You can find the complete 2Q1998 SEC filing here:
sec.gov
The relevant section on the junk bond & restrictions:
On May 8, 1998, the Company completed the offering of approximately $326 million gross proceeds of the Senior Discount Notes ("Senior Discount Notes") due May 1,2008. The Senior Discount Notes were sold at a substantial discount from their principal amount at maturity of $530 million. Prior to November 1, 2003, no cash interest payments are required; instead, interest will accrete during this period to the $530 million aggregate principal amount at maturity.
From and after May 1, 2003, the Senior Discount Notes will bear interest at the rate of 10% per annum payable in cash on each May 1 and November 1.The Senior Discount Notes are redeemable, at the option of the Company, in whole or in part, at any time on or after May 1, 2003, at the redemption prices set forth in the Indenture for the Senior Discount Notes (the "Indenture"), plus accrued interest, if any, to the date of redemption.
At any time prior to May 1,2001, the Company also may redeem up to 35% of the aggregate principal amount at maturity of the Senior Discount Notes with the proceeds of one or more sales of Capital Stock (as defined in the Indenture) (other than Disqualified Stock (as defined in the Indenture)), at 110 % of their Accreted Value (as defined in the Indenture) on the redemption date, plus accrued interest, if any, to the date of redemption; provided that after any such redemption at least 65% of the aggregate principal amount at maturity of Senior Discount Notes originally issued remains outstanding.
In addition, at any time prior to May 1, 2003, the Company may redeem all, but not less than all, of the Senior Discount Notes at a redemption price equal to the sum of (i) the Accreted Value (as defined in the Indenture) on the redemption date, plus (ii) accrued interest, if any, to the redemption date, plus (iii) the Applicable Premium (as defined in the Indenture). Upon a Change of Control (as defined in the Indenture), the Company would be required to make an offer to purchase the Senior Discount Notes at a purchase price equal to 101% of their Accreted Value on the date of purchase, plus accrued interest, if any. There can be no assurance that the Company would have sufficient funds available at the time of any Change of Control to make any required debt repayment (including repurchases of the Senior Discount Notes). The Senior Discount Notes are senior unsecured indebtedness of the Company ranking pari passu with the Company's existing and future unsubordinated, unsecured indebtedness and senior in right of payment to all subordinated indebtedness of the Company. The Senior Discount Notes are effectively subordinated to all secured indebtedness and to all existing and future liabilities of the Company's subsidiaries.
The Indenture contains certain covenants that, among other things, limit the ability of the Company and its Restricted Subsidiaries to incur indebtedness, pay dividends, prepay subordinated indebtedness, repurchase capital stock, make Page 14<PAGE> 15investments, create liens, engage in transactions with stockholders and affiliates, sell assets and engage in mergers and consolidations.
However, these limitations are subject to a number of important qualifications and exceptions. A portion of the net proceeds from the offering of the Senior Discount Notes has been used to retire approximately $75 million of existing indebtedness. The Company expects to use the remaining net proceeds for general corporate purposes, including working capital to fund anticipated operating losses, the expansion of the Company's core business, investments in new business segments and markets, including the Company's sales of music products and international expansion, and capital expenditures. The Company expects, if the opportunity arises, to use an unspecified portion of the net proceeds to acquire or investing complementary businesses, products and technologies. The Company believes that current cash and marketable securities balances will be sufficient to meet its anticipated cash needs for at least 12 months. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. If current cash, marketable securities and cash which may be generated from operations are insufficient to satisfy the Company's liquidity requirements, the Company may seek to sell additional equity or debt securities or to obtain a line of credit. The sale of additional equity or convertible debt securities could result in additional dilution to the Company's stockholders. There can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all. In addition, the Company will, from time to time, consider the acquisition of or investment in complementary businesses, products and technologies, which might increase the Company's liquidity requirements or cause the Company to issue additional equity or debt securities. For example, the Company recently announced the acquisitions of Junglee and PlanetAll, which together will result in the issuance of approximately 2.4 million shares of common stock and assumption of approximately 400,000 outstanding options.
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