SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE TO
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION
14(d)(1) OR 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 2)
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COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV)
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(Name of Subject Company (Issuer))
NATIONAL TELEPHONE COMPANY OF VENEZUELA (CANTV)
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(Translation of Name of Issuer Into English)
COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV)
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(Name of Filing Person (Issuer and Offeror))
AMERICAN DEPOSITARY SHARES
(EACH REPRESENTING 7 SHARES OF CLASS D COMMON STOCK,
NOMINAL VALUE BS. 36.90182224915 PER SHARE)
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(Title of Class of Securities)
204421101 (ADSs)
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(CUSIP Number)
Armando Yanes, Chief Financial Officer
Compania Anonima Nacional Telefonos de Venezuela (CANTV)
Avenida Libertador
Centro Nacional de Telecomunicaciones
Nuevo Edificio Administrativo
Piso 1, Apartado Postal 1226
Caracas, Venezuela 1010
Telephone: (58) 212-500-6800
Copies to:
Robert W. Mullen, Jr., Esq. and Lawrence Lederman, Esq.
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005
Telephone: (212) 530-5000
Facsimile: (212) 530-5219
____________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
CALCULATION OF FILING FEE
Transaction Valuation Amount of Filing Fee
$595,309,740(1) $119,062(2)
_________
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
(1) The transaction value is calculated by multiplying 19,843,658, the amount
of ADSs being sought by the offeror, by $30.00, the offer price per ADS.
(2) The amount of filing fee is calculated by multiplying $595,309,740, the
transaction valuation, by 0.0002.
Amount Previously Paid: $119,062
Filing Party: Compania Anonima Nacional Telefonos de Venezuela (CANTV)
Form or Registration No.: Schedule TO Date Filed: October 24, 2001
[_] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[_] third party tender offer subject to Rule 14d-1.
[X] issuer tender offer subject to 13e-4.
[_] going-private transaction subject to Rule 13e-3.
[_] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [_]
This Amendment No. 2 to the Tender Offer Statement on Schedule TO (as amended
hereby, the "Schedule TO") relates to the offer by Compania Anonima Nacional
Telefonos de Venezuela (CANTV), a company (compania anonima) organized under the
laws of the Bolivarian Republic of Venezuela (the "Company" or "CANTV") to
purchase for cash 19,843,658 American Depositary Shares ("ADSs"), representing
in the aggregate 138,905,606 Class D Shares of common stock of the Company (the
"Class D Shares"), for $30.00 per ADS, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated October
24, 2001 (as amended, the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with the Offer to Purchase and any amendments or
supplements thereto, collectively constitute the "U.S. Offer"). Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Offer to Purchase.
All the information set forth in the Offer to Purchase and the related Letter of
Transmittal and any supplement or amendment thereto is incorporated herein by
reference with respect to Items 1 through 11 of this Schedule TO.
ITEM 1. SUMMARY TERM SHEET
Item 1 of the Schedule TO is hereby amended and supplemented as follows:
The first paragraph on page 1 of the Offer to Purchase is hereby amended
and supplemented by adding the following sentence to the end of the paragraph:
"Class D shares not exchanged for ADSs will be returned to such shareholder
as Class D shares."
The answer to the question "What are the classes and amounts of securities
sought in this U.S. offer?" on page 3 of the Offer to Purchase is hereby amended
and supplemented by adding the following sentence after the second sentence of
such answer:
"Class D shares not exchanged for ADSs will be returned to such shareholder
as Class D shares."
The answer to the question "How will these transactions affect the
ownership of the other shareholders?" on page 6 of the Offer to Purchase is
hereby amended and supplemented by deleting the third sentence therein and
replacing such third sentence with the following two sentences:
"In addition, Verizon has advised the Company that, GTE Venholdings B.V.,
an indirect subsidiary of Verizon which owns 4,706,547 ADSs, will also
tender into the offers a number of CANTV shares or ADSs equal to the
proportion of total shares tendered in the offers by other shareholders.
Accordingly, VenWorld's and Venholdings' proportional voting power and
economic interest should not increase as a result of the offers."
ITEM 4. TERMS OF THE TRANSACTION
The first paragraph of the section entitled "INTRODUCTION" on page 10 of
the Offer to Purchase is hereby amended and supplemented by adding the following
sentence before the last sentence of such paragraph:
"Class D Shares not exchanged for ADSs will be returned to such shareholder
as Class D Shares."
The first full paragraph on page 25 of the Offer to Purchase is hereby
amended and supplemented by deleting the last sentence therein and adding the
following two sentences:
"In addition, Verizon has advised the Company that GTE Venholdings B.V., an
indirect subsidiary of Verizon ("Venholdings"), which owns 4,706,547 ADSs,
will also tender into the Offers a number of CANTV shares or ADSs equal to
the proportion of total shares tendered in the Offers by other
shareholders. Accordingly, VenWorld's and Venholdings' proportional voting
power and economic interest should not increase as a result of the Offers."
The fourth full paragraph on page 32 of the Offer to Purchase is hereby
amended and supplemented by deleting the last sentence therein and adding the
following two sentences:
"In addition, Verizon has advised the Company that, Venholdings, which owns
4,706,547 ADSs, will also tender into the Offers a number of CANTV shares
or ADSs equal to the proportion of total shares tendered in the Offers by
other shareholders. Accordingly, VenWorld's and Venholdings' proportional
voting power and economic interest should not increase as a result of the
Offers."
The section entitled "Conditions of the U.S. Offer" on page 38 of the Offer
to Purchase is hereby amended and supplemented by deleting the following text
from the last sentence of the first paragraph of such section:
"and prior to the acceptance for payment of the ADSs (including ADSs for
which Class D Shares have been exchanged."
The subsection entitled "Termination of the Venezuelan Offer Condition" on
page 40 of the Offer to Purchase is hereby amended and supplemented by adding
the following text to the end of the second paragraph under such subsection:
"prior to the Expiration Date."
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
Item 6 of the Schedule TO is hereby amended and supplemented as follows:
The subsection entitled "Other Plans" of Section 10 of the Offer to
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Purchase is hereby amended and supplemented by adding the following two
paragraphs to the end of such subsection on page 36:
"From November 2, 2001 through November 4, 2001, representatives of the
Company had discussions with representatives of AES which discussions could have
had the effect of terminating AES's tender offers in the United States and
Venezuela. Discussions were tentative and no agreements or understandings were
reached. There is no assurance that there will be further discussions between
the Company or its representatives and AES or its representatives and, if there
are further discussions, there can be no assurance that any agreement or
understanding will be reached. The Company will not undertake further disclosure
of discussions, if any, between the Company or its representatives and AES or
its representatives until the Company and AES reach an agreement in principal,
if any.
The Company remains fully committed to completing its currently pending
tender offer in the United States, the share repurchase program in Venezuela and
its previously announced dividends. The Company does not intend to change the
terms of its tender offer, share repurchase program or scheduled dividends in
connection with any termination of the AES offers."
ITEM 10. FINANCIAL STATEMENTS
The first paragraph of the subsection entitled "Financial Information" on
page 26 of the Offer to Purchase is hereby amended and supplemented in its
entirety as follows:
"CANTV does not believe its financial statements are material to
the Offers. Nevertheless, the following selected consolidated financial
information relating to CANTV and its subsidiaries, which has been taken or
derived from the audited consolidated financial statements contained in the
Form 20-F, has been provided for your convenience. Additional financial
information is available in documents which have been filed by CANTV with
the SEC. The financial statements of CANTV are prepared in accordance with
generally accepted accounting principles in Venezuela ("Venezuelan GAAP"),
which differ in certain important respects from generally accepted
accounting principles in the United States ("U.S. GAAP"). The primary
differences between U.S. GAAP and Venezuelan GAAP that apply to the Company
are as follows:
Restatement for Inflation. Venezuela follows general price level
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accounting as prescribed in the Venezuelan Statement of Accounting
Principles Number 10 "Standards for the Preparation of Financial Statements
Adjusted for Inflation", as amended (DPC 10). In most circumstances U.S.
GAAP does not allow for the restatement of financial statements for general
price level changes. For U.S. GAAP purposes, account balances and
transactions are stated in the units of currency of the period when the
transactions originated. This accounting model is commonly known as the
historical cost basis of accounting. However, because the economy of
Venezuela has experienced periods of
significant inflation in the recent past, the use of financial statements
restated for general price level changes is consistent with the
requirements of the SEC rules and with the methodology described in
Statement of Financial Accounting Standards No. 89, "Financial Reporting
and Changing Prices" (SFAS 89). The U.S. GAAP reconciliations presented
herein do not, therefore, exclude the effect of the general price level
accounting as prescribed in DPC 10.
Accounting for Taxation. Venezuelan GAAP is consistent with the
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accounting principles set forth in the now superseded U.S. Accounting
Principles Board Opinion No. 11, "Accounting for Income Taxes" (APB 11).
Venezuelan GAAP requires that deferred taxes be provided at the tax rates
prevailing at the time of the provision. In addition, the provision for
deferred taxes is not adjusted to take into account subsequent changes to
the statutory rates of taxation. In 1992, the Financial Accounting
Standards Board (FASB) in the United States adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109).
This standard requires that deferred tax assets and liabilities be
established for the tax consequences of "temporary differences" by applying
enacted statutory tax rates applicable to future years to differences
between the financial statement carrying amounts and the tax bases of
existing assets and liabilities. Under SFAS 109, the effect on deferred
taxes of a change in tax rates is recognized in income in the period that
includes the enactment date. Valuation allowances are provided for deferred
tax assets when realization is not assured.
Accounting for Postretirement Benefits other than Pensions. Until
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1998, postretirement medical benefits were recorded as operating expenses
when claims were filed and the Company did not fund its obligation related
to this plan. U.S. GAAP requires the expected costs of these benefits to be
recognized systematically over employees' service periods. In 1999, the
Company adopted International Accounting Standard 19 (IAS 19) and will
recognize postretirement benefits other than pension systematically over
employee's service period. As permitted under IAS 19 the accumulated
postretirement benefits obligation, as of December 31, 1998, was recognized
as an adjustment to beginning retained earnings, therefore, this item will
no longer be a difference between U.S. and Venezuelan GAAP.
Employee Severance Benefits. In accordance with Venezuelan GAAP,
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employee severance benefits are reflected as the absolute amount earned in
accordance with the Venezuelan labor law. U.S. GAAP permits but does not
require these types of liabilities to be accrued based on actuarial
estimates, in accordance with Statement of Financial Accounting Standard
No. 87, "Employers' Accounting for Pensions." (SFAS 87) For U.S. GAAP
purposes, the Company has chosen to reflect the liability based on
actuarial assumptions at its discounted value. In addition, in accordance
with SFAS 89, under U.S. GAAP this item is treated as a nonmonetary
liability while under Venezuelan GAAP it was considered a monetary
liability until 1997. In June 1997, the Venezuelan Congress enacted an
amendment to the labor law regarding severance benefits. As a result of the
amendment to the labor law, these employee severance benefits are treated
as a defined contribution plan and discounting is no longer applicable.
Also, under SFAS 89, employee severance benefits became a monetary item for
U.S. GAAP purposes due to its defined contribution plan nature.
Capitalized Interest. In accordance with Venezuelan GAAP, in its
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inflation adjusted financial statements, the Company does not capitalize
interest costs incurred in connection with the construction of major
capital projects. Under U.S. GAAP, the amount of interest incurred in
connection with the construction of these projects is reflected in
inflation adjusted financial statements. The amount capitalized is
calculated by applying the composite weighted average interest rates of
outstanding borrowings to construction work in process balances during each
applicable period. Capitalized interest is included in property, plant and
equipment and depreciated over the lives of the related assets.
Treasury Stock. One percent of the shares, or 10,000,000 shares,
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issued at privatization were purchased by the Company from the Venezuelan
government to be distributed to employees in the form of awards. The
Company's cost of these shares is recorded in Other assets. U.S. GAAP for
publicly traded entities reflects these shares as treasury stock.
Earnings Per Share. Statement of Financial Accounting Standard No.
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128, "Earnings per Share" (SFAS 128) establishes standards for computing
and presenting earnings per share (EPS) as it applies to entities with
publicly held common stock. It replaces the presentation of primary and
fully diluted EPS with a presentation of basic and diluted EPS. It requires
dual presentation of basic and diluted EPS for all entities with complex
capital structure."
ITEM 11. ADDITIONAL INFORMATION
The subsection entitled "Venezuelan Legal Proceeding" on page 41 of the
Offer to Purchase is hereby amended and supplemented to add the following
paragraph after the first paragraph under such subsection:
"On October 24, 2001, the First Administrative Court in Caracas
declined to grant plaintiff's requested relief on the ground that, as a
result of the publication of the Venezuelan Offer made by CANTV prior to
the extraordinary shareholder meeting, the plaintiff was deemed to be
sufficiently informed regarding the content of such offering."
SIGNATURE
After due 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.
Date: November 5, 2001
/s/ GUSTAVO ROOSEN
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Name: Gustavo Roosen
Title: President, Chairman and Chief
Executive Officer