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[Federal Register Volume 63, Number 150 (Wednesday, August 5, 1998)]
[Notices]
[Pages 41879-41880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20872]

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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-23367; 812-10530]

UIH Latin America, Inc.; Notice of Application

July 30, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for exemption under section 3(b)(2) of 
the Investment Company Act of 1940 (the ``Act'').

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    Summary of Application: Applicant requests an order declaring that 
it is engaged primarily in a business other than that of investing, 
reinvesting, owning, holding, or trading in securities.

FILING DATES: The application was filed on February 25, 1997, and 
amended on August 7, 1997, and on July 27, 1998.
    Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the SEC orders a hearing. Interested 
persons may request a hearing by writing to the SEC's Secretary and 
serving applicant with a copy of the request, personally or by mail. 
Hearing requests should be received by the SEC by 5:30 p.m. on August 
24, 1998, and should be accompanied by proof of service on applicant, 
in the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing the SEC's 
Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549. 
Applicant, UIH Latin America, Inc., 4643 South Ulster St., Suite 1300, 
Denver, CO 80237.

FOR FURTHER INFORMATION CONTACT:
Lisa McCrea, Attorney Adviser, at (202) 942-0562, or Edward P. 
Macdonald, Branch Chief, at (202) 942-0564 (Office of Investment 
Company Regulation, Division of Investment Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 450 5th Street, NW., Washington, DC 
20549 (tel. 202-942-8090).

Applicant's Representations

    1. Applicant, a Colorado corporation formed in 1995, is a wholly-
owned subsidiary of United International Holdings, Inc. (``UIHI''), a 
Delaware corporation. UIHI provides multi-channel television and other 
telecommunication services outside the U.S. and has ownership interests 
in multi-channel television systems in operation or construction in 25 
countries.
    2. Applicant currently has two majority-owned subsidiaries, each of 
which is engaged in the business of owning and operating multi-channel 
television and telecommunications businesses in Peru, and one majority-
owned subsidiary providing programming to Latin America. Applicant also 
has several minority-owned subsidiaries, each of which is engaged in 
the business of owning and operating multi-channel television and 
telecommunications businesses in Brazil, Chile and Mexico (``Controlled 
Companies'').
    3. The Controlled Companies include the following: TV Cabo 
Comunicacoes de Jundiai, in which applicant, through

[[Page 41880]]

a wholly-owned subsidiary, owns a 46% interest; TV Show Brasil S.A. 
(``TVSB''), in which applicant, through a wholly-owned subsidiary, owns 
a 45% interest; VTR Hipercable S.A. (``Hipercable''), in which 
applicant, through a wholly-owned subsidiary, owns a 34% interest; and 
six operating subsidiaries of Megapo Comunicaciones de Mexico, S.A. de 
C.V., in each of which applicant, through a wholly-owned subsidiary, 
owns a 49% interest. Applicant has exercised an option to obtain the 
remaining 55% interest in TVSB and consummation of the transaction is 
pending regulatory approval. Applicant also will have an option to 
purchase new Hipercable shares to increase its ownership to 50%.
    4. Applicant states that it is a holding company that conducts its 
multi-channel television and related communications operations through 
wholly-owned and majority-owned subsidiaries and Controlled Companies. 
Applicant further states that, while it always intends to purchase a 
majority voting interest when acquiring an equity interest in a new 
television or telecommunications system, it is not always possible or 
feasible because many Latin American countries prohibit United States 
owners such as applicant from acquiring a direct majority interest in 
cable, telecommunication or programming companies.
    5. Applicant states that it does not seek passive investments. To 
ensure that applicant has active participation in the management of the 
companies in which it does not own a majority voting interest, 
applicant enters into shareholder or other voting agreements and often 
requires amendments to the governing documents of the company. 
Applicant states that these agreements and amendments establish 
applicant's right to appoint a specified number of directors to the 
company's board of directors and require supermajority approval of 
shareholders or the board for most significant decisions affecting the 
company. Applicant asserts that under these provisions applicant 
controls the direction and development of the company and has veto 
power over most major decisions. In addition, under management or 
technical assistance agreements with the company, applicant's personnel 
typically manage the design, construction and operation of the 
company's operating system and are responsible for the selection and 
training of key personnel of the company. Applicant assets that it has 
these arrangements in place with respect to each of the Controlled 
Companies.

Applicant's Legal Analysis

    1. Under section 3(a)(1)(C) of the Act, an issuer is an investment 
company if it ``is engaged or proposes to engage in the business of 
investing, reinvesting, owning, holding, or trading in securities, and 
owns or proposes to acquire investment securities having a value 
exceeding 40 per cent of the value of an issuer's total assets 
(exclusive of Government securities and cash items) on an 
unconsolidated basis.'' Section 3(a)(2) defines ``investment 
securities'' to include all securities except, in part, securities 
issued by majority-owned subsidiaries of the owner which are not 
investment companies.
    2. Applicant states that it currently meets the definition of 
investment company under section 3(a)(1)(C) of the Act because 
approximately 81% of its total assets are interests in the Controlled 
Companies that are ``investment securities'' within the meaning of 
section 3(a)(2).
    3. Section 3(b)(2) provides that, notwithstanding section 
3(a)(1)(C) of the Act, the SEC may issue an order declaring an issuer 
to be primarily engaged in a business or businesses other than that of 
investing, reinvesting, owning, holding, or trading in securities 
either directly, through majority-owned subsidiaries, or controlled 
companies conducting similar types of businesses. Applicant requests an 
order under section 3(b)(2) declaring that it is primarily engaged, 
through majority-owned subsidiaries and Controlled Companies, in a 
business other than that of investing, reinvesting, owning, holding, or 
trading in securities.
    4. To determine whether applicant is primarily engaged in a non-
investment company business under section 3(b)(2), the SEC considers 
the following factors: (a) applicant's historical development; (b) its 
public representations or policy; (c) the activities of its officers 
and directors; (d) the nature of its present assets; and (e) the 
sources of its present income.\1\
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    \1\ See Tonopah Mining Company of Nevada, 26 S.E.C. 426, 427 
(1947).
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    (a) Historical Development. Applicant states that it was formed to 
consolidate UIHI's Latin American cable and telecommunications 
businesses under one corporation. Since its incorporation, applicant 
has been engaged in the television and telecommunications business in 
Latin American through its wholly-owned and majority-owned subsidiaries 
and Controlled Companies.
    (b) Public Representations of Policy. Applicant states that it has 
never held itself out as an investment company. Applicant asserts that 
it consistently has held itself out as being in the business of 
acquiring, developing, owning and operating cable and 
telecommunications businesses outside the United States.
    (c) Activities of Officers and Directors. Applicant states that its 
officers spend the majority of their time operating applicant's 
subsidiaries, including constructing distribution networks, hiring 
staff, planning and implementing budgets, and designing, acquiring, 
operating, and monitoring subscriber management and information 
systems. Of applicant's officers, only the Chief Financial Officer 
spends any time (approximately 10%) overseeing the management of 
applicant's funds and temporarily investing those funds pending their 
use in applicant's business.
    (d) Nature of Assets. As of May 31, 1998, applicant has total 
assets of apprxoimately $259,232,000, 10.2% of which were attributable 
to its majority-owned subsidiaries, 81% of which were attributable to 
its Controlled Companies, and 8.7% of which were attributable to its 
other assets (such as capitalized development costs, cash, short-term 
investments and accounts receivables).
    (e) Sources of Income. For the twelve month period ending May 31, 
1998, applicant experienced net losses that were attributable 27% to 
majority-owned subsidiaries, 17% to Controlled Companies, and 56% to 
applicant's operating expenses (in the form of interest payments on 
bridge financing to fund acquisitions of wholly-owned and majority-
owned operating subsidiaries, and overhead costs).
    5. Applicant thus asserts that it meets the requirements for an 
order under section 3(b)(2) of the Act.
    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-20872 Filed 8-4-98; 8:45 am]
BILLING CODE 8010-01-M
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