-----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, V1kyC8b/mZRm6v2/3IdzHsfjNp3rr/bmrc9xVHG84K9w/sek9gYvwS9xgqs2PLtV rgqnBnUtIc9hbOiewLq4Vw== 0000950136-01-500766.txt : 20010704 0000950136-01-500766.hdr.sgml : 20010704 ACCESSION NUMBER: 0000950136-01-500766 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20010703 GROUP MEMBERS: AES CHANNON HOLDINGS B.V. GROUP MEMBERS: AES CORPORATION GROUP MEMBERS: CORPORACION EDC, C.A. GROUP MEMBERS: INVERSIONES INEXTEL, C.A. GROUP MEMBERS: INVERSIONES ONAPO, C.A. GROUP MEMBERS: SERVICIOS EDC, C.A. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL TELEPHONE CO OF VENEZUELA CENTRAL INDEX KEY: 0001025862 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-47557 FILM NUMBER: 1674578 BUSINESS ADDRESS: STREET 1: EDIFICIO CANT PRIMER PISO STREET 2: AVENIDA LIBERTADOR CITY: CARACAS VENEZUELA STATE: X5 BUSINESS PHONE: 5825006800 MAIL ADDRESS: STREET 1: MILBANK TWEED HADLEY & MCCLOY STREET 2: 1 CHASE MANHATTAN PLAZA CITY: NEW YORK STATE: NY ZIP: 10005 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AES CORPORATION CENTRAL INDEX KEY: 0000874761 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 541163725 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1001 N 19TH ST STREET 2: STE 2000 CITY: ARLINGTON STATE: VA ZIP: 22209 BUSINESS PHONE: 7035221315 SC 13D 1 file001.txt SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------- SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a) COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV) - ------------------------------------------------------------------------------- (Name of Issuer) NATIONAL TELEPHONE COMPANY OF VENEZUELA (CANTV) - ------------------------------------------------------------------------------- (Translation of Name of Issuer Into English) Class D Common Shares, Nominal Value Bs. 36.90182224915 Per Share (the "Class D Shares") American Depositary Shares, Each Representing Seven Class D Shares (the "ADSs") - ------------------------------------------------------------------------------- (Title of Class of Securities) P3055Q103 (Class D Shares); 204421101 (ADSs) - ------------------------------------------------------------------------------- (CUSIP Number) Barry J. Sharp, Senior Vice President and Chief Financial Officer, The AES Corporation 1001 North 19th Street Arlington, Virginia 22209; Tel: (703) 522-1315 COPY TO: William R. Luraschi, Vice President and Secretary, The AES Corporation 1001 North 19th Street Arlington, Virginia 22209; Tel: (703) 522-1315 - ------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) JUNE 21, 2001 - ------------------------------------------------------------------------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d(f) or 13d-1(g), check the following box [ ]. - ------------------------------------------------------------------------------- CUSIP NO.P3055Q103 (Class D Shares) 13D PAGE 2 204421101 (ADSs) - ------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) The AES Corporation - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO, AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION State of Delaware - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER Class D Shares: 64,000,524 SHARES ADSs: 1,000 BENEFICALLY --------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER Class D Shares: None REPORTING ADSs: None PERSON WITH --------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER Class D Shares: 64,000,524 ADSs: 1,000 --------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER Class D Shares: None ADSs: None - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Class D Shares: 64,000,524 ADSs: 1,000 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.6% (the 64,000,524 Class D Shares and 1,000 ADSs represent approximately 14.6% of the total Class D Shares outstanding (including Class D Shares represented by ADSs)). See Item 5. - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON HC - ------------------------------------------------------------------------------- 2 - ------------------------------------------------------------------------------- CUSIP NO.P3055Q103 (Class D Shares) 13D PAGE 3 204421101 (ADSs) - ------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) AES Channon Holdings B.V. - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO, AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION The Netherlands - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER Class D Shares: 64,000,524 SHARES ADSs: 1,000 BENEFICALLY --------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER Class D Shares: None REPORTING ADSs: None PERSON WITH --------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER Class D Shares: 64,000,524 ADSs: 1,000 --------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER Class D Shares: None ADSs: None - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Class D Shares: 64,000,524 ADSs: 1,000 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.6% (the 64,000,524 Class D Shares and 1,000 ADSs represent approximately 14.6% of the total Class D Shares outstanding (including Class D Shares represented by ADSs)). See Item 5. - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ------------------------------------------------------------------------------- 3 - ------------------------------------------------------------------------------- CUSIP NO.P3055Q103 (Class D Shares) 13D PAGE 4 204421101 (ADSs) - ------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Corporacion EDC, C.A. - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO, WC - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Venezuela - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER Class D Shares: 64,000,524 SHARES ADSs: 1,000 BENEFICALLY -------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER Class D Shares: None REPORTING ADSs: None PERSON WITH -------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER Class D Shares: 64,000,524 ADSs: 1,000 -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER Class D Shares: None ADSs: None - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Class D Shares: 64,000,524 ADSs: 1,000 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.6% (the 64,000,524 Class D Shares and 1,000 ADSs represent approximately 14.6% of the total Class D Shares outstanding (including Class D Shares represented by ADSs)). See Item 5. - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ------------------------------------------------------------------------------- 4 - ------------------------------------------------------------------------------- CUSIP NO.P3055Q103 (Class D Shares) 13D PAGE 5 204421101 (ADSs) - ------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Inversiones Inextel, C.A. - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Venezuela - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER Class D Shares: 63,999,524 SHARES ADSs: None BENEFICALLY -------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER Class D Shares: None REPORTING ADSs: None PERSON WITH -------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER Class D Shares: 63,999,524 ADSs: None -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER Class D Shares: None ADSs: None - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Class D Shares: 63,999,524 ADSs: None - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.6% (the 63,999,524 Class D Shares represent approximately 14.6% of the total Class D Shares outstanding (including Class D Shares represented by ADSs)). See Item 5. - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ------------------------------------------------------------------------------- 5 - ------------------------------------------------------------------------------- CUSIP NO.P3055Q103 (Class D Shares) 13D PAGE 6 204421101 (ADSs) - ------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Servicios EDC, C.A. - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Venezuela - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER Class D Shares: 1,000 SHARES ADSs: 1,000 BENEFICALLY --------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER Class D Shares: None REPORTING ADSs: None PERSON WITH --------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER Class D Shares: 1,000 ADSs: 1,000 --------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER Class D Shares: None ADSs: None - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Class D shares: 1,000 ADSs: 1,000 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 0.1% (the 1,000 Class D Shares and 1,000 ADSs represent less than 0.1% of the total Class D Shares outstanding (including Class D Shares represented by ADSs)). See Item 5. - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ------------------------------------------------------------------------------- 6 - ------------------------------------------------------------------------------- CUSIP NO. P3055Q103 (Class D Shares) 13D PAGE 7 214421101 (ADSs) - ------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Inversiones Onapo, C.A. - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Venezuela - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER Class D Shares: 1,000 SHARES ADSs: 1,000 BENEFICALLY --------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER Class D Shares: None REPORTING ADSs: None PERSON WITH --------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER Class D Shares: 1,000 ADSs: 1,000 --------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER Class D Shares: None ADSs: None - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Class D Shares: 1,000 ADSs: 1,000 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 0.1% (the 1,000 Class D Shares and 1,000 ADSs represent less than 0.1% of the total Class D Shares outstanding (including Class D Shares represented by ADSs)). See Item 5. - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ------------------------------------------------------------------------------- 7 Item 1. Security and Issuer. This statement on Schedule 13D relates to: (a) Class D shares ("Class D Shares") nominal value Bs. 36.90182224915 per share of Compania Anonima Nacional Telefonos de Venezuela ("CANTV" or the "Issuer"), and (b) American Depositary Shares ("ADSs") of the Issuer, each ADS representing seven Class D Shares. The Issuer has its principal offices at Avenida Libertador, Centro Nacional de Telecomunicaciones, Nuevo Edificio Administrativo, Piso 1, Apartado Postal 1226, Caracas, Venezuela. The ADSs are evidenced by American Depositary Receipts ("ADRs") issued under a Deposit Agreement dated as of September 10, 2000, as amended, among the Issuer, Bank of New York, as depositary (the "Depositary"), and the holders and beneficial owners from time to time of ADRs issued thereunder. The principal executive offices of the Depositary are 101 Barclay Street, 22nd Floor, New York, New York, 10289. Item 2. Identity and Background. This statement is being filed jointly by: (a) The AES Corporation ("AES"), a corporation incorporated under the laws of the State of Delaware; (b) AES Channon Holdings B.V. ("Channon"), a company organized under the laws of The Netherlands and a wholly owned subsidiary of AES; (c) Corporacion EDC, C.A. ("CEDC"), a company organized under the laws of Venezuela of which Channon owns approximately 87% of the outstanding ordinary shares; (d) Inversiones Inextel, C.A. ("Inextel"), a company organized under the laws of Venezuela and a wholly owned subsidiary of CEDC; (e) Servicios EDC, C.A. ("Servicios"), a company organized under the laws of Venezuela and a wholly owned subsidiary of CEDC; and (f) Inversiones Onapo, C.A. ("Onapo"), a company organized under the laws of Venezuela and a wholly owned subsidiary of Servicios. AES, Channon, CEDC, Inextel, Servicios and Onapo are collectively called the "Reporting Persons" and, individually, a "Reporting Person." AES develops, owns and operates electric power generation and distribution facilities in the United States and abroad. AES has grown steadily since its founding in 1981 to become the world's largest 8 independent power company with operations throughout North America, South America, Europe and Asia. The address of AES's principal business and principal office is 1001 North 19th Street, Arlington, Virginia, 22209. Channon is a holding company whose assets include 87% of the outstanding ordinary shares of CEDC. The address of Channon's principal business and principal office is Drentestraat 24, 1083 HQ, Amsterdam, The Netherlands. CEDC primarily holds interests in companies dedicated to the production and distribution of electricity, telecommunications and distribution of natural gas. The address of CEDC's principal business and principal office is Av. Vollmer, San Bernadino, Edificio La Electricidad de Caracas, Torre Central, Caracas, Venezuela. Inextel is a holding company whose assets consist of the Inextel Class D Shares (as defined in Item 3) and 136 shares of VenWorld (as defined in Item 3). The address of Inextel's principal business and principal office is Av. Vollmer, San Bernadino, Edificio La Electricidad de Caracas, Torre Central, Caracas, Venezuela. Servicios is a holding company whose assets consist of the stock of a number of companies controlled by CEDC, including Onapo. The address of Servicios' principal business and principal office is Av. Vollmer, San Bernadino, Edificio La Electricidad de Caracas, Torre Central, Caracas, Venezuela. Onapo is a holding company whose assets consist of the Onapo Class D Shares and the Onapo ADSs (each as defined in Item 3). The address of Onapo's principal business and principal office is Av. Vollmer, San Bernadino, Edificio La Electricidad de Caracas, Torre Central, Caracas, Venezuela. The name, residence or business address, principal occupation or employment and citizenship of each of the executive officers and directors of the Reporting Persons are set forth in Schedule A hereto. None of the Reporting Persons, or, to the best of their knowledge, any of the persons listed on Schedule A, have, during the past five years, (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which any of them is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding a violation in respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. Inextel Class D Shares On June 21, 2001, Inextel acquired 63,999,524 Class D Shares (the "Inextel Class D Shares") pursuant to the exercise of its redemption rights, as a shareholder of VenWorld (as defined below), under an Association Agreement dated as of August 1, 1991, as amended (the 9 "Association Agreement"), among GTE Corporation, T.I. Telefonica de Espana, S.A., AT&T International Inc., C.A. La Electricidad de Caracas, S.A.I.C.A.- S.A.C.A and Consorcio Inversionista Mercantil Cima, C.A., S.A.C.A., S.A.I.C.A. Under the Association Agreement, any shareholder of VenWorld may, subject to certain conditions, require that VenWorld redeem all or part of the VenWorld shares held by such shareholder in exchange for VenWorld distributing to such shareholder its pro rata interest in the Issuer's Class A shares held by VenWorld. No cash consideration was used to acquire the Inextel Class D Shares. The Association Agreement sets forth certain rights and obligations with respect to the shareholders of VenWorld Telecom, C.A. ("VenWorld"), a company organized under the laws of Venezuela, and a holder of Class A shares of the Issuer. In 1991, VenWorld acquired 40% of the outstanding share capital of the Issuer from the Government of Venezuela. Until earlier this year, this interest represented approximately 43% of the equity share capital of the Issuer. VenWorld holds its interest in the Issuer through the ownership of Class A shares of the Issuer. In accordance with the Issuer's bylaws, the Class A shares received by Inextel on the exercise of its redemption rights automatically converted into Class D Shares of the Issuer. Inextel continues to hold 136 shares of VenWorld which may, subject to the provisions of the Association Agreement, be redeemed at the option of Inextel for 476 Class A shares of the Issuer. Onapo Class D Shares On May 14, 2001, Onapo acquired 1,000 Class D Shares (the "Onapo Class D Shares") for Bs.2,250,000 in cash, or Bs.2,250 per share, using funds acquired from CEDC's working capital. Onapo ADSs On May 14, 2001, Onapo acquired 1,000 ADSs (the "Onapo ADSs") for $22,000 in cash, or $22 per ADS, using funds acquired from CEDC's working capital. Item 4. Purpose of Transaction. The Reporting Persons acquired beneficial ownership of the Inextel Class D Shares because they considered that it was preferable to own directly this interest in the Issuer. The Reporting Persons may, subject to applicable law, directly or through its affiliates, make additional purchases of Class D Shares or ADSs or other securities of the Issuer either in the open market, in private transactions or otherwise depending on such factors as the Reporting Persons may deem relevant at the time, including, among others, the Issuer's business, prospects, financial and other condition, the market 10 and prices for such securities, the availability of funds for such purchases, other opportunities available to the Reporting Persons, prospects for the Reporting Persons' own businesses, general economic and other conditions, including conditions in the Republic of Venezuela, stock market conditions and other future developments. Depending on similar factors, the Reporting Persons may decide to sell all or part of the Class D Shares or ADSs held or hereafter acquired, or may decide to retain such shares and ADSs. In addition, the Reporting Persons may decide to redeem its remaining interest in VenWorld. AES intends to review its investment in the Issuer on a continuing basis and may directly or through its affiliates engage in discussions with the Issuer or shareholders of the Issuer or VenWorld concerning the business, operations, prospects and future plans of the Issuer and the Reporting Persons' investment in the Issuer. The Reporting Persons reserve the right to change their purpose in respect of the Class D Shares and ADSs, and take such actions as they deem appropriate in light of the circumstances existing at the time, including without limitation, the matters set forth above. Except as indicated above, none of the Reporting Persons, and, to the best of the Reporting Persons' knowledge, none of the persons listed in Schedule A hereto, have any present plans or proposals that relate to or would result in any of the actions described in Subparagraphs (a) through (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. (a) AES, Channon and CEDC beneficially own 64,000,524 Class D Shares and 1,000 ADSs respectively (being the Inextel Class D Shares, the Onapo Class D Shares and the Onapo ADSs). Each ADS represents seven Class D Shares. The Reporting Persons calculate that such 64,000,524 Class D Shares and 1,000 ADSs represent approximately 14.6% of the total number of outstanding Class D Shares (including Class D Shares represented by ADSs), or approximately 6.9% of the total number of shares of capital stock of the Issuer. Inextel beneficially owns 63,999,524 Class D Shares (being the Inextel Class D Shares). The Reporting Persons calculate that such 63,999,524 Class D Shares represent approximately 14.6% of the total number of outstanding Class D Shares (including Class D Shares represented by ADSs), or approximately 6.9% of the total number of outstanding shares of capital stock of the Issuer. 11 Servicios and Onapo beneficially own 1,000 Class D Shares and 1,000 ADSs respectively (being the Onapo Class D Shares and the Onapo ADSs). The Reporting Persons calculate that such 1,000 Class D Shares and 1,000 ADSs represent less than 0.1% of the total number of outstanding Class D Shares (including Class D Shares represented by ADSs), and less than 0.1% of the total number of outstanding shares of capital stock of the Issuer. According to the Issuer's report on Form 20-F filed with the Securities and Exchange Commission on May 25, 2001, as of April 30, 2001, the Issuer had 926,037,385 shares of capital stock outstanding, of which approximately 373,845,612 were Class D Shares (including Class D Shares represented by ADSs). In calculating the percentages above, the Reporting Persons have assumed that the total number of shares of Issuer capital stock remains at 926,037,385, and have adjusted the number of Class D Shares and Class A shares outstanding for the redemption by Inextel of its interest in VenWorld. See Item 3. The Reporting Persons understand that certain other shareholders of VenWorld have redeemed their interest in VenWorld in exchange for Class A shares of the Issuer. However, the Reporting Persons have not made any adjustments to the numbers of Class D Shares or Class A shares outstanding which may have changed as a result of such redemptions. To the best of the Reporting Persons' knowledge, none of the persons listed in Schedule A hereto beneficially owns any Class D Shares or ADSs except as set forth on such Schedule. (b) The Reporting Persons have, and, to the best of the Reporting Persons' knowledge, the persons listed in Schedule A hereto as beneficially owning the shares specified, have, the sole power to vote, and the sole power to dispose of, such shares owned beneficially by them. (c) In the past sixty days from the date of this Statement, none of the Reporting Persons, nor any of the persons listed on Schedule A, acquired Class D Shares and ADSs, except as follows:
Entity Date Number of Class D Price Per Place and Manner Effecting of Shares or Class D of Transaction Transaction ADSs Involved Share or ADS Transaction - ----------- ----------- ------------- ------------ ----------- Inextel June 21, 2001 63,999,524 N/A Redemption of interest in Class D Shares VenWorld for Class D Shares (See Item 3) Onapo May 14, 2001 1,000 Class Bs. 2,250 per share Purchase in an open D Shares market transaction effected on the Caracas Stock Exchange Onapo May 14, 2001 1,000 ADSs $22 per ADS Purchase in an open market transaction effected on the New York Stock Exchange
12 (d) The Class D Shares held by Inextel are currently pledged to the lenders under a loan agreement. In the event of a sale of such shares, the proceeds therefrom must be used to repay the outstanding amount under such loan agreement. Except as set forth herein, no person (other than those identified above) is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Class D Shares and ADSs listed above. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings, or Relationships With Respect to Securities of the Issuer. The Association Agreement provides that all decisions of VenWorld relating to the operations of VenWorld and the Issuer will be decided by consensus of the shareholders of VenWorld, provided that if no consensus is reached, the views of investors holding a majority of the ownership interests in VenWorld will prevail, provided that resolutions on the following matters require the affirmative vote of shareholders of VenWorld holding at least 66-2/3% of VenWorld: (i) dissolution or liquidation of VenWorld or the decision of VenWorld to support the dissolution or liquidation of the Issuer; (ii) change in the corporate purpose of VenWorld or the decision of VenWorld to support a change in the corporate purpose of the Issuer; (iii) any merger or consolidation involving VenWorld or the decision of VenWorld to support any merger or consolidation involving the Issuer; (iv) sale or transfer of all or substantially all the assets of VenWorld or the decision of VenWorld to support the transfer of all or substantially all of the assets of the Issuer; (v) increase or decrease in the capital of VenWorld, or the decision of VenWorld to support an increase or decrease in the capital of the Issuer or to subscribe to any such increase; (vi) fixing of the general dividend policy of VenWorld, or the decision of VenWorld to support a particular general dividend policy of the Issuer; (vii) the incurrence by VenWorld of any indebtedness outside the ordinary course of business, or the decision of VenWorld to support the incurrence by the Issuer of indebtedness outside the ordinary course of business; (viii) any amendment to the Charter and bylaws (estatutos) of VenWorld; (ix) investment of VenWorld's funds in another entity or business or the decision of VenWorld to support the investment of the Issuer's funds in another entity or business; (x) authorizing any issuance, sale, purchase or redemption of VenWorld's equity securities or a decision of VenWorld to support the Issuer's authorizing any issuance, sale, purchase or redemption of the Issuer's equity securities; (xi) entry into any new line or field of business, other than related to telecommunications, or the discontinuance of any line or field of business, or a decision of VenWorld to support the Issuer's entry into any new line or field of business, other than related to telecommunications, or the discontinuance of any line or field or business; and (xii) appointment of auditors or VenWorld's decision to support a proposal by the Issuer to appoint auditors. The Association Agreement also contains provisions providing for the election of directors of VenWorld and the Issuer. Pursuant to those provisions, representatives of CEDC currently serve as a director and such director's alternate on the Board of Directors of the Issuer. 13 Under the Association Agreement, every shareholder of VenWorld holds a pro rata right of first refusal with respect to any transfer of VenWorld shares by another shareholder of VenWorld. If the right of first refusal is not exercised, the shareholder of VenWorld who intends to transfer VenWorld shares may, subject to the provisions of the Association Agreement, including a provision requiring unanimous approval by the shareholders of VenWorld, which approval may not be unreasonably withheld, transfer such shares to a third party. Each shareholder of VenWorld may redeem all or part of its VenWorld shares in exchange for such shareholder's pro rata interest in the Class A shares held by VenWorld, provided that any shareholder of VenWorld wishing to exercise such redemption option must offer to sell the Issuer shares so redeemed to the other shareholders of VenWorld (who have a pro rata right to acquire such shares) at a price equal to 95% of the average market price for the shares of the Issuer during a period established under the Assocation Agreement. The foregoing summary of the provisions of the Association Agreement is qualified in its entirety by reference to the provisions of the Association Agreement which is attached as Exhibit 1.1 to this Schedule 13D. On May 28, 2001, the Comision Nacional de Valores de Venezuela (the "CNV") issued an order to the effect that acquisitions of shares of the Issuer pursuant to the redemption provisions of the Association Agreement are subject to Venezuelan tender offer regulations. Among other things, these regulations specify that acquisitions of 10% or more of the capital of a listed company in Venezuela (such as the Issuer) must be made through a public tender offer and that a controlling shareholder of a listed company in Venezuela may only acquire additional shares of such company pursuant to a public tender for at least 75% of the capital of such company. GTE Corporation has appealed this order of the CNV to the Venezuelan First Court on Administrative Matters (Corte Primera de lo Contencioso Administrativo). In addition, GTE Corporation has commenced an arbitration against, among others, C.A. La Electricidad de Caracas, S.A.I.C.A.-S.A.C.A. ("EDC") under the Association Agreement alleging breaches by EDC of its obligations under the Association Agreement, including breaches relating to the redemption of virtually all of Inextel's shares in VenWorld. See Item 3. C.A. La Electricidad de Caracas, S A.I.C.A.-S.A.C.A. has entered into a letter agreement with Chase Securities, Inc., which provides for, among other things, in the event of a sale of the interest of VenWorld held by Inextel, or the Class D Shares received on redemption of such interest, a payment to be made to Chase Securities, Inc. based on the proceeds received upon such sale in excess of an agreed-upon amount. Except as set forth above, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 and between such persons and any person with respect to any securities of the Issuer, including but not limited to transfer or voting of any of the securities of the Issuer, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. 14 Item 7. Material to be Filed as Exhibits. Exhibit No. Description - ----------- ----------- 1.1 Form of Association Agreement dated August 1, 1991, as amended. 1.2 Joint Filing Agreement, dated July 2, 2001 by and between The AES Corporation, AES Channon Holdings B.V., Corporacion EDC, C.A., Inversiones Inextel, C.A., Servicios EDC, C.A. and Inversiones Onapo, C.A. 15 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. The AES Corporation By: /s/ Barry J. Sharp --------------------------------------- Name: Barry J. Sharp Title: Senior Vice President Date: July 2, 2001 and Chief Financial Officer SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. AES Channon Holdings B.V. By: /s/ Steven P. Clancy ----------------------------- Name: Steven P. Clancy Title: Director Date: July 2, 2001 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Corporacion EDC, C.A. By: /s/ Steven P. Clancy ----------------------------- Name: Steven P. Clancy Title: Chief Financial Officer Date: July 2, 2001 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Inversiones Inextel, C.A. By: /s/ Steven P. Clancy ----------------------------- Name: Steven P. Clancy Title: Director Date: July 2, 2001 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Servicios EDC, C.A. By: /s/ Paul Hanrahan ----------------------------- Name: Paul Hanrahan Title: Director Date: July 2, 2001 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Inversiones Onapo, C.A. By: /s/ Steven P. Clancy --------------------- Name: Steven P. Clancy Title: Director Date: July 2, 2001 SCHEDULE A The AES Corporation The business address of each executive officer and director of The AES Corporation is c/o The AES Corporation, 1001 North 19th Street, Arlington, Virginia 22209. (a) Executive Officers
Name Principal Occupation Citizenship - ---- -------------------- ----------- Michael N. Armstrong Vice President United States The AES Corporation Richard A. Bulger Vice President United States The AES Corporation Dennis W. Bakke Chief Executive Office, President and United States Director The AES Corporation Shahazad S. Qasim Vice President United States The AES Corporation Dan Rothaupt Vice President United States The AES Corporation Robert Ruccius Vice President United States The AES Corporation Mark S. Fitzpatrick Executive Vice President United States The AES Corporation Paul T. Hanrahan Senior Vice President United States The AES Corporation Lenny M. Lee Vice President United States The AES Corporation Garry K. Levesley Vice President United States The AES Corporation William R. Luraschi Vice President, Secretary and United States General Counsel The AES Corporation John Ruggirello Executive Vice President United States The AES Corporation J. Stuart Ryan Executive Vice President United States The AES Corporation Barry J. Sharp Executive Vice President United States and Chief Financial Officer The AES Corporation
Sarah Slusser Vice President United States The AES Corporation Paul D. Stinson Vice President United States The AES Corporation David Luis Travesso Vice President United States The AES Corporation Thomas A. Tribone Executive Vice President United States The AES Corporation Kenneth R. Woodcock Senior Vice President United States The AES Corporation Ann D. Murtlow Vice President United States The AES Corporation Roger F. Naill Senior Vice President United States The AES Corporation (b) Directors Alice F. Emerson Senior Advisor United States The Andrew W. Mellon Foundation Robert F. Hemphill, Jr. Managing Director United States Toucan Capital Corporation Frank Jungers Director United States The AES Corporation Phil Lader Chairman of the Board United States WPP Group John H. McArthur Senior Advisor to the President United States World Bank Group Hazel R. O'Leary Director United States The AES Corporation Roger W. Sant Chairman of the Board United States The AES Corporation Thomas I. Unterberg Managing Director United States C.E. Unterberg, Towbin Robert H. Waterman, Jr. Chief Executive Officer United States The Waterman Group, Inc.
Dennis W. Bakke Chief Executive Officer and President United States The AES Corporation
AES Channon Holdings B.V. The business address of each director of AES Channon Holdings B.V. is Drentestraat 24, 1083 HQ, Amsterdam, The Netherlands, except for Steve Clancy whose business address is c/o C.A. La Electricidad de Caracas, AV. Vollmer, San Bernadino, Edificio La Electricidad de Caracas, Torre Central, Caracas, Venezuela. (a) Executive Officers None (b) Directors
Name Principal Occupation Citizenship - ---- -------------------- ----------- Steve Clancy Chief Financial Officer United States C.A. La Electricidad de Caracas Stefan Dijkers Team Leader at ELSTA The Netherlands Edwald C.H. Segers Safety Co-ordinator at ELSTA The Netherlands
Corporacion EDC, C.A. The business address of each executive officer and director of Corporacion EDC, C.A. whose principal occupation is with The AES Corporation is c/o The AES Corporation, 1001 North 19th Street, Arlington, Virginia 22209. The business address of each other executive officer and director of Corporacion EDC, C.A. is c/o Corporacion EDC, C.A., Av. Vollmer, San Bernadino, Edificio La Electricidad de Caracas, Torre Central, Caracas, Venezuela. (a) Executive Officers
Name Principal Occupation Citizenship - ---- -------------------- ----------- Richard A. Bulger Vice President United States The AES Corporation Roger W. Sant Chairman of the Board United States The AES Corporation Julian Nebreda Legal Counsel Venezuela C.A. La Electricidad de Caracas (b) Directors Richard A. Bulger Vice President United States The AES Corporation Dennis W. Bakke Chief Executive Officer, President and United States Director The AES Corporation Paul T. Hanrahan Senior Vice President United States The AES Corporation Cira Romero Member of the Board of the Caracas Chamber Venezuela of Commerce Michele Goguikian Executive President Spain Banco de Venezuela J. Stuart Ryan Executive Vice President United States The AES Corporation Roger W. Sant Chairman of the Board United States The AES Corporation Gustavo Julio Vollmer President Venezuela Corporacion Palmar, S.A. Lorenzo Mendoza (1) Director of the Board of Directors and Venezuela Executive Committee Empresas Polar
- ---------------------- (1) Owns 42,066 Class D Shares, which represent less than 0.1% of the outstanding Class D Shares (including Class D Shares represented by ADSs), and less than 0.1% of the total number of outstanding shares of capital stock of the Issuer. Inversiones Inextel, C.A. The business address of each executive officer and director of Inversiones Inextel, C.A. whose principal occupation is with The AES Corporation is c/o The AES Corporation, 1001 North 19th Street, Arlington, Virginia 22209. The business address of each other executive officer and director of Inversiones Inextel, C.A. is c/o Inversiones Inextel, C.A., Av. Vollmer, San Bernadino, Edificio La Electricidad de Caracas, Torre Central, Caracas, Venezuela. (a) Executive Officers
Name Principal Occupation Citizenship - ---- -------------------- ----------- Richard A. Bulger Vice President United States The AES Corporation Julian Nebreda Legal Counsel Venezuela C.A. La Electricidad de Caracas (b) Directors Richard A. Bulger Vice President United States The AES Corporation Steven Clancy Chief Financial Officer United States C.A. La Electricidad de Caracas Julian Nebreda Legal Counsel Venezuela C.A. La Electricidad de Caracas
Servicios EDC, C.A. The business address of each executive officer and director of Servicios EDC, C.A. whose principal occupation is with The AES Corporation is c/o The AES Corporation, 1001 North 19th Street, Arlington, Virginia 22209. The business address of each other executive officer and director of Servicios EDC, C.A. is c/o Servicios EDC, C.A., Av. Vollmer, San Bernadino, Edificio La Electricidad de Caracas, Torre Central, Caracas, Venezuela. (a) Executive Officers
Name Principal Occupation Citizenship - ---- -------------------- ----------- Richard A. Bulger Vice President United States The AES Corporation Julian Nebreda Legal Counsel Venezuela C.A. La Electricidad de Caracas (b) Directors Richard A. Bulger Vice President United States The AES Corporation Paul T. Hanrahan Senior Vice President United States The AES Corporation Andres Gluski (2) President Venezuela Gener, S.A.
- ------------------------ (2) Owns 7,587 Class C shares of the Issuer. Inversiones Onapo, C.A. The business address of each executive officer and director of Inversiones Onapo, C.A. is c/o Inversiones Onapo, C.A., Av. Vollmer, San Bernadino, Edificio La Electricidad de Caracas, Torre Central, Caracas, Venezuela. (a) Executive Officers
Name Principal Occupation Citizenship - ---- -------------------- ----------- Steven Clancy Chief Financial Officer United States C.A. La Electricidad de Caracas Julian Nebreda Legal Counsel Venezuela C.A. La Electricidad de Caracas (b) Directors Steven Clancy Chief Financial Officer United States C.A. La Electricidad de Caracas Andres Gluski (3) President Venezuela Gener, S.A. Manuel Perez Dubuc Treasury Manager Venezuela C.A. La Electricidad de Caracas
- -------------------- (3) See footnote (2) on preceding page. EX-1.1 2 file002.txt ASSOCIATION AGREEMENT Exhibit 1.1 ASSOCIATION AGREEMENT among GTE CORPORATION T.I. TELEFONICA INTERNACIONAL DE ESPANA, S.A. AT&T INTERNATIONAL INC. C.A. LA ELECTRICIDAD DE CARACAS, S.A.I.C.A.-S.A.C.A. and CONSORCIO INVERSIONISTA MERCANTIL CIMA, C.A., S.A.C.A., S.A.I.C.A. ASSOCIATION AGREEMENT CONTENTS Page ---- 1. Evaluation..................................................... 2 2. Decision to Bid................................................ 4 3. Formation of VENTEL............................................ 4 4. Capital Contribution........................................... 5 5. Withdrawal after Bid Submission................................ 5 6. Related Party Agreements....................................... 6 7. Operation of VENTEL and CANTV.................................. 7 8. Bond........................................................... 12 9. GTE Guaranty................................................... 13 10. Parent Guaranties.............................................. 14 11. Financial Accounts............................................. 14 12. Transfers...................................................... 16 13. Termination.................................................... 20 14. Covenant Not to Compete........................................ 23 15. Governing Law.................................................. 27 16. Arbitration.................................................... 27 17. Miscellaneous.................................................. 29 2 ASSOCIATION AGREEMENT AGREEMENT, dated as of August 1, 1991, by and among GTE CORPORATION, a New York corporation ("GTE"), T.I. TELEFONICA INTERNACIONAL DE ESPANA, S.A., a Spanish corporation ("TIDE"), AT&T INTERNATIONAL INC., a Delaware corporation ("AT&TI"), C.A. LA ELECTRICIDAD DE CARACAS, S.A.I.C.A.-S.A.C.A., a Venezuelan corporation ("Electricidad"), and CONSORCIO INVERSIONISTA MERCANTIL CIMA, C.A., S.A.C.A., S.A.I.C.A., a Venezuelan corporation ("CIMA"). WHEREAS, the parties are interested in considering the making of a joint bid for the purchase of all of the Series A shares of Compania Anonima Nacional Telefonos de Venezuela, a Venezuelan corporation ("CANTV"), comprising 40% of the issued and outstanding shares of CANTV ("CANTV Shares"), being offered for sale by the Fondo de Inversiones de Venezuela pursuant to its program of privatization of CANTV; WHEREAS, GTE has been prequalified as a telephone operator eligible to participate in the privatization; WHEREAS, the parties intend to form a Venezuelan corporation for the purpose of making the joint bid; and WHEREAS, GTE intends to have its wholly-owned subsidiary, GTE Venezuelan Telephone Incorporated, a Delaware corporation ("GTE-VEN"), own an interest in such Venezuelan corporation; TIDE initially intends to own an interest in the Venezuelan corporation directly, but intends to transfer the totality of such interest to its wholly-owned subsidiary, Telefonica Venezuela Holding B.V., a Dutch corporation currently in formation, which will be TIDE's "Titular", as such term is defined in the purchase and sale agreement relating to relating to the purchase of the CANTV Shares. AT&TI intends to own an interest in the Venezuelan corporation directly (GTE-VEN, TIDE and AT&TI being the "Foreign Investors"); Inversiones Cima Ven C.A., a Venezuelan corporation ("CIMA-VEN"), own an interest in such Venezuelan corporation; and Electricidad intends to have its wholly-owned subsidiary, C.A. Telecomunicaciones de Caracas, a Venezuelan corporation ("ELEC-VEN"), own an interest in such Venezuelan corporation (CIMA-VEN and ELEC-VEN being the "Venezuelan Investors"; and the Venezuelan Investors and the Foreign Investors being the "Investors"). NOW, THEREFORE, the parties hereto agree as follows: 1. Evaluation. (a) The investors shall jointly evaluate the feasibility of making a joint bid to purchase the CANTV Shares. The investors shall appoint legal counsel, accountants, financial consultants and other outside consultants, as necessary, to assist in the evaluation, and the fees and expenses thereof shall be borne by the Investors in proportion to their respective Ownership Interests (as defined below). The parties have agreed by a separate memorandum of understanding on a budget for such shared expenses, it being understood that a material increase in shared expenses above the budgeted amount shall require the vote of Investors holding Ownership Interests of at least 66 2/3%. Each investor will bear additional expenses incurred by 3 it in the evaluation which are not included in the budget. Each party will share with the other parties the results of its evaluation, and each party shall receive copies of any reports or documents generated by the outside consultants on behalf of the parties as a group and shall be entitled to consult with such consultants for the purposes of the evaluation. It is understood that the information provided in the evaluation (i) is subject to the Non-Disclosure Agreement, effective June 3, 1991, and the Supplemental Non-Disclosure Agreement No. 1, effective June 17, 1991, among the parties or their affiliates, (ii) is the property of the entity that prepared the information, and (iii) shall not be used by the other parties or their affiliates other than to evaluate participation in a joint bid of the Investors. (b) On or before December 31, 1991, or such earlier date as all the Investors shall agree not to make a joint bid, no Investor (or its affiliates) shall participate in a bid for the CANTV Shares other than jointly with the other Investors. 2. Decision to Bid. The Investors shall exercise their best efforts to achieve a consensus agreement on or before October 31, 1991, as to the price and other terms of the joint bid. No Investor shall be required to participate in the joint bid and is entitled to withdraw from the bid process; it being understood that in the absence of consensus, (i) GTE-VEN and two or more other Investors may proceed to bid as a group at such price and on such other terms as they may agree, and (ii) the provisions of Sections 1(a) (to the extent of expenses incurred before the date of withdrawal), 1(b), 14(a) and 14(b) shall be the only provisions of this Agreement that apply thereafter to the Investors that do not participate in the joint bid. 3. Formation of VENTEL. On or prior to the date required by the privatization rules, the Investors shall incorporate a Venezuelan corporation to be named VenWorld Telecom, C.A. or such other name as the investors may agree ("VENTEL"). The Investors shall initially own the following percentages of the total issued and outstanding capital stock of VENTEL (such percentages as are in effect from time to time being the "Ownership Interests") (it being understood that if not all of the Investors decide to participate in the joint bid, the initial Ownership Interests shall be as agreed by the remaining Investors): GTE-VEN 51% TIDE 13% AT&TI 13% ELEC-VEN 13% CIMA-VEN 10% Except as agreed by the Venezuelan Investors, no Venezuelan persons or entities other than the Venezuelan Investors shall be initial shareholders in VENTEL. The Charter and By-laws (estatutos) of VENTEL shall be in the form attached as Exhibit A hereto. The initial capital of VENTEL shall be Bs. 100,000, divided into 100 shares of Bs. 1,000 each. 4 4. Capital Contribution. On or before the date on which VENTEL must pay the purchase price for the CANTV Shares or such earlier date as the Investors may agree, each Investor shall make an additional capital contribution to VENTEL in an amount equal to the product of its Ownership Interest times the amount bid by the Investors for the purchase of the Shares. 5. Withdrawal after Bid Submission. If the rules governing the bid for the CANTV Shares are changed in any material way after the joint bid is made, and bidders are then permitted to withdraw from the bid process without penalty and with a refund or termination of deposits and guaranties previously established, any Investor may withdraw from the bid process and from VENTEL, it being understood that the withdrawing Investor shall be subject to the obligations established in Sections 1(a) (to the extent of expenses incurred before the date of withdrawal) and 1(b). If GTE-VEN and at least two of the remaining Investors decide to continue the joint bid, the withdrawing Investors shall also be subject to the provisions of Sections 14(a) and 14(b). 6. Related Party Agreements. Any and all agreements between CANTV or VENTEL, on the one hand, and any party hereto, or its affiliates, on the other hand, shall be on an arm's-length basis and in accordance with market conditions, it being understood that in judging the advisability of CANTV or VENTEL entering into such agreements, representatives of the parties hereto or their affiliates when acting on behalf of CANTV or VENTEL, as the case may be, shall apply the following principles: (a) competition between CANTV or VENTEL, on the one hand, and the parties hereto (or their affiliates), on the other hand, must be avoided, (b) in the event of conflict, the interests of CANTV shall prevail over the interests of the parties (or their affiliates), (c) in the event of conflict, the interests of VENTEL shall prevail over the interests of the parties (or their affiliates), and (d) the interests of Venezuela shall prevail over the interests of the countries in which the parties are incorporated. The parties agree that CANTV may enter into one or more agreements with the parties hereto and their respective affiliates for the provision of general administrative and technical services, provided that (i) services are rendered, (ii) the aggregate amount of such fees does not exceed 5% of annual gross revenues of CANTV, and (iii) the amount of fees received by each Investor (including for this purpose its affiliates), as compared to the fees received by all Investors (and their affiliates) providing such services, is in the same proportion as the Ownership Interest of such Investor bears to the Ownership Interests of all Investors receiving such fees. The restrictions set forth in clauses (ii) and (iii) of the preceding sentence shall not apply to equipment supply agreements or agreements for services of a type within the specialty of a particular Investor (or its affiliates), including, but not limited to, providing payroll payment services, design and/or development projects such as design or development of a billing system, computer programs, or network configurations or network operations centers, in which case a negotiated contract fee shall apply. 7. Operation of VENTEL and CANTV. (a) Except as specifically stated herein, all decisions relating to the operations of VENTEL and CANTV shall be decided by consensus of the Investors, it being understood that in the absence of consensus, the views of Investors holding a majority of the Ownership Interests shall prevail. Notwithstanding the foregoing, resolutions on the following matters shall require the affirmative vote (i) of GTE-VEN and two other Investors, for such time as VENTEL is owned by the original Investors and in the 5 percentages set forth in Section 3 above, and (ii) thereafter, of Investors holding Ownership Interests of not less than 66 2/3%: (i) dissolution or liquidation of VENTEL or the decision of VENTEL to support the dissolution or liquidation of CANTV; (ii) change in the corporate purpose of VENTEL or the decision of VENTEL to support a change in the corporate purpose of CANTV; (iii) any merger or consolidation involving VENTEL or the decision of VENTEL to support any merger or consolidation involving CANTV; (iv) sale or transfer of all or substantially all the assets of VENTEL or the decision of VENTEL to support the transfer of all or substantially all of the assets of CANTV; (v) increase or decrease in the capital of VENTEL, or the decision of VENTEL to support an increase or decrease in the capital of CANTV or to subscribe to any such increase; (vi) fixing of the general dividend policy of VENTEL, or the decision of VENTEL to support a particular general dividend policy of CANTV; (vii) the incurrence by VENTEL of any indebtedness outside the ordinary course of business, or the decision of VENTEL to support the incurrence by CANTV of indebtedness outside the ordinary course of business; (viii) any amendment to the Charter and By-laws (estatutos) of VENTEL; (ix) investment of VENTEL's funds in another entity or business or the decision of VENTEL to support the investment of CANTV's funds in another entity or business; (x) authorizing any issuance, sale, purchase or redemption of VENTEL's equity securities or a decision of VENTEL to support CANTV's authorizing any issuance, sale, purchase or redemption of CANTV's equity securities; (xi) entry into any new line or field of business, other than related to telecommunications, or the discontinuance of any line or field of business, or a decision of VENTEL to support CANTV's entry into any new line or field of business, other than related to telecommunications, or the discontinuance of any line or field of business; and (xii) appointment of auditors or VENTEL's decision to support a CANTV proposal to appoint auditors 6 (b) In the initial phase, and in order to receive input from all the Investors, transition advisory committees shall be established to advise on the functional areas related to the operation of VENTEL and CANTV. The transition advisory committees will be recommended by the Vice Presidents of CANTV and approved by the President of CANTV and will operate under the direction of the functional Vice Presidents of CANTV. The committees will be formed by members appointed by the Investors, according to their areas of interest and expertise. Examples of transition advisory committees are the following: - Planning and Engineering - Construction - Service Improvement - International - Finance - Marketing and Customer Service - Government Relations - Human Resources - Complementary and Value Added Services - Logistics and Administration. The CANTV President and the Vice Presidents as a group will approve the need to maintain, create, or terminate the transition advisory committees depending on the final organizational structure given to CANTV. The CANTV President will submit to the Boards of CANTV and VENTEL his recommendations on the functions being addressed. (c) The VENTEL Board of Directors (junta directiva) shall be composed of nine directors (directores). Notwithstanding any other provisions of this Agreement or the Charter and By-laws (estatutos) of VENTEL, (i) if any Investor has an Ownership Interest of more than 50%, such Investor shall be entitled to elect not less than a majority of the Directors of VENTEL, and (ii) an Investor (or group of Investors) shall be entitled to elect one director of VENTEL for each 10% Ownership Interest that the Investor (or group of Investors) holds. Should the foregoing not result in the election of all the directors of VENTEL by particular Investors, the selection of remaining directors shall be allocated to the Investors in an equitable manner, taking into account (i) over a period of years the relative Ownership Interests of the Investors from time to time, and (ii) the policy of promoting representation on the Board of Directors for each Investor with an Ownership Interest of at least 5%. Each Investor shall vote its shares in VENTEL in order to achieve the result contemplated in this Section 7(c). Alternate and replacement directors will be appointed by the Investors that had the right to appoint the corresponding directors. (d) Should the shareholding of VENTEL in CANTV permit VENTEL to elect one or more directors of CANTV, and should any Investor hold a majority of the Ownership Interests, the board of directors of VENTEL shall cause VENTEL to cast its votes in order that a majority of the CANTV directors to be elected by VENTEL are persons nominated by the directors of VENTEL who are selected by such Investor. Subject to the foregoing, the board of directors of VENTEL shall cause VENTEL to cast its votes for the selection of such CANTV 7 directors in order that such directors are allocated over a period of years in a manner so as to reflect the respective Ownership Interests of the Investors and to maintain at least one CANTV director who is nominated by VENTEL directors who are elected by one of the Venezuelan Investors and at least one CANTV director who is nominated by VENTEL directors who are elected by one of the Foreign Investors (in each case other than any Investor that owns a majority of VENTEL), if possible. Alternate and replacement CANTV directors will be appointed by VENTEL directors that had the right to appoint the corresponding CANTV directors. 8. Bond. The parties acknowledge that the terms of the sale of CANTV Shares may require VENTEL, if it is the successful, bidder, to post bonds or guaranties in favor of the Government of Venezuela to secure the performance by (i) CANTV of its obligations under the Concession, and (ii) VENTEL of its obligations in connection with the joint bid. In obtaining any such bond or guaranty, if it should be necessary to provide corresponding guaranties of the Investors or one or more of their respective affiliates, each Investor will provide such corresponding guaranties in the required amount, but not to exceed in the case of each Investor the product of the total amount of such bond or guaranty to be provided by VENTEL times such Investor's Ownership Interest. If VENTEL or any Investor should incur any damage or liability as a result of the failure of any Investor to provide or maintain its corresponding guaranty, the defaulting Investor shall indemnify such person in respect of such damage or liability. 9. GTE Guaranty. The parties acknowledge that the terms of the sale of the CANTV Shares may require that, if VENTEL is the successful bidder, GTE guaranty the performance by VENTEL of all its obligations under the Purchase and Sale Agreement pursuant to which the CANTV Shares will be sold to VENTEL. Should GTE suffer or incur any expense, loss, damage or liability in respect of such guaranty, which is not attributable to GTE's intentional misconduct or gross negligence, each Investor shall indemnify GTE in an amount equal to the product of the amount of such expense, loss, damage or liability times the Ownership Interest of such Investor. 10. Parent Guaranties. GTE hereby guaranties to the other parties hereto the prompt payment and performance by GTE-VEN of all its obligations hereunder, and covenants that during the period in which GTE-VEN is a shareholder in VENTEL, it will own a majority of the voting shares of GTE-VEN. CIMA hereby guaranties to the other parties hereto the prompt payment and performance by CIMA-VEN of all its obligations hereunder, and covenants that during the period in which CIMA-VEN is a shareholder in VENTEL it will own a majority of the voting shares of CIMA-VEN. Electricidad hereby guaranties to the other parties hereto the prompt payment and performance by ELEC-VEN of all its obligations hereunder, and covenants that during the period in which ELEC-VEN is a shareholder in VENTEL, it will own a majority of the voting shares of ELEC-VEN. GTE, CIMA and Electricidad covenant that GTE-VEN, CIMA-VEN and ELEC-VEN, respectively, shall agree in a writing acceptable to the parties hereto, as soon as practicable after VENTEL is formed, to assume the obligations imposed on such entities herein. 11. Financial Accounts. (a) The Investors shall have full and complete access during normal business hours to VENTEL's accounting books and records through designees of their respective choice, for the purpose of inspection. VENTEL's accounting books and records shall 8 be kept in VENTEL's principal place of business in the Spanish language, on a bolivares basis, and shall reflect generally accepted Venezuelan accounting principles and practices. VENTEL's outside auditing and accounting firm shall be chosen from among the leading such firms in Venezuela which are subsidiaries of, or otherwise affiliated with, one of the accounting and auditing firms of recognized international standing. Reports prepared by such outside auditors shall be prepared in English (showing U.S. dollar amounts) and Spanish and submitted simultaneously to VENTEL's shareholders and directors. (b) Unless otherwise agreed by the Investors, an annual audit of VENTEL's accounting books and records shall be conducted by the auditing and accounting firm referred to in subsection (a) above at VENTEL's expense. (c) The Investors shall be provided unaudited financial statements of VENTEL as follows: (i) within thirty (30) calendar days after the end of each quarter, a quarterly financial statement, including a profit and loss statement, balance sheet, and a cash-flow statement; (ii) at least ninety (90) calendar days prior to the beginning of the next succeeding fiscal year of VENTEL, an annual capital expenditure budget for such fiscal year. 12. Transfers. (a) No party may sell, transfer or assign any interest herein, and no Investor may sell, transfer or assign any shares of VENTEL ("VENTEL Shares"), except as specifically provided in this Section 12 or in Section 13. No such sale, transfer or assignment shall be permitted if such action would violate the terms of the purchase and sale agreement entered into by VENTEL in connection with the purchase of the CANTV Shares. (b) Except as provided in subsection (g) or (i) hereof or Section 13, no such sale, transfer or assignment may be made from the date hereof until two years after the date on which VENTEL purchases the CANTV Shares. (c) Thereafter, should an Investor wish to sell any of its VENTEL Shares ("Offered Shares"), it shall first offer the Offered Shares to the other Investors at a price per share specified by the offering Investor. Within 45 days after receiving the offering Investor's offer, each Investor shall inform the other Investors of whether or not it intends to purchase a percentage of the Offered Shares not higher than the percentage that its Ownership Interest bears to the Ownership Interests of all the Investors to whom the offer was made. (d) If some but not all of the Investors agree to purchase all of the Offered Shares to which they are entitled, the offering Investor will make an offer of the remaining Offered Shares to the Investors who have so agreed. Within thirty (30) days after receiving the second offer, each such Investor will inform the other Investors of whether it intends to purchase some or all of the remaining Offered Shares, it being understood that if such Investors taken together 9 indicate the intention to purchase an amount in excess of the total number of remaining Offered Shares, the remaining Offered Shares will be allocated among such Investors in percentages equal to the percentages that their respective Ownership Interests bear to the Ownership Interests of all the Investors who accepted the second offer or in any other manner agreed upon by the Investors who have agreed to purchase the Offered Shares. (e) As a result of the foregoing procedures, (i) if the Investors shall have agreed to purchase all the Offered Shares, such purchase shall occur within fifteen (15) days after the date of such agreement, or (ii) if the Investors shall not have agreed to purchase all the Offered Shares, the offering Investor may (A) sell all (but not less than all) of the Offered Shares to a third party, within sixty (60) days after the expiration of the procedures referred to above, at the same price per share (and on the same other terms) previously offered to the Investors, or (B) sell to the other Investors, within fifteen (15) days, such amount of the Offered Shares as such other Investors shall have agreed to purchase and (at its option) sell the remainder in the manner provided in clause (ii)(A) of this subsection. In the event that all of the Offered Shares are not sold within the period and on the terms provided in this subsection, the offering Investor may not sell, assign or transfer any of the remaining Offered Shares without again following the procedures of this Section 12. (f) Notwithstanding any other provisions hereof, no sale, transfer or assignment of the VENTEL Shares or any interest in this Agreement may be made (other than pursuant to subsection (g) hereof) to any third party that has not been approved by each Investor, which approval shall not be withheld unreasonably. A good faith belief that the Investor could not work cooperatively with the proposed third party shall be sufficient reason for withholding approval. (g) Any Investor may sell, assign or transfer its VENTEL Shares to any entity of which it owns (directly or indirectly) a majority of the shares, any entity that owns (directly or indirectly) a majority of the shares of such Investor, or any entity a majority of whose shares are owned (directly or indirectly) by another entity which owns (directly or indirectly) a majority of the shares of such Investor. The guaranty of a party hereto contained in Section 10 with respect to the obligations of a transferor Investor shall extend as well to the obligations of the transferee. (h) As an additional condition precedent to the sale, transfer or assignment of the VENTEL Shares, the transferee must agree to assume the obligations of an Investor hereunder. (i) Any Investor may sell, assign or transfer its VENTEL Shares to any other Investor, provided such VENTEL Shares have been first offered to all the Investors in accordance with the provisions of subsections (c)-(e) hereof. (j) On or after the date which is nine years after VENTEL purchases the CANTV Shares, but only if there exists a substantial public market for the shares of CANTV, any Investor may require that VENTEL, to the extent permitted by Venezuelan law and any agreements entered into by VENTEL in connection with the purchase of the CANTV Shares, redeem all or part of VENTEL Shares held by such Investor, by distributing to the Investor an amount of CANTV Shares equal to the product of (i) the total number of 10 CANTV Shares then held by VENTEL, and (ii) a fraction, the numerator of which is the number of VENTEL Shares to be redeemed and the denominator of which is the number of outstanding shares of VENTEL. VENTEL will also distribute to such Investor its proportionate share of any net worth of VENTEL not attributable to the ownership of CANTV Shares. Before exercising such option, the Investor must offer to sell the CANTV Shares so redeemed to the other Investors, at a price equal to 95% of the market price for the shares of CANTV on the date of sale to the other Investors. The other Investors shall have thirty (30) days in which to agree to purchase all or part of the CANTV Shares so offered for sale, if the other Investors desire to purchase more CANTV Shares than are available for purchase, the CANTV Shares shall be allocated in proportion to the respective Ownership Interests of the Investors who accepted the offer or in such other manner as such Investors may agree. 13. Termination. (a) An "Event of Termination" shall occur if any party hereto or any Investor shall breach any representation, covenant, warranty, duty or obligation made by or assumed by it hereunder. Upon the occurrence of an Event of Termination, any other party may notify the breaching party or Investor of such occurrence, whereupon the breaching party or Investor shall have thirty (30) days to cure the breach that gave rise to the Event of Termination. (b) If the breach is not cured within such period, the Investors (excluding any breaching Investor and any Investor that is an affiliate of a breaching party (the "Breaching Investor")) shall meet to decide whether to require the Breaching Investor to offer its Ownership Interest to the other Investors ("Other Investors"), provided that a sale by the Breaching Investor of its Ownership Interest is not prohibited by the agreements executed by VENTEL or GTE in connection with the purchase of the CANTV Shares. A decision to require such a sale shall require the affirmative vote of Other Investors whose aggregate Ownership Interests represent a majority of the Ownership Interests of all of the Other Investors. (c) If the affirmative vote referred to in subsection (b) above is achieved, the Breaching Investor shall be notified of such fact, and the Investors shall attempt for thirty (30) days to agree on a price at which the Breaching Investor shall offer to sell its Ownership Interest to the Other Investors. Should the Investors not agree on the price within such period, they shall attempt for fifteen (15) days to agree on the selection of an internationally recognized investment bank to value the Ownership Interest of the Breaching Investor. Should the Investors fail to agree on that selection, an investment bank will be selected by the accounting firm which is then responsible for auditing the accounts of VENTEL, provided that the investment bank selected shall not be employed as the investment bank of any of the parties hereto. (d) The investment bank so selected shall determine the fair market value of the Breaching Party's Ownership Interest within thirty (30) days of the date of its selection. The "fair market value" shall be that price for the Ownership Interest which a willing buyer would pay a willing seller in an arm's length transaction, considering the value of VENTEL solely in connection with the going concern value of VENTEL taken as a whole multiplied by the Ownership Interest of the Breaching Party. 11 (e) For a period of thirty (30) days after the Investors agree on a price as provided in subsection (c) above or the investment bank fixes a fair market value as provided in subsection (d) above, as the case may be, the Other Investors may elect (by notice given to the Breaching Investor) to purchase all but not less than all the Ownership Interest of the Breaching Investor at a price equal to (i) if price was agreed by the Investors pursuant to subsection (c) above, such agreed price, or (ii) if such price was not agreed, 90% of the fair market value established by the investment bank pursuant to subsection (d) above. (f) In exercising the election to purchase the Ownership Interest of the Breaching Investor, the Other Investors shall purchase pro rata in accordance with their respective Ownership Interests, it being understood that if one or more of the Other Investors do not wish to purchase their pro rata shares of the Ownership Interest of the Breaching Investor, such shares may be purchased by the Other Investors who have agreed to purchase their pro rata shares, in proportion to their respective Ownership Interests or on such other basis as they may agree. (g) The sale of the Ownership Interest of the Breaching Investor shall occur within fifteen (15) days after the Other Investors have notified the Breaching Investor of their election to purchase such Ownership Interest. (h) The option granted in subsections (b) - (g) above to the Other Investors is in addition to any other remedy that is available hereunder or at law or in equity against the Breaching Investor regarding any damage incurred as a result of the breach that gave rise to the Event of Termination. 14. Covenant Not to Compete. (a) Subject to the provisions of subsection (b) below, beginning on the date the joint bid is successful and ending (i) if an Investor did not participate in the joint bid, two (2) years after VENTEL purchases the CANTV Shares and (ii) if an Investor participated in the joint bid, (A) two (2) years after the Investor ceases to own shares of the capital stock of VENTEL, provided such event occurs within eight (8) years after VENTEL purchases the CANTV Shares, and (B) if such event occurs thereafter, the last to occur of the date which is one (1) year after the Investor ceases to own shares of the capital stock of VENTEL and the date which is ten (10) years after the date on which VENTEL purchases the CANTV Shares, such Investor covenants and agrees that neither it nor any of its affiliates shall, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of any enterprise which is in the business of operating basic, value added, cellular, mobile or related telephone services in any part of Venezuela, other than for its own use or the use within the affiliated group of any of its affiliates. The parties acknowledge and agree that the foregoing restrictions are reasonable and necessary to protect the legitimate business interests of the parties, CANTV and VENTEL, and that any violation of such restrictions would result in irreparable harm to the other parties and that the remedy for breach of the covenant contained in this subsection shall include, in addition to damages and any other remedy available at law or in equity, an order that the breaching party shall immediately cease the prohibited activity. 12 (b) If at the date VENTEL purchases the CANTV Shares, AT&TI or any of its affiliates is involved in the project known as TDI or any other enterprise that would fall within the provisions of subsection (a) above, it will offer, subject to rights of first refusal and under the terms of pre-existing contracts with unrelated parties and any applicable provision of Venezuelan law to the contrary, to sell all of the interest held by it in the enterprise to CANTV as soon as practicable before February 15, 1992, or thirty (30) days after the date VENTEL purchases the CANTV Shares, whichever is later, at a mutually agreed price based on book value plus start-up expenses. If CANTV purchases AT&TI's interest in TDI, the Investors will cause VENTEL to support CANTV's entry through TDI into the digital private line (including point to multipoint) telecommunications transport business by satellite. Should CANTV decline an offer to purchase AT&TI's interest in TDI or any other enterprise falling within the provisions of subsection (a) above, AT&TI or its affiliate may maintain its interest in the enterprise involved, and the other Investors will endeavor to reach agreement among themselves to offer to purchase AT&TI's share in VENTEL at a price equal to AT&TI's share of the price paid by VENTEL for the CANTV Shares. Notwithstanding any other provisions of this Agreement, should Electricidad not participate in the joint bid hereunder, and should the joint bid be successful, Electricidad may construct and operate the project known as REXTEL (the parameters of which were set forth in a letter previously delivered by Electricidad to the other parties hereto), and shall not be required to offer such project to CANTV and VENTEL pursuant to this Section 14(b). As consideration for, and as a condition to the foregoing sentence, (i) Electricidad will enter into a confidentiality agreement with VENTEL, in form and substance acceptable to VENTEL, which will provide that Electricidad shall not use any information received or developed in connection with the evaluation of CANTV as provided hereunder, and (ii) whenever REXTEL plans to construct facilities, Electricidad shall offer to make its (and those of its affiliates) rights of way, towers and ducts, if any, to be used by REXTEL, and any telecommunications cable to be made available to REXTEL, also available for use by CANTV in its telecommunications operations, subject to reasonable compensation for such use to be paid by CANTV to Electricidad or its affiliates. This second condition shall not apply if CANTV and Electricidad mutually agree that it is not technically feasible or that facilities are not available. (c) For so long as any Investor owns shares of the capital stock of VENTEL, neither it nor any of its affiliates shall purchase or otherwise acquire, directly or indirectly, any shares of the capital stock of CANTV without first proposing that such shares be purchased or otherwise acquired by VENTEL on the same terms and conditions, and shall not undertake such transactions unless VENTEL decides that it should not make the purchase or acquisition. If VENTEL declines to make the purchase or acquisition, or does not answer within fifteen (15) days, the Investor that suggested the transaction shall be free to conclude the transaction, on the same terms and conditions previously proposed to VENTEL, within fifteen (15) days after (i) receipt by it of VENTEL's decision, or (ii) the expiration of the first fifteen-day period without a response from VENTEL. The provisions of this Section 14(c) shall not apply to purchases or acquisitions by the Investors and their respective affiliates of shares of the capital stock of CANTV which are publicly traded on a stock exchange, provided that each Investor shall promptly inform the other Investors of any purchase or sale of such shares of CANTV by the Investor or its affiliates. 13 15. Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be wholly performed within the State of New York. 16. Arbitration. (a) Any claim, controversy or dispute arising out of or in connection with this Agreement or the performance of this Agreement shall be submitted to arbitration before a panel of three arbitrators in Miami, Florida, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. The arbitration shall be conducted in the English language. The decision of the arbitration panel shall be in writing and shall set forth in detail the facts of the case and the reasons for the decision. The costs of arbitration shall be borne equally by the parties that are the petitioners in arbitration and the parties that are the respondents, it being understood that within each such category costs of arbitration shall be borne in accordance with the respective Ownership Interests of the parties involved. Each party shall pay its respective legal and witness fees. The determination of a majority of the arbitrators shall be final and binding upon the parties and nonappealable. Judgment on the award may be entered and enforced in any court of competent jurisdiction. (b) By execution and delivery of this Agreement each party accepts and consents to the jurisdiction of the aforesaid arbitration panel and, solely for purposes of the enforcement of an arbitral award under subsection (a) above, any court of competent jurisdiction, for itself and in respect of its property, and waives in respect of both itself and its property any defense it may have as to or based on sovereign immunity, jurisdiction, improper venue or inconvenient forum. Each of the parties irrevocably consents to the service of any process or other papers by the use of any of the methods and to the addresses set for the giving of notices in Section 17(g). Nothing herein shall affect the right of any party to serve such process or papers in any other manner permitted by law. 17. Miscellaneous. (a) This Agreement is not intended, nor should anything herein be construed, to create the relationship of partners, joint venturers, principal and agent, or employer and employee between the parties. None of the parties shall have any authority to represent or to bind the other parties in any manner whatsoever, and each party shall be solely responsible and liable for its own acts. (b) No modification or amendment of this Agreement shall be effective for any purpose unless in writing and signed by the parties hereto. (c) No waiver, forbearance or failure by any party of its right to enforce any provision of this Agreement shall constitute a waiver or estoppel of such party's right to enforce such provision thereafter or to enforce any other provision of this Agreement. (d) Each party shall bear its own costs and expenses incurred in connection with the negotiation, execution and performance of this Agreement, except to the extent specifically provided otherwise in writing by the parties. 14 (e) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect any of the terms or provisions of this Agreement. (f) This Agreement together with its Exhibit constitutes the entire agreement and understanding between the parties hereto, and supersedes and cancels all previous negotiations representations, undertakings, understandings and agreements heretofore made between the parties hereto with respect to the subject matter hereof. (g) All notices required hereunder shall be in writing and shall be effective upon receipt; such notices shall be sent by telex or telefax, confirmed in writing, hand delivered or sent by private mail service, with evidence of receipt, to the telex or telefax numbers and addresses set forth below by the parties, unless notice of change of telex, telefax and/or address is given in writing in accordance with the foregoing to the other parties, in which case any notices shall be sent to such new telex, telefax and/or address. The parties, for everything pertaining to this Agreement set forth as their telex, telefax and/or addresses, the following: GTE CORPORATION AT&T INTERNATIONAL INC. c/o GTE Telephone Operations 600 Hidden Ridge 131 Morristown Road Irving, Texas 75015-2092 Basking Ridge, NJ 07920 U.S.A. U.S.A. Telefax: (214) 718-1964 Telefax: (201) 644-8621 Attention: Vice President Attention: John A. Hinds President and - International Chief Executive Officer T.I. TELEFONICA INTERNACIONAL CONSORCIO INVERSIONISTA DE ESPANA, S.A. MERCANTIL CIMA, C.A., S.A.C.A., S.A.I.C.A. c/o Jorge Manrique, 12 28006 Madrid, Espana Edificio Mercantil, Piso 22 Telex: 48395 CITF-E Av. Andres Bello Telefax: (341) 362-6650 Caracas, Venezuela Attention: D. Ignacio Santillana del Telefax: (582) 507-1318 Barrio Attention: Celso Dominquez Consejero Delegado Gerente General 15 C.A. LA ELECTRICIDAD DE CARACAS, S.A.I.C.A.-S.A.C.A. Av. Vollmer, Edificio E. de C. San Bernardino Caracas, Venezuela Telex: 21647 Telefax: (582) 575-3961 Attention: Luis Jose Diaz-Zuloaga Vice-Presidente Ejecutivo Finanzas y Administracion The addresses for notices to GTE-VEN, ELEC-VEN and CIMA-VEN shall be the same addresses listed above for GTE, Electricidad and CIMA, respectively. (h) In no event shall any party be liable to any other party for consequential, punitive, indirect or special damages, including loss of profits suffered by such other party. (i) For so long as VENTEL is owned by the original Investors and in the percentages set forth in Section 3, each of the parties agrees that it and any Investor controlled by it owes each other party and Investor the duty of utmost good faith and loyalty regarding the matters set forth in this Agreement and in the operation of VENTEL and CANTV, and that no party or Investor shall take any action relating thereto unless such action serves a legitimate business purpose with respect to VENTEL or CANTV and, if such action has an adverse effect on any party or Investor, the legitimate business purpose could not have been achieved through a reasonably available alternative having a less adverse effect. (j) In the event there is a conflict between this Agreement and VENTEL's Charter and By-laws (estatutos) as filed, the provisions of this Agreement shall control with respect to the parties hereto and the Investors. (k) This Agreement may be executed in any number of counterparts with the same effect as if the signatures thereto were upon one instrument. 16 IN WITNESS WHEREOF, the parties hereto have caused this Association Agreement to be executed by their duly authorized representatives as of the day and year first above written. GTE CORPORATION AT&T INTERNATIONAL INC. By: By: ----------------------------- ----------------------------- Name: Name: Title: Title: T.I. TELEFONICA INTERNACIONAL CONSORCIO INVERSIONISTA DE ESPANA, S.A. MERCANTIL CIMA, C.A., S.A.C.A., S.A.I.C.A. By: By: ----------------------------- ----------------------------- Name: Name: Title: Title: C.A. LA ELECTRICIDAD DE CARACAS, S.A.I.C.A. S.A.C.A. By: ----------------------------- Name: Title: 17 Amendment No. 2 Dated March 20, 2001 to the Association Agreement Reference is made to the Association Agreement dated as of August 1, 1991 by and among GTE Corporation, T.I. Telefonica Internacional de Espana, S.A., AT&T International Inc., C.A. La Electricidad de Caracas, S.A.I.C.A.-S.A.C.A. and Consorcio Inversionista Mercantil Cima, C.A., S.A.C.A., S.A.I.C.A., as amended in accordance with its terms (the "Association Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Association Agreement. 1. Amendment to Redemption Procedures. Section 12(j) of the Association Agreement shall be deleted in its entirety and replaced by the following new Section 12(j): Any Investor or other VENTEL shareholder (each, a "Shareholder" and, collectively, the "Shareholders") may, by written notice to the Secretary of VENTEL (the "Redemption Notice"), require that VENTEL, to the extent permitted by Venezuelan law and any agreements entered into by VENTEL in connection with the purchase of the CANTV Shares, redeem all or part of the VENTEL Shares held by such Shareholder, by distributing to the Shareholder an amount of CANTV Shares equal to the product of (i) the total number of CANTV Shares then held by VENTEL, and (ii) a fraction, the numerator of which is the number of VENTEL Shares to be redeemed and the denominator of which is the number of outstanding shares of VENTEL (such amount of CANTV Shares hereinafter to be referred to as the "Redemption Shares"), which product shall be rounded down to the nearest whole number of CANTV Shares. VENTEL will also distribute to such Shareholder, on the Closing Date (as defined below), its proportionate share of any net worth of VENTEL not attributable to the ownership of CANTV Shares. Before a Shareholder may exercise such redemption option and receive title to Redemption Shares, the redeeming Shareholder must first irrevocably offer to sell the Redemption Shares to be distributed to such Shareholder to the other Shareholders. The Redemption Notice shall be deemed to constitute such an irrevocable offer to the other Shareholders (the "Redemption Offer") and shall at minimum include (i) the identity of the redeeming Shareholder, (ii) the number of VENTEL shares that the redeeming Shareholder wishes to redeem, (iii) the identity of the financial institution and account to which funds should be transferred in the event of an acceptance of all or part of the Redemption Offer by other Shareholders (and any corresponding wire transfer instructions), and (iv) an express choice as to whether, upon any acceptance of the Redemption Offer, the redeeming Shareholder wishes to receive United States dollars as the exclusive money of payment or, instead, its equivalent in Venezuelan bolivares at the exchange rate corresponding on the Closing Date (as defined below) as established by the Venezuelan Central Bank; provided, however, that a choice to receive United States dollars can occur if and only if the bank account identified in the Redemption Notice as the potential recipient of funds is maintained in a banking institution that utilizes United States dollars in its operations. The price per Redemption Share of the Redemption Offer (the "Redemption Offer Price") shall be the price in U.S. dollars equal to 95% of the average of the weighted average price, as set forth on a daily basis, after the close of trading, in Bloomberg L.P. as the "Precio medio ponderado" on its VNT page, at which American Depositary Shares of the CANTV Series D Shares traded on the New York Stock Exchange during the eight (8) trading days beginning with the eighth (8th) trading day after the date, but not including the date, on which the Secretary of VENTEL shall have received the Redemption Notice (the "Redemption Notice Receipt Date") divided by the number of CANTV Series D Shares that comprise a CANTV American Depository Share (which, as of the date of this Amendment No. 2, is seven). The Secretary of VENTEL shall, as promptly as practicable after the Redemption Notice Receipt Date, but in no event more than five (5) business days thereafter with respect to the Shareholders and no more than three (3) business days with respect to the Investors, distribute a notice (the "Redemption Offer Notice") in writing to all Shareholders which shall include the identity of the redeeming Shareholder, the number of Redemption Shares offered pursuant to the Redemption Offer, the Acceptance Period (as defined in the paragraph following the immediately succeeding paragraph), the eight (8) trading days which shall be used to determine the Redemption Offer Price, the Closing Date (as defined below) for any such accepted Redemption Offer, appropriate wire transfer instructions and the address in Caracas, Venezuela selected by the Secretary of VENTEL where the closing shall take place. Absent manifest error, the Acceptance Period, Closing Date and eight (8) trading days to be used to determine the Redemption Offer Price set forth in the Redemption Offer Notice shall be conclusive and binding on all Shareholders. As promptly as practicable after the fifteenth (15th) trading day after the Redemption Notice Receipt Date (but not including the Redemption Notice Receipt Date), but in no event more than two (2) business days thereafter with respect to the Shareholders, including the Investors, the Secretary of VENTEL shall distribute a notice (the "Redemption Offer Price Notice") in writing to all Shareholders which shall identify the Redemption Offer Price. Absent manifest error, the Redemption Offer Price set forth in the Redemption Offer Price Notice shall be conclusive and binding on all Shareholders. 2 The Redemption Offer may be accepted by the other Shareholders on such terms, in whole or in part, by delivering written notice (the "Acceptance Notice") to the Secretary of VENTEL at any time on or before the thirtieth (30th) calendar day following the Redemption Notice Receipt Date no later than 5:00 p.m., Caracas time, on that date (the "Acceptance Period"), with the first day being the calendar day after the Redemption Notice Receipt Date; provided, however, that if the thirtieth (30th) calendar day following the Redemption Notice Receipt Date shall fall on a day which is not a business day in both Venezuela and the United States of America, then the Acceptance Period for such Redemption Offer shall be extended until 5:00 p.m., Caracas time, on the next succeeding business day in both Venezuela and the United States of America. The Acceptance Notice shall specifically indicate the number of Redemption Shares that the accepting Shareholder wishes to purchase. The Acceptance Notice shall be irrevocable and shall bind the accepting Shareholder to acquire such number of Redemption Shares as shall be established in accordance with the immediately following paragraph. The number of Redemption Shares to be acquired by each accepting Shareholder shall be determined by the Secretary of VENTEL, pursuant to the Acceptance Notices delivered in accordance with the provisions of the immediately preceding and immediately succeeding paragraphs, on the first (1st) business day after the end of the Acceptance Period. By the close of business on the second (2nd) business day after the end of the Acceptance Period, the Secretary of VENTEL shall notify the accepting Shareholders in writing of the number of Redemption Shares to be purchased by each of them on the Redemption Offer Closing Date. Absent manifest error, the determination of the Secretary of VENTEL as to the identity of the accepting Shareholders and the number of Redemption Shares to be purchased by each such accepting Shareholder shall be conclusive and binding on all Shareholders, including, without limitation, the redeeming Shareholder and all accepting Shareholders. In the event that other Shareholders, in their Acceptance Notices, in the aggregate accept to purchase a total number of CANTV Shares that is greater than the total number of Redemption Shares, then the Redemption Shares shall be allocated among the accepting Shareholders in proportion to the respective Ownership Interests of the accepting Shareholders; provided, however, that no accepting Shareholder shall be entitled or required to purchase any number of Redemption Shares that is in excess of the number of Redemption Shares set forth in its Acceptance Notice as the maximum number of Redemption Shares it wishes to accept and purchase. If any Redemption Shares remain after the allocation procedure set forth in the immediately preceding sentence, then the remaining Redemption Shares shall be allocated among the accepting Shareholders whose Acceptance Notices sought to purchase a 3 greater number of Redemption Shares than they were allocated in the initial allocation in proportion to their respective Ownership Interests; provided, again, that no accepting Shareholder shall be entitled or required to purchase any number of Redemption Shares that, in the aggregate, is in excess of the number of Redemption Shares set forth in its Acceptance Notice as the maximum number of Redemption Shares it wishes to accept and purchase. This allocation procedure shall be repeated successively until all Redemption Shares shall have been allocated or until each accepting Shareholder shall have been allocated the maximum number of Redemption Shares that it sought to accept and purchase as set forth in its Acceptance Notice. The purchase and sale of the Redemption Shares accepted pursuant to timely Acceptance Notices shall close at the place in Caracas, Venezuela selected by the Secretary of VENTEL and indicated in the Redemption Offer Notice on the fifth (5th) business day after the end of the Acceptance Period, unless an earlier closing date is otherwise agreed to between or among the redeeming Shareholder and the accepting Shareholder(s) (the "Closing Date"). Payments shall be made in United States dollars or Venezuelan bolivares, as set forth in the Redemption Offer Notice, by wire transfer of immediately transferable funds to the redeeming Shareholder to the account set forth in the Redemption Offer Notice. Upon the receipt by the redeeming Shareholder of payment for the Redemption Shares, the VENTEL Secretary shall take such action as may be necessary or appropriate to effect the annulment of the redeemed VENTEL Shares in the shareholder record books of VENTEL, and VENTEL shall take such action as may be necessary or appropriate to cause CANTV to effect the transfer of the Redemption Shares to the accepting Shareholder(s) in the shareholder record books of CANTV. To the extent that none or only a portion of the Redemption Shares subject to a Redemption Offer pursuant to this Section 12(j) are purchased by Investors or other VENTEL shareholders, then, on the Closing Date, the unpurchased Redemption Shares shall be distributed to the redeeming Shareholder, the VENTEL Secretary shall take such action as may be necessary or appropriate to effect the annulment of the redeemed VENTEL Shares in the shareholder record books of VENTEL, and VENTEL shall take such action as may be necessary or appropriate to cause CANTV to effect the transfer of the Redemption Shares to the redeeming Shareholder in the shareholder record books of CANTV. Upon any distribution of Redemption Shares to an accepting or redeeming Shareholder in accordance with the terms and conditions of this Section 12(j), the capital of VENTEL shall automatically be reduced, notwithstanding the supermajority voting provisions set forth in Section 7(a)(v) of this Association Agreement. The VENTEL Board of Directors shall be 4 authorized to make the appropriate entries in the Commercial Registry to formalize any such capital reduction. The Secretary of VENTEL shall have the right, upon such terms and conditions as the Board of Directors of VENTEL shall agree, to delegate its duties under this Section 12(j) to a bank or other financial institution, transfer agent or brokerage house. Upon any such delegation of duties, the Secretary of VENTEL shall cease to have any liability for any failure to carry out its duties under this Section 12(j). Except as otherwise provided herein with respect to the redemption of specifically identifiable VENTEL Shares, any and all costs and expenses related to such delegation of duties (and the corresponding services provided by any such bank, other financial institution, transfer agent or brokerage house) shall be borne exclusively by VENTEL. All notices required under this Section 12(j) shall be in writing and shall be effective upon receipt. Notwithstanding the provisions of Section 17(g) of this Association Agreement, notices under Section 12(j) shall be sent by electronic mail (so long as there is no evidence of failure of delivery) to the electronic mail addresses delivered in writing by the Shareholders to the Secretary of VENTEL. If a Shareholder shall not have delivered an electronic mail address to the Secretary of VENTEL, then notices under Section 12(j) to such Shareholder shall be sent by telecopier (fax), with evidence of receipt, to the telecopier (fax) numbers established pursuant to Section 17(g) of this Association Agreement with respect to Investors, and to those delivered in writing by the other Shareholders to the Secretary of VENTEL with respect to the Shareholders who are not Investors. If a Shareholder shall not have delivered a telecopier (fax) number to the Secretary of VENTEL, then notice shall be delivered by hand delivery to, and shall be available to the Shareholder at, the offices of the Secretary of the Board of Directors of VENTEL, Office 6-A, Piso 6, Edificio FORUM, between Calle Guaicaipuro, Avenida Las Mercedes and Calle Carabobo, Urbanizacion El Rosal, Municipio Chacao, State of Miranda, Caracas, Venezuela. The Investors agree that no Investor shall have the right to assign any of its rights under this Section 12(j) to any person, except as part of a transfer of VENTEL Shares permitted under this Agreement. Any and all costs and expenses (other than taxes) of redeeming specifically identifiable VENTEL Shares, including, without limitation, the fees and expenses related to distributing any Redemption Offer Notice and Redemption Offer Price Notice, transfer fees and variable fees related directly to the number of Redemption Shares, if any, shall be borne (i) with respect to Redemption Shares that are not accepted by any other Shareholder in a redemption offer, exclusively by the redeeming Shareholder, and (ii) with respect to Redemption Shares that are accepted by one or more other 5 Shareholders, 50% by the redeeming Shareholder and 50% by the Shareholder or Shareholders accepting a Redemption Offer (and, among such accepting Shareholders, on a pro rata basis in accordance with the number of Redemption Shares purchased). The Investors agree that any and all taxes corresponding to (i) the redemption of VENTEL Shares and (ii) if a Redemption Offer is accepted by any Shareholder, the transfer and delivery of Redemption Shares to an accepting Shareholder, shall be borne exclusively by the persons charged with such tax payment responsibility by the applicable Venezuelan tax legislation. 2. Effective Date. This Amendment No. 2 shall become effective on April 27, 2001 or on such earlier date as shall be established by the VENTEL Board of Directors. 3. Implementation of Section 12(j). Until such time as the Investors otherwise determine, the parties hereby agree that VENTEL shall retain, upon such terms and conditions as the Board of Directors of VENTEL shall agree, a bank or other financial institution (and, in the event that the Investors determine that VENTEL cannot retain a bank or other financial institution on acceptable terms and conditions, a transfer agent or brokerage house) to undertake the duties of the Secretary under Section 12(j) of the Association Agreement. Any and all costs, expenses and fees related to such retention (and the corresponding services provided by any such bank, other financial institution, transfer agent or brokerage house, as the case may be) shall be borne as set forth in Section 12(j) of the Association Agreement. 4. No Other Modification. Except as and to the extent modified in this Amendment No. 2, the terms and conditions of the Association Agreement shall remain unmodified, valid and in full force and effect. 5. Governing Law. This Amendment No. 2 shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be wholly performed within the State of New York. 6. Counterparts. This Amendment No. 2 may be executed in one or more counterparts, each of which shall be deemed to be an original, and all of which, taken together, shall be deemed to constitute one and the same agreement. 6 IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2 as of this 20th day of March, 2001. GTE VENHOLDINGS B.V. BANCO MERCANTIL C.A. By: By: -------------------------- -------------------------- Name: Name: Title: Title: INVERSIONES TIDE S.A. Telefonica Venezuelan Holding, B.V. By: By: -------------------------- -------------------------- Name: Name: Title: Title: INVERSIONES INEXTEL C.A. AT&T Communications Services International Inc. By: By: -------------------------- -------------------------- Name: Name: Title: Title: 7 EX-1.2 3 file003.txt JOINT FILING AGREEMENT EXHIBIT 1.2 JOINT FILING AGREEMENT This JOINT FILING AGREEMENT, dated July 2, 2001, is made by and between The AES Corporation, a Delaware corporation ("AES"), AES Channon Holdings B.V., a Dutch corporation ("Channon"), Corporacion EDC, C.A. a Venezuelan corporation ("CEDC"), Inversiones Inextel, C.A., a Venezuelan corporation ("Inextel"), Servicios EDC, C.A., a Venezuelan corporation ("Servicios") and Inversiones Onapo, C.A., a Venezuelan corporation ("Onapo"). AES, Channon, CEDC, Inextel, Servicios and Onapo collectively referred to herein as the "Parties" and each individually as a "Party." Pursuant to Rule 13d-1(k)(1)(iii) promulgated under the Securities Exchange Act of 1934, as amended, the Parties hereby acknowledge and agree that the statement on Schedule 13D with respect to Compania Anonima Nacional Telefonos de Venezuela is filed on behalf of each such Party and that all subsequent amendments to the Statement on Schedule 13D shall be filed on behalf of each of the Parties without the necessity of filing additional joint acquisition statements. The Parties hereby acknowledge that each Party shall be responsible for timely filing of such amendments, and for the completeness and accuracy of the information concerning such Party contained therein, but shall not be responsible for the completeness and accuracy of the information concerning any other Party, except to the extent that such Party knows or has reason to believe that such information is inaccurate. IN WITNESS WHEREOF, the Parties hereto have executed this Joint Filing Agreement on the day and year first above written. The AES Corporation By: /s/ Barry J. Sharp -------------------------------------- Name: Barry J. Sharp Title: Senior Vice President and Chief Financial Officer IN WITNESS WHEREOF, the Parties hereto have executed this Joint Filing Agreement on the day and year first above written. AES Channon Holdings B.V. By: /s/ Steven P. Clancy ----------------------------- Name: Steven P. Clancy Title: Director IN WITNESS WHEREOF, the Parties hereto have executed this Joint Filing Agreement on the day and year first above written. Corporacion EDC, C.A. By: /s/ Steven P. Clancy ----------------------------- Name: Steven P. Clancy Title: Chief Financial Officer IN WITNESS WHEREOF, the Parties hereto have executed this Joint Filing Agreement on the day and year first above written. Inversiones Inextel, C.A. By: /s/ Steven P. Clancy ----------------------------- Name: Steven P. Clancy Title: Director IN WITNESS WHEREOF, the Parties hereto have executed this Joint Filing Agreement on the day and year first above written. Servicios EDC, C.A. By: /s/ Paul Hanrahan ----------------------------- Name: Paul Hanrahan Title: Director IN WITNESS WHEREOF, the Parties hereto have executed this Joint Filing Agreement on the day and year first above written. Inversiones Onapo, C.A. By: /s/ Steven P. Clancy ----------------------------- Name: Steven P. Clancy Title: Director -----END PRIVACY-ENHANCED MESSAGE-----