-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OsR0OZSB49/tnPveL+8TELIVwXzr/Oky7FIZRyEn/8OzgMWvrFW0NMeHtINCtcfh 6SXhs0YsElJUsz7uXqbUBQ== 0000950144-95-003366.txt : 19951201 0000950144-95-003366.hdr.sgml : 19951201 ACCESSION NUMBER: 0000950144-95-003366 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19951129 SROS: BSE SROS: CSX SROS: NYSE SROS: PHLX SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACTAVA GROUP INC CENTRAL INDEX KEY: 0000039547 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PHOTOFINISHING LABORATORIES [7384] IRS NUMBER: 580971455 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-63853 FILM NUMBER: 95597515 BUSINESS ADDRESS: STREET 1: 945 E PACES FERRY RD STREET 2: STE 2210 CITY: ATLANTA STATE: GA ZIP: 30326 BUSINESS PHONE: 4046589000 MAIL ADDRESS: STREET 1: 4900 GEORGIA PACIFIC CTR CITY: ATLANTA STATE: GA ZIP: 30303 FORMER COMPANY: FORMER CONFORMED NAME: FUQUA INDUSTRIES INC /DE/ DATE OF NAME CHANGE: 19920703 424B3 1 ACTAVA/METROMEDIA 424B3 1 RULE 424(B)(3) COMMISSION FILE NO. 33-63853 PROSPECTUS 752,708 SHARES METROMEDIA INTERNATIONAL GROUP, INC. COMMON STOCK The 752,708 shares (the "Shares") of Common Stock, par value $1.00 per share (the "Common Stock"), of Metromedia International Group, Inc. (formerly known as The Actava Group Inc.) (the "Company") offered hereby are being offered for the account of certain Selling Stockholders (the "Selling Stockholders"). The Company will not receive any proceeds from the sale of such securities. See "Selling Stockholders." The Selling Stockholders may sell the Shares offered hereby from time to time on the American and The Pacific Stock Exchanges or such other national securities exchange or automated interdealer quotation system on which shares of the Company's Common Stock are then listed, through negotiated transactions or otherwise at market prices prevailing at the time of the sale or at negotiated prices. The Selling Stockholders directly, or through agents designated from time to time, or through underwriters, brokers or dealers also to be designated, may sell the Shares from time to time on terms to be determined at the time of sale. Such underwriters, brokers or dealers may receive compensation in the form of commissions or otherwise in such amounts as may be negotiated by them. As of the date of this Prospectus, no agreements have been reached for the sale of the Shares or the amount of any compensation to be paid to underwriters, brokers or dealers in connection therewith. In the event that a Selling Stockholder does not intend to effect the sale of the Shares through an underwriter, broker or dealer, the Selling Stockholder must effect such transactions by notifying the Company in advance of any intended transaction in order for the Company to determine compliance with applicable federal and state securities laws, and then upon receipt of notice from the Company that such transaction may proceed, the Selling Stockholder may sell the Shares. The Company will bear all expenses in connection with the registration and sale of the Shares being offered by the Selling Stockholders, other than commissions, concessions or discounts to underwriters, brokers or dealers and fees and expenses of counsel or other advisors to the Selling Stockholders. See "Plan of Distribution." The Common Stock of the Company is listed on the American Stock Exchange and The Pacific Stock Exchange under the trading symbol "MMG." Prior to November 2, 1995, the Company's Common Stock was listed on the New York Stock Exchange and The Pacific Stock Exchange under the trading symbol "ACT." See "The Company -- Recent Developments." On November 14, 1995, the last reported sale price of the Company's Common Stock on the American Stock Exchange was $16.00 per share. --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------- The date of this Prospectus is November 15, 1995. 2 No person has been authorized in connection with this offering to give any information or to make any representation not contained or incorporated by reference in this Prospectus, and, if given or made, such information or representation must not be relied upon as having been authorized by the Company. Neither the delivery of this Prospectus nor any sales hereunder shall under any circumstances create any implication that the information contained herein is correct as of any time subsequent to the date hereof or the dates as of which information is otherwise set forth or incorporated by reference herein. This Prospectus does not constitute an offer to sell or a solicitation of an offer to purchase any securities other than those to which it relates or an offer to any person in any jurisdiction where such offer or solicitation would be unlawful. AVAILABLE INFORMATION Additional information regarding the Company and the Shares offered hereby is contained in the Registration Statement on Form S-3 (Registration No. 33-63853) (of which this Prospectus forms a part) and the exhibits relating thereto (the "Form S-3 Registration Statement") filed by the Company with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "1933 Act"). The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith files reports, proxy statements, information statements and other information with the Commission. Such reports, proxy statements, information statements and other information can be inspected and copied at the public reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices at CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements and other information also may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents heretofore filed by the Company with the Commission pursuant to the 1934 Act hereby are incorporated by reference into this Prospectus as of their respective dates: (1) The Company's Annual Report on Form 10-K for the year ended December 31, 1994, Form 10-K/A Amendment No. 1 filed on April 28, 1995 and Form 10-K/A Amendment No. 2 filed July 13, 1995 amending the Company's Form 10-K for the year ended December 31, 1994; (2) The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995; (3) The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995; (4) The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995; (5) The Company's Current Report on Form 8-K dated April 12, 1995 and Form 8-K/A Amendment No. 1 dated April 28, 1995 amending the Company's Current Report on Form 8-K dated April 12, 1995; (6) The Company's Current Report on Form 8-K dated September 27, 1995; (7) The Company's Current Report on Form 8-K dated November 1, 1995; and (8) The description of the Common Stock as contained in the Company's Registration Statement on Form 8-A (Registration No. 1-5706) as filed with the Commission on October 30, 1995. Also incorporated by reference into this Prospectus is the following document filed by the Company with the Commission: Registration Statement on Form S-4 (Registration No. 33-63003) declared effective by the Commission on September 28, 1995, which includes the Joint Proxy Statement/Prospectus (the "Form S-4 Registration Statement") with respect to a Special Meeting of Stockholders of the Company 2 3 held on November 1, 1995, and all subsequent amendments thereof, but excluding the material set forth under the following captions: "Summary Information -- Opinion of Actava's Financial Advisor," "-- Opinion of Orion's Financial Advisor," "Opinion of MITI's Financial Adviser," and "-- Opinion of Sterling's Financial Advisor." "Proposal No. 1 -- The Proposed Mergers -- Opinions of Financial Advisors" "Appendix B -- Fairness Opinion of CS First Boston Corporation" "Appendix C -- Fairness Opinion of Alex. Brown & Sons Incorporated" "Appendix D -- Fairness Opinion of Gerard Klauer Mattison & Co., L.L.C." "Appendix E -- Fairness Opinion of Houlihan, Lokey, Howard & Zukin, Inc." In addition, all reports and documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date hereof and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and made a part hereof from the date of the filing of such documents. The Company will provide without charge to each person to whom this Prospectus is delivered, at the written or oral request of such person, a copy of any or all of the foregoing documents incorporated herein by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into the foregoing documents). The Company also will provide without charge upon request a copy of the Company's latest Annual Report. Written or telephonic requests should be directed to W. Tod Chmar, Senior Vice President, Metromedia International Group, Inc., 945 East Paces Ferry Road, Suite 2210, Atlanta, Georgia 30326; (404) 261-6190. 3 4 THE COMPANY GENERAL The Company was organized in 1929 under Pennsylvania law and was reincorporated in 1968 under Delaware law. On July 19, 1993, the Company changed its name from Fuqua Industries, Inc. to The Actava Group Inc. and, as described under "Recent Developments" below, on November 1, 1995, the Company changed its name from The Actava Group Inc. to "Metromedia International Group, Inc." The Company's principal executive offices are located at 945 East Paces Ferry Road, Suite 2210, Atlanta, Georgia 30326, and its telephone number is (404) 261-6190. Since the late 1960's, the Company has owned, operated and sold dozens of companies in many diverse industries, including photofinishing, recreation, sporting goods, yacht and sailboat manufacturing, outdoor power equipment, manufactured housing, petroleum distribution, movie theaters, retailing, broadcasting, trucking, food and beverages, grain storage bins, taxicabs, seating and banking. At the beginning of 1994, the Company owned and operated businesses in three industries: photofinishing, lawn and garden equipment, and sporting goods. The Company sold its photofinishing subsidiary and its four sporting goods subsidiaries during 1994. As a result of these transactions, prior to the Mergers (as defined below) the Company operated only one business, Snapper Power Equipment Company ("Snapper"), which is engaged in the manufacture and sale of lawn and garden equipment. In addition, the Company owns at the date of this Prospectus 19,169,000 shares or approximately 38% of the outstanding common stock of Roadmaster Industries, Inc. ("Roadmaster"). These shares were issued to the Company in connection with the sale of the Company's four sporting goods subsidiaries to Roadmaster. Following consummation of the Mergers, the Company is a holding company which conducts business through its three principal subsidiaries. Through its Orion Pictures Corporation subsidiary, it is engaged in the development, production, acquisition, exploitation and worldwide distribution in all media of motion pictures, video product and made-for-television product. Through its Metromedia International Telecommunications, Inc. subsidiary, it currently owns interests in and participates along with local partners in the management of certain joint ventures which operate communications businesses in certain countries in Eastern Europe and certain of the former Soviet Republics. Through Snapper Inc., a subsidiary to which the business and assets of Snapper were transferred, it is engaged in the manufacture and sale of lawn and garden equipment. In addition, as described above, the Company owns at the date of this Prospectus, 19,169,000 shares, or approximately 38% of the outstanding common stock of Roadmaster. RECENT DEVELOPMENTS On September 27, 1995, the Company, Orion Pictures Corporation ("Orion"), MCEG Sterling Incorporated ("Sterling") and Metromedia International Telecommunications, Inc. ("MITI") entered into an Amended and Restated Agreement and Plan of Merger (the "Merger Agreement"), which amends and restates in its entirety an Agreement and Plan of Merger dated as of April 12, 1995 among the Company, Orion, Sterling and MITI (the "Initial Merger Agreement"). The terms of the Initial Merger Agreement were approved by the Board of Directors of the Company by a vote of five to four at a meeting held on April 12, 1995 and, following the resignation of two members of the Board of Directors, the Board of Directors unanimously approved the Merger Agreement on September 15, 1995. The Merger Agreement and the Mergers contemplated thereby were approved by the stockholders of each of the Company, Orion, MITI and Sterling on November 1, 1995. Pursuant to the Merger Agreement, on November 1, 1995 (the "Effective Time"), (i) Orion merged with and into OPC Merger Corp. ("OPC Mergerco"), a newly formed, wholly-owned subsidiary of the Company (the "Orion Merger"), with OPC Mergerco being the surviving corporation of the Orion Merger, (ii) MITI merged with and into MITI Merger Corp. ("MITI Mergerco"), a newly formed, wholly-owned subsidiary of the Company (the "MITI Merger"), with MITI Mergerco being the surviving corporation of the MITI Merger, and (iii) Sterling merged with and into the Company (the "Sterling Merger" and together with the Orion Merger and the MITI Merger, the "Mergers") with the Company being the surviving corporation of the Sterling Merger. OPC Mergerco, as the surviving corporation of the Orion Merger, was renamed "Orion Pictures Corporation" and continues the business and operations of Orion and Sterling (see below). MITI Mergerco, as the surviving corporation of the MITI Merger, was 4 5 renamed "Metromedia International Telecommunications, Inc." and continues the business and operations of MITI. The Company, as the surviving corporation of the Sterling Merger, changed its name from The Actava Group Inc. to "Metromedia International Group, Inc." and transfered the operating assets of Sterling to OPC Mergerco. Effective November 2, 1995, the Company delisted its Common Stock from trading on the New York Stock Exchange and listed its Common Stock for trading on the American Stock Exchange under the symbol "MMG." On that date the Company also changed its trading symbol on The Pacific Stock Exchange from "ACT" to "MMG." Consequently, the Company's Common Stock currently is listed for trading on the American Stock Exchange and The Pacific Stock Exchange under the trading symbol "MMG." As of November 2, 1995, there were approximately 42,456,886 shares of Common Stock outstanding. The number of outstanding shares of Common Stock includes approximately 24,965,985 shares issued pursuant to the Merger Agreement and the transactions contemplated thereby to the former stockholders of Orion, Sterling and MITI. The Mergers are described more fully in the Company's Current Report on Form 8-K dated April 12, 1995, as amended, the Company's Current Report on Form 8-K dated September 27, 1995, the Company's Current Report on Form 8-K dated November 1, 1995 and the Form S-4 Registration Statement relating to the Special Meeting of the Stockholders of the Company held with respect to the Mergers. All or a portion of such documents are incorporated by reference into this Prospectus, and copies are available upon request to the Company. See "Incorporation of Certain Documents By Reference." Certain pro forma financial information of the Company, as the surviving parent corporation in the Mergers, is set forth in Appendix A hereto under the caption "Pro Forma Combining Financial Statements." Such information is incorporated by reference herein, and should be read in conjunction with the other financial statements incorporated by reference herein. SELLING STOCKHOLDERS RENAISSANCE PARTNERS Of the 752,708 Shares offered hereby, 700,000 Shares (approximately 1.6% of the outstanding Common Stock as of November 2, 1995) are beneficially owned by and offered for the account of Renaissance Partners, a partnership for which John D. Phillips, the President and Chief Executive Officer of the Company, and Buck Creek Ventures, Inc., a corporation wholly owned by W. Tod Chmar, a Senior Vice President of the Company, serve as general partners. Renaissance Partners purchased the 700,000 Shares on April 19, 1994 for $4,462,500 in cash. If all of the Shares offered by Renaissance Partners are sold, Renaissance Partners will have no beneficial ownership of any shares of the Company's Common Stock. LONG, ALDRIDGE & NORMAN Of the 752,708 Shares offered hereby, 52,708 Shares (approximately .124% of the outstanding Common Stock as of November 2, 1995) are beneficially owned by and offered for the account of Long, Aldridge & Norman ("LAN"). LAN has served as legal counsel to the Company since 1994 and was issued the 52,708 Shares in payment of certain legal fees. If all of the Shares offered by LAN are sold, LAN will have no beneficial ownership of any shares of the Company's Common Stock. PLAN OF DISTRIBUTION The Shares may be sold from time to time by the Selling Stockholders, or by pledgees, donees, transferees or other successors in interest, including without limitation John D. Phillips, Buck Creek Ventures, Inc. and Michael P. Marshall. Mr. Marshall also serves as a general partner of Renaissance Partners. Such sales may be made on the American Stock Exchange or The Pacific Stock Exchange or such other national securities exchange or automated interdealer quotation system on which shares of Common Stock are then listed, through negotiated transactions or otherwise at prices and at terms then prevailing or at prices related to the then current market price or in negotiated transactions. The Shares may be sold pursuant to one or more of the following: (a) ordinary brokerage transactions and transactions in which the broker solicits purchasers; 5 6 (b) purchases by an underwriter, a broker or a dealer as principal and resale by such underwriter, broker or dealer for its account pursuant to this Prospectus; (c) a block trade in which the broker or dealer so engaged will attempt to sell the Shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; (d) an exchange distribution in accordance with the rules of such exchange; and (e) through the writing of options on the Shares. In the event that a Selling Stockholder does not intend to effect the sale of the Shares through an underwriter, a broker or a dealer, the Selling Stockholder must effect such transactions by notifying the Company in advance of any intended transaction in order for the Company to determine compliance with applicable federal and state securities laws, and then upon receipt of notice from the Company that such transaction may proceed, the Selling Stockholder may sell the Shares. If necessary, a supplemental prospectus which describes the method of sale in greater detail may be filed by the Company with the Commission pursuant to Rule 424(c) under the 1933 Act under certain circumstances. In effecting sales, underwriters, brokers or dealers engaged by the Selling Stockholders and/or purchasers of the Shares may arrange for other underwriters, brokers or dealers to participate. Underwriters, brokers or dealers will receive commissions, concessions or discounts from the Selling Stockholders and/or the purchasers of the Shares in amounts to be negotiated prior to the sale. In addition, any Shares covered by this Prospectus which qualify for sale pursuant to Rule 144 under the 1933 Act may be sold under Rule 144 rather than pursuant to this Prospectus. The Company will bear all expenses in connection with the registration and sale of the Shares, other than commissions, concessions or discounts to underwriters, brokers or dealers and fees and expenses of counsel or other advisors to the Selling Stockholders. The Selling Stockholders and any underwriter, broker or dealer who acts in connection with the sale of the Shares hereunder may be deemed to be "underwriters" within the meaning of Section 2(11) of the 1933 Act, and any compensation received by them and any profit on any resale of the Shares as principals might be deemed to be underwriting discounts and commissions under the 1933 Act. Pursuant to a registration rights agreement, the Company has agreed to indemnify the Selling Stockholders against certain liabilities, including liabilities under the 1933 Act as underwriters or otherwise. LEGAL MATTERS The legality of the Shares offered hereby has been passed upon for the Company by Long, Aldridge & Norman, Atlanta, Georgia, counsel to the Company. LAN is the beneficial owner of approximately 52,708 shares of Common Stock as of the date hereof. See "Selling Stockholders." EXPERTS The consolidated financial statements and related schedule of Orion as of February 28, 1995 and 1994 and for each of the years in the three-year period ended February 28, 1995, have been incorporated by reference herein and in the Form S-3 Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP on the February 28, 1995, 1994 and 1993 consolidated financial statements of Orion contains an explanatory paragraph that states that Orion is a defendant in certain litigation which alleges various breaches of agreements by Orion, and seeks certain damages. It is not possible to assess the ultimate damages, if any, at this time. The report of KPMG Peat Marwick LLP on the February 28, 1995 consolidated financial statements of Orion contains an explanatory paragraph that states that based upon Orion's inability to meet required debt payments that are due within the next year under the terms of its Indentures (as defined in Note 6 of the Notes to Consolidated Financial Statements) there exists substantial doubt about the entity's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty. 6 7 The report of KPMG Peat Marwick LLP on the February 28, 1994 consolidated financial statements of Orion includes an explanatory paragraph on the Company's change in method of accounting for income taxes. The consolidated financial statements of the Company appearing in the Company's Annual Report on Form 10-K for the year ended December 31, 1994, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements of MITI as of December 31, 1994 and 1993 and for each of the years in the two-year period ended December 31, 1994, have been incorporated by reference herein and in the Form S-3 Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP on the December 31, 1994 and 1993, consolidated financial statements of MITI contains an explanatory paragraph that states that MITI's significant recurring losses and negative operating and investing cash flows raise substantial doubt about MITI's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty. The independent auditor's report for the years ended December 31, 1994 and 1993, refers to a change in policy of accounting for investments in Joint Ventures in 1994. The combined financial statements of International Telcell, Inc. (ITI) and International Telcell Group Limited Partnership (ITGLP) (predecessor entities of MITI) as of December 31, 1992 and for the year then ended have been incorporated by reference herein and in the Form S-3 Registration Statement in reliance upon the report of Arthur Andersen LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing in giving said reports. The report of Arthur Andersen LLP covering the December 31, 1992 combined financial statements of ITI and ITGLP contains an explanatory paragraph that states that MITI's significant recurring losses and negative operating and investing cash flows raise substantial doubt about MITI's ability to continue as a going concern. The combined financial statements do not include any adjustments that might result from the outcome of that uncertainty. The financial statements of Kosmos TV as of December 31, 1993 and September 30, 1994, and for the year ended December 31, 1994 and for the nine months ended September 30, 1994 have been incorporated by reference herein and in the Form S-3 Registration Statement in reliance upon the report of KPMG, independent auditors, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The report of KPMG on the December 31, 1993 and September 30, 1994 financial statements of Kosmos TV contains an explanatory paragraph that states that Kosmos TV's recurring losses from operations and net capital deficiency raise substantial doubt about Kosmos TV's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of that uncertainty. The audited consolidated financial statements and related schedules of Sterling as of March 31, 1995 and 1994 and for each of the fiscal years ended March 31, 1995, 1994 and 1993, incorporated by reference herein and in the Form S-3 Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated herein in reliance upon the authority of said firm as experts in giving said reports. 7 8 APPENDIX A PRO FORMA COMBINING FINANCIAL STATEMENTS The information set forth below should be read in conjunction with the information set forth in the Form S-4 Registration Statement, portions of which are incorporated herein by reference. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Form S-4 Registration Statement. The following unaudited Pro Forma Combining Balance Sheet of Orion (the acquiror for accounting purposes only) as of August 31, 1995 and unaudited Pro Forma Combining Statement of Operations of Orion for the six months ended August 31, 1995 and the year ended February 28, 1995, illustrate the effect of the Mergers (see "Accounting Treatment" below), the associated refinancing of the Orion Senior Indebtedness and the Orion Subordinated Indebtedness, the contribution for equity of inventory and certain amounts owed to MetProductions, the conversion to equity of certain amounts owed to Met International, the settlement of certain Orion liabilities, each as of October 24, 1995 for illustrative purposes only, and accounting for the results of the Company's sporting goods subsidiaries for the period from January 1, 1994 through December 6, 1994 on the equity method as a result of the exchange of such subsidiaries for approximately 39% of Roadmaster's outstanding common stock on December 6, 1994. The unaudited Pro Forma Combining Balance Sheet assumes that the Mergers and other aforementioned transactions occurred on August 31, 1995 and the unaudited Pro Forma Combining Statements of Operations assume that the Mergers and other aforementioned transactions occurred at the beginning of the periods presented. Pursuant to the terms of the Merger Agreement, each holder of Orion Common Stock, MITI Common Stock and Sterling Common Stock is entitled to receive the number of whole shares of Common Stock equal to the number of shares of Orion Common Stock, MITI Common Stock and Sterling Common Stock, as the case may be, owned immediately prior to the Effective Time multiplied by the Orion Exchange Ratio, the MITI Exchange Ratio and the Sterling Exchange Ratio, respectively, plus cash in lieu of fractional shares and cash issued in respect of dissenters rights of appraisal, if any (which is expected to be immaterial). The Orion Exchange Ratio is based upon the Actava Average Closing Price and the number of shares of Orion Common Stock outstanding immediately prior to the Determination Date (October 27, 1995). The MITI Exchange Ratio is based upon the Actava Average Closing Price and the number of shares of MITI Common Stock outstanding immediately prior to the Determination Date. The Sterling Exchange Ratio is based upon the Actava Average Closing Price and the number of shares of Sterling Common Stock outstanding immediately prior to the Determination Date. These pro forma combining financial statements have been prepared based on an assumed Actava Average Closing Price of $17.6875 and assuming 20.0 million shares of Orion Common Stock outstanding and an Orion Exchange Ratio of .57143, 1.7 million shares of MITI Common Stock outstanding and a MITI Exchange Ratio of 5.54937, and 11.2 million shares of Sterling Common Stock outstanding and a Sterling Exchange Ratio of .04627, each as of October 24, 1995 for illustrative purposes only. The actual Orion Exchange Ratio, MITI Exchange Ratio and Sterling Exchange Ratio were determined on the Determination Date in accordance with the formulas set forth in the Merger Agreement. The Actava Options remain outstanding after the Effective Time with the same terms and subject to the same conditions as in effect prior to the Effective Time. The MITI Options were converted into options to purchase shares of Common Stock, with a proportional adjustment being made to the exercise price of and the number of shares issuable upon exercise of each such option to reflect the MITI Exchange Ratio in the Mergers. ACCOUNTING TREATMENT The Metromedia Holders had the right to appoint a majority of the members of the Board of Directors of the Company at the Effective Time as a result of their majority ownership of the Orion Common Stock and their control, with a member of Orion's management, of the Board of Directors of Orion. In addition the Metromedia Holders, collectively, are now the Company's single largest stockholder. Due to the existence of common control of Orion and MITI, their combination pursuant to the Mergers will be accounted for as a combination of entities under common control. As a result, the combination of Orion and MITI will be A-1 9 effected utilizing historical costs for the ownership interests of the Metromedia Holders. The remaining ownership interests of MITI other than those of the Metromedia Holders will be accounted for based on the fair value of such ownership interests, as determined by the value of the shares received by the holders of such interests at the Effective Time, in accordance with the purchase method of accounting. For accounting purposes only, Orion and MITI have been deemed to be the joint acquiror of the Company and Sterling. The acquisition of the Company and Sterling will be accounted for as a purchase. As a result of the reverse acquisition of the Company by Orion, the historical financial statements of the Surviving Corporation for periods prior to the Mergers will be those of Orion rather than the Company. The pro forma adjustments are based upon currently available information and upon certain assumptions that management of each of the Company, Orion, MITI and Sterling (collectively "Management") believes are reasonable. The mergers of the Company and Sterling will be recorded based upon the estimated fair market value of the net tangible assets acquired at the date of acquisition. The adjustments included in the unaudited pro forma combining financial statements represent management's preliminary determination of these adjustments based upon available information. There can be no assurance that the actual adjustments will not differ significantly from the pro forma adjustments reflected in the pro forma financial information. The unaudited pro forma combining financial statements are not necessarily indicative of either future results of operations or results that might have been achieved if the foregoing transactions had been consummated as of the indicated dates. The unaudited pro forma combining financial statements should be read in conjunction with the historical financial statements of the Company, Orion, MITI and Sterling, together with the related notes thereto, incorporated by reference herein. A-2 10 METROMEDIA INTERNATIONAL GROUP, INC. UNAUDITED PRO FORMA COMBINING BALANCE SHEET
AUGUST 31, 1995 ------------ METROMEDIA AUGUST 31, INTERNATIONAL 1995 JUNE 30, 1995 GROUP ------------ ---------------------------------------- PRO FORMA PRO FORMA ORION MITI ACTAVA STERLING MERGER FOR MERGER HISTORICAL HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS COMBINED ------------ ------------ ------------ ------------ ------------ ------------ (IN THOUSANDS) Cash and marketable securities..... $ 18,504 $ 1,840 $ 38,851 $ 613 $ 1,907 (25) $ 61,715 Accounts receivable................ 33,749 1,439 109,938 3,140 -- 148,266 Notes receivable................... -- -- 108,177 -- -- 108,177 Other current assets............... 60,131 410 50,255 -- 15,323 (1) 136,371 10,252 (2) ------------ ------------ ------------ ------ ------------ ------------ Current assets..................... 112,384 3,689 307,221 3,753 27,482 454,529 Film inventories................... 149,648 -- -- 2,891 558 (3) 153,097 Property and equipment, net........ 2,314 2,891 32,871 -- -- 38,076 Intangibles........................ -- 9,507 955 -- 314,730 (4) 320,054 (955)(5) (4,183)(6) Other assets....................... 42,759 34,586 85,792 430 (15,236)(7) 147,331 (1,000)(8) ------------ ------------ ------------ ------ ------------ ------------ Total assets............... $ 307,105 $ 50,673 $ 426,839 $ 7,074 $ 321,395 $ 1,113,086 ======== ======== ========= ======== ========== ========== Accrued expenses................... $ 25,341 $ 8,056 $ 75,519 $ 398 $ 6,500 (9) $ 137,738 7,423 (10) 15,356 (11) (855)(12) Short-term debt.................... 79,697 46,294 69,816 495 (11,994)(12) 184,308 Other current liabilities.......... 53,541 3,269 6,383 2,183 -- 65,376 ------------ ------------ ------------ ------ ------------ ------------ Current liabilities................ 158,579 57,619 151,718 3,076 16,430 387,422 Deferred income taxes.............. -- -- 6,709 -- -- 6,709 Deferred revenues.................. 29,385 -- -- 232 -- 29,617 Long-term debt..................... 117,839 628 156,674 -- (14,661)(8) 260,480 Other liabilities.................. 28,640 160 3,752 -- -- 32,552 Stockholders' equity: Common stock..................... 5,000 2 22,768 11 (4,808)(4) 41,124 15,950 (4) 976 (2) 1,224 (12) Additional paid-in capital....... 265,811 35,794 34,705 1,989 339,454 (4) 677,612 (15,950)(4) 9,276 (2) 11,625 (12) (4,183)(6) (909)(25) Retained earnings (accumulated deficit)....................... (298,149) (43,530) 156,385 1,766 (1,766)(4) (322,430) (156,385)(4) 19,249 (4) Treasury stock................... -- -- (105,872) -- 103,056 (4) 0 2,816 (25) ------------ ------------ ------------ ------ ------------ ------------ Total stockholders' equity (deficiency)............. (27,338) (7,734) 107,986 3,766 319,626 396,306 ------------ ------------ ------------ ------ ------------ ------------ Total liabilities and stockholders' equity (deficiency)............. $ 307,105 $ 50,673 $ 426,839 $ 7,074 $ 321,395 $ 1,113,086 ======== ======== ========= ======== ========== ========== AUGUST 31, 1995 METROMEDIA INTERNATIONAL PRO FORMA GROUP REFINANCING PRO FORMA ADJUSTMENTS COMBINED ------------ ------------ Cash and marketable securities..... $ (39,782)(13) $ 14,051 (7,882)(24) Accounts receivable................ -- 148,266 Notes receivable................... (53,795)(14) 54,382 Other current assets............... -- 136,371 ------------ ------------ Current assets..................... (101,459) 353,070 Film inventories................... -- 153,097 Property and equipment, net........ -- 38,076 Intangibles........................ -- 320,054 Other assets....................... 6,727 (13) 149,589 (4,469)(13) ------------ ------------ Total assets............... $ (99,200) $ 1,013,886 ========== ========== Accrued expenses................... $ (4,882) $ 132,856 Short-term debt.................... (78,269)(13) 131,907 (33,839)(14) 59,707 (13) Other current liabilities.......... -- 65,376 ------------ ------------ Current liabilities................ (57,283) 330,139 Deferred income taxes.............. -- 6,709 Deferred revenues.................. (3,000)(24) 26,617 Long-term debt..................... (90,993)(13) 257,531 108,000 (13) (19,956)(14) Other liabilities.................. -- 32,552 Stockholders' equity: Common stock..................... -- 41,124 Additional paid-in capital....... -- 677,612 Retained earnings (accumulated deficit)....................... (35,969)(13) (358,399) Treasury stock................... -- 0 ------------ ------------ Total stockholders' equity (deficiency)............. (35,969) 360,337 ------------ ------------ Total liabilities and stockholders' equity (deficiency)............. $ (99,200) $ 1,013,886 ========== ==========
A-3 11 METROMEDIA INTERNATIONAL GROUP, INC. PRO FORMA COMBINING STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, SIX MONTHS 1995 ENDED ------------- AUGUST 31, SIX MONTHS ENDED METROMEDIA 1995 JUNE 30, 1995 PRO FORMA INTERNATIONAL ---------- ------------------------------------ MERGER AND GROUP ORION MITI ACTAVA STERLING REFINANCING PRO FORMA HISTORICAL HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS COMBINED ---------- ---------- ---------- ---------- ----------- ------------- (IN THOUSANDS EXCEPT PER SHARE DATA) Revenues............................... $ 73,419 $ 3,316 $ 98,848 $4,364 $ -- $179,947 Cost of revenues....................... 66,532 -- 78,426 2,049 22 (15) 147,029 Operating expenses..................... 11,468 12,635 25,984 1,890 (101)(16) 51,876 Depreciation and amortization.......... 319 725 3,804 44 6,192 (17) 11,084 ---------- ---------- ---------- ---------- ----------- ------------- Operating income (loss)................ (4,900) (10,044) (9,366) 381 (6,112) (30,041) Other income (expense): Interest expense..................... (13,671) (926) (10,903) -- 12,992 (18) (19,919) 1,131 (19) (5,948)(20) (1,278)(21) (1,316)(22) Other................................ -- (2,152) 1,411 -- -- (741) ---------- ---------- ---------- ---------- ----------- ------------- Income (loss) before tax............... (18,571) (13,122) (18,858) 381 (531) (50,701) Provision for income taxes............. 300 -- -- 166 -- 466 ---------- ---------- ---------- ---------- ----------- ------------- Net income (loss) from continuing operations........................... $(18,871) $ (13,122) $ (18,858) $ 215 $ (531) $ (51,167) ========= ========= ========= ======== ========== ========== Number of shares issued and outstanding.......................... 41,124 Loss per share......................... $ (1.24) ==========
A-4 12 METROMEDIA INTERNATIONAL GROUP, INC. PRO FORMA COMBINING STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1995 YEAR ENDED YEAR ENDED YEAR ENDED ------------- FEBRUARY 28, DECEMBER 31, 1994 MARCH 31, METROMEDIA 1995 ------------------------------------------ 1995 PRO FORMA INTERNATIONAL ------------ ACTAVA SPORTING ---------- MERGER AND GROUP ORION MITI ACTAVA GOODS STERLING REFINANCING PRO FORMA HISTORICAL HISTORICAL HISTORICAL SUBSIDIARIES(23) HISTORICAL ADJUSTMENTS COMBINED ------------ ---------- ---------- ---------------- ---------- ----------- ------------- (IN THOUSANDS EXCEPT PER SHARE DATA) Revenues................ $191,244 $ 3,545 $ 551,828 $ (302,326) $8,443 $ -- $ 452,734 Cost of revenues........ 187,477 -- 461,175 (265,707) 4,656 43 (15) 387,644 Operating expenses...... 21,278 19,312 77,638 (36,565) 3,240 (204)(16) 84,699 Depreciation and amortization.......... 767 1,149 13,336 (4,900) 90 12,384 (17) 22,826 ------------ ---------- ---------- ---------------- ---------- ----------- ------------- Operating income (loss)................ (18,278) (16,916) (321) 4,846 457 (12,223) (42,435) Other income (expense): Interest expense...... (29,082) (213) (28,434) 5,299 -- 29,884 (18) (36,762) 2,867 (19) (11,897)(20) (2,555)(21) (2,631)(22) Other................. (1,610) (2,012) 5,299 82 -- -- 1,759 ------------ ---------- ---------- ---------------- ---------- ----------- ------------- Income (loss) before tax................... (48,970) (19,141) (23,456) 10,227 457 3,445 (77,438) Provision for income taxes................. 1,300 -- -- (417) 198 -- 1,081 ------------ ---------- ---------- ---------------- ---------- ----------- ------------- (50,270) (19,141) (23,456) 10,644 259 3,445 (78,519) Equity in loss of Actava Sporting Goods Subsidiaries.......... -- -- -- (10,644) -- -- (10,644) ------------ ---------- ---------- ---------------- ---------- ----------- ------------- Net income (loss) from continuing operations............ $(50,270) $ (19,141) $ (23,456) $ -- $ 259 $ 3,445 $ (89,163) ========== ========= ========= ============= ========= ========== ========== Number of shares issued and outstanding....... 41,124 ========== Loss per share.......... $ (2.17) ==========
A-5 13 FOOTNOTES (1) Reflects Actava's inventory at estimated fair market value. (2) Reflects contribution of film inventory and the conversion of indebtedness by certain affiliates of Metromedia in exchange for 976,373 shares of Common Stock. (3) Reflects Sterling's film inventory at estimated fair market value. (4) Reflects the excess of cost over the estimated fair value of net tangible assets acquired in the Mergers, the elimination of Actava's and Sterling's historical additional paid-in capital and retained earnings (accumulated deficit), the elimination of MITI's accumulated deficit attributable to the minority stockholders, the retirement of Actava's treasury stock and the value of the Common Stock issued to the Actava and Sterling stockholders and MITI minority stockholders in the Mergers.
(IN THOUSANDS EXCEPT SHARE AND PER SHARE SHARE DATA) ------------- Actava shares outstanding at October 24, 1995................. 17,490,901 Common Stock to be owned by MITI minority stockholders........ 4,221,432 Common Stock to be owned by Sterling stockholders............. 480,451 ------------- Number of shares issued to acquire Actava, MITI minority and Sterling.................................................... 22,182,783 Per share price at closing (assumed at October 24, 1995 for illustrative purposes)...................................... $ 18 1/4 ------------- Value of stock................................................ $ 404,836 Value of Actava options....................................... 7,423 Value of MITI options......................................... 18,922 Transaction costs............................................. 6,500 ------------- Purchase price of Actava, MITI minority and Sterling.......... 437,681 Less -- Estimated fair value of net tangible assets acquired.................................................... 122,952 Excess of cost over fair value of the net tangible assets acquired.................................................... $ 314,730 ==========
These adjustments reflect the conversion of each outstanding share of Orion Common Stock and MITI Common Stock into 0.57143 and 5.54937 shares of Common Stock, respectively. Based on the number of shares of Orion Common Stock and MITI Common Stock outstanding October 24, 1995 and assuming an Actava Average Closing Price of $17.68750, the MITI Common Stock owned by the Metromedia Holders and all of the Orion Common Stock will be converted into an aggregate of 16,740,986 shares of Common Stock, excluding shares issued in connection with the conversion of certain amounts owed to Met Productions and Met International as described in footnotes (2) and (12) to the Pro Forma Financial Statements, respectively. Excess of cost over fair value of the net tangible assets acquired is presented in the pro forma balance sheet utilizing estimated amounts at October 24, 1995 and will be determined at the Effective Time. Such amount will also be allocated according to the estimated fair values of assets at the Effective Time. (5) Reflects elimination of historical goodwill at Actava. (6) Reflects elimination of historical goodwill of MITI attributable to MITI minority stockholders. (7) Reflects Actava's equity investment in Roadmaster at fair market value at October 24, 1995. (8) Reflects fair market value of Actava's debentures based on trading quotes as of October 24, 1995 and the elimination of $1.0 million of historical debt issuance cost. (9) Reflects transaction costs incurred in connection with the Mergers. (10) Reflects estimated fair market value of Actava's stock options at October 24, 1995. (11) Reflects excess of estimated fair market value at October 24, 1995 of MITI's stock options over amounts accrued at June 30, 1995. (12) Reflects conversion of $7.3 million of indebtedness owed to certain affiliates of Metromedia and $5.5 million of indebtedness as of June 30, 1995 to be refinanced by certain affiliates of Metromedia into 1,223,733 shares of Common Stock. In addition, $12.1 million borrowed from certain affiliates of A-6 14 FOOTNOTES -- (CONTINUED) Metromedia subsequent to June 30, 1995 and outstanding as of October 24, 1995 will be converted into 1,152,382 shares of Common Stock at the Effective Time. (13) Reflects refinancing of Orion Senior Indebtedness (including unamortized discount) and the Orion Subordinated Indebtedness with the Term Loan and the MIG Credit Facility (as described elsewhere herein). Debt issuance costs are assumed to be paid in cash. A loss of $36.0 million on the retirement of this debt will be reflected as an extraordinary loss in the fiscal period following the consummation of the Mergers and this financing.
IN THOUSANDS DR. (CR.) ------------ Elimination of the current portion of Orion Existing Indebtedness (comprised of the Orion Senior Indebtedness and the current portion of the Orion Subordinated Indebtedness)............................................... $ 78,269 Elimination of the non-current portion of the Orion Subordinated Indebtedness................................... 90,993 Capitalization of financing fees.............................. 6,727 Loss on refinancing of debt................................... 35,969 Refinancing with current portion of Term Loan ($27,000) and the MIG Credit Facility ($32,707)........................... (59,707) Refinancing with non-current portion of Term Loan............. (108,000) Reduction of Surviving Corporation's cash needed to effect refinancing................................................. (39,782) Reduction of Other Assets due to write off of deferred financing fees related to the Existing Orion Indebtedness... (4,469) ------------ Net................................................. $ 0 ==========
(14) Reflects the settlement of amounts due to and from the participants in the Mergers and Metromedia. (15) Reflects additional amortization expense associated with the purchase price allocation to film inventories. (16) Reflects elimination of Plan distribution costs as a result of Mergers and refinancing. (17) Reflects amortization of the excess of cost over the fair value of net tangible assets acquired in the Mergers by use of the straight-line method over 25 years. (18) Reflects elimination of interest expense attributable to Orion Senior Indebtedness and Orion Subordinated Indebtedness as a result of the refinancing. (19) Reflects reduction in interest expense due to the repayment of Actava's Swiss Franc Senior Subordinated Debentures, net of a reduction in interest income (assumed interest rate of 4.5%) related to cash equivalents utilized to retire redeemable common stock on February 17, 1995. (20) Reflects interest expense on the Term Loan (assumed interest rate of 8.8%). (21) Reflects interest on the MIG Credit Facility (assumed interest rate of 8.8%). (22) Reflects amortization of debt issuance costs related to the Term Loan and the MIG Credit Facility. (23) Reflects the results of Actava's Sporting Goods subsidiaries on the equity method for the period from January 1, 1994 through December 6, 1994. The Actava Sporting Goods subsidiaries were combined with Roadmaster in exchange for approximately 19.2 million shares of Roadmaster Common Stock. Actava consolidated the results of operations of the Sporting Goods subsidiaries with the results of Actava for periods ending prior to December 6, 1994. Actava's investment in Roadmaster is accounted for by the equity method. (24) Reflects the settlement of certain Orion liabilities at the Effective Time. (25) Reflects the exercise of 144,175 Actava options subsequent to June 30, 1995. A-7 -----END PRIVACY-ENHANCED MESSAGE-----