Agenda Packets - 1996/09/23 - Laserfiche WebLink

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MEMORANDUM • August 9, 1996 Page 7 First, US West has been inconsistent in identifying the transferee of the cable systems. Initially, US West, Inc. was listed as the transferee on FCC 394. In its response to the request for information, US West indicated that a new subsidiary, "Merger Subsidiary", will be created to hold the Continental assets, including the cable systems. In addition to its inconsistency in naming the actual transferee, US West has not provided any information regarding the assets of the Merger Subsidiary or the people who will be running it. In response to the request for information, US West indicated that there are no officers, directors of five percent shareholders of the Merger Subsidiary. We did not, therefore, have the information needed to determine who is ultimately responsible for the cable systems subject to the franchise. III Second, US West has not indicated how the funds necessary to operate the cable systems and make capital improvements will be obtained by the Merger Subsidiary. The most recent public information released by US West in its Form 10-K indicated the US West Media Group expects that cash from operations will not be enough to fund expected cash requirements and additional financing will come primarily from new debt. In the responses dated July 29, 1996, US West indicates that the Merger Subsidiary will have no fewer assets than those of Continental currently. In essence, US West intends to merge Continental into an empty shell. Third, US West has not provided information on how much of the ownership structure of Continental will be retained after the merger. The operating subsidiaries may be three or four corporations removed from US West, Inc. US West indicates in FCC 394 that of "crucial 0 importance is the fact that day-to-day operations of Continental Cablevision will continue to be