intangible assets
Movement in “Property, plant and equipment” for the three month period ended 31 March 2012 and 2011 is as follows:
Property, plant and equipment
31 March 31 March
2012 ( * ) 2011 ( * )
Thousands of Euros
Cost
Balance at 1 January ........................................................ 7,492,680 7,276,012
Additions .................................................................. 51,434 61,782
Disposals .................................................................. (2,114) (1,418)
Balance at 31 March ........................................................ 7,542,000 7,336,376
Accumulated depreciation
Balance at 1 January ........................................................ (3,319,027) (2,973,248)
Depreciation charge .......................................................... (88,029) (87,897)
Depreciation disposals ........................................................ 448 1,156
Balance at 31 March ........................................................ (3,406,608) (3,059,989)
Impairment losses
Balance at 1 January ........................................................ (60,363) (60,160)
Impairment gains (losses) ...................................................... — —
Balance at 31 March ........................................................ (60,363) (60,160)
Balance at 1 January ........................................................ 4,113,290 4,242,604
Balance at 31 March ........................................................ 4,075,029 4,216,227
(*) Unaudited
Additions under “Property, plant and equipment” for the three month ended 31 March 2012 and 2011 mainly
correspond to customer installations.
Movement in “Intangible assets” for the three month period ended 31 March 2012 and 2011 is as follows:
Intangible assets
31 March 31 March
2012 ( * ) 2011 ( * )
Thousands of Euros
Cost
Balance at 1 January ................................................................ 279,887 223,977
Additions .......................................................................... 9,896 10,373
Balance at 31 March ................................................................ 289,783 234,350
Accumulated amortization
Balance at 1 January ................................................................ (184,124) (159,421)
Depreciation charge .................................................................. (6,206) (7,217)
Balance at 31 March ................................................................ (190,330) (166,638)
Balance at 1 January ................................................................ 95,763 64,556
Balance at 31 March ................................................................ 99,453 67,712
(*) Unaudited
During the three month period ended 31 March 2012 and 2011 no impairment adjustments were recognised for
property, plant and equipment or intangible assets.
As at 31 March 2012 and 2011 there is no significant property, plant and equipment or intangible assets subject to
ownership restrictions or pledged to secure liabilities.
ONO Midco Group has several insurance policies to cover the risks that the property, plant and equipment is
exposed to. The insurance coverage is considered sufficient.
F-10

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
10. Financial instruments
a) Financial assets
The carrying amounts of each one of the financial assets categories established in the “Financial instruments”
accounting policy, except “Investments in the equity of associated companies”, as at 31 March 2012 and 31 December 2011
are as follows:
Assets at
fair value
through
the profit
and loss
Derivatives
used for
hedging
Loans and
receivables
Available-forsale
Total
Thousands of Euros
31 March 2012 ( * )
Assets as per balance sheet
Available-for-sale financial assets ..................... — — — 557 557
Derivative financial instruments ....................... — 1,066 6,338 — 7,404
Trade and other receivables (1) ......................... 129,320 — — — 129,320
Other financial assets ............................... 27,983 — — — 27,983
Cash and cash equivalents ........................... 248,162 — — — 248,162
405,465 1,066 6,338 557 413,426
31 December 2011
Assets as per balance sheet
Available-for-sale financial assets ..................... — — — 557 557
Derivative financial instruments ....................... — — 11,321 — 11,321
Trade and other receivables (1) ......................... 146,047 — — — 146,047
Other financial assets ............................... 26,583 — — — 26,583
Cash and cash equivalents ........................... 184,883 — — — 184,883
357,513 — 11,321 557 369,391
(*) Unaudited
(1) Assets from legal requirements with Public Administration are excluded from the trade and other receivables balance, as this analysis is
required only for financial instruments
Loans and receivables
The breakdown of loans and receivables as at 31 March 2012 and 31 December 2011 is as follows:
31 March
2012 ( * ) 31 December
2011
Thousands of Euros
Non current:
—Investments in audiovisual productions ............................................. 6,209 5,509
—Deposits and other .............................................................. 3,871 4,095
10,080 9,604
Current:
—Trade and other receivables ....................................................... 278,075 295,374
— Provision for impairment of trade receivables ........................................ (168,607) (171,201)
—Related parties receivables (note 15) ............................................... 611 889
—Public Administration ........................................................... 397 316
—Advances to suppliers and commercial creditors ...................................... 19,241 20,985
Trade and other receivables ......................................................... 129,717 146,363
—Credits to related parties (note 15) ................................................. 7,629 6,705
—Deposits and other .............................................................. 10,274 10,274
Other financial assets ............................................................. 17,903 16,979
147,620 163,342
(*) Unaudited
F-11

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
Trade receivables relates mainly to receivables arising from the provision of telephone, television and broadband
Internet services to direct-access residential customers, indirect-access customers and business clients and the provision of
interconnection services to other operators.
Movement on the impairment provision for trade receivables for the three month period ended 31 March 2012 and
2011 is as follows:
31 March
31 March
2012 ( * ) 2011 ( * )
Thousands of Euros
Beginning of period ................................................................. 171,201 172,220
Impairment provision for trade receivables ............................................... 4,343 4,920
Receivables written-off ............................................................... (6,937) (2,407)
End of period ...................................................................... 168,607 174,733
(*) Unaudited
b) Financial liabilities
The financial liabilities breakdown as at 31 March 2012 and 31 December 2011 is as follows:
Derivatives
used for
hedging
Other
financial
liabilities
Total
Thousands of Euros
31 March 2012 ( * )
Liabilities as per balance sheet
Borrowings ............................................................ — 3,604,267 3,604,267
Derivative financial instruments ............................................ 3,039 — 3,039
Trade and other payables (1) ................................................ — 288,801 288,801
Other financial liabilities .................................................. — 3,564 3,564
3,039 3,896,632 3,899,671
31 December 2011
Liabilities as per balance sheet
Borrowings ............................................................ — 3,601,224 3,601,224
Trade and other payables (1) ................................................ — 303,452 303,452
Other financial liabilities .................................................. — 3,318 3,318
— 3,907,994 3,907,994
(*) Unaudited
(1) Liabilities from legal requirements with Public Administration are excluded from the trade payables balance, as this analysis is required
only for financial instruments
F-12

Debts and payables
ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
follows:
The breakdown of borrowings and trade and other payables as at 31 March 2012 and 31 December 2011 is as
31 March
2012 ( * ) 31 December
2011
(€ in thousands)
Non current:
—Senior Bank Facility ............................................................ 1,357,161 1,957,126
—Debt related to the issuance of Senior Secured Notes .................................. 1,696,286 975,180
—Debt related to the issuance of Subordinated Notes .................................... 451,256 456,264
—Mortgage loans ................................................................ 7 15
—Payables under lease agreements .................................................. 957 1,120
—Subsidised loans (PROFIT) ...................................................... 3,530 3,444
Borrowings ..................................................................... 3,509,197 3,393,149
Other non-current liabilities ........................................................ 953 953
3,510,150 3,394,102
Current:
—Borrowings ................................................................... 42,773 175,529
—Payables under lease agreements .................................................. 808 908
—Interest payable ................................................................ 51,489 31,638
Borrowings ..................................................................... 95,070 208,075
—Trade payables ................................................................ 198,432 207,637
—Property, plant and equipment suppliers ............................................. 80,179 78,870
—Amounts payable to Group companies (note 15) ...................................... 337 148
—Short-term public authorities ..................................................... 14,256 13,006
—Outstanding employee remunerations .............................................. 9,853 16,797
Trade and other payables .......................................................... 303,057 316,458
Other current liabilities ............................................................ 2,611 2,365
400,738 526,898
3,910,888 3,921,000
(*) Unaudited
Notes issuance
On 26 January 2012, the Group completed the issuance of $1,000 million Senior Secured Notes which accrues
interest at an annual rate of 8.875%. The Notes were issued at a discount with a price of 96.934%. These notes mature on
1 December 2018, but the issuer reserves the right to call the debt in advance, subject to certain conditions, after 1 December
2013.
The gross proceeds of the offering were used to prepay €738 million of existing bank tranches under the Senior
Bank Facility.
The Notes were issued by a special purpose vehicle, Nara Cable Funding Limited, a private company with limited
liability under the laws of Ireland.
Nara Cable Funding Limited is an independent company established in Ireland with the corporate purpose of issuing
notes and the subsequent financing of the ONO Group with the funds obtained from the issues.
F-13

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
The payment calendar at redemption value as of 31 March 2012 and 31 December 2011 of the long and short-term
debt with credit institutions and of the financial lease, is as follows:
At 31 March 2012:
Average
interest
rate 2012
Maximum
available
at a
31.03.12 2012
Until
March
2013
April -
December
Maturities
2013 2014 2015 2016 Subsequent Total Interest
years debt payable
Thousands of Euros
Type of debt
Debt with credit institutions
Senior Bank Facility (1) ........ 2.68% 1,762,310 34,591 — 1,363,719 — — — — 1,398,310 213
Mortgage loan ............... 4.49% 40 26 7 7 — — — — 40 —
Leasing .................... 2.64% 1,765 646 162 772 165 20 — — 1,765 —
Other credit lines ............. 2.32% 7,100 580 — — — — — — 580 5
Total debt with credit
institutions ............... 1,771,215 35,843 169 1,364,498 165 20 — — 1,400,695 218
Other debt
Debt related to the issuance of
Senior Secured Notes (1) ...... 8.88% 1,748,727 — — — — — — 1,748,727 1,748,727 40,475
Debt related to the issuance of
Subordinated Notes (1) ....... 11.05% 463,464 — — — — — — 463,464 463,464 10,796
Subsidised loans (2) ............ — 11,530 7,569 — 1,424 397 357 268 1,515 11,530 —
Total other debt ............. 2,223,721 7,569 — 1,424 397 357 268 2,213,706 2,223,721 51,271
Total long- and short-term
debt ..................... 3,994,936 43,412 169 1,365,922 562 377 268 2,213,706 3,624,416 51,489
(1) The payment calendar does not include the discount effect amounting €6,558 thousand, €52,441 thousand and €12,208 thousand,
respectively.
(2) The subsidised loans as shown in the balance sheet include the subsidy recognised as non-current liabilities for an amount of €432
thousand.
At 31 December 2011:
Average
interest
rate 2011
Maturities
Maximum
available at
31.12.11 2012 2013 2014 2015 2016 Subsequent
years
Thousands of Euros
Total
debt
Interest
payable
Type of debt
Debt with credit institutions
Senior Bank Facility (1) .............. 3.13% 2,500,237 166,832 1,969,404 — — — — 2,136,236 381
Mortgage loan ..................... 3.14% 51 36 15 — — — — 51 —
Leasing .......................... 2.19% 2,028 908 935 165 20 — — 2,028 —
Other credit lines .................. 4.91% 8,300 1,092 — — — — — 1,092 7
Total debt with credit institutions .... 2,510,616 168,868 1,970,354 165 20 — — 2,139,407 388
Other debt
Debt related to the issuance of Senior
Secured Notes (1) ................. 8.82% 1,000,000 — — — — — 1,000,000 1,000,000 7,396
Debt related to the issuance of
Subordinated Notes (1) ............. 11.11% 468,893 — — — — — 468,893 468,893 23,854
Subsidised loans (2) ................. 11,530 7,569 1,424 397 357 268 1,515 11,530 —
Total other debt .................. 1,480,423 7,569 1,424 397 357 268 1,470,408 1,480,423 31,250
Total long- and short-term debt ..... 3,991,039 176,437 1,971,778 562 377 268 1,470,408 3,619,830 31,638
(1) The payment calendar does not include the discount effect amounting €12,278 thousand, €24,820 thousand and €12,629 thousand,
respectively.
(2) The subsidised loans as shown in the balance sheet include the subsidy recognised as non-current liabilities for an amount of €517
thousand.
F-14

Credit lines
ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
As at 31 March 2012 and 31 December 2011 ONO Midco Group had the following undrawn credit lines:
31 March
2012 ( * ) 31 December
2011
Thousands of Euros
Variable rate:
—maturing at less than one year ..................................................... 6,520 7,208
—maturing at more than one year .................................................... — —
6,520 7,208
(*) Unaudited
c) Derivative financial instruments
31 March 2012 ( * ) 31 December 2011
Assets Liabilities Assets Liabilities
Thousands of Euros
Forward foreign exchange contracts—cash flow hedges ...................... 6,338 3,039 11,321 —
Forward foreign exchange contracts—Trading derivatives .................... 1,066 — — —
Total .............................................................. 7,404 3,039 11,321 —
Non-current portion ................................................. 7,404 3,039 11,321 —
Current portion ..................................................... — — — —
(*) Unaudited
After the issuance of the Senior Notes in January 2012, the Group has $1,225 million of U.S. Dollar indebtedness
outstanding. Accordingly, the Group is exposed to the risk of an increase in the value of the US dollar compared to the Euro.
The Group has several hedging financial instruments (forward foreign exchange contracts) in order to be covered
against the fluctuations of the foreign exchanges between dollar and euro currencies until December 2013 and January 2014.
As of 31 March 2012, the notional principal amounts of the forward foreign exchange contracts were $274 million
(100% of the principal issued in 28 January 2011 amounting to $225 million and $49 million for coupon payments until
January 2014) and $163 million (for coupon payments related to the issuance of $1,000 million of Senior Secured Notes until
December 2013). These contracts have been designated as hedges.
Cash flows associated to hedge contracts will take place in years 2012, 2013 and 2014.
In addition, the Group has entered into collar options with respect to the 50% of the principal of the $1,000 million
Senior Secured Notes due 2018 until 31 December 2013. At the transaction date the premium paid was €5 million. As of
31 March 2012 according to the valuation of the instrument, the Group has recognised a loss amounting to €3,934 thousand.
These contracts have not been designated as efficient hedges.
11. Deferred Income
This caption mainly includes advance payments from Sogecable amounting to €109 million.
As of 1 December 2009, First Instance Court of Madrid sentenced Sogecable to pay an indemnity to Cableuropa for
damages caused, amounting to €44 million plus legal interests, due to the breach of the signed contract between both
companies concerning the distribution of Gran Vía and Cablesport channels.
Cableuropa and Sogecable agreed a calendar payment by which a total amount of €49 million has been advanced in
cash by Sogecable. The sentence has been appealed by Sogecable at the Provincial Court of Madrid.
In addition, on 3 March 2010 Commercial Court Nº 7 of Madrid sentenced Sogecable-AVS to pay €51.7 million
plus interests to Cableuropa for abuse of dominant position in relation with 2003/2004 to 2008/2009 football content
contracts.
F-15

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
Cableuropa and Sogecable agreed a payment calendar by which at December 2011 a total amount of €60 million has
been advanced in cash by Sogecable. The sentence has been appealed by Sogecable at the Provincial Court of Madrid.
As of 31 March 2012 and 31 December 2011, these amounts have been considered contingent assets, and no
revenue has been recognised yet, as the final indemnity amounts depends on the final Court settlements.
12. Net Equity
a) Capital and share premium
As of 31 March 2012 and 31 December 2011, the share capital comprises 43,817,066 ordinary shares with a face
value of 3.0003 euro each fully paid and a share premium of €1,087,769 thousand. Both share capital and share premium are
fully disbursed.
On 18 January 2011, Grupo Corporativo ONO, S.A., entered into an agreement to increase the share capital of ONO
Midco, S.A.U. in €300 and a share premium of €1,087,769 thousand. This share capital increase was paid up through the
capitalisation of some existing credits between them.
On 4 November 2005, the shares of what is currently Cableuropa, S.A.U. were pledged as security for the preferred
secured loan granted to Cableuropa, S.A.U., having resolved unanimously the board of ONO Midco that the Company should
adhere as pledges to the pledge in respect of the shares in question.
b) Shareholders contributions
On 8 February 2011, Grupo Corporativo ONO sold to Cableuropa S.A.U. the EVCs it owned which matured in
February 2011 so that the latter could cancel the same with ONO Finance PLC. The total price payable by Cableuropa S.A.U.
to Grupo Corporativo ONO amounted to €16,334 thousand. This resulting credit right in favour of Grupo Corporativo ONO
has been defined as a subordinated debt. Likewise, Grupo Corporativo ONO loaned Cableuropa S.A.U. the additional amount
necessary for the latter to pay the EVCs with ONO Finance PLC (€2,115 thousand). These participating loans will not have to
be repaid before 2025, unless otherwise agreed by the parties. The loan bears an 5% variable interest on the Cableuropa’s
monthly profit, if the profit exceeds €200 million per month. In the event of repayment, this would be carried out by means of
a capital increase or by express agreement of both parties. As a result, the amount of these loans is considered as equity.
13. Long and short- term provisions
Movements on the provisions recognised in the balance sheet are as follows:
Onerous
contracts
Litigations and
other Total
Thousands of Euros
Balance at 31 December 2010 ............................................ 57,870 60,530 118,400
Charge / (Reversal) for the year ........................................... 780 — 780
Applications .......................................................... (7,908) (405) (8,313)
Balance at 31 March 2011 ( * ) ............................................. 50,742 60,125 110,867
Balance at 31 December 2011 ............................................ 30,291 49,688 79,979
Charge / (Reversal) for the year ........................................... 530 100 630
Applications .......................................................... (6,820) (234) (7,054)
Balance at 31 March 2012 ( * ) ............................................. 24,001 49,554 73,555
(*) Unaudited
F-16

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
As at 31 March 2012 and 31 December 2011 the analysis of the total of these provisions is as follows:
31 March
2012 ( * ) 31 December
2011
Thousands of Euros
Non-current ..................................................................... 49,554 54,817
Current ......................................................................... 24,001 25,162
73,555 79,979
(*) Unaudited
a) Litigations and other liabilities
The amount represents a provision for certain complaints filed against the Group companies, and other risks and
liabilities. The amounts have been estimated in accordance with the sums claimed or the risk estimated by the Group.
In the Directors’ opinion after receiving the relevant legal advice, the result of these litigations is not expected to
represent significant losses higher than the amounts provided for at 31 March 2012.
14. Income tax and tax situation
a) Consolidated tax regime
In 2002, Grupo Corporativo ONO, S.A. notified its election to apply the consolidated tax regime. The Group has
consolidated for tax purposes since 1 January 2003.
Group.
The parent company for tax consolidation is Grupo Corporativo ONO, S.A., sole shareholder of the ONO Midco
b) Income tax
Income tax expense is recognised in each interim period based on the best estimate of the weighted average annual
income tax rate expected for the full financial year. Income tax rate for the year 2012 is approximately 30%.
On 31 March 2012 Royal Decree-Law 12/2012 came into effect with the objective of reducing public deficit. The
main terms of the new law that impact the Group are the following: (i) the amount of net deductible financial expenses in the
tax period is generally reduced to 30% of operating profit (applying certain adjustments). Net financial expenses exceeded can
be used during the next 18 years; (ii) unrestricted depreciation of investments in new tangible fixed assets and investment
property has been repealed; A transitional regime is provided for investments made prior to 31 March 2012; (iii) limitation on
the deductibility of the goodwill from 5% to 1%; (iv) deductions are reduced from 35% to 25% of gross tax payable; the
period for applying deductions not applied owing to insufficient tax payable is extended from 10 to 15 years and (v) advance
payments will amount to at least 8% of the accounting profit.
The Group does not expect impacts on the tax credit recovery concerning those measures.
c) Years open to inspection
According to current legislation, taxes may not be deemed to have been definitively settled until the returns filed
have been inspected by the tax authorities or the 4 years from the last day of the voluntary period for filing statute of
limitations has expired.
The Directors do not expect any significant additional liabilities to arise in the years open to inspection.
F-17

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
15. Related-party transactions
a) Shareholders’ Transactions
The significant transactions carried out by the Group with Shareholders of the Parent Company during the three
month period ended 31 March 2012 and 2011 are as follows:
At 31 March 2012, the Group has financing transactions signed under fair market value with Banco Santander
amounting €25 million (€55 million at 31 March 2011), with General Electric amounting €46 million (€86 million at
31 March 2011) and JP Morgan amounting €19 million (€36 million at 31 March 2011) already included under the caption of
Borrowings in note 10.
At 31 March 2012 there are bank guarantees granted from Banco Santander to the Group, at fair market value,
amounting to €12 million (29 million at 31 March 2011).
b) Transactions with other Group companies
The balances as at 31 March 2012 and 31 December 2011 with Group and related companies and volumes of
transactions carried out during the three month period ended 31 March 2012 and 2011 with them are set out below:
31 March 2012 ( * ) 31 December 2011
Receivables Payables Receivables Payables
Thousands of Euros
Balances
Grupo Corporativo ONO, S.A. .................................... 8,237 337 7,591 148
Spanish Cable Holding, S.A. ...................................... 3 — 3 —
Total balances ................................................ 8,240 337 7,594 148
(*) Unaudited
31 March 2012 ( * ) 31 March 2011 ( * )
Financial
income
Financial
expenses
Services
received
Financial
income
Financial
expenses
Services
received
Thousands of Euros
Transactions
Grupo Corporativo ONO, S.A. ...................... 60 1,201 1,390 35 658 2,000
Total transactions ............................... 60 1,201 1,390 35 658 2,000
(*) Unaudited
During the three month period ended 31 March 2012 the main transactions with related parties amount to
€1.4 million with Grupo Corporativo ONO, S.A. regarding financial advisory and management support.
These transactions are carried out under market conditions.
16. Compensation of the Board of Directors and Senior Management
a) Compensation of the members of the Board of Directors
During the three month period ended 31 March 2012 and 2011, the members of the Board of Directors of ONO
MIDCO, S.A.U. have not received any remuneration for their duties as Directors. Other remunerations related to their work as
Senior Management are included in the following note.
b) Compensation to Senior Management
The total compensation to ONO Midco Group Senior Management in the three month period ended 31 March 2012
and 2011, is €584 and €1,056 thousand respectively.
F-18

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
c) Long term incentive plan
On 25 May 2011, the Grupo Corporativo ONO, S.A. Board of Directors approved a cash–settled share–based
payment variable remuneration plan (the Long Term Incentive Plan), based on the evolution of the Parent Company’s share
value. This plan was approved in 22 June 2011 by the General Meeting of Shareholders of Grupo Corporativo ONO, S.A. The
incentive is determined by multiplying the theoretical number of shares granted to each participant by the difference between
the final and initial reference value as defined in the plan.
The plan envisages two potential outcomes:
• A Liquidity Event (IPO or change of control) happens during the life of the plan (up to 31 December 2017).
• If before 31 December 2017 the Liquidity Event has not occurred, both parts, the Company and participants,
will agree a settlement in good faith.
On July 2011 the Board of Directors communicated the shares granted for the participants on the basis of the
following tranches:
Tranche Initial reference Value Number of shares
A ................................................................ 0,00 3,626,754
B ................................................................ 0,90 5,934,688
C ................................................................ 1,20 3,626,754
The incentive is accrued according to the service period of each participant as follows:
13,188,196
• 40% as of 31 of December of the third year since the reference date fixed by the Board of Director for every
participant.
• 40% as of 31 of December of the fourth year since the reference date fixed by the Board of Director for every
participant.
• 20% as of 31 December 2017 or the Liquidity Event date, if earlier.
As of 31 March 2012 the Group’s management has made a reasonable estimation on the basis that the probability of
occurrence of the Liquidity Event is considered as uncertain, and therefore the Long Term Incentive Plan will be settled in
2017 based on good faith between both parts. The estimated impact for the whole 2012 year is €0.2 million (€0.2 million in
2011).
17. Employees
The average number of employees for the three month period ended 31 March 2012 and 2011 by sex and categories
is as follows:
31 March 2012 ( * ) 31 March 2011 ( * )
Men Women Total Men Women Total
Directors .................................................. 63 6 69 77 9 86
Qualified, technical .......................................... 1,341 564 1,905 1,357 548 1,905
Administration .............................................. 276 643 919 333 743 1,076
1,680 1,213 2,893 1,751 1,300 3,067
(*) Unaudited
18. Contingent liabilities
ONO Midco Group has contingent liabilities for litigations arising in the normal course of business. No significant
liabilities other than those already provided for are expected to arise from these litigations (see note 13).
ONO Midco Group holds guarantees with several Spanish credit institutions to secure compliance with certain
financial and technical commitments held with the Ministry of Industry, Tourism and Trade, City Councils and other
organisations and entities.
F-19

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
Details of commitments assumed at 31 March 2012 and 31 December 2011 are as follows:
31 March
2012 ( * ) 31 December
2011
Thousands of Euros
Ministry of Industry, Tourism and Trade ............................................... 12,343 13,661
City Councils and other entities ...................................................... 35,663 37,716
Total ........................................................................... 48,006 51,377
(*) Unaudited
19. Commitments
a) Purchase and sale commitments
As of 31 March 2012, the Group has fixed assets purchase commitments amounting to €130 million (€91 million at
31 December 2011).
b) Operating lease commitments
The Group leases fibre optic, circuits and channelling under operating lease agreements. These contracts have terms
of between five and thirty years.
The Group leases office and technical buildings under non-cancellable operating lease agreements. These contracts
have terms of between five and ten years and most of them are renewable upon expiry under market conditions.
The Group also leases infrastructure, installations and machinery under cancellable operating lease agreements. The
Group is obliged to give six months’ advance notice of the termination of these agreements.
Total minimum future payments for non-cancellable operating leases are as follows:
31 March
2012 ( * ) 31 December
2011
Thousands of Euros
Less than one year ................................................................ 28,216 24,989
Between 1 and 5 years ............................................................. 88,051 83,009
Over 5 years ..................................................................... 145,313 142,734
261,580 250,732
(*) Unaudited
c) Other commitments: invest in audiovisual contents.
The Group is legally required to invest 5% of the revenues from television and audiovisual services into the
production of new Spanish and European television and other audiovisual content as a consequence of the Audiovisual
Communication Law.
The financing of the audiovisual contents mentioned above may be done through direct production or through rights
acquisitions.
20. Post balance sheet events
a) PIK Loan.
On 24 April 2012, the Board of Directors of GCO agreed to propose the capitalization of the PIK loan plus any
accrued interests until 30 June 2011 to the GCO’s General Shareholders meeting. As a result of this proposal, on 11 May
2012, Val Telecomunicaciones S.L has agreed to withdraw the lawsuit challenging the corporate resolutions related with the
PIK within two business days of the completion of the capital increase in GCO capitalizing the PIK Loan and accrued interest
until 30 June 2011.
F-20

ONO MIDCO, S.A.U. AND SUBSIDIARIES (MIDCO GROUP)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTH PERIOD ENDED 31 MARCH 2012—(Continued)
(Thousands of Euros)
The General Shareholders meeting of GCO has been convened to be held on 20 June 2012. As a result of such
convening, GCO and VAL Telecomunicaciones, S.L. have requested from the court a suspension of the trial scheduled for
31 May 2012. All the lenders under the PIK Loan have agreed to the proposed capitalization and to that end on 11 May 2012
have executed with GCO an amendment to the PIK Loan enabling its capitalization and an agreement where each of them
undertake to effectively capitalize the PIK Loan.
b) Settlement of legal disputes with Prisa TV.
On 9 March 2009 our competitor Prisa TV (formerly Sogecable) was ordered to pay a compensation of
€51.7 million plus interest to ONO for abuse of dominant position in relation to the 2003/2004 to 2008/2009 football content
contracts. This compensation was in addition to the compensation awarded on 1 December 2009 for a contractual breach on
the Gran Via and Cablesport channel distribution. On 18 May 2012, ONO and Prisa TV reached an agreement pursuant to
which Sogecable would end the appeal process in exchange for ONO repaying to Prisa TV 50% of the amounts already
collected by ONO pursuant to these lawsuits. The total amount to be repaid by ONO is €54.4 million.
c) New Senior Facility.
On 24 May 2012, the Group signed the New Senior Facility which permits term loan borrowings of up to €2,400
million and $1,000 million.
Borrowings under the New Senior Facility (including the Bridge Tranche), together with available cash, would be
sufficient to refinance in full the 2005 Senior Facility.
Under the New Senior Bank Facility Agreement, the banks will provide on a fully committed basis:
• €890.7 million of amortizing term loan A (“TLA”) due June 2017 with an interest of Euribor + 4.50%;
• €100 million of revolving credit facility (“RCF”) due June 2017 with an interest of Euribor + 4.50%;
• €185.0 million of bullet term loan B (“TLB”) due March 2018 with an interest of Euribor + 5.25%; and
• €224.3 million of bullet bridge loan (“Bridge Loan”) due December 2018, and expected to be refinanced with
appropriate debt instruments.
As part of the refinancing, the SPV Tranches issued by Nara Cable Funding Limited, which include €700 million
Senior Secured Notes due 2018 issued in October 2010, the €300 million Senior Secured Notes due 2018 issued in July 2011
and the $1,000 million Senior Secured Notes due 2018 issued in February 2012, would accede as SPV Tranches to the New
Senior Bank Facility Agreement and the new Intercreditor Agreement.
F-21

DATED 24 MAY 2012
(AS AMENDED AND RESTATED ON [Š] 2012)
€[2,400,000,000] AND US$[Š]
SENIOR SECURED CREDIT FACILITIES
FOR
CABLEUROPA, S.A.U.
ARRANGED BY
[ ]
AS MANDATED LEAD ARRANGERS
WITH
SOCIÉTÉ GÉNÉRALE, S.A., LONDON BRANCH
ACTING AS AGENT
AND
SOCIÉTÉ GÉNÉRALE, S.A., LONDON BRANCH
ACTING AS SECURITY AGENT
SENIOR BANK FACILITIES AGREEMENT
A-1

Clause
CONTENTS
1. Definitions and Interpretation ...................................................... A-3
2. The Facilities ................................................................... A-41
3. Purpose ....................................................................... A-52
4. Conditions of Utilisation .......................................................... A-53
5. Utilisation—Loans .............................................................. A-55
6. Ancillary Facilities .............................................................. A-56
7. Repayment .................................................................... A-60
8. Illegality, Voluntary Prepayment and Cancellation ..................................... A-62
9. Mandatory Prepayment ........................................................... A-64
10. Restrictions .................................................................... A-68
11. Interest ........................................................................ A-69
12. Interest Periods ................................................................. A-70
13. Changes to the Calculation of Interest ............................................... A-71
14. Fees .......................................................................... A-72
15. Tax Gross-Up and Indemnities ..................................................... A-73
16. Increased Costs ................................................................. A-75
17. Other Indemnities ............................................................... A-75
18. Mitigation by the Lenders ......................................................... A-76
19. Costs and Expenses .............................................................. A-77
20. Guarantee and Indemnity ......................................................... A-78
21. Representations ................................................................. A-81
22. Information Undertakings ......................................................... A-85
23. Financial Covenants ............................................................. A-88
24. General Undertakings ............................................................ A-90
25. Events of Default ............................................................... A-100
26. Changes to the Lenders ........................................................... A-104
27. Debt Purchase Transactions ....................................................... A-107
28. Changes to the Obligors .......................................................... A-109
29. Role of the Agent, the Arranger and Others ........................................... A-113
30. Conduct of Business by the Finance Parties ........................................... A-118
31. Sharing Among the Finance Parties ................................................. A-119
32. Payment Mechanics ............................................................. A-121
33. Set-Off ........................................................................ A-123
34. Notices ....................................................................... A-123
35. Calculations and Certificates ...................................................... A-126
36. Partial Invalidity ................................................................ A-126
37. Remedies and Waivers ........................................................... A-126
38. Amendments and Waivers ........................................................ A-126
39. Confidentiality ................................................................. A-130
40. Counterparts ................................................................... A-133
41. Non-petition ................................................................... A-133
42. Executive Proceedings ........................................................... A-133
43. Governing Law ................................................................. A-135
44. Enforcement ................................................................... A-135
Page
A-2

THIS AGREEMENT is originally dated 24 May 2012 and made between:
(1) CABLEUROPA, S.A.U., a Spanish company, with offices at calle Basauri 7, Edificio Belagua, Urbanización La
Florida, Aravaca, (Distrito Moncloa-Aravaca), Madrid, incorporated on 9 February 2000, before the Notary Public
of Barcelona, Mr Antonio López Cerón y Cerón, entered under number 700 in the notary’s official registry and
registered with the Registro Mercantil de Madrid (Commercial Registry of Madrid) at Volume 22913, folio 120,
page M-410376, NIF number (Tax Identification Number) A-62186556 (“Cableuropa” or the “Company”);
(2) THE COMPANY as original borrower (the “Original Borrower”);
(3) THE COMPANY as original guarantor (the “Original Guarantor”);
(4) [ ] as mandated lead arrangers (whether acting individually or together, the “Arranger”);
(5) NARA CABLE FUNDING LIMITED, a company incorporated in Ireland and registered in the Registry of
Companies under number 489807 as lender of the Original SPV Tranches (“Nara Cable”);
(6) THE FINANCIAL INSTITUTIONS listed in Part II of Schedule 1 (The Original Parties) as lenders (together
with Nara Cable, the “Original Lenders”);
(7) SOCIÉTÉ GÉNÉRALE, S.A., LONDON BRANCH as agent of the other Finance Parties (the “Agent”); and
(8) SOCIÉTÉ GÉNÉRALE, S.A., LONDON BRANCH as security agent for the Secured Parties (the “Security
Agent”).
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
SECTION 1
INTERPRETATION
“Accession Deed” means a document substantially in the form set out in Schedule 6 (Form of Accession Deed).
“Additional Borrower” means a company which becomes an Additional Borrower in accordance with Clause 28
(Changes to the Obligors).
“Additional Cost Rate” has the meaning given to it in Schedule 4 (Mandatory Cost Formula).
“Additional Guarantor” means a company which becomes an Additional Guarantor in accordance with Clause 28
(Changes to the Obligors).
“Additional Obligor” means an Additional Borrower or an Additional Guarantor.
“Additional SPV Tranche” has the meaning given to such term in Clause 2.2 (Additional SPV Tranches) and, with
effect from the First Amendment Date, SPV Tranche 4 is incorporated into this Agreement as an Additional SPV
Tranche.
“Additional SPV Tranche Commitment” means, in relation to an SPV, the amount in the Base Currency which,
following the execution of the relevant Amendment and Restatement Agreement contemplated by Clause 2.2
(Additional SPV Tranches) will be set opposite its name in Part IIA of Schedule 1 (The Original Parties) to the
extent not cancelled or reduced under this Agreement.
“Additional SPV Tranche Loan” means a loan made or to be made under an Additional SPV Tranche or the
principal amount outstanding of that loan.
“Affected Assets” means those assets necessary to provide any public service.
“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any
other Subsidiary of that Holding Company.
A-3

“Agent’s Spot Rate of Exchange” means the Agent’s spot rate of exchange for the purchase of the relevant
currency with the Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day.
“Amendment and Restatement Agreement” means an agreement amending and restating this Agreement for the
purposes of implementing:
(a)
(b)
(c)
a New Bank Tranche;
an Additional SPV Tranche; or
a Replacement Revolving Facility,
on the terms set out in Clauses 2.2 (Additional SPV Tranches), 2.3 (New Bank Tranches) 2.4 (Replacement
Revolving Facility), as applicable, and entered into by the Obligors, the Agent and (in the case of (a) above) each
relevant New Bank Tranche Lender or (in the case of (b) above) the relevant SPV providing such Additional SPV
Tranche or (in the case of (c) above) the relevant Replacement Revolving Facility Lenders.
“Ancillary Commencement Date” means, in relation to an Ancillary Facility, the date on which that Ancillary
Facility is first made available, which date shall be a Business Day within the Availability Period for the Revolving
Facility.
“Ancillary Commitment” means, in relation to an Ancillary Lender and an Ancillary Facility, the maximum Base
Currency Amount which that Ancillary Lender has agreed (whether or not subject to satisfaction of conditions
precedent) to make available from time to time under an Ancillary Facility and which has been authorised as such
under Clause 6 (Ancillary Facilities), to the extent that amount is not cancelled or reduced under this Agreement or
the Ancillary Documents relating to that Ancillary Facility.
“Ancillary Document” means each document relating to or evidencing the terms of an Ancillary Facility.
“Ancillary Facility” means any ancillary facility made available by an Ancillary Lender in accordance with
Clause 6 (Ancillary Facilities).
“Ancillary Lender” means each Lender (or Affiliate of a Lender) which makes available an Ancillary Facility in
accordance with Clause 6 (Ancillary Facilities).
“Ancillary Outstandings” means, at any time, in relation to an Ancillary Lender and an Ancillary Facility then in
force the aggregate of the equivalents (as calculated by that Ancillary Lender) in the Base Currency of the following
amounts outstanding under that Ancillary Facility:
(a)
(b)
(c)
the principal amount under each overdraft facility and on-demand short term loan facility (net of any
credit balances on any account of any Borrower of an Ancillary Facility with the Ancillary Lender making
available that Ancillary Facility to the extent that the credit balances are freely available to be set off by
that Ancillary Lender against liabilities owed to it by that Borrower under that Ancillary Facility);
the face amount of each guarantee, bond and letter of credit under that Ancillary Facility; and
the amount fairly representing the aggregate exposure (excluding interest and similar charges) of that
Ancillary Lender under each other type of accommodation provided under that Ancillary Facility,
in each case as determined by such Ancillary Lender, acting reasonably in accordance with its normal banking
practice and in accordance with the relevant Ancillary Document.
“Asset Transfer Account” means Cableuropa’s account held with the Agent, pledged in accordance with the
corresponding Security Agreement, bearing interest at market rates and of restricted availability.
“Assignment Agreement” means an agreement substantially in the form set out in Schedule 5 (Form of Assignment
Agreement) or any other form agreed between the relevant assignor and assignee provided that if that other form
does not contain the undertaking set out in the form set out in Schedule 5 (Form of Assignment Agreement) it shall
not be a Creditor/Agent/Trustee Accession Undertaking as defined in, and for the purposes of, the Intercreditor
Agreement.
“Audited Consolidated Annual Financial Statements” has the meaning given to that term in paragraph (a) of
Clause 22.1 (Financial information).
A-4

“Auditors” means PricewaterhouseCoopers or any other international audit firm that Cableuropa might hereafter
appoint from among Deloitte & Touche, Ernst & Young, KPMG Auditores and PricewaterhouseCoopers or such
other international recognised firm of independent auditors acceptable to the Agent (acting reasonably) and licensed
to practise in Spain.
“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or
registration.
“Availability Period” means:
(a)
(b)
(c)
(d)
in relation to Facility A, Facility B and the Bridge Tranche, the period from and including the Signing
Date to and including the date falling thirty (30) days thereafter;
in relation to the Revolving Facility, the period from and including the Closing Date (or in relation to a
Replacement Revolving Facility, the period from and including the date of entry into that Replacement
Revolving Facility) to and including the date falling one month before the applicable Termination Date;
in relation to an Original SPV Tranche, the Closing Date; and
in relation to an Additional SPV Tranche or a New Bank Tranche, the execution date of the relevant
Amendment and Restatement Agreement incorporating that Additional SPV Tranche or New Bank
Tranche (being, in the case of SPV Tranche 4, the First Amendment Date).
“Available Commitment” means, in relation to a Facility, a Lender’s Commitment under that Facility minus
(subject to Clause 6.8 (Affiliates of Lenders as Ancillary Lenders) and as set out below):
(a)
(b)
the Base Currency Amount of its participation in any outstanding Utilisations under that Facility and, in
the case of the Revolving Facility only, the Base Currency Amount of the aggregate of its Ancillary
Commitments; and
in relation to any proposed Utilisation, the Base Currency Amount of its participation in any other
Utilisations that are due to be made under that Facility on or before the proposed Utilisation Date and, in
the case of the Revolving Facility only, the Base Currency Amount of its Ancillary Commitment in
relation to any new Ancillary Facility that is due to be made available on or before the proposed
Utilisation Date.
For the purposes of calculating a Lender’s Available Commitment in relation to any proposed Utilisation under the
Revolving Facility only, the following amounts shall not be deducted from a Lender’s Commitment under that
Facility:
(i)
(ii)
that Lender’s participation in any Revolving Facility Loans that are due to be repaid or prepaid on or
before the proposed Utilisation Date; and
that Lender’s (or its Affiliate’s) Ancillary Commitments to the extent that they are due to be reduced or
cancelled on or before the proposed Utilisation Date.
“Available Facility” means, in relation to a Facility, the aggregate for the time being of each Lender’s Available
Commitment in respect of that Facility.
“Average Remaining Life of the Facilities” means the average number of days elapsed from any measurement
date until each of the ordinary repayment dates of each Facility pursuant to Clause 7 (Repayment) of this
Agreement, weighted in accordance with the principal amount to be paid on each such date.
“Base Accounting Principles” has the meaning given to such term in paragraph (a) of Clause 22.3 (Requirements
as to financial statements).
“Base Currency” means Euro.
“Base Currency Amount” means:
(a)
in relation to a Utilisation, the amount specified in the Utilisation Request delivered by a Borrower for
that Utilisation (or, if the amount requested is not denominated in the Base Currency, that amount
converted into the Base Currency at the Agent’s Spot Rate of Exchange on the date which is (in the case
of an Additional SPV Tranche) two or (in any other case) three Business Days before the Utilisation Date
or, if later, on the date the Agent receives the Utilisation Request in accordance with the terms of this
Agreement); and
A-5

(b)
in relation to an Ancillary Commitment, the amount specified as such in the notice delivered to the Agent
by the Company pursuant to Clause 6.2 (Availability) (or, if the amount specified is not denominated in
the Base Currency, that amount converted into the Base Currency at the Agent’s Spot Rate of Exchange
on the date which is three Business Days before the Ancillary Commencement Date for that Ancillary
Facility or, if later, the date the Agent receives the notice of the Ancillary Commitment in accordance
with the terms of this Agreement),
as adjusted to reflect any repayment, prepayment, consolidation or division of a Utilisation, or (as the case may be)
cancellation or reduction of an Ancillary Facility.
“Base Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) as
supplied to the Agent at its request by the Base Reference Banks:
(a)
(b)
in relation to EURIBOR, as the rate at which the relevant Base Reference Bank could borrow funds in the
European interbank market; or
in relation to LIBOR, as the rate at which the relevant Base Reference Bank could borrow funds in the
London interbank market,
in the relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank
offers for deposits in reasonable market size in that currency and for that period.
“Base Reference Banks” means, in relation to LIBOR, the principal offices in London of HSBC Bank plc, Barclays
Bank PLC and Bank of Scotland plc and, in relation to EURIBOR, the principal office in Madrid of Bankinter, S.A.,
Banco Popular Español, S.A. and Banco Sabadell, S.A. or such other banks as may be appointed by the Agent in
consultation with the Company.
“Borrower” means an Original Borrower or an Additional Borrower unless it has ceased to be a Borrower in
accordance with Clause 28 (Changes to the Obligors) and, in respect of an Ancillary Facility only, any Affiliate of a
Borrower that becomes a borrower of that Ancillary Facility with the approval of the relevant Lender pursuant to the
provisions of Clause 6.9 (Affiliates of Borrowers).
“Break Costs” means the amount (if any) by which:
(a)
the interest excluding the Margin which a Lender should have received for the period from the date of
receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest
Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been
paid on the last day of that Interest Period;
exceeds:
(b)
the amount which that Lender would be able to obtain by placing an amount equal to the principal amount
or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a
period starting on the Business Day following receipt or recovery and ending on the last day of the current
Interest Period.
“Bridge Commitment” means:
(a)
(b)
in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading
“Bridge Commitment” in Part IIA of Schedule 1 (The Original Parties) and the amount of any other
Bridge Commitment transferred to it under this Agreement or assumed by it in accordance with paragraph
(a) of Clause 2.5 (Increase); and
in relation to any other Lender, the amount in the Base Currency of any Bridge Commitment transferred
to it under this Agreement or assumed by it in accordance with paragraph (a) of Clause 2.5 (Increase),
to the extent:
(i)
(ii)
not cancelled, reduced or transferred by it under this Agreement; and
not deemed to be zero pursuant to Clause 27.2 (Disenfranchisement on Debt Purchase Transactions
entered into by Sponsor Affiliates).
“Bridge Loan” means a loan made or to be made under the Bridge Tranche or the principal amount outstanding for
the time being of that loan.
A-6

“Bridge Tranche” means the term loan facility made available under this Agreement as described in paragraph
(a)(iv) of Clause 2.1 (The Facilities).
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in
London and Madrid and:
(a)
(b)
(in relation to any date for payment or purchase of a currency other than Euro) the principal financial
centre of the country of that currency; or
(in relation to any date for payment or purchase of Euro) any TARGET Day.
“Business Plan” means the financial model delivered by Cableuropa to the Agent that reflects the business plan of
the Group as provided pursuant to Part I of Schedule 2 (Conditions Precedent) and including, in the case of a
Business Plan delivered in connection with a Permitted Acquisition, the target or target group to be acquired.
“Calendar Quarter” means each of the periods of three (3) calendar months ending on the last day of March, June,
September or December.
“Capex” means, for any Testing Period, investments in tangible fixed assets and intangible fixed assets, including
capitalised expenses, which would be treated as capital expenditure in accordance with Generally Accepted
Accounting Principles.
“Cash Equivalents” means:
(a)
(b)
(c)
(d)
securities denominated in Sterling, US Dollars or Euros with maturities of less than three (3) months from
the date of acquisition or subscription, and that are issued or fully secured by the US government or by
any member state of the European Union (or any governmental agency or public law institution thereof)
which is rated at least A by Standard & Poor’s Rating Services or A2 by Moody’s Investor Service Inc.;
commercial paper or other debt instruments issued by an issuer rated at least A-1 by Standard & Poor’s
Rating Services or P-1 by Moody’s Investor Service Inc. and with a maturity of less than three (3) months
from the date of acquisition, subscription or endorsement;
certificates of deposit of any commercial bank which has outstanding debt securities rated at least equal to
the rating referred to in (b) above and having maturities of less than three (3) months from the date of
acquisition or subscription; or
such other securities, commercial paper or debt instruments that have been approved by the Agent in
writing prior to their acquisition, subscription or endorsement.
“Change of Control” means:
(a)
(b)
prior to an IPO of Cableuropa or any Parent Company, if the Permitted Shareholders hold less than 50 per
cent. of the voting shares, or otherwise control less than 50 per cent. of the voting rights of Cableuropa or
any Parent Companies; and
on and following an IPO of Cableuropa or any Parent Company, any person or group of persons (other
than the Permitted Shareholders) acting in concert gaining direct or indirect control of Cableuropa.
For the purposes of this definition of Change of Control:
(i)
(ii)
“acting in concert” means, a group of persons who, pursuant to an agreement or understanding
(whether formal or informal), actively co-operate, through the acquisition directly or indirectly
of shares in Cableuropa by any of them, either directly or indirectly, to obtain or consolidate
control of Cableuropa; and
a person or group of persons acting in concert shall be deemed to gain “direct or indirect
control of Cableuropa” if they directly or indirectly hold voting shares in Cableuropa or any
Parent Company (or otherwise control voting rights of Cableuropa or any Parent Company)
representing a percentage of at least 30 per cent. of the voting rights of Cableuropa or any
Parent Company and provided that such percentage is higher than the percentage held by the
Permitted Shareholders.
A-7

“Charged Property” means all of the assets of the Obligors which from time to time are, or are expressed to be, the
subject of the Transaction Security.
“Closing Date” means the date of the first Utilisation under this Agreement.
“Commitment” means a Facility A Commitment, a Facility B Commitment, a Revolving Facility Commitment, a
Bridge Commitment, an SPV Tranche Commitment or a New Bank Tranche Commitment.
“Compliance Certificate” means a certificate substantially in the form set out in Schedule 8 (Form of Compliance
Certificate).
“Confidential Information” means all information relating to GCO, Midco, the Company, any Obligor, the Group,
the Finance Documents or a Facility of which a Finance Party becomes aware in its capacity as, or for the purpose
of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming
a Finance Party under, the Finance Documents or a Facility from either:
(a)
(b)
GCO, Midco, any member of the Group or any of their advisers; or
another Finance Party, if the information was obtained by that Finance Party directly or indirectly from
GCO, Midco, any member of the Group or any of their advisers,
in whatever form, and includes information given orally and any document, electronic file or any other way of
representing or recording information which contains or is derived or copied from such information but excludes
information that:
(i)
(ii)
(iii)
is or becomes public information other than as a direct or indirect result of any breach by that
Finance Party of Clause 39 (Confidentiality); or
is identified in writing at the time of delivery as non-confidential by GCO, Midco, any member
of the Group or any of their advisers; or
is known by that Finance Party before the date the information is disclosed to it in accordance
with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date,
from a source which is, as far as that Finance Party is aware, unconnected with the Group and
which, in either case, as far as that Finance Party is aware, has not been obtained in breach of,
and is not otherwise subject to, any obligation of confidentiality.
“Confidentiality Undertaking” means a confidentiality undertaking substantially in a recommended form of the
LMA or in any other form agreed between the Company and the Agent.
“Consolidated EBITDA” means consolidated net income of the Group for the relevant Calendar Quarter or the
relevant Testing Period (excluding gains or losses on the disposal or revaluation of assets other than in the ordinary
course of business, and excluding net income of any company disposed of during the period), calculated in
accordance with Generally Accepted Accounting Principles, before, without double counting:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
any amount charged to the provision for corporate income tax;
Financial Interest Expenses;
amounts collected or paid as a consequence of a position under the Permitted Hedge Agreements;
other extraordinary or exceptional items or any other non-cash item (other than bad debt provisions);
amortisation of goodwill;
realised and unrealised exchange gains and losses including, without limitation, gains and losses arising
from a conversion of the financing currency;
any amounts for the amortisation or depreciation of intangible assets, start-up costs, deferred expenses and
tangible assets;
profits or losses attributable to minority interests in any member of the Group;
A-8

(i)
(j)
any share of the profit of associated companies, other than Material Subsidiaries, or investments except
for dividends received in cash by a member of the Group; and
for the avoidance of doubt, any profits attributable to a Debt Purchase Transaction.
“Consolidated Excess Cash Flow” means, for any Testing Period, Consolidated Operating Cash Flow less: (a) the
Total Debt Service for such Testing Period and (b) any voluntary prepayment of the Facilities made during such
Testing Period in accordance with the provisions of Clause 8.3 (Voluntary prepayment of Term Loans) or Clause 8.4
(Voluntary Prepayment of SPV Tranches).
“Consolidated Financial Statements” means the Audited Consolidated Annual Financial Statements and the
Consolidated Quarterly Financial Statements.
“Consolidated LTM EBITDA” means Consolidated EBITDA for the last four (4) full consecutive Calendar
Quarters.
“Consolidated Operating Cash Flow” means, without double counting, for any Testing Period, Consolidated
EBITDA plus:
(a)
(b)
(c)
(d)
(e)
(f)
any decrease in the result obtained after deducting current liabilities from current assets (on the
understanding that current assets includes stock and trade receivables and other current assets but excludes
cash and Cash Equivalents, and current liabilities includes trade payables and other current liabilities but
excludes Financial Debt);
any cash receipts in respect of any exceptional or extraordinary items;
any cash dividends or returns on Equity received by a member of the Group from any person in which the
Group has an ownership interest but which is not a member of the Group during such period;
any cash proceeds (to the extent not already included in Consolidated EBITDA) received by a member of
the Group from the disposal of assets to the extent such proceeds have not been paid into the Asset
Transfer Account; and
the amount of any outflows from the Asset Transfer Account in accordance with the terms of this
Agreement;
(except for the purposes of calculating Consolidated Excess Cash Flow) cash and Cash Equivalents held
by the Group at the beginning of that Testing Period.
less:
(i)
(ii)
(iii)
(iv)
Capex (excluding any additional Equity from Parent Companies, Shareholder Loans or Subordinated Debt
subject to a Subordination Commitment and any Retained Excess Cash Flow, provided, in all cases, that
such amounts have been utilised for new Capex);
any increase in the result obtained after deducting current liabilities from current assets (on the
understanding that current assets includes stock and trade receivables and other current assets but excludes
cash and Cash Equivalents, and current liabilities includes trade payables and other current liabilities but
excludes Financial Debt);
any amount effectively paid or due and payable on account of corporate income tax for the relevant
period; and
any cash disbursements in respect of any exceptional or extraordinary items.
all as reported in accordance with Generally Accepted Accounting Principles provided that (A) no amount shall be
included or deducted more than once, (B) the effects of non-cash items of that period shall be excluded from the
above calculation and (C) for the purposes of the calculation of the Debt Service Cover Ratio only, taking no
account of the payment made by the Group prior to the Signing Date in settlement of the litigation proceedings
between Cableuropa and Sogecable S.A.
“Consolidated Quarterly Financial Statements” has the meaning given to that term in paragraph (b) of
Clause 22.1 (Financial information).
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“Consolidated Revenues” means the consolidated operating revenues of the Group for the relevant Calendar
Quarter, calculated in accordance with Generally Accepted Accounting Principles.
“Control” means the dominant position of a legal entity, an individual, a group of individuals or group of legal
entities acting in concert with respect to any other entity or group of entities over which they exercise control and
with which they form a decision-making unit, all in accordance with Article 42 of the Spanish Code of Commerce
(Código de Comercio).
“Debt Instruments” means any debt capital markets instrument (including, but not limited to, senior secured bonds
or other debt instruments) issued or incurred by an SPV which fulfils each of the following conditions:
(a) it has a final maturity which is at least six (6) Months after the Termination Date for Facility B;
(b)
(c)
(d)
(e)
(f)
(g)
it is repayable in a single instalment upon its final maturity, subject to customary asset sale and change of
control put and company optional redemption provisions;
its financial covenants and other comparable covenants and undertakings of the Obligors are no more
restrictive than the ones contained under this Agreement (for the avoidance of doubt and for this purpose,
any covenant included in any Debt Instrument which is substantially equal to an equivalent covenant
under the Debt Instruments issued by Nara Cable on 22 October 2010, 14 July 2011 and 2 February 2012,
shall be considered to be “no more restrictive” and the incurrence covenants shall by definition be
considered to be “no more restrictive” than maintenance covenants);
it contains customary high-yield event of default grace periods of at least 30 days except for insolvency
and payment of principal when due;
it contains a provision requiring the Trustee (or equivalent) to give notice to the Agent of any notice of
default or acceleration under the Debt Instrument;
in case that any of the Obligors grants a guarantee, on an unsecured basis and ranking pari passu with the
Facilities, in connection with the obligations arising under the relevant Debt Instrument(s), such a
guarantee provides for a waiting period of 30 Business Days between any claim made thereunder and
amounts becoming due under the guarantee, except in the case of an Insolvency Event or upon the
ordinary maturity of the relevant Debt Instrument; and
its proceeds are on-lent to Cableuropa under an SPV Tranche (it being understood that such on-loan may
be pledged as security for the relevant Debt Instrument).
“Debt Purchase Transaction” means, in relation to a person, a transaction where such person:
(a)
(b)
(c)
purchases by way of assignment or transfer;
enters into any sub-participation in respect of; or
enters into any other agreement or arrangement having an economic effect substantially similar to a
sub-participation in respect of,
any Commitment or amount outstanding under this Agreement.
“Debt Service Cover Ratio” means, for each Testing Period, Consolidated Operating Cash Flow divided by Total
Debt Service.
“Default” means an Event of Default or any event or circumstance specified in Clause 25 (Events of Default) which
would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance
Documents or any combination of any of the foregoing) be an Event of Default.
“Defaulting Lender” means any Lender (other than a Lender which is a member of the Group or a Sponsor
Affiliate):
(a)
(b)
which has failed to make its participation in a Loan available or has notified the Agent that it will not
make its participation in a Loan available by the Utilisation Date of that Loan in accordance with
Clause 5.4 (Lenders’ participation);
which has otherwise rescinded or repudiated a Finance Document; or
A-10

(c)
with respect to which a Finance Party Insolvency Event has occurred and is continuing,
unless, in the case of paragraph (a) above:
(i)
its failure to pay is caused by:
(A)
(B)
administrative or technical error; or
a Disruption Event; and
payment is made within 5 Business Days of its due date; or
(ii)
the Lender is disputing in good faith whether it is contractually obliged to make the payment in
question.
“Delegate” means any delegate, agent, attorney or co-trustee appointed by the Security Agent.
“Designated Senior Debt” means any Senior Debt that is specifically designated in the instrument evidencing such
Senior Debt and is designated in a notice delivered by the relevant Obligor or other person entitled to designate any
Designated Senior Debt to the holders or a representative of the holders of such Senior Debt and in an “Officers’
Certificate” (as defined in the indentures governing the Existing High-Yield Notes and as may be defined in the
relevant indentures governing any Future High-Yield Notes) of the relevant Obligor or other person entitled to
designate any Designated Senior Debt delivered to the Trustee as “Designated Senior Debt” of the corresponding
Obligor for purposes of any Existing High-Yield Notes or Future High-Yield Notes.
“Disposal” has the meaning given to such term in paragraph (b) of Clause 9.2 (Mandatory prepayment events).
“Disposal Proceeds” has the meaning given to such term in paragraph (b) of Clause 9.2 (Mandatory prepayment
events).
“Disruption Event” means either or both of:
(a)
(b)
a material disruption to those payment or communications systems or to those financial markets which
are, in each case, required to operate in order for payments to be made in connection with the Facilities (or
otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which
disruption is not caused by, and is beyond the control of, any of the Parties; or
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to
the treasury or payments operations of a Party preventing that, or any other Party:
(i)
(ii)
from performing its payment obligations under the Finance Documents; or
from communicating with other Parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are
disrupted.
“Distributions” means any payment made on account of (i) distribution of dividends (in cash, in kind, interim
dividends and dividends distributed out of reserves); (ii) capital reductions involving the return of capital
contributions or return of the issuance premium; or (iii) any other transactions similar or analogous to those above,
the effect of which is to return capital or contributions.
“Domestic Lender” means:
(a)
(b)
(c)
a credit entity or financing entity referred to in paragraph (c) of Section 59 of Royal Decree 1777/2004 of
30 July (Real Decreto 1777/2004, de 30 de julio) approving the Corporate Income Tax Regulations;
a permanent establishment of a non Spanish resident financing entity referred to in the second paragraph
of Section 8.1 of Royal Decree 1776/2004 of 30 July (Real Decreto 1776/2004, de 30 de julio) approving
the Non-Resident Income Tax Regulations; and
a securitization fund (“fondo de titulización”) referred to in paragraph (k) of Section 59 of Royal Decree
1777/2004 of 30 July (Real Decreto 1777/2004, de 30 de julio) approving the Corporate Income Tax
Regulations.
A-11

“Dormant Subsidiary” means a member of the Group which does not trade (for itself or as agent for any other
person) and does not own, legally or beneficially, assets (including, without limitation, indebtedness owed to it)
which in aggregate have a value of €3,000,000 or more or its equivalent in other currencies.
“EIB” means the European Investment Bank.
“EIB Facilities” means one or a series of credit facilities that the Obligors may enter into with EIB for a total
amount up to three hundred million Euros (€300,000,000).
“Eligible Lender” means (a) a Lender (i) that is a resident of a Qualifying State for tax purposes, (ii) that does not
operate through a territory considered to be a tax haven under Spanish law (as provided by Royal Decree 1080/1991
of 5 July (Real Decreto 1080/1991, de 5 de Julio)), and (iii) that is not operating through a permanent establishment
in Spain to which the Facilities are effectively connected); or (b) a Domestic Lender.
“Engagement Letter” means the engagement letter dated on or about the date of this Agreement between the
Company and the Lenders under the Bridge Tranche (or their respective Affiliates).
“Environment” means humans, animals, plants and all other living organisms including the ecological systems of
which they form part and the following media:
(a)
(b)
(c)
air (including, without limitation, air within natural or man-made structures, whether above or below
ground);
water (including, without limitation, territorial, coastal and inland waters, water under or within land and
water in drains and sewers); and
land (including, without limitation, land under water).
“Environmental Claim” means any claim, proceeding, formal notice or investigation by any person in respect of
any Environmental Law.
“Environmental Law” means any applicable law or regulation which relates to:
(a)
(b)
(c)
the pollution or protection of the Environment;
the conditions of the workplace; or
the generation, handling, storage, use, release or spillage of any substance which, alone or in combination
with any other, is capable of causing harm to the Environment, including, without limitation, any waste.
“Environmental Permits” means any permit and other Authorisation and the filing of any notification, report or
assessment required under any Environmental Law for the operation of the business of any member of the Group
conducted on or from the properties owned or used by any member of the Group.
“Equity” means the amounts paid on account of fully paid up capital stock plus any issuance premium. Equity shall
also include the amounts contributed by shareholders in the form of participating loans granted by such
shareholders, which fulfil the requirements set out in article 20 of the Royal Decree-Law 7/1996, of 7 June, as
amended by the second additional provision or Law 10/1996, of 18 December, for them to be taken into account for
the purposes of Sections 317 and 363 of the Capital Companies Law (Ley de Sociedades de Capital), but excluding
any capitalised interest after the Closing Date.
“EURIBOR” means, in relation to any Loan in Euro:
(a)
(b)
the applicable Screen Rate; or
(if no Screen Rate is available for the Interest Period of that Loan) the Base Reference Bank Rate,
as of the Specified Time on the Quotation Day for Euro and for a period comparable to the Interest Period of that
Loan and, if any such rate is below zero, EURIBOR will be deemed to be zero.
“Event of Default” means any event or circumstance specified as such in Clause 25 (Events of Default).
“Existing Bank Guarantees (Avales Existentes)” means the bank guarantees executed and delivered but not
released as of the Signing Date, the amount and effective term of which are described in Schedule 13 (Existing
Debt), that secure the Existing Subsidised Financing of the Borrowers.
A-12

“Existing Credit Agreement” means the commercial credit agreement dated 27 October 2005, as amended and
restated on 20 June 2007, 31 July 2008, 13 May 2010, 22 October 2010, 14 July 2011 and 2 February 2012 and
made between the Company, certain subsidiaries of the Company as borrowers and guarantors, Société Générale,
London Branch as facility agent and certain financial entities and institutional investors as lenders.
“Existing Credit Facilities” means the €2,769,660,926.18 term and revolving credit facilities and bank guarantee
facilities and US$1,000,000,000 term facility available to the Borrowers under (and as defined in) the Existing
Credit Agreement, with the US Dollar amount of the term facility tranche having been converted for reference
purposes into an amount in Euros of €761,266,747.87 on the Sixth Amendment Signing Date (as defined in the
Existing Credit Agreement).
“Existing Debt” means the amount outstanding as of the Signing Date under the financing agreements executed by
the Group, the amounts, dates and counterparties of which are identified in Schedule 13 (Existing Debt).
“Existing High-Yield Notes” means the high-yield notes issued by ONO Finance II plc maturing in 2019:
(a)
(b)
in the aggregate nominal amount of two hundred and ninety five million (€295,000,000) Euros, bearing
nominal annual fixed interest at 11.125% per annum; and
in the aggregate nominal amount of two hundred and twenty five million ($225,000,000) US Dollars,
bearing nominal annual fixed interest at 10.875% per annum,
and guaranteed by Midco, Cableuropa and certain other Obligors, together with the Financial Debt agreements
(including any agreements in relation to High-Yield Proceeds Loans used to on-lend the proceeds of such issuances
to Cableuropa) related to any such issuances.
“Existing SPV Tranches” means “SPV Tranche 1”, “SPV Tranche 2” and “SPV Tranche 3” under (and as defined
in) the Existing Credit Agreement.
“Existing Subsidised Financing” means the loans and facilities that have been granted to the Borrowers as of the
Signing Date by any European Union, state, autonomous, provincial and local authorities or by any other
governmental agencies, the amounts, dates and counterparties of which are identified in Schedule 13 (Existing
Debt).
“Facilities Hedge Agreement” means the financial transactions master agreement or agreements (conforming,
either to the ISDA form of the International Swaps and Derivatives Association, Inc. or to the CMOF form of the
Asociación Española de Banca) and the corresponding confirmation or confirmations thereof to hedge interest rate
or exchange rate fluctuations in respect of the Facilities executed between Cableuropa and each Facilities Hedge
Entity, or a designated company within its group, together with any subsequent amendments hereto and novations
thereof.
“Facilities Hedge Entity” means any Lender or Lenders (or the Affiliate or Related Fund of a Lender) that may, at
any time, be Cableuropa’s counterparty under each Facilities Hedge Agreement and any subsequent amendment
thereto or novation thereof.
“Facility” means a Term Facility or the Revolving Facility.
“Facility A” means the term loan facility made available under this Agreement as described in paragraph (a)(i) of
Clause 2.1 (The Facilities).
“Facility A Commitment” means:
(a)
(b)
in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading
“Facility A Commitment” in Part IIA of Schedule 1 (The Original Parties) and the amount of any other
Facility A Commitment transferred to it under this Agreement or assumed by it in accordance with
paragraph (a) of Clause 2.5 (Increase); and
in relation to any other Lender, the amount in the Base Currency of any Facility A Commitment
transferred to it under this Agreement or assumed by it in accordance with paragraph (a) of Clause 2.5
(Increase);,
to the extent:
(i)
(ii)
not cancelled, reduced or transferred by it under this Agreement; and
not deemed to be zero pursuant to Clause 27.2 (Disenfranchisement on Debt Purchase
Transactions entered into by Sponsor Affiliates).
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“Facility A Loan” means a loan made or to be made under Facility A or the principal amount outstanding for the
time being of that loan.
“Facility A Repayment Date” means each of the dates specified in paragraph (a) of Clause 7.1 (Repayment of
Term Loans) as Repayment Dates.
“Facility B” means the term loan facility made available under this Agreement as described in paragraph (a)(ii) of
Clause 2.1 (The Facilities).
“Facility B Commitment” means:
(a)
(b)
in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading
“Facility B Commitment” in Part IIA of Schedule 1 (The Original Parties) and the amount of any other
Facility B Commitment transferred to it under this Agreement or assumed by it in accordance with
paragraph (a) of Clause 2.5 (Increase); and
in relation to any other Lender, the amount in the Base Currency of any Facility B Commitment
transferred to it under this Agreement or assumed by it in accordance with paragraph (a) of Clause 2.5
(Increase),
to the extent:
(i)
(ii)
not cancelled, reduced or transferred by it under this Agreement; and
not deemed to be zero pursuant to Clause 27.2 (Disenfranchisement on Debt Purchase
Transactions entered into by Sponsor Affiliates).
“Facility B Increase Amount” has the meaning given to such term in paragraph (b) of Clause 2.6 (Increase of
Revolving Facility or Facility B).
“Facility B Loan” means a loan made or to be made under Facility B or the principal amount outstanding for the
time being of that loan.
“Facility Office” means:
(a)
(b)
in respect of a Lender, the office or offices notified by that Lender to the Agent in writing on or before the
date it becomes a Lender (or, following that date, by not less than five Business Days’ written notice) as
the office or offices through which it will perform its obligations under this Agreement; or
in respect of any other Finance Party, the office in the jurisdiction in which it is resident for tax purposes.
“Fee Letter” means:
(a)
(b)
any letter or letters dated on or about the date of this Agreement between the Arranger and the Company
(or the Agent and the Company, an Original Lender and the Company, or the Security Agent and the
Company, as the case may be) setting out any of the fees referred to in Clause 14 (Fees); and
any other agreement setting out fees payable to a Finance Party under a Finance Document.
“Final Maturity Date” means the latest falling Termination Date under this Agreement, including the Termination
Date of any Facilities incorporated into this Agreement after the Signing Date pursuant to Clauses 2.2 (Additional
SPV Tranches) or 2.3 (New Bank Tranches) or any Replacement Revolving Facility implemented pursuant to
Clause 2.4 (Replacement Revolving Facility).
“Finance Document” means this Agreement, any Accession Deed, any Compliance Certificate, the Engagement
Letter, any Fee Letter, the Permitted Hedge Agreements, the Intercreditor Agreement, any Resignation Letter, any
Selection Notice, any Security Agreement, any Amendment and Restatement Agreement, any Utilisation Request,
any Ancillary Document and any other document designated as a “Finance Document” by the Agent and the
Company.
“Finance Party” means the Agent, the Arranger, the Security Agent, a Lender or any Ancillary Lender.
“Finance Party Insolvency Event” in relation to a Finance Party means that the Finance Party:
(a)
is dissolved (other than pursuant to a consolidation, amalgamation or merger);
A-14

(b)
(c)
(d)
(e)
becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its
debts as they become due;
makes a general assignment, arrangement or composition with or for the benefit of its creditors;
institutes or has instituted against it, by a regulator, supervisor or any similar official with primary
insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or
organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency
or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting
creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator,
supervisor or similar official;
has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is
presented for its winding-up, liquidation or examination, and, in the case of any such proceeding or
petition instituted or presented against it, such proceeding or petition is instituted or presented by a person
or entity not described in paragraph (d) above and:
(i)
(ii)
results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the
making of an order for its winding-up, liquidation or examination; or
is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution
or presentation thereof;
(f)
(g)
(h)
(i)
(j)
(k)
has exercised in respect of it one or more of the stabilisation powers pursuant to Part 1 of the Banking
Act 2009 and/or has instituted against it a bank insolvency proceeding pursuant to Part 2 of the Banking
Act 2009 or a bank administration proceeding pursuant to Part 3 of the Banking Act 2009;
has a resolution passed for its winding-up, official management, liquidation or examination (other than
pursuant to a consolidation, amalgamation or merger);
seeks or becomes subject to the appointment of an administrator, provisional liquidator, provisional
examiner, examiner, conservator, receiver, trustee, custodian or other similar official for it or for all or
substantially all its assets, all other than by way of an Undisclosed Administration;
has a secured party take possession of all or substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially
all its assets and such secured party maintains possession, or any such process is not dismissed,
discharged, stayed or restrained, in each case within 30 days thereafter;
causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has
an analogous effect to any of the events specified in paragraphs (a) to (i) above; or
takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the
foregoing acts.
“Financial Covenants” has the meaning given to such term in Clause 23.1 (Financial covenants).
“Financial Debt” means, at any time, any obligation for payment or repayment of money, whether present or
future, on account of the following:
(a)
(b)
(c)
(d)
Subsidised Financing and short, medium and long-term debts payable to credit entities and other financial
institutions under loan, credit, discount and overdraft agreements;
Subordinated Debt, as well as any other loans or credit facilities subordinated to the rights of the Secured
Parties under the Finance Documents;
the issuance of debt securities in the form of notes, bonds, promissory notes or any other short, medium or
long-term debt instrument;
non-operating financial leases, with or without option to purchase;
A-15

(e)
(f)
(g)
(h)
(i)
(j)
(k)
amounts owed to trade creditors in the ordinary course of the Telecommunications Business after the
passage of one hundred eighty (180) calendar days from their due date, unless (i) such amounts are in
dispute and the debtor has not filed frivolous or bad faith claims, or (ii) the payment terms of such
amounts owed allow for a payment period of more than 180 days and those amounts do not accrue
interest;
any interest-bearing forward agreement, contract or arrangement for the purchase of assets or services, the
last payment date of which is deferred for more than three hundred sixty-five (365) calendar days in order
to finance the acquisition of those assets or services;
amounts obtained through the securitisation, sale, discount or assignment of present or future receivables,
provided that there is recourse to the assignor;
the amount guaranteed or counter-guaranteed under the Financial Guarantees provided to persons outside
of the Group, with the understanding that, in order to avoid the double counting of guarantees, if an
obligation assumed by any of the Obligors falling within the definition of Financial Debt is guaranteed or
counter-guaranteed by any of the Obligors, this latter guarantee or counter-guarantee shall not be
computed again as Financial Debt;
Performance Guarantees, as from the time of their enforcement;
amounts received on account of capital or premium, for the issuance of shares redeemable at the option of
the shareholders; and
any other obligation, commitment or financing agreement of similar nature or effect executed by any
Obligor which has the commercial effect of a borrowing,
but not including:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Subordinated Debt subject to a Subordination Commitment (which, for the avoidance of doubt,
does not include Existing High-Yield Notes or Future High-Yield Notes or Future Subordinated
Facilities);
non-reimbursable grants and subsidies provided to each Obligor by any European Union, state,
autonomous, provincial or local authorities or by any governmental agency;
trade payables in the ordinary course of the Telecommunications Business other than those
contemplated in paragraph (e) above; or
the amount guaranteed or counter-guaranteed under the Performance Guarantees, provided that
enforcement thereof has not commenced and that the persons guaranteed under such
Performance Guarantees have not communicated their intention to enforce them;
the net liability with respect to any Permitted Hedge Agreement; and
for the avoidance of doubt, factoring or confirming facilities without recourse.
“Financial Guarantees” means the bank guarantees or counter-guarantees granted by credit entities or financial
institutions for the benefit of any of the Obligors intended to guarantee the full and timely performance of their
obligations under the Financial Debt, or any bank guarantee or counter-guarantee granted by any of the Obligors in
order to guarantee the full and timely performance of a third-party’s obligations under an obligation that would fall
within the definition of Financial Debt.
“Financial Interest Expense” means, for each Testing Period:
(a)
the aggregate amount of all interest, commissions, fees, expenses and other financial payments other than
principal (including payments under non-operating financial leases) accrued or incurred by the members
of the Group under any of the debts or obligations included in the definition of Financial Debt (expressly
excluding (i) any fees paid to the Lenders and transactions costs and expenses paid by the Company in
connection with this Agreement, any Amendment and Restatement Agreements, and any fees and
expenses payable in respect of any SPV Tranche (and the underlying Debt Instrument) or any New Bank
Tranche) and (ii) any fees and transaction costs and expenses paid by the Company in connection with the
issuance of any Future High Yield Notes or any Permitted Debt); less
A-16

(b)
the aggregate amount of all income from interest, commissions, expenses and other sums of a financial
nature accruing or collected by the members of the Group, all as disclosed in the related consolidated
income statement and always in accordance with Generally Accepted Accounting Principles,
and taking no account, in the case of paragraphs (a) and (b) above, of amounts of gains or, as the case may be,
losses, resulting from fluctuations in any relevant currency.
“Financial Sponsors” means J.P.Morgan Partners (BCHA) Luxembourg, S.à.r.l.; J.P.Morgan Partners (PTC)
Luxembourg, S.à.r.l.; J.P.Morgan Partners Global Investors Luxembourg, S.à.r.l.; JPMP GCO Equity Investments,
S.à.r.l.; J.P.Morgan Partners Global Investors (Paul) Luxembourg, S.à.r.l.; J.P.Morgan Partners Global Investors
(Selldown) Luxembourg, S.à.r.l.; J.P.Morgan Partners Global Investors (Cayman/Selldown) III Luxembourg,
S.à.r.l.; J.P. Morgan Partners Global Investors (Selldown II) Luxembourg, S.à.r.l.; PEP GCO S.á.r,l.; PEP GCO
Co-invest, S.á.r.l.; PEP GCO HL Co-invest, S.á.r.l.; QCP GCO Investments S.á.r.l.; QCP GCO Investments II
S.á.r.l.; QCP GCO Investments A S.á.r.l.; QCP GCO Investments II-A S.á.r.l.; Quadrangle Capital Partners LP;
QCP GCO Equity Investors, S.á.r.l.; THL GCO Investments I, S.á.r.l.; THL GCO Investments II, S.á.r.l.; THL GCO
Investments III, S.á.r.l.; THL GCO Investments HL, S.á.r.l.; THL GCO Investments IV, S.á.r.l.; THL GCO
GmbH & Co KG, PEP ESP S.á.r.l.; and any Related Fund or any Affiliate of any of the foregoing.
“First Amendment Date” means the execution date of the Amendment and Restatement Agreement incorporating
SPV Tranche 4 into this Agreement as an Additional SPV Tranche.
“Funds Flow Statement” means a funds flow statement in agreed form and delivered pursuant to Part I of
Schedule 2 (Conditions Precedent).
“Future High-Yield Notes” means:
(a)
(b)
the high-yield notes or similar financial products hereafter issued by any person who is not a member of
the Group with a personal unlimited guarantee from all or any of the Obligors; and
the Financial Debt agreements (including any agreements in relation to High-Yield Proceeds Loans used
to on-lend the proceeds of such issuances to any of the Obligors) related to any issuance described under
paragraph (a) above, and/or any bridge loan granted in connection with such issuance,
provided that, in each case, (i) such indebtedness and any such guarantee are subordinated to the rights of the
Secured Parties arising from the Finance Documents under conditions substantially similar in all material respects to
those of the Existing High-Yield Notes and High-Yield Proceeds Loans relating thereto (having its Trustee accede
to an intercreditor agreement entered into upon terms satisfactory to the Lenders or, otherwise, having its Trustee
accede to the Intercreditor Agreement then in force) and having a maturity equal to or longer than the maturity of
the Existing High-Yield Notes; and (ii) the payment terms of any High-Yield Proceeds Loans or similar agreements
used to on-lend the proceeds of such issuances to any of the Obligors are the same as the payment terms of the
underlying Future High-Yield Notes except for any additional interest or fees that may be agreed between the
relevant issuer and the Obligors, but in any event such additional interest or fees shall not exceed the amount
required in order to ensure that the relevant issuer receives the minimum customary tax profit (after payment of
corporate expenses which, for the avoidance of doubt, shall be permitted to be paid); and (iii) until there are no
Bridge Commitments or Bridge Loans outstanding, the proceeds of any High-Yield Proceeds Loans in respect of
Future High-Yield Notes must be applied to (1) prepay the Bridge Loans and (2) (to the extent no Bridge Loans are
outstanding) cancel the Total Bridge Commitments.
“Future Subordinated Facilities” means any subordinated facilities, including in the form of mezzanine facilities
agreements or second lien facilities agreements or similar financial arrangements, hereafter entered into by any of
the Obligors or with a personal unlimited guarantee from all or any of the Obligors and/or any loan or similar
instrument used to on-lend funds to any Obligor (such loan or instrument being a “Future Subordinated Facilities
Proceeds Loan”) and/or any bridge loans granted in connection with such facilities, provided that:
(a)
(b)
such indebtedness of the Obligors (whether on account of principal, interest of any kind, fees, expenses or
any other cause) is subordinated to the rights of the Secured Parties arising from the Finance Documents
under the Intercreditor Agreement or under conditions substantially similar in all material respects to
those contained in the Intercreditor Agreement (provided that these facilities may be secured with second
lien and/or second ranking in rem security to the extent the granting of such security is not in
contravention of any Financial Debt of the Obligors then existing) and has a maturity equal to or longer
than the maturity of the Existing High-Yield Notes;
the payment terms of the relevant Future Subordinated Facilities Proceeds Loan are the same as the
payment terms of the underlying Future Subordinated Facilities except for any additional interest or fees
that may be agreed between the relevant issuer or borrower and the Obligors, but in any event such
A-17

additional interest or fees shall not exceed the amount required in order to ensure that the relevant issuer
or borrower receives the minimum customary tax profit;
(c)
(d)
(e)
(f)
the creditors (or agent of creditors on their behalf) of such indebtedness accede to the Intercreditor
Agreement;
none of the Future Subordinated Facilities (nor any agreements related thereto) conflicts in any material
respect with any Finance Document or results in a breach or termination of any Finance Document;
in connection with each Future Subordinated Facility, Midco must irrevocably consent to assume
automatically and unconditionally the obligations of the borrower thereunder as contemplated by
paragraph (b) clause 5.4 of the Intercreditor Agreement; and
until there are no Bridge Commitments or Bridge Loans outstanding, the proceeds of any Future
Subordinated Facilities (if borrowed by an Obligor) and Future Subordinated Facilities Proceeds Loans
must be applied to (i) prepay the Bridge Loans and (ii) (to the extent no Bridge Loans are outstanding)
cancel the Total Bridge Commitments.
“Future Subordinated Facilities Proceeds Loan” has the meaning given to it in the definition of “Future
Subordinated Facilities”.
“GCO” means Grupo Corporativo ONO, S.A.
“Generally Accepted Accounting Principles” means the accounting principles included in the Spanish General
Accounting System (Plan General de Contabilidad), approved by Royal Decree No. 1514/2007 of 16 November
(Real Decreto 1514/2007, de 16 de noviembre), or any other successor principles applicable in Spain. Any reference
to the General Accounting System shall be understood as a reference to all regulations that may hereafter replace it,
including the International Accounting Standards or the International Financial Reporting Standards adopted by the
European Union through Regulation (EC) 1725/2003 of the European Commission, in accordance with Regulation
(EC) 1606/2002 of the European Parliament and of the Council of Europe, to the extent they are applicable to the
Group.
“Group Structure Chart” means the group structure chart provided to the Agent pursuant to Part I of Schedule 2
(Conditions precedent to initial Utilisation).
“Group” means Cableuropa and its Subsidiaries from time to time provided that, for the purposes of Clauses 21
(Representations), 24 (General Undertakings) and 25 (Events of Default), a reference to the “Group” shall exclude
all Dormant Subsidiaries.
“Guarantor” means an Original Guarantor or an Additional Guarantor, unless it has ceased to be a Guarantor in
accordance with Clause 28 (Changes to the Obligors).
“Hedge Entities” means the Original Hedge Entities, the Facilities Hedge Entities and any other Lender (or
Affiliate or Related Fund of a Lender), which may enter into any foreign exchange or interest rate protection
arrangements with any Obligor under paragraph (c) of the definition of Permitted Hedge Agreements (provided that
if any such person ceases to be a Lender or an Affiliate or a Related Fund of a Lender after it has entered into such
arrangements, that shall not prevent it from continuing to be a Hedge Entity).
“High-Yield Notes” means the Existing High-Yield Notes and the Future High-Yield Notes.
“High-Yield Proceeds Loan” means a loan advanced by an issuer of High-Yield Notes to on-lend the proceeds of
the relevant High-Yield Notes to the Company or another Obligor, and subordinated to the rights of the Secured
Parties arising from the Finance Documents on the terms set out in the Intercreditor Agreement.
“Holding Company” means, in relation to a person, any other person in respect of which it is a Subsidiary.
“Holding Issuance Loans” means those Shareholder Loans which proceeds have been obtained by any Parent
Company from Financial Debt agreements related to any Future Subordinated Facilities, any Future High-Yield
Notes or other Financial Debt agreements in substantially similar terms as the Future High-Yield Notes and, in any
event, such proceeds are on-lent to any member of the Group.
“Impaired Agent” means the Agent at any time when:
(a)
it has failed to make (or has notified a Party that it will not make) a payment required to be made by it
under the Finance Documents by the due date for payment;
A-18

(b)
(c)
(d)
the Agent otherwise rescinds or repudiates a Finance Document;
(if the Agent is also a Lender) it is a Defaulting Lender under paragraph (a) or (b) of the definition of
“Defaulting Lender”; or
a Finance Party Insolvency Event has occurred and is continuing with respect to the Agent,
unless, in the case of paragraph (a) above:
(i)
its failure to pay is caused by:
(A)
(B)
administrative or technical error; or
a Disruption Event; and
payment is made within three (3) Business Days of its due date; or
(ii)
the Agent is disputing in good faith whether it is contractually obliged to make the payment in
question.
“Increase Confirmation” means a confirmation substantially in the form set out in Schedule 11 (Form of Increase
Confirmation).
“Increase Lender” has the meaning given to that term in paragraph (a) of Clause 2.5 (Increase).
“Initial Bridge Period” means [ ].
“Initial Final Maturity Date” means the latest falling Termination Date of any of the Facilities made available
under this Agreement as at the Signing Date.
“Insolvency Event” has the meaning originally given to it in section 6.01(a)(vii) of the indentures governing the
Debt Instruments issued by Nara Cable on 22 October 2010, 14 July 2011 and 2 February 2012.
“Insolvency Law” means the Insolvency Law 22/2003 of 9 July (Ley 22/2003, de 9 de Julio, Concursal) as
amended.
“Insurance Account” means Cableuropa’s account held with the Agent, pledged in accordance with the
corresponding Security Agreement, bearing interest at market rates and of restricted availability.
“Insurance Proceeds” has the meaning given to such term in paragraph (b) of Clause 9.2 (Mandatory prepayment
events)
“Intercreditor Agreement” means (a) the intercreditor agreement dated the same date as this Agreement and made
between, among others, the Company, the Debtors (as defined in the Intercreditor Agreement), Société Générale,
S.A., London Branch as Security Agent, Société Générale, S.A., London Branch as senior agent, the Lenders, the
Arranger, and the Trustees of the Existing High Yield Notes and (b) any other agreement to be executed between
the Lenders and any other creditors of the Group and/or the trustee or paying agent for any Future High Yield Notes
and/or the agent in respect of any Future Subordinated Facilities and which is in any event in form and substance
satisfactory to the Majority Lenders.
“Interest Period” means, in relation to a Loan, each period determined in accordance with Clause 12 (Interest
Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 11.3 (Default
interest).
“Investment Grade Rating” means a credit rating provided by one (1) of the following two (2) agencies which is
equal to or higher than: (a) BBB- from Standard & Poor’s Rating Services; or (b) Baa3 from Moody’s Investor
Service Inc.
“IPO” means the admission for trading on a stock exchange located in Spain or in any member State of the
Organisation for Economic Cooperation and Development (OECD), of shares representing all or part of the capital
stock of Cableuropa, a Material Subsidiary or a Parent Company, as the case may be, so long as that listing is
preceded by an initial public offering for the subscription (Oferta Pública de Suscripción) for new shares of the
issuing entity or of subscription rights, convertible notes, warrants or any other similar instrument that, directly or
indirectly, entitles its holder to subscribe for such new shares.
A-19

For the avoidance of doubt:
(a)
(b)
any such listing which is preceded solely by an initial public offering for the sale of existing shares
(Oferta Pública de Venta) shall not be considered an IPO for the purposes of this Agreement; and
in the event that the listing is preceded by a combination of an initial public offering for the subscription
of new shares (Oferta Pública de Suscripción) and an initial public offering for the sale of existing shares
(Oferta Pública de Venta), the portion relating to such initial public offering for the sale of existing shares
shall not be considered an IPO for the purposes of this Agreement.
“IPO Proceeds” has the meaning given to such term in paragraph (b) of Clause 9.2 (Mandatory prepayment
events).
“Legal Reservations” means:
(a)
(b)
(c)
(d)
the principle that equitable remedies may be granted or refused at the discretion of a court and the
limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting
the rights of creditors;
the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability
for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or
counterclaim;
similar principles, rights and defences under the laws of any Relevant Jurisdiction; and
any other matters which are set out as qualifications or reservations as to matters of law of general
application in any legal opinion delivered to the Agent pursuant to this Agreement or any other Finance
Document.
“Lender” means:
(a)
(b)
(c)
(d)
any Original Lender;
any bank, financial institution, trust fund or other entity which has become a Party as a Lender in
accordance with paragraph (a) of Clause 2.5 (Increase) or Clause 26 (Changes to the Lenders);
any SPV which has become a Party as a Lender of an Additional SPV Tranche in accordance with
Clause 2.2 (Additional SPV Tranches); and
any New Bank Lender which has become a Party as a Lender of a New Bank Tranche accordance with
Clause 2.3 (New Bank Tranches),
which in each case has not ceased to be a Lender in accordance with the terms of this Agreement.
“LIBOR” means, in relation to any Loan in US Dollars:
(a)
(b)
the applicable Screen Rate; or
(if no Screen Rate is available for the currency or Interest Period of that Loan) the Base Reference Bank
Rate,
as of the Specified Time on the Quotation Day for the currency of that Loan and a period comparable to the Interest
Period of that Loan and, if any such rate is below zero, LIBOR will be deemed to be zero.
“Licence” means any of the licences, authorisations, approvals, concessions, registrations, permits and
administrative requirements relating to the telecommunications, audiovisual, environmental, zoning or similar
sectors, including with respect to the use of the spectrum, that may at any time be required pursuant to applicable
European Union, state, autonomous, provincial or local regulations for the development of the Telecommunications
Business by any of the Obligors.
“Limitation Acts” means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984.
“Liquidity” means cash and Cash Equivalents on balance sheet, as well as any committed, available and undrawn
commitments under any financial agreement constituting Permitted Debt available for a minimum of six (6) months
A-20

plus one (1) day from 31 December in each financial year for general corporate purposes (provided that in the case
of credit lines which are not included in this Agreement, the Chief Financial Officer (Director Financiero) ofthe
Company certifies in writing their availability).
“LMA” means the Loan Market Association.
“Loan” means a Term Loan or a Revolving Facility Loan.
“Majority Lenders” means (subject to Clause 38.4 (SPV Tranches)):
(a)
(b)
(for the purposes of paragraph (a) of Clause 38.1 (Required consents) in the context of a waiver in relation
to a proposed Utilisation of the Revolving Facility of the condition in Clause 4.2 (Further conditions
precedent)), a Lender or Lenders whose Revolving Facility Commitments aggregate more than
66.66 per cent. of the Total Revolving Facility Commitments; and
(in any other case), a Lender or Lenders whose Commitments aggregate more than 66.66 per cent. of the
Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than
66.66 per cent. of the Total Commitments immediately prior to that reduction).
“Mandatory Cost” means the percentage rate per annum calculated by the Agent in accordance with Schedule 4
(Mandatory Cost Formula).
“Mandatory Prepayment Account” means an interest-bearing account:
(a)
(b)
(c)
(d)
held in Madrid by a Borrower with the Agent;
identified in a letter between Cableuropa and the Agent as a Mandatory Prepayment Account;
subject to Security pursuant to paragraph (b)(ii) of Clause 24.3 (Transaction Security); and
from which no withdrawals may be made by any members of the Group except as contemplated by this
Agreement,
as the same may be redesignated, substituted or replaced from time to time.
“Margin” means:
(a)
(b)
(c)
(d)
(e)
(f)
in relation to any Facility A Loan 4.50 per cent. per annum;
in relation to any Facility B Loan 5.25 per cent. per annum;
in relation to any Revolving Facility Loan 4.50 per cent. per annum;
in relation to a Bridge Loan during the Initial Bridge Period 5.25 per cent. per annum;
in relation to any Unpaid Sum relating or referable to a Facility, the rate per annum specified above for
that Facility; and
in relation to any other Unpaid Sum, the highest rate specified above,
but if:
(g)
(h)
(i)
a period of at least 12 Months has expired since the Closing Date;
no Event of Default has occurred and is continuing; and
the ratio of Total Debt as at the last day of the most recently completed Testing Period to
Consolidated LTM EBITDA in respect of the most recently completed Testing Period is within
a range set out below,
then the Margin for each Loan under Facility A and the Revolving Facility will be the percentage per annum set out
below opposite that range:
Facility A and Revolving Facility
Total Debt to Consolidated LTM EBITDA ratio
Margin % p.a.
Greater than or equal to 4.50:1 ........................... 4.50
Less than 4.50:1 but greater than or equal to 4.00:1 ........... 4.25
Less than 4.00:1 but greater than or equal to 3.00:1 ........... 4.00
Less than 3.00:1 ...................................... 3.75
A-21

and the Margin for the Loan under Facility B will be the percentage per annum set out below opposite that range:
Facility B Margin
Total Debt to Consolidated LTM EBITDA ratio
% p.a.
Greater than or equal to 4.00:1 ..................................... 5.25
Less than 4.00:1 ................................................. 5.00
However:
(i)
(ii)
(iii)
any increase or decrease in the Margin for a Loan shall take effect as of the date (the “reset
date”) on which the Agent receives the relevant financial statements and related Compliance
Certificate for that Testing Period pursuant to Clause 22.1 (Financial information) and
Clause 22.2 (Compliance Certificates) respectively, and such increase or decrease shall be
applied as from the first day of the Interest Period for that Loan during which such financial
statements and related Compliance Certificate were delivered;
if, following receipt by the Agent of the financial statements of the Group and related
Compliance Certificate, those statements and Compliance Certificate do not confirm the basis
for a reduced Margin, then the provisions of Clause 11.2 (Payment of interest) shall apply and
the Margin for each Loan shall be the percentage per annum determined using the table above,
and the revised ratio of Total Debt to Consolidated LTM EBITDA calculated using the figures
in the Compliance Certificate; and
while an Event of Default is continuing, the Margin for each Loan under Facility A, Facility B
and the Revolving Facility shall be the highest percentage per annum set out above for a Loan
under that Facility.
“Material Adverse Change” means any event or circumstance (or a combination thereof) occurring or evidenced
after the Closing Date that:
(a)
(b)
has or may reasonably be expected to have a material adverse effect on the financial condition, business or
assets of the Obligors considered as a whole in a manner that will result in the inability of the Obligors to
satisfy the obligations assumed by the Obligors vis-à-vis the Lenders under the Finance Documents; or
renders any of the Finance Documents and/or any of the guarantees granted from time to time to the
Lenders by virtue of this Agreement illegal, invalid, ineffective or unenforceable against any of the
Obligors.
“Material Subsidiaries” means each of the Obligors and any other companies over which any Obligor has Control,
which individually represent five (5%) per cent or more of:
(a)
(b)
(c)
Total Consolidated Assets;
Consolidated Revenues; or
Consolidated EBITDA.
Compliance with the conditions set out above shall be determined by reference to the most recent Compliance
Certificate supplied by the Company and/or the latest audited financial statements of that Subsidiary (consolidated
in the case of a Subsidiary which itself has Subsidiaries) and the latest Consolidated Financial Statements. However
if a Subsidiary has been acquired since the date as at which the latest Audited Consolidated Annual Financial
Statements were prepared, Total Consolidated Assets, Consolidated Revenues and Consolidated EBITDA shall be
deemed to be adjusted in order to take into account the acquisition of that Subsidiary (that adjustment being certified
by the Group’s Auditors as representing an accurate reflection of the revised Consolidated EBITDA, Consolidated
Revenues or Total Consolidated Assets).
“Midco” means ONO Midco, S.A.U., a wholly-owned subsidiary of GCO.
“Month” means a period starting on one day in a calendar month and ending on the numerically corresponding day
in the next calendar month, except that:
(a)
(subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period
shall end on the next Business Day in that calendar month in which that period is to end if there is one, or
if there is not, on the immediately preceding Business Day;
A-22

(b)
(c)
if there is no numerically corresponding day in the calendar month in which that period is to end, that
period shall end on the last Business Day in that calendar month; and
if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on
the last Business Day in the calendar month in which that Interest Period is to end.
The above rules will only apply to the last Month of any period.
“New Bank Tranche” has the meaning given to such term in paragraph (a) of Clause 2.3 (New Bank Tranches).
“New Bank Tranche Commitment” means:
(a)
(b)
in relation to a New Bank Tranche Lender, the amount in the Base Currency which, following the
execution of the relevant Amendment and Restatement Agreement contemplated by Clause 2.3 (New
Bank Tranches) will be set opposite its name in Part IIA of Schedule 1 (The Original Parties) and the
amount of any other New Bank Tranche Commitment transferred to it under this Agreement or assumed
by it in accordance with paragraph (a) of Clause 2.5 (Increase); and
in relation to any other Lender, the amount in the Base Currency of any New Bank Tranche Commitment
transferred to it under this Agreement or assumed by it in accordance with paragraph (a) of Clause 2.5
(Increase),
to the extent not cancelled, reduced or transferred by it under this Agreement.
“New Bank Tranche Lender” has the meaning given to such term in paragraph (b) of Clause 2.3 (New Bank
Tranches).
“New Bank Tranche Loan” means any loan made or to be made under a New Bank Tranche or the principal
amount outstanding of that loan.
“New Lender” has the meaning given to that term in Clause 26.1 (Changes to the Lenders).
“Non-Consenting Lender” has the meaning given to that term in Clause 38.5 (Replacement of Lender).
“Non-Core Business” means such part of the business of the Obligors including its associated assets, which is not
necessary to provide the direct access cable services to the residential segment (negocio de acceso directo por
cable).
“Notifiable Debt Purchase Transaction” has the meaning given to that term in paragraph (b) of Clause 27.2
(Disenfranchisement on Debt Purchase Transactions entered into by Sponsor Affiliates).
“Obligor” means a Borrower or a Guarantor.
“Obligors’ Agent” means the Company, appointed to act on behalf of each Obligor in relation to the Finance
Documents pursuant to Clause 2.8 (Obligors’ Agent).
“Original Financial Statements” means the individual and consolidated annual audited financial statements of
Cableuropa for the financial year ending 31 December 2011.
“Original Hedge Agreements” means: [ ], to hedge US Dollar-Euro exchange rate risk with respect to the
coupon payments on the Existing High-Yield Notes, together with the relevant ISDA agreements and schedules and
any amendments thereto and novations thereof.
“Original Hedge Entity” means each of [
] as a counterparty under an Original Hedge Agreement.
“Original Obligor” means an Original Borrower or an Original Guarantor.
“Original SPV Tranche Commitment” means a SPV Tranche 1 Commitment, a SPV Tranche 2 Commitment or a
SPV Tranche 3 Commitment.
“Original SPV Tranches” means SPV Tranche 1, SPV Tranche 2 and SPV Tranche 3.
“Parent Company” means each of GCO, Midco or any other company (other than Permitted Shareholders) that is
not a member of the Group, which directly or indirectly Controls the Obligors.
A-23

“Participating Member State” means any member state of the European Union that adopts or has adopted the
Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and
Monetary Union.
“Party” means a party to this Agreement.
“Performance Guarantees” means any bank guarantees or counter-guarantees other than Financial Guarantees,
including financial support letters or any other commitments securing third-party obligations, whether jointly and
severally, subsidiarily or in any other way whatsoever, granted by, or for the account of, any company of the Group:
(a)
(b)
(c)
(d)
(e)
for the benefit of any European Union, state, autonomous or local public authority as required for the
granting of any Licence or the award under any tender, competitive bidding process or negotiated
procedure relating to the Telecommunications Business;
to guarantee any tax or administrative fine or penalty that has been challenged or any amount claimed as a
consequence of an administrative act that has been challenged or appealed;
in the context of any judicial proceeding or pursuant to a judicial order or resolution;
for the benefit of any other customer in respect of any Licence, concession or bid required for the
provision of the Telecommunications Business; and
granted for the benefit of creditors on account of non-financial trade payables of the Group needed to
develop the Telecommunications Business. For the avoidance of doubt, any guarantee, which does not fall
under the definition of Financial Guarantee, shall be considered a Performance Guarantee.
“Permitted Acquisitions” means:
(a)
(b)
the Tenaria Acquisition;
those acquisitions of shares, participations or any other form of Equity interests in companies or other
legal entities or group of companies or other legal entities (whether by way of a purchase, merger or any
other analogous means), other than Permitted Investments, made by any member of the Group:
(i)
(ii)
in order to comply with the Group’s obligations under article 5 of the General Law on
Audiovisual Communications 7/2010 of 31 March (artículo 5 de la Ley 7/2010, de 31 de marzo,
General de la Comunicación Audiovisual); or
that comply, on a cumulative basis, with the following requirements:
(A)
(B)
(C)
(D)
(E)
where that member of the Group acquires more than fifty per cent (50%) of the
economic and voting rights (or otherwise acquires Control) of a company or legal
entity;
the main activity of that company or legal entity or group falls within the definition of
Telecommunications Business within Spain or Portugal;
Cableuropa has served prior notice to the Agent of the intended acquisition;
no Event of Default is continuing as at the date of the acquisition and no Event of
Default will occur as a result of the acquisition;
Cableuropa delivers to the Agent, prior to the acquisition, a report prepared by the
Chief Financial Officer (Director Financiero) of Cableuropa including a calculation
on a pro-forma basis (as if the projected acquisition had taken place) of the ratio of
Total Debt to Consolidated LTM EBITDA and confirming that, as a consequence of
the acquisition and, in particular, taking into consideration the result of adding the
Financial Debt and the EBITDA of the acquired company or legal entity or group
(calculated on the same basis as Consolidated EBITDA) to the Financial Debt and the
Consolidated EBITDA of the Group:
(1) for each Testing Period ending after the date of the projected acquisition
until the last day of the Calendar Quarter immediately preceding the Final
Maturity Date, the ratio of pro forma Total Debt to pro forma Consolidated
LTM EBITDA will afford headroom of at least 10 per cent. for the purposes
of the Financial Covenant set out in paragraph (b) (Total Debt Cover) of
Clause 23.1 (Financial Covenants);
A-24

(2) the ratio of pro forma Total Debt to pro forma Consolidated LTM EBITDA
(taking no account of any pro forma synergies projected to result from the
acquisition) will, as at the date of the projected acquisition, not exceed
4.50:1; and
(3) if the aggregate consideration for the acquisition exceeds €5,000,000, the
EBITDA, of the acquired company or legal entity or group (calculated on
the same basis as Consolidated EBITDA) was positive for the most recently
ended financial year of that company or legal entity or group,
provided that, if the Agent (following the instructions of the Majority Lenders, acting
reasonably) does not agree with the calculations contained in such report, the Auditor
will be required to resolve such discrepancy in the term of seven (7) Business Days;
(iii)
the aggregate Financial Debt incurred under arrangements in existence at the date of the
acquisition by the acquired company or legal entity or group is not considered, in whole or part,
a preferred claim over a certain asset (crédito con privilegio especial) pursuant to the provisions
of the Insolvency Law or under any other applicable insolvency law, as the case may be
provided that if the requirements of this sub paragraph (iii) are not met, the acquisition of such
company, legal entity or group may be carried out if, on or prior to the effective date of the
relevant acquisition, the Obligor making that acquisition:
(A)
(B)
draws a Utilisation under (and in accordance with the terms of) this Agreement in
order to Refinance that portion of the Financial Debt of the relevant company, legal
entity or group which does not comply with the requirements of sub paragraph
(iii) above; or
demonstrates to the Agent that it has received a letter of commitment for the
Refinancing of the Financial Debt of the relevant company, legal entity or group so
that, upon such Refinancing, such Financial Debt will comply with the requirements
of sub paragraph (iii) above, and the relevant Obligor undertakes to accept such offer
(or another offer on substantially the same terms) for the Refinancing of such
Financial Debt within a period of four (4) Months from the effective date of the
acquisition;
(iv)
(v)
(vi)
the acquisition price represents the fair market value of the acquired company, legal entity or
group provided that if the full enterprise value of the acquisition exceeds two hundred million
Euro (€200,000,000), the Agent (acting on the instructions of the Majority Lenders) shall be
entitled to request, prior to the date of execution of the agreements relating to the acquisition
and at the expense of the Company, that a reputable international financial institution proposed
by the Company and acceptable to the Agent certifies, for the benefit of the Lenders, that the
acquisition price does not exceed the fair market value of the relevant company, legal entity or
group;
the Agent is provided with a report describing the structure of the acquisition (including the
incorporation of the acquired company, legal entity or group into the Group), together with tax,
accounting and legal due diligence reports and, upon a reasonable request, copies of any other
due diligence reports in relation to the acquisition prepared for the Company by external firms,
experts or advisers, together with customary reliance and subject to customary confidentiality
undertakings; and
if the total consideration for the acquisition exceeds €50,000,000, Cableuropa has provided the
Agent with an updated Business Plan to include the business plan projections for the combined
business of the Group and the company or legal entity or group to be acquired.
“Permitted Debt” means the following categories of Financial Debt incurred or to be incurred by any Obligor:
(a)
(b)
Existing Debt provided that Financial Debt under the Existing Credit Agreement will only be Permitted
Debt until the Closing Date;
Financial Debt under the Facilities (including, for the avoidance of doubt, any SPV Tranches and/or New
Bank Tranches) and the EIB Facilities, provided that in the case of the EIB Facilities and to the extent
that the EIB requires to share the benefit of the Security Agreements,
(i)
such EIB Facilities do not have a maturity date occurring before the Initial Final Maturity Date;
A-25

(ii)
(iii)
(iv)
(v)
(vi)
the Chief Financial Officer (Director Financiero) of Cableuropa certifies that the incurrence of
such Permitted Debt under the EIB Facilities will not result in the Group failing to comply on a
pro-forma basis with the Financial Covenants (which will be calculated as if such Financial
Debt had been incurred) nor will it result, after such Financial Debt having been incurred, in any
breach of the terms of this Agreement;
Cableuropa notifies the Agent at least ten (10) Business Days in advance of the proposed date of
execution of the relevant documents in connection with the extension of the Security
Agreements (for the avoidance of doubt, the Secured Parties will be obliged to execute any
documents necessary to implement such an extension);
the Secured Parties shall benefit from any security interest or guarantee (other than those created
under the Security Agreements) granted in order to secure or guarantee the obligations arising
under the EIB Facilities;
the EIB accedes to the Intercreditor Agreement as Senior Creditor (as defined in the
Intercreditor Agreement) at the same time than the extension of the Security Agreements is
effected, assuming the same terms and conditions as the Senior Creditors; and
the EIB Facilities shall rank pari passu with the Facilities;
(c)
any other Financial Debt (including the EIB Facilities to the extent that the EIB does not require to share
the benefit of the Security Agreements) not referred to in paragraphs (a) and (b) above, provided that:
(i)
(ii)
Pro Forma Leverage (taking into account the incurrence and use of proceeds of such Financial
Debt) is equal to or less than 4.00:1 (except where paragraph (ii) below applies, in which case
Pro Forma Leverage shall comply with the level referred to in sub paragraph (ii)(E)(2) of
paragraph (b) of Permitted Acquisitions); or
where such Financial Debt is incurred or acquired as a result of a Permitted Acquisition,
Cableuropa delivers to the Agent, prior to the acquisition, a report prepared by the Chief
Financial Officer (Director Financiero) of Cableuropa including a calculation on a pro-forma
basis (as if the projected acquisition had taken place) projecting the ratio of Total Debt to
Consolidated LTM EBITDA and confirming that, as a consequence of the acquisition and, in
particular, taking into consideration the result of adding the Financial Debt and the EBITDA of
the acquired company or legal entity or group to the Financial Debt and the EBITDA of the
Group:
(A)
(B)
for each Testing Period from the date of the projected acquisition until the last day of
the Calendar Quarter immediately preceding the Final Maturity Date, the ratio of
Total Debt to Consolidated LTM EBITDA will afford headroom of at least 10 per
cent. for the purposes of the Financial Covenant set out in paragraph (b) (Total Debt
Cover) of Clause 23.1 (Financial Covenants); and
the ratio of Total Debt to Consolidated LTM EBITDA (taking no account of any pro
forma synergies projected to result from the acquisition) will, as at the date of the
projected acquisition, not exceed 4.50:1,
provided that, if the Agent (following the instructions of the Majority Lenders, acting
reasonably) does not agree with the calculations contained in such report, the Auditor will be
required to resolve such discrepancy in the term of seven (7) Business Days;
(d)
any new Financial Debt incurred by an Obligor provided that:
(i)
(ii)
(iii)
such new Financial Debt is exclusively applied to Refinance other Permitted Debt by prepaying
it in full or part and paying any amount due in connection therewith;
the maturity and the average life of the new Financial Debt is substantially similar to or longer
than the maturity and average life of the Permitted Debt being Refinanced (calculated by
applying, with corresponding changes, the definition of Average Remaining Life of the
Facilities);
none of the new Financial Debt agreements (or any agreements related thereto) conflicts with
any Finance Document or results in a breach or termination of any Finance Document or
impairs compliance with Financial Covenants; and
A-26

(iv)
the new Financial Debt does not benefit from guarantees or security, other than Permitted
Security, which go beyond those provided under the Permitted Debt which is thereby
Refinanced;
(e)
(f)
(g)
loans or credit facilities granted by any Obligor to another Obligor, with the understanding that any
Financial Debt incurred reciprocally among any of the Obligors and the transfer of funds among them is
permitted under this Agreement;
any Permitted Guarantees;
any other Financial Debt not permitted by the preceding paragraphs the aggregate principal amount of
which does not exceed two hundred million Euros (€200,000,000) at any time, provided that, when the
ratio of Total Debt to Consolidated LTM EBITDA is projected for each Testing Period from the date of
the proposed incurrence of such Finance Debt until the last day of the Calendar Quarter immediately
preceding the Final Maturity Date on a pro forma basis as if such additional Financial Debt had been
incurred, such ratio will afford headroom of at least 10 per cent. for the purposes of the Financial
Covenant set out in paragraph (b) (Total Debt Cover) of Clause 23.1 (Financial Covenants) (the
“Headroom Test”); provided that the Headroom Test shall not apply to any Financial Debt incurred
under this paragraph (g) which is described in sub paragraph (ii) of paragraph (c) of “Permitted Security”
(and which complies with the applicable cap set out in such sub paragraph),
provided that until there are no Bridge Commitments or Bridge Loans outstanding, all proceeds of any Permitted
Debt under:
(A)
(B)
(C)
paragraph (b) above, to the extent only these arise under SPV Tranches and/or New
Bank Tranches (and only to the extent described in the proviso to paragraph (d) of
Clause 3.1 (Purpose)) or under EIB Facilities;
paragraph (c) above; or
paragraph (d) above,
must be applied to (1) prepay the Bridge Loans and (2) (to the extent no Bridge Loans are outstanding) cancel the
Total Bridge Commitments.
“Permitted Financial Accommodation” means the following loans, credit facilities or guarantees that Obligors
may grant to third parties:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
loans or credit facilities to directors, officers or employees of the Obligors or GCO, provided that the
aggregate loaned or credited outstanding amount does not exceed ten million Euros (€10,000,000) over
any consecutive twelve (12) month period for the Obligors;
loans or credit facilities (including participating loans (préstamos participativos)) granted to any other
Obligor, provided, however, that for the avoidance of doubt any Financial Debt incurred by an Obligor
vis-à-vis another Obligor is permitted without limitation under this Agreement;
the Tenaria Loan;
loans, credit facilities, bank guarantees and counter-guarantees granted to Tenaria (other than the Tenaria
Loan) until it becomes a wholly owned Subsidiary of Cableuropa, provided that the aggregate outstanding
balance of such amounts granted by the Obligors under this paragraph (d) does not exceed ten million
Euros (€10,000,000) per year;
loans, credit facilities, bank guarantees and counter-guarantees granted to individuals or legal entities
other than the Obligors and Tenaria, provided that the aggregate outstanding balance of such amounts
granted by the Obligors under this paragraph (e) does not exceed fifteen million Euros (€15,000,000);
any deferred payment obligation by the purchaser of the purchase price of assets sold by any company of
the Group, including in the form of loans and credit facilities to the purchaser; and
any payment required to be made in connection with the Group’s obligations under article 5 of the
General Law on Audiovisual Communications 7/2010 of 31 March (artículo 5 de la Ley 7/2010, de 31 de
marzo, General de la Comunicación Audiovisual).
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“Permitted Guarantees” means:
(a)
(b)
(c)
(d)
the endorsement of negotiable instruments in the ordinary course of trade;
any guarantee which is Permitted Debt;
unsecured guarantees created in connection with Subsidised Financing;
unsecured guarantees created by Obligors in connection with any Future High-Yield Notes, provided that:
(i)
(ii)
(iii)
(iv)
all proceeds from the Future High-Yield Notes are, promptly on receipt by the issuer of the
relevant Future High-Yield Notes, on-lent to Cableuropa or any of the other Obligors by way of
a High-Yield Proceeds Loan;
any other credit rights against the Obligors arising from or in relation to the Future High-Yield
Notes are subordinated in terms reasonably similar to those governing or, if applicable, that
governed, the Existing High-Yield Notes to the rights of the Secured Parties under this
Agreement;
the indentures and other instruments governing the Future High-Yield Notes (as well as
Subordinated Debt agreements related thereto), are executed upon terms satisfactory to the
Majority Lenders. Absent evidence to the contrary, terms shall be deemed to be satisfactory if,
when taken as a whole, they are substantially similar or more favourable to the Lenders to the
terms of the Existing High-Yield Notes including the Subordinated Debt agreements related
thereto; and
guarantees in connection with any Future High-Yield Notes are substantially similar in form and
substance to the guarantees created in connection with the Existing High-Yield Notes;
(e)
(f)
(g)
(h)
(i)
(j)
(k)
the bank guarantees, guarantees and counter-guarantees granted before the Signing Date to secure
Existing Debt (including the Existing High-Yield Notes), the amount and characteristics of which are
described in Schedule 13 (Existing Debt);
Financial Guarantees (other than those guaranteeing other Permitted Debt) provided that no Financial
Guarantee may be granted if the granting of such Financial Guarantee would result in the outstanding
aggregate amount guaranteed by Financial Guarantees (other than those guaranteeing other Permitted
Debt) exceeding one hundred million Euros (€100,000,000);
Performance Guarantees;
unsecured guarantees by Obligors created in connection with any Future Subordinated Facilities provided
that: (i) all the proceeds obtained from such Future Subordinated Facilities are, promptly on receipt by the
issuer or borrower of the relevant Future Subordinated Facilities, on-lent to Cableuropa or any of the other
Obligors under a Future Subordinated Facilities Proceeds Loan, and (ii) the credit rights against the
Obligors arising from those unsecured guarantees are subordinated to the rights of the Secured Parties
arising from the Finance Documents under the Intercreditor Agreement or under conditions substantially
similar in all material respects to those contained in the Intercreditor Agreement;
any direct or indirect guarantee granted by any of the Obligors, on an unsecured basis and ranking pari
passu with the Facilities, in connection with the obligations arising under any Debt Instruments if such
guarantee is advisable according to the market conditions at the time of issuance of such Debt
Instruments, and provided that such a guarantee provides (i) for a waiting period of 30 Business Days
between any claim made thereunder and amounts becoming due under the guarantee, except in the case of
an Insolvency Event or upon the ordinary maturity of the relevant Debt Instrument, and (ii) that any
payment made to the SPV under the corresponding SPV Tranche shall discharge an equivalent amount
under the guarantee (and vice versa));
any guarantee given by a Guarantor to a Hedge Entity in relation to a Permitted Hedge Agreement
pursuant to clause 7.7 (Guarantees) of the Intercreditor Agreement; and
any guarantee given in respect of the netting or set-off arrangements permitted pursuant to paragraph
(e) of the definition of Permitted Security.
“Permitted Hedge Agreements” means (a) the Original Hedge Agreements; (b) each Facilities Hedge Agreement;
and (c) any foreign exchange or interest rate protection arrangements entered into by the Obligors to hedge on a
prudent, non-speculative basis, their foreign exchange or interest rate exposure under any Permitted Debt or
A-28

accounts payable, provided that such arrangement is entered into with an entity that is a Lender or an Affiliate of a
Lender and that such Lender or, as the case may be, Affiliate, accedes to the Intercreditor Agreement, in its capacity
as Hedge Entity.
“Permitted Investments” means those acquisitions of shares, participations or any other form of Equity interests in
companies or other legal entities (whether by way of a purchase or any other analogous means) made by any
member of the Group:
(a)
(b)
in order to comply with the Group’s obligations under article 5 of the General Law on Audiovisual
Communications 7/2010 of 31 March (artículo 5 de la Ley 7/2010, de 31 de marzo, General de la
Comunicación Audiovisual); or
that comply, on a cumulative basis, with the following requirements:
(i)
(ii)
(iii)
(iv)
the Group holds fifty per cent. (50%) or less of the economic and voting rights in the relevant
company or legal entity (and does not otherwise have Control of such company or legal entity);
no Event of Default is continuing and no Event of Default will occur as a result of the
acquisition;
the acquisition price represents the fair market value of the shares, participations or Equity
interests to be acquired; and
the aggregate amount of Permitted Investments made by the Group does not exceed twenty
million Euros (€20,000,000) at any time, unless the excess is funded with Retained Excess Cash
Flow,
provided that should such member of the Group subsequently gain Control over or dispose of the relevant
company or legal entity in accordance with this Agreement, any Permitted Investments in such company or legal
entity shall be equal to zero (0).
“Permitted Security” means:
(a)
(b)
(c)
the Transaction Security (including in rem security interests created to secure Permitted Hedge
Agreements, the EIB Facilities, any SPV Tranches and/or New Bank Tranches, which shall consist of
Security of the same rank and over the same assets which are created in order to secure obligations
assumed by the Obligors under the Finance Documents, to the extent permitted by applicable law);
the in rem Security granted before the Signing Date to secure Existing Debt (including the Existing High-
Yield Notes), the amount and characteristics of which are described in Schedule 13 (Existing Debt);
in rem security interests created to secure Permitted Debt or any Refinancing thereof, provided that:
(i)
(ii)
the proceeds obtained from such Permitted Debt or Refinancing thereof are applied in
accordance with the terms specified in this Agreement; and
in no event shall such Permitted Debt or any Refinancing thereof (except for Existing Debt)
benefit from in rem security interests created over assets other than:
(A)
(B)
financial assets and receivables, provided that in no case shall the aggregate secured
principal hereunder exceed one hundred million Euros (€100,000,000) from time to
time; and
assets securing debt arising under vendor financing arrangements, real estate and
financial leasing arrangements, in each case to the extent that such assets have been
financed through such arrangements and provided that in no case shall the aggregate
secured principal hereunder exceed fifty million Euros (€50,000,000) from time to
time;
(d)
second lien and/or second ranking in rem security interests created to secure any Future Subordinated
Facilities, to the extent:
(i)
(ii)
the granting of such security is not in contravention with any Financial Debt of the Obligors
then existing;
such security shall rank junior to any guarantees and security interests created under the
Security Agreements;
A-29

(iii)
(iv)
(v)
such security shall not be enforceable unless, among other requirements, with the prior written
consent of the Agent to such enforcement, upon the prior agreement of the Majority Lenders;
the possession of the collateral of such security is transferred to the Agent, which shall possess
such collateral for the benefit of the Lenders (as first ranking creditors) and the creditors of the
relevant Future Subordinated Facilities (as second ranking creditors); and
any proceeds obtained from the enforcement of such second lien and/or second ranking security
interests shall only be used to satisfy the obligations under the secured Future Subordinated
Facilities once each and every obligations under the Facilities and the Permitted Hedge
Agreements have been fully satisfied; and
(e)
any netting or set-off arrangement entered into by any member of the Group in the ordinary course of its
banking arrangements for the purposes of netting debit and credit balances of members of the Group but
only so long as (i) such arrangement does not permit credit balances of Obligors to be netted or set off
against debit balances of members of the Group which are not Obligors and (ii) such arrangement does
not give rise to any Security over the assets of Obligors in support of liabilities of members of the Group
which are not Obligors.
“Permitted Shareholders” means:
(a)
(b)
(c)
the Financial Sponsors, Grupo Multitel, S.A., Telco Investment Europe, S.à.r.l., Multitel Alfa, S.L.U.;
Multitel Beta, S.L.; Multitel Beta, S.à.r.l.; Multitel Gamma, S.L.U.; Multitel Epsilon, S.L.U.; Multitel,
S.á.r.l.; Multitel Group, S.P.R.L.; Banco Santander, S.A.; Capital Riesgo Global SCR de Régimen
Simplificado, S.A.; Val Telecomunicaciones, S.L.; Sodinteleco, S.L.; Caisse de Dépôt et Placement du
Quebec; Particitel International Limited Partnership; General Electric Company; Global Telecom
Investments, LLC; Bregal Investments; Candover Partners Limited; Five Arrows Capital AG; Five
Arrows Mezzanine Debt Holder, S.A.; Luxono, S.à.r.l.; OTPP Power Luxembourg; Parinvest, S.A.S.;
Paris Orleans, S.A.; PO Invest 1, S.A.; The Northwestern Mutual Life Insurance Company (USA); Bregal
Co-Invest, S.à.r.l., and any other legal entity in which one or more of the above –mentioned companies
holds directly or otherwise controls at least sixty-six point sixty-six (66.66%) per cent. of the voting
rights;
any officers, employees or directors of the Group or GCO, becoming shareholders in GCO upon the
allocation of shares in GCO pursuant to a stock option plan directly or through directly or indirectly
controlled companies; and
any financial institution acting in the capacity of an underwriter in connection with a public or private
offering of shares of Cableuropa or any of the Parent Companies.
“Pro Forma Leverage” means on any date, the ratio of Total Debt to Consolidated LTM EBITDA for the most
recently completed Testing Period for which a Compliance Certificate has been delivered pursuant to Clause 22.2
(Compliance Certificate) (the “Relevant Testing Period”), adjusted by:
(a)
(b)
(c)
(d)
increasing Total Debt as at the end of the Relevant Testing Period by the aggregate principal amount of
any Financial Debt incurred by the Group pursuant to paragraph (c) of the definition of Permitted Debt or
pursuant to any New Bank Tranche or SPV Tranche since the end of the Relevant Testing Period;
for the purposes of paragraph (e) of Clause 9.2 (Mandatory prepayment events) only, reducing Total Debt
as at the end of the Relevant Testing Period by the aggregate principal amount of any Financial Debt to be
prepaid by, and cash or Cash Equivalents to be retained from, IPO Proceeds pursuant thereto;
reducing cash or Cash Equivalents at the end of the Relevant Testing Period by the aggregate amount of
Distributions and payments under (or for the acquisition of) any Subordinated Debt subject to a
Subordination Commitment in each case which have been made since the end of the Relevant Testing
Period; and
adjusting Consolidated LTM EBITDA on a pro forma basis to reflect any company or business sold or
acquired since the beginning of the period in respect of which Consolidated LTM EBITDA was tested
(including any company or business to be acquired using the proceeds of any Financial Debt in respect of
which Pro Forma Leverage is tested.
“Protected Party” means a Finance Party which is or will be subject to any liability or required to make any
payment for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of
Tax to be received or receivable) under a Finance Document.
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“Qualifying State” means (a) a member state of the European Union other than Spain, or (b) a state which has
signed and ratified with Spain a double taxation treaty giving residents of that state full exemption from the
imposition of any withholding or deduction for or on account of Spanish taxes on interest.
“Quotation Day” means, in relation to any period for which an interest rate is to be determined:
(a)
(b)
(if the currency is Euro) two TARGET Days before the first day of that period; or
(for any other currency) two Business Days before the first day of that period,
unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for
that currency will be determined by the Agent in accordance with market practice in the Relevant Interbank Market
(and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one
day, the Quotation Day will be the last of those days).
“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the
Charged Property.
“Refinancing” means any Permitted Debt raised in order to repay any amounts owed by any of the Obligors under
any other Permitted Debt incurred together with any interest accrued thereunder and any required premiums and
costs incurred in connection with the refinancing.
“Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same
investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or
investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment
manager or investment adviser of the first fund.
“Release Event” means the occurrence of one of the following events:
(a)
(b)
Cableuropa presents to the Agent two (2) consecutive Compliance Certificates stating that the ratio of the
Total Debt to Consolidated LTM EBITDA has been less than 3.00:1 for the Testing Period to which each
such Compliance Certificate relates and the Auditor certifies compliance with such Financial Covenants
for both consecutive Testing Periods; or
Cableuropa, ONO Finance II plc or any issuer of Future High Yield Notes (and to the extent that issues
are only guaranteed by the Group or by a Parent Company, provided that in this case such Parent
Company is only guaranteed or counter-guaranteed by Midco and/or the Group) achieve an “Investment
Grade” Rating,
and provided that a Release Event shall have no effect as from the date on which the circumstance triggering its
occurrence under paragraph (a) or (b) above ceases to occur, until the date on which it is triggered again by the
occurrence of one of the circumstances described in paragraph (a) or (b) above.
“Relevant Facility Acceding Lender” has the meaning given to such term in paragraph (d)(i)(B) of Clause 2.6
(Increase of Revolving Facility or Facility B).
“Relevant Facility Increase Effective Date” means the date specified by the Company in the corresponding
Relevant Facility Increase Request as being the date (which must be a date falling at least 10 Business Days (in the
case of the Revolving Facility) and three Business Days (in the case of Facility B) after the date of that Relevant
Facility Increase Request) on which the proposed increase in the amount of the Total Revolving Facility
Commitments or, as applicable, Total Facility B Commitments is to take effect.
“Relevant Facility Increase Lender” has the meaning given to such term in paragraph (d)(i)(A) of Clause 2.6
(Increase of Revolving Facility or Facility B).
“Relevant Facility Increase Request” means a request substantially in the form of Schedule 15 (Form of Relevant
Facility Increase Request) and which must specify:
(a)
(b)
(c)
that it relates to one Facility (which must be either the Revolving Facility or Facility B);
the Revolving Facility Increase Amount or, as applicable, the Facility B Increase Amount; and
the Relevant Facility Increase Effective Date.
“Relevant Facility Lender Accession Agreement” means a document substantially in the form of Part II of
Schedule 14 (Form of Relevant Facility Lender Accession Agreement).
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“Relevant Facility Lender Increase Certificate” means a document substantially in the form of Part I of
Schedule 14 (Form of Relevant Facility Lender Increase Certificate).
“Relevant Interbank Market” means the European interbank market.
“Relevant Jurisdiction” means, in relation to an Obligor:
(a)
(b)
(c)
its jurisdiction of incorporation;
any jurisdiction where any asset subject to or intended to be subject to the Transaction Security to be
created by it is situated; and
any jurisdiction where it conducts its business.
“Repayment Instalment” means each instalment for repayment of the Facility A Loans referred to in paragraph
(a) of Clause 7.1 (Repayment of Term Loans).
“Repeating Representations” means each of the representations set out in Clause 21.1 (Representations) except for
those set out in paragraphs (g) (No filing or stamp taxes), (i) (No Security rights created), (k) (Financial
statements), (l) (No Material Adverse Change), (p) (Information), (aa) (Group structure), (bb) (No Designated
Senior Debt) and (ee) (Accounting reference date).
“Replacement Revolving Facility” has the meaning given to such term in paragraph (a) of Clause 2.4
(Replacement Revolving Facility).
“Replacement Revolving Facility Lender” has the meaning given to such term in paragraph (b) of Clause 2.4
(Replacement Revolving Facility).
“Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
“Resignation Letter” means a letter substantially in the form set out in Schedule 7 (Form of Resignation Letter).
“Retained Excess Cash Flow” means, in respect of any Consolidated Excess Cash Flow that is generated according
to the calculation prepared by Cableuropa and certified by the Auditor on the basis of the Group’s Audited
Consolidated Annual Financial Statements for the immediately preceding financial year, any excess over the part of
such Consolidated Excess Cash Flow which has been mandatorily prepaid pursuant to paragraph (f) of Clause 9.2
(Mandatory Prepayment Events) of this Agreement.
“Revolving Commitment Notice” has the meaning given to such term in paragraph (b) of Clause 2.4
(Uncommitted Revolving Facility).
“Revolving Facility” means the revolving credit facility made available under this Agreement as described in
paragraph (a)(iv) of Clause 2.1 (The Facilities).
“Revolving Facility Commitment” means:
(a)
(b)
in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading
“Revolving Facility Commitment” in Part IIA of Schedule 1 (The Original Parties) and the amount of any
other Revolving Facility Commitment transferred to it under this Agreement or assumed by it in
accordance with Clause 2.4 (Uncommitted Revolving Facility) or paragraph (a) of Clause 2.5 (Increase);
and
in relation to any other Lender, the amount in the Base Currency of any Revolving Facility Commitment
transferred to it under this Agreement or assumed by it in accordance with Clause 2.4 (Uncommitted
Revolving Facility) or paragraph (a) of Clause 2.5 (Increase),
to the extent not cancelled, reduced or transferred by it under this Agreement.
“Revolving Facility Increase Amount” has the meaning given to such term in paragraph (a) of Clause 2.6
(Increase of Revolving Facility or Facility B).
“Revolving Facility Loan” means a loan made or to be made under the Revolving Facility or the principal amount
outstanding for the time being of that loan.
A-32

“Rollover Loan” means one or more Revolving Facility Loans:
(a)
(b)
(c)
(d)
made or to be made on the same day that a maturing Revolving Facility Loan is due to be repaid;
the aggregate amount of which is equal to or less than the amount of the maturing Revolving Facility
Loan;
in the same currency as the maturing Revolving Facility Loan; and
made or to be made to the same Borrower for the purpose of refinancing that maturing Revolving Facility
Loan.
“Screen Rate” means:
(a)
(b)
in relation to EURIBOR, the percentage rate per annum determined by the Banking Federation of the
European Union for the relevant period; and
in relation to LIBOR, the British Bankers’ Association Interest Settlement Rate for the relevant currency
and period,
displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be
available, the Agent may specify another page or service displaying the appropriate rate after consultation with the
Company and the Lenders.
“Secured Parties” means the Agent, the Security Agent, each Lender from time to time party to this Agreement,
each Hedge Entity, EIB (if EIB has acceded to the Intercreditor Agreement in accordance with paragraph (b)(v) of
the definition of Permitted Debt) and any Receiver or Delegate.
“Security” means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person
or any other agreement or arrangement having a similar effect.
“Security Agreements” means each of the documents listed as being a Security Agreement in paragraph 3 of Part I
of Schedule 2 (Conditions Precedent) and any document required to be delivered to the Agent under Clause 24.3
(Transaction Security).
“Selection Notice” means a notice substantially in the form set out in Part II of Schedule 3 (Requests and Notices)
given in accordance with Clause 12 (Interest Periods) in relation to a Term Facility.
“Senior Debt” means the Financial Debt incurred under the Facilities and, without double counting, any other
Financial Debt ranking at least pari passu with the Lenders’ credit rights under the Facilities, less any cash or Cash
Equivalents held by any member of the Group (to the extent that such cash or Cash Equivalents is unrestricted or, if
restricted, it secures any Financial Debt included in the calculation of Senior Debt).
“Shareholder Loans” means any obligation, whether present or future, of any member of the Group, to pay or
repay money to any Parent Company under: (a) any Subordinated Debt subject to a Subordination Commitment; or
(b) any participating loan (préstamo participativo), provided that such loans are computed as shareholders’ Equity.
“Signing Date” means the date of this Agreement.
“Specified Time” means a time determined in accordance with Schedule 9 (Timetables).
“Special Purpose Vehicle” or“SPV” means:
(a)
(b)
Nara Cable; and
any newly incorporated corporation, organisation, trust, partnership or limited liability company
established from time to time with the sole or limited purpose of issuing (and whose activities are
incidental or related to the issuance and maintenance of) Debt Instruments and with restricted ability to
incur financial indebtedness (other than the Debt Instruments or any hedging required pursuant thereto) as
reflected in its constitutional documents which is independent from the Obligors or any Parent Company
both in terms of management and ownership and which is responsible for its own funding, risk capital and
management decisions.
“Sponsor Affiliate” means any Parent Company and each of its Affiliates, any trust of which any Parent Company
or any of its Affiliates is a trustee, any partnership of which any Parent Company or any of its Affiliates is a partner
and any trust, fund or other entity which is managed by, or is under the control of, any Parent Company or any of its
A-33

Affiliates provided that any such trust, fund or other entity which has been established for at least 6 months solely
for the purpose of making, purchasing or investing in loans or debt securities and which is managed or controlled
independently from all other trusts, funds or other entities managed or controlled by any Parent Company or any of
its Affiliates which have been established for the primary or main purpose of investing in the share capital of
companies shall not constitute a Sponsor Affiliate.
“SPV Tranche” has the meaning given to such term in paragraph (a) of Clause 2.2 (Additional SPV Tranches).
“SPV Tranche 1” means the term loan facility made available under this Agreement as described in paragraph
(d)(i) of Clause 2.1 (The Facilities).
“SPV Tranche 1 Commitment” means:
(a)
(b)
in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading
“SPV Tranche 1 Commitment” in Part II A of Schedule 1 (The Original Parties) and the amount of any
other SPV Tranche 1 Commitment transferred to it under this Agreement or assumed by it in accordance
with paragraph (a) of Clause 2.5 (Increase); and
in relation to any other Lender, the amount in the Base Currency of any SPV Tranche 1 Commitment
transferred to it under this Agreement or assumed by it in accordance with paragraph (a) of Clause 2.5
(Increase),
to the extent not cancelled or reduced under this Agreement.
“SPV Tranche 1 Loan” means a loan made or to be made under SPV Tranche 1 or the principal amount
outstanding for the time being of that loan.
“SPV Tranche 2” means the term loan facility made available under this Agreement as described in paragraph
(d)(ii) of Clause 2.1 (The Facilities).
“SPV Tranche 2 Commitment” means:
(a)
(b)
in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading
“SPV Tranche 2 Commitment” in Part IIA of Schedule 1 (The Original Parties) and the amount of any
other SPV Tranche 2 Commitment transferred to it under this Agreement or assumed by it in accordance
with paragraph (a) of Clause 2.5 (Increase); and
in relation to any other Lender, the amount in the Base Currency of any SPV Tranche 2 Commitment
transferred to it under this Agreement or assumed by it in accordance with paragraph (a) of Clause 2.5
(Increase),
to the extent not cancelled or reduced under this Agreement.
“SPV Tranche 2 Loan” means a loan made or to be made under SPV Tranche 2 or the principal amount
outstanding for the time being of that loan.
“SPV Tranche 3” means the term loan facility made available under this Agreement as described in paragraph
(d)(iii) of Clause 2.1 (The Facilities).
“SPV Tranche 3 Commitment” means:
(a)
(b)
in relation to an Original Lender, the amount in US Dollars set opposite its name under the heading “SPV
Tranche 3 Commitment” in Part IIA of Schedule 1 (The Original Parties) and the amount of any other
SPV Tranche 3 Commitment transferred to it under this Agreement or assumed by it in accordance with
paragraph (a) of Clause 2.5 (Increase); and
in relation to any other Lender, the amount in US Dollars of any SPV Tranche 3 Commitment transferred
to it under this Agreement or assumed by it in accordance with paragraph (a) of Clause 2.5 (Increase),
to the extent not cancelled or reduced under this Agreement.
“SPV Tranche 3 Loan” means a loan made or to be made under SPV Tranche 3 or the principal amount
outstanding for the time being of that loan.
“SPV Tranche 4” means the term loan facility made available under this Agreement as described in paragraph
(d)(iv) of Clause 2.1 (The Facilities).
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“SPV Tranche 4 Commitment” means:
(a)
(b)
in relation to an Original Lender, the amount in US Dollars set opposite its name under the heading “SPV
Tranche 4 Commitment” in Part IIA of Schedule 1 (The Original Parties) and the amount of any other
SPV Tranche 4 Commitment transferred to it under this Agreement or assumed by it in accordance with
paragraph (a) of Clause 2.5 (Increase); and
in relation to any other Lender, the amount in US Dollars of any SPV Tranche 3 Commitment transferred
to it under this Agreement or assumed by it in accordance with paragraph (a) of Clause 2.5 (Increase),
to the extent not cancelled or reduced under this Agreement.
“SPV Tranche 4 Loan” means a loan made or to be made under SPV Tranche 4 or the principal amount
outstanding for the time being of that loan.
“SPV Tranche Commitment” means an Original SPV Tranche Commitment or an Additional SPV Tranche
Commitment.
“SPV Tranche Loan” means an SPV Tranche 1 Loan, an SPV Tranche 2 Loan, and SPV Tranche 3 Loan, an SPV
Tranche 4 Loan or any other Additional SPV Tranche Loan.
“Subordinated Debt” means: (a) the Existing High-Yield Notes; (b) the Future High-Yield Notes; (c) the Future
Subordinated Facilities; and (d) the loans, notes or credit facilities subject to a Subordination Commitment granted
to any of the Obligors.
“Subordination Commitment” means an express written recognition by the Subordinated Debt creditors, by means
of a stipulation in favour of third parties or by means of an intercreditor agreement, of the absolute seniority of the
obligations currently existing or hereafter assumed by the Obligors under the Finance Documents over the
obligations to the Subordinated Debt creditors currently existing or hereafter assumed by the Obligors. Under the
Subordination Commitment, the Subordinated Debt creditors agree that:
(a)
(b)
(c)
(d)
(e)
the Subordinated Debt shall not provide for any payment obligation thereunder (other than payments
made by means of a share capital increase by the debtor under article 301 of the Capital Companies Law
(“Ley de Sociedades de Capital”) or payments permitted by paragraph (h) (No payments on Subordinated
Debt) of Clause 24.2 (Negative covenants)) until a date not earlier than twelve (12) months after the Final
Maturity Date applicable at the date on which the Subordinated Debt was incurred;
the Subordinated Debt creditors shall not be entitled to accelerate any payment under such Subordinated
Debt until any obligations under the Finance Documents have been completely fulfilled;
the Subordinated Debt shall not benefit from guarantees or security;
security is granted in favour of the Secured Parties over the credit rights arising under such Subordinated
Debt within a reasonable period, but, in any event, not exceeding one (1) month from the execution of the
agreements documenting the Subordinated Debt; and
any payment (whether on account of principal, interest of any kind, fees, expenses or any other cause) that
they may be entitled to collect from the Obligors under the Subordinated Debt shall rank junior and be
subordinated to any payment of any amount owed by the Borrowers to: (i) the Secured Parties (whether
on account of principal, interest of any kind, fees, expenses, derivative breakage costs or any other cause);
and (ii) any other third party creditors as provided for under Article 92.2 of the Insolvency Law.
“Subsidised Financing” means the Existing Subsidised Financing and any loans or facilities granted to any Obligor
by any European Union, state, autonomous, provincial or local authority or by any governmental agency, provided
that such loans or facilities have been granted under terms substantially similar to the terms of the Existing
Subsidised Financing.
“Subsidiary” means any person (referred to as the “first person”) in respect of which another person (referred to as
the “second person”):
(a)
(b)
(c)
Controls, directly or indirectly, that first person; or
holds a majority of the voting rights in that first person or has the right under the constitution of the first
person to direct the overall policy of the first person or alter the terms of its constitution; or
is a member of that first person and has the right to appoint or remove a majority of its board of directors
or equivalent administration, management or supervisory body; or
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(d)
(e)
(f)
(g)
has the right to exercise a dominant influence (which must include the right to give directions with respect
to operating and financial policies of the first person which its directors are obliged to comply with
whether or not for its benefit) over the first person by virtue of provisions contained in the articles (or
equivalent) of the first person or by virtue of a control contract which is in writing and is authorised by the
articles (or equivalent) of the first person and is permitted by the law under which such first person is
established; or
is a member of that first person and controls alone, pursuant to an agreement with other shareholders or
members, a majority of the voting rights in the first person or the rights under its constitution to direct the
overall policy of the first person or alter the terms of its constitution; or
has the power to exercise, or actually exercises dominant influence or control over the first person; or
together with the first person are managed on a unified basis,
and for the purposes of this definition, a person shall be treated as a member of another person if any of that
person’s Subsidiaries is a member of that other person or, if any shares in that other person are held by a person
acting on behalf of it or any of its Subsidiaries.
“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system
which utilises a single shared platform and which was launched on 19 November 2007.
“TARGET Day” means any day on which TARGET2 is open for the settlement of payments in Euro.
“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or
interest payable in connection with any failure to pay or any delay in paying any of the same).
“Tax Credit” means a credit against, relief or remission for, or repayment of, any Tax.
“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance
Document.
“Telecommunications Business” means the exploitation or ownership of a Licence to provide in Spain or Portugal
any telecommunications services or audiovisual services as well as communications systems through the Internet
and any other type of electronic communications services and services of the information society or audiovisual
services, in accordance with the General Telecommunications Law No. 32/2003 of 3 November (Ley 32/2003, de 3
de noviembre, General de Telecomunicaciones), Information Society and Electronic Commerce Services Law
No. 34/2002 of 11 July (Ley 34/2002, de 11 de julio, de Servicios de la Sociedad de la Información y de Comercio
Electrónico) and the Audiovisual Communications General Law No. 7/2010 of 31 March (Ley 7/2010, de 31 de
marzo, General de la Comunicación Audiovisual) and their implementing laws and regulations and any law or
regulation, amending, supplementing or replacing them at any time, as well as the operation of telecommunication
or audiovisual networks and the performance of activities reasonably relating or supplemental to the provision of
such services, including the management, creation and sale of contents.
“Tenaria” means Tenaria, S.A., a Subsidiary of Cableuropa.
“Tenaria Acquisition” means the acquisition or series of acquisitions by Cableuropa of (up to) the 7.19 per cent. of
the share capital of Tenaria which is not held by Cableuropa as at the Signing Date.
“Tenaria Loan” means the commercial loan owed to Cableuropa by Tenaria (with a principal amount of one
hundred million Euros (€100,000,000), of which an amount of twenty one million three hundred and twenty four
thousand four hundred and ninety Euros and sixty four cents (€21,324,490.64) was outstanding as of 31 December
2011.
“Term Facility” means Facility A, Facility B, the Bridge Tranche, the SPV Tranches and any New Bank Tranche
which is a term facility.
“Term Loan” means a Facility A Loan, a Facility B Loan, a Bridge Loan, an SPV Tranche Loan or a New Bank
Tranche Loan.
“Termination Date” means:
(a) in relation to Facility A, 30 June 2017;
(b) in relation to Facility B, 31 March 2018;
(c) in relation to the Revolving Facility, 30 June 2017;
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(d) in relation to the Bridge Tranche, 1 December 2018;
(e) in relation to SPV Tranche 1, 1 December 2018;
(f) in relation to SPV Tranche 2, 1 December 2018;
(g) in relation to SPV Tranche 3, 1 December 2018;
(h) in relation to SPV Tranche 4, 1 December 2018;
(i)
(j)
in relation to any Additional SPV Tranche (other than SPV Tranche 4), the date agreed between the
relevant SPV and the Company as contemplated by paragraph (c)(i) of Clause 2.2 (Additional SPV
Tranches); and
in relation to any New Bank Tranche, the date agreed between the relevant New Bank Lenders and the
Company as contemplated by paragraph (c)(i) of Clause 2.3 (New Bank Tranches).
“Testing Period” means each period of twelve months ending on the last day of a Calendar Quarter.
“Total Additional SPV Tranche Commitments” means the aggregate of the Additional SPV Tranche
Commitments, being, as at the First Amendment Date, an amount equal to the Total SPV Tranche 4 Commitments.
“Total Bridge Commitments” means the aggregate of the Bridge Commitments, being, at the date of this
Agreement, two hundred and twenty four million three hundred thousand Euros (€224,300,000).
“Total Commitments” means the aggregate of the Total Facility A Commitments, the Total Facility B
Commitments, the Total Revolving Facility Commitments, the Total SPV Tranche Commitments and the Total New
Bank Tranche Commitments, being two billion four hundred million Euros (€2,400,000,000) and [Š] US Dollars
(US$[Š]) at the First Amendment Date (as the same may be increased after the Signing Date pursuant to an
Amendment and Restatement Agreement by the incorporation of Additional SPV Tranche Commitments and/or
New Bank Tranche Commitments in accordance with Clause 2.2 (Additional SPV Tranches) and Clause 2.3 (New
Bank Tranches) respectively or by an increase to the Total Facility B Commitments or, as applicable, the Total
Revolving Facility Commitments in accordance with the provisions of Clause 2.6 (Increase of Revolving Facility or
Facility B)).
“Total Consolidated Assets” means the total consolidated assets of the Group, calculated in accordance with
Generally Accepted Accounting Principles.
“Total Debt” means, without double counting, the aggregate amount of Financial Debt incurred and owing by the
Group, less any cash or Cash Equivalents held by any member of the Group (to the extent that such cash or Cash
Equivalents is unrestricted or, if restricted, it secures any Financial Debt included in the calculation of Total Debt).
“Total Debt Service” means, in respect of the relevant Testing Period, the aggregate of: (a) Financial Interest
Expenses, to the extent that they are paid in cash; and (b) principal repayments or prepayments due and payable
under the Financial Debt of the Group for such period (excluding voluntary and mandatory prepayments pursuant to
Clauses 8.3 (Voluntary prepayment of Term Loans), 8.4 (Additional provisions voluntary prepayment for SPV
Tranches) and paragraphs (e) and (f) of Clause 9.2 (Mandatory prepayment events)).
“Total Facility A Commitments” means the aggregate of the Facility A Commitments, being eight hundred and
ninety million seven hundred thousand Euros (€890,700,000) at the date of this Agreement.
“Total Facility B Commitments” means the aggregate of the Facility B Commitments, being an amount of one
hundred and eighty five million Euros (€185,000,000) at the date of this Agreement.
“Total New Bank Tranche Commitments” means the aggregate of the New Bank Tranche Commitments, being
zero at the date of this Agreement.
“Total Original SPV Tranche Commitments” means the aggregate of the Total SPV Tranche 1 Commitments, the
Total SPV Tranche 2 Commitments and the Total SPV Tranche 3 Commitments.
“Total Revolving Facility Commitments” means the aggregate of the Revolving Facility Commitments, being one
hundred million Euros (€100,000,000) at the date of this Agreement.
“Total SPV Tranche 1 Commitments” means the aggregate of the SPV Tranche 1 Commitments, being seven
hundred million Euros (€700,000,000) at the date of this Agreement.
“Total SPV Tranche 2 Commitments” means the aggregate of the SPV Tranche 2 Commitments, being three
hundred million Euros (€300,000,000) at the date of this Agreement.
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“Total SPV Tranche 3 Commitments” means the aggregate of the SPV Tranche 3 Commitments, being one
billion US Dollars (US$1,000,000,000) at the date of this Agreement.
“Total SPV Tranche 4 Commitments” means the aggregate of the SPV Tranche 4 Commitments, being [Š] US
Dollars (US$1[Š]) at the First Amendment Date.
“Total SPV Tranche Commitments” means the Total Original SPV Tranche Commitments and the Total
Additional SPV Tranche Commitments.
“Transaction Security” means the Security created or expressed to be created in favour of the Security Agent
pursuant to the Security Agreements.
“Transfer Date” means, in relation to an assignment or a transfer, the later of:
(a)
(b)
the proposed Transfer Date specified in the relevant Assignment Agreement; and
the date on which the Agent executes the relevant Assignment Agreement.
“Trustee” means the trustee for the holders of Future High-Yield Notes and/or any Existing High-Yield Notes and/
or any Debt Instruments (as appropriate).
“Undisclosed Administration” means, in relation to a Lender, the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator
under or based on the law in the country where such Lender is subject to home jurisdiction supervision if applicable
law requires that such appointment is not to be publicly disclosed.
“Unpaid Sum” means any sum due and payable but unpaid by an Obligor under the Finance Documents.
“Utilisation” means a Loan.
“Utilisation Date” means the date of a Utilisation.
“Utilisation Request” means a notice substantially in the relevant form set out in Part I of Schedule 3 (Requests
and Notices).
“VAT” means valued added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar
nature.
1.2 Construction
(a)
Unless a contrary indication appears a reference in this Agreement to:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
the “Agent”, the “Security Agent”, the “Arranger”, any “Finance Party”, any “Lender”, any
“Obligor”, any “Hedge Entity”, any “Party”, any “Secured Party”, or any other person shall
be construed so as to include its successors in title, permitted assigns and permitted transferees;
a document in “agreed form” is a document which is previously agreed in writing by or on
behalf of the Company and the Agent or, if not so agreed, is in the form specified by the Agent;
“assets” includes present and future properties, revenues and rights of every description;
a “Finance Document” or any other agreement or instrument is a reference to that Finance
Document or other agreement or instrument as amended, novated, supplemented, extended or
restated;
“guarantee” means (other than in Clause 20 (Guarantee and Indemnity)) any guarantee, letter
of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect,
actual or contingent, to purchase or assume any indebtedness of any person or to make an
investment in or loan to any person or to purchase assets of any person where, in each case, such
obligation is assumed in order to maintain or assist the ability of such person to meet its
indebtedness;
“indebtedness” includes any obligation (whether incurred as principal or as surety) for the
payment or repayment of money, whether present or future, actual or contingent;
a “person” includes any individual, firm, company, corporation, government, state or agency of
a state or any association, trust, joint venture, consortium or partnership (whether or not having
separate legal personality);
A-38

(viii)
(ix)
(x)
a “regulation” includes any regulation, rule, official directive, request or guideline (whether or
not having the force of law) of any governmental, intergovernmental or supranational body,
agency, department or of any regulatory, self-regulatory or other authority or organisation;
a provision of law is a reference to that provision as amended or re-enacted; and
a time of day is a reference to Madrid time.
(b)
(c)
(d)
Section, Clause and Schedule headings are for ease of reference only.
Unless a contrary indication appears, a term used in any other Finance Document or in any notice given
under or in connection with any Finance Document has the same meaning in that Finance Document or
notice as in this Agreement.
A Borrower providing “cash cover” for an Ancillary Facility means a Borrower paying an amount in the
currency of the Ancillary Facility to an interest-bearing account in the name of the Borrower and the
following conditions being met:
(i)
(ii)
(iii)
the account is with the Security Agent or with the Ancillary Lender for which that cash cover is
to be provided;
until no amount is or may be outstanding under that Ancillary Facility, withdrawals from the
account may only be made to pay a Finance Party amounts due and payable to it under this
Agreement in respect of that Ancillary Facility; and
the Borrower has executed a security document over that account, in form and substance
satisfactory to the Security Agent or the Ancillary Lender with which that account is held,
creating a first ranking security interest over that account.
(e)
(f)
A Default is “continuing” if it has not been remedied or waived.
A Borrower “repaying” or“prepaying” Ancillary Outstandings means:
(i)
(ii)
(iii)
that Borrower providing cash cover in respect of the Ancillary Outstandings;
the maximum amount payable under the Ancillary Facility being reduced or cancelled in
accordance with its terms; or
the Ancillary Lender being satisfied that it has no further liability under that Ancillary Facility,
and the amount by which Ancillary Outstandings are, repaid or prepaid under paragraphs (f)(i) and (f)(ii)
above is the amount of the relevant cash cover or reduction.
(g)
An amount borrowed includes any amount utilised under an Ancillary Facility.
1.3 Currency
(a)
(b)
(c)
“EUR”, “€” and “Euro” means the single currency unit of the Participating Member States, “£” and
“Sterling” denote lawful currency of the United Kingdom and “US$” and “US Dollars” denotes lawful
currency of the United States of America.
Unless otherwise specified, references to the equivalent of an amount specified in a particular currency
(the specified currency amount) shall be construed as a reference to the amount of any other relevant
currency which can be purchased with the specified currency amount at the Agent’s Spot Rate of
Exchange on the date on which the calculation falls to be made for spot delivery, as determined by the
Agent.
Where any provision of a Finance Document requires a Commitment in US Dollars to be aggregated or
compared with a Commitment in the Base Currency, the US Dollar Commitment shall be notionally
converted into the Base Currency:
(i)
(ii)
in the case of an undrawn Commitment, at the Agent’s Spot Rate of Exchange on the date of
this Agreement;
in the case of a drawn Commitment (other than in relation to SPV Tranches), at the same
weighted average rate of exchange used to determine the Base Currency Amount of the
Utilisations comprised in that drawn Commitment; and
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(iii)
in the case of a drawn Commitment under an SPV Tranche, at the rate of exchange used to
determine the Base Currency Amount of the Utilisation comprised in that drawn Commitment
as at the date of incorporation of (in the case of SPV Tranche) the tranche named “SPV Tranche
3” into the Existing Credit Agreement or (in the case of any Additional SPV Tranche
denominated in US Dollars) the relevant Additional SPV Tranche into this Agreement pursuant
to Clause 2.2 (Additional SPV Tranches).
(d)
Where any provision of a Finance Document requires a Utilisation in US Dollars to be aggregated or
compared with a Utilisation in the Base Currency, the US Dollar Utilisation shall be taken into account at
its Base Currency Amount.
1.4 Third party rights
(a)
(b)
Unless expressly provided to the contrary in a Finance Document a person who is not a Party has no right
under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce or enjoy the
benefit of any term of this Agreement.
Notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not
required to rescind or vary this Agreement at any time.
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SECTION 2
THE FACILITIES
2. THE FACILITIES
2.1 The Facilities
(a)
Subject to the terms of this Agreement, the Lenders make available:
(i)
(ii)
(iii)
(iv)
a Base Currency term loan facility in an aggregate amount equal to the Total Facility A
Commitments;
a Base Currency term loan facility in an aggregate amount equal to the Total Facility B
Commitments;
a Base Currency revolving credit facility in an aggregate amount equal to the Total Revolving
Facility Commitments; and
a Base Currency term loan facility in an aggregate amount equal to the Total Bridge
Commitments.
(b)
(c)
(d)
Each Term Facility referred to in paragraph (a) above will be available to the Company and the Revolving
Facility will be available to all the Borrowers.
Subject to the terms of this Agreement and the Ancillary Documents, an Ancillary Lender may make
available an Ancillary Facility to any of the Borrowers in place of all or part of its Commitment under the
Revolving Facility.
Subject to the terms of this Agreement, Nara Cable makes available to the Company:
2.2 Additional SPV Tranches
(i) a Base Currency term loan facility in an aggregate amount equal to the Total SPV Tranche 1
Commitments;
(ii) a Base Currency term loan facility in an aggregate amount equal to the Total SPV Tranche 2
Commitments;
(iii) a US Dollars term loan facility in an aggregate amount equal to the Total SPV Tranche 3
Commitments; and
(iv) a US Dollars term loan facility in an aggregate amount equal to the Total SPV Tranche 4
Commitments.
(a)
(b)
(c)
Additional tranches consisting of term loans may be made available to the Company by any SPV upon the
issuance by that SPV of Debt Instruments in the Base Currency or US Dollars (each an “Additional SPV
Tranche” and, together with the Original SPV Tranches, the “SPV Tranches”) in an amount equal to the
principal amount of each such issuance less costs and expenses incurred in connection with such issuance
and taxes incidental thereto (the “Net Issuance Proceeds”), and which will be denominated either in the
Base Currency or in US Dollars depending on the currency in which the relevant Debt Instruments are
denominated.
The Parties agree that at any time until the Final Maturity Date, each SPV will (by the execution of an
Amendment and Restatement Agreement as referred to in paragraph (c)(iv) below) become a party to this
Agreement as a Lender in respect of each Additional SPV Tranche made available by it, upon the issuance
by it of any Debt Instrument.
The entry into an Additional SPV Tranche pursuant to this Clause 2.2 is subject to the following
conditions:
(i)
the Termination Date of any Additional SPV Tranche shall occur on a date to be agreed between
the SPV and Cableuropa and which, for the avoidance of doubt, must fall on a date on or after
the latest Termination Dates for the other Facilities;
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(ii)
(iii)
if the Obligors have entered into any separate agreement with an SPV whereby the Obligors
agree to be bound by the covenants contained in a relevant Debt Instrument (for which there
will not be any restriction or consent from the Lenders whatsoever required under the terms of
this Agreement), so that any breach of such covenants would result in a potential unsecured
claim by the SPVs against the Obligors, such agreement provides for a waiting period of 30
Business Days between any claim made thereunder and amounts becoming due thereunder
except in the case of an Insolvency Event (and, for the avoidance of doubt, any changes,
amendments or waivers of such agreements will not be subject to the approval of the Lenders
except for any reduction of the 30 Business Days waiting period, which would require the
consent of the Majority Lenders);
execution by the relevant SPV, the Obligors and the Agent of an Amendment and Restatement
Agreement, amending and restating this Agreement for the purposes of:
(A)
documenting the particular terms and conditions applicable to each relevant
Additional SPV Tranche, being:
(1) amendment to the definition of “Total Commitments” and Clause 2.1 (The
Facilities) to include the relevant Additional SPV Tranche;
(2) the currency in which the relevant Additional SPV Tranche is to be
denominated;
(3) the updating of the table showing the participation of the Lenders under the
Facilities in Part IIA of Schedule 1 (The Original Parties) to include the
relevant Additional SPV Tranche;
(4) the interest rate and any fees applicable to the relevant Additional SPV
Tranche;
(5) the Termination Date applicable to the Additional SPV Tranche;
(6) confirmation of whether prepayment fees are payable by the SPV under the
underlying Debt Instrument, for the purposes of paragraph (b) of Clause 8.4
(Additional provisions for the voluntary prepayment of SPV Tranches and
New Bank Tranches);
(7) confirmation of whether the underlying Debt Instrument provides for a
mandatory repurchase offer upon the occurrence of a change of control and/
or in connection with asset sale excess proceeds for the purposes of
Clauses 8.4 (Additional provisions for the voluntary prepayment of SPV
Tranches and New Bank Tranches) and paragraph (c)(i) of Clause 9.3
(Application of mandatory prepayments);
(8) if applicable, any waiver by the SPV of its rights as Lender under this
Agreement;
(9) the duration of the Interest Periods and the date on which the interest
payments become due, which shall be the same as those under the Debt
Instrument;
(10) if applicable, confirmation of any restriction period under the underlying
Debt Instrument for the repurchase of the bonds (call protection); and
(11) if applicable, any other mechanical changes in this Agreement that are
required to implement the Additional SPV Tranche or consequential to
those changes;
(B)
(C)
extending and ratifying the Security Agreements to grant security for the obligations
under each Additional SPV Tranche on a pari passu basis with the other Facilities
(including with respect to distribution of enforcement proceeds);
providing that the relevant SPV becomes a party to the Intercreditor Agreement as a
“Senior Creditor”, undertaking to perform all the obligations expressed therein to be
assumed by a “Senior Creditor” and agreeing that it shall be bound by all the
provisions of the Intercreditor Agreement as if it had been an original party thereto;
and
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(D)
documenting the single Utilisation of the Additional SPV Tranche, which shall take
place for the whole amount of the Net Issuance Proceeds on the date of execution of
the relevant Amendment and Restatement Agreement (the “Execution Date”) by
means of the SPV making the funds available to the Company for the purposes
described in paragraph (d) of Clause 3.1 (Purposes) by the delivery on such same date
of the net funds directly to the Agent;
(iv)
(v)
if the Additional SPV Tranche is to be denominated in US Dollars, the establishment of an
account with the Agent in that currency for the purposes of making and receiving payments in
that currency prior to the Execution Date (unless a US Dollars account is already established
with the Agent in the name of the relevant SPV for those purposes); and
as conditions precedent for the execution by the Agent of such Amendment and Restatement
Agreement, all documentation and other evidence set out in Part II (Conditions Precedent for
Additional SPV Tranches) of Schedule 2 (Conditions Precedent) are delivered to the Agent in
form and substance satisfactory to it.
(d)
(e)
In order to proceed with the execution of the relevant Amendment and Restatement Agreement by the
relevant SPV, the Obligors and the Agent, the Company shall give the Agent written notice of its intention
to raise an Additional SPV Tranche no later than the Specified Time, together with (unless the relevant
SPV is already a Lender under an SPV Tranche and such information has already been provided to the
Agent) the relevant documentation and other evidence about the SPV required for the purposes of the
Agent to comply with “know your customer” procedures (being the deed of incorporation and by-laws of
the SPV, details of both the direct and the ultimate shareholders of the SPV, personal identification of the
SPV’s directors and powers of attorney of the signatories acting on behalf of the SPV and names and
details of contact persons for the SPV).
If an Additional SPV Tranche is denominated in US Dollars:
(i)
(ii)
(iii)
(iv)
the Company shall give the Agent written notice no later than the Specified Time of the final
and definitive amount of the Additional SPV Tranche Commitment and the net proceeds of the
Additional SPV Tranche Loan to be received thereunder and, if applicable, shall deliver a notice
of prepayment in accordance with Clause 8.3 (Voluntary Prepayment of Term Loans);
on the Execution Date, upon receipt of the funds from the SPV, (A) the Company will enter into
a foreign exchange derivative transaction with the Agent or, if the Agent cannot enter into such
foreign exchange derivative transaction on terms satisfactory to the Company, with another
bank, which is a Lender or an Affiliate of a Lender (an “Exchange Lender”), (B) the Agent
will communicate the exchange rate resulting from this transaction to the Lenders, (or, as the
case may be, the Exchange Lender will communicate such exchange rate to the Agent and the
Agent will communicate the same to the Lenders) and (C) the net proceeds in US Dollars will
be deposited in the account opened for such purposes with the Agent (provided that the timing
of any of the steps described in this paragraph (ii) may be varied by agreement between the
Agent and the Company);
no later than the Specified Time, the Agent will exchange the US Dollars to Euros, send the
notices required by this Agreement to the Lenders for the next Interest Periods, and calculate
and communicate to the Company and the Lenders the Break Costs, if any;
no later than the Specified Time, the Agent will apply the Euros obtained from the foreign
exchange derivative transaction in accordance with paragraph (d) of Clause 3.1 (Purpose) and,
if applicable, Clause 8.3 (Voluntary Prepayment of Term Loans).
(f)
If an Additional SPV Tranche is denominated in the Base Currency:
(i)
(ii)
the Company shall give the Agent written notice no later than the Specified Time of the final
and definitive amount of the Additional SPV Tranche Commitment and the net proceeds of the
Additional SPV Tranche Loan to be received thereunder and, if applicable, shall deliver a notice
of prepayment in accordance with Clause 8.3 (Voluntary Prepayment of Term Loans);
on the Execution Date, upon receipt of the funds from the SPV, the Agent will send the usual
notices to the Lenders for the next Interest Periods, and calculate and communicate to the
Company and the Lenders the Break Costs, if any; and
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(iii)
no later than the Specified Time, the Agent will apply the proceeds of the Additional SPV
Tranche Loan in accordance with paragraph (d) of Clause 3.1 (Purpose) and, if applicable,
Clause 8.3 (Voluntary Prepayment of Term Loans).
(g)
(h)
(i)
(j)
(k)
For the avoidance of doubt, the execution and performance of any Additional SPV Tranche and the
amendments to this Agreement necessary to implement an Additional SPV Tranche as contemplated in
this Clause 2.2, or in this Agreement generally, will be expressly permitted in accordance with the terms
of this Clause 2.2 and shall not require any further consents from the Lenders whatsoever.
Notwithstanding the above, the Agent shall be entitled to request that each of the Lenders ratify each
Amendment and Restatement Agreement executed by the Agent pursuant to this Clause 2.2 in accordance
with paragraph (i) of Clause 29.6 (Rights and discretions) below. Each of the Lenders hereby irrevocably
agrees to effect such ratification promptly after being requested to do so although it is understood that
nothing in this provision shall be construed or interpreted as requiring any further consent or ratification
from Lenders for the implementation of any Additional SPV Tranche or the extension of the Security
Agreements to secure the obligations thereunder.
The Agent when executing an Amendment and Restatement Agreement amending and restating this
Agreement to incorporate an Additional SPV Tranche will do so under the mandate given to it under
Clause 38 (Amendment and Waivers) below, and, as provided by paragraph (a) of Clause 29.6 (Rights and
discretions) below, shall not be required to verify any statement, declaration or confirmation made by any
of the Obligors or other persons in accordance with this Agreement or any matter of fact or law presented
to it in respect of the Additional SPV Tranche or the underlying Debt Instrument (including, without
limitation, size or interest) and shall be entitled to rely on the confirmations provided by legal counsel to
the Company and by the bookrunners of the issuing of the Debt Instruments provided under this
Agreement to be delivered to it.
There will be no restriction on the ability of the Obligors to pay, and the Obligors shall be permitted to
pay, fees to any SPV in order to match any original discount and incurred expenses in relation to the
relevant issuance of Debt Instruments, and ongoing administrative expenses.
The Obligors may not grant any Security to secure the obligations of an SPV under any Debt Instruments,
although the SPV may grant Security over its rights arising under the relevant SPV Tranche(s) and any
Finance Documents as security for such obligations.
2.3 New Bank Tranches
(a)
(b)
(c)
Additional tranches consisting of term loans may be made available to the Company by any banks and/or
institutions active in the bank and institutional loan markets that qualify as Eligible Lenders (individually
referred to as a “New Bank Tranche” and collectively referred to as the “New Bank Tranches”), and
may be denominated either in the Base Currency or in US Dollars.
The Parties agree that at any time until the Final Maturity Date, each relevant bank or institution that
makes available a New Bank Tranche to the Company (each a “New Bank Tranche Lender”) will (by
executing the Amendment and Restatement Agreement referred to below) become a party to this
Agreement as Lender in respect of each corresponding New Bank Tranche.
The entry into a New Bank Tranche pursuant to this Clause 2.3 is subject to the following conditions:
(i)
(ii)
the Termination Date of any New Bank Tranche shall occur on a date to be agreed between the
relevant New Bank Tranche Lenders and Cableuropa and which, for the avoidance of doubt,
must fall on a date on or after the latest Termination Dates for the other Facilities;
the interest rate applicable to each Interest Period corresponding to New Bank Tranche Loans
shall be that agreed upon by the Company and the New Bank Tranche Lenders, provided that
the margin component of such interest rate shall be no more than 1.00 per cent. higher than the
highest Margin then applicable to the other Facilities under this Agreement unless:
(A)
(B)
an independent bank determines that such higher pricing is reasonable in light of then
prevailing market conditions; or
Cableuropa grants the Lenders (other than the SPVs which are Lenders) a first right of
refusal to match the offer for such New Bank Tranche with such pricing (such right to
be exercisable for the whole of such Financial Debt only, and not for part thereof but
in any proportion between the Lenders (other than the SPVs which are Lenders) as the
Lenders (other than the SPVs which are Lenders) may agree or, in the absence of any
such agreement, pro rata to their Commitments under this Agreement);
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(iii)
execution by the relevant New Bank Tranche Lenders, the Obligors and the Agent of an
Amendment and Restatement Agreement, amending and restating this Agreement for the
purposes of:
(A)
documenting the particular terms and conditions applicable to each relevant New
Bank Tranche, being
(1) amendment to the definition of “Total Commitments” and Clause 2.1 (The
Facilities) to include the relevant New Bank Tranche;
(2) the currency in which the relevant New Bank Tranche is to be denominated;
(3) the participation of the New Bank Lenders in the amount of the relevant
New Bank Tranche and the corresponding updating of the participation of
the Lenders under the Facilities in Part IIA of Schedule 1 (Original Parties);
(4) the interest rate and any fees applicable to the relevant New Bank Tranche;
(5) the Termination Date applicable to the relevant New Bank Tranche;
(6) if applicable, confirmation of whether prepayment fees would be payable
for the purposes of paragraph (b) of Clause 8.4 (Additional provisions for
the voluntary prepayment of SPV Tranches and New Bank Tranches); and
(7) if applicable, any other mechanical changes to this Agreement that are
required to implement the New Bank Tranche or consequential to those
changes;
(B)
(C)
(D)
extending and ratifying the Security Agreements to grant security for the obligations
under each New Bank Tranche on a pari passu basis with the other Facilities
(including with respect to distribution of enforcement proceeds);
providing that each New Bank Lender becomes a party to the Intercreditor Agreement
as a “Senior Creditor”, undertaking to perform all the obligations expressed therein to
be assumed by a “Senior Creditor” and agreeing that it shall be bound by all the
provisions of the Intercreditor Agreement as if it had been an original party thereto;
and
documenting the single Utilisation of the New Bank Tranche, which shall take place
for the whole amount of the New Bank Tranche on the date of execution of the
relevant Amendment and Restatement Agreement (the “Execution Date”) by means
of the New Bank Tranche Lenders making the funds available to the Company for the
purposes described in paragraph (d) of Clause 3.1 (Purpose) by the delivery on such
same date of the net funds directly to the Agent; and
(iv)
if the New Bank Tranche is to be denominated in US Dollars, the establishment of an account
with the Agent in that currency for the purposes of making and receiving payments in that
currency prior to the Execution Date (unless a US Dollars account is already established with
the Agent in the name of the Company for those purposes).
(d)
(e)
In order to proceed with the execution by the relevant bank or institution, the Obligors and the Agent of
the relevant Amendment and Restatement Agreement, the Company shall give the Agent a written notice
of its intention to raise a New Bank Tranche no later than the Specified Time together with the relevant
documentation and other evidence about the New Bank Lenders required for the purposes of the Agent to
comply with “know your customer” procedures (being the deed of incorporation and by-laws of the New
Bank Lenders, details of both the direct and the ultimate shareholders of the New Bank Lenders, personal
identification of the New Bank Lenders’ directors, powers of attorney of the signatories acting on behalf
of the New Bank Lenders and contact persons for the New Bank Lenders and their details).
If a New Bank Tranche is denominated in US Dollars:
(i)
the Company shall give the Agent written notice no later than the Specified Time with the final
and definitive amount of the New Bank Tranche Commitment and the net proceeds of the New
Bank Tranche Loan to be received thereunder and, if applicable, shall deliver a notice of
prepayment in accordance with Clause 8.3 (Voluntary Prepayment of Term Loans);
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(ii)
(iii)
(iv)
on the Execution Date, upon receipt of the funds from the New Bank Tranche Lenders, (A) the
Company will enter into a foreign exchange derivative transaction with the Agent or, if the
Agent cannot enter into such foreign exchange derivative transaction on terms satisfactory to the
Company, with an Exchange Lender (as defined in paragraph (e)(ii) of Clause 2.2 (Additional
SPV Tranches)), (B) the Agent will communicate the exchange rate resulting from this
transaction to the Lenders, (or, as the case may be, the Exchange Lender will communicate such
exchange rate to the Agent and the Agent will communicate the same to the Lenders), and
(C) the net proceeds of the New Bank Trance Loan in US Dollars will be deposited in the
account opened to that effect with the Agent (provided that the timing of any of the steps
described in this paragraph (ii) may be varied by agreement between the Agent and the
Company);
no later than the Specified Time, the Agent will exchange the US Dollars to Euros, send the
notices required by this Agreement to the Lenders for the next Interest Periods, and calculate
and communicate to the Company and the Lenders the Break Costs, if any; and
no later than the Specified Time, the Agent will apply the Euros obtained from the foreign
exchange derivative transaction in accordance with paragraph (d) of Clause 3.1 (Purpose) or, if
applicable, Clause 8.3 (Voluntary Prepayment of Term Loans).
(f)
If a New Bank Tranche is denominated in the Base Currency:
(i)
(ii)
(iii)
the Company shall give the Agent written notice no later than the Specified Time with the final
and definitive amount of the New Bank Tranche Commitment and the proceeds of the New
Bank Tranche Loan to be received thereunder and, if applicable, shall deliver a notice of
prepayment in accordance with Clause 8.3 (Voluntary Prepayment of Term Loans);
on the Execution Date, upon receipt of the funds from the New Bank Lenders, the Agent will
send the usual notices to the Lenders for the next roll over, and calculate the Break Costs, if any;
and
no later than the Specified Time, the Agent will apply the proceeds of the New Bank Tranche
Loan in accordance with paragraph (d) of Clause 3.1 (Purpose) or, if applicable, Clause 8.3
(Voluntary Prepayment of Term Loans).
(g)
(h)
(i)
For the avoidance of doubt, the execution and performance of any New Bank Tranche and the
amendments to this Agreement necessary to implement its particularities as contemplated in this
Clause 2.3, or in the Agreement generally, will be expressly permitted in accordance with the terms of this
Clause 2.3 and shall not require any further consents from the Lenders whatsoever.
Notwithstanding the above, the Agent shall be entitled to request the Lenders to ratify each Amendment
and Restatement Agreement executed by the Agent pursuant to this Clause in accordance with paragraph
(i) of Clause 29.6 (Rights and Discretions) below. The Lenders hereby irrevocably agree to effect such
ratification promptly after being requested to do so although it is understood that nothing in this provision
shall be construed or interpreted as requiring any further consent or ratification from Lenders for the
implementation of any New Bank Tranche or the extension of the Security Agreements to secure the
obligations thereunder.
The Agent when executing an Amendment and Restatement Agreement amending and restating this
Agreement to incorporate a New Bank Tranche will do so under the mandate given to it under Clause 38
(Amendments and waivers) below, and, as provided by paragraph (a) of Clause 29.6 (Rights and
discretions) below, shall not be required to verify any statement, declaration or confirmation made by any
of the Obligors or other persons in accordance with this Agreement or any matter of fact presented to it in
respect to the New Bank Tranche (such as size, interest, etc.) and shall be entitled to rely on the
confirmations provided by lenders under a New Bank Tranche provided under this Agreement to be
delivered to it.
2.4 Replacement Revolving Facility
(a)
The Company may, at any time, request that the Revolving Facility be replaced by a replacement
revolving credit facility provided by Lenders or other banks and/or institutions active in the bank and
institutional loan markets that qualify as Eligible Lenders (a “Replacement Revolving Facility”) and,
thereafter, that any such Replacement Revolving Facility be itself replaced by a Replacement Revolving
Facility provided by Lenders or other banks and/or institutions active in the bank and institutional loan
markets that qualify as Eligible Lenders.
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(b)
(c)
The Parties agree that at any time until the Final Maturity Date, each relevant bank or institution that
makes available a Replacement Revolving Facility to the Company (each a “Replacement Revolving
Facility Lender”) will, if not already a Lender, by executing the Amendment and Restatement Agreement
referred to below become a party to this Agreement as Lender in respect of each corresponding New Bank
Tranche.
The entry into a Replacement Revolving Facility pursuant to this Clause 2.4 is subject to the following
conditions:
(i)
(ii)
(iii)
(iv)
(v)
the amount of the Replacement Revolving Facility may be an amount greater than, equal to or
less than the amount of the Revolving Facility (or, if applicable, the existing Replacement
Revolving Facility which it is replacing) provided that the Total Revolving Facility
Commitments (including in respect of the Replacement Revolving Facility) do not exceed two
hundred and fifty million Euros (€250,000,000);
the currency of the Replacement Revolving Facility must be the Base Currency;
the Termination Date of the Replacement Revolving Facility must be a date falling on or after
the Termination Date applicable to the Revolving Facility (or, if applicable, the existing
Replacement Revolving Facility which it is replacing); and
the other terms applicable to the Replacement Revolving Facility must be the same in all
material respects as the terms applicable to the Revolving Facility (or, if applicable, the existing
Replacement Revolving Facility which it is replacing) (except for margin, fees and
commissions, which the Company and the Replacement Revolving Facility Lenders shall be
free to agree);
execution by the relevant Replacement Revolving Facility Lenders, the Obligors and the Agent
of an Amendment and Restatement Agreement, amending and restating this Agreement for the
purposes of:
(A)
documenting the particular terms and conditions applicable to the Replacement
Revolving Facility, being:
(1) the participation of the Replacement Revolving Facility Lenders and the
corresponding updating of the participation of the Lenders under the
Facilities in Part IIA of Schedule 1 (The Original Parties);
(2) the interest rate and any fees applicable to the relevant Replacement
Revolving Facility (with changes, as appropriate, to Clause 14.1
(Commitment Fee));
(3) the Termination Date applicable to the Replacement Revolving Facility; and
(4) if applicable, any other mechanical changes to this Agreement that are
required to implement the Replacement Revolving Facility or consequential
to those changes,
but provided that, except as set out in sub paragraphs (1) to (4) above, following the
execution of the Amendment and Restatement Agreement all references in this
Agreement to “Revolving Facility” shall be references to the Replacement Revolving
Facility;
(vi)
(vii)
extending and ratifying the Security Agreements to grant security for the obligations under each
the Replacement Revolving Facility on a pari passu basis with the other Facilities (including
with respect to distribution of enforcement proceeds); and
providing that each Replacement Revolving Facility Lender (if not already a party) becomes a
party to the Intercreditor Agreement as a “Senior Creditor”, undertaking to perform all the
obligations expressed therein to be assumed by a “Senior Creditor” and agreeing that it shall be
bound by all the provisions of the Intercreditor Agreement as if it had been an original party
thereto.
(d)
In order to proceed with the replacement of the Revolving Facility with a Replacement Revolving Facility
by the execution of the relevant Amendment and Restatement Agreement, the Company shall give the
Agent a written notice of the same no later than the Specified Time together with the relevant
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documentation and other evidence about the Replacement Revolving Facility Lenders (if not already
Lenders) required for the purposes of the Agent to comply with “know your customer” procedures (being
the deed of incorporation and by-laws of the Replacement Revolving Facility Lenders, details of both the
direct and the ultimate shareholders of the New Bank Lenders, personal identification of the Replacement
Revolving Facility Lenders directors, powers of attorney of the signatories acting on behalf of the
Replacement Revolving Facility Lenders and contact persons for the Replacement Revolving Facility
Lenders and their details).
(e)
The replacement of the Revolving Facility or of a Replacement Revolving Facility (as the case may be)
(whichever facility is being replaced will be the “Replaced Revolving Facility”) with the Replacement
Revolving Facility shall be implemented as follows:
(i)
(ii)
(iii)
the Replacement Revolving Facility will replace the Replaced Revolving Facility in whole on
the date of the relevant Amendment and Restatement Agreement executed in accordance with
this Clause 2.4 (Replacement Revolving Facility) or, if later, on the effective date for the
replacement specified in the relevant Amendment and Restatement Agreement (whichever date
is applicable will be the “Replacement Date”);
on the Replacement Date, the Commitments under the Replaced Revolving Facility will be
cancelled in full; and
the Company will ensure that on the Replacement Date, it:
(A)
(B)
utilises the Replacement Revolving Facility in an amount equal to the aggregate
amount of any Loans outstanding under the Replaced Revolving Facility; and
repays any outstanding Loans under the Replaced Revolving Facility in full.
(f)
(g)
(h)
For the avoidance of doubt, the execution and performance of any Replacement Revolving Facility and
the amendments to this Agreement necessary to implement its particularities as contemplated in this
Clause 2.4 or in the Agreement generally, will be expressly permitted in accordance with the terms of this
Clause 2.4 and shall not require any further consents from the Lenders whatsoever.
Notwithstanding the above, the Agent shall be entitled to request the Lenders to ratify each Amendment
and Restatement Agreement executed by the Agent pursuant to this Clause in accordance with paragraph
(a) of Clause 29.6 (Rights and Discretions) below. The Lenders hereby irrevocably agree to effect such
ratification promptly after being requested to do so although it is understood that nothing in this provision
shall be construed or interpreted as requiring any further consent or ratification from Lenders for the
implementation of a Replacement Revolving Facility or the extension of the Security Agreements to
secure the obligations thereunder.
The Agent when executing an Amendment and Restatement Agreement amending and restating this
Agreement to incorporate a Replacement Revolving Facility will do so under the mandate given to it
under Clause 38 (Amendments and waivers) below, and, as provided by paragraph (a) of Clause 29.6
(Rights and discretions) below, shall not be required to verify any statement, declaration or confirmation
made by any of the Obligors or other persons in accordance with this Agreement or any matter of fact
presented to it in respect to the Replacement Revolving Facility and shall be entitled to rely on the
confirmations provided by lenders under a Replacement Revolving Facility provided under this
Agreement to be delivered to it.
2.5 Increase
(a)
The Company may by giving prior notice to the Agent by no later than the date falling thirty
(30) Business Days after the effective date of a cancellation of:
(i)
(ii)
the Available Commitments of a Defaulting Lender in accordance with Clause 8.7 (Right of
cancellation in relation to a Defaulting Lender); or
the Commitments of a Lender in accordance with Clause 8.1 (Illegality),
request that the Total Commitments be increased (and the Total Commitments under that Facility shall be
so increased) in an aggregate amount in the Base Currency of up to the amount of the Available
Commitments or Commitments so cancelled as follows:
(iii)
the increased Commitments will be assumed by one or more Lenders or other banks, financial
institutions, trusts, funds or other entities (each an “Increase Lender”) selected by the
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Company (each of which shall not be a Sponsor Affiliate or a member of the Group and which
is further acceptable to the Agent (acting reasonably)) and each of which confirms its
willingness to assume and does assume all the obligations of a Lender corresponding to that part
of the increased Commitments which it is to assume, as if it had been an Original Lender;
(iv)
(v)
(vi)
(vii)
each of the Obligors and any Increase Lender shall assume obligations towards one another and/
or acquire rights against one another as the Obligors and the Increase Lender would have
assumed and/or acquired had the Increase Lender been an Original Lender;
each Increase Lender shall become a Party as a “Lender” and any Increase Lender and each of
the other Finance Parties shall assume obligations towards one another and acquire rights
against one another as that Increase Lender and those Finance Parties would have assumed and/
or acquired had the Increase Lender been an Original Lender;
the Commitments of the other Lenders shall continue in full force and effect; and
any increase in the Total Commitments shall take effect on the date specified by the Company
in the notice referred to above or any later date on which the conditions set out in paragraph
(b) below are satisfied.
(b)
An increase in the Total Commitments will only be effective on:
(i)
(ii)
the execution by the Agent of an Increase Confirmation from the relevant Increase Lender;
in relation to an Increase Lender which is not a Lender immediately prior to the relevant
increase:
(A)
(B)
the Increase Lender entering into the documentation required for it to accede as a
party to the Intercreditor Agreement; and
the performance by the Agent of all necessary “know your customer” or other similar
checks under all applicable laws and regulations in relation to the assumption of the
increased Commitments by that Increase Lender, the completion of which the Agent
shall promptly notify to the Company and the Increase Lender.
(c)
(d)
(e)
Each Increase Lender, by executing the Increase Confirmation, confirms (for the avoidance of doubt) that
the Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on
behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on
which the increase becomes effective.
Each Obligor and each Lender agrees to any extension and ratifying of the Security Agreements which
may be necessary to grant the Transaction Security in favour of any Increase Lender.
Clause 26.4 (Limitation of responsibility of Existing Lenders) shall apply mutatis mutandis in this
Clause 2.5 in relation to an Increase Lender as if references in that Clause to:
(i)
(ii)
(iii)
an “Existing Lender” were references to all the Lenders immediately prior to the relevant
increase;
the “New Lender” were references to that “Increase Lender”; and
a “re-transfer” and “re-assignment” were references to respectively a “transfer” and
“assignment”.
2.6 Increase of Revolving Facility or Facility B
(a)
The Company may, at any time during the Availability Period applicable to the Revolving Facility and on
one or more occasions, on not less than 10 Business Days prior notice, request by delivery to the Agent of
a Relevant Facility Increase Request that the Total Revolving Facility Commitments be increased by an
amount (a “Revolving Facility Increase Amount”), which, when aggregated with any previous increases
to the Total Revolving Facility Commitments made in accordance with the provisions of this Clause, must
not exceed EUR 50,000,000.
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(b)
(c)
(d)
The Company may, at any time prior to the date falling six Months prior to the Termination Date relating
to Facility B and on one or more occasions, on not less than three Business Days prior notice, request by
delivery to the Agent of a Relevant Facility Increase Request that the Total Facility B Commitments be
increased by an amount not exceeding the then Total Bridge Commitments (a “Facility B Increase
Amount”), which, when aggregated with any previous increases to the Total Facility B Commitments
made in accordance with the provisions of this Clause, must not exceed the then Total Bridge
Commitments.
Upon receipt of such Relevant Facility Increase Request, the Agent shall forward a copy of that Relevant
Facility Increase Request to the Lenders.
An increase in the Total Revolving Facility Commitments or, as applicable, the Total Facility B
Commitments shall be effected as follows:
(i)
The Revolving Facility Increase Amount or, as applicable, the Facility B Increase Amount will
be assumed by:
(A)
(B)
one or more Lenders (each such Lender, a “Relevant Facility Increase Lender”)
selected by the Company (each of which shall not be a Sponsor Affiliate or a member
of the Group and which is further acceptable to the Agent (acting reasonably)) and
each of which confirms (such confirmation to be evidenced by its execution of a
Relevant Facility Lender Increase Certificate); and/or
other banks or financial institutions or trusts, funds or other entities which are
regularly engaged in or established for the purpose of making, purchasing or investing
in loans, securities or other financial assets (each a “Relevant Facility Acceding
Lender”) selected by the Company (each of which shall not be a Sponsor Affiliate or
a member of the Group and which is further acceptable to the Agent (acting
reasonably)) and each of which confirms (such confirmation to be evidenced by its
execution of a Relevant Facility Lender Accession Agreement),
its willingness to assume and does assume all the obligations of a Lender corresponding to that
part of the increase to the Total Revolving Facility Commitments or, as applicable, the Total
Facility B Commitments which it is to assume, as if it had been an Original Lender.
(ii)
(iii)
(iv)
If the Company approaches any Relevant Facility Acceding Lender for such purpose it shall
promptly notify the Agent.
The Company shall confirm to the Agent the Relevant Facility Increase Lenders or, as
applicable, the Relevant Facility Acceding Lenders it has selected to participate in the
Revolving Facility Increase Amount or, as applicable, the Facility B Increase Amount and the
Agent shall promptly inform the Relevant Facility Increase Lenders selected by the Company
and the amount of their Revolving Facility Commitment or, as applicable, Facility B
Commitment (in each case, as increased in accordance with this Clause).
No later than one Business Days prior to the Relevant Facility Increase Effective Date:
(A)
(B)
each Lender which is an Relevant Facility Increase Lender shall deliver to the Agent a
duly completed and executed Relevant Facility Lender Increase Certificate; and
the Company shall procure that each Relevant Facility Acceding Lender shall deliver
to the Agent a duly completed and executed Relevant Facility Lender Accession
Agreement,
in each case relating to the Revolving Facility Increase Amount or, as applicable, the
Facility B Increase Amount.
(v)
On each Relevant Facility Increase Effective Date, the Agent shall execute each Relevant
Facility Lender Increase Certificate and each Relevant Facility Lender Accession Agreement
delivered to it, whereupon:
(A)
each of the Obligors and any Relevant Facility Increase Lender or, as applicable,
Relevant Facility Acceding Lender shall assume obligations towards one another and/
or acquire rights against one another as the Obligors and the Relevant Facility
Increase Lender or, as applicable, Relevant Facility Acceding Lender would have
assumed and/or acquired had the Relevant Facility Increase Lender or, as applicable,
Relevant Facility Acceding Lender been an Original Lender; and
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(B)
each Relevant Facility Increase Lender and, as applicable, Relevant Facility Acceding
Lender shall become a Party as a “Lender” and a party to the Intercreditor Agreement
as a “Senior Lender”,
and any Relevant Facility Increase Lender or, as applicable, Relevant Facility Acceding Lender
and each of the other Finance Parties shall assume obligations towards one another and acquire
rights against one another as that Relevant Facility Increase Lender or, as applicable, Relevant
Facility Acceding Lender and those Finance Parties would have assumed and/or acquired had
the Relevant Facility Increase Lender or, as applicable, Relevant Facility Acceding Lender been
an Original Lender.
(vi)
(vii)
The Commitments of the other Lenders shall continue in full force and effect.
Any amounts borrowed by the Company under Facility B as a result of this Clause shall be
applied in accordance with the proviso to paragraph (a) of Clause 3.1 (Purpose).
(e)
(f)
(g)
(h)
The Agent shall only be obliged to execute a Relevant Facility Lender Accession Agreement delivered to
it by an Relevant Facility Acceding Lender once it is satisfied it has complied with all necessary “know
your customer” or other similar checks under all applicable laws and regulations in relation to such
Relevant Facility Acceding Lender, the completion of which the Agent shall promptly notify to the
Company and the Relevant Facility Acceding Lender.
Each Relevant Facility Increase Lender, by executing the Relevant Facility Lender Increase Certificate,
and each Relevant Facility Acceding Lender, by executing the Relevant Facility Lender Accession
Agreement, confirms (for the avoidance of doubt) that the Agent has authority to execute on its behalf any
amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in
accordance with this Agreement on or prior to the date on which the increase to the Total Revolving
Facility Commitments or, as applicable, the Total Facility B Commitments becomes effective.
Each Obligor and each Lender agrees to any extension and ratifying of the Security Agreements which
may be necessary to grant the Transaction Security in favour of any Relevant Facility Increase Lender or,
as applicable, any Relevant Facility Acceding Lender.
No Lender shall have any obligation to increase its Revolving Facility Commitment or, as applicable,
Facility B Commitment or incur any other obligations under this Agreement and the other Finance
Documents in relation to any Revolving Facility Increase Amount or, as applicable, Facility B Increase
Amount, and any decision by a Lender to increase its Revolving Facility Commitment or, as applicable,
its Facility B Commitment shall be made in its sole discretion.
2.7 Finance Parties’ rights and obligations
(a)
(b)
(c)
The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance
Party to perform its obligations under the Finance Documents does not affect the obligations of any other
Party under the Finance Documents. No Finance Party is responsible for the obligations of any other
Finance Party under the Finance Documents.
The rights of each Finance Party under or in connection with the Finance Documents are separate and
independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor
shall be a separate and independent debt.
A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights
under the Finance Documents.
2.8 Obligors’ Agent
(a) Each Obligor (other than the Company) by its execution of this Agreement or an Accession Deed
irrevocably appoints the Company to act on its behalf as its agent in relation to the Finance Documents
and irrevocably authorises:
(i)
(ii)
the Company on its behalf to supply all information concerning itself contemplated by this
Agreement to the Finance Parties and to give all notices and instructions (including, in the case
of a Borrower, Utilisation Requests), to execute on its behalf any Accession Deed, to make such
agreements and to effect the relevant amendments, supplements and variations capable of being
given, made or effected by any Obligor notwithstanding that they may affect the Obligor,
without further reference to or the consent of that Obligor; and
each Finance Party to give any notice, demand or other communication to that Obligor pursuant
to the Finance Documents to the Company,
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and in each case the Obligor shall be bound as though the Obligor itself had given the notices and
instructions (including, without limitation, any Utilisation Requests) or executed or made the agreements
or effected the amendments, supplements or variations, or received the relevant notice, demand or other
communication.
(b)
Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation,
notice or other communication given or made by the Obligors’ Agent or given to the Obligors’ Agent
under any Finance Document on behalf of another Obligor or in connection with any Finance Document
(whether or not known to any other Obligor and whether occurring before or after such other Obligor
became an Obligor under any Finance Document) shall be binding for all purposes on that Obligor as if
that Obligor had expressly made, given or concurred with it. In the event of any conflict between any
notices or other communications of the Obligors’ Agent and any other Obligor, those of the Obligors’
Agent shall prevail.
3. PURPOSE
3.1 Purpose
(a)
Each Borrower shall apply all amounts borrowed by it under Facility A, Facility B and the Bridge Tranche
towards:
(i)
(ii)
refinancing (in part) amounts outstanding under the Existing Credit Facilities (including,
without limitation, principal, interest break costs, fees and expenses, commissions and any other
premiums in connection therewith); and
payment of fees, costs and expenses due and payable under the Finance Documents and any
other fees, costs and expenses incurred by the Obligors in connections with the negotiation and
preparation of the Finance Documents,
provided that until there are no Bridge Commitments or Bridge Loans outstanding, (1) the Company
shall apply amounts borrowed by it under Facility B (to the extent not applied in accordance with
paragraphs (i) or (ii) above) in or towards prepayment of the Bridge Loans up to the amount of the Bridge
Loans outstanding, and (2) (to the extent no Bridge Loans are outstanding) the Total Bridge Commitments
(up to the amount of the Total Bridge Commitments) shall be cancelled in an amount equivalent to such
amounts borrowed.
(b)
(c)
(d)
Each Borrower shall apply all amounts borrowed by it under the Revolving Facility and any utilisation of
any Ancillary Facility towards the general corporate purposes and ordinary activities of the Group,
including (up to maximum aggregate amount of one hundred million Euro (€100,000,000)) Permitted
Acquisitions (provided that any Revolving Facility Loan applied to finance Permitted Acquisitions must
be repaid (other than from the proceeds of another Revolving Facility Loan or an Ancillary Facility)
within six Months of its Utilisation Date).
The Company shall apply all amounts borrowed by it under the Original SPV Tranches towards
refinancing (in whole) amounts outstanding under the corresponding Existing SPV Tranches.
In the case of Additional SPV Tranches and New Bank Tranches, if Pro Forma Leverage (taking into
account the incurrence of Financial Debt under the Additional SPV Tranches and/or the New Bank
Tranches (as the case may be)) is:
(i)
(ii)
greater than or equal to 4.00:1, the Company shall apply amounts borrowed by it under that
Additional SPV Tranche or New Bank Tranche (A) for the purposes of making voluntary
prepayments of the Term Loans outstanding in accordance with Clause 8.3 (Voluntary
prepayment of Term Loans) up to the amount of the Term Loans outstanding and/or (B) towards
the financing of Permitted Acquisitions provided that the conditions set out in sub paragraph
(ii)(E) of paragraph (b) of the definition of “Permitted Acquisitions” are fulfilled; and
less than 4.00:1, the Company shall apply all amounts borrowed by it under that Additional SPV
Tranche or New Bank Tranche for the general corporate purposes and ordinary activities of the
Group (including Permitted Acquisitions),
provided that until there are no Bridge Commitments or Bridge Loans outstanding, (1) the Company
shall apply amounts borrowed by it under Additional SPV Tranches and New Bank Tranches in or
towards prepayment of the Bridge Loans up to the amount of the Bridge Loans outstanding, and (2) (to
the extent no Bridge Loans are outstanding) the Total Bridge Commitments (up to the amount of the Total
Bridge Commitments) shall be cancelled in an amount equivalent to such amounts borrowed.
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3.2 Monitoring
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4. CONDITIONS OF UTILISATION
4.1 Initial conditions precedent
The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) in relation to any Utilisation if
on or before the Utilisation Date for that Utilisation, the Agent has received all of the documents and other evidence
listed in Part I of Schedule 2 (Conditions precedent) in form and substance satisfactory to the Agent. The Agent
shall notify the Company and the Lenders promptly upon being so satisfied.
4.2 Further conditions precedent
Subject to Clause 4.1 (Initial Conditions Precedent), the Lenders will only be obliged to comply with Clause 5.4
(Lenders’ participation) in relation to a Utilisation, if on the date of the Utilisation Request and on the proposed
Utilisation Date:
(a)
in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan,
and in the case of any other Utilisation, no Default is continuing or would result from the proposed
Utilisation; and
(b) in relation to any Utilisation on the Closing Date, all the representations and warranties in Clause 21
(Representations) or, in relation to any other Utilisation (other than a Rollover Loan), the Repeating
Representations to be made by each Obligor are true.
4.3 Maximum number of Utilisations
(a)
A Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
two or more Facility A Loans would be outstanding;
two or more Facility B Loans would be outstanding;
sixteen or more Revolving Facility Loans would be outstanding;
two or more Bridge Loans would be outstanding;
two or more SPV Tranche 1 Loans would be outstanding;
two or more SPV Tranche 2 Loans would be outstanding;
two or more SPV Tranche 3 Loans would be outstanding; or
two or more SPV Tranche 4 Loans would be outstanding.
(b) Any Separate Loan shall not be taken into account in this Clause 4.3.
4.4 Deemed Utilisation (other than Original SPV Tranches)
(a)
In this Clause 4.4, “Rollover Amount” means, in respect of a Lender which is also a Lender under the
Existing Credit Agreement, the lesser of:
(i)
(ii)
the amount (if any) to be paid, on the Closing Date, to that Lender as a lender under the Existing
Credit Agreement by way of repayment of principal amounts owing under the Existing Credit
Agreement; and
the participation share of that Lender in any Loan(s) to be advanced on the Closing Date.
(b)
If, on the Closing Date, any Lender is also a lender under the Existing Credit Agreement and that Lender
has given the Agent not less than three Business Days prior notice that it wishes this Clause to apply to it
(each such Lender being a “Rollover Lender”), then (unless the Agent notifies that Rollover Lender that
it is not willing to apply the provisions of this Clause to that Rollover Lender within one Business Day of
receipt of the Rollover Lender’s notice to the Agent requesting that this Clause be applied to it):
(i)
that Rollover Lender, in its capacity as a lender under the Existing Credit Agreement, directs the
agent under the Existing Credit Agreement to pay any Rollover Amounts directly to the Agent;
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(ii) the amount which that Rollover Lender is obliged to pay to the Agent under Clause 5.4
(Lenders’ participation) will be reduced by the Rollover Amounts; and
(iii)
the Agent will make the Rollover Amounts available to the relevant Borrowers notwithstanding
the operation of sub-paragraph (ii) above.
(c)
(d)
Each Rollover Lender acknowledges that, to the extent paragraph (b) above applies to it, it is not entitled
to receive repayment of any Rollover Amounts as a lender under the Existing Credit Agreement.
For the avoidance of doubt this Clause 4.4 does not apply in respect of any SPV Tranches.
4.5 Deemed Utilisation (Original SPV Tranches)
(a)
(b)
(c)
In respect of the Utilisation of the Original SPV Tranches (and subject to the conditions of this
Agreement), Nara Cable shall be deemed to make its participation in each Original SPV Tranche Loan
available in full on the Closing Date through its Facility Office.
Nara Cable and the Company confirm that the outstanding amounts owed to Nara Cable in respect of the
Existing SPV Tranches shall, contemporaneously with the deemed first Utilisation of the Original SPV
Tranches under this Agreement as contemplated by paragraph (a) above (but no earlier), be irrevocably
cancelled and deemed repaid in full, and each other Obligor and Finance Party acknowledges and agrees
to the above.
Nara Cable confirms that any notice of prepayment or cancellation requirement under the Existing Credit
Agreement in respect of the Existing SPV Tranches owed to it is irrevocably waived in relation to the
deemed prepayment and cancellation on the first Utilisation Date as contemplated by paragraph (b) above.
4.6 Documentation of Utilisations
At any time after the earlier of the date of expiry of the Availability Period for Facility A, Facility B and the Bridge
Tranche or the date on which the Total Facility A Commitments, the Total Facility B Commitments and the Total
Bridge Commitments have been fully drawn, the Agent may request to in writing to Cableuropa that a duly
authorised representative of Cableuropa execute before a Notary Public selected by Cableuropa a notarial deed
acknowledging the amounts of the Loans owed to the Lenders under Facility A, Facility B and the Bridge Tranche
and such notarial deed shall:
(a)
(b)
be provided no later than the date falling five (5) Business Days after the Agent’s request; and
reflect (i) the amounts of the Loans advanced by the Lenders under Facility A, Facility B and the Bridge
Tranche as at the relevant Utilisation Date in each case and (ii) the amounts that remain outstanding under
the Facility A Loan, the Facility B Loan and the Bridge Loan as of the date of such notarial deed,
and, in the event that Cableuropa has not selected a Notary Public within the first three (3) Business Days from the
Agent’s request, it must appear before a Notary Public designated by the Agent.
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SECTION 3
UTILISATION
5. UTILISATION—LOANS
5.1 Delivery of a Utilisation Request
A Borrower (or the Company on its behalf) may utilise a Facility by delivery to the Agent of a duly completed
Utilisation Request not later than the Specified Time.
5.2 Completion of a Utilisation Request for Loans
(a)
Each Utilisation Request for a Loan is irrevocable and will not be regarded as having been duly completed
unless:
(i)
(ii)
(iii)
(iv)
it identifies the Facility to be utilised;
the proposed Utilisation Date is a Business Day within the Availability Period applicable to that
Facility and, in the case of Facility A, Facility B and the Bridge Tranche, is the Closing Date;
the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount); and
the proposed Interest Period complies with Clause 12 (Interest Periods).
(b)
Multiple Utilisations may be requested in a Utilisation Request where the proposed Utilisation Date is the
Closing Date. Only one Utilisation may be requested in each subsequent Utilisation Request.
5.3 Currency and amount
(a)
The currency specified in a Utilisation Request must be:
(i) in relation to Facility A, Facility B, the Revolving Facility, the Bridge Tranche, SPV Tranche 1
and SPV Tranche 2, the Base Currency; and
(ii)
in relation to SPV Tranche 3 or SPV Tranche 4, US Dollars.
(b)
The amount of the proposed Utilisation must be:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
an amount equal to five million Euros (€5,000,000) for Facility A or, if less, the Available
Facility;
an amount equal to five million Euros (€5,000,000) for Facility B or, if less, the Available
Facility;
for the Revolving Facility a minimum of five million Euros (€5,000,000) or, if less, the
Available Facility;
an amount equal to five million Euros (€5,000,000) for the Bridge Tranche or, if less, the
Available Facility;
for SPV Tranche 1, an amount equal to the Total SPV Tranche 1 Commitments;
for SPV Tranche 2, an amount equal to the Total SPV Tranche 2 Commitments;
for SPV Tranche 3, an amount equal to the Total SPV Tranche 3 Commitments; and
for SPV Tranche 4, an amount equal to the Total SPV Tranche 4 Commitments.
5.4 Lenders’ participation
(a)
(b)
If the conditions set out in this Agreement have been met, and subject to Clause 7.2 (Repayment of
Revolving Facility Loans), each Lender shall make its participation in each Loan available by the
Utilisation Date through its Facility Office.
The amount of each Lender’s participation in each Loan will be equal to the proportion borne by its
Available Commitment to the Available Facility immediately prior to making the Loan.
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5.5 Ancillary Commitments
The maximum aggregate amount of the Ancillary Commitments of all the Lenders shall not at any time exceed
seventy five million Euros (€75,000,000).
5.6 Cancellation of Commitment
(a)
(b)
(c)
(d)
The Facility A Commitments which, at that time, are unutilised shall be immediately cancelled at the end
of the Availability Period for Facility A.
The Facility B Commitments which, at that time, are unutilised shall be immediately cancelled at the end
of the Availability Period for Facility B.
The Revolving Facility Commitments which, at that time, are unutilised shall be immediately cancelled at
the end of the Availability Period for the Revolving Facility.
The Bridge Commitments which, at that time, are unutilised shall be immediately cancelled at the end of
the Availability Period for the Bridge Tranche.
6. ANCILLARY FACILITIES
6.1 Type of Facility
An Ancillary Facility may be by way of:
(a)
(b)
(c)
(d)
a guarantee, bonding, documentary or stand-by letter of credit facility;
a loan facility;
a derivatives facility;
a foreign exchange facility; or
any other facility or accommodation required in connection with the business of the Group and which is agreed by
the Company with an Ancillary Lender.
6.2 Availability
(a)
(b)
If the Company and a Lender agree and except as otherwise provided in this Agreement, the Lender may
provide an Ancillary Facility on a bilateral basis in place of all or part of that Lender’s unutilised
Revolving Facility Commitment (which shall (except for the purposes of determining the Majority
Lenders and of Clause 38.5 (Replacement of Lender)) be reduced by the amount of the Ancillary
Commitment under that Ancillary Facility).
An Ancillary Facility shall not be made available unless, not later than five (5) Business Days prior to the
Ancillary Commencement Date for an Ancillary Facility, the Agent has received from the Company:
(i)
a notice in writing of the establishment of an Ancillary Facility and specifying:
(A)
(B)
(C)
(D)
(E)
(F)
the proposed Borrower(s) (or Affiliate(s) of a Borrower) which may use the Ancillary
Facility;
the proposed Ancillary Commencement Date and expiry date of the Ancillary
Facility;
the proposed type of Ancillary Facility to be provided;
the proposed Ancillary Lender;
the proposed Ancillary Commitment, the maximum amount of the Ancillary Facility;
and
the proposed currency of the Ancillary Facility (if not denominated in the Base
Currency); and
(ii)
any other information which the Agent may reasonably request in connection with the Ancillary
Facility.
The Agent shall promptly notify the Ancillary Lender and the other Lenders of the establishment of an
Ancillary Facility.
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No amendment or waiver of a term of any Ancillary Facility shall require the consent of any Finance
Party other than the relevant Ancillary Lender unless such amendment or waiver itself relates to or gives
rise to a matter which would require an amendment of or under this Agreement (including, for the
avoidance of doubt, under this Clause). In such a case, the provisions of this Agreement with regard to
amendments and waivers will apply.
(c)
Subject to compliance with paragraph (b) above:
(i)
(ii)
the Lender concerned will become an Ancillary Lender; and
the Ancillary Facility will be available,
with effect from the date agreed by the Company and the Ancillary Lender.
6.3 Terms of Ancillary Facilities
(a)
(b)
Except as provided below, the terms of any Ancillary Facility will be those agreed by the Ancillary
Lender and the Company.
However, those terms:
(i)
must be based upon normal commercial terms at that time (except as varied by this Agreement);
(ii) may allow only Borrowers (or Affiliates of Borrowers nominated pursuant to Clause 6.9
(Affiliates of Borrowers)) to use the Ancillary Facility;
(iii)
(iv)
(v)
may not allow the Ancillary Outstandings to exceed the Ancillary Commitment;
may not allow the Ancillary Commitment of a Lender to exceed the Available Commitment
with respect to the Revolving Facility of that Lender; and
must require that the Ancillary Commitment is reduced to nil, and that all Ancillary
Outstandings are repaid (or cash cover provided in respect of all the Ancillary Outstandings) not
later than the Termination Date for the Revolving Facility (or such earlier date as the Revolving
Facility Commitment of the relevant Ancillary Lender (or its Affiliate) is reduced to zero).
(c)
(d)
If there is any inconsistency between any term of an Ancillary Facility and any term of this Agreement,
this Agreement shall prevail except for (i) Clause 35.3 (Day count convention) which shall not prevail for
the purposes of calculating fees, interest or commission relating to an Ancillary Facility; (ii) an Ancillary
Facility comprising more than one account where the terms of the Ancillary Documents shall prevail to
the extent required to permit the netting of balances on those accounts; and (iii) where the relevant term of
this Agreement would be contrary to, or inconsistent with, the law governing the relevant Ancillary
Document, in which case that term of this Agreement shall not prevail.
Interest, commission and fees on Ancillary Facilities are dealt with in Clause 14.4 (Interest, commission
and fees on Ancillary Facilities).
6.4 Repayment of Ancillary Facility
(a)
(b)
(c)
An Ancillary Facility shall cease to be available on the Termination Date in relation to the Revolving
Facility or such earlier date on which its expiry date occurs or on which it is cancelled in accordance with
the terms of this Agreement.
If an Ancillary Facility expires in accordance with its terms the Ancillary Commitment of the Ancillary
Lender shall be reduced to zero (and its Revolving Facility Commitment shall be increased accordingly).
No Ancillary Lender may demand repayment or prepayment of any amounts or demand cash cover for
any liabilities made available or incurred by it under its Ancillary Facility (except where the Ancillary
Facility is provided on a net limit basis to the extent required to bring any gross outstandings down to the
net limit) unless:
(i)
the Total Revolving Facility Commitments have been cancelled in full, or all outstanding
Utilisations under the Revolving Facility have become due and payable in accordance with the
terms of this Agreement, or the Agent has declared all outstanding Utilisations under the
Revolving Facility immediately due and payable, or the expiry date of the Ancillary Facility
occurs; or
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(ii)
(iii)
it becomes unlawful in any applicable jurisdiction for the Ancillary Lender to perform any of its
obligations as contemplated by this Agreement or to fund, issue or maintain its participation in
its Ancillary Facility; or
the Ancillary Outstandings (if any) under that Ancillary Facility can be refinanced by a
Revolving Facility Utilisation and the Ancillary Lender gives sufficient notice to enable a
Revolving Facility Utilisation to be made to refinance those Ancillary Outstandings.
(d)
For the purposes of determining whether or not the Ancillary Outstandings under an Ancillary Facility
mentioned in paragraph (c)(iii) above can be refinanced by a Utilisation of the Revolving Facility:
(i)
(ii)
the Revolving Facility Commitment of the Ancillary Lender will be increased by the amount of
its Ancillary Commitment; and
the Utilisation may (so long as paragraph (c)(i) above does not apply) be made irrespective of
whether a Default is outstanding or any other applicable condition precedent is not satisfied (but
only to the extent that the proceeds are applied in refinancing those Ancillary Outstandings) and
irrespective of whether Clause 4.3 (Maximum number of Utilisations) or paragraph (a)(iii) of
Clause 5.2 (Completion of a Utilisation Request for Loans) applies.
(e)
On the making of a Utilisation of the Revolving Facility to refinance Ancillary Outstandings:
(i)
(ii)
each Lender will participate in that Utilisation in an amount (as determined by the Agent) which
will result as nearly as possible in the aggregate amount of its participation in the Revolving
Facility Utilisations then outstanding bearing the same proportion to the aggregate amount of
the Revolving Facility Utilisations then outstanding as its Revolving Facility Commitment bears
to the Total Revolving Facility Commitments; and
the relevant Ancillary Facility shall be cancelled.
6.5 Ancillary Outstandings
Each Borrower and each Ancillary Lender agrees with and for the benefit of each Lender that the Ancillary
Outstandings under any Ancillary Facility provided by that Ancillary Lender shall not exceed the Ancillary
Commitment applicable to that Ancillary Facility.
6.6 Adjustment for Ancillary Facilities upon acceleration
(a) In this Clause 6.6:
“Revolving Outstandings” means, in relation to a Lender, the aggregate of the equivalent in the Base
Currency of (i) its participation in each Revolving Facility Utilisation then outstanding (together with the
aggregate amount of all accrued interest, fees and commission owed to it as a Lender under the Revolving
Facility), and (ii) if the Lender is also an Ancillary Lender, the Ancillary Outstandings in respect of
Ancillary Facilities provided by that Ancillary Lender (together with the aggregate amount of all accrued
interest, fees and commission owed to it as an Ancillary Lender in respect of the Ancillary Facility).
“Total Revolving Outstandings” means the aggregate of all Revolving Outstandings.
(b)
(c)
(d)
If a notice is served under Clause 25.2 (Acceleration) (other than a notice declaring Utilisations to be due
on demand), each Lender and each Ancillary Lender shall promptly adjust by corresponding transfers (to
the extent necessary) their claims in respect of amounts outstanding to them under the Revolving Facility
and each Ancillary Facility to ensure that after such transfers the Revolving Outstandings of each Lender
bear the same proportion to the Total Revolving Outstandings as such Lender’s Revolving Facility
Commitment bears to the Total Revolving Facility Commitments, each as at the date the notice is served
under Clause 25.2 (Acceleration).
If an amount outstanding under an Ancillary Facility is a contingent liability and that contingent liability
becomes an actual liability or is reduced to zero after the original adjustment is made under paragraph
(b) above, then each Lender and Ancillary Lender will make a further adjustment by corresponding
transfers (to the extent necessary) to put themselves in the position they would have been in had the
original adjustment been determined by reference to the actual liability or, as the case may be, zero
liability and not the contingent liability.
All calculations to be made pursuant to this Clause 6.6 shall be made by the Agent based upon
information provided to it by the Lenders and Ancillary Lenders.
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6.7 Information
Each Borrower and each Ancillary Lender shall, promptly upon request by the Agent, supply the Agent with any
information relating to the operation of an Ancillary Facility (including the Ancillary Outstandings) as the Agent
may reasonably request from time to time. Each Borrower consents to all such information being released to the
Agent and the other Finance Parties.
6.8 Affiliates of Lenders as Ancillary Lenders
(a)
(b)
(c)
(d)
(e)
Subject to the terms of this Agreement, an Affiliate of a Lender may become an Ancillary Lender. In such
case, the Lender and its Affiliate shall be treated as a single Lender whose Revolving Facility
Commitment is the amount set out opposite the relevant Lender’s name in Part IIA of Schedule 1 (The
Original Parties) and/or the amount of any Revolving Facility Commitment transferred to or assumed by
that Lender under this Agreement, to the extent (in each case) not cancelled, reduced or transferred by it
under this Agreement. For the purposes of calculating the Lender’s Available Commitment with respect to
the Revolving Facility, the Lender’s Commitment shall be reduced to the extent of the aggregate of the
Ancillary Commitments of its Affiliates.
The Company shall specify any relevant Affiliate of a Lender in any notice delivered by the Company to
the Agent pursuant to paragraph (b)(i) of Clause 6.2 (Availability).
An Affiliate of a Lender which becomes an Ancillary Lender shall accede to the Intercreditor Agreement
as an Ancillary Lender and any person which so accedes to the Intercreditor Agreement shall, at the same
time, become a party to this Agreement as an Ancillary Lender in accordance with clause 15.6 (Creditor/
Agent/Trustee Accession Undertaking) of the Intercreditor Agreement.
If a Lender assigns all of its rights and benefits or transfers all of its rights and obligations to a New
Lender (as defined in Clause 26 (Changes to the Lenders), its Affiliate shall cease to have any obligations
under this Agreement or any Ancillary Document.
Where this Agreement or any other Finance Document imposes an obligation on an Ancillary Lender and
the relevant Ancillary Lender is an Affiliate of a Lender which is not a party to that document, the
relevant Lender shall ensure that the obligation is performed by its Affiliate.
6.9 Affiliates of Borrowers
(a)
(b)
(c)
(d)
(e)
Subject to the terms of this Agreement, an Affiliate of a Borrower (provided that it is a member of the
Group and incorporated in Spain) may with the approval of the relevant Lender become a borrower with
respect to an Ancillary Facility.
The Company shall specify any relevant Affiliate of a Borrower in any notice delivered by the Company
to the Agent pursuant to paragraph (b)(i) of Clause 6.2 (Availability).
If a Borrower ceases to be a Borrower under this Agreement in accordance with Clause 28.3 (Resignation
of a Borrower), its Affiliate shall cease to have any rights under this Agreement or any Ancillary
Document.
Where this Agreement or any other Finance Document imposes an obligation on a Borrower under an
Ancillary Facility and the relevant Borrower is an Affiliate of a Borrower which is not a party to that
document, the relevant Borrower shall ensure that the obligation is performed by its Affiliate.
Any reference in this Agreement or any other Finance Document to a Borrower being under no
obligations (whether actual or contingent) as a Borrower under such Finance Document shall be construed
to include a reference to any Affiliate of a Borrower being under no obligations under any Finance
Document or Ancillary Document.
6.10 Revolving Facility Commitment amounts
Notwithstanding any other term of this Agreement, each Lender shall ensure that at all times its Revolving Facility
Commitment is not less than:
(a)
(b)
its Ancillary Commitment; or
the Ancillary Commitment of its Affiliate.
A-59

SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION
7. REPAYMENT
7.1 Repayment of Term Loans
(a)
The Borrowers under Facility A shall repay the Facility A Loan in instalments by repaying on each
Facility A Repayment Date an amount which reduces the Base Currency Amount of the outstanding
Facility A Loan by an amount equal to the relevant percentage of that Loan as at the close of business in
Madrid on the last day of the Availability Period in relation to Facility A as set out in the table below:
Facility A Repayment Date Repayment Instalment (%)
30 June 2013 ........................................................... 2.17
31 December 2013 ....................................................... 2.17
30 June 2014 ........................................................... 4.33
31 December 2014 ....................................................... 4.33
30 June 2015 ........................................................... 7.17
31 December 2015 ....................................................... 7.17
30 June 2016 ........................................................... 13.83
31 December 2016 ....................................................... 13.83
30 June 2017 ........................................................... 45.00
100
(b)
(c)
(d)
(e)
(f)
The Borrower under Facility A shall repay the Facility A Loan then outstanding in full on the applicable
Termination Date.
The Borrowers under Facility B shall repay the Facility B Loan in full on the applicable Termination
Date.
The Borrowers under the Bridge Tranche shall repay the Bridge Loan in full on the applicable
Termination Date.
The Company shall repay each SPV Tranche Loan and each New Bank Tranche Loan in full on the
applicable Termination Date.
The Borrowers may not reborrow any part of a Term Facility which is repaid.
7.2 Repayment of Revolving Facility Loans
(a)
(b)
Subject to paragraph (c) below, each Borrower which has drawn a Revolving Facility Loan shall repay
that Loan on the last day of its Interest Period.
Without prejudice to each Borrower’s obligation under paragraph (a) above, if one or more Revolving
Facility Loans are to be made available to a Borrower:
(i)
(ii)
(iii)
on the same day that a maturing Revolving Facility Loan is due to be repaid by that Borrower;
in the same currency as the maturing Revolving Facility Loan; and
in whole or in part for the purpose of refinancing the maturing Revolving Facility Loan,
and that Borrower has not given notice to the Agent in writing by no later than three (3) Business Days
before the end of the relevant interest period of its, intention to repay the maturing Revolving Facility
Loan, the aggregate amount of the new Revolving Facility Loans shall be treated as if applied in or
towards repayment of the maturing Revolving Facility Loan so that:
(A)
if the amount of the maturing Revolving Facility Loan exceeds the aggregate amount
of the new Revolving Facility Loans:
(1) the relevant Borrower will only be required to pay an amount in cash in the
relevant currency equal to that excess; and
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(2) each Lender’s participation (if any) in the new Revolving Facility Loans
shall be treated as having been made available and applied by the Borrower
in or towards repayment of that Lender’s participation (if any) in the
maturing Revolving Facility Loan and that Lender will not be required to
make its participation in the new Revolving Facility Loans available in
cash; and
(B)
if the amount of the maturing Revolving Facility Loan is equal to or less than the
aggregate amount of the new Revolving Facility Loans:
(1) the relevant Borrower will not be required to make any payment in cash;
and
(2) each Lender will be required to make its participation in the new Revolving
Facility Loans available in cash only to the extent that its participation (if
any) in the new Revolving Facility Loans exceeds that Lender’s
participation (if any) in the maturing Revolving Facility Loan and the
remainder of that Lender’s participation in the new Revolving Facility
Loans shall be treated as having been made available and applied by the
Borrower in or towards repayment of that Lender’s participation in the
maturing Revolving Facility Loan.
(c)
(d)
(e)
(f)
At any time when a Lender becomes a Defaulting Lender, the maturity date of each of the participations
of that Lender in the Revolving Facility Loans then outstanding will be automatically extended to the
Termination Date in relation to the relevant Revolving Facility and will be treated as separate Revolving
Facility Loans (the “Separate Loans”) denominated in the currency in which the relevant participations
are outstanding.
A Borrower to whom a Separate Loan is outstanding may prepay that Loan by giving three (3) Business
Days’ prior notice to the Agent. The Agent will forward a copy of a prepayment notice received in
accordance with this paragraph (d) to the Defaulting Lender concerned as soon as practicable on receipt.
Interest in respect of a Separate Loan will accrue for successive Interest Periods selected by the Borrower
by the time and date specified by the Agent (acting reasonably) and will be payable by that Borrower to
the Defaulting Lender on the last day of each Interest Period of that Loan.
The terms of this Agreement relating to Revolving Facility Loans generally shall continue to apply to
Separate Loans other than to the extent inconsistent with paragraphs (c) to (e) above, in which case those
paragraphs shall prevail in respect of any Separate Loan.
7.3 Effect of cancellation and prepayment on scheduled repayments
(a)
(b)
(c)
(d)
If the Company cancels the whole or any part of the Facility A Commitments in accordance with
Clause 8.6 (Right of cancellation and repayment in relation to a single Lender) or Clause 8.7 (Right of
cancellation in relation to a Defaulting Lender) or if the Facility A Commitment of any Lender is reduced
under Clause 8.1 (Illegality) (other than, in any relevant case, to the extent that any part of the relevant
Commitment(s) is subsequently increased pursuant to Clause 2.5 (Increase)), then the amount of the
Repayment Instalment for each Facility A Repayment Date falling after that cancellation will reduce pro
rata by the amount cancelled.
If the Facility A Loan is prepaid in accordance with Clause 8.1 (Illegality) or Clause 8.6 (Right of
cancellation and repayment in relation to a single Lender) then the amount of the Repayment Instalment
for the relevant Facility for each Repayment Date falling after that prepayment will reduce pro rata by the
amount of the Facility A Loan.
If the Facility A Loan is prepaid in accordance with Clause 8.3 (Voluntary prepayment of Term Loans)
then the Borrowers may freely apply the amount of the Facility A Loan prepaid to reduce such of the
Repayment Instalments relating to that Facility falling after that prepayment as they may select.
If the Facility A Loan is prepaid in accordance with Clause 9.2 (Mandatory prepayment events), then, at
the Borrowers’ option, the amount of the Facility A Loan prepaid shall be applied to reduce:
(i)
by fifty per cent. (50%), each of the Repayment Instalments for the relevant Facility for the next
four Repayment Dates falling after that relevant prepayment and, thereafter, the Repayment
Instalments for the relevant Facility for all remaining Repayment Dates pro rata;or
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(ii)
the Repayment Instalments relating to the relevant Facility for all Repayment Dates falling after
that prepayment pro rata.
8. ILLEGALITY, VOLUNTARY PREPAYMENT AND CANCELLATION
8.1 Illegality
If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated
by this Agreement or to fund, issue or maintain its participation in any Utilisation:
(a)
(b)
(c)
that Lender shall promptly notify the Agent upon becoming aware of that event;
upon the Agent notifying the Company, the Commitment of that Lender will be cancelled with effect from
such date as the Lender may select (being no later than the date falling twenty (20) Business Days after
notice is given to the Company under this paragraph (b)); and
each Borrower shall repay that Lender’s participation in the Utilisations made to that Borrower on the last
day of the Interest Period for each Utilisation occurring after the Agent has notified the Company or, if
earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last
day of any applicable grace period permitted by law).
8.2 Voluntary cancellation
The Company may, if it gives the Agent not less than five (5) Business Days’ (or such shorter period as the Majority
Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of five million Euros
(€5,000,000)) of the Available Commitment under the Revolving Facility. Any cancellation under this Clause 8.2
shall reduce the Commitments of the Lenders rateably under that Facility.
8.3 Voluntary prepayment of Term Loans
(a)
(b)
(c)
(d)
A Borrower to which a Term Loan has been made may, if the Company gives the Agent not less than five
(5) Business Days’ prior notice (or, in the case of any voluntary prepayment using the proceeds of any
Additional SPV Tranche Loans or New Bank Tranche Loans in accordance with paragraph (c) of
Clause 3.1 (Purpose), not less than three (3) Business Days’ prior notice), prepay the whole or any part of
that Term Loan (but, if in part, being an amount that reduces the Base Currency Amount of that Term
Loan by a minimum amount of five million Euros (€5,000,000)), provided that no voluntary
prepayments of Facility B Loans may be made until the second anniversary of the Closing Date.
A Term Loan may only be prepaid after the last day of the Availability Period (or, if earlier, the day on
which the applicable Available Facility is zero).
Subject to paragraph (d) below and to Clause 8.4 (Additional provisions for voluntary prepayment of SPV
Tranches and New Bank Tranches), the Borrowers shall be entitled to freely apply any voluntary
prepayment to such Facility or Facilities (and, in the case of Facility A, to such Repayment Instalment or
Repayment Instalments) as they may select.
If a Lender under Facility B or, as the case may be, an SPV Tranche, elects not to receive a prepayment in
accordance with Clause 10.9 (Prepayment elections), the amount of that waived prepayment shall be
applied (in the case of a Lender under Facility B) first to the participations of the other Lenders under
Facility B, and thereafter to Facility A or (in the case of an SPV) to the other Facilities as set out in
paragraph (a) of Clause 9.3 (Application of mandatory prepayments) below.
8.4 Additional provisions for voluntary prepayment of SPV Tranches and New Bank Tranches
(a)
(b)
Voluntary prepayments shall not be permitted to be applied to SPV Tranches unless (i) funded from
Equity from Parent Companies, Subordinated Debt subject to a Subordination Commitment, Retained
Excess Cash Flow or a Refinancing, (ii) made in accordance with paragraph (d) below or (iii) when
making such prepayment, the Company applies an amount proportionate to the amount of SPV Tranche
Loans prepaid to prepay the Facilities as set out in paragraph (a) of Clause 9.3 (Application of mandatory
prepayments) below.
In the case of a voluntary prepayment of an SPV Tranche or a New Bank Tranche:
(i)
in relation to an SPV Tranche, if a prepayment fee is payable under the relevant Debt
Instrument, the Company shall be obliged to pay a prepayment fee in an equivalent amount to
the relevant SPV;
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(ii)
in relation to a New Bank Tranche, if a prepayment fee is payable under the documentation
relating thereto, the Company shall be obliged to pay a prepayment fee in an equivalent amount
to the relevant Lenders thereunder.
(c)
(d)
If, upon a “Change of Control” as defined in the relevant Debt Instrument, an SPV is required under the
terms of the relevant Debt Instrument to prepay all or a portion of the Debt Instrument upon acceptances
of a mandatory repurchase offer upon the occurrence of a change of control, the Company shall be entitled
to prepay the corresponding portion of the relevant SPV Tranche at 101 per cent., and it is hereby
confirmed that Nara Cable is required under the terms of the relevant Debt Instruments issued in
connection with SPV Tranche 1, SPV Tranche 2 and SPV Tranche 3, as applicable, to prepay all or a
portion of such Debt Instruments upon acceptances of a mandatory repurchase offer upon the occurrence
of a change of control.
At any time after the Borrowers have complied with their mandatory prepayment obligations pursuant to
paragraph (e) of Clause 9.2 (Mandatory prepayment events):
(i)
prior to 1 December 2013, the Borrowers will be entitled to use the proceeds of one or more
public equity offerings to make any voluntary prepayments of SPV Tranche 1 and/or SPV
Tranche 2 and/or SPV Tranche 3 and/or SPV Tranche 4 pursuant to Clause 8.3 (Voluntary
prepayment of Term Loans) as follows:
(A)
(B)
(C)
(D)
in the case of SPV Tranche 1, up to a maximum of two hundred and forty five million
Euros (€245,000,000) (plus 35 per cent. of the aggregate principal amount of any
additional debt issued after 22 October 2010 under the same Debt Instrument issued
by Nara Cable, where such debt proceeds are used to fund an Additional SPV Tranche
hereunder pursuant to the terms of Clause 2.2 (Additional SPV Tranches)) upon
payment of a prepayment fee of 8.875 per cent. of the principal amount prepaid, plus
accrued and unpaid interest, if any, to the date of such prepayment and in order to
redeem notes issued by Nara Cable under the Debt Instrument corresponding to SPV
Tranche 1 in accordance with its terms;
in the case of SPV Tranche 2, up to a maximum of one hundred and five million
Euros (€105,000,000) upon payment of a prepayment fee of 8.875 per cent. of the
principal amount prepaid, plus accrued and unpaid interest, if any, to the date of such
prepayment and in order to redeem notes issued by Nara Cable under the Debt
Instrument corresponding to SPV Tranche 2 in accordance with its terms;
in the case of SPV Tranche 3, up to a maximum of three hundred and fifty million US
Dollars ($350,000,000) upon payment of a prepayment fee of 8.875 per cent. of the
principal amount prepaid, plus accrued and unpaid interest, if any, to the date of such
prepayment and in order to redeem notes issued by Nara Cable under the Debt
Instrument corresponding to SPV Tranche 3 in accordance with its terms; and
in the case of SPV Tranche 4, up to a maximum of [Š] US Dollars ($[Š]) upon
payment of a prepayment fee of [Š] per cent. of the principal amount prepaid, plus
accrued and unpaid interest, if any, to the date of such prepayment and in order to
redeem notes issued by Nara Cable under the Debt Instrument corresponding to SPV
Tranche 4 in accordance with its terms; and
(ii)
at any time after 1 December 2013, following not less than thirty (30) nor more than sixty
(60) days’ notice, the Borrowers will be entitled to make a voluntary prepayment of SPV
Tranche 1 and/or SPV Tranche 2 and/or SPV Tranche 3 and/or SPV Tranche 4 pursuant to
Clause 8.3 (Voluntary prepayment of Term Loans) (although such voluntary prepayment must
be in an amount of one thousand Euros (€1,000) (or, in the case of SPV Tranche 3 or SPV
Tranche 4, one thousand US Dollars (US$1,000)) or integral multiples thereof) upon payment of
the following prepayment fee (expressed as percentages of the principal amount prepaid for the
relevant 12 month period (commencing on 1 December in each case) in which the prepayment
occurs), plus accrued and unpaid interest, if any, to the date of such prepayment:
Year
Prepayment Fees
2013 .................................................. 8.875%
2014 .................................................. 4.438%
2015 .................................................. 2.219%
2016 and thereafter ....................................... Zero
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8.5 Voluntary prepayment of Revolving Facility Utilisations
A Borrower to which a Revolving Facility Utilisation has been made may, if the Company gives the Agent not less
than five (5) Business Days’ prior notice, prepay the whole or any part of a Revolving Facility Utilisation (but if in
part, being an amount that reduces the Base Currency Amount of that Revolving Facility Utilisation by a minimum
amount of five million Euros (€5,000,000)).
8.6 Right of cancellation and repayment in relation to a single Lender
(a)
If:
(i)
any sum payable to any Lender by an Obligor is required to be increased under Clause 15.1 (Tax
gross-up);
(ii) any Lender claims indemnification from the Company or an Obligor under Clause 16.1
(Increased costs); or
(iii)
a Lender becomes a Non-Consenting Lender (subject to receiving the prior written consent of
the Majority Lenders to the prepayment referred to below),
the Company may, whilst the circumstance giving rise to the requirement for that increase or
indemnification continues or whilst that Lender is a Non-Consenting Lender (as applicable), give the
Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment
of that Lender’s participation in the Utilisations with effect from such date as the Company may select
(being, in the case of (i) or (ii) above, no later than 180 days after the Company has received notice of
such requirement for that increase or indemnification, and in the case of (iii) above, no later than thirty
(30) Business Days after the Company has received notice that the relevant Lender is a Non-Consenting
Lender).
(b)
(c)
On receipt of a notice referred to in paragraph (a) above in relation to a Lender, the Commitment of that
Lender shall immediately be reduced to zero.
On the last day of each Interest Period which ends after the Company has given notice under paragraph
(a) above in relation to a Lender (or, if earlier, the date specified by the Company in that notice), each
Borrower to which a Utilisation is outstanding shall repay that Lender’s participation in that Utilisation
together with all interest and other amounts accrued under the Finance Documents.
8.7 Right of cancellation in relation to a Defaulting Lender
(a)
(b)
(c)
If any Lender becomes a Defaulting Lender, the Company may, at any time whilst the Lender continues to
be a Defaulting Lender, give the Agent three (3) Business Days’ notice of cancellation of each Available
Commitment of that Lender.
On the notice referred to in paragraph (a) above becoming effective, each Available Commitment of the
Defaulting Lender shall immediately be reduced to zero.
The Agent shall as soon as practicable after receipt of a notice referred to in paragraph (a) above, notify
all the Lenders.
9. MANDATORY PREPAYMENT
9.1 Change of Control
If a Change of Control occurs:
(a)
(b)
(c)
the Borrower shall promptly notify the Agent upon becoming aware of that event;
a Lender shall not be obliged to fund a Utilisation; and
if a Lender so requires and notifies the Agent within ten (10) days of the Borrower notifying the Agent of
the event, the Agent shall, by not less than five (5) days’ notice to the Borrowers, cancel the Commitment
of that Lender and declare the participation of that Lender in all outstanding Loans, together with accrued
interest and all other amounts accrued under the Finance Documents and owing to that Lender,
immediately due and payable, at which time the Commitment of that Lender will be cancelled and all such
outstanding amounts will become immediately due and payable.
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9.2 Mandatory prepayment events
(a) The Borrowers shall prepay the Facilities in accordance with this Clause 9.2.
(b)
In this Clause 9.2 and in Clause 9.3 (Application of mandatory prepayments):
“Disposal” means a sale or transfer of any fixed assets, lines of business, or shares and interests in any
company of the Group, belonging to any Obligor.
“Disposal Proceeds” means the consideration obtained by an Obligor from a Disposal and after deducting
costs and expenses incurred on an arms’ length basis for such transactions, escrowed amounts, and taxes
incidental to the transaction.
“Excluded Disposal Proceeds” means (a) Disposal Proceeds which, when aggregated with the other
Disposals Proceeds received in the same year, do not exceed €25,000,000 (or its currency equivalent) and
(b) any Disposal Proceeds which are reinvested in the business of the Group during the period of twelve
(12) Months following the date of receipt;
“Excluded Insurance Proceeds” means (a) any Insurance Proceeds which, when aggregated with all
other Insurance Proceeds received in the same year, do not exceed €10,000,000 and (b) any Insurance
Proceeds which are used, during the period of twelve (12) Months following the date of receipt, for
replacement or repair of the lost asset or to meet the liabilities in respect of which the Insurance Proceeds
were received.
“Insurance Proceeds” means the indemnification received in the event of a loss insured under insurance
policies (except civil liability insurance and business interruption insurance) of an Obligor (after taxes).
“IPO Proceeds” means the proceeds of an IPO, after deducting taxes and reasonable transaction expenses
incurred in raising the same.
(c)
(d)
(e)
Insurance Proceeds: In the event that an Obligor receives Insurance Proceeds, the amount of such
Insurance Proceeds shall be immediately paid by the receiving Obligor into the Insurance Account (in
accordance with paragraph (q) (Accounts) of Clause 24.1 (Positive covenants)) and, except for Excluded
Insurance Proceeds, shall be applied by the Borrowers in prepayment of the Facilities.
Disposal Proceeds: In the event of a Disposal, the amount of the resulting Disposal Proceeds shall
immediately be paid by the receiving Obligor into the Asset Transfer Account (in accordance with
paragraph (q) (Accounts) of Clause 24.1 (Positive covenants)) and, except for Excluded Disposal
Proceeds, shall be applied by the Borrowers in prepayment of the Facilities.
IPO Proceeds: In the event of an IPO if the Pro Forma Leverage in respect of the most recently completed
Testing Period is:
(i)
(ii)
(iii)
greater than 4.50:1, then the Company shall apply an amount equal to 75 per cent. of the IPO
Proceeds in prepayment of the Facilities unless at such time the ratio of Senior Debt to
Consolidated LTM EBITDA in respect of the most recently completed Testing Period is less
than 4.00:1, in which case the Company shall apply an amount equal to 75 per cent. of the IPO
Proceeds in prepayment or repayment of any Permitted Debt (other than any Permitted Debt
which by its terms is capable of being re-drawn), at the option of the Company;
equal to or less than 4.50:1 but greater than 4.00:1, then the Company shall apply an amount
equal to 50 per cent. of the IPO Proceeds in prepayment of the Facilities unless at such time the
ratio of Senior Debt to Consolidated LTM EBITDA in respect of the most recently completed
Testing Period is less than 4.00:1, in which case the Company shall apply an amount equal to
50 per cent. of the IPO Proceeds in prepayment or repayment of any Permitted Debt (other than
any Permitted Debt which by its terms is capable of being re-drawn), at the option of the
Company;
equal to or less than 4.00:1, then the Company shall apply an amount equal to 25 per cent. of the
IPO Proceeds in prepayment or repayment of any Permitted Debt (other than any Permitted
Debt which by its terms is capable of being re-drawn), at the option of the Company,
and, for the purposes of this paragraph (e), the ratio of Senior Debt to Consolidated LTM EBITDA in
respect of the most recently completed Testing Period shall be certified by the Company to the Agent in a
certificate setting out the computations of such ratio (with detailed calculations that are reasonably
acceptable for the Agent).
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(f)
Cash sweep: If Consolidated Excess Cash Flow is generated (according to the calculation prepared by
Cableuropa and certified by the Auditors on the basis of the Group’s Audited Consolidated Annual
Financial Statements for the immediately preceding financial year (as set out in the relevant Compliance
Certificate delivered pursuant to Clause 22.2 (Compliance Certificate))), and provided that at that time:
(i)
(ii)
there is Liquidity in an amount of at least three hundred million Euros (€300,000,000); and
the ratio of Total Debt to Consolidated LTM EBITDA in respect of the most recently completed
Testing Period in respect of which a Compliance Certificate has been delivered to the Agent is
within a range set out in the table below,
then the Borrowers shall apply in prepayment of the Facilities an amount equal to the percentage of such
Consolidated Excess Cash Flow as set out in the second column of the table below opposite that range:
% of Consolidated
Total Debt to Consolidated LTM EBITDA ratio
Excess Cash Flow
Greater than 4.25:1 ............................................. 75%
Less than 4.25:1 but equal to or greater than 4.00:1 .................... 50%
Less than 4.00:1 but equal to or greater than 3.50:1 .................... 25%
Where the ratio of Total Debt to Consolidated LTM EBITDA for any Testing Period falls below 3.50:1
and for each Testing Period in respect of which it remains below 3.50:1, the mandatory prepayment
obligation set out in this paragraph (f) shall not apply.
(g)
(h)
The prepayment events set out in paragraphs (c) and (d) above shall cease to apply for so long as a
Release Event has occurred and is continuing.
The Company shall prepay the Bridge Loan with the proceeds referred to, and in the manner described, in
sub paragraph (iii) of the proviso to the definition of Future High-Yield Notes, paragraph (f) of the
definition of Future Subordinated Facilities, the proviso to the definition of Permitted Debt, and the
proviso to each of paragraphs (a) and (d) of Clause 3.1 (Purpose).
9.3 Application of mandatory prepayments
(a)
With the exception of prepayments under paragraph (h) of Clause 9.2 (Mandatory prepayment events), a
prepayment made under Clause 9.2 (Mandatory prepayment events) or paragraph (c) of Clause 8.3
(Voluntary prepayment of term loans) or paragraph (a) of Clause 8.4 (Additional provisions for voluntary
prepayment of SPV Tranches and New Bank Tranches) shall be applied in prepayment of Loans as
contemplated in the following order:
(i)
(ii)
(iii)
(iv)
first, in prepayment of Term Loans as contemplated in paragraphs (b) to (d) inclusive below;
secondly, in cancellation of Available Commitments under the Revolving Facility (and the
Available Commitment of the Lenders under the Revolving Facility will be cancelled rateably);
thirdly, in prepayment of Revolving Facility Utilisations and cancellation of Revolving Facility
Commitments; and
then, in repayment and cancellation of the Ancillary Outstandings and Ancillary Commitments.
(b)
Unless the Company makes an election under paragraph (d) below, the Borrowers shall prepay Loans at
the following times:
(i)
(ii)
in the case of any prepayment required to be made using amounts of Insurance Proceeds
pursuant to paragraph (c) of Clause 9.2 (Mandatory prepayment events), Disposal Proceeds
pursuant to paragraph (d) of Clause 9.2 (Mandatory prepayment events) or IPO Proceeds
pursuant to paragraph (e) of Clause 9.2 (Mandatory prepayment events), or any prepayment
under paragraph (h) of Clause 9.2 (Mandatory prepayment events), promptly upon receipt of
those proceeds; and
in the case of any prepayment relating to an amount of Consolidated Excess Cash Flow, within
14 days of delivery pursuant to paragraph (a) of Clause 22.1 (Financial information) ofthe
Annual Consolidated Audited Financial Statements for the relevant financial year.
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(c)
With the exception of prepayments under paragraph (h) of Clause 9.2 (Mandatory prepayment events), a
prepayment under Clause 9.2 (Mandatory prepayment events) or paragraph (c) of Clause 8.3 (Voluntary
prepayment of term loans) or paragraph (a) of Clause 8.4 (Additional provisions for voluntary prepayment
of SPV Tranches and New Bank Tranches) shall prepay the Loans as follows:
(i)
in the case of any prepayment relating to Disposal Proceeds, in amounts which reduce first the
Bridge Loans until they are prepaid in full and thereafter reduce all of the Term Loans by the
same proportion, provided that:
(A)
(B)
an SPV Tranche Loan shall only be prepaid in the event that the SPV is required
under the terms of the relevant Debt Instrument to make a repayment upon the
acceptances of a mandatory repurchase offer in connection with asset sale excess
proceeds, and only to the extent necessary to cover such acceptances (such amount,
the “Relevant Amount”) (and, in connection with the above, it is hereby confirmed
that Nara Cable is required under the terms of the relevant Debt Instruments issued in
connection with SPV Tranche 1, SPV Tranche 2, SPV Tranche 3 and SPV Tranche 4,
as applicable, to make a repayment upon the acceptances of a mandatory repurchase
offer in connection with asset sale excess proceeds, and therefore, in the event of a
Disposal, the Relevant Amount can be applied against the prepayment of the SPV
Tranche 1 Loan, SPV Tranche 2 Loan, the SPV Tranche 3 Loan and the SPV Tranche
4 Loan); and
if the Relevant Amount is below the pro rata amount allocated to that SPV Tranche
Loan for prepayment in accordance with this sub paragraph (i), then the relevant SPV
shall return the excess amount of such prepayment, which shall be applied by
Cableuropa to the mandatory prepayment of Loans under the other Term Facilities on
a pro rata basis;
(ii)
in the case of any prepayment relating to Insurance Proceeds, IPO Proceeds or Consolidated
Excess Cashflow or any prepayment made contemporaneously with a prepayment of SPV
Tranches pursuant to paragraph (a) of Clause 8.4 (Additional provisions for voluntary
prepayment of SPV Tranches and New Bank Tranches), in amounts which reduce the Facility A
Loan, the Facility B Loan and the Bridge Loan by the same proportion and, once the Facility A
Loan, the Facility B Loan and the Bridge Loan are prepaid in full, to the Revolving Facility (as
set out in sub paragraph (ii) and (iii) of paragraph (a) above),
provided that, if an SPV or, as the case may be, a Lender under Facility B, elects not to receive a
prepayment under Clause 10.9 (Prepayment Elections), the amount of the waived prepayment will be
applied (in case of a Lender under Facility B) first to the participations of the other Lenders under Facility
B and thereafter to Facility A or (in the case of an SPV) as set out in paragraph (a) above.
(d)
The Company may, by giving the Agent not less than three (3) Business Days (or such shorter period as
the Majority Lenders may agree) prior written notice, elect that any prepayment under Clause 9.2
(Mandatory prepayment events) be applied in prepayment of a Loan on the last day of the Interest Period
relating to that Loan. If the Company makes that election then a proportion of the Loan equal to the
amount of the relevant prepayment will be due and payable on the last day of its Interest Period.
9.4 Mandatory Prepayment Accounts
(a)
The Company shall ensure that:
(i)
(ii)
Disposal Proceeds, Insurance Proceeds and IPO Proceeds in respect of which the Company has
made an election under paragraph (d) of Clause 9.3 (Application of mandatory prepayments) are
paid into a Mandatory Prepayment Account as soon as reasonably practicable after receipt by a
member of the Group; and
an amount equal to any Consolidated Excess Cash Flows in respect of which the Company has
made an election under paragraph (d) of Clause 9.3 (Application of mandatory prepayments) is
paid into a Mandatory Prepayment Account promptly after such election.
(b)
The Company and each Borrower irrevocably authorise the Agent to apply amounts credited to the
Mandatory Prepayment Account to pay amounts due and payable under Clause 9.3 (Application of
mandatory prepayments) and otherwise under the Finance Documents.
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(c)
The Agent (with which the Mandatory Prepayment Account is held) acknowledges and agrees that
(i) interest shall accrue at normal commercial rates on amounts credited to those accounts and that the
account holder shall be entitled to receive such interest (which shall be paid in accordance with the
mandate relating to such account) and (ii) each such account is subject to the Transaction Security.
10. RESTRICTIONS
10.1 Notices of Cancellation or Prepayment
Any notice of cancellation, prepayment, authorisation or other election given by any Party under Clause 8
(Illegality, voluntary prepayment and cancellation), paragraph (d) of Clause 9.3 (Application of Mandatory
Prepayments) shall (subject to the terms of those Clauses) be irrevocable and, unless a contrary indication appears
in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made
and the amount of that cancellation or prepayment.
10.2 Interest and other amounts
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and,
subject to any Break Costs and any prepayment fee contemplated by paragraph (b) of Clause 8.4 (Additional
provisions for voluntary prepayment of SPV Tranches and New Bank Tranches), without premium or penalty.
10.3 No reborrowing of Term Facilities
No Borrower may reborrow any part of a Term Facility which is prepaid.
10.4 Reborrowing of Revolving Facilities
Unless a contrary indication appears in this Agreement, any part of the Revolving Facility which is prepaid or
repaid may be reborrowed in accordance with the terms of this Agreement.
10.5 Prepayment in accordance with Agreement
No Borrower shall repay or prepay all or any part of the Utilisations or cancel all or any part of the Commitments
except at the times and in the manner expressly provided for in this Agreement.
10.6 No reinstatement of Commitments
Subject to Clause 2.5 (Increase), no amount of the Total Commitments cancelled under this Agreement may be
subsequently reinstated.
10.7 Agent’s receipt of Notices
If the Agent receives a notice under Clause 8 (Illegality, voluntary prepayment and cancellation) or an election
under paragraph (d) of Clause 9.3 (Application of Mandatory Prepayments), it shall promptly forward a copy of that
notice or election to either the Company or the affected Lender, as appropriate.
10.8 Effect of Repayment and Prepayment on Commitments
If all or part of a Utilisation under a Facility is repaid or prepaid and is not available for redrawing (other than by
operation of Clause 4.2 (Further conditions precedent)), an amount of the Commitments (equal to the Base
Currency Amount of the amount of the Utilisation which is repaid or prepaid) in respect of that Facility will be
deemed to be cancelled on the date of repayment or prepayment. Any cancellation under this Clause 10.8 shall
reduce the Commitments of the Lenders rateably under that Facility.
10.9 Prepayment Elections
Until the Term Facilities have been irrevocably paid in full, the Agent shall notify the Lenders as soon as practicable
of any proposed voluntary or mandatory prepayment of the Facility B Loan or an SPV Tranche Loan.
Notwithstanding the provisions of this Agreement, by not less than three (3) Business Days’ prior notice to the
Agent, a Lender under Facility B or an SPV may elect not to receive any voluntary prepayment made under Clause
8.3 (Voluntary Prepayment of Term Loans) (except, in the case of an SPV, for any prepayment permitted under
Clause 8.4 (Additional provisions for voluntary prepayment of SPV Tranches and New Bank Tranches)) or any
mandatory prepayment made under Clause 9 (Mandatory Prepayments) of the Facility B Loan or, as the case may
be, any SPV Tranche made available by it.
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SECTION 5
COSTS OF UTILISATION
11. INTEREST
11.1 Calculation of interest
(a)
The rate of interest on each Loan under Facility A, Facility B, the Revolving Facility and (for any Interest
Period which ends on or before the end of the Initial Bridge Period) the Bridge Tranche for each Interest
Period is the percentage rate per annum which is the aggregate of the applicable:
(i)
(ii)
(iii)
Margin;
EURIBOR or, for any Loan in US Dollars, LIBOR; and
Mandatory Cost, if any.
(b)
(c)
(d)
(e)
(f)
(g)
The rate of interest on each Bridge Loan for each Interest Period which ends after the Initial Bridge Period
shall be [ ].
The rate of interest for the SPV Tranche 1 Loan shall be 8.875143 per cent. per annum.
The rate of interest for the SPV Tranche 2 Loan shall be 8.87533 per cent. per annum.
The rate of interest for the SPV Tranche 3 Loan shall be 8.87515 per cent. per annum.
The rate of interest for each Loan under an Additional SPV Tranche shall be equal to the rate applicable
under the relevant Debt Instrument in connection with such SPV Tranche (including any additional
amounts applicable thereto) plus the minimum taxable margin (as determined by the legal and tax counsel
advising in the incorporation of the relevant SPV) reasonably necessary for regulatory purposes or
otherwise to establish the substance of the SPV (so that, contrary to the rate corresponding to the other
Facilities under the terms of this Agreement, the interest rate applicable to any SPV Tranche may be a
fixed rate). Pursuant to this paragraph (f), the rate of interest for the SPV Tranche 4 Loan shall be [Š] per
cent. per annum.
The rate of interest for each Loan under a New Bank Tranche shall (subject to paragraph (c)(ii) of
Clause 2.3 (New Bank Tranches)) be the rate agreed between the Company and the relevant New Bank
Tranche Lenders.
11.2 Payment of interest
The Borrower to which a Loan has been made shall pay accrued interest on that Loan on the last day of each Interest
Period (and, if the Interest Period is longer than six Months, on the dates falling at six Monthly intervals after the
first day of the Interest Period).
11.3 Default interest
(a)
(b)
If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest
shall accrue on the overdue amount from the due date up to the date of actual payment (both before and
after judgment) at a rate which, subject to paragraph (b) below, is two (2) per cent. higher than the rate
which would have been payable if the overdue amount had, during the period of non-payment, constituted
a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected
by the Agent (acting reasonably). Any interest accruing under this Clause 11.3 shall be immediately
payable by the Obligor on demand by the Agent.
If the financial statements of the Group and related Compliance Certificate received by the Agent
pursuant to, respectively, Clause 22.1 (Financial information) and 22.2 (Compliance Certificates) show
that:
(i)
(ii)
a higher Margin should have applied during a certain period, then the Company shall (or shall
ensure the relevant Borrower shall) promptly pay to the Agent any amounts necessary to put the
Agent and the Lenders in the position they would have been in had the appropriate rate of the
Margin applied during such period; or
a lower Margin should have applied during a certain period, then the future payments to the
Lenders shall be reduced to put the Lenders in the position they would have been in had the
appropriate rate of the Margin applied during such period,
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provided that payments to a Lender will only be increased or reduced to the extent that it was a Lender
during the relevant period when a higher or lower Margin should have applied (and, for the avoidance of
doubt, no person which has ceased to be a Lender in accordance with the terms of this Agreement shall be
obliged to return any over-payment of interest it received whilst still a Lender during a period in which a
lower Margin should have applied).
(c)
If any overdue amount consists of all or part of a Loan which became due on a day which was not the last
day of an Interest Period relating to that Loan:
(i)
(ii)
the first Interest Period for that overdue amount shall have a duration equal to the unexpired
portion of the current Interest Period relating to that Loan; and
the rate of interest applying to the overdue amount during that first Interest Period shall be two
(2) per cent. higher than the rate which would have applied if the overdue amount had not
become due.
(d)
Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at
the end of each Interest Period applicable to that overdue amount but will remain immediately due and
payable.
11.4 Notification of rates of interest
The Agent shall promptly notify the Lenders and the relevant Borrower (or the Company) of the determination of a
rate of interest under this Agreement.
12. INTEREST PERIODS
12.1 Selection of Interest Periods
(a)
(b)
(c)
(d)
(e)
(f)
A Borrower (or the Company on behalf of a Borrower) may select an Interest Period for a Loan in the
Utilisation Request for that Loan or (if the Loan is a Term Loan and has already been borrowed) in a
Selection Notice.
Each Selection Notice for a Term Loan is irrevocable and must be delivered to the Agent by the Borrower
(or the Company on behalf of the Borrower) to which that Term Loan was made not later than the
Specified Time.
If a Borrower (or the Company) fails to deliver a Selection Notice to the Agent in accordance with
paragraph (b) above, the relevant Interest Period will be three (3) Months (except in the case of an SPV
Tranche Loan).
Subject to this Clause 12 and except for SPV Tranche Loans and the Bridge Loan, a Borrower (or the
Company) may select an Interest Period of one (1), three (3) or six (6) Months or any other period agreed
between the Company and the Agent (acting on the instructions of all the Lenders in relation to the
relevant Loan). In addition a Borrower (or the Company on its behalf) may select an Interest Period in
relation to Facility A of a period of less than one Month, if necessary to ensure that the Facility A Loan
will have an Interest Period ending on a Repayment Date for the Borrowers to make the Repayment
Instalment due on that date.
An Interest Period for a Loan shall not extend beyond the Termination Date applicable to its Facility.
An Interest Period for an SPV Tranche Loan shall be the same duration as the interest periods under the
relevant Debt Instrument and Cableuropa, Nara Cable and the Agent hereby agree and acknowledge that,
in relation to the first Interest Period for each of the Original SPV Tranches to end following the Closing
Date, the following shall apply:
(i)
(ii)
on the Closing Date, the interest period applicable to each of the Existing SPV Tranches under
the Existing Credit Agreement (each an “Existing Interest Period”) which are due to end on
the end date of the corresponding interest period under the relevant Debt Instrument (the
“Existing Interest Payment Date”) shall be deemed to continue, without any break thereof, as
an Interest Period under this Agreement until the applicable Existing Interest Payment Date;
on the Closing Date, all amounts of interest which have accrued on loans under each of the
Existing SPV Tranches under the Existing Credit Agreement since the first day of the Existing
Interest Period up to (but not including) the Closing Date (the “Existing Interest”) shall be
deemed rolled into the Interest Period for the corresponding Original SPV Tranche under this
Agreement referred to in sub paragraph (i) above;
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(iii)
(iv)
from (and including) the Closing Date, interest shall accrue on each Original SPV Tranche in
accordance with (as appropriate) paragraphs (b), (d) or (e) of Clause 11.1 (Calculation of
interest) until the Existing Interest Payment Date; and
on the Existing Interest Payment Date, the interest paid by the Borrower under the Original SPV
Tranches in accordance with Clause 11.2 (Payment of interest) shall be the aggregate of the
Existing Interest and all amounts of interest described in sub paragraph (iii) above.
(g)
(h)
(i)
The initial Interest Period for a Bridge Loan shall be the period from the Closing Date until the end of the
Initial Bridge Period (or, if the Closing Date is on the last day of the Initial Bridge Period, the period of
six Months commencing on the Closing Date). Each subsequent Interest Period for a Bridge Loan will be
of six Months’ duration (subject to paragraph (e) above).
Each Interest Period for a Term Loan shall start on the Utilisation Date or (if already made) on the last day
of its preceding Interest Period.
A Revolving Facility Loan has one Interest Period only.
12.2 Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end
on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
13. CHANGES TO THE CALCULATION OF INTEREST
13.1 Absence of quotations
Subject to Clause 13.2 (Market disruption), if EURIBOR or, if applicable, LIBOR, is to be determined by reference
to the Base Reference Banks but a Base Reference Bank does not supply a quotation by the Specified Time on the
Quotation Day, the applicable EURIBOR or LIBOR shall be determined on the basis of the quotations of the
remaining Base Reference Banks
13.2 Market disruption
(a)
If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest
on each Lender’s share of that Loan for the Interest Period shall be the percentage rate per annum which is
the sum of:
(i)
(ii)
(iii)
the Margin;
the rate notified to the Agent by that Lender as soon as practicable and in any event by close of
business on the date falling five (5) Business Days after the Quotation Day (or, if earlier, on the
date falling five (5) Business Days prior to the date on which interest is due to be paid in respect
of that Interest Period), to be that which expresses as a percentage rate per annum the cost to
that Lender of funding its participation in that Loan from whatever source it may reasonably
select;
the Mandatory Cost, if any, applicable to that Lender’s participation in the Loan.
(b)
If:
(i)
(ii)
the percentage rate per annum notified by a Lender pursuant to paragraph (a)(ii) above is less
than EURIBOR or, in relation to any Loan not in Euro, LIBOR; or
a Lender has not notified the Agent of a percentage rate per annum pursuant to paragraph (a)(ii)
above,
the cost to that Lender of funding its participation in that Loan for that Interest Period shall be deemed, for
the purposes of paragraph (a) above, to be EURIBOR or, if applicable, LIBOR.
(c)
In this Agreement:
“Market Disruption Event” means:
(i)
at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not
available and none or only one of the Base Reference Banks supplies a rate to the Agent to
determine EURIBOR or, if applicable, LIBOR, for the relevant currency and Interest Period; or
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(ii)
before close of business in London on the Quotation Day for the relevant Interest Period, the
Agent receives notifications from a Lender or Lenders (whose participations in a Loan exceed
35 per cent. of that Loan) that the cost to it of funding its participation in that Loan from
whatever source it may reasonably select would be in excess of EURIBOR or, if applicable,
LIBOR.
13.3 Alternative basis of interest or funding
(a)
(b)
If a Market Disruption Event occurs and the Agent or the Company so requires, the Agent and the
Company shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a
substitute basis for determining the rate of interest.
Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the
Lenders and the Company, be binding on all Parties.
13.4 Break Costs
(a)
(b)
Each Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party
its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by that Borrower on a
day other than the last day of an Interest Period for that Loan or Unpaid Sum.
Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate
confirming the amount of its Break Costs for any Interest Period in which they accrue.
14. FEES
14.1 Commitment fee
(a)
(b)
(c)
The Company shall pay to the Agent (for the account of each Lender) a fee in the Base Currency
computed at the rate of 40 per cent. of the Margin applicable to the Revolving Facility per annum, on that
Lender’s Available Commitment under the Revolving Facility for the Availability Period applicable to the
Revolving Facility.
The accrued commitment fee is payable on the last day of each successive period of three Months which
ends during the relevant Availability Period, on the last day of the relevant Availability Period and on the
cancelled amount of the relevant Lender’s Commitment at the time the cancellation is effective.
No commitment fee is payable to the Agent (for the account of a Lender) on any Available Commitment
of that Lender for any day on which that Lender is a Defaulting Lender.
14.2 Upfront fee/arrangement fee
The Company shall pay to each Original Lender the upfront fee/arrangement fee in the amounts and at the times
agreed in a Fee Letter.
14.3 Agency fee
The Company shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in a
Fee Letter.
14.4 Security Agent fee
The Company shall pay to the Security Agent (for its own account) a Security Agent fee in the amount and at the
times agreed in a Fee Letter.
14.5 Interest, commission and fees on Ancillary Facilities
The rate and time of payment of interest, commission, fees and any other remuneration in respect of each Ancillary
Facility shall be determined by agreement between the relevant Ancillary Lender and the Borrower of that Ancillary
Facility based upon normal market rates and terms.
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15. TAX GROSS-UP AND INDEMNITIES
15.1 Tax gross-up
SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS
(a)
(b)
(c)
All payments owed by an Obligor to any of the Lenders or to the Agent under the Finance Documents,
whether as principal, interest, fees, expenses or otherwise, shall be made without a Tax Deduction, unless
an Obligor is obliged by law to make such payments after a Tax Deduction. If a Tax Deduction is
required, the amount due from that Obligor shall be increased to an amount which (after making the Tax
Deduction) leaves an amount equal to the payment that would have been received had no Tax Deduction
been effected.
Once any such Tax Deductions have been effected, the relevant Obligor shall provide to the Lenders, as
applicable, and as soon as possible, the relevant document evidencing that such Tax Deduction has been
made.
The obligations contemplated in paragraphs (a) and (b) above shall not apply in favour of:
(i)
(ii)
any Lender which is not, or has ceased to be, an Eligible Lender otherwise than by reason of any
change in (or in the interpretation, administration or application of) any law or practice or in any
double taxation treaty or any published practice after the date it became a Lender under this
Agreement; and
any Eligible Lender, which is not a Domestic Lender, that has not delivered to Cableuropa a
certificate of residence issued by the relevant fiscal administration accrediting such Eligible
Lender as resident for tax purposes in a Qualifying State (i) before the first date upon which
payment of interest is to be made under this Agreement to such Eligible Lender and (ii) as such
certificates are only valid for a period of one year, before the previous certificate expires,
provided that no such certificate of residence will be required to be delivered to Cableuropa in
the event that as result of a change in Spanish tax law after the date of this Agreement such
certificates of residence are no longer required by the Obligors for the purposes of making
payments hereunder without any Tax Deduction or making payments hereunder subject to a
withholding for, or on account of, Tax but at a reduced rate.
15.2 Tax indemnity
(a)
(b)
The Company shall (within three Business Days of demand by the Agent) pay to a Protected Party an
amount equal to the loss, liability or cost which that Protected Party determines will be or has been
(directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance
Document.
Paragraph (a) above shall not apply:
(i)
with respect to any Tax assessed on a Finance Party:
(A)
(B)
under the law of the jurisdiction in which that Finance Party is incorporated or, if
different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as
resident for tax purposes; or
under the law of the jurisdiction in which that Finance Party’s Facility Office is
located in respect of amounts received or receivable in that jurisdiction,
if that Tax is imposed on or calculated by reference to the net income received or receivable
(but not any sum deemed to be received or receivable) by that Finance Party; or
(ii)
to the extent a loss, liability or cost:
(A)
(B)
is compensated for by an increased payment under Clause 15.1 (Tax gross-up); or
would have been compensated for by an increased payment under Clause 15.1 (Tax
gross-up) but was not so compensated solely because one of the exclusions in
paragraph (c) of Clause 15.1 (Tax gross-up) applied.
(c)
(d)
A Protected Party making, or intending to make a claim under paragraph (a) above shall promptly notify
the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall
notify the Company.
A Protected Party shall, on receiving a payment from an Obligor under this Clause 15.2, notify the Agent.
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15.3 Tax Credit
If an Obligor makes a Tax Payment and the relevant Finance Party determines that:
(a)
(b)
a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part or to that
Tax Payment; and
that Finance Party has obtained, utilised and retained that Tax Credit,
the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that
payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made
by the Obligor.
15.4 Lender Status Confirmation
(a)
Each Lender which becomes a Party to this Agreement after the date of this Agreement shall indicate, in
the Assignment Agreement, Increase Confirmation, Relevant Facility Lender Accession Agreement or
Relevant Facility Lender Increase Certificate which it executes on becoming a Party, and for the benefit of
the Agent and without liability to any Obligor, which of the following categories it falls in:
(i)
(ii)
an Eligible Lender (other than a Domestic Lender); or
an Eligible Lender (being a Domestic Lender).
(b)
If a New Lender fails to indicate its status in accordance with this Clause 15.4 then such New Lender shall
be treated for the purposes of this Agreement (including by each Obligor) as if it is not an Eligible Lender
until such time as it notifies the Agent which category applies (and the Agent, upon receipt of such
notification, shall inform the Company). For the avoidance of doubt, an Assignment Agreement, Increase
Confirmation Relevant Facility Lender Accession Agreement or Relevant Facility Lender Increase
Certificate shall not be invalidated by any failure of a Lender to comply with this Clause 15.4.
15.5 Stamp taxes
15.6 VAT
The Company shall pay and, within three Business Days of demand, indemnify each Secured Party and Arranger
against any cost, loss or liability that Secured Party or Arranger incurs in relation to all stamp duty, registration and
other similar Taxes payable in respect of any Finance Document.
(a)
(b)
(c)
(d)
All amounts set out or expressed in a Finance Document to be payable by any Party to a Finance Party
which (in whole or in part) constitute the consideration for a supply or supplies for VAT purposes shall be
deemed to be exclusive of any VAT which is chargeable on such supply or supplies, and accordingly,
subject to paragraph (b) below, if VAT is or becomes chargeable on any supply made by any Finance
Party to any Party under a Finance Document, that Party shall pay to the Finance Party (in addition to and
at the same time as paying any other consideration for such supply) an amount equal to the amount of
such VAT (and such Finance Party shall promptly provide an appropriate VAT invoice to such Party).
If VAT is or becomes chargeable on any supply made by any Finance Party (the “Supplier”) to any other
Finance Party (the “Recipient”) under a Finance Document, and any Party other than the Recipient (the
“Subject Party”) is required by the terms of any Finance Document to pay an amount equal to the
consideration for such supply to the Supplier (rather than being required to reimburse the Recipient in
respect of that consideration), such Party shall also pay to the Supplier (in addition to and at the same time
as paying such amount) an amount equal to the amount of such VAT. The Recipient will promptly pay to
the Subject Party an amount equal to any credit or repayment obtained by the Recipient from the relevant
tax authority which the Recipient reasonably determines is in respect of such VAT.
Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or
expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full
amount of such cost or expense, including such part thereof as represents VAT, save to the extent that
such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT
from the relevant tax authority.
Any reference in this Clause 15.6 to any Party shall, at any time when such Party is treated as a member
of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a
reference to the representative member of such group at such time (the term “representative member” to
have the same meaning as in the Value Added Tax Act 1994).
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16. INCREASED COSTS
16.1 Increased costs
(a)
Subject to Clause 16.3 (Exceptions) the Company shall, within three Business Days of a demand by the
Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance
Party or any of its Affiliates as a result of:
(i)
(ii)
the introduction of or any change in (or in the interpretation, administration or application of)
any law or regulation after the date of this Agreement; or
compliance with any law or regulation made after the date of this Agreement.
(b)
In this Agreement, “Increased Costs” means:
(i)
(ii)
(iii)
a reduction in the rate of return from a Facility or on a Finance Party’s (or its Affiliate’s) overall
capital;
an additional or increased cost; or
a reduction of any amount due and payable under any Finance Document,
16.2 Increased cost claims
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable
to that Finance Party having entered into its Commitment or an Ancillary Commitment or funding or
performing its obligations under any Finance Document.
(a)
(b)
A Finance Party intending to make a claim pursuant to Clause 16.1 (Increased costs) shall notify the
Agent of the event giving rise to the claim, following which the Agent shall promptly notify the
Company.
Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate
confirming the amount of its Increased Costs.
16.3 Exceptions
Clause 16.1 (Increased costs) does not apply to the extent any Increased Cost is:
(a)
(b)
(c)
attributable to a Tax deduction required by law to be made by an Obligor;
compensated for by the payment of the Mandatory Cost; or
attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.
17. OTHER INDEMNITIES
17.1 Currency indemnity
(a)
If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or
award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”)
in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:
(i)
(ii)
making or filing a claim or proof against that Obligor; or
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration
proceedings,
that Obligor shall as an independent obligation, within three Business Days of demand, indemnify the
Arranger and each other Secured Party to whom that Sum is due against any cost, loss or liability arising
out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to
convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange
available to that person at the time of its receipt of that Sum.
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(b)
Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance
Documents in a currency or currency unit other than that in which it is expressed to be payable.
17.2 Other indemnities
The Company shall (or shall procure that an Obligor will), within three Business Days of demand, indemnify the
Arranger and each other Secured Party against any cost, loss or liability incurred by it as a result of:
(a)
(b)
(c)
(d)
the occurrence of any Event of Default;
a failure by an Obligor to pay any amount due under a Finance Document on its due date, including
without limitation, any cost, loss or liability arising as a result of Clause 31 (Sharing among the Finance
Parties);
funding, or making arrangements to fund, its participation in a Utilisation requested by a Borrower in a
Utilisation Request but not made by reason of the operation of any one or more of the provisions of this
Agreement (other than by reason of default or negligence by that Finance Party alone);
a Utilisation (or part of a Utilisation) not being prepaid in accordance with a notice of prepayment given
by a Borrower or the Company.
17.3 Indemnity to the Agent
The Company shall promptly indemnify the Agent against any cost, loss or liability incurred by the Agent (acting
reasonably) as a result of:
(a)
(b)
investigating any event which it reasonably believes is a Default; or
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct
and appropriately authorised.
17.4 Indemnity to the Security Agent
(a)
Each Obligor shall promptly indemnify the Security Agent and every Receiver and Delegate against any
cost, loss or liability incurred by any of them as a result of:
(i)
(ii)
(iii)
the taking, holding, protection or enforcement of the Transaction Security,
the exercise of any of the rights, powers, discretions and remedies vested in the Security Agent
and each Receiver and Delegate by the Finance Documents or by law; or
any default by any Obligor in the performance of any of the obligations expressed to be
assumed by it in the Finance Documents.
(b)
The Security Agent may, in priority to any payment to the Secured Parties, indemnify itself out of the
Charged Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in
this Clause 17.4 and shall have a lien on the Transaction Security and the proceeds of the enforcement of
the Transaction Security for all monies payable to it.
18. MITIGATION BY THE LENDERS
18.1 Mitigation
(a)
(b)
Each Finance Party shall, at the request of the affected Borrower, use its reasonable efforts, as long as the
related action does not result in financial prejudice to it, to avoid or mitigate any circumstances which
arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant
to, any of Clause 8.1 (Illegality), Clause 15 (Tax gross-up and indemnities) or Clause 16 (Increased
Costs) or paragraph 3 of Schedule 4 (Mandatory Cost Formula) including (but not limited to) transferring
its rights and obligations under the Finance Documents to another Affiliate or Facility Office or
transferring at par its Commitment and participation under this Agreement pursuant to Clause 38.3
(Replacement of a Lender).
Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance
Documents.
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18.2 Limitation of liability
(a)
(b)
The Company shall promptly indemnify each Finance Party for all costs and expenses reasonably incurred
by that Finance Party as a result of steps taken by it under Clause 18.1 (Mitigation).
A Finance Party is not obliged to take any steps under Clause 18.1 (Mitigation) if, in the opinion of that
Finance Party (acting reasonably), to do so might be prejudicial to it.
19. COSTS AND EXPENSES
19.1 Transaction expenses
The Company shall promptly on demand pay the Agent, the Arranger and the Security Agent the amount of all costs
and expenses (including legal fees) reasonably incurred by any of them (and, in the case of the Security Agent, by
any Receiver or Delegate) in connection with the negotiation, preparation, printing, execution, syndication and
perfection of:
(a)
(b)
this Agreement and any other documents referred to in this Agreement and the Transaction Security; and
any other Finance Documents executed after the date of this Agreement.
19.2 Amendment costs
If (a) an Obligor requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause
32.10 (Change of currency), the Company shall, within three Business Days of demand, reimburse each of the
Agent and the Security Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by
the Agent and the Security Agent (and, in the case of the Security Agent, by any Receiver or Delegate) in
responding to, evaluating, negotiating or complying with that request or requirement.
19.3 Enforcement and preservation costs
The Company shall, within three Business Days of demand, pay to the Arranger and each other Secured Party the
amount of all costs and expenses (including legal fees) incurred by it in connection with the enforcement of or the
preservation of any rights under any Finance Document and the Transaction Security and any proceedings instituted
by or against the Security Agent as a consequence of taking or holding the Transaction Security or enforcing these
rights.
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SECTION 7
GUARANTEE
20. GUARANTEE AND INDEMNITY
20.1 Guarantee and indemnity
Each Guarantor irrevocably and unconditionally jointly and severally:
(a)
(b)
(c)
guarantees to each Finance Party punctual performance by each other Obligor of all that Obligor’s
obligations under the Finance Documents;
undertakes with each Finance Party that whenever another Obligor does not pay any amount when due
under or in connection with any Finance Document, that Guarantor shall immediately on demand pay that
amount as if it was the principal obligor; and
agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable,
invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party
immediately on demand against any cost, loss or liability it incurs as a result of an Obligor not paying any
amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under
any Finance Document on the date when it would have been due. The amount payable by a Guarantor
under this indemnity will not exceed the amount it would have had to pay under this Clause 20 if the
amount claimed had been recoverable on the basis of a guarantee.
20.2 Continuing Guarantee
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor
under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
20.3 Reinstatement
If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for
those obligations or otherwise) is made by a Finance Party in whole or in part on the basis of any payment, security
or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise,
without limitation, then the liability of each Guarantor under this Clause 20 will continue or be reinstated as if the
discharge, release or arrangement had not occurred.
20.4 Waiver of defences
(a)
The obligations of each Guarantor under this Clause 20 will not be affected by an act, omission, matter or
thing which, but for this Clause 20, would reduce, release or prejudice any of its obligations under this
Clause 20 (without limitation and whether or not known to it or any Finance Party) including:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
any time, waiver or consent granted to, or composition with, any Obligor or other person;
the release of any other Obligor or any other person under the terms of any composition or
arrangement with any creditor of any member of the Group;
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to
perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other
person or any non-presentation or non-observance of any formality or other requirement in
respect of any instrument or any failure to realise the full value of any security;
any incapacity or lack of power, authority or legal personality of or dissolution or change in the
members or status of an Obligor or any other person;
any amendment, novation, supplement, extension, restatement (however fundamental and
whether or not more onerous) or replacement of a Finance Document or any other document or
security including, without limitation, any change in the purpose of, any extension of or increase
in any facility or the addition of any new facility under any Finance Document or other
document or security;
any unenforceability, illegality or invalidity of any obligation of any person under any Finance
Document or any other document or security; or
any insolvency or similar proceedings.
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(b)
This guarantee is enforceable on demand, and each Guarantor expressly waives any exception or
objection to which such Guarantor may be entitled.
20.5 Guarantor Intent
Without prejudice to the generality of Clause 20.4 (Waiver of Defences), each Guarantor expressly confirms that it
intends that this guarantee shall extend from time to time to any (however fundamental and of whatsoever nature
and whether or not more onerous) variation, increase, extension or addition of or to any of the Finance Documents
and/or any facility or amount made available under any of the Finance Documents for the purposes of or in
connection with any of the following: business acquisitions of any nature; increasing working capital; enabling
investor distributions to be made; carrying out restructurings; refinancing existing facilities; refinancing any other
indebtedness; making facilities available to new borrowers; any other variation or extension of the purposes for
which any such facility or amount might be made available from time to time; and any fees, costs and/or expenses
associated with any of the foregoing.
20.6 Immediate recourse
Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its
behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming
from that Guarantor under this Clause 20. This waiver applies irrespective of any law or any provision of a Finance
Document to the contrary.
20.7 Appropriations
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance
Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:
(a)
(b)
refrain from applying or enforcing any other moneys, security or rights held or received by that Finance
Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in
such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall
be entitled to the benefit of the same; and
hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of
any Guarantor’s liability under this Clause 20.
20.8 Deferral of Guarantors’ rights
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance
Documents have been irrevocably paid in full and unless the Agent otherwise directs, no Guarantor will exercise
any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by
reason of any amount being payable, or liability arising, under this Clause 20:
(a)
(b)
(c)
(d)
(e)
(f)
to be indemnified by an Obligor;
to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance
Documents;
to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of
the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to,
or in connection with, the Finance Documents by any Finance Party;
to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform
any obligation, in respect of which any Guarantor has given a guarantee, undertaking or indemnity under
Clause 20.1 (Guarantee and Indemnity);
to exercise any right of set-off against any Obligor; and/or
to claim or prove as a creditor of any Obligor in competition with any Finance Party.
If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit,
payment or distribution to the extent necessary to enable all amounts which may be or become payable to the
Finance Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for
the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for
application in accordance with Clause 32 (Payment mechanics).
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20.9 Release of Guarantors’ right of contribution
If any Guarantor (a “Retiring Guarantor”) ceases to be a Guarantor in accordance with the terms of the Finance
Documents for the purpose of any sale or other disposal of that Retiring Guarantor then on the date such Retiring
Guarantor ceases to be a Guarantor:
(a)
(b)
that Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or
future and whether actual or contingent) to make a contribution to any other Guarantor arising by reason
of the performance by any other Guarantor of its obligations under the Finance Documents; and
each other Guarantor waives any rights it may have by reason of the performance of its obligations under
the Finance Documents to take the benefit (in whole or in part and whether by way of subrogation or
otherwise) of any rights of the Finance Parties under any Finance Document or of any other security taken
pursuant to, or in connection with, any Finance Document where such rights or security are granted by or
in relation to the assets of the Retiring Guarantor.
20.10 Additional security
This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or
subsequently held by any Finance Party.
20.11 Guarantee Limitations
Any company acquired by an Obligor which becomes a Guarantor under the provisions of this Agreement may not
grant a guarantee under any Finance Document to the extent that it falls under the legal prohibition on financial
assistance.
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21. REPRESENTATIONS
21.1 Representations
SECTION 8
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
Each Obligor makes the representations and warranties set out in this Clause 21 to each Finance Party.
(a)
Status:
(i)
(ii)
(iii)
(iv)
The Material Subsidiaries are companies validly organised and registered with the Commercial
Registries to which they correspond by reason of their corporate domicile, and they have full
legal capacity and standing to pursue their respective corporate purposes (including the capacity
to dispose of and encumber any of their assets which are subject to a Security Document). In
particular, the Obligors have full legal capacity and standing to execute this Agreement,
exercise the rights and assume and perform the obligations arising from the Finance Documents.
None of the Material Subsidiaries has been dissolved or wound up; no resolution has been
adopted for the dissolution or winding up thereof, and the Obligors are not aware of any
pending proceeding or petition intended to obtain such dissolution or winding up.
None of the Material Subsidiaries has been declared bankrupt or subjected to reorganisation or
like insolvency proceedings; there is no pending proceeding or petition to declare bankrupt the
Material Subsidiaries or to subject them to reorganisation or like insolvency proceedings, no
declaration of suspension of payments has been requested or obtained, and they are not in any
situation that evidences their present or imminent insolvency pursuant to the provisions of the
Bankruptcy Law.
For the avoidance of doubt, the representations in this paragraph (a) shall not be deemed
breached as a result of any merger among Material Subsidiaries.
(b)
Corporate authority:
(i)
(ii)
The Obligors have adopted such corporate resolutions and taken all such steps as are required to
execute and perform each of the Finance Documents to which they are a party.
The persons signing each of such documents are, or at the time of execution were, duly
empowered to act on behalf of the relevant Obligor.
(c)
(d)
(e)
Binding obligations: Subject to the Legal Reservations, the obligations assumed by the Obligors under the
Finance Documents to which they are a party are legal, valid, binding and enforceable obligations.
No immunity: In any proceeding instituted in its jurisdiction of incorporation in connection with the
Finance Documents, none of the Obligors is entitled to claim for itself or its assets (other than Affected
Assets, if any) any immunity whatsoever as to execution, attachment or like proceeding in respect thereof
that may be contemplated in other similar legal provisions generally applicable. As of the Signing Date,
no assets are qualified as Affected Assets.
Non-conflict with other obligations: The execution and performance of the Finance Documents to which
any of the Obligors are a party, as well as the borrowing of the maximum amount provided thereunder on
the consummation of all of the transactions contemplated therein:
(i)
(ii)
(iii)
do not violate any law, regulation, order, rule or judicial, administrative or arbitral ruling,
whether Spanish or foreign, applicable thereto;
do not violate any provision of the By-Laws or articles of incorporation of any member of the
Group; and
do not require any consent, approval, authorisation or notice under, nor do they conflict with,
any contract, agreement or other instrument to which any member of the Group is a party
(including, but not limited to, the contracts, agreements and instruments related to the Existing
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High-Yield Notes), nor do they cause a breach or termination of any such contracts, agreements
or other instruments.
(f)
(g)
(h)
(i)
(j)
Authorisations: Subject to the Legal Reservations, all Authorisations required or desirable (i) to enable it
lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to
which it is a party and (ii) to make the Finance Documents to which it is a party admissible in evidence in
its Relevant Jurisdictions have been obtained or effected and are in full force and effect.
No filing or stamp taxes: Under the laws of its Relevant Jurisdictions, it is not necessary that the Finance
Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any
stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents or
the transactions contemplated by the Finance Documents, except for the registration of any chattel
mortgages granted pursuant to paragraph (d) of Clause 24.3 (Transaction Security) with the relevant
public registries and payment of associated stamp Taxes.
Governing law and enforcement: (i) The choice of governing law of the Finance Documents will be
recognised and enforced in its Relevant Jurisdictions; and (ii) any judgment obtained in relation to a
Finance Document in the jurisdiction of the governing law of that Finance Document will be recognised
and enforced in its Relevant Jurisdictions.
No Security rights created: The execution of the Finance Documents, and all such rights and obligations
as arise therefrom, shall not result in the mandatory constitution by any member of the Group of any liens
on or Security over all or part of their assets or revenues, whether present or future, in favour of thirdparty
creditors other than the Secured Parties or otherwise being Permitted Security.
Licences:
(i)
(ii)
(iii)
(iv)
The Material Subsidiaries are the owners of all material Licences required for the conduct of
their business, and there has been no material breach of the terms and conditions applicable
thereto.
None of the Material Subsidiaries has been given notice of any modification or alteration in the
terms and conditions of any of the Licences in effect that causes a Material Adverse Change.
The Material Subsidiaries have not been given notice by the applicable authorities setting forth
the lack of any material Licences and demanding that they be requested and obtained.
As of the Signing Date, there is no reason to believe that the material Licences owned by the
Material Subsidiaries may be revoked, invalidated or terminated.
(k)
(l)
(m)
(n)
(o)
Financial statements: The Original Financial Statements provide, in accordance with Generally Accepted
Accounting Principles, a true picture of the assets and the economic and financial situation of the Group
(including contingent liabilities) and of the results of their operations in the periods ending on the dates to
which they refer.
No Material Adverse Change: To the best of their knowledge and belief, from 31 December 2011 to the
Signing Date, no event or circumstance has occurred that causes a Material Adverse Change or that
should have been notified to the Lenders in view of its relevance to the decision of the Lenders to grant
the Facilities.
Compliance with laws: Each member of the Group has complied in all material respects with the
corporate, commercial, civil, labour, administrative, environmental, tax and other legal obligations that are
applicable to it.
Litigation: No member of the Group is, at the Signing Date, involved as either plaintiff or defendant in
any arbitration, litigation or administrative proceeding (including environmental proceedings), and no
other arbitration, litigation or administrative proceedings causing a Material Adverse Change have been
started, nor to the best of each Obligor’s knowledge and belief are there any reasons that such actions
might be commenced in the near future, nor is there any action or investigation that has been commenced
or threatened by the proper authorities or by any other third party with respect to the business or assets of
any member of the Group that causes a Material Adverse Change.
Ranking: The credit rights of the Lenders, or of any one Lender, against the Obligors under the Finance
Documents rank at least pari passu as to priority in respect of the rights of other creditors of the Obligors,
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except for those having priority by operation of Law or as otherwise expressly permitted under this
Agreement.
(p)
Information: To the best of their knowledge and belief, and following proper and prudent deliberations
and consultations:
(i)
(ii)
(iii)
all the information provided by Cableuropa or its advisers to the Agent, the Lenders or the
advisers to any of them, including information of a financial nature, is true, correct, complete as
at the date of the relevant report or document containing the information or (as the case may be)
as at the date the information is expressed to be given, has been prepared (where relevant)
pursuant to Generally Accepted Accounting Principles and faithfully reflects the situation of the
Group;
the opinions, calculations and projections contained in the Business Plan and the hypotheses,
assumptions and factors upon which they are based are reasonable as at the date of the Business
Plan; and
there are no facts or omissions that make such information misleading, and the information on
the Group’s Financial Debt included in Schedule 13 (Existing Debt) is true, correct, complete
and accurate as at the date of this Agreement.
(q)
(r)
No Event of Default: No fact or circumstance, individually or in conjunction with another circumstance,
that constitutes an Event of Default has occurred and is continuing.
No Security or Guarantees: There is not, nor has any undertaking been made to create:
(i)
(ii)
any lien, attachment, pledge or personal guarantee upon or Security in all or part of the present
or future assets, revenues or rights of any member of the Group, as well as in all or part of the
present or future shares held by any Parent Company in any Material Subsidiary or in all or part
of the present or future credit rights arising under any Financial Debt borrowed by any member
of the Group, except for such liens and guarantees as have been or may be created by way of
Permitted Security and Permitted Guarantees; and
any lien upon or Security in the shares or interests representing the capital of any member of the
Group held by another member of the Group, except for any Permitted Security.
(s)
Assets:
(i)
(ii)
(iii)
The Material Subsidiaries are the owners of or have legal and legitimate title to all property,
plant, machinery, equipment and other kinds of fixed assets, rights, revenues or personal
property and any other kind of asset, whether tangible or intangible (including any intellectual
property rights that may be required by the Telecommunications Business), utilised in their
activities, and upon which there are no mortgages, charges or liens (except for those created by
reason of the Permitted Security), or third party rights, claims or similar restrictions.
All such fixed assets, plant, machinery and any other property utilised by the Material
Subsidiaries has been properly maintained and is in proper working order for the use to which
they are assigned, except for normal wear and tear arising from the ordinary use thereof.
The Parent Companies (directly or indirectly) are the owners of and have legal and legitimate
title to all shares held in any Material Subsidiary, and in all credit rights arising under any
financial debt borrowed by any Material Subsidiary from any Parent Company.
(t)
(u)
(v)
Insurance: The insurance policies taken out by the Material Subsidiaries with respect to their assets,
business and relevant transactions adequately cover the risks associated therewith according to market
practices in the Telecommunications Business and have been taken out with reputed insurance companies,
and the Material Subsidiaries are up-to-date in the payment of the premiums thereunder.
Arm’s length basis: All contracts and agreements executed between the Obligors, the Parent Companies
and any other companies in the Group have been executed on an arm’s length basis.
No restrictions on Security: There is no restriction or limitation whatsoever upon the creation of in rem
rights of pledge on any of the shares or interests representing the capital of the Material Subsidiaries, or
upon the transferability of such shares or interests, or upon the foreclosure on the above-mentioned in rem
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ights of pledge by means of such foreclosure proceedings as may be applicable, except for such
restrictions or limitations as are necessarily established by operation of Law.
(w)
(x)
(y)
(z)
(aa)
(bb)
(cc)
(dd)
(ee)
(ff)
(gg)
No defaults: No event has occurred which, either individually or in conjunction with another
circumstance, constitutes a default under any of the Financial Debt agreements to which any member of
the Group is a party.
Deduction of Tax: Pursuant to the legal provisions in effect in Spain as of the Signing Date, no deduction
or withholding need be made as a result of the payments made in compliance with the Finance
Documents, to the extent that the entity that is the creditor for such payments is an Eligible Lender and
provides to the Borrowers a certificate of residence issued by the proper tax authorities in order to
evidence the tax residence of such entity so that it may benefit from the corresponding exemption, and
provided that such certificate is in force at the time the relevant payment is made.
Transaction Security: The Security Agreements create, from the time of perfection thereof, valid senior in
rem rights in and to the assets or rights that they affect and grant the Lenders (and other permitted
beneficiaries thereof) priority of payment, and in the event of bankruptcy or reorganisation of the
Obligors, and priority over any other creditor that may create a lien or charge on such assets or rights,
except for such creditors whose priority is recognised by operation of law.
Financial Debt: Neither the Obligors nor the other companies in the Group have in force agreements
giving rise to Financial Debt other than the Finance Documents, the Existing Debt and the Permitted Debt.
Group structure: As of the Signing Date, the Group is structured as indicated in the organisation chart
(indicating which companies are Material Subsidiaries) provided to the Agent pursuant to Part I of
Schedule 2 (Conditions precedent).
No Designated Senior Debt: No Financial Debt of any member of the Group is considered Designated
Senior Debt with respect to the Existing High-Yield Notes, except for the Financial Debt under the
Finance Documents (including, for the avoidance of doubt, the Facilities) and, eventually, the EIB
Facilities.
Environmental laws: Each member of the Group is in compliance with all Environmental Law, obtains,
maintains and ensures compliance with all requisite Environmental Permits and implements procedures to
monitor compliance with and to prevent liability under any Environmental Law where failure to do so
causes a Material Adverse Change and, to the best of its knowledge and belief (having made due and
careful enquiry) no circumstances have occurred which would prevent such compliance in a manner or to
an extent which causes a Material Adverse Change.
Environmental Claims: No Environmental Claim has been commenced or (to the best of its knowledge
and belief (having made due and careful enquiry)) is threatened against any member of the Group where
that claim would, if determined against that member of the Group, cause a Material Adverse Change.
Accounting reference date: the accounting reference date of each member of the Group is 31 December.
COMI: For the purposes of the Council of the European Union Regulation No.1346/2000 on Insolvency
Proceedings (the “Regulation”), its centre of main interest (as that term is used in Article 3(1) of the
Regulation) is situated in its jurisdiction of incorporation and it has no “establishment” (as that term is
used in Article 2(h) of the Regulation) in any other jurisdiction.
FATCA: No Obligor under the Finance Documents is either (a) created in, or organised under the laws of,
the United States of America or any state thereof, including the District of Columbia or treated, directly or
indirectly, as engaged in a trade or business within the United States of America or (b) is a foreign
financial institution as defined in FATCA and, for these purposes, “FATCA” means Sections 1471 to
1474 (inclusive) of the United States Internal Revenue Code of 1986 (as at the date of this Agreement),
any regulations thereunder (in the form of draft regulations in existence at the date of this Agreement) or
any official interpretations thereof in existence at the date of this Agreement.
21.2 Times when representations made
(a)
All the representations and warranties in this Clause 21 are made by each Original Obligor on the Signing
Date and on the Closing Date.
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(b)
(c)
(d)
The Repeating Representations are deemed to be made by each Obligor on the date of each Utilisation
Request and on the last day of each Interest Period.
The Repeating Representations and paragraph (h) (No Security rights created) are deemed to be made by
each Additional Obligor on the day on which it becomes (or it is proposed that it becomes) an Additional
Obligor.
Each representation or warranty deemed to be made after the Signing Date shall be deemed to be made by
reference to the facts and circumstances existing at the date the representation or warranty is deemed to be
made.
22. INFORMATION UNDERTAKINGS
The undertakings in this Clause 22 remain in force from the Signing Date for so long as any amount is outstanding
under the Finance Documents or any Commitment is in force.
22.1 Financial information
Subject to Clause 22.6 (Exceptions) below, the Borrowers undertake to deliver through Cableuropa the following
information to the Agent (electronically by e-mail or, otherwise, in a sufficient number of copies to be distributed to
the Lenders) at the intervals and within the deadlines indicated below:
(a)
(b)
(c)
(d)
as soon as they are available but, in any event, within one hundred and eighty (180) days following the
end of each financial year, the individual audited annual financial statements (including balance sheet,
profit and loss account and annual report) and management report of the Borrowers, and the consolidated
financial statements of the Group, audited by the Auditor (the “Audited Consolidated Annual Financial
Statements”) for such financial year;
as soon as they are available but, in any event, within sixty (60) days following the end of each Calendar
Quarter (except in the case of the fourth Calendar Quarter of each fiscal year, in respect of which this
period will be extended up to ninety (90) days as from the end of such Calendar Quarter), the consolidated
quarterly unaudited financial statements (including balance sheet, profit and loss account and cash flow
statement) of the Group and key operating indicators (the “Consolidated Quarterly Financial
Statements”) for the Calendar Quarter ended (including comparisons with the same Calendar Quarter of
the previous financial year), in such detail as may be sufficient for calculation of the Financial Covenants;
as soon as it is available but, in any event, within thirty (30) days following approval by the board of
directors of Cableuropa and no later than 15 February of the year to which it refers, the annual budget for
the Group, which will include, at least, the following documents for each month or Calendar Quarter of
the relevant financial year, as approved by the Board of Directors: (i) consolidated profit and loss account
of the Group (reflecting Consolidated EBITDA); (ii) interim consolidated balance sheet of the Group; and
(iii) cash flow statements; and
as soon as possible, all such information regarding the financial situation or the business of the Obligors
and the Group as may reasonably be requested by the Agent,
provided that, notwithstanding the above, Nara Cable expressly waives its right to receive the information
described above other than the information that it is entitled to receive pursuant to the terms of the relevant
indentures governing the Debt Instruments issued by it.
22.2 Compliance Certificates
(a)
(b)
The Company shall provide to the Agent, together with the Consolidated Quarterly Financial Statements
delivered under paragraph (b) of Clause 22.1 (Financial information) a Compliance Certificate and duly
signed by the Chief Financial Officer of Cableuropa (except for the Compliance Certificate for the fourth
Calendar Quarter of each financial year, which shall be prepared by Cableuropa and certified by the
Auditor as referred to in paragraph (b) below) setting forth the computations of the Financial Covenants
(with detailed calculations that are reasonably acceptable for the Agent).
The Borrowers shall provide, together with the Audited Consolidated Annual Financial Statements
delivered to the Agent pursuant to the provisions of paragraph (a) of Clause 22.1 (Financial information),
a Compliance Certificate, certified by the Auditor, setting forth the amounts of Consolidated Excess Cash
Flow for the relevant financial year as determined by the Annual Audited Consolidated Financial
Statements.
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(c)
A review of which Group companies fulfil any of the conditions to be deemed Material Subsidiaries shall
be conducted at the end of each Calendar Quarter and a list of the then Material Subsidiaries shall be
included in each Compliance Certificate.
22.3 Requirements as to financial information
(a)
(b)
(c)
(d)
Each of the documents required to be delivered under Clause 22.1 (Financial information) shall (if
applicable) be prepared in accordance with the accounting principles and practices and financial reference
periods consistent with these applied in the preparation of the Business Plan and the Original Financial
Statements (the “Base Accounting Principles”).
In the event that there is a modification to the Base Accounting Principles or mandatory interpretations or
clarifications of these Base Accounting Principles (other than in respect of immaterial modifications that
bear no consequences) that impact on the Financial Covenants, Cableuropa shall provide: (i) a report
prepared by Cableuropa and validated by the Auditor describing the changes and adjustments that have
been made in the Consolidated Financial Statements and a reconciliation of changes to the last
Consolidated Quarterly Financial Statements, as a consequence of the modified, interpreted or clarified
Base Accounting Principles; and (ii) a report prepared by Cableuropa describing proposed changes, if any,
to the Business Plan and to the Financial Covenants.
Negotiations in good faith in order to redefine the Financial Covenants in accordance to the adjustments
made to the Consolidated Financial Statements shall commence as soon as reasonably practicable after
receipt of the aforementioned reports by the Agent and, for the avoidance of doubt, until an agreement is
reached between Cableuropa and the Majority Lenders: (i) the Financial Covenants as defined prior to the
modification of the Base Accounting Principles or interpretations or clarifications of the same shall apply
and be tested as if modifications of the Base Accounting Principles or interpretations or clarifications of
the same had not occurred; and (ii) Cableuropa shall attach to every Compliance Certificate a
reconciliation to the former Base Accounting Principles in respect of the calculation of Financial
Covenants.
Cableuropa shall provide, at all times until an agreement has been reached to redefine the Financial
Covenants in accordance with paragraph (c) above, sufficient information, in such form and detail as may
reasonably be required by the Agent, in order to enable the Lenders to make a precise comparison
between the financial position of the Group before and after the application of the modified, interpreted or
clarified principles.
22.4 Other information—Cableuropa
Subject to Clause 22.6 (Exceptions) below, Cableuropa shall:
(a)
(b)
(c)
(d)
(e)
(f)
immediately inform the Agent in writing, as soon as it becomes aware thereof, of the existence of any
event that: (i) constitutes an Event of Default; (ii) causes a Material Adverse Change; or (iii) causes any of
the representations in Clause 21 (Representations) to cease to be true and correct;
inform the Agent, as soon as it becomes aware thereof, of the filing of any petition or proceeding intended
to obtain a declaration of bankruptcy or any similar insolvency proceeding against any of the Obligors and
of the existence of any circumstance that reveals its present or imminent insolvency pursuant to the
provisions of the Insolvency Law;
inform the Agent, as soon as it becomes aware thereof, of any litigation, arbitration or proceeding of any
kind that has been commenced or of the commencement of which it has notice, in which the amount for
which any Obligor is sought to be held liable exceeds thirty million (€30,000,000) Euros or which, if
adversely disposed of against any Obligor or company in the Group, causes a Material Adverse Change;
immediately inform the Agent, as soon as it becomes aware thereof, of any material variation that has
occurred or significant inaccuracy found in the data, documents or information that it has provided to the
Agent or to the Lenders;
deliver to the Agent copies of all the relevant documentation governing any Debt Instruments (including
any agreement entered into with any SPV as contemplated by paragraph (c)(iii) of Clause 2.2 (Additional
SPV Tranches), promptly after it is executed;
immediately inform the Agent in writing, as soon as it becomes aware thereof, of any changes,
amendments or waivers in connection with any agreement entered into with any SPV as contemplated by
paragraph (c)(iii) of Clause 2.2 (Additional SPV Tranches); and
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(g)
deliver to the Agent, promptly on request, such further information regarding the financial condition,
assets and operations of the Group and/or any member of the Group as any Finance Party through the
Agent may reasonably request.
22.5 “Know your customer” checks
(a)
If:
(i)
(ii)
(iii)
the introduction of or any change in (or in the interpretation, administration or application of)
any law or regulation made after Signing Date;
any change in the status of an Obligor after Signing Date; or
a proposed assignment or transfer by a Lender of any of its rights and obligations under this
Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges the Agent or any Lender (or, in the case of paragraph (iii) above, any prospective new Lender) to
comply with “know your customer” or similar identification procedures in circumstances where the
necessary information is not already available to it, each Obligor shall promptly upon the request of the
Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is
reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in
the case of the event described in paragraph (iii) above, on behalf of any prospective new Lender) in order
for the Agent, such Lender or, in the case of the event described in paragraph (iii) above, any prospective
new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other
similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the
Finance Documents.
(b)
Following:
(i)
(ii)
the giving of any notice by Cableuropa of its intention to request that a Material Subsidiary
becomes an Additional Borrower pursuant to Clause 28.2 (Additional Borrowers); or
any Material Subsidiary or member of the Group becoming an Additional Guarantor pursuant to
paragraph (a) of Clause 28.4 (Additional Guarantors),
if any of such circumstances obliges the Agent or any Lender to comply with “know your customer” or
similar identification procedures in circumstances where the necessary information is not already
available to it, Cableuropa shall promptly upon the request of the Agent or any Lender supply, or procure
the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself
or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order
for the Agent or such Lender or any prospective new Lender to carry out and be satisfied it has complied
with the results of all necessary “know your customer” or other similar checks under all applicable laws
and regulations pursuant to the accession of such subsidiary to this Agreement as an Additional Borrower
or Additional Guarantor.
(c)
Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such
documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the
Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other
similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the
Finance Documents.
22.6 Exceptions
(a)
(b)
The information undertakings in this Clause 22 shall, upon the listing of the shares in Cableuropa or any
Parent Company on an official secondary market in Spain or in a member state of the Organisation for
Economic Cooperation and Development (O.E.C.D.) with similar disclosure requirements to those
imposed in Spain, be limited to the delivery periods and extent of information legally imposed by the
relevant regulatory authority.
Notwithstanding paragraph (a) above, the Borrowers will continue to be obliged to provide the
Compliance Certificate in accordance with paragraph Clause 22.2 (Compliance Certificates), and the
information referred to in paragraphs (a) and (d) of Clause 22.4 (Other information) and Clause 22.5
(“Know your customer” checks).
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23. FINANCIAL COVENANTS
23.1 Financial Covenants
The Obligors shall comply (and shall procure that the other members of the Group comply), with the financial
covenants set out in this Clause 23 (the “Financial Covenants”), which shall be calculated in accordance with the
Base Accounting Principles (subject to paragraphs (b) to (d) of Clause 22.3 (Requirements as to financial
information)) and tested by reference to the Consolidated Financial Statements of the Group delivered pursuant to
paragraphs (a) and (b) of Clause 22.1 (Financial information) and/or each Compliance Certificate delivered
pursuant to Clause 22.2 (Compliance Certificate).
(a)
Total Interest Cover Ratio: the ratio of Consolidated LTM EBITDA to Financial Interest Expenses (the
“Total Interest Cover Ratio”) in respect of any Testing Period shall be equal to or higher than the ratio
set out in the following table opposite that Testing Period:
Testing Period expiring
Ratio
30 June 2012 ............................................................ [Š]
30 September 2012 ....................................................... [Š]
31 December 2012 ....................................................... [Š]
31 March 2013 .......................................................... [Š]
30 June 2013 ............................................................ [Š]
30 September 2013 ....................................................... [Š]
31 December 2013 ....................................................... [Š]
31 March 2014 .......................................................... [Š]
30 June 2014 ............................................................ [Š]
30 September 2014 ....................................................... [Š]
31 December 2014 ....................................................... [Š]
31 March 2015 .......................................................... [Š]
30 June 2015 ............................................................ [Š]
30 September 2015 ....................................................... [Š]
31 December 2015 ....................................................... [Š]
31 March 2016 .......................................................... [Š]
30 June 2016 ............................................................ [Š]
30 September 2016 ....................................................... [Š]
31 December 2016 ....................................................... [Š]
31 March 2017 .......................................................... [Š]
30 June 2017 ............................................................ [Š]
30 September 2017 ....................................................... [Š]
31 December 2017 and thereafter ............................................ [Š]
On the date of incorporation into the Agreement of any Additional SPV Tranche or any New Bank
Tranche or the issuance of any Future High-Yield Notes or any Future Subordinated Facilities Cableuropa
will recalculate (and the Chief Financial Officer (Director Financiero) shall certify to the Agent) the Total
Interest Cover Ratio set out in this paragraph (a) by:
(i)
taking into account in the Business Plan the quantum, fees and interest payable in relation to
such Additional SPV Tranche, New Bank Tranche, Future High-Yield Notes or Future
Subordinated Facilities and the corresponding prepayment (if any) of any other Facilities with
the net proceeds of the same; and
(ii) dividing the resulting Total Interest Cover Ratio by 1.25.
To the extent the resulting Total Interest Cover Ratio is lower than that set out in the table above, the
levels of the Total Interest Cover Ratio in the table in this paragraph (a) shall be automatically reset and
amended to reflect the recalculated ratios. Notwithstanding the above, the Total Interest Cover Ratio shall
not be lower than 2.00:1 for any Testing Period.
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(b)
Total Debt Cover Ratio: the ratio of Total Debt on the last day of a Testing Period to Consolidated LTM
EBITDA in respect of that Testing Period shall be equal to or lower than the ratio set out in the following
table opposite that Testing Period:
Testing Period expiring
Ratio
30 June 2012 ........................................................... 5.95:1
30 September 2012 ...................................................... 5.95:1
31 December 2012 ...................................................... 5.95:1
31 March 2013 ......................................................... 5.95:1
30 June 2013 ........................................................... 5.95:1
30 September 2013 ...................................................... 5.95:1
31 December 2013 ...................................................... 5.85:1
31 March 2014 ......................................................... 5.75:1
30 June 2014 ........................................................... 5.75:1
30 September 2014 ...................................................... 5.50:1
31 December 2014 ...................................................... 5.50:1
31 March 2015 ......................................................... 5.25:1
30 June 2015 ........................................................... 5.25:1
30 September 2015 ...................................................... 5.00:1
31 December 2015 ...................................................... 4.75:1
31 March 2016 ......................................................... 4.50:1
30 June 2016 ........................................................... 4.25:1
30 September 2016 ...................................................... 4.00:1
31 December 2016 ...................................................... 3.95:1
31 March 2017 ......................................................... 3.75:1
30 June 2017 ........................................................... 3.50:1
30 September 2017 ...................................................... 3.25:1
31 December 2017 and thereafter .......................................... 3.25:1
(c)
(d)
Debt Service Cover Ratio: the Debt Service Cover Ratio shall be equal to or greater than 1.00:1 for each
Testing Period.
Maximum Capex: The cumulative Capex of the Group incurred in any financial year (excluding any
amount of Capex funded by the cash proceeds of new Equity from Parent Companies) shall not exceed the
amount set out in the following table opposite that financial year:
Financial year ending Maximum Capex (€)
31 December 2012 ............................................. 362,000,000
31 December 2013 ............................................. 330,000,000
31 December 2014 ............................................. 335,000,000
31 December 2015 ............................................. 324,000,000
31 December 2016 ............................................. 314,000,000
31 December 2017 ............................................. 316,000,000
If in any financial year (the “Original Financial Year”) the amount of Capex is less than the maximum
amount permitted for that Original Financial Year (the difference being referred to below as the “Unused
Amount”), then the maximum expenditure amount set out in column 2 above for the immediately
following Financial Year (the “Carry Forward Year”) shall be increased by an amount (the “Permitted
Carry Forward Amount”) equal to the Unused Amount.
In any Carry Forward Year, the original amount specified in column 2 above shall be treated as having
been incurred prior to any Permitted Carry Forward Amount carried forward into that Carry Forward Year
and no amount carried forward into that Carry Forward Year may be carried forward into a subsequent
Financial Year.
In any Original Financial Year, an amount equal to the higher of (i) ten per cent. (10%) of the permitted
Capex for the following two financial years or (ii) fifty millions Euros (€50,000,000) (the “Permitted
Carry Back Amount”) may be carried back to that Original Financial Year, with a corresponding
reduction in the maximum amounts of Capex permitted for those two financial years (pro rata to the
Maximum Capex for those two years).
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23.2 Interpretation
Following a Permitted Acquisition, the Maximum Capex in the second column above for each financial
year commencing with the financial year during which such Permitted Acquisition takes place shall be
increased by an amount equal to fifteen per cent. (15%) of revenues of the target or target group acquired
in the most recently ended financial year of such target or target group (or as reasonably calculated on an
LTM basis). Following a Permitted Disposal of a member of the Group, the Maximum Capex in the
second column above for each financial year commencing with the financial year during which such
Permitted Disposal takes place shall be decreased by an amount equal to fifteen per cent. (15%) of
revenues of the member of the Group disposed of in the most recently ended financial year of the Group
(or as reasonably calculated on an LTM basis).
(a)
Any amount in a currency other than the Base Currency is to be taken into account at its Base Currency
equivalent calculated on the basis of the relevant rates of exchange used by the Company in, or in
connection with, its financial statements for the period in which that amount is being used to make
calculations or other determinations under this Clause 23.
(b) No item must be credited or deducted more than once in any calculation under this Clause 23.
24. GENERAL UNDERTAKINGS
The undertakings in this Clause 24 remain in force from the Signing Date for so long as any amount is outstanding
under the Finance Documents or any Commitment is in force.
24.1 Positive covenants
The Obligors undertake to comply with the following positive covenants:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Corporate existence: To preserve their corporate existence and not carry out any transformation
(transformación) that is not expressly permitted in this Agreement. For the avoidance of doubt, this
paragraph (a) shall not be deemed breached as a result of any permitted merger among Obligors.
Licences: To obtain, maintain and punctually renew (and to procure that the Material Subsidiaries obtain,
maintain and punctually renew) during the life of the Agreement all material Licences that may be
required by any legal provision or any authority for the normal conduct of their business (and, in
particular, the Telecommunications Business) or for the performance of their obligations and the exercise
of their rights under the Finance Documents, and also to carry out (and to procure that the Material
Subsidiaries carry out) such proceedings as may be required under such Licences or by any authority.
Ranking: To maintain the Facilities and the rights arising from this Agreement in favour of the Lenders
and the Hedge Counterparties at the same or a higher rank, or with the same or higher priorities,
preferences and security interests, personal or other guarantees (including, if applicable, third-party
guarantees with respect to obligations of the Borrowers) vis-à-vis the rights that might be enjoyed by any
other creditors of the Obligors under any Financial Debt, except for those having priority by operation of
law, and except for the credit rights secured by Permitted Security, which is security in rem.
Financial statements: To prepare the individual financial statements for each Obligor and the
Consolidated Financial Statements and keep their books, accounts and records in compliance with Spanish
law and with the Generally Accepted Accounting Principles from time to time applied in Spain.
Compliance with laws: To keep (and to procure that each member of the Group keeps) up-to-date in the
payment and performance of their civil, administrative, labour, environmental, tax, Social Security and
commercial obligations, unless contested in good faith, as well as comply (and procure that each member
of the Group complies) in all material respects, with all applicable legal provisions, be they municipal,
autonomous government or national or contained in the International Treaties signed by Spain and in the
Regulations of the European Union.
Purpose: To apply the Loans solely for such purposes as are respectively established for each of them in
Clause 3 (Purpose) of this Agreement.
Transactions on arm’s length terms: To carry out (and to procure that each member of the Group carries
out) any commercial or financial transaction with their shareholders, companies in the Group or any third
party on an arm’s length basis, for legitimate reasons and taking into account the corporate interests of the
Obligors and the Group.
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(h)
(i)
(j)
(k)
(l)
(m)
Assets: To preserve (and to procure that the Material Subsidiaries preserve) ownership of or the lawful
right to use all of their significant assets, both tangible and intangible, and in particular, such industrial
and intellectual property rights as are required for the conduct of the business of the Material Subsidiaries.
Maintenance of insurance: To keep (and to procure that the Material Subsidiaries keep) insured, with
insurance companies of recognised repute and solvency, the business, assets, equipment and plant of the
Material Subsidiaries, in such manner, against such risks and in such amounts as is usual for the
companies in their industry and in such manner as is desirable in accordance with the practices of an
orderly and prudent businessman.
Compliance with terms of insurance: To keep (and to procure that the Material Subsidiaries keep) current
in the payment of the insurance premiums and fulfil (and to procure that the Material Subsidiaries fulfil),
at all times, the terms and conditions of the insurance policies purchased. To deliver to the Agent, when so
requested by it, copies of the evidence of payment of the premiums corresponding to each of the insurance
policies purchased.
Notice of Default: To give notice as soon as possible of any Default and, upon giving such notice, to
provide the Agent, or any adviser to or appointed representative of the Agent, acting on the instructions of
the Majority Lenders, with contact with the Auditor and with access to all such documentation, records,
books and information regarding the Obligors as may reasonably be requested by the Agent. Any
reasonable costs arising as a result of such access shall be borne by the Obligors.
No change of business: To preserve (and to procure that the Material Subsidiaries preserve) their
corporate purpose in substantially identical terms and not to abandon or modify (and to procure that none
of the Material Subsidiaries will abandon or modify) their main business activity as of the Signing Date
(for the avoidance of doubt any merger among Material Subsidiaries will not be deemed an abandonment
of the business by such Material Subsidiaries).
Material Subsidiaries: With respect to Material Subsidiaries:
(i)
(ii)
to maintain a direct or indirect interest in the Material Subsidiaries with at least such
percentages as are indicated in Schedule 10 (Material Subsidiaries) and, in any event, maintain
Control over any Material Subsidiary named in Schedule 10 (Material Subsidiaries) and any
member of the Group which becomes a Material Subsidiary after the Signing Date;
in the event that other Material Subsidiaries join the Group, or there are companies in the Group
that hereafter become Material Subsidiaries, the Obligors shall:
(A)
(B)
take all such steps as may be required to cause the new Material Subsidiaries or
members of the Group to accede to this Agreement as an Additional Guarantor
pursuant to paragraph (a) of Clause 28.4 (Additional Guarantors), except where, in
the event of an acquired Material Subsidiary, the Obligors do not hold a 100%
ownership of the Material Subsidiary or if the giving of such guarantee is prevented
by any applicable law; and
execute (or, if applicable, co-operate and take all actions as may be necessary in order
to obtain the execution by the relevant Parent Company, as the case may be) of
Transaction Security over all of the shares or interests held by them (whether as a
consequence of capital increases, or of an exchange for any other securities) in the
capital stock of the new Material Subsidiary in such terms as set forth in paragraph
(c) of Clause 24.3 (Transaction Security), except if the giving of such security is
prevented by any applicable law.
(n)
(o)
Obligor coverage: To cause the Obligors to represent, at all times until the Final Maturity Date, ninetyfive
(95%) per cent or more of the Total Consolidated Assets and of the Consolidated EBITDA and
Consolidated Revenues, respectively, provided that if, to satisfy the requirements of this paragraph (n) it
becomes necessary for Tenaria or any other non wholly owned Subsidiary to accede to this Agreement as
Additional Obligor, Tenaria or other such non wholly owned Subsidiaries shall be exempted from
becoming Obligors to the extent that any share capital directly or indirectly owned by any Obligor in such
Subsidiaries is pledged in favour of the Secured Parties.
Security and guarantees: To create and, if applicable, co-operate and take all actions as may be necessary
in order to obtain the creation by the relevant Parent Company, ONO Finance II plc, and the issuer of any
Future High-Yield Notes, the Security contemplated in Clause 24.3 (Transaction Security), below within
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such deadlines and under such conditions as are therein set forth. To maintain at all times such Security
and the guarantees granted pursuant to Clause 20 (Guarantee and indemnity) current and in force.
(p)
(q)
(r)
(s)
(t)
Voting rights: To exercise (and to procure that each member of the Group exercises) their voting rights in
the companies in the Group consistently with the terms of the Finance Documents.
Accounts: As regards Cableuropa, except if a Release Event is continuing, to open with the Agent the
Insurance Account and the Asset Transfer Account, keeping them open and pledged pursuant to the
corresponding Security Agreements, and ensure that all Insurance Proceeds referred to in Clause 9
(Mandatory Prepayment) are paid into the Insurance Account and that all Disposal Proceeds referred to in
Clause 9 (Mandatory Prepayment) are paid into the Asset Transfer Account.
Designated Senior Debt: To maintain the Facilities and the Permitted Hedge Agreements designated as
Designated Senior Debt for the purposes of the Existing High-Yield Notes (and to procure that the
Facilities and the Permitted Hedge Agreements are so maintained) and to designate (or procure the
designation of) the Facilities and the Permitted Hedge Agreements as Designated Senior Debt for the
purposes of the indentures on the date of execution thereof with respect to the Future High-Yield Notes.
Existing High-Yield Notes: To deliver to the Agent, within thirty (30) Business Days following the
redemption and/or cancellation of the Existing High Yield Notes, evidence of such redemption and/or
cancellation.
High Yield-Notes and Future Subordinated Facilities: Take all actions as may be necessary in order to
ensure that:
(i)
(ii)
(iii)
all Financial Debt owing by a member of the Group in relation to the Existing High-Yield Notes
and any Future High-Yield Notes is (A) unsecured (except for the guarantees and (if any)
escrow arrangements used pending completion of the transactions financed by the relevant
issuance or, as the case may be, to hold part of the proceeds of such issuance for payment of
future interest) and (B) subordinated (in the case of any Future High-Yield Notes, in terms
reasonably similar to those governing the Existing High-Yield Notes) to all indebtedness of the
Obligors under the Finance Documents;
each Obligor (and procure that ONO Finance II plc and each issuer of the Future High-Yield
Notes) complies with its obligations under the Existing High-Yield Notes and any Future High-
Yield Notes, and gives notice of any obligation to redeem, repurchase or repay any securities
prior to their stated maturity;
neither ONO Finance II plc nor any issuer of the Future High-Yield Notes redeems or
repurchases any securities prior to their stated maturity at any time at which the ratio of Pro
Forma Leverage (taking into account that redemption or repurchase) is greater than or equal to
3.50:1 other than from:
(A)
(B)
(C)
(D)
(E)
(F)
the proceeds of an IPO which are not required to be applied in prepayment under
paragraph (e) of Clause 9.2 (Mandatory prepayment events);
Equity from Parent Companies;
the proceeds of any Permitted Debt which has the same seniority as, or which ranks
behind, the High-Yield Notes or the proceeds of any Subordinated Debt subject to a
Subordination Commitment;
fifty per cent (50%) of the proceeds obtained on a disposal of Non-Core Business;
Retained Excess Cash Flow; or
if Pro Forma Leverage (taking into account that redemption or repurchase) is equal to
or less than 4.00:1, Senior Debt provided that (1) the maturity date of such Senior
Debt falls at least two years later than the Final Maturity Date applicable at the date
such Senior Debt was incurred, and (2) the per annum Financial Interest Expense of
such Senior Debt is less than that of the securities being redeemed or repurchased;
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(iv)
no Obligor or other borrower of Future Subordinated Facilities prepays any Future Subordinated
Facilities prior to their stated maturity at any time at which the ratio of Pro Forma Leverage
(taking into account that prepayment) is greater than or equal to 3.50:1 other than from:
(A)
(B)
(C)
(D)
the proceeds of an IPO which are not required to be applied in prepayment under
paragraph (e) of Clause 9.2 (Mandatory prepayment events);
the proceeds of any Permitted Debt which has the same seniority as, or which ranks
behind, the Future Subordinated Facilities or the proceeds of any Subordinated Debt
subject to a Subordination Commitment; or
fifty per cent (50%) of the proceeds obtained on a disposal of Non-Core Business;
Retained Excess Cash Flow; and
(v)
except for any Debt Instruments issued with a guarantee from any of the Obligors, any highyield
notes hereafter issued by any of the Obligors or with a personal unlimited guarantee from
all or any of the Obligors, the Financial Debt agreements related to any such issuances, and/or
any bridge loan granted in connection with such issuances are Future High-Yield Notes,
provided that sub paragraph (iii) above shall not apply if a Release Event has occurred and for so long as
it is continuing.
(u)
(v)
(w)
(x)
IPO: In the event of an IPO, to ensure that the IPO Proceeds are injected into Cableuropa (in an account
opened by Cableuropa with the Agent) and applied by Cableuropa in accordance with paragraph (e) (IPO
Proceeds) of Clause 9.2 (Mandatory prepayment events).
Transactions between Obligors and Parent Companies: To ensure, and to procure that each Parent
Company shall ensure, that (i) any agreement or transaction giving rise to payments between Obligors
and/or Parent Companies and/or (ii) any guarantee or security interest created pursuant to the Security
Agreements is structured in such a way that it will not contravene any applicable legal regulation
including in relation to financial assistance, corporate benefit restrictions on upstreaming cash intra-group
and the fiduciary and statutory duties of the directors of any member of the Group.
Terms of Debt Instruments: To ensure that the financial covenants and other comparable covenants and
undertakings of the Obligors under any Debt Instruments are no more restrictive than the ones contained
under this Agreement (for the avoidance of doubt, and for these purposes, any covenant included in any
Debt Instrument which is substantially equal to an equivalent covenant under the Debt Instruments issued
by Nara Cable on 22 October 2010, 14 July 2011 and 2 February 2012, shall be considered to be “no more
restrictive” and the incurrence covenants shall by definition be considered to be “no more restrictive” than
maintenance covenants).
Hedging: (In the case of the relevant Borrowers only):
(i)
with respect to Additional SPV Tranches, New Bank Tranches, Future High-Yield Notes or
Future Subordinated Facilities (as applicable) which are denominated, in whole or in part, in US
Dollars and subject to (a) availability of hedge counterparties and (b) the credit and liquidity
margin being reasonable (calculated in accordance with the standard market practice), to enter
into, by no later than the date falling six (6) Months after:
(A)
(in the case of Additional SPV Tranches or New Bank Tranches):
(1) the Execution Date (as defined in paragraph (c)(iii)(D) of Clause 2.2
(Additional SPV Tranches)) for Additional SPV Tranches or
(2) the Execution Date (as defined in paragraph (c)(iii)(D) of Clause 2.3 (New
Bank Tranches)) for the New Bank Tranches; and
(B)
(in the case of Future High-Yield Notes or Future Subordinated Facilities) the date on
which the Financial Indebtedness thereunder is incurred,
and thereafter to maintain, until the first call date (if any) for the underlying principal amount of
such Additional SPV Tranches, New Bank Tranches, Future High-Yield Notes or Future
Subordinated Facilities (as applicable), currency hedging arrangements in order to hedge
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exchange rate fluctuations in respect of 100 per cent. of the interest payable in US Dollars
under, and 50 per cent. of the underlying outstanding principal amount denominated in US
Dollars of, such Additional SPV Tranches, New Bank Tranches, Future High-Yield Notes or
Future Subordinated Facilities; and
(ii)
use its reasonable endeavours to ensure that, at any time, not more than US$1,000,000,000 of its
Financial Indebtedness denominated in US Dollars is unhedged.
(y)
(z)
Provisions for release of debt: In the case of the Company only, to ensure that any debt (as defined in the
Intercreditor Agreement) of the Company (i) that is subordinated or junior in right of payment to the
High-Yield Notes or which ranks equally with the High-Yield Notes and (ii) that is required to be released
pursuant to paragraph (b) of the definition of “Permitted Enforcement Action” in the Intercreditor
Agreement in order for the requirements of such definition to be satisfied, includes a provision releasing
the obligations of the Company under such debt (as defined in the Intercreditor Agreement) in the
circumstances contemplated by the definition of “Permitted Enforcement Action” in the Intercreditor
Agreement.
Subordinated Guarantors: In the case of the Company only, to ensure that any debt (as defined in the
Intercreditor Agreement) of a Subordinated Guarantor (as defined in the Intercreditor Agreement) (i) that
is subordinated or junior in right of payment to the Subordinated Liabilities (as defined in the Intercreditor
Agreement) and (ii) that is required to be released by paragraph (a)(ii) of clause 5.4 (Release of
subordinated guarantees) of the Intercreditor Agreement for the purposes of releasing the obligations of
such Subordinated Guarantor under the Subordinated Liabilities (in each case as defined in the
Intercreditor Agreement), includes a provision releasing the obligations of each Subordinated Guarantor
(as defined in the Intercreditor Agreement) under such debt (as defined in the Intercreditor Agreement) in
the circumstances contemplated by paragraph (a)(ii) of clause 5.4 (Release of subordinated guarantees) of
the Intercreditor Agreement.
24.2 Negative Covenants
The Obligors shall not (and shall procure that (1) in respect of paragraphs (a) to (d), (f) to (k), (n) and (r) below, no
member of the Group will, and (2) in respect of paragraphs (e) and (m) below, no Material Subsidiary will) without
the prior written consent of the Agent (upon the prior agreement of the Majority Lenders):
(a)
(b)
(c)
(d)
(e)
(f)
Negative pledge: Create, or permit the creation of, any Security or charge upon property or assets owned
by any member of the Group or upon their rights or revenues, whether present or future, except for
(i) those contemplated in the Permitted Security, and (ii) those created by operation of Law;
No loans or credit: Grant loans, credit facilities, guarantees, counterguarantees, or any other kind of
financing in favour of third parties other than the Obligors, except for Permitted Financial
Accommodation and Permitted Guarantees;
No Financial Debt: Incur or allow to remain outstanding any kind of Financial Debt other than the
Permitted Debt;
No acquisitions: Take Control or acquire, under any title (including mergers and contributions), any
interest in any company or business, other than in respect of: (i) any wholly-owned Obligor; (ii) the
Permitted Acquisitions; (iii) the Permitted Investments; and (iv) any issuances of shares in exchange for a
contribution in kind or mergers, provided that there are no payments of cash;
No changes to by-laws: Make or consent to modifications in their by-laws (and, in particular, in the date
of commencement and closing of the financial year), except for those that do not affect performance of the
Finance Documents or those that are required by Law;
No dissolution or merger: Commence any proceeding for their dissolution, winding up, spin-off, merger,
consolidation or transformation. The following acts shall be excluded from such prohibition:
(i)
(ii)
(iii)
the dissolution, winding-up, spin-off, merger, consolidation or transformation that is legally
mandatory pursuant to Spanish law;
spin-offs, mergers or contributions of interests among Material Subsidiaries or of Non-Core
Business; and
mergers that fulfil all the conditions established for Permitted Acquisitions;
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(g)
No Distributions: Resolve upon or pay any Distributions or any payment under (or acquire) any
Shareholder Loan (excluding Holding Issuance Loans) or any Subordinated Debt subject to a
Subordination Commitment unless:
(i) (A) the amount of the payment (when aggregated with the amount of all other payments
permitted under this sub-paragraph (g)(i)(A)) does not exceed €50,000,000 (or its
equivalent in other currencies) over the life of the Facilities; or
(B)
the payment is made using Retained Excess Cash Flow; and
(ii)
(iii)
(iv)
there is no event that constitutes, or will constitute as a consequence of such payments being
made, an Event of Default and such payment is not prohibited by subordination, intercreditor or
other agreements (including, without limitation, the Intercreditor Agreement); and
Pro Forma Leverage (taking into account that Distribution) is lower than 3.50:1 (or, if an IPO of
the Company or a Parent Company has occurred, 4.00:1); and
the Company has Liquidity of at least €300,000,000 (or its equivalent in other currencies),
and provided that (1) any distribution of dividends, share capital reduction or issuance premium
repayment among the Obligors shall be permitted at any time and (2) no amount of any Distribution may
be funded from the proceeds of a Revolving Facility Loan.
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
No payments on Subordinated Debt: Make any payment under (or to acquire) any Subordinated Debt
(including, for the avoidance of doubt, the Existing High-Yield Notes, any Future High-Yield Notes and
any guarantee thereof and including Holding Issuance Loans and any Future Subordinated Facilities) if
there is an event that constitutes, or will constitute as a consequence of such payments being made, an
Event of Default or if such payment is prohibited by subordination, intercreditor or other agreements
(including, without limitation, the Intercreditor Agreement).
No payments to Parent Companies: Pay to, or for the account of, any Parent Company, during the same
calendar year, amounts in an aggregate sum in excess of (i) €15,000,000, (ii) amounts payable to officers,
directors or other employees of a Parent Company under long term incentive plans and (iii) amounts paid
to GCO to enable it to make tax payments in its position as head of the tax group (of which Cableuropa is
a member) as required by Royal-Decree Law 12/2012 of 30 March (Real Decreto-ley 12/2012, de 30 de
marzo);
Hedging: Execute interest rate hedge agreements, exchange rate hedge agreements, futures or derivatives
contracts other than the Permitted Hedge Agreements;
Incorporation of companies: Incorporate or establish other companies whose corporate purpose and main
business activity is not included in the Telecommunications Business;
Auditors: Appoint an auditor that is not an “Auditor” as defined in Clause 1.1 (Definitions);
Actions in relation to insurances: Act (and the Obligors shall procure that no Material Subsidiary shall
act) in a manner that may give rise to the unenforceability, suspension, invalidation (whether total or
partial), rescission or ineffectiveness of the insurance policies;
No redemption of High-Yield Notes or Future Subordinated Facilities: Redeem, repurchase or repay, in
any way whatsoever, the Existing High-Yield Notes or any Future High-Yield Notes or Future
Subordinated Facilities before their maturity date, except for the transactions permitted under sub
paragraphs (iii) and (iv) of paragraph (t) (High-Yield Notes and Future Subordinated Facilities) of
Clause 24.1 (Positive covenants);
No changes to terms of High-Yield Notes or Subordinated Debt: Modify any of the terms and conditions
of:
(i)
(ii)
the Future High-Yield Notes (including the indentures, the loans and other legal transactions
through which the delivery of the funds raised under the issue to the Group was materialised); or
the Existing High-Yield Notes or other Subordinated Debt;
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except:
(A)
(B)
in the case of sub paragraph (i) above, such amendment does not prevent or alter in
any way whatsoever compliance by the corresponding Future High-Yield Notes with
the conditions required to be considered Permitted Debt; and
in each case, where the relevant amendment is not prejudicial to the Lenders or,
otherwise with the prior written consent of the Agent, following approval by the
Majority Lenders;
(p)
No Designated Senior Debt: Designate (and the Obligors shall procure that no other person with the
power to do so designates) any Financial Debt as Designated Senior Debt under any Existing High-Yield
Notes or Future High-Yield Notes issue other than:
(i)
(ii)
(iii)
any indebtedness of the Obligors under the Finance Documents (including, for the avoidance of
doubt, any SPV Tranches and/or New Bank Tranches);
if applicable, any VAT facility or the EIB Facilities; and
any other Financial Debt agreed with the Majority Lenders;
(q)
(r)
Midco: Take (and procure that Midco takes) any action in order to allow, or fail (and procure that Midco
does not fail) to take all actions as may be necessary in order to avoid, Midco: (i) to enter into or
commence any activity or business other than acting as a Parent Company; or (ii) to reclaim any amount
contributed by it to a member of the Group (except for payments permitted under paragraph (g) (No
Distributions) above).
No disposals: Sell, lease, transfer or otherwise dispose of, by one or more transactions or a series of
transactions (whether related or not), the whole or any part of its assets (other than Non Core Business),
unless such sale, lease, transfer or disposal is made at a fair market value and:
(i)
(ii)
the proceeds obtained from such sale, lease, transfer or disposal (except for proceeds arising
under sub paragraphs (ii)(A), (B) or (E) below), are immediately paid into the Asset Transfer
Account; and
the relevant transaction falls within any of the following circumstances:
(A)
(B)
(C)
any stock option plans in the Obligors provided that such stock option plans are on
terms and conditions consistent with market practice and that all shares issued, or
deemed to be issued, pursuant thereto do not at any time in aggregate exceed five per
cent (5%) of the total equity share capital of the relevant Obligor;
sales of assets in the ordinary course of business;
disposals on normal arm’s length commercial terms of assets where the assets are no
longer required for the Telecommunications Business or the assets are:
(1) obsolete or surplus equipment and the proceeds are applied to the
Telecommunications Business, or, if required to be applied in prepayment
of the Facilities pursuant to paragraph (d) of Clause 9.2 (Mandatory
prepayment events), are applied in accordance with Clause 9.3 (Application
of mandatory prepayments); or
(2) fixed assets to the extent that the net proceeds of sale are applied in the
acquisition of assets of comparable or superior type, value and quality
within the twelve (12) month period following the effective date of the
disposal;
(D)
(E)
disposals made with the consent of the Majority Lenders, provided that the Majority
Lenders must not unreasonably withhold or delay its consent to disposals in exchange
for assets (other than cash or cash equivalent) comparable or superior as to type, value
and quality;
disposals made by one Obligor to another Obligor;
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(F)
(G)
disposals of assets for cash where the total net cash proceeds obtained from such
disposals over any twelve (12) month period by all Obligors on a consolidated basis:
(1) does not exceed twenty five million Euros (€25,000,000) or (2) if such amount is
exceeded, Cableuropa evidences, to the satisfaction of the Agent, acting on the
instructions of the Majority Lenders (which consent will not be unreasonably
withheld) that the relevant disposals do not constitute, or will not constitute on a
consolidated pro-forma basis, a breach of any Financial Covenant (which will be
calculated as if such disposal had taken place); or
disposals of shares in the issued share capital of any company or any member of the
Group which is not an Obligor or a Material Subsidiary or in any Permitted
Investment. For the avoidance of doubt, any disposals of shares in the issued share
capital of an Obligor or a Material Subsidiary shall not be permitted.
(s)
SPV Tranches and New Bank Tranches: except as provided in this Agreement, refinance SPV Tranches or
New Bank Tranches prior to the Final Maturity Date unless the SPV Tranches (or related Debt
Instruments) or New Bank Tranches are refinanced by a Debt Instrument and/or bank debt in an amount
that exceeds the SPV Tranches or the New Bank Tranches being refinanced, plus prepayment costs,
including make whole premium, if any.
The negative covenants set forth in paragraphs (i) (No payments to Parent Companies), (n) (No redemption of High-
Yield Notes or Future Subordinated Facilities) and (p) (No Designated Senior Debt) above shall not apply while a
Release Event continues to be in effect.
24.3 Transaction Security
Notwithstanding the foregoing and the personal and unlimited liability of the Borrowers, and in order to ensure full
performance of their obligations under the Finance Documents, the following Transaction Security shall be created.
(a)
Holding Companies, ONO Finance II plc., any issuer of Future High-Yield Notes, any borrower of Future
Subordinated Facilities or any creditor of Subordinated Debt subject to a Subordination Commitment:In
order to secure the obligations undertaken by the Obligors in connection with the Finance Documents, the
Obligors (subject to paragraph (d) below) undertake to co-operate and take all actions as may be necessary
in order to ensure that:
(i)
(ii)
(iii)
(iv)
(v)
Midco creates or grants, in favour of the Secured Parties, the first ranking pledges over the
shares representing one hundred per cent. (100%) of the capital stock of Cableuropa granted
under the Security Agreements;
any Parent Company creates, in favour of the Secured Parties, a first ranking pledge over all
credit rights of such Parent Company arising at any time under the agreements governing any
Financial Debt granted by such Parent Company to any member of the Group, substantially in
the form of the pledge agreement agreed between the Company and the Agent as at the Signing
Date;
ONO Finance II plc and any issuer of Future High-Yield Notes creates, in favour of the Secured
Parties, a first ranking pledge over all of its credit rights arising at any time under the
agreements governing any High-Yield Proceeds Loan made by it to any Obligor, substantially in
the form of the pledge agreement agreed between the Company and the Agent as at the Signing
Date;
any borrower (which is not an Obligor) under any Future Subordinated Facilities creates, in
favour of the Secured Parties, a first ranking pledge over all of its credit rights arising at any
time under the agreements governing any Future Subordinated Facilities Proceeds Loan made
by it to any Obligor, substantially in the form of the pledge agreement agreed between the
Company and the Agent as at the Signing Date; and
any creditor of Subordinated Debt subject to a Subordination Commitment creates, in favour of
the Secured Parties, a first ranking pledge over all credit rights of such creditor arising at any
time under the agreements governing such Subordinated Debt granted by that creditor to any
company of the Group, substantially in the form of the pledge agreement agreed between the
Company and the Agent as at the Signing Date,
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and, in the event of:
(A)
(B)
a share capital increase in Cableuropa, the Obligors undertake to co-operate and take
all actions as may be necessary in order to ensure that Midco creates, in favour of the
Secured Parties, a first ranking pledge over the newly issued shares not later than
fifteen (15) Business Days following the date of registration of such share capital
increase with the corresponding Commercial Registry; and
the grant of any Financial Debt, any High-Yield Proceeds Loan, any Future
Subordinated Facilities Proceeds Loan or Subordinated Debt subject to a
Subordination Commitment as referred to in paragraphs (ii) to (iv) above, the
Obligors undertake to co-operate and take all actions as may be necessary in order to
ensure that the relevant Parent Companies or creditors create, in favour of the Secured
Parties, a first ranking pledge over any credit rights arising under such Financial Debt,
High-Yield Proceeds Loan, Future Subordinated Facilities Proceeds Loan or
Subordinated Debt not later than one (1) month following the execution of the
agreements documenting such additional Financial Debt, High-Yield Proceeds Loan,
Future Subordinated Facilities Proceeds Loan or Subordinated Debt.
(b)
Obligors: The Obligors shall (subject to paragraph (d) below) create or grant, in favour of the Secured
Parties, the following first ranking pledges to secure the obligations undertaken by the Obligors in
connection with the Finance Documents:
(i)
(ii)
a pledge over all credit rights of each Obligor arising at any time under the existing insurance
policies taken out by each Obligor (and, in the event that new insurance policies are taken out
by any Obligor, such Obligor undertakes to create, in favour of the Secured Parties, a first rank
pledge over any credit rights arising under such additional insurance policies not later than one
(1) month following their date of execution); and
Cableuropa shall create or grant a pledge over the credit rights arising under the Insurance
Account, the Asset Transfer Account and the Mandatory Prepayment Account.
(c)
Security over shares in Material Subsidiaries: If, after the Closing Date, other Material Subsidiaries
become part of the Group or if any Group company becomes a Material Subsidiary then to secure the
obligations undertaken by the Obligors in connection with the Finance Documents the Obligors, subject to
sub paragraph (i) below, shall execute (or, if applicable, shall cause any Parent Company, as the case may
be, to execute):
(i)
in the case of any Material Subsidiary incorporated in Spain, a notarial deed for the creation
(with, if legally required, the prior approval by the General Shareholders Meeting, Junta
General de Accionistas or Junta General de Socios of any such Material Subsidiary which is not
a wholly-owned company) in favour of the Secured Parties, of a first ranking pledge on all the
shares representing at any time one hundred per cent (100%) of the capital stock of that Material
Subsidiary owned by them, substantially in the form of the pledge agreement agreed between
the Company and the Agent as at the Signing Date (with such amendments as may be necessary
if the pledged capital stock is divided into participations (participaciones sociales), or if Law
5/2006, of May 10, from the Parliament of Catalonia about Security Interests, is applicable),
provided that:
(A)
the notarial deed referred to above shall be executed within a period not to exceed
fifteen (15) Business Days (or sixty (60) days if a General Shareholders Meeting is
required to take place in accordance with the above) following the earlier of:
(1) the date on which the relevant Compliance Certificate is delivered,
demonstrating that the company has become a Material Subsidiary;
(2) the acquisition date of the shares in the capital stock of the Material
Subsidiary; or
(3) the date of registration of any share capital increase in such Material
Subsidiary with the corresponding Commercial Registry; and
(B)
in the event that the Material Subsidiary becomes part of the Group as a result of
having been acquired under a Permitted Acquisition, such notarial deeds creating a
pledge shall be executed to secure such obligations under the Finance Documents as
may be legally secured; and
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(ii)
in the case of any Material Subsidiary incorporated in a jurisdiction other than Spain, a first
ranking pledge in favour of the Secured Parties over all the shares representing at any time one
hundred per cent. (100%) of the capital stock of that Material Subsidiary owned by them, on
substantially the same commercial terms as the Spanish law pledge agreement agreed between
the Company and the Agent as at the Signing Date (with, if legally required, the prior approval
of the shareholders any such Material Subsidiary which is not a wholly-owned company and, if
the Material Subsidiary becomes part of the Group as a result of a Permitted Acquisition,
securing such obligations under the Finance Documents as may be legally secured),
and further provided that the obligations set out in this paragraph (c) shall not apply as long as a Release
Event continues to be in effect.
(d)
Mortgage: The Company undertakes to create a first ranking chattel mortgage (hipoteca mobiliaria) (or an
equivalent Security in the case of an Obligor incorporated in a jurisdiction other than Spain) over the
telecommunications network owned by it, to secure the obligations undertaken by the Obligors in
connection with the Finance Documents, at the request of the Agent following the instructions of the
Majority Lenders upon the occurrence of an Event of Default (as long as such Event of Default is not
remedied within the maximum period set forth in Clause 25 (Events of Default), if applicable, or
otherwise waived by the Lenders) in accordance with the following:
(i)
(ii)
(iii)
(iv)
following such a request from the Agent, the Company will be required to appear before a
notary within a period of ten (10) Business Days, starting from the date of the relevant request,
in order to provide the corresponding chattel mortgage, and the Company undertakes to execute
whatever notarised or private document as may be necessary in order to create the
corresponding chattel mortgage and to obtain its registration with the corresponding public
registries, including any documents of rectification, correction or addition;
all expenses and taxes associated with the creation and perfection of the said chattel mortgage
shall be for the Company’s account;
the Parties expressly agree that the chattel mortgage which the Company has undertaken to
provide pursuant to the above paragraph may only secure a maximum amount equal to the book
value of the network at the time in which such security is to be granted; and
the Company has executed an irrevocable power of attorney in favour of the Agent including
powers of self-contracting, so that the Agent can create the chattel mortgage in accordance with
these provisions for and on behalf of the Company and in favour of the Secured Parties and, in
the event that the Company has not created it on the terms and conditions laid down herein, can
take whatever steps and execute whatever documents may be necessary for the valid creation of
the aforementioned chattel mortgage, and for its registration with the corresponding public
registries where appropriate.
(e)
Release of Transaction Security:
(i)
(ii)
(iii)
(iv)
If a Release Event occurs and for so long as it is continuing, all Transaction Security referred to
in this Clause 24.3 shall be released except for the pledge of the shares representing one
hundred per cent (100%) of the share capital of Cableuropa and any pledge of credit rights
arising under the Shareholder Loans (excluding Holding Issuance Loans).
Upon the occurrence of a Release Event, Cableuropa shall send a written instrument to the
Agent for notice thereof to be given to the other Lenders, requesting the release of certain
security interests, provided that: (A) all representations and warranties which are deemed to be
made as at the release date, are true and correct; (B) no Event of Default is continuing;
(C) Cableuropa has notified the Agent of the request for the release of security interests not less
than thirty (30) Business Days prior to the effective date thereof; and (D) each of the Obligors
(or grantor of the Transaction Security) requesting the release of any of the Transaction Security
shall have granted the irrevocable power of attorney established in paragraph (f) below.
The release of the Transaction Security shall not be effective until the Agent confirms to
Cableuropa in writing that the requirements have been complied with. Such confirmation shall,
if applicable, be made within three (3) Business Days prior to the effective date thereof.
If the Release Event ceases, the respective Obligors (or grantors of the Transaction Security)
shall create the first ranking in rem Transaction Security interests over the assets or rights that
had been released within five (5) Business Days following request by the Agent.
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(f)
Irrevocable power of attorney of the Obligors: Each Obligor shall, as a condition precedent to the release
of Transaction Security under paragraph (e) above, grant to the Agent an irrevocable power of attorney
authorising it to create in rem rights, substantially in the form agreed between the Company and the Agent
at the Signing Date and:
(i)
(ii)
the Agent may demand that each Obligor create such Transaction Security as the Agent may
specify (including any Transaction Security which would have been required to be created
during the period in which the Release Event was continuing, but for the occurrence of that
Release Event) if the Release Event that led to the release of the security interests pursuant to
paragraph (e) above (or, as the case may be, which exempted the relevant Obligor from the
requirement to create such Transaction Security) has ceased, in which case such Obligor shall
constitute and perfect such security interests within not more than five (5) Business Days of the
written request to do so from the Agent to that Obligor.;
if an Obligor fails to comply with sub paragraph (i), the Agent under the above power of
attorney, applying criteria of reasonability and proportionality, may create new Transaction
Security, which shall, in no event, be less favourable than the Transaction Security previously
released as a consequence of a Release Event.
25. EVENTS OF DEFAULT
25.1 Events of Default
Each of the following events or circumstances set out in this Clause 24.1 is an Event of Default.
(a)
(b)
(c)
Non-payment: If any Obligor fails to pay, on the respective due dates, any amount owed under this
Agreement or under any other Finance Document, including any amounts owed on account of principal
(whether by ordinary payment or prepayment), interest (whether ordinary, substitute or default), fees,
expenses or cancellation costs of any kind agreed herein or in the other Finance Documents, unless (i) the
only reason for the unpaid amount is the existence of technical problems, and (ii) this circumstance is
entirely remedied within three (3) Business Days of the date on which such payment should have been
made.
Other obligations: If any of the Obligors defaults on any obligation (other than a payment obligation or
the obligations under Clause 23 (Financial covenants)) assumed in the Finance Documents and such
default is not fully remedied within fifteen (15) Business Days of the date on which the Agent notifies
Cableuropa of the existence of such default.
Financial covenants: If any of the Financial Covenants is breached, and such breach, if capable of
remedy, is not fully remedied to the satisfaction of the Agent within ten (10) Business Days of the date on
which the relevant Obligor delivers Consolidated Quarterly Financial Statements pursuant to (and as
defined in) paragraph (b) of Clause 22.1 (Financial information)) and the related Compliance Certificate
pursuant to Clause 22.2 (Compliance Certificates), in accordance with the following:
(i)
(ii)
(iii)
(iv)
any such remedy shall be by way of the investment of further Equity from the Parent Companies
or Shareholder Loans sufficient to reduce Total Debt for the purpose of the Financial Covenants
if such Equity or Shareholder Loans had been invested by the end of the Testing Period in
which the Financial Covenant test or tests were not satisfied to a level at which such test or tests
would have been satisfied; and
to the extent that any such Equity or Shareholder Loan is invested in a particular Testing Period
to prevent a test or tests in a previous Testing Period from being breached, that investment shall
be deemed to have taken place on the last day of that prior Testing Period for the purpose of the
Financial Covenants;
such Equity or Shareholder Loan shall not count retroactively towards any other permission or
usage under or in respect of the Finance Documents and, in respect of any period before the date
on which the proceeds of such Equity or Shareholder Loan were actually received by the Group,
shall not be taken into account in calculating the Margin; and
if any test is satisfied when subsequently tested following a breach of that Financial Covenant,
that breach and any resulting Event of Default under this paragraph (c) shall be deemed not to
have occurred,
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ut provided that:
(A)
(B)
the equity cure rights set out in this paragraph (c) may not be exercised more than
three times in total during the life of the Facilities and may not be exercised in two
consecutive Testing Periods; and
at least fifty per cent. (50%) of any amount invested under this paragraph (c) must be
applied by the Company in prepayment of the Term Facilities pro rata (subject to the
proviso below) and, thereafter, in cancellation and prepayment of the Revolving
Facility (provided that no such amount may be applied to any SPV Tranche unless
(1) the only Facilities then outstanding are SPV Tranches and (2) the Revolving
Facility has been repaid and cancelled in full).
(d)
(e)
(f)
(g)
(h)
Authorisations: If any current or future Authorisation necessary for the validity, binding force and full
enforceability of any of the Finance Documents is not granted, renewed or complied with so that the
performance of all or some of the obligations assumed in the Finance Documents at any time is or might
be unlawful or no longer valid, binding and enforceable for any Obligor. In particular, if any material
Licence required for the development of the business of the Material Subsidiaries is not granted or, having
been granted, is cancelled, revoked or amended so that such event causes a Material Adverse Change.
Misrepresentation: If any of the representations and warranties made by the Obligors in this Agreement or
in the other Finance Documents, whether referring to the date on which they were made or to the moment
when such representations and warranties are deemed to be repeated, is false, incorrect, inaccurate and
such lack of veracity, incorrectness or inaccuracy, if capable of remedy, is not fully cured within a period
of fifteen (15) Business Days of the date on which the respective representation and warranty was made or
was deemed to have been repeated.
Insolvency: If any of the Material Subsidiaries or Parent Companies files a request for a moratorium or an
out-of-court agreement with creditors, or commences with respect to itself or has commenced against it a
voluntary bankruptcy (“concurso”) or analogous insolvency case or proceeding, or if any of the Material
Subsidiaries or the Parent Companies is placed into receivership (“administración judicial”) or is the
subject of seizure or intervention, or if its shares or interests are expropriated or it is unable or admits its
inability to pay its debts as they fall due, or if any other similar action or proceeding, whether judicial or
private, is taken or commenced with analogous effects, or another circumstance occurs that reveals that
any of the Material Subsidiaries or the Parent Companies is or is likely to become insolvent.
Creditors process: If any of the Material Subsidiaries: (i) is obliged, under a final and conclusive court
decision or arbitration award, to pay amounts to third parties which, in the aggregate, exceed fifty million
(€50,000,000) Euros and which are not covered in full or in part by insurance policies, so that the
uncovered portion to be paid exceeds such limit; (ii) generally ceases paying its current liabilities to its
creditors; or (iii) has attachments levied against it, security interests enforced against it or suffers
confiscation or expropriation of assets in an aggregate amount of fifty million (€50,000,000) Euros or more.
Cross default: If any of the following circumstances occurs:
(i)
(ii)
(iii)
any member of the Group fails to perform a payment obligation to any third party not belonging
to the Group under any Financial Debt other than the Finance Documents, and such default is
not fully remedied within five (5) Business Days of the later of (1) the ordinary due date or the
early termination date of such payment obligation; or (2) the expiration date of the grace period
or the cure period, if any, granted for the performance of the respective payment obligation in
the document under which the respective Financial Debt was incurred;
any Financial Debt other than the Finance Documents or any Subordinated Debt subject to a
Subordination Commitment incurred by a member of the Group becomes due and payable (or in
the case of any guarantee of a Debt Instrument by a member of the Group, when a demand is
made on such guarantee in accordance with its terms) prior to its ordinary due date; or
any creditor of a member of the Group declares any Financial Debt other than the Finance
Documents due and payable prior to its specified maturity, unless such Financial Debt is
capitalised by the relevant member of the Group,
and, in any event, provided that the amount of such Financial Debt, individually or together with any other
Financial Debt other than the Finance Documents and any Subordinated Debt subject to a Subordination
Commitment, due and payable prior to its specified maturity, exceeds twenty five million (€25,000,000)
Euros, unless, despite the existence of such event of default, the respective creditor is not empowered to
accelerate its claim under the Financial Debt and demand payment thereof.
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(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
Material Adverse Change: If a Material Adverse Change occurs.
Cessation of business of Group: If a material part of the assets of the Group or a material business unit is
disposed of or transferred or if any of the Material Subsidiaries suspends, discontinues or announces the
suspension or discontinuation of its main business or materially alters it (for the avoidance of doubt
mergers among the Material Subsidiaries or disposals of Non-Core Business will not be deemed covered
by this event).
Material Subsidiaries: If any Material Subsidiary or member of the Group fails to become a Guarantor in
the terms, manner and within the deadlines established in this Agreement, or if the shares or participations
representing the capital stock of a Material Subsidiary owned by an Obligor are not pledged in favour of
the Lenders in the terms, manner and within the deadlines established herein.
Cessation of business of Obligors or Parent Companies: If any of the Obligors or of the Parent
Companies (unless its assets and obligations are fully assumed by any other Parent Company by means of
a full transfer of assets and liabilities—“sucesión universal”—) ceases its main business activities or
agrees to its dissolution or winding-up, except where such circumstance occurs in accordance with the
rules set forth in this Agreement (for the avoidance of doubt mergers among the Obligors or disposals of
Non-Core Business will not be deemed covered by this event).
Valid security: If any of the Security Agreements ceases to be a valid first ranking in rem security interest
on the assets or rights to which it attaches, in respect of any other creditors (except for creditors having a
preference by operation of law) or any circumstances arise that prevent, might prevent, prejudice or hinder
the effectiveness of any guarantee created thereby or the priority rank thereof (subject to the Legal
Reservations). This event shall not apply during a Release Event in respect of all Security Agreements
other than the pledge of shares of Cableuropa and the pledge of credit rights arising under Shareholder
Loans (excluding Holding Issuance Loans).
Legal valid and binding obligations: If the obligations of any of the Obligors under a Finance Document
cease to be legal, valid and binding at any time (subject to the Legal Reservations).
Transaction Security: If the Transaction Security is not granted and perfected within the deadline set forth
in this Agreement, or is cancelled or revoked other than in accordance with this Agreement before the
Final Maturity Date.
Midco, ONO Finance II plc and any issuers of Future High-Yield Notes: If:
(i)
(ii)
Midco, ONO Finance II plc and any other relevant issuers of Future High-Yield Notes or Parent
Companies fail to create Security as provided in Clause 24.3 (Transaction Security) within the
deadline set forth therein; or
ONO Finance II plc or any other relevant issuers of Future High-Yield Notes has, at any time,
other outstanding debts under loan, credit, discount or overdraft agreements (except for any
Future High-Yield Notes, the loans granted to companies of the Group in connection with any
Financial Debt permitted under the terms of the indentures of the Existing High-Yield Notes).
(q)
(r)
(s)
(t)
Debt Instruments: If a default occurs under any Debt Instrument in accordance with the terms of the
documentation governing such instrument.
Unlawfulness and invalidity: If it is or becomes unlawful for an Obligor, ONO Finance II plc, any issuer
of Future High-Yield Notes, any borrower of Future Subordinated Facilities or any other person that is a
party to the Intercreditor Agreement or a Subordination Commitment to perform any of its obligations
under the Finance Documents or any Transaction Security created or expressed to be created or evidenced
by the Transaction Security Documents ceases to be effective or any subordination created under the
Intercreditor Agreement or that Subordination Commitment is or becomes unlawful.
Repudiation and rescission of agreements: If an Obligor rescinds or purports to rescind or repudiates or
purports to repudiate a Finance Document or any of the Transaction Security or evidences an intention to
rescind or repudiate a Finance Document or any Transaction Security.
Expropriation: If the authority or ability of any member of the Group to conduct its business is limited or
wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or
other action by or on behalf of any governmental, regulatory or other authority or other person in relation
to any member of the Group or all or substantially all of its assets.
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25.2 Acceleration
(a)
On and at any time after the occurrence of an Event of Default which is continuing the Agent may, and
shall if so directed by the Majority Lenders, by notice to the Company:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
cancel the Total Commitments and/or Ancillary Commitments at which time they shall
immediately be cancelled;
declare that all or part of the Loans, together with accrued interest, and all other amounts
accrued or outstanding under the Finance Documents be immediately due and payable, at which
time they shall become immediately due and payable;
declare that all or part of the Loans be payable on demand, at which time they shall immediately
become payable on demand by the Agent on the instructions of the Majority Lenders;
declare all or any part of the amounts (or cash cover in relation to those amounts) outstanding
under the Ancillary Facilities to be immediately due and payable at which time they shall
become immediately due and payable;
declare that all or any part of the amounts (or cash cover in relation to those amounts)
outstanding under the Ancillary Facilities be payable on demand, at which time they shall
immediately become payable on demand by the Agent on the instructions of the Majority
Lenders; and/or
exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or
discretions under the Finance Documents.
(b)
On the acceleration of any Debt Instrument in accordance with the terms of the documentation governing
such instrument prior to its stated maturity, the Agent shall automatically (and without requiring any
specific approval from the Lenders):
(i)
(ii)
(iii)
(iv)
(v)
(vi)
cancel the Total Commitments and/or Ancillary Commitments at which time they shall
immediately be cancelled;
declare that all or part of the Loans, together with accrued interest, and all other amounts
accrued or outstanding under the Finance Documents be immediately due and payable, at which
time they shall become immediately due and payable;
declare that all or part of the Loans be payable on demand, at which time they shall immediately
become payable on demand by the Agent on the instructions of the Majority Lenders;
declare all or any part of the amounts (or cash cover in relation to those amounts) outstanding
under the Ancillary Facilities to be immediately due and payable at which time they shall
become immediately due and payable;
declare that all or any part of the amounts (or cash cover in relation to those amounts)
outstanding under the Ancillary Facilities be payable on demand, at which time they shall
immediately become payable on demand by the Agent on the instructions of the Majority
Lenders; and/or
exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or
discretions under the Finance Documents.
25.3 SPV Tranches
(a)
(b)
At any such time that the only amounts outstanding under the Finance Documents are under or in respect
of SPV Tranche Loans, the Obligors under this Agreement may agree to accede to the underlying Debt
Instruments as primary obligors, co-issuers or guarantors and grant Security equivalent to the Transaction
Security to such Debt Instruments, in each case in accordance with the terms thereof.
Upon the completion of such accession and granting of such Security, this Agreement shall be terminated
and the Obligors shall not be required to pay any amounts then due (such amounts having been replaced
by the obligation to pay the debt under the relevant Debt Instruments).
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SECTION 9
CHANGES TO PARTIES
26. CHANGES TO THE LENDERS
26.1 Assignments and transfers by the Lenders
Subject to this Clause 26, a Lender (the “Existing Lender”) may:
(a)
(b)
assign any of its rights; or
transfer by assignment, assumption and release any of its rights and obligations,
under any Finance Document to another bank or financial institution or to a trust, fund or other entity which is
regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other
financial assets (the “New Lender”).
26.2 Conditions of assignment or transfer
(a)
(b)
(c)
(d)
An Existing Lender (other than an SPV) may make an assignment of any of its rights or a transfer by way
of assignment, assumption and release of any of its rights or obligations under any Finance Document to
an Eligible Lender, subject to notice being given to the Company.
No member of the Group shall be required to indemnify any Existing Lender or New Lender for any cost
(including any increase in Mandatory Cost) which results from an assignment or transfer.
An assignment or transfer of part of a Lender’s participation must be in an amount such that the Base
Currency Amount of that Lender’s remaining participation (when aggregated with its Affiliates’ and
Related Funds’ participation) in respect of Commitments or Utilisations is in a minimum amount of
€1,000,000 or reduced to zero.
An assignment will only be effective on:
(i)
(ii)
receipt by the Agent (whether in the Assignment Agreement or otherwise) of written
confirmation from the New Lender (in form and substance satisfactory to the Agent) that the
New Lender will assume the same obligations to the other Finance Parties and the other Secured
Parties as it would have been under if it was an Original Lender (subject to paragraph (c) of
Clause 29.1 (Appointment of the Agent)); and
the New Lender entering into the documentation required for it to accede as a party to the
Intercreditor Agreement.
(e)
If:
(i)
(ii)
a Lender assigns or transfers any of its rights or obligations under the Finance Documents or
changes its Facility Office; and
as a result of circumstances existing at the date the assignment, transfer or change occurs, an
Obligor would be obliged to make a payment to the New Lender or Lender acting through its
new Facility Office under Clause 16 (Increased Costs),
then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment
under that Clause to the same extent as the Existing Lender or Lender acting through its previous Facility
Office would have been if the assignment, transfer or change had not occurred. This paragraph (f) shall
not apply in respect of an assignment or transfer made in the ordinary course of the primary syndication of
the Facilities.
(f)
Subject to paragraph (c) of Clause 29.1 (Appointment of the Agent), each New Lender, by executing the
relevant Assignment Agreement, confirms, for the avoidance of doubt, that the Agent has authority to
execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite
Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or
assignment becomes effective in accordance with this Agreement and that it is bound by that decision to
the same extent as the Existing Lender would have been had it remained a Lender.
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26.3 Assignment or transfer fee
Unless the Agent otherwise agrees and excluding an assignment or transfer (i) to an Affiliate of a Lender, (ii) to a
Related Fund or (iii) made in connection with primary syndication of the Facilities, the New Lender shall, on the
date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of two thousand
five hundred Euros (€2,500).
26.4 Limitation of responsibility of Existing Lenders
(a)
Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and
assumes no responsibility to a New Lender for:
(i)
(ii)
(iii)
(iv)
the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents, the
Transaction Security or any other documents;
the financial condition of any Obligor;
the performance and observance by any Obligor of its obligations under the Finance Documents
or any other documents; or
the accuracy of any statements (whether written or oral) made in or in connection with any
Finance Document or any other document,
and any representations or warranties implied by law are excluded.
(b)
Each New Lender confirms to the Existing Lender, the other Finance Parties and the Secured Parties that
it:
(i)
(ii)
has made (and shall continue to make) its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related entities in connection with its
participation in this Agreement and has not relied exclusively on any information provided to it
by the Existing Lender or any other Finance Party in connection with any Finance Document or
the Transaction Security; and
will continue to make its own independent appraisal of the creditworthiness of each Obligor and
its related entities whilst any amount is or may be outstanding under the Finance Documents or
any Commitment is in force.
(c)
Nothing in any Finance Document obliges an Existing Lender to:
(i)
(ii)
accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations
assigned or transferred under this Clause 26; or
support any losses directly or indirectly incurred by the New Lender by reason of the
non-performance by any Obligor of its obligations under the Finance Documents or otherwise.
26.5 Procedure for assignment
(a)
(b)
(c)
Subject to the conditions set out in Clause 26.2 (Conditions of assignment or transfer) an assignment may
be effected in accordance with paragraph (c) below when the Agent executes an otherwise duly completed
Assignment Agreement delivered to it by the Existing Lender and the New Lender. The Agent shall,
subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed
Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in
accordance with the terms of this Agreement, execute that Assignment Agreement.
The Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing
Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer”
or other similar checks under all applicable laws and regulations in relation to the assignment to such New
Lender.
On the Transfer Date:
(i)
the Existing Lender will assign absolutely to the New Lender its rights under the Finance
Documents and in respect of the Transaction Security expressed to be the subject of the
assignment in the Assignment Agreement;
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(ii)
(iii)
(iv)
(v)
the New Lender will assume obligations equivalent to those obligations of the Existing Lender
expressed to be the subject of the assumption in the Assignment Agreement;
to the extent the obligations referred to in sub paragraph (ii) above are effectively assumed by
the New Lender, the Existing Lender will be released from the obligations (the “Relevant
Obligations”) expressed to be the subject of the release in the Assignment Agreement (and any
corresponding obligations by which it is bound in respect of the Transaction Security);
the New Lender shall become a Party as a “Lender” and will be bound by obligations equivalent
to the Relevant Obligations; and
if the assignment relates only to part of a Loan owing to the Existing Lender, that part will be
separated from that Existing Lender’s Loan, made an independent debt, and assigned to the New
Lender as a whole debt.
(d)
Lenders may utilise procedures other than those set out in this Clause 26.5 to assign their rights under the
Finance Documents (but not, without the consent of the relevant Obligor, to obtain a release by that
Obligor from the obligations owed to that Obligor by the Lenders nor the assumption of equivalent
obligations by a New Lender) provided that they comply with the conditions set out in Clause 26.2
(Conditions of assignment or transfer).
26.6 Copy of Assignment Agreement, Increase Confirmation, Relevant Facility Lender Accession Agreement or
Relevant Facility Lender Increase Certificate to Company
The Agent shall within five (5) Business Days after it has executed an Assignment Agreement, an Increase
Confirmation Relevant Facility Lender Accession Agreement or Relevant Facility Lender Increase Certificate send
to the Company a copy of that Assignment Agreement, Increase Confirmation, Relevant Facility Lender Accession
Agreement or Relevant Facility Lender Increase Certificate.
26.7 Security over Lenders’ rights
In addition to the other rights provided to Lenders under this Clause 26, each Lender may without consulting with or
obtaining consent from any Obligor, at any time charge, assign or otherwise create Security in or over (whether by
way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that
Lender including, without limitation:
(a)
(b)
any charge, assignment or other Security to secure obligations to a federal reserve or central bank; and
in the case of any Lender which is a fund, any charge, assignment or other Security granted to any holders
(or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as
security for those obligations or securities,
except that no such charge, assignment or Security shall:
(i)
(ii)
release a Lender from any of its obligations under the Finance Documents or substitute the
beneficiary of the relevant charge, assignment or other Security for the Lender as a party to any
of the Finance Documents; or
require any payments to be made by an Obligor or grant to any person any more extensive rights
than those required to be made or granted to the relevant Lender under the Finance Documents.
26.8 Pro rata interest settlement
If the Agent has notified the Lenders that it is able to distribute interest payments on a “pro rata basis” to Existing
Lenders and New Lenders then (in respect of any assignment, assumption and release pursuant to Clause 26.5
(Procedure for assignment) the Transfer Date of which, in each case, is after the date of such notification and is not
on the last day of an Interest Period):
(a)
any interest or fees in respect of the relevant participation which are expressed to accrue by reference to
the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer
Date (“Accrued Amounts”) and shall become due and payable to the Existing Lender (without further
interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer
than six Months, on the next of the dates which falls at six Monthly intervals after the first day of that
Interest Period); and
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(b)
the rights assigned or transferred by the Existing Lender will not include the right to the Accrued
Amounts so that, for the avoidance of doubt:
(i)
(ii)
when the Accrued Amounts become payable, those Accrued Amounts will be payable for the
account of the Existing Lender; and
the amount payable to the New Lender on that date will be the amount which would, but for the
application of this Clause 26.8, have been payable to it on that date, but after deduction of the
Accrued Amounts.
27. DEBT PURCHASE TRANSACTIONS
27.1 Permitted Debt Purchase Transactions
(a)
(b)
The Company shall not, and shall procure that each other member of the Group shall not (i) enter into any
Debt Purchase Transaction other than in accordance with the other provisions of this Clause 27 or
(ii) beneficially own all or any part of the share capital of a company that is a Lender or a party to a Debt
Purchase Transaction of the type referred to in paragraphs (b) or (c) of the definition of Debt Purchase
Transaction.
A Borrower may purchase by way of assignment, pursuant to Clause 26 (Changes to the Lenders), a
participation in any Term Loan in respect of which it is the borrower and any related Commitment where:
(i)
(ii)
(iii)
(iv)
such purchase is made for a consideration of less than par;
such purchase is made in accordance with paragraph (c) below;
such purchase is made at a time when no Default is continuing; and
the consideration for such purchase is funded from (1) Retained Excess Cash Flow or (2) Equity
from Parent Companies.
(c)
(i)
(ii)
(iii)
(iv)
A Debt Purchase Transaction referred to in paragraph (b) above may be entered into pursuant to
a solicitation process (a “Solicitation Process”) which is carried out as follows.
Prior to 11.00 am on a given Business Day (the “Solicitation Day”) the Company or a financial
institution acting on its behalf (the “Purchase Agent”) will approach at the same time each
Lender which participates in the relevant Term Facilities to enable them to offer to sell to the
relevant Borrower(s) an amount of their participation in one or more Term Facilities. Any
Lender wishing to make such an offer shall, by 11.00 am on the second Business Day following
such Solicitation Day, communicate to the Purchase Agent details of the amount of its
participations, and in which Term Facilities, it is offering to sell and the price at which it is
offering to sell such participations. Any such offer shall be irrevocable until 11.00 am on the
third Business Day following such Solicitation Day and shall be capable of acceptance by the
Company on behalf of the relevant Borrower(s) on or before such time by communicating its
acceptance in writing to the Purchase Agent or, if it is the Purchase Agent, the relevant Lenders.
The Purchase Agent (if someone other than the Company) will communicate to the relevant
Lenders which offers have been accepted by 12 noon on the third Business Day following such
Solicitation Day. In any event by 11.00 am on the fourth Business Day following such
Solicitation Date, the Company shall notify the Agent of the amounts of the participations
purchased through the relevant Solicitation Process, the identity of the Term Facilities to which
they relate and the average price paid for the purchase of participations in each relevant Term
Facility. The Agent shall disclose such information to any Lender that requests such disclosure.
Any purchase of participations in the Term Facilities pursuant to a Solicitation Process shall be
completed and settled on or before the fifth Business Day after the relevant Solicitation Day.
In accepting any offers made pursuant to a Solicitation Process the Company shall be free to
select which offers and in which amounts it accepts but on the basis that in relation to a
participation in a particular Term Facility it accepts offers in inverse order of the price offered
(with the offer or offers at the lowest price being accepted first) and that if in respect of
participations in a particular Term Facility it receives two or more offers at the same price it
shall only accept such offers on a pro rata basis.
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(d)
(i)
(ii)
(iii)
(iv)
(v)
A Debt Purchase Transaction referred to in paragraph (b) above may also be entered into
pursuant to an open order process (an “Open Order Process”) which is carried out as follows.
The Company (on behalf of the relevant Borrower(s)) may by itself or through another Purchase
Agent place an open order (an “Open Order”) to purchase participations in one or more of the
Term Facilities up to a set aggregate amount at a set price by notifying at the same time all the
Lenders participating in the relevant Term Facilities of the same. Any Lender wishing to sell
pursuant to an Open Order will, by 11.00 am on any Business Day following the date on which
the Open Order is placed but no earlier than the first Business Day, and no later than the fifth
Business Day, following the date on which the Open Order is placed, communicate to the
Purchase Agent details of the amount of its participations, and in which Term Facilities, it is
offering to sell. Any such offer to sell shall be irrevocable until 11.00 am on the Business Day
following the date of such offer from the Lender and shall be capable of acceptance by the
Company on behalf of the relevant Borrower(s) on or before such time by it communicating
such acceptance in writing to the relevant Lender.
Any purchase of participations in the Term Facilities pursuant to an Open Order Process shall
be completed and settled by the relevant Borrower(s) on or before the fourth Business Day after
the date of the relevant offer by a Lender to sell under the relevant Open Order.
If in respect of participations in a Term Facility the Purchase Agent receives on the same
Business Day two or more offers at the set price such that the maximum amount of such Term
Facility to which an Open Order relates would be exceeded, the Company shall only accept such
offers on a pro rata basis.
The Company shall, by 11.00 am on the sixth Business Day following the date on which an
Open Order is placed, notify the Agent of the amounts of the participations purchased through
such Open Order Process and the identity of the Term Facilities to which they relate. The Agent
shall disclose such information to any Lender that requests the same.
(e)
(f)
For the avoidance of doubt, there is no limit on the number of occasions a Solicitation Process or an Open
Order Process may be implemented.
In relation to any Debt Purchase Transaction entered into pursuant to this Clause 27.1, notwithstanding
any other term of this Agreement or the other Finance Documents:
(i)
(ii)
(iii)
on completion of the relevant assignment pursuant to Clause 26 (Changes to the Lenders), the
portions of the Term Loans to which it relates shall be extinguished and any related Repayment
Instalments will be reduced pro-rata accordingly;
such Debt Purchase Transaction and the related extinguishment referred to in paragraph
(i) above shall not constitute a prepayment of the Facilities;
the Borrower which is the assignee shall be deemed to be an entity which fulfils the
requirements of Clause 26.1 (Assignments and transfers by the Lenders) to be a New Lender (as
defined in such Clause);
(iv) no member of the Group shall be deemed to be in breach of any provision of Clause 24
(General Undertakings) solely by reason of such Debt Purchase Transaction;
(v)
(vi)
Clause 31 (Sharing among the Finance Parties) shall not be applicable to the consideration paid
under such Debt Purchase Transaction; and
for the avoidance of doubt, any extinguishment of any part of the Term Loans shall not affect
any amendment or waiver which prior to such extinguishment had been approved by or on
behalf of the requisite Lender or Lenders in accordance with this Agreement.
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27.2 Disenfranchisement on Debt Purchase Transactions entered into by Sponsor Affiliates
(a)
For so long as a Sponsor Affiliate (i) beneficially owns a Commitment or (ii) has entered into a
sub-participation agreement relating to a Commitment or other agreement or arrangement having a
substantially similar economic effect and such agreement or arrangement has not been terminated:
(i)
(ii)
in ascertaining the Majority Lenders or whether any given percentage (including, for the
avoidance of doubt, unanimity) of the Total Commitments has been obtained to approve any
request for a consent, waiver, amendment or other vote under the Finance Documents, such
Commitment shall be deemed to be zero; and
for the purposes of Clause 38.2 (Exceptions), such Sponsor Affiliate or the person with whom it
has entered into such sub-participation, other agreement or arrangement shall be deemed not to
be a Lender (unless in the case of a person not being a Sponsor Affiliate it is a Lender by virtue
otherwise than by beneficially owning the relevant Commitment).
(b)
(c)
Each Lender shall, unless such Debt Purchase Transaction is an assignment or transfer, promptly notify
the Agent in writing if it knowingly enters into a Debt Purchase Transaction with a Sponsor Affiliate (a
“Notifiable Debt Purchase Transaction”), such notification to be substantially in the form set out in Part
I of Schedule 12 (Forms of Notifiable Debt Purchase Transaction Notice).
A Lender shall promptly notify the Agent if a Notifiable Debt Purchase Transaction to which it is a party:
(i)
(ii)
is terminated; or
ceases to be with a Sponsor Affiliate,
such notification to be substantially in the form set out in Part II of Schedule 12 (Forms of Notifiable Debt
Purchase Transaction Notice).
(d)
Each Sponsor Affiliate that is a Lender agrees that:
(i)
(ii)
in relation to any meeting or conference call to which all the Lenders are invited to attend or
participate, it shall not attend or participate in the same if so requested by the Agent or, unless
the Agent otherwise agrees, be entitled to receive the agenda or any minutes of the same; and
in its capacity as Lender, unless the Agent otherwise agrees, it shall not be entitled to receive
any report or other document prepared at the behest of, or on the instructions of, the Agent or
one or more of the Lenders.
28. CHANGES TO THE OBLIGORS
28.1 Assignment and transfers by Obligors
No Obligor or any other member of the Group may assign any of its rights or transfer any of its rights or obligations
under the Finance Documents.
28.2 Additional Borrowers
(a)
After the Closing Date, any member of the Group that is a Material Subsidiary that is incorporated in
Spain may, upon the prior request of Cableuropa to the Agent, become a Borrower under the Facilities,
provided that:
(i)
(ii)
(iii)
(iv)
Cableuropa has served notice on the Agent of the accession of a new Borrower, at least one
(1) month prior to the effective date of such accession;
all of the representations and warranties contained in Clause 21.1 (Representations), which
pursuant to the provisions of paragraph (c) of Clause 21.2 (Times when representations made)
shall be deemed to be made as of the date of accession by the new Borrower, are true and
correct;
no Event of Default has occurred and is continuing or would result from the accession;
in order to secure the obligations assumed by the Borrowers in connection with the Finance
Documents first ranking pledges have been created upon the terms provided in Clause 24.3
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(Transaction Security) over: (i) all shares representing at any time one hundred per cent
(100%) of the capital stock in the new Borrower; (ii) all credit rights of any creditor of
Subordinated Debt subject to a Subordination Commitment against such new Borrower; and
(iii) all credit rights of such new Borrower arising at any time under the insurance policies taken
out by such Borrower;
(v)
(vi)
(vii)
the Material Subsidiary, through Cableuropa, has delivered to the Agent any additional
documents reasonably requested by the Lenders under paragraph (b) of Clause 22.5 (“Know
your customer” checks);
the Material Subsidiary becomes a Guarantor; and
the Agent has received an Accession Deed duly executed by such Material Subsidiary and the
Company before a Notary Public and the Agent has received all of the documents and other
evidence listed in Part III of Schedule 2 (Conditions precedent) in relation to that Additional
Borrower, each in form and substance satisfactory to the Agent.
(b)
The Material Subsidiary’s accession as an Additional Borrower shall not take effect until the Agent has
confirmed compliance with the requirements set out in paragraph (a) above in a written notice to the
Company (such notice to be served within three (3) Business Days prior to the proposed effective date of
such accession.
28.3 Resignation of a Borrower
(a)
(b)
(c)
In this Clause 28.3, Clause 28.5 (Resignation of a Guarantor) and Clause 28.7 (Resignation and release of
Security on disposal), “Third Party Disposal” means the disposal of an Obligor to a person which is not
a member of the Group where that disposal is permitted under paragraph (r) (No disposals) of Clause 24.2
(Negative covenants) or made with the approval of the Majority Lenders (and the Company has confirmed
this is the case).
If a Borrower is the subject of a Third Party Disposal, the Company may request that such Borrower
(other than the Company) ceases to be a Borrower by delivering to the Agent a Resignation Letter.
The Agent shall accept a Resignation Letter and notify the Company and the other Finance Parties of its
acceptance if:
(i)
(ii)
(iii)
(iv)
the Company has confirmed that no Default is continuing or would result from the acceptance
of the Resignation Letter;
the Borrower is under no actual or contingent obligations as a Borrower under any Finance
Documents;
where the Borrower is also a Guarantor (unless its resignation has been accepted in accordance
with Clause 28.5 (Resignation of a Guarantor)), its obligations in its capacity as Guarantor
continue to be legal, valid, binding and enforceable and in full force and effect (subject to the
Legal Reservations) and the amount guaranteed by it as a Guarantor is not decreased (and the
Company has confirmed this is the case); and
the Company has confirmed that it shall ensure that any relevant Disposal Proceeds will be
applied in accordance with paragraph (d) of Clause 9.2 (Mandatory prepayment events)).
(d)
Upon notification by the Agent to the Company of its acceptance of the resignation of a Borrower, that
company shall cease to be a Borrower and shall have no further rights or obligations under the Finance
Documents as a Borrower except that the resignation shall not take effect (and the Borrower will continue
to have rights and obligations under the Finance Documents) until the date on which the Third Party
Disposal takes effect.
28.4 Additional Guarantors
(a)
Subject to compliance with the provisions of paragraph (b) of Clause 22.5 (“Know your customer”
checks), the Company may request that any of its Subsidiaries become a Guarantor.
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(b)
(c)
The Company shall procure that any other member of the Group which is required by sub paragraph (ii) of
paragraph (m) (Material Subsidiaries) of Clause 24.1 (Positive covenants) to become a Guarantor shall
become an Additional Guarantor and grant Security as required by Clause 24.3 (Transaction Security).
A member of the Group shall become an Additional Guarantor if:
(i)
(ii)
(iii)
the Company and the proposed Additional Guarantor deliver to the Agent a duly completed and
executed Accession Deed executed before a Notary Public within a period not exceeding fifteen
(15) Business Days (or, if the approval of a General Shareholders Meeting is required as
contemplated by sub paragraph (ii) below, sixty (60) days) from the earlier of (i) the date on
which a Compliance Certificate demonstrating that the company has become a Material
Subsidiary is delivered pursuant to Clause 22.2 (Compliance Certificates); (ii) the acquisition
date of the shares or interests representing the capital stock of the Material Subsidiary; or
(iii) the date on which the member of the Group becomes obliged to guarantee any obligations
arising under any Subordinated Debt;
where the member of the Group is not a wholly-owned Subsidiary, the prior approval of the
General Shareholders Meeting (Junta General de Accionistas or Junta General de Socios) is
obtained, if legally required; and
the Agent has received all of the documents and other evidence listed in Part III and, if
applicable, Part IV of Schedule 2 (Conditions precedent) in relation to that Additional
Guarantor, each in form and substance satisfactory to the Agent.
(d)
The Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in
form and substance satisfactory to it) all the documents and other evidence listed in Part III of Schedule 2
(Conditions precedent).
28.5 Resignation of a Guarantor
(a)
After the Closing Date, any Guarantor which has ceased to be a Material Subsidiary (except for the
Company and any other Guarantor which is also a Borrower), may by sending a Resignation Letter to the
Agent through Cableuropa for notice thereof to be given to the other Lenders, request the release of the
guarantee provided by it under this Agreement and accordingly, cease to be a Guarantor under the
Documents provided that:
(i)
(ii)
(iii)
(iv)
(v)
Cableuropa has notified the Agent of the request for resignation of a Guarantor at least thirty
(30) days prior to its intended effective date;
all representations and warranties in Clause 21.1 (Representations) which are to be deemed
made as at the date of such Guarantor’s resignation are true and correct;
no Event of Default is continuing or would result from the resignation;
Cableuropa certifies, on the basis of the latest Annual Audited Consolidated Financial
Statements of the Group, that the relevant Guarantor does not meet any of the requirements to
be considered a Material Subsidiary and that it would continue to be in compliance with
paragraph (n) (Obligor Coverage) of Clause 24.1 (Positive covenants) following the resignation
of that Guarantor;
the Guarantor requesting resignation is current in the performance of all its payment obligations
under any and all Finance Documents.
(b)
Such company shall not cease to be a Guarantor until the Agent confirms to Cableuropa in writing that the
requirements of paragraph (a) have been met, which confirmation shall be given, if applicable, not less
than three (3) Business Days prior to the proposed effective date of such resignation.
28.6 Repetition of Representations
Delivery of an Accession Deed constitutes confirmation by the relevant Subsidiary that the representations and
warranties referred to in paragraph (c) of Clause 21.2 (Times when representations made) are true and correct in
relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.
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28.7 Resignation and release of Security on disposal
If a Borrower or Guarantor is or is proposed to be the subject of a Third Party Disposal then:
(a)
(b)
(c)
where that Borrower or Guarantor created Transaction Security over any of its assets or business in favour
of the Security Agent, or Transaction Security in favour of the Security Agent was created over the shares
(or equivalent) of that Borrower or Guarantor, the Security Agent may, at the cost and request of the
Company, release those assets, business or shares (or equivalent);
the resignation of that Borrower or Guarantor and related release of Transaction Security referred to in
paragraph (a) above shall not become effective until the date of that disposal; and
if the disposal of that Borrower or Guarantor is not made, the Resignation Letter of that Borrower or
Guarantor and the related release of Transaction Security referred to in paragraph (a) above shall have no
effect and the obligations of the Borrower or Guarantor and the Transaction Security created or intended
to be created by or over that Borrower or Guarantor shall continue in such force and effect as if that
release had not been effected.
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SECTION 10
THE FINANCE PARTIES
29. ROLE OF THE AGENT, THE ARRANGER AND OTHERS
29.1 Appointment of the Agent
(a)
(b)
(c)
Subject to paragraph (c) below, each of the Arranger and the Lenders appoints the Agent to act as its agent
under and in connection with the Finance Documents.
Subject to paragraph (c) below, each of the Arranger and the Lenders authorises the Agent to exercise the
rights, powers, authorities and discretions specifically given to the Agent under or in connection with the
Finance Documents together with any other incidental rights, powers, authorities and discretions.
Each Finance Party which is unable to authorise the Agent to carry out, execute, effect or perform any
exercise of their rights, powers, authorities under the Finance Documents, including but not limited to the
execution of any document, any amendment, release, waiver or other consent under a Finance Document
on its behalf under this Clause 29.1 undertakes:
(i)
(ii)
to appear with the Agent to effect any amendment or waiver permitted in accordance with
Clause 38 (Amendments and waivers), any release permitted by the Finance Documents or to
execute any other document or, otherwise, to grant a power of attorney in favour of the Agent,
so that the Agent can effect such amendment, waiver or release, or execute such document, on
behalf of that Finance Party; and
to abide by and act, or refrain from acting, in accordance with any decision of the Majority
Lenders (or, as the case may be, any other group of Lenders) made in accordance with any
Finance Document,
29.2 Duties of the Agent
provided that any failure on the part of any Finance Party to comply with sub paragraphs (i) and (ii) above
shall not affect any decision of the Majority Lenders (or any group of Lenders permitted by Clause 38.3
(Structural Adjustments) to approve a Structural Adjustment) made in accordance with this Agreement
with respect to any amendment or waiver or other consent under a Finance Document.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Subject to paragraph (b) below, the Agent shall promptly forward to a Party the original or a copy of any
document which is delivered to the Agent for that Party by any other Party.
Without prejudice to Clause 26.6 (Copy of Assignment Agreement, Increase Confirmation, Relevant
Facility Lender Accession Agreement or Relevant Facility Lender Increase Certificate to Company),
paragraph (a) above shall not apply to any Assignment Agreement, any Increase Confirmation any
Relevant Facility Lender Accession Agreement or any Relevant Facility Lender Increase Certificate.
Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or
check the adequacy, accuracy or completeness of any document it forwards to another Party.
If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that
the circumstance described is a Default, it shall promptly notify the other Finance Parties.
If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable
to a Finance Party (other than the Agent, the Arranger or the Security Agent) under this Agreement it shall
promptly notify the other Finance Parties.
The Agent shall provide to the Company within two (2) Business Days of a request by the Company (but
in any event once per calendar month), a list (which may be in electronic form) setting out the names of
the Lenders, their respective Commitments, the address and fax number (and the department or officer, if
any, for whose attention any communication is to be made) of each Lender for any communication to be
made or document to be delivered under or in connection with the Finance Documents, the electronic mail
address and/or any other information required to enable the sending and receipt of information by
electronic mail or other electronic means to and by each Lender to whom any communication under or in
connection with the Finance Documents may be made by that means and the account details of each
Lender for any payment to be distributed by the Agent to that Lender under the Finance Documents.
The Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.
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29.3 Role of the Arranger
Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other
Party under or in connection with any Finance Document.
29.4 No fiduciary duties
(a)
(b)
Nothing in this Agreement constitutes the Agent or the Arranger as a trustee or fiduciary of any other
person.
None of the Agent, the Security Agent, the Arranger or any Ancillary Lender shall be bound to account to
any Lender for any sum or the profit element of any sum received by it for its own account.
29.5 Business with the Group
The Agent, the Security Agent, the Arranger and each Ancillary Lender may accept deposits from, lend money to
and generally engage in any kind of banking or other business with any member of the Group.
29.6 Rights and discretions
(a)
The Agent may rely on:
(i)
(ii)
any representation, notice or document (including, without limitation, any notice given by a
Lender pursuant to paragraph (b) or (c) of Clause 27.2 (Disenfranchisement on Debt Purchase
Transactions entered into by Sponsor Affiliates)) believed by it to be genuine, correct and
appropriately authorised; and
any statement made by a director, authorised signatory or employee of any person regarding any
matters which may reasonably be assumed to be within his knowledge or within his power to
verify.
(b)
The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the
Lenders) that:
(i)
(ii)
(iii)
(iv)
no Default has occurred (unless it has actual knowledge of a Default arising under
paragraph (a) (Non-payment) of Clause 25.1 (Events of Default);
any right, power, authority or discretion vested in any Party or the Majority Lenders has not
been exercised;
any notice or request made by the Company (other than a Utilisation Request or Selection
Notice) is made on behalf of and with the consent and knowledge of all the Obligors; and
no Notifiable Debt Purchase Transaction:
(A)
(B)
(C)
has been entered into;
has been terminated; or
has ceased to be with a Sponsor Affiliate.
(c)
(d)
(e)
(f)
The Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors
or other experts.
The Agent may act in relation to the Finance Documents through its personnel and agents.
The Agent may disclose to any other Party any information it reasonably believes it has received as agent
under this Agreement.
Without prejudice to the generality of paragraph (e) above, the Agent may disclose the identity of a
Defaulting Lender to the other Finance Parties and the Company and shall disclose the same upon the
written request of the Company or the Majority Lenders.
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(g)
(h)
(i)
Notwithstanding any other provision of any Finance Document to the contrary, none of the Agent or the
Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a
breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.
The Agent is not obliged to disclose to any Finance Party any details of the rate notified to the Agent by
any Lender or the identity of any such Lender for the purpose of paragraph (a)(ii) of Clause 13.2 (Market
disruption).
Each of the Lenders hereby undertakes to provide assistance to and cooperate with the Agent as
necessary, which includes participating in the negotiation and execution of such documents, both public
and private, as may be necessary or advisable for the execution and effectiveness of the agreements
contained in this Agreement and in the other Finance Documents including, if applicable and necessary,
ratifying the actions taken by the Agent in the performance of its obligations under this Agreement.
29.7 Majority Lenders’ instructions
(a)
(b)
(c)
(d)
(e)
Unless a contrary indication appears in a Finance Document, the Agent shall (i) exercise any right, power,
authority or discretion vested in it as Agent in accordance with any instructions given to it by the Majority
Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority
or discretion vested in it as Agent) and (ii) not be liable for any act (or omission) if it acts (or refrains from
taking any action) in accordance with an instruction of the Majority Lenders.
Unless a contrary indication appears in a Finance Document, any instructions given by the Majority
Lenders will be binding on all the Finance Parties other than the Security Agent.
The Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if
appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability
(together with any associated VAT) which it may incur in complying with the instructions.
In the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders) the Agent may
act (or refrain from taking action) as it considers to be in the best interest of the Lenders.
The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in
any legal or arbitration proceedings relating to any Finance Document. This paragraph (e) shall not apply
to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under
the Security Agreements or enforcement of the Transaction Security or Security Agreements.
29.8 Responsibility for documentation
None of the Agent, the Arranger or any Ancillary Lender:
(a)
(b)
is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or
written) supplied by the Agent, the Arranger, an Ancillary Lender, an Obligor or any other person given in
or in connection with any Finance Document or the transactions contemplated in the Finance Documents;
is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document
or the Transaction Security or any other agreement, arrangement or document entered into, made or
executed in anticipation of or in connection with any Finance Document or the Transaction Security.
29.9 Exclusion of liability
(a)
(b)
Without limiting paragraph (b) below (and without prejudice to the provisions of paragraph (e) of
Clause 32.11 (Disruption to Payment Systems etc.)), none of the Agent or any Ancillary Lender will be
liable (including, without limitation, for negligence or any other category of liability whatsoever) for any
action taken by it under or in connection with any Finance Document or the Transaction Security, unless
directly caused by its gross negligence or wilful misconduct.
No Party (other than the Agent or an Ancillary Lender) may take any proceedings against any officer,
employee or agent of the Agent or an Ancillary Lender, in respect of any claim it might have against the
Agent or an Ancillary Lender or in respect of any act or omission of any kind by that officer, employee or
agent in relation to any Finance Document and any officer, employee or agent of the Agent or an
Ancillary Lender may rely on this Clause subject to Clause 1.4 (Third party rights) and the provisions of
the Third Parties Act.
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(c)
(d)
The Agent will not be liable for any delay (or any related consequences) in crediting an account with an
amount required under the Finance Documents to be paid by the Agent if the Agent has taken all
necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures
of any recognised clearing or settlement system used by the Agent for that purpose.
Nothing in this Agreement shall oblige the Agent or the Arranger to carry out any “know your customer”
or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Agent
and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may
not rely on any statement in relation to such checks made by the Agent or the Arranger.
29.10 Lenders’ indemnity to the Agent
Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero,
to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent, within
three Business Days of demand, against any cost, loss or liability incurred by the Agent (otherwise than by reason of
the Agent’s gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to
Clause 32.11 (Disruption to Payment Systems etc.) notwithstanding the Agent’s negligence, gross negligence or any
other category of liability whatsoever but not including any claim based on the fraud of the Agent) in acting as
Agent under the Finance Documents (unless the Agent has been reimbursed by an Obligor pursuant to a Finance
Document).
29.11 Resignation of the Agent
(a)
(b)
(c)
(d)
(e)
(f)
(g)
The Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom or
Spain as successor by giving notice to the Lenders and the Company.
Alternatively the Agent may resign by giving 30 days notice to the Lenders and the Company, in which
case the Majority Lenders (with the consent of the Company (not to be unreasonably withheld)) may
appoint a successor Agent.
If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above
within 45 days after notice of resignation was given, or the appointee has not accepted the appointment,
the retiring Agent (with the consent of the Company (not to be unreasonably withheld)) may appoint a
successor Agent (acting through an office in the United Kingdom or Spain).
The retiring Agent shall, at its own cost, make available to the successor Agent such documents and
records and provide such assistance as the successor Agent may reasonably request for the purposes of
performing its functions as Agent under the Finance Documents.
The Agent’s resignation notice shall only take effect upon the appointment of a successor.
Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in
respect of the Finance Documents but shall remain entitled to the benefit of this Clause 29. Any successor
and each of the other Parties shall have the same rights and obligations amongst themselves as they would
have had if such successor had been an original Party.
If the Agent resigns in accordance with the provisions of this Clause, the retiring Agent shall retain part of
the agency fee accrued pursuant to Clause 14.3 (Agency Fee) (daily, based on a year of three hundred and
sixty (360) days) during the period running between the preceding anniversary of the Closing Date and the
effective date (inclusive) of the appointment of the new Agent and shall promptly deliver the remaining
part of such agency fee to the new Agent.
29.12 Replacement of the Agent
(a)
(b)
With the consent of Company (not to be unreasonably withheld), the Majority Lenders may, by giving
30 days’ notice to the Agent (or, at any time the Agent is an Impaired Agent, by giving any shorter notice
determined by the Majority Lenders) replace the Agent by appointing a successor Agent (acting through
an office in the United Kingdom or Spain).
The retiring Agent shall (at its own cost if it is an Impaired Agent and otherwise at the expense of the
Lenders) make available to the successor Agent such documents and records and provide such assistance
as the successor Agent may reasonably request for the purposes of performing its functions as Agent
under the Finance Documents.
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(c)
(d)
(e)
The appointment of the successor Agent shall take effect on the date specified in the notice from the
Majority Lenders to the retiring Agent. As from this date, the retiring Agent shall be discharged from any
further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this
Clause 29 (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall
be payable on) that date).
Any successor Agent and each of the other Parties shall have the same rights and obligations amongst
themselves as they would have had if such successor had been an original Party.
If the Agent is replaced in accordance with the provisions of this Clause, the replaced Agent shall retain
part of the agency fee accrued (daily, based on a year of three hundred and sixty (360) days) during the
period running between the preceding anniversary of the Closing Date and the effective date (inclusive) of
the replacement and shall promptly deliver the remaining part of such agency fee to the new Agent.
29.13 Confidentiality
(a)
(b)
(c)
In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency
division which shall be treated as a separate entity from any other of its divisions or departments.
If information is received by another division or department of the Agent, it may be treated as confidential
to that division or department and the Agent shall not be deemed to have notice of it.
Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the
Arranger is obliged to disclose to any other person (i) any confidential information or (ii) any other
information if the disclosure would or might in its reasonable opinion constitute a breach of any law or a
breach of a fiduciary duty.
29.14 Relationship with the Lenders
(a)
The Agent may treat the person shown in its records as Lender at the opening of business (in the place of
the Agent’s principal office as notified to the Finance Parties from time to time) as the Lender acting
through its Facility Office:
(i)
(ii)
entitled to or liable for any payment due under any Finance Document on that day; and
entitled to receive and act upon any notice, request, document or communication or make any
decision or determination under any Finance Document made or delivered on that day,
unless it has received not less than five Business Days’ prior notice from that Lender to the contrary in
accordance with the terms of this Agreement.
(b)
(c)
(d)
Each Lender shall supply the Agent with any information required by the Agent in order to calculate the
Mandatory Cost in accordance with Schedule 4 (Mandatory Cost Formula).
Each Lender shall supply the Agent with any information that the Security Agent may reasonably specify
(through the Agent) as being necessary or desirable to enable the Security Agent to perform its functions
as Security Agent. Each Lender shall deal with the Security Agent exclusively through the Agent and
shall not deal directly with the Security Agent.
Any Lender may by notice to the Agent appoint a person to receive on its behalf all notices,
communications, information and documents to be made or despatched to that Lender under the Finance
Documents. Such notice shall contain the address, fax number and (where communication by electronic
mail or other electronic means is permitted under Clause 34.6 (Electronic communication)) electronic
mail address and/or any other information required to enable the sending and receipt of information by
that means (and, in each case, the department or officer, if any, for whose attention communication is to
be made) and be treated as a notification of a substitute address, fax number, electronic mail address,
department and officer by that Lender for the purposes of Clause 34.2 (Addresses) and paragraph
(a) (iii) of Clause 34.6 (Electronic communication) and the Agent shall be entitled to treat such person as
the person entitled to receive all such notices, communications, information and documents as though that
person were that Lender.
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29.15 Credit appraisal by the Lenders and the Ancillary Lenders
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with
any Finance Document, each Lender and each Ancillary Lender confirms to the Agent, the Arranger and each
Ancillary Lender that it has been, and will continue to be, solely responsible for making its own independent
appraisal and investigation of all risks arising under or in connection with any Finance Document including but not
limited to:
(a)
(b)
(c)
(d)
(e)
the financial condition, status and nature of each member of the Group;
the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and the
Transaction Security and any other agreement, arrangement or document entered into, made or executed
in anticipation of, under or in connection with any Finance Document or the Transaction Security;
whether that Secured Party has recourse, and the nature and extent of that recourse, against any Party or
any of its respective assets under or in connection with any Finance Document, the Transaction Security
or the transactions contemplated by the Finance Documents or any other agreement, arrangement or
document entered into, made or executed in anticipation of, under or in connection with any Finance
Document;
the adequacy, accuracy and/or completeness of any information provided by the Agent, any Party or by
any other person under or in connection with any Finance Document, the transactions contemplated by the
Finance Documents or any other agreement, arrangement or document entered into, made or executed in
anticipation of, under or in connection with any Finance Document; and
the right or title of any person in or to, or the value or sufficiency of any part of the Charged Property, the
priority of any of the Transaction Security or the existence of any Security affecting the Charged Property.
29.16 Base Reference Banks
If a Base Reference Bank (or its Affiliate) becomes a Lender, the Agent shall (in consultation with the Company)
appoint another Base Reference Bank which is not a Lender or an Affiliate of a Lender to replace that Base
Reference Bank.
29.17 Deduction from amounts payable by the Agent
If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that
Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would
otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards
satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having
received any amount so deducted.
29.18 Reliance and engagement letters
Each Finance Party and Secured Party confirms that each of the Arranger and the Agent has authority to accept on
its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Arranger or
Agent) the terms of any reliance letter or engagement letters relating to any reports or letters provided by
accountants in connection with the Finance Documents or the transactions contemplated in the Finance Documents
and to bind it in respect of those reports or letters and to sign such letters on its behalf and further confirms that it
accepts the terms and qualifications set out in such letters.
30. CONDUCT OF BUSINESS BY THE FINANCE PARTIES
No provision of this Agreement will:
(a)
(b)
(c)
interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it
thinks fit;
oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it
or the extent, order and manner of any claim; or
oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any
computations in respect of Tax.
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31. SHARING AMONG THE FINANCE PARTIES
31.1 Payments to Finance Parties
(a)
Subject to paragraph (b) below, if a Finance Party (a “Recovering Finance Party”) receives or recovers
any amount from an Obligor other than in accordance with Clause 32 (Payment mechanics)(a“Recovered
Amount”) and applies that amount to a payment due under the Finance Documents then:
(i)
(ii)
(iii)
the Recovering Finance Party shall, within three Business Days, notify details of the receipt or
recovery, to the Agent;
the Agent shall determine whether the receipt or recovery is in excess of the amount the
Recovering Finance Party would have been paid had the receipt or recovery been received or
made by the Agent and distributed in accordance with Clause 32 (Payment mechanics), without
taking account of any Tax which would be imposed on the Agent in relation to the receipt,
recovery or distribution; and
the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to
the Agent an amount (the “Sharing Payment”) equal to such receipt or recovery less any
amount which the Agent determines may be retained by the Recovering Finance Party as its
share of any payment to be made, in accordance with Clause 32.6 (Partial payments).
(b)
Paragraph (a) above shall not apply to any amount received or recovered by an Ancillary Lender in
respect of any cash cover provided for the benefit of that Ancillary Lender.
31.2 Redistribution of payments
The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between
the Finance Parties (other than the Recovering Finance Party) (the “Sharing Finance Parties”) in accordance with
Clause 32.6 (Partial payments) towards the obligations of that Obligor to the Sharing Finance Parties.
31.3 Recovering Finance Party’s rights
On a distribution by the Agent under Clause 31.2 (Redistribution of payments), of a payment received by a
Recovering Finance Party from an Obligor, as between the relevant Obligor and the Recovering Finance Party, an
amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that
Obligor.
31.4 Reversal of redistribution
If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is
repaid by that Recovering Finance Party, then:
(a)
(b)
each Sharing Finance Party shall, upon request of the Agent, pay to the Agent for the account of that
Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment
(together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of
any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the
“Redistributed Amount”); and
as between the relevant Obligor and each relevant Sharing Finance Party, an amount equal to the relevant
Redistributed Amount will be treated as not having been paid by that Obligor.
31.5 Exceptions
(a)
(b)
This Clause 31 shall not apply to the extent that the Recovering Finance Party would not, after making
any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Obligor.
A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the
Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings,
if:
(i)
it notified the other Finance Party of the legal or arbitration proceedings; and
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(ii)
the other Finance Party had an opportunity to participate in those legal or arbitration
proceedings but did not do so as soon as reasonably practicable having received notice and did
not take separate legal or arbitration proceedings.
31.6 Ancillary Lenders
(a)
(b)
This Clause 31 shall not apply to any receipt or recovery by a Lender in its capacity as an Ancillary
Lender at any time prior to service of notice under Clause 25.2 (Acceleration).
Following service of notice under Clause 25.2 (Acceleration), this Clause 31 shall apply to all receipts or
recoveries by Ancillary Lenders.
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SECTION 11
ADMINISTRATION
32. PAYMENT MECHANICS
32.1 Payments to the Agent
(a)
(b)
On each date on which an Obligor or a Lender is required to make a payment under a Finance Document,
excluding a payment under the terms of an Ancillary Document, that Obligor or Lender shall make the
same available to the Agent (unless a contrary indication appears in a Finance Document) for value on the
due date at the time and in such funds specified by the Agent as being customary at the time for settlement
of transactions in the relevant currency in the place of payment.
Payment shall be made to such account in the principal financial centre of the country of that currency (or,
in relation to Euro, in a principal financial centre in a Participating Member State or London) with such
bank as the Agent specifies.
32.2 Distributions by the Agent
Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 32.3
(Distributions to an Obligor) and Clause 32.4 (Clawback) be made available by the Agent as soon as practicable
after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for
the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five
Business Days’ notice with a bank in the principal financial centre of the country of that currency (or, in relation to
Euro, in the principal financial centre of a Participating Member State or London).
32.3 Distributions to an Obligor
The Agent may (with the consent of the Obligor or in accordance with Clause 33 (Set-Off)) apply any amount
received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any
amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any
currency to be so applied.
32.4 Clawback
(a)
(b)
Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not
obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until
it has been able to establish to its satisfaction that it has actually received that sum.
If the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually
received that amount, then the Party to whom that amount (or the proceeds of any related exchange
contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on
that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to
reflect its cost of funds.
32.5 Impaired Agent
(a)
(b)
(c)
If, at any time, the Agent becomes an Impaired Agent, an Obligor or a Lender which is required to make a
payment under the Finance Documents to the Agent in accordance with Clause 32.1 (Payments to the
Agent) may instead either pay that amount direct to the required recipient or pay that amount to an
interest-bearing account held with a bank or financial institution which has a rating for its long-term
unsecured and non-credit enhanced debt obligations of A-1 by Standard & Poor’s Rating Services or
higher or P-1 by Moody’s Investor Service Inc. or higher or a comparable rating from an international
credit rating agency and in relation to which no Finance Party Insolvency Event has occurred and is
continuing, in the name of the Obligor or the Lender making the payment and designated as a trust
account for the benefit of the Party or Parties beneficially entitled to that payment under the Finance
Documents. In each case such payments must be made on the due date for payment under the Finance
Documents.
All interest accrued on the amount standing to the credit of the trust account shall be for the benefit of the
beneficiaries of that trust account pro rata to their respective entitlements.
A Party which has made a payment in accordance with this Clause 32.5 shall be discharged of the relevant
payment obligation under the Finance Documents and shall not take any credit risk with respect to the
amounts standing to the credit of the trust account.
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(d)
Promptly upon the appointment of a successor Agent in accordance with Clause 29.12 (Replacement of
the Agent), each Party which has made a payment to a trust account in accordance with this Clause 32.5
shall give all requisite instructions to the bank with whom the trust account is held to transfer the amount
(together with any accrued interest) to the successor Agent for distribution in accordance with Clause 32.2
(Distributions by the Agent).
32.6 Partial payments
(a)
If the Agent receives a payment for application against amounts due in respect of any Finance Documents
that is insufficient to discharge all the amounts then due and payable by an Obligor under those Finance
Documents, the Agent shall apply that payment towards the obligations of that Obligor under those
Finance Documents in the following order:
(i)
(ii)
(iii)
(iv)
first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent and
the Arranger and the Security Agent under those Finance Documents;
secondly, in or towards payment pro rata of any accrued interest, fee or commission due but
unpaid under those Finance Documents;
thirdly, in or towards payment pro rata of any principal due but unpaid under those Finance
Documents; and
fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance
Documents.
(b)
(c)
The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to
(iv) above.
Paragraphs (a) and (b) above will override any appropriation made by an Obligor.
32.7 Set-off by Obligors
All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and
free and clear of any deduction for) set-off or counterclaim.
32.8 Business Days
(a)
(b)
Any payment which is due to be made on a day that is not a Business Day shall be made on the next
Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement
interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.
32.9 Currency of account
(a)
(b)
(c)
(d)
(e)
Subject to paragraphs (b) to (e) below, the Base Currency is the currency of account and payment for any
sum due from an Obligor under any Finance Document.
A repayment of a Utilisation or Unpaid Sum or a part of a Utilisation or Unpaid Sum shall be made in the
currency in which that Utilisation or Unpaid Sum is denominated on its due date.
Each payment of interest shall be made in the currency in which the sum in respect of which the interest is
payable was denominated when that interest accrued.
Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs,
expenses or Taxes are incurred.
Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other
currency.
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32.10 Change of currency
(a)
Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time
recognised by the central bank of any country as the lawful currency of that country, then:
(i)
(ii)
any reference in the Finance Documents to, and any obligations arising under the Finance
Documents in, the currency of that country shall be translated into, or paid in, the currency or
currency unit of that country designated by the Agent (after consultation with the Company);
and
any translation from one currency or currency unit to another shall be at the official rate of
exchange recognised by the central bank for the conversion of that currency or currency unit
into the other, rounded up or down by the Agent (acting reasonably).
(b)
If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting
reasonably and after consultation with the Company) specifies to be necessary, be amended to comply
with any generally accepted conventions and market practice in the Relevant Interbank Market and
otherwise to reflect the change in currency.
32.11 Disruption to Payment Systems etc.
If either the Agent determines (in its discretion) that a Disruption Event has occurred or the Agent is notified by the
Company that a Disruption Event has occurred:
(a)
(b)
(c)
(d)
(e)
(f)
the Agent may, and shall if requested to do so by the Company, consult with the Company with a view to
agreeing with the Company such changes to the operation or administration of the Facilities as the Agent
may deem necessary in the circumstances;
the Agent shall not be obliged to consult with the Company in relation to any changes mentioned in
paragraph (a) if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall
have no obligation to agree to such changes;
the Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (a) but
shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;
any such changes agreed upon by the Agent and the Company shall (whether or not it is finally
determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as
the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of
Clause 38 (Amendments and Waivers);
the Agent shall not be liable for any damages, costs or losses whatsoever (including, without limitation for
negligence, gross negligence or any other category of liability whatsoever but not including any claim
based on the fraud of the Agent) arising as a result of its taking, or failing to take, any actions pursuant to
or in connection with this Clause 32.11; and
the Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above.
33. SET-OFF
(a)
(b)
A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents
(to the extent beneficially owned by that Finance Party) against any matured obligation owed by that
Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either
obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at
a market rate of exchange in its usual course of business for the purpose of the set-off.
Any credit balances taken into account by an Ancillary Lender when operating a net limit in respect of
any overdraft under an Ancillary Facility shall on enforcement of the Finance Documents be applied first
in reduction of the overdraft provided under that Ancillary Facility in accordance with its terms.
34. NOTICES
34.1 Communications in writing
Any communication to be made under or in connection with the Finance Documents shall be made in writing and,
unless otherwise stated, may be made by fax or letter.
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34.2 Addresses
The address and fax number (and the department or officer, if any, for whose attention the communication is to be
made) of each Party for any communication or document to be made or delivered under or in connection with the
Finance Documents is:
(a)
(b)
(c)
in the case of the Company or the Company, that identified with its name below;
in the case of each Lender, each Ancillary Lender or any other Obligor, that notified in writing to the
Agent on or prior to the date on which it becomes a Party; and
in the case of the Agent or the Security Agent, that identified with its name below,
or any substitute address, fax number or department or officer as the Party may notify to the Agent (or the Agent
may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days’ notice.
34.3 Delivery
(a)
Any communication or document made or delivered by one person to another under or in connection with
the Finance Documents will only be effective:
(i)
(ii)
if by way of fax, when received in legible form; or
if by way of letter, when it has been left at the relevant address or five Business Days after being
deposited in the post postage prepaid in an envelope addressed to it at that address,
and, if a particular department or officer is specified as part of its address details provided under
Clause 34.2 (Addresses), if addressed to that department or officer.
(b)
(c)
Any communication or document to be made or delivered to the Agent or the Security Agent will be
effective only when actually received by the Agent or Security Agent and then only if it is expressly
marked for the attention of the department or officer identified with the Agent’s or Security Agent’s
signature below (or any substitute department or officer as the Agent or Security Agent shall specify for
this purpose).
All notices from or to an Obligor shall be sent through the Agent.
(d) Any communication or document made or delivered to the Company in accordance with this Clause 34.3
will be deemed to have been made or delivered to each of the Obligors.
34.4 Notification of address and fax number
Promptly upon receipt of notification of an address or fax number or change of address or fax number pursuant to
Clause 34.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other Parties.
34.5 Communication when Agent is Impaired Agent
If the Agent is an Impaired Agent the Parties may, instead of communicating with each other through the Agent,
communicate with each other directly and (while the Agent is an Impaired Agent) all the provisions of the Finance
Documents which require communications to be made or notices to be given to or by the Agent shall be varied so
that communications may be made and notices given to or by the relevant Parties directly. This provision shall not
operate after a replacement Agent has been appointed.
34.6 Electronic communication
(a)
Any communication to be made between (A) the Company and the Agent or the Security Agent or (B) the
Agent or the Security Agent and a Lender under or in connection with the Finance Documents may be
made by electronic mail or other electronic means, if the Company, the Agent, the Security Agent and the
relevant Lender:
(i)
(ii)
agree that, unless and until notified to the contrary, this is to be an accepted form of
communication;
notify each other in writing of their electronic mail address and/or any other information
required to enable the sending and receipt of information by that means; and
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(iii)
notify each other of any change to their address or any other such information supplied by them.
(b)
Any electronic communication made between the Company and the Agent or the Security Agent or, as the
case may be, the Agent and a Lender or the Security Agent will be effective only when actually received
in readable form and in the case of any electronic communication made by a Lender or the Company to
the Agent or the Security Agent only if it is addressed in such a manner as the Agent or Security Agent
shall specify for this purpose.
34.7 Use of websites
(a)
The Company may satisfy its obligation under this Agreement to deliver any information in relation to
those Lenders (the “Website Lenders”) who accept this method of communication by posting this
information onto an electronic website designated by the Company and the Agent (the “Designated
Website”) if:
(i)
(ii)
(iii)
the Agent expressly agrees (after consultation with each of the Lenders) that it will accept
communication of the information by this method;
both the Company and the Agent are aware of the address of and any relevant password
specifications for the Designated Website; and
the information is in a format previously agreed between the Company and the Agent.
If any Lender (a “Paper Form Lender”) does not agree to the delivery of information electronically then
the Agent shall notify the Company accordingly and the Company shall, at its own cost, supply the
information to the Agent (in sufficient copies for each Paper Form Lender) in paper form. In any event the
Company shall, at its own cost, supply the Agent with at least one copy in paper form of any information
required to be provided by it.
(b)
(c)
The Agent shall supply each Website Lender with the address of and any relevant password specifications
for the Designated Website following designation of that website by the Company and the Agent.
The Company shall promptly upon becoming aware of its occurrence notify the Agent if:
(i)
(ii)
(iii)
(iv)
(v)
the Designated Website cannot be accessed due to technical failure;
the password specifications for the Designated Website change;
any new information which is required to be provided under this Agreement is posted onto the
Designated Website;
any existing information which has been provided under this Agreement and posted onto the
Designated Website is amended; or
the Company becomes aware that the Designated Website or any information posted onto the
Designated Website is or has been infected by any electronic virus or similar software.
If the Company notifies the Agent under paragraph (c)(i) or paragraph (c)(v) above, all information to be
provided by the Company under this Agreement after the date of that notice shall be supplied in paper
form unless and until the Agent and each Website Lender is satisfied that the circumstances giving rise to
the notification are no longer continuing.
(d)
Any Website Lender may request, through the Agent, one paper copy of any information required to be
provided under this Agreement which is posted onto the Designated Website. The Company shall at its
own cost comply with any such request within ten Business Days.
34.8 Language
(a)
(b)
Any notice given under or in connection with any Finance Document must be in English.
All other documents provided under or in connection with any Finance Document must be:
(i)
(ii)
in English; or
if not in English, and if so required by the Agent, accompanied by a certified English translation
and, in this case, the English translation will prevail unless the document is a constitutional,
statutory or other official document.
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35. CALCULATIONS AND CERTIFICATES
35.1 Accounts
In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries
made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.
35.2 Certificates and determinations
Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the
absence of manifest error, conclusive evidence of the matters to which it relates.
35.3 Day count convention
(a)
(b)
Subject to paragraph (b) below, any interest, commission or fee accruing under a Finance Document will
accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of
three hundred and sixty (360) days or, in any case where the practice in the Relevant Interbank Market
differs, in accordance with that market practice.
Interest with respect to all SPV Tranches shall be calculated based on a year of three hundred and sixty
(360) days but on the basis of 12 months of 30-days each.
36. PARTIAL INVALIDITY
If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any
respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions
nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way
be affected or impaired.
37. REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of any Finance Party or Secured Party, any right or
remedy under the Finance Documents shall operate as a waiver of any such right or remedy or constitute an election
to affirm any of the Finance Documents. No election to affirm any of the Finance Documents on the part of any
Finance Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall
prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided
in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.
38. AMENDMENTS AND WAIVERS
38.1 Required consents
(a)
(b)
(c)
Subject to Clause 38.2 (Exceptions) and Clause 38.4 (SPV Tranches) any term of the Finance Documents
(other than the Intercreditor Agreement, terms of which shall be amended and waived in accordance with
the Intercreditor Agreement) may be amended or waived only with the consent of the Majority Lenders
and the Company and any such amendment or waiver will be binding on all Parties.
Subject to paragraph (c) of Clause 29.1 (Appointment of the Agent), the Agent may effect, on behalf of
any Finance Party, any amendment or waiver permitted by this Clause 38.
Each Obligor agrees to any such amendment or waiver permitted by this Clause 38 which is agreed to by
the Company. This includes any amendment or waiver which would, but for this paragraph (c), require the
consent of all of the Guarantors.
38.2 Exceptions
(a)
Any of the following amendments to this Agreement (or, in relation to paragraph (vii) below, any
Transaction Security) or any waiver under this Agreement (or, in relation to paragraph (vii) below, any
Transaction Security) which relates to any of the following:
(i)
amendments that amount to an advantage or disadvantage for one or more Lenders with respect
to one or more of the other Lenders in the same Facility in respect of any payment obligations
and means of payment, unless the consent of the affected Lender or Lenders is obtained;
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(ii)
(iii)
(iv)
(v)
(vi)
(vii)
amendments that impose new or additional restrictions to the credit rights of any Lender or to
the means of collection of such credit rights, unless the consent of the affected Lender or
Lenders is obtained;
increases or extensions of any Commitment or the Total Commitments (except in the case of the
implementation of an Additional SPV Tranche in accordance with Clause 2.2 (Additional SPV
Tranches), a New Bank Tranche in accordance with Clause 2.3 (New Bank Tranches) ora
Replacement Revolving Facility in accordance with Clause 2.4 (Replacement Revolving
Facility) or under Clause 2.5 (Increase), which shall not require any consents of the Lenders
under this Agreement);
amendments to Clauses 16 (Increased Costs), 17 (Other indemnities) or26(Changes to
Lenders);
changes in the definition of “Majority Lenders” or “Borrowers” under Clause 1.1 (Definitions);
amendments or waivers of Clause 28.2 (Additional Borrowers) to permit any company other
than a Material Subsidiary incorporated in Spain to become a Borrower (provided that this
paragraph (vi) shall not apply to any other amendment or waiver of Clause 28.2 (Additional
Borrowers));
any change amounting to (A) an extension to the due date or a reduction in the amount of any
payment of principal, interest or other amount payable under the Transaction Security, (B) an
amendment to the currency in which any amount is payable under the Transaction Security, or
(C) the total or partial release of any asset which is subject to the Transaction Security (other
than as permitted under this Agreement); and
(viii) any amendment to this Clause 38,
shall not be made without the prior consent of all the Lenders.
(b)
(c)
(d)
An amendment or waiver which relates to the rights or obligations of the Agent, the Arranger, an
Ancillary Lender, the Hedge Entities, the Security Agent (each in their capacity as such) may not be
effected without the consent of the Agent, the Arranger, that Ancillary Lender, the Hedge Entities or, as
the case may be, the Security Agent.
Any amendment which relates to the rights of the Lenders to waive prepayment of Facility B or the SPV
Tranches under Clause 10.9 (Prepayment elections) shall not be effected without the consent of the
Lenders under Facility B or the SPV Tranches, as the case may be.
If any Lender fails to respond to a request for a consent, waiver or amendment of or in relation to any of
the terms of any Finance Document or other vote of Lenders under the terms of this Agreement within
fifteen (15) Business Days (unless the Company and the Agent agree to a longer time period in relation to
any request) of that request being made, its Commitment and/or participation shall not be included for the
purpose of calculating the Total Commitments or participations under the relevant Facility/ies when
ascertaining whether any relevant percentage (including, for the avoidance of doubt, unanimity) of Total
Commitments and/or participations has been obtained to approve that request.
38.3 Structural Adjustments
(a)
Notwithstanding anything in this Clause 38 or anything else (express or implied) in the Finance
Documents to the contrary, Structural Adjustments may be approved with:
(i)
(ii)
the consent of each Lender with a Commitment and/or participation under the relevant Facility
affected by any of the amendments (or waivers) referred to in paragraphs (b) below; and
the Majority Lenders, except in the case of:
(A)
(B)
any amendment under paragraph (b)(i) below which constitutes an extension to the
repayment schedule for any Facility (including, in the case of Facility A, extensions to
any Repayment Date) or an extension to any Termination Date; and
any amendment under paragraph (b)(iv) below which constitutes a decrease in
Margin.
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(b)
For the purposes of this Agreement, a “Structural Adjustment” means:
(i) extensions to the repayment schedule for any Facility (including, in the case of Facility A,
extensions to any Repayment Date or Repayment Instalment) or to any Termination Date or the
Final Maturity Date;
(ii)
(iii)
(iv)
(v)
a reduction in the amount of any amount payable under any Finance Document;
extensions to the Availability Period of any Facility or extensions to the dates set for the
payment of any amount under any Finance Document;
amendments in the interest rate or the Margin or amendments to the method of calculation and/
or payment of interest in respect of any Finance Document, or changes in the amount, method of
calculation or payment of fees under a Finance Document; and
changes in the currency for payment of any amount under a Finance Document.
38.4 SPV Tranches
In relation to any waiver or amendment or other vote of Lenders under this Agreement, in respect of all SPV
Tranches:
(a)
(b)
(c)
(d)
the vote of the SPV (calculated in accordance with paragraph (d) below) will be counted pro rata with
other Lenders for the purposes of Clause 25.2 (Acceleration) (but only if such acceleration relates to an
Event of Default which, other than through cross default or cross acceleration, would also constitute a
default under the Debt Instrument to which such SPV Tranche relates) and for the purposes of any
amendment of paragraph (q) (Debt Instruments) of Clause 25.1 (Events of Default) and any other term of
this Agreement specifically related to the rights of the SPVs or the SPV Tranches;
for any enforcement of Transaction Security under the Security Agreements, the vote of the SPV
(calculated in accordance with paragraph (d) below) will be counted pro rata with other Lenders;
for any other matter relating to this Agreement including acceleration relating to any Event of Default that
is not a default under the Debt Instrument to which the SPV Tranches relates, the voting rights of all SPV
Tranches in aggregate will be deemed to vote alongside the vote cast by the Lenders under the other
Facilities in a proportion identical to such Lenders; and
any time that an SPV votes (and such vote is not deemed to vote alongside the vote cast by the Lenders
under the other Facilities), such vote will be split to reflect the proportion of holders consenting and not
consenting reached in the underlying Debt Instrument.
38.5 Replacement of Lender
(a)
If at any time:
(i)
(ii)
any Lender becomes a Non-Consenting Lender (as defined in paragraph (c) below); or
an Obligor becomes obliged to repay any amount in accordance with Clause 8.1 (Illegality) orto
pay additional amounts pursuant to Clause 16.1 (Increased Costs) or Clause 15.1 (Tax gross-up)
to any Lender in excess of amounts payable to the other Lenders generally,
then the Company may, by giving ten (10) Business Days’ prior written notice to the Agent and such
Lender, replace such Lender by requiring such Lender to (and such Lender shall) transfer pursuant to
Clause 26 (Changes to the Lenders) all (and not part only) of its rights and obligations under this
Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement
Lender”) selected by the Company, and which is acceptable to the Agent (acting reasonably) which
confirms its willingness to assume and does assume all the obligations of the transferring Lender
(including the assumption of the transferring Lender’s participations on the same basis as the transferring
Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal
amount of such Lender’s participation in the outstanding Utilisations and all accrued interest, Break Costs
and other amounts payable in relation thereto under the Finance Documents.
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(b)
The replacement of a Lender pursuant to this Clause shall be subject to the following conditions:
(i)
(ii)
(iii)
(iv)
the Company shall have no right to replace the Agent or Security Agent;
neither the Agent nor the Lender shall have any obligation to the Company to find a
Replacement Lender;
in the event of a replacement of a Non-Consenting Lender such replacement must take place no
later than on thirty (30) Business Days’ after the date the Non-Consenting Lender notifies the
Company and the Agent of its failure or refusal to give a consent in relation to, or agree to any
waiver or amendment to the Finance Documents requested by the Company; and
in no event shall the Lender replaced under this paragraph (b) be required to pay or surrender to
such Replacement Lender any of the fees received by such Lender pursuant to the Finance
Documents.
(c)
In the event that:
(i)
(ii)
(iii)
the Company or the Agent (at the request of the Company) has requested the Lenders to give a
consent in relation to, or to agree to a waiver or amendment of, any provisions of the Finance
Documents;
the consent, waiver or amendment in question requires the approval of all the Lenders; and
Lenders whose Commitments aggregate more than 75 per cent. of the Total Commitments (or, if
the Total Commitments have been reduced to zero, aggregated more than 75 per cent. of the
Total Commitments prior to that reduction) have consented or agreed to such waiver or
amendment,
then any Lender who does not and continues not to consent or agree to such waiver or amendment shall be
deemed a “Non-Consenting Lender”.
38.6 Disenfranchisement of Defaulting Lenders
(a)
(b)
For so long as a Defaulting Lender has any Available Commitment, in ascertaining the Majority Lenders
or whether any given percentage (including, for the avoidance of doubt, unanimity) of the Total
Commitments or Total Revolving Facility Commitments has been obtained to approve any request for a
consent, waiver, amendment or other vote under the Finance Documents, that Defaulting Lender’s
Commitments will be reduced by the amount of its Available Commitments.
For the purposes of this Clause 38.6, the Agent may assume that the following Lenders are Defaulting
Lenders:
(i)
(ii)
any Lender which has notified the Agent that it has become a Defaulting Lender;
any Lender in relation to which it is aware that any of the events or circumstances referred to in
paragraphs (a), (b) or (c) of the definition of “Defaulting Lender” has occurred,
unless it has received notice to the contrary from the Lender concerned (together with any supporting
evidence reasonably requested by the Agent) or the Agent is otherwise aware that the Lender has ceased
to be a Defaulting Lender.
38.7 Replacement of a Defaulting Lender
(a)
The Company may, at any time a Lender has become and continues to be a Defaulting Lender, by giving
five (5) Business Days’ prior written notice to the Agent and such Lender:
(i)
(ii)
replace such Lender by requiring such Lender to (and such Lender shall) transfer pursuant to
Clause 26 (Changes to the Lenders) all (and not part only) of its rights and obligations under
this Agreement;
require such Lender to (and such Lender shall) transfer pursuant to Clause 26 (Changes to the
Lenders) all (and not part only) of the undrawn Revolving Facility Commitment of the Lender;
or
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(iii)
require such Lender to (and such Lender shall) transfer pursuant to Clause 26 (Changes to the
Lenders) all (and not part only) of its rights and obligations in respect of each Revolving
Facility,
to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”)
selected by the Company, and which (unless the Agent is an Impaired Agent) is acceptable to the Agent
(acting reasonably), which confirms its willingness to assume and does assume all the obligations or all
the relevant obligations of the transferring Lender (including the assumption of the transferring Lender’s
participations or unfunded participations (as the case may be) on the same basis as the transferring
Lender).
(b)
Any transfer of rights and obligations of a Defaulting Lender pursuant to this Clause shall be subject to
the following conditions:
(i)
(ii)
(iii)
(iv)
the Company shall have no right to replace the Agent or Security Agent;
neither the Agent nor the Defaulting Lender shall have any obligation to the Company to find a
Replacement Lender;
the transfer must take place no later than sixty (60) days after the notice referred to in paragraph
(a) above; and
in no event shall the Defaulting Lender be required to pay or surrender to the Replacement
Lender any of the fees received by the Defaulting Lender pursuant to the Finance Documents.
39. CONFIDENTIALITY
39.1 Confidential Information
Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to
the extent permitted by Clause 39.2 (Disclosure of Confidential Information), and to ensure that all Confidential
Information is protected with security measures and a degree of care that would apply to its own confidential
information.
39.2 Disclosure of Confidential Information
Any Finance Party may disclose:
(a)
(b)
to any of its Affiliates and Related Funds and any of its or their officers, directors, employees,
professional advisers, auditors, partners and Representatives such Confidential Information as that
Finance Party shall consider appropriate if any person to whom the Confidential Information is to be
given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of
such Confidential Information may be price-sensitive information except that there shall be no such
requirement to so inform if the recipient is subject to professional obligations to maintain the
confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to
the Confidential Information;
to any person:
(i)
(ii)
(iii)
to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of
its rights and/or obligations under one or more Finance Documents and to any of that person’s
Affiliates, Related Funds, Representatives and professional advisers;
with (or through) whom it enters into (or may potentially enter into), whether directly or
indirectly, any sub-participation in relation to, or any other transaction under which payments
are to be made or may be made by reference to, one or more Finance Documents and/or one or
more Obligors and to any of that person’s Affiliates, Related Funds, Representatives and
professional advisers;
appointed by any Finance Party or by a person to whom paragraph (b)(i) or (ii) above applies to
receive communications, notices, information or documents delivered pursuant to the Finance
Documents on its behalf (including, without limitation, any person appointed under
paragraph (d) of Clause 29.14 (Relationship with the Lenders));
A-130

(iv)
(v)
(vi)
(vii)
(viii)
(ix)
who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly
or indirectly, any transaction referred to in paragraph (b)(i) or (b)(ii) above;
to whom information is required or requested to be disclosed by any court of competent
jurisdiction or any governmental, banking, taxation or other regulatory authority or similar
body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;
to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security
(or may do so) pursuant to Clause 26.7 (Security over Lenders’ rights);
to whom information is required to be disclosed in connection with, and for the purposes of, any
litigation, arbitration, administrative or other investigations, proceedings or disputes;
who is a Party; or
with the consent of the Company;
in each case, such Confidential Information as that Finance Party shall consider appropriate if:
(A)
(B)
(C)
in relation to paragraphs (b)(i), (b)(ii) and b(iii) above, the person to whom the
Confidential Information is to be given has entered into a Confidentiality Undertaking
with the disclosing Finance Party except that there shall be no requirement for a
Confidentiality Undertaking if the recipient is a professional adviser and is subject to
professional obligations to maintain the confidentiality of the Confidential
Information;
in relation to paragraph (b)(iv) above, the person to whom the Confidential
Information is to be given has entered into a Confidentiality Undertaking with the
disclosing Finance Party or is otherwise bound by requirements of confidentiality in
relation to the Confidential Information they receive and is informed that some or all
of such Confidential Information may be price-sensitive information;
in relation to paragraphs (b)(v), (b)(vi) and (b)(vii) above, the person to whom the
Confidential Information is to be given is informed of its confidential nature and that
some or all of such Confidential Information may be price-sensitive information
except that there shall be no requirement to so inform if, in the opinion of that Finance
Party, it is not practicable so to do in the circumstances;
(c)
(d)
to any person appointed by that Finance Party or by a person to whom paragraph (b)(i) or (b)(ii) above
applies to provide administration or settlement services in respect of one or more of the Finance
Documents including without limitation, in relation to the trading of participations in respect of the
Finance Documents, such Confidential Information as may be required to be disclosed to enable such
service provider to provide any of the services referred to in this paragraph (c) if the service provider to
whom the Confidential Information is to be given has entered into a confidentiality agreement
substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/
Settlement Service Providers or such other form of confidentiality undertaking agreed between the
Company and the relevant Finance Party; and
to any rating agency (including its professional advisers) such Confidential Information as may be
required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to
the Finance Documents and/or the Obligors if the rating agency to whom the Confidential Information is
given is informed of its confidential nature and that some or all of such Confidential Information may be
price sensitive information.
39.3 Disclosure to numbering service providers
(a)
Any Finance Party may disclose to any national or international numbering service provider appointed by
that Finance Party to provide identification numbering services in respect of this Agreement, the Facilities
and/or one or more Obligors the following information:
(i)
(ii)
(iii)
names of Obligors;
country of domicile of Obligors;
place of incorporation of Obligors;
A-131

(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
date of this Agreement;
the names of the Agent and the Arranger;
date of each amendment and restatement of this Agreement;
amount of Total Commitments;
currencies of the Facilities;
type of Facilities;
ranking of Facilities;
Termination Date for Facilities;
changes to any of the information previously supplied pursuant to paragraphs (i) to (xi) above;
and
such other information agreed between such Finance Party and the Company,
to enable such numbering service provider to provide its usual syndicated loan numbering identification
services.
(b)
(c)
The Parties acknowledge and agree that each identification number assigned to this Agreement, the
Facilities and/or one or more Obligors by a numbering service provider and the information associated
with each such number may be disclosed to users of its services in accordance with the standard terms and
conditions of that numbering service provider.
The Agent shall notify the Company and the other Finance Parties of:
(i)
(ii)
the name of any numbering service provider appointed by the Agent in respect of this
Agreement, the Facilities and/or one or more Obligors; and
the number or, as the case may be, numbers assigned to this Agreement, the Facilities and/or
one or more Obligors by such numbering service provider.
39.4 Entire agreement
This Clause 39 (Confidentiality) constitutes the entire agreement between the Parties in relation to the obligations of
the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous
agreement, whether express or implied, regarding Confidential Information.
39.5 Inside information
Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be pricesensitive
information and that the use of such information may be regulated or prohibited by applicable legislation
including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not
to use any Confidential Information for any unlawful purpose.
39.6 Notification of disclosure
Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Company:
(a)
of the circumstances of any disclosure of Confidential Information made pursuant to paragraph (b)(v) of
Clause 39.2 (Disclosure of Confidential Information) except where such disclosure is made to any of the
persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function;
and
(b) upon becoming aware that Confidential Information has been disclosed in breach of this Clause 39
(Confidentiality).
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39.7 Continuing obligations
The obligations in this Clause 39 (Confidentiality) are continuing and, in particular, shall survive and remain
binding on each Finance Party for a period of twelve (12) months from the earlier of:
(a)
(b)
the date on which all amounts payable by the Obligors under or in connection with the Finance
Documents have been paid in full and all Commitments have been cancelled or otherwise cease to be
available; and
the date on which such Finance Party otherwise ceases to be a Finance Party.
40. COUNTERPARTS
Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the
signatures on the counterparts were on a single copy of the Finance Document.
41. NON-PETITION
Each of the parties to this Agreement agrees that it:
(a)
(b)
will not be entitled to petition or take any corporate action or other steps or legal proceedings for the
bankruptcy, examinership, reorganisation, arrangement, insolvency, winding-up or liquidation of Nara
Cable or for the appointment for the receiver, administrator, manager, administrative receiver, trustee,
liquidator, examiner or similar officer in respect of Nara Cable or any of its revenues or assets save for
lodging a claim in the liquidation of Nara Cable which is initiated by another party or taking proceedings
to obtain a declaration or judgement as to the obligations of Nara Cable; and
shall not have any recourse against any director, shareholder or officer of Nara Cable in respect of any
obligations, covenant or agreement entered into or made by Nara Cable.
42. EXECUTIVE PROCEEDINGS
42.1 Executive Proceedings
(a)
(b)
(c)
This Agreement and any other Finance Document at the discretion of the Agent, as well as any
amendments hereto or thereto, shall be formalised in a Spanish Public Document by both the Company
and the Finance Parties, so that it may have the status of a notarial document of loan for all purposes
contemplated in Article 517, number 4 of the Spanish Civil Procedural Law (Law 1/2000 of 7 January)
(Ley de Enjuiciamiento Civil) (the Civil Procedural Law).
Upon enforcement, the sum payable by any Borrower shall be the total aggregate amount of the balance of
the accounts maintained by the Agent (or the relevant Lender, as the case may be). For the purposes of
Articles 571 et seq. of the Civil Procedural Law, the Parties expressly agree that such balances shall be
considered as due, liquid and payable and may be claimed pursuant to the same provisions of such law.
For the purpose of the provisions of Art. 571 et seq. of the Civil Procedural Law, it is expressly agreed by
the Parties that the determination of the debt to be claimed through the executive proceedings shall be
effected by the Agent (or the relevant Lender, as the case may be) by means of the appropriate certificate
evidencing the balances shown in the relevant account(s) referred to in paragraph (b) above. By virtue of
the foregoing, to exercise executive action by the Agent or any of the Lenders it will be sufficient to
present:
(i)
(ii)
(iii)
an original notarial first or authentic copy of this Agreement;
a notarial certificate, if necessary, for the purposes described in paragraph (d) below;
the notarial document (acta notarial) which incorporates the certificate issued by the Agent (or
the relevant Lender, as the case may be) of the amount due by the relevant Borrower including
an excerpt of the credits and debits, including the interest applied, which appear in the relevant
account(s) referred to in paragraph (b) above, evidencing that the determination of the amounts
due and payable by the Borrowers have been calculated as agreed in this Agreement and that
such amounts coincide with the balance of such accounts; and
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(iv)
a notarial document (acta notarial) evidencing that the relevant Borrower has been served
notice of the amount that is due and payable.
(d)
(e)
(f)
Paragraph (c) above is also applicable to any Lender with regard to its Commitment. Such Lender may
issue the appropriate certification of the balances of the relevant account(s) referred to in
paragraph (b) above and the certification of the balances of the such accounts may be legalised by a
notary.
The amount of the balances so established shall be notified to the relevant Borrower in an attestable
manner at least three days in advance of exercising the executive action set out in paragraph (c) above.
The Borrowers hereby expressly authorise the Agent (and each Lender, as appropriate) to request and
obtain certificates and documents issued by the notary who has formalised this Agreement in order to
evidence its compliance with the entries of his registry-book and the relevant entry date for the purpose of
number 4 of Article 517, of the Civil Procedural Law. The cost of such certificate and documents will be
for the account of the Borrowers in the manner provided under this Agreement.
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SECTION 12
GOVERNING LAW AND ENFORCEMENT
43. GOVERNING LAW
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English
law.
44. ENFORCEMENT
44.1 Jurisdiction of English courts
(a)
(b)
(c)
The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with
this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or
the consequences of its nullity) or any non-contractual obligations arising out of or in connection with this
Agreement (a “Dispute”).
The Parties agree that the courts of England are the most appropriate and convenient courts to settle
Disputes and accordingly no Party will argue to the contrary.
This Clause ?44.1 is for the benefit of the Finance Parties and Secured Parties only. As a result, no
Finance Party or Secured Party shall be prevented from taking proceedings relating to a Dispute in any
other courts with jurisdiction. To the extent allowed by law, the Finance Parties and Secured Parties may
take concurrent proceedings in any number of jurisdictions.
44.2 Service of process
(a)
Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than
an Obligor incorporated in England and Wales):
(i)
(ii)
(b)
irrevocably appoints TMF Corporate Services Limited as its agent for service of process in
relation to any proceedings before the English courts in connection with any Finance Document;
and
agrees that failure by an agent for service of process to notify the relevant Obligor of the process
will not invalidate the proceedings concerned.
If any person appointed as an agent for service of process is unable for any reason to act as
agent for service of process, the Company (on behalf of all the Obligors) must immediately (and
in any event within ten (10) days of such event taking place) appoint another agent on terms
acceptable to the Agent. Failing this, the Agent may appoint another agent for this purpose.
This Agreement has been entered into on the date stated at the beginning of this Agreement.
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EXECUTION COPY
DATED 24 MAY 2012
CABLEUROPA, S.A.U.
THE COMPANY
ONO FINANCE II PLC
THE EXISTING HIGH-YIELD NOTES ISSUER
THE PARTIES NAMED HEREIN
AS SENIOR ARRANGERS
THE SENIOR LENDERS
THE ORIGINAL HEDGE ENTITIES
THE BANK OF NEW YORK MELLON, LONDON BRANCH
AS TRUSTEE FOR THE HOLDERS OF EXISTING HIGH-YIELD NOTES
SOCIÉTÉ GÉNÉRALE, S.A., LONDON BRANCH
AS SENIOR AGENT
SOCIÉTÉ GÉNÉRALE, S.A., LONDON BRANCH
AS INTERCREDITOR AGENT
SOCIÉTÉ GÉNÉRALE, S.A., LONDON BRANCH
AS SECURITY AGENT
INTERCREDITOR AGREEMENT
B-1

Clause
CONTENTS
1. Definitions and Interpretation ............................................................... B-3
2. Security Agent and Intercreditor Agent ........................................................ B-16
3. Ranking of Liabilities ..................................................................... B-25
4. Senior Lenders and Senior Lender Liabilities ................................................... B-25
5. Subordinated Creditors and Subordinated Liabilities ............................................. B-26
6. Turnover by Creditors ..................................................................... B-29
7. Hedge Entities and Permitted Hedging Liabilities ............................................... B-29
8. Application of Proceeds .................................................................... B-31
9. Petition for Bankruptcy of the Debtors ........................................................ B-33
10. Enforcement of Transaction Security ......................................................... B-34
11. Amendments to Transaction Security ......................................................... B-35
12. Execution of this Agreement by the Debtors .................................................... B-35
13. High-Yield Notes Trustee Protections ......................................................... B-36
14. Purchase Option .......................................................................... B-39
15. Changes to the Parties ..................................................................... B-40
16. Notices ................................................................................. B-42
17. Preservation ............................................................................. B-44
18. Amendments and Termination .............................................................. B-45
19. Counterparts ............................................................................. B-46
20. Non-Petition ............................................................................. B-46
21. Governing Law .......................................................................... B-47
22. Enforcement ............................................................................. B-47
Page
B-2

THIS AGREEMENT is dated 24 May 2012 and made between:
(1) CABLEUROPA, S.A.U., a company incorporated under the laws of Spain, with its registered office at calle
Basauri 7, Edificio Belagua, Urbanización La Florida, Aravaca, (Distrito Moncloa-Aravaca), Madrid, incorporated
on 9 February 2000, before the Notary Public of Barcelona, Mr. Antonio López Cerón y Cerón, entered under
number 700 in the notary’s official registry, registered with the Commercial Registry of Madrid (Registro Mercantil
de Madrid) at Volume 22913, folio 120, page M-410376, and with Tax Identification Number (Número de
Identificación Fiscal) A-62186556 (“Cableuropa” or the “Company” or the “Original Debtor”);
(2) ONO FINANCE II PLC, a Company incorporated under the laws of Ireland, with registered number 414099 and
with its registered office at Block C, Second Floor, Maynooth Business Campus, Maynooth, Co. Kildare, Ireland as
issuer of the Existing High-Yield Notes (the “Existing High-Yield Notes Issuer”)
(3) [ ] as mandated lead arrangers under the Senior Bank Facilities Agreement (whether acting individually or
together, the “Senior Arranger”);
(4) THE FINANCIAL INSTITUTIONS named on the signing pages as Senior Lenders (the “Original Senior
Lenders”);
(5) THE PERSONS named on the signing pages as Original Hedge Entities (the “Original Hedge Entities”);
(6) THE BANK OF NEW YORK MELLON, LONDON BRANCH as trustee for the holders of Existing High-Yield
Notes (the “Existing High-Yield Notes Trustee”);
(7) SOCIÉTÉ GÉNÉRALE, S.A., LONDON BRANCH as agent for the lenders under the Senior Bank Facilities
Agreement (the “Senior Agent”);
(8) SOCIÉTÉ GÉNÉRALE, S.A., LONDON BRANCH as Intercreditor Agent; and
(9) SOCIÉTÉ GÉNÉRALE, S.A., LONDON BRANCH as security agent for the Secured Parties (the “Security
Agent”).
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
“1992 ISDA Master Agreement” means the Master Agreement (Multicurrency Cross Border) as published by the
International Swaps and Derivatives Association, Inc.
“2002 ISDA Master Agreement” means the 2002 Master Agreement as published by the International Swaps and
Derivatives Association, Inc.
“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any
other Subsidiary of that Holding Company.
“Agent” means the Senior Agent or any Subordinated Agent.
“Ancillary Document” means each document relating to or evidencing the terms of an Ancillary Facility.
“Ancillary Facility” means any ancillary facility made available by an Ancillary Lender on a bilateral basis in place
of all or part of that Lender’s Revolving Facility Commitment (as defined in the Senior Bank Facilities Agreement)
in accordance with clause 6 (Ancillary Facilities) of the Senior Bank Facilities Agreement.
“Ancillary Facility Cash Cover” has the meaning given to the term “cash cover” in the Senior Bank Facilities
Agreement.
“Ancillary Lender” means each Senior Lender (or Affiliate of a Senior Lender) which makes an Ancillary Facility
available pursuant to the terms of the Senior Bank Facilities Agreement.
“Charged Property” means all of the assets which from time to time are, or are expressed to be, the subject of the
Transaction Security.
B-3

“Control” means the dominant position of a legal entity, an individual, a group of individuals or group of legal
entities acting in concert with respect to any other entity or group of entities over which they exercise control and
with which they form a decision-making unit, all in accordance with Article 42 of the Spanish Code of Commerce
(Código de Comercio).
“Creditor/Agent/Trustee Accession Undertaking” means:
(a)
(b)
(c)
(d)
(e)
an undertaking substantially in the form set out in Schedule 2 (Form of Creditor/Agent/Trustee Accession
Undertaking);
an Assignment Agreement (as defined in the Senior Bank Facilities Agreement);
an Increase Confirmation (as defined in the Senior Bank Facilities Agreement);
a Relevant Facility Lender Accession Agreement (as defined in the Senior Bank Facilities Agreement); or
a Relevant Facility Lender Increase Certificate (as defined in the Senior Bank Facilities Agreement).
“Creditors” means the Senior Creditors and the Subordinated Creditors.
“Debt Documents” means any Senior Debt Documents and any Subordinated Debt Documents.
“Debtor Accession Deed” means a deed substantially in the form set out in Schedule 1 (Form of Debtor Accession
Deed).
“Debtor Resignation Request” means a notice substantially in the form set out in Schedule 3 (Form of Debtor
Resignation Request).
“Debtors” means the Original Debtor and any person which becomes a Party as a Debtor in accordance with the
provisions of Clause 15.7 (New Debtor).
“Defaulting Lender” has the meaning given to such term in the Senior Bank Facilities Agreement.
“Delegate” means any delegate, agent, attorney or co-trustee appointed by the Security Agent.
“Designated Senior Debt” means any Senior Debt under the Senior Bank Facilities Agreement and any other
Senior Debt that is specifically designated in the instrument evidencing such Senior Debt and is designated in a
notice delivered by the relevant Debtor or other person entitled to designate such Senior Debt to the holders or a
representative of the holders of such Senior Debt and in an “Officers’ Certificate” (as defined in the indentures
governing the Existing High-Yield Notes and as may be defined in the relevant indentures governing any Future
High-Yield Notes) of the relevant Debtor or other person entitled to designate such Senior Debt delivered to the
relevant High-Yield Notes Trustee as “Designated Senior Debt” of the corresponding Debtor for purposes of any
Existing High-Yield Notes or Future High-Yield Notes and, for the purposes of this definition, “Senior Debt”
means all Financial Debt (as defined in the Senior Bank Facilities Agreement) under or in respect of the Senior
Bank Facilities and, without double counting, any other Financial Debt (as defined in the Senior Bank Facilities
Agreement) ranking at least pari passu with the Senior Lenders’ credit rights under the Senior Bank Facilities.
“Disruption Event” means either or both of:
(a)
(b)
a material disruption to those payment or communications systems or to those financial markets which
are, in each case, required to operate in order for payments to be made in connection with the Facilities (or
otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which
disruption is not caused by, and is beyond the control of, any of the Parties; or
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to
the treasury or payments operations of a Party preventing that, or any other Party:
(i)
(ii)
from performing its payment obligations under the Finance Documents; or
from communicating with other Parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations
are disrupted.
“EIB” means the European Investment Bank.
B-4

“EIB Facilities” means one or a series of credit facilities that the Obligors may enter into with EIB for a total
amount up to €300,000,000, subject to the Senior Bank Facilities Agreement including, without limitation, the
conditions set out in paragraph (b) of the definition of “Permitted Debt” in clause 1.1 (Definitions).
“Enforcement Action” means, in relation to any Liabilities, any action to:
(a)
(b)
(c)
(d)
(e)
demand payment, declare prematurely due and payable or otherwise seek to accelerate payment of or
place on demand all or any part of the Liabilities or to require a Debtor to redeem or purchase any part of
the Liabilities, but excluding any such right which arises as a result of clause 27 (Debt Purchase
Transactions) of the Senior Bank Facilities Agreement;
recover all or part of the Liabilities (including by exercising any right of set-off or combination of
accounts);
exercise or enforce any security right (including the Transaction Security) against sureties or any other
rights under any other document or agreement in relation to (or given in support of) all or any part of the
Liabilities;
commence legal or arbitration proceedings against any Debtor; or
apply or petition or vote for (or take any other steps which may reasonably be expected to lead to) a total
or partial liquidation, dissolution or winding up of any Debtor or the opening of insolvency proceedings in
any of the Debtors,
provided that the following shall not constitute Enforcement Action:
(i)
(ii)
(iii)
(iv)
any legal proceedings not falling within paragraphs (a) to (e) above necessary to preserve the
validity and existence of claims, including the commencement of such claims before any court
or governmental authority;
the taking of any action (including legal proceedings) against any Debtor or any Creditor (or
any agent, trustee or receiver acting on behalf of such Creditor) to challenge the basis on which
any sale or disposal is being implemented;
legal proceedings against any person in connection with any securities violation or fraud; or
the delivery of a notice pursuant to Clause 9 (Petition for Bankruptcy of the Debtors) of this
Agreement.
“Event of Default” means an Event of Default under (and as defined in) the Senior Bank Facilities Agreement.
“Existing High-Yield Notes” means the high-yield notes issued by ONO Finance II plc pursuant to the indenture
dated as of 28 January 2011 (the “Existing High-Yield Notes Indenture”) and maturing in 2019:
(a)
(b)
in the aggregate nominal amount of two hundred and ninety five million (€295,000,000) Euros, bearing
nominal annual fixed interest at 11.125% per annum; and
in the aggregate nominal amount of two hundred and twenty five million ($225,000,000) US Dollars,
bearing nominal annual fixed interest at 10.875% per annum,
and guaranteed on a senior basis by Midco and on a senior subordinated basis by Cableuropa.
“Existing High-Yield Notes Documents” means:
(a)
(b)
(c)
the Existing High-Yield Notes;
the Existing High-Yield Notes Indenture; and
the High-Yield Proceeds Loan Agreements relating to the Existing High-Yield Notes.
“Facilities Hedge Agreement” means the financial transactions master agreement or agreements (conforming,
either to the ISDA form of the International Swaps and Derivatives Association, Inc. or to the CMOF form of the
Asociación Española de Banca)) and the corresponding confirmation or confirmations thereof to hedge interest rate
or exchange rate fluctuations in respect of the Senior Bank Facilities executed between Cableuropa and each
Facilities Hedge Entity, or a designated company within its group, together with any subsequent amendments hereto
and novations thereof.
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“Facilities Hedge Entity” means any Senior Lender or Senior Lenders (or the Affiliate or Related Fund of a Senior
Lender) that may, at any time, be Cableuropa’s counterparty under each Facilities Hedge Agreement and any
subsequent amendment thereto or novation thereof (provided that if any such person ceases to be a Senior Lender or
an Affiliate or Related Fund of a Senior Lender after it has entered into such arrangements, that shall not prevent it
from continuing to be a Hedge Entity).
“Final Discharge Date” means the later to occur of the Senior Liabilities Discharge Date and the Subordinated
Liabilities Discharge Date.
“Future High-Yield Notes” means:
(a)
(b)
any high-yield notes or similar financial products hereafter issued by any person who is not a member of
the Group with a personal unlimited guarantee from all or any of the Debtors; and
the agreements (including any agreements in relation to High-Yield Proceeds Loans used to on-lend the
proceeds of such issuances to any of the Debtors) related to any issuance described under paragraph
(a) above, and/or any bridge loan granted in connection with such issuance,
provided that, in each case, (i) such indebtedness is subordinated to the rights of the Secured Parties arising from
the Senior Debt Documents under conditions substantially similar in all material respects to those of the Existing
High-Yield Notes and related High-Yield Proceeds Loans and having a maturity equal to or longer than the maturity
of the Existing High Yield Notes, (ii) the payment terms of any High-Yield Proceeds Loans or similar agreements
used to on-lend the proceeds of such issuances to any of the Debtors are the same as the payment terms of the
underlying Future High-Yield Notes except for any additional interest or fees that may be agreed between the
relevant issuer and the Debtors, but in any event such additional interest or fees shall not exceed the amount
required in order to ensure that the relevant issuer receives the minimum customary tax profit (after payment of
corporate expenses which, for the avoidance of doubt, shall be permitted to be paid), and (iii) the relevant issuer
accedes to this Agreement pursuant to Clause 15.6 (Creditor/Agent/Trustee Accession Undertaking).
“Future High-Yield Notes Documents” means:
(a)
(b)
(c)
the global notes in respect of Future High-Yield Notes;
the indentures pursuant to which Future High-Yield Notes are issued (including any ancillary documents
entered into pursuant to such indentures); and
any High-Yield Proceeds Loan Agreements relating to Future High-Yield Notes.
“Future High-Yield Notes Trustee” means any trustee for any holders of Future High-Yield Notes which has
acceded to this Agreement pursuant to Clause 15.6 (Creditor/Agent/Trustee Accession Undertaking).
“Future Subordinated Facilities” means any subordinated facilities, including in the form of mezzanine facilities
agreements or second lien facilities agreements or similar financial arrangements, hereafter entered into by any of
the Debtors or with a personal unlimited guarantee from all or any of the Debtors and/or any loan or similar
instrument used to on-lend funds to any Debtor (such loan or instrument being a “Future Subordinated Facilities
Proceeds Loan”) and/or any bridge loans granted in connection with such facilities, provided that:
(a)
(b)
(c)
(d)
such indebtedness of the Debtors (whether on account of principal, interest of any kind, fees, expenses or
any other cause) is subordinated to the rights of the Secured Parties arising from the Senior Debt
Documents under this Agreement or under conditions substantially similar in all material respects to those
contained in this Agreement (provided that these facilities may be secured with second lien and/or
second ranking in rem security to the extent the granting of such security is not in contravention of any
Financial Debt (as defined in the Senior Bank Facilities Agreement) of the Debtors then existing);
the payment terms of the relevant Future Subordinated Facilities Proceeds Loan are the same as the
payment terms of the underlying Future Subordinated Facilities except for any additional interest or fees
that may be agreed between the relevant issuer or borrower and the Debtors, but in any event such
additional interest or fees shall not exceed the amount required in order to ensure that the relevant issuer
or borrower receives the minimum customary tax profit;
the creditors (or a Subordinated Agent on their behalf) of such indebtedness accede to this Agreement
pursuant to Clause 15.6 (Credit/Agent/ Trustee Accession Undertaking); and
none of the Future Subordinated Facilities (nor any agreements related thereto) conflicts in any material
respect with any Senior Debt Document or results in a breach or termination of any Senior Debt
Document.
B-6

“Future Subordinated Facilities Document” means any agreement or document in respect of any Future
Subordinated Facilities.
“Future Subordinated Facilities Liabilities” means the Liabilities owed by the Debtors to any creditor under any
Future Subordinated Facilities Document if that creditor (or a Subordinated Agent on its behalf) has acceded to this
Agreement pursuant to Clause 15.6 (Creditor/Agent/Trustee Accession Undertaking).
“Future Subordinated Facilities Proceeds Loan” has the meaning given to it in the definition of “Future
Subordinated Facilities”.
“GCO” means Grupo Corporativo ONO, S.A.
“Hedge Entities” means:
(a)
(b)
(c)
the Original Hedge Entities;
any Facilities Hedge Entity; and
any other Senior Lender (or an Affiliate or Related Fund of a Senior Lender), which may enter into any
foreign exchange or interest rate protection arrangements with any Debtor under paragraph (c) of the
definition of Permitted Hedge Agreements (provided that if any such person ceases to be a Senior Lender
or an Affiliate or Related Fund of a Senior Lender after it has entered into such arrangements, that shall
not prevent it from continuing to be a Hedge Entity),
which in each case is a Party on the date of this Agreement or has acceded to this Agreement pursuant to
Clause 15.6 (Creditor/Agent/Trustee Accession Undertaking).
“Hedge Excess” means the amount by which the aggregate amount of Restricted Hedging Liabilities exceeds
€200,000,000.
“Hedging Ancillary Document” means an Ancillary Document which relates to or evidences the terms of an
Ancillary Facility made available by way of a hedging facility.
“High-Yield Noteholders” means any registered or beneficial holders of High-Yield Notes.
“High-Yield Notes” means the Existing High-Yield Notes and any Future High-Yield Notes.
“High-Yield Notes Documents” means the Existing High-Yield Notes Documents and any Future High-Yield
Notes Documents.
“High-Yield Notes Issuer” means the Existing High-Yield Notes Issuer and any issuer of Future High-Yield Notes.
“High-Yield Notes Liabilities” means, without double counting, the Liabilities owed by the Debtors to any
High-Yield Notes Trustee or High-Yield Noteholder or (in its capacity as a creditor under a High-Yield Proceeds
Loan) any High-Yield Notes Issuer.
“High-Yield Notes Trustee” means:
(a)
(b)
the Existing High-Yield Notes Trustee: and
any Future High-Yield Notes Trustee.
“High-Yield Proceeds Loan Agreement” means any agreement between a High-Yield Notes Issuer and a Debtor
in relation to a High-Yield Proceeds Loan.
“High-Yield Proceeds Loan” means a loan:
(a)
(b)
advanced by an issuer of High-Yield Notes to on-lend the proceeds of the relevant High-Yield Notes to a
Debtor; and
subordinated to the rights of the Secured Parties arising from the Senior Debt Documents on the terms set
out in this Agreement.
B-7

“High-Yield Trustee Amounts” means fees and expenses of, and amounts incurred by and/or payable to, a High-
Yield Notes Trustee (and for the avoidance of doubt, shall include any amounts payable to a High-Yield Notes
Trustee personally by way of indemnity and/or remuneration), pursuant to the relevant indenture (including
guarantees of such amounts contained therein) or any other document entered into in connection with the issuance
of the relevant High-Yield Notes; and also, without limitation, (i) compensation for, and the fees and expenses of,
the collection by a High-Yield Notes Trustee of any amount payable to a High-Yield Notes Trustee for the benefit
of the relevant High-Yield Noteholders, (ii) fees and expenses of a High-Yield Notes Trustee’s agents and counsel,
and (iii) the costs of any actual or attempted Enforcement Action (including legal and other professional advisory
fees) which are recoverable pursuant to the terms of the relevant High-Yield Notes (provided that, for the
avoidance of doubt, High-Yield Trustee Amounts shall not include any amount of principal or interest payable in
respect of the High-Yield Notes).
“Holding Company” means, in relation to a person, any other person in respect of which it is a Subsidiary.
“Impaired Agent” means the Intercreditor Agent at any time when:
(a)
(b)
(c)
(d)
it has failed to make (or has notified a Party that it will not make) a payment required to be made by it
under the Finance Documents by the due date for payment;
the Intercreditor Agent otherwise rescinds or repudiates a Finance Document;
(if the Intercreditor Agent is also a Senior Lender) it is a Defaulting Lender under paragraph (a) or (b) of
the definition of “Defaulting Lender” as defined in clause 1.1 (Definitions) of the Senior Bank Facilities
Agreement; or
an Intercreditor Agent Insolvency Event has occurred and is continuing,
unless, in the case of paragraph (a) above:
(i)
its failure to pay is caused by:
(A)
(B)
administrative or technical error; or
a Disruption Event; and
payment is made within three Business Days of its due date; or
(ii)
the Intercreditor Agent is disputing in good faith whether it is contractually obliged to make the
payment in question.
“Insolvency Law” means the Spanish Law 22/2003 of 9 July 2003 (Ley 22/2003 de 9 de julio) or any analogous
law applicable to any Debtor not incorporated in Spain.
“Intercreditor Agent Insolvency Event” means, in relation to the Intercreditor Agent or any other person, that the
Intercreditor Agent or that person:
(a)
(b)
(c)
(d)
is dissolved (other than pursuant to a consolidation, amalgamation or merger);
becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its
debts as they become due;
makes a general assignment, arrangement or composition with or for the benefit of its creditors;
institutes or has instituted against it, by a regulator, supervisor or any similar official with primary
insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or
organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency
or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting
creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator,
supervisor or similar official;
B-8

(e)
has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is
presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition is instituted or presented by a person or entity not
described in paragraph (d) above and:
(i)
(ii)
results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the
making of an order for its winding-up or liquidation; or
is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution
or presentation thereof;
(f)
(g)
(h)
(i)
(j)
(k)
has exercised in respect of it one or more of the stabilisation powers pursuant to Part 1 of the Banking Act
2009 and/or has instituted against it a bank insolvency proceeding pursuant to Part 2 of the Banking Act
2009 or a bank administration proceeding pursuant to Part 3 of the Banking Act 2009;
has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger);
seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator,
receiver, trustee, custodian or other similar official for it or for all or substantially all its assets;
has a secured party take possession of all or substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially
all its assets and such secured party maintains possession, or any such process is not dismissed,
discharged, stayed or restrained, in each case within 30 days thereafter;
causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has
an analogous effect to any of the events specified in paragraphs (a) to (i) above; or
takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the
foregoing acts.
“ISDA Master Agreement” means a 1992 ISDA Master Agreement or a 2002 ISDA Master Agreement.
“Liabilities” means all present and future liabilities and obligations at any time of any member of the Group to any
Creditor under the Debt Documents, both actual and contingent and whether incurred solely or jointly or in any
other capacity together with any of the following matters relating to or arising in respect of those liabilities and
obligations:
(a)
(b)
(c)
(d)
any refinancing, novation, deferral or extension;
any claim for breach of representation, warranty or undertaking or on an event of default or under any
indemnity given under or in connection with any document or agreement evidencing or constituting any
other liability or obligation falling within this definition;
any claim for damages or restitution; and
any claim as a result of any recovery by any member of the Group of a Payment on the grounds of
preference or otherwise,
and any amounts which would be included in any of the above but for any discharge, non provability,
unenforceability or non allowance of those amounts in any insolvency or other proceedings.
“Majority of Creditors” means, at any time, Senior Creditors and Subordinated Creditors to whom in aggregate
more than 66.66% of the total Senior Liabilities and Subordinated Liabilities (taken together) are owed. For the
purpose of calculating the portion of such Liabilities corresponding to the Permitted Hedge Agreements, this will be
the loss (if any) suffered by the Hedge Entities as a result of an Early Termination Date (as this term is defined in
the Permitted Hedge Agreements) occurring (or being deemed to occur) under any relevant Permitted Hedge
Agreement. Such loss will be calculated:
(a)
in accordance with Market Quotation and Second Method as contemplated by and in accordance with
Section 6(e) (Payments on Termination) of the 1992 ISDA Master Agreement (if the relevant Permitted
Hedge Agreement is based on the 1992 ISDA Master Agreement);
B-9

(b)
(c)
in accordance with Section 6(e) (Payments on Termination) of the 2002 ISDA Master Agreement (if the
relevant Permitted Hedge Agreement is based on the 2002 ISDA Master Agreement); or
in accordance with the equivalent system if the relevant Permitted Hedge Agreement is based on the
CMOF form of the Asociación Española de Banca.
If such loss is to be calculated prior to an Early Termination Date (as defined in the relevant ISDA Master
Agreement) (or the equivalent concept in the CMOF form) having occurred, such loss will be calculated as if the
Early Termination Date (or the equivalent concept in the CMOF form) had occurred on the date the relevant
calculation falls to be made. However: (a) as from (and including) the Senior Lender Liabilities Discharge Date,
references made in this Agreement to the Majority of Creditors shall be construed as being made only to the Hedge
Entities and Subordinated Creditors to whom in aggregate more than 66.66% of the total Permitted Hedging
Liabilities and the Subordinated Liabilities are owed; and (b) as from (and including) the Senior Liabilities
Discharge Date, references made in this Agreement to the Majority of Creditors shall be construed as being made
only to the Subordinated Creditors to whom in aggregate more than 66.66% of the total Subordinated Liabilities are
owed.
“Majority of Senior Creditors” means, at any time, Senior Creditors to whom in aggregate more than 66.66% of
the total Senior Liabilities are owed. For the purpose of calculating the portion of the Senior Liabilities
corresponding to the Permitted Hedge Agreements, this will be the loss (if any) suffered by the Hedge Entities as a
result of an Early Termination Date (as defined in the relevant ISDA Master Agreement) (or the equivalent concept
in the CMOF form) occurring (or being deemed to occur) under any relevant Permitted Hedge Agreement. Such
loss will be calculated:
(a)
(b)
(c)
in accordance with Market Quotation and Second Method as contemplated by and in accordance with
Section 6(e) (Payments on Termination) of the 1992 ISDA Master Agreement (if the relevant Permitted
Hedge Agreement is based on the 1992 ISDA Master Agreement);
in accordance with Section 6(e) (Payments on Termination) of the 2002 ISDA Master Agreement (if the
relevant Permitted Hedge Agreement is based on the 2002 ISDA Master Agreement); or
in accordance with the equivalent system if the relevant Permitted Hedge Agreement is based on the
CMOF form of the Asociación Española de Banca.
If such loss is to be calculated prior to an Early Termination Date (as defined in the relevant ISDA Master
Agreement) (or the equivalent concept in the CMOF form) having occurred, such loss will be calculated as if the
Early Termination Date (or the equivalent concept in the CMOF form) had occurred on the date the relevant
calculation falls to be made. However, as from (and including) the Senior Lender Liabilities Discharge Date,
references made in this Agreement to the Majority of Senior Creditors shall be construed as being made only to the
Hedge Entities to whom in aggregate more than 66.66% of the total Permitted Hedging Liabilities are owed.
“Majority of Senior Lenders” means at any time Senior Lenders to whom in aggregate more than 66.66% of the
total Senior Lender Liabilities are owed.
“Midco” means ONO Midco, S.A.U.
“New Bank Tranche” has the meaning given to such term in the Senior Bank Facilities Agreement.
“New Bank Tranche Lender” has the meaning given to such term in the Senior Bank Facilities Agreement.
“Obligors” means the Obligors under (and as defined in) the Senior Bank Facilities Agreement.
“Original Hedge Agreements” means [ ] to hedge US Dollar-Euro exchange rate risk with respect to the
coupon payments and principal on the Existing High-Yield Notes, together with the relevant ISDA Master
Agreements and schedules and any amendments thereto and novations thereof.
“Parent Company” means GCO, Midco or any other company (other than a Permitted Shareholder (as defined in
the Senior Bank Facilities Agreement)) that is not a member of the Group which directly or indirectly controls the
Debtors.
“Participating Member State” means any member state of the European Union that adopts or has adopted the
Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and
Monetary Union.
“Parties” means the parties to this Agreement.
B-10

“Payment” means, in respect of any Liabilities (or any other liabilities or obligations), a payment, prepayment,
repayment, redemption, defeasance or discharge of those Liabilities (or other liabilities or obligations).
“Payment Blockage Notice” has the meaning given to such term in paragraph (b) of Clause 5.3 (Payment blockage
provisions).
“Permitted Enforcement Action” means a sale by way of enforcement by any Senior Lenders (through the
Security Agent) under the Senior Lender Finance Documents of any Transaction Security of (i) all of the capital
stock of Cableuropa or any Parent Company; or (ii) all or substantially all of the assets of Cableuropa, in each case,
so long as:
(a)
(b)
(c)
the proceeds of such sale are in cash (or substantially all in cash) and are applied in the manner described
in Clause 10 (Enforcement of Transaction Security) of this Agreement;
Cableuropa is released from its obligations in respect of all other debt that is subordinated or junior in
right of payment to the High-Yield Notes and all other debt ranking equally with the High-Yield Notes,
provided, however, that nothing in this paragraph (b) shall require the release by Cableuropa or any of
its Subsidiaries of any of its or their obligations in respect of any other debt that is senior in right of
payment to the High-Yield Notes, including any of their obligations in respect of the Senior Liabilities;
and
the sale is made pursuant to either a public auction or a competitive bid process to obtain the best price
reasonably obtainable given the then-current condition (financial or otherwise), earnings, business, assets
and prospects of Cableuropa and its Subsidiaries, the Senior Lenders having consulted with an
internationally recognised investment bank (including without limitation and to the extent appropriate a
Senior Lender or a relationship bank of Cableuropa or its Subsidiaries) or an internationally recognized
accounting firm regarding the appropriate procedures for obtaining the best price for the shares or assets,
considered the recommendations of that investment bank or accounting firm and used its reasonable
efforts to cause the procedures recommended by that investment bank or accounting firm to be
implemented in all material respects in relation to the sale and to permit Subordinated Creditors and
holders of High-Yield Notes to participate in the sale process as bidders, provided, however, that the
Senior Lenders shall not be under any further obligation to cause such recommendation to be
implemented to the extent not implemented in connection with such sale by the relevant court, authority
or other third party required to act in connection with such sale, provided further, however, that such
reasonable efforts will, to the extent permitted by applicable law, include attempting to conduct such sale
process other than through a court or legal proceeding.
“Permitted Hedge Agreements” means (a) the Original Hedge Agreements; (b) each Facilities Hedge Agreement;
and (c) any foreign exchange or interest rate protection arrangements entered into by the Obligors to hedge on a
prudent, non-speculative basis, their foreign exchange or interest rate exposure under any Permitted Debt (as
defined in the Senior Bank Facilities Agreement) or accounts payable, provided that such arrangement is entered
into with an entity that is a Senior Lender or an Affiliate of a Senior Lender and that such Senior Lender or, as the
case may be, Affiliate, accedes to this Agreement, as a Hedge Entity pursuant to Clause 15.6 (Creditor/Agent/
Trustee Accession Undertaking) (provided that if any such Hedge Entity ceases to be a Senior Lender or an
Affiliate of a Senior Lender after it has entered into any such arrangements, that shall not prevent those
arrangements from being Permitted Hedge Agreements).
“Permitted Hedging Liabilities” means the Liabilities owed by any Debtor to the Hedge Entities under the
Permitted Hedge Agreements.
“Permitted Junior Securities” means, with respect to any person, (a) capital stock in such person; or (b) debt
securities of such person that are subordinated to all Senior Liabilities and any debt securities issued in exchange for
Senior Liabilities to substantially the same extent as, or to a greater extent than, the Subordinated Liabilities are
subordinated to the Senior Liabilities pursuant to this Agreement.
“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the
Charged Property.
“Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same
investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or
investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment
manager or investment adviser of the first fund.
“Relevant Ancillary Lender” means, in respect of any Ancillary Facility Cash Cover, the Ancillary Lender (if any)
for which that Ancillary Facility Cash Cover is provided.
B-11

“Replacement Revolving Facility” has the meaning given to such term in the Senior Bank Facilities Agreement.
“Replacement Revolving Facility Lender” has the meaning given to such term in the Senior Bank Facilities
Agreement.
“Restricted Hedging Liabilities” means Permitted Hedging Liabilities in respect of Permitted Hedge Agreements
the purpose of which is to hedge foreign exchange rate risk or interest rate exposure under any debt that is
subordinated to the Senior Lender Liabilities.
“Secured Obligations” means all the Liabilities and all other present and future obligations at any time due, owing
or incurred by any member of the Group and by each Debtor to any Secured Party under the Senior Debt
Documents, both actual and contingent, and whether incurred solely or jointly and as principal or surety or in any
other capacity.
“Secured Parties” means the Security Agent, any Receiver or Delegate, each Senior Creditor and the Senior Agent.
“Security Property” means:
(a)
(b)
(c)
the Transaction Security expressed to be granted in favour of the Security Agent as agent for the Secured
Parties and all proceeds of that Transaction Security;
all obligations expressed to be undertaken by a Debtor to pay amounts in respect of the Liabilities to the
Security Agent as agent for the Secured Parties and secured by the Transaction Security together with all
representations and warranties expressed to be given by a Debtor in favour of the Security Agent as agent
for the Secured Parties;
any other amounts or property, whether rights, entitlements, choses in action or otherwise, actual or
contingent, which the Security Agent is required by the terms of the Debt Documents to hold as agent for
the Secured Parties.
“Senior Agent” means the “Agent” under (and as defined in) the Senior Bank Facilities Agreement.
“Senior Bank Facilities” means the “Facilities” under (and as defined in) the Senior Bank Facilities Agreement.
“Senior Bank Facilities Agreement” means the EUR2,400,000,000 and US$1,000,000,000 senior bank facilities
agreement, dated on or about the date of this Agreement, between, among others, Cableuropa as original borrower
and original guarantor, the Senior Arrangers as mandated lead arrangers and the Senior Agent as senior agent and
the Security Agent as security agent.
“Senior Creditors” means the Senior Lenders and the Hedge Entities, which in each case is a Party on the date of
this Agreement or has acceded to this Agreement pursuant to Clause 15.6 (Creditor/Agent/Trustee Accession
Undertaking).
“Senior Debt Document” means the Senior Lender Finance Documents and the Permitted Hedge Agreements.
“Senior Lender Finance Documents” has the meaning given to the term “Finance Documents” in the Senior Bank
Facilities Agreement.
“Senior Lender Liabilities” means the Liabilities owed by the Debtors to the Senior Lenders under the Senior
Lender Finance Documents.
“Senior Lender Liabilities Discharge Date” means the date on which all the Senior Lender Liabilities have been
unconditionally and irrevocably paid and discharged in full, no further payment obligations can arise under or in
respect of the Senior Lender Finance Documents and none of the Senior Lenders is under any commitment,
obligation or liability (whether actual or contingent) to make advances or provide other financial accommodation to
any Debtor under any of the Senior Lender Finance Documents.
“Senior Lenders” means each Lender under (and as defined in) the Senior Bank Facilities Agreement and each
Ancillary Lender, which in each case is a Party on the date of this Agreement or has acceded to this Agreement
pursuant to Clause 15.6 (Creditor/Agent/Trustee Accession Undertaking).
“Senior Liabilities” means the Senior Lender Liabilities and the Permitted Hedging Liabilities.
“Senior Liabilities Discharge Date” means the date on which all the Senior Liabilities have been unconditionally
and irrevocably paid and discharged in full, no further payment obligations can arise under or in respect of the
B-12

Senior Liabilities and none of the Senior Creditors is under any commitment, obligation or liability (whether actual
or contingent) to make advances or provide other financial accommodation to any Debtor under any of the Senior
Debt Documents.
“Sponsor Affiliate” means any Parent Company and each of its Affiliates, any trust of which any Parent Company
or any of its Affiliates is a trustee, any partnership of which any Parent Company or any of its Affiliates is a partner
and any trust, fund or other entity which is managed by, or is under the control of, any Parent Company or any of its
Affiliates provided that any such trust, fund or other entity which has been established for at least 6 months solely
for the purpose of making, purchasing or investing in loans or debt securities and which is managed or controlled
independently from all other trusts, funds or other entities managed or controlled by any Parent Company or any of
its Affiliates which have been established for the primary or main purpose of investing in the share capital of
companies shall not constitute a Sponsor Affiliate.
“SPV” has the meaning given to such term in the Senior Bank Facilities Agreement.
“SPV Tranche” has the meaning given to such term in the Senior Bank Facilities Agreement.
“Subordinated Administration Payments” means payments by a Debtor not to exceed in aggregate a maximum
amount of one million five hundred thousand Euros (€1,500,000) per annum required:
(a)
(b)
to pay audit fees, directors fees, taxes and any other proper and incidental expenses required to maintain
the corporate existence of any High-Yield Notes Issuer; and
to comply with its or any High-Yield Notes Issuer’s other obligations under the High-Yield Notes (other
than payments of interest and principal), including fees, costs and expenses relating to financial reporting
and other public reporting, listing, registration and ongoing administration of any High-Yield Notes Issuer
and the High-Yield Notes.
“Subordinated Agent” means any agent under a Future Subordinated Facilities Document which has acceded to
this Agreement in accordance with Clause 15.6 (Creditor/Agent/Trustee Accession Undertaking).
“Subordinated Agent Amounts” means the fees, costs and expenses of any Subordinated Agent (including any
amount payable by way of indemnity, remuneration or reimbursement for expenses incurred) payable to it pursuant
to this Agreement or the Subordinated Debt Documents.
“Subordinated Creditors” means:
(a)
(b)
(c)
any High-Yield Notes Trustee or any High-Yield Noteholders;
any High-Yield Notes Issuer which is a creditor under any High-Yield Proceeds Loan; and
any Subordinated Agent and any creditor under any Future Subordinated Facilities,
which, in each case, is a Party on the date of this Agreement or has acceded to this Agreement pursuant to Clause
15.6 (Creditor/Agent/Trustee Accession Undertaking).
“Subordinated Debt Document” means any High-Yield Notes Documents and any Future Subordinated Facilities
Documents.
“Subordinated Liabilities” means the Liabilities owed to the Subordinated Creditors by the Debtors under the
Subordinated Debt Documents.
“Subordinated Liabilities Discharge Date” means the date on which all the Subordinated Liabilities have been
unconditionally and irrevocably paid and discharged in full, no further payment obligations can arise under or in
respect of the Subordinated Liabilities, none of the Subordinated Creditors is under any commitment, obligation or
liability (whether actual or contingent) to make advances or provide other financial accommodation to any Debtor
under any of the Subordinated Debt Documents.
“Subsidiary” means any person (referred to as the “first person”) in respect of which another person (referred to as
the “second person”):
(a)
Controls, directly or indirectly, that first person (and for the purposes of this paragraph, “Control” means
the dominant position of a legal entity, an individual, a group of individuals or group of legal entities
acting in concert with respect to any other entity or group of entities over which they exercise control and
with which they form a decision-making unit, all in accordance with Article 42 of the Spanish Code of
Commerce (Código de Comercio)); or
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(b)
(c)
(d)
(e)
(f)
(g)
holds a majority of the voting rights in that first person or has the right under the constitution of the first
person to direct the overall policy of the first person or alter the terms of its constitution; or
is a member of that first person and has the right to appoint or remove a majority of its board of directors
or equivalent administration, management or supervisory body; or
has the right to exercise a dominant influence (which must include the right to give directions with respect
to operating and financial policies of the first person which its directors are obliged to comply with
whether or not for its benefit) over the first person by virtue of provisions contained in the articles (or
equivalent) of the first person or by virtue of a control contract which is in writing and is authorised by the
articles (or equivalent) of the first person and is permitted by the law under which such first person is
established; or
is a member of that first person and controls alone, pursuant to an agreement with other shareholders or
members, a majority of the voting rights in the first person or the rights under its constitution to direct the
overall policy of the first person or alter the terms of its constitution; or
has the power to exercise, or actually exercises dominant influence or control over the first person; or
together with the first person are managed on a unified basis,
and for the purposes of this definition, a person shall be treated as a member of another person if any of that
person’s Subsidiaries is a member of that other person or, if any shares in that other person are held by a person
acting on behalf of it or any of its Subsidiaries.
“Transaction Security” means the Security created or expressed to be created in favour of the Security Agent or, as
the case may be, the Secured Parties, pursuant to the Security Agreements under (and as defined in) the Senior Bank
Facilities Agreement.
1.2 Construction
(a)
Unless a contrary indication appears, a reference in this Agreement to:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
any “Agent”, “Ancillary Lender”, “Arranger”, “Company”, “Debtor”, “Hedge Entity”,
“High-Yield Notes Issuer”, “Intercreditor Agent”, “Party”, “Security Agent”, “Senior
Creditor”, “Senior Lender”, “Subordinated Creditor” or“High-Yield Notes Trustee” shall
be construed to be a reference to it in its capacity as such and not in any other capacity;
any “Agent”, “Ancillary Lender”, “Arranger”, “Company”, “Debtor”, “Hedge Entity”,
“High-Yield Notes Issuer”, “Intercreditor Agent”, “Party”, “Security Agent”, “Senior
Creditor”, “Senior Lender”, “Subordinated Creditor” or“High-Yield Notes Trustee” or
any other person shall be construed so as to include its successors in title, permitted assigns and
permitted transferees and, in the case of the Security Agent, any person for the time being
appointed as Security Agent or Security Agents in accordance with this Agreement;
“assets” includes present and future properties, revenues and rights of every description;
a “Debt Document” or any other agreement or instrument is (other than a reference to a “Debt
Document” or any other agreement or instrument in “original form”) a reference to that Debt
Document, or other agreement or instrument, as amended, novated, supplemented, extended or
restated as permitted by this Agreement;
for the purposes of paragraph (b) of the definition of Permitted Enforcement Action and the sub
paragraph (a)(ii) of Clause 5.4 (Release of subordinated guarantees) “debt” shall have the
meaning originally given to the term “Debt” as defined in the Existing High-Yield Notes
Indenture;
“enforcing” (or any derivation) the Transaction Security shall include the appointment of an
administrator of a Debtor by the Security Agent;
“indebtedness” includes any obligation (whether incurred as principal or as surety) for the
payment or repayment of money, whether present or future, actual or contingent;
a “person” includes any individual, firm, company, corporation, government, state or agency of
a state or any association, trust, joint venture, consortium or partnership (whether or not having
separate legal personality);
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(ix)
(x)
a “regulation” includes any regulation, rule, official directive, request or guideline (whether or
not having the force of law) of any governmental, intergovernmental or supranational body,
agency, department or of any regulatory, self-regulatory or other authority or organisation; and
a provision of law is a reference to that provision as amended or re-enacted.
(b)
(c)
(d)
Section, Clause and Schedule headings are for ease of reference only.
An Event of Default or a default is “continuing” if it has not been remedied or waived.
Any capitalised term used but not defined in this Agreement shall have the meaning given to it in the
Senior Bank Facilities Agreement.
1.3 Currency
(a)
In this Agreement:
(i) “EUR”, “€” and “Euro” means the single currency unit of the Participating Member States, “£”
and “Sterling” denote lawful currency of the United Kingdom and “US$” and “US Dollars”
denotes lawful currency of the United States of America;
(ii)
(iii)
“Euro Amount” means, in relation to any amount, that amount converted (to the extent not
already denominated in Euro) into Euro at the Agent’s Spot Rate of Exchange on the Business
Day prior to the relevant calculation; and
“Agent’s Spot Rate of Exchange” means, in respect of the conversion of one currency (the
“First Currency”) into another currency (the “Second Currency”) the spot rate of exchange
of, as applicable, the Intercreditor Agent or the Security Agent, for the purchase of the Second
Currency with the First Currency in the London foreign exchange market at or about 11:00 a.m.
on a particular day.
(b)
(c)
Unless otherwise specified, references to the equivalent of an amount specified in a particular currency
(the specified currency amount) shall be construed as a reference to the amount of any other relevant
currency which can be purchased with the specified currency amount at the relevant Agent’s Spot Rate of
Exchange on the date on which the calculation falls to be made for spot delivery, as determined by the
relevant Agent.
Where any provision of this Agreement requires a commitment for any Liabilities in US Dollars to be
aggregated or compared with a commitment for any Liabilities in Euro, the US Dollar commitment shall
be notionally converted into Euro:
(i)
(ii)
(iii)
in the case of a commitment which is undrawn, at the relevant Agent’s Spot Rate of Exchange
on the date of this Agreement;
in the case of a drawn commitment (other than in relation to SPV Tranches), at the same
weighted average rate of exchange used to determine the Euro Amount of the Liabilities
comprised in that drawn commitment; and
in the case of a drawn commitment under an SPV Tranche, at the rate of exchange used to
determine the Euro Amount of the Liabilities comprised in that drawn commitment as at the
date of incorporation of (in the case of SPV Tranche 3) the tranche named “SPV Tranche 3”
into the Existing Credit Agreement or (in the case of any Additional SPV Tranche denominated
in US Dollars) the relevant Additional SPV Tranche into the Senior Bank Facilities Agreement
pursuant to clause 2.2 (Additional SPV Tranches) thereof.
(d)
Where any provision of this Agreement requires any Liabilities in US Dollars to be aggregated or
compared with Liabilities in Euro, the US Dollar Liabilities shall be taken into account at their Euro
Amount.
1.4 Third Party Rights
(a)
Unless expressly provided to the contrary in this Agreement, a person who is not a Party has no right
under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Rights Act”) to enforce or to
enjoy the benefit of any term of this Agreement.
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(b)
(c)
Notwithstanding any term of this Agreement, the consent of any person who is not a Party is not required
to rescind or vary this Agreement at any time.
Any Receiver or Delegate and any person described in paragraph (c) of Clause 2.4 (Powers of
representation of the Security Agent) or paragraph (c) of Clause 2.5 (Powers of representation of the
Intercreditor Agent) may, subject to this Clause 1.4 (Third Party Rights) and the Third Parties Rights Act,
rely on any Clause of this Agreement which expressly confers rights on it.
1.5 Date of effectiveness of this Agreement
The provisions of this Agreement shall take effect on the date of first utilisation of the Senior Bank Facilities in
accordance with the terms of the Senior Bank Facilities Agreement.
2. SECURITY AGENT AND INTERCREDITOR AGENT
2.1 Appointment of the Security Agent and Intercreditor Agent
(a)
(b)
(c)
The Secured Parties hereby appoint the Security Agent to act as the agent of each and every one of them,
in respect of the exercise of their rights arising from this Agreement and under the Transaction Security,
all of the foregoing pursuant to the terms and conditions contained herein. Such appointment shall not be
in detriment of any rights which the Security Agent may have as Senior Agent under the Senior Bank
Facilities Agreement. The Security Agent hereby accepts such appointment.
The Senior Creditors and the Subordinated Creditors hereby appoint the Intercreditor Agent to act as the
agent of each and every one of them, in respect of the exercise of their rights and obligations arising from
this Agreement pursuant to the terms and conditions contained herein (except for those of the Security
Agent in respect of the Secured Parties). Such appointment shall not be in detriment of any rights which
the Intercreditor Agent may have as Senior Agent under the Senior Bank Facilities Agreement. The
Intercreditor Agent hereby accepts such appointment.
For the avoidance of doubt, nothing in this Clause 2 (Security Agent and Intercreditor Agent) shall
prevent the Security Agent and the Intercreditor Agent from being one and the same entity.
2.2 Replacement of the Security Agent
(a)
(b)
(c)
(d)
(e)
(f)
(g)
The Security Agent may resign and appoint one of its affiliates as successor by giving notice to the other
Parties.
Alternatively, the Security Agent may resign from its position by notice to the other Parties, in which case
the Senior Creditors shall have the right to appoint a new Security Agent from among the Senior Creditors
by agreement of the Majority of Senior Creditors with the consent of the Company, which consent shall
not be unreasonably withheld or delayed.
If, within forty-five (45) days following the notice, the Majority of Senior Creditors have not made the
appointment, or the appointee has not accepted the appointment, the Security Agent shall have the right to
make the appointment itself from among the Senior Creditors with the consent of the Company, which
consent shall not be unreasonably withheld or delayed.
The resignation of the retiring Security Agent and the appointment of the successor Security Agent shall
take effect from the date of acceptance of its appointment by the successor Security Agent by notice to the
other Parties.
The retiring Security Agent shall, at its own cost, make available to the successor Security Agent such
documents and records and provide such assistance as the successor Security Agent may reasonably
request for the purposes of performing its functions as Security Agent.
Upon the appointment of a successor, the retiring Security Agent shall be discharged from any further
obligation in respect of the Debt Documents (other than its obligations under paragraph (e) above) but
shall, in respect of any act or omission by it whilst it was the Security Agent, remain entitled to the benefit
of Clause 2.4 (Powers of representation of the Security Agent), paragraph (a) of Clause 2.8
(Reimbursement of expenses) and paragraph (a) of Clause 2.9 (Indemnity). Its successor and each of the
other Parties shall have the same rights and obligations amongst themselves as they would have had if that
successor had been an original Party.
If the Security Agent merges or is absorbed by another entity, the resulting entity shall be subrogated to
all of the corresponding rights and obligations of the Security Agent.
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(h)
The Majority of Senior Creditors may, by notice to the Security Agent, require it to resign in accordance
with paragraph (b) above. In this event, the Security Agent shall resign in accordance with paragraph
(b) above, but the cost referred to in paragraph (e) above shall be for the account of the Secured Parties
which required its resignation pursuant to this paragraph (h), pro rata to their share of the Senior
Liabilities.
2.3 Replacement of the Intercreditor Agent
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
The Intercreditor Agent may resign and appoint one of its affiliates as successor by giving notice to the
other Parties.
Alternatively, the Intercreditor Agent may resign from its position by notice to the other Parties, in which
case the Senior Creditors and the Subordinated Creditors shall have the right to appoint a new
Intercreditor Agent from among the Creditors by agreement of the Majority of Creditors with the consent
of the Company, which consent shall not be unreasonably withheld or delayed.
If, within forty-five (45) days following the notice, the Senior Creditors and the Subordinated Creditors
have not made the appointment, or the appointee has not accepted the appointment, the Intercreditor
Agent shall have the right to make the appointment itself from among the Senior Creditors and the
Subordinated Creditors with the consent of the Company, which consent shall not be unreasonably
withheld or delayed.
The resignation of the retiring Intercreditor Agent and the appointment of the successor Intercreditor
Agent shall take effect from the date of acceptance of its appointment by the successor Intercreditor Agent
by notice to the other Parties.
The retiring Intercreditor Agent shall, at its own cost, make available to the successor Intercreditor Agent
such documents and records and provide such assistance as the successor Intercreditor Agent may
reasonably request for the purposes of performing its functions as Intercreditor Agent.
Upon the appointment of a successor, the Retiring Intercreditor Agent shall be discharged from any
further obligation in respect of the Debt Documents (other than its obligations under paragraph (e) above)
but shall, in respect of any act or omission by it whilst it was the Intercreditor Agent, remain entitled to
the benefit of Clause 2.5 (Powers of representation of the Intercreditor Agent), paragraph (b) of
Clause 2.8 (Reimbursement of expenses) and paragraph (b) of Clause 2.9 (Indemnity). Its successor and
each of the other Parties shall have the same rights and obligations amongst themselves as they would
have had if that successor had been an original Party.
If the Intercreditor Agent merges or is absorbed by another entity, the resulting entity shall be subrogated
to all of the corresponding rights and obligations of the Intercreditor Agent.
The Majority of Creditors may, by notice to the Intercreditor Agent, require it to resign in accordance with
paragraph (b) above. In this event, the Intercreditor Agent shall resign in accordance with paragraph
(b) above, but the cost referred to in paragraph (e) above shall be for the account of the Senior Creditors
and/or Subordinated Creditors which required its resignation pro rata to their share of the aggregate
Senior Liabilities and Subordinated Liabilities (unless the Intercreditor Agent is, at that time, an Impaired
Agent, in which case such costs shall be for the account of the Intercreditor Agent).
2.4 Powers of representation of the Security Agent
(a)
The Secured Parties irrevocably empower and entitle the Security Agent (and undertake to carry out any
actions and to execute any documents that may be required by the Security Agent to allow the following
actions to be carried out) to exercise any rights and carry out any acts which are required to comply with
the provisions set out in this Agreement, expressly including the execution of any of the following acts in
the name and on behalf of the Secured Parties (even when doing so under the legal notion of
self-contracting):
(i)
(ii)
creating, granting, accepting, releasing and terminating the Transaction Security, as well as any
other contract amending, extending, supplementing or ratifying the Transaction Security as
permitted by the Senior Lender Finance Documents;
accepting the transfer or endorsement in favour of the Secured Parties of any shares, interests,
assets, property, pledge or mortgage covered by the Transaction Security and holding them on
deposit on behalf of the Secured Parties;
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(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
appearing before a Notary Public to grant or execute any public or private deed related to this
mandate and, specifically, those deemed necessary or appropriate according to the mandate
received (including documents of formalisation, acknowledgement, confirmation, modification
and release);
issuing and receiving notifications, requests and letters of intent associated with the issues
contemplated herein;
enforcing the Transaction Security pursuant to the terms and conditions of the Transaction
Security and, in all cases, pursuant to the provisions and procedures set out in this Agreement;
filing a petition for bankruptcy (concurso) of any Debtor or any analogous procedure for a
Debtor incorporated in a jurisdiction other than Spain in accordance with the terms and
conditions of this Agreement;
after consultation with the Majority of Senior Creditors, engaging and paying for the advice or
services of any lawyers, accountants, surveyors or other specialists whose advice or services
may to it seem necessary, expedient or desirable and relying upon any advice so obtained;
carrying out as many related or supplementary acts as appropriate or necessary to fulfil its duties
under the mandate concerned; and
receiving any proceeds from the enforcement of the Transaction Security,
provided that, each Senior Creditor which is unable to authorise the Security Agent to carry out, execute,
effect or perform any exercise of their rights, powers, authorities under this Agreement and/or the
Transaction Security, including but not limited to the execution of any document, any amendment,
release, waiver, consent under a Finance Document or any action referred to in this paragraph
(a) undertakes, so long as it is a Senior Creditor:
(A)
(B)
to effect with the Security Agent, any action permitted in accordance with this
Agreement (including, without limitation, any amendment of the Transaction Security
made in accordance with Clause 11 (Amendments to Transaction Security)) or,
otherwise, to grant powers of attorney in favour of the Security Agent so that the
Security Agent can effect such action; and
to abide by and act, or refrain from acting, in accordance with any decision of the
Majority of Senior Creditors or, as the case may be, the Majority Creditors made in
accordance with this Agreement,
and further provided that any failure on the part of any Senior Creditor to comply with sub paragraphs
(i) and (ii) above shall not affect any decision of the Majority Senior Creditors or, as the case may be, the
Majority of Creditors, made in accordance with this Agreement.
(b)
(c)
Each of the Secured Parties undertakes to provide assistance to and cooperate with the Security Agent as
necessary, which includes participating in the negotiation and execution of such documents, both public
and private, as may be necessary or advisable for the execution and effectiveness of the agreements
contained in this Agreement and in the Transaction Security. It also includes, if applicable and necessary,
ratifying the actions taken by the Security Agent in the performance of its obligations under this
Agreement.
In the exercise of its powers of representation, the Security Agent shall not incur any liability if it follows
the instructions received from the Majority of Senior Creditors or if, in the absence of instructions, it acts
with prudent discretion in accordance with customary banking practices. The Security Agent may request
instructions from the Secured Parties at any time, even when it is not obliged to do so. For the avoidance
of doubt the Security Agent shall not become or have the capacity of trustee for the Secured Parties nor
shall it have any other fiduciary obligation towards them. Pursuant to these principles, and for explanatory
purposes:
(i)
none of the Security Agent, any Receiver or Delegate shall be liable to the Secured Parties for:
(A)
the adequacy, accuracy or completeness of any information (whether oral or written)
supplied by the Security Agent or any other person in or in connection with any Debt
Document or the transactions contemplated in the Debt Documents, or any other
agreement, arrangement or document entered into, made or executed in anticipation
of, under or in connection with any Debt Document;
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(B)
(C)
(D)
(E)
the legality, validity, effectiveness, adequacy or enforceability of any Debt Document,
the Security Property or any other agreement, arrangement or document entered into,
made or executed in anticipation of, under or in connection with any Debt Document
or the Security Property;
any losses to any person or any liability arising as a result of taking or refraining from
taking any action in relation to any of the Debt Documents, the Security Property or
otherwise, whether in accordance with an instruction from an Agent or otherwise
unless directly caused by its gross negligence or wilful misconduct;
the exercise of, or the failure to exercise, any judgment, discretion or power given to it
by or in connection with any of the Debt Documents, the Security Property or any
other agreement, arrangement or document entered into, made or executed in
anticipation of, under or in connection with, the Debt Documents or the Security
Property; or
any shortfall which arises on the enforcement or realisation of the Security Property;
(ii)
(iii)
the duty of information of the Security Agent shall be deemed to be limited to those
communications that are necessary for the normal fulfilment and development of the agreements
contained in this Agreement and the Transaction Security, or for the enforceability thereof; and
the Security Agent shall not have the obligation of verifying the veracity or the fulfilment of the
undertakings assumed by the relevant parties to the Transaction Security, nor shall it be obliged
to investigate the existence of possible causes of early termination or the reduction in the
solvency of the Debtors and other members of the Group.
(d)
(e)
(f)
(g)
In the fulfilment of its tasks and duties vis-à-vis the Secured Parties, the Security Agent does not assume
any liability other than that arising from gross negligence or wilful misconduct.
No Party (other than the Security Agent, or that Receiver or that Delegate) may take any proceedings
against any officer, employee or agent of the Security Agent, a Receiver or Delegate in respect of any
claim it might have against the Security Agent, a Receiver or Delegate or in respect of any act or omission
of any kind by that officer, employee or agent in relation to any Debt Document or any Security Property
and any officer, employee or agent of the Security Agent, a Receiver or Delegate may rely on this Clause
subject to Clause 1.3 (Third Party Rights) and the provisions of the Third Parties Rights Act.
The Security Agent may refrain from: (i) exercising any right, power or discretion vested in it as security
agent under this Agreement unless and until instructed by the Majority of Senior Creditors as to whether
or not such right, power or discretion is to be exercised and, if it is to be exercised, as to the manner in
which it should be exercised; and (ii) acting in accordance with any such instructions of the Majority of
Senior Creditors until it shall have received such indemnity and/or security as it may require (whether by
way of payment in advance or otherwise) for all costs, claims, losses, expenses (including legal fees) and
liabilities together with any VAT thereon which it will or may expend or incur in complying with such
instructions.
The Security Agent shall:
(i)
(ii)
(iii)
(iv)
promptly inform each Secured Party of the contents of any notice or document received by it in
its capacity as Security Agent from any other party to the Transaction Security;
as soon as it becomes aware, promptly notify each Secured Party of the occurrence of any
default by any other party to the Transaction Security;
act as security agent in respect of the Transaction Security in accordance with the instructions
given to it by the Majority of Senior Creditors which instructions shall be binding on all the
Secured Parties; and
if so instructed by the Majority of Senior Creditors, refrain from exercising any right, power or
discretion vested in it as Security Agent under this Agreement.
(h)
The Security Agent may:
(i)
assume (unless it has received actual notice to the contrary from a Hedge Entity, or from an
agent or a trustee under any of the Debt Documents) that (i) no Default has occurred under (and
as defined in) the Senior Bank Facilities Agreement, no default (howsoever described) has
B-19

occurred under any of the other Debt Documents and that no Debtor is in breach of or default
under its obligations under any of the Debt Documents and (ii) any right, power, authority or
discretion vested by any Debt Document in any person has not been exercised;
(ii)
(iii)
(iv)
engage, pay for and rely on the advice or services of any legal advisers, accountants, tax
advisers, surveyors or other experts (whether obtained by the Security Agent or by any other
Secured Party) whose advice or services may at any time seem necessary, expedient or
desirable;
if it receives any instructions or directions under Clause 10 (Enforcement of Transaction
Security) to take any action in relation to the Transaction Security, assume that all applicable
conditions under the Debt Documents for taking that action have been satisfied; and
rely upon any communication or document believed by it to be genuine and, as to any matters of
fact which might reasonably be expected to be within the knowledge of a Secured Party, a
Creditor or a Debtor, upon a certificate signed by or on behalf of that person.
(i)
Without affecting the responsibility of any Debtor for information supplied by it or on its behalf in
connection with any Debt Document, each Secured Party confirms to the Security Agent that it has been,
and will continue to be, solely responsible for making its own independent appraisal and investigation of
all risks arising under or in connection with any Debt Document including but not limited to:
(i)
(ii)
(iii)
(iv)
(v)
the financial condition, status and nature of each member of the Group;
the legality, validity, effectiveness, adequacy and enforceability of any Debt Document, the
Security Property and any other agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any Debt Document or the Security
Property;
whether that Secured Party has recourse, and the nature and extent of that recourse, against any
Party or any of its respective assets under or in connection with any Debt Document, the
Security Property, the transactions contemplated by the Debt Documents or any other
agreement, arrangement or document entered into, made or executed in anticipation of, under or
in connection with any Debt Document or the Security Property;
the adequacy, accuracy and/or completeness of any information provided by the Security Agent
or by any other person under or in connection with any Debt Document, the transactions
contemplated by any Debt Document or any other agreement, arrangement or document entered
into, made or executed in anticipation of, under or in connection with any Debt Document; and
the right or title of any person in or to, or the value or sufficiency of any part of the Charged
Property, the priority of any of the Transaction Security or the existence of any Security
affecting the Charged Property,
and each Secured Party warrants to the Security Agent that it has not relied on and will not at any time
rely on the Security Agent in respect of any of these matters.
(j)
The Security Agent shall not be liable for any failure to:
(i)
(ii)
(iii)
(iv)
(v)
require the deposit with it of any deed or document certifying, representing or constituting the
title of any Debtor to any of the Charged Property;
obtain any licence, consent or other authority for the execution, delivery, legality, validity,
enforceability or admissibility in evidence of any of the Debt Documents or the Transaction
Security;
register, file or record or otherwise protect any of the Transaction Security (or the priority of
any of the Transaction Security) under any applicable laws in any jurisdiction or to give notice
to any person of the execution of any of the Debt Documents or of the Transaction Security;
take, or to require any of the Debtors to take, any steps to perfect its title to any of the Charged
Property or to render the Transaction Security effective or to secure the creation of any ancillary
Security under the laws of any jurisdiction; or
require any further assurances in relation to any of the Security Agreements.
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(k)
(l)
(m)
(n)
(o)
(p)
(q)
Each of the Debtors and Secured Parties agrees that the Security Agent shall have only those duties,
obligations and responsibilities expressly specified in this Agreement or in the Security Agreements to
which the Security Agent is expressed to be a party (and no others shall be implied).
The Security Agent shall not be under any obligation to insure any of the Charged Property, to require any
other person to maintain any insurance or to verify any obligation to arrange or maintain insurance
contained in the Debt Documents. The Security Agent shall not be responsible for any loss which may be
suffered by any person as a result of the lack of or inadequacy of any such insurance. Where the Security
Agent is named on any insurance policy as an insured party, it shall not be responsible for any loss which
may be suffered by reason of, directly or indirectly, its failure to notify the insurers of any material fact
relating to the risk assumed by such insurers or any other information of any kind, unless an Agent shall
have requested it to do so in writing and the Security Agent shall have failed to do so within fourteen days
after receipt of that request.
The Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in
relation to any assets of the Security Property as the Security Agent may determine, including for the
purpose of depositing with a custodian this Agreement and the Security Agent shall not be responsible for
any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct,
omission or default on the part of any person appointed by it under this Agreement or be bound to
supervise the proceedings or acts of any person.
The Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, any
right and title that any of the Debtors may have to any of the Charged Property and shall not be liable for
or bound to require any Debtor to remedy any defect in its right or title.
Notwithstanding anything to the contrary expressed or implied in the Debt Documents, the Security Agent
may refrain from doing anything which in its opinion will or may be contrary to any relevant law,
directive or regulation of any jurisdiction and the Security Agent may do anything which is, in its opinion,
necessary to comply with any such law, directive or regulation.
The Security Agent may accept deposits from, lend money to, and generally engage in any kind of
banking or other business with any of the Debtors.
Each Debtor by way of security for its obligations under this Agreement irrevocably appoints the Security
Agent to be its attorney to do anything which that Debtor has authorised the Security Agent or any other
Party to do under this Agreement or is itself required to do under this Agreement but has failed to do (and
the Security Agent may delegate that power on such terms as it sees fit).
2.5 Powers of representation of the Intercreditor Agent
(a)
The Creditors irrevocably empower and entitle the Intercreditor Agent (and undertake to carry out any
actions and to execute any documents that may be required by the Intercreditor Agent to allow the
following actions to be carried out) to exercise any rights and carry out any acts which are required to
comply with the provisions set out in this Agreement, expressly including the execution of any of the
following acts in the name and on behalf of the Creditors:
(i)
(ii)
(iii)
(iv)
(v)
issuing and receiving notifications, requests and letters of intent associated with the issues
contemplated herein;
appearing before a Notary Public to grant or execute any public or private deed related to this
mandate and, specifically, those deemed necessary or appropriate according to the mandate
received (including documents of formalisation, acknowledgement, confirmation, modification
and release);
after consultation with the Majority of Creditors, engaging and paying for the advice or services
of any lawyers, accountants, surveyors or other specialists whose advice or services may to it
seem necessary, expedient or desirable and relying upon any advice so obtained;
carrying out as many related or supplementary acts as appropriate or necessary to fulfil its duties
under the mandate concerned; and
receive any payments on account of any Liabilities which shall be made by any Debtor or
Creditor to any other Creditor by virtue of Clause 8 (Application of proceeds) of this
Agreement,
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provided that, each Senior Creditor which is unable to authorise the Intercreditor Agent to carry out,
execute, effect or perform any exercise of their rights, powers, authorities under this Agreement, including
but not limited to the execution of any document, any amendment, release, waiver, consent under a
Finance Document or any action referred to in this paragraph (a) undertakes, so long as it is a Senior
Creditor:
(A)
(B)
to effect with the Intercreditor Agent, any action permitted in accordance with this
Agreement or, otherwise, to grant powers of attorney in favour of the Intercreditor
Agent so that the Intercreditor Agent can effect such action; and
to abide by and act, or refrain from acting, in accordance with any decision of the
Majority of Senior Creditors or, as the case may be, the Majority Creditors made in
accordance with this Agreement,
and further provided that any failure on the part of any Senior Creditor to comply with sub paragraphs
(i) and (ii) above shall not affect any decision of the Majority Senior Creditors or, as the case may be, the
Majority of Creditors, made in accordance with this Agreement.
(b)
(c)
Each of the Creditors undertakes to provide assistance to and cooperate with the Intercreditor Agent as
necessary, which includes participating in the negotiation and execution of such documents, both public
and private, as may be necessary or advisable for the execution and effectiveness of the agreements
contained in this Agreement. It also includes, if applicable and necessary, ratifying the actions taken by
the Intercreditor Agent in the performance of its obligations under this Agreement.
In the exercise of its powers of representation, the Intercreditor Agent shall not incur any liability if it
follows the instructions received from the Majority of Creditors or if, in the absence of instructions, it acts
with prudent discretion in accordance with customary banking practices. The Intercreditor Agent may
request instructions from the Creditors at any time, even when it is not obliged to do so. For the avoidance
of doubt the Intercreditor Agent shall not become or have the capacity of trustee for the other Creditors
nor shall it have any other fiduciary obligation towards them. Pursuant to these principles, and for
explanatory purposes:
(i)
the Intercreditor Agent shall not be liable to the other Creditors for:
(A)
(B)
(C)
(D)
the adequacy, accuracy or completeness of any information (whether oral or written)
supplied by the Intercreditor Agent or any other person in or in connection with any
Debt Document or the transactions contemplated in the Debt Documents, or any other
agreement, arrangement or document entered into, made or executed in anticipation
of, under or in connection with any Debt Document;
the legality, validity, effectiveness, adequacy or enforceability of any Debt Document
or any other agreement, arrangement or document entered into, made or executed in
anticipation of, under or in connection with any Debt Document;
any losses to any person or any liability arising as a result of taking or refraining from
taking any action in relation to any of the Debt Documents, or otherwise, whether in
accordance with an instruction from an Agent or otherwise unless directly caused by
its gross negligence or wilful misconduct; or
the exercise of, or the failure to exercise, any judgment, discretion or power given to it
by or in connection with any of the Debt Documents or any other agreement,
arrangement or document entered into, made or executed in anticipation of, under or
in connection with, the Debt Documents;
(ii)
(iii)
the duty of information of the Intercreditor Agent shall be deemed to be limited to those
communications that are necessary for the normal fulfilment and development of the agreements
contained in this Agreement, or for the enforceability thereof; and
the Intercreditor Agent shall not be obliged to investigate the existence of possible causes of
early termination or the reduction in the solvency of any Debtor under any Liabilities and other
members of the Group.
(d)
In the fulfilment of its tasks and duties vis-à-vis the Creditors, the Intercreditor Agent does not assume
any liability other than that arising from gross negligence or wilful misconduct.
B-22

(e)
(f)
No Party (other than the Intercreditor Agent) may take any proceedings against any officer, employee or
agent of the Intercreditor Agent in respect of any claim it might have against the Intercreditor Agent or in
respect of any act or omission of any kind by that officer, employee or agent in relation to any Debt
Document and any officer, employee or agent of the Intercreditor Agent may rely on this Clause subject to
Clause 1.4 (Third Party Rights) and the provisions of the Third Parties Rights Act.
The Intercreditor Agent may refrain from:
(i)
(ii)
exercising any right, power or discretion vested in it as intercreditor agent under this Agreement
unless and until instructed by the Majority of Creditors as to whether or not such right, power or
discretion is to be exercised and, if it is to be exercised, as to the manner in which it should be
exercised; and
acting in accordance with any such instructions of the Majority of Creditors until it shall have
received such indemnity and/or security as it may require (whether by way of payment in
advance or otherwise) for all costs, claims, losses, expenses (including legal fees) and liabilities
together with any VAT thereon which it will or may expend or incur in complying with such
instructions.
(g)
The Intercreditor Agent shall:
(i)
(ii)
(iii)
(iv)
promptly inform each Creditor of the contents of any notice or document received by it in its
capacity as Intercreditor Agent;
as soon as it becomes aware, promptly notify each Creditor of the occurrence of any default by
any other party to this Agreement;
act as intercreditor agent in respect of this Agreement in accordance with the instructions given
to it by the Majority of Creditors, which instructions shall be binding on all the Creditors; and
if so instructed by the Majority of Creditors, refrain from exercising any right, power or
discretion vested in it as Intercreditor Agent under this Agreement.
(h)
Each of the parties to this Agreement agrees that the Intercreditor Agent shall have only those duties,
obligations and responsibilities expressly specified in this Agreement (and no others shall be implied).
2.6 Refrain from illegality
Notwithstanding anything to the contrary expressed or implied in the Debt Documents, the Intercreditor Agent may
refrain from doing anything which in its opinion will or may be contrary to any relevant law, directive or regulation
of any jurisdiction and the Intercreditor Agent may do anything which is, in its opinion, necessary to comply with
any such law, directive or regulation.
2.7 Business with the Debtors
The Intercreditor Agent may accept deposits from, lend money to, and generally engage in any kind of banking or
other business with any of the Debtors.
2.8 Reimbursement of expenses
(a)
(b)
The Secured Parties agree immediately to reimburse the Security Agent, pro rata to their participation in
that part of the Liabilities which is secured by the Transaction Security, all the amounts that, even though
payable by the Debtors pursuant to the terms of this Agreement, have not been voluntarily reimbursed
thereby and that require the Security Agent to make a disbursement for any item that, by reason of this
Agreement and the management or enforcement of the Transaction Security, is made in the common
interest of the other Secured Parties, provided that such expenses are duly justified, and regardless of the
favourable results of the action or measures that gave rise to the disbursement.
The Creditors agree immediately to reimburse the Intercreditor Agent, pro rata to their participation in the
Liabilities, all the amounts that, even though payable by the Debtors pursuant to the terms of this
Agreement, have not been voluntarily reimbursed thereby and that require the Intercreditor Agent to make
a disbursement for any item that, by reason of this Agreement, is made in the common interest of the other
Creditors, provided that such expenses are duly justified, and regardless of the favourable results of the
action or measures that gave rise to the disbursement (provided that any High-Yield Notes Trustee shall
only be subject to such reimbursement obligation so far as it is able to request and collect the relevant
amounts from the note-holders).
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2.9 Indemnity
(a)
(b)
(c)
Each Secured Party shall on demand indemnify the Security Agent, pro rata to their participation in that
part of the Liabilities which is secured by the Transaction Security, against any loss incurred by the
Security Agent in complying with any instructions from the Secured Parties or the Majority of Secured
Parties (as the case may be) or otherwise incurred in connection with this Agreement or the Transaction
Security or its duties, obligations and responsibilities under this Agreement or the Transaction Security,
except to the extent that they are incurred as a result of the gross negligence or wilful misconduct of the
Security Agent or any of its personnel.
Each Creditor shall on demand indemnify the Intercreditor Agent, pro rata to their participation in the
Liabilities, against any loss incurred by the Intercreditor Agent in complying with any instructions from
the Majority of Creditors or otherwise incurred in connection with this Agreement or its duties,
obligations and responsibilities under this Agreement (provided that any High-Yield Notes Trustee shall
only be subject to such indemnification obligation so far as it is able to request and collect the relevant
amounts from the note-holders), except to the extent that they are incurred as a result of the gross
negligence or wilful misconduct of the Intercreditor Agent or any of its personnel.
The Company shall promptly indemnify the Intercreditor Agent against any cost, loss or liability incurred
by the Intercreditor Agent (acting reasonably) as a result of acting or relying on any notice, request or
instruction which it reasonably believed to be genuine, correct and appropriately authorised, except to the
extent that they are incurred as a result of the gross negligence or wilful misconduct of the Intercreditor
Agent or any of its personnel.
2.10 Turnover by Intercreditor Agent
Any amount received by the Intercreditor Agent from the proceeds of enforcement of the Transaction Security shall
forthwith be turned over to the Security Agent for the Security Agent’s distribution of the same in accordance with
Clause 10 (Enforcement of Transaction Security).
2.11 Impaired Agent
If, at any time, the Intercreditor Agent becomes an Impaired Agent, a Debtor or a Creditor which is required to
make a payment under this Agreement to the Intercreditor Agent in accordance with this Agreement may instead
either pay that amount direct to the required recipient or pay that amount to an interest-bearing account held with a
bank or financial institution which has a rating for its long-term unsecured and non-credit enhanced debt obligations
of A-1 by Standard & Poor’s Rating Services or higher or P-1 by Moody’s Investor Service Inc. or higher or a
comparable rating from an internationally recognised credit rating agency and in relation to which no Intercreditor
Agent Insolvency Event has occurred and is continuing, in the name of the Debtor or the Creditor making the
payment and designated as a trust account for the benefit of the Party or Parties beneficially entitled to that payment
under this Agreement. In each case such payments must be made on the due date for payment under this Agreement.
(a)
(b)
All interest accrued on the amount standing to the credit of the trust account shall be for the benefit of the
beneficiaries of that trust account pro rata to their respective entitlements.
A Party which has made a payment in accordance with this Clause 2.11 shall be discharged of the relevant
payment obligation under this Agreement and shall not take any credit risk with respect to the amounts
standing to the credit of the trust account.
(c) Promptly upon the appointment of a successor Intercreditor Agent in accordance with Clause 2.3
(Replacement of the Intercreditor Agent), each Party which has made a payment to a trust account in
accordance with this Clause 2.11 shall give all requisite instructions to the bank with whom the trust
account is held to transfer the amount (together with any accrued interest) to the successor Intercreditor
Agent for distribution in accordance with this Agreement.
B-24

3. RANKING OF LIABILITIES
3.1 Liabilities
Each of the Parties agrees that, at all times and for all purposes (including in the event of a bankruptcy (concurso) of
any of the Debtors (or any analogous proceeding in respect of a Debtor incorporated in a jurisdiction other than
Spain) under the provisions of the Insolvency Law or any other applicable regulation), the Liabilities owed by the
Debtors to the Creditors shall rank in right and priority of payment in the following order and are postponed and
subordinated to any prior ranking Liabilities as follows:
(a)
(b)
first, the Senior Lender Liabilities and the Permitted Hedging Liabilities, pari passu and without any
preference between them; and
second, the Subordinated Liabilities, pari passu and without any preference between them.
3.2 Transaction Security
Each of the Parties agrees that the Transaction Security shall rank and secure the Senior Lender Liabilities and the
Permitted Hedging Liabilities, pari passu and without any preference between them.
4. SENIOR LENDERS AND SENIOR LENDER LIABILITIES
4.1 Payment of Senior Lender Liabilities
The Debtors may make Payments at any time of the Senior Lender Liabilities in accordance with the Senior Lender
Finance Documents.
4.2 Security: Senior Lenders
The Senior Creditors agree that the Senior Lenders may (other than as set out in Clause 4.4 (Security: Ancillary
Lenders)) take, accept or receive without restrictions the benefit of any Security in addition to the Transaction
Security if (except for any Security, permitted under Clause 4.4 (Security: Ancillary Lenders)) to the extent legally
possible and reasonably practicable it is also offered either:
(a)
(b)
to the other Secured Parties in respect of their Secured Obligations; or
to the Security Agent for the benefit of the other Secured Parties.
4.3 Enforcement: Senior Lenders
Upon the occurrence of an Event of Default, the Senior Lenders shall be entitled to take any kind of Enforcement
Action at any time without any restriction (other than an enforcement of the Transaction Security which will be
subject to Clause 10 (Enforcement of Transaction Security)), in accordance with the Senior Lender Finance
Documents. Notwithstanding the foregoing, the Senior Lenders and the Security Agent shall only take an
Enforcement Action in respect of the High-Yield Proceeds Loan pursuant to a Permitted Enforcement Action.
4.4 Security: Ancillary Lenders
No Ancillary Lender will, unless the prior consent of the Majority Senior Creditors is obtained, take, accept or
receive from any member of the Group the benefit of any Security, guarantee, indemnity or other assurance against
loss in respect of any of the Liabilities owed to it other than:
(a)
(b)
(c)
(d)
the Transaction Security;
each guarantee, indemnity or other assurance against loss contained in the original form of Senior Bank
Facilities Agreement or this Agreement; or
indemnities and assurances against loss contained in the Ancillary Documents no greater in extent than
any of those referred to in paragraph (b) above;
any Ancillary Facility Cash Cover permitted under the Senior Bank Facilities Agreement relating to any
Ancillary Facility;
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(e)
(f)
the indemnities contained in an ISDA Master Agreement (in the case of a Hedging Ancillary Document
which is based on an ISDA Master Agreement) or any indemnities which are similar in meaning and
effect to those indemnities (in the case of a Hedging Ancillary Document which is not based on an ISDA
Master Agreement); or
any Security, guarantee, indemnity or other assurance against loss giving effect to, or arising as a result of
the effect of, any netting or set-off arrangement relating to the Ancillary Facilities for the purpose of
netting debit and credit balances arising under the Ancillary Facilities.
4.5 Restriction on Enforcement: Ancillary Lenders
Subject to Clause 4.6 (Permitted Enforcement: Ancillary Lenders), so long as any of the Senior Liabilities (other
than any Liabilities owed to the Ancillary Lenders) are or may be outstanding, none of the Ancillary Lenders shall
be entitled to take any Enforcement Action in respect of any of the Liabilities owed to it.
4.6 Permitted Enforcement: Ancillary Lenders
The Ancillary Lenders may take Enforcement Action if:
(a)
(b)
(c)
(d)
(e)
at the same time as, or prior to, that action, Enforcement Action has been taken in respect of the Senior
Lender Liabilities (excluding the Liabilities owing to Ancillary Lenders), in which case the Ancillary
Lenders may take the same Enforcement Action as has been taken in respect of those Senior Lender
Liabilities;
that action is contemplated by the Senior Bank Facilities Agreement or Clause 4.4 (Security: Ancillary
Lenders);
that Enforcement Action is taken in respect of Ancillary Facility Cash Cover which has been provided in
accordance with the Senior Bank Facilities Agreement;
at the same time as or prior to, that action, the consent of the Majority Senior Creditors to that
Enforcement Action is obtained; or
the relevant Debtor files a request for a moratorium or an out-of court agreement with any of its creditors,
or commences with respect to itself or has commenced against it a voluntary bankruptcy (concurso) or
analogous insolvency case or proceeding, or if the relevant Debtor is placed into receivership
(administración judicial) or is the subject of seizure or intervention, or if its shares or interests are
expropriated or it is unable or admits an inability to pay its debts as they fall due, or if any other similar
action or proceeding, whether judicial or private, is taken or commenced with analogous effects
(provided that such bankruptcy or other circumstances is not the result of the actions of any Ancillary
Lender not in compliance with this Agreement and provided further that the Enforcement Action may
only be taken against the Debtor which is subject to any of the proceedings or circumstances referred to
above).
5. SUBORDINATED CREDITORS AND SUBORDINATED LIABILITIES.
5.1 Payment of Subordinated Liabilities
Subject to this Clause 5, prior to the Senior Liabilities Discharge Date the Debtors may make Payments under the
Subordinated Debt Documents which are:
(a)
(b)
interest payments on principal and other fees, taxes, expenses and other amounts due (other than
principal) to the extent that such payments are scheduled under the terms of any Future Subordinated
Facilities, the High-Yield Notes or corresponding amounts (other than principal) under the High-Yield
Proceeds Loans; or
payments in the form of Permitted Junior Securities or payments funded entirely from the proceeds of the
issue of Permitted Junior Securities.
B-26

5.2 Restrictions on Enforcement Actions by the Subordinated Creditors
The Subordinated Creditors may not take any Enforcement Action against a Debtor in relation to any Subordinated
Liabilities without the prior written consent of the Majority of Senior Creditors unless:
(a)
(b)
(c)
the relevant Debtor files a request for a moratorium or an out-of court agreement with any of its creditors,
or commences with respect to itself or has commenced against it a voluntary bankruptcy (concurso) or
analogous insolvency case or proceeding, or if the relevant Debtor is placed into receivership
(administración judicial) or is the subject of seizure or intervention, or if its shares or interests are
expropriated or it is unable or admits an inability to pay its debts as they fall due, or if any other similar
action or proceeding, whether judicial or private, is taken or commenced with analogous effects
(provided that such bankruptcy or other circumstances is not the result of the actions of any Subordinated
Creditor not in compliance with this Agreement and provided further that the Enforcement Action may
only be taken against the Debtor which is subject to any of the proceedings or circumstances referred to
above));
any of the Senior Creditors have taken an Enforcement Action in relation to such Debtor; or
a default has occurred (otherwise than solely pursuant to any cross default provision by reason of a default
under any of the Senior Debt Documents) under a Subordinated Debt Document to which the relevant
Subordinated Creditors are party, and:
(i)
(ii)
(iii)
the relevant Subordinated Creditors have notified the existence of such default to the
Intercreditor Agent;
a period of not less than 179 days has passed from the date the Intercreditor Agent was notified
of the default; and
at the end of the 179 day period, the relevant default is continuing and has not been waived by
the relevant Subordinated Creditors.
5.3 Payment blockage provisions
(a)
Save for Subordinated Administration Payments, Subordinated Agent Amounts, High-Yield Trustee
Amounts or Payments in the form of Permitted Junior Securities or Payments funded entirely from the
proceeds of the issue of Permitted Junior Securities, a Debtor shall not make any Payment in respect of
any Subordinated Liabilities if:
(i)
(ii)
a payment default under any Designated Senior Debt has occurred and is continuing beyond any
applicable grace period; or
any other default occurs and is continuing under any agreement or instrument in respect of
Designated Senior Debt that permits the relevant Creditors thereunder (or an agent on their
behalf, if applicable) to accelerate the maturity of such Designated Senior Debt and the
Subordinated Creditors (through their agent or High-Yield Notes Trustee, as the case may be)
receive a notice of such default (a “Payment Blockage Notice”) from such Creditors (through
the Security Agent).
(b)
Payments on any such Subordinated Debt may and will be resumed:
(i)
(ii)
in the case of a payment default, when such default is cured or waived; or
in the case of a non-payment default, upon the earlier of:
(A)
(B)
(C)
the date on which such non-payment default is cured or waived;
the Senior Liabilities Discharge Date;
the date on which the Security Agent (acting on the instructions of the Senior
Lenders) delivers a notice to the Subordinated Creditors (through any Subordinated
Agent and/or any High-Yield Notes Trustee, as the case may be) cancelling the
Payment Blockage Notice; and
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(D)
179 days after the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Senior Liabilities has been accelerated.
(c)
(d)
Not more than one Payment Blockage Notice with respect to the same default, any other default existing
and known to the person giving such notice at the time of such notice, or any other defaults arising
directly as a result of the occurrence which gave rise to the first-mentioned default, in each case in respect
of the same issue of Designated Senior Debt, may be given during any consecutive 360-day period unless
such default or such other defaults have been cured or waived for a period of not less than 90 consecutive
days.
For the avoidance of doubt, it is expressly agreed that the obligation to make any Payment on its due date
under the Subordinated Liabilities which is not permitted to be paid under this Clause 5.3 shall continue
notwithstanding the payment suspension and the accrual or capitalisation of interest (including default
interest, if any) in accordance with the relevant provision of the relevant Subordinated Debt Documents,
as applicable.
5.4 Release of subordinated guarantees
(a) Each Debtor (other than Midco) which is a guarantor under any Subordinated Liabilities (a
“Subordinated Guarantor”) shall automatically and unconditionally be released from all obligations
under its guarantee thereunder (each a “Subordinated Guarantee”), and such Subordinated Guarantee
shall thereupon terminate and be discharged and be of no further force or effect, concurrently with any
sale by way of enforcement by the Senior Creditors of a Security over (1) all of the capital stock of such
Subordinated Guarantor or any parent company of such Subordinated Guarantor or (2) all or substantially
all of the assets of such Subordinated Guarantor, in each case so long as:
(i)
(ii)
(iii)
the proceeds of such sale are in cash (or substantially all in cash) and are applied in the manner
described under Clause 10 (Enforcement of Transaction Security) below;
such Subordinated Guarantor is released from its obligations in respect of all other debt that is
subordinated or junior in right of payment to the Subordinated Liabilities provided, however,
that nothing in this paragraph (ii) shall (A) require the release by the Subordinated Guarantors
or any of their subsidiaries of any of its or their obligations in respect of any Senior Liabilities
or (B) prohibit the assignment of any High-Yield Proceeds Loans in accordance with their
terms; and
the sale is made pursuant to either a public auction or a competitive bid process to obtain the
best price reasonably obtainable given the then-current condition (financial or otherwise),
earnings, business, assets and prospects of such Subordinated Guarantor and its subsidiaries, the
Senior Lenders having consulted with an internationally recognised investment bank (including
without limitation and to the extent appropriate a Senior Lender or a relationship bank of
Cableuropa or the remaining Debtors) or an internationally recognised accounting firm
regarding the appropriate procedures for obtaining the best price for the shares or assets,
considered the recommendations of that investment bank or accounting firm and used its
reasonable efforts to cause the procedures recommended by that investment bank or accounting
firm to be implemented in all material respects in relation to the sale and to permit holders to
participate in the sale process as bidders provided, however, that the Senior Lenders shall not be
under any further obligation to cause such recommendation to be implemented to the extent not
implemented in connection with such sale by the relevant court, authority or other third party
required to act in connection with such sale provided further, however, that such reasonable
efforts will, to the extent permitted by applicable law, include attempting to conduct such sale
process other than through a court or legal proceeding.
(b)
Concurrently with any sale by way of enforcement by the Senior Creditors of Transaction Security over:
(i)
(ii)
all of the capital stock of Cableuropa;
all or substantially all of the assets of Cableuropa, the sale of which meets the conditions set out
in paragraph (a) above,
Cableuropa’s rights and obligations as borrower under any Future Subordinated Facilities shall be
automatically and unconditionally assumed by Midco and Cableuropa shall cease to be the borrower
thereunder provided however that such release shall only be effective to the extent that Midco has validly
given its consent under the terms of the relevant Future Subordinated Facilities, as the case may be, to
assume the position of borrower thereunder.
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6. TURNOVER BY CREDITORS
6.1 Turnover by Creditors
If at any time on or before the Senior Liabilities Discharge Date:
(a)
(b)
(c)
(d)
any Creditor receives or recovers a Payment or distribution of any kind whatsoever in respect or on
account of any Liabilities which is not permitted under Clause 4 (Senior Lenders and Senior Lender
Liabilities), Clause 5 (Subordinated Creditors and Subordinated Liabilities), Clause 7 (Hedge Entities and
Permitted Hedging Agreement) or any other term of this Agreement, or which exceeds the amount to
which they should properly be entitled pursuant to Clause 8 (Application of Proceeds);
any Creditor receives or recovers proceeds pursuant to any Enforcement Action which is not permitted
under Clause 4 (Senior Lenders and Senior Lender Liabilities), Clause 5 (Subordinated Creditors and
Subordinated Liabilities), Clause 7 (Hedge Entities and Permitted Hedging Agreement) or Clause 10
(Enforcement of Transaction Security);
any company of the Group makes any Payment or distribution of any kind whatsoever in relation to the
purchase or other acquisition of any Liabilities which is not permitted by this Agreement; or
any Liabilities are discharged by set-off, combination of accounts or otherwise which is not permitted
under this Agreement,
and such Creditors have actual knowledge that the payment is prohibited by this Agreement (and, in the case of each
High-Yield Notes Trustee subject to Clause 13.6 (Turnover Obligation)),
the recipient or beneficiary of that Payment, distribution, set-off or combination will hold the Payment on account
and for the benefit of the Intercreditor Agent on behalf of the Creditors and, upon the proper written request of the
Intercreditor Agent, will deliver the amounts so held to the Intercreditor Agent for application under Clause 8
(Application of proceeds) after deducting the costs, liabilities and expenses (if any) reasonably incurred in
recovering or receiving that Payment or distribution and, pending that Payment, will hold those amounts and
distributions for the benefit of the Intercreditor Agent. If no sums are due for payment in respect of the Senior
Liabilities at that time but such amounts may be due in the future, the monies will be placed in a blocked account
held by the Intercreditor Agent and applied in repayment of Senior Liabilities as and when they fall due.
6.2 No reduction or discharge
As between the Debtors and the Subordinated Creditors, the Subordinated Liabilities will be deemed not to have
been reduced or discharged to the extent of any payment or distribution to the Intercreditor Agent under Clause 6.1
(Turnover by Creditors).
7. HEDGE ENTITIES AND PERMITTED HEDGING LIABILITIES
7.1 Restrictions for benefit of Senior Lenders
(a)
(b)
The restrictions on Payments of Permitted Hedging Liabilities and on the taking of Enforcement Actions
by the Hedge Entities set out below are for the benefit of and enforceable only by the Senior Lenders who
hereby accept them.
The Subordinated Creditors and the Debtors will have no action and shall not be entitled to enforce the
provisions contained in this Clause 7 (Hedge Entities and Permitted Hedging Liabilities), which may be
waived by the Majority of Senior Lenders expressly in writing from time to time.
7.2 Restrictions on Payments and Enforcement Actions
Prior to the Senior Lender Liabilities Discharge Date, each Hedge Entity undertakes to the Senior Lenders that it
will not, without the prior written consent of the Majority of Senior Lenders:
(a)
demand (other than as may be necessary in order to exercise any rights referred to and permitted under
paragraph (b) below) or receive any Payment from the Debtors in respect of, or on account of, any
Permitted Hedging Liabilities whether in cash or in kind or by way of set-off or apply any money or
property in or towards the discharge of any such payment obligation except for:
(i)
scheduled payments arising under the terms of the Permitted Hedge Agreements;
B-29

(ii)
(iii)
(iv)
the proceeds of any payment or enforcement received or applied in the terms permitted under
Clause 8 (Application of Proceeds) below;
payments, prepayments or repayments made under the Permitted Hedge Agreements to the
Hedge Entities as a result of a total or partial termination or close out of any such Permitted
Hedge Agreements permitted under paragraph (b)(v) below, provided that the accumulated
amount of such payments, prepayments or repayments does not exceed at any time an amount of
€50,000,000; and
any payments authorised with the prior written consent of the Security Agent (acting on the
instructions of the Majority of Senior Lenders); or
(b)
terminate or close out any Permitted Hedge Agreement to which it is a party except:
(i)
(ii)
as a result of a payment default of any obligation under such Permitted Hedge Agreement which
non-payment continues for three (3) Business Days after notice of such payment default has
been given by such Hedge Entity to the Security Agent (provided that if such Hedge Entity and
the Security Agent are the same entity it will not be necessary for there to be any formal notice
of such payment default to be given and such grace period shall commence on the date of
non-payment); or
upon the earliest of:
(A)
(B)
(C)
the last day on which a payment of principal is due to be made under a Senior Lender
Finance Document;
an acceleration of the principal amount outstanding under a Senior Lender Finance
Document, pursuant to the terms of clause 25 (Events of Default) of the Senior Bank
Facilities Agreement following consultation with (but without being required to obtain
the prior written consent of) the Senior Agent; and
the Senior Lender Liabilities Discharge Date; or
(iii)
(iv)
(v)
upon it becoming unlawful for the relevant Debtor or such Hedge Entity to perform or comply
with its material obligations under any such Permitted Hedge Agreement or any such
obligations becoming illegal, invalid or unenforceable against the relevant Debtor; or
the relevant Debtor being declared bankrupt (en concurso) or any equivalent declaration in
respect of a Debtor incorporated in a jurisdiction other than Spain and for so long as it is
continuing (provided that such bankruptcy is not the result of the actions of the relevant Hedge
Entities not in compliance with this Agreement and provided further that the Enforcement
Action may only be taken against the Debtor which is subject to any of the proceedings or
circumstances referred to above); or
in any other circumstance, provided that:
(A)
(B)
no Event of Default is continuing or will occur as a result of such termination or
closing out; and
the accumulated amount of any payments, prepayments or repayments made under the
Permitted Hedge Agreements to the Hedge Entities as a result of the total or partial
termination or close out of any such Permitted Hedge Agreements does not exceed at
any time an amount of €50,000,000; or
(vi)
with the prior written consent of the Majority of Senior Lenders;
(c)
(d)
discharge all or any part of the Debtors’ payment obligations under the Permitted Hedge Agreements by
set-off, any right of combination of accounts or otherwise except if and to the extent that such Hedge
Entity is permitted to be paid under paragraph (a) above; or
permit to subsist or receive the benefit of any Security or financial support (including without limitation,
the giving of any guarantee, indemnity or other assurance against loss, or the making of any deposit or
payment) for, or in respect of, any of the Debtors’ payment obligations under the Permitted Hedge
Agreements other than under those contemplated in the Senior Lender Finance Documents.
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7.3 Terms of Permitted Hedge Agreements
Prior to the Senior Lender Liabilities Discharge Date, each Hedge Entity undertakes to the Intercreditor Agent and
to each of the Senior Lenders that any Permitted Hedge Agreements to which it is a party governing the terms of a
hedging transaction will provide for “two way payments” in the event of a termination of that hedging transaction
entered into under such Permitted Hedge Agreements howsoever caused, meaning that the defaulting party under
those Permitted Hedge Agreements will be entitled to receive payment under the relevant termination provisions if
the net replacement value of all terminated transactions effected under the Permitted Hedge Agreements is in its
favour, and netting will be permitted only between hedging transactions that constitute Permitted Hedge
Agreements (and, for the avoidance of doubt, to the extent that any such Permitted Hedge Agreements do not so
provide, each Hedge Entity party to any such Permitted Hedge Agreement agrees and acknowledges that they will
be deemed to so provide and undertakes to each of the other Parties to make payments under each such Permitted
Hedge Agreement as if it did so provide).
7.4 Amendment of Permitted Hedge Agreements
The Permitted Hedge Agreements shall not be amended or varied:
(a)
(b)
so that the Permitted Hedge Agreement ceases to comply with the requirements of this Clause 7 (Hedge
Entities and Hedging Liabilities); or
in a manner which is prejudicial to the interests of the other Senior Creditors,
in each case without the prior written consent of the Majority of Senior Creditors (for this purpose excluding that
relevant Hedge Entity in its capacity as such).
7.5 Release Event
Each Hedge Entity agrees that, upon the occurrence of a Release Event under the Senior Bank Facilities Agreement,
it will release the relevant Security as provided under paragraph (e) of clause 24.3 (Transaction Security) ofthe
Senior Bank Facilities Agreement and hereby authorises the Security Agent to execute on its behalf any required
agreements in order to comply with such release provisions.
7.6 Termination of Permitted Hedge Agreements on Event of Default
Each Hedge Entity undertakes to the Intercreditor Agent and the Senior Lenders immediately to terminate the
Permitted Hedge Agreements to which it is a party and close out any hedging exposure arising thereunder in the
event of an acceleration of the principal amount outstanding under a Senior Lender Finance Document pursuant to
the terms of clause 25.2 (Acceleration) of the Senior Bank Facilities Agreement.
7.7 Guarantees
Each Debtor which is a Guarantor under (and as defined in) the Senior Bank Facilities Agreement (a “Senior
Guarantor”) grants a guarantee and indemnity in favour of each Hedge Entity in respect of the obligations of each
other Debtor which is a counterparty under a Permitted Hedge Agreement on the same terms, mutatis mutandis, as
the guarantee and indemnity granted to the Senior Lenders by that Senior Guarantor pursuant to clause 20
(Guarantee and indemnity) of the Senior Bank Facilities Agreement.
8. APPLICATION OF PROCEEDS
8.1 Receipt of sums by the Parties
In the event of the bankruptcy (concurso) of any Debtor (or any analogous procedure in respect of any Debtor
incorporated in a jurisdiction other than Spain), each of the Creditors (subject, in the case of each High-Yield Notes
Trustee, to Clause 13.6 (Turnover Obligation)) shall promptly pay any sum received or recovered (whether by
payment, the exercise of any right of set-off or combination of accounts or otherwise) by it, from any of the Debtors
or any third party on account of any Liabilities, and each of the Debtors shall pay any sum due and payable by it on
account of any Liabilities, to such bank account as may be specified by the Intercreditor Agent for this purpose
pending distribution under Clause 8.2 (Order of application).
8.2 Order of application
The Intercreditor Agent shall distribute all sums deposited in the account specified by virtue of Clause 8.1 (Receipt
of sums by the Parties) or received from the Creditors by virtue of the provisions under Clause 6.1 (Turnover by
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Creditors), (but excluding any proceeds obtained from the enforcement of the Transaction Security which shall be
subject to Clause 10.3 (Application of enforcement proceeds) below) or otherwise received by the Intercreditor
Agent for application in accordance with this Clause 8.2 in the following order of priority (on the basis that no
proceeds will be applied in payment of any amounts specified in any of the paragraphs below until all amounts
specified in each of the preceding paragraphs have been paid or discharged in full):
(a)
(b)
in or towards payment of or provision for all amounts payable to the Security Agent, any Receiver or
Delegate, the Senior Agent and Intercreditor Agent (in each case for its own account and in such capacity)
pursuant to the Senior Bank Facilities Agreement and this Agreement, including all costs, charges and
expenses incurred and payments made by it in performing its duties, together with, in each case, interest
on the foregoing (both before and after judgment and payable on demand) at the default interest rate
agreed under the Senior Bank Facilities Agreement from the date the same become due and payable until
the date the same are unconditionally and irrevocably paid and discharged in full;
in or towards payment of the following, on a pari passu basis:
(i)
(ii)
(iii)
(iv)
the aggregate of the Senior Liabilities to the Senior Creditors;
the High-Yield Trustee Amounts;
the Subordinated Agent Amounts; and
the Subordinated Administration Payments,
provided that such sums will (if they are insufficient to discharge such payment obligations in full) be
paid to the Senior Creditors and to the relevant persons for the Subordinated Administration Payments, the
Subordinated Agent Amounts and each High-Yield Notes Trustee for the High-Yield Trustee Amounts
pro rata to the aforesaid amounts then owed to them provided further that no sums shall be distributed
by the Intercreditor Agent under this paragraph (b) in respect of any Hedge Excess;
(c)
(d)
(e)
in or towards payment of the Hedge Excess to the relevant Hedge Entities pro rata to their respective
Permitted Hedging Liabilities in respect of the Restricted Hedging Liabilities;
in or towards payment to the Subordinated Creditors of the Subordinated Liabilities, provided that such
sums will (if they are insufficient to discharge such payment obligations in full) be paid to the
Subordinated Creditors pro rata to the aforesaid amounts then owed to them; and
in payment of the surplus (if any) to the Debtors (or any of them).
For the purposes of paragraphs (b) and (c) above, any Hedge Excess shall be attributed to the Restricted Hedging
Liabilities on a rateable basis.
8.3 Subordination of Liabilities by provision of law
In the event of the bankruptcy (concurso) of any Debtor (or any analogous procedure in respect of a Debtor
incorporated in a jurisdiction other than Spain), the terms set forth in this Clause 8 (Application of proceeds) shall
apply, regardless of the payment distribution provided for by the trustees in bankruptcy (administradores
concursales), the creditors general meeting (junta de acreedores) or any composition agreement (convenio) (or, in
each case, the equivalent in respect of a Debtor incorporated in a jurisdiction other than Spain). However, should the
credit rights of any Creditor be declared subordinated within any insolvency proceedings of any Debtor pursuant to
the provisions (including the legal subordination presumptions) of Articles 92 or 93 of the Insolvency Law (or
equivalent in respect of a Debtor incorporated in a jurisdiction other than Spain, the Creditors hereto agree that, in
respect of their internal relations, the Creditor thus subordinated within any such insolvency proceedings shall not
receive from the other Creditors any amounts required to re-establish the position it would have been entitled to
under this Agreement had it not been subordinated and, therefore, the proportionality provisions contained in this
Clause 8 (Application of proceeds) shall not apply to the Creditor thus subordinated.
8.4 Timing of Distributions
Distributions by the Intercreditor Agent shall be made at such times as the Intercreditor Agent in its absolute
discretion determines, which will be as soon as reasonably practicable having regard to all relevant circumstances.
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8.5 Basis of Distribution
(a)
(b)
For the purposes of determining the amount of any payment to be made to each Creditor pursuant to
Clause 8.2 (Order of application), the Intercreditor Agent shall be entitled to request a certificate from the
relevant Creditors of the amount, currency and nature of any Liabilities owing to that Creditor at a date
fixed by the Intercreditor Agent for such purpose and as to such other matters as the Intercreditor Agent
may deem necessary or desirable to enable it to make a distribution. The Intercreditor Agent shall be
entitled to rely on any such certificate and shall provide copies to the other Creditors hereto upon request.
For the purposes of the above calculations only, any amounts or payment obligations denominated in any
currency other than Euro shall be converted into Euros using the exchange rate determined by the
Intercreditor Agent acting reasonably based on prevailing spot rules.
8.6 Treatment of Ancillary Facility Cash Cover
(a)
(b)
Nothing in this Agreement shall prevent any Ancillary Lender taking any Enforcement Action in respect
of any Ancillary Facility Cash Cover which has been provided for it in accordance with the Senior Bank
Facilities Agreement.
To the extent that any Ancillary Facility Cash Cover is not held with the Relevant Ancillary Lender, all
amounts from time to time received or recovered in connection with the realisation or enforcement of that
Ancillary Facility Cash Cover shall be paid to the Intercreditor Agent and shall be held by the
Intercreditor Agent on trust to apply them at any time as the Intercreditor Agent (in its discretion) sees fit,
to the extent permitted by applicable law, in the following order of priority:
(i)
(ii)
to the Relevant Ancillary Lender towards the discharge of the Senior Lender Liabilities for
which that Ancillary Facility Cash Cover was provided; and
the balance, if any, in accordance with Clause 8.2 (Order of Application).
(c)
To the extent that any Ancillary Facility Cash Cover is held with the Relevant Ancillary Lender, nothing
in this Agreement shall prevent that Relevant Ancillary Lender receiving and retaining any amount in
respect of that Ancillary Facility Cash Cover.
9. PETITION FOR BANKRUPTCY OF THE DEBTORS
9.1 Filing of petitions for bankruptcy
Subject to the restrictions on Enforcement Actions set out in Clause 5.2 (Restrictions on Enforcement Actions by the
Subordinated Creditors) above, the filing of a petition for bankruptcy (concurso) of any of the Debtors or any
analogous procedure in respect of any Debtor incorporated in a jurisdiction other than Spain by any of the Creditors
for amounts due and payable under the Liabilities will be subject to the provisions of Clause 9.2 (Restrictions on
filings of petitions for bankruptcy of the Debtors).
9.2 Restrictions on filings of petitions for bankruptcy
(a)
(b)
(c)
Any Creditor intending to file a petition for bankruptcy (concurso) of any Debtor or any analogous
procedure in respect of any Debtor incorporated in a jurisdiction other than Spain (the “Filing Creditor”)
shall communicate its intention to do so by giving the Intercreditor Agent five (5) Business Days’ prior
written notice.
Should such a notice be given to the Intercreditor Agent in accordance with the foregoing, the
Intercreditor Agent shall promptly communicate the contents of such notice to the remaining Creditors in
accordance with Clause 16 (Notices).
Upon the expiry of the five Business Day period referred to in paragraph (a) above (the “Pre-filing
Period”), the Filing Creditor shall only be entitled to file a petition for bankruptcy (concurso) of any of
the Debtors or any analogous procedure in respect of any Debtor incorporated in a jurisdiction other than
Spain if such filing is made together with those Creditors from whom the Filing Creditor has received
written notice of their intention to join in the filing for the petition for bankruptcy prior to the expiry of the
Pre-filing Period.
9.3 High-Yield Notes Trustees
(a)
Notwithstanding the foregoing, if any High-Yield Notes Trustee is a Party to this Agreement at signing or
has acceded to this Agreement pursuant to Clause 15.6 (Creditor/Agent/Trustee Accession Undertaking),
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the provisions of Clauses 9.1 (Filing of petitions for bankruptcy) to 9.2 (Restrictions on filings of petitions
for bankruptcy) (both inclusive) shall not be binding upon that High-Yield Notes Trustee unless such
High-Yield Notes Trustee has expressly acceded to such Clauses in the relevant Creditor/Agent/Trustee
Accession Undertaking or, if later (or if such High Yield Notes Trustee is a Party to this Agreement at
signing), in a written notice sent to the Intercreditor Agent (it being understood that no High-Yield Notes
Trustee shall be under any obligation to accede to Clauses 9.1 (Filing of petitions for bankruptcy) to 9.2
(Restrictions on filings of petitions for bankruptcy)).
(b)
The Parties to this Agreement agree that the provisions of Clauses 9.1 (Filing of petitions for bankruptcy)
to 9.2 (Restrictions on filings of petitions for bankruptcy) (both inclusive) shall be ineffective until the
earlier of: (i) the accession to such Clauses by each High-Yield Notes Trustee as provided in paragraph
(a) above; and (ii) the date upon which the High-Yield Notes have been redeemed, repaid or discharged in
their entirety, at which time the provisions of this Clause 9 shall come into full force and effect.
10. ENFORCEMENT OF TRANSACTION SECURITY
10.1 Consent to enforcement
The enforcement of any or all of the Transaction Security shall require the prior written and express approval of the
Majority of Senior Creditors.
10.2 Procedure for enforcement
(a)
(b)
Should the Majority of Senior Creditors agree to enforce all or part of the Transaction Security, the
Security Agent will start the enforcement procedures, acting in the name and on behalf of the Secured
Parties, including those Secured Parties who have not given or refused their written and express approval
of such enforcement.
The Secured Parties unconditionally and irrevocably undertake to grant in favour of the Security Agent at
its request, by means of a power of attorney raised to the status of public deed in Spain (and apostilled if
necessary) (or, if required under the laws of any other relevant jurisdiction, a power of attorney duly
issued in that jurisdiction), as many powers as the Security Agent may reasonably request in order to take
all necessary action in order to enforce any of the Transaction Security pursuant to this Agreement.
Alternatively, any Secured Parties shall be entitled to appear individually in the enforcement procedures,
if they deem it appropriate, provided that such Secured Parties act in coordination with the Security
Agent and always following the Security Agent’s instructions.
10.3 Application of enforcement proceeds
The proceeds collected from the enforcement of the Transaction Security shall be distributed by the Security Agent
in the following order of priority (on the basis that no proceeds will be applied in payment of any amounts specified
in any of the paragraphs below until all amounts specified in each of the preceding paragraphs have been paid or
discharged in full):
(a)
(b)
(c)
(d)
in or towards payment of or provision for all amounts payable to the Intercreditor Agent, the Senior
Agent, the Security Agent and any Receiver or Delegate (in each case for its own account and in such
capacity) pursuant to the Senior Bank Facilities Agreement and this Agreement, including all costs,
charges and expenses incurred and payments made by it in performing its duties, together with, in each
case, interest on the foregoing (both before and after judgment and payable on demand) at the default
interest rate agreed under the Senior Bank Facilities Agreement from the date the same become due and
payable until the date the same are unconditionally and irrevocably paid and discharged in full;
in or towards payment of the Senior Liabilities to the Senior Creditors, provided that such sums will (if
they are insufficient to discharge such payment obligations in full) be paid to the Senior Creditors pro rata
to the aforesaid amounts then owed to them and provided further that the Hedge Excess shall be
excluded from any sums to be distributed by the Security Agent under this paragraph (b);
in or towards payment of the Hedge Excess to the Hedge Entities pro rata to their respective Permitted
Hedging Liabilities in respect of the Restricted Hedging Liabilities; and
once all the Senior Liabilities has been unconditionally and irrevocably paid and discharged in full, in
payment of the surplus (if any) to the relevant persons holding the ownership over the assets or rights
subject to the relevant Transaction Security.
For the purposes of paragraphs (b) and (c) above, any Hedge Excess shall be attributed to the Restricted Hedging
Liabilities on a rateable basis.
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11. AMENDMENTS TO TRANSACTION SECURITY
11.1 Majority approval
Subject to Clause 11.2 (Unanimous approval) and Clause 11.3 (Additional tranches under Senior Bank Facilities
Agreement), the amendment, modification or other variations of the Transaction Security shall require the prior
written approval of the Majority of Senior Creditors.
11.2 Unanimous approval
The following decisions shall be adopted by means of a unanimous agreement of all the Secured Parties (provided,
however, that no Hedge Entity shall be entitled to refuse to give its consent to any decision approved by the
Majority of Senior Creditors when such Hedge Entity (or its Affiliate) had voted, as Senior Lender, in favour of
such decision):
(a)
any amendment to any Transaction Security entered into in favour of all the Secured Parties hereto which
would:
(i)
(ii)
extend the due date or reduce the amount of any payment of principal, interest, or other amount
payable under any Transaction Security; or
change the currency in which any amount is payable under any Transaction Security; and
(b)
the total or partial release of any asset of whatever nature that is subject to a Transaction Security entered
into in favour of all the Secured Parties, unless such release is permitted under the Senior Bank Facilities
Agreement.
11.3 Additional tranches under Senior Bank Facilities Agreement and EIB Facilities
Any amendment, modification or other variation of the Transaction Security to grant Security for the obligations of:
(a)
any Senior Lender which is:
(i)
(ii)
(iii)
an SPV which has made available an SPV Tranche;
a New Bank Tranche Lender which has made available a New Bank Tranche; or
a lender under any Replacement Revolving Facility; or
(b)
the EIB, in the event that it makes available EIB Facilities,
to Cableuropa or another Obligor (in each case in accordance with the terms of the Senior Bank Facilities
Agreement) shall be expressly permitted and shall not require any consents of the Senior Creditors whatsoever.
12. EXECUTION OF THIS AGREEMENT BY THE DEBTORS
(a)
(b)
The execution by Cableuropa and, as provided in Clause 15.7 (New Debtor), by any other Debtor, of this
Agreement is intended for the sole purpose of making the subordination terms and payment provisions
contained in this Agreement binding on the Debtors for the benefit of the Senior Creditors who hereby
accept such subordination terms and payment provisions.
By virtue of entering this Agreement, none of Cableuropa and the other Debtors (nor any successors,
assignees or creditors thereof) shall be entitled to:
(i)
(ii)
demand or claim the compliance by the Creditors of any of their obligations under this
Agreement; or
refuse to comply with their obligations to the Creditors under the Debt Documents, the
Transaction Security or any other financing or refinancing agreement related thereto, nor to
enjoy the right of any benefit, exception, suspension or waiver in connection with their
obligations thereunder or the enforceability thereof, by reason of the breach by any of such
Creditors or any other Debtor of their obligations under this Agreement or any such Creditor or
any such Creditors waiving the compliance of any obligation by any other Creditor or Debtor.
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13. HIGH-YIELD NOTES TRUSTEE PROTECTIONS
13.1 Capacity of each High-Yield Notes Trustee
Each High-Yield Notes Trustee, including any High-Yield Notes Trustee which accedes to this Agreement, executes
this Agreement or, as applicable, a Creditor/Agent/Trustee Accession Undertaking, not in its individual or personal
capacity but solely in its capacity as High-Yield Notes Trustee in the exercise of the powers and authority conferred
and vested in it under the relevant indenture for and on behalf of the relevant High-Yield Noteholders for which it
acts as High-Yield Notes Trustee. It will exercise its powers and authority under this Agreement in the manner
provided for in the relevant indenture. Prior to taking any action under this Agreement instructed to be taken in
accordance with the relevant indenture, each High-Yield Notes Trustee may (if acting reasonably) request and rely
upon an opinion of counsel or opinion of another qualified expert, at the expense of the Company.
13.2 Liability of each High-Yield Notes Trustee
(a)
In no case shall any High-Yield Notes Trustee be:
(i)
(ii)
personally responsible or accountable in damages or otherwise to any other party for any loss,
damage or claim incurred by reason of any act or omission performed or omitted by such
High-Yield Notes Trustee in good faith in accordance with this Agreement or the relevant
indenture in a manner that any such High-Yield Notes Trustee (acting reasonably) believed to
be within the scope of the authority conferred on it by this Agreement or the relevant indentures
or by law (other than for its own gross negligence or wilful misconduct); or
personally liable for or on account of any of the statements, representations, warranties,
covenants or obligations stated to be those of any other party, all such liability, if any, being
expressly waived by the parties and any person claiming by, through or under such party. Any
High-Yield Notes Trustee (or any successor trustee) shall, however, be liable under this
Agreement for its own gross negligence or wilful misconduct. No High-Yield Notes Trustee
shall have any responsibility for the actions of any individual noteholder.
(b)
With respect to the Creditors, each High-Yield Notes Trustee undertakes to perform or to observe only
such of its covenants or obligations as are specifically set forth in the High-Yield Notes Documents
pursuant to which it acts as trustee or this Agreement and the parties acknowledge and agree that no
implied agreement, covenants or obligations on the part of the relevant High-Yield Notes Trustee shall be
read into this Agreement.
13.3 Senior Creditors and High-Yield Notes Trustee
Provided it complies with its obligations in this Agreement, no High-Yield Notes Trustee is required to have any
regard to the interests of the Senior Creditors.
13.4 Reliance and information
(a)
(b)
(c)
(d)
Each High-Yield Notes Trustee shall at all times be entitled to, and may rely on, any notice, consent or
certificate purported to be given or granted by the Security Agent or Intercreditor Agent pursuant to this
Agreement without being under any obligation to enquire or otherwise determine whether any such
notice, consent or certificate has in fact been given or granted by the Security Agent or Intercreditor
Agent.
In acting under and in accordance with this Agreement each High-Yield Notes Trustee is entitled to seek
instructions from the High-Yield Noteholders at any time, and where it so acts on the instructions of the
requisite percentage of the High-Yield Noteholders (to the extent required by the indenture), the relevant
High-Yield Notes Trustee shall not incur any liability to any person for so acting.
Each High-Yield Notes Trustee may rely and shall be fully protected in acting or refraining from acting
upon any notice or other document reasonably believed by it to be genuine and correct and to have been
signed by, or with the authority of, the proper person.
Without affecting the responsibility of any Debtor for information supplied by it or on its behalf in
connection with any Debt Document, each Creditor confirms that it has not relied exclusively on any
information provided to it by the relevant High-Yield Notes Trustee in connection with any Debt
Document. The relevant High-Yield Notes Trustee is not obliged to review or check the adequacy,
accuracy or completeness of any document it forwards to another party.
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(e)
Each High-Yield Notes Trustee is entitled to assume that:
(i)
(ii)
(iii)
any payment or other distribution made in respect of the High-Yield Notes Liabilities has been
made in accordance with the provisions of this Agreement;
no default or event of default (however described) has occurred; and
neither the Senior Lender Liabilities Discharge Date nor the Senior Liabilities Discharge Date
has occurred,
unless it has actual notice to the contrary.
(f)
No High-Yield Notes Trustee is obliged to monitor or enquire whether any default or event of default has
occurred.
13.5 Other parties not affected
This Clause 13 is intended to afford protection to each High-Yield Notes Trustee only and no provision of this
Clause 13 shall alter or change the rights and obligations as between the other Parties in respect of each other.
13.6 Turnover obligation
(a)
(b)
(c)
Notwithstanding any provision in this Agreement to the contrary, each High-Yield Notes Trustee shall
only have an obligation to turn over or repay amounts received or recovered under this Agreement by it
(i) if it has actual knowledge that the receipt or recovery is an amount received in breach of a provision of
this Agreement (a “Turnover Receipt”) and (ii) to the extent that, prior to receiving that knowledge, it
has not distributed the amount of the Turnover Receipt to the relevant High-Yield Noteholders in
accordance with the provisions of the relevant indenture.
References to “actual knowledge” of the a High-Yield Notes Trustee shall be construed to mean that that
High-Yield Notes Trustee shall not be charged with knowledge (actual or otherwise) of the existence of
facts that would impose an obligation on it to make any payment or prohibit it from making any payment
unless a Responsible Officer of the High-Yield Notes Trustee has received two Business Days’ prior
written notice from the Security Agent or Intercreditor Agent (as applicable) that such payments are
required or prohibited by this Agreement. For the purposes of this Agreement, delivery of the notice will
be effective only when actually received by such Responsible Officer and then only if it is expressly
marked for the attention of a Responsible Officer.
A “Responsible Officer” in this Agreement means any person who is an officer within the corporate trust
and agency department of the relevant High-Yield Notes Trustee, including any vice president, assistant
vice president, assistant treasurer, trust officer or any other officer of the High-Yield Notes Trustee who
customarily performs functions similar to those performed by these officers.
13.7 No Action
(a)
(b)
A High-Yield Notes Trustee shall not have any obligation to take any action under this Agreement unless
it is indemnified and/or secured to its satisfaction in respect of all costs, expenses and liabilities which it
would in its opinion thereby incur.
Notwithstanding any other provision of this Agreement, a High-Yield Notes Trustee is not required to
indemnify any other person, whether or not a Party, in respect of any of the transactions contemplated by
this Agreement.
13.8 Departmentalisation
In acting as a High-Yield Notes Trustee, the relevant High-Yield Notes Trustee shall be treated as acting through its
agency division which shall be treated as a separate entity from its other divisions and departments. Any
information received or acquired by that High-Yield Notes Trustee which is received or acquired by some other
division or department or otherwise than in its capacity as the High-Yield Notes Trustee may be treated as
confidential by that High-Yield Notes Trustee and will not be treated as information possessed by that High-Yield
Notes Trustee in its capacity as such.
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13.9 High-Yield Notes Trustee not fiduciary for other Parties
No High-Yield Notes Trustee shall be deemed to owe any fiduciary duty to any of the Secured Parties, any of the
Subordinated Parties or any Debtor and shall not be liable to any Secured Party, any Subordinated Party, any holder
or note trustee of any Senior Secured Debt, or any member of the Group if any High-Yield Notes Trustee shall in
good faith mistakenly pay over or distribute to any High-Yield Noteholder or to any other person cash, property or
securities to which any person shall be entitled by virtue of this Agreement or otherwise. With respect to the
Secured Parties and any Subordinated Party, each High-Yield Notes Trustee undertakes to perform or to observe
only such of its covenants or obligations as are specifically set forth in the High-Yield Notes Documents and this
Agreement and no implied covenants or obligations with respect to the Secured Parties and any Subordinated Party
shall be read into this Agreement against any High-Yield Notes Trustee.
13.10 Payments
Nothing in this Agreement shall prevent (i) payment by any Debtor of High-Yield Trustee Amounts; or (ii) the
receipt and retaining of the relevant High-Yield Notes Trustee Amounts by any High-Yield Notes Trustee.
13.11 Security Agent, Intercreditor Agent and the High-Yield Notes Trustee
(a)
(b)
(c)
No High-Yield Notes Trustee is responsible for the appointment or for monitoring the performance of the
Security Agent or the Intercreditor Agent.
Each of the Security Agent and Intercreditor Agent agrees and acknowledges that it shall have no claim
against any High-Yield Notes Trustee in respect of any fees, costs, expenses and liabilities due and
payable to, or incurred by, the Security Agent or the Intercreditor Agent.
Each High-Yield Notes Trustee shall be under no obligation to instruct or direct the Security Agent or
Intercreditor Agent to take any enforcement action unless it shall have been instructed to do so by the
High-Yield Noteholders pursuant to the terms of the High-Yield Notes Documents and indemnified and/
or secured to its satisfaction.
13.12 Provision of information
No High-Yield Notes Trustee is obliged to review or check the adequacy, accuracy or completeness of any
document it forwards to another Party. No High-Yield Notes Trustee is responsible for:
(a)
(b)
providing any Creditor with any credit or other information concerning the risks arising under or in
connection with the Debt Documents (including any information relating to the financial condition or
affairs of any of the Debtors or their related entities or the nature or extent of recourse against any Party or
its assets) whether coming into its possession before, on or after the date of this Agreement; or
obtaining any certificate or other document from any Debtor.
13.13 Disclosure of information
Each Debtor irrevocably authorises the relevant High-Yield Notes Trustee to disclose to any other Creditor any
information that is received by that High-Yield Notes Trustee in its capacity as a High-Yield Notes Trustee.
13.14 Illegality
Each High-Yield Notes Trustee may refrain from doing anything (including disclosing any information) which
might, in its opinion, constitute a breach of any law or regulation and may do anything which, in its opinion, is
necessary or desirable to comply with any law or regulation.
13.15 Resignation of High-Yield Notes Trustee
13.16 Agents
Each High-Yield Notes Trustee may resign or be removed in accordance with the terms of the High-Yield Notes
Documents, provided that a replacement of that High-Yield Notes Trustee agrees with the Parties to become the
replacement trustee under this Agreement by the execution of a Creditor/Agent Trustee Accession Undertaking as
provided for in Clause 15.4 (New Agent or High-Yield Notes Trustee).
Each High-Yield Notes Trustee may act through its attorneys and agents and shall not be responsible for the
misconduct or negligence of any attorney or agent appointed by it hereunder using reasonable care.
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13.17 Requirement for bond or surety
No High-Yield Notes Trustee shall be required to give any bond or surety with respect to the performance of its
duties or the exercise of its powers under this Agreement.
13.18 Provisions survive termination
The provisions of this Clause 13 shall survive any termination of this Agreement.
14. PURCHASE OPTION
14.1 Purchase Option
If as a result of an Event of Default:
(a)
(b)
any Senior Liabilities have been declared due and payable prior to their stated maturity; or
the Senior Creditors have instigated any formal steps to enforce any guarantees and Transaction Security,
any Subordinated Creditors may (without any obligation to do so), on giving not less than ten (10) Business Days’
notice to the Senior Agent and Intercreditor Agent, at the expense of the relevant Subordinated Creditors (but
having obtained all necessary approvals from the Subordinated Creditors) purchase or procure the purchase by a
person nominated by such Subordinated Creditors of all (but not part only) of the rights and obligations of the
Senior Creditors under the Senior Debt Documents by way of transfers in accordance with the terms of the Senior
Debt Documents.
14.2 Terms of Purchase
Any such purchase shall take effect on the following terms:
(a)
(b)
(c)
(d)
(e)
payment in full in cash of an amount equal to the Senior Liabilities outstanding under the Senior Debt
Documents as at the date that amount is to be paid;
payment in full in cash of the amount which each Senior Creditor certifies to be necessary to compensate
it for any loss on account of funds borrowed, contracted for or utilised to fund any amount included in the
Senior Liabilities resulting from the receipt of that payment otherwise than on the last day of an interest
period in relation thereto;
after the transfer, no Senior Creditor will be under any actual or contingent liability to any Debtor or any
other person under this Agreement or the Senior Debt Documents in relation to any Senior Liabilities for
which it is not holding cash collateral in an amount and established on terms reasonably satisfactory to it;
an indemnity is provided from each Subordinated Creditor (other than a High-Yield Notes Trustee), or
from another third party acceptable to all Senior Creditors, in a form satisfactory to each Senior Creditor
in respect of all losses which may be sustained or incurred by any Senior Creditor in consequence of any
sum received or recovered by any Senior Creditor from any Debtor or any Subordinated Creditor or other
person being required (or it being alleged that it is required) to be paid back by or clawed back from any
Senior Creditor for any reason whatsoever, provided that where it is demonstrated to the reasonable
satisfaction of the Security Agent that those losses could not have been recovered in full by the relevant
Senior Creditor under the relevant Senior Debt Document, as may be applicable, that transfer had not been
made, that indemnity shall not extend to the shortfall; and
the relevant transfer shall be without recourse to, or warranty from, the Senior Creditors, except that each
Senior Creditor shall be deemed to have warranted on the date of that transfer that:
(i)
(ii)
(iii)
it is the owner, free from all Security and third party interests (other than any arising by
operation of law) of all rights and interests under the Senior Debt Documents purporting to be
transferred by it by that transfer;
it has the corporate power to effect that transfer; and
it has taken all necessary action to authorise the making by it of that transfer.
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15. CHANGES TO THE PARTIES
15.1 Assignments and transfers
No Party may assign any of its rights or transfer any of its rights and obligations in respect of any Debt Documents
or the Liabilities except as permitted by this Clause 15 (Changes to the Parties).
15.2 Change of Creditor
(a)
Any Creditor may assign any of its rights and benefits or transfer by novation or, as the case may be, by
assignment, assumption or release, any of its rights, benefits and obligations in respect of any Debt
Documents or the Liabilities if:
(i)
(ii)
the assignment or transfer is in accordance with the terms of the Debt Documents to which it is
a party; and
subject to paragraph (b) below, the assignee or transferee (if not already a Party to this
Agreement in the appropriate capacity) accedes to this Agreement in the appropriate capacity
pursuant to Clause 15.6 (Creditor/Agent/Trustee Accession Undertaking).
(b)
Paragraph (a) above shall not apply to any Debt Purchase Transaction under (and as defined in) the Senior
Bank Facilities Agreement and entered into in accordance with the term thereof.
15.3 New Senior Lenders
(a)
(b)
Each person which becomes an SPV (in respect of an SPV Tranche), a New Bank Tranche Lender (in
respect of a New Bank Tranche) or a Replacement Revolving Facility Lender (in respect of a
Replacement Revolving Facility) in accordance with the terms of the Senior Bank Facilities Agreement
shall (if not already a Party to this Agreement as a Senior Lender) accede to this Agreement as a Senior
Lender pursuant to Clause 15.6 (Creditor/Agent/Trustee Accession Undertaking).
If EIB makes available EIB Facilities which are to share in the Transaction Security, it shall accede to this
Agreement as a Senior Lender pursuant to Clause 15.6 (Creditor/Agent/Trustee Accession Undertaking)
and, with effect from its accession, the terms “Senior Lender” and “Senior Lender Finance Documents”
shall be deemed to include (respectively) EIB and any agreement or document in respect of the EIB
Facilities.
15.4 New Agent or High-Yield Notes Trustee
No person shall become an Agent or a High-Yield Notes Trustee unless, at the same time, it accedes to this
Agreement in such capacity pursuant to Clause 15.6 (Creditor/Agent/Trustee Accession Undertaking).
15.5 New Ancillary Lender
If any Affiliate of a Senior Lender becomes an Ancillary Lender in accordance with clause 6.8 (Affiliates of Lenders
as Ancillary Lenders) of the Senior Bank Facilities Agreement, it shall not be entitled to share in any of the
Transaction Security or in the benefit of any guarantee or indemnity in respect of any of the liabilities arising in
relation to its Ancillary Facilities unless it has (if not already party to this Agreement as a Senior Lender) acceded to
this Agreement as a Senior Lender and to the Senior Facilities Agreement as an Ancillary Lender pursuant to
Clause 15.6 (Creditor/Agent Accession Undertaking).
15.6 Creditor/Agent/Trustee Accession Undertaking
With effect from the date of acceptance by the Intercreditor Agent of a Creditor/Agent/Trustee Accession
Undertaking duly executed and delivered to the Intercreditor Agent by the relevant acceding party or, if later, the
date specified in that Creditor/Agent Accession Undertaking:
(a)
(b)
any Party ceasing entirely to be a Creditor, Agent or High-Yield Notes Trustee shall be discharged from
further obligations towards the Security Agent (if applicable) or the Intercreditor Agent and other Parties
under this Agreement and their respective rights against one another shall be cancelled (except in each
case for those rights which arose prior to that date); and
as from that date, the replacement or new Creditor, Agent or High-Yield Notes Trustee shall assume the
same obligations, and become entitled to the same rights, as if it had been an original Party to this
Agreement in that capacity; and
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(c)
any new Ancillary Lender (which is an Affiliate of a Senior Lender) shall also become party to the Senior
Bank Facilities Agreement as an Ancillary Lender, and shall assume the same obligations and become
entitled to the same rights as if it had been an original party to the Senior Bank Facilities Agreement as an
Ancillary Lender.
15.7 New Debtor
(a)
If any member of the Group:
(i)
(ii)
incurs any Liabilities; or
gives any security, guarantee, indemnity or other assurance against loss in respect of any of the
Liabilities,
the Debtors will procure that the person incurring those Liabilities or giving that assurance accedes to this
Agreement as a Debtor, in accordance with paragraph (b) below, no later than contemporaneously with
the incurrence of those Liabilities or the giving of that assurance.
(b)
With effect from the date of acceptance by the Intercreditor Agent of a Debtor Accession Deed duly
executed and delivered to the Intercreditor Agent by the new Debtor or, if later, the date specified in the
Debtor Accession Deed, the new Debtor shall assume the same obligations and become entitled to the
same rights as if it had been an original Party to this Agreement as a Debtor.
15.8 Additional parties
(a)
(b)
Each of the Parties appoints the Intercreditor Agent to receive on its behalf each Debtor Accession Deed
and Creditor/Agent/Trustee Accession Undertaking delivered to the Intercreditor Agent and the
Intercreditor Agent shall, subject to paragraph (c) below, as soon as reasonably practicable after receipt by
it, sign and accept the same if it appears on its face to have been completed, executed and, where
applicable, delivered in the form contemplated by this Agreement or, where applicable, by the relevant
Debt Document.
In the case of a Creditor/Agent/Trustee Accession Undertaking delivered to the Intercreditor Agent by any
new Ancillary Lender (which is an Affiliate of a Senior Lender) or any party acceding to this Agreement
as a Hedge Entity:
(i)
(ii)
the Intercreditor Agent shall, as soon as practicable after signing and accepting that Creditor/
Agent/Trustee Accession Undertaking in accordance with paragraph (a) above, deliver that
Creditor/Agent/Trustee Accession Undertaking to the Senior Agent; and
the Senior Agent shall, as soon as practicable after receipt by it, sign and accept that Creditor/
Agent/Trustee Accession Undertaking if it appears on its face to have been completed, executed
and delivered in the form contemplated by this Agreement.
(c)
(d)
The Intercreditor Agent and the Senior Agent shall only be obliged to sign and accept a Debtor Accession
Deed or Creditor/Agent/Trustee Accession Undertaking received by it once it is satisfied that it has
complied with all necessary “know your customer” or similar other checks under all applicable laws and
regulations in relation to the accession by the prospective party to this Agreement.
Each Party shall promptly upon the request of the Intercreditor Agent or, as the case may be, the Senior
Agent, supply, or procure the supply of, such documentation and other evidence as is reasonably
requested by the Intercreditor Agent or, as the case may be, the Senior Agent, (in each case for itself) from
time to time in order for the Intercreditor Agent or, as the case may be, the Senior Agent, to carry out and
be satisfied with the results of all necessary “know your customer” or other similar checks under all
applicable laws and regulations pursuant to the transactions contemplated in the Debt Documents.
15.9 Resignation of a Debtor
The Senior Agent shall not accept a Resignation Letter (as defined in the Senior Bank Facilities
Agreement) from a Guarantor under (and as defined in) the Senior Bank Facilities Agreement unless each
Hedge Entity has notified the Intercreditor Agent that no payment is due from that Guarantor to that
Hedge Entity under Clause 7.7 (Guarantees), and the Intercreditor Agent shall, upon receiving that
notification, notify the Senior Agent.
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(a)
(b)
The Company may request that a Debtor ceases to be a Debtor by delivering to the Intercreditor Agent a
Debtor Resignation Request.
The Intercreditor Agent shall accept a Debtor Resignation Request and notify the Company and each
other Party of its acceptance if:
(i)
(ii)
(iii)
(iv)
the Company has confirmed that no default under any Debt Document is continuing or would
result from the acceptance of the Debtor Resignation Request;
to the extent that the Senior Lender Discharge Date has not occurred, the Senior Agent (and, if it
has acceded to this Agreement in accordance with Clause 15.6 (Creditor/Agent/Trustee
Accession Undertaking), EIB) notifies the Intercreditor Agent that that Debtor is not, or has
ceased to be, a borrower or guarantor under the Senior Lender Finance Documents;
each Hedge Entity notifies the Intercreditor Agent that that Debtor is under no actual or
contingent obligations to that Hedge Entity in respect of the Permitted Hedging Liabilities; and
to the extent that the Subordinated Liabilities Discharge Date has not occurred, the Subordinated
Agents and/or High-Yield Notes Trustees under the relevant Subordinated Debt Documents
notifies the Intercreditor Agent that the Debtor is not, or has ceased to be, a borrower or
guarantor or issuer under the Subordinated Debt Documents.
(c)
Upon notification by the Intercreditor Agent to the Company of its acceptance of the resignation of a
Debtor, that Debtor shall cease to be a Debtor and shall have no further rights or obligations under this
Agreement as a Debtor.
16. NOTICES
16.1 Communications in writing
Any communication to be made under or in connection with this Agreement shall be made in writing and, unless
otherwise stated, may be made by fax or letter.
16.2 Security Agent’s and Intercreditor Agent’s communications with Creditors
The Security Agent and the Intercreditor Agent shall be entitled to carry out all dealings with:
(a)
(b)
the Senior Bank Facility Lenders and Subordinated Creditors through the relevant Agents or High-Yield
Notes Trustees, if and as applicable; and
with each other Party, directly with that Party.
16.3 Addresses
The address and fax number (and the department or officer, if any, for whose attention the communication is to be
made) of each Party for any communication or document to be made or delivered under or in connection with this
Agreement is:
(a)
(b)
in the case of the Company, the Security Agent and the Intercreditor Agent, that identified with its name
below; and
in the case of each other Party, that notified in writing to the Intercreditor Agent on or prior to the date on
which it becomes a Party,
or any substitute address, fax number or department or officer which that Party may notify to the Intercreditor Agent
(or the Intercreditor Agent may notify to the other Parties, if a change is made by the Intercreditor Agent) by not
less than five Business Days’ notice.
16.4 Delivery
(a)
Any communication or document made or delivered by one person to another under or in connection with
this Agreement will only be effective:
(i)
if by way of fax, when received in legible form; or
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(ii)
if by way of letter, when it has been left at the relevant address or five Business Days after being
deposited in the post postage prepaid in an envelope addressed to it at that address,
and, if a particular department or officer is specified as part of its address details provided under
Clause 16.3 (Addresses), if addressed to that department or officer.
(b)
Any communication or document to be made or delivered to the Security Agent, the Intercreditor Agent
or a High-Yield Notes Trustee will be effective only when actually received by the Security Agent,
Intercreditor Agent or the relevant High-Yield Notes Trustee (as applicable) and then only if it is
expressly marked for the attention of the department or officer identified with the Security Agent’s,
Intercreditor Agent’s or that High-Yield Notes Trustee’s (as applicable) signature below (or any substitute
department or officer as the Security Agent, Intercreditor Agent or High-Yield Notes Trustee shall specify
for this purpose).
(c) Any communication or document made or delivered to the Company in accordance with this Clause 16.4
will be deemed to have been made or delivered to each of the Debtors.
16.5 Notification of address and fax number
Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to
Clause 16.3 (Addresses) or changing its own address or fax number, the Intercreditor Agent shall notify the other
Parties.
16.6 Electronic communication
(a)
Any communication to be made between the Security Agent or the Intercreditor Agent and any other
Party may be made by electronic mail or other electronic means, if the Security Agent or the Intercreditor
Agent and the relevant Party:
(i)
(ii)
(iii)
agree that, unless and until notified to the contrary, this is to be an accepted form of
communication;
notify each other in writing of their electronic mail address and/or any other information
required to enable the sending and receipt of information by that means; and
notify each other of any change to their address or any other such information supplied by them.
(b)
Any electronic communication made between the Security Agent or Intercreditor Agent and any other
Party will be effective only when actually received in readable form and in the case of any electronic
communication made to the Security Agent or Intercreditor Agent only if it is addressed in such a manner
as the Security Agent or Intercreditor Agent (as applicable) shall specify for this purpose.
16.7 Communication when Intercreditor Agent is Impaired Agent
If the Intercreditor Agent is an Impaired Agent the Parties may, instead of communicating with each other through
the Intercreditor Agent, communicate with each other directly and (while the Intercreditor Agent is an Impaired
Agent) all the provisions of this Agreement which require communications to be made or notices to be given to or
by the Intercreditor Agent shall be varied so that communications may be made and notices given to or by the
relevant Parties directly. This provision shall not operate after a replacement Intercreditor Agent has been
appointed.
16.8 English language
(a)
(b)
Any notice given under or in connection with this Agreement must be in English.
All other documents provided under or in connection with this Agreement must be:
(i)
(ii)
in English; or
if not in English, and if so required by the Security Agent or Intercreditor Agent, accompanied
by a certified English translation and, in this case, the English translation will prevail unless the
document is a constitutional, statutory or other official document.
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17. PRESERVATION
17.1 Partial invalidity
If, at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under
any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the
legality, validity or enforceability of that provision under the law of any other jurisdiction will in any way be
affected or impaired.
17.2 No impairment
If, at any time after its date, any provision of a Debt Document (including this Agreement) is not binding on or
enforceable in accordance with its terms against a person expressed to be a party to that Debt Document, neither the
binding nature nor the enforceability of that provision or any other provision of that Debt Document will be
impaired as against the other party(ies) to that Debt Document.
17.3 Remedies and waivers
No failure to exercise, nor any delay in exercising, on the part of any Party, any right or remedy under this
Agreement shall operate as a waiver of any such right or remedy or constitute an election to affirm this Agreement.
No election to affirm this Agreement on the part of any Party shall be effective unless it is in writing. No single or
partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right
or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or
remedies provided by law.
17.4 Waiver of defences
The provisions of this Agreement will not be affected by an act, omission, matter or thing which, but for this
Clause 17.4, would reduce, release or prejudice the subordination and priorities expressed to be created by this
Agreement including (without limitation and whether or not known to any Party):
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
any time, waiver or consent granted to, or composition with, any Debtor or other person;
the release of any Debtor or any other person under the terms of any composition or arrangement with any
creditor of any Debtor;
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up
or enforce, any rights against, or security over assets of, any Debtor or other person or any non
presentation or non observance of any formality or other requirement in respect of any instrument or any
failure to realise the full value of any Security;
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members
or status of any Debtor or other person;
any amendment, novation, supplement, extension (whether of maturity or otherwise) or restatement (in
each case, however fundamental and of whatsoever nature, and whether or not more onerous) or
replacement of a Debt Document or any other document or security;
any unenforceability, illegality or invalidity of any obligation of any person under any Debt Document or
any other document or security;
any intermediate Payment of any of the Liabilities owing to the Creditors in whole or in part; or
any insolvency or similar proceedings.
17.5 Priorities not affected
Except as otherwise provided in this Agreement the priorities referred to in Clause 3 (Ranking of Liabilities) will:
(a)
not be affected by any reduction or increase in the principal amount secured by the Transaction Security
in respect of the Liabilities owing to the Creditors or by any intermediate reduction or increase in,
amendment or variation to any of the Debt Documents, or by any variation or satisfaction of, any of the
Liabilities or any other circumstances;
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(b)
(c)
apply regardless of the order in which or dates upon which this Agreement and the other Debt Documents
are executed or registered or notice of them is given to any person; and
secure the Liabilities owing to the Creditors in the order specified, regardless of the date upon which any
of the Liabilities arise or of any fluctuations in the amount of any of the Liabilities outstanding.
18. AMENDMENTS AND TERMINATION
18.1 Amendments
(a)
(b)
(c)
(d)
(e)
(f)
Subject to Clauses 18.2 (Disenfranchisement of Sponsor Affiliates), Clause 18.3 (Disenfranchisement of
Defaulting Lenders) and paragraph (b) of Clause 18.4 (Termination), any modifications to this Agreement
whatsoever shall be made by means of an amendment agreement duly signed by the representatives of
each one of the Creditors and the Company (for itself and acting on behalf of the other Debtors) hereto in
order to become effective, unless otherwise stated herein. The consent of the Company to any proposed
amendment made by the Creditors shall not be unreasonably withheld or delayed.
Any waiver to the obligations of the Parties under this Agreement shall require the prior written consent
of the representatives of the Creditors.
Each Creditor agrees that to the extent that an amendment to this Agreement or waiver of any obligation
contemplated herein only affects the rights and obligations of one Creditor or class of Creditors and could
not reasonably be expected to be adverse to the interests of the other Creditors or a class of Creditors, only
the Creditor or class of Creditors affected by such amendment need to agree to such amendment or
waiver.
Any amendment to or waiver of the requirements of this Agreement which is prejudicial to the rights and
obligations of the Security Agent, the Intercreditor Agent, any High-Yield Notes Trustee or any Agent
may not be effected without its prior written consent.
Any amendment to or waiver of this Agreement which is consequential solely to the incorporation of an
SPV Tranche, a New Bank Tranche or a Replacement Revolving Facility into the Senior Bank Facilities
Agreement (and on the terms set out therein) shall not require the consent of any Party.
In relation to any amendment or waiver or other vote of Senior Lenders under this Agreement, in respect
of all SPV Tranches the vote of the SPVs shall be counted in accordance with clause 38.4 (SPV Tranches)
of the Senior Bank Facilities Agreement.
18.2 Disenfranchisement of Sponsor Affiliates
(a)
For so long as a Sponsor Affiliate (i) beneficially owns a Commitment under (and as defined in) the
Senior Bank Facilities Agreement (a “Commitment”) or (ii) has entered into a sub-participation
agreement relating to a Commitment or other agreement or arrangement having a substantially similar
economic effect and such agreement or arrangement has not been terminated:
(i)
(ii)
in ascertaining (A) the Majority Senior Creditors or (B) whether any relevant percentage
(including, for the avoidance of doubt, unanimity) of Senior Liabilities or the agreement of any
specified group of Senior Creditors, has been obtained to approve any request for a consent or to
carry any other vote or approve any action under this Agreement, that Commitment shall be
deemed to be zero; and
subject to paragraph (b) below, that Sponsor Affiliate (or the person with whom it has entered
into that sub-participation, other agreement or arrangement (a “Counterparty”)) shall be
deemed not to be a Senior Lender.
(b)
(c)
Sub paragraph (ii) of paragraph (a) above shall not apply to the extent that a Counterparty is a Senior
Lender (as the case may be) by virtue otherwise than by beneficially owning the relevant Commitment.
Each Sponsor Affiliate that is a Senior Lender agrees that:
(i)
in relation to any meeting or conference call to which all the Senior Creditors or any
combination of those groups of Senior Creditors are invited to attend or participate, it shall not
attend or participate in the same if so requested by the Security Agent or, unless the Security
Agent otherwise agrees, be entitled to receive the agenda or any minutes of the same; and
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(ii)
it shall not, unless the Security Agent otherwise agrees, be entitled to receive any report or other
document prepared at the behest of, or on the instructions of, the Security Agent or one or more
of the Senior Creditors.
18.3 Disenfranchisement of Defaulting Lenders
(a)
For so long as a Defaulting Lender has any Available Commitment (as defined in the Senior Bank
Facilities Agreement) (an “Available Commitment”):
(i)
(ii)
in ascertaining (A) the Majority Senior Creditors or (B) whether any relevant percentage
(including, for the avoidance of doubt, unanimity) of Senior Liabilities or the agreement of any
specified group of Senior Creditors has been obtained to approve any request for a Consent or to
carry any other vote or approve any action under this Agreement, that Defaulting Lender’s
Commitments will be reduced by the amount of its Available Commitments; and
to the extent that that reduction results in that Defaulting Lender’s Commitments being zero,
that Defaulting Lender shall be deemed not to be a Senior Lender.
(b)
For the purposes of this Clause 18.3, the Intercreditor Agent and the Security Agent may assume that the
following Creditors are Defaulting Lenders:
(i)
(ii)
(iii)
any Senior Lender which has notified the Intercreditor Agent or the Security Agent that it has
become a Defaulting Lender;
any Senior Lender to the extent that the relevant Agent has notified the Intercreditor Agent or
the Security Agent that that Senior Lender is a Defaulting Lender; and
any Senior Lender in relation to which it is aware that any of the events or circumstances
referred to in paragraphs (a), (b) or (c) of the definition of “Defaulting Lender” in the Senior
Bank Facilities Agreement has occurred,
18.4 Termination
unless it has received notice to the contrary from the Senior Lender concerned (together with any
supporting evidence reasonably requested by the Intercreditor Agent or the Security Agent) or the
Intercreditor Agent or the Security Agent is otherwise aware that the Senior Lender has ceased to be a
Defaulting Lender.
(a)
(b)
Unless terminated earlier in accordance with this Clause 18, this Agreement (other than the provisions of
Clause 13 (High-Yield Notes Trustee Protections)) shall terminate on the Final Discharge Date.
The consent of the Debtors is not required for the termination of this Agreement provided that:
(i)
(ii)
such termination has been agreed by all of the Creditors; and
such termination will not trigger a default or an increase in margin under any of the Debt
Documents.
18.5 Override
Unless expressly stated otherwise in this Agreement, this Agreement overrides anything in the Debt Documents to
the contrary.
19. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on
the counterparts were on a single copy of this Agreement.
20. NON-PETITION
Each of the parties to this agreement agrees that it:
(a)
will not be entitled to petition or take any corporate action or other steps or legal proceedings for the
bankruptcy, examinership, reorganisation, arrangement, insolvency, winding-up or liquidation of Nara
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Cable Funding Limited or for the appointment for the receiver, administrator, manager, administrative
receiver, trustee, liquidator, examiner or similar officer in respect of Nara Cable Funding Limited or any
of their revenues or assets save for lodging a claim in the liquidation of Nara Cable Funding Limited
which is initiated by another party or taking proceedings to obtain a declaration or judgement as to the
obligations of Nara Cable Funding Limited; and
(b)
shall not have any recourse against any director, shareholder or officer of Nara Cable Funding Limited in
respect of any obligations, covenant or agreement entered into or made by Nara Cable Funding Limited.
21. GOVERNING LAW
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English
law.
22. ENFORCEMENT
22.1 Jurisdiction
(a)
(b)
(c)
The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with
this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or
the consequences of its nullity or any non-contractual obligations arising out of or in connection with this
Agreement) (a “Dispute”).
The Parties agree that the courts of England are the most appropriate and convenient courts to settle
Disputes and accordingly no Party will argue to the contrary.
This Clause 22.1 is for the benefit of the Secured Parties only. As a result, no Secured Party shall be
prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the
extent allowed by law, the Secured Parties may take concurrent proceedings in any number of
jurisdictions.
22.2 Service of process
(a)
Without prejudice to any other mode of service allowed under any relevant law, each Debtor (unless
incorporated in England and Wales):
(i)
(ii)
irrevocably appoints TMF Corporate Services Limited as its agent for service of process in
relation to any proceedings before the English courts in connection with this Agreement; and
agrees that failure by a process agent to notify the relevant Debtor of the process will not
invalidate the proceedings concerned.
(b)
(c)
If any person appointed as an agent for service of process is unable for any reason to act as agent for
service of process, the Company (in the case of an agent for service of process for a Debtor), must
immediately (and in any event within ten days of such event taking place) appoint another agent on terms
acceptable to the Intercreditor Agent. Failing this, the Intercreditor Agent may (at the Company’s
expense) appoint another agent for this purpose.
Each Debtor expressly agrees and consents to the provisions of Clause 21 (Governing Law) and this
Clause 22.
This Agreement has been entered into on the date stated at the beginning of this Agreement and executed as a deed by
the Company and the Existing High-Yield Notes Issuer and is intended to be and is delivered by them as a deed on the
date specified above.
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