Print Page  Close Window

SEC Filings

S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 07/22/1999
Entire Document
 
<PAGE>
 
                       AVALON CABLE LLC AND SUBSIDIARIES
 
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands)
                               December 31, 1998
 
1. Basis of Presentation and Description of Business
 
   Avalon Cable LLC ("Avalon"), and its wholly owned subsidiaries Avalon Cable
Holdings Finance, Inc. ("Avalon Holdings Finance") and Avalon Cable of Michigan
LLC ("Avalon Michigan"), were formed in October 1998, pursuant to the laws of
the State of Delaware, as a wholly owned subsidiary of Avalon Cable of New
England Holdings, Inc. ("Avalon New England Holdings").
 
   On November 6, 1998, Avalon New England Holdings contributed its 100%
interest in Avalon Cable of New England LLC ("Avalon New England") to Avalon in
exchange for a membership interest in Avalon. This contribution was between
entities under common control and was accounted for similar to a pooling-of-
interests. Under this pooling-of-interests method, the results of operations
for Avalon include the results of operations from the date of inception
(September 4, 1997) of Avalon New England. On that same date, Avalon received
$63,000 from affiliated entities, which was comprised of (i) a $45,000 capital
contribution by Avalon Investors, LLC ("Avalon Investors") and (ii) a $18,000
promissory note from Avalon Cable Holdings LLC ("Avalon Holdings"), which was
used to make a $62,800 cash contribution to Avalon New England.
 
   The cash contribution received by Avalon New England was used to (i)
extinguish existing indebtedness of $29,600 and (ii) fund a $33,200 loan to
Avalon Holdings Finance which matures on December 31, 2001.
 
   On December 10, 1998, Avalon received a dividend distribution from Avalon
New England in the amount of $18,206, which was used by Avalon to pay off the
promissory note payable to Avalon Holdings, plus accrued interest.
 
   Avalon Cable of Michigan, Inc. was formed in June 1998, pursuant to the laws
of the state of Delaware, as a wholly owned subsidiary of Avalon Cable of
Michigan Holdings, Inc. ("Michigan Holdings".) On June 3, 1998, Avalon Cable of
Michigan, Inc. entered into an Agreement and Plan of Merger (the "Agreement")
among Avalon Cable of Michigan, Inc., Michigan Holdings and Cable Michigan,
Inc. ("Cable Michigan"), pursuant to which Avalon Cable of Michigan, Inc. will
merge into Cable Michigan and Cable Michigan will become a wholly owned
subsidiary of Michigan Holdings (the "Merger"). As part of the Merger, the name
of the company was changed to Avalon Cable of Michigan, Inc.
 
   In accordance with the terms of the Agreement, each share of common stock,
par value $1.00 per share ("common stock"), of Cable Michigan outstanding prior
to the effective time of the Merger (other than treasury stock shares owned by
Michigan Holdings or its subsidiaries, or shares as to which dissenters' rights
have been exercised) shall be converted into the right to receive $40.50 in
cash (the "Merger Consideration"), subject to certain possible closing
adjustments.
 
   In conjunction with the acquisition of Cable Michigan, Avalon Cable of
Michigan, Inc. acquired Cable Michigan's 62% ownership interest in Mercom, Inc.
("Mercom").
 
   On November 6, 1998, Avalon Cable of Michigan, Inc. completed its Merger.
The total consideration payable in conjunction with the Merger, including fees
and expenses is $431,629, including repayment of all existing Cable Michigan
indebtedness and accrued interest of $135,205. Subsequent to the Merger, the
arrangements with RCN and CTE for certain support services were terminated. The
Agreement also permitted Avalon Cable of Michigan, Inc. to agree to acquire the
remaining shares of Mercom that it did not own.
 
   Michigan Holdings contributed $137,375 in cash to Avalon Cable of Michigan,
Inc., which was used to consummate the Merger. On November 5, 1998, Michigan
Holdings received $105,000 in cash in exchange for promissory notes to lenders
(the "Bridge Agreement"). On November 6, 1998, Michigan Holdings contributed
the proceeds received from the Bridge Agreement and an additional $35,000 in
cash to Avalon Cable of Michigan Inc. in exchange for 100 shares of common
stock.
 
                                      F-8