[Federal Register Volume 65, Number 151 (Friday, August 4, 2000)]
[Notices]
[Pages 48021-48022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19731]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 24586; 812-11946]


CompleTel Europe N.V.; Notice of Application

July 28, 2000.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 6(c) of the 
Investment Company Act of 1940 (the ``Act'').

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SUMMARY OF THE APPLICATION: CompleTel Europe N.V. (``CompleTel'' or 
``Applicant'') requests an order exempting it from all provisions of 
the Act until the earlier of one year from the date the requested order 
is issued or the date Applicant no longer may be deemed to be an 
investment company.

FILING DATES: The application was filed on January 14, 2000 and amended 
on July 26, 2000.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicant with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on August 25, 2000,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 to the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, N.W., Washington, 
D.C. 20549-0609. Applicant, c/o Anthony Vertuno, Esq., Swidler Berlin 
Shereff Friedman, LLP, 3000 K Street, N.W., Washington, D.C. 20007.

[[Page 48022]]


FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Sr., Senior Counsel, 
at (202) 942-0714, or Janet M. Grossnickle, Branch Chief, at (202) 942-
0564 (Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the Commission's Public Reference Branch, 450 Fifth Street, N.W., 
Washington, D.C. 20549-0102 (telephone (202) 942-8090).

Applicant's Representations

    1. Applicant, a Dutch public limited company formed in 1998, is a 
subsidiary of CompleTel LLC, a Delaware limited liability company. 
Applicant, through its wholly-owned subsidiaries, is a facilities-based 
provider of telecommunications services in Western Europe. As such, it 
owns and operates the telecommunication networks (including local fiber 
loops, telecommunications switches, switching facilities, network 
operations and customer care facilities) through which Applicant 
provides telecommunications services to its customers. Applicant's 
wholly-owned operating subsidiaries applied for and were granted 
telecommunications facility operator and service provider licenses for 
their respective markets in France, Germany and the United Kingdom and 
began deploying networks in its target markets.
    2. To finance the acquisition, construction and deployment of its 
network facilities in each of its target markets, Applicant requires a 
significant amount of capital. In addition, as a key element of its 
deployment strategy, Applicant has developed a financing plan 
predicated on pre-funding each market's expansion to the point at which 
that market's operating cash flow is sufficient to fund both the 
operating costs (including working capital, debt service and cash flow 
deficits) and capital expenditures. Consistent with this financing 
plan, CompleTel has raised capital whenever it is available on 
attractive terms and may do so in the future in order to pre-fund its 
network construction and deployment in targeted markets in pursuit of 
its business plan.
    3. As of April 15, 2000, Applicant had total assets of 
approximately $817.7 million, of which $118.5 million have been 
invested in property, equipment and other long-term assets, and $665.6 
million in cash, ``government securities'' (as defined in section 
2(a)(16) of the Act), and ``investment securities'' (as defined in 
section 3(a)(1)(C) of the Act) in accordance with Applicant's 
investment objectives of preserving principal and maintaining liquidity 
to meet daily cash needs and earning a competitive rate of return 
within the limits of these objectives. Applicant states that its 
investment securities may consist of money market funds or the European 
equivalent of money market funds and commercial paper rated A-1/P-1 
denominated in U.S. dollars, euros and other Western European 
currencies (``Qualified Investments''). Applicant states that it holds 
Qualified Investments solely for the purpose of preserving capital 
pending the application of capital to its operations.

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 it the business of 
investing, reinvesting, owning, holding or trading in securities, and 
owns on proposes to acquire investment securities having a value 
exceeding 40 per cent of the value of such issuer's total assets 
(exclusive of government securities and cash items) on an 
unconsolidated basis.'' Section 3(a)(2) of the Act defines ``investment 
securities'' to include all securities except government securities, 
securities issued by employees' securities companies and securities 
issued by majority-owned subsidiaries of the owner which are not 
investment companies, and are not relying on the exception from the 
definition of investment company in section 3(c)(1) or 3(c)(7) of the 
Act.
    2. Applicant states that, pending utilization in the construction 
and deployment of its networks and the development of its competitive 
local exchange business, the proceeds of its capital raising activities 
may be invested in Qualified Investments so as to cause Applicant's 
investment securities to exceed 40% of its total assets.
    3. Section 6(c) of the Act permits the Commission to except any 
person, security, or transaction from any provision of the Act, if and 
to the extent that the exemption is necessary or appropriate in the 
public interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act.
    4. Applicants requests an exemption under section 6(c) from all 
provisions of the Act until the earlier of one year from the date the 
requested order is issued or the date Applicant no longer may be deemed 
to be an investment company. Applicant believes that within this period 
its capital expenditures, including substantial investments in 
property, equipment and other long-term assets, will be sufficient to 
reduce its investment securities to less than 40% of its total 
assets.\1\
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    \1\ Applicant states that it relied on rule 3a-2 under the Act 
for a period that began in February 1999. Rule 3a-2 provides a one 
year exemption from the definition of investment company for certain 
transient investment companies.
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    5. Applicant states that it has always been engaged primarily in 
the business of developing a Western European competitive local 
exchange carrier business. Applicant further states that its business 
activities to date have consisted primarily of the procurement of 
governmental authorizations, the acquisition of telecommunications 
equipment and facilities, the hiring of management and key personnel, 
the raising of capital, the construction and deployment of its fiber 
optic networks, the development, acquisition and integration of 
operation support systems and other back office systems, the 
negotiation of interconnection agreements with incumbent local exchange 
carriers and the development of its Internet service provider business. 
Applicant thus asserts that the requested relief is appropriate in the 
public interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act.

Applicant's Condtions

    Applicant agrees that the requested exemption will be subject to 
the following conditions:
    1. Applicant will not purchase or otherwise acquire any investment 
securities other than Qualified Investments.
    2. Applicant will not hold itself out as being engaged in the 
business of investing, reinvesting, owning, holding or trading in 
securities.
    3. Applicant will allocate and utilize its accumulated cash and 
securities for the purpose of funding the construction and deployment 
of its networks and the development of its competitive local exchange 
business and Internet and related services.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-19731 Filed 8-3-00; 8:45 am]
BILLING CODE 8010-01-M