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1q Cable TV FranchiseCITYOF CHANHASSEN ~ Ci~ Center Drive, PO Box 147 ;hanhassen, Minnesota 55317 Phone 612.937.1900 General Fax 612.93Z5739 ~gineering Fax 612.93Z9152 :blic Safe~y Fax 612.934.2524 'feb www. ci. chanhassen, mn. us TO: FROM: DATE: SUB J: MEMORANDUM Mayor and City Council Scott A. Botcher, City Manage June 8, 1999 Assignment of Cable Television Franchise from Triax Midwest Associates, L.P. to Mediacom LLC As some of you may be aware, an agreement has been struck between Triax and Mediacom for the assignment of Triax Cable Systems to Mediacom. This means that a transfer of the franchise granted by the City of Chanhassen to Triax will need to be made to Mediacom. I have enclosed for your review a packet of information provided by Brian Grogan of Moss & Barnett. Consistent with this letter and with federal law, the city council has until June 23, 1999 to make a determination if a public hearing on this assignment is desirable. If the answei is in the affirmative, the city is obligated to hold the public heating within 30 days after that determination is made. If we determine Monday evening that a public hearing is desirOus, the public hearing may be scheduled for our July 12, 1999 council meeting. At this point I have no strong feelings one way or the other as to Whether or not a public hearing is desirable or not. That being said, I believe it is safe to err on the side of holding a public heating and allowing for any public input or comment regarding this assignment. As such, I recommend that the council make a determination that a public hearing is desirous and establish July 12, 1999 as the date of this public hearing. Please contact me if you have any questions. Thank you. g:\user~scottb\rnediacora.doc , CiO, ofChanhassen. A growing communi{y with clean lakes, quali9~ schoo& a charming downtown, thriving businesses, and beauti3l parks A great place to live, work, and play. BP, JAN T. GROOAN (612) 347-0340 E-Mail: GroganB(~aoss-barne~com VIA FAX AND U.S. MAIL Mr. Scott Botcher City Manager City of Chanhassen P. O. Box 147 Chanhassen, MN 55317,0147 LAw OI~FICBS MOSS & BARNETT A PROFESSIONAL ASSOCIATION 4800 NORWI~ST CI~NTI~R 90 SOUTH SI~VI~NTH STRI~I~T MINNEAPOLIS, MINNESOTA 55402-~129 TBLRPHONI~ {612) 347-0300 FACSlMll, S (612) 339-6686 June 4, 1999 fie _ IVED, CITY 0t- NI-IASSEN Re: Assignment of Cable Television Franchise From Triax Midwest Associates, ("Triax") to Mediacom LLC CMediacom") Our File No.: 39962.1 Dear Scott: This letter will provide you with information on the procedural requirements under Minnesoti law that the City must follow regarding the assignment referred to above. According to information available to us, the City of Chanhassen should have received the Federal Communications Form 394 on May 24, 1999. If this is not correct, please advise me as soon~s possible. The dates that the City must meet under Minnesota law are determined from the dale that the Form 394 was received. First, the City must decide no later than June 23, 1999 O0 days fromthe dateof receipt ofth~ FCC Form 394) if a public hearingis necessary. Becauseyour city councilmeets onthe 2nd~nd 4th Monday of each month, th~sdeemon may be made at your June 14,1999 city council meeting. If a public hearing is deemed necessary, you wiil need to sendalette~: toYour local-~ Triax Manager and Mediacom advising them that a public hearing will beheld. We have _ attached a draft letter for your review and use. Second, the pUblic hearing must takeplace within thirty (30) days after the determination is made. Should your city council mak~ the determination on ~lune 14, 1999, the public hearing- may be scheduled for your July 12, !999 City Council meeting. Please beadvised that then~ice of public hearing must be 'published 14 days (June 28, 1999) in advance ofthehearing. We-~ve al.so attached a draft of such notice for your review and use. MOSS & BARNETT A PROFESSIONAL ASSOCIATION Mr. Scott Botcher June 4, 1999 Page 2 Third, the City must approve or deny the assignment request within thirty (30) days of closing the public hearing. We are in the process or reviewing the legal, technical and financial qualifications of Mediacom LLC. We will then prepare a detailed report which will include our recommendations to the City to approve or deny the assignment request. Should our recommendation be to approve the request, a resolution and other appropriate closing documentation will also be provided. Should you follow the above recommended dates, we anticipate our report to the City with regard to this proposed assignment will be submitted to your office in late July. If your City decides to vary from the above dates, please let me know. In addition, if your City has any special issues that you wish to have addressed with regard to the cable television franchise, please indicate these in a letter to me. We can then address these issues in any proposed Resolution. As always, if you have any questions, feel free to call me. Very truly yours, lan . Grogan BTG/mac enclosures 262294/1 (Date) VIA FACSIMILE (612-440-9661) and U.S. MAIL Mr. Tom Bordwell 14162 Commerce Avenue Suite 10 Prior Lake, MN 55372 Re: Assignment of Cable Television Franchise to Mediacom LLC Dear Mr. Bordwell: This letter is to inform you that the City of Chm~hassen, Minnesota has decided to hold a public hearing with regard to the above requested assignment to determine if the assignment will have an adverse impact on cable television subscribers. This hearing will be held on Monday, July 12, 1999 at 7:00 p.m. or as soon thereafter as it may be heard at the Chanhassen, Minnesota City Hall. If you have any questions, feel free to contact me or counsel for the City of Chanhassen, Minnesota on this issue, Brian Grogan at Moss & Barnett, 4800 Norwest Center, 90 South 7th Street, Minneapolis, MN 55402-4129. Mr. Grogan's telephone number is (612) 347-0340. Sincerely, Scott Botcher City Manager cC: Brian T. Grogan, Esq. Mr. Mark Stephan, CFO Mediacom LLC 100 Crystal Run Road Middletown, NY 10941 262309/1 NOTICE OF PUBLIC HEARING The City Council for the City of Chanhassen, Minnesota, will be conducting a public hearing on Monday July 12, 1999 at 7:00 p.m. or as soon thereafter as it may be heard at the City Hall in Chanhassen, Minnesota. The purpose of this public hearing is to consider the application to assign the city's cable television franchise from Triax Midwest Associates, L.P. to Mediacom LLC. The hearing will focus on the application submitted and the qualifications of the Mediacom LLC. All interested persons should appear at the above date and time. Dated this (date) day of (month), 1999. CITY OF CHANHASSEN By: Scott Botcher City Manager BRIAN T. GROGAN (612) 347-0340 E-Mail: GroganB~moss-barnett.com LAW OFFICES MOSS & BARNETT A PROFESSIONAL ASSOCIATION 4800 NORWEST CENTER 90 SOUTH SEVENTH STREET MINNEAPOLIS, MINNESOTA 55402-4129 TELEPHONE (612} 3~7-0300 F^CSIM[LE (612) 339-6686 June 4,1999 VIA U.S. MAIL Mr. Tom Bordwell Government Relations Manager Triax Midwest Associates, L.P. 14162 Commerce Avenue Suite 100 Prior Lake, MN 55372 Mr. Mark Stephan, CFO Mediacom, L.L.C. 100 Crystal Run Road Middletown, NY 10941 Rel Proposed Assignment of Cable Television Franchises from Triax Midwest Associates, L.P. to Mediacom, L.L.C. Our File No.: 39962.1 Dear Gentlemen: Enclosed herewith please find a Transfer Questionnaire/Application dated June 4, 1999 ("Application") with respect to the above.-referenced transaction. As indicated in the Application, we · presently represent 23 communities on this matter and have affiliated with Municipal & County Management Services to provide assistance to its clients in the review of this transaction. In addition, a number of cities have contacted Moss & Barnett and are currently considering how best to address Triax's request for assignment of its cable television franchises. Therefore, additional cities may seek our assistance on this matter. The cities which we have identified have chosen to work together with Moss & Barnett to conduct a review of the proposed assignment in an effort to reduce overall costs associated with the review and to facilitate an expeditious cortsideration of Triax's request. Therefore, your prompt response to this Application will serve to speed the review of this transaction and allow the franchising authorities to take action in a timely manner. If you should have any specific questions regarding the questions and issues raised in the Application, please feet free to contact me directly. I trust you will be formulating one response on behalf of Triax and Mediacom to the Application. If this understanding is in error, please advise me so I may coordinate our analysis accordingly. BTG/tlh 262534/1 Enclosure cc: Ms. Jane Bremer, Esq. (w/enclosure) Very truly yours, Brian T. Grogan '/] Municipalities served by Moss & Barnett (w/enclosure) TRIAX MIDWEST ASSOCIATES, L.P. CONSENT TO ASSIGN CABLE TELEVISION FRANCHISE TO MEDIACOM LLC TRANSFER QUESTIONNAIRE/APPLICATION June 4, 1999 Prepared by: Brian T. Grogan Timothy L. Gustin Michael R. Nixt, C.P.A. Kenneth A. Moats, Paralegal MOSS & BARNETT A Professional Association 4800 Norwest Center 90 South Seventh Street Minneapolis, MN 55402-4129 (612) 347-0300 (telephone) (612) 339-6676 (facsimile) ©Moss & Barnett, A Professional Association, 1999 261697/1 INTRODUCTION Moss & Barnett, A Professional Association, has, as of this date, been retained to represent the below-listed cities (hereinafter "City") regarding the proposed assignment of cable television systems and franchises to Mediacom LLC. This list may be modified and/or increased if additional communities seek our assistance. This Transfer Questionnaire/Application will serve as a request on behalf of the City for supplemental information regarding the proposed assignment. The Applicant for the assignment is requested to use the following forms in order to inform the City of the Applicant's legal, technical and financial qualifications. In addition to the qualifications, the Applicant is requested to identify any and all changes proposed to the cable communications system now serving the City, the operation of that system or the franchise document. In considering a request for transfer and assignment, the City will consider and review the legal, technical and financial qualifications of the Applicant together with any modifications requested by the Applicant. The City will comply with any and all state or federal procedural requirements. Cities represented by Moss & Barnett 1. Apache Junction, AZ 2. Boscobel, WI 3. Caledonia, MN 4. Cannon Falls, MN 5. Canton, MN 6. Chanhassen, MN 7. Granite Falls, MN 8. Ivanhoe, MN 9. Lake City, MN 10. Litchfield, MN 11. Marseilles, IL 12. Mound, MN 13. Ottawa, IL 14. Paynesville, MN 15. Pipestone, MN 16. Prior Lake, MN 17. Rushford, MN 18. St. James, MN 19. Savage, MN 20. Slayton, MN 21. Spencer, IA 22. Waconia, MN 23. Wayzata, MN 261697/1 2 NOTE: Moss & Barnett will also be assisting Municipal & County Management Services ("MCMS) and its principal, Patrick Callahan, Esq. in its review of this proposed assignment on behalf of MCMS clients. Please provide five (5) copies of Applicant's Transfer Questionnaire/Application to: Brian T. Cirogan Moss & Barnett 4800 Norwest Center 90 South Seventh Street Minneapolis, MN 55402-4129 The City expressly reserves the right to request additional information. DEFINITIONS Unless the context otherwise requires, when used in this Application, the terms listed in this section shall have the following meanings: mo The term "Affiliate," when used in reference to the Applicant or a Principal of the Applicant, shall mean any Person that directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control witti the Applicant or the Principal of the Applicant. Bo The term "Applicant" shall mean Mediacom LLC (as identified in FCC Form 394; please clarify if this is incorrect). Co The term "Person" shall mean any individual, corporation, general or limited partnership, joint venture, limited liability company, trust, association, or other entity. The term "Principal," when used in reference to the Applicant, shall mean (i) any officer, director, or beneficial owner of five percent (5%) or more of any class of voting securities of the Applicant and any Affiliates of the Applicant, (ii) any Person who provides management or operational services with respect to the "System" (as hereinafter defined) and any officers, directors, or beneficial owners of five percent (5%) or more of any class of voting securities of any such Person, (iii) any general or limited partner of the Applicant or any Affiliate of the Applicant and any officer, director, or beneficial owner of five percent (5%) or more of any class of voting securities of any such partner, and (iv) any Person who or which serves in a capacity or stands in a relationship similar to any of the foregoing. Eo The term "System" shall mean the cable communications systems covered by the Franchise Ordinances awarded by the City, to which this Application relates. 261697/I 3 OVERVIEW OF TRANSACTION Below we have outlined an overview of the transaction based upon our initial review of FCC Form 394. If any errors have been made in our description, please provide clarification as part of your response to this application. The Applicant presently owns and operates cable systems in fourteen (14) states and in 313 franchise communities serving over 370,000 cable and intemet customers. Triax is presently operating cable systems in approximately 617 franchised communities, serving approximately 355,000 customers. The transaction contemplated will result in the Applicant expanding its scope of operations into six (6) additional states where it is not presently doing business, increasing the number of customers by nearly 100% and increasing the number of communities served by more than 300%. The Applicant and Triax entered into an Asset Purchase Agreement dated April 29, 1999 ("Purchase Agreement") which provides for the acquisition of substantially all of Triax's cable system operations hereinabove described (the "Systems"), subject to certain exclusions based upon the success of the Applicant in obtaining applicable governmental consent of the several hundred communities which are involved in Triax's operations. The Purchase Agreement provides that the Applicant will purchase from Triax the Systems for a stated amount of $740,000,000.00, subject to certain adjustments, both increases and decreases to the purchase price based on the occurrence of certain events occurring prior to the Closing Date of the Purchase Agreement. 1. Ownership Information A. Multiple Systems Operator Please specify which of the Applicant's Principals will guarantee the payment and performance of the Grantee's obligations under this franchise. B. Certificates of Authority, Good Standing, and Existence Please provide copies of Applicant's Certificate of Authority and, if available, Certificate of Good Standing for the State of New York and Applicant's Certificates of Existence for the States of Arizona, Illinois, Iowa, Minnesota, and Wisconsin. If Applicant is not yet qualified to conduct business in these States, please provide any applications or further documentation of its attempt to qualify to conduct business in said States. C. Pledge of Grantee's Stock Please provide any documents, agreements, or other information that discusses the proposed financing plan between Grantee and a group of lenders that would include a pledge of the Grantee's interest. 261697/1 4 Cun'ent Franchises Please provide a list of forty (40) cable communications Systems owned, operated or controlled by the Applicant or any Principal of the applicant. (Please specify whether the systems below are owned and'operated by Applicant or a parent or subsidiary_ of Applicant). Please do not include in this list those Systems in which representative comments were provided from local leaders in Attachment A to the FCC Form 394. When preparing the list, please provide the following information. A. Name of Franchise Holder (Municipality/State) B. Contact Person and Phone Number C. Date of Franchise Award D. Number of Current Subscribers Potential Franchises Please state the number of subscribers the Applicant currently serves in each state where it provides service and the number of subscribers the Applicant will serve in each state if the transfer is approved. . Please provide a list of communities where the Applicant or any Principal of the Applicant has submitted a request for an initial franchise or the approval for a transfer of ownership.' A. Community in which Franchise is Sought B. Date of Application C. Expected Date of Action D. Estimated Number of Subscribers E. Municipal Contact Person & Phone Changes to the System Is the Applicant proposing or will the Applicant undertake any technical changes in the System. Changes in the Operation of the System Is the Applicant proposing, or will the Applicant undertake any changes in the operation of the System including, but not limited to, the following areas: rate increases, programming, customer service practices, billing practices, personnel, etc.? Please describe in detail. 261697/1 5 10. 11. 12. Future Plans Please provide any applicable information to help explain any future plans Applicant may have regarding the implementation of new technologies into the System serving the City. How will the introduction of these new technologies impact the growth of the System in the City? New Services Does the Applicant have any plans to add new services to the existing system? Please describe any potential services which Applicant may consider providing over the system. Programming Line-up Does Applicant own an interest in any cable programming services? Will Applicant make any changes to the programming line-up in the City? Will Applicant consider changing the programming line-up in the future? If so, in what way? Costs Increases Please comment on any projected cost increases to the current services offered by applicant over the next three (3) years. Billing System Please describe any changes Applicant will make in the current billing system. Will subscribers see a new billing system and if so, what modifications or improvements will result due to a change in the billing format? Customer Service Centers Please describe how customer service will be handled. Will there be any planned cutbacks in staff, operations or locations for customer service centers. What phone numbers will be used, e.g., will they change from existing numbers? Will customer service be centralized, and if so, where and how will it accommodate the increase in telephone traffic? Required Waivers Please provide copies of requests made to any federal or state governmental entity seeking waiver of cross ownership prohibitions existing under federal law. Please fully describe the process and timing for receipt of any required waivers. Please also provide copies of requests or information regarding any other state or federal regulatory approvals which must be obtained as part of this proposed transfer. 261697/1 6 13. 14. 15. 16. 17. 18. 19. System Upgrade Please describe any and all plans to upgrade and/or rebuild the system serving the City. High Speed Data Please describe Applicant's plans regarding implementation of high speed data services in the system serving the City. Technical and Managerial Employees Please explain whether Applicant will retain employees currently providing technical and managerial services for the cable System serving the City. Asset Purchase Agreement between Triax Midwest Associates and Mediacom LLC Please provide a copy of all schedules and exhibits part of the Asset Purchase Agreement. Security Ownership of Certain Beneficial Owners and Management Please explain the equity interests presented in the chart following page 3 and responding to Section II, Question 2 of the FCC Form 394. As presented, the equity interests do not total 100 percent. Exhibit 10, Page 11 provides a similar chart that totals 100 percent and references "Other Investors" as part of the percentage equity interests. Who are the "Other Investors"? Applicant's Operating Agreement Please provide a copy of Applicant's Operating Agreement. Financial Qualifications With respect to financial information, the Applicant submitted the following financial information in support of its financial qualifications to acquire and become the successor operator of the Systems: A. Applicant's Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 31, 1999, including the consolidated audited financial statements of the Applicant and subsidiaries consisting of (i) report of independent public accountants; (ii) consolidated balance sheets as of December 31, 1998 and 1997; (iii) consolidated statements of operations for the years ended December 31, 1998 and 1997; (iv) consolidated statements of Changes in Member's Equity for the years ended December 31, 1998 and 1997; (v) consolidated statements of cash flows for the years ended December 31, 1998 and 1997; (vi) notes to consolidated financial stateme.nts; and (vii) valuation and qualifying accounts. 261697/1 7 B. Form 1 O-K/A- 1; and Form 10-Q for the three months ended March 31, 1999, filed with the SEC on May 17, 1999, including Financial Statements consisting of (i) consolidated financial statements of Applicant and Subsidiaries; (ii) notes to consolidated financial statements; (iii) Financial Statement of Mediacom's Capital Corporation; and (iv) Notes to financial statement. With respect to the information provided, we have the following comments and/or requests for additional information: mo Applicant shall provide a detailed organizational chart of Mediacom, LLC and subsidiaries (including the Applicant's four (4) operating subsidiaries, Mediacom Capital Corporation and the acquisition subsidiary or subsidiaries ("Acquisition Sub") which is intended to be formed as the Assignee of the Purchase Agreement and to consummate the transactions contemplated thereby. A description of the relationship between Mediacom, LLC and Mediacom Capital Corporation shall also be provided to the extent that Mediacom Capital is not engaged merely as a shell for offering securities. Bo To the extent that the Applicant intends to form an Acquisition Sub to effect the consummation of the transaction contemplated by the Purchase Agreement, fi description of the subsidiary(ies) to be formed, where the subsidiaries will fit within the Applicant's organizational structure, and details surrounding the management · structure of the Acquisition Sub shall be provided for consideration by the City. Co The Applicant has indicated that "it is likely that this transaction will be financed from the proceeds of a credit facility that Mediacom intends to arrange on behalf of its operating subsidiaries." As the bulk of the Purchase Price to be paid for the System is to be paid in cash, the Applicant shall provide the City with an update as to the progress which has been made in securing such a credit facility, including a summary of the terms relating thereto (i.e., maximum facility available, repayment terms, security, etc.). Do The Applicant is advised that, in the event it elects to make an assignment of its rights under the Purchase Agreement to the Acquisition Sub, the Applicant should anticipate the City requiring that the Applicant provide a guarantee of the performance of the operating subsidiaries with respect to the franchise, as well as possibly being required to provide performance bonds and other forms of financial assurance of the subsidiaries operating performance, as the same are customary under local law or as otherwise may be deemed reasonably necessary under the circumstances by the City. - END OF APPLICATION - 261697/1