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SEC Filings

AVALON CABLE OF MICHIGAN INC/ filed this Form 10-Q on 08/16/1999
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Item 1. Legal Proceedings.
Legal Proceedings

    In connection with the acquisition of Mercom, former shareholders of Mercom
holding approximately 731,894 Mercom common shares or approximately 15.3% of all
outstanding Mercom common shares gave notice of their election to exercise
appraisal rights as provided by Delaware law. On July 2, 1999, former
shareholders of Mercom holding 535,501 shares of Mercom common stock filed a
petition for appraisal of stock in the Court of Chancery in the State of
Delaware seeking the fair value of their shares of Mercom common stock, together
with interest, all costs of the proceeding, including reasonable attorneys' fees
and expenses of experts, including an award pursuant to section 262(j) of the
General Corporation Law of the State of Delaware, and such other relief as the
Court deems just, proper and equitable. With respect to 209,893 of the total
number of shares for which we received notice, we received the notice of
election from beneficial holders of Mercom common shares and not from holders of
record. We believe that the notice with respect to the 209,893 shares did not
comply with Delaware law and is ineffective. We cannot predict at this time the
effect of these elections or the results of any appraisal proceedings on us
since we do not know the extent to which these former shareholders will continue
to pursue appraisal rights under Delaware law or choose to abandon these efforts
and accept the consideration payable in the Mercom merger. If these former
shareholders continue to pursue their appraisal rights and if a Delaware court
were to find that the fair value of the Mercom common shares, exclusive of any
element of value arising from our acquisition of Mercom, exceeded $12.00 per
share, we would have to pay the additional amount for each Mercom common share
subject to the appraisal proceedings together with a fair rate of interest. In
addition, we would have to pay our own litigation costs. We have already
provided for the consideration of $12.00 per Mercom share due under the terms of
our merger with Mercom with respect to these shares but have not provided for
any additional amounts or costs. We can provide no assurance as to what a
Delaware court would find in any appraisal proceeding or when this matter will
be resolved. Accordingly, we cannot assure you that the ultimate outcome would
not have a material adverse effect on us.

Item 2. Changes in Securities and Use of Proceeds.


Item 3. Defaults Upon Senior Securities.


Item 4. Submission of Matters to a Vote of Security Holders.


Item 5. Other Information.


Item 6. Exhibits and Reports on Form 8-K.