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HomeMy WebLinkAbout92-051 . . . STATE OF MINNESOTA COUNTY OF RAMSEY CITY OF ARDEN HILLS RESOLUTION NO. 92-51 APPROVING THE TRANSFER OF OWNERSHIP OF NORTH CENTRAL CABLE COMMUNICATIONS CORPORATION WHEREAS, Hauser Cable of Minnesota, Inc., a Delaware corpora- tion, Hauser Cable Communications, Inc., a Delaware corporation, and Continental Cablevision of Minnesota, Inc., a Minnesota corporation (hereinafter "Transferors"), originally owned One Hundred percent (100%) of the outstanding stock of North Central Cable Communications Corporation (hereinafter "North Central") ; and WHEREAS, North Central, by and through Group W Cable of The North Suburbs, Inc., a wholly owned subsidiary, owns, operates and maintains a cable television system in the city pursuant to the terms and conditions of City Ordinance No. ?RO , as amended, (hereinafter "Franchise"); and WHEREAS, through an interim transaction completed on or before December 31, 1991, Transferors' interest in the outstanding stock of North Central was modified so that the stock of continental Cablevision of Minnesota, Inc. (hereinafter "Continental") , previously 50%, was transferred to result in continental's ownership of 19 1/2% of the stock with 30 1/2% of the stock owned by NCC HOlding Co., Inc., a Massachusetts Corporation (hereinafter "Holdco"), an entity in which continental retained all voting stock and transferred non-voting stock in the holding company to Meredith/New Heritage Strategic Partners, L.P. (hereinafter "Transferee"); and WHEREAS, Transferors desire to sell and otherwise transfer all of their shares of the capital stock of North Central, together with all of the voting stock of Holdco, to Transferee, in whom Meredith/New Heritage Partnership will initially hold, as general partner, a 72.73% interest and Continental, a Limited Partner, will initially acquire a 27.27% interest; and WHEREAS, the city has been informed that the ownership interests in Transferee, after taking into account all notes delivered as capital contributions to Transferee, will be 62.1% for Meredith/New Heritage Partnership, general partner and 37.9% for Continental Cablevision of Minnesota, Inc., Limited Partner; and . . . WHEREAS, the Transfer Application discloses that Meredith/New Heritage Partnership, which is the general partner of Transferee and holds a 62.1% ownership interest in Transferee, may in certain circumstances be required or have the right to purchase the limited partnership interest of Continental Cablevision of Minnesota, Inc. subject to the requirements of local, state and federal law; and WHEREAS, Meredith Cable, Inc. ("Meredith Cable"), a wholly- owned sUbsidiary of Meredith Corporation ("Meredith"), currently holds a 54.6% ownership interest in Transferee through its 88% ownership of the General Partner of Transferee and has the right to acquire total ownership and management control of both the General Partner and Transferee, subject to the requirements of local, state and federal law; and WHEREAS, the interim transaction has taken place; and WHEREAS, the Transferors have requested the consent from the city to a change in ownership and control of North Central to Transferee; and WHEREAS, city has waived any right of first refusal to purchase the stock acquired by Transferee as such right of first refusal applies to the pending sale and transfer; and WHEREAS, the North Suburban Cable Communications Commission (hereinafter "Commission") has been delegated the authority and re.sponsibility to coordinate, administer and enforce the Cable Communications Franchise Ordinance on behalf of the City pursuant to the terms of a Joint and Cooperative Agreement for the Adminis- tration of a Cable Television Franchise; and WHEREAS, the Commission has held public hearings on behalf of City and has reviewed the legal, technical, character and financial qualifications of Transferee and its general partner Meredith/New Heritage Partnership and finds no reasonable basis to deny the request for transfer as a result of said review, except for those conditions listed below; and WHEREAS, the Commission has recommended to City approval of the transfer of control of North Central to Transferee subject to the actual closing of the stock sale and subject to the conditions listed below; and WHEREAS, the Commission has also recommended approval of a request by Transferee to permit the pledge as security to its lenders of the stock and assets of North Central and its subsidiaries, which would include Group W Cable of The North Suburbs, Inc.; and 2 . . . WHEREAS, the City does not object to such security interest in the stock and assets. NOW THEREFORE, BE IT RESOLVED, by the City Council of the City of that: 1. The city hereby approves the sale and transfer by Transferors of all of their shares of the capital stock of North Central, together with all of the voting stock of Holdco, subject to an actual closing of the stock sale transaction on or before December 31, 1992, pursuant to the terms and conditions as evidenced by the Notice of Transfer to said commission and city and all written representations from Transferors, Transferee, Meredith/New Heritage Partnership, its subsidiaries, employees, agents, partners, parent corporations and North Central, and further subject to the terms and conditions of this Resolution. 2. The City approves the pledge by Transferee, Meredith/New Heritage Partnership, and North Central as security to their lenders the stock and assets of North Central and its subsidiaries subject to the terms and conditions of this Resolution. 3. This Resolution constitutes all action and approvals of the City necessary under the City's Franchise for the sale and transfer of control to Transferee. 4. The city's approval of the above named transfer of ownership of North Central is further conditioned upon the following: a. North Central shall have corrected all technical discrepancies in the cable system of city as delineated in the report of Communications Support Corporation (hereinafter "CSC") No. 920l0.00l, and its addendum No. 92010.A01, and as represented as corrected pursuant to the letter from Mr. Kevin Griffin to Ms. Coralie Wilson dated June 17, 1992, unless otherwise qualified, below. b. North Central and the Commission shall have agreed to waive any and all alleged or existing claims for overpayment of franchise fees attributable to sales tax and/or underpayment of franchise fees as delin- eated in the Commission's audit of the gross reve- nues of North Central. North Central shall have agreed and city hereby agrees to negotiate mutually acceptable language to amend the Franchise 3 . c. d. e. . definition of "Gross Revenues" to more adequately reflect the current practices of North Central in the calculation and payment of Franchise Fees. The City hereby waives the Franchise requirement that the emergency override system also override audio on the FM service provided to subscribers. The City hereby waives any Franchise requirement that short wave signals be carried on the FM band. The city hereby agrees to hold in abeyance the issue of the provision of status monitoring equipment by North Central, and agrees not to enforce the Franchise requirement for the remaining term of the Franchise, with the understanding that such equipment/capability will be a subject for negotiation upon any request for renewal of the Franchise. f. North Central shall have agreed to amend the existing Franchise to conform to this Resolution and the terms of this sale and transfer of control. g. To the extent required as a result of the sale of stock and transfer of control, North Central and city agree to the replacement of any and all letters of credit, bonds, insurance certificates, or other forms of security provided to the City pursuant to the terms of the Franchise. h. North Central shall have agreed to conduct "proof of performance tests" as required by the FCC, with 50% of the test sites selected by Commission on the scheduled day of the tests, and any sweeping and balancing of the system required as a result of the random end-of-line performance tests. .In addition, North Central shall have agreed to conduct an annual sweep and balance of the trunk cable system, and a bi-annual (every other year) sweep and balance of the distribution system. i. . North Central shall have agreed to contribute to the Commission two (2) Di-tech frames each with a capacity of forty (40) inputs by fifteen (15) outputs for the purpose of enhancing the North Suburban Access Corporation I s responsibility for institutional and subscriber network switching. North Central shall purchase for the Shoreview headend a new Di-tech switcher with thirty-two (32) inputs and sixteen (16) outputs for institutional and subscriber network switching. In the event the 4 . j . k. 1. m. . Shoreview headend should no longer be util.ized by North Central, this switcher shall at the expense of North Central be moved to and utilized for the same purpose at the commission's master control operated by the access corporation. The access corporation agrees to assume responsibili ty for switching on the institutional network. North Central shall have agreed to contribute to the Commission a new Di-tech Pace 3000 controller including two additional controllers for sites currently identified as sites two and three. North Central shall have agreed to remove the hard- wiring which was done to the switching capacity of the system for the purpose of accommodating the then existing needs of the school districts. North Central shall have agreed to purchase ten (10) RF demodulators and three (3) frequency agile demodulators for utilization on the institutional network in the North Suburban system. North Central shall have agreed to reimburse commission and its Member cities for all expenses incurred in relation to the interim transaction and final Transfer of Ownership, including an agreement to reimburse cities and Commission for any expenses associated with subsequent ordinance amendments required by the Transfer of Ownership but not incurred until after closing. n. North Central shall pay to Commission $650,000.00 pursuant to the Resolution Transferring Community Programming. o. p. . Failure to comply with above conditions "b., f., g., h., i., j., k., I., m., and n.," shall render City's Resolution of Approval null and void. Failure to comply with condition "a.," above, or any agreements required by this Resolution shall result in penalties and/or sanctions provided for in the Franchise. 5 . . . The above resolution was moved by Council Member duly seconded by council Member Growe Malone and The following Council Members voted in the affirmative: Mayor Sather Councilrnernber Mahowald Councilmernber Malone Councilrnernber Growe The following Council Members voted in the negative: Councilrnember Hicks None Passed and adopted this 27th day of July ,', /" / , 1992. -~. I/ ~'. ..' .,'f ,i\ .<:. i,:J(":<.:~:~ _ r t, ~j; i/f/ ,,-_,- , ATTEST: i;:Z:}'72kf4 Mayor /') / .i / C/ ' U{tkLcUl l) City- mtmini-str?t:o ,^, "iJ-~ 'eC/ Acting Clerk Adrnin'strator 6