-----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, WMCLhG9DqZ3tK976n5soJkDmrngASrAiBe0NEi7NLkXTgASgu2vvjLuujVd1Shia VzpcdTN+O0R8tc3bI7fnHg== 0000898822-96-000047.txt : 19960201 0000898822-96-000047.hdr.sgml : 19960201 ACCESSION NUMBER: 0000898822-96-000047 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960129 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960131 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: FALCON CABLE SYSTEMS CO CENTRAL INDEX KEY: 0000783008 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 954108170 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09322 FILM NUMBER: 96509427 BUSINESS ADDRESS: STREET 1: 10900 WILSHIRE BLVD 15TH FL CITY: LOS ANGELES STATE: CA ZIP: 90024 BUSINESS PHONE: 3108249990 MAIL ADDRESS: STREET 1: 10900 WILSHIRE BLVD CITY: LOS ANGELES STATE: CA ZIP: 90024 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 29, 1996 Falcon Cable Systems Company, a California limited partnership (Exact name of registrant as specified in its charter) California (State or other jurisdiction of incorporation) 1-9332 95-4108170 (Commission File Number) (IRS Employer Identification No.) 10900 Wilshire Boulevard, 15th Floor, Los Angeles, CA 90024 (Address of principal executive offices) (Zip Code) (310) 824-9990 (Registrant's Telephone Number) ITEM 5. OTHER EVENTS. In its Quarterly Report on Form 10-Q for the period end- ing September 31, 1995, the Partnership provided the follow- ing "Other Information": The Partnership Agreement provides that the General Partner shall use its best efforts to cause the Partner- ship to sell all of the Partnership's cable systems be- tween December 31, 1991 and December 31, 1996, the "ter- mination date" of the Partnership. The Partnership has stated in prior public reports and filings that, from time to time, it may enter into discussions regarding the sale of its cable systems to affiliates or other parties. In addition, the Partnership Agreement provides the General Partner or its affiliates the right to purchase for cash substantially all of the Partnership's cable systems at any time after December 31, 1991 without so- liciting unaffiliated purchasers. Pursuant to the Part- nership Agreement, in the event the General Partner or its affiliates exercise such right, the purchase price will be determined solely by reference to an "appraised value" determined pursuant to an appraisal process set forth in the Partnership Agreement (the "Appraisal Pro- cess"). The Partnership Agreement provides that the "appraised value" shall be determined by the average of three appraisal evaluations of the Partnership's cable systems and provides that one appraiser is to be se- lected by the General Partner; one appraiser is to be selected by a majority vote of the independent members of the Partnership's advisory committee; and one ap- praiser is to be selected by the two appraisers already so chosen. If any such appraisal is expressed as a range, then in calculating the average, the minimum amount of such appraisal shall be used. In the event of a sale of a cable system, including a sale to the Gen- eral Partner or its affiliates, the General Partner will be entitled to a fee equal to 2 1/2% of gross proceeds from the sale less any amounts paid as brokerage or similar fees to third parties. The Partnership has previously disclosed that the General Partner or its affiliates may from time to time explore the possibility of exercising such purchase right. The General Partner, in its exploration of the possibility of exercising such purchase right, has now initiated the Appraisal Process by inviting the indepen- dent members of the Partnership's advisory committee to designate a nationally-recognized independent appraiser. In conjunction with the initiation of the Appraisal Process, certain affiliates (the "Affiliates") of the Partnership and its General Partner, including Marc B. Nathanson (the Chairman of the Board, Chief Executive Officer, President and a director of Falcon Holding Group, Inc., the General Partner's sole general partner) have made a preliminary proposal (the "Proposal") to the independent members of the Partnership's advisory com- mittee with respect to an exchange transaction (the "Ex- change"). Under the Proposal, the Exchange would take place immediately prior to the exercise by the General Partner or its affiliates of their right to purchase for cash substantially all of the Partnership's cable sys- tems remaining after giving effect to the Exchange. In the Exchange, substantially all of the Falcon Units owned by the Affiliates would be exchanged for a portion (by value) of the Partnership's cable systems equal to the proportion of total outstanding Units exchanged by the Affiliates (the Affiliates would also relieve Falcon of an equal proportion of its total debt). Any decision of Falcon to pursue the Proposal, the Exchange, or the sale of the cable systems of the Part- nership in accordance with the rights of the General Partner under the terms of the Partnership Agreement (as described above) or otherwise, ultimately will be depen- dent upon numerous factors including, without limita- tion, (i) the receipt by the General Partner of an opin- ion of a qualified appraiser or other financial advisor selected by the independent members of the Partnership's advisory committee as to, among other things, the fair- ness of the Proposal as compared to a sale of all of the Partnership's cable systems (without giving effect to the Exchange) to the General Partner or its affiliates in accordance with their rights under the Partnership Agreement (as described above), or the conclusion on another basis that such fairness was otherwise estab- lished ; (ii) the availability of necessary equity and debt financing on favorable terms; (iii) the relative attractiveness of available alternative business and investment opportunities; (iv) the regulatory environ- ment for cable properties; (v) future developments re- lating to the Partnership and the cable industry, gen- eral economic conditions and other future developments. If the Proposal is pursued and the Exchange is consum- mated, the Affiliates expect that they would defer their potential tax liability as compared to a liquidation of the Partnership without effecting the Exchange. Although the foregoing reflects activities which the General Partner is currently exploring with the Partnership and the Affiliates with respect to the Part- nership, the foregoing is subject to change at any time. Accordingly, there can be no assurance that the Pro- posal, the Exchange, or the sale of the cable systems of the Partnership in accordance with the rights of the -2- General Partner and its affiliates under the terms of the Partnership Agreement (as described above) or other- wise will be pursued or, if pursued, when and if any of them will be successfully consummated. For additional information on the terms of the Partnership Agreement, see "Item 1 --Business --Introduction" and Item 13 -- "Certain Relationships and Related Transactions -- Con- flicts of Interest" in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994. The Partnership has entered into a letter agreement, a copy of which is filed as an exhibit hereto and incorporated herein by reference, dated January 29, 1996, with a group of holders of limited partnership interests in the Partnership (the "Unofficial Unitholder Committee"), consisting of the Baupost Group, Inc., Cumberland Associates, Harvest Capital, L.P., and Tweedy, Browne Company L.P., and collectively hold- ing approximately 1,339,000 Partnership Units (or approxi- mately 21% of the outstanding Units). As contemplated by the Partnership Agreement and the Company's Quarterly Report on Form 10-Q for the period ending September 31, 1995, the appraiser to be selected by the Gen- eral Partner, the appraiser to be selected by a majority vote of the independent members of the Partnership's advisory com- mittee, and the appraiser to be selected by the two apprais- ers so chosen, have each been selected and are currently un- dertaking the appraisal contemplated by the Partnership Agreement as described above. The three appraisers are, re- spectively, Malarkey-Taylor Associates, Inc., Kane-Reece As- sociates, Inc., and Waller Capital Corporation. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits. Exhibit No. Description 1 Letter Agreement dated January 29, 1996, be- tween the Unofficial Unitholder Committee and the Partnership. -3- SIGNATURE Pursuant to the requirements of the Securities Ex- change Act of 1934, the registrant has duly caused this re- port to be signed on its behalf by the undersigned hereunto duly authorized. Date: January 31, 1996 FALCON CABLE SYSTEMS COMPANY By: Falcon Cable Investors Group Managing General Partner By: Falcon Holding Group, L.P. General Partner By: Falcon Holding Group, Inc. General Partner By: /s/ Michael K. Menerey ___________________________ Michael K. Menerey, Secretary and Chief Financial Officer EXHIBIT INDEX Exhibit No. Description Page No. 1 Letter Agreement dated January 29, 1996, between the Unofficial Unitholder Committee and the Partner- ship. EX-99 2 EXHIBIT 1 EXHIBIT 1 THE PROPOSED UNOFFICIAL UNITHOLDER OVERSIGHT COMMITTEE OF FALCON CABLE SYSTEMS COMPANY c/o The Baupost Group, Inc. 44 Brattle Street P.O. Box 389125 Cambridge, MA 02238-9125 January 29, 1996 CONFIDENTIAL BY FACSIMILE/REGULAR MAIL Falcon Cable Systems Company 10900 Wilshire Boulevard Los Angeles, California 90024 Gentlemen: Thank you for meeting with us on December 19, 1995 to discuss preliminarily the concerns of certain holders ("Hold- ers") of units of limited partnership interest ("Unitholders") in Falcon Cable Systems Company (the "Partnership") regarding certain transactions between the Partnership and its affiliates proposed in connection with the scheduled termination of the Partnership on December 31, 1996 (the "Termination). Following our December 19, 1995 meeting and in anticipation of your agreement set forth herein, the Holders identified on Annex A hereto preliminarily have determined to form an unofficial Unitholder oversight committee (the "Committee") in the near future. The purpose of this letter is to confirm with you certain arrangements and matters which we discussed on December 19, 1995 and January 19, 1996. Specifically, you have agreed as follows: 1. Counsel Fees. In connection with the Commit- tee's proposed retention of Battle Fowler LLP regarding the Termination, the Partnership shall pay for fifty percent (50%) of the Committee's legal fees and disbursements, up to a maxi- mum amount to be paid by the Partnership of $50,000. The Partnership hereby agrees to provide to Battle Fowler LLP a retainer of $50,000 (the "Retainer"), which Re- tainer (i) shall be deposited and held in an interest bearing trust account and (ii) shall be applied, from time to time, against one-half of the fees and disbursements incurred by Battle Fowler LLP in connection with the contemplated represen- tation of the Committee, provided and to the extent such fees and disbursements are approved in writing by an authorized rep- resentative of the Committee for payment and release, and pro- vided that an equal amount has been applied toward the payment of such fees and disbursements from the Committee's own funds. The Committee shall provide to the Partnership a copy of Battle Fowler LLP's monthly statement for services rendered as soon as practicable after the same is received and approved by the Com- mittee for payment. Battle Fowler LLP has agreed to utilize its established hourly rates generally used by that firm, con- sistent with its customary billing practices, without "premium" or other add-ons. The Partnership's obligation to provide Battle Fowler LLP the Retainer is expressly conditioned on the Committee providing Battle Fowler a retainer in an equal or greater amount prior to or simultaneously with the Partnership. The Committee and Battle Fowler LLP agree that no portion of the Retainer shall at any time be drawn down or ap- plied against services rendered specifically for the purpose of commencing litigation or otherwise in connection with actual litigation (litigation for purposes of this letter agreement being understood to include, without limitation, the exercise of any federal or state law rights or remedies that may be or be alleged to be available to the Committee or any Unithold- ers), against the Partnership or any of its affiliates. To the extent the Committee explicitly threatens or commences litiga- tion proceedings against the Partnership or any of its affili- ates, or if the members of the Committee and their respective affiliates cease to own in the aggregate at least 50% of the number of Units set forth on Annex A, the Partnership shall have the right to terminate this letter agreement, in which event the Committee and Battle Fowler LLP agree to return promptly to the Partnership any unused portion of the Retainer as of such commencement date. Any unused portion of the Partnership's Retainer af- ter Battle Fowler LLP's services on behalf of the Committee are concluded will be returned to the Partnership. The parties hereto understand and agree that Battle Fowler LLP was selected by the Committee to act on behalf of the Committee and its members, and not by the Partnership or any other person or entity, and notwithstanding the fact that the Partnership is paying a portion of Battle Fowler's fees and disbursements in accordance with the provisions of this Section 1, Battle Fowler LLP is not, is not authorized to be, and is not purporting to be, an agent of the Partnership or any other -2- person or entity, including Unitholders of the Partnership that are not members of the Committee, for any purpose whatsoever. 2. Access to Information and Confidentiality. The Partnership has agreed to provide to the Committee, from time to time as requested by the Committee, reasonable access to such documents and information as the Partnership deems appro- private (including copies thereof), including, but not limited to documents and other information provided to the appraisers in the appraisal process ("Partnership Information"). In that regard, the Committee, upon its formation, intends to provide the Partnership with a preliminary document and information request. The Partnership hereby agrees and acknowledges that nothing herein shall be deemed a waiver or compromise of any rights or privileges that may hereafter be asserted by the Holders in their respective capacities as Unitholders or other- wise, including, but not limited to, rights to the inspection of the books and records of the Partnership, and the receipt of a list of the Unitholders of the Partnership. In consideration of, and as a condition to, furnish- ing the Committee with Partnership Information, the Committee agrees: A. That any Partnership Information which is fur- nished to the Committee, its members or their respective employees, agents, advisors or repre- sentatives (collectively, "Permitted Persons") by or on behalf of the Partnership (collectively referred to as the "Confidential Material"), shall be treated by the Committee and the Per- mitted Persons confidentially and in accordance with the provisions of this letter agreement and shall not be shown to or discussed with any other person or entity. Each Permitted Person to whom Confidential Information is disclosed by the Committee will be advised of its confiden- tial nature and the terms of this letter agree- ment. B. The term "Confidential Material" does not in- clude any portion of the Partnership Information which (i) was or becomes generally available to the public other than as a result of a disclo- sure by the Committee or a Permitted Person, (ii) was or becomes available to the Committee or a Permitted Person on a non-confidential ba- sis from a source other than the Partnership or its advisors, provided that such source is not bound by a confidentiality agreement with or -3- other obligation of secrecy to the Partnership or another party, or (iii) was or becomes avail- able to the Committee or a Permitted Person on a non-confidential basis from the Partnership, including pursuant to rights afforded to Unitholders under the Partnership Agreement and/ or California law. C. If (1) the Committee explicitly threatens or commences any litigation proceedings against the Partnership or any of its affiliates, (2) the Partnership or its assets are liquidated or sold, (3) the Committee disbands or otherwise ceases to exist, or (4) this letter agreement is terminated pursuant to its terms or the written agreement of the Partnership and the Committee, the Committee and the Permitted Persons (i) shall promptly redeliver to the Partnership (or, if the Partnership shall have been terminated or otherwise cease to exist, its general partner) all copies of all Confidential Material, (ii) will not retain any copies of such material, and (iii) agree to keep confidential the Confiden- tial Material. D. In the event that the Committee, any Committee member, or any Permitted Person is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Material, the Com- mittee will promptly notify the Partnership of such request or requirement so that the Partner- ship may seek an appropriate protective order or waive compliance with the provisions of this agreement, and/or take any other mutually agreed action. If, in the absence of a protective or- der or the receipt of a waiver hereunder, the Committee or any Permitted Person is, in the reasonable written opinion of such person's counsel, compelled to disclose information or else stand liable for contempt or suffer other censure or significant penalty, such person may disclose that portion of the requested informa- tion which such person's counsel advises such person in writing that such person is compelled to disclose. 3. Securities Laws. The Committee acknowledges that it and its members are subject to applicable federal law -4- regarding the purchase and sale of securities when in posses- sion of non-public material inside information with respect to the issuer of such securities; that some or all of the Confi- dential Information may constitute non-public material inside information with respect to the Partnership; and that the Com- mittee and its members shall be solely responsible for deter- mining if such information is or is not non-public material inside information with respect to the Partnership and for any violation of law by it or them resulting from any transactions effected by it or them then while in possession of such Confi- dential Information. 4. Permitted Disclosure. The Committee and the Partnership acknowledge that it may be necessary or desirable for either the Committee and its affiliates, on the one hand, or the Partnership and its affiliates, on the other hand, to make public disclosure of the existence of this letter agree- ment and its terms, and agree that (i) the existence of this letter agreement and its terms shall not be deemed "Confiden- tial Material" hereunder, and (ii) neither the Partnership nor the Committee is obligated to keep the existence of this letter agreement or its terms confidential, and may make public dis- closure with respect thereto without the consent, approval or review of the other party. The agreements set forth in paragraph 2 and the ac- knowledgments set forth in paragraph 3 of this letter agreement shall survive the termination of this letter agreement, as will Battle Fowler LLP's obligation to apply the Retainer only in accordance with the terms hereof and to return any unused por- tion of the Retainer. 5. Multiple Counterparts. This letter agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. In closing, the Committee advises the Partnership that it shall be an ad hoc committee whose constituents shall include Committee members only. The Committee does not and shall not, nor shall it be deemed or construed to, act for or on behalf of any other person or entity, including Unitholders of the Partnership that are not members of the Committee, for any purpose whatsoever. -5- If the foregoing correctly sets forth our understand- ing, please sign and return to us the enclosed copy of this letter and promptly forward the Partnership's $50,000 retainer to Battle Fowler LLP, 75 East 55th Street, New York, New York 10022, attention: Charles H. Baker, Esq. Sincerely, UNOFFICIAL UNITHOLDER OVERSIGHT COM- MITTEE OF FALCON CABLE SYSTEMS COMPANY By: The Baupost Group, Inc., Committee Chair By: /s/ Abner B. Kurtin Name: Abner B. Kurtin Title: Investment Analyst AGREED TO AND ACCEPTED as of January 29, 1996: FALCON CABLE SYSTEMS COMPANY By: Falcon Cable Investors Group Managing General Partner By: Falcon Holding Group, L.P. General Partner By: Falcon Holding Group, Inc. General Partner By: /s/ Stanley S. Itskowitch Name: Stanley S. Itskowitch Title: Executive Vice President ACKNOWLEDGED AND AGREED, with respect to the second, third and fourth paragraphs of Section 1 above: BATTLE FOWLER LLP By: /s/ C.H. Baker Charles H. Baker -6- Annex A Proposed Holders/Committee Members* No. of Units of the Partnership Name Owned as of January 29, 1996** The Baupost Group, Inc. 500,200 Cumberland Associates 378,900 Harvest Capital, L.P. 170,000 Tweedy, Browne Company L.P. 290,040 _____________________ * Nothing in this Annex A shall be deemed a representation or warranty whatsoever as to the number of Units owned, of record or beneficially, by any Committee member. The num- ber of Units reflects determinations of beneficial owner- ship which may change from time to time, depending on the circumstances. The number of Units owned are as of the date specified, and the Committee does not undertake, and shall not be obligated, to update Unit ownership data at any time hereafter. ** Unit amounts may include Units beneficially owned by af- filiates or certain related persons. -7- -----END PRIVACY-ENHANCED MESSAGE-----