0000912057-01-535139.txt : 20011019
0000912057-01-535139.hdr.sgml : 20011019
ACCESSION NUMBER: 0000912057-01-535139
CONFORMED SUBMISSION TYPE: F-3/A
PUBLIC DOCUMENT COUNT: 11
FILED AS OF DATE: 20011011
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: TRICOM SA
CENTRAL INDEX KEY: 0001052124
STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812]
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: F-3/A
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-65842
FILM NUMBER: 1757022
BUSINESS ADDRESS:
STREET 1: AVE LOPE DE VEGA NO 95
CITY: SANTO DOMINGO
STATE: G8
BUSINESS PHONE: 8094766000
MAIL ADDRESS:
STREET 1: AVE LOPE DE VEGA NO 95
CITY: SANTO DOMINGO
STATE: G8
ZIP: 00000
F-3/A
1
a2060685zf-3a.txt
FORM 3/A
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 11, 2001 REGISTRATION NO. 333-65842
=================================================================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
AMENDMENT NO. 1 TO
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------------
TRICOM, S.A.
(Exact name of Registrant as specified in its charter)
DOMINICAN REPUBLIC NOT APPLICABLE NOT APPLICABLE
(State or other jurisdiction of (I.R.S. Employer (Translation of Registrant's name into
incorporation or organization) Identification Number) English)
TRICOM, S.A.
AVE. LOPE DE VEGA NO. 95
SANTO DOMINGO, DOMINICAN REPUBLIC
TELEPHONE: (809) 476-4000
(Address, including zip code, and telephone number of Registrant's principal
executive offices)
CT CORPORATION SYSTEM
111 EIGHTH AVENUE, 13TH FLOOR
NEW YORK, NEW YORK 10011
TELEPHONE: (212) 894-8940
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-----------------------------------------
Copies to:
STEVEN L. WASSERMAN, ESQ.
PIPER MARBURY RUDNICK & WOLFE LLP
1251 Avenue of the Americas
New York, New York 10020
TELEPHONE: (212) 835-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
-----------------------------
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to completion, dated October 11, 2001
PROSPECTUS
[TRICOM LOGO]
RIGHTS OFFERING
[______________] AMERICAN DEPOSITARY SHARES EACH REPRESENTING ONE SHARE
OF CLASS A COMMON STOCK AT $[________] PER ADS
We are offering up to o shares of Class A common stock in the form of
American depositary shares or ADSs. We are offering our ADSs in a rights
offering. You will receive o subscription rights for each ADS that you owned on
________, 2001, the record date. You will not receive any fractional rights.
Each subscription right entitles you to purchase one ADS for a subscription
price of $[________] per ADS. If you fully exercise your rights and other
shareholders do not fully exercise their rights, you may elect to purchase
additional shares on a pro rata basis with other oversubscribing shareholders.
This is your oversubscription privilege.
Our ADSs are listed on the New York Stock Exchange under the symbol
"TDR". On [____________ ___], 2001, the last reported sale price for our ADSs as
reported by the NYSE was $[_______] per ADS.
The rights are exercisable beginning on the date of this prospectus and
continuing until [__________, ____], 2001 at 5:00 p.m., New York City time. We
have the option of extending the expiration date.
The rights may not be sold or transferred. The rights will not be
listed for trading on any stock exchange.
The holders of our Class B stock also will receive subscription rights
on the same terms and conditions as the holders of our Class A common stock. Our
Class B stock is identical in all respects to our Class A common stock, except
that each share of Class B stock has ten votes per share. GFN, a major
shareholder of TRICOM which is controlled by Manuel Arturo Pellerano Pena, our
Chairman of the Board of Directors and Chief Executive Officer, and members of
his family, already has advanced to us $40 million on an interest free basis
which will be used to subscribe for ADSs on the same terms and conditions
offered to all shareholders.
WE URGE YOU TO READ CAREFULLY THE "RISK FACTORS" SECTION BEGINNING ON
PAGE 10 WHERE WE DESCRIBE SPECIFIC RISKS ASSOCIATED WITH AN INVESTMENT IN US AND
OUR SECURITIES BEFORE YOU MAKE YOUR INVESTMENT DECISION.
SUBSCRIPTION PRICE DISCOUNT AND COMMISSIONS OUR PROCEEDS
Per Share Total. . . . . . . . $[_____] None $[_____]
Total. . . . . . . . . . . . . $[_____] None $[_____]
Subscription Agent: The Bank of New York
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is ____________.
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY............................................................................................ 1
RISK FACTORS.................................................................................................. 11
FORWARD LOOKING STATEMENTS.................................................................................... 23
RECENT DEVELOPMENTS........................................................................................... 24
CAPITALIZATION................................................................................................ 27
PRICE RANGE OF AMERICAN DEPOSITARY SHARES AND DIVIDEND POLICY................................................. 28
USE OF PROCEEDS............................................................................................... 29
THIS OFFERING................................................................................................. 30
DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS................................................................... 38
TAX CONSIDERATIONS OF THE RIGHTS OFFERING..................................................................... 44
TAX CONSIDERATIONS OF OWNING SHARES........................................................................... 46
LEGAL MATTERS................................................................................................. 50
EXPERTS....................................................................................................... 50
WHERE YOU CAN FIND MORE INFORMATION........................................................................... 50
ii
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS. WE
URGE YOU TO READ THE ENTIRE PROSPECTUS CAREFULLY. WE ALSO ENCOURAGE YOU TO
REVIEW THE FINANCIAL STATEMENTS AND OTHER INFORMATION PROVIDED IN REPORTS AND
OTHER DOCUMENTS THAT WE FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, WHICH
ARE INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AS DESCRIBED UNDER "WHERE YOU
CAN FIND MORE INFORMATION" ON THE INSIDE BACK COVER OF THIS PROSPECTUS.
OUR BUSINESS
OVERVIEW
We are a leading full service communications service provider in the
Dominican Republic. We offer local, long distance, mobile, Internet and
broadband data transmission services. Our wireless network covers approximately
85% of the population in the Dominican Republic. Our network providing local
service is 100% digital, the only such network in the Dominican Republic.
Telecommunications networks that employ digital technology can transmit higher
quality signals at lower cost. We also own interests in undersea fiber optic
cable networks that connect and transmit telecommunications signals between
Central America, the Caribbean, the United States and Europe. Fiber optic cable
is composed of glass strands and transmits telecommunications signals in the
form of light. Through our subsidiary, TRICOM USA, Inc., we own
telecommunication switching facilities in New York, Miami and Puerto Rico. Using
these facilities, we originate, transport and terminate international
long-distance traffic. We are one of the few Latin American long distance
carriers that is licensed by the U.S. Federal Communications Commission to use
switching facilities that it operates to connect long distance traffic.
Since our inception in 1992, we have diversified our operations, and
have captured a significant share in key markets entirely through internal
growth. In 1999, we carried approximately 40% of the southbound voice and data
traffic from the United States to the Dominican Republic. Since we introduced
wireless services in 1995, we have achieved an approximate 40% market share as
of year-end 2000, based upon data published by the Instituto Dominicano de las
Telecomunicaciones, or INDOTEL, the Dominican agency that regulates
telecommunications. From 1996 to 2000, we increased revenues from $79.1 million
to $224.3 million , representing a compounded annual growth rate of 30% .
We were the leader in the Dominican Republic for 1998 and 1999 in net
new customer additions in the market for local service and in 1998 for net new
customer additions for mobile services, based upon data published by INDOTEL.
Our recent success is reflected in the following period-to-period changes in
operating statistics from 1999 to 2000:
o Local access lines increased 24.7% to 148,312;
o Cellular and PCS subscribers increased 61.9% to 284,991; and
o International long distance traffic increased 65.6% to 597.2
million minutes.
Our growth has resulted from aggressive marketing, excellent customer
service, rapid deployment of state-of-the-art technologies and the use of highly
integrated management information systems. Our experienced core management team,
in place since 1996, has successfully executed our business strategy,
implementing our entry into new markets and introducing new product offerings.
We have built a strong brand name in the Dominican Republic. Today, our wireless
network covers approximately seven million people. In 1999, as part of our local
services product offering, we launched a wireless local loop system in areas of
Santo Domingo and Santiago, the two largest cities in the Dominican Republic, as
well as in nine other cities. Using wireless local loop technology, we can
connect a customer within 48 hours, substantially less time than required for
wireline installation.
We plan to establish in selected Central American markets a mobile
service network targeted at business customers that will provide uninterrupted
connection throughout the region without any change
in service provider or equipment. We will deploy an advanced integrated
radio-telephone and dispatch communications system known as IDEN(R), developed
by Motorola. This technology enables us to use spectrum efficiently and offer
multiple wireless services on one digital handset. We plan to capitalize on the
increasing demand by business customers for a product that provides advanced
mobile services and a complete solution for their intra-regional communication
needs.
We have purchased a 51% interest in a Panamanian company, Cellular
Communications of Panama, S.A., now TRICOM Panama, S.A., which owns the
frequency rights for 107 channels of 25 MHz each. TRICOM Panama has
approximately 1,600 analog mobile users. These frequencies will give us access
to nationwide coverage, covering a population of approximately 2.81 million
people. Currently, we are constructing an iDEN network, at a cost as of June 30,
2001 of approximately $30 million, in Panama City and Colon, the two largest
cities in Panama, and in important transportation corridors in other parts of
the country. Our expected completion date for this phase of the buildout is the
fourth quarter of 2001. We will offer digital mobile integrated services,
including two-way radio, paging and interconnect services.
In 2000, we were awarded, in a government auction, radio frequency
rights in Guatemala to 172 channels of 25 MHz, providing us with nationwide
coverage. We also have acquired in El Salvador radio frequency rights for an
aggregate of 185 channels of 25 MHz, that provides spectrum to operate our iDEN
network. We currently do not intend to develop a network in either Guatemala or
El Salvador in 2001.
RECENT DEVELOPMENTS
On July 16, 2001, we entered into a definitive agreement to acquire
Telecable Nacional, C. por A., the largest multi-channel system operator in the
Dominican Republic's pay-TV market. The transaction will be valued at
approximately $1,130 per subscriber equivalent or $63.7 million, payable $41.8
million in cash and with 3,375,000 shares of our Class A common stock. The
transaction is subject to customary closing conditions, including the receipt of
regulatory and third party consents, and is expected to close in October 2001.
Telecable is the leader of the Dominican cable TV market with a 43%
market share, serving approximately 52,000 residential subscribers with
approximately 150,000 homes passed and an additional 8,000 commercial customers.
Telecable operates primarily in the capital city of Santo Domingo, where, based
on market information available to us, we believe it has a 90% market share, and
the resort cities of Puerto Plata and La Romana. Approximately 70% of
Telecable's cable network has been recently upgraded to 750 MHz; and it is
expected that the network will be fully upgraded by 2002. For the year ended
December 31, 2000, Telecable had revenues of approximately $17.0 million, and
earnings before taxes of approximately $2.9 million .
-----------------------------------
We are incorporated in the Dominican Republic. Our operations are
headquartered at Ave. Lope de Vega No. 95, Santo Domingo, Dominican Republic and
our telephone number at the above address is 809-476-4000. Our website address
is www.tricom.net. The information on our website is not part of this
prospectus.
QUESTIONS AND ANSWERS ABOUT THIS OFFERING
WHAT IS A RIGHT?
You will receive , at no charge, o rights for every ADS or share of
Class A common stock you own as of the record date. Rights enable you
to purchase additional ADSs for $o per ADS. For
-2-
example, if you owned 100 ADSs on the record date, and receive ___
rights, you will have the right to purchase ___ ADSs for $___ per
share. This is your basic subscription privilege.
WHAT IS THE RECORD DATE?
[_______], 2001 at 5:00 p.m., New York City time. Only our shareholders
as of the record date will receive subscription rights . This includes
both holders of Class A common stock and of Class B stock, which is
identical in all respects to our Class A common stock, except that each
share of Class B stock has ten votes per share. At this time, the only
holder of shares of Class A common stock is the depositary, The Bank of
New York. We have instructed The Bank of New York to make these rights
available to holders of our ADSs.
WHY IS TRICOM OFFERING THE RIGHTS?
We are seeking additional equity. GFN, one of our major shareholders,
has committed to provide to us $40 million in additional equity. Our
board of directors has chosen to give you the opportunity to buy more
shares on the same basis as GFN. GFN already has advanced funds to us
on an interest-free basis which will be used to subscribe for ADSs on
the same terms and conditions offered to all shareholders. The shares
to be received by GFN, however, will not be registered under the U.S.
Securities Act of 1933.
HAS THE BOARD OF DIRECTORS MADE A RECOMMENDATION REGARDING THIS OFFERING?
Our board of directors makes no recommendation to you about whether
you should exercise any rights in this offering.
HOW SOON MUST YOU ACT?
The rights expire on [__________], 2001 at 5:00 p.m., New York City
time. The subscription agent must actually receive all required
documents and payments before that date and time.
MAY I SELL OR GIVE AWAY MY RIGHTS?
No. The rights may not be sold or otherwise transferred. The rights
will not be listed for trading on any stock exchange.
WHAT IS THE OVERSUBSCRIPTION PRIVILEGE?
If you fully exercise your basic subscription privilege, the
oversubscription privilege entitles you to subscribe for additional
ADSs at the same subscription price of $___ per share that applies
to your basic subscription privilege.
WHAT ARE THE LIMITATIONS ON THE OVERSUBSCRIPTION PRIVILEGE?
We will be able to satisfy your exercise of the oversubscription
privilege only if our other shareholders receiving rights do not
elect to purchase all of the shares offered under their basic
subscription privilege. You may purchase a percentage of the
unsubscribed shares equal to your percentage ownership of our ADSs
and Class B stock on the record date.
AM I REQUIRED TO SUBSCRIBE IN THIS OFFERING?
No. You are not required to exercise any rights, purchase any new
shares or otherwise take any action in response to this offering.
-3-
WHAT WILL HAPPEN IF I DO NOT EXERCISE MY RIGHTS?
You will retain your current number of shares even if you do not
exercise your rights. However, if you do not exercise your rights
and other shareholders do, the percentage of TRICOM that you own
will diminish. In addition, the subscription price is less than the
net book value per share before the offering and the effect of the
issuance of the ADSs in this offering will be to reduce net book
value per share.
MAY I CHANGE OR CANCEL MY EXERCISE OF RIGHTS AFTER I SEND IN THE REQUIRED FORMS?
No. Once you send in your subscription certificate and payment, you
cannot revoke the exercise of your rights, even if you later learn
information about us that you consider to be unfavorable.
MAY WE EXTEND, WITHDRAW OR AMEND THIS OFFERING?
We have the option of extending this offering and the subscription
period, although we currently do not intend to do so. We also
reserve the right to withdraw, terminate or amend this offering at
any time for any reason.
WILL MY MONEY BE RETURNED IF THIS OFFERING IS AMENDED, WITHDRAWN OR TERMINATED?
If we terminate or cancel this offering, or any submitted
subscriptions no longer comply with the amended terms of this
offering, we will promptly return your subscription price, but
without any payment of interest.
WHAT ARE THE U.S. FEDERAL INCOME AND DOMINICAN TAX CONSEQUENCES OF EXERCISING MY
RIGHTS?
The receipt and exercise of your rights are intended to be
nontaxable under U.S. federal and Dominican law.
WHEN WILL I RECEIVE MY NEW SHARES?
If you purchase ADSs through the rights offering, you will receive
certificates representing those shares as soon as practicable after
[________ __], 2001.
HOW MUCH MONEY WILL WE RECEIVE FROM THE RIGHTS OFFERING?
Our gross proceeds from the rights offering depend on the number of
shares that are purchased. If all rights are exercised, then we
will receive net proceeds of approximately $[__________] in cash,
including funds previously advanced to us by GFN, one of our major
shareholders.
HOW WILL WE USE THE PROCEEDS FROM THE RIGHTS OFFERING?
We will use any proceeds generated from the exercise of rights in
this rights offering for general corporate purposes, including to
fund, in part, our acquisition of Telecable and for working
capital.
HOW MANY SHARES WILL BE OUTSTANDING AFTER THE RIGHTS OFFERING?
Each ADS represents one share of our Class A common stock. The
number of shares of our Class A common stock that will be
outstanding after the rights offering depends on the number of
shares that are purchased. If we sell all of the shares offered by
this prospectus, then we will issue [_____________] new ADSs,
representing the same number of shares of Class A
-4-
common stock, and then we will have [_________] shares of Class A
common stock outstanding. Even if no other shareholders exercise
their subscription rights, GFN has committed to purchase a total of
approximately [____________] ADSs from us in the rights offering,
in which case we will have [_____________] shares of Class A common
stock outstanding after the rights offering.
WHAT SHOULD I DO IF I WANT TO PARTICIPATE IN THIS OFFERING, BUT MY SHARES ARE
HELD IN THE NAME OF MY BROKER, DEALER OR OTHER NOMINEE?
If you hold your ADSs through a broker, dealer or other nominee,
for example, through a custodian bank, then your broker, dealer or
other nominee is the record holder of the shares you own. This
record holder must exercise the rights on your behalf for the
shares you wish to purchase. Therefore, you will need to have your
record holder act for you.
If you wish to participate in this offering and purchase shares,
please contact the record holder of your shares promptly. To
indicate your decision with respect to your rights, you should
complete and return to your record holder the form entitled
"Beneficial Owner Election Form." You should receive this form from
your record holder with the other offering materials.
WHAT FEES OR CHARGES APPLY IF I PURCHASE SHARES?
We are not charging any fee or sales commission to issue rights to
you or to issue ADSs to you if you exercise rights. If you exercise
rights through a record holder of your shares, you are responsible
for paying any fees that person may charge.
HOW DO I EXERCISE MY RIGHTS? WHAT FORMS AND PAYMENT ARE REQUIRED TO PURCHASE
SHARES?
As a record holder of our ADSs, on [____________,] 2001, you are
receiving this prospectus, a subscription certificate evidencing
your subscription rights and instructions on how to purchase
shares. If you wish to participate in this offering, then, before
your rights expire, you must:
o deliver the subscription price by certified or cashier's
check or bank draft drawn upon a U.S. bank, or a U.S.
Postal money order, or a personal check that clears
before expiration of the rights; and
o deliver a properly completed subscription certificate.
TO WHOM SHOULD I SEND FORMS AND PAYMENTS?
You should send your subscription documents and payment by mail or
courier service to:
-5-
THE BANK OF NEW YORK
BY MAIL: BY HAND:
Tender & Exchange Department The Bank of New York
P.O. Box 11248 Tender & Exchange Department
Church Street Station c/o The Depository Trust Company
New York, New York 10286-1248 55 Water Street
Jenrette Park Entrance
New York, New York 10041
BY OVERNIGHT COURIER: BY FACSIMILE:
The Bank of New York (For Eligible Institutions Only)
Tender & Exchange Department (973)-247-4077
385 Rifle Camp Road
West Paterson, New Jersey 07424 FOR CONFIRMATION OF FACSIMILE,
TELEPHONE:
(973)-247-4076
For instructions on how your subscription payment should be sent to
the subscription agent, see "The Offering - Required Forms of
Payment of Subscription Price" on page [____].
WHAT SHOULD I DO IF I HAVE OTHER QUESTIONS?
If you have questions, need additional copies of offering documents
or otherwise need assistance, please contact the information agent
for this offering:
[]
[]
[]
[]
To ask other questions or to receive copies of our recent SEC
filings, you can also contact us by mail or telephone, or refer to
the other sources described under "Where You Can Find More
Information" on the inside back cover of this prospectus.
---------------------------
In this prospectus references to "$," "US$" or "U.S. dollars" are to
United States dollars, and references to "Dominican pesos" or "RD$" are to
Dominican pesos. This prospectus contains translations of certain Dominican
pesos amounts into U.S. dollars at specified rates solely for the convenience of
the reader. These translations should not be construed as representations that
the Dominican peso amounts actually represent such U.S. dollar amounts or could
be converted into U.S. dollars at the rate indicated. The average of prices of
one U.S. dollar quoted by certain private commercial banks or the private market
rate, as reported by Banco Central de la Republica Dominicana on June 29, 2001
was RD$16.85 = US$1.00, the date closest to the date of the most recent
financial information included in this prospectus. The Federal Reserve Bank of
New York does not report a noon buying rate for Dominican pesos. On August 31,
2001, the private market rate was RD$16.84 = US$1.00.
-6-
SUMMARY FINANCIAL DATA
The following table provides summary financial and operating data for
the periods indicated. We have derived the summary financial data for, and as
of, the years ended December 31, 1998, 1999 and 2000 from our consolidated
financial statements, which have been audited by KPMG (member firm of KPMG
International in the Dominican Republic), independent auditors. The summary
consolidated financial data for, and as of, the six months ended June 30, 2000
and 2001 are derived from our unaudited consolidated financial statements and,
in the opinion of management, include all adjustments, consisting only of normal
recurring accruals, that are necessary for a fair presentation of our financial
and operating results for these periods. The summary consolidated financial and
operating data are not necessarily indicative of the results that may be
expected for any future period. You should read the information in the following
tables in conjunction with "Operating and Financial Review and Prospects" and
the consolidated financials included in our Annual Report on Form 20-F for the
year ended December 31, 2000.
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------- -----------------------
1998 1999 2000 2000 2001
STATEMENTS OF OPERATIONS DATA:
Operating revenues:
Toll ................................. $ 17,645 $ 23,118 $ 28,666 $ 13,400 $ 14,446
International ........................ 50,332 60,592 84,187 36,958 39,591
Local service ........................ 11,863 33,299 51,310 24,054 30,377
Data and Internet .................... 1,079 560 3,461 472 3,878
Cellular and PCS ..................... 20,364 26,474 35,796 17,290 18,045
Paging ............................... 4,528 2,696 1,704 912 589
Sale of equipment .................... 4,115 7,690 5,263 3,607 2,186
Installation and activation fees ..... 12,937 15,502 13,749 6,553 6,985
Other ................................ 2,640 889 162 65 374
Total operating revenues ........ 125,501 170,819 224,298 103,311 116,472
Operating costs:
Satellite connections and carrier . 32,309 43,688 68,608 29,317 31,649
Network depreciation ................. 11,382 15,983 29,342 12,875 20,847
Expense in lieu of income taxes(2) ... 9,562 12,764 10,174 5,498 6,480
General and administrative expenses .. 36,139 46,646 63,867 30,079 36,296
Amortization expenses ................ -- -- -- 527 315
Depreciation expense ................. 3,240 4,855 6,824 3,067 4,591
Other ................................ 3,391 5,421 4,462 2,444 2,781
Total operating costs ............. 96,024 129,357 183,276 83,808 102,960
Operating income ..................... 29,478 41,462 41,022 19,503 13,512
Other income (expenses):
Interest expense, net ................ (12,873) (20,041) (30,736) (14,540) (18,944)
Foreign currency exchange gain (loss) 104 (203) (303) (335) (262)
Gain on sale of land or equipment .... -- 898 30 -- --
Other, net ........................... 845 179 (197) (115) (542)
Other expenses, net
(11,924) (19,166) (31,206) (14,991) (18,665)
Earnings before income taxes and
cumulative effect of accounting change 17,554 22,296 9,816 4,512 (5,153)
Income taxes ......................... 352 (142) (588) (270) (101)
-7-
Cumulative effect of accounting change:
Organization costs ................. -- (120) -- -- --
Installation and activation revenues -- -- (16,453) (16,453) --
Net earnings (loss) .................... $ 17,906 $ 22,035 $ (7,226) $ (12,212) $ (5,193)
=============================================================
Basic earnings per common share:
Earnings (loss) before cumulative
effect of accounting change .......... $ 0.78 $ 0.89 $ 0.33 $ 0.16 $ (0.18)
Cumulative effect of accounting change -- -- (0.59) (0.62) --
-------------------------------------------------------------
Net earnings (loss) .................. $ 0.78 $ 0.89 $ (0.26) $ (0.46) $ (0.18)
=============================================================
Average number of common shares
outstanding .......................... 22,945 24,845 27,724 26,603 28,845
=============================================================
AT DECEMBER 31, AT JUNE 30,
-------------------------------------- --------------------------
1998 1999 2000 2000 2001
---- ---- ---- ---- ----
BALANCE SHEET DATA:
Cash and cash equivalents $ 15,377 $ 13,460 $ 18,200 $ 69,723 $ 41,516
Working capital (deficit) (19,600) (83,659) (125,299) (63,061) (129,241)
Property and equipment, net 330,456 455,045 586,224 585,921 626,604
Total assets 444,815 531,478 682,440 646,597 743,778
Long-term debt and capital leases (excluding current
Portion) 200,000 240,413(4) 276,744(4) 246,541(4) 278,610
Total indebtedness 279,257 336,468 398,808 374,749 421,007
Shareholders' equity 127,561 149,869 210,796 223,453 246,149
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------- ---------------------------
1998 1999 2000 2000 2001
---- ---- ---- ---- ----
OTHER FINANCIAL DATA:
Capital expenditures $ 142,101 $ 145,426(4) $ 168,913(4) $ 74,811(4) $ 65,818
Net cash provided by operating activities 26,912 31,526 42,339 26,117 22,038
Net cash used in investing activities (121,171) (64,360) (149,395) (68,001) (66,227)
Net cash provided by financing activities 104,065 30,966 111,796 98,146 67,505
EBITDA(5) $ 53,662 $ 75,063 $ 87,681 $ 41,471 $ 45,746
Ratio of EBITDA to net interest expense 4.2x 3.7x 2.9x 2.9x 2.4x
Ratio of total indebtedness to EBITDA 5.2x 4.5x 4.5x 4.5x 4.6x
OTHER OPERATING DATA:
International minutes (in thousands) 231,075 360,532 597,204 256,568 348,076
Local access lines in service (at period end) 80,616 118,926 148,312 131,334 161,411
Mobile subscribers (at period end) 108,532 176,080 284,991 211,151 302,613
-----------
(1) Except per share information, ratios and Other Operating Data.
(2) Since 1996, we have made payments in lieu of income tax to the
Dominican government, in accordance with the terms of our concession
agreement. These payments represent 10% of gross domestic revenues,
after deducting charges for access to the local network, plus 10% of
net international revenues. Expense in lieu of income taxes also
includes a tax, implemented in 1998, of 2% on international settlement
revenues collected. This tax amounted to $0.3 million in 1998, $0.6
million in 1999 and $0.4 million in 2000.
(3) Effective January 1, 2000, we adopted the U.S. Securities and Exchange
Commission's Staff Accounting Bulletin No. 101, concerning the
recognition of revenue. This pronouncement provides that we recognize
net revenues from installations and activations over the period in
which we retain our clients, which based on our experience is
approximately 35 months. Since we previously recognized these revenues
when they were collected, this change in revenue recognition resulted
in a one-time, non-cash charge to earnings in 2000 of $16,452,799. At
December 31, 2000, deferred revenues for installations and activations
aggregated $14,654,886, which will be recognized as follows: $9,010,741
in 2001; $4,793,662 in 2002; and $850,483 in 2003.
-8-
(4) Includes capital lease obligations incurred during 1999 of $26.2
million and during 2000 of $17.7 million.
(5) EBITDA typically consists of earnings (loss) before interest and other
income and expenses, income taxes and depreciation and amortization. As
described in note 2 we make payments to the Dominican government in
lieu of income taxes. As a result, we calculate EBITDA prior to the
deduction of payments to the Dominican government in lieu of income
taxes. Our calculation of EBITDA may not be comparable to EBITDA
calculated by other companies. We believe that EBITDA is useful to
investors because EBITDA is commonly used in the telecommunications
industry to analyze companies on the basis of operating performance,
leverage and liquidity. However, it does not purport to represent cash
generated or used by operating activities and should not be considered
in isolation or as a substitute for a measure of performance in
accordance with generally accepted accounting principles. For 1999 and
2000, we have also added back to EBITDA amortization of radio frequency
rights of $198,333 and $320,186, respectively.
-9-
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW AND OTHER
INFORMATION IN THIS PROSPECTUS AND IN OUR REPORTS INCORPORATED BY REFERENCE INTO
THIS PROSPECTUS BEFORE DECIDING TO PURCHASE SHARES OF THIS OFFERING.
RISKS RELATING TO OUR CAPITAL STRUCTURE
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR ABILITY TO FUND
EXPANSION AND OUR COMPETITIVE POSITION.
We are highly leveraged. At June 30, 2001, we had outstanding
approximately $421.0 million in aggregate principal amount of indebtedness,
including capital leases. At June 30, 2001, we had approximately $246.1 million
total shareholders' equity.
The degree to which we are leveraged could have important consequences
to us, including the following:
o a substantial portion of our cash flow must be used to pay
interest on our indebtedness. Therefore, our cash flow
available for use in our business will be reduced;
o our high degree of leverage could increase our vulnerability
to changes in general economic conditions;
o our ability to obtain additional financing for working
capital, capital expenditures, acquisitions, general corporate
purposes or other purposes could be impaired;
o we are much more leveraged than our principal competitor,
which may be a competitive disadvantage in our principal
market; and
o our failure to comply with covenants and restrictions
contained in our notes' indenture could lead to a default
which could cause that and other debt to become immediately
payable.
WE MAY NOT BE ABLE TO GENERATE SUFFICIENT CASH FLOW FROM OPERATIONS TO
MEET OUR DEBT SERVICE REQUIREMENTS.
Our ability to pay interest on our indebtedness and meet our debt
service obligations will depend on our future performance, which in turn depends
on successful implementation of our strategy and on financial, competitive,
regulatory, technical and other factors, many of which are beyond our control.
Our interest expense for the six months ended June 30, 2001 was $19.8 million
and our cash flow from operations for the six months ended June 30, 2001 was
$22.0 million. Approximately $157.4 million of our indebtedness will mature
during the 12 months ending June 30, 2002, however most of these borrowings will
be renewed or rolled over at maturity. Our ability to refinance any of this
indebtedness will depend on our financial condition at the time it matures, the
restrictions in the agreements governing our indebtedness and other factors,
including general market and economic conditions. If refinancing were not
possible, we could be forced to dispose of assets at unfavorable prices. In
addition, our inability to refinance these obligations could result in our
defaulting on our other debt obligations.
WE DEPEND ON SHORT-TERM BORROWINGS IN THE DOMINICAN FINANCIAL MARKETS,
WHICH BEAR HIGH INTEREST RATES AND WE CANNOT BE CERTAIN THAT THEY WILL
CONTINUE TO BE AVAILABLE.
We fund a substantial portion of our capital expenditure and working
capital requirements with short-term borrowings in the Dominican financial
markets. As of June 30, 2001, we had $52.7 million of these borrowings, with
interest rates ranging from 24% per annum to 26% per annum. These borrowings
-10-
have maturities ranging up to 180 days and often are payable on demand. However,
our current lenders may be unable or unwilling to lend to us in the future. Even
if these short term borrowings continue to be available to us, due to their
short-term maturities, we may be required to repay them at times when
replacement financing is not available on commercially attractive terms.
RISKS RELATED TO OUR OPERATIONS
OUR PRINCIPAL COMPETITOR IN THE DOMINICAN REPUBLIC, CODETEL, HAS
SUBSTANTIALLY GREATER MARKET SHARE AND RESOURCES, WHICH MAY PREVENT US
FROM MAINTAINING OR INCREASING OUR MARKET SHARE.
We compete primarily with Compania Dominicana de Telefonos C. por A.,
or Codetel, a wholly owned subsidiary of Verizon Communications Inc. Codetel has
an established market presence, networks and resources substantially greater
than ours. More than 75% of the Dominican Republic's local access line customers
are customers of Codetel. The growth of our market share depends upon our
ability to obtain customers in areas that currently are not served, or are
underserved, by Codetel and to convince Codetel customers to either add, or
switch to, the telephony services we offer. If Codetel implements significant
price reductions for particular services we may be forced to reduce our rates in
response in order to remain competitive. In addition, Codetel could expend
significantly greater amounts of capital than are available to us in order to
upgrade its network and/or sustain price reductions over a prolonged period. As
a result we may not be able to maintain or increase our market share.
THERE ARE NEW ENTRANTS IN THE DOMINICAN MARKETS, PARTICULARLY FOR
WIRELESS SERVICES, WHICH COULD INCREASE COMPETITION FOR OUR SERVICES,
REDUCE OUR MARKET SHARE OR INCREASE PRICE COMPETITION.
The Dominican government has granted telecommunications concessions to
a number of companies in the last several years.
o In 1999, France Telecom acquired a company which has a
concession to provide telecommunication services. France
Telecom has used the concession to offer wireless services.
France Telecom's marketing efforts has included offering
services at discounts.
o In January 2000, Centennial Cellular Corp. acquired 70% of All
America Cables and Radio, Inc., an integrated
telecommunications provider. Centennial is attempting to
expand All America's share of the Dominican market for
cellular and PCS services.
o In the international long distance market, investment by U.S.
telecommunications companies in Dominican markets could limit
the number of U.S. carriers that would send a significant
number of minutes to us or otherwise adversely affect our
ability to generate international settlement revenue.
o As a result of these and other potential new entrants, we
expect to face more competition in the Dominican
telecommunications market in the future, which could adversely
affect our ability to maintain our market share or require us
to lower prices.
COMPETITORS IN THE DOMINICAN REPUBLIC AND PANAMA HAVE PURSUED LEGAL
ACTION AGAINST US, WHICH, IF DECIDED AGAINST US, COULD RESTRICT OUR
INTERNATIONAL BUSINESS IN THE DOMINICAN REPUBLIC AND OUR EXPANSION INTO
PANAMA.
Centennial, one of our competitors in the Dominican Republic, filed a
complaint against Tricom USA Inc. with the United States Federal Communications
Commission on September 4, 2001, claiming that:
-11-
o Tricom USA and other U.S. carriers of international
telecommunications traffic had better termination terms and
circuit availability in the Dominican Republic with Tricom
S.A. than Centennial for traffic from the U.S. southbound to
the Dominican Republic; and
o Tricom U.S.A.'s actions harm competition in the United States
and violate the license granted to Tricom USA by the Federal
Communications Commission.
Centennial requested that the Federal Communications Commission:
o require Tricom USA to stop accepting special concessions from
Tricom, S.A.; and
o order Tricom S.A. to allocate more network capacity to
Centennial in the Dominican Republic and to pay to Centennial
unspecified damages.
If Centennial prevails, Tricom USA could be required to pay damages and to
stop accepting any special concessions it receives. This could negatively
affect, diminish or eliminate the business we generate from traffic generated in
the United States and terminated in the Dominican Republic.
BSC of Panama, S.A., a subsidiary of Bell South, one of our competitors
in Panama, requested that the Panamanian ENTE REGULADOR DE LOS SERVICIOS
PUBLICOS, or ENTE, investigate Tricom Panama, S.A. for pretending to use iDEN
technology to provide trunking services, which BSC of Panama, S.A. alleges
violates the Telecommunications Act and the ENTE's regulations. If Bell South
prevails in this action, we will not be able to provide our services in
Panama using iDEN technology.
Additionally, BSC of Panama, S.A. obtained a court order on
August 28, 2001 requiring Tricom Panama to cease all activity relating to the
provision of telecommunications services using the iDEN(R) system. In a related
action, Bell South additionally seeks damages from us in the amount of US
$20,000,000, which it claims it may sustain if Tricom Panama begins using the
iDEN(R) system in Panama. We have appealed the order. However, the appeal
process could be lengthy and, even if we ultimately prevail, the construction
of our network and the commencement of our operations could be delayed for
months.
If Bell South prevails in all of its actions, we may be forced
to discontinue our business in Panama.
SETTLEMENT RATES FOR INTERNATIONAL TRAFFIC FROM THE UNITED STATES AND
PUERTO RICO COULD CONTINUE TO DECLINE, WHICH COULD REDUCE OUR
INTERNATIONAL SETTLEMENT REVENUES AND PROFIT MARGINS FROM THESE
REVENUES.
Revenues from incoming international long distance calls represented
approximately 40% of our operating revenues in 1998, 36% in 1999 and 38% in
2000. Approximately 98% of these revenues were attributable to calls originating
in the United States and Puerto Rico. Settlement rates for traffic between the
United States and the Dominican Republic have declined from $0.41 per minute
during 1996 to $0.10 per minute during 2000. We believe that competitive and
regulatory pressures could continue to push settlement rates lower. Future
decreases in settlement rates, without a corresponding increase in our
international long distance traffic from the United States, would reduce our
international settlement revenues and adversely affect the profit margins that
we realize on these revenues .
BECAUSE WE ARE RECEIVING AN INCREASING PORTION OF OUR INTERNATIONAL
MINUTES FROM U.S.-BASED RESELLERS, WE MAY EXPERIENCE SUBSTANTIAL
FLUCTUATION IN OUR INTERNATIONAL REVENUES.
Since 1997, we have derived an increasing proportion of international
revenues from U.S.-based resellers, which are companies that typically buy long
distance minutes in bulk and resell the minutes to other companies or individual
end users. During 2000, resellers originated approximately 45% of our
international long distance minutes from the United States to the Dominican
Republic. While we enter into agreements with resellers, they are not required
to provide us with any specified amount of traffic. During the first quarter of
2001, our revenues from resellers declined by 44%, which resulted in a decline
in our international settlement revenues by 22%. The volume of minutes and
revenues we receive from these resellers may vary significantly because of their
uncertain financial condition.
-12-
INTENSE COMPETITION IN U.S. MARKETS AMONG INTERNATIONAL LONG DISTANCE
CARRIERS HAS RESULTED IN BANKRUPTCY FILINGS BY A NUMBER OF OUR RESELLER
CLIENTS. WE MAY NOT BE ABLE TO COLLECT MONIES THAT THESE CLIENTS OWE TO
US.
During 2001, six U.S. carriers with which we exchanged, exchange or
contracted at one time to exchange long distance service filed voluntary
petitions for bankruptcy. In four cases, our subsidiary, TRICOM USA, is an
unsecured, pre-petition creditor and has claims aggregating approximately US$1.5
million. We may not be able to recover the amounts owed to us and we may face
substantial delays in resolving our claims. In two cases, the bankrupt carriers
applied to prevent us from altering, refusing or discontinuing services,
although the courts in these cases did not grant the requests of these carriers.
We may be compelled to provide service to other carriers in bankruptcy under
terms mandated by the court, which may not be as favorable to us as terms that
we receive from other resellers.
OUR EFFORTS TO MINIMIZE CREDIT RISKS MAY ADVERSELY AFFECT OUR EFFORTS
TO EXPAND OUR CUSTOMER BASE.
During 1996, we terminated service for a significant number of mobile
subscribers due to credit considerations, which adversely affected our results
of operations. Since that time, we have instituted measures to minimize consumer
credit risks. However, our efforts to minimize consumer credit risks may not be
successful as we expand and offer our services across many different social and
economic markets, including our expansion in Central America. Moreover, efforts
to minimize credit risks may limit the number of our new subscribers.
OUR NET GROWTH IN SUBSCRIBERS MAY BE REDUCED BY CUSTOMER DISCONNECTIONS
OR CHURN.
Our results of operations in the past have been, and in the future may
be, affected by subscriber disconnections. In order to realize net growth in
subscribers, we must replace disconnected subscribers and add new subscribers.
The sales and marketing costs associated with attracting new subscribers are
substantial, relative to the costs of providing service to existing subscribers.
Our average monthly disconnection rate, or "churn rate," during 2000 was 3.1%
for cellular and PCS subscribers and 2.3% for local access line subscribers. If
we are not able to maintain our credit policies, or not otherwise able to limit
churn, we will not experience net growth in subscribers .
WE MAY NOT HAVE SUFFICIENT RESOURCES TO KEEP PACE WITH CHANGES IN
TECHNOLOGIES USED TO PROVIDE TELECOMMUNICATIONS SERVICES OR THE
TECHNOLOGIES THAT WE HAVE CHOSEN TO PROVIDE SERVICE MAY BE LESS POPULAR
AMONG USERS THAN OTHER TECHNOLOGIES.
If we do not offer the latest technology, we may not be able to retain
our existing customers or attract new ones. Our digital mobile technology could
become obsolete. Our investment, to date, in our Dominican market exceeds $700
million and we would require substantial investment to replace all or a
substantial part of it or our Central American network.
SPECIAL TAX PROVISIONS CONTAINED IN OUR CONCESSION AGREEMENT ARE
REQUIRED TO BE APPROVED BY THE DOMINICAN CONGRESS BUT HAVE NOT BEEN TO
DATE, WHICH MAY CAUSE OUR FUTURE TAXES PAYABLE TO THE DOMINICAN
GOVERNMENT TO INCREASE.
Our 1996 concession agreement with the Dominican government , which
grants us our right to operate as a telecommunications provider, provides for
payments to the Dominican government, in lieu of income tax imposed on other
Dominican corporations. Under the Dominican Constitution, provisions of
agreements with the Dominican government that contain exemptions from income tax
only become effective upon approval by the Dominican Congress. Neither our
existing concession agreement, nor the concession agreements of Codetel and
other competitors, all of which contain tax provisions identical to ours, has
been submitted to the Dominican Congress for approval. We are not aware of any
plans of the Dominican government to submit any concession agreements to the
Dominican Congress for approval.
-13-
If our concession agreement is presented to the Dominican Congress, it
may not approve or validate those provisions of the concession agreement
relating to the payment of taxes. If the provisions relating to the payment of
taxes in our concession agreement were to be disapproved by the Dominican
Congress, we believe that Dominican tax law would require the payment of a tax
equal to 25% of our adjusted net income, but never less than 1.5% of gross
revenues, payable in advance on a monthly basis, which is the current tax regime
generally applicable to Dominican corporate taxpayers. For 2000, this would have
resulted in our paying income taxes of $2.5 million compared to taxes in lieu of
income taxes of $10.2 million for 2000. However, the calculation of taxes on the
basis applicable to other Dominican corporations could result in our paying
greater taxes than we would otherwise pay under the terms of our concession
agreement.
WE MAY LOSE REVENUE OR INCUR INCREASED COST AS A RESULT OF FRAUDULENT
USE OF OUR PCS AND CELLULAR NETWORKS.
During 2000 and the six months ended June 30, 2001, we estimate that
our lost revenues from fraudulent use of our PCS and cellular networks totaled
$711,000 and $471,000. Anti-fraud technology continually becomes obsolete, and
we will have to make future expenditures to acquire and use anti-fraud
technology.
OUR NETWORK OPERATIONS MAY BE VULNERABLE TO HACKING, VIRUSES AND OTHER
DISRUPTIONS.
"Hacking" involves efforts to gain unauthorized access to information
or systems or to cause intentional malfunctions or loss or corruption of data,
software, hardware or other computer equipment. Hackers, if successful, could
misappropriate proprietary information or cause disruptions in our services.
Security breaches could have a material adverse effect on our business. In
addition, the inadvertent transmission of computer viruses could expose us to a
material risk of loss or litigation and possible liability. Moreover, if a
computer virus affecting our system is highly publicized, our reputation could
be materially damaged and our user traffic may decrease.
RISKS RELATING TO OUR EXPANSION STRATEGY
WIRELESS TELECOMMUNICATIONS SERVICES COMPANIES HAVE A LIMITED HISTORY
IN OUR EXISTING AND TARGETED MARKETS, ACCEPTANCE OF OUR SERVICES IS UNCERTAIN,
AND WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR BUSINESS PLAN.
Due, in part, to the limited history of wireless communications
services in our existing market in the Dominican Republic and our targeted
markets in Central America, we face many uncertainties in our markets that may
affect our ability to grow or implement our business plan. These uncertainties
include:
o the size of the markets for wireless communications services;
o the penetration rates of these markets;
o the ability of potential subscribers to pay subscription and
other fees;
o the extent and nature of the competitive environment in these
markets; and
o the immediate and long-term commercial viability of wireless
communications service in these markets.
As a result of these uncertainties, we may make significant investments
in developing a network and promoting our digital mobile services in markets
-14-
where we may not achieve significant market acceptance for our services. If this
occurs we may be unable to recover our investment in these markets.
WE MAY NOT BE ABLE TO FINANCE OUR CAPITAL EXPENDITURE NEEDS WHICH COULD
RESULT IN THE DELAY OR ABANDONMENT OF SOME OR ALL OF OUR DEVELOPMENT
AND EXPANSION PLANS AND EXPENDITURES.
We currently anticipate that our capital expenditures will be
approximately $122 million in 2001. We believe that we will continue to expend
substantial amounts in subsequent years. We believe our cash generated by
operations and borrowings available to us will be sufficient to fund our
expected capital expenditures through the end of 2001. In the event additional
funds are required, we would be forced to obtain them through additional
borrowings, including, if available, vendor financing or through the public or
private sale of debt or equity securities. Acquisitions or investments may
require additional financing. There can be no assurance that additional
financing will be available to us or, if available, that it can be obtained on
terms acceptable to us or within limitations that are contained in our current
or future financing arrangements. Our ability to access additional funds may be
limited by:
o the terms of our existing financing agreements, including
restrictive covenants;
o conditions in the U.S. and in international markets that may
adversely affect the availability or cost of capital;
o the volatility of the economies of Latin America and Asia, or
in the local markets in which we operate, which may make lenders
less likely to extend credit to us;
o our high level of indebtedness, which may affect our
attractiveness as a potential borrower; and
o the market's perception of our performance .
Failure to obtain additional financing could result in the delay or
abandonment of some or all of our development and expansion plans and
expenditures, including the building of our iDEN network in Central America.
WE DO NOT HAVE EXPERIENCE IN OPERATING A CABLE TELEVISION BUSINESS AND
IF WE ARE UNABLE TO SUCCESSFULLY INTEGRATE TELECABLE, OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS COULD BE ADVERSELY AFFECTED.
We have not previously operated a cable television business. The
success of our acquisition, in part, will depend on our ability to integrate it
into our existing systems. Some of our existing operational, financial and
management systems may be incompatible with or inadequate to effectively
integrate and manage the Telecable systems. In addition, we may not be able to
retain or recruit qualified personnel which may be required. We also may
encounter unexpected operating difficulties, liabilities or contingencies. Any
of these or other factors could significantly delay or even preclude our
realizing synergies or other benefits from our acquisition or place significant
demands on our management and financial resources.
SOCIAL, POLITICAL AND ECONOMIC CONDITIONS IN CENTRAL AMERICAN MARKETS,
INTO WHICH WE PLAN TO EXPAND, MAY CAUSE VOLATILITY IN OUR OPERATIONS
AND ADVERSELY AFFECT OUR REVENUES FROM THESE MARKETS.
We plan to expand into Central American telecommunications markets in
which we have not operated previously and these markets will present numerous
challenges to us. Poor social, political and economic conditions, matters over
which we have no control, could inhibit our market entry and subsequent
performance. Social and political conditions in parts of the Central American
markets are volatile and may cause the nature and results of our operations to
fluctuate. Historically, volatility in parts of the Central American markets has
been caused by:
o significant governmental influence over many aspects of local
economies;
o political and economic instability;
-15-
o unexpected changes in regulatory requirements;
o social unrest;
o slow or negative growth;
o imposition of trade barriers;
o wage and price controls;
o natural disasters; and
o this volatility could make it difficult for us to sustain our
operations in these markets, which could adversely affect our
business.
GOVERNMENT REGULATIONS IN VARIOUS COUNTRIES MAY HAMPER OUR ABILITY TO
GROW AND IMPLEMENT OUR STRATEGY.
In each market that we are considering, one or more regulatory entities
regulate the licensing, construction, acquisition, ownership and operation of
our wireless communications systems. Adoption of new regulations, changes in the
current telecommunications laws or regulations or changes in the manner in which
they are interpreted or applied could adversely affect our operations. Because
of the uncertainty as to the interpretation of regulations in some countries in
which we may operate, we may not always be able to provide the services we have
planned in each market. It is possible that, in the future, we may face
additional regulatory prohibitions or limitations on our services or on foreign
ownership of telecommunications companies. Inability to provide planned services
could make it more difficult for us to compete in the affected markets. These
issues could affect our ability to operate in targeted markets, and therefore
impact our growth and strategy plans.
IN CENTRAL AMERICAN MARKETS, GOVERNMENT-OWNED OR AFFILIATED
TELECOMMUNICATIONS COMPANIES, WIRELINE MONOPOLY OPERATORS AND
MULTINATIONAL TELECOMMUNICATION COMPANIES MAY HAVE SIGNIFICANT
COMPETITIVE ADVANTAGES THAT WOULD HINDER THE DEVELOPMENT OF OUR
WIRELESS BUSINESS THERE.
In some markets in Central America, we may not be able to compete
effectively against :
o incumbent government-owned telecommunications companies;
o formerly government-owned companies in which the government
may or may not retain a significant interest;
o wireline monopoly operators; and
o multinational telecommunications companies.
We may be at a competitive disadvantage in these markets because these
competitors may have:
o close ties with national regulatory authorities;
o control over connections to local telephone lines;
o larger customer base;
o greater managerial and technical talent;
o ability to cut prices;
o better name recognition;
o larger spectrum positions;
-16-
o greater managerial and technical talent;
o ability to cut prices;
o larger coverage areas than those of our operating companies;
or
o the ability to subsidize competitive services with revenues
generated from other services they provide.
For example, in Panama, Cable & Wireless has temporary exclusivity over
wireline services and only an affiliate of Bell South and Cable & Wireless are
licensed to provide wireless services. These competitors, among others, may
adversely affect our ability to develop our wireless business in Central
America.
INITIALLY, OUR COVERAGE IN CENTRAL AMERICAN MARKETS WILL NOT BE AS
EXTENSIVE AS THOSE OF OTHER WIRELESS SERVICE PROVIDERS IN OUR MARKETS,
WHICH MAY LIMIT OUR ABILITY TO ATTRACT AND RETAIN CUSTOMERS.
At first, we plan to provide wireless services only in the metropolitan
areas and large business centers of Central America. Since our digital mobile
networks will not initially offer nationwide coverage in the countries in which
we are considering and our technology limits our potential roaming partners, we
may not be able to compete effectively with other wireless providers in our
markets.
Many of the wireless providers in our targeted markets have entered
into roaming agreements with each other, which permit these providers to offer
coverage to their subscribers in each other's networks. While the iDEN
technology that we will deploy is compatible with GSM technology (Global System
for Mobile Communications), it is not compatible with any other wireless
technology operating in our spectrum. As a result, we cannot enter into roaming
agreements with the operators of these other networks. Our customers also will
not be able to roam on other systems using technology identical to or compatible
with ours where we do not have a roaming agreement. As a result, we will not be
able to provide coverage to our subscribers outside of our planned operating
digital mobile markets until:
o we build out additional networks in areas outside our
initially planned markets;
o other operators deploy technology compatible to the technology
that we will deploy in markets outside of our planned coverage
areas and we enter into roaming agreements with those operators; or
o handsets that can be used on both our wireless communications
networks and networks deploying other technologies become available
and we enter into roaming agreements with the operators of those
networks.
OUR EQUIPMENT IS MORE EXPENSIVE THAN THAT OF SOME COMPETITORS IN
CENTRAL AMERICA MARKETS, WHICH MAY AFFECT OUR ABILITY TO ESTABLISH AND
MAINTAIN A SIGNIFICANT SUBSCRIBER BASE.
We will market multi-function digital handsets. The higher cost of our
equipment, as compared to analog handsets and some digital handsets that do not
incorporate a comparable multi-function capability, may make it more difficult
or less profitable for us to attract customers. This may reduce our growth
opportunities or profitability.
WE MAY FACE DELAYS CONSTRUCTING OUR DIGITAL MOBILE NETWORK IN CENTRAL
AMERICA WHICH WOULD HARM OUR OPERATIONS.
We may not be able to complete our currently planned construction
successfully or in a timely manner. If we do not, our ability to establish a
subscriber base, improve the transmission quality of our digital mobile services
and expand our service area could be impaired. It may be necessary to
-17-
substantially change our proposed plans or otherwise alter our currently
anticipated time frames or budgets because we are not able to:
o locate suitable sites for communications sites or towers;
o obtain any required zoning variances or other governmental or
local regulatory approvals;
o negotiate acceptable purchase, lease, or other agreements; or
o obtain quality supplies in a timely manner, if at all.
We also may encounter delays caused by
o frequency cross-interference with other radio spectrum users,
including television stations;
o shortages of equipment or skilled labor;
o engineering or environmental problems;
o work stoppages;
o weather interference; and
o unanticipated cost increases.
WE ARE NOT EXPERIENCED IN SELLING AND MARKETING IDEN SERVICES OR IN
CENTRAL AMERICAN MARKETS WHICH COULD AFFECT OUR ABILITY TO ESTABLISH OR
MAINTAIN A SIGNIFICANT SUBSCRIBER BASE.
Once our digital mobile network operations are in place in a particular
market, the development of a significant, quality subscriber base depends on the
success of our sales and marketing efforts and the receptiveness of the
marketplace to our services. We have limited experience in marketing iDEN
services and local conditions in our target markets may require us to modify our
sales and marketing efforts or rely, in part, on the efforts of independent
dealers and distributors to market our services. If the sales and marketing
teams of our operating companies and the independent dealers and distributors
are not able to establish a large subscriber base consisting of quality
customers in our new markets, our revenues will not grow as planned.
SINCE WE RELY PRINCIPALLY ON ONE SUPPLIER TO IMPLEMENT OUR DIGITAL
MOBILE NETWORKS, ANY FAILURE OF THAT SUPPLIER TO PERFORM COULD HURT OUR
OPERATIONS.
Motorola is currently our sole source for the iDEN digital network
equipment and handsets used throughout our markets. If Motorola fails to deliver
necessary technology improvements and enhancements and system infrastructure
equipment and handsets on a timely, cost-effective basis, or discontinues
providing this technology altogether we would not be able to service our
existing subscribers or add new subscribers.
MOTOROLA MAY SUPPLY IDEN TECHNOLOGY TO OTHER COMPANIES WHICH COULD
NEGATIVELY AFFECT OUR COMPETITIVE POSITION IN THE CENTRAL AMERICA.
Motorola, which supplies the iDEN system that we use in Central
America, agreed that it would not sell iDEN technology to anybody else for use,
before agreed upon dates, in Panama, Costa Rica, Guatemala, Honduras, El
Salvador and Nicaragua. Its agreement was conditioned upon our placing orders
for systems in each of those countries by specified dates. Except for Panama, we
have not placed the orders necessary to preserve the head start afforded to us
by Motorola's agreement. As a result, Motorola is free to provide the technology
in those countries to anybody else. If it did so, we could lose an important
competitive advantage to us.
-18-
CONCERNS ABOUT HEALTH RISKS ASSOCIATED WITH WIRELESS EQUIPMENT MAY
REDUCE THE DEMAND FOR OUR SERVICES.
Portable communications devices have been alleged to pose health risks,
including cancer, due to radio frequency emissions from these devices. The
actual or perceived risk of mobile communications devices could adversely affect
us through a reduction in subscribers, reduced network usage per subscriber or
through reduced financing available to the mobile communications industry.
Studies performed by wireless telephone equipment manufacturers have
investigated these allegations and additional studies are ongoing.
RISKS RELATING TO OUR PRINCIPAL MARKET, THE DOMINICAN REPUBLIC
OUR FINANCIAL CONDITION AND RESULTS OF OPERATION COULD BE ADVERSELY
AFFECTED BY DOWNTURNS IN THE DOMINICAN ECONOMY.
Most of our operations are conducted in, and most of our customers are
located in, the Dominican Republic. Accordingly, our financial condition and
results of operations are substantially dependent on economic conditions in the
Dominican Republic. While the Dominican Republic's GDP has grown every year
since 1991, this growth may not continue in the future. Future developments in
the Dominican economy could impair our ability to proceed with our business
strategies, our financial condition or our results of operations. Our financial
condition and results of operations also could be adversely affected by changes
in economic or other policies of the Dominican government or other political or
economic developments in or affecting the Dominican Republic, as well as
regulatory changes or administrative practices of Dominican authorities, over
which we have no control.
POVERTY, SOCIAL UNREST AND SHORTAGES OF BASIC SERVICES IN THE DOMINICAN
REPUBLIC COULD AFFECT THE USE OF TELECOMMUNICATIONS SERVICES, WHICH
WOULD DECREASE OUR REVENUES.
The Dominican Republic has widespread poverty. As recently as November
1997, the country experienced riots, partly as a result of price increases and
shortages of water and electricity. Several state-owned companies have been
privatized, including the country's state-owned electric utility company, and
there can be no assurance that the implementation of these privatizations will
not cause social unrest. Any increase of poverty, social unrest or shortage of
basic services could adversely affect the use of telecommunications services.
ALTHOUGH INFLATION IN THE DOMINICAN REPUBLIC HAS BEEN MODERATE SINCE
1990, INCREASES IN THE INFLATION RATE WOULD ADVERSELY AFFECT THE
DOMINICAN REPUBLIC'S ECONOMY AND THE DEMAND FOR OUR TELECOMMUNICATIONS
SERVICES.
Inflation has moderated in the Dominican Republic since 1991, following
an austerity program instituted by the Dominican government. According to the
Central Bank, the annual rates of inflation were 3.9% for 1996, 8.4% for 1997,
7.8% for 1998, 5.1% for 1999 and 9.0% for 2000. However, the country has
experienced high levels of inflation in the past, including an inflation rate of
79.9% for 1990. Any increase in the value of the U.S. dollar against the
Dominican peso directly affects the Dominican Republic's inflation rate because
the Dominican Republic relies heavily on imports from the United States of raw
materials and consumer goods. High inflation levels could adversely affect the
Dominican Republic's economy and reduce demand for telecommunications services.
THE VOLATILITY AND DEPRECIATION OF THE DOMINICAN PESO AGAINST THE U.S.
DOLLAR COULD REDUCE THE AMOUNT OF CASH WE WILL HAVE TO REPAY OUR
INDEBTEDNESS OR FUND OUR OPERATIONS, INCLUDING THE PURCHASE OF
TELECOMMUNICATIONS EQUIPMENT.
For 1998, 1999 and 2000, we earned between 55% and 65% of our operating
revenues in Dominican pesos and the remainder of our operating revenues in
foreign currency, primarily in U.S.
-19-
dollars. The percentage of operating revenues in Dominican pesos could increase
if we successfully increase our share in Dominican local markets in accordance
with our strategy. The Dominican peso has depreciated in value against the U.S.
dollar in the past and may be subject to fluctuations in the future. Most of our
outstanding indebtedness is U.S. dollar-denominated and must be paid in U.S.
dollars. Vendors of telecommunications equipment all require that we pay for
equipment in U.S. dollars. The devaluation of the Dominican peso could affect
adversely our ability to purchase U.S. dollars in order to service our debt
obligations and pay our equipment vendors. Our purchase of substantial amounts
of U.S. currency in Dominican markets could adversely affect the value of the
Dominican peso in relation to the U.S. dollar, and make these purchases more
costly for us.
RISKS RELATED TO THIS OFFERING
THE PRICE OF OUR ADSs MAY DECLINE BEFORE OR AFTER THE SUBSCRIPTION
RIGHTS EXPIRE.
The public trading market price of our ADSs may decline after you
exercise your subscription rights. If that occurs, you will have committed to
buy ADSs at a price above the prevailing market price and you will have an
immediate unrealized loss. Moreover, following the exercise of subscription
rights you may not be able to sell your ADSs at a price equal to or greater than
the subscription price. Until certificates are delivered upon expiration of this
offering, you may not be able to sell the ADSs you purchase in this offering.
Certificates representing our ADSs purchased will be delivered as soon as
practicable after expiration of this offering.
ONCE YOU EXERCISE YOUR SUBSCRIPTION RIGHTS, YOU MAY NOT REVOKE THE
EXERCISE EVEN IF YOU NO LONGER DESIRE TO INVEST IN US.
Once you exercise your subscription rights, you may not revoke the
exercise. Therefore, even if circumstances arise after you have subscribed in
the offering that eliminate your interest in investing in our ADSs, you will be
required to purchase the ADSs for which you subscribed.
GFN WILL OWN STOCK WITH A MAJORITY OF THE VOTING POWER AND WILL BE ABLE
TO DETERMINE MANY DECISIONS CONCERNING US.
GFN beneficially owns 11,486,720 shares of Class B stock having
approximately 57% of our voting power. GFN's purchase of ADSs in this offering
would increase its percentage of the voting power to o%, if all of the shares
offered are subscribed, and to o% if only GFN subscribes for ADSs. Motorola, the
other shareholder with shares of Class B stock, beneficially owns approximately
38% of the voting power, which, if Motorola does not exercise its rights, will
be reduced to o% if all of the ADSs offered are subscribed for and to o% if only
GFN subscribes for ADSs. Accordingly, GFN and Motorola are able to control the
election of directors and all other matters which are subject to a vote of
shareholders. This concentration of ownership may have the effect of delaying or
preventing a change of control of TRICOM even if this change of control would
benefit all of our shareholders.
THE SHARES UNDERLYING YOUR ADRS MAY NOT BE VOTED IN THE MANNER YOU
DIRECT, IF AT ALL.
You may instruct The Bank of New York, the depositary of the ADRs, to
vote the shares underlying your ADRs only if we ask the depositary to ask for
your instructions. Otherwise, you will not be able to exercise your right to
vote unless you withdraw the shares represented by the ADRs. We have asked and
intend to ask the depositary to ask you for voting instructions. However, you
may not receive voting materials from the depositary in time to instruct it to
vote your shares or for you to withdraw your shares. The depositary is not
responsible for failing to carry out your voting instructions. Therefore, you
may not have the ability to vote your shares and their may not be anything you
can do to prevent it or correct it.
-20-
WE HAVE A LARGE AMOUNT OF SHARES ELIGIBLE FOR FUTURE SALE, WHICH COULD
HAVE A NEGATIVE IMPACT ON THE MARKET PRICE OF OUR ADSS.
After this offering, GFN and Motorola will own a total of 19,144, 544
shares of our Class B stock, each of which is convertible into one share of
Class A common stock. GFN also will own ___ ADSs. We will also issue 3,375,000
shares of Class A common stock in our acquisition of Telecable. GFN has agreed
to purchase ___ of those shares from the Telecable shareholders. GFN and
Motorola have, and the shareholders of Telecable will have, registration rights
which would enable them to sell shares. We cannot predict the effect, if any,
that future sales of ADSs, or the availability of shares for sale, would have on
the market price prevailing from time to time. Sales by any of GFN, Motorola or
the shareholders of Telecable of substantial amounts of our ADSs in the public
market, or the perception that sales could occur, could adversely affect
prevailing market prices for our common stock. A reduction in the market price
of our ADSs could impair our ability to raise additional capital through future
public offerings of our equity securities.
THE OFFERING WILL RESULT IN THE REDUCTION OF BOOK VALUE PER SHARE AND
IF YOU DO NOT FULLY SUBSCRIBE YOU WILL BE DISPROPORTIONATELY AFFECTED.
If you do not subscribe for ADSs, your percentage ownership of TRICOM
will be reduced by ___%. The market price of our ADSs is currently less than the
book value per share at June 30, 2001, approximately $7.15 per share, and the
book value per share will be reduced by the issuance of ADSs in this offering to
approximately $___ per share, if we receive subscription for all ADSs that we
are offering. If you do not fully exercise your rights, your participation in
the book value of the shares will be affected disproportionately to your
pre-offering percentage ownership.
IF YOU DO NOT ACT PROMPTLY AND FOLLOW INSTRUCTIONS CAREFULLY , YOU MAY
NOT BE ABLE TO PARTICIPATE IN THIS OFFERING AND YOUR CURRENT INVESTMENT
COULD BE DILUTED.
Shareholders who desire to purchase shares in this rights offering must
act promptly to ensure that all required forms and payments are actually
received by our subscription agent, The Bank of New York, prior to the
expiration date. If you fail to complete and sign the required subscription
forms, send an incorrect payment amount, or otherwise fail to follow the
subscription procedures that apply to your desired transaction, we may,
depending on the circumstances, reject your subscription or accept it only to
the extent of the payment received.
FORWARD LOOKING STATEMENTS
Some things in this prospectus, or incorporated by reference in this
prospectus, are known as "forward-looking statements," as that term is used in
Section 27A of this Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements may relate to, among other
things, future performance generally, business development activities, future
capital expenditures, financing sources and availability and the effects of
regulation and competition.
When we use the words "believe," "intend," "expect," "may," "will,"
"should," "anticipate," or their negatives, or other similar expressions, the
statements which include those words are usually forward-looking statements.
When we described strategy that involves risks or uncertainties, we are making
forward-looking statements.
We warn you that forward-looking statements are only predictions.
Actual events or results may differ as a result of risks that we face, including
those set forth in the section of this prospectus called "Risk Factors." Those
are representatives of factors that could affect the outcome of the
forward-looking statements.
-21-
RECENT DEVELOPMENTS
TELECABLE
On July 16, 2001, we entered into a definitive agreement to acquire
Telecable Nacional, C. por A., the largest multi-channel system operator in the
Dominican Republic's pay-TV market. The transaction will be valued at
approximately $1,130 per subscriber equivalent or $63.7 million, payable $41.8
million in cash and with 3,375,000 shares of our Class A common stock. The
transaction is subject to customary closing conditions, including the receipt of
regulatory and third party consents, and is expected to close in October 2001.
Telecable is the leader of the Dominican cable TV market with a 43%
market share, serving approximately 52,000 residential subscribers with
approximately 150,000 homes passed and an additional 8,000 commercial customers.
Telecable operates primarily in the capital city of Santo Domingo, where, based
on market information available to us, we believe it has a 90% market share, and
the resort cities of Puerto Plata and La Romana. Approximately 70% of
Telecable's cable network has been recently upgraded to 750 MHz; and it is
expected that the network will be fully upgraded by 2002. For the year ended
December 31, 2000, Telecable had revenues of approximately $17.0 million, and
earnings before taxes of approximately $2.9 million.
LITIGATION
ALL AMERICA CABLE & RADIO LITIGATION
On August 13, 2001, Instituto Dominicano de Telecomunicaciones, or
Indotel, the Dominican telecommunications regulator, issued an order, in
response to a complaint filed by All America Cable & Radio, a subsidiary of
Centennial Corp., that we are not dominant in the Dominican market and that the
interconnection agreement we offered to All America was not discriminatory. The
interconnection agreement that we offered to enter into with All America was the
same as we entered into with France Telecom in the Dominican Republic and which,
we understand, All America has with Codetel and which Codetel has with France
Telecom. Indotel further ruled that if we granted to All America the economic
concessions that it seeks from us, the allowance would create discrimination
against other carriers in the Dominican Republic, violating the Dominican law
and the Dominican constitution.
On September 14, 2001, Indotel issued an order, in response to a motion
submitted by All America for reconsideration of the August 13, that ratified the
August 13 order and ordered us and All America to enter into an interconnection
agreement on substantially the terms and conditions that we proposed.
On September 4, 2001, Centennial Communications Corp. and its
affiliates filed a complaint against Tricom USA Inc. with the United States
Federal Communications Commission claiming that
o We refused to provide Centennial's affiliate in the Dominican
Republic with sufficient facilities and reasonable,
nondiscriminatory terms for connecting traffic between ours
and its network in the Dominican Republic.
o Centennial should not pay to Tricom, S.A. the market rate for
terminating calls to Tricom customers in the Dominican
Republic determined by Indotel, approximately US$.042 per
minute, but should pay $US.011 per minute; our refusal to
agree to this rate is discriminatory; and even if Centennial
pays the same international termination rate as Tricom USA,
Tricom USA gets a benefit because it is affiliated with
Tricom, S.A.
-22-
o We engage in discriminatory behavior because other U.S.
carriers including Tricom USA get better interconnection
capacity from Tricom, S.A. between the United States and the
Dominican Republic than does Centennial.
o We are harming competition in the United States by limiting
the number of interconnection facilities we have made
available to connect calls from Centennial's customers to
ours, inflating the price for local termination of
international traffic and refusing in general to deal with
Centennial on a nondiscriminatory basis.
o We are violating the conditions of the license granted to
Tricom USA by the FCC to operate as a facilities based carrier
which provides that neither Tricom USA nor any persons
controlling it would participate in any favorable
interconnection arrangements or special concessions not
available to other U.S. carriers.
Centennial requests that the FCC:
o order Tricom USA to cease accepting special concessions from
Tricom S.A.;
o require Tricom USA and Tricom S.A. to provide adequate
interconnection capacity to Centennial and reduce the access
charge to a level consistent with costs;
o find that Tricom USA is liable to Centennial for damages to
compensate Centennial for the losses that it suffered as a
result of Tricom's violations of law and the FCC's rules; and
o revoke Tricom USA's Section 214 license if Tricom USA does not
stop receiving special concessions from Tricom, S.A.
We intend to seek dismissal of Centennial's complaint with the FCC.
BELL SOUTH LITIGATION
On May 8, 2001, BSC of Panama, S.A., a subsidiary of Bell South, which
owns one of the two cellular telecommunications concessions granted by the
Panamanian government, requested that the Panamanian ENTE REGULADOR DE LOS
SERVICIOS PUBLICOS, or ENTE, investigate Tricom Panama, S.A. for violations of
the Telecommunications Act and the ENTE's regulations. Bell South claimed that
Tricom Panama:
o will use its iDEN based trunking services to provide cellular
telecommunications services, in violation of our license; and
o although we proved that our iDEN system has been modified to
disable "hand off" capabilities, the fact that the equipment
has these capabilities represents a breach of regulations and
our license.
The ENTE has not issued any ruling on Bell South's request, but has
stated publicly that Panamanian regulations do not limit the provision of mobile
services to a particular technology.
On August 24, 2001, Bell South requested that the ENTE initiate a legal
review before the Third Chamber of the Panamanian Supreme Court of Justice, of
the interpretation given by the ENTE to the definition of "Conventional Trunking
System Services." Bell South alleges that the interpretation given by the ENTE
to the definition of "Conventional Trunking System Services," found in
Resolution No. JD-025 of December 12, 1996 violates several articles of the
Telecommunications Act, including that the ENTE's interpretation allows a
trunking service provider to use any mobile system, including any type of
cellular systems, as long as the "Hand-Off" capabilities is disabled. Bell South
claims that this violates
-23-
the Telecommunications Act, which states that cellular services are a Type A
Service that can only be provided by Bell South and the other holder of a Type A
License, Cable & Wireless.
The ENTE has replied that it only regulates services and not
technology and that the definition of "Conventional Trunking System Services"
protects the temporary exclusivity regime given to cellular services because
it does not allow the participation of new cellular service providers in the
Panamanian market. The license given to Tricom Panama is for the operation of
conventional trunking services which it plans to operate with the iDEN system.
The legal review by the Third Chamber of the Panamanian Supreme Court
of Justice requested by Bell South cannot be undertaken until the Supreme Court
resolves a constitutional review regarding the lack of procedure for it to
undertake a legal review of the sort sought by Bell South. To date, the Supreme
Court has not indicated whether it will review the procedure.
On August 28, 2001, Bell South obtained a precautionary order from
the Seventh Civil Court of the First Judicial Circuit requiring Tricom Panama
to cease all activity directly or indirectly related to the installation and
supply of telecommunication services using Motorola's iDEN system. This order
forms part of a tort claim, submitted by Bell South on September 4, 2001,
against Tricom for US$20,000,000 for the possible damages that Tricom Panama
may cause Bell South in the event that Tricom Panama initiates operations of
an iDEN-based trunking service.
On September 11, 2001 Tricom Panama submitted a motion before the
Seventh Civil Court to substitute a bond for the precautionary order to cease
its activities and at the same time appealed to the Superior Civil Chamber
the precautionary order itself. On October 1, 2001, the Seventh Civil Court
denied Tricom Panama's motion and, on October 8, 2001, Tricom Panama also
appealed this decision to the Superior Civil Chamber. The Tricom Panama
defense is based on the following principles:
o only the ENTE has by law the power to discontinue public
utilities services;
o this precautionary measure can only be applied to real
property (not to personal property); and
o there is no imminent damage that justifies the precautionary
measure.
On September 11, 2001, Bell South submitted a complaint stating that
Tricom Panama was in default of the court order.
Tricom Panama also submitted a motion to the Seventh Civil Court to
dismiss Bell South's tort claim and to invalidate the precautionary order,
due to the court's lack of jurisdiction over a matter that should be decided
by the ENTE. On September 28, 2001, Tricom Panama filed a US$1,000,000
damages counterclaim against Bell South for the public campaign set against
Tricom Panama by Bell South and for the unfounded investigation requested
before the ENTE.
We believe, based on the advice of our Panamanian legal counsel,
that Bell South should not succeed in its claims because:
o Bellsouth cannot claim any damages caused by Tricom Panama
activities, since Tricom Panama operations are protected
under a legitimate Conventional Trunking System Services
license.
o The Ente is the only authority empowered to declare that the
telecommunications services to be provided by Tricom Panama
are not conventional trunking services, or that the iDEN
system cannot be used to provide conventional trunking
services.
o Tricom Panama has yet to finish installation of their
telecommunication equipment and has not begun to advertise or
offer their services, therefore, Bellsouth can not prove any
possible damages derived from Tricom Panama's operations.
-24-
CAPITALIZATION
The following table sets forth at June 30, 2001 our capitalization (1)
at such date, and (2) as adjusted to reflect the rights offering and the
application by us of the estimated net proceeds of this offering on a partially
subscribed basis, assuming the subscription by GFN only, and on a fully
subscribed basis. For purposes of this table, we have assumed that the
subscription price is equal to $5.78, the closing price of our ADSs on the NYSE
on August 28, 2001.
JUNE 30, 2001
----------------------------------------
(IN THOUSANDS)
AS ADJUSTED
FOR THIS AS ADJUSTED FOR
OFFERING THIS OFFERING
PARTIALLY FULLY
ACTUAL SUBSCRIBED(2) SUBSCRIBED(3)
--------- ------------- ---------------
Total short-term debt (including current portion of
long-term debt and capital leases) (1) .............. $ 142,398 $ 142,398 $ 142,398
Long term debt:
Bank loans .......................................... 63,954 63,954 63,954
11 3/8% senior notes due 2004 ....................... 200,000 200,000 200,000
Capital leases ...................................... 14,655 14,655 14,655
--------- --------- ---------
Total long-term debt and capital leases .......... 278,610 278,610 278,610
Shareholders' equity:
Class A common stock, RD$10 par value, 9,700,000,
16,049,206 and 25,652,779 shares issued and
outstanding actual, partially subscribed and fully
subscribed ....................................... 6,210 10,317 16,478
Class B stock, RD$10 par value, 19,144,544 shares
issued and outstanding ........................... 12,595 12,595 12,595
Additional paid-in-capital .......................... 162,181 197,074 250,913
Additional investment of capital .................... 40,000 -- --
Retained earnings ................................... 27,187 27,187 27,187
Equity adjustment for foreign currency translation .. (2,024) (2,024) (2,024)
--------- --------- ---------
Total shareholders' equity .......................... 246,149 245,149 305,149
Total capitalization (including total short-term
debt) ............................................... $ 667,157 $ 666,157 $ 726,157
========= ========= =========
------------
(1) At June 30, 2001, we had available $64.3 million of additional borrowing
capacity under our credit facilities and capital leases.
(2) As Adjusted for this Offering Partially Subscribed assumes that only GFN
exercises its subscription rights resulting in estimated net proceeds of
$39 million.
(3) As Adjusted for this Offering Fully Subscribed gives effect to the net
proceeds of the sale of all of the ADSs that we are offering resulting in
estimated net proceeds of $99 million.
-25-
PRICE RANGE OF AMERICAN DEPOSITARY SHARES AND DIVIDEND POLICY
Our ADSs are traded on the New York Stock Exchange under the symbol
"TDR". Shares of Class A common stock are not traded on any other exchange or
automated quotation system. At June 30, 2001, there were 29 record holders in
the United States of the ADSs.
The following tables provides the high and low prices for the ADSs on
the New York Stock Exchange for (1) 1998, the year in which we completed our
initial public offering, (2) each quarter of our two most recent full fiscal
years, each of the first two quarters this year and the third quarter to date
and (3) each of the most recent six months.
NEW YORK STOCK EXCHANGE
-----------------------------------------------
HIGH LOW
----------------- ------------------
YEAR ENDED DECEMBER 31, 1998.............................. 12 9/16 3 7/16
YEAR ENDED DECEMBER 31, 1999
First Quarter............................................. 9 6
Second Quarter............................................ 11 5/8 6 13/16
Third Quarter............................................. 12 7/16 7 9/16
Fourth Quarter............................................ 22 5/8 7 5/8
YEAR ENDED DECEMBER 31, 2000
First Quarter............................................. 28 1/2 16 1/2
Second Quarter............................................ 22 3/8 13 3/4
Third Quarter............................................. 19 1/2 14 1/8
Fourth Quarter............................................ 16 1/2 6 11/20
YEAR ENDING DECEMBER 31, 2001
First Quarter............................................. 12.46 7.00
Second Quarter............................................ 7.80 6.00
Third Quarter............................................. 6.70 5.30
April..................................................... 7.80 6.15
May....................................................... 6.90 6.25
June...................................................... 7.40 6.00
July...................................................... 6.70 5.80
August.................................................... 6.26 5.50
September................................................. 5.89 5.30
-26-
USE OF PROCEEDS
We will use the net proceeds from this offering for general corporate
purposes, including to fund in part the acquisition of Telecable, and for
working capital. The purchase price, approximately $63.7 million, is payable
$41.8 million in cash and by the issuance of 3,375,000 shares of Class A common
stock.
Our gross proceeds from the rights offering depend on the number of
shares that are purchased. If all of the subscription rights offered by this
prospectus are exercised, then we will receive proceeds of approximately $99
million in cash, including amounts previously advanced to us by GFN.
-27-
THIS OFFERING
BEFORE EXERCISING ANY RIGHTS, YOU SHOULD READ CAREFULLY THE INFORMATION
SET FORTH UNDER THE "RISK FACTORS" BEGINNING ON PAGE 10.
THE RIGHTS
As soon as practicable after the date of this prospectus, we are
distributing, at no charge, to holders of our ADSs, Class A common stock and
Class B stock as of 5:00 p.m., New York City time, on the record date of [____],
2001, ___ non-transferable subscription rights to purchase additional ADSs for
every ADS, share of Class A common stock and share of Class B stock owned at
that time. You will not receive fractional subscription rights, but instead we
will round your number of subscription rights down to the nearest whole number.
Each right entitles you to purchase one ADS for the subscription price. On July
25, 2001, the day on which we announced this offering, the last reported sales
price for our ADSs on the NYSE was $6.00 per share. On the date of this
prospectus, the last reported sales price for our ADSs on the NYSE was $___ per
share.
RECORD DATE
[_______], 2001 at 5:00 p.m., New York City time. Only our shareholders
as of the record date will receive rights to subscribe for new ADSs. This
includes both holders of Class A common stock and of Class B stock, which is
identical in all respects to our Class A common stock except that each share of
Class B stock has ten votes per share. At this time, the only holder of shares
of Class A common stock is the depositary, The Bank of New York. We have
instructed the Bank of New York to make these rights available to holders of our
ADSs.
SUBSCRIPTION PRICE
The subscription price is $[__________] per ADS, payable in cash. All
payments must be cleared on or before the expiration date.
BASIC SUBSCRIPTION PRIVILEGE
You are entitled to purchase one newly-issued ADS at the subscription
price for each right exercised.
OVERSUBSCRIPTION PRIVILEGE
If you exercise your basic subscription privilege in full, you may also
subscribe for additional shares that other shareholders have not purchased under
their basic subscription privilege. You may purchase a percentage of the
unsubscribed shares equal to your percentage ownership of our ADSs and Class B
stock on the record date. If there are not enough shares available to fill all
such subscriptions for additional shares, the available shares will be allocated
pro rata based on the number of shares each subscriber for additional shares has
purchased under the basic subscription privilege. We will not allocate to you
more than the number of shares you have actually subscribed and paid for.
You are not entitled to exercise the oversubscription privilege unless
you have fully exercised your basic subscription privilege. For this purpose,
you would only count the shares you own in your own name, and not other shares
that might, for example, be jointly held with a spouse, held as a custodian for
someone else, or held in an individual retirement account.
You can elect to exercise the oversubscription privilege only at the
same time you exercise your basic subscription privilege in full.
-28-
In exercising the oversubscription privilege, you must pay the full
subscription price for all the shares you are electing to purchase. If we do not
allocate to you all of the shares you have subscribed for under the
oversubscription privilege, we will refund by mail to you any payment you have
made for shares which are not available to issue to you, promptly after
completion of this offering. Interest will not be payable on amounts refunded.
Banks, brokers and other nominees who exercise the oversubscription
privilege on behalf of beneficial owners of shares must report certain
information to the subscription agent, The Bank of New York, and us and record
certain other information received from each beneficial owner exercising rights.
Generally, banks, brokers and other nominees must report
o the number of shares held on the record date on behalf of each
beneficial owner,
o the number of rights as to which the basic subscription
privilege has been exercised on behalf of each beneficial
owner
o that each beneficial owner's basic subscription privilege held
in the same capacity has been exercised in full, and
o the number of shares subscribed for under the oversubscription
privilege by each beneficial owner.
If you complete the portion of the subscription certificate to exercise
the oversubscription privilege, you will be representing and certifying that you
have fully exercised your basic subscription privilege as described above. You
must exercise your oversubscription privilege at the same time you exercise your
basic subscription privilege.
REASONS FOR OFFERING.
We are seeking additional equity. GFN, one of our major shareholders,
has committed to provide to us $40 million in additional equity. Our board of
directors has chosen to give you the opportunity to buy more shares on the same
basis as GFN. GFN already has advanced funds to us on an interest-free basis
which will be used to subscribe for ADSs on the same terms and conditions
offered to all shareholders. The shares to be received by GFN, however, will not
be registered under the U.S. Securities Act of 1933.
THE BOARD MAKES NO INVESTMENT RECOMMENDATIONS TO SHAREHOLDERS.
Our board of directors has approved but does not make any
recommendation to you about whether you should exercise any rights. In making
the decision to exercise or not exercise your rights, you must consider your own
best interests.
If you choose not to exercise your subscription rights in full, your
relative ownership interest in us will be diluted. In addition, our book value
per share at June 30, 2001 was approximately $7.15 per share and the book value
per share will be reduced by the issuance of ADSs in this offering to
approximately $o per share, if we receive subscriptions for all ADSs that we are
offering. If you exercise rights, you risk investment loss on new money
invested. The trading price of our ADSs may decline below the subscription
price. We cannot assure you that the subscription price will remain below any
trading price for our ADSs or that its trading price will not decline to below
the subscription price during or after this offering. For a summary of some of
the risks a new investment would entail, see "Risk Factors" beginning on
page 10.
EXPIRATION TIME AND DATE.
-29-
The rights expire on [_________], at 5:00 p.m., New York City time. We
have the option of extending the expiration date for any reason, although
presently we do not intend to do so. Rights not exercised by the expiration date
will be null and void.
In order to exercise rights in a timely manner, you must ensure that
the subscription agent actually receives, prior to expiration of the rights, the
properly executed and completed subscription certificate together with full
payment for all ADSs you wish to purchase.
NO REVOCATION
You are not allowed to revoke or change your exercise of rights after
you send in your subscription forms and payment.
DETERMINATION OF SUBSCRIPTION PRICE
The subscription price is $ o per ADS. Our board of directors
determined the per ADS subscription price based upon a number of factors
including:
o GFN's commitment to exercise its rights in full valued at $40
million;
o the historic and current market price of our ADSs;
o the difficult market conditions prevailing for the raising of
equity capital;
o our business prospects;
o our operating history;
o general conditions in the securities market;
o our need for capital;
o alternatives available to us for raising capital;
o the amount of proceeds desired; and
o general economic, business and market conditions.
The $[__________] per share price should not be considered an
indication of the actual value of our ADSs. You may not be able to sell ADSs
purchased during this offering at a price equal to or greater than $[__________]
per share. We have neither sought, nor obtained, any valuation opinion from
outside financial advisors or investment bankers.
TRANSFERABILITY OF SUBSCRIPTION RIGHTS
Only you may exercise the subscription privilege. You may not sell,
give away or otherwise transfer the subscription privilege.
EXTENSION, WITHDRAWAL AND AMENDMENT
We have the option of extending the period for exercising your rights,
although we do not intend to do so at this time. We also reserve the right to
withdraw or terminate this offering at any time for any reason. In the event
that this offering is withdrawn or terminated, all funds received from
subscriptions
-30-
will be returned promptly. We will not pay interest on any returned funds. We
will notify shareholders if we extend, withdraw or terminate this offering by
issuing a press release and filing that press release with the Securities and
Exchange Commission as an exhibit to a Form 6-K.
We reserve the right to amend the terms of this offering. If we make an
amendment that we consider significant, we will
o mail notice of the amendment to all shareholders of record as
of the record date,
o extend the expiration date by at least ten days and
o offer all subscribers no less than ten days to revoke any
subscription already submitted.
o The extension of the expiration date will not, in and of itself, be
treated as a significant amendment for these purposes.
MAILING OF SUBSCRIPTION CERTIFICATES AND RECORD HOLDERS
We are sending a subscription certificate to each record holder along
with this prospectus and related instructions to evidence the rights. In order
to exercise rights, you must fill out and sign the subscription certificate and
timely deliver it with full payment for the shares to be purchased. Only the
holders of record of our ADSs, Class A common stock and Class B stock as of the
close of business as of the record date may exercise rights. You are a record
holder for this purpose only, in the case of holders of ADSs, if your name is
registered as a holder with our depositary, The Bank of New York, as of the
record date.
A depository bank, trust company or securities broker or dealer which
is a record holder for more than one beneficial owner of shares may divide or
consolidate subscription certificates to represent shares held as of the record
date by their beneficial owners, upon proper showing to the subscription agent.
If you own shares held in a brokerage, bank or other custodial or
nominee account, in order to exercise your rights you must promptly send the
proper instruction form to the person holding your shares. Your broker, dealer,
depository or custodian bank or other person holding your shares is the record
holder of your shares and will have to act on your behalf in order for you to
exercise your rights. We have asked your broker, dealer or other nominee holders
of our shares to contact the beneficial owners to obtain instructions concerning
rights the beneficial owners it represents are entitled to exercise.
FOREIGN AND UNKNOWN ADDRESSES
We are not mailing subscription certificates to shareholders whose
addresses are outside the United States or who have an APO or FPO address. In
those cases, the subscription certificates will be held by the subscription
agent for those shareholders. To exercise their rights, these shareholders must
notify the subscription agent prior to 11:00 a.m., New York City time, on the
third business day prior to the expiration date.
RIGHT TO BLOCK EXERCISE DUE TO REGULATORY ISSUES
We reserve the right to refuse the exercise of rights by any holder of
rights who would, in our opinion, be required to obtain prior clearance or
approval from any Dominican or U.S. state or federal or regulatory authorities
for the exercise of rights or ownership of additional shares if, at the
expiration date, this clearance or approval has not been obtained. We are not
undertaking to pay any expenses incurred in seeking such clearance or approval.
-31-
We are not offering or selling, or soliciting any purchase of, shares
in any state or other jurisdiction in which this offering is not permitted. We
reserve the right to delay the commencement of this offering in certain states
or other jurisdictions if necessary to comply with local laws. However, we may
elect not to offer rights to residents of any state or other jurisdiction whose
law would require a change in this offering in order to carry out this offering
in such state or jurisdiction.
PROCEDURES TO EXERCISE RIGHTS
Please do not send subscription certificates or related forms to us.
Please send the properly completed and executed form of subscription certificate
with full payment to the subscription agent for this offering, The Bank of New
York.
You should read carefully the subscription certificate and related
instructions and forms which accompany this prospectus. You should call
[____________], the information agent for this offering, at the address and
telephone number listed below under the caption "This Offering - Questions and
Assistance Concerning the Rights" promptly with any questions you may have.
You may exercise your rights by delivering to the subscription agent,
at the address specified below and in the instructions accompanying this
prospectus, on or prior to the expiration date:
Properly completed and executed subscription certificate(s) which
evidence your rights. See "The Offering - Delivery of Subscription Certificate"
below for instructions on where to send these.
o Any required signature guarantees.
o Payment in full of the subscription price for each newly
issued ADS you wish to purchase under the subscription
privilege and the oversubscription privilege. See "This
Offering - Required Forms of Payment of Subscription Price"
below for payment instructions.
REQUIRED FORMS OF PAYMENT OF SUBSCRIPTION PRICE
The subscription price is $[__________] per ADS subscribed for, payable
in cash. All payments must be cleared on or before the expiration date.
If you exercise any rights, you must deliver to the subscription agent
full payment in the form of a personal check, certified or cashier's check or
bank draft drawn upon a U.S. bank, or a U.S. postal money order, payable to The
Bank of New York, subscription agent.
In order for you to timely exercise your rights, the subscription agent
must actually receive the subscription price before the expiration date.
Funds paid by uncertified personal check may take at least five
business days to clear. Accordingly, if you pay the subscription price by means
of uncertified personal check, you should make payment sufficiently in advance
of the expiration date to ensure that your check actually clears and the payment
is received before such date. We are not responsible for any delay in payment by
you and suggest that you consider payment by means of certified or cashier's
check or bank draft drawn upon a U.S. bank, or a U.S. postal money order.
DELIVERY OF SUBSCRIPTION CERTIFICATES
All subscription certificates, payments of the subscription price and
nominee holder certifications and DTC participant oversubscription exercise
forms, to the extent applicable to your exercise of rights, must be delivered to
the subscription agent, The Bank of New York, as follows:
-32-
BY MAIL: BY HAND:
Tender & Exchange Department The Bank of New York
P.O. Box 11248 Tender & Exchange Department
Church Street Station c/o The Depository Trust Company
New York, New York 10286-1248 55 Water Street
Jenrette Park Entrance
New York, New York 10041
BY OVERNIGHT COURIER: BY FACSIMILE:
The Bank of New York (For Eligible Institutions Only)
Tender & Exchange Department (973)-247-4511
385 Rifle Camp Road
West Paterson, New Jersey 07424 FOR CONFIRMATION OF FACSIMILE,
TELEPHONE:
(973)-247-4076
INCOMPLETE FORMS; INSUFFICIENT PAYMENT
If you do not indicate on your subscription certificate the number of
rights being exercised, or do not forward sufficient payment for the number of
rights that you indicate are being exercised, then we will accept the
subscription forms and payment only for the maximum number of rights that may be
exercised based on the actual payment delivered. We will make this determination
as follows: (1) you will be deemed to have exercised your basic subscription
privilege to the full extent of the payment received, and (2) if any funds
remain, you will be deemed to have exercised your oversubscription privilege to
the extent of the remaining funds. We will return any payment not applied to the
purchase of ADSs under this offering promptly. Interest will not be payable on
amounts refunded.
PROHIBITION ON FRACTIONAL SHARES
Each right entitles you to purchase one ADS at the subscription price.
We will accept any inadvertent subscription indicating a purchase of fractional
ADSs by rounding down to the nearest whole ADS and refunding without interest
any payment received for a fractional ADS promptly.
INSTRUCTIONS TO NOMINEE HOLDERS
If you are a broker, trustee or depository for securities or other
nominee holder for beneficial owners of our ADSs, we are requesting that you
contact such beneficial owners as soon as possible to obtain instructions and
related certifications concerning their rights. Our request to you is further
explained in the suggested form of letter of instructions from nominee holders
to beneficial owners accompanying this prospectus.
To the extent so instructed, nominee holders should complete
appropriate subscription certificates on behalf of beneficial owners and, in the
case of any exercise of the oversubscription privilege, the related form of
"Nominee Holder Certification" and submit them on a timely basis to the
subscription agent, The Bank of New York, with the proper payment.
RISK OF LOSS ON DELIVERY OF SUBSCRIPTION CERTIFICATE FORMS AND PAYMENTS
Each holder of rights bears all risk of the method of delivery to the
subscription agent of subscription certificates and payments of the subscription
price.
If subscription certificates and payments are sent by mail, you are
urged to send these by registered mail, properly insured, with return receipt
requested, and to allow a sufficient number of days to ensure delivery to the
subscription agent and clearance of payment prior to the expiration date.
-33-
Because uncertified personal checks may take at least five business
days to clear, you are strongly urged to pay, or arrange for payment, by means
of certified or cashier's check or bank draft drawn upon a U.S. bank, or a U.S.
postal money order.
HOW PROCEDURAL AND OTHER QUESTIONS ARE RESOLVED
We are entitled to resolve all questions concerning the timeliness,
validity, form and eligibility of any exercise of rights. Our determination of
such questions will be final and binding. We, in our reasonable discretion, may
waive any defect or irregularity, or permit a defect or irregularity to be
corrected within such time as we may determine, or reject the purported exercise
of any right because of any defect or irregularity.
Subscription certificates will not be considered received or accepted
until all irregularities have been waived or cured within such time as we
determine in our reasonable discretion. Neither we nor the subscription agent
have any duty to give notification of any defect or irregularity in connection
with the submission of subscription certificates or any other required document.
Neither we nor the subscription agent will incur any liability for failure to
give such notification.
We reserve the right to reject any exercise of rights if the exercise
does not comply with the terms of this offering or is not in proper form or if
the exercise of rights would be unlawful or materially burdensome.
ISSUANCE OF CERTIFICATES
Certificates for ADSs purchased in this offering will be issued as soon
as practicable after the expiration date. The subscription agent will deliver
subscription payments to us only after consummation of this offering and the
issuance of certificates to our shareholders that exercised rights. Unless you
instruct otherwise in your subscription certificate form, ADSs purchased by the
exercise of rights will be registered in the name of the person exercising the
rights.
SHARES OF CLASS A COMMON STOCK OUTSTANDING AFTER THE RIGHTS OFFERING
Assuming we issue all of the ADSs, each of which represents one share
of Class A common stock, offered in the rights offering, approximately
[__________] shares of Class A common stock will be issued and outstanding. This
would represent a [_____]% increase in the number of outstanding shares of Class
A common stock as of the date of this prospectus. IF YOU DO NOT EXERCISE YOUR
SUBSCRIPTION PRIVILEGE, THE PERCENTAGE OF OUR CLASS A COMMON STOCK THAT YOU HOLD
WILL DECREASE.
FEES AND EXPENSES
We will pay all fees charged by the subscription agent. You are
responsible for paying any other commissions, fees, taxes or other expenses
incurred in connection with the exercise of the subscription rights. Neither we
nor the subscription agent will pay these expenses.
We will pay the issuance fees to the depositary, which would be in the
amount of US$5.00 per 100 ADSs issued.
SUBSCRIPTION AGENT
We have appointed The Bank of New York as subscription agent for the
rights offering. The subscription agent's address for packages sent by mail or
overnight delivery is:
-34-
BY MAIL: BY HAND:
Tender & Exchange Department The Bank of New York
P.O. Box 11248 Tender & Exchange Department
Church Street Station c/o The Depository Trust Company
New York, New York 10286-1248 55 Water Street
Jenrette Park Entrance
New York, New York 10041
BY OVERNIGHT COURIER:
The Bank of New York
Tender & Exchange Department
385 Rifle Camp Road
West Paterson, New Jersey 07424
The subscription agent's telephone number is (973)-247-4076 and its
facsimile number is (973)-247-4077. You should deliver your subscription
certificate and payment of the subscription price to the subscription agent. We
will pay the fees and specified expenses of the subscription agent, which we
estimate will total $[_______]. We have also agreed to indemnify the
subscription agent from any liability, which it may incur in connection with the
rights offering.
IMPORTANT
PLEASE CAREFULLY READ THE INSTRUCTIONS ACCOMPANYING THE SUBSCRIPTION
CERTIFICATE AND FOLLOW THOSE INSTRUCTIONS IN DETAIL. DO NOT SEND SUBSCRIPTION
CERTIFICATES DIRECTLY TO US. YOU ARE RESPONSIBLE FOR CHOOSING THE PAYMENT AND
DELIVERY METHOD FOR YOUR SUBSCRIPTION CERTIFICATE, AND YOU BEAR THE RISKS
ASSOCIATED WITH SUCH DELIVERY. IF YOU CHOOSE TO DELIVER YOUR SUBSCRIPTION
CERTIFICATE AND PAYMENT BY MAIL, WE RECOMMEND THAT YOU USE REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. WE ALSO RECOMMEND THAT YOU
ALLOW A SUFFICIENT NUMBER OF DAYS PRIOR TO [_______________], 2001. BECAUSE
UNCERTIFIED PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR, WE
STRONGLY URGE YOU TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR
CASHIER'S CHECK OR BANK DRAFT DRAWN UPON A U.S. BANK, OR A U.S. POSTAL MONEY
ORDER.
QUESTIONS AND ASSISTANCE CONCERNING THE RIGHTS
If you have any questions or need assistance concerning the procedure
for exercising subscription rights, or if you would like additional copies of
this prospectus or the instructions, you should contact us or the information
agent:
TRICOM, S.A. []
Ave. Lope de Vega No. 95 []
Santo Domingo, Dominican Republic []
Attention: Investor Relations []
(809) 476-4044/4012 []
[]
DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS
AMERICAN DEPOSITARY RECEIPTS
-35-
The Bank of New York will issue the American Depositary Receipts or
ADRs evidencing ADSs. Each ADS represents one share of Class A common stock. We
will deposit the shares of Class A common stock (or the right to such shares) to
be issued in this offering with the New York office of The Bank of New York
which we refer to as the custodian. Each ADR will also represent securities,
cash or other property deposited, from time to time, with The Bank of New York
but not distributed to ADR holders. The Bank of New York's Corporate Trust
office is located at 101 Barclay Street, New York, NY 10286, and its principal
executive office is located at One Wall Street, NY, NY 10286 (temporarily
located at One Wall Street, NY, NY 10286).
You may hold ADRs either directly or indirectly through your broker or
other financial institution. If you hold ADRs directly, you are an ADR holder.
If you hold the ADRs indirectly, you must rely on the procedures of your broker
or other financial institution to assert the rights of ADR holders described in
this section. You should consult with your broker or financial institution to
find out what those procedures are.
Because The Bank of New York actually holds the shares, you must rely
on it to exercise the rights of a shareholder. Our obligations and the
obligations of The Bank of New York are set out in an agreement among TRICOM,
The Bank of New York and you, as an ADR holder. The agreement and the ADRs are
generally governed by New York law.
The following is a summary of the agreement. We encourage you to read
the entire agreement and the ADR. Directions on how to obtain copies of these
are provided in the section entitled "Where You Can Find More Information."
SHARE DIVIDENDS AND OTHER DISTRIBUTIONS
The Bank of New York has agreed to pay to you the cash dividends or
other distributions it receives on shares or other deposited securities after
deducting its fees and expenses. You will receive these distributions in
proportion to the number of shares your ADRs represent.
CASH. The Bank of New York will convert any cash dividend or other cash
distribution we pay on the shares into U.S. dollars, if it can do so on a
reasonable basis, and, subject to Dominican Republic law, can transfer the U.S.
dollars to the United States. If that is not possible or if any approval from
the Dominican Republic government is needed and cannot be obtained, the
agreement allows The Bank of New York to distribute the Dominican pesos only to
those ADR holders to whom it is possible to do so. It will hold the Dominican
pesos it cannot convert for the account of the ADR holders who have not been
paid. It will not invest the Dominican pesos and it will not be liable for the
interest.
Before making a distribution, any withholding taxes that must be paid
under Dominican Republic law will be deducted. The Bank of New York will
distribute only whole U.S. dollars and cents and will round fractional cents to
the nearest whole cent. If the exchange rates fluctuate during a time when The
Bank of New York cannot convert the Dominican pesos, you may lose some or all of
the value of the distribution.
SHARES. The Bank of New York may distribute new ADRs representing any
shares we may distribute as a dividend or free distribution, if we furnish it
promptly with satisfactory evidence that it is legal to do so. The Bank of New
York will only distribute whole ADRs. It will sell shares which would require it
to use a fractional ADR and distribute the net proceeds in the same way as it
does with cash. If The Bank of New York does not distribute additional ADRs,
each ADR will also represent the new shares.
RIGHTS TO RECEIVE ADDITIONAL SHARES. If we offer holders of our shares
any rights to subscribe for additional shares or any other rights, The Bank of
New York may make these rights available to you. We must first instruct The Bank
of New York to do so and furnish it with satisfactory evidence that it is legal
-36-
to do so. If we do not furnish this evidence and/or give these instructions, and
The Bank of New York decides it is practical to sell the rights, The Bank of New
York will sell the rights and distribute the proceeds, in the same way as it
does with cash. The Bank of New York may allow rights that are not distributed
or sold to lapse. In that case, you will receive no value for them.
If The Bank of New York makes rights available to you, upon instruction
from you, it will exercise the rights and purchase the shares on your behalf.
The Bank of New York will then deposit the shares and issue ADRs to you. It will
only exercise rights if you pay it the exercise price and any other charges the
rights require you to pay.
U.S. securities laws may restrict the sale, deposit, cancellation and
transfer of the ADRs issued after exercise of rights. For example, you may not
be able to trade the ADRs freely in the United States. In this case, The Bank of
New York may issue the ADRs under a separate restricted deposit agreement which
will contain the same provisions as the agreement, except for the changes needed
to put the restrictions in place.
OTHER DISTRIBUTIONS. The Bank of New York will send to you anything
else we distribute on deposited securities by any means it thinks is legal, fair
and practical. If it cannot make the distribution in that way, The Bank of New
York has a choice. It may decide to sell what we distributed and distribute the
net proceeds in the same way as it does with cash or it may decide to hold what
we distributed, in which case the ADRs will also represent the newly distributed
property.
The Bank of New York is not responsible if it decides that it is
unlawful or impractical to make a distribution available to any ADR holders. We
have no obligation to register ADRs, shares, rights or other securities under
the Securities Act of 1933. We also have no obligation to take any other action
to permit the distribution of ADRs, shares, rights or anything else to ADR
holders. This means that you may not receive the distribution we make on our
shares or any value for them if it is illegal or impractical for us to make them
available to you.
DEPOSIT, WITHDRAWAL AND CANCELLATION
The Bank of New York will issue ADRs if you or your broker deposit
shares or evidence of rights to receive shares with it. Upon payment of its fees
and expenses and of any taxes or charges, such as stamp taxes or stock transfer
taxes or fees, The Bank of New York will register the appropriate number of ADRs
in the names you request and will deliver the ADRs at its Corporate Trust office
to the persons you request.
You may turn in your ADRs at The Bank of New York's Corporate Trust
office. Upon payment of its fees and expenses and of any taxes or charges, such
as stamp taxes or stock transfer taxes or fees, The Bank of New York will
deliver (1) the underlying shares to an account designated by you and (2) any
other deposited securities underlying the ADR at the office of the custodian.
Or, at your request, risk and expense, The Bank of New York will deliver the
deposited securities at its Corporate Trust office.
VOTING RIGHTS
You may instruct The Bank of New York to vote the shares underlying
your ADRs but only if we ask The Bank of New York to ask for your instructions.
Otherwise, you won't be able to exercise your right to vote unless you withdraw
the shares. However, you may not know about the meeting enough in advance to
withdraw the shares.
If we ask for your instructions, The Bank of New York will notify you
of the upcoming vote and arrange to deliver our voting materials to you. The
materials will (1) describe the matters to be voted on and (2) explain how you,
on a certain date, may instruct The Bank of New York to vote the shares or other
deposited securities underlying your ADRs as you direct. For instructions to be
valid, The Bank of
-37-
New York must receive them on or before the date specified. The Bank of New York
will try, as far as practical, subject to Dominican Republic law and the
provisions of our by-laws, to vote or to have its agents vote the shares or
other deposited securities as you instruct. The Bank of New York will only vote
or attempt to vote as you instruct.
We cannot assure you that you will receive the voting materials in time
to ensure that you can instruct The Bank of New York to vote your shares. In
addition, The Bank of New York and its agents are not responsible for failing to
carry out voting instructions or for the manner of carrying out voting
instructions. This means that you may not be able to exercise your right to vote
and there may be nothing you can do if your shares are not voted as you
requested.
FEES AND EXPENSES
ADR HOLDERS MUST PAY: FOR:
--------------------
$5.00 (or less) per 100 ADSs........................ Each issuance of an ADS, including as a result of a
distribution of shares or rights or other property.
Each cancellation of an ADS, including if the deposit
agreement terminates.
$.02 (or less) per ADS.............................. Any cash payment, except for distributions of cash
dividends.
Registration of Transfer Fees.......................
Transfer and registration of shares on the share
register of the Foreign Registrar from your name to
the name of The Bank of New York or its agent when you
deposit or withdraw shares.
Expenses to The Bank of New York.................... Conversion of Dominican pesos to U.S. dollars. Cable,
telex and facsimile transmission expenses.
Taxes and other governmental charges The Bank of
New York or the custodian have to pay on any ADS
or share underlying an ADS, for example, stock
transfer taxes, stamp duty or withholding
taxes............................................... As necessary
PAYMENT OF TAXES
You will be responsible for any taxes or other governmental charges
payable on your ADRs or on the deposited securities underlying your ADRs. The
Bank of New York may refuse to transfer your ADRs or allow you to withdraw the
deposited securities underlying your ADRs until such taxes or other charges are
paid. It may apply payments owed to you or sell deposited securities underlying
your ADRs to pay any taxes owed and you will remain liable for any deficiency.
If it sells deposited securities, it will, if appropriate, reduce the number of
ADRs to reflect the sale and pay to you any proceeds, or send to you any
property, remaining after it has paid the taxes.
RECLASSIFICATIONS, RECAPITALIZATIONS AND MERGERS
If we (1) change the nominal or par value of our shares, (2)
reclassify, split up or consolidate any of the deposited securities, (3)
distribute securities on the shares that are not distributed to you, or (4)
recapitalize, reorganize, merge, liquidate, sell all or substantially all of our
assets, or take any similar action, then the cash, shares or other securities
received by The Bank of New York will become deposited securities. Each ADR will
automatically represent its equal share of the new deposited securities unless
-38-
additional ADRs are delivered pursuant to the following sentence. The Bank of
New York may, and will if we ask it to, issue new ADRs or ask you to surrender
your outstanding ADRs in exchange for new ADRs, identifying the new deposited
securities.
AMENDMENT AND TERMINATION
We may agree with The Bank of New York to amend the agreement and the
ADRs without your consent for any reason. If the amendment adds or increases
fees or charges, except for taxes and other governmental charges or registration
fees, cable, telex or facsimile transmission costs, delivery costs or other such
expenses, or prejudices an important right of ADR holders, it will only become
effective 30 days after The Bank of New York notifies you of the amendment. At
the time an amendment becomes effective, you are considered, by continuing to
hold your ADR, to agree to the amendment and to be bound by the ADRs and the
agreement is amended.
The Bank of New York will terminate the agreement if we ask it to do
so. The Bank of New York may also terminate the agreement if The Bank of New
York has told us that it would like to resign and we have not appointed a new
depositary bank within 90 days. In both cases, The Bank of New York must notify
you at least 90 days before termination.
After termination, The Bank of New York and its agents will be required
to do only the following under the agreement
o advise you that the agreement is terminated and
o collect distributions on the deposited securities and deliver
shares and other deposited securities upon cancellation of
ADRs.
o At any time after the expiration of one year after the date
of termination, The Bank of New York may sell any remaining deposited
securities by public or private sale. After that, The Bank of New York
will hold the proceeds of the sale, as well as any other cash it is
holding under the agreement for the pro rata benefit of the ADR holders
that have not surrendered their ADRs. It will not invest the money and
will have no liability for interest. The Bank of New York's only
obligations will be to account for the proceeds of the sale and other
cash. After termination, our only obligations will be with respect to
indemnification and to pay certain amounts to The Bank of New York.
INSPECTION OF TRANSFER BOOKS
The Bank of New York will maintain at its transfer office in the
Borough of Manhattan, the City of New York, facilities for the execution and
delivery, registration of transfer, combination or split-up of ADRs and a
register for the registration of ADRs and the registration of the transfer of
ADRs that at reasonable times will be open for inspection by us and the holders
of ADRs, provided that such inspection shall not be for the purpose of
communication with holders of ADRs in the interest of a business or object other
than our business or a matter related to the ADRs.
LIMITATIONS ON OBLIGATIONS AND LIABILITY TO ADR HOLDERS
The agreement expressly limits our obligations and the obligations of
The Bank of New York, and it limits our liability and the liability of The Bank
of New York. TRICOM and The Bank of New York:
o are only obligated to take the actions specifically set forth
in the agreement without negligence or bad faith;
-39-
o are not liable if either is prevented or delayed by law or
circumstances beyond their control from performing their
obligations under the agreement;
o are not liable if either exercises discretion permitted under
the agreement;
o have no obligation to become involved in a lawsuit or other
proceeding related to the ADRs or the agreement on your behalf
or on behalf of any other party; and
o may rely upon any documents they believe in good faith to be
genuine and to have been signed or presented by the proper
party.
NONE OF THESE LIMITATIONS AFFECTS INVESTOR RIGHTS UNDER THE UNITED
STATES FEDERAL SECURITIES LAWS.
In the agreement, TRICOM and The Bank of New York agree to indemnify
each other under certain circumstances.
REQUIREMENTS FOR DEPOSITARY ACTIONS
Before The Bank of New York will issue or register transfer of an ADR,
make a distribution on an ADR, or process the withdrawal of any shares, The Bank
of New York may require:
o payment of stock transfer or other taxes or other governmental
charges and transfer or registration fees charged by third
parties for the transfer of any shares or other deposited
securities;
o production of satisfactory proof of the identity and
genuineness of any signature or other information it deems
necessary; and
o compliance with regulations it may establish, from time to
time, consistent with the agreement, including presentation of
transfer documents.
The Bank of New York may refuse to deliver, transfer, or register
transfers of ADRs generally when our books or the books of The Bank of New York
are closed, or at any time if we or The Bank of New York thinks it advisable to
do so.
You have the right to cancel your ADRs and withdraw the underlying
shares at any time except:
o when temporary delays arise because: (1) The Bank of New York
or TRICOM has closed its transfer books; (2) the transfer of
shares is blocked to permit voting at a shareholders' meeting;
or (3) TRICOM is paying a dividend on the shares;
o when you or other ADR holders seeking to withdraw shares owe
money to pay fees, taxes and similar charges; or
o when it is necessary to prohibit withdrawals in order to
comply with any laws or governmental regulations that apply
to ADRs or to the withdrawal of shares or other deposited
securities.
This right of withdrawal may not be limited by any other provision of
the agreement.
PRE-RELEASE OF ADRS
In certain circumstances, subject to the provisions of the agreement,
The Bank of New York may issue ADRs before deposit of the underlying shares.
This is called a pre-release of the ADR. The Bank of New York may also deliver
shares upon cancellation of pre-released ADRs (even if the ADRs are
-40-
canceled before the pre-release transaction has been closed out). A pre-release
is closed out as soon as the underlying shares are delivered to The Bank of New
York. The Bank of New York may receive ADRs instead of shares to close out a
pre-release. The Bank of New York may pre-release ADRs only under the following
conditions:
o before or at the time of the pre-release, the person to whom
the pre-release is being made must represent to The Bank of
New York in writing that it or its customer owns the shares or
ADRs to be deposited;
o the pre-release must be fully collateralized with cash or
other collateral that The Bank of New York considers
appropriate; and
o The Bank of New York must be able to close out the pre-release
on not more than five business days' notice.
o In addition, The Bank of New York will limit the number of ADRs that
may be outstanding at any time as a result of pre-release, although The
Bank of New York may disregard the limit from time to time, if it
thinks it is appropriate to do so.
TAX CONSIDERATIONS OF THE RIGHTS OFFERING
DOMINICAN REPUBLIC TAX CONSIDERATIONS
In the opinion of our Dominican law firm, Pellerano & Herrera, the
discussion below sets forth the material Dominican Republic income tax
consequences of this offering to the holders of our ADSs, Class A common stock
and Class B stock with respect to the distribution of the rights, which for the
purposes of this tax discussion includes oversubscription rights, to them and of
the exercise of such rights.
ISSUANCE OF RIGHTS
You will not recognize taxable income for Dominican income tax purposes
upon distribution of the rights.
LAPSE OF THE RIGHTS
If you own shares of Class A common stock and allow your rights
received to lapse, no gain or loss will be recognized and the basis in the
shares upon which you received a distribution of the rights will be the same as
it was immediately prior to the distribution of the rights.
EXERCISE OF RIGHTS; SALE OF SHARES
You will not recognize any gain or loss upon the exercise of your
rights. The basis of the shares acquired through your exercise of the rights
will be equal to the subscription price paid for the shares acquired through
exercise of the rights. If you sell your shares acquired through the exercise of
the rights, you may recognize gain or loss in an amount equal to the difference
between the amount realized on the sale and your basis in the shares, adjusted
for inflation. Regulations for the application of the Dominican Tax Code clarify
how the tax basis is to be calculated and also provide how the inflation
adjustment is to be applied.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
-41-
In the opinion of our United States law firm, Piper Marbury Rudnick &
Wolfe LLP, the discussion below sets forth the material United States income tax
consequences of this offering to the holders of our ADSs, Class A common stock
and Class B stock with respect to the distribution of the rights, which for the
purposes of this tax discussion includes oversubscription rights, to them and of
the exercise of such rights. The summary is based on the Internal Revenue Code
of 1986, as amended, which we refer to as the Code, the Treasury regulations
promulgated under the Code, judicial authority and current administrative rules
and practice, all of which are subject to change on a prospective or retroactive
basis.
The tax consequences of this offering under state, local and foreign
law are not discussed. The consequences of this offering with respect to any
taxes other than income taxes are not discussed. Moreover, special
considerations not described in this summary may apply to some taxpayers or some
types of taxpayers, including financial institutions, broker-dealers, nominee
holders of our shares, life insurance companies, tax- exempt organizations and
foreign taxpayers. The discussion is limited to those who have held the ADSs,
Class A common stock and Class B stock, and will hold the rights and any shares
acquired upon the exercise of the rights, as capital assets (generally, property
held for investment) within the meaning of Section 1221 of the Code.
WE URGE STOCKHOLDERS TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE PARTICULAR FEDERAL INCOME OR OTHER TAX CONSEQUENCES TO THEM OF THE OFFERING,
AS WELL AS THE TAX CONSEQUENCES UNDER STATE, LOCAL AND FOREIGN LAW AND THE
POSSIBLE EFFECTS OF CHANGES IN TAX LAWS.
ISSUANCE OF RIGHTS
You will not recognize taxable income for federal income tax purposes
upon distribution of the rights.
STOCKHOLDER BASIS AND HOLDING PERIOD OF THE RIGHTS
As a result of receiving the distribution of rights, you must generally
allocate the basis of your ADSs and Class A common stock (treating them as one
class of stock) or Class B stock between such stock and the rights in proportion
to their respective fair market values on the date of issuance. For example,
assume that you own Class A common stock with a basis of $80 and a fair market
value of $100 and you are issued rights to acquire new shares of Class A common
stock with a fair market value of $20. After the issuance, you will have a basis
of $66.67 in your Class A common stock and $13.33 in your rights. If the rights
are subsequently exercised, the basis of the new stock acquired will be equal to
the subscription price paid for the new stock plus your basis in the rights
exercised. If the rights are sold prior to exercise, the gain (or loss) will be
equal to the amount realized on the sale less your basis in the rights.
If the fair market value of your rights on the date of issuance is less
than 15% of the fair market value of the ADSs and Class A common stock or Class
B stock you hold on the date of issuance, then your basis in the rights will be
zero. In such a case, you may make an irrevocable election on your federal
income tax return for the year relating to the date of issuance to allocate the
basis of your ADSs and Class A common stock or Class B stock between such stock
and the rights in proportion to their respective fair market values on the date
of issuance in the manner set forth in the prior paragraph. An election to
allocate basis to the rights must be in the form of a statement attached to your
income tax return for the year in which the rights were received. If you make
such an election, you must retain a copy of the election, and of the tax return
with which it was filed, in order to substantiate the basis allocated to the
rights. If such an election is not made, the basis of the new stock acquired
will be equal to the subscription price paid. If such an election is not made
and the rights are sold prior to their exercise, the gain will be equal to the
amount realized on the sale.
-42-
Your holding period with respect to the rights will include your
holding period for the ADSs, Class A common stock or Class B stock with respect
to which the rights were distributed.
LAPSE OF THE RIGHTS
If you allow your rights received to lapse, no gain or loss will be
recognized and the basis in the shares upon which you received a distribution of
the rights will be the same as it was immediately prior to the distribution of
the rights.
EXERCISE OF THE RIGHTS; BASIS AND HOLDING PERIOD OF THE COMMON STOCK
You will not recognize any gain or loss upon the exercise of your
rights. The basis of the shares acquired through your exercise of the rights
will be equal to the sum of the subscription price paid for the shares acquired
through exercise of the rights and your basis in the rights, if any. The holding
period for the shares acquired through exercise of the rights will begin on the
date the rights are exercised.
For example, assume you hold Class A common stock for a period of two
years and at the end of such two year period, an issuance of rights to acquire
new shares of Class A common stock is made to you on your Class A common stock.
Immediately after the issuance of the rights, your holding period in the rights
will be two years (i.e., the rights will also be a long-term capital asset in
your hands). Assume further that $10 of basis is allocated to the rights and the
subscription price for the new Class A common stock is $100. Your basis in the
new Class A common stock will be $110 (i.e., your $10 basis in your rights plus
the $100 subscription price paid to exercise the rights) on the date you
exercise your rights. The holding period for the new Class A common stock will
then begin on the day the rights are exercised.
SALE OF SHARES
If you sell your shares acquired through the exercise of the rights,
you will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and your basis in the shares, which will include the
exercise price. If you hold the shares as a capital asset, gain or loss on the
sale will be long-term or short-term capital gain or loss, depending on whether
you have held the shares for more than one year beginning on the date of
exercise of the rights.
TAX CONSIDERATIONS OF OWNING SHARES
DOMINICAN REPUBLIC TAX CONSIDERATIONS
The following discussion summarizes the material Dominican Republic
income tax consequences of an investment in the ADRs, ADSs or shares of Class A
common stock by a person who is neither domiciled in nor a resident of the
Dominican Republic for tax purposes and who holds such ADRs, ADSs or shares of
Class A common stock for investment purposes and not for purposes of a trade or
business. In the opinion of our Dominican law firm, Pellerano & Herrera, the
discussion sets forth the material Dominican Republic consequences of such an
investment. The discussion is not intended as tax advice to any particular
investor.
Under our 1996 concession agreement with the Dominican government which
grants to us our right to operate as a telecommunications provider, dividends
and interest paid to any of our shareholders, bondholders or other investors are
exempt from Dominican income tax. Under Dominican tax law, the term "dividends"
refers to any distribution of profits of a company to its shareholders. Thus,
under the concession agreement, any dividend or distribution paid by us with
respect to the Class A common stock will not be subject to Dominican income tax.
-43-
Our concession agreement has not yet been approved by the Dominican
Congress, but was duly executed by the Dominican Executive Branch, making the
concession itself valid and binding on the Dominican government under our laws.
Provisions in our concession agreement providing preferential tax treatment for
Tricom and its shareholders still need to be submitted to and approved by the
Dominican Congress to be binding under the Dominican Constitution. At the time
our concession agreement was executed, it was not submitted to the Dominican
Congress for approval for political reasons. Our concession agreement, along
with the concession agreements of most of Tricom's competitors in the
telecommunications business, was not submitted to the Dominican Congress because
the Dominican Congress was greatly divided at that time and the Dominican
Executive Branch did not control a majority of the Congress. However, the tax
provisions contained in these concession agreements, along with other concession
agreements in other areas, have been completely followed and complied with by
our Dominican Tax Administration.
Until our concession agreement is approved by the Dominican Congress,
however, cash dividends and other distributions paid by us with respect to ADSs
or shares of Class A common stock held by any holder could be subject to a 25%
withholding tax, which would be required to be withheld by us and paid to the
Dominican tax administration at the time a cash dividend or other distribution
is paid. Such tax withheld may not be a creditable foreign tax in determining
the U.S. tax liability of such holder. We are not aware of any plans of the
Dominican government to submit our 1996 concession agreement for approval to the
Dominican Congress.
Our concession agreement does not specifically address whether capital
gains taxes will apply to sales of ADSs in the Dominican Republic. However, it
states that the transfer or sale of our shares of any type will be exempt from
Dominican income tax. Under the principles of territoriality underlying the
Dominican constitution, gain from the sale or exchange of ADRs evidencing the
ADSs by a foreign holder outside of the Dominican Republic would not be subject
to taxation by the Dominican tax authority even if our 1996 concession agreement
were not applicable to gains on the transfer or sale of ADSs.
Until our 1996 concession agreement is approved by the Dominican
Congress, the Dominican government could require payment of capital gains tax on
gain recognized on the sale or exchange in the Dominican Republic of shares of
Class A common stock (as distinguished from sales or exchanges of ADSs). The
capital gains tax was instituted in the Dominican Republic only in 1992 and was
later modified by regulations in 1998 as part of major tax reform legislation.
Under present law, the capital gains tax rate is identical to the regular income
tax rate of the person or entity that earned such gain; there is no preferential
rate. Thus, a corporation, whether based in the Dominican Republic or not,
selling shares of Class A common stock in the Dominican Republic would be
required to pay the corporate income tax of 25% on any gain from a sale or
exchange of such shares. An individual, whether a resident of the Dominican
Republic or not, also would have to pay income tax at the applicable individual
rate, as set forth below, on gain from the sale of shares of Class A common
stock in the Dominican Republic. The individual income tax rates applicable in
the Dominican Republic since January 1, 2001 are as follows:
If Taxable Income is: The Tax is:
----------------------------------------------------- -----------
Not over RD$120,000.00 0.
Over RD$120,000.01 but not over RD$200,000.00 15% of taxable income over RD$120,000.01.
Over RD$200,000.01 but not over RD$300,000.00 RD$12,000.00 plus 20% of the excess over
RD$200,000.01.
Over RD$300,000.01 RD$32,000.00 plus 25% of the excess over
RD$300,000.01.
The amount of gain on which the capital gains tax is assessed is equal
to the sale or transfer price (i.e., amount realized on the sale or transfer)
minus the acquisition price, adjusted for inflation.
-44-
Regulations for the application of the Dominican Tax Code clarify how the tax
basis is to be calculated and also provide how the inflation adjustment is to be
applied.
There is no income tax treaty in force between the Dominican Republic
and the United States.
There are no Dominican inheritance or succession taxes applicable to
the ownership, transfer or disposition of ADSs by a foreign holder not domiciled
in the Dominican Republic at the moment of death. It is unclear whether
Dominican gift taxes would apply to the transfer or other disposition by gift of
shares of Class A common stock by a non-resident foreign holder; however, ADSs
or ADRs are not subject to Dominican gift taxes. There are no Dominican stamp,
issue, registration or similar taxes or duties payable by holders of ADSs or
shares of Class A common stock.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of our United States law firm, Piper Marbury Rudnick &
Wolfe LLP, the discussion below sets forth the material United States federal
income tax consequences of an investment in the ADSs. This discussion is based
upon United States federal income tax laws and regulations presently in force
and such authorities may be repealed, revoked or modified, possibly with
retroactive effect, so as to result in United States federal income consequences
different from those discussed below.
The discussion is not a full description of all tax considerations that
may be relevant to a decision to purchase ADSs or to the holding or disposition
of such instruments. In particular, the discussion is directed only to U.S.
holders that will hold ADSs as capital assets and that have the United States
dollar as their functional currency. It does not address the tax treatment of
U.S. holders that are subject to special tax rules, including banks, securities
dealers, insurance companies, tax-exempt entities, holders who hold ADSs as part
of a hedging, straddle or conversion transaction and holders of 10% or more of
the total combined voting power of our voting shares. Prospective purchasers
should consult their tax advisors about the federal, state, local and foreign
tax consequences to them of the purchase, ownership and disposition of ADSs.
U.S. HOLDER
"U.S. holder" means a beneficial owner of ADSs that is:
(1) a United States citizen or resident,
(2) a corporation, partnership or other entity created or
organized under the laws of the United States or any State or
any political subdivision thereof,
(3) an estate the income of which is subject to United States
federal income taxation regardless of its source, or
(4) any trust if both:
o A COURT WITHIN THE UNITED STATES IS ABLE TO EXERCISE
PRIMARY SUPERVISION OVER THE ADMINISTRATION OF THE
TRUST; AND
o one or more United States persons have the authority
to control all substantial decisions of the trust as
described in Section 7701(a)(30) of the Code.
If the obligations contemplated by the deposit agreement are performed
in accordance with its terms, holders of ADSs will be treated for United States
federal income tax purposes as the owners of the shares of Class A common stock
represented by ADSs.
-45-
CASH AND OTHER DISTRIBUTIONS
Distributions made by us with respect to ADSs (other than distributions
in liquidation and certain distributions in redemption of stock) will generally
be taxed as ordinary dividend income to the extent that such distributions do
not exceed our current and accumulated earnings and profits, as determined in
accordance with United States federal income tax principles. Distributions, if
any, in excess of our current and accumulated earnings and profits will
constitute a non-taxable return of capital and will be applied against and will
reduce your tax basis in the ADSs (but not below zero). To the extent that such
distributions exceed your basis in the shares, the excess generally will be
treated as capital gain.
Dividends generally will be included in your gross income as ordinary
income when the dividends are received by you or the depositary, as applicable.
Dividends paid in Dominican pesos will be included in your gross income as a
United States dollar amount based on the exchange rate in effect on the day of
receipt by you or the depositary, as applicable. Any gain or loss recognized
upon a subsequent sale or conversion of the Dominican pesos into U.S. dollars
will be United States source ordinary income or loss. Dividends will generally
not be eligible for the dividends-received deduction allowed to corporations.
Dividends generally will be foreign source income for purposes of
determining your foreign tax credit limitation and generally will be "passive"
income. Any Dominican tax withheld on such dividends may not be a creditable
foreign tax in determining your U.S. tax liability. As we have been advised by
our local counsel that we would be permitted to credit the amount withheld
against our Dominican corporate income tax, you might be treated as, in effect,
not paying any Dominican tax.
CAPITAL GAINS AND LOSSES
You will recognize capital gain or loss on the sale or other
disposition of ADSs in an amount equal to the difference between the amount
realized for the ADSs over their adjusted tax basis. If you are an individual,
such gain or loss will be taxed at the rate of tax for capital gains provided
you held the ADSs for longer than one year. The deductibility of capital losses
is subject to limitations. You will not recognize gain or loss on any deposits
or withdrawals of shares of Class A common stock in exchange for ADSs. Any gain
you recognize on a sale of ADSs generally will be treated as United States
source income for purposes of determining your foreign tax credit limitation.
BACKUP WITHHOLDING
You may be subject to backup withholding at the rate of 31% with
respect to dividends paid on the ADSs or the proceeds of a sale, exchange or
redemption of ADSs unless (1) you are a corporation or come within certain other
exempt categories, and, when required, demonstrate this fact, and (2) provide a
correct taxpayer identification number, certify that you are not subject to
backup withholding and otherwise comply with applicable requirements of the
backup withholding rules. Any amount withheld under these rules will be
creditable against your U.S. federal income tax liability. If you do not provide
a correct taxpayer identification number, you may be subject to penalties
imposed by the U.S. Internal Revenue Service. Currently, the backup withholding
rate is 30.5%, but is scheduled to be reduced to 30% as of January 1, 2002.
LEGAL MATTERS
The validity of the ADSs is being passed upon for us by Piper
Marbury Rudnick & Wolfe LLP, New York, New York. The validity of the shares of
Class A common stock underlying such ADSs is being passed upon for us by our
Dominican counsel, Pellerano & Herrera, Santo Domingo, Dominican Republic. Piper
Marbury Rudnick & Wolfe LLP may rely, without independent investigation, upon
the opinion of Pellerano & Herrera with respect to matters governed by Dominican
Republic Law.
-46-
EXPERTS
Our consolidated financial statements at December 31, 1999 and 2000,
and for each of the years in the three-year period ended December 31, 2000,
incorporated in this prospectus by reference to our Annual Report on Form 20-F
for the year ended December 31, 2000, as amended, have been audited by KPMG
(member firm of KPMG International in the Dominican Republic), independent
public accountants, as stated in their report appearing in our Annual Report,
and are incorporated in reliance upon the report of such firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual reports on Form 20-F and reports on Form 6-K with the
SEC. You may read and copy this information at the SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's regional
offices in New York, New York and Chicago, Illinois. You can also request copies
of the documents, upon payment of a duplicating fee, by writing to the Public
Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the Public Reference Room. In addition, our
reports, proxy statements and other information may be inspected at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
This prospectus incorporates by reference the following documents:
o our Annual Report on Form 20-F for the year ended December 31,
2000, which we have previously filed with the SEC and is not
delivered with this prospectus;
o our report on Form 6-K reporting results for the quarter ended
March 31, 2001, which we have previously filed with the SEC
and is not delivered with this prospectus; and
o our report on Form 6-K reporting results for the quarter ended
June 30, 2001, which we have previously filed with the SEC and
is not delivered with this prospectus.
In addition, this prospectus will be deemed to incorporate by
reference:
o any report on Form 6-K submitted by us to the SEC prior to the
termination of the offering and identified by us as being
incorporated by reference into this prospectus.
You may request a copy of these filings, at no cost, by contacting us
at Ave. Lope de Vega No. 95, Santo Domingo, Dominican Republic, Attention:
Investor Relations, telephone number: 809-476-4044 or at our website,
www.tdr-investor.com.
-47-
====================================== ===================================
Tricom, S.A. has not authorized any
person to give you information that
differs from the information in [TRICOM LOGO]
this prospectus. You should rely
solely on the information contained
in this prospectus. This prospectus
is not an offer to sell these
securities, and we are not
soliciting offers to buy these
securities in any state where the [_________] AMERICAN
offer or sale of these securities DEPOSITARY SHARES
is not permitted. The information EACH REPRESENTING
in this prospectus is accurate only ONE SHARE OF CLASS A
as of the date of this prospectus, COMMON STOCK
even if the prospectus is delivered
to you after the prospectus date,
or you buy Tricom, S.A. American
Depositary Shares after the
prospectus date.
-----------------------------
PROSPECTUS
-----------------------------
[__________ __], 2001
====================================== ===================================
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 8. INDEMNIFICATION OF DIRECTORS AND OFFICERS
There are no statutory provisions under applicable Dominican law for
the indemnification or insuring of directors against liability.
Pursuant to Dominican law, shareholders are asked to vote upon the
performance of management at annual shareholders' meetings. The Company's
vigilance officer delivers a report on the financial performance of the Company
and other issues related to management's performance. If the holders of a
majority of the votes entitled to be cast approve management's performance, all
shareholders are deemed to have released the directors and officers from claims
or liability to the Company or its shareholders arising out of actions taken or
any failure to take actions by any of them on behalf of the Company during the
prior fiscal year, with certain exceptions, and shareholders will likely fail in
any suit brought in a Dominican court with respect to such acts or omissions.
Officers and directors may not be released from any claims or liability for
criminal acts, fraud, self-dealing or gross negligence. If the shareholders do
not approve management's performance, the vigilance officer's report may form
the basis of any suit brought by the shareholders against the officers and
directors of the Company.
Article 48 of the Company's by-laws provides that the Company shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person, or a
person of whom he or she is the legal representative, is or was a director,
officer, employee or agent of the Company, or serves or served any other
enterprise as a director, officer, employee or agent at the request of the
Company.
The Company shall pay any expenses reasonably incurred by a director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by the Company under Article 48
or otherwise. The Company may, by action of its Board of Directors, provide for
the payment of such expenses incurred by employees and agents of the Company as
it deems appropriate.
ITEM 9. EXHIBITS
The following exhibits are filed as part of this Registration
Statement:
Exhibit Description
------- -----------
4.1 Form of Class A Common Stock Certificate
(Incorporated by reference to Exhibit 4.1 to the
Company's Amendment No. 1 to Registration Statement
on Form F-1, filed on May 1, 1998).
4.2 Form of American Depositary Receipt (included as part
of Exhibit 4.3) (Incorporated by reference to Exhibit
4.2 to the Company's Registration Statement on Form
F-1, filed on April 2, 1998).
4.3 Form of Deposit Agreement between The Bank of New
York, TRICOM, S.A. and owners and holders of American
Depositary Receipts (Incorporated by reference to
Exhibit 4.3 to the Company's Registration Statement
on Form F-1, filed on April 2, 1998).
II-1
5.1 Opinion of Pellerano & Herrera regarding legality.
8.1 Tax Opinion of Piper Marbury Rudnick & Wolfe LLP.
8.2 Tax Opinion of Pellerano & Herrera.
23.1 Consent of KPMG (member firm of KPMG International in
the Dominican Republic).
23.2 Consent of Piper Marbury Rudnick & Wolfe LLP
(additional consent included as part of Exhibit 8.1
above).
23.3 Consent of Pellerano & Herrera (included as part of
Exhibit 5.1 and 8.2 above).
24.1 Power of Attorney for directors and officers of
TRICOM, S.A. (included on signature page).
99.1 Form of Subscription Certificate.
99.2 Instructions to Shareholders.
99.3 Form of Letter to Shareholders.
99.4 Form of Letter to Brokers.
99.5 Form of Rights Agency Agreement.
ITEM 10. UNDERTAKINGS
(a) The undersigned hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution;
II-2
Provided, however, paragraphs (i) and (ii) do not apply if the
information required in a post-effective amendment is incorporated by reference
from periodic reports filed by the Registrant under the Securities Exchange Act
of 1934, as amended.
(2) That, for determining any liability under the Securities Act, to treat
post-effective amendment as a new registration statement of the securities
offered, and the offering of securities at the time to be the initial bona fide
offering.
(3) To file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) To file a post-effective amendment to the registration statement to include
any financial statements required by Item 8.A of Form 20-F at the start of any
delayed offering or throughout a continuous offering.
Financial statements and information otherwise required by Section
10(a)(3) of the Securities Act need not be furnished, PROVIDED that the
registrant includes in the prospectus, by means of a post-effective amendment,
financial statements required pursuant to this paragraph (4) and other
information necessary to ensure that all other information in the prospectus is
at least as current as the date of those financial statements. Notwithstanding
the foregoing, with respect to registration statements on Form F-3, a
post-effective amendment need not be filed to include financial statements and
information required by Section 10(a)(3) of the Securities Act if such financial
statements and information are contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the Form F-3.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions described in Item 8 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue. (i)
The undersigned Registrant hereby undertakes that:
(1) for the purpose of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant under Rule 424(b)(1) or (4), or 497(h) under
the Securities Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(2) for the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed a
new registration statement relating to the securities
II-3
offered therein, and that offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form F-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Santo Domingo, Dominican Republic on October 9, 2001
TRICOM, S.A.
By: /s/ MANUEL ARTURO PELLERANO PENA
------------------------------------
Manuel Arturo Pellerano Pena,
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ MANUEL ARTURO PELLERANO PENA Chairman of the Board of October 9, 2001
---------------------------------- Directors and Chief Executive
Manuel Arturo Pellerano Pena Officer (Principal Executive
Officer)
* Vice President of the Board of October 9, 2001
----------------------------------- Directors
Hector CastroNoboa
* Secretary o the Board of October 9, 2001
----------------------------------- Directors, Executive Vice
Marcos J. Troncoso President and Member of the
Office of the President
/S/ CARL H. CARLSON BARRUOS Treasurer of the Board of October 9, 2001
----------------------------------- Directors, Executive Vice
Carl H. Carlson Barruos President and Member of the
Office of the President
* First Vice President, Finance October 9, 2001
----------------------------------- and Administrative Division
Carlos F. Vargas and Chief Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
* Director October 9, 2001
-----------------------------------
Juan Felipe Mendoza
II-5
* Director October 9, 2001
-----------------------------------
Anibal de Castro
Director October 9, 2001
-----------------------------------
Ralph Smith
Director October 9, 2001
-----------------------------------
Kevin Wiley
Director October 9, 2001
-----------------------------------
Carl O. Barry
Director October 9, 2001
-----------------------------------
Richard Haning
* Director October 9, 2001
-----------------------------------
Fernando Rainieri
Director October 9, 2001
-----------------------------------
Jose Manuel Villalvazo
* By: /s/ Carl H. Carlson Barruos
-----------------------------------
Carl H. Carlson Barruos,
Attorney-in-Fact
II-6
SIGNATURE OF AUTHORIZED REPRESENTATIVE
Pursuant to the Securities Act of 1933, as amended, the undersigned,
the duly authorized representative in the United States of TRICOM, S.A. has
signed this Registration Statement in Santo Domingo, Dominican Republic on
October 9, 2001.
TRICOM USA, INC.
By: /s/ CARL H. CARLSON BARRUOS
---------------------------------
Carl H. Carlson Barruos
TREASURER OF THE BOARD
OF DIRECTORS, EXECUTIVE
VICE PRESIDENT AND MEMBER
OF THE OFFICE OF THE
PRESIDENT
II-7
EXHIBITS
Exhibit Description
------- -----------
4.1 Form of Class A Common Stock Certificate
(Incorporated by reference to Exhibit 4.1 to the
Company's Amendment No. 1 to Registration Statement
on Form F-1, filed on May 1, 1998).
4.2 Form of American Depositary Receipt (included as part
of Exhibit 4.3) (Incorporated by reference to Exhibit
4.2 to the Company's Registration Statement on Form
F-1, filed on April 2, 1998).
4.3 Form of Deposit Agreement between The Bank of New
York, TRICOM, S.A. and owners and holders of American
Depositary Receipts (Incorporated by reference to
Exhibit 4.3 to the Company's Registration Statement
on Form F-1, filed on April 2, 1998).
5.1 Opinion of Pellerano & Herrera regarding legality.
8.1 Tax Opinion of Piper Marbury Rudnick & Wolfe LLP.
8.2 Tax Opinion of Pellerano & Herrera.
23.1 Consent of KPMG (member firm of KPMG International in
the Dominican Republic).
23.2 Consent of Piper Marbury Rudnick & Wolfe LLP
(additional consent included as part of Exhibit 8.1
above).
23.3 Consent of Pellerano & Herrera (included as part of
Exhibit 5.1 and 8.2 above).
24.1 Power of Attorney for directors and officers of
TRICOM, S.A. (included on signature page). =
99.1 Form of Subscription Certificate.
99.2 Instructions to Shareholders.
99.3 Form of Letter to Shareholders.
99.4 Form of Letter to Brokers .
99.5 Form of Rights Agency Agreement.
II-8
EX-5.1
3
a2060685zex-5_1.txt
EXHIBIT 5.1
EXHIBIT 5.1
[LETTERHEAD OF PELLERANO & HERRERA]
October 8, 2001
Sirs
TRICOM, S. A.:
Avenida Lope de Vega No. 95
Santo Domingo, Dominican Republic
Re: Registration Statement on Form F-3
Matter: 662*980013464
We have acted as Dominican counsel to TRICOM, S.A., a corporation (sociedad
anonima) organized under the laws of the Dominican Republic (the "Company"), in
connection with the preparation and filing of a Registration Statement on Form
F-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the proposed offering by the Company
(the "Offering") of shares of the Company's Class A Common Stock, RD$10 per
share (the "Class A Common Stock").
In rendering this opinion, we have examined and are familiar with originals or
copies, certified or otherwise identified to our satisfaction, of the Amended
and Restated By-Laws of the Company (estatutos) and such other agreements,
corporate records, certificates of public officials, powers of attorney,
governmental orders and other documents as we have deemed necessary or
appropriate as a basis for the opinions hereinafter expressed. In our
examination, we have assumed the legal capacity of all natural persons, the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies and the authenticity of the originals of
such latter Documents. As to any facts material to the opinions expressed
herein, we have, when such facts were not independently established, relied upon
certificates of public officials and certificates, oaths, declarations and
representations of the Company and the Company's officers, directors and other
representatives.
We are attorneys admitted to the practice of law in the Dominican Republic, and
we express no opinion as to the law of any jurisdiction other than the laws of
the Dominican Republic. The opinions set forth below are based upon the laws,
rules or regulations, as the case may be, in effect on the date hereof.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation (sociedad anonima) organized and
existing in good standing under the laws of the Dominican Republic.
2. The shares of Class A Common Stock proposed to be offered by the
Company, when issued and delivered upon payment therefor in
accordance with the terms and conditions of the rights offering
described in the Registration Statement, will be duly authorized,
validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to us contained under the heading
"Legal Matters" in the Prospectus which forms part of the Registration
Statement. In giving the foregoing consent to being referenced under the heading
"Legal Matters," we do not hereby admit that we belong to the category of
persons whose consent is required under Section 7 of the
Securities Act, or the rules and regulations promulgated by the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ PELLERANO & HERRERA
--------------------------------
Pellerano & Herrera
EX-8.1
4
a2060685zex-8_1.txt
EXHIBIT 8.1
EXHIBIT 8.1
[LETTERHEAD OF PIPER MARBURY RUDNICK & WOLFE LLP]
October 8, 2001
TRICOM, S.A.
Avenida Lope de Vega No. 95
Santo Domingo, Dominican Republic
Ladies and Gentlemen:
Reference is made to the prospectus (the "Prospectus"), which constitutes
part of the registration statement on Form F-3 ("Registration Statement"), to be
filed by TRICOM, S.A. with the Securities and Exchange Commission on or about
the date hereof pursuant to the Securities Act of 1933, as amended, for the
registration of American Depository Shares ("TRICOM ADSs") representing shares
of Class A common stock of TRICOM, S.A.
We are of the opinion that the statements set forth under the captions
"Tax Considerations of the Rights Offering - United States Federal Income Tax
Considerations" and "Tax Considerations of Owning Shares - United States Federal
Income Tax Considerations" in the Prospectus constitute an accurate description,
in general terms, of certain material United States federal income tax
considerations that may be relevant to the prospective purchasers of the TRICOM
ADSs.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to us in the Prospectus under the
captions "Tax Considerations of the Rights Offering - United States Federal
Income Tax Considerations" and "Tax Considerations of Owning Shares - United
States Federal Income Tax Considerations."
Very truly yours,
/s/ PIPER MARBURY RUDNICK & WOLFE LLP
--------------------------------------
Piper Marbury Rudnick & Wolfe LLP
EX-8.2
5
a2060685zex-8_2.txt
EXHIBIT 8.2
EXHIBIT 8.2
[LETTERHEAD OF PELLERANO & HERRERA]
October 8, 2001
TRICOM, S.A.
Avenida Lope de Vega No. 95
Santo Domingo, Dominican Republic
Re: Registration Statement on Form F-3
Matter: 662*980013464
Ladies and Gentlemen:
Reference is hereby made to the prospectus (the "Prospectus"), which constitutes
part of the registration statement on Form F-3 (File No. 333-65842)
("Registration Statement") filed with the Securities and Exchange Commission by
TRICOM, S.A. in connection with the registration for issuance and sale of
shares of TRICOM, S.A.'s Class A Common Stock, par value RD$10 per shares
("Class A Common Stock"), under the Securities Act of 1933, as amended.
We are of the opinion that the statements set forth under the captions "Tax
Considerations of the Rights Offering - Dominican Republic Tax Considerations"
and "Tax Considerations of Owning Shares - Dominican Republic Tax
Considerations" in the Prospectus constitute an accurate description, in general
terms, of certain material Dominican tax considerations that may be relevant to
investors in the American Depositary Shares, each of which will represent one
share of Class A Common Stock.
We hereby consent to the reference to us contained under the captions "Tax
Considerations of the Rights Offering - Dominican Republic Tax Considerations"
and "Tax Considerations of Owning Shares - Dominican Republic Tax
Considerations" in the Prospectus.
Very truly yours,
/s/ PELLERANO & HERRERA
----------------------------
Pellerano & Herrera
EX-23.1
6
a2060685zex-23_1.txt
EXHIBIT 23.1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
TRICOM, S. A.:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the headings "Experts" and "Summary Financial Data"
in the prospectus.
/s/ KPMG
---------------------------------
Member Firm of KPMG International
Santo Domingo, Dominican Republic
October 8, 2001
EX-23.2
7
a2060685zex-23_2.txt
EXHIBIT 23.2
EXHIBIT 23.2
[LETTERHEAD OF PIPER MARBURY RUDNICK & WOLFE LLP]
October 8, 2001
TRICOM, S.A.
Avenida Lope de Vega No. 95
Santo Domingo, Dominican Republic
Re: TRICOM, S.A.
Registration Statement on Form F-3
Ladies and Gentlemen:
Reference is hereby made to that certain Registration Statement on Form
F-3 (File No. 333-65842) filed with the Securities and Exchange Commission by
TRICOM, S.A. in connection with the registration under the Securities Act of
1933, as amended, of shares of TRICOM, S.A.'s Class A Common Stock, par value
RD$10 per share (the "Registration Statement"). We hereby consent to being
referenced in the Prospectus, which forms a part of the Registration Statement,
under the heading "Legal Matters." In giving the foregoing consent to being
referenced under the heading "Legal Matters," we do not thereby admit that we
belong to the category of persons whose consent is required under Section 7 of
the Securities Act, or the rules and regulations promulgated by the Securities
and Exchange Commission thereunder.
Very truly yours,
/s/ PIPER MARBURY RUDNICK & WOLFE LLP
--------------------------------------
Piper Marbury Rudnick & Wolfe LLP
EX-99.1
8
a2060685zex-99_1.txt
EXHIBIT 99.1
EXHIBIT 99.1: FORM OF SUBSCRIPTION CERTIFICATE.
CONTROL No. ___________ Number of Subscription Rights _____
VOID IF NOT RECEIVED BY THE SUBSCRIPTION AGENT BEFORE 5:00 P.M. NEW YORK CITY
TIME, ON ________, 2001
TRICOM, S.A.
SUBSCRIPTION RIGHTS FOR AMERICAN DEPOSITARY SHARES
Dear Shareholder:
As the registered owner of this Subscription Certificate, you are the
owner of the number of subscription rights (each a "Subscription Right") shown
above. Each Subscription Right entitles you to subscribe for one American
Depositary Share, each representing one share of Class A Common Stock, par value
RD$10 per share ("ADS"), of Tricom, S.A. (the "Subscription Privilege"). You may
subscribe for such shares at the Subscription Price of $[ ] per ADS (the "Basic
Subscription Right"). If you subscribe for all of the ADSs available pursuant to
the Basic Subscription Right, you are also entitled to purchase additional ADSs
at the Subscription Price limited to a percentage of the unsubscribed ADSs of
your pro rata ownership of our ADSs with Class B stock (subject to proration)
(the "Oversubscription Privilege").
The other terms and conditions of these Subscription Rights are set
forth in the enclosed prospectus. You have been issued [ ] Subscription Rights
per ADS that you held on [ ], 2001. You may not purchase fractional ADSs, but
instead your number of Subscription Rights was rounded down to the nearest whole
Subscription Right.
SAMPLE CALCULATION OF SUBSCRIPTION PRIVILEGE:
ADSs owned on [ ], 2001: 100
Number of Subscription Rights issued per ADS: [ ]
Number of Subscription Rights required to purchase one ADS: 1
New ADSs you may purchase: [ ]
----
You have four (4) choices:
1. You can subscribe for all of the new shares listed at the top
of the page (the "Basic Subscription Right").
2. You can subscribe for more than the number of new shares
listed above (the "Oversubscription Privilege"). Shares may be
available to you subject to an allocation process as described
in the Prospectus.
3. You can subscribe for less than the number of new shares
listed above and allow the rest of your Rights to expire.
4. If you do not want to purchase any additional shares, you can
disregard this material.
TO SUBSCRIBE, FULL PAYMENT OF THE SUBSCRIPTION PRICE IS REQUIRED FOR EACH ADS.
YOU MUST COMPLETE THE REVERSE SIDE OF THIS FORM TO SUBSCRIBE FOR NEW ADSs.
ATTEST: TRICOM, S.A.
By: /s/ CARL H. CARLSON BARRUOS By: /s/ MANUEL ARTURO PELLERANO PENA
---------------------------------- ----------------------------------
Treasurer of the Board of Directors, Chairman of the Board of Directors
Executive Vice President and Member and Chief Executive Officer
of the Office of the President
Control No.: _______________
Account No.: _______________
No. of Subscription Rights: _______________
-2-
DELIVERY OPTIONS FOR SUBSCRIPTION CERTIFICATE
TO THE SUBSCRIPTION AGENT:
BY MAIL BY HAND
The Bank of New York The Bank of New York
Tender and Exchange Department Tender And Exchange Department
P.O. Box 11248 C/o The Depository Trust Company
Church Street Station 55 Water Street
New York, NY 10286-1248 Jenrette Park Entrance
New York, New York 10041
BY OVERNIGHT COURIER: BY FACSIMILE
The Bank of New York (For Eligible Institutions Only)
Tender & Exchange Department (973) 247-4077
385 Rifle Camp Road For Confirmation of Facsimile,
West Patterson, New Jersey 074241 Telephone:
(973) 247-4076
Delivery to an address other than one of the addresses
listed above will not
constitute valid delivery.
Delivery by facsimile will not constitute valid delivery.
PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY.
IF YOU WISH TO SUBSCRIBE FOR YOUR FULL BASIC SUBSCRIPTION PRIVILEGE OR A PORTION
THEREOF:
I apply for ____________________ ADSs X $[ ] = $__________________
----
(no. of new ADSs) (amount enclosed)
IF YOU HAVE SUBSCRIBED FOR YOUR FULL BASIC SUBSCRIPTION RIGHT AND WISH TO
PURCHASE ADDITIONAL SHARES PURSUANT TO THE OVERSUBSCRIPTION PRIVILEGE:
I apply for ____________________ ADSs X $[ ] = $__________________
----
(no. of new ADSs) (amount enclosed)
-3-
TO SUBSCRIBE: I acknowledge that I have received the prospectus for this offer
and I hereby irrevocably subscribe for the number of shares indicated above on
the terms and conditions specified in the prospectus. I hereby agree that if I
fail to pay for the ADSs for which I have subscribed, Tricom, S.A. may exercise
its legal remedies against me.
_____________________________________
Signature(s) of Subscriber(s)
IMPORTANT: THE SIGNATURE(S) MUST CORRESPOND IN EVERY PARTICULAR, WITHOUT
ALTERATION, WITH THE NAME(S) AS PRINTED ON THE REVERSE OF THIS SUBSCRIPTION
CERTIFICATE.
THE SUBSCRIPTION FORM IS BINDING UPON SUBMISSION. FAILURE TO SUBMIT SUCH FORM BY
THE EXPIRATION DATE WILL RESULT IN A FORFEITURE OF THE HOLDER'S SUBSCRIPTION
RIGHTS.
THIS RIGHTS OFFERING HAS BEEN QUALIFIED OR IS BELIEVED TO BE EXEMPT FROM
QUALIFICATION ONLY UNDER THE FEDERAL LAWS OF THE UNTIED STATES AND THE LAWS OF
EACH OF THE STATES IN THE UNITED STATES. RESIDENTS OF OTHER JURISDICTIONS MAY
NOT PURCHASE THE SHARES OR ADSS OFFERED HEREBY UNLESS THEY CERTIFY THAT THEIR
PURCHASES OF SUCH ADSS ARE EFFECTED IN ACCORDANCE WITH THE APPLICABLE LAWS OF
SUCH JURISDICTIONS.
SPECIAL ISSUANCE OR DELIVERY INSTRUCTIONS
FOR SUBSCRIPTION RIGHTS HOLDERS:
(a) To be completed ONLY if the certificate representing the ADSs is to be
issued in a name other than that of the registered holder. (See the
Instructions.) DO NOT FORGET TO COMPLETE THE GUARANTEE OF SIGNATURE(S)
SECTION BELOW.
ISSUE ADSs TO:
--------------------------- -------------------------------
(Please Print Name) (Street Address)
--------------------------- --------------------------------
(Social Security # or Tax ID #) (City, State Zip Code)
(b) To be completed ONLY if the certificate representing the ADSs is to be
sent to an address other than that shown above. (See the Instructions.)
DO NOT FORGET TO COMPLETE THE GUARANTEE OF SIGNATURE(S) SECTION BELOW.
-------------------------- --------------------------------
(Please Print Name) (Street Address)
-------------------------- --------------------------------
(Social Security # or Tax ID #) (City, State Zip Code)
-4-
ACKNOWLEDGEMENT
THE SUBSCRIPTION ORDER FORM IS NOT VALID UNLESS YOU SIGN BELOW
I/We acknowledge receipt of the prospectus and understand that after
delivery to Tricom, S.A., I/we may not modify or revoke this Subscription
Certificate. Under penalties of perjury, I/we certify that the information
contained herein, including the social security number or taxpayer
identification number given above, is correct. If the Special Issuance or
Delivery Instructions for Subscription Rights Holders are completed, I/we
certify that although the certificate representing the ADSs is to be issued in a
name other than the registered holder, beneficial ownership of the ADSs will not
change.
The signature below must correspond with the name of the registered
holder exactly as it appears on the books of the Company's transfer agent
without any alteration or change whatsoever.
SIGN HERE: _________________________________ ______________________________
Signature(s) Of Registered Holder
DATED: __________________, 2001
If signature is by trustee(s), executor(s), administrator(s),
guardian(s), attorney(s)-in-fact, agent(s), officer(s) of a corporation or
another acting in a fiduciary or representative capacity, please provide the
following information (please print). See the instructions.
Name(s):_______________________________ Daytime Phone:_____________________
Capacity (Full Title):_________________ Evening Phone:_____________________
Address:_______________________________ Taxpayer Identification
(including zip code) or Social Security Number:________
-5-
GUARANTEE OF SIGNATURE(S)
All Subscription Rights Holders who specify special issuance or
delivery instructions must have their signatures guaranteed by an Eligible
Institution. An "Eligible Institution" for this purpose is a bank, stockbroker,
savings and loan association and credit union with membership in an approved
signature guaranteed medallion program, pursuant to Rule 17Ad-l5 of the
Securities Exchange Act of 1934, as amended.
Authorized Signature:__________________ Name of Firm:________________________
Name:__________________________________ Address:_____________________________
Title:_________________________________ Area Code and Telephone No.:_________
YOU MUST HAVE YOUR SIGNATURE GUARANTEED IF YOU WISH TO HAVE YOUR SHARES
DELIVERED TO AN ADDRESS OTHER YOUR OWN OR TO A SHAREHOLDER OTHER THAN THE
REGISTERED HOLDER.
Your signature must be guaranteed by an Eligible Guarantor Institution, as
defined in Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.
These generally include (a) a commercial bank or trust company, (b) a member
firm of a domestic stock exchange, or (c) a credit union.
Signature Guaranteed:
By:_________________________________
(Signature of Officer)
____________________________________
(Name of Bank or Firm)
FULL PAYMENT FOR THE ADSs MUST ACCOMPANY THIS FORM AND MUST BE MADE IN UNITED
STATES DOLLARS BY PERSONAL CHECK, CERTIFIED OR CASHIER'S CHECK OR BANK DRAFT
DRAWN UPON A UNITED STATES BANK OR A UNITED STATES POSTAL MONEY ORDER PAYABLE TO
THE BANK OF NEW YORK, AS SUBSCRIPTION AGENT.
STOCK CERTIFICATES FOR THE ADSs SUBSCRIBED TO PURSUANT TO THE RIGHTS OFFERING
WILL BE DELIVERED AS SOON AS PRACTICABLE AFTER THE EXPIRATION DATE. ANY REFUND
IN CONNECTION WITH YOUR SUBSCRIPTION WILL BE DELIVERED AS SOON AS PRACTICABLE
THEREAFTER.
FOR INSTRUCTIONS ON THE USE OF TRICOM, S.A. SUBSCRIPTION CERTIFICATES
CONSULT [ ], [ ] OF TRICOM, S.A. [( ) - ], OR YOUR
------ ---------------- --- --- ----
BANK OR BROKER WITH QUESTIONS
-6-
EX-99.2
9
a2060685zex-99_2.txt
EXHIBIT 99.2
EXHIBIT 99.2: INSTRUCTIONS FOR USE OF TRICOM, S.A. SUBSCRIPTION CERTIFICATES.
TRICOM, S.A.
INSTRUCTIONS FOR USE OF
SUBSCRIPTION CERTIFICATES
The following instructions relate to a rights offering (the "Rights
Offering") by Tricom, S.A., a Dominican Republic corporation ("TRICOM"), to the
holders of its American Depositary Shares, each representing one share of Class
A Common Stock, par value RD$10 per share ("ADS"), as described in TRICOM's
prospectus dated [ ], 2001 (the "Prospectus"). Holders of record
of ADSs at the close of business on [________________], 2001 (the "Record
Date") will receive [ ] non-transferable subscription rights (the
"Subscription Rights") for each ADS held by them as of the close of business
on the Record Date. An aggregate of [ ]Subscription Rights exercisable for an
aggregate of [ ] ADSs of TRICOM are being distributed in connection with the
Rights Offering. Each Subscription Right is exercisable, upon payment of $[ ]
in cash (the "Subscription Price"), to purchase one ADS (the "Basic
Subscription Privilege") to The Bank of New York (the "Subscription Agent").
In addition, subject to the allocation described below, each Subscription
Right also carries the right to subscribe at the Subscription Price for
additional ADSs limited to a percentage of the unsubscribed ADSs of your pro
rata ownership of our ADSs of Class B stock (the "Oversubscription
Privilege"), (subject to proration). See "The Rights Offering" in the
Prospectus.
No fractional Subscription Rights will be issued. The number of
Subscription Rights to be issued to each shareholder will be rounded down to the
nearest full Subscription Right.
To exercise your Subscription Rights, a properly completed and executed
Subscription Certificate and payment in full must be delivered to the
Subscription Agent, prior to 5:00 p.m. (New York City time) on
[ ], 2001 (the "Expiration Date").
For a more complete description of the Rights Offering, please refer to
the prospectus or contact [ ], the information agent for this
offering at [ ].
The number of ADSs to which you are entitled to purchase is printed on
the face of your Subscription Certificate. You should indicate your wishes with
regard to the exercise of your Subscription Rights by completing the appropriate
section on the back of your Subscription Certificate and returning the
Subscription Certificate to the Subscription Agent in the envelope provided.
YOUR SUBSCRIPTION CERTIFICATE MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, OR
GUARANTEED DELIVERY REQUIREMENTS WITH RESPECT TO YOUR SUBSCRIPTION CERTIFICATES
MUST BE COMPLIED WITH, ON OR BEFORE THE EXPIRATION DATE. PAYMENT OF THE
SUBSCRIPTION PRICE OF ALL SUBSCRIPTION RIGHTS EXERCISED, INCLUDING FINAL
CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE SUBSCRIPTION AGENT ON OR BEFORE
THE EXPIRATION DATE. ONCE A HOLDER OF SUBSCRIPTION RIGHTS HAS EXERCISED THE
BASIC SUBSCRIPTION PRIVILEGE AND/OR THE OVERSUBSCRIPTION PRIVILEGE, SUCH
EXERCISE MAY NOT BE REVOKED.
1. SUBSCRIPTION PRIVILEGES. To exercise Subscription Rights, complete
your Subscription Certificate and send your properly completed and executed
Subscription Certificate, together with payment in full of the Subscription
Price for each ADS subscribed for pursuant to the Basic Subscription Privilege
and the Oversubscription Privilege, to the Subscription Agent. Delivery of the
Subscription Certificate must be made by mail or by overnight delivery.
FACSIMILE DELIVERY OF THE SUBSCRIPTION CERTIFICATE WILL NOT CONSTITUTE VALID
DELIVERY. All payments must be made in United States dollars by personal check,
certified or cashier's check or bank draft drawn upon a United States bank or
United States postal money order payable to The Bank of New York, as
Subscription Agent.
ACCEPTANCE OF PAYMENTS. Payments will be deemed to have been received
by the Subscription Agent only upon the (a) clearance of any uncertified check
or (b) receipt by the Subscription Agent of any certified or cashier's check or
bank draft drawn upon a United States bank or a United States postal money
order. IF PAYING BY UNCERTIFIED PERSONAL CHECK, PLEASE NOTE THAT THE FUNDS PAID
THEREBY MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR. ACCORDINGLY, HOLDERS OF
SUBSCRIPTION RIGHTS WHO WISH TO PAY THE SUBSCRIPTION PRICE BY MEANS OF
UNCERTIFIED PERSONAL CHECK ARE URGED TO MAKE PAYMENT SUFFICIENTLY IN ADVANCE OF
THE EXPIRATION DATE TO ENSURE THAT SUCH PAYMENT IS RECEIVED AND CLEARS BY SUCH
DATE. YOU ARE URGED TO CONSIDER PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S CHECK
OR MONEY ORDER.
CONTACTING THE SUBSCRIPTION AGENT. The address and telecopier numbers
of the Subscription Agent are as follows:
BY MAIL BY HAND
The Bank of New York The Bank of New York
Tender and Exchange Department Tender And Exchange Department
P.O. Box 11248 c/o The Depository Trust Company
Church Street Station 55 Water Street
New York, NY 10286-1248 Jenrette Park Entrance
New York, New York 10041
BY OVERNIGHT COURIER: BY FACSIMILE
The Bank of New York (For Eligible Institutions Only)
Tender & Exchange Department (973) 247-4077
385 Rifle Camp Road For Confirmation of Facsimile,
West Patterson, New Jersey 074241 Telephone:
(973) 247-4076
The Subscription Agent must receive the Subscription Certificate and
payment of the estimated subscription price on or before the Expiration Date.
DEPOSIT IN THE MAIL WILL NOT CONSTITUTE DELIVERY TO THE SUBSCRIPTION AGENT. The
Subscription Agent has discretion to refuse to accept any improperly completed
or unexecuted rights certificate.
PARTIAL EXERCISES; EFFECT OF OVER- AND UNDERPAYMENTS. If you exercise
less than all of the Subscription Rights evidenced by your Subscription
Certificate, then the Subscription Agent will issue to you a new Subscription
Certificate evidencing the unexercised Subscription Rights. However, if you
choose to have a new Subscription Certificate sent to you, you may not receive
any such
-2-
new Subscription Certificate in sufficient time to permit exercise of the
Subscription Rights evidenced thereby. If you have not indicated the number of
Subscription Rights being exercised, or if the dollar amount you have forwarded
is not sufficient to purchase (or exceeds the amount necessary to purchase) the
number of shares subscribed for, you will be deemed to have exercised the Basic
Subscription Privilege with respect to the maximum number of whole Subscription
Rights which may be exercised for the Subscription Price payment delivered by
you. To the extent that the Subscription Price payment delivered by you exceeds
the product of the Subscription Price multiplied by the number of ADSs you may
purchase pursuant to the Subscription Rights evidenced by the Subscription
Certificates delivered by you (such excess being the "Subscription Excess"), you
will be deemed to have exercised your Oversubscription Privilege to purchase, to
the extent available, that number of ADSs equal to the quotient obtained by
dividing the Subscription Excess by the Subscription Price.
2. DELIVERY OF STOCK CERTIFICATES, ETC. The following deliveries and
payments to you will be made to the address shown on the face of your
Subscription Certificate unless you provide instructions to the contrary on the
back of your Subscription Certificate.
(a) BASIC SUBSCRIPTION PRIVILEGE. As soon as practicable after
the valid exercise of Subscription Rights and the Expiration Date, the
Subscription Agent will mail to each exercising Rights holder certificates
representing ADSs purchased pursuant to the Basic Subscription Privilege.
(b) OVERSUBSCRIPTION PRIVILEGE. As soon as practicable after
the Expiration Date and after all prorations and adjustments contemplated by the
terms of the Offering have been effected, the Subscription Agent will mail to
each Rights holder who validly exercises the Oversubscription Privilege the
number of ADSs allocated to such Rights holder pursuant to the Oversubscription
Privilege. See "The Offering" in the Prospectus.
(c) EXCESS PAYMENTS. Promptly after the Expiration Date and
after all prorations and adjustments contemplated by the terms of the Offering
have been effected, the Subscription Agent will mail to each Rights holder who
exercises the Oversubscription Privilege any excess funds received (without
interest or deduction) in payment of the Subscription Price for ADSs that are
subscribed for but not allocated to such Rights holder pursuant to the
Oversubscription Privilege.
3. TO HAVE A SUBSCRIPTION CERTIFICATE DIVIDED INTO SMALLER
DENOMINATIONS. To have a Subscription Certificate divided into smaller
denominations, send your Subscription Certificate, together with complete
separate instructions (including specification of the denominations into which
you wish your Subscription Rights to be divided) signed by you, to the
Subscription Agent, allowing a sufficient amount of time for the Subscription
Certificates to be issued and returned so that they can be used prior to the
Expiration Date. Alternatively, you may ask a bank or broker to effect such
actions on your behalf. Your signature must be guaranteed by an Eligible
Guarantor Institution, as defined in Rule 17Ad-15 of the Securities Exchange Act
of 1934, as amended, if any of the new Subscription Certificates are to be
issued in a name other than that in which the old Subscription Certificate was
issued. Subscription Certificates may not be divided into Subscription Rights
which have the right to purchase fractional ADSs, and any instruction to do so
will be rejected. As a result of delays in the mail, the time of the
transmittal, the necessary processing time and other factors, you may not
receive such new Subscription Certificates in time to enable you to complete an
exercise by the Expiration Date. Neither Tricom nor the Subscription Agent will
be liable to you for any such delays.
-3-
4. EXECUTION.
(a) EXECUTION BY REGISTERED HOLDER. The signature on the
Subscription Certificate must correspond with the name of the registered holder
exactly as it appears on the face of the Subscription Certificate without any
alteration or change whatsoever. Persons who sign the Subscription Certificate
in a representative or other fiduciary capacity must indicate their capacity
when signing and, unless waived by the Subscription Agent in its sole and
absolute discretion, must present to the Subscription Agent satisfactory
evidence of their authority so to act.
(b) EXECUTION BY PERSON OTHER THAN REGISTERED HOLDER. If the
Subscription Certificate is executed by a person other than the holder named on
the face of the Subscription Certificate, proper evidence of authority of the
person executing the Subscription Certificate must accompany the same unless the
Subscription Agent, in its discretion, dispenses with proof of authority.
(c) SIGNATURE GUARANTEES. Your signature must be guaranteed by
an Eligible Guarantor Institution if you wish a new Subscription Certificate(s)
or the ADS Certificate to be issued in a name other than that in which the old
Subscription Certificate was issued, or if you specify special payment or
delivery instructions.
5. METHOD OF DELIVERY. The method of delivery of Subscription
Certificates and payment of the Subscription Price to the Subscription Agent
will be at the election and risk of the Subscription Rights holder. If sent by
mail, it is recommended that they be sent by registered mail, properly insured,
with return receipt requested, and that a sufficient number of days be allowed
to ensure delivery to the Subscription Agent prior to the Expiration Date.
6. SPECIAL PROVISIONS RELATING TO THE DELIVERY OF SUBSCRIPTION
RIGHTS THROUGH DEPOSITORY FACILITY PARTICIPANTS. In the case of holders of
Subscription Rights that are held of record through The Depositary Trust Company
("DTC"), exercises of the Basic Subscription Privilege and the Oversubscription
Privilege may be effected by instructing DTC to transfer Subscription Rights
from the DTC account of such holder to the DTC account of the Subscription
Agent, together with payment of the Subscription Price for each ADS subscribed
for pursuant to the Basic Subscription Privilege and the Oversubscription
Privilege.
-4-
EX-99.3
10
a2060685zex-99_3.txt
EXHIBIT 99.3
EXHIBIT 99.3: FORM OF LETTER TO SHAREHOLDERS.
TRICOM, S.A.
Ave. Lope De Vega No. 95
Santo Domingo, Dominican Republic
[______ __], 2001
Dear Shareholder:
Enclosed are the prospectus and other materials relating to the Rights
Offering by TRICOM, S.A. ("TRICOM"). Please carefully review the prospectus,
which describes how you can participate in the Rights Offering. You will be able
to exercise your Subscription Rights to purchase additional American Depositary
Shares, each representing one share of Class A common stock, par value RD$10 per
share ("ADS"), of TRICOM only during a limited period. You will find answers to
some frequently asked questions about the Rights Offering beginning on page
______ of the prospectus. You should also refer to the detailed Instructions for
Use of TRICOM, S.A. Subscription Certificates, included with this letter. The
exercise of Subscription Rights will be irrevocable.
SUMMARY OF THE TERMS OF THE OFFERING
o You will receive [ ] non-transferable Subscription Right for
each ADS of TRICOM you owned on [____], 2001. You will be
ables to purchase one ADS for each Subscription Right
exercised, but you may not purchase fractional ADSs; TRICOM
will round your number of Subscription Rights down to the
nearest whole number. For example, if you own 100 ADSs, you
will receive [ ] Subscription Rights which will entitle you to
purchase up to an aggregate of [____] ADSs.
o You may purchase one ADS for each Subscription Right you
receive at the Subscription Price of $[ ] per ADS. This right
is referred to as the Basic Subscription Privilege.
o If you fully exercise the Basic Subscription Privilege issued
to you, you may subscribe for additional shares through the
Oversubscription Privilege. If Tricom's other shareholders
receiving Subscription Rights do not elect to purchase all of
the shares offered under their basic subscription privilege
then shares purchased through the Oversubscription Privilege
will be allocated pro rata based on the number of shares each
subscriber for additional shares has purchased under the Basic
Subscription Privilege, as more fully described in the
Prospectus.
o The Rights Offering expires at 5:00 p.m., New York City time,
on [ ], 2001. If you do not exercise your Subscription Rights
before that time, they will expire and will have no monetary
value.
If your ADSs are held in your name, a Subscription Certificate is
enclosed. If your ADSs are held in the name of your bank or broker, you must
contact your bank or broker if you wish to participate in this offering.
If you do not exercise your Subscription Rights, your ownership in
TRICOM may be diluted. Please see page ____ of the prospectus for a discussion
of dilution and other risk factors.
If you have any questions concerning the Rights Offering, please feel
free to contact TRICOM's [ ], [ ], at
----------------------- -----------------
[( ) - ].
--- --- -----
Sincerely,
By: /s/ MANUEL ARTURO PELLERANO PENA
---------------------------------------
Manuel Arturo Pellerano Pena
Chairman of the Board of Directors and
Chief Executive Officer
-2-
EX-99.4
11
a2060685zex-99_4.txt
EXHIBIT 99.4
EXHIBIT 99.4: FORM OF LETTER TO BROKERS.
TRICOM, S.A.
Ave. Lope De Vega No. 95
Santo Domingo, Dominican Republic
[____], 2001
To: Securities Dealers, Commercial Banks, Trust Companies, and Other
Nominees
This letter is being distributed to securities dealers, commercial
banks, trust companies and other nominees in connection with the offering (the
"Rights Offering") by TRICOM, S.A. ("TRICOM") of an aggregate of [ ] American
Depositary Shares, each representing one share of Class A common stock, par
value RD$10 per share ("ADS"), of TRICOM, at a subscription price of $[ ] per
ADS (the "Subscription Price"), pursuant to the exercise of non-transferable
subscription rights initially distributed on [____], 2001 ("Subscription
Rights'), to all holders of record of shares of TRICOM's ADSs as of the close of
business on _______________, 2001 (the "Record Date"). Each Subscription Right
also carries the right to oversubscribe at the Subscription Price for additional
ADSs limited to a percentage of the unsubscribed ADSs equal to a holder's
percentage ownership of our ADSs and Class B stock (subject to proration) on the
record date. The Subscription Rights are described in the enclosed prospectus
and evidenced by a Subscription Certificate registered in your name or in the
name of your nominee.
Each beneficial owner of shares of ADSs registered in your name or the
name of your nominee is entitled to [ ] Subscription Rights for each ADS owned
by such beneficial owner. Shareholders may purchase one ADS for each
Subscription Right exercised. Shareholders may not purchase fractional ADSs, but
instead Subscription Rights will be rounded down to the nearest full
Subscription Right.
We are asking you to contact your clients for whom you hold ADSs
registered in your or in the name of your nominee to obtain instructions with
respect to the Subscription Rights.
Enclosed are copies of the following documents:
1. Prospectus;
2. Form of Letter from TRICOM to its Shareholders;
3. Instructions for Use of TRICOM, S.A. Subscription Certificates; and
4. return envelope
addressed to The Bank of New York, as Subscription Agent.
Your prompt action is requested. The Subscription Rights will expire at
5:00 P.M., New York City time, on [ ], 2001 (as it may be extended, the
"Expiration Date").
To exercise Subscription Rights, properly completed and executed
Subscription Certificates and payment in full for all Subscription Rights
exercised must be delivered to The Bank of New York, as Subscription Agent (the
"Subscription Agent"), as indicated in the prospectus prior to the Expiration
Date.
TRICOM will not pay any fees or commissions to any broker, dealer or
other person for soliciting subscriptions for Subscription Rights pursuant to
the Rights Offering, other than the
Subscription Agent and the information agent as described in the prospectus.
Nothing contained herein or in the enclosed documents shall make you or
any other person the agent of TRICOM, the Subscription Agent, the information
agent or any affiliate of any of them, or authorize you or any other person to
make any statement or use any document on behalf of any of them in connection
with the Rights Offering other than the enclosed documents and the statements
contained therein.
Additional copies of the enclosed materials may be obtained by
contacting TRICOM's, [ ], at [( ) - ].
----------- ----- --- -----
Sincerely,
By: /s/ MANUEL ARTURO PELLERANO PENA
----------------------------------
Manuel Arturo Pellerano Pena
Chairman of the Board of Directors
and Chief Executive Officer
-2-
EX-99.5
12
a2060685zex-99_5.txt
EXHIBIT 99.5
EXHIBIT 99.5
RIGHTS AGENCY AGREEMENT
The Bank of New York
101 Barlcay Street, 12W
Reorganization Administration
New York, New York 10286
Ladies and Gentlemen:
RIGHTS AGENCY AGREEMENT (the "Agreement"), dated as of ___________,
2001, between TRICOM, S.A. (the "Company"), incorporated under the laws of
Dominican Republic, and THE BANK OF NEW YORK, a New York banking corporation
(the "Rights Agent").
WHEREAS, the Company will grant to existing owners of American
Depositary Shares ("ADSs") issued under the Deposit Agreement dated as of May 4,
1998, among the Company, The Bank of New York, as Depositary (the "Depositary")
and all Owners (as defined therein) and holders of American Depositary Receipts
issued thereunder from time to time (the "Deposit Agreement"), that are
registered on the books of the Depositary (the "Owners"), the right to purchase
additional ADSs at a subscription price of $______________ (the "Rights Offer").
Each ADS represents one share of Class A Common Stock, par value RD$10 per share
("Shares"), of the Company.
WHEREAS, the Rights Offer is expected to be commenced on or
________________. The Rights Offer will be made to each of the Owners by means
of the prospectus dated _________________ (the "Prospectus"), which will be
accompanied by a letter of transmittal containing instructions with respect to
the number of ADSs that may be purchased, the method for subscribing and the
delivery of payment (the "Letter of Transmittal"). The section of the Letter of
Transmittal entitled INSTRUCTIONS WITH RESPECT TO THE RIGHTS OFFER is to be used
by the Owners to subscribe for additional ADSs in the Rights Offer (the "Owner's
Instructions").
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein, the Company and the Rights Agent hereby agree as follows:
ARTICLE I -- APPOINTMENT OF THE RIGHTS AGENT
The Company hereby appoints The Bank of New York as the Rights Agent of
the Company in connection with the Rights Offer in accordance with the terms and
conditions
-1-
of this Agreement and The Bank of New York hereby accepts such appointment and
agrees to be bound by the terms and conditions of this Agreement upon execution
of this Agreement.
ARTICLE II -- TERMS OF RIGHTS OFFER
1. The subscription period will commence on or about
___________________ (the "Commencement Date") and will end on _______________
(the "Expiration Date"). The Commencement Date through 5:00 p.m. New York time
on the Expiration Date will constitute the subscription period (the
"Subscription Period").
2. Owners holding ADSs as of ____________, 2001 (the "Record
Date") may purchase ADSs pursuant to the Rights Offer at the subscription price
of $________________ per ADS (the "Subscription Price").
ARTICLE III -- DELIVERY OF RIGHTS OFFER MATERIAL
1. On or before ____ days prior to the Commencement Date, the
Company will deliver to the Rights Agent sufficient copies of the Prospectus,
the Letter of Transmittal (including instructions as to the use thereof and, on
the reverse thereof, a substitute Form W-9), Guidelines for Certification of
Taxpayer Identification Number of Substitute Form W-9 (the "Guidelines").
2. Unless otherwise instructed in writing by the Company, on
the Record Date the Rights Agent shall send to each Owner as of the Record Date
(i) a Prospectus, (ii) a Letter of Transmittal, (iii) the Guidelines, and (iv) a
return envelope addressed to the Rights Agent for use by such Owner (such
material, collectively, the "Rights Offer Material").
3. In the event that the Rights Offer Material is returned to
the Rights Agent for any reason and a proper delivery thereof cannot be effected
to an Owner, the Rights Agent shall hold such Rights Offer Material and the
related Owner's right to purchase ADSs under the Rights Offer will be treated as
unexercised. The Rights Agent shall supply the Company with such information as
the Company may request with respect to any Rights Offer Material that cannot be
delivered to an Owner.
4. In the event that, prior to the Expiration Date, any Owner
notifies the Rights Agent that the Rights Offer Material to which such Owner is
entitled has not been delivered, or has been lost, stolen or destroyed, the
Rights Agent will furnish to such Owner a copy of the Rights Offer Material. The
Company agrees to supply the Rights Agent with sufficient copies of the Rights
Offer Materials for such purposes.
ARTICLE IV -- ACCEPTANCE OF SUBSCRIPTIONS
-2-
1. The Rights Agent is hereby authorized and directed to
receive subscriptions for ADSs on behalf of the Company throughout the
Subscription Period. Any funds that the Rights Agent receives during the
Subscription Period from Owners in respect of payments for ADSs shall be
deposited in an interest bearing account at the Rights Agent that the Rights
Agent designates solely for such purpose (the "Deposit Account") and such funds
shall remain in the Deposit Account until they are distributed to the Company in
accordance with Article __, paragraph __ hereof.
As promptly as practicable after the Rights Agent receives
each Owner's Instruction, the Rights Agent shall determine whether the Owner
sending such Owner's Instruction has properly completed and executed such forms
and has submitted the correct payment for the ADSs. If such form is not properly
completed, is unexecuted or, if such Owner did not send the correct payment
amount then the Rights Agent will send a notice to such Owner instructing such
Owner to amend its Owner's Instruction or submit the proper payment amount, as
the case may be. Except as set forth in Section ______ hereof, if such Owner
does not amend its Owner's Instruction or submit the proper payment amount, as
the case may be, by the Expiration Date, such Owner's right to purchase ADSs in
the Rights Offer shall be deemed to be unexercised.
Notwithstanding the foregoing, without further authorization
from the Company, except where otherwise specified or as otherwise notified in
writing by the Company prior to the Expiration Date, the following Owner's
Instructions shall be deemed to be properly completed:
(a) any subscription with respect to which an Owner has failed to
execute an Owner's Instruction in the manner provided by the terms
thereof, provided that (1) the Owner has indicated on such Owner's
Instruction or by written communication, the manner in which the Owner
wishes to subscribe and (2) proper payment has been made by such Owner;
(b) any subscription by an individual (and not by a corporation,
partnership or fiduciary) which is accompanied by a check drawn by an
individual (and not by a corporation, partnership or fiduciary) other
than the Owner, provided that (1) the Owner's Instruction submitted
therewith has been duly executed by the Owner, (2) the Owner is the
Owner to which such Owner's Instruction relates, (3) the check tendered
in payment of such subscription is drawn for the proper amount and to
the order of The Bank of New York and is otherwise in order, and (4)
there is no evidence actually known to the Rights Agent indicating that
such check was delivered to the Owner by the drawer thereof for any
purpose other than the payment of the accompanying subscription;
(c) any subscription by a custodian on behalf of a minor which is
accompanied by a check drawn by an individual (and not by a
corporation, partnership or fiduciary) other than the Owner, if the
provisos set forth in clause (b) above are satisfied; or
-3-
(d) any subscription by an individual (and not by a corporation,
partnership or fiduciary) which is accompanied by a check drawn by a
corporation, partnership or fiduciary other than the Owner, if the
provisos set forth in clause (b) above are satisfied.
2. The Rights Agent is hereby authorized to accept
subscriptions for ADSs on behalf of the Company (i) on the Expiration Date, (ii)
after determining the total number of ADSs that an owner is entitled to purchase
in the Rights Offer, pursuant to Article VI hereof, and (iii) upon the proper
completion and execution of the Owner's Instruction, in accordance with the
terms thereof and hereof.
3. The Rights Agent is authorized to waive proof of authority
to sign (including the right to waive signatures of co-fiduciaries and proof of
appointment or authority of any fiduciary or other person acting in a
representative capacity) in connection with any subscription with respect to
which:
(a) the ADSs to which the Owner's Instruction relates are registered in
the name of an executor, administrator, trustee, custodian for a minor
or other fiduciary and has been executed by such Owner provided that
the ADSs purchased are to be issued in the name of such Owner;
(b) the ADSs to which the Owner's Instructions relates are registered
in the name of a corporation and the Owner's Instruction has been
executed by an officer of such corporation, provided that the ADSs
purchased are to be issued in the name of such corporation;
(c) the Owner's Instruction has been executed by a bank, trust company
or broker as agent for the Owner to which such Owner's Instruction
relates, provided that the ADSs purchased are to be issued in the name
of such Owner; or
(d) the ADSs to which such Owner's Instructions relates are registered
in the name of a decedent and the Owner's Instruction has been executed
by a person who purports to act as the executor or administrator of
such decedent's estate, provided that (1) the ADSs are to be issued in
the name of such person as executor or administrator of such decedent's
estate, (2) the check tendered in payment of such subscription is drawn
for the proper amount and to the order of The Bank Of New York and is
otherwise in order, and (3) there is no evidence actually known to the
Rights Agent indicating that such person is not the duly authorized
representative which such person purports to be.
ARTICLE V -- REPORTS BY THE RIGHTS AGENT
1. The Rights Agent will advise the Company by facsimile
transmission (i) on the Commencement Date as to the total number of Owners and
the total number of ADSs
-4-
outstanding; and (ii) on _________________ and _______________ during the
Subscription Period as to (1) the total number of subscriptions for ADSs
pursuant to the Rights Offer that the Rights Agent has received (which have been
properly completed and executed and for which the correct payment amount was
received), (2) the aggregate amount of funds received by the Rights Agent in
payment of such subscriptions and (3) the total number of Owners which the
Rights Agent has notified pursuant to Article IV, paragraph 1 hereof that their
Owner's Instruction was not properly completed or that the correct payment
amount for the ADSs was not received.
2. Not later than 5:00 p.m. (New York City time) on the
Expiration Date the Rights Agent will advise the Company by facsimile
transmission as to (i) the total number of ADSs subscribed for in the Rights
Offer and the total number of Shares represented thereby and (ii) the aggregate
amount of funds received by the Rights Agent in payment of such subscriptions.
ARTICLE VI -- PAYMENTS; INTEREST ON SUBSCRIPTION PAYMENTS; REFUNDS
1. Promptly after the Expiration Date, the Company will
deposit the Shares underlying the ADSs with _______________, as custodian under
the Deposit Agreement and will request that the Depositary confirm such deposit
with the Rights Agent. Once the Rights Agent receives confirmation that the
Shares have been deposited, the Rights Agent shall tender to the Company the
aggregate amount of funds held in the Deposit Account representing the
Subscription Price for the ADSs. The payment shall be made in same day funds by
wire transfer, in U.S. dollars to a bank account specified by the Company.
2. At the time that the Rights Agent tenders payment to the
Company, the Rights Agent shall pay to the Company an amount in respect of the
interest accrued on cleared funds received by the Rights Agent for subscription
payments received and held by the Rights Agent in the Deposit Account prior to
the payment of such monies to the Company. The interest payable to the Company
in respect of unremitted subscription payments shall be calculated daily on the
basis of the aggregate amount of cleared subscription payments received as
reflected in the reports delivered to the Company pursuant to Article __ using a
rate equal to the rate allowed, from time to time, by The Bank of New York for
its accounts entitled "Deposit Reserves."
ARTICLE VII -- ISSUANCE OF ADRs
1. Following receipt of the Shares issued in respect of the
ADSs properly purchased pursuant to the Rights Offer, and in accordance with the
terms of the Deposit Agreement, the Rights Agent will mail or deliver an
American Depositary Receipt (an "ADR") as instructed to each Owner of ADSs,
evidencing the number of ADSs for which
-5-
such Owner has subscribed. Each ADR certificate will be registered in the name
specified by the Owner on their Owner's Instruction.
2. The Rights Agent will mail the ADR certificates by
___________ mail under a blanket surety bond protecting the Rights Agent and the
Company from any loss or liability arising out of the nonreceipt or nondelivery
of any such certificate or the replacement thereof. If the market value of
securities to be mailed in any one shipment will exceed $__________, such
shipment will be sent by registered mail and will be insured separately for the
replacement value of its contents.
ARTICLE VIII -- LIMITATIONS OF DUTIES
1. The Rights Agent shall have no duties or obligations other
than those specifically set forth herein, including any duties or obligations
under any other agreement, and no implied duties or obligations shall be read
into this Agreement against the Rights Agent.
2. The Rights Agent makes no, and will not be deemed to have
made, any representations with respect to, and shall have no duties,
responsibilities or obligations with respect to determining, the validity,
sufficiency, value or genuineness of any Shares, Letter of Transmittal or other
documents deposited with or delivered to it or any signature or endorsement set
forth on or in connection with such documents.
3. The Rights Agent shall not be obligated to take any legal
action hereunder which might in the Rights Agent's judgement involve any expense
or liability, unless the Rights Agent shall have been furnished with indemnity
satisfactory to the Rights Agent.
4. The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement, the
Letter of Transmittal or any other Rights Offer Materials or be required to
verify the same; and may rely upon and comply with, and shall be fully
indemnified and held harmless for relying upon and complying with, any Letter of
Transmittal or other Rights Offer Material, certificate, instrument, opinion of
counsel, notice, letter, telegram, records, or other document or security
delivered to it in connection with this Agreement.
5. The Rights Agent may consult with legal counsel for the
Company or its own counsel (which may be in-house counsel) and rely upon any
opinion of such counsel, and shall have no liability in respect of any action
taken, omitted or suffered by the Rights Agent hereunder in reliance upon, and
in accordance with, any such opinion.
6. The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Company, and to apply to
-6-
the Company for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions. Any application by the Rights Agent
for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Agreement and the date on/or after which such action
shall be taken or such omission shall be effective. The Rights Agent shall not
be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than three business
days after the date the Company actually receives such application, unless the
Company shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
7. The Rights Agent shall escheat any property held by the
Rights Agent in accordance with applicable law.
ARTICLE IX -- COMPENSATION; PAYMENT OF EXPENSES
1. In consideration for the services rendered herein, the
Company agrees to pay to the Rights Agent such compensation as shall be agreed
in writing between the Company and the Rights Agent for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable out-of-pocket expenses and counsel fees and other reasonable
disbursements incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder.
2. No provision of this Agreement shall require the Rights
Agent to expend or risk the Rights Agent's own funds or otherwise incur any
financial liability in the performance of any of the Rights Agent's duties
hereunder or in the exercise of the Rights Agent's rights.
ARTICLE X -- TERMINATION OF AGENCY
1. Unless terminated earlier by the parties hereto, this
Agreement shall terminate ___ (_) days after the Closing Date (the "Termination
Date"). On the business day following the Termination Date, the Rights Agent
shall deliver to the Company any Rights Offer entitlements, if any, held by the
Rights Agent under this Agreement. The Rights Agent's right to be reimbursed for
fees, charges and out-of-pocket expenses as provided in Article IX paragraph 1
above and the indemnification provisions of Article XI paragraph 2 below shall
survive the termination of this Agreement.
-7-
ARTICLE XI - LIMITATION OF LIABILITY; INDEMNIFICATION
1. The Rights Agent shall not be liable for any Losses (as
defined below) or action taken or omitted or for any loss or injury resulting
from its actions or performance or lack of performance of its duties hereunder
in the absence of gross negligence, bad faith or willful misconduct on its part.
In no event shall the Rights Agent be liable for (I) acting in accordance with
the instructions from the Company, (II) special, consequential or punitive
damages, or (III) any Losses due to forces beyond the control of the Rights
Agent, including without limitation, strikes, work stoppages, acts of war or
terrorism, insurrection, revolution, nuclear or natural catastrophes or acts of
God, and interruptions, loss or malfunctions of utilities, communications or
computer (software and hardware) services.
2. The Company shall be liable for and shall indemnify and
hold harmless the Rights Agent, its directors, employees, agents and affiliates
against any and all claims, losses, liabilities, damages, expenses or judgments
(including attorney's fees and expenses) (collectively referred to herein as
"Losses") arising from or in connection with this Agreement or the performance
of the Rights Agent's duties hereunder, the enforcement of this Agreement and
disputes between the parties hereto; PROVIDED, HOWEVER, that nothing contained
herein shall require that the Rights Agent be indemnified for its gross
negligence, bad faith or willful misconduct. The provisions of this Paragraph
shall survive termination of this Agreement or the discharge of the Rights Agent
under the terms hereof.
ARTICLE XII -- MISCELLANEOUS
1. NOTICES. All reports, notices and other communications
required or permitted to be given hereunder shall be addressed to the following
on behalf of the respective parties hereto and delivered by hand, by courier or
by first-class mail, postage prepaid, or by telecopy promptly confirmed in
writing, as follows or to such other address as may be specified in writing form
time to time:
To the Company:
TRICOM, S.A.
Ave. Lope de Vega No. 95
Santo Domingo, Dominican Republic
Attn: [ ]
To the Rights Agent:
The Bank of New York
Reorganization Administration
101 Barclay Street - 12W
-8-
New York, NY 10286
Attn: Kelly Gallagher
2. CONFIDENTIALITY. All information as to the Rights Offer
shall be held by the Rights Agent and its offices, employees, representatives
and agents in strict confidence and shall be disclosed only as required by law,
regulation or any judicial, regulatory or administrative authority, including,
for the avoidance of doubt, any banking or regulatory agency with jurisdiction
over the Rights Agent.
3. ASSIGNMENT. Neither the Rights Agent nor the Company
shall assign this Agreement without first obtaining the written consent of the
other party hereto.
4. HEADINGS. The Article and Paragraph headings contained
herein are for convenience and reference only and are not intended to define or
limit the scope of any provision of this Agreement.
5. ENTIRE AGREEMENT; AMENDMENT. This Agreement shall
constitute the entire agreement of the parties with respect to the subject
matter and supersedes all prior oral or written agreements in regard thereto.
References to any other document or agreement shall not incorporate by reference
such other document or agreement into this Agreement and shall not impose any
duties or responsibilities, obligations or liabilities on the Rights Agent under
such other document or agreement. Except as otherwise specifically provided
herein, this Agreement may be amended only by an instrument in writing duly
executed by both parties hereto.
6. GOVERNING LAW; JURISDICTION; CERTAIN WAIVERS.(a) This
Agreement shall be interpreted and construed in accordance with the internal
substantive laws (and not the choice of law rules) of the State of New York. All
actions and proceedings brought by the Rights Agent relating to or arising from,
directly or indirectly, this Agreement may be litigated in courts located within
the State of New York. The Company hereby submits to the personal jurisdiction
of such courts; hereby waives personal service of process and consents that any
such service of process may be made by certified or registered mail, return
receipt requested, directed to the Company at its address last specified for
notices hereunder; and hereby waives the right to a trial by jury in any action
or proceeding with the Rights Agent. All actions and proceedings brought by the
Company against the Rights Agent relating to or arising from, directly or
indirectly, this Agreement shall be litigated only in courts located within the
State of New York.
(b) The invalidity, illegality or unenforceability of any
provision of this Agreement shall in no way affect the validity, legality or
enforceability of any other provision; and if any provision is held to be
unenforceable as a matter of law, the other provisions shall not be affected
thereby and shall remain in full force and effect.
-9-
7. RIGHTS AND REMEDIES. The rights and remedies conferred upon
the parties hereto shall be cumulative, and the exercise or waiver of any such
right or remedy shall not preclude or inhibit the exercise of any additional
rights or remedies. The waiver of any right or remedy hereunder shall not
preclude or inhibit the subsequent exercise of such right or remedy.
8. REPRESENTATIONS AND WARRANTIES. The Company hereby
represents, warrants and covenants that:
(a) The Company is a corporation duly organized and validly
existing under the laws of the Dominican Republic.
(b) This Agreement has been duly authorized, executed and
delivered on its behalf and constitutes the legal, valid and binding obligation
of the Company. The execution, delivery and performance of this Agreement by the
Company does not and will not violate any applicable law or regulation and does
not require the consent of any governmental or other regulatory body except for
such consents and approvals as have been obtained and are in full force and
effect. For the avoidance of doubt, all Shares and ADSs to be issued and
delivered hereunder have been registered with the Securities and Exchange
Commission and all transactions contemplated by this Agreement are in compliance
with, and not in violation of, the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended.
9. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Remainder of page intentionally left blank.]
-10-
IN WITNESS WHEREOF, TRICOM, S.A. and THE BANK OF NEW YORK have duly
executed this Rights Agency Agreement as of the day and year first set forth
above.
TRICOM, S.A.
By: ___________________________
Name:
Title:
THE BANK OF NEW YORK,
as Rights Agent
By:____________________________
Name:
Title:
-11-