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iesy Repository GmbH - Irish Stock Exchange

iesy Repository GmbH - Irish Stock Exchange

SUMMARY This summary

SUMMARY This summary highlights certain information contained in this Prospectus. This summary does not contain all the information you should consider before investing in the Notes. You should read this entire Prospectus carefully, including “Risk Factors,” “Operating and Financial Review and Prospects of iesy,” “Operating and Financial Review and Prospects of ish,” the iesy and ish financial statements and the notes to those financial statements. Our Company We are the largest cable television operator in the German states of Hesse and North Rhine-Westphalia, with approximately 5.3 million subscribers. The regions in which we operate are characterized by attractive demographics for providing services over cable networks. Hesse has the highest GDP per capita, and North Rhine-Westphalia has the highest population density, in each case, of the nine former DTAG cable regions in Germany. We provide basic and premium cable television, high speed Internet access and telephony services. Our network passes approximately 8.4 million homes out of approximately 11.2 million total homes in the region, representing a 75.0% coverage rate, of which approximately 5.3 million homes are connected to our network and subscribe to our services, a 63.1% penetration rate. The upgraded portion of our network passes more than 1.5 million homes. The largest part of our business is the provision of basic cable television services, which is characterized by stable revenues and cash flows. For the year ended December 31, 2004 on a pro forma basis, we generated total revenues of €560.0 million and Adjusted EBITDA (as defined herein) of €262.2 million and €560.8 million of total revenues and €265.8 million of Adjusted EBITDA for the twelve months ended March 31, 2005. The ish Acquisition On March 11, 2005, iesy Hessen entered into a definitive agreement with Kabelnetz Ltd. to acquire ish (the “ish Acquisition”). The ish Acquisition closed on June 24, 2005 and was funded by a combination of existing cash on hand and the proceeds of the Refinancing and the Financing. See “The ish Acquisition” for further details. Our increased scale and advanced infrastructure are expected to reduce costs, limit capital expenditures, decrease reliance on suppliers, and open up new strategic opportunities. Economies of scale will allow us to purchase goods and services more cheaply, deploy capital more efficiently and spread costs and investments across a larger revenue base. By the end of 2005, our network and state-of-the-art network operations center (“NOC”) should technically enable us to distribute premium cable television signals to the vast majority of our homes passed. Our increased scale together with our combined technical platform also will make us a more attractive partner for broadcasters and content providers. The combined entity will furthermore benefit from cost synergies as well as the harmonization of best practices and products across both iesy and ish. The integration of two businesses in adjacent regions will be facilitated by their similar network strategies, a shared history of ownership by and separation from DTAG and similar corporate cultures. We intend to keep customer-oriented functions localized and take a deliberate approach to integrating other areas of the combined business. Our Products and Services Our products and services include the following: • Basic cable television. Our current basic cable offering consists of 30 to 36 analog television channels (depending on the region served) and up to 39 analog radio channels. Furthermore, homes that have a set-top box installed can also receive digital programming including that of the public broadcasters ARD and ZDF. Subscription and installation fees for our basic cable television business generated €480.0 million, or 85.7%, of our total revenues for the year ended December 31, 2004 and €117.6 million or 86.2% of our total revenues for the three months ended March 31, 2005 on a pro forma basis. We also received carriage fees totalling €41.2 million (7.4% of our total revenues) for the year ended December 31, 2004 and €10.6 million or 7.8% for the three months ended March 31, 2005 on a pro forma basis from national, regional and local broadcasters for the distribution of their programming over our network. • Premium cable television. Our primary premium cable television offerings are marketed under the “ish Digital TV” brand in North Rhine-Westphalia. Packages offered under this brand include ish Music, ish Active, ish Lifestyle and ish Kino, which is a pay-per-view service provided by arrivo. Our premium cable television products also include foreign-language program packages, and an English language program package introduced in the fourth quarter of 2004 in Frankfurt and southern Hesse. We plan to extend the ish premium cable television offerings to Hesse, and the iesy tv USA UK television offerings to North Rhine-Westphalia, and we also intend to launch additional premium cable television services. This will be facilitated by the similar network strategies of iesy and ish, technically allowing the NOC in Kerpen to service the vast majority of our homes connected by the 14

end of 2005. Our subscribers can also gain access to the premium cable television offerings of Premiere, the dominant German pay television provider. We estimate that more than 600,000 cable television homes in Hesse and North Rhine-Westphalia subscribe to Premiere, from whom we receive carriage fees for the transmission of their premium cable television programs throughout our network. • High speed Internet access. We provide high speed Internet services at speeds ranging from 128 kbit/s to 5 Mb/s. iesy’s products include iesy Multimedia-Anschluss, a service tailored for housing associations to enable their properties for Internet access and to purchase Internet access at 128 kbit/s on a bulk basis. iesy internet 256 is a 256 kbit/s flat-rate product designed to encourage Internet users to upgrade from dial-up access, while iesy internet 2000 provides access at a higher speed of 2 Mb/s. ish’s products include ish flat at a speed of 256 kbit/s, ish flat plus at 2 Mb/s and ish flat pro at 5 Mb/s. Due to the improved economics of upgrading our network resulting from technological advances and lower equipment costs, we recently recommenced the upgrade of certain parts of our network. Our upgraded network now passes over 1.5 million homes. This represents a 27.2% increase of the number of upgraded homes in 2003. As of March 31, 2005 on a pro forma basis, we served approximately 21,300 high speed Internet subscribers. We intend to upgrade further parts of our network particularly in conjunction with new housing association contracts that allow us to increase the number of customers to whom we can market our high speed Internet services. • Telephony. We offer telephony services under the brand name “ish Zusammen” to subscribers in upgraded areas in North Rhine-Westphalia in conjunction with high speed Internet access services. Our telephony offering provides first-line quality of service, which is made possible by the investments in our network. The ability to offer telephony services has led to increased take-up of high speed Internet services in this region. The ish Acquisition will enable us to offer telephony services in the upgraded areas of Hesse as well. We intend to offer a similar bundle of telephony and high speed Internet access in upgraded areas of Hesse as soon as possible following the ish Acquisition. Our Free Cash Flow The combination of our strong EBITDA generation and our disciplined approach to capital investment has generated substantial free cash flow. We intend to maintain an efficient cost structure. Our primary costs consist of costs of materials, which are mainly network infrastructure expenses (21.0% of our total revenues for the year ended December 31, 2004) and personnel expenses (15.7% of our total revenues for the year ended December 31, 2004). We have streamlined and refocused our business on the relevant basic cable television customer segments. Operating costs (comprised of costs of materials, personnel expenses, and other operating expenses) were reduced from €323.2 million in 2003 to €319.6 million in the year ended December 31, 2004 on a pro forma basis, a reduction of 1.1%. Our capital expenditures in 2004 were €45.9 million on a pro forma basis and €47.4 million in the twelve months ended March 31, 2005, which includes expenditures for the recently completed upgrade of the network passing an additional 320,000 homes in Frankfurt, Bonn and Neuss. We intend to undertake future upgrades after careful consideration of the customer demand for high speed Internet access services or in conjunction with long-term housing association contracts. Our Adjusted EBITDA minus capital expenditures in 2004 was €216.3 million on a pro forma basis, or 38.6% of revenues and €218.4 million on a pro forma basis, or 38.9% of revenues for the twelve months ended March 31, 2005. This results in Adjusted EBITDA minus capital expenditures per home passed of approximately €25.70 in 2004 and €25.80 for the twelve months ended March 31, 2005. We are the leading Level 3 cable operator in Germany based on these measures. Our Markets German Television Market The German television market is the largest in Western Europe, with approximately 36.2 million television homes and a combined cable, satellite and terrestrial penetration rate of approximately 92.6% (as a percentage of approximately 39.1 million households in Germany as of March 2004). According to industry sources, the German television market accounted for approximately €12.0 billion of total public and private revenues in 2003. The television signal distribution platforms in Germany include cable networks, satellite and terrestrial systems. According to industry sources as of December 2004, approximately 19.4 million, or 53.5%, of German television homes use cable as their primary means of reception. Satellite is used in approximately 15.5 million, or 42.7%, of television homes and terrestrial transmission via antenna is used in approximately 1.4 million, or 3.8%, of television homes. 15

  • Page 1 and 2: PROSPECTUS iesy Repository GmbH €
  • Page 3 and 4: the market price of the Notes at a
  • Page 5 and 6: which the issue or the offer of sec
  • Page 7 and 8: “combined entity”, and “we”
  • Page 9 and 10: “Tele Columbus” refers to the c
  • Page 11 and 12: Revenue generating units, or “RGU
  • Page 13: CURRENCY PRESENTATION AND EXCHANGE
  • Page 17 and 18: populations, with approximately 2.7
  • Page 19 and 20: In April/May 2005, iesy entered int
  • Page 21 and 22: Our Corporate and Financing Structu
  • Page 23 and 24: THE OFFERING The summary below desc
  • Page 25 and 26: Optional Redemption We may redeem a
  • Page 27 and 28: SUMMARY FINANCIAL AND OPERATING INF
  • Page 29 and 30: iesy Other Financial Data (unaudite
  • Page 31 and 32: iesy Operational Data (unaudited) R
  • Page 33 and 34: ish Income Statement Data Audited y
  • Page 35 and 36: 35 Three months ended Year ended De
  • Page 37 and 38: 37 As of December 31, As of March 3
  • Page 39 and 40: RISK FACTORS You should carefully c
  • Page 41 and 42: acquiring content, purchasing servi
  • Page 43 and 44: agreements—MSG”). We cannot ass
  • Page 45 and 46: In addition, most of our cable netw
  • Page 47 and 48: Strikes or other industrial actions
  • Page 49 and 50: 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
  • Page 57 and 58: • Claims against the Issuer and s
  • 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
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    In addition to the warranties, spec

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    CAPITALIZATION The following table

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    Unaudited Pro Forma Condensed Conso

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    NOTES TO THE UNAUDITED PRO FORMA CO

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    (€m, except percentages) Pro form

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    Income Statement Data 75 Audited Ye

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    (7) Number of subscribers at the en

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    • iesy’s premium cable televisi

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    egulated pricing model. Fees are pa

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    Risks Relating to Our Indebtedness

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    Legal, Consulting and Management Fe

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    Subscribers iesy classifies its cus

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    2003 to €8.20 per subscriber in t

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    • the senior credit facilities we

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    average installation fees from July

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    Cash flow from investing activities

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    In the three months ended March 31,

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    eview and optimization of services

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    Cash Flow from Operating Activities

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    oadcasters in television and radio.

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    educed or increased by a material a

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    Income Statement Data Audited year

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    109 As of December 31, As of March

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    • ish’s premium cable televisio

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    In addition, ish markets pay-per-vi

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    Cost of Materials and Services Cost

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    For accounting purposes, ish treats

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    Subscribers ish classifies its cust

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    Competition ish faces significant c

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    This decrease was primarily due to

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    Net Loss Net loss was €17.9 milli

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    Pension Obligations As of March 31,

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    Term Sheets with DTAG, BRN-ish agre

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    estructuring liabilities, while 200

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    accrual for pending losses. The exp

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    International Financial Reporting S

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    Content Providers Basic Television

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    Digital Home” and PrimaCom offers

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    [GRAPHIC] [GRAPHIC] Level 4 is the

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    shared access basis. In this case,

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    The following table shows several k

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    In the domestic market, the German

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    BUSINESS Unless otherwise indicated

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    Germany, with approximately 30.2 mi

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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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    CERTAIN RELATIONSHIPS AND RELATED P

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    Beneficial Ownership The following

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    DESCRIPTION OF OTHER INDEBTEDNESS T

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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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    DESCRIPTION OF THE NOTES The Issuer

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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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    PLAN OF DISTRIBUTION We, the Subsid

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    LEGAL MATTERS Certain legal matters

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    WHERE YOU CAN FIND OTHER INFORMATIO

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    Listing LISTING AND GENERAL INFORMA

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    INDEX TO FINANCIAL STATEMENTS iesy

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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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    INDEPENDENT AUDITORS’ REPORT We h

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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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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    (1) General COURTESY TRANSLATION FR

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    (3) Accounting and Valuation Princi

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    The following auditors’ report (B

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    Inventories COURTESY TRANSLATION FR

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    Goodwill COURTESY TRANSLATION FROM

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    COURTESY TRANSLATION FROM THE GERMA

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    Depreciation and Amortization COURT

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    (1) General COURTESY TRANSLATION FR

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    Cost of materials COURTESY TRANSLAT

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    [THIS PAGE INTENTIONALLY LEFT BLANK

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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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