0000950133-05-000898.txt : 20120626 0000950133-05-000898.hdr.sgml : 20120626 20050307060126 ACCESSION NUMBER: 0000950133-05-000898 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20050307 DATE AS OF CHANGE: 20050307 GROUP MEMBERS: JAMES S. MARCUS GROUP MEMBERS: MICHAEL S. WILLNER GROUP MEMBERS: THOMAS L. KEMPNER GROUP MEMBERS: TRUSTS F/B/O KNAFEL CHILDREN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INSIGHT COMMUNICATIONS CO INC CENTRAL INDEX KEY: 0001084421 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 134053502 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-58331 FILM NUMBER: 05662673 BUSINESS ADDRESS: STREET 1: 126 EAST 56TH STREET CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2123712266 MAIL ADDRESS: STREET 1: INSIGHT COMMUNICATIONS CO INC STREET 2: 126 EAST 56TH STREET CITY: NEW YORK STATE: NY ZIP: 10022 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: KNAFEL SIDNEY R CENTRAL INDEX KEY: 0000924039 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: BUSINESS PHONE: 2123712266 MAIL ADDRESS: STREET 1: 126 EAST 56 STREET CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D 1 w06515sc13d.htm SCHEDULE 13D sc13d
 

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. )*

INSIGHT COMMUNICATIONS COMPANY, INC.
(Name of Issuer)

Class A Common Stock, $0.01 par value
(Title of Class of Securities)

45768V108
(CUSIP Number)

J. Kevin Mills
Thomas D. Twedt
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Washington, D.C. 20036 (202)776-2000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

March 6, 2005
(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. þ

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

             
CUSIP No. 45768V108 Page 2 of 18
  1. Name of Reporting Person:
Sidney R. Knafel		 I.R.S. Identification Nos. of above persons (entities only):
  2. Check the Appropriate Box if a Member of a Group (See Instructions):
    (a) o  
    (b) o  
  3. SEC Use Only:
  4. Source of Funds (See Instructions):
OO
  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o
  6. Citizenship or Place of Organization:
United States of America
Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
7. Sole Voting Power:
3,904,598*
8. Shared Voting Power:
0
9. Sole Dispositive Power:
3,904,598*
10.Shared Dispositive Power:
0
  11.Aggregate Amount Beneficially Owned by Each Reporting Person:
3,904,598*
  12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o
  13.Percent of Class Represented by Amount in Row (11):
Approximately 7.1%**
  14.Type of Reporting Person (See Instructions):
IN
*   Includes 3,853,132 shares of Class B Common Stock of Insight Communications Company, Inc. (“Insight”), par value $0.01 per share (the “Class B Common Stock”). Of the shares deemed to be beneficially owned by Mr. Knafel, 50,000 shares of Class A Common Stock of Insight, par value $0.01 per share (the “Class A Common Stock,” and together with the Class B Common Stock, the “Common Stock”), and 3,427,177 shares of Class B Common Stock are held by a foundation and a corporation controlled by Mr. Knafel, respectively, 425,955 shares of Class B Common Stock are held by the estate of Mr. Knafel’s deceased wife for which Mr. Knafel serves as executor and 1,466 shares of Class A Common Stock are held in his 401(k) account. Each share of Class B Common Stock is convertible at any time into one share of Class A Common Stock.
 
**   The denominator is based on: (i) 50,912,910 shares of Class A Common Stock outstanding as of December 31, 2004, as stated in the consolidated balance sheets of Insight dated as of December 31, 2004 and 2003 included in Exhibit 99.1 to the Current Report on Form 8-K of Insight dated February 24, 2005 (collectively, the “February 24, 2005 8-K Report”); and (ii) 3,853,132 shares of Class A Common Stock into which the Class B Common Stock beneficially owned by Mr. Knafel may be converted. Each share of Class B Common Stock is convertible at any time into one share of Class A Common Stock. Holders of Class A Common Stock are entitled to one vote per share, and holders of Class B Common Stock are entitled to ten votes per share. Holders of both classes of Common Stock vote together as a single class on all matters presented for a vote, except as otherwise required by law. The shares deemed to be beneficially owned by Mr. Knafel represent approximately 28.4% of the total outstanding votes of the Common Stock as a single class.

 

 

             
CUSIP No. 45768V108 Page 3 of 18
  1. Name of Reporting Person:
Andrew G. Knafel, Joshua Rubenstein and William L. Scherlis, as trustees (the “Trustees”) under Trusts F/B/O Knafel children (the “Trusts”)		 I.R.S. Identification Nos. of above persons (entities only):
  2. Check the Appropriate Box if a Member of a Group (See Instructions):
    (a) o  
    (b) o  
  3. SEC Use Only:
  4. Source of Funds (See Instructions):
OO
  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o
  6. Citizenship or Place of Organization:
New York
Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
7. Sole Voting Power:
3,397,027*
8. Shared Voting Power:
0
9. Sole Dispositive Power:
3,397,027*
10.Shared Dispositive Power:
0
  11.Aggregate Amount Beneficially Owned by Each Reporting Person:
3,397,027*
  12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o
  13.Percent of Class Represented by Amount in Row (11):
Approximately 6.3%**
  14.Type of Reporting Person (See Instructions):
OO
*   Represents 3,397,027 shares of Class B Common Stock beneficially owned by the Trusts, including 386,413 shares held individually by Andrew G. Knafel. Sidney Knafel expressly disclaims beneficial ownership of all of the reported shares, and the Trustees disclaim any economic interest in or beneficial ownership of any of the Class A Common Stock or Class B Common Stock held by the Trusts.
 
**   The denominator is based on: (i) 50,912,910 shares of Class A Common Stock outstanding as of December 31, 2004, as stated in the February 24, 2005 8-K Report; and (ii) 3,397,027 shares of Class A Common Stock into which the Class B Common Stock beneficially owned by the Trusts and Andrew G. Knafel may be converted. The shares deemed to be beneficially owned by the Trusts represent approximately 25.0% of the total outstanding votes of the Common Stock as a single class.

 

 

             
CUSIP No. 45768V108 Page 4 of 18
  1. Name of Reporting Person:
Michael S. Willner		 I.R.S. Identification Nos. of above persons (entities only):
  2. Check the Appropriate Box if a Member of a Group (See Instructions):
    (a) o  
    (b) o  
  3. SEC Use Only:
  4. Source of Funds (See Instructions):
OO
  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o
  6. Citizenship or Place of Organization:
United States of America
Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
7. Sole Voting Power:
1,147,903*
8. Shared Voting Power:
0
9. Sole Dispositive Power:
1,147,903*
10.Shared Dispositive Power:
0
  11.Aggregate Amount Beneficially Owned by Each Reporting Person:
1,147,903*
  12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o
  13.Percent of Class Represented by Amount in Row (11):
Approximately 2.2%**
  14.Type of Reporting Person (See Instructions):
IN
*   Includes 1,106,516 shares of Class B Common Stock. Also includes 40,000 shares of Class A Common Stock issuable upon the exercise of stock options and 1,387 shares of Class A Common Stock held in Mr. Willner’s 401(k) account. The Class B Common Stock includes 6,448 shares held in trust for the benefit of Mr. Willner’s minor children.
 
**   The denominator is based on: (i) 50,912,910 shares of Class A Common Stock outstanding as of December 31, 2004, as stated in the February 24, 2005 8-K Report; (ii) 1,106,516 shares of Class A Common Stock into which the Class B Common Stock beneficially owned by Mr. Willner may be converted; and (iii) 40,000 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days. The shares deemed to be beneficially owned by Mr. Willner represent approximately 8.2% of the total outstanding votes of the Common Stock as a single class.

 

 

             
CUSIP No. 45768V108 Page 5 of 18
  1. Name of Reporting Person:
James S. Marcus		 I.R.S. Identification Nos. of above persons (entities only):
  2. Check the Appropriate Box if a Member of a Group (See Instructions):
    (a) o  
    (b) o  
  3. SEC Use Only:
  4. Source of Funds (See Instructions):
OO
  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o
  6. Citizenship or Place of Organization:
United States of America
Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
7. Sole Voting Power:
151,558*
8. Shared Voting Power:
0
9. Sole Dispositive Power:
151,558*
10.Shared Dispositive Power:
0
  11.Aggregate Amount Beneficially Owned by Each Reporting Person:
151,558*
  12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o
  13.Percent of Class Represented by Amount in Row (11):
Approximately 0.3%**
  14.Type of Reporting Person (See Instructions):
IN
*   Includes 132,779 shares of Class B Common Stock. Also includes 18,779 shares of Class A Common Stock issuable upon the exercise of independent director retainer stock options.
 
**   The denominator is based on: (i) 50,912,910 shares of Class A Common Stock outstanding as of December 31, 2004, as stated in the February 24, 2005 8-K Report; (ii) 132,779 shares of Class A Common Stock into which the Class B Common Stock beneficially owned by Mr. Marcus may be converted; and (iii) 18,779 shares of Class A Common Stock issuable upon the exercise of his independent director retainer stock options. The shares deemed to be beneficially owned by Mr. Marcus represent approximately 1.0% of the total outstanding votes of the Common Stock as a single class.

 

 

             
CUSIP No. 45768V108 Page 6 of 18
  1. Name of Reporting Person:
Thomas L. Kempner		 I.R.S. Identification Nos. of above persons (entities only):
  2. Check the Appropriate Box if a Member of a Group (See Instructions):
    (a) o  
    (b) o  
  3. SEC Use Only:
  4. Source of Funds (See Instructions):
OO
  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o
  6. Citizenship or Place of Organization:
United States of America
Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
7. Sole Voting Power:
516,940*
8. Shared Voting Power:
0
9. Sole Dispositive Power:
516,940*
10.Shared Dispositive Power:
0
  11.Aggregate Amount Beneficially Owned by Each Reporting Person:
516,940*
  12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o
  13.Percent of Class Represented by Amount in Row (11):
Approximately 1.0%**
  14.Type of Reporting Person (See Instructions):
IN
 
*   Includes 60,668 shares of Class A Common Stock held personally by Mr. Kempner, 160 shares of Class A Common Stock held by a corporation that he controls and 18,779 shares of Class A Common Stock issuable upon the exercise of independent director retainer stock options. Also includes 31,051 shares of Class A Common Stock held by Mr. Kempner’s spouse and 406,282 shares of Class A Common Stock held by trusts for which he serves as trustee, for which he disclaims beneficial ownership.
 
**   The denominator is based on: (i) 50,912,910 shares of Class A Common Stock outstanding as of December 31, 2004, as stated in the February 24, 2005 8-K Report; and (ii) 18,779 shares of Class A Common Stock issuable upon the exercise of his independent director retainer stock options. The shares deemed to be beneficially owned by Mr. Kempner represent approximately 0.4% of the total outstanding votes of the Common Stock as a single class.

 

 

Schedule 13D   Page 7 of 18 Pages
Insight Communications Company, Inc.    

Item 1. Security and Issuer

               The class of equity securities to which this statement on Schedule 13D (this “Statement”) relates is the Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), of Insight Communications Company, Inc., a Delaware corporation (“Insight”). The principal executive offices of Insight are located at 810 7th Avenue, New York, New York 10019.

Item 2. Identity and Background

               This Statement is being filed by Sidney R. Knafel; Andrew G. Knafel, Joshua Rubenstein and William L. Scherlis, as trustees (the “Trustees”) under Trusts F/B/O Knafel children (the “Trusts”); Michael S. Willner; James S. Marcus; Thomas L. Kempner; and Andrew G. Knafel, individually (collectively, the “Reporting Persons”). The Reporting Persons are filing this Statement because they may be deemed to be a “group” within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the transaction described in Item 4 of this Statement. Except as expressly set forth in this Statement, each Reporting Person disclaims beneficial ownership of the shares of Class A Common Stock or Class B Common Stock of Insight, par value $0.01 per share (the “Class B Common Stock,” and together with the Class A Common Stock, the “Common Stock”), beneficially owned by any other Reporting Person.

               This Statement amends and restates in its entirety the Schedule 13G of Sidney R. Knafel (filed with the Securities and Exchange Commission (the “Commission”) on February 14, 2000), as amended by Amendment No. 1 to Schedule 13G (filed with the Commission on February 14, 2002), with respect to Mr. Knafel’s beneficial ownership of the Class A Common Stock. This Statement also amends and restates in its entirety the Schedule 13G of the Trusts (filed with the Commission on February 14, 2000) with respect to the Trusts’ beneficial ownership of the Class A Common Stock.

               The name, business address and present principal occupation or employment of each Reporting Person is set forth on Appendix A hereto, which Appendix A is incorporated by reference herein.

               During the last five years, none of the Reporting Persons has been convicted in any criminal proceedings (excluding traffic violations or similar misdemeanors).

               During the last five years, none of the Reporting Persons has been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction as the result of which he or it was or is subject to any judgment, decree or final order enjoining future violations of, or prohibiting or

 

 

Schedule 13D   Page 8 of 18 Pages
Insight Communications Company, Inc.    

mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

               To the best knowledge of the persons filing this Statement, each Reporting Person is a citizen of the United States of America.

Item 3. Source and Amount of Funds or Other Consideration

               The shares of Class A Common Stock deemed to be beneficially owned by the Reporting Persons were acquired in the initial public offering of Insight, through open market purchases using personal funds, by means of gift, inheritance or other gratuitous transfer, or through their service as an officer or director of Insight.

               With respect to the proposed transaction described in Item 4 of this Statement (which Item 4 is incorporated herein by reference), the Reporting Persons estimate that the amount of funds that would be required to purchase all of the shares of outstanding Class A Common Stock at the Offer Price (as defined in Item 4) is approximately $545 million. The funds required to consummate the proposed transaction would be provided by TC Group, L.L.C., an affiliate of The Carlyle Group (the “Sponsor”), through its cash investment in Newco (as defined in Item 4) as further described in Item 4, the Proposal Letter (as defined in Item 4) and the Term Sheet (as defined in Item 4).

               The information set forth in response to this Item 3 is qualified in its entirety by reference to the Proposal Letter and the Term Sheet, which are incorporated herein by reference.

Item 4. Purpose of Transaction

               As set forth in a letter dated March 6, 2005 (the “Proposal Letter”), the Reporting Persons and the Sponsor have submitted to Insight’s Board of Directors (the “Board of Directors”) a proposal to acquire all of the outstanding Class A Common Stock (the “Proposal”). Certain terms of the Proposal currently contemplated by the Reporting Persons and the Sponsor are set forth in the Summary of Prospective Terms dated March 6, 2005 (the “Term Sheet”). On March 7, 2005, a related press release was issued. Copies of the Proposal Letter, the Term Sheet and the press release are being filed herewith as Exhibits 7.02, 7.03 and 7.04, respectively. The Reporting Persons expect that the Board of Directors will form a special committee of independent directors (the “Special Committee”) to consider the terms and conditions of the Proposal and to recommend to the Board of Directors whether to approve the Proposal.

               As described in the Term Sheet, the Proposal contemplates the formation of a new limited liability company (“Newco”) by the Reporting Persons and the Sponsor. Mr. Knafel and the

 

 

Schedule 13D   Page 9 of 18 Pages
Insight Communications Company, Inc.    

Trusts would contribute all of the shares of Common Stock owned by them (other than shares held in his 401(k) account) to Newco in exchange for units of Newco’s equity (“Newco Units”). The other Reporting Persons would contribute approximately two-thirds of the shares of Common Stock owned by them to Newco in exchange for Newco Units. The Sponsor would receive Newco Units in consideration of its investment described in Item 3 of this Statement. In addition, it is contemplated that Insight would issue a new class of super-voting preferred stock to Messrs. Knafel and Willner to ensure that they collectively retain control of Insight following the merger described below. This preferred stock would have a nominal liquidation value.

               As described in the Term Sheet, it is contemplated that Newco would form a wholly-owned corporate subsidiary which would merge with and into Insight, with Insight as the surviving corporation. In the merger, the outstanding shares of Class A Common Stock other than those held by Newco would be converted into the right to receive a cash payment equal to $10.70 per share (the “Offer Price”). Shares of Common Stock held by Newco and the new preferred stock issued to Messrs. Knafel and Willner would be converted into new classes of common stock and preferred stock of the post-merger Insight, respectively. The treatment of restricted and deferred shares of Common Stock and options exercisable for shares of Common Stock will be determined at a later date.

               Following consummation of the merger, the Class A Common Stock would be delisted from the Nasdaq National Market and deregistered under the Exchange Act. It is further contemplated that Insight’s Board of Directors would be increased to nine directors. Messrs. Knafel and Willner, as the holders of Insight’s new preferred stock, would have the right to designate five directors, two of whom must be independent. The Sponsor would have the right to designate four directors, one of whom must be independent. Replacements for directors would be designated only by the party originally entitled to designate the director being replaced. Terms for the directors would be staggered, with the initial term of the three independent directors being three years.

               The Proposal is subject to the approval of the Special Committee and the Board of Directors, and the Proposal shall not create any agreement, arrangement or understanding between any of the Reporting Persons, the Sponsor or other parties with respect to Insight or the Common Stock for purposes of any law, rule, regulation, agreement or otherwise, until such time as definitive documentation and any agreement, arrangement or understanding has been approved by the Special Committee and the Board of Directors and thereafter executed and delivered by Insight and all other appropriate parties. The proposed merger would also require the approval of Insight’s stockholders. The Reporting Persons collectively beneficially own approximately 63% of the total outstanding votes of the Common Stock entitled to vote on the Proposal as a single class and intend to vote for the Proposal and will not agree to any other transaction involving their stake in Insight. If the Special Committee and the Board of Directors approve the Proposal and a merger agreement is executed, the Term Sheet contemplates that Messrs. Knafel and Willner and the Trusts would enter into an agreement with the Sponsor pursuant to which they would agree not to sell their shares of Common Stock or support another transaction relating to the acquisition of Common

 

 

Schedule 13D   Page 10 of 18 Pages
Insight Communications Company, Inc.    

Stock until the consummation of the merger or 12 months following the termination of the merger agreement.

               The foregoing is a summary of the Reporting Persons’ current proposal and should not be construed as an offer to purchase shares of Class A Common Stock. A proxy statement will be distributed to stockholders if and when definitive documentation is entered into by Insight and all other appropriate parties. Stockholders should read Insight’s proxy statement and other relevant documents regarding the Proposal filed with the Commission when they become available because they will contain important information relevant to the decision to approve the merger. Stockholders will be able to receive these documents (when they become available), as well as other documents filed by the Reporting Persons or Newco or its affiliates with respect to the Proposal and the merger, free of charge at the Commission’s web site, www.sec.gov.

               Other than as set forth in the Proposal Letter and the Term Sheet, the Reporting Persons have no plans or proposals that relate to or would result in any of the events set forth in Items 4(a) through (j) of Schedule 13D. However, if the Proposal is not consummated for any reason, the Reporting Persons intend to review continuously Insight’s business affairs, capital needs and general industry and economic conditions, and, based on such review, the Reporting Persons may, from time to time, determine to increase their ownership of Common Stock, approve an extraordinary corporate transaction with regard to Insight or engage in any of the events set forth in Items 4(a) through (j) of Schedule 13D, except that the Reporting Persons currently have no intention of selling any shares of Common Stock.

               The information set forth in response to this Item 4 is qualified in its entirety by reference to the Proposal Letter and the Term Sheet, which are incorporated herein by reference.

Item 5. Interest in Securities of the Issuer

               (a)-(b) Mr. Knafel is deemed to beneficially own 51,466 shares of Class A Common Stock and 3,853,132 shares of Class B Common Stock, which are convertible into shares of Class A Common Stock at any time on a share-for-share basis, including 50,000 shares of Class A Common Stock and 3,427,177 shares of Class B Common Stock held by a foundation and corporation controlled by Mr. Knafel, respectively, 425,955 shares of Class B Common Stock held by the estate of Mr. Knafel’s deceased wife for which Mr. Knafel serves as executor and 1,466 shares of Class A Common Stock held in his 401(k) account. The shares deemed to be beneficially owned by Mr. Knafel represent approximately 7.1% of the Class A Common Stock and 28.4% of the total outstanding votes of Common Stock as a single class. Holders of both classes of Common Stock vote together as a single class on all matters presented for a vote, except as otherwise required by law.

 

 

Schedule 13D   Page 11 of 18 Pages
Insight Communications Company, Inc.    

               The Trusts are deemed to beneficially own 3,397,027 shares of Class B Common Stock, which are convertible into shares of Class A Common Stock at any time on a share-for-share basis, including 386,413 shares held individually by Andrew G. Knafel. Sidney R. Knafel expressly disclaims beneficial ownership of all of these reported shares. The Trustees disclaim any economic interest in or beneficial ownership of any of the Common Stock held by the Trusts and covered by this Statement. The shares deemed to be beneficially owned by the Trusts represent approximately 6.3% of the Class A Common Stock and 25.0% of the total outstanding votes of the Common Stock as a single class.

               Mr. Willner is deemed to beneficially own 41,387 shares of Class A Common Stock and 1,106,516 shares of Class B Common Stock, which are convertible into shares of Class A Common Stock at any time on a share-for-share basis. Mr. Willner’s Class A Common Stock includes 40,000 shares issuable upon the exercise of stock options and 1,387 shares held in his 401(k) account. Mr. Willner’s Class B Common Stock includes 6,448 shares held in trust for the benefit of his minor children. The shares deemed to be beneficially owned by Mr. Willner represent approximately 2.2% of the Class A Common Stock and 8.2% of the total outstanding votes of the Common Stock as a single class.

               Mr. Marcus is deemed to beneficially own 18,779 shares of Class A Common Stock, all of which shares are issuable upon the exercise of independent director retainer stock options, and 132,779 shares of Class B Common Stock, which are convertible into shares of Class A Common Stock at any time on a share-for-share basis. The shares deemed to be beneficially owned by Mr. Marcus represent approximately 0.3% of the Class A Common Stock and 1.0% of the total outstanding votes of the Common Stock as a single class.

               Mr. Kempner is deemed to beneficially own 516,940 shares of Class A Common Stock, including 18,779 shares of Class A Common Stock issuable upon the exercise of independent director retainer stock options, 60,668 shares held personally and 160 shares held by a corporation he controls. The Class A Common Stock deemed to be beneficially owned by Mr. Kempner also includes 31,051 shares held by his spouse and 406,282 shares held by trusts for which Mr. Kempner serves as trustee, in respect of which Mr. Kempner disclaims beneficial ownership. The shares deemed to be beneficially owned by Mr. Kempner represent approximately 1.0% of the Class A Common Stock and 0.4% of the total outstanding votes of the Common Stock as a single class.

               The percentage of the Class A Common Stock set forth for each Reporting Person in this Item 5 was calculated based upon (i) 50,912,910 shares of Class A Common Stock outstanding as of December 31, 2004, as stated in the consolidated balance sheets of Insight, dated as of December 31, 2004 and 2003, included in Exhibit 99.1 to the Current Report on Form 8-K of Insight dated February 24, 2005 (collectively, the “February 24, 2005 8-K Report”); (ii) the number of shares of Class A Common Stock issuable upon the conversion of the Class B Common Stock, if any, beneficially owned by such Reporting Person; and (iii) the number of shares of Class A Common Stock issuable upon the

 

 

Schedule 13D   Page 12 of 18 Pages
Insight Communications Company, Inc.    

exercise of options to purchase Class A Common Stock held by such Reporting Person that are exercisable within 60 days, if any. The percentage of the total outstanding votes of the Common Stock as a single class set forth for each Reporting Person in this Item 5 was calculated based on the outstanding shares of Class A Common Stock set forth in clause (i) above and 8,489,454 shares of Class B Common Stock outstanding as of December 31, 2004, as stated in the February 24, 2005 8-K Report. Holders of Class A Common Stock are entitled to one vote per share, and holders of Class B Common Stock are entitled to ten votes per share. The Reporting Persons (other than Thomas L. Kempner), collectively, are deemed to beneficially own all of the outstanding shares of Class B Common Stock.

               Except as otherwise provided in this Item 5, each of the Reporting Persons has the sole power to vote or to direct the vote, and the sole power to dispose or to direct the disposition of, the shares of Class A Common Stock deemed to be beneficially owned by them.

               (c) No Reporting Person has effected any transactions in the Class A Common Stock during the past sixty days.

               (d) No other person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Class A Common Stock referred to in paragraphs (a) and (b) above.

               (e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

               Items 3 and 4 of this Statement are incorporated herein by reference. The Related Persons have entered into a Joint Filing Agreement dated as of March 7, 2005 (the “Joint Filing Agreement”), a copy of which is attached hereto as Exhibit 7.01 and incorporated herein by reference.

               The information set forth in response to this Item 6 is qualified in its entirety by reference to the Proposal Letter and the Term Sheet, which are incorporated herein by reference.

Item 7. Material to Be Filed as Exhibits

     
Exhibit 7.01
  Joint Filing Agreement, dated as of March 7, 2005, by and among Sidney R. Knafel, Andrew G. Knafel, individually and as trustee under Trusts F/B/O Knafel children, Michael S. Willner, Thomas L. Kempner and James S. Marcus.

 

 

Schedule 13D   Page 13 of 18 Pages
Insight Communications Company, Inc.    
     
Exhibit 7.02
  Proposal Letter, dated March 6, 2005.
 
    
Exhibit 7.03
  Term Sheet, dated March 6, 2005.
 
    
Exhibit 7.04
  Press Release, dated March 7, 2005.

 

 

Schedule 13D   Page 14 of 18 Pages
Insight Communications Company, Inc.    

SIGNATURE

               After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.

             
March 7, 2005
      By:   /s/ Sidney R. Knafel
 
            
Date
          Sidney R. Knafel

 

 

Schedule 13D   Page 15 of 18 Pages
Insight Communications Company, Inc.    

SIGNATURE

               After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.

             
March 6, 2005
      By:   /s/ Andrew G. Knafel
 
            
Date
          Andrew G. Knafel, as Trustee under
          Trust F/B/O Andrew G. Knafel dated September 13, 1978,
          Trust F/B/O Douglas R. Knafel dated September 13, 1978,
          Trust F/B/O Andrew G. & Douglas R. Knafel dated July 16, 1976,
          Trust F/B/O Douglas R. Knafel dated November 6, 1983
             
March 6, 2005
      By:   /s/ Andrew G. Knafel
 
            
Date
          Andrew G. Knafel

 

 

Schedule 13D   Page 16 of 18 Pages
Insight Communications Company, Inc.    

SIGNATURE

               After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.

             
March 7, 2005
      By:   /s/ Michael S. Willner
 
            
Date
          Michael S. Willner

 

 

Schedule 13D   Page 17 of 18 Pages
Insight Communications Company, Inc.    

SIGNATURE

               After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.

             
March 7, 2005
      By:   /s/ James S. Marcus
 
            
Date
          James S. Marcus

 

 

Schedule 13D   Page 18 of 18 Pages
Insight Communications Company, Inc.    

SIGNATURE

               After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.

             
March 7, 2005
      By:   /s/ Thomas L. Kempner
 
            
Date
          Thomas L. Kempner

 

 

Schedule 13D    
Insight Communications Company, Inc.    

Appendix A
Reporting Persons

                       
 
  Name     Business Address     Principal Occupation     Employed  
 
Sidney R. Knafel*
    SRK Management Co.
810 7th Avenue
New York, New York
10019
     Managing Partner
SRK Management Co. 		    SRK Management Co.
810 7th Avenue
New York, New York
10019
  
 
Andrew G. Knafel,
Joshua Rubenstein and
William L. Scherlis, as
trustees under Trusts
F/B/O Knafel children
    c/o Insight
Communications
Company, Inc.
810 7th Avenue
New York, New York
10019 		    N/A     N/A  
 
Michael S. Willner*
    Insight
Communications
Company, Inc.
810 7th Avenue
New York, New York
10019 		    Vice Chairman,
President and Chief
Executive Officer,
Insight
Communications
Company, Inc. 		    Insight
Communications
Company, Inc.
810 7th Avenue
New York, New York
10019		  
 
James S. Marcus*
    c/o Insight
Communications
Company, Inc.
810 7th Avenue
New York, New York
10019 		    Retired     N/A  
 
Thomas L. Kempner*
    Loeb Partners
Corporation
61 Broadway
New York, New York
10006 		    Chairman and Chief
Executive Officer,
Loeb Partners
Corporation 		    Loeb Partners
Corporation
61 Broadway
New York, New York
10006		  
 
Andrew G. Knafel
    Clear Brook Farm
123 Dexter Road
Shaftsbury, Vermont
05262 		    Farmer     Clear Brook Farm
123 Dexter Road
Shaftsbury, Vermont
05262		  
 

*   Director of Insight Communications Company, Inc.

 

EX-7.01 2 w06515exv7w01.htm EXHIBIT 7.01 exv7w01
 

Exhibit 7.01

JOINT FILING AGREEMENT

     The undersigned acknowledge and agree that the foregoing Statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this Statement on Schedule 13D shall be filed on behalf of each of the undersigned without the necessity of filing additional joint filing agreements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning him or it contained therein, but shall not be responsible for the completeness and accuracy of the information concerning any other, except to the extent that he or it knows or has reason to believe that such information is inaccurate.

     IN WITNESS WHEREOF, the undersigned hereby execute this Joint Filing Agreement as of this 7th day of March, 2005.

     
  /s/ Sidney R. Knafel
  Sidney R. Knafel
 
    
  /s/ Andrew G. Knafel
Andrew G. Knafel, as Trustee under
Trust F/B/O Andrew G. Knafel dated September 13, 1978
Trust F/B/O Douglas R. Knafel dated September 13, 1978
Trust F/B/O Andrew G. & Douglas R. Knafel
dated July 16, 1976
Trust F/B/O Douglas R. Knafel dated November 6, 1983
 
    
  /s/ Michael S. Willner
  Michael S. Willner
 
    
  /s/ James S. Marcus
  James S. Marcus
 
    
  /s/ Thomas L. Kempner
  Thomas L. Kempner
 
    
  /s/ Andrew G. Knafel
  Andrew G. Knafel

EX-7.02 3 w06515exv7w02.htm exv7w02
 

EXHIBIT 7.02

New Insight LLC

March 6, 2005

Board of Directors
Insight Communications Company, Inc.
810 7th Avenue
New York, NY 10019

Ladies and Gentlemen,

Sidney R. Knafel and Michael S. Willner, together with certain related parties (the “Controlling Shareholders”), and TC Group, L.L.C. (“Carlyle”), on behalf of an entity to be formed (“New Insight LLC” or “ New Insight”), are pleased to offer to acquire the outstanding Class A shares of Insight Communications Company, Inc. (“Insight” or the “Company”) (other than those shares of the Controlling Shareholders and certain others that will be rolled over) at a cash purchase price of $10.70 per share. This offer represents an 11% premium over the closing price of Insight’s Class A shares on Friday March 4, 2005, and a premium of 17% over the six-month average closing price.

We believe that the holders of the Insight Class A common stock will find our proposal attractive due to the substantial premium to its recent trading range and the opportunity for liquidity at a price higher than the shares have traded over the past 12 months. Our current intent is to structure the transaction as a long-form merger. The Controlling Shareholders will roll over a substantial majority of their ownership in the Company and will retain control. In considering our proposal the Controlling Shareholders want to make you aware that they will not agree to any other transaction involving their stake in the Company. We do not expect to refinance any of the Company’s outstanding debt in conjunction with this transaction.

While you are intimately familiar with the Controlling Shareholders, Carlyle, with $24.5 billion under management, is one of the world’s largest private firms and an active investor in the telecommunications and media sectors. Since the firm’s founding in 1987, Carlyle has invested in several cable television operators including: Casema (the third

 

 

largest cable operator in the Netherlands; ongoing), Prime Communications (the former SBC/Hauser cable systems; exited), Taiwan Broadband (a leading cable operator in Taiwan; ongoing), and Genesis Cable Communications (cable system roll-up in the Southeastern U.S.; exited). Carlyle does not currently have any investments that would pose regulatory risks for this transaction, and has an excellent track record of completing transactions of this type on an expedited basis.

Carlyle is familiar with the cable industry and has invested significant time and resources in completing nearly all of our business, legal, and financial due diligence on the Company. Carlyle is prepared to provide the capital required for this transaction. The transaction would be funded through Carlyle Partners III, a $3.9 billion U.S. buyout fund, which has ample resources to complete this transaction. This proposal has received all necessary internal approvals from Carlyle.

New Insight is designing arrangements for employee shareholders and option holders, which are intended to provide ongoing incentives to the Company’s management and employees. Based on the substantial amount of work we have completed to date, we are in a position to execute a merger agreement and consummate the transaction very quickly.

To assist us in this transaction, we have retained Dow, Lohnes & Albertson PLLC and Debevoise & Plimpton LLP as our legal advisors and Morgan Stanley and Stephens as our financial advisors. This indication of interest is non-binding and no agreement, arrangement or understanding between the parties shall be created until such time as definitive documentation has been executed and delivered by the Company and all other appropriate parties and the agreement, arrangement or understanding has been approved by the Company’s Board of Directors and its special committee. The transaction will also have to be approved by the Company’s shareholders. No regulatory approvals will be required other than compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

We expect that the Board of the Company will form a special committee of independent directors to consider our proposal on behalf of the Company’s public shareholders and to recommend to the Board of Directors whether to approve the proposal. We also encourage the special committee to retain its own legal and financial advisors to assist in its review. We would welcome the opportunity to present our proposal to the special

2

 

committee as soon as possible. Our entire team looks forward to working with the special committee and its legal and financial advisors to complete a mutually acceptable transaction.

Should you have any questions, please call any of us. For Carlyle, please contact William Kennard (202-729-5331), Michael Connelly (212-381-4849), or Stephen Owens (202-729-5374).

Sincerely,

         
/s/ Sidney R. Knafel
  /s/ Michael S. Willner   /s/ William E. Kennard
 
Sidney R. Knafel
 
 
Michael S. Willner 		 
 
William E. Kennard
      TC Group, L.L.C.

3

EX-7.03 4 w06515exv7w03.htm EXHIBIT 7.03 exv7w03
 

EXHIBIT 7.03

March 6, 2005

SUMMARY OF PROSPECTIVE TERMS

THIS SUMMARY OF PROSPECTIVE TERMS SHALL NOT CREATE ANY AGREEMENT, ARRANGEMENT OR UNDERSTANDING BETWEEN THE PERSONS IDENTIFIED HEREIN WITH RESPECT TO INSIGHT OR THE STOCK OF INSIGHT FOR PURPOSES OF ANY LAW, RULE, REGULATION, OR OTHERWISE, UNTIL SUCH TIME AS DEFINITIVE DOCUMENTATION AND ANY AGREEMENT, ARRANGEMENT OR UNDERSTANDING HAS BEEN APPROVED BY THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS OF THE COMPANY AND THEREAFTER EXECUTED AND DELIVERED BY THE COMPANY AND ALL OTHER RELEVANT PERSONS.

I. Transaction Description

     
Overview:
  The members of the Company’s management team and certain related parties who agree to be bound by the terms of a transaction (collectively, “Management”) and TC Group, L.L.C., an affiliated entity of The Carlyle Group (“Sponsor”), would form a limited liability company (the “LLC”) to acquire, at the Transaction Price, 100% of the common stock of the Company.
 
    
Structure:
  As described below, members of Management would contribute a portion of such member’s equity in the Company to the LLC in exchange for Class A units in the LLC. The Sponsor would make a cash investment in the LLC in exchange for Class A units in the LLC, with the number of Class A units being equal to the amount of the cash investment divided by the Transaction Price. The LLC would create a corporate subsidiary which would merge with and into the Company, with the Company as the surviving corporation in the merger. In the merger outstanding shares of the Company’s stock (other than those held by the LLC) would be converted into the right to receive a cash payment equal to the Transaction Price. The transaction would be structured, as described herein, so as not to constitute a “transfer of control” under the Amended and Restated Limited Partnership Agreement of Insight Midwest (the “Partnership Agreement”) or a change in control under the credit agreement or indentures of the Company and its subsidiaries. In furtherance of the foregoing, existing control of the Company would be maintained by issuing to Sidney R. Knafel (“SRK”) and Michael S. Willner (“MSW”) new super-voting preferred shares of the Company, which would not accrue dividends and would have a nominal liquidation value (the “Preferred Shares” and their holders, the “Preferred Stockholders”).

1

 

     
II. Management Economic Package
    
 
    
Equity Rollover:
  SRK and certain related parties would roll over 100% of their common shares into a corresponding number of Class A units in the LLC. All other members of Management would roll over, in such a way as to minimize the amount of accelerated vesting, at least two-thirds of such member’s common shares as of the close of business on March 4, 2005 (excluding loan exchange program shares (which rollover requirements will be discussed) and shares held in 401(k) accounts) into a corresponding number of Class A units in the LLC, provided that they would be given the opportunity, but not be required, to roll over common shares they have purchased on the open market or receive upon a future exercise of options. The remaining common shares not contributed to the LLC would be converted into the right to receive a cash payment equal to the Transaction Price. All shares held in a 401(k) account of an employee or former employee would be converted into the right to receive a cash payment equal to the Transaction Price, subject to the terms of the Company’s 401(k) plan’s trust.
 
    
Treatment of Options, Shares of
Restricted Stock and Deferred Stock:
  The parties will discuss the treatment of options, restricted stock and deferred stock.
 
    
Performance based incentive:
  Management would receive a performance based incentive that would be structured as a profits interest in the LLC under applicable IRS regulations. This profits interest (the “Promote Profits Interest”) would provide for tiered allocations based upon the Sponsor’s Class A units achieving internal rate of return levels as follows:

  •   Profits would first be allocated to the Class A units and to certain profits interests (the “Class B Units”) (based on the number of units held and to the extent agreed upon thresholds are met), until the Sponsor’s IRR is equal to 10%;
 
  •   Next, remaining profits would be allocated 95% to the Class A units and the Class B units (as aforesaid) and 5% to the Promote Profits Interest, until the Sponsor’s IRR is equal to 15%;
 
  •   Next, remaining profits would be allocated 90% to the Class A units and the Class B units (as aforesaid) and 10% to the Promote Profits Interest, until the Sponsor’s IRR is equal to 20%;
 
  •   Next, remaining profits would be allocated 85% to the Class A units and the Class B units (as aforesaid) and 15% to the Promote Profits Interest, until the Sponsor’s IRR is equal to 25%;
 
  •   Thereafter, remaining profits would be allocated 75% to the Class A units and the Class B units (as aforesaid) and 25% to the Promote Profits Interest.

2

 

     
  Distributions would be made in the same manner as allocations (i.e., first to the Class A units to return the initial capital of the Sponsor and the rollover investors and then following the same waterfall as the profits allocations as described above).
 
    
  The parties will agree on the allocation at closing of 90% of the Promote Profits Interests among certain current members of Management and directors by awarding them with a specified number of Promote Profits Interest units (“Class P units”). Following the closing, the Company would be permitted to award an aggregate number of additional Class P units equal to the number of Class P units that have been forfeited plus the 10% of the total that was not allocated at closing to members of management and directors. An award may only be made if Management recommends the award to the Compensation Committee, and the Compensation Committee approves such award. All Class P units that are not awarded at the time of a sale of the Company or a Qualified IPO would be awarded at that time pursuant to the recommendations of Management and the approval of the Compensation Committee, provided that if Management and the Compensation Committee cannot agree, the remaining Class P units would be awarded pro rata based on the then current ownership of Class P units.
 
    
  The Class P units issued to Management and directors would vest as follows: (i) 50% of all units issued to SRK would vest in full immediately upon issuance, with the balance vesting ratably at the end of each of the 5 years following issuance; (ii) 10% of the units issued to MSW would vest immediately upon issuance, with 20% vesting at the end of each of the 4 years following issuance, and the remaining 10% vesting at the end of the fifth year following issuance; and (iii) units issued to any other person would vest 20% at the end of each of the 5 years following issuance.
 
    
Acceleration of Vesting and Forfeiture:
  All of SRK’s and his related parties’ unvested LLC units, of whatever class, would vest upon the closing of the sale of the Company or his death or disability. In addition, upon a recapitalization (or like transaction) or the consummation of an IPO in response to a liquidity request as described in “Exit Provisions” below, a portion of SRK’s and his related parties’ unvested LLC units would vest to the extent necessary to allow them to obtain liquidity for 2/3 of the aggregate value of their Class A, Class B and Class P interests as described below.
 
    
  All unvested LLC units, of whatever class, held by any person then employed by the LLC or the Company would vest upon the closing of the sale of the Company or the death or disability of such person. For these purposes, “disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last continuously through the final vesting date of the applicable LLC unit.

3

 

     
  Upon his involuntary termination other than for cause (to be defined), all of MSW’s unvested LLC units other than his unvested Class P units would immediately vest. In addition, a number of MSW’s unvested Class P units equal to the amount, if any, by which one-half of the total number of MSW’s vested and unvested Class P units exceeds the number of MSW’s Class P units that had vested as of the date of his involuntary termination would immediately vest.
 
    
  Except as set forth above, all unvested LLC units, of whatever class, held by any person (other than SRK or MSW) would be forfeited on the date that such person is no longer employed by the LLC or the Company.
 
    
Key Management Employment
Agreements:
  Term – 3 years
Employees covered – MSW, DJ, JA
Existing compensation guarantee arrangements would remain in full force and effect.
 
    
Bonus Pool for Management:
  $3 million annual aggregate bonus pool, subject to adjustment as described below. $1.5 million of the pool would be awarded each year in accordance with the recommendations of SRK and MSW in consultation with the Compensation Committee. Each year, the portion of the $1.5 million balance actually awarded would equal $1.5 million less $150,000 per each percentage point, if any, that actual EBITDA for that year falls below the level of EBITDA contained in the budget for such year (provided, for the avoidance of doubt, that such balance in any year may not fall below $0 or exceed $1.5 million). The balance would be allocated in accordance with the recommendations of SRK and MSW, provided the Compensation Committee would have to approve those allocations.
 
    
Fees to Sponsor:
  3% of aggregate committed capital, which would be payable upon closing of the transaction
 
    
  Sponsor monitoring fees of $1.5 million per annum, payable quarterly.
 
    
III. Liquidity
    
 
    
Transfer Restrictions:
  No equity holder would be permitted to transfer its interest except as described below, subject to (i) each party’s right to transfer to “Permitted Assignees” (to be defined) and (ii) customary post-IPO transfer and registration rights. The foregoing notwithstanding, (i) the Sponsor would have the right to syndicate up to an agreed percentage of its economic investment to parties reasonably acceptable to Management so long as Sponsor does not transfer its consent, director designation, exit or exit process control rights without approval of Management; and (ii) the Sponsor or

4

 

     
  Management, as the case may be, would have the right to make transfers of their interest to any party if at the time and under the circumstances of the transfer the Sponsor, the Preferred Stockholders or SRK, as applicable, is entitled under “Exit Provisions” below to cause a sale of the Company, subject both to customary tag-along rights and to customary drag-along rights. In addition, in the event Sponsor sought to make a transfer other than as set forth above, it could do so, but only if (x) Management approved the transferees and, insofar as they would impact the future relationship and rights among Management, the Sponsor and the transferees, the terms, and (y) Management has customary tag-along rights with respect to such transfer.
 
    
Exit Provisions:
  At the end of three years, the Sponsor would have the right to trigger the split-up arrangements under (and in conformity with) the Partnership Agreement and/or to cause a sale or Qualified IPO of the Company, or a leveraged recapitalization that results in a pro rata return of capital. Following a Qualified IPO (as defined below), holders of LLC units would be entitled to reasonable and customary registration rights (to be determined) in connection with the Company common stock they would be entitled to receive with respect to their LLC units, based on the IPO True-Up Calculation (as defined below). A Qualified IPO would be a firm commitment underwritten public offering of at least $200,000,000 and of at least 20% of the equity value of the Company on a nationally recognized exchange or automated dealer quotation system. The Company common stock that holders of LLC units would be entitled to receive in exchange for their LLC units would be determined using an equity valuation of the Company based on the volume–weighted average closing price of the Company’s common stock for each of the twenty trading days preceding the 60th day following the closing of the IPO, provided that the underwriters have determined prior to the filing of the IPO that the public valuation of the Company would not be materially lower than the valuation of the Company in the context of a private sale. If the underwriters have not so determined, the equity valuation for these purposes would be as determined by an independent investment bank or appraiser (to be determined) based on parameters and procedures to be determined (the foregoing two sentences, the “IPO True-Up Calculation”). The Company common stock to be received in respect of their unvested LLC units would continue to be subject to the same vesting schedule.
 
    
  The parties would effect the IPO and the liquidation of the LLC so as not to constitute a “transfer of control” under the Partnership Agreement (if then in effect) or a change in control under the credit agreement or indentures of the Company and its subsidiaries. The parties would replicate the parties’ governance rights as in effect prior to the IPO as nearly as practicable taking into account applicable legal and market restraints.

5

 

     
  Prior to the end of three years, either the Sponsor or the Preferred Stockholders would have the right to cause a sale of the Company and as part of such sale transaction trigger the split-up arrangements under (and in conformity with) the Partnership Agreement, so long as the proceeds available in respect of the Sponsor’s equity and the rollover equity were at least two times the going-in price for such equity.
 
    
  The Sponsor would have ultimate control over the split-up under the Partnership Agreement and any sale, IPO or recapitalization processes, from and after the third anniversary of the Closing and at any time if the split-up process were triggered by Comcast. The Board would control such processes prior to the third anniversary of the closing unless the split-up were triggered by Comcast. In connection with the foregoing, the parties would cooperate fully and in good faith, Sponsor would consult with the Management in good faith and keep Management informed, and the parties would use their commercially reasonable efforts to ensure that the process is fair to both parties.
 
    
  After the fourth anniversary of the closing, SRK can, if the Company has not previously had a Qualified IPO or a liquidity transaction that provided SRK and his related parties with an opportunity to receive distributions or sale proceeds equal to no less than 66 2/3% of the value of their aggregate Class A, Class B and Class P interest in the Company at the time, deliver a liquidity request to the Sponsor. Within 365 days of the delivery of such a request the Sponsor shall, at its option, either (i) commence the process of seeking to effectuate a Qualified IPO, in which case the Sponsor shall thereafter use its reasonable best efforts to consummate such offering as expeditiously as possible consistent with market conditions, (ii) commence a recapitalization or other transaction in which SRK and his related parties receive as redemption, distribution or other proceeds (together with any proceeds previously received) 66 2/3% of the fair market value of their aggregate Class A, Class B and Class P interest in the Company, or (iii) commence the process of selling the Company, in which case the Sponsor shall thereafter use its reasonable best efforts to effectuate such transaction as expeditiously as possible (provided that the Sponsor shall have no obligation to effectuate a sale at a value that yields (together with any proceeds previously received) an internal rate of return to the Sponsor of less than 9%, it being understood that Sponsor may not invoke the 9% IRR condition after a definitive agreement for a sale transaction has been executed, but that the 9% IRR would be determined based on an estimated closing date). If the Sponsor elects option (i) or (ii) and is unable to complete such liquidity event within six months of the delivery of the commencement, SRK may require the Sponsor to commence the process of selling the Company pursuant to clause (iii) above (subject to the 9% internal rate of return condition). If Sponsor does not cause a Qualified IPO, recapitalization or sale to be consummated as described above, SRK would retain the right to renew his liquidity request (6 months after the conclusion of the previous process) until a Qualified IPO, recapitalization or sale is consummated.

6

 

     
  In the event the liquidity request is satisfied with a Qualified IPO, the registration rights and IPO True-Up Calculation described above would apply.
 
    
  In the event the liquidity request is satisfied with a recapitalization or like transaction, SRK and his related parties would not be entitled to receive as redemption, distribution or other proceeds (together with any proceeds previously received) more than 66 2/3% of the fair market value of their aggregate Class A, Class B and Class P interest in the Company. The fair market value would be determined by retaining an independent investment bank or appraiser (to be determined) to value the Company based on parameters and procedures to be determined and then determining what SRK’s and his related parties aggregate Class A, Class B and Class P interest in the LLC would be worth based on a sale for that value. SRK may rescind his liquidity request if he is not satisfied in his sole discretion with the fair market value determination, provided that SRK would not be entitled to make a subsequent liquidity request for 6 months. Upon a final sale of the Company (which for purposes of this term sheet includes any transaction after which the Sponsor (together with its limited partners and syndicate members, if any) owns less than 10% of the equity of the Company), the Sponsor’s IRR and the amount distributable in respect of Class P units, Class A units and Class B units would be determined based on actual distributions that have been made to the Sponsor, the valuation of the Company implicit in the final sale transaction and the amount of deferred and restricted and unvested units that actually issued or vested. In the event SRK and his related parties received distribution or redemption proceeds as a result of a recapitalization, SRK’s and his related parties’ proceeds in respect of the final sale would be adjusted such that SRK’s and his related parties aggregate proceeds from the sale transaction and the recapitalization transaction are equal to the proceeds SRK and his related parties would have received from all of SRK’s and his related parties aggregate Class A, Class B and Class P interest in the sale transaction had there been no interim recapitalization transaction, provided that SRK and his related parties would never be required to refund any proceeds paid to them in the recapitalization transaction.
 
    
IV. Governance
    
 
    
Board Representation:
  The Preferred Shares would entitle its holders to designate five directors and the Sponsor would have the right to designate four directors, for a total of nine directors. At least two designees of the Preferred Stockholders and one designee of the Sponsor would be required to be independent. Following the closing, a person would be “independent” only if a majority of the Board (including a majority of the then sitting independent directors) determines that the person has no

7

 

     
  material relationship with the Company, has no current or prior relationship with Management, the Company or the Sponsor that might cause the director to act other than entirely independently with respect to all issues that come before the Board, and otherwise satisfies the requirements of independence under the New York Stock Exchange rules. Replacements for directors designated by Management or the Sponsor, as the case may be, may be designated only by the parties originally entitled to designate such directors, however the vacancy is created. Replacements for directors required to be independent would also be required to be independent. Current provisions requiring that directors can only be removed for cause would remain in place as to the independent directors. Terms would be staggered, with the three independent directors having three year terms.
 
    
  The Compensation and Governance Committees of the Board initially would be made up of three directors (two independent directors and one Sponsor designee). The Audit Committee would be made up of two independent directors if and to the extent required by securities laws and would otherwise be constituted in the same manner as the other committees.
 
    
  The charter of the Governance Committee would provide that it shall assume the functions of an executive committee (scope of authority to be agreed upon) following (i) any default under any of Sections 7.12, 7.13 or 7.14 of the Insight Midwest Holdings, LLC Credit Agreement, regardless of whether such Credit Agreement has been terminated, replaced or amended, or (ii) any payment default under any debt instrument at the Company or subsidiary levels (subject to a cure period equal to the lesser of three days or the applicable cure period contained in the debt instrument). In addition, following the consummation of the transactions contemplated by the split-up provisions of the Partnership Agreement, the composition of the Board would be adjusted so as in general to reflect the economic interests in the Company of Management and the Sponsor and the Preferred Shares would be retired.
 
    
Sponsor Consent Rights:
  Subject to the parties’ exit rights, the Sponsor’s consent would be required before the Company could take or approve any of the following actions:

  •   Any material change in the business of the Company or the partnership
 
  •   Changing the charter or bylaws or the composition of the Board or of Board committees (i.e., size, allocation of seats, independence requirements), or the entity form or tax classification of the partnership or any subsidiary thereof (each, including the partnership, a “Subsidiary”)
 
  •   Transactions with related parties (at each of the Company, partnership and other Subsidiary levels), including approval of management compensation plans, subject to the agreed upon Management economic package and it being understood that Sponsor’s consent would not be required with respect to Class P unit awards and bonus pool awards pursuant to the mechanisms described above

8

 

 
  •   Changing the public accountants of the Company
 
  •   Liquidating, dissolving, filing a petition in bankruptcy, or entering into an arrangement for the benefit of creditors, with respect to the Company, the partnership or any other Subsidiary
 
  •   Any incurrence of material indebtedness (or material amendment of any agreement governing material indebtedness) or issuance of equity, preferred stock, convertible debt, options/warrants or sale of additional partnership interests, subject to customary carve-outs and definition of materiality for debt incurrence, or any calls by the partnership for additional capital contributions
 
  •   Acquisition, disposition or exchange of material assets or equity interests (including equity interests of any Subsidiary), including sale or merger of the Company or IPO or recapitalization or other form of reorganization, and entering into any material joint ventures, subject to the rights of the parties under “Exit Provisions” above
 
  •   Any declaration or payment of any distribution or dividends on, or repurchase or redemption of, the equity interests of the Company or any of its Subsidiaries, except as required under the Midwest Partnership Agreement
 
  •   Any amendments to the Midwest Partnership Agreement
 
  •   The commencement of the split-up procedures under the Partnership Agreement, subject to the rights of the parties under “Exit Provisions” above
 
  •   Entering into certain contracts or strategic relationships (to be defined) outside the ordinary course of business that are material to the Company as a whole
 
  •   Settling any material claim or lawsuit
 
  •   Selection of a new general partner for a Subsidiary or admission of any new partners or members to any Subsidiary
 
  •   The parties will agree on the 2005 budgets prior to signing of definitive agreements. Subsequent year operating and capital budgets must be approved by two thirds of the Board.
 
  •   Selection of any replacement Chief Executive Officer, President, Chief Operating Officer or Chief Financial Officer. In the event there were a replacement CEO, such executive would become one of the Preferred Stockholders’ designees, unless the Preferred Stockholders decided not to consider such executive as a Preferred Stockholder designee, in which case (i) such executive would be entitled to a tenth Board seat, and (ii) the Preferred Stockholders would thereafter be entitled to designate three Management members and three independent members, and Sponsor would thereafter be entitled to designate three Sponsor members.

9

 

     
Information Rights:
  Sponsor would have customary information rights, including access to management and monthly management reports, in form to be agreed.
 
    
Management Consents:
  In every case in which this term sheet calls for consents, approvals or recommendations of Management, the consents, approvals or recommendations of SRK and MSW shall be sufficient.
 
    
V. Acquisition Mechanics
    
 
    
  The parties will discuss the mechanics of proceeding with the transaction and negotiations with the Special Committee. Following Board approval and execution of definitive agreements until 12 months following termination of the merger agreement, Management would agree (solely in their capacity as stockholders of the Company and not in their fiduciary capacity as officers or directors of the Company) that it would not sell its stake in the Company or support another transaction.

     This summary is for discussion purposes only and creates no legal rights or obligations (including any obligation to negotiate or execute definitive documentation). This summary of prospective terms shall not create any agreement, arrangement or understanding between the persons identified herein with respect to the Company or the stock of the Company for purposes of any law, rule, regulation, or otherwise, until such time as definitive documentation and any agreement, arrangement or understanding has been approved by the special committee and board of directors of the Company and thereafter executed and delivered by the Company and all other relevant persons.

10

EX-7.04 5 w06515exv7w04.htm exv7w04
 

EXHIBIT 7.04

For Immediate Release

INSIGHT COMMUNICATIONS CONTROLLING SHAREHOLDERS AND THE
CARLYLE GROUP PROPOSE TO ACQUIRE COMPANY’S
OUTSTANDING PUBLIC SHARES

Insight Co-Founders Sid Knafel and Michael Willner Join with The Carlyle Group
to Make $10.70 Cash Per Share Offer for Insight’s Public Shares

New York, NY, March 7, 2005 – Insight Communications Company, Inc.’s (NASDAQ: ICCI) (“Insight”) co-founders Sidney R. Knafel and Michael S. Willner and The Carlyle Group today announced that they are proposing to acquire the outstanding publicly held shares of Insight for $10.70 per share in cash.

The acquiring entity, which will be called New Insight LLC, is offering a price representing an 11% premium over the closing price of Insight’s stock on Friday, March 4, 2005 of $9.68 per share and a 17% premium over the six-month average closing price. The proposal values the total equity of Insight at approximately $650 million and implies an enterprise value of approximately $2.1 billion (based on Insight’s attributable share of indebtedness). The transaction will not result in a change of control. The company’s existing debt will remain outstanding.

Mr. Knafel, Chairman of Insight, stated, “This proposal represents an opportunity for Insight’s public shareholders to realize liquidity at a price higher than the shares have traded over the past 12 months.”

Mr. Willner, President and Chief Executive Officer of Insight, added, “In today’s increasingly competitive environment, the continued leadership of our current management team will ensure that our customers can look forward to getting the same outstanding service and innovative solutions they have come to expect from the same people who serve them today. Likewise, our employees can rest assured that it will be business as usual both during and after the transaction process is completed.”

Michael J. Connelly, Managing Director of The Carlyle Group, said, “Our commitment to this transaction demonstrates Carlyle’s confidence in Insight’s management and the U.S. cable television business. We look forward to supporting Sid, Michael and the other members of Insight’s experienced management team.”

Following today’s announcement, New Insight expects the Board of Directors of Insight to form a special committee of independent directors to consider the proposal with the assistance of outside financial and legal advisors. Directors of Insight affiliated with New Insight will not participate in the evaluation of the proposal.

The transaction will be implemented through a merger and will require shareholder approval, as well as approval by the special committee. The transaction can be consummated immediately

 

 

after shareholder approval and is not subject to any regulatory or financing conditions other than compliance with Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Mr. Knafel, Mr. Willner and their related parties collectively own shares of Insight representing approximately 14% of the equity and 62% of the vote. They have advised Insight’s Board that they will not consider any other transaction involving their interest in the company.

Morgan Stanley and Stephens are serving as New Insight’s financial advisors in the transaction and Dow, Lohnes & Albertson PLLC and Debevoise & Plimpton LLP are providing legal counsel.

Insight shareholders and other interested parties should read Insight’s relevant documents filed with the Securities and Exchange Commission when they become available because they will contain important information. Insight’s shareholders will be able to obtain such documents free of charge at the SEC’s web site (www.sec.gov) or from Insight at 810 7th Avenue, New York, NY 10019, Attn: Corporate Communications.

About Insight
Insight Communications, through a 50/50 partnership with Comcast, is the 9th largest cable operator in the United States, managing approximately 1.27 million basic customers (of whom half are attributable to Insight’s equity) in the four contiguous states of Illinois, Indiana, Ohio, and Kentucky. Insight specializes in offering bundled, state-of-the-art services in mid-sized communities, delivering analog and digital video, high-speed Internet, and voice telephony in selected markets to its customers.

About The Carlyle Group
The Carlyle Group is a global private equity firm with more than $24.5 billion under management. Carlyle invests in buyouts, venture capital, real estate, and leveraged finance in North America, Europe, and Asia, focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, healthcare, industrial, technology & business services, and telecommunications & media. Since 1987, the firm has invested more than $12 billion of equity in over 350 transactions. The Carlyle Group employs more than 500 people in 14 countries.

Statements in this release represent the parties’ current intentions, plans, expectations and beliefs and involve risks and uncertainties that could cause actual events to differ materially from the events described in this release, including risks or uncertainties related to the success of the negotiations with the special committee and whether the merger will be completed, as well as changes in general economic conditions, stock market trading conditions, tax law requirements or government regulation, and changes in the broadband communications industry or the business or prospects of Insight. The reader is cautioned that these factors, as well as other factors described or to be described in SEC filings with respect to the transaction, are among the factors that could cause actual events or results to differ materially from the current expectations described herein. No agreement, arrangement or understanding shall be created between the parties with respect to Insight or the stock of Insight for purposes of any law, rule, regulation, or otherwise, until such time as definitive documentation and any agreement, arrangement, or understanding has been approved by the special committee and the Board of Directors of Insight and thereafter executed and delivered by Insight and all other relevant persons.

 

 

     
CONTACTS:
    
 
    
New Insight:
   The Carlyle Group:
Joele Frank / Eden Abrahams
  Chris Ullman
Joele Frank, Wilkinson Brimmer Katcher
  (202) 729-5450
(212) 355-4449