HomeMy WebLinkAbout1992-093 Council ResolutionSTATE OF MINNESOTA
COUNTY OF ANOKA
CITY OF LINO LAKES
RESOLUTION NO. 92 - 93 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 Central 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. 83-08 ,
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 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 Central Suburban Cable Communications
Commission (hereinafter "Commission") has been delegated the
authority and responsibility to coordinate, administer and enforce
the Franchise on behalf of the City pursuant to the terms of a
Joint and Cooperative Agreement for the Administration 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
Central Suburbs, Inc.; and
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 Lino Lakes 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. 92010.001, and
its addendum No. 92010.A01, and as represented as
corrected pursuant to the letter from Mr. Kevin
Griffin to Mr. Michael Cusick 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
definition of "Gross Revenues" to more adequately
reflect the current practices of North Central in
the calculation and payment of Franchise Fees.
c. The City hereby waives the Franchise requirement
that the emergency override system also override
audio on the FM service provided to subscribers.
d. The City hereby waives any Franchise requirement
that short wave signals be carried on the FM band.
e. The City hereby agrees to hold in abeyance the
enforcement of the Franchise requirement regarding
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, 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
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 maintain and
continue to provide both permanent and mobile
access facilities and equipment required in the
Franchise. North Central shall have agreed that
North Central in Years 10 through 15 of the
Franchise shall replace access equipment subject to
the terms and conditions set forth herein. North
Central shall have agreed to spend the amounts
listed below (hereinafter "Annual Amount") to
replace existing access equipment in each of the
next six (6) years of the Franchise term listed
below beginning with Year 10 commencing on
September 9, 1992. North Central shall have agreed
to meet with Commission to create a list of
equipment to be replaced in any year and the
equipment proposed to replace said equipment, which
list may include proposed new technology or
equipment different than the existing equipment if
the proposed different equipment performs equal to
or better than the existing equipment. North
Central shall have agreed to jointly review and
amend this list of proposed equipment with
Commission as necessary to best meet the needs of
access users. North Central shall have agreed that
to the extent North Central does not spend the
Annual Amount in any year, any unspent amount will
be added to the Annual Amount to be expended in the
next year. North Central shall have agreed that to
the extent North Central spends more than the
Annual Amount in any given year, the Annual Amount
to be expended in Year 15 shall be reduced by any
such excess expenditures. North Central shall have
agreed that the Commission shall have the right to
review and approve the list of proposed equipment
submitted by North Central each year, and such
approval shall not be unreasonably withheld. North
Central shall have agreed to continue its Franchise
obligation to repair and maintain equipment, which
expenses shall not be credited against the Annual
Amount. If any equipment which has not yet been
replaced once can no longer be repaired and needs
to be replaced, the Annual Amount will be credited
once for the replacement of that equipment, but any
subsequent need to replace said piece of equipment
will not be credited against the Annual Amount, the
intent being that the Annual Amount is to be spent
once to replace each original piece of equipment,
and all future needs for replacement shall be in
addition to the Annual Amount obligation.
YEAR ANNUAL AMOUNT
10 $179,352.00
11 $177,533.00
12 $ 89,992.00
13 $ 55,184.00
14 $ 55,184.00
15 $ 55,184.00
$612,429.00
North Central shall have agreed that any area
served by the North Central Suburban system that
fails to have cable service provided to its
customers for over one hour in any twelve (12)
month period, due to a failure of power which would
have been prevented by the provision of standby
power in the effected power supply, then North
Central must install standby power capability, with
batteries, to the effected power supply within
thirty (30) days of the above mentioned one hour
failure.
k. 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.
1. North Central shall have agreed that the Commission
and its member cities are relieved of any existing
obligations to repay any franchise fee payments and
advances currently held by the Commission.
m. North Central shall reimburse Commission and its
member cities an amount of $28,724.89 for
litigation expenses.
n. Failure to comply with above conditions "b., f.,
g., h., i., j., k., 1., and m.," shall render
City's Resolution of Approval null and void.
o. 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.
The above resolution was moved by Council Member Elliott and
duly seconded by Council Member Bergeson
The following Council Members voted in the affirmative: Neal,
Kuether, Reinert, Elliott, Bergeson.
The following Council Members voted in the negative: none.
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Passed and adopted this 27th day of July
ATTEST:
=ti _
7
, 1992.
Mayor
City Administrator
The undersigned, the Clerk -Treasurer of the
City of Lino Lakes , Minnesota does hereby certify
that attached hereto is a true and correct copy of Resolution No.
92 - 93 , which Resolution was duly adopted by the City Council on
the 27thday of July , 1992 and is in full force and
effect on the date hereof.
/2iNam
Title • Clerk -Treasurer
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