5 years ago

iesy Repository GmbH - Irish Stock Exchange

iesy Repository GmbH - Irish Stock Exchange

We anticipate that we

We anticipate that we will be highly leveraged in the foreseeable future. Our high level of debt may have important negative consequences for you. For more information, see “Risk Factors—Risks Relating to Our Indebtedness and Our Structure—Our high leverage and debt service obligations could materially adversely affect our business, financial condition or results of operations.” In addition, additional indebtedness incurred or the use of available cash on hand to finance acquisitions (including the ish Acquisition) could reduce the amount of our cash flow available to make payments on the Notes and increase our leverage. See “The ish Acquisition” and “Risk Factors—Risks Relating to Our Indebtedness and Our Structure.” Senior Credit Facilities The Senior Credit Facilities require us to comply with certain covenants, including certain financial ratios. For a description of the Senior Credit Facilities, see the description included in “Description of Other Indebtedness.” Aggregate Financial Obligations The following table summarizes the financial payments that iesy will be obligated to make under its debt instruments as of December 31, 2004. The information presented in the table below reflects management’s estimates of the contractual maturities of iesy’s obligations. These maturities may differ significantly from the actual maturity of these obligations. In particular, debt under the Senior Credit Facilities may be retired earlier due to mandatory prepayments, such as from excess cash flow. This table does not reflect additional long-term debt obligations, which we will incur in connection with the Financing and the ish Acquisition. 102 Payments due by period (1) (€’000s) Less than 1 Year 1-3 years 4-5 years Office rental 1,850 3,101 2,709 Other rental 947 1,127 0 Network infrastructure 21,261 43,692 45,409 MSG and Copyright fees 6,408 6,413 1,526 Other contractual obligations 213 0 0 Subtotal 30,679 54,333 49,643 Long-term debt obligations 2,000 3,940 3,862 Total 32,679 58,273 53,505 (1) We have not included iesy’s obligations beyond five years, including with respect to network infrastructure, the Senior Credit Facilities and the Existing Notes. Leasing and rental obligations. iesy has entered into the long term SLAs with DTAG and its affiliates. These include usage and access agreements for underground cable ducts space, the use of fiber optic transmission systems, tower and facility space. In general, these agreements primarily impose fixed prices for a limited period of time, which may then be raised to reflect increased costs, subject to index-linked limitations. Some agreements impose prices based on the cost to DTAG of services that are passed through to iesy. iesy has the ability to terminate these agreements with notice periods of between 12 and 24 months. Furthermore, iesy has entered into the long term BRN-iesy agreement under which iesy leases additional fiber optic lines. See “Business—Business of iesy—Supply—SLAs with DTAG.” iesy has also entered into various other license, rental and operating lease agreements, all of which are expensed as services are provided. iesy treats these leases as operating rather than capital leases. See “Risk Factors—Risks Relating to Our Indebtedness and Our Structure—Our high leverage and debt service obligations could materially adversely affect our business, financial condition or results of operations” and “—Risks Relating to the Notes, the Subsidiary Guarantees and the Security—We have not included IFRS or U.S. GAAP financial information in this Prospectus, and there may be certain significant differences between our financial position and results of operations under German GAAP, IFRS or U.S. GAAP.” Copyright agreements. iesy is required under German law to pay royalties to the holders of copyrights and related rights for the re-transmission of radio and television programs that include, among other things, literary, scientific or artistic works protected by copyright law. iesy pays these fees pursuant to a collective agreement (Kabelglobalvertrag) between members of the cable television industry and GEMA, representing collecting societies, public broadcasters, and a few private

oadcasters in television and radio. The agreement with GEMA covers analog and digital transmission and will remain in force until December 31, 2006. Furthermore, iesy recently acceded to the VG Media agreement, which was concluded in 2003 between the other Level 3 operators, VG Media and DTAG regarding the re-transmission of a number of the remaining German private radio and television programs through the telecommunications cable networks of the regional cable companies. This agreement came into force on January 1, 2003 and may be terminated by each party on December 31, 2005, at the earliest. On March 22, 2005, as part of settling arbitration proceedings, iesy became a party to this agreement. As a result, iesy’s accruals increased and a payment was made to cover the periods from January 1, 2003. After the agreement with GEMA and VG Media expire, new agreements with new royalty arrangements may be concluded. See “Operating and Financial Review and Prospects— Factors Affecting Our Results of Operations—Other operating expenses—Copyright license fees,” “Risks Factors—Risks Relating to Our Business—Uncertainties as to copyright laws may adversely affect our ability to conduct our business” and “Business—Business of iesy—Legal Proceedings.” In the year ended December 31, 2004, total copyright fees paid by iesy under the GEMA and the VG Media agreements amounted to €5.6 million. Pension obligations. As of December 31, 2004, 18% of iesy’s employees were covered by a pension program, which was transferred to iesy from DTAG. The covered employees receive a percentage of the previous year’s gross income, multiplied by a variable age factor. As of December 31, 2004, iesy has €1.3 million reserved on our balance sheet with respect to its exposure with respect to pension obligations. See “Risk Factors—Risks Relating to our Business—We have unfunded liabilities tied with respect to our pension plans and other post-retirement benefits.” As of December 31, 2004, 25% of iesy’s workforce participated in a pension plan with DTAG. iesy is required to make monthly payments to DTAG to a special fund (“Unterstützungskasse”) for each employee concerned. These payments equal 30% of the covered individual’s gross civil servant salary (“versorgungsfähige Beamtenbezüge”) and amount to approximately €700 to €1,500 per month per eligible person. See “Risk Factors—Risks Relating to Our Business—We have unfunded liabilities with respect to our pension plans and other post retirement benefits.” Other commitments. Based upon contracts with customers, iesy is contractually obliged to upgrade or maintain connections to Level 4 dwelling units. As of December 31, 2004, there were approximately 2,600 dwelling units in Marburg for which iesy has to complete its commitment to upgrade connections. The expected investment for this obligation amounts to approximately €0.4 million. See “—Recent Developments.” iesy is also involved, from time to time, in lawsuits, claims, investigations and proceedings, including copyright, environmental, human resources, workplace health and safety, and commercial matters that arise in the ordinary course of business. See “Risk Factors—Risks Relating to Our Business—Uncertainties as to copyright laws may adversely affect our ability to conduct our business” and “Business—Business of iesy—Legal Proceedings.” Qualitative and Quantitative Disclosure of Market Risk Currency Risk Our reporting currency is the euro. iesy has no revenues, and few expenses or liabilities, that are denominated in currencies other than the euro. In the future, if iesy incurs other debt denominated in other currencies, such as dollar denominated bank or bond debt, iesy could incur additional currency risk and related hedging costs. We intend to swap our obligations under the Dollar Notes into euros so that our interest payments can be made in euros, so that we do not subject ourselves to foreign currency exchange risk. See “Risk Factors”—Risks Relating to Our Indebtedness and Our Structure— We will be exposed to foreign exchange risks that may adversely affect our financial condition and results of operations.” Interest Rate Risk iesy’s exposure to market risk for changes in interest rates relates primarily to its debt obligations. iesy will have no cash flow exposure due to rate changes on the Notes because they will bear interest at a fixed rate. However, iesy has interest rate risk on those portions of the Senior Credit Facilities that have variable pricing and which are not interest rate hedged. The terms of iesy’s Senior Credit Facilities require it to hedge at least 50% of its floating rate term debt within 90 days of funding under the Amended Senior Credit Facility for a period of three years from the date of funding. Accordingly, iesy intends to hedge against at least this proportion of our interest rate risk. In the future, we may hedge against the exposure to interest rate risk that we may incur from time to time on other borrowings. For fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument but not our earnings or cash flows. iesy does not currently have any obligation to prepay fixed rate debt prior to maturity and accordingly, interest 103

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    PROSPECTUS iesy Repository GmbH €

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    the market price of the Notes at a

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    which the issue or the offer of sec

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    “combined entity”, and “we”

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    “Tele Columbus” refers to the c

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    Revenue generating units, or “RGU

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    end of 2005. Our subscribers can al

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    populations, with approximately 2.7

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    In April/May 2005, iesy entered int

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    Our Corporate and Financing Structu

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    THE OFFERING The summary below desc

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    Optional Redemption We may redeem a

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    iesy Other Financial Data (unaudite

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    iesy Operational Data (unaudited) R

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    ish Income Statement Data Audited y

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    35 Three months ended Year ended De

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    37 As of December 31, As of March 3

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    RISK FACTORS You should carefully c

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    acquiring content, purchasing servi

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    agreements—MSG”). We cannot ass

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    In addition, most of our cable netw

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    Strikes or other industrial actions

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    acquisitions. In addition, any addi

  • Page 51 and 52: provision and may not be abusive. S
  • Page 53 and 54: €1,050.0 million would have been
  • Page 55 and 56: We depend on payments from our subs
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  • Page 59 and 60: Senior Credit Facilities before the
  • Page 61 and 62: court rulings did not address the p
  • Page 63 and 64: THE ISH ACQUISITION The description
  • Page 65 and 66: In addition to the warranties, spec
  • Page 67 and 68: CAPITALIZATION The following table
  • Page 69 and 70: Unaudited Pro Forma Condensed Conso
  • Page 73 and 74: (€m, except percentages) Pro form
  • Page 75 and 76: Income Statement Data 75 Audited Ye
  • Page 77 and 78: (7) Number of subscribers at the en
  • Page 79 and 80: • iesy’s premium cable televisi
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  • Page 83 and 84: Risks Relating to Our Indebtedness
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  • Page 87 and 88: Subscribers iesy classifies its cus
  • Page 89 and 90: 2003 to €8.20 per subscriber in t
  • Page 91 and 92: • the senior credit facilities we
  • Page 93 and 94: average installation fees from July
  • Page 95 and 96: Cash flow from investing activities
  • Page 97 and 98: In the three months ended March 31,
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  • Page 101: Cash Flow from Operating Activities
  • Page 105 and 106: educed or increased by a material a
  • Page 107 and 108: Income Statement Data Audited year
  • Page 109 and 110: 109 As of December 31, As of March
  • Page 111 and 112: • ish’s premium cable televisio
  • Page 113 and 114: In addition, ish markets pay-per-vi
  • Page 115 and 116: Cost of Materials and Services Cost
  • Page 117 and 118: For accounting purposes, ish treats
  • Page 119 and 120: Subscribers ish classifies its cust
  • Page 121 and 122: Competition ish faces significant c
  • Page 123 and 124: This decrease was primarily due to
  • Page 125 and 126: Net Loss Net loss was €17.9 milli
  • Page 127 and 128: Pension Obligations As of March 31,
  • Page 129 and 130: Term Sheets with DTAG, BRN-ish agre
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  • Page 133 and 134: accrual for pending losses. The exp
  • Page 135 and 136: International Financial Reporting S
  • Page 137 and 138: Content Providers Basic Television
  • Page 139 and 140: Digital Home” and PrimaCom offers
  • Page 141 and 142: [GRAPHIC] [GRAPHIC] Level 4 is the
  • Page 143 and 144: shared access basis. In this case,
  • Page 145 and 146: The following table shows several k
  • Page 147 and 148: In the domestic market, the German
  • Page 149 and 150: BUSINESS Unless otherwise indicated
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    Prudently deploying capital. Our de

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    iesy’s Current Basic Cable Televi

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    amounted to €8.0 million or 5.9%

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    within iesy’s upgraded areas and

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    Supply The following chart shows th

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    Term Sheet Service Duration Offer o

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    y the new fiber system. See “Oper

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    part of settling arbitration procee

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    Business of ish Products and Servic

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    ish’s Current Basic Cable Televis

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    In addition to the monthly subscrip

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    Customers who subscribe to Premiere

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    Sales ish’s sales team is divided

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    The following chart illustrates ish

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    Term Sheet Service Duration Co-use

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    Lease of space for broadband cable

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    Other Significant Supply Agreements

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    ights themselves. As an exception,

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    Competition The cable television an

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    Introduction REGULATION German law

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    We assume that we will be deemed to

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    The Amendment provides that provisi

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    • Providers who had a dominant po

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    in the Munich office of Apax Partne

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    Marketing for Germany and Austria,

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    Gerard Tyler is ish’s Treasurer.

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    Beneficial Ownership The following

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    period (unless the interest period

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    Subordinated Bridge Facility In con

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    • the ability of the Obligors (ot

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    owed by the Insolvent Obligor will

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    in London, the Bank of New York, Ne

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    Issuer have agreed that iesy Hessen

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    Subsidiary Guarantor outstanding wh

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    the amount of their secured claim.

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    provisions described under “—De

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    In addition, the Intercreditor Agre

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    Euro Note to and including February

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    circumstances referred to above exi

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    that it has unconditionally exercis

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    time outstanding not exceeding (i)

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    description of this covenant and no

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    Date of any Indebtedness that has b

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    (13) Investments in an aggregate am

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    supplement or other modification) t

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    (1) the assumption by the transfere

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    Reports Whether or not required by

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    of the European Union on January 1,

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    contemporaneously with any such act

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    25% in principal amount of the outs

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    (2) provide for the assumption by a

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    (6) an Officer’s Certificate stat

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    calculated based on the relevant cu

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    “Bank Indebtedness” means any a

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    Consolidated Net Income (excluding

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    (9) the impact of capitalized inter

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    “Exchange Act” means the U.S. S

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    (iii) for the avoidance of doubt, a

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    “Nationally Recognized Statistica

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    (2) Investments in another Person i

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    (15) Permitted Collateral Liens; (1

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    (5) in the case of Apollo and Golde

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    service level agreement as replaced

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    “Unrestricted Subsidiary” means

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    The Issuer and the Trustee and thei

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    Secondary Market Trading The Book-E

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    to trade tax. The taxable gain from

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    date). A U.S. Holder’s adjusted t

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    (c) for so long as the Notes are el

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    LEGAL MATTERS Certain legal matters

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    Assets iesy Hessen GmbH & Co. KG, W

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    I. Application of Legal Provisions

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    III. Explanation of Balance Sheet a

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    Last year’s extraordinary expense

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    iesy Repository GmbH, Hamburg AMEND

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    and remaining useful life for the i

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    The movements in consolidated equit

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    iesy Repository GmbH, Hamburg AMEND

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    Assets iesy Repository GmbH, Hambur

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    I. Basis of Presentation The consol

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    V. Explanations to Material Items o

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    Network infrastructure, rental, lea

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    iesy Repository GmbH, Hamburg UNAUD

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    1. Basis of Presentation iesy Repos

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    5. Explanations to Material Items o

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    Shareholdings of iesy Repository Gm

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    iesy Hessen GmbH & Co. KG, Weiterst

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    (3) Accounting and Valuation Princi

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    The following auditors’ report (B

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    Depreciation and Amortization COURT

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    Cost of materials COURTESY TRANSLAT

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    Goodwill. Under German GAAP, the di

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    Under U.S. GAAP, loan origination f

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    IFRS requires a purchase price allo

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    financial liability incurred result

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    €235,000,000 10 1 /8% Senior Note

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