Annual report (20-F) - Ono

equity value certificates by allocating the $1,000 issue price of each dollar unit between the 2009 dollar
note and the associated dollar equity value certificate and by allocating the €1,000 issue price of each
euro unit between the 2009 euro note and the associated euro equity value certificate based upon their
relative fair market values.
According to such determination, the issue price of each 2009 dollar note is $984.59 per $1,000
principal amount, and the issue price of each dollar equity value certificate is $15.41. The issue price of
each 2009 euro note is €984.59 per €1,000 principal amount, and the issue price of each euro equity value
certificate is €15.41. These allocations establish a U.S. holder’s initial tax bases in the note and the equity
value certificate. These allocations are binding on each U.S. holder, unless such U.S. holder explicitly
discloses (on a statement attached to such U.S. holder’s timely filed U.S. federal income tax return for the
year that includes the acquisition date of the unit) that its allocation of the unit’s issue price between the
note and the equity value certificate is different from the issuer’s allocation. The issuer’s allocation is not
binding on the Internal Revenue Service, or IRS, and therefore there can be no assurance that the IRS will
respect such allocation.
If the “stated redemption price at maturity” of a 2009 dollar or euro note exceeds its issue price
by more than a de minimis amount (generally defined as ¼ of 1% of a note’s stated redemption price at
maturity multiplied by the number of complete years to its maturity), the note will be treated as having
been issued with original issue discount (“OID”). Based upon the Issuer’s allocation of the issue price of
the units between the 2009 Notes and the associated equity value certificates, the 2009 Notes will be
treated as having been issued with no OID under the de minimis rules described above. However, if the
IRS were to disagree with this allocation, it might successfully contend that the 2009 Notes should be
treated as having been issued with OID, in which case US Holders would be required to include the OID
in taxable income as it accrues over the life of the Notes. See discussion under the caption “Original Issue
Discount” below. US Holders should consult their own tax advisers as to the potential application of the
OID rules to the 2009 Notes.
Allocation of Purchase Price Between the 2011 Notes and Associated Equity Value Certificates
The 2011 Notes were issued in the form of units. Each dollar unit consists of one $1,000
principal amount 2011 dollar note and one dollar equity value certificate evidencing the right to receive
upon exercise the value of 48.98512580 Ordinary Shares of Cableuropa as of the earliest of certain
defined trigger events. Each euro unit consists of one €1,000 principal amount 2011 euro note and one
euro equity value certificate evidencing the right to receive upon exercise the value of 45.98831311
Ordinary Shares of Cableuropa as of the earliest of certain defined trigger events. For U.S. federal income
tax purposes, each unit is treated as an investment unit, consisting of a note and an equity value
certificate. The issuer has determined the “issue price” of each of the 2011 Notes and equity value
certificates by allocating the $1,000 issue price of each dollar unit between the 2011 dollar note and the
associated dollar equity value certificate and by allocating the €1,000 issue price of each euro unit
between the 2011 euro note and the associated euro equity value certificate based upon their relative fair
market values. According to such determination, the issue price of each 2011 dollar note is $862.04 per
$1,000 principal amount, and the issue price of each dollar equity value certificate is $137.96. The issue
price of each 2011 euro note is €862.03506067 per €1,000 principal amount, and the issue price of each
euro equity value certificate is €137.96493933.
After allocating the issue price of the units between the 2011 Notes and the associated equity
value certificates in the manner described above, each of the 2011 Notes will be treated as having been
issued with OID in an amount equal to the excess of (a) the “stated redemption price at maturity” of the
note over (b) its “issue price”. See discussion under the caption “Original Issue Discount” below. U.S.
Holders should consult their own tax advisers as to the potential application of the OID rules to the 2011
Notes.
Tax Treatment of the Notes
Classification of the Notes. This summary is based upon the assumption that the Notes are
characterized as indebtedness for U.S. federal income tax purposes. Current holders of the Notes should
recognize, however, that there is some uncertainty regarding the appropriate characterization of
instruments such as the Notes, and no rulings have been or will be sought from the IRS with respect to the
appropriate characterization of the Notes for U.S. federal income tax purposes. It is possible that the IRS
might contend that the Notes should be treated as equity in the Issuer rather than indebtedness. Any such
recharacterization might result in material adverse consequences to U.S. Holders of the Notes, including
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