5 years ago

iesy Repository GmbH - Irish Stock Exchange

iesy Repository GmbH - Irish Stock Exchange

The licenses granted to

The licenses granted to ish under the Betacrypt agreements allow ish to access existing MSG/Premiere set-top boxes and to distribute its digital offering in North Rhine-Westphalia using its own smart cards. As a result, those of ish’s end customers who already have MSG/Premiere set-top boxes/smart cards can now use ish’s Nagra smart cards to receive ish’s digital content in North Rhine-Westphalia, and ish no longer needs to depend on the “ish zone” of the MSG smart cards to distribute its digital offering. However, such end customers now have to use two or more smart cards (“mixed use”) for the reception of Premiere and ish digital content because the license terms do not allow the use of a combined card. The addendum reflects the parties’ intention to agree to a one smart card solution by October 31, 2005. If the parties fail to come to an agreement by that date, each party will have the right to terminate the addendum with four weeks’ prior notice. If the addendum is terminated, the right to mixed use ends and ish will no longer have the right to distribute ish content using ish smart cards to those of its subscribers who are also Premiere subscribers. The licenses granted under the Betacrypt agreements expire on December 31, 2007 if not extended. The fee for the license is €150,000 for the first 120,000 ish smart cards and €1 for each additional ish smart card. Although the license is restricted to ish and the North Rhine-Westphalia territory, the parties have agreed to negotiate in good faith the extension of the agreements to iesy and to the Hesse territory by October 31, 2005. Convergys On December 18, 2000, Convergys Information Management Group Inc. (“Convergys”) granted ish a non-transferable and non-exclusive license to use the “CableMaster” software for its customer support and billing operations. The license agreement is effective for the longer of the duration of the copyright of the licensed program materials and derivative works or 50 years, while the maintenance and support agreement is effective for an initial period of five years and will be automatically renewed for subsequent periods of 12 months unless terminated with six months’ prior written notice. In addition, the license agreement may be terminated for cause by either party and the maintenance and support agreement may be terminated by Convergys if ish’s hardware or operating software cease to be able to run the system successfully. Nortel On April 25, 2003, ish concluded a support agreement with Nortel Networks Germany GmbH & Co. KG under which ish was granted a non-exclusive, perpetual, non-transferable, royalty-free and worldwide license to network related software and the provision of respective software upgrades. The scope of the agreement for support has been amended and extended in time to the end of 2005 and is terminable by ish to the end of the year with three months’ prior written notice, and by Nortel with immediate effect if ish fails to make payments thereunder for a period of 30 days after notice of such failure has been given. AlixPartners LLC James Bonsall, until recently the CEO of ish, provided his services to ish pursuant to a contract ish had with AlixPartners LLC. AlixPartners LLC provided CEO and program management services to ish. Since 2002, AlixPartners LLC provided various personnel to effect the restructuring of ish. All AlixPartners LLC roles have been replaced by ish employees or such roles have been eliminated. The contract between ish and AlixPartners LLC terminated upon the successful completion of the ish Acquisition and James Bonsall resigned from his positions as Chief Executive Officer of ish and as Managing Director of Kabelnetz, Kabelnetz GP, ish GP, ish KS GP and KSG and Parm Sandhu was appointed to these positions. Other ish also leases fiber capacity in connection with the network upgrade from other telecommunications service providers under several dark fiber service agreements. Where an amount has been prepaid upon signing of the agreement, it is amortized over the life of the agreement resulting in a non-cash charge to ish’s income statement. Intellectual Property The operators of telecommunications cable networks are required under the German Copyright Act (Gesetz über Urheberrecht und verwandte Schutzrechte) to acquire rights for the retransmission of radio and television programs that include, among other things, literary, scientific or artistic work protected by copyright law. In case there is no agreement on the rights for the retransmission, the retransmission may be prohibited by an injunction. Claims for royalties can exclusively be asserted by the German collecting societies (Verwertungsgesellschaften) and not by the holders of copyrights or related 186

ights themselves. As an exception, however, broadcasters have the choice to assert their rights individually or via a collecting society. GEMA, one of the German collecting societies, has been mandated by most of the relevant German collecting societies to collect royalties from the telecommunications cable network operators. The large German private broadcasters, however, mandated VG Media to assert their royalty claims based on their cable re-transmission rights. The amount of the royalties due is not determined in the Copyright Act. On November 21, 1991, the legal predecessor of DTAG concluded agreements with the German public broadcasters, the German private broadcasters, certain foreign broadcasters and GEMA (acting both on its own behalf and on behalf of other relevant German collecting societies). These agreements governed the collection by GEMA of royalties for, among other things, literary, scientific or artistic works protected by copyright law that were included in radio and television programs re-transmitted through the telecommunications cable networks that are today operated by the regional cable companies. In 2000, a dispute over the amount of royalties to be paid to GEMA and to the German private broadcasters arose, and the existing agreements were terminated with effect from December 31, 2002. The parties involved entered into lengthy negotiations leading to the following settlements: The Level 3 operators, the German public broadcasters, a number of small private German radio and television companies, certain foreign broadcasters and GEMA (acting both on its own behalf and on behalf of these private and foreign broadcasters and the other relevant German collecting societies except for VG Media) agreed to amend and reinstate the agreements that had previously been terminated with effect of January 1, 2003. The new agreements cover analog and digital transmission and will remain in force until December 31, 2006. ish, the other Level 3 operators and VG Media entered into an agreement regarding the acquisition of rights for the retransmission of radio and television programs that include, among other things, literary, scientific or artistic work protected by copyright law, 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. In the three months ended March 31, 2005, total copyright fees paid by ish under the GEMA and the VG Media agreements amounted to €4.7 million, and in the year ended December 31, 2004 amounted to €18.7 million. Some other collecting societies represented by ARGE Kabel have claimed additional royalty payments from ish. ARGE Kabel, an association of three German collecting societies, did not fully accept the GEMA settlements and claims that it is entitled to additional royalty payments from ish. Although ARGE Kabel has not filed a lawsuit against ish, it has threatened to sue ish through a letter dated December 11, 2003 to recover these royalties. ish intends to vigorously defend itself against this claim. Meanwhile, ARGE Kabel has sued KDG. The case is pending at the arbitration court in Munich. The German legislature is currently considering a reform of the German Copyright Act. As part of the reform, the obligation of operators of telecommunications cable networks to pay royalties for the transmission of radio and television programs is under scrutiny. Despite the submission of legal studies and the support of the Federal Ministry of Economics and Labor, the Ministry of Justice has not yet changed the relevant provision of the Copyright Act to the benefit of cable operators by providing a respective amendment of the Copyright Act in the official draft. The reform process is ongoing. A proposal for separate royalties for broadcasters, however, has so far not been integrated into the current official draft amending the Copyright Act. Properties The following table sets forth certain information with respect to the facilities ish currently operates and which ish believes are of importance to its operations. All the following facilities are leased to ish. Location 187 Approximate Area (Square Meters) Use of Facility Bochum, Koenigsallee 178 8,341 Customer service Kerpen, Michael Schumacher Str. 1 7,994 NOC Cologne, Widdersdorfer Str. 399-403 6,861 Head office Others (5) 4,237 Branch offices Technical Sites (11) 4,141 Technical sites Since the summer of 2002, ish has closed 60 buildings, two warehouses and eight HUB sites. All material planned site closures by ish have been completed.

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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

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    provision and may not be abusive. S

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    €1,050.0 million would have been

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    We depend on payments from our subs

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    • Claims against the Issuer and s

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    Senior Credit Facilities before the

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    court rulings did not address the p

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    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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    (€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

  • 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
  • Page 151 and 152: Germany, with approximately 30.2 mi
  • Page 153 and 154: Prudently deploying capital. Our de
  • Page 155 and 156: iesy’s Current Basic Cable Televi
  • Page 157 and 158: amounted to €8.0 million or 5.9%
  • Page 159 and 160: within iesy’s upgraded areas and
  • Page 161 and 162: Supply The following chart shows th
  • Page 163 and 164: Term Sheet Service Duration Offer o
  • Page 165 and 166: y the new fiber system. See “Oper
  • Page 167 and 168: part of settling arbitration procee
  • Page 169 and 170: Business of ish Products and Servic
  • Page 171 and 172: ish’s Current Basic Cable Televis
  • Page 173 and 174: In addition to the monthly subscrip
  • Page 175 and 176: Customers who subscribe to Premiere
  • Page 177 and 178: Sales ish’s sales team is divided
  • Page 179 and 180: The following chart illustrates ish
  • Page 181 and 182: Term Sheet Service Duration Co-use
  • Page 183 and 184: Lease of space for broadband cable
  • Page 185: Other Significant Supply Agreements
  • Page 189 and 190: Competition The cable television an
  • Page 191 and 192: Introduction REGULATION German law
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  • Page 195 and 196: The Amendment provides that provisi
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  • Page 203 and 204: Gerard Tyler is ish’s Treasurer.
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  • Page 219 and 220: DESCRIPTION OF THE NOTES The Issuer
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  • Page 223 and 224: Issuer have agreed that iesy Hessen
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  • Page 231 and 232: In addition, the Intercreditor Agre
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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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