Supplemental Disclosure Material - Ono

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.
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