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Exhibit 10.10
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[Form of Waiver Letter]
[ON LETTERHEAD OF POLSKA TELEFONIA CYFROWA SP. Z O.O.]
To: Citibank International plc and Citibank (Poland) S.A.
as Agents on behalf of the Banks party to the Loan Agreement
referred to below
, 1999
Dear Sir/Madam
We refer to:
(i) the Loan Agreement dated 17th December, 1997 between Polska Telefonia
Cyfrowa Sp. z o.o. as Borrower, the Arrangers and the Banks referred to
therein, Citibank International plc and Citibank (Poland) S.A. as
Agents, Citibank (Poland) S.A. and Citibank, N.A. as Security Agents and
Citibank, N.A. as Co-ordinator (the "LOAN AGREEMENT"); and
(ii) the waiver and consent (the "ORIGINAL WAIVER") granted to the Borrower
by the Majority Banks on 4 August, 1999.
Terms defined in the Loan Agreement shall have the same meaning where used in
this letter, unless otherwise defined or the context otherwise requires.
We are writing to advise as follows:
(i) The Borrower, acting through its Luxembourg Subsidiary established by it
for this purpose ("PTC INTERNATIONAL FINANCE II S.A.") is contemplating
incurring Financial Indebtedness by the issue of further high yield debt
("FURTHER HIGH YIELD DEBT"):
(a) the aggregate face value of which, less the Escrow Amounts (as
defined below), will be at least US$150,000,000 (or its
equivalent in any other currency or currencies);
(b) the maturity of which will be not earlier than the maturity of
the existing high yield debt issued pursuant to the High Yield
Debt Documents (the "EXISTING HIGH YIELD DEBT"), being July 1,
2007;
(c) which will be (a) guaranteed by the Borrower (b) subordinated in
right of payment and priority to amounts outstanding under the
Senior Finance Documents on terms substantially similar to the
subordination terms contained in the High Yield Debt Documents
relating to the Existing High Yield Debt and (c) rank pari passu
with the Existing High Yield Debt;
(d) the proceeds of which in an amount equal to the aggregate face
amount
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of the notes issued in relation thereto less any discounts,
commissions, fees, costs and expenses will be disbursed by PTC
International Finance II S.A. to a Dutch Subsidiary established
for this purpose of the Borrower ("PTC INTERNATIONAL FINANCE
(HOLDING) B.V.") and an intercompany loan from PTC International
Finance II S.A. to PTC International Finance (Holding) B.V. will
arise in an amount equal to such aggregate face amount of such
notes (the "FIRST ON-LOAN");
(e) the proceeds of the First On-loan less any discounts,
commissions, fees, costs, expenses and amounts placed by PTC
International Finance (Holding) B.V. in an Escrow Account(s) (as
defined below) will be disbursed by PTC International Finance
(Holding) B.V. to the Borrower and an intercompany loan from PTC
International Finance (Holding) B.V. to the Borrower will arise
in an amount equal to the aggregate face amount of such notes
less amounts held in the Escrow Account(s) (the "SECOND
ON-LOAN");
(f) which will involve an escrow arrangement pursuant to which:
(a) amounts ("ESCROW AMOUNTS") which (together with interest
and/or investment gains or income accruing or arising
thereon or in relation thereto sufficient to cover the
first five semi-annual instalments of interest payable
on the Further High Yield Debt) will be placed by or on
behalf of PTC International Finance (Holding) B.V. in an
account or accounts (each an "ESCROW ACCOUNT") from
which amounts equal to each of the first five
instalments of interest payable on the Further High
Yield Debt shall be debited and applied in payment of
each such instalment; and
(b) a first priority Security Interest will be created over
the Escrow Account(s) and any balance from time to time
standing to the credit thereof in favour of the
noteholders holding such Further High Yield Debt or the
trustee of such noteholders.
Incurring Financial Indebtedness in a manner referred to in this
paragraph (A), giving a guarantee as referred to in this paragraph (A)
and creating security referred to in sub-paragraph (b) of paragraph
(A)(vi) above, would constitute a breach of undertakings under Clauses
20.26 (Financial Indebtedness), 20.8 (Negative Pledge) and 20.12 (Loans
and Guarantees) and, in each case, a resulting Event of Default under
Clause 23.3 (Breach of Obligations) of the Loan Agreement.
(b) The Borrower is contemplating incurring Financial Indebtedness by
entering into arrangements with its vendors ("VENDOR FINANCING
ARRANGEMENTS") whereby payments to such vendors may be deferred for
periods which would or might constitute a breach of undertakings under
Clause 20.26(a)(iv) and a resulting Event of Default under Clause 23.3
(Breach of Obligations) of the Loan Agreement.
(c) The Borrower is contemplating entering into hedging transactions
("RELEVANT HEDGING
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TRANSACTIONS") in accordance with Clause 20.14 of the Loan Agreement and
otherwise in accordance with the Hedging Policy with Banks or other
financial institutions which are underwriters of the Further High Yield
Debt, certain of which Relevant Hedging Transactions will be unsecured
and not designated Senior Finance Documents.
Incurring Financial Indebtedness by the Borrower in a manner referred to
in this paragraph (C) would or might constitute a breach of undertakings
under Clause 20.26 (Financial Indebtedness) and a resulting Event of
Default under Clause 23.3 (Breach of Obligations) of the Loan Agreement.
(d) The Borrower is hereby requesting the consent of the Majority Banks to
permit the Borrower to utilise the entire undrawn portion of the Total
Commitments under the Loan Agreement.
(e) The Borrower is contemplating incurring Financial Indebtedness by:
(A) borrowing from its Shareholders;
(B) borrowing or obtaining other forms of credit from any reputable
bank or other financial institution; or
(C) a combination of the foregoing.
(together "ADDITIONAL FINANCING ARRANGEMENTS").
Incurring Financial Indebtedness by the Borrower in a manner referred to
in paragraph (E)(i) above is permitted under Clause 20.26(a)(iii)
provided that such Financial Indebtedness is subordinated to the amounts
outstanding under the Loan Agreement on terms reasonably satisfactory to
the Majority Banks. Incurring Financial Indebtedness by the Borrower in
the manner referred to in paragraph (E)(ii) and (E)(iii) would
constitute a breach of undertaking under Clause 20.26 (Financial
Indebtedness) and a resulting Event of Default under Clause 23.3 (Breach
of Obligations) of the Loan Agreement.
(A) In connection with the Loan Agreement we hereby request that you sign
this letter as evidence of your agreement to the following:
(A) In relation to the matters set out in paragraph (A) above, you agree to
waive a breach of undertakings under Clauses 20.26 (Financial
Indebtedness), Clause 20.8 (Negative Pledge) and 20.12 (Loans and
Guarantees) of the Loan Agreement and any resulting Event of Default
under Clause 23.3 (Breach of Obligations) of the Loan Agreement, arising
as a result of the issue of the Further High Yield Debt and the related
guarantee given by the Borrower and security in relation to the Escrow
Account(s) provided by PTC International Finance (Holding) B.V.,
provided that:
(a) PTC International Finance (Holding) B.V. and PTC International
Finance II S.A. are deemed to be Principal Members of the Group
for the purposes of the Senior Finance Documents; and
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(b) securities and guarantees in favour of the Finance Parties on
terms substantially similar to those existing in relation to PTC
International Finance B.V. are given by the Borrower, PTC
International Finance (Holding) B.V. and PTC International
Finance II S.A. (including, without limitation, a pledge by the
Borrower of its shares in PTC International Finance (Holding)
B.V., a pledge by PTC International Finance (Holding) B.V. of
its shares in PTC International Finance II S.A., a pledge by PTC
International Finance (Holding) B.V. of its accounts (other than
the Escrow Account(s)), a pledge by PTC International Finance II
S.A. of its accounts, pledges by PTC International Finance
(Holding) B.V. and PTC International Finance II S.A. of all
receivables, and guarantees by PTC International Finance
(Holding) B.V. and PTC International Finance II S.A. of the
Borrower's obligations under the Senior Finance Documents);
(A) (c) the Further High Yield Debt (including the guarantee, the First
On-loan and the Second On-loan) is subordinated in right of
payment and priority to amounts outstanding under the Senior
Finance Documents in a manner substantially similar to the
subordination terms contained in the Existing High Yield other
than in relation to the amounts standing to the credit of each
Escrow Account;
(d) any amounts released from the Escrow Account(s) to PTC
International Finance (Holding) B.V. are promptly on-lent to the
Borrower, except to the extent that such amounts represent
payments of any amounts due on the High Yield Debt (including
each of the first five instalments of interest) in accordance
with the terms of the Escrow Account(s). Any such further
on-loan shall be subordinated in right of payment and priority
to amounts outstanding under the Senior Finance Documents in a
manner substantially similar to the subordination terms
contained in the Existing High Yield;
(B) (e) the documentation relating to the issue of the Further High
Yield Debt is substantially similar to the High Yield Debt
Documents (other than as regards the covenants and other
commercial terms of the Further High Yield Debt and provisions
relating to the Escrow Amounts and Escrow Account(s)) and is
designated as High Yield Debt Documents for the purposes of
paragraph (f) of the definition of High Yield Debt Documents in
the Loan Agreement; and
(f) the aggregate face value of the notes issued in relation to the
Further High Yield Debt less the Escrow Amounts is not less than
US$150,000,000 (or its equivalent in any other currency or
currencies).
(A) In relation to the matters set out in paragraph B above, you agree that
(a) the reference to 90 days in paragraph (e) of the definition of
"FINANCIAL INDEBTEDNESS" in Clause 1.1 of the Loan Agreement shall
henceforth be read and construed as though it were a reference to 180
days and (b) Clause 20.26(a)(iv) of the Loan Agreement shall henceforth
be read and construed as though the vendor financings therein referred
to were vendor financings with payment terms of 180 days or more.
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(B) In relation to the matters set out in paragraph (C) above, you agree to
waive a breach of undertakings under Clause 20.26 (Financial
Indebtedness) and a resulting Event of Default under Clause 23.3 (Breach
of Obligations) of the Loan Agreement arising as a result of the
Borrower incurring any Financial Indebtedness under any Relevant Hedging
Transactions provided that (a) such Relevant Hedging Transactions are
entered into with Banks or other financial institutions which are
underwriters of the further High Yield Debt, (b) are within the terms of
the Hedging Policy and (c) the Borrower procures that the details of the
exposure under each such Relevant Hedging Transaction is reported
pursuant to Clause 20.2(a)(ii) (B) whether or not such Relevant Hedging
Transaction is designated as a "Senior Finance Document" pursuant to
Clause 20.14(c).
(C) You hereby confirm that the updated Hedging Policy dated 20th October,
1999 is acceptable to you.
(D) In relation to the matters set out in paragraph (D) above, you hereby
agree that:
(a) you have received the updated Business Plan dated 21st October,
1999 ("UPDATED BUSINESS Plan") and you agree that
notwithstanding the requirements of Clause 4.2(c) of the Loan
Agreement, the proceeds of future Utilisations may be applied
for the purposes provided in Clause 3.1(c) of the Loan
Agreement;
(b) Clause 4.2(d)(ii) shall cease to apply and Clause 4.2(d) shall
be read and construed as if the words "the lower of" in line 6
of Clause 4.2(d) were omitted; and
(c) notwithstanding that the Borrower's financial performance as
projected by the Updated Business Plan may result in breaches of
financial covenants in the Loan Agreement and indicates the
necessity of a refinancing of the December 2000 principal
repayments, you agree that neither those prospective breaches
nor that potential refinancing shall be taken as an event which,
with the lapse of time, would constitute an Event of Default for
the purposes of the term "Default" in Clause 4.2(a) of the Loan
Agreement, but this shall not prevent the operation of the
drawstop under Clause 4.2(a) if those breaches actually occur or
if any such principal repayment is not made, nor shall they
affect any other conditions to drawing under the Loan Agreement,
nor shall the operation of Clause 4.2(a) be affected in relation
to any other breach or default.
However, subject to the foregoing, it is the intention that
within the current terms of the Senior Finance Documents,
further Utilisations of the unutilised Total Commitments be made
available to the Borrower notwithstanding its predicted
financial condition under the Updated Business Plan
(d) Provided always that your agreement to (a), (b) and (c) above
shall take effect only if and when the Borrower shall have
received proceeds of the Further High Yield Debt which after
deducting the Escrow Amounts shall be
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at least US$150,000,000 (less only the amount of any discounts,
commissions, fees, costs and expenses incurred directly in
relation to the same).
(b) In relation to the matters set out in paragraph (E) above, you agree to
waive any breach of undertaking under Clause 20.26 (Financial
Indebtedness) and any resulting Event of Default under Clause 23.3
(Breach of Obligations) of the Loan Agreement arising as a result of the
Borrower incurring Financial Indebtedness as a result of entering into
any Additional Financing Arrangements provided that such Financial
Indebtedness is subordinated pursuant to a subordination agreement
substantially similar in all material respects to the Subordination
Agreements dated August 24, 1999 and entered into between the Security
Agent, the Borrower and each Subordinated Lender party thereto
("EXISTING SUBORDINATION AGREEMENTS").
(c) You agree that any Financial Indebtedness incurred under the Further
High Yield Debt, or any Additional Financing Arrangement subordinated as
provided in 6 above, shall be disregarded for the purposes of the
definition of "Senior Debt" set out in Clause 1.1 of the Loan Agreement.
(d) You agree that interest accruing on the Further High Yield Debt during
the period commencing on the issue date thereof and ending on the date
on which the fifth semi-annual instalment of interest falls to be made
shall be disregarded from the "INTEREST" element of the calculation of
"INTEREST EXPENSE" set out in Clause 1.1 of the Loan Agreement.
(e) You hereby agree that the documentation relating to the issue of the
Further High Yield Debt shall be designated as "HIGH YIELD DEBT
DOCUMENTS" for the purposes of paragraph (f) of the definition of "HIGH
YIELD DEBT DOCUMENTS" in the Loan Agreement.
(f) You hereby agree that for the purposes of paragraph 1(c) and paragraph 6
any determination by the Agent (i) that the Further High Yield Debt has
been subordinated on terms substantially similar to the subordination
terms contained in the High Yield Debt Documents relating to the
Existing High Yield Debt and/or (ii) that for the purposes of paragraph
6 any Financial Indebtedness arising out of any Additional Financing
Arrangements has been subordinated pursuant to a subordination agreement
substantially similar in all material respects to the Existing
Subordination Agreement shall be binding on the Banks (the Banks
agreeing that the Agent's determination relates only to the wording of
the express terms relating to subordination, as identified to the Agent
by Xxxxx & Xxxxx, contained in those documents).
The Borrower hereby confirms the following:
I Except as provided herein and in the Original Waiver, the provisions of
Clause 22 (Financial Undertakings) of the Loan Agreement are complied
with and will continue to be complied with following the issue of the
Further High Yield Debt, entry into any of the Vendor Financing
Arrangements and any of the Relevant Hedging Transactions, and the
utilisation of the unutilised portion of the Total Commitments
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under the Loan Agreement.
II Except as waived by or consented to in this letter, no Default is
outstanding and continuing.
III Except for the waivers and consents specifically referred to in this
letter, the Loan Agreement remains in full force and effect without any
further waiver.
IV Your agreement to the waivers and consent sought in this letter shall
not in any way be construed as a waiver of any other term of the Loan
Agreement.
This letter and the waivers and consents herein shall be governed by, and
construed in accordance with, English law.
Please sign and return a copy of this letter to Mr. Xxxx Xxxxxxxx, Citibank
Loans Agency, by facsimile to 44 171 500 4482 by not later than Thursday
11 November, 1999.
Yours faithfully
For and on behalf of
POLSKA TELEFONIA CYFROWA SP. Z O.O.
We agree to the above
For and on behalf of
[name of Bank]
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