FILED PURSUANT TO RULE 424(b)(5)
REGISTRATION NO. 333-41106
Prospectus Supplement to Prospectus dated July 18, 2000.
12,000,000 Shares
[CROWN CASTLE LOGO]
Crown Castle International Corp.
Common Stock
$26.25 Per Share
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Our common stock is quoted on the Nasdaq National Market under the symbol
"TWRS." The last reported sales price of the common stock on January 11, 2001
was $29.63 per share.
See "Risk Factors" beginning on page S-4 to read about certain factors you
should consider before buying shares of the common stock.
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Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
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Per Share Total
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Initial price to public.............................. $26.25 $315,000,000
Underwriting discount(1)............................. $ 0.75 $ 9,000,000
Proceeds, before expenses, to Crown Castle........... $25.50 $306,000,000
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(1) In addition, the underwriters may receive from purchasers of the shares
normal brokerage commissions in amounts agreed with such purchasers.
To the extent that the underwriters sell more than 12,000,000 shares of
common stock, the underwriters have the option to purchase up to an additional
1,800,000 shares from Crown Castle at the initial price to public less the
underwriting discount.
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The underwriters expect to deliver the shares against payment in New York,
New York on January 17, 2001.
Goldman, Sachs & Co.
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Prospectus Supplement dated January 11, 2001.
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement contains the terms of this offering. A
description of our capital stock is contained in the attached prospectus. This
prospectus supplement, or the information incorporated by reference in this
prospectus supplement, may add, update or change information in the attached
prospectus. If information in this prospectus supplement, or the information
incorporated by reference in this prospectus supplement, is inconsistent with
the attached prospectus, this prospectus supplement, or the information
incorporated by reference in this prospectus supplement, will apply and will
supersede that information in the attached prospectus.
It is important for you to read and consider all information contained in
this prospectus supplement and the attached prospectus in making your
investment decision. You should also read and consider the information in the
documents we have referred you to in "Where You Can Find More Information About
the Company."
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this prospectus supplement or the prospectus and,
if given or made, such information or representations must not be relied upon
as having been authorized by Crown Castle International Corp., the underwriters
or any other person. Neither the delivery of this prospectus supplement and the
prospectus nor any sale made hereunder shall under any circumstances create an
implication that there has been no change in the affairs of Crown Castle
International Corp., since the date hereof or thereof or that the information
contained herein or therein is correct as of any time subsequent to its date.
This prospectus supplement and the prospectus do not constitute an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such offer
or solicitation.
i
THE COMPANY
We are a leading owner and operator of towers and transmission networks for
wireless communications and broadcast transmission companies. As of September
30, 2000, we owned, leased or managed 12,489 towers and rooftops, including
9,470 sites in the United States and Puerto Rico, 2,303 sites in the United
Kingdom and 716 sites in Australia. In addition, we have recently entered into
an agreement that will provide us with an additional 670 towers in Australia.
Our customers currently include many of the world's major wireless
communications and broadcast companies, including Verizon, Cingular, Powertel,
Nextel, Sprint PCS, AT&T Wireless, Cable & Wireless Optus, Vodafone, One2One
and the British Broadcasting Corporation.
Our strategy is to use our leading domestic and international position to
capture the growing opportunities to consolidate ownership and management of
existing towers and other wireless and transmission infrastructure and to build
and operate new towers and wireless and transmission networks and
infrastructure created by:
. the transfer to third parties, or outsourcing, of tower ownership and
management by major wireless carriers;
. the need for existing wireless carriers to expand coverage and improve
capacity;
. the additional demand for towers and wireless infrastructure created by
new entrants into the wireless communications industry;
. the privatization of state-run broadcast transmission networks; and
. the introduction of wireless technologies including broadband data, or
"3G" technology.
Our main businesses are leasing antenna space on wireless and broadcast
towers that can accommodate multiple tenants and operating analog and digital
broadcast transmission networks and wireless networks. We also provide related
services to our customers, including network design, radio frequency
engineering, site acquisition, site development and construction, antenna
installation and network management and maintenance. We believe that our full
service capabilities are a key competitive advantage in forming strategic
partnerships to acquire large concentrations of towers, or tower clusters, and
in winning contracts for tower acquisitions, management and construction along
with wireless and transmission network management.
Our primary business in the United States is the leasing of antenna space to
wireless carriers. We believe that by owning and managing large tower clusters
we are able to offer customers the ability to fulfill rapidly and efficiently
their network expansion plans across particular markets or regions. Our
acquisition strategy has been focused on adding tower clusters to our tower
portfolio. As of September 30, 2000, we had tower clusters in 34 of the 50
largest U.S. metropolitan areas, and 68 of the 100 largest U.S. metropolitan
areas.
Our primary business in the United Kingdom, which is conducted through Crown
Castle UK Holdings Limited, or "CCUK", is the operation of television and radio
broadcast transmission networks. Following our 1997 acquisition of the BBC's
broadcast and tower infrastructure, we were awarded long-term contracts to
provide the BBC and other broadcasters analog and digital transmission
services. We also lease antenna space to wireless operators in the United
Kingdom on the towers we acquired from the BBC, as well as on various towers we
acquired from wireless carriers or that we have constructed. We have nationwide
broadcast and wireless coverage in the United Kingdom.
In November 2000, CCUK entered into an agreement with British
Telecommunications plc, or "British Telecom", to lease space on as many as
4,000 British Telecom exchange sites throughout the United Kingdom. We expect
to invest approximately $325 million over the next two years
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developing the British Telecom site portfolio for the deployment of 3G wireless
services. We intend to integrate the new sites into our existing portfolio of
sites in the UK to provide a network that will offer operators immediate
coverage of large population areas. Together with British Telecom, we will also
make available our technical expertise to help operators plan, construct,
operate and maintain their wireless networks.
Our primary business in Australia is the leasing of antenna space to
wireless carriers. We currently operate approximately 710 towers in Australia
that we purchased from Cable & Wireless Optus during 2000. In December 2000,
Crown Castle Australia Pty Limited, or "CCAL", our 66.7%-owned subsidiary,
entered into a definitive agreement to purchase approximately 670 wireless
communications towers from Vodafone Australia for approximately $130 million
(Australian $240 million). The transaction is expected to close in the second
quarter of 2001 and includes an exclusive arrangement whereby CCAL will have
the option to acquire from Vodafone Australia up to 600 additional towers that
Vodafone Australia constructs over the next six years. Giving effect to this
transaction, CCAL will operate 1,380 towers in Australia with a strategic
presence in all of Australia's licensed regions including Sydney, Melbourne,
Brisbane, Adelaide and Perth. CCAL is owned 66.7% by Crown Castle and 33.3% by
Jump Capital, a New Zealand-based investment firm acting on behalf of a group
of investors that includes Fay Richwhite. Crown Castle will fund 66.7% of the
purchase price of the Vodafone Australia towers and anticipates that the Jump
Capital group will fund the remaining 33.3%. Any of the remaining 33.3% not
funded by the Jump Capital group will be funded by Crown Castle.
We believe our towers are attractive to a diverse range of wireless
communications industries, including personal communications services,
cellular, enhanced specialized mobile radio, specialized mobile radio, paging,
and fixed microwave, as well as radio and television broadcasting. In the
United States our major customers include Verizon, Cingular, Powertel, Nextel,
Sprint PCS and AT&T Wireless. In the United Kingdom our major customers include
the BBC, Cellnet, NTL, ONdigital, One2One, Orange, Virgin Radio and Vodafone
AirTouch. Our principal customers in Australia are Cable & Wireless Optus and
Vodafone Australia.
We are continuing our ongoing construction program to enhance our tower
portfolios. In 2000, we constructed approximately 1,170 towers. In 2001, we
plan to construct approximately 1,350 towers, at an estimated aggregate cost of
approximately $350 million, for lease to wireless carriers such as Verizon,
Cingular and Nextel. The actual number of towers built may vary depending on
acquisition opportunities and potential build-to-suit contracts from large
wireless carriers.
Our principal executive offices are located at 510 Bering Drive, Suite 500,
Houston, Texas 77057, and our telephone number is (713) 570-3000.
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THE OFFERING
Shares of common stock offered (a).... 12,000,000 shares
Shares of common stock outstanding
after this offering (a)(b)........... 211,089,248 shares
Use of Proceeds....................... The net proceeds to the Company will
be used to fund costs related to the
construction and acquisition of
towers, and for working capital and
general corporate purposes.
Specifically, we are exploring
strategic investments or partnership
arrangements in Europe and Latin
America through which we intend to
pursue tower acquisition
opportunities. See "Use of Proceeds."
Nasdaq National Market symbol......... TWRS
The calculation of the number of shares outstanding after this offering is
based on the number of shares outstanding on January 11, 2001. Unless otherwise
specifically stated, information in this prospectus supplement, including the
foregoing numbers, assumes the underwriters do not exercise their option to
purchase additional shares in the offering. See "Underwriting."
(a) Does not include 1,800,000 shares of common stock that will be offered
if the underwriters' over-allotment option is exercised in full.
(b) Does not include (1) 1,639,990 shares of common stock reserved for
issuance upon exercise of warrants outstanding prior to the offering, nor (2)
27,677,291 shares of common stock reserved for issuance under our various stock
option plans, nor (3) 18,357,114 shares of common stock reserved for issuance
upon the conversion of the outstanding convertible preferred stock.
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RISK FACTORS
You should carefully consider the risks described below, as well as the
other information included in this prospectus supplement, when evaluating an
investment in our common stock.
Failure to Properly Manage Our Growth--If we are unable to successfully
integrate acquired operations or manage our existing operations as we grow, our
business will be adversely affected, and we may not be able to continue our
current business strategy.
We cannot guarantee that we will be able to successfully integrate acquired
businesses and assets into our business or implement our plans without delay.
If we fail to do so it could have a material adverse effect on our financial
condition and results of operations. We have grown significantly over the past
two years through acquisitions, and such growth continues to be an important
part of our business plan. The addition of over 10,000 towers to our operations
over the past two years has and will continue to increase our current business
considerably and adds operating complexities. Successful integration of these
transactions will depend primarily on our ability to manage these combined
operations and to integrate new management and employees with and into our
existing operations. For the nine months ended September 30, 2000, our net loss
increased from $63.8 million to $145.8 million, an increase of 128%, as a
result of our expanded business operations and the financing thereof, including
an 87% increase in depreciation and amortization and a 140% increase in
interest expense in the first nine months of 2000 as compared to the first nine
months of 1999. We expect that such net losses, at least in the near term, will
continue to exceed those of comparable prior year periods, as a result of our
growth and the financing thereof. As of January 11, 2001, long-term debt and
capital shares (defined as common stock plus additional paid-in capital) were
$2,602.6 million and $2,899.3 million, respectively.
Implementation of our acquisition strategy may impose significant strains on
our management, operating systems and financial resources. We regularly
evaluate potential acquisition and joint venture opportunities and are
currently evaluating potential transactions that could involve substantial
expenditures, possibly in the near term. If we fail to manage our growth or
encounter unexpected difficulties during expansion it could have a material
adverse effect on our financial condition and results of operations. The
pursuit and integration of acquisitions and joint venture opportunities will
require substantial attention from our senior management, which will limit the
amount of time they are able to devote to our existing operations.
Substantial Level of Indebtedness--Our substantial level of indebtedness could
adversely affect our ability to react to changes in our business. We may also
be limited in our ability to use debt to fund future capital needs.
We have a substantial amount of indebtedness. The following chart sets forth
certain important credit information and is presented as of September 30, 2000,
both on an actual basis as well as on a pro forma basis giving effect to this
offering.
Actual Pro Forma
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(Dollars In Thousands)
Total indebtedness............................... $2,564,896 $2,564,896
Redeemable preferred stock....................... 834,338 834,338
Stockholders' equity............................. 2,456,105 2,761,105
Debt and redeemable preferred stock to equity
ratio........................................... 1.38x 1.23x
In addition, our earnings for the nine months ended September 30, 2000 were
insufficient to cover fixed charges by $142.3 million.
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As a result of our substantial indebtedness:
. we could be more vulnerable to general adverse economic and industry
conditions;
. we may find it more difficult to obtain additional financing to fund
future working capital, capital expenditures and other general corporate
requirements;
. we will be required to dedicate a substantial portion of our cash flow
from operations to the payment of principal and interest on our debt,
reducing the available cash flow to fund other projects;
. we may have limited flexibility in planning for, or reacting to, changes
in our business and in the industry; and
. we will have a competitive disadvantage relative to other companies with
less debt in our industry.
We cannot guarantee that we will be able to generate enough cash flow from
operations or that we will be able to obtain enough capital to service our
debt, pay our obligations under our convertible preferred stock or fund our
planned capital expenditures. In addition, we may need to refinance some or all
of our indebtedness on or before maturity. We cannot guarantee, however, that
we will be able to refinance our indebtedness on commercially reasonable terms
or at all.
As a Holding Company, We Require Dividends from Subsidiaries to Meet Cash
Requirements or Pay Dividends--If our subsidiaries are unable to dividend cash
to us when we need it, we may be unable to pay dividends or satisfy our
obligations, including interest and principal payments, under our debt
instruments.
Crown Castle International Corp., or CCIC, is a holding company with no
business operations of its own. CCIC's only significant asset is the
outstanding capital stock of its subsidiaries. CCIC conducts all its business
operations through its subsidiaries. Accordingly, CCIC's only source of cash to
pay dividends or make other distributions on its capital stock or to pay
interest and principal on its outstanding indebtedness is distributions
relating to its ownership interest in its subsidiaries from the net earnings
and cash flow generated by such subsidiaries. We currently expect that the
earnings and cash flow of CCIC's subsidiaries will be retained and used by such
subsidiaries in their operations, including to service their respective debt
obligations. Even if we did determine to make a distribution in respect of the
capital stock of CCIC's subsidiaries, there can be no assurance that CCIC's
subsidiaries will generate sufficient cash flow to pay or distribute such a
dividend or funds, or that applicable state law and contractual restrictions,
including negative covenants contained in the debt instruments of such
subsidiaries, would permit such dividends, distributions or payments.
Furthermore, the terms of our credit facilities place restrictions on our
principal subsidiaries' ability to pay dividends or to make distributions, and
in any event, such dividends or distributions may only be paid if no default
has occurred under the applicable instrument. Moreover, CCIC's subsidiaries are
permitted under the terms of their existing debt instruments to incur
additional indebtedness that may restrict or prohibit the making of
distributions, the payment of dividends or the making of loans by such
subsidiaries to CCIC. See "--Substantial Level of Indebtedness" and "--Ability
to Service Debt".
Ability to Service Debt--To service our indebtedness, we will require a
significant amount of cash from our subsidiaries. An inability to access our
subsidiaries' cash flow may lead to an acceleration of our indebtedness,
including our notes. Currently, the instruments governing
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our subsidiaries' indebtedness do not allow sufficient funds to be distributed
to CCIC to service its indebtedness.
If CCIC is unable to refinance its subsidiary debt or renegotiate the terms
of such debt, CCIC may not be able to meet its debt service requirements,
including interest payments on our notes, in the future. Our 9% senior notes,
our 9 1/2% senior notes and our 10 3/4% senior notes require annual cash
interest payments of approximately $16.2 million, $11.9 million and $53.8
million, respectively. Prior to November 15, 2002, May 15, 2004 and August 1,
2004, the interest expense on our 10 5/8% discount notes, our 10 3/8% discount
notes and our 11 1/4% discount notes, respectively, will be comprised solely of
the amortization of original issue discount. Thereafter, the 10 5/8% discount
notes, the 10 3/8% discount notes and the 11 1/4% discount notes will require
annual cash interest payments of approximately $26.7 million, $51.9 million and
$29.3 million, respectively. Prior to December 15, 2003, we do not expect to
pay cash dividends on our exchangeable preferred stock or, if issued, cash
interest on the exchange debentures. Thereafter, assuming all dividends or
interest have been paid-in-kind, our exchangeable preferred stock or, if
issued, the exchange debentures will require annual cash dividend or interest
payments of approximately $47.8 million. Annual cash interest payments on the
CCUK bonds are (Pounds)11.25 million ($17.0 million). In addition, our various
credit facilities will require periodic interest payments on amounts borrowed
thereunder.
Restrictive Debt Covenants--The terms of our debt instruments limit our ability
to take a number of actions that our management might otherwise believe to be
in our best interests. In addition, if we fail to comply with our covenants,
our debt could be accelerated.
Currently we have debt instruments in place that restrict our ability to
incur more indebtedness, pay dividends, create liens, sell assets and engage in
certain mergers and acquisitions. Our subsidiaries, under their debt
instruments, are also required to maintain specific financial ratios. Our
ability to comply with the restrictions of these instruments and to satisfy our
debt obligations will depend on our future operating performance. If we fail to
comply with the debt restrictions, we will be in default under those
instruments, which in some cases would cause the maturity of substantially all
of our long-term indebtedness to be accelerated.
We Require Significant Capital to Fund Our Operations and Make Acquisitions--If
we are unable to raise capital in the future, we will be unable to achieve our
currently contemplated business strategy and may not be able to fund our
operations.
We will require substantial capital (1) as we increase the number of towers
we own and manage by partnering with wireless carriers, by pursuing
opportunities to build new towers, or build-to-suit opportunities, for wireless
carriers and by pursuing other tower acquisition opportunities and (2) to
acquire existing transmission networks globally as opportunities arise. If we
are unable to raise capital when our needs arise, we will be unable to pursue
our current business strategy and may not be able to fund our operations.
To fund the execution of our business strategy, including the construction
of new towers that we have agreed to build, we expect to use the remaining net
proceeds of our recent offerings and borrowings available under our credit
facilities. We will have additional cash needs to fund our operations and
acquisitions in the future. We may also have additional cash needs in the near
term if additional tower acquisitions or build-to-suit opportunities arise.
Some of the opportunities that we are currently pursuing could require
significant additional capital. If we do not otherwise have cash available, or
borrowings under our credit facilities have otherwise been utilized, when our
cash need arises, we would be forced to seek additional debt or equity
financing or to forego the opportunity. In the event we determine to seek
additional debt or equity financing, there can be no assurance that any such
financing will be available, on commercially acceptable terms or at all, or
permitted by the terms of our existing indebtedness.
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We May Not Be Able To Construct Or Acquire New Towers At The Pace And In The
Locations That We Desire--If we are unable to do so, we may not be able to
satisfy our current agreements to build new towers and we may have difficulty
finding tenants to lease space on our new towers.
Our growth strategy depends in part on our ability to construct and operate
towers in conjunction with expansion by wireless carriers. If we are unable to
build new towers when wireless carriers require them, or we are unable to build
new towers where we believe the best opportunity to add tenants exists, we
could fail to meet our contractual obligations under build-to-suit agreements,
and we could lose opportunities to lease space on our towers.
During 2000, we completed construction of approximately 1,170 towers. We
currently have plans to commence construction on approximately 1,350 additional
towers during 2001. Our ability to construct these new towers could be affected
by a number of factors beyond our control, including:
. zoning and local permitting requirements and national regulatory
approvals;
. availability of construction equipment and skilled construction
personnel; and
. bad weather conditions.
In addition, as the concern over tower proliferation has grown in recent
years, certain communities have placed restrictions on new tower construction
or have delayed granting permits required for construction. You should consider
that:
. the barriers to new construction may prevent us from building towers
where we want;
. we may not be able to complete the number of towers planned for
construction in accordance with the requirements of our customers; and
. we cannot guarantee that there will be a significant need for the
construction of new towers once the wireless carriers complete their
tower networks.
All of the above factors could affect both our domestic and international
operations. In addition, competition laws could prevent us from acquiring or
constructing towers or tower networks in certain geographical areas.
Our Business Depends on the Demand for Wireless Communications--We will be
adversely affected by any slowdown in the growth of, or reduction in demand
for, wireless communications.
Demand for our site rentals depends on demand for communication sites from
wireless carriers, which, in turn, depends on the demand for wireless services.
The demand for our sites depends on many factors which we cannot control,
including:
. the level of demand for wireless services generally;
. the financial condition and access to capital of wireless carriers;
. the strategy of carriers relating to owning or leasing communication
sites;
. changes in telecommunications regulations; and
. general economic conditions.
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A slowdown in the growth of, or reduction in, demand in a particular
wireless segment could adversely affect the demand for communication sites.
Moreover, wireless carriers often operate with substantial indebtedness, and
financial problems for our customers could result in accounts receivable going
uncollected, the loss of a customer (and associated lease revenue) or a reduced
ability of these customers to finance expansion activities. Finally, advances
in technology, such as the development of new satellite and antenna systems,
could reduce the need for land-based, or terrestrial, transmission networks.
The occurrence of any of these factors could have a material adverse effect on
our financial condition and results of operations.
Variability In Demand For Network Services May Reduce The Predictability Of Our
Results--Our network services business has historically experienced significant
volatility in demand. As a result, the operating results of our network
services business for any particular period may vary significantly and should
not be considered as necessarily being indicative of longer-term results.
Demand for our network services fluctuates from period to period and within
periods. These fluctuations are caused by a number of factors, including:
. the timing of customers' capital expenditures;
. annual budgetary considerations of customers;
. the rate and volume of wireless carriers' tower build-outs;
. timing of existing customer contracts; and
. general economic conditions.
While demand for our network services fluctuates, we must incur certain
costs, such as maintaining a staff of network services employees in
anticipation of future contracts, even when there may be no current business.
Furthermore, as wireless carriers complete their build-outs, the need for the
construction of new towers and the demand for our network services could
decrease significantly and could result in fluctuations and, possibly,
significant declines in our operating performance.
We Operate Our Business In An Increasingly Competitive Industry And Many Of Our
Competitors Have Significantly More Resources--As a result of this competition,
we may find it more difficult to achieve favorable lease rates on our towers
and we may be forced to pay more for future tower acquisitions.
We face competition for site rental customers from various sources,
including:
. other large independent tower owners;
. wireless carriers that own and operate their own towers and lease
antenna space to other carriers;
. site development companies that acquire antenna space on existing towers
for wireless carriers and manage new tower construction; and
. traditional local independent tower operators.
Wireless carriers that own and operate their own tower portfolios generally
are substantially larger and have greater financial resources than we have.
Competition for tenants on towers could adversely affect lease rates and
service income.
In addition, competition for the acquisition of towers is keen, and we
expect it to continue to grow. We not only compete against other independent
tower owners and operators, but also against
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wireless carriers, broadcasters and site developers. As competition
consolidates, we may be faced with fewer acquisition opportunities, as well as
higher acquisition prices. While we regularly explore acquisition
opportunities, we cannot guarantee that we will be able to identify suitable
towers to acquire in the future.
A Substantial Portion Of Our Revenues Is Dependent Upon Agreements With the
BBC, NTL, Verizon, Cingular And Powertel
If we were to lose our contracts with the BBC or our site sharing agreement
with NTL, we would likely lose a substantial portion of our revenues. The BBC
accounted for approximately 28% and 16% of our revenues for the twelve-month
period ended December 31, 1999 and the nine months ended September 30, 2000,
respectively.
Our broadcast business is substantially dependent on our contracts with the
BBC. We cannot guarantee that the BBC will renew our contracts or that they
will not attempt to negotiate terms that are not as favorable to us as those in
place now. If we were to lose these BBC contracts, our business, results of
operations and financial condition would be materially adversely affected. The
initial term of our analog transmission contract with the BBC will expire on
March 31, 2007, and our digital transmission contract with the BBC expires on
October 31, 2010. In addition, our digital transmission contract with the BBC
may be terminated by the BBC after five years if the BBC's board of governors
does not believe that digital television in the United Kingdom has enough
viewers.
A substantial portion of our U.K. broadcast transmission operations is
conducted using sites owned by National Transcommunications Limited, or NTL,
our major competitor in the United Kingdom. NTL also utilizes our sites for
their broadcast operations. This site sharing arrangement with NTL may be
terminated on December 31, 2015, or any 10-year anniversary of that date, with
five years' prior notice by either us or NTL, and may be terminated sooner if
there is a continuing breach of the agreement. We cannot guarantee that this
agreement will not be terminated, which could have a material adverse effect on
our business, results of operations and financial condition.
In addition, a substantial portion of our revenues are received from a few
major wireless carriers, particularly carriers that have transferred their
tower assets to us. We cannot guaranty that the lease or management service
agreements with such carriers will not be terminated or that these carriers
will renew such agreements.
Extensive Regulations Which Could Change At Any Time And With Which We Could
Fail To Comply Regulate Our Business--If we fail to comply with applicable
regulations, we could be fined or even lose our right to conduct some of our
business.
A variety of foreign, federal, state and local regulations apply to our
business. Failure to comply with applicable requirements may lead to civil
penalties or require us to assume costly indemnification obligations or breach
contractual provisions. We cannot guarantee that existing regulatory policies
will not adversely affect the timing or cost of new tower construction or that
additional regulations will not be adopted which increase delays or result in
additional costs. These factors could have a material adverse effect on our
financial condition and results of operations.
Since we signed our analog transmission contract with the BBC, the BBC has
increased its service requirements to include 24-hour broadcasting on our
transmission network for the BBC's two national television services and a
requirement for us to add a number of additional analogue stations and service
enhancements to existing analogue stations. As of September 30, 2000, the BBC
has agreed to increases of approximately (Pounds)1,734,000 (approximately
$2,564,000) per year in the charges payable by the BBC to us for these service
enhancements. These additional charges may require a revision amendment to that
part of CCUK's transmission telecommunications license dealing with
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price regulation of analogue broadcasting services to the BBC. We are in
discussions with the BBC and OFTEL, the relevant regulatory authority in the
United Kingdom, as to the most appropriate way to clarify the license
regulatory provisions to take into account these agreed additional payments.
There can be no assurance that such clarification will be achieved as a result
of these discussions with OFTEL.
If we fail to complete any or all of our previously agreed-to transactions, we
will not recognize all of the benefits of such transactions.
If one or more of our previously agreed-to transactions is not fully
completed or is completed on significantly different terms than those currently
contemplated, it could substantially affect the implementation of our business
strategy. As a result, our future site rental revenue would be adversely
affected. The agreements relating to these agreed-to transactions contain many
conditions that must be satisfied before we can consummate such agreed-to
transactions. In addition, each of the agreements relating to these agreed-to
transactions includes provisions that could result in our purchasing or
building fewer towers pursuant to such agreements.
Emissions from our Antennas May Create Health Risks--We could suffer from
future claims if the radio frequency emissions from equipment on our towers is
demonstrated to cause negative health effects.
The government imposes requirements and other guidelines on our towers
relating to radio frequency emissions. The potential connection between radio
frequency emissions and certain negative health effects, including some forms
of cancer, has been the subject of substantial study by the scientific
community in recent years. To date, the results of these studies have been
inconclusive. We cannot guarantee that claims relating to radio frequency
emissions will not arise in the future.
Our International Operations Expose Us to Changes in Foreign Currency Exchange
Rates--If we fail to properly match or hedge the currencies in which we conduct
business, we could suffer losses as a result of changes in currency exchange
rates.
We conduct business in countries outside the United States, which exposes us
to fluctuations in foreign currency exchange rates. We also intend to expand
our international operations in the future. For the nine months ended September
30, 2000, approximately 37.3% of our consolidated revenues originated outside
the United States, all of which were denominated in currencies other than U.S.
dollars, principally pounds sterling and Australian dollars. We have not
historically engaged in significant hedging activities relating to our non-U.S.
dollar operations, and we could suffer future losses as a result of changes in
currency exchange rates.
We Are Heavily Dependent on Our Senior Management--If we lose members of our
senior management, we may not be able to find appropriate replacements on a
timely basis and our business could be adversely affected.
Our existing operations and continued future development depend to a
significant extent upon the performance and active participation of certain key
individuals as employees, including our chief executive officer and our
president. We cannot guarantee that we will be successful in retaining the
services of these or other key personnel. None of our executives have signed
noncompetition agreements. If we were to lose any of these individuals, we may
not be able to find appropriate replacements on a timely basis and our
financial condition and results of operations could be materially adversely
affected.
S-10
Anti-Takeover Provisions in Our Certificate of Incorporation Could Have Effects
That Conflict with the Interests of Our Stockholders--Certain provisions of our
certificate of incorporation, by-laws and operative agreements could make it
more difficult for a third party to acquire control of us even if such a change
in control would be beneficial to you.
We have a number of anti-takeover devices in place that will hinder takeover
attempts and could reduce the market value of our common stock. Our anti-
takeover provisions include:
. a staggered board of directors;
. the authority of the board of directors to issue preferred stock without
approval of the holders of common stock, other than the holders of our
Class A common stock;
. advance notice requirements for director nominations and actions to be
taken at annual meetings;
. the right of the holders of our Class A common stock to elect up to two
members of the board of directors; and
. the requirement that the holders of our Class A common stock approve
certain changes to our certificate of incorporation or by-laws.
In addition, our by-laws permit special meetings of the stockholders to be
called only upon the request of a majority of the board of directors, and deny
stockholders the ability to call such meetings. In addition, our BBC contracts
may be terminated upon the occurrence of certain change of control events
described in such contracts. Such provisions, as well as the provisions of
Section 203 of the Delaware General Corporation Law, could impede a merger,
consolidation, takeover or other business combination or discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control
of us. See "Description of Capital Stock" in the attached prospectus.
Shares Eligible For Future Sale--Sales of a substantial number of shares of
common stock could adversely affect the market price of the common stock.
Future sales of a substantial number of shares of our common stock could
adversely affect the market price of our common stock. Upon completion of the
common stock offering, we will have 211,089,248 shares of common stock
outstanding. In addition, we have reserved 27,677,291 shares of common stock
for issuance under our various stock options plans, 1,639,990 shares of common
stock upon exercise of outstanding warrants and 18,357,114 shares of common
stock for the conversion of the outstanding convertible preferred stock. The
12,000,000 shares sold in the offering will be freely transferable without
restriction under the Securities Act, unless they are held by our "affiliates"
as that term is used under the Securities Act.
Dilution--This offering and other existing arrangements will result in
substantial dilution to the value of our common stock.
Persons purchasing shares of common stock in this stock offering will incur
immediate and substantial dilution in net tangible book value per share.
Purchasers of shares will experience dilution of $18.27 per share based on net
tangible book value per share as of September 30, 2000. Any below market
issuances could result in substantial dilution to our other stockholders.
Moreover, to the extent that outstanding options and warrants to purchase
common stock are exercised, there could be substantial additional dilution.
S-11
We Will Have Broad Discretion in the Application of Proceeds from the
Offering--We will have the ability to utilize some or all of the proceeds of
this offering to fund as yet unidentified acquisitions, investment or joint
ventures.
We will have broad discretion in allocating the net proceeds from this
offering without any action or approval of our stockholders. Accordingly,
investors may not have the opportunity to evaluate the economic, financial and
other relevant information that we will consider in determining the application
of the net proceeds.
This Prospectus Supplement Includes Forward-Looking Statements--If our
expectations reflected in these forward-looking statements prove to be
incorrect, our actual results could differ materially from these expectations.
This prospectus supplement includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements other than statements of
historical facts included in this document, including, without limitation, the
statements under "The Company" and located elsewhere in this prospectus
supplement regarding industry prospects, our prospects and our financial
position are forward-looking statements. Although we believe that the
expectations reflected in such forward-looking statements are reasonable, we
can give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from our
expectations are disclosed in this document. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the cautionary statements included
in this prospectus supplement. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this prospectus supplement
might not occur.
S-12
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately $305.0
million, assuming the underwriters do not exercise their over-allotment option,
from this offering, after deducting estimated fees and expenses. We expect to
use the net proceeds of this offering to fund costs related to the construction
and acquisition of towers, including in connection with the anticipated
commencement of 3G networks, and for working capital and general corporate
purposes. Some or all of the net proceeds may also be used to acquire or invest
in additional tower assets or tower companies and complementary businesses,
technologies or products. We have no current agreements or commitments with
respect to any material business acquisitions. However, we are continuously
engaged in discussions with carriers, broadcasters, other tower owners and
potential co-investors to explore transmission, acquisition, leasing and
investment opportunities in the consolidating tower ownership and management
industry. Specifically, we are exploring strategic investments or partnership
arrangements in Europe and Latin America through which we intend to pursue
tower acquisition opportunities. If we make any such investment or enter into
any such partnership, a substantial portion of the net proceeds of this
offering could be applied in connection therewith. In addition, we continue to
pursue discussions with carriers in Europe with respect to the build-out of 3G
wireless networks for such carriers. As we engage in the build-out of such 3G
networks, a significant portion of the net proceeds of this offering could be
applied in connection therewith. Pending such uses, the net proceeds of this
offering will be invested in short-term investments.
We will have broad discretion in allocating the net proceeds from this
offering without any action or approval of our stockholders. Accordingly,
investors may not have the opportunity to evaluate the economic, financial and
other relevant information that we will consider in determining the application
of the net proceeds. See "Risk Factors--We Will Have Broad Discretion in the
Application of Proceeds from the Offering".
S-13
PRICE RANGE OF COMMON STOCK
The common stock was initially offered to the public on August 18, 1998 at a
price of $13.00 per share. The common stock is listed and traded on The Nasdaq
Stock Market's National Market(SM) under the symbol "TWRS". The following table
sets forth for the calendar periods indicated the high and low sales prices per
share of the common stock as reported by Nasdaq.
High Low
------ ------
1998:
Third Quarter.............................................. $13.25 $ 6.69
Fourth Quarter............................................. 23.50 6.00
1999:
First Quarter.............................................. $23.50 $16.63
Second Quarter............................................. 21.50 16.38
Third Quarter.............................................. 25.50 14.69
Fourth Quarter............................................. 33.50 15.44
2000:
First Quarter.............................................. $44.75 $28.19
Second Quarter............................................. 40.38 23.06
Third Quarter.............................................. 39.69 24.50
Fourth Quarter............................................. 32.25 21.38
2001:
First Quarter (through January 11, 2001)................... $30.13 $24.19
On January 11, 2001, the last reported sale price of the common stock as
reported by Nasdaq was $29.63. As of January 11, 2001, there were approximately
539 holders of record of the common stock.
S-14
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock and
do not anticipate paying cash dividends on our capital stock in the foreseeable
future. It is our current policy to retain earnings to finance the expansion of
our operations. Future declaration and payment of dividends, if any, will be
determined in light of the then-current conditions, including:
. our earnings;
. our operations;
. our capital requirements;
. our financial condition; and
. other factors deemed relevant by our board of directors.
In addition, our ability to pay dividends is limited by the terms of our
debt instruments and the terms of the certificate of designations in respect of
our exchangeable preferred stock and our convertible preferred stock.
S-15
UNDERWRITING
CCIC and the underwriters for the offering named below have entered into an
underwriting agreement with respect to the shares being offered. Subject to
certain conditions, each underwriter has severally agreed to purchase the
number of shares indicated in the following table. Goldman, Sachs & Co. is the
representative of the underwriters.
Underwriters Number of Shares
------------ ----------------
Goldman, Sachs & Co. ....................................... 11,500,000
Raymond James & Associates, Inc. ........................... 500,000
----------
Total..................................................... 12,000,000
==========
If the underwriters sell more shares than the total number set forth in the
table above, the underwriters have an option to buy up to an additional
1,800,000 shares from CCIC to cover such sales. They may exercise that option
for 30 days. If any shares are purchased pursuant to this option, the
underwriters will severally purchase shares in approximately the same
proportion as set forth in the table above.
The following table shows the per share and total underwriting discounts and
commissions to be paid to the underwriters by CCIC. Such amounts are shown
assuming both no exercise and full exercise of the underwriters option to
purchase additional shares.
No Exercise Full Exercise
----------- -------------
Per Share............................................. $0.75 $0.75
Total............................................... $9,000,000 $10,350,000
Shares sold by the underwriters to the public will initially be offered at
the initial price to public set forth on the cover of this prospectus. In
addition to the underwriting discounts and commissions in the table above, the
underwriters may receive from purchasers of the shares normal brokerage
commissions in amounts agreed with such purchasers. Any shares sold by the
underwriters to securities dealers may be sold at a discount of up to $0.45 per
shares from the initial price to public. Any such securities dealers may resell
any shares purchased from the underwriters to certain other brokers or dealers
at a discount of up to $0.10 per share from the initial price to public. If all
the shares are not sold at the initial price to public, the underwriters may
change the offering price and the other selling terms.
CCIC and certain of its officers, with respect to all or substantially all
of the shares of common stock held by such officers, have agreed that, for a
period of 90 days from the date of this prospectus supplement they will not,
without the prior written consent of Goldman, Sachs & Co., dispose of or hedge
any share of common stock of CCIC, or any securities convertible into or
exchangeable for common stock except (1) in lieu of cash dividends of preferred
stock of CCIC issued and outstanding on the date of this prospectus, (2)
pursuant to joint venture, tower acquisition or similar agreements existing as
of the date of this prospectus and (3) in connection with acquisition
transactions to transferees that agree to be bound by the transfer restrictions
set forth herein for the remainder of such 90 day period. Goldman, Sachs & Co.,
in its sole discretion, may release any of the securities subject to these
lock-up agreements at any time without notice.
The common stock is quoted on the Nasdaq National Market under the symbol
"TWRS."
In connection with the offerings, the underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and
S-16
purchases to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater number of shares than they are required
to purchase in the offering. Stabilizing transactions consist of certain bids
or purchases made for the purpose of preventing or retarding a decline in the
market price of the common stock while the offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares
sold by or for the account of such underwriter in stabilizing or short covering
transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.
The underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.
CCIC estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately
$1,000,000.
CCIC has agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
The underwriters have, from time to time, performed, and may in the future
perform, certain investment banking and advisory services for CCIC for which
they have received, and may receive, customary fees and expenses.
S-17
PROSPECTUS
CROWN CASTLE INTERNATIONAL CORP.
From time to time, we may sell any of the following securities:
--DEBT SECURITIES
--PREFERRED STOCK
--COMMON STOCK
--WARRANTS
We will provide the specific terms of these securities in one or more
supplements to this prospectus. You should read this prospectus and any
prospectus supplement carefully before you invest.
Our common stock is traded over-the-counter on The Nasdaq Stock Market's
National Market under the trading symbol "TWRS." The applicable prospectus
supplement will contain information, where applicable, as to any other listing
(if any) on The Nasdaq Stock Market's National Market or any securities
exchange of the securities covered by the prospectus supplement.
In addition, up to 10,000,000 shares of common stock may be offered by
certain selling stockholders. For additional information on the methods of
sale, you should refer to the section entitled "Plan of Distribution."
The securities may be sold directly by us or, in case of the common stock,
may be sold by the selling stockholders, to investors, through agents
designated from time to time or to or through underwriters or dealers. See
"Plan of Distribution." If any underwriters are involved in the sale of any
securities in respect of which this prospectus is being delivered, the names of
such underwriters and any applicable commissions or discounts will be set forth
in a prospectus supplement. The net proceeds we expect to receive from such
sale also will be set forth in a prospectus supplement. We would not receive
any of the proceeds from the sale of common stock by selling stockholders.
This prospectus may not be used to offer or sell any securities unless
accompanied by a prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the securities to be issued under this
prospectus or determined if this prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense.
The date of this prospectus is July 18, 2000.
TABLE OF CONTENTS
Page
----
ABOUT THIS PROSPECTUS...................................................... 1
WHERE YOU CAN FIND MORE INFORMATION........................................ 1
INCORPORATION OF INFORMATION WE FILE WITH THE SEC.......................... 1
FORWARD-LOOKING STATEMENTS................................................. 2
THE COMPANY................................................................ 3
RATIO OF EARNINGS TO FIXED CHARGES......................................... 4
USE OF PROCEEDS............................................................ 4
DESCRIPTION OF DEBT SECURITIES............................................. 5
DESCRIPTION OF CAPITAL STOCK............................................... 15
DESCRIPTION OF WARRANTS.................................................... 24
SELLING STOCKHOLDERS....................................................... 25
PLAN OF DISTRIBUTION....................................................... 26
VALIDITY OF SECURITIES..................................................... 27
EXPERTS.................................................................... 27
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may,
over the next two years, sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$1,500,000,000. In addition, under this shelf process, one or more selling
stockholders also may sell up to 10,000,000 shares of our common stock in one
or more offerings.
This prospectus provides you with a general description of the securities we
may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described
immediately below under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file with the SEC at the SEC's following public reference
facilities:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
You may also obtain copies of the documents at prescribed rates by writing
to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549. Please call 1-800-SEC-0330 for further
information on the operations of the public reference facilities. Our SEC
filings are also available at the offices of The Nasdaq Stock Market at 1735 K
Street, N.W., Washington, D.C. 20006.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information we file with
them, which means:
--incorporated documents are considered part of this prospectus;
--we can disclose important information to you by referring you to those
documents; and
--information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which were filed with
the SEC under the Securities Exchange Act of 1934:
(1) Our Annual Report on Form 10-K for the year ended on December 31, 1999.
(2) Our Quarterly Report on Form 10-Q for the quarter ended on March 31,
2000.
(3) Our Proxy Statement pursuant to Section 14(a) of the Securities
Exchange Act of 1934, filed on April 24, 2000.
(4) The description of our common stock contained in the Registration
Statement on Form S-1, as amended (File No. 333-74553), filed on March
16, 1999.
(5) Our Amendment No. 1 to our Current Report on Form 8-K/A dated July 23,
1999.
(6) Our Current Report on Form 8-K dated May 18, 2000.
(7)Our Current Report on Form 8-K dated May 18, 2000.
(8)Our Current Report on Form 8-K dated June 7, 2000.
(9)Our Current Report on Form 8-K dated June 26, 2000.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of the initial filing of the registration
statement and prior to the time we and the selling stockholders sell all of the
securities offered by this prospectus:
--Reports filed under Section 13(a) and (c) of the Exchange Act;
--Definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders meeting; and
--Any reports filed under Section 15(d) of the Exchange Act.
You can obtain any of the filings incorporated by reference in this document
through us, or from the SEC through the SEC's web site or at the addresses
listed above. Documents incorporated by reference are available from us without
charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this prospectus. You
can obtain documents incorporated by reference in this prospectus by requesting
them in writing or by telephone from us at the following address:
Crown Castle International Corp.
510 Bering Drive
Suite 500
Houston, TX 77057
Attention: Donald J. Reid
Telephone: (713) 570-3000
Facsimile: (713) 570-3100
If you request any incorporated documents from us, we will mail them to you
by first class mail, or another equally prompt means, within one business day
after we receive your request.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in or incorporated by reference in this
prospectus discuss our plans and strategies for our business or state other
forward-looking statements, as this term is defined in the Private Securities
Litigation Reform Act. The words "anticipates," "believes," "estimates,"
"expects," "plans," "intends" and similar expressions are intended to identify
these forward-looking statements, but are not the exclusive means of
identifying them. These forward-looking statements reflect the current views of
our management; however, various risks, uncertainties and contingencies could
cause our actual results, performance or achievements to differ materially from
those expressed in, or implied by, these statements, including the following:
. the success or failure of our efforts to implement our business strategy
. the other factors discussed below under the heading "Risk Factors" and
elsewhere in this prospectus
We assume no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. For a
discussion of important risks of an investment in our securities, including
factors that could cause actual results to differ materially from results
referred to in the forward-looking statements, see "Risk Factors." You should
carefully consider the information set forth under the caption "Risk Factors."
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in or incorporated by reference in this prospectus might not
occur.
2
THE COMPANY
We are a leading owner and operator of towers and transmission networks for
wireless communications and broadcast transmission companies. As of April 30,
2000, we owned, leased or managed 10,392 towers, including 8,195 sites in the
United States and Puerto Rico and 2,197 sites in the United Kingdom. We have
entered into agreements, which, when completed, will provide us with over 900
additional towers in the United States in 2000. In addition, we have recently
entered into an agreement which provides us with a tower portfolio of
approximately 700 towers in Australia. Our customers currently include many of
the world's major wireless communications and broadcast companies, including
GTE Wireless, Verizon, BellSouth Mobility, Powertel, Nextel, Sprint PCS, AT&T
Wireless, Triton PCS, Tritel Communications, Motorola, Cable & Wireless Optus,
One Zone and the British Broadcasting Corporation.
Our strategy is to use our leading domestic and international position to
capture the growing opportunities to consolidate ownership and management of
existing towers and other wireless and transmission infrastructure and to build
and operate new towers and wireless and transmission networks and
infrastructure created by:
. the transfer to third parties, or outsourcing, of tower ownership and
management by major wireless carriers;
. the need for existing wireless carriers to expand coverage and improve
capacity;
. the additional demand for towers and wireless infrastructure created by
new entrants into the wireless communications industry;
. the privatization of state-run broadcast transmission networks; and
. the introduction of new wireless technologies such as broadband data, or
"3G," technology.
Our main businesses are leasing antenna space on wireless and broadcast
towers that can accommodate multiple tenants and operating analog and digital
broadcast transmission networks and wireless networks. We also provide related
services to our customers, including network design, radio frequency
engineering, site acquisition, site development and construction, antenna
installation and network management and maintenance. We believe that our full
service capabilities are a key competitive advantage in forming strategic
partnerships to acquire large concentrations of towers, or tower clusters, and
in winning contracts for tower acquisitions, management and construction along
with wireless and transmission network management.
Our primary business in the United States is the leasing of antenna space to
wireless carriers. We believe that by owning and managing large tower clusters
we are able to offer customers the ability to fulfill rapidly and efficiently
their network expansion plans across particular markets or regions. Our
acquisition strategy has been focused on adding tower clusters to our tower
portfolio. As of April 30, 2000, we had tower clusters in 34 of the 50 largest
U.S. metropolitan areas, and 68 of the 100 largest U.S. metropolitan areas.
Our primary business in the United Kingdom, which is conducted through Crown
Castle UK Holdings Limited ("CCUK"), is the operation of television and radio
broadcast transmission networks. Following the 1997 acquisition of the BBC's
broadcast and tower infrastructure, we were awarded long-term contracts to
provide the BBC and other broadcasters analog and digital transmission
services. We also lease antenna space to wireless operators in the United
Kingdom on the towers we acquired from the BBC and from various wireless
carriers along with towers we have constructed. We have nationwide broadcast
and wireless coverage in the United Kingdom.
Our primary business in Australia is the leasing of antenna space to
wireless carriers. In March 2000, a 66.7% subsidiary of ours, Crown Castle
Australia Limited, or "CCAL", entered into an agreement to purchase
approximately 700 towers in Australia from Cable & Wireless Optus for at total
purchase price of approximately $135 million in cash (Australian $220 million).
Upon completion of the Cable & Wireless Optus transaction, which we expect to
close during the remainder of 2000, CCAL will own and operate a nationwide
portfolio of approximately 700 towers in Australia covering over 90 percent of
the population.
3
We believe our towers are attractive to a diverse range of wireless
communications industries, including personal communications services,
cellular, enhanced specialized mobile radio, specialized mobile radio, paging,
and fixed microwave, as well as radio and television broadcasting. In the
United States our major customers include GTE Wireless, Verizon, BellSouth
Mobility, Powertel, Nextel, Sprint PCS, AT&T Wireless, Triton PCS, Tritel
Communications and Motorola. In the United Kingdom our major customers include
the BBC, Cellnet, Dolphin, NTL, ONdigital, One2One, Orange, Virgin Radio and
Vodafone AirTouch. Our principal customer in Australia is Cable & Wireless
Optus.
We are continuing our ongoing construction program to enhance our tower
portfolios. In 1999, we constructed over 900 towers. In 2000, we plan to
construct approximately 1,170 towers at an estimated aggregate cost of $270
million for lease to wireless carriers such as Verizon, BellSouth Mobility, GTE
Wireless and Nextel. The actual number of towers built may be outside that
range depending on acquisition opportunities and potential build-to-suit
contracts from large wireless carriers.
Our principal executive offices are located at 510 Bering Drive, Suite 500,
Houston, Texas 77057, and our telephone number is (713) 570-3000.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to fixed
charges, the deficiency of our consolidated earnings to cover fixed charges,
our consolidated ratio of earnings to combined fixed charges and preferred
stock dividends and the deficiency of our consolidated earnings to cover
combined fixed charges and preferred stock dividends for the periods indicated.
Three Months
Years Ended December 31, Ended
---------------------------------- March 31,
1995 1996 1997 1998 1999 2000
---- ---- ------- ------- -------- ------------
(in thousands of dollars)
Ratio of Earnings to Fixed
Charges....................... -- -- -- -- -- --
Deficiency of Earnings to Cover
Fixed Charges................. $21 $947 $10,755 $37,802 $ 91,316 $30,508
Ratio of Earnings to Combined
Fixed Charges and Preferred
Stock Dividends............... -- -- -- -- -- --
Deficiency of Earnings to Cover
Combined Fixed Charges and
Preferred Stock Dividends..... $21 $947 $12,954 $43,213 $120,197 $42,001
For purposes of computing the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends, earnings
represent income (loss) before income taxes, minority interests, extraordinary
item, cumulative effect of change in accounting principle, fixed charges and
undistributed equity in earnings (losses) of unconsolidated affiliate. Fixed
charges consist of interest expense, the interest component of operating leases
and amortization of deferred financing costs.
USE OF PROCEEDS
We will use the net proceeds from our sale of the securities for our general
corporate purposes, which may include repaying indebtedness, making additions
to our working capital, funding future acquisitions or for any other purpose we
describe in the applicable prospectus supplement.
We will not receive any of the proceeds from the sale of common stock that
may be sold by selling stockholders.
4
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the debt securities sets forth
certain general terms and provisions of the debt securities to which any
prospectus supplement may relate. The particular terms of the debt securities
offered by any prospectus supplement and the extent, if any, to which such
general provisions may apply to the debt securities so offered will be
described in the prospectus supplement relating to such debt securities.
Accordingly, for a description of the terms of a particular issue of debt
securities, reference must be made to both the prospectus supplement relating
thereto and to the following description.
The debt securities will be our general obligations and may be subordinated
to "Senior Indebtedness" (as defined below) we have or may incur to the extent
set forth in the prospectus supplement relating to them. See "Description of
Debt Securities--Subordination" below. Debt securities will be issued under an
indenture between us and one or more commercial banks to be selected as
trustees (collectively, the "trustee"). A copy of the form of indenture has
been filed as an exhibit to the registration statement filed with the SEC. The
following discussion of certain provisions of the indenture is a summary only
and should not be considered a complete description of the terms and provisions
of the indenture. Accordingly, the following discussion is qualified in its
entirety by reference to the provisions of the indenture, including the
definition of certain terms used below.
General
The indenture does not limit the aggregate principal amount of debt
securities that can be issued under it. The debt securities may be issued in
one or more series as we may authorize from time to time. You should refer to
the applicable prospectus supplement for the following terms of the debt
securities of the series with respect to which that prospectus supplement is
being delivered:
(a) the title of the debt securities of the series;
(b) any limit on the aggregate principal amount of the debt securities
of the series that may be authenticated and delivered under the indenture;
(c) the date or dates on which the principal and premium with respect to
the debt securities of the series are payable;
(d) the rate or rates (which may be fixed or variable) at which the debt
securities of the series shall bear interest (if any) or the method of
determining such rate or rates, the date or dates from which such interest
shall accrue, the interest payment dates on which such interest shall be
payable or the method by which such dates will be determined, the record
dates for the determination of holders thereof to whom such interest is
payable (in the case of Registered Securities (as defined below)), and the
basis upon which interest will be calculated if other than that of a 360-
day year of twelve 30-day months;
(e) the currency or currencies in which debt securities of the series
shall be denominated, the place or places, if any, in addition to or
instead of the corporate trust office of the trustee (in the case of
Registered Securities) or the principal New York office of the trustee (in
the case of Bearer Securities), where the principal, premium, and interest
with respect to debt securities of the series shall be payable;
(f) the price or prices at which, the period or periods within which,
and the terms and conditions upon which debt securities of the series may
be redeemed, in whole or in part at our option or otherwise;
(g) whether debt securities of the series are to be issued as Registered
Securities or Bearer Securities (as defined below) or both and, if Bearer
Securities are to be issued, whether coupons will be attached to them,
whether Bearer Securities of the series may be exchanged for Registered
Securities of the series, and the circumstances under which and the places
at which any such exchanges, if permitted, may be made;
(h) if any debt securities of the series are to be issued as Bearer
Securities or as one or more Global Securities (as defined below)
representing individual Bearer Securities of the series, whether certain
5
provisions for the payment of additional interest or tax redemptions shall
apply; whether interest with respect to any portion of a temporary Bearer
Security of the series payable with respect to any interest payment date
prior to the exchange of such temporary Bearer Security for definitive
Bearer Securities of the series shall be paid to any clearing organization
with respect to the portion of such temporary Bearer Security held for its
account and, in such event, the terms and conditions (including any
certification requirements) upon which any such interest payment received
by a clearing organization will be credited to the persons entitled to
interest payable on such interest payment date; and the terms upon which a
temporary Bearer Security may be exchanged for one or more definitive
Bearer Securities of the series;
(i) our obligation, if any, to redeem, purchase, or repay debt
securities of the series under any sinking fund or analogous provisions or
at the option of a holder of such debt securities and the price or prices
at which, the period or periods within which, and the terms and conditions
upon which debt securities of the series shall be redeemed, purchased, or
repaid, in whole or in part, under such obligations;
(j) the terms, if any, upon which the debt securities of the series may
be convertible into or exchanged for our or any other issuer's or obligor's
common stock, preferred stock, other debt securities or warrants for common
stock, preferred stock, indebtedness or other securities of any kind and
the terms and conditions upon which such conversion or exchange shall be
effected, including the initial conversion or exchange price or rate, the
conversion or exchange period and any other additional provisions;
(k) if other than denominations of $1,000 or any integral multiple
thereof, the denominations in which debt securities of the series shall be
issuable;
(l) if the amount of principal, premium or interest with respect to the
debt securities of the series may be determined with reference to an index
or pursuant to a formula, the manner in which such amounts will be
determined;
(m) if the principal amount payable at the stated maturity of debt
securities of the series will not be determinable as of any one or more
dates prior to such stated maturity, the amount that will be deemed to be
such principal amount as of any such date for any purpose, including the
principal amount thereof which will be due and payable upon any maturity
other than the stated maturity or which will be deemed to be outstanding as
of any such date (or, in any such case, the manner in which such deemed
principal amount is to be determined), and if necessary, the manner of
determining the equivalent thereof in United States currency;
(n) any changes or additions to the provisions of the indenture dealing
with defeasance;
(o) if other than the principal amount thereof, the portion of the
principal amount of debt securities of the series that shall be payable
upon declaration of acceleration of the maturity thereof or provable in
bankruptcy;
(p) the terms, if any, of the transfer, mortgage, pledge or assignment
as security for the debt securities of the series of any properties,
assets, moneys, proceeds, securities or other collateral, including whether
certain provisions of the Trust Indenture Act of 1939, as amended, are
applicable and any corresponding changes to provisions of the Indenture as
then in effect;
(q) any addition to or change in the Events of Default (as defined
below) with respect to the debt securities of the series and any change in
the right of the trustee or the holders to declare the principal, premium
and interest with respect to such debt securities due and payable;
(r) if the debt securities of the series shall be issued in whole or in
part in the form of a global security, the terms and conditions, if any,
upon which such global security may be exchanged in whole or in part for
other individual debt securities in definitive registered form, the
depositary (as defined in the applicable prospectus supplement) for such
global security and the form of any legend or legends to be borne by any
such global Security in addition to or in lieu of the legend referred to in
the Indenture;
(s) any trustee, authenticating or paying agents, transfer agents or
registrars;
6
(t) the applicability of, and any addition to or change in, the
covenants and definitions then set forth in the indenture or in the terms
then set forth in the indenture relating to permitted consolidations,
mergers, or sales of assets;
(u) the terms, if any, of any guarantee of the payment of principal,
premium, and interest with respect to debt securities of the series and any
corresponding changes to the provisions of the indenture as then in effect;
(v) the subordination, if any, of the debt securities of the series
pursuant to the indenture and any changes or additions to the provisions of
the Indenture relating to subordination;
(w) with regard to debt securities of the series that do not bear
interest, the dates for certain required reports to the trustee; and
(x) any other terms of the debt securities of the series (which terms
shall not be prohibited by the provisions of the Indenture).
The prospectus supplement will also describe any material United States
federal income tax consequences or other special considerations applicable to
the series of debt securities to which such prospectus supplement relates,
including those applicable to (a) Bearer Securities, (b) debt securities with
respect to which payments of principal, premium or interest are determined with
reference to an index or formula (including changes in prices of particular
securities, currencies or commodities), (c) debt securities with respect to
which principal, or interest is payable in a foreign or composite currency, (d)
debt securities that are issued at a discount below their stated principal
amount, bearing no interest or interest at a rate that at the time of issuance
is below market rates ("Original Issue Discount Debt Securities") and (e)
variable rate debt securities that are exchangeable for fixed rate debt
securities.
Unless otherwise provided in the applicable prospectus supplement,
Registered Securities may be transferred or exchanged at the office of the
trustee at which its corporate trust business is principally administered in
the United States or at the office of the trustee or the trustee's agent in the
Borough of Manhattan, the City and State of New York, at which its corporate
agency business is conducted, subject to the limitations provided in the
indenture, without the payment of any service charge, other than any tax or
governmental charge payable in connection therewith. Bearer Securities will be
transferable only by delivery. Provisions with respect to the exchange of
Bearer Securities will be described in the prospectus supplement relating to
such Bearer Securities.
All funds which we pay to a paying agent for the payment of principal,
premium or interest with respect to any debt securities that remain unclaimed
at the end of two years after such principal, premium or interest shall have
become due and payable will be repaid to us, and the holders of such debt
securities or any coupons appertaining thereto will thereafter look only to us
for payment thereof.
Global Securities
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities. A global security is a debt security
that represents, and is denominated in an amount equal to the aggregate
principal amount of, all outstanding debt securities of a series, or any
portion thereof, in either case having the same terms, including the same
original issue date, date or dates on which principal and interest are due, and
interest rate or method of determining interest. A global security will be
deposited with, or on behalf of, a depositary, which will be identified in the
prospectus supplement relating to such debt securities. Global securities may
be issued in either registered or bearer form and in either temporary or
definitive form. Unless and until it is exchanged in whole or in part for the
individual debt securities represented thereby, a global security may not be
transferred except as a whole by the depositary to a nominee of the depositary,
by a nominee of the depositary to the depositary or another nominee of the
depositary, or by the depositary or any nominee of the depositary to a
successor depositary or any nominee of such successor.
7
The specific terms of the depositary arrangement with respect to a series of
debt securities will be described in the prospectus supplement relating to such
debt securities. We anticipate that the following provisions will generally
apply to depositary arrangements.
Upon the issuance of a global security, the depositary for such global
security will credit, on its book entry registration and transfer system, the
respective principal amounts of the individual debt securities represented by
such global security to the accounts of persons that have accounts with the
depositary ("participants"). Such accounts shall be designated by the dealers
or underwriters with respect to such debt securities or, if such debt
securities are offered and sold directly by us or through one or more agents,
by us or such agents. Ownership of beneficial interests in a global security
will be limited to participants or persons that hold beneficial interests
through participants. Ownership of beneficial interests in such global security
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the depositary (with respect to interests of
participants) or records maintained by participants (with respect to interests
of persons other than participants). The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limitations and laws may impair the ability to transfer
beneficial interests in a global security.
So long as the depositary for a global security, or its nominee, is the
registered owner or holder of such global security, such depositary or nominee,
as the case may be, will be considered the sole owner or holder of the
individual debt securities represented by such global security for all purposes
under the indenture. Except as provided below, owners of beneficial interests
in a global security will not be entitled to have any of the individual debt
securities represented by such global security registered in their names, will
not receive or be entitled to receive physical delivery of any of such debt
securities in definitive form, and will not be considered the owners or holders
thereof under the Indenture.
Subject to the restrictions applicable to Bearer Securities described in an
applicable prospectus supplement (see "Limitations on Issuance of Bearer
Securities" below), payments of principal, premium, and interest with respect
to individual debt securities represented by a global security will be made to
the depositary or its nominee, as the case may be, as the registered owner or
holder of such global security. Neither we, the trustee, any paying agent or
registrar for such debt securities or any agent of ours or the trustee's will
have any responsibility or liability for (a) any aspect of the records relating
to or payments made by the depositary, its nominee or any participants on
account of beneficial interests in the global security or for maintaining,
supervising or reviewing any records relating to such beneficial interests, (b)
the payment to the owners of beneficial interests in the global security of
amounts paid to the depositary or its nominee or (c) any other matter relating
to the actions and practices of the depositary, its nominee or its
participants. Neither we, the trustee, any paying agent or registrar for such
debt securities or any agent of ours or the trustee will be liable for any
delay by the depositary, its nominee or any of its participants in identifying
the owners of beneficial interests in the global security, and we and the
trustee may conclusively rely on, and will be protected in relying on,
instructions from the depositary or its nominee for all purposes.
We expect that the depositary for a series of debt securities or its
nominee, upon receipt of any payment of principal, premium or interest with
respect to a definitive global security representing any of such debt
securities, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such global security, as shown on the records of the depositary or
its nominee. We also expect that payments by participants to owners of
beneficial interests in such global security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers and registered in
"street name." Such payments will be the responsibility of such participants.
Receipt by owners of beneficial interests in a temporary global security of
payments of principal, premium or interest with respect thereto will be subject
to the restrictions described in an applicable prospectus supplement (see
"Limitation on Issuance of Bearer Securities" below).
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If the depositary for a series of debt securities is at any time unwilling,
unable or ineligible to continue as depositary, we shall appoint a successor
depositary. If a successor depositary is not appointed by us within 90 days,
we will issue individual debt securities of such series in exchange for the
global security representing such series of debt securities. In addition, we
may at any time and in our sole discretion, subject to any limitations
described in the prospectus supplement relating to such debt securities,
determine to no longer have debt securities of a series represented by a
global security and, in such event, will issue individual debt securities of
such series in exchange for the global security representing such series of
debt securities. Furthermore, if we so specify with respect to the debt
securities of a series, an owner of a beneficial interest in a global security
representing debt securities of such series may, on terms acceptable to us,
the trustee, and the depositary for such global security, receive individual
debt securities of such series in exchange for such beneficial interests,
subject to any limitations described in the prospectus supplement relating to
such debt securities. In any such instance, an owner of a beneficial interest
in a global security will be entitled to physical delivery of individual debt
securities of the series represented by such global security equal in
principal amount to such beneficial interest and to have such debt securities
registered in its name (if the debt securities are issuable as Registered
Securities). Individual debt securities of such series so issued will be
issued (a) as Registered Securities in denominations, unless otherwise
specified by us, of $1,000 and integral multiples thereof if the debt
securities are issuable as Registered Securities, (b) as Bearer Securities in
the denomination or denominations specified by us if the debt securities are
issuable as Bearer Securities or (c) as either Registered Securities or Bearer
Securities as described above if the debt securities are issuable in either
form.
Limitations on Issuance of Bearer Securities
The debt securities of a series may be issued as Registered Securities
(which will be registered as to principal and interest in the register
maintained by the registrar for such debt securities) or Bearer Securities
(which will be transferable only by delivery). If such debt securities are
issuable as Bearer Securities, the applicable prospectus supplement will
describe certain special limitations and considerations that will apply to
such debt securities.
Certain Covenants
Merger, Consolidation or Sale of Assets
The indenture provides that we may not:
(1) consolidate or merge with or into (whether or not we are the
surviving corporation), or
(2) sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of our properties or assets in one or more related
transactions, to another corporation, Person or entity, unless:
(a) either:
(A) we are the surviving corporation, or
(B) the entity or the Person (as defined) formed by or surviving
any such consolidation or merger (if other than us) or to which the
sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of
Columbia;
(b) the entity or Person formed by or surviving any such
consolidation or merger (if other than us) or the entity or Person to
which the sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all our obligations under the
debt securities and the indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the trustee;
(c) immediately after such transaction no Default (as defined)
exists; and
(d) except in the case of:
(A) a merger of us with or into our Wholly Owned Restricted
Subsidiary (as defined) and
9
(B) a merger entered into solely for the purpose of
reincorporating us in another jurisdiction:
(x) in the case of a merger or consolidation in which we are
the surviving corporation, our Debt to Adjusted Consolidated
Cash Flow Ratio (as defined) at the time of the transaction,
after giving pro forma effect to the transaction as of such date
for balance sheet purposes and as if the transaction had
occurred at the beginning of our most recently ended four full
fiscal quarter period for which internal financial statements
are available for income statement purposes, would have been
less than our Debt to Adjusted Consolidated Cash Flow Ratio for
the same period without giving pro forma effect to such
transaction, or
(y) in the case of any other such transaction, the Debt to
Adjusted Consolidated Cash Flow of the entity or Person formed
by or surviving any such consolidation or merger (if other than
us), or to which the sale, assignment, transfer, lease,
conveyance or other disposition shall have been made, at the
time of the transaction, after giving pro forma effect to the
transaction as of such date for balance sheet purposes and as if
such transaction had occurred at the beginning of the most
recently ended four full fiscal quarter period of such entity or
Person for which internal financial statements are available for
income statement purposes, would have been less than our Debt to
Adjusted Consolidated Cash Flow Ratio for the same period
without giving pro forma effect to such transaction; provided
that for purposes of determining the Debt to Adjusted
Consolidated Cash Flow Ratio of any entity or Person for
purposes of this clause (y) the entity or Person will be
substituted for us in the definition of Debt to Adjusted
Consolidated Cash Flow Ratio and the defined terms included in
the indenture.
Subordination
Debt securities of a series may be subordinated ("subordinated debt
securities") to Senior Indebtedness (as defined in the applicable prospectus
supplement) to the extent set forth in the prospectus supplement relating
thereto. We conduct substantially all our operations through subsidiaries, and
the holders of debt securities (whether or not subordinated debt securities)
will be structurally subordinated to the creditors of our subsidiaries.
Upon any payment or distribution of our assets to creditors or upon our
total or partial liquidation or dissolution or in a bankruptcy, receivership,
or similar proceeding relating to us or our property, holders of Senior
Indebtedness shall be entitled to receive payment in full in cash of the Senior
Indebtedness before holders of subordinated debt securities shall be entitled
to receive any payment of principal, premium, or interest with respect to the
subordinated debt securities, and until the Senior Indebtedness is paid in
full, any distribution to which holders of subordinated debt securities would
otherwise be entitled shall be made to the holders of Senior Indebtedness
(except that such holders may receive shares of stock and any debt securities
that are subordinated to Senior Indebtedness to at least the same extent as the
subordinated debt securities).
We may not make any payments of principal, premium, or interest with respect
to subordinated debt securities, make any deposit for the purpose of defeasance
of such subordinated debt securities, or repurchase, redeem, or otherwise
retire (except, in the case of subordinated debt securities that provide for a
mandatory sinking fund, by the delivery of subordinated debt securities by us
to the trustee in satisfaction of our sinking fund obligation) any subordinated
debt securities if (a) any principal, premium or interest with respect to
Senior Indebtedness is not paid in full in cash within any applicable grace
period (including at maturity) or (b) any other default on Senior Indebtedness
occurs and the maturity of such Senior Indebtedness is accelerated in
accordance with its terms, unless, in either case, the default has been cured
or waived and such acceleration has been rescinded, such Senior Indebtedness
has been paid in full in cash or we and the trustee receive written notice
approving such payment from the representatives of such Senior Indebtedness.
During the continuance of any default (other than a default described in clause
(a) or (b) above) with respect to any Designated Senior
10
Indebtedness (as defined in the applicable prospectus supplement) pursuant to
which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, we may not pay the subordinated
debt securities for a period (the "payment blockage period") commencing on the
receipt by us and the trustee of written notice of such default from the
representative of any Designated Senior Indebtedness specifying an election to
effect a payment blockage period (a "blockage notice"). The payment blockage
period may be terminated before its expiration by written notice to the trustee
and us from the person who gave the blockage notice, by repayment in full in
cash of the Senior Indebtedness with respect to which the blockage notice was
given or because the default giving rise to the payment blockage period is no
longer continuing. Unless the holders of such Designated Senior Indebtedness
shall have accelerated the maturity thereof, we may resume payments on the
subordinated debt securities after the expiration of the payment blockage
period. Not more than one blockage notice may be given in any period of 360
consecutive days. In no event, however, may the total number of days during
which any payment blockage period or periods is in effect exceed 179 days in
the aggregate during any period of 360 consecutive days. After all Senior
Indebtedness is paid in full and until the subordinated debt securities are
paid in full, holders of the subordinated debt securities shall be subrogated
to the rights of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness.
By reason of such subordination, in the event of insolvency, creditors of
ours who are holders of Senior Indebtedness, as well as certain general
creditors of ours, may recover more, ratably, than the holders of the
subordinated debt securities.
Events of Default and Remedies
The following events are defined in the indenture as "Events of Default"
with respect to a series of debt securities:
(a) default for 30 days in the payment when due of interest on the debt
securities;
(b) default in payment when due of the principal of or premium, if any,
on the debt securities;
(c) our failure or failure by any of our Subsidiaries (as defined) to
comply with the provisions described under the caption "--Certain
Covenants--Merger, Consolidation or Sale of Assets" or our failure to
consummate a Change of Control Offer (as defined) or Asset Sale Offer (as
defined) in accordance with the provisions of the indenture;
(d) our failure or failure by any of our Subsidiaries for 30 days after
notice to comply with any other agreements in the indenture or the debt
securities;
(e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness (as defined) for money borrowed by us or any of our
Significant Subsidiaries (as defined), or the payment of which is
guaranteed by us or any of our Significant Subsidiaries, whether such
Indebtedness or guarantee now exists, or is created after the date of the
indenture, which default:
(1) is caused by a failure to pay principal of or premium, if any,
or interest on the Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of the default (a
"Payment Default"); or
(2) results in the acceleration of the Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $20.0 million or
more;
(f) failure by us or any of our Significant Subsidiaries to pay final
judgments aggregating in excess of $20.0 million, which judgments are not
paid, discharged or stayed for a period of 60 days; or
11
(g) certain events of bankruptcy or insolvency described in the
indenture with respect to us or any of our Restricted Subsidiaries.
(h) any other Event of Default provided with respect to debt securities
of that series.
An Event of Default with respect to one series of debt securities is not
necessarily an Event of Default for another series.
A prospectus supplement may omit, modify or add to the foregoing Events of
Default.
If any Event of Default occurs and is continuing, the trustee under the
indenture or the holders of at least 25% in principal amount at maturity of the
then outstanding notes of the applicable series may declare all the notes of
such series to be due and payable immediately. Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to us, all outstanding debt securities will become due
and payable without further action or notice. Holders of the debt securities
may not enforce the indenture or the debt securities except as provided in the
indenture. Subject to certain limitations, Holders of a majority in principal
amount at maturity of the then outstanding debt securities may direct the
trustee under the indenture in its exercise of any trust or power.
The holders of a majority in aggregate principal amount at maturity of the
debt securities then outstanding by notice to the trustee under the indenture
may on behalf of the holders of all of such series of debt securities waive any
existing Default or Event of Default and its consequences under the applicable
indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of the debt securities.
The indenture provides that if a Default occurs and is continuing and is
known to the trustee, the trustee must mail to each holder of the relevant
series of debt securities notice of the Default within 90 days after it occurs.
Except in the case of a Default in the payment of principal of or interest on
any debt security, the trustee may withhold notice if and so long as a
committee of its trust officers determines that withholding notice is not
opposed to the interest of the holders of the debt securities. In addition, we
are required to deliver to the trustee, within 90 days after the end of each
fiscal year, a certificate indicating whether the signers thereof know of any
Default that occurred during the previous year. We are also required to deliver
to the trustee, promptly after the occurrence thereof, written notice of any
event that would constitute a Default, the status thereof and what action we
are taking or proposes to take in respect thereof.
Modification of the Indenture
We and the trustee may enter into supplemental indentures without the
consent of the holders of debt securities for one or more of the following
purposes:
(a) to evidence the succession of another person to us pursuant to the
provisions of the indenture relating to consolidations, mergers and sales
of assets and the assumption by such successor of our covenants, agreements
and obligations in the indenture and in the debt securities;
(b) to surrender any right or power conferred upon us by the indenture,
to add to our covenants such further covenants, restrictions, conditions or
provisions for the protection of the holders of all or any series of debt
securities as our board of directors shall consider to be for the
protection of the holders of such debt securities, and to make the
occurrence, or the occurrence and continuance, of a default in any of such
additional covenants, restrictions, conditions or provisions a default or
an Event of Default under the indenture (provided, however, that with
respect to any such additional covenant, restriction, condition or
provision, such supplemental indenture may provide for a period of grace
after default, which may be shorter or longer than that allowed in the case
of other defaults, may provide for an immediate enforcement upon such
default, may limit the remedies available to the trustee upon such default
or may limit the right of holders of a majority in aggregate principal
amount of any or all series of debt securities to waive such default);
12
(c) to cure any ambiguity or correct or supplement any provision
contained in the indenture, in any supplemental indenture or in any debt
securities that may be defective or inconsistent with any other provision
contained therein, to convey, transfer, assign, mortgage or pledge any
property to or with the trustee, or to make such other provisions in regard
to matters or questions arising under the indenture as shall not adversely
affect the interests of any holders of debt securities of any series;
(d) to modify or amend the indenture in such a manner as to permit the
qualification of the indenture or any supplemental indenture under the
Trust Indenture Act as then in effect;
(e) to add to or change any of the provisions of the indenture to
provide that Bearer Securities may be registerable as to principal, to
change or eliminate any restrictions on the payment of principal or premium
with respect to Registered Securities or of principal, premium or interest
with respect to Bearer Securities, or to permit Registered Securities to be
exchanged for Bearer Securities, so as to not adversely affect the
interests of the holders of debt securities or any coupons of any series in
any material respect or permit or facilitate the issuance of debt
securities of any series in uncertificated form;
(f) to comply with the provisions of the indenture relating to
consolidations, mergers and sales of assets;
(g) in the case of subordinated debt securities, to make any change in
the provisions of the indenture relating to subordination that would limit
or terminate the benefits available to any holder of senior indebtedness
under such provisions (but only if each such holder of senior indebtedness
consents to such change);
(h) to add guarantees with respect to the debt securities or to secure
the debt securities;
(i) to make any change that does not adversely affect the rights of any
holder;
(j) to add to, change, or eliminate any of the provisions of the
indenture with respect to one or more series of debt securities, so long as
any such addition, change or elimination not otherwise permitted under the
indenture shall (1) neither apply to any debt security of any series
created prior to the execution of such supplemental indenture and entitled
to the benefit of such provision nor modify the rights of the holders of
any such debt security with respect to such provision or (2) become
effective only when there is no such debt security outstanding;
(k) to evidence and provide for the acceptance of appointment by a
successor or separate trustee with respect to the debt securities of one or
more series and to add to or change any of the provisions of the indenture
as shall be necessary to provide for or facilitate the administration of
the indenture by more than one trustee; and
(l) to establish the form or terms of debt securities and coupons of any
series, as described under "Description of Debt Securities--General" above.
With the consent of the holders of a majority in aggregate principal amount
of the outstanding debt securities of each series affected thereby, we and the
trustee may from time to time and at any time enter into a supplemental
indenture for the purpose of adding any provisions to, changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
Indenture or modifying in any manner the rights of the holder of the debt
securities of such series; provided, however, that without the consent of the
holders of each debt security so affected, no such supplemental indenture shall
(a) reduce the percentage in principal amount of debt securities of any series
whose holders must consent to an amendment, (b) reduce the rate of or extend
the time for payment of interest on any debt security or coupon or reduce the
amount of any payment to be made with respect to any coupon, (c) reduce the
principal of or extend the stated maturity of any debt security, (d) reduce the
premium payable upon the redemption of any debt security or change the time at
which any debt security may or shall be redeemed, (e) make any debt security
payable in a currency other than that stated in the debt security, (f) in the
case of any subordinated debt security or coupons appertaining thereto, make
any change in the provisions of the indenture relating to subordination that
adversely affects the rights of
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any holder under such provisions, (g) release any security that may have been
granted with respect to the debt securities, (h) make any change in the
provisions of the indenture relating to waivers of defaults or amendments that
require unanimous consent, (i) change any obligation of ours provided for in
the indenture to pay additional interest with respect to Bearer Securities or
(j) limit our obligation to maintain a paying agency outside the United States
for payment on Bearer Securities or limit our obligation to redeem certain
Bearer Securities.
Satisfaction and Discharge of the Indenture; Defeasance
The indenture shall generally cease to be of any further effect with respect
to a series of debt securities if (a) we have delivered to the trustee for
cancellation all debt securities of such series (with certain limited
exceptions) or (b) all debt securities and coupons of such series not
theretofore delivered to the trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year, and we shall have deposited with
the trustee as trust funds the entire amount sufficient to pay at maturity or
upon redemption all such debt securities and coupons (and if, in either case,
we shall also pay or cause to be paid all other sums payable under the
indenture by us).
In addition, we shall have a "legal defeasance option" (pursuant to which we
may terminate, with respect to the debt securities of a particular series, all
of our obligations under such debt securities and the indenture with respect to
such debt securities) and a "covenant defeasance option" (pursuant to which we
may terminate, with respect to the debt securities of a particular series, our
obligations with respect to such debt securities under certain specified
covenants contained in the indenture). If we exercise our legal defeasance
option with respect to a series of debt securities, payment of such debt
securities may not be accelerated because of an Event of Default. If we
exercise our covenant defeasance option with respect to a series of debt
securities, payment of such debt securities may not be accelerated because of
an Event of Default related to the specified covenants.
The applicable prospectus supplement will describe the procedures we must
follow in order to exercise our defeasance options.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 600,000,000 shares of common stock,
par value $.01 per share, 90,000,000 shares of Class A common stock, par value
$.01 per share, and 10,000,000 shares of preferred stock, par value $.01 per
share. As of July 5, 2000 there were 183,683,790 shares of common stock
outstanding, no shares of Class A common stock outstanding, 241,431 shares of
12 3/4% Senior Exchangeable Preferred Stock due 2010 outstanding and 200,000
shares of 8 1/4% Cumulative Convertible Redeemable Preferred Stock due 2012
outstanding.
Common Stock
Voting Rights
Each share of common stock is entitled to one vote. The common stock votes
together as a single class on all matters presented for a vote of the
stockholders, except as provided under the Delaware General Corporation Law.
Dividends and Liquidation Rights
Each share of common stock is entitled to receive dividends if, as and when
declared by the board of directors out of funds legally available for that
purpose, subject to approval of certain holders of preferred stock. In the
event of our dissolution, after satisfaction of amounts payable to our
creditors and distribution of any preferential amounts to the holders of
outstanding preferred stock, if any, holders of common stock are entitled to
share ratably in the assets available for distribution to the stockholders.
Other Provisions
There are no preemptive rights to subscribe for any additional securities
which we may issue, and there are no redemption provisions or sinking fund
provisions applicable to the common stock. All outstanding shares of common
stock are legally issued, fully paid and nonassessable.
Class A Common Stock
Voting Rights
Each share of Class A common stock is entitled to one vote for each such
share on all matters presented to the stockholders, except the election of
directors. The holders of the shares of Class A common stock vote, except as
provided under the Delaware General Corporation Law, together with the holders
of the common stock and any other class or series of our stock accorded such
general voting rights, as a single class.
The holders of Class A common stock, subject to limitations, have a veto
over certain significant corporate actions we may take.
Convertibility
Each share of Class A common stock is convertible, at the option of its
record holder, into one share of common stock at any time.
In the event of any transfer of any share of Class A common stock to any
person other than an Affiliate (as defined in Rule 12b-2 of the Exchange Act)
of the transferor, such share of Class A common stock automatically converts,
without any further action, into one share of common stock. However, a holder
of shares of Class A common stock may pledge its shares to a lender under a
bona fide pledge of such shares of Class A common stock as collateral security
for any indebtedness or other obligation of any person due to the pledgee or
its nominee.
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Dividends and Liquidation Rights
Holders of shares of Class A common stock are entitled to the same dividends
and liquidation rights as holders of shares of common stock.
Preferred Stock
Under our certificate of incorporation, we may issue up to 10,000,000 shares
of preferred stock in one or more series. Our board of directors has the
authority, without any vote or action by the stockholders, to create one or
more series of preferred stock up to the limit of our authorized but unissued
shares of preferred stock and to fix their designations, preferences, rights,
qualifications, limitations and restrictions, including the voting rights,
dividend rights, dividend rate, conversion rights, terms of redemption
(including sinking fund provisions), redemption price or prices, liquidation
preferences and the number of shares constituting any series.
12 3/4% Exchangeable Preferred Stock due 2010
Each share of exchangeable preferred stock has a liquidation preference of
$1,000 per share and is exchangeable, at our option, in whole but not in part,
for our exchange debentures.
Voting Rights
The shares of exchangeable preferred stock have no voting rights, except as
required by law and as specified in the certificate of designations. If we fail
to meet our obligations under the certificate of designations, the holders of
the exchangeable preferred stock will be entitled to elect two additional
members to the board of directors.
Dividends
Dividends are paid on each March 15, June 15, September 15 and December 15,
at an annual fixed rate of 12 3/4%. On or before December 15, 2003, we have the
option to pay dividends in cash or in additional fully paid and non-assessable
shares of exchangeable preferred stock having an aggregate liquidation
preference equal to the amount of such dividends. After December 15, 2003,
dividends will be paid only in cash.
Mandatory Redemption
We are required to redeem all of the shares of exchangeable preferred stock
outstanding on December 15, 2010 at a redemption price equal to 100% of the
liquidation preference of such shares, plus accumulated and unpaid dividends to
the date of redemption.
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Optional Redemption
On or after December 15, 2003, we may redeem some or all of the shares of
exchangeable preferred stock at any time at certain specified redemption
prices. In addition, before December 15, 2001, we may redeem up to 35% of the
exchangeable preferred stock with the proceeds of public equity offerings or
strategic equity investments at a redemption price equal to 112.750% of the
liquidation preference of the exchangeable preferred stock, together with
accumulated and unpaid dividends.
Change of Control
If we experience specific kinds of changes in control, we will be required
to make an offer to purchase any and all shares of exchangeable preferred stock
at a purchase price of 101% of the liquidation preference of such shares
together with all accumulated and unpaid dividends.
Certain Covenants
We issued the exchangeable preferred stock under a certificate of
designations that became part of our certificate of incorporation. The
certificate of designations contains certain covenants that, among other
things, limit our ability and the ability of our subsidiaries to borrow money;
pay dividends on stock or purchase capital stock; make investments and sell
assets or merge with or into other companies.
Ranking
The exchangeable preferred stock ranks (1) senior to all our other classes
of capital stock established after the issue date of the exchangeable preferred
stock that do not expressly provide that they rank on par with the exchangeable
preferred stock as to dividends and distributions upon our liquidation, winding
up and dissolution and (2) on par with any class of capital stock established
after the date of issuance of the exchangeable preferred stock the terms of
which provide that such class or series will rank on par with the exchangeable
preferred stock as to dividends and distributions upon our liquidation, winding
up and dissolution.
8 1/4% Cumulative Convertible Redeemable Preferred Stock
On November 19, 1999, we privately placed 200,000 shares of series A
convertible preferred stock with a wholly owned subsidiary of GE Capital
("GE"). Each share of series A convertible preferred stock automatically
converts into one share of series B convertible preferred stock upon a sale or
other transfer of such share to a party other than an affiliate of GE. Each
share of convertible preferred stock has a liquidation preference of $1,000 and
is convertible, at the option of the holder, in whole or in part, into shares
of our common stock.
Voting Rights
Holders of series A convertible preferred stock are entitled to vote on all
matters voted on by holders of common stock, voting together as a single class
with the other holders of common stock, on all matters submitted for a
shareholder vote. Each share of series A convertible preferred stock has voting
rights equal to the number of votes that could be cast by the holder of the
number of shares of common stock into which each share of series A convertible
preferred stock is convertible on the record date of such vote.
The shares of series B convertible preferred stock have no voting rights,
except as required by law and as specified in the certificate of designations
if certain events occur or fail to occur.
Convertibility
The shares of convertible preferred stock are convertible, at the option of
the holder, into shares of our common stock at a conversion price of $26.875
per share of common stock.
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Dividends
Dividends are paid on each March 15, June 15, September 15 and December 15,
at an annual fixed rate of 8 1/4%. Dividends on the convertible preferred stock
can be paid at our option in cash, common stock or any combination of cash and
common stock. Holders of the 8 1/4% convertible preferred stock will also be
eligible to receive additional dividends up to an amount of $1,000,000 per
year, if certain events occur or fail to occur.
Mandatory Redemption
We are required to redeem all of the shares of convertible preferred stock
outstanding on March 31, 2012 at a redemption price equal to 100% of the
liquidation preference of such shares, plus accumulated and unpaid dividends to
the date of redemption.
Optional Redemption
On or after October 1, 2002, we may redeem some or all of the shares of
convertible preferred stock at any time at certain specified redemption prices.
Change of Control
Upon the occurrence of specified change of control events, the holders of
the convertible preferred stock, if the current market price of our common
stock as of the date of such change of control is less than the conversion
price, have a one time option, exercisable at any time within ninety days
following such change of control event, to convert all of their outstanding
shares of convertible preferred stock into shares of our common stock at an
adjusted conversion price per share equal to the greater of (1) the last
reported sale price for one share of common stock in an arm's length
transaction as of the date of such change of control and (2) $12.96. We may, at
our option and in lieu of issuing the shares of common stock issuable upon a
change of control event as described above, make a cash payment to holders of
convertible preferred stock equal to the current market price of such common
stock otherwise issuable.
Certain Covenants
We issued the exchangeable preferred stock under a certificate of
designations that became part of our certificate of incorporation. The
certificate of designations contains certain covenants that, among other
things, limit our ability and the ability of our subsidiaries to pay dividends
on stock or sell assets or merge with or into other companies.
Ranking
The convertible preferred stock, with respect to dividends and distributions
upon our liquidation, dissolution or winding-up, ranks (1) senior to our common
stock and all other classes of our capital stock authorized and issued after
the issue date of the convertible preferred stock that do not expressly state
that they rank on par with or senior to the convertible preferred stock with
respect to dividends and distributions upon our liquidation, dissolution or
winding-up, (2) on par with all other classes of our capital stock authorized
and issued after the issue date of the convertible preferred stock that
expressly provide that such class or series will rank on par with the
convertible preferred stock with respect to dividends and distributions upon
our liquidation, dissolution or winding-up, and (3) junior to (A) the senior
exchangeable preferred stock, (B) up to an aggregate of $200.0 million in any
class of capital stock authorized and issued after the issue date of the
convertible preferred stock to replace the senior exchangeable preferred stock
and (C) up to an aggregate of $400.0 million in any other class of senior stock
authorized and issued after the issue date of the convertible preferred stock.
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Senior Preferred Warrants
In connection with the offering of a series of senior convertible preferred
stock in August 1997 and October 1997, we issued warrants to purchase an
aggregate of 1,314,990 shares of common stock, of which 835,990 remained
outstanding as of May 1, 2000, at an exercise price of $7.50 per share. In
connection with the offering of the cumulative convertible preferred stock in
November 1999, we issued warrants to purchase an aggregate of 1,000,000 shares
of our common stock at an exercise price of $26.875 per share.
Certificate of Incorporation and By-laws
Stockholders' rights and related matters are governed by the Delaware
General Corporation Law, and our certificate of incorporation and the by-laws.
Certain provisions of our certificate of incorporation and by-laws, which are
summarized below, may have the effect, either alone or in combination with each
other, of discouraging or making more difficult a tender offer or takeover
attempt that is opposed by our board of directors but that a stockholder might
consider to be in its best interest. Such provisions may also adversely affect
prevailing market prices for the common stock. We believe that such provisions
are necessary to enable us to develop our business in a manner that will foster
our long-term growth without disruption caused by the threat of a takeover not
deemed by our board of directors to be in our best interests and those of our
stockholders.
Classified Board of Directors and Related Provisions
Our certificate of incorporation provides that our directors, other than
those directors who may be elected by holders of any series of preferred stock
or holders of the Class A common stock, initially are divided into three
classes of directors, consisting of three, three and four directors. One class
of directors, initially consisting of four directors, was elected for a term
expiring at the annual meeting of stockholders to be held in 2001, another
class initially consisting of four directors was elected for a term expiring at
the annual meeting of stockholders in 2002, and another class initially
consisting of three directors was elected for a term expiring at the annual
meeting of stockholders in 2003. The classified board provisions will prevent a
party who acquires control of a majority of our outstanding voting stock from
obtaining control of our board of directors until the second annual
stockholders meeting following the date such party obtains the controlling
interest. Voting stock is defined in our certificate of incorporation as the
outstanding shares of our capital stock entitled to vote in a general vote of
our stockholders as a single class with shares of common stock, which shares of
capital stock include the shares of Class A common stock and shares of our 8
1/4% cumulative convertible redeemable preferred stock.
No Stockholder Action by Written Consent; Special Meeting
The certificate of incorporation prohibits stockholders from taking action
by written consent in lieu of an annual or special meeting, except relating to
holders of Class A common stock on matters on which they are entitled to vote
and, thus, stockholders may only take action at an annual or special meeting
called in accordance with our by-laws. The by-laws provide that special
meetings of stockholders may only be called by our secretary at the direction
of our board of directors under a resolution adopted by the board.
These provisions could have the effect of delaying consideration of a
stockholder proposal until the next annual meeting. The provisions would also
prevent the holders of a majority of the voting power of our capital stock
entitled to vote from unilaterally using the written consent procedure to take
stockholder action.
Advance Notice Requirements for Stockholder Proposals and Director Nominations
Our by-laws establish advance notice procedures for stockholder proposals
and the nomination, other than by or at the direction of the board of
directors, of candidates for election as directors. These procedures provide
that the notice of stockholder proposals and stockholder nominations for the
election of directors at an annual
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meeting must be in writing and received by our secretary at least 90 days but
not more than 120 days prior to the first anniversary of our preceding year's
annual meeting. However, if the date of our annual meeting is more than 30 days
earlier than, or more than 90 days later than, the anniversary date of our
preceding year's annual meeting, notice by a stockholder will be considered
timely if it is delivered not earlier than the 120th day prior to such annual
meeting and not later than the later of the 90th day prior to such annual
meeting or the 10th day following the day on which public disclosure of the
date of the annual meeting was made. The notice of nominations for the election
of directors must set forth certain information concerning the stockholder
giving the notice and each nominee.
By requiring advance notice of nominations by stockholders, these procedures
will afford our board of directors an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the board of directors, to inform stockholders about these
qualifications. By requiring advance notice of other proposed business, these
procedures will provide our board of directors with an opportunity to inform
stockholders of any business proposed to be conducted at a meeting, together
with any recommendations as to the board of directors' position on action to be
taken on such business. This should allow stockholders to better decide whether
to attend a meeting or to grant a proxy for the disposition of any such
business.
Dilution
Our certificate of incorporation provides that our board of directors is
authorized to create and issue, whether or not in connection with the issuance
and sale of any of its stock or other securities or property, rights entitling
the holders to purchase from us shares of stock or other securities of us or of
any other corporation. Our board of directors is authorized to issue these
rights even though the creation and issuance of these rights could have the
effect of discouraging third parties from seeking, or impairing their right to
seek, to:
(1) acquire a significant portion of our outstanding securities;
(2) engage in any transaction which might result in a change of control
of the corporation; or
(3) enter into any agreement, arrangement or understanding with another
party to accomplish these transactions or for the purpose of acquiring,
holding, voting or disposing of any of our securities.
Amendments
Our certificate of incorporation and by-laws provide that we may amend,
alter, change or repeal any provision contained in our certificate of
incorporation or a preferred stock designation. However, the affirmative vote
of the holders of at least 80% of the voting power of the then outstanding
voting stock, voting together as a single class, is required to amend, repeal
or adopt any provision inconsistent with certain provisions our certificate of
incorporation, including the provisions discussed above relating to the
classification of our board of directors, prohibiting stockholder action by
written consent, and prohibiting the calling of special meetings by
stockholders.
Our by-laws may be amended by either the holders of 80% of the voting power
of the voting stock or by the majority of the board; but the board may alter,
amend or repeal or adopt new by-laws in conflict with some of these provisions
by a two-thirds vote of the entire board.
Rights Plan
Rights
Our board of directors has declared a dividend of one right for each
outstanding share of common stock and each outstanding share of Class A common
stock. Rights have been issued in connection with each outstanding share of
common stock and Class A common stock; and rights will be issued in connection
with
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common stock and Class A common stock issued subsequently until the
distribution date, and, in certain circumstances, for common stock and Class A
common stock issued after the distribution date referred to below. Each right,
when it becomes exercisable as described below, will entitle the registered
holder to purchase from us one one-thousandth of a share of Series A
Participating Cumulative Preferred Stock at a price of $110.00 per one one-
thousandth of a share, subject to adjustment in certain circumstances. The
description and terms of the rights are set forth in a rights agreement between
us and the rights agent named therein. The rights will not be exercisable until
the distribution date and will expire on the tenth annual anniversary of the
rights agreement, unless earlier redeemed by us. Until a right is exercised,
the holder, as such, will have no rights as our stockholder, including the
right to vote or to receive dividends.
Distribution Date
Under the rights agreement, the "distribution date" is the earlier of:
(1) such time as we learn that a person or group, including any
affiliate or associate of such person or group, has acquired, or has
obtained the right to acquire, beneficial ownership of more than 15% of our
outstanding voting securities (such person or group being an "acquiring
person"), subject to the exceptions relating to Bell South, Bell Atlantic,
GTE and Berkshire Fund IV Investment Corp., Berkshire Investors LLC and
Berkshire Partners LLC (collectively, the "Berkshire group"), unless
provisions preventing accidental triggering of the distribution of the
rights apply, and
(2) the close of business on such date, if any, as may be designated by
our board of directors following the commencement of, or first public
disclosure of an intent to commence, a tender or exchange offer for more
than 15% or more of the outstanding shares of voting securities.
Each member of the Berkshire group will not otherwise be deemed an acquiring
person if the aggregate ownership interest of the Berkshire group does not
exceed the greater of:
(a) the aggregate ownership interest of the Berkshire group upon the
execution of the rights agreement, reduced by an amount equal to any
disposition of voting securities following the date the rights agreement is
executed and
(b) 15% of the outstanding voting securities.
Triggering Event and Effect of Triggering Event
When there is an acquiring person, the rights will entitle each holder,
other than such acquiring person, of a right to purchase, at the purchase
price, that number of one one-thousandths of a preferred share equivalent to
the number of shares of common stock that at the time of such event would have
a market value of twice the purchase price.
If we are acquired in a merger or other business combination by an acquiring
person or an affiliate or associate of an acquiring person that is a publicly
traded corporation, or if 50% or more of our assets or assets representing 50%
or more of our revenues or cash flow are sold, leased, exchanged or otherwise
transferred to
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an acquiring person or an affiliate or associate of an acquiring person that is
a publicly traded corporation, each right will entitle its holder, other than
rights beneficially owned by such acquiring person, to purchase, for the
purchase price, that number of common shares of such corporation which at the
time of the transaction would have a market value or, in some cases, book value
of twice the purchase price. If we are acquired in a merger or other business
combination by an acquiring person or an affiliate or associate of an acquiring
person that is not a publicly traded entity, or if 50% or more of our assets or
assets representing 50% or more of our revenues or cash flow are sold, leased,
exchanged or otherwise transferred to an acquiring person or affiliate or
associate of an acquiring person that is not a publicly traded entity, each
right will entitle its holder to purchase for the purchase price, at such
holder's option:
(1) that number of shares of the surviving corporation, which could be
us, in the transaction with such entity, which at the time of the
transaction would have a book value of twice the purchase price,
(2) that number of shares of the ultimate parent of or entity
controlling such surviving corporation which at the time of the transaction
would have a book value of twice the purchase price or
(3) if such entity has an affiliate which has publicly traded common
shares, that number of common shares of such affiliate which at the time of
the transaction would have a market value of twice the purchase price.
Any rights that are at any time beneficially owned by an acquiring person,
or any affiliate or associate of an acquiring person, will be null and void and
nontransferable, and any holder of any such right will be unable to exercise or
transfer any such right.
Redemption
At any time prior to the earlier of (1) such time as a person or group
becomes an acquiring person and (2) the expiration date, our board of directors
may redeem the rights in whole, but not in part, at a price, in cash or common
stock or other securities of ours deemed by our board of directors to be at
least equivalent in value, of $.01 per right, which amount shall be subject to
adjustment as provided in the rights agreement. Immediately upon the action of
our board of directors ordering the redemption of the rights, and without any
further action and without any notice, the right to exercise the rights will
terminate and the only right of the holders of rights will be to receive the
redemption price.
In addition, at any time after there is an acquiring person, our board of
directors may elect to exchange each right for consideration per right
consisting of one-half of the securities that would be issuable at such time
upon exercise of one right under the terms of the rights agreement.
Amendment
At any time prior to the distribution date, we may, without the approval of
any holder of any rights, supplement or amend any provision of the rights
agreement, including the date on which the expiration date or distribution date
shall occur, the definition of acquiring person, the time during which the
rights may be redeemed or the terms of the preferred shares, except that no
supplement or amendment shall be made which reduces the redemption price other
than under certain adjustments therein.
Certain Effects of the Rights Plan
The rights plan is designed to protect our stockholders in the event of
unsolicited offers to acquire us and other coercive takeover tactics which, in
the opinion of our board of directors, could impair its ability to represent
stockholder interests. The provisions of the rights plan may render an
unsolicited takeover of us more difficult or less likely to occur or might
prevent such a takeover, even though such takeover may offer our stockholders
the opportunity to sell their stock at a price above the prevailing market rate
and may be favored by a majority of our stockholders.
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Section 203 of the Delaware General Corporation Law
Section 203 of the Delaware General Corporation Law prohibits certain
transactions between a Delaware corporation and an "interested stockholder",
which is defined as a person who, together with any affiliates and/or
associates of such person, beneficially owns, directly or indirectly, 15% or
more of the outstanding voting shares of a Delaware corporation. This provision
prohibits certain business combinations between an interested stockholder and a
corporation for a period of three years after the date the interested
stockholder acquired its stock, unless:
(1) the business combination is approved by the corporation's board of
directors prior to the date the interested stockholder acquired shares;
(2) the interested stockholder acquired at least 85% of the voting stock
of the corporation in the transaction in which it became an interested
stockholder; or
(3) the business combination is approved by a majority of the board of
directors and by the affirmative vote of two-thirds of the outstanding
voting stock owned by disinterested stockholders at an annual or special
meeting.
A business combination is defined broadly to include mergers,
consolidations, sales or other dispositions of assets having an aggregate value
of 10% or more of the consolidated assets of the corporation, and certain
transactions that would increase the interested stockholder's proportionate
share ownership in the corporation. A Delaware corporation, under a provision
in its certificate of incorporation or by-laws, may elect not to be governed by
Section 203 of the Delaware General Corporation Law. We are subject to the
restrictions imposed by Section 203.
Under certain circumstances, Section 203 makes it more difficult for a
person who could be an "interested stockholder" to effect various business
combinations with a corporation for a three-year period. It is anticipated that
the provisions of Section 203 of the Delaware General Corporation Law may
encourage companies interested in acquiring us to negotiate in advance with the
board of directors, since the stockholder approval requirement would be avoided
if a majority of the directors then in office approves, prior to the date on
which a stockholder becomes an interested stockholder, either the business
combination or the transaction which results in the stockholder becoming an
interested stockholder.
Limitations of Directors' Liability
Our certificate of incorporation provides that none of our directors will be
personally liable to us or our stockholders for monetary damages for breach of
fiduciary duty as a director except for liability:
(1) for any breach of the director's duty of loyalty to us or our
stockholders,
(2) for acts of omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
(3) under Section 174 of the Delaware General Corporation Law, or
(4) for any transaction from which the director derived an improper
personal benefit.
The effect of these provisions will be to eliminate our rights and the
rights of our stockholders (through stockholders' derivatives suits on behalf
of us) to recover monetary damages against a director for breach of fiduciary
duty as a director (including breaches resulting from grossly negligent
behavior), except in the situations described above. These provisions will not
limit the liability of directors under federal securities laws and will not
affect the availability of equitable remedies such as an injunction or
rescission based upon a director's breach of his duty of care.
Transfer Agent
The Transfer Agent and Registrar for the common stock is ChaseMellon
Shareholder Services, L.L.C.
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DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock
or common stock. Warrants may be issued independently or together with debt
securities, preferred stock or common stock offered by any prospectus
supplement and may be attached to or separate from any such offered securities.
Each series of warrants will be issued under a separate warrant agreement to be
entered into between us and a bank or trust company, as warrant agent. The
warrant agent will act solely as our agent in connection with the warrants and
will not assume any obligation or relationship of agency or trust for or with
any holders or beneficial owners of warrants. The following summary of certain
provisions of the warrants does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the provisions of the warrant
agreement that will be filed with the SEC in connection with the offering of
such warrants.
Debt Warrants
The prospectus supplement relating to a particular issue of debt warrants
will describe the terms of such debt warrants, including the following: (a) the
title of such debt warrants; (b) the offering price for such debt warrants, if
any; (c) the aggregate number of such debt warrants; (d) the designation and
terms of the debt securities purchasable upon exercise of such debt warrants;
(e) if applicable, the designation and terms of the debt securities with which
such debt warrants are issued and the number of such debt warrants issued with
each such debt security; (f) if applicable, the date from and after which such
debt warrants and any debt securities issued therewith will be separately
transferable; (g) the principal amount of debt securities purchasable upon
exercise of a debt warrant and the price at which such principal amount of debt
securities may be purchased upon exercise (which price may be payable in cash,
securities, or other property); (h) the date on which the right to exercise
such debt warrants shall commence and the date on which such right shall
expire; (i) if applicable, the minimum or maximum amount of such debt warrants
that may be exercised at any one time; (j) whether the debt warrants
represented by the debt warrant certificates or debt securities that may be
issued upon exercise of the debt warrants will be issued in registered or
bearer form; (k) information with respect to book-entry procedures, if any; (1)
the currency or currency units in which the offering price, if any, and the
exercise price are payable; (m) if applicable, a discussion of material United
States federal income tax considerations; (n) the antidilution provisions of
such debt warrants, if any; (o) the redemption or call provisions, if any,
applicable to such debt warrants; and (p) any additional terms of such debt
warrants, including terms, procedures, and limitations relating to the exchange
and exercise of such debt warrants.
Stock Warrants
The prospectus supplement relating to any particular issue of preferred
stock warrants or common stock warrants will describe the terms of such
warrants, including the following: (a) the title of such warrants; (b) the
offering price for such warrants, if any; (c) the aggregate number of such
warrants; (d) the designation and terms of the common stock or preferred stock
purchasable upon exercise of such warrants; (e) if applicable, the designation
and terms of the offered securities with which such warrants are issued and the
number of such warrants issued with each such offered security; (f) if
applicable, the date from and after which such warrants and any offered
securities issued therewith will be separately transferable; (g) the number of
shares of common stock or preferred stock purchasable upon exercise of a
warrant and the price at which such shares may be purchased upon exercise; (h)
the date on which the right to exercise such warrants shall commence and the
date on which such right shall expire; (i) if applicable, the minimum or
maximum amount of such warrants that may be exercised at any one time; (j) the
currency or currency units in which the offering price, if any, and the
exercise price are payable, (k) if applicable, a discussion of material United
States federal income tax considerations; (l) the antidilution provisions of
such warrants, if any; (m) the redemption or call provisions, if any,
applicable to such warrants; and (n) any additional terms of such warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such warrants.
24
SELLING STOCKHOLDERS
The selling stockholders may be our directors, executive officers, former
directors, employees or certain holders of our common stock. The prospectus
supplement for any offering of the common stock by selling stockholders will
include the following information:
--the names of the selling stockholders;
--the number of shares held by each of the selling stockholders;
--the percentage of the common stock held by each of the selling
stockholders; and
--the number of shares of the common stock offered by each of the
selling stockholders.
25
PLAN OF DISTRIBUTION
The distribution of the securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each prospectus
supplement will describe the method of distribution of the securities offered
therein.
Our company and any selling stockholders may sell securities directly,
through agents designated from time to time, through underwriting syndicates
led by one or more managing underwriters or through one or more underwriters
acting alone. The selling stockholders may also distribute securities through
one or more special purpose trusts, which will enter into forward purchase
arrangements with selling stockholders and distribute their own securities.
Each prospectus supplement will describe the terms of the securities to which
such prospectus supplement relates, the names of the selling stockholders and
the number of shares of common stock to be sold by each, the name or names of
any underwriters or agents with whom we or the selling stockholders, or both,
have entered into arrangements with respect to the sale of such securities, the
public offering or purchase price of such securities and the net proceeds we or
the selling stockholders will receive from such sale. In addition, each
prospectus supplement will describe any underwriting discounts and other items
constituting underwriters' compensation, any discounts and commissions allowed
or paid to dealers, if any, any commissions allowed or paid to agents, and the
securities exchange or exchanges, if any, on which such securities will be
listed. Dealer trading may take place in certain of the securities, including
securities not listed on any securities exchange.
If so indicated in the applicable prospectus supplement, we or the selling
stockholders, or both, will authorize underwriters or agents to solicit offers
by certain institutions to purchase securities from us or the selling
stockholders, or both, pursuant to delayed delivery contracts providing for
payment and delivery at a future date. Institutions with which such contracts
may be made include, among others:
--commercial and savings banks;
--insurance companies;
--pension funds;
--investment companies;
--educational and charitable institutions.
In all cases, such institutions must be approved by us or the selling
stockholders, or both. Unless otherwise set forth in the applicable prospectus
supplement, the obligations of any purchaser under any such contract will not
be subject to any conditions except that (i) the purchase of the securities
will not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject and (ii) if the securities are
also being sold to underwriters acting as principals for their own account, the
underwriters will have purchased such securities not sold for delayed delivery.
The underwriters and such other persons will not have any responsibility in
respect of the validity or performance of such contracts.
Any selling stockholder, underwriter or agent participating in the
distribution of the securities may be deemed to be an underwriter, as that term
is defined in the Securities Act, of the securities so offered and sold and any
discounts or commissions received by them, and any profit realized by them on
the same or resale of the securities may be deemed to be underwriting discounts
and commissions under the Securities Act.
Certain of any such underwriters and agents, including their associates, may
be customers of, engage in transactions with and perform services for us and
our subsidiaries in the ordinary course of business. One or more of our
affiliates may from time to time act as an agent or underwriter in connection
with the sale of the securities to the extent permitted by applicable law. The
participation of any such affiliate in the offer and sale of the securities
will comply with Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. regarding the offer and sale of securities of an
affiliate.
26
Except as indicated in the applicable prospectus supplement, the securities
are not expected to be listed on a securities exchange, except for the common
stock, which is listed on The Nasdaq Stock Market's National Market, and any
underwriters or dealers will not be obligated to make a market in securities.
We cannot predict the activity or liquidity of any trading in the securities.
We will not receive any proceeds from the sale of shares of common stock by
the selling stockholders. We will, however, bear certain expenses in connection
with the registration of the securities being offered under this prospectus by
the selling stockholders, including all costs incident to the offering and sale
of the securities to the public other than any commissions and discounts of
underwriters, dealers or agents and any transfer taxes.
VALIDITY OF SECURITIES
The validity of the securities offered hereby will be passed upon for us by
Cravath, Swaine & Moore, New York, New York and for the underwriters or agents,
if any, by Latham & Watkins, New York, New York.
EXPERTS
Our consolidated financial statements at December 31, 1998 and 1999, and for
each of the three years in the period ended December 31, 1999 have been
incorporated by reference in this prospectus in reliance upon the report of
KPMG LLP, independent certified public accountants incorporated by reference in
this prospectus, and upon the authority of said firm as experts in accounting
and auditing.
The financial statements of the Powertel Tower Operations at December 31,
1998, and for the year then ended, have been incorporated by reference in this
prospectus in reliance upon the report of KPMG LLP, independent certified
public accountants, incorporated by reference in this prospectus, and upon the
authority of said firm as experts in accounting and auditing.
27
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No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
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TABLE OF CONTENTS
Prospectus Supplement
Page
----
About This Prospectus Supplement........................................... i
The Company................................................................ S-1
The Offering............................................................... S-3
Risk Factors............................................................... S-4
Use of Proceeds............................................................ S-13
Price Range of Common Stock................................................ S-14
Dividend Policy............................................................ S-15
Underwriting............................................................... S-16
Prospectus
About This Prospectus...................................................... 1
Where You Can Find More Information........................................ 1
Incorporation of Information We File with the SEC.......................... 1
Forward-Looking Statements................................................. 2
The Company................................................................ 3
Ratio of Earnings to Fixed Charges......................................... 4
Use of Proceeds............................................................ 4
Description of Debt Securities............................................. 5
Description of Capital Stock............................................... 15
Description of Warrants.................................................... 24
Selling Stockholders....................................................... 25
Plan of Distribution....................................................... 26
Validity of Securities..................................................... 27
Experts.................................................................... 27
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12,000,000 Shares
Crown Castle International Corp.
Common Stock
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[LOGO OF CROWN CASTLE INTERNATIONAL]
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Goldman, Sachs & Co.
Representative of the Underwriters
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