[Federal Register Volume 63, Number 216 (Monday, November 9, 1998)]
[Notices]
[Pages 60418-60419]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29863]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-23514; 812-10734]
CD Radio Inc.; Notice of Application
November 2, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'').
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SUMMARY OF APPLICATION: 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 ceases to be an
investment company.
FILING DATE: The application was filed on July 22, 1997, and amended on
August 6, 1998. Applicant has agreed to file an amendment during the
notice period, the substance of which is included in this notice.
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 November
27, 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 may request
notification of a hearing by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 5th Street NW, Washington, DC 20549.
Applicant, 14th Floor, 1180 Avenue of the Americas, New York, NY 10019-
6064.
FOR FURTHER INFORMATION CONTACT:
Lisa McCrea, Attorney Adviser, at (202) 942-0562, or Nadya B. Roytblat,
Assistant Director, at (202) 942-0564
[[Page 60419]]
(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 at the
SEC's Public Reference Branch, 450 5th Street, NW, Washington, DC 20549
(tel. 202-942-8090).
Applicant's Representations
1. Applicant is a Delaware corporation formed in 1990 and engaged
in the business of developing a national satellite broadcast system to
provide digital audio radio service (``Service''). In October 1997,
applicant was granted a license by the Federal Communications
Commission (``FCC'') to build, launch and operate the Service.
2. To obtain the funds needed to pay for the FCC License, in 1997
applicant completed a public stock offering, a public debt offering,
and a private placement of its common stock. Pending utilization in
building the Service, the proceeds of the offerings were used to pay
for the FCC License and invested in a money market fund, U.S.
government securities, commercial paper, and a bank certificate of
deposit.
3. For applicant to continue to hold the FCC License, applicant
must satisfy certain progress requirements, including meeting certain
deadlines for the construction and launch of satellites, and a deadline
for the Service to be in full operation. Satisfying these requirements
will require significant expenditures. Applicant currently expects to
commence operations of the Service by the first quarter of the year
2000.
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 percent 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,
and securities which are 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 building and
operating the System, the proceeds of applicant's offerings of its
stock may be held in ``investment securities'' within the meaning of
section 3(a)(2) of the Act. As of June 30, 1998, approximately 44% of
applicant's total assets consisted of ``investment securities.''
Applicant states, therefore, that it may come within the definition of
investment company in section 3(a)(1)(C) of the Act. Applicant also
states that it anticipates raising additional funds to complete the
development of the System, and will place the proceeds in U.S.
government securities and shares of money market funds to be drawn down
as needed to complete the construction and operate the System.
3. Section 6(c) of the Act permits the SEC to exempt 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. Applicant 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 ceases to be an
investment company. Applicant believes that within this period it will
have sufficient expenditures of funds on the establishment of the
Service and the acquisition of non-investment assets to cure its
temporary status under section 3(a)(1)(C) of the Act.
5. Applicant asserts that, as a company that was created to build
and operate the Service, applicant is not the type of entity that was
intended to be governed by the Act. Applicant states that, since its
inception, its principal activities have been in technology
development, pursuing regulatory approval for the Service, discussions
with radio manufacturers and automakers, market research, design and
development, development of a mobile demonstration program, contract
negotiations with satellite and launch vehicle contractors, technical
efforts with respect to standards and specifications, and securing
adequate working capital. Applicant thus asserts that the requested
relief is consistent with the protection of investors and the purposes
fairly intended by the policy and provisions of the Act.
Applicant's Conditions
Applicant agrees that the requested exemption will be subject to
the following conditions:
1. Applicant will not purchase or otherwise acquire any securities
other than shares of a money market fund and U.S. Government
securities.
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 its satellite radio system
business.
For the SEC, by the Division of Investment Management, under
delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 98-29863 Filed 11-6-98; 8:45 am]
BILLING CODE 8010-01-M
