HomeMy WebLinkAboutReso 134-86 ViacomCableAgmtRESOLUTION NO. 134- 86
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
AUTHORIZING THE ASSIGNMENT OF THE
CABLE TELEVISION FRANCHISE
TO VIACOM CABLEVISION OF EAST BAY, INC.
WHEREAS, Tele-Vue Systems, Inc., a wholly-owned
subsidiary of Viacom International Inc. ("Viacom"), is franchised
to provide cable television service in Dublin; and
WHEREAS, an investor group led by Viacom's senior
management is engaged in a transaction involving a merger between
Viacom and a newly-created corporation, as fully explained in a
letter dated October 24, 1986; and
WHEREAS, a new whollY-owned subsidiary of Viacom, Viacom
Cablevision of East Bay Inc., has agreed to assume and be bound by
all applicable cable television franchise terms and conditions in
Dublin,
NOW, THEREFORE, BE IT RESOLVED that the City Council of
the City of Dublin hereby grants its approval to permit 1) the
transfer of control of Viacom to the investor group including
Viacom's senior management, as set forth in the letters dated
October 24, 1986 attached hereto, and 2) the assignment of all
applicable cable television franchise obligations to Viacom
Cablevision of the East Bay, Inc.
PASSED, APPROVED AND ADOPTED this 24th day of November,
1986.
AYES:
Councilmembers Hegarty, Moffatt, Snyder, Vonheeder
and Mayor Jeffery
NOES: None
ABSENT: None
- - City
Viacom Cablevision
October 24, 1986
Mr. Richard Ambrose, City Manager
City of Dublin
6500 Dublin Blvd.
Dublin, CA 94568
Dear Mr. Ambrose:
I am pleased to advise you that an investor group, led by existing senior
management of Viacom International Inc., and ~lith the backing of major
financial institutions, is engaged in a transaction vihich uill result in the
reorganization of Viacom. The transaction uill not cause any changes in the
operations .or management of Viacom or in your local cable service.
The transaction will involve a merger bet~/een Viacom and a ~holly-o~med
subsidiary of a ne~i corporation uhich has been established by the investor
group. Viacom will be the surviving corporation of this merger. For each
share o~ned, Viacom's shareholders ¥~ill receive $37.00 in cash, a fraction of
a share of Exchangeable Preferred stock ~ith an expected value of $7.00, and a
fraction of a share of Convertible Preferred stock in Viacom's ne~-~ parent
corporation, convertible in the aggregate to 20% of the common stock. In
connection ~ith this transaction, the assets of our cable television system in
your community ~ill be assigned to a ne~ly created subsidiary, Viacom
Cablevision of East Bay Inc., ~hich ~ill be ~holly-owned by Viacom
International Inc. This ne~ subsidiary has been created merely for internal
organizational purposes and uill have no practical impact on the operation of
the cable system.
Appropriate arrangements have been undertaken to assure the continued
financial strength of Viacom. As indicated by the attached letter,
Manufacturers Hanover Trust Company has agreed to act as agent for a revolving
credit facility ~-~ith Bankers Trust Company as co-agent. Additional funding
for this transaction has been arranged through Donaldson, Lufkin & Jenrette
Securities Corporation, The First Boston Corporation, Drexel Burnham Lambert
Incorporated, and The Equitable Life Assurance Society of the United States.
This transaction will insure the continued stability, independence, and
gro¥1th of the corporation. As you may be a~.~are, Viacom has in the past been
threatened by hostile takeover activities. Hostile takeovers, if successful,
often result in upheaval, changes in management, and a breakup of the target
corporation and piecemeal sale of its assets. In the case of a cable company,
this ~ould be especially troublesome if a hostile raider lacked experience as
a cable operator, being insensitive to the particular demands of the
community. This proposed transaction, houever, uill allou Viacom management
6640 Sierra Lane, Dublin, CA 94568 · Mail: P.O. Box 2729, Dublin, CA 94568 · (415) 828-8510
Mr. Richard ~mbrose
October 24, 1986
Page
to continue to pursue its goals of excellence, as shoun by its history of
superior cable television service, and .uill ensure the integrity and
continuity of Viacom.
As mentioned previously, a neu ~holly-ot.~ned subsidiary of Viacom, Viacom
Cablevision of East Bay Inc., uill assume all of the cable franchise
obligations in your community. This continuing commitment is evidenced by the
attached certificate from John W. Goddard, President of Viacom's cable
operations ~ho ~ill also serve as President of our subsidiary.
The purpose of this letter is to advise you of this transaction and to
request your approval for the transfer of control of Viacom International Inc.
and the substitution of Viacom Cablevision of East Bay Inc. as the cable
television franchisee. I am enclosing a draft resolution ~hich may be of some
assistance to you in your consideration of this matter. The vote of the'
shareholders approving this merger is expected to occur prior to December 20,
1986, so your prompt attention to this matter uill be sincerely appreciated.
We uill be contacting you in the immediate future to discuss the process to
complete this transaction.
Very truly yours,
General Manager
CERTIFICATE
This ~.~ill certify that Viacom Cablevision of East Bay Inc. uill assume
and be bound by all of the applicable cable franchise terms and conditions in
Dublin, California following the transaction involving the merger of Viacom
International Inc. with a ne~ corporation, of which Viacom t~ill bel the
survi vi ng corporati on.
~ddard
President
October 24, 1986
Ronzld lt~,htstone
Senior Vice President
Corporate and Le~a/Al{airs
October 24, 1986
To whom it may concern,
I am pleased to confim that an investor group consisting of ment~ers of
the senior management of Viacom International Inc., Donaldson, Lufkin &
Jenrette Securities Corporation, The First Boston Corporation, Drexel
Burnham Lambert Incorporated, The Equitable Life Assurance Society of the
United States and certain other investors has received certain commitments
for the financing of the acquisition of Viacom International Inc., subject
to the satisfaction of certain terms and conditions as follows:
1. lhe Equitable Life assurance Society of the United States has
agreed to purchase: certain Junior Sd~ordinated Debentures in the
principal amount of $250,000,000; certain Exchangeable Preferred
Stock in the face amount of $40,000,000; and certain common stock
for $50,000,000.
Donaldson., Lufkin & Jenrette Securities Corporation, First Boston,
Inc. and Drexel Burnham Lambert Incorporated are highly confident
of their ability to raise approximately $1,000,000,000 from the
sale of debt and equity securities in connection with the
acquisition of Viacom International Inc..
Hanufacturers Hanover Trust Company ("HHTC") has agreed to
participate tn, and act as agent for, a secured revoiving credit
faciiity in the original princtpai amount of $1,350,000,000 (the
"Credit Facility,,) to be made availabIe for the prtnctpaI purpose
of financing the acquisition of Viacom International Inc. HH?C
w£i1 provide up to $50a,000,000 of the Credit Faciiity. Bankers
Trust Company ("BTC") will act as co-agent and will provide up to
$300,000,000 of the Credit Facility.
MHT'C and BlC have also agreed to use their best efforts to assist
in forming a group of commercial banks .to provide the remainder of
the Credit Facility. NHTC and BTC have received expressions of
interest in participation by various commercial banks in excess of
the remaining original principal amount.
Very truly yours,