UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
June 30, 2010
or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission File Number: 001-33862
Liberty Acquisition Holdings Corp.
(Exact name of Registrant as specified in its charter)
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Delaware
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26-0490500
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(State or other jurisdiction of incorporation)
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(IRS Employer Identification Number)
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1114 Avenue of the Americas, 41st Floor
New York, New York 10036
(Address of principal executive offices)
(212) 380-2230
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
þ
Yes No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
o
Yes No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See definition of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of
the Act).
þ
Yes No
o
Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date. The number of shares of common stock outstanding as of August 9,
2010 was 129,375,000.
Forward-Looking Statements
This report, and the information incorporated by reference in it, include forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Our
forward-looking statements include, but are not limited to, statements regarding our expectations,
hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that
refer to projections, forecasts or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking statements. The words anticipates,
believe, continue, could, estimate, expect, intend, may, might, plan, possible,
potential, predict, project, should, would and similar expressions may identify
forward-looking statements, but the absence of these words does not mean that a statement is not
forward-looking. Forward-looking statements in this report may include, for example, statements
about our:
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ability to complete a combination with one or more target businesses, including our
proposed business combination with Promotora de Informaciones, S.A. (Prisa);
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success in retaining or recruiting, or changes required in, our officers or
directors following a business combination;
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potential inability to obtain additional financing to complete a business
combination;
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limited pool of prospective target businesses;
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potential change in control if we acquire one or more target businesses for stock;
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public securities limited liquidity and trading;
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inability to have our securities listed on the NYSE Amex LLC following a business
combination or the delisting of our securities from the NYSE Amex LLC;
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use of proceeds not in trust or available to us from interest income on our trust
account balance; or
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financial performance.
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The forward-looking statements contained or incorporated by reference in this report are based
on our current expectations and beliefs concerning future developments and their potential effects
on us and speak only as of the date of such statement. There can be no assurance that future
developments affecting us will be those that we have anticipated. These forward-looking statements
involve a number of risks, uncertainties (some of which are beyond our control) or other
assumptions that may cause actual results or performance to be materially different from those
expressed or implied by these forward-looking statements. These risks and uncertainties include,
but are not limited to, those factors described in Part II Other Information, Item 1A. Risk
Factors and elsewhere in this report and in our annual report on Form 10-K for the Year ended
December 31, 2009, and those described in our future reports filed with the Securities Exchange
Commission. Should one or more of these risks or uncertainties materialize, or should any of our
assumptions prove incorrect, actual results may vary in material respects from those projected in
these forward-looking statements. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws.
References in this report to we, us, Liberty, or our company refer to Liberty
Acquisition Holdings Corp. References to our founders refer, collectively, to our sponsors and
each of our independent directors. References to public stockholders refer to purchasers of our
securities in our initial public offering and subsequent purchasers in the secondary market. To
the extent our founders purchased common stock in our initial public offering or thereafter in the
open market they would be public stockholders for liquidation and dissolution purposes, but will
vote all such shares in favor of our initial business combination and therefore would not be
eligible to seek redemption in connection with a vote on a business combination.
1
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
CONDENSED BALANCE SHEETS
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June 30, 2010
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December 31, 2009
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(unaudited)
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Current assets
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Cash
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$
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6,832,539
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$
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8,941,801
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Income tax receivable
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328,000
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Prepaid income taxes
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550,576
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Other prepaid expenses
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147,033
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101,635
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Total current assets
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7,307,572
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9,594,012
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Other assets
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Deferred taxes
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699,000
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492,000
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Cash and cash equivalents held in Trust Account
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1,021,633,285
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1,022,041,138
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Total assets
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$
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1,029,639,857
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$
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1,032,127,150
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LIABILITIES AND STOCKHOLDERS EQUITY
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Current liabilities
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Accrued expenses
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$
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5,869,029
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$
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2,027
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Franchise taxes payable
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31,574
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Total current liabilities
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5,869,029
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33,601
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Long-term liabilities
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Deferred underwriters fee
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24,427,500
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27,427,500
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Common stock subject to redemption, 31,049,999
shares at redemption value, approximately $9.81
per share
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304,910,990
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304,910,990
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Deferred interest income related to common stock
subject to possible redemption
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2,241,525
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2,205,468
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Total long-term liabilities
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331,580,015
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334,543,958
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Stockholders equity
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Preferred stock, $.0001 par value; 1,000,000
shares authorized; none issued
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Common stock, $.0001 par value, authorized
215,062,500 shares; 129,375,000 shares issued
and outstanding (including 31,049,999 shares
subject to possible redemption)
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12,938
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12,938
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Additional paid-in capital
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689,812,963
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686,812,963
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Earnings accumulated during the development stage
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2,364,912
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10,723,690
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Total stockholders equity
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692,190,813
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697,549,591
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Total liabilities and stockholders equity
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$
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1,029,639,857
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$
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1,032,127,150
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See accompanying notes to condensed interim financial statements.
2
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
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For the
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Three
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For the Three
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Months
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Period from
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For the Six
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For the Six
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Months
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Ended
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June 27, 2007
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Months Ended
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Months Ended
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Ended
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June 30,
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(inception) to
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June 30, 2010
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June 30, 2009
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June 30, 2010
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2009
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June 30, 2010
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Revenue
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$
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$
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$
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$
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$
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Formation and administrative costs
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1,759,706
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630,241
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802,865
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258,659
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6,120,530
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Warrant modification charge (stock compensation expense)
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2,460,000
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Business combination fees and expenses
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7,282,870
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2,482,870
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7,282,870
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Loss from operations
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(9,042,576
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)
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(630,241
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)
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(3,285,735
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(258,659
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(15,863,400
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Interest income
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184,855
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3,048,751
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98,562
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981,883
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32,504,913
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Income before provision for income taxes
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(8,857,721
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2,418,510
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(3,187,173
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723,224
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16,641,513
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Income tax expense (benefit)
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(535,000
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)
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1,068,598
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(240,000
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)
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307,899
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12,035,076
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Net income (loss) applicable to common stockholders
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$
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(8,322,721
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)
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$
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1,349,912
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$
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(2,947,173
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)
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$
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415,325
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$
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4,606,437
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Maximum number of shares subject to possible redemption:
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Approximate weighted average number of shares, basic and diluted
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31,049,999
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31,049,999
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31,049,999
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31,049,999
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26,279,591
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Income per share to common stock subject to possible redemption, basic and diluted
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$
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0.00
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$
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0.02
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$
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0.00
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$
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0.01
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$
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0.09
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Approximate weighted average number of common shares outstanding (not subject to
possible redemption), basic
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98,325,001
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98,325,001
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98,325,001
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98,325,001
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87,194,046
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Net income (loss) per common share not subject to possible redemption, basic
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$
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(0.09
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$
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0.01
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$
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(0.03
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$
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0.00
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$
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0.05
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Approximate weighted average number of common shares outstanding (not subject to
possible redemption), diluted
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98,325,001
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121,447,836
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98,325,001
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121,959,253
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109,259,394
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Income (loss) per common share not subject to possible redemption, diluted
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$
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(0.09
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)
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$
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0.01
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$
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(0.03
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)
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$
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0.00
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$
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0.04
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See accompanying notes to condensed interim financial statements.
3
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
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Earnings
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(Deficit)
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Accumulated
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During the
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Total
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Common
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Additional
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Development
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Stockholders
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Shares
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Amount
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Paid-in Capital
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Stage
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Equity
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Sale of Units issued to
founding stockholders on
August 9, 2007 at
approximately $0.00097 per
unit (each unit consists one
share of common stock and one
half (1/2) of one warrant)
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25,875,000
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$
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2,588
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$
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22,412
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$
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$
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25,000
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Sale of 12,000,000 warrants
at $1 per warrant on December
12, 2007 to Berggruen
Holdings and Marlin Equities
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12,000,000
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12,000,000
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Sale of 103,500,000 units on
December 12, 2007 at a price
of $10 per unit in the public
offering, including
13,500,000 Units sold to the
underwriters
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103,500,000
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10,350
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1,034,989,650
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1,035,000,000
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Proceeds from public offering
subject to possible
redemption (31,049,999 shares
common stock at redemption
value)
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(304,910,990
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)
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(304,910,990
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)
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Underwriters discount and
offering costs related to
public offering and
over-allotment option
(including $27,427,500
payable upon a Business
Combination)
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(57,748,109
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)
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(57,748,109
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)
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Warrants modification charge
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2,460,000
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2,460,000
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Accretion of Trust Account
relating to common stock
subject to possible
redemption, net of tax of
approximately $385,000
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(482,772
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)
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|
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(482,772
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Net loss
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(959,980
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)
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(959,980
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|
|
|
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|
|
Balances, at December 31, 2007
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|
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129,375,000
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$
|
12,938
|
|
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$
|
686,812,963
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|
$
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(1,442,752
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)
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$
|
685,383,149
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|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion of Trust Account
relating to common stock
subject to possible
redemption, net of tax of
approximately $898,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,085,528
|
)
|
|
|
(1,085,528
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,328,223
|
|
|
|
13,328,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, at December 31, 2008
|
|
|
129,375,000
|
|
|
$
|
12,938
|
|
|
$
|
686,812,963
|
|
|
$
|
10,799,943
|
|
|
$
|
697,625,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion of Trust Account
relating to common stock
subject to possible
redemption, net of tax of
approximately $521,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(637,168
|
)
|
|
|
(637,168
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
560,915
|
|
|
|
560,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, at December 31, 2009
|
|
|
129,375,000
|
|
|
$
|
12,938
|
|
|
$
|
686,812,963
|
|
|
$
|
10,723,690
|
|
|
$
|
697,549,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to reflect reduction of underwriters discount
|
|
|
|
|
|
|
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
3,000,000
|
|
Accretion of Trust Account
relating to common stock
subject to possible
redemption, net of tax of
approximately $84,000
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(36,057
|
)
|
|
|
(36,057
|
)
|
Net loss (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,322,721
|
)
|
|
|
(8,322,721
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, at June 30, 2010
(unaudited)
|
|
|
129,375,000
|
|
|
$
|
12,938
|
|
|
$
|
689,812,963
|
|
|
$
|
2,364,912
|
|
|
$
|
692,190,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed interim financial statements.
4
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six
|
|
|
|
|
|
|
Period from
|
|
|
|
Months
|
|
|
For the Six
|
|
|
June 27, 2007
|
|
|
|
Ended
|
|
|
Months Ended
|
|
|
(inception) to
|
|
|
|
June 30, 2010
|
|
|
June 30, 2009
|
|
|
June 30, 2010
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(8,322,721
|
)
|
|
$
|
1,349,912
|
|
|
$
|
4,606,437
|
|
Adjustment to reconcile net income to net cash
provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant modification charge (stock compensation
expense)
|
|
|
|
|
|
|
|
|
|
|
2,460,000
|
|
Deferred tax benefit
|
|
|
(207,000
|
)
|
|
|
(265,000
|
)
|
|
|
(699,000
|
)
|
Increase (decrease) in cash attributable to
changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax receivable
|
|
|
(328,000
|
)
|
|
|
|
|
|
|
(328,000
|
)
|
Prepaid income taxes
|
|
|
550,576
|
|
|
|
53,750
|
|
|
|
|
|
Other prepaid expenses
|
|
|
(45,398
|
)
|
|
|
122,468
|
|
|
|
(147,033
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
5,867,002
|
|
|
|
|
|
|
|
5,869,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes payable
|
|
|
|
|
|
|
(80,536
|
)
|
|
|
|
|
Franchise taxes payable
|
|
|
(31,574
|
)
|
|
|
46,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
(2,517,115
|
)
|
|
|
1,227,214
|
|
|
|
11,761,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal deposited in Trust Account
|
|
|
|
|
|
|
|
|
|
|
(1,017,502,500
|
)
|
Interest reinvested in Trust Account
|
|
|
(182,197
|
)
|
|
|
(3,018,230
|
)
|
|
|
(32,366,900
|
)
|
Redemptions from the Trust Account
|
|
|
590,050
|
|
|
|
1,308,167
|
|
|
|
28,236,115
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
407,853
|
|
|
|
(1,710,063
|
)
|
|
|
(1,021,633,285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of notes payable, founding stockholders
|
|
|
|
|
|
|
|
|
|
|
(250,000
|
)
|
Proceeds from notes payable, founding stockholders
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
Proceeds from issuance of units to founding
stockholders
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
Gross proceeds from public offering
|
|
|
|
|
|
|
|
|
|
|
1,035,000,000
|
|
Proceeds from issuance of warrants in private
placements
|
|
|
|
|
|
|
|
|
|
|
12,000,000
|
|
Payments for underwriters discounts and offering
costs
|
|
|
|
|
|
|
|
|
|
|
(30,320,609
|
)
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
|
|
|
|
|
|
|
1,016,704,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
(2,109,262
|
)
|
|
|
(482,849
|
)
|
|
|
6,832,539
|
|
Cash, beginning of period
|
|
|
8,941,801
|
|
|
|
9,689,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
6,832,539
|
|
|
$
|
9,206,888
|
|
|
$
|
6,832,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred underwriters fee
|
|
$
|
(3,000,0000
|
)
|
|
$
|
|
|
|
$
|
24,427,500
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid (received) during the period for income taxes
|
|
$
|
(537,150
|
)
|
|
$
|
786,131
|
|
|
$
|
12,962,926
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed interim financial statements.
5
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
NOTE ADESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS, BUSINESS OPERATIONS AND GOING CONCERN
CONSIDERATION
Liberty Acquisition Holdings Corp. (a corporation in the development stage) (the Company)
was incorporated in Delaware on June 27, 2007. The Company plans to acquire one or more operating
businesses through a merger, stock exchange, asset acquisition, reorganization or similar Business
Combination (a Business Combination). The Company has neither engaged in any operations nor
generated revenue from operations to date. The Company is considered to be in the development
stage as defined in
Accounting and Reporting By Development Stage Enterprises
, and is subject to
the risks associated with activities of development stage companies. Following the initial public
offering (described below), the Company will not generate any operating revenues until after the
completion of its initial Business Combination, at the earliest. The Company currently generates
non-operating income in the form of interest income on cash and cash equivalents held in an escrow
Trust Account (Trust Account) from the proceeds derived from the offering. For the six months
ended June 30, 2010, the Company earned approximately $0.2 million of interest income on the Trust
Account. The Company has selected December 31st as its fiscal year end.
The accompanying condensed financial statements have been prepared in accordance with
accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the
accounting and disclosure rules and regulations of the Securities and Exchange of Commission
(SEC), and reflect all adjustments, consisting only of normal recurring adjustments, which are,
in the opinion of management, necessary for a fair presentation of the financial position as of
June 30, 2010 and the results of operations for the three and six months ended June 30, 2010 and
2009 and for the period from June 27, 2007 (date of inception) to June 30, 2010. Certain
information and disclosures normally included in financial statements prepared in accordance with
U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed
balance sheet as of December 31, 2009, as presented herein, was derived from the Companys audited
financial statements as reported on Form 10-K to the Companys Annual Report for the year ended
December 31, 2009 filed with the SEC.
The results of operations for the three and six months ended June 30, 2010 are not necessarily
indicative of the results of operations to be expected for a full fiscal year. These unaudited
condensed interim financial statements should be read in conjunction with the Companys audited
financial statements as of December 31, 2009, which are included in the Companys Annual Report on
Form 10-K filed with the SEC.
The registration statement for the Companys initial public offering (the Offering) (as
described in Note C) was declared effective on December 6, 2007. The Company consummated the
Offering on December 12, 2007, and contemporaneous with the consummation of the Offering, the
Companys Sponsors (as defined below) purchased 12,000,000 warrants in the aggregate at $1.00 per
warrant in a private placement (the Private Placement) (See Note D). Substantially all of the
net proceeds of the Offering are intended to be generally applied toward consummating a Business
Combination. Furthermore, there is no assurance that the Company will be able to successfully
effect a Business Combination. Since the Offering, approximately 98% of the gross proceeds, after
payment of certain amounts to the underwriters, is held in a Trust Account and invested in U.S.
government securities
6
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
defined as any Treasury Bill issued by the United States having a maturity of 180 days or less
and/or in any open ended money market(s) selected by us meeting the conditions of Sections (c)(2),
(c)(3) and (c) (4) of Rule 2a-7 under the Investment Company Act of 1940, until the earlier of (i)
the consummation of its first Business Combination or (ii) the distribution of the Trust Account as
described below. The remaining proceeds may be used to pay for business, legal and accounting due
diligence on a prospective Business Combination and continuing general and administrative expenses.
The Company, after signing a definitive agreement for the Business Combination, will submit
such transaction for stockholder approval. In the event that 30% or more of the Companys
outstanding common stock, $0.0001 par value (Common Stock) (excluding, for this purpose, those
shares of the Common Stock issued prior to the Offering) vote against the Business Combination and
exercise their redemption rights described below, the Business Combination will not be consummated.
Stockholders that purchased the Common Stock in the Offering voting against a Business Combination
will be entitled to cause the Company to redeem their stock for a pro rata share of the Trust
Account (including the additional 2.65% fee of the gross proceeds payable to the underwriters upon
the Companys consummation of a Business Combination), including any interest earned (net of taxes
payable and the amount distributed to the Company to fund its working capital requirements) on
their pro rata share, if the Business Combination is approved and consummated. However, voting
against the Business Combination alone will not result in an election to exercise a stockholders
redemption rights. A stockholder must also affirmatively exercise such redemption rights at or
prior to the time the Business Combination is voted upon by the stockholders. All of the Companys
stockholders prior to the Offering (collectively, the Founders) have agreed to vote all of the
shares of the Common Stock held by them in accordance with the vote of the majority in interest of
all other stockholders of the Company.
In the event that the Company does not consummate a Business Combination by December 12, 2010
(extended from June 12, 2010, based upon the satisfaction of certain extension criteria), the
proceeds held in the Trust Account will be distributed to the Companys public stockholders,
excluding the Founders to the extent of their initial stock holdings. In the event of such
distribution, it is likely that the per share value of the residual assets remaining available for
distribution (including Trust Account assets) will be less than the initial public offering price
per Unit in the Offering (assuming no value is attributed to the warrants contained in the Units
offered in the Offering discussed in Note C). The potential mandatory liquidation raises
substantial doubt about the Companys ability to continue as a going concern. The accompanying
financial statements do not include any adjustments that may be necessary if the Company is unable
to continue as a going concern.
NOTE BSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation:
The accompanying condensed financial statements are presented in U.S. dollars and have been
prepared in accordance with U.S. GAAP and pursuant to the accounting and disclosure rules and
regulations for interim financial statements of the SEC.
Development stage company:
The Company complies with the accounting and reporting requirements of
Accounting and
Reporting by Development Stage Enterprises
.
7
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
Cash and cash equivalents:
Cash and cash equivalents are defined as cash and investments that have a maturity at date of
purchase of, or can be converted to cash in, three months or less.
Units:
On December 6, 2007, the Company effected a 1-for-5 unit dividend (Unit Dividend). All
transactions and disclosures in the condensed interim financial statements, related to the
Companys Units, have been adjusted to reflect the effect of the Unit Dividend.
Income (loss) per common share:
Basic income per common share is computed by dividing net income for the period by the
weighted average common shares outstanding for the period. Diluted net income per share reflects
the potential dilution that could occur if warrants were to be exercised or converted or otherwise
result in the issuance of common stock.
For the three and six months ended June 30, 2010 and 2009 and for the period from June 27,
2007 (inception) to June 30, 2010, the Company had potentially dilutive securities in the form of
76,687,500 warrants, including 12,937,500 warrants issued as part of the Founders Units (as
defined below), 12,000,000 Sponsors Warrants (as defined below) issued in the Private Placement
and 51,750,000 warrants issued as part of the Units (as defined below) in the Offering. Of the
total warrants outstanding for the periods then ended, approximately 23,634,000, 23,123,000 and
22,065,000 represent incremental shares of common stock, based on their assumed exercise, to be
included in the weighted average number of shares of common stock outstanding (not subject to
possible redemption) for the calculation of diluted income per share of common stock for the three
months ended June 30, 2009, the six months ended June 30, 2009, and the period from inception to
June 30, 2010, respectively. For the three and six months ended June 30, 2010, 27,385,000 and
27,067,000, respectively, of potentially diluted shares were not included in the computation of
diluted net loss per share because to do so would be anti-dilutive. The Company uses the treasury
stock method to calculate potential dilutive shares, as if they were redeemed for common stock at
the beginning of the period.
The Companys condensed statements of operations include a presentation of income per common
share subject to possible redemption in a manner similar to the two-class method of income per
common share. Basic and diluted income per common share amount for the maximum number of common
shares subject to possible redemption is calculated by dividing the net interest attributable to
common shares subject to redemption by the weighted average number of shares subject to possible
redemption. Basic and diluted income per share amount for the common shares outstanding not
subject to possible redemption is calculated by dividing the net income exclusive of the net
interest income attributable to common shares subject to redemption by the weighted average number
of shares not subject to possible redemption.
8
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
Concentration of credit risk:
Financial instruments that potentially subject the Company to concentrations of credit risk
consist of a cash account in a financial institution which exceeds the current Federal depository
insurance coverage of $250,000. The Company has not experienced losses on this account and
management believes the Company is not exposed to significant risks on this account.
Fair value of financial instruments:
The Company does not enter into financial instruments or derivative contracts for trading or
speculative purposes. The carrying amounts of financial instruments classified as current assets
and liabilities approximate their fair value due to their short maturities.
Use of estimates:
The preparation of condensed financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. If the Company were to effect a Business Combination,
estimates and assumptions would be based on historical factors, current circumstances and the
experience and judgment of the Companys management, and would evaluate its assumptions and
estimates on an ongoing basis and may employ outside experts to assist in the Companys
evaluations.
Income taxes:
The Company complies with
Accounting for Income Taxes
, which requires an asset and liability
approach to financial accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed for differences between the financial statement and tax bases of assets
and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws
and rates applicable to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
The Company also complies with the provisions of
Accounting for Uncertainty in Income Taxes
,
which prescribes a recognition threshold and measurement process for recording in the financial
statements uncertain tax positions taken or expected to be taken in a tax return. It also provides
guidance on de-recognition, classification, interest and penalties, accounting in interim periods,
disclosures and transitions. The Company adopted
Accounting for Uncertainty in Income Taxes
on the
inception date and has determined that the adoption did not have an impact on the Companys
financial position, results of operations or cash flows.
9
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
Stock-based compensation:
The Company accounts for stock options and warrants using the fair value recognition
provisions of
Share-Based Payment
, which addresses all forms of share-based compensation awards
including shares issued under employment stock purchase plans, stock options, restricted stock and
stock appreciation rights. Share-based payment awards will be measured at fair value on the grant
date, based on estimated number of awards that are expected to vest and will be reflected as
compensation expense in the financial statements. See Note D.
Redeemable common stock:
The Company accounts for redeemable common stock in accordance with
Classification and
Measurement of Redeemable Securities
, which provides that securities that are redeemable for cash
or other assets are classified outside of permanent equity if they are redeemable at the option of
the holder. In addition, if the redemption causes a liquidation event, the redeemable securities
should not be classified outside of permanent equity. As discussed in Note A, the Business
Combination will only be consummated if a majority of the shares of common stock voted by the
Public Stockholders are voted in favor of the Business Combination and Public Stockholders holding
less than 30% (31,049,999) of common stock sold in the Offering exercise their redemption rights.
As further discussed in Note A, if a Business Combination is not consummated by December 12, 2010
(extended from June 12, 2010, based upon the satisfaction of certain extension criteria), the
Company will liquidate. Accordingly, 31,049,999 shares of common stock have been classified
outside of permanent equity at redemption value. The Company recognizes changes in the redemption
value immediately as they occur and adjusts the carrying value of the redeemable common stock to
equal its redemption value at the end of each reporting period.
Recently issued accounting pronouncements:
In June 2009, the Financial Accounting Standard Board (FASB) issued Accounting Standards
Update (ASU) No. 2009-01,
Topic 105 Generally Accepted Accounting Principles amendments based
on Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification
(ASC) and the Hierarchy of Generally Accepted Accounting Principles
. This ASU reflected the
issuance of FASB Statement No. 168. This ASU amends the FASB Accounting Standards Codification for
the issuance of FASB Statement No. 168,
The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles
. This ASU includes Statement 168 in its
entirety, including the accounting standards update instructions contained in Appendix B of the
Statement. The Codification does not change current U.S. GAAP, but is intended to simplify user
access to all authoritative U.S. GAAP by providing all the authoritative literature related to a
particular topic in one place. The Codification is effective for interim and annual periods ending
after September 15, 2009, and as of the effective date, all existing accounting standard documents
will be superseded. The Codification is effective for the Company in the third quarter of 2009, and
accordingly, the Companys Annual Report on Form 10-K for the year ended December 31, 2009
referenced, and all subsequent public filings will reference, the Codification as the sole source
of authoritative literature.
In June 2009, the FASB issued ASU No. 2009-02,
Omnibus UpdateAmendments to Various Topics for
Technical Corrections
. This omnibus ASU detailed amendments to various topics for technical
corrections, effective as of July 1, 2009. The adoption of ASU 2009-02 will not have a material
impact on the Companys condensed interim financial statements.
10
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
In August 2009, the FASB issued ASU No. 2009-03,
SEC Update Amendments to Various Topics
Containing SEC Staff Accounting Bulletins
. This ASU updated cross-references to Codification text.
The adoption of ASU 2009-03 will not have a material impact on the Companys condensed interim
financial statements.
In August 2009, the FASB issued ASU No. 2009-04,
Accounting for Redeemable Equity Instruments
Amendment to Section 480-10-S99
. This ASU represents an update to Section 480-10-S99,
Distinguishing Liabilities from Equity, per Emerging Issues Task Force Topic D-98, Classification
and Measurement of Redeemable Securities. The adoption of ASU 2009-04 will not have a material
impact on the Companys condensed interim financial statements.
In August 2009, the FASB issued ASU No. 2009-05,
Fair Value Measurements and Disclosures
(Topic 820) Measuring Liabilities at Fair Value
. This ASU amends Subtopic 820-10, Fair Value
Measurements and Disclosures, to provide guidance on the fair value measurement of liabilities.
This update is effective for financial statements issued for interim and annual periods ending
after August 26, 2009. The adoption of ASU 2009-05 is not expected to have a material impact on
the Companys condensed interim financial statements.
In September 2009, the FASB issued ASU No. 2009-07,
Technical Corrections to SEC Paragraphs
.
This ASU corrected SEC paragraphs in response to comment letters. The adoption of ASU 2009-07 will
not have material impact on the Companys condensed interim financial statements.
In September 2009, the FASB issued ASU No. 2009-08,
Earnings Per Share Amendments to Section
260-10-S99
. This ASU represents technical corrections to Topic 260-10-S99, Earnings per Share,
based on EITF Topic D-53, Computation of Earnings Per Share for a Period that Includes a Redemption
or an Induced Conversion of a Portion of a Class of Preferred Stock and EITF Topic D-42, The Effect
of the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred
Stock. The adoption of ASU 2009-08 will not have material impact on the Companys condensed interim
financial statements.
In September 2009, the FASB issued ASU No. 2009-09,
Accounting for Investments-Equity Method
and Joint Ventures and Accounting for Equity-Based Payments to Non-Employees
. This ASU represents a
correction to Section 323-10-S99-4, Accounting by an Investor for Stock-Based Compensation Granted
to Employees of an Equity Method Investee. Section 323-10-S99-4 was originally entered into the
Codification incorrectly. The adoption of ASU 2009-09 will not have material impact on the
Companys condensed interim financial statements.
In September 2009, the FASB issued ASU No. 2009-12,
Fair Value Measurements and Disclosures
(Topic 820), Investments in Certain Entities that Calculate Net Asset Value per Share (or Its
Equivalent)
. This ASU amends Subtopic 820-10, Fair Value Measurements and Disclosures, to provide
guidance on the fair value measurement of investments in certain entities that calculate net asset
value per share (or its equivalent). This update is effective for financial statements issued for
interim and annual periods ending after December 15, 2009. The adoption of ASU 2009-12 will not
have material impact on the Companys condensed interim financial statements.
11
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
In January 2010, the FASB issued
Fair Value Measurements and Disclosures (Topic 820):
Improving Disclosures about Fair Value Measurements
, which provides guidance on how investment
assets and liabilities are to be valued and disclosed. Specifically, the amendment requires
reporting entities to disclose (i) the input and valuation techniques used to measure fair value
for both recurring and nonrecurring fair value measurements, for Level 2 or Level 3 positions, (ii)
transfers between all levels (including Level 1 and Level 2) will be required to be disclosed on a
gross basis (i.e. transfers out must be disclosed separately from transfers in) as well as the
reason(s) for the transfers and (iii) purchases, sales, issuances and settlements must be shown on
a gross basis in the Level 3 rollforward rather than as one net number. The effective date of the
amendment is for interim and annual periods beginning after December 15, 2009. However, the
requirement to provide the Level 3 activity for purchases, sales, issuances and settlements on a
gross basis will be effective for interim and annual periods beginning after December 15, 2010.
The adoption of the amendment did not have a material impact on the Companys condensed interim
financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting
pronouncements, if currently adopted, would have a material effect on the Companys condensed
interim financial statements.
NOTE CTHE OFFERING
On December 12, 2007, the Company consummated its initial public offering of 103,500,000 units
(Units) (including 13,500,000 Units sold pursuant to the underwriters exercise of their
over-allotment option) at a price of $10.00 per Unit in the Offering. Each Unit consists of one
share of the Companys Common Stock and one half (1/2) of one redeemable Common Stock purchase
warrant (Warrant). Because each unit includes one half (1/2) of one warrant, holders will need
to have two units in order to have one warrant. Warrants may be exercised only in increments of
one whole warrant. The public offering price was $10.00 per Unit. Each Warrant entitles the
holder to purchase from the Company one share of Common Stock at an exercise price of $5.50
commencing on the later of (i) the consummation of the Companys initial Business Combination or
(ii) December 6, 2008, provided in each case that there is an effective registration statement
covering the shares of Common Stock underlying the Warrants in effect. The Warrants will expire
December 12, 2013, unless earlier redeemed. The Warrants will be redeemable at a price of $0.01
per Warrant upon 30 days prior notice after the Warrants become exercisable, only in the event that
the last sale price of the Common Stock is at least $15.00 per share for any 20 trading days within
a 30 trading day period ending on the third business day prior to the date on which notice of
redemption is given.
No warrants will be exercisable and the Company will not be obligated to issue shares of
Common Stock unless at the time a holder seeks to exercise such warrant, a prospectus relating to
the Common Stock issuable upon exercise of the warrants is current and the Common Stock has been
registered or qualified or deemed to be exempt under the securities laws of the state of residence
of the holder of the warrants. Under the terms of the warrant agreement, the Company has agreed to
use its best efforts to meet these conditions and to maintain a current prospectus relating to the
Common Stock issuable upon exercise of the warrants until the expiration of the warrants. However,
if the Company does not maintain a current prospectus relating to the Common Stock issuable upon
exercise of the warrants, holders will be unable to exercise their warrants. In no circumstance
will the Company be required to settle any such warrant exercise for cash. If the prospectus
relating to the Common Stock issuable upon the exercise of the warrants is not current or if the
Common Stock is not qualified or
12
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
exempt from qualification in the jurisdiction in which the holders of the warrants reside, the
warrants may have no value, the market for the warrants may be limited and the warrants will expire
worthless.
Proceeds held in the Trust Account will not be available for the Companys use for any purpose
except to pay any income taxes, and up to $10.35 million can be taken from the interest earned on
the Trust Account to fund the Companys working capital. These proceeds will be used to pay for
business, legal, and accounting due diligence on prospective acquisitions and continuing general
and administrative expenses.
NOTE DRELATED PARTY TRANSACTIONS
The Founders purchased an aggregate of 25,875,000 (after giving effect to the Unit Dividend)
of the Companys founders units (the Founders Units) for an aggregate price of $25,000 in a
private placement. The Founders Units are identical to those sold in the Offering, except that
each of the Founders has agreed to vote the Common Stock included in the Founders Units in the
same manner as a majority of the public stockholders who vote at the special or annual meeting
called for the purpose of approving the initial Business Combination. As a result, the Founders
will not be able to exercise redemption rights with respect to the Founders Common Stock if the
initial Business Combination is approved by a majority of the Companys public stockholders. The
Founders Common Stock included in the Founders Units will not participate with the Common Stock
included in the Units sold in the Offering in any liquidating distribution. The Warrants included
in the Founders Units will become exercisable after the consummation of a Business Combination, if
and when the last sales price of the Common Stock exceeds $15.00 per share for any 20 trading days
within a 30 trading day period beginning 90 days after such Business Combination, will be
non-redeemable so long as they are held by the Founders or their permitted transferees and may be
exercised by the holder on a cashless basis. In no circumstance will the Company be required to
settle any such warrant exercise for cash. If the prospectus relating to the common stock issuable
upon the exercise of the warrants is not current or if the Common Stock is not qualified or exempt
from qualification in the jurisdiction in which the holders of the warrants reside, the warrants
may have no value, the market for the warrants may be limited and the warrants will expire
worthless.
Prior to, and in connection with the pricing of, the Offering, the Companys Board of
Directors approved an amendment to modify the terms of (i) the warrants granted to the Founders as
part of the Founders Units and (ii) the Sponsors Warrants that were to be purchased by the
Sponsors immediately prior to the consummation of the Offering, whereby the exercise price of the
warrants was reduced from $7.00 to $5.50 and the exercise term extended from five to six years.
The impact of the amendment to these warrants issued in connection with the Founders Units
resulted in a warrant modification, whereby the Company was required to record a charge for the
change in fair value measured immediately prior and subsequent to the modification of the warrants.
As a result of the modifications, the Company recorded a noncash expense of approximately $2.5
million in the period from June 27, 2007 (date of inception) to December 31, 2007.
The Company presently occupies office space provided by Berggruen Holdings, Inc., an affiliate
of Berggruen Acquisition Holdings Ltd (Berggruen Holdings) and the Companys Chief Executive
Officer. Upon the consummation of the Offering, the Company agreed to pay Berggruen Holdings a
total of $10,000 per month for office space, administrative services and secretarial support until
the earlier of
13
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
the Companys consummation of a Business Combination or its liquidation. Upon consummation of
a Business Combination or its liquidation, the Company will cease paying these monthly fees.
Each of Berggruen Holdings and Marlin Equities II, LLC (Marlin Equities and, together with
Berggruen Holdings, the Sponsors) have invested $6.0 million in the Company ($12.0 million in the
aggregate) in the form of sponsors warrants (Sponsors Warrants) to purchase 6,000,000 shares of
Common Stock (12,000,000 shares in the aggregate) at a price of $1.00 per Sponsors Warrant. Each of
Berggruen Holdings and Marlin Equities purchased such Sponsors Warrants from the Company
immediately prior to the consummation of the Offering. Each of Berggruen Holdings and Marlin
Equities has agreed not to transfer, assign or sell any of the Sponsors Warrants (including the
Common Stock to be issued upon exercise of the Sponsors Warrants) until one year after the Company
consummates a Business Combination. In no circumstance will the Company be required to settle any
such warrant exercise for cash. If the prospectus relating to the Common Stock issuable upon the
exercise of the warrants is not current or if the Common Stock is not qualified or exempt from
qualification in the jurisdiction in which the holders of the warrants reside, the warrants may
have no value, the market for the warrants may be limited and the warrants will expire worthless.
There was no charge associated with the issuance of these warrants in the Private Placement, as the
Company has determined that the purchase price of these warrants were above the fair value of such
warrants.
Each of Berggruen Holdings and Marlin Equities agreed to invest $30.0 million in the Company
($60.0 million in the aggregate) in the form of co-investment units (Co-Investment Units) at a
price of $10.00 per Unit. Each of Berggruen Holdings and Marlin Equities is obligated to purchase
such Co-Investment Units from the Company immediately prior to the consummation of a Business
Combination.
The Co-Investment Units will be identical to the Units sold in the Offering. Each of
Berggruen Holdings and Marlin Equities has agreed not to transfer, assign or sell any of the
Co-Investment Units or the Common Stock or Warrants included in the Co-Investment Units (including
the Common Stock to be issued upon exercise of the Warrants), until one year after the Company
consummates a Business Combination.
NOTE EINCOME TAXES
The Companys provision for income taxes reflects the application of federal, state and city
statutory rates to the Companys income before taxes. Components of the provision for income taxes
are as follows:
14
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
For the Three
|
|
|
For the Three
|
|
|
For the Six
|
|
|
For the Six
|
|
|
June 27, 2007
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
(inception) to
|
|
|
|
June 30, 2010
|
|
|
June 30, 2009
|
|
|
June 30, 2010
|
|
|
June 30, 2009
|
|
|
June 30, 2010
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(168,000
|
)
|
|
$
|
278,779
|
|
|
$
|
(328,000
|
)
|
|
$
|
879,120
|
|
|
$
|
8,384,342
|
|
State
|
|
|
|
|
|
|
60,874
|
|
|
|
|
|
|
|
191,965
|
|
|
|
1,843,357
|
|
City
|
|
|
|
|
|
|
83,246
|
|
|
|
|
|
|
|
262,513
|
|
|
|
2,506,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
|
|
$
|
(168,000
|
)
|
|
$
|
422,899
|
|
|
$
|
(328,000
|
)
|
|
$
|
1,333,598
|
|
|
$
|
12,734,076
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(72,000
|
)
|
|
$
|
(77,000
|
)
|
|
$
|
(207,000
|
)
|
|
$
|
(177,000
|
)
|
|
$
|
(699,000
|
)
|
State
|
|
|
(9,000
|
)
|
|
|
(18,000
|
)
|
|
|
(26,000
|
)
|
|
|
(41,000
|
)
|
|
|
(89,000
|
)
|
City
|
|
|
(12,000
|
)
|
|
|
(20,000
|
)
|
|
|
(35,000
|
)
|
|
|
(47,000
|
)
|
|
|
(119,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(93,000
|
)
|
|
|
(115,000
|
)
|
|
|
(268,000
|
)
|
|
|
(265,000
|
)
|
|
|
(907,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
21,000
|
|
|
|
|
|
|
|
61,000
|
|
|
|
|
|
|
|
208,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred
|
|
$
|
(72,000
|
)
|
|
$
|
(115,000
|
)
|
|
$
|
(207,000
|
)
|
|
$
|
(265,000
|
)
|
|
$
|
(699,000
|
)
|
Provision of income
tax
|
|
$
|
(240,000
|
)
|
|
$
|
307,899
|
|
|
$
|
(535,000
|
)
|
|
$
|
1,068,598
|
|
|
$
|
12,035,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three and six months ended June 30, 2010, the effective income tax rate of (7.5%) and (6.0%), respectively, differs
from the expected federal statutory benefit rate of (34%) due to the effect of the non-deductibility of the Business
Combination fees and expenses. For the three and six month periods ended June 30, 2009, the
effective income tax rate of 42.6% and 44.2%, respectively, differs from the federal statutory rate of 34% principally due to the
effect of state and city income taxes. For the period from June 27, 2007 (inception) to June 30,
2010, the effective income tax rate of 72.3% differs from the federal statutory rate principally due to
state and city income taxes and the non-deductibility of the warrant modification charge and the
Business Combination fees and expenses.
Deferred taxes for the June 30, 2010 and the December 31, 2009 condensed balance sheets were
primarily composed of the tax effect of the deferral of start-up costs for tax purposes.
NOTE FCOMMITMENTS
The Company paid an underwriting discount of 2.85% of the Offering proceeds ($29.5 million) to
the underwriters at the closing of the Offering. Under the underwriting agreement, the Company is
required to pay the underwriters an additional fee of 2.65% of the Offering proceeds ($27.4
million) payable upon the consummation of a Business Combination (See Note I).
NOTE GPREFERRED STOCK
The Company is authorized to issue 1,000,000 shares of preferred stock with such designations,
voting and other rights and preferences as may be determined from time to time by the Board of
Directors. As of June 30, 2010, the Company has not issued any shares of preferred stock.
NOTE HFAIR VALUE MEASUREMENTS
The Company complies with Fair Value Measurements for its financial assets and liabilities
that are re-measured and reported at fair value at each reporting period, and non-financial assets
and liabilities that are re-measured and reported at fair value at least annually.
The following table presents information about the Companys assets and liabilities that are
measured at fair value on a recurring basis as of June 30, 2010 and December 31, 2009, and
indicates the fair value hierarchy of the valuation techniques the Company utilized to determine
such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices
(unadjusted) in active markets for identical assets or liabilities. Fair value determined by Level
2 inputs utilize data points that are observable such as quoted prices in markets that are not
active, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable
data points for the asset or liability, and includes situations where there is little, if any,
market activity for the asset or liability.
15
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
Financial Assets at Fair Value as of June 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
|
in
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
Fair Value
|
|
|
Active Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
Description
|
|
June 30, 2010
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents held in trust account
|
|
$
|
1,021,633,285
|
|
|
$
|
1,021,633,285
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,021,633,285
|
|
|
$
|
1,021,633,285
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Assets at Fair Value as of December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
|
in
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
Fair Value
|
|
|
Active Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
Description
|
|
December 31, 2009
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents held in trust account
|
|
$
|
1,022,041,138
|
|
|
$
|
1,022,041,138
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,022,041,138
|
|
|
$
|
1,022,041,138
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair values of the Companys cash and cash equivalents held in the Trust Account are
determined through market, observable and corroborated sources.
The carrying amounts reflected in the condensed balance sheets for other current assets and
accrued expenses approximate fair value due to their short-term maturities.
NOTE IBUSINESS COMBINATION AGREEMENT
On March 5, 2010, the Company and Promotora de Informaciones, S.A. (Prisa) entered into a
business combination agreement, which agreement was amended and restated in its entirety pursuant to an amended and restated business combination agreement entered into by the Company and Prisa on August 4, 2010 (as so amended and restated, the Business Combination Agreement),
regarding a proposed business combination (the Proposed Business Combination). Consummation of the Proposed Business Combination is
subject to the satisfaction of a number of conditions, including the approval of the shareholders
of the Company and Prisa.
Pursuant to the Business Combination Agreement, the Company has formed a new, wholly-owned
Virginia corporation (Liberty Virginia). At the closing of the Proposed Business Combination,
the Company will merge with and into Liberty Virginia (the Reincorporation Merger), with Liberty
16
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
Virginia surviving the merger and the Companys stockholders and warrantholders becoming
stockholders and warrantholders of Liberty Virginia. Immediately following the Reincorporation
Merger, Liberty Virginia will effect a statutory share exchange with Prisa under the Virginia Stock
Corporation Act and applicable Spanish law, pursuant to which Liberty
Virginia will become a wholly-owned subsidiary of Prisa and the stockholders and warrantholders of
Liberty Virginia will receive the consideration described below.
As a result of the Proposed Business Combination, Prisa will become the owner of 100% of the
outstanding shares of Liberty Virginia stock and each share of Liberty Virginia stock
(other than shares held by stockholders of the Company who have validly exercised their redemption
rights) will be exchanged for the right to receive either, at the option of the stockholder, (1) $10.00 in cash (the Cash Consideration) or (2) the
following consideration (the Mixed Consideration): 1.5 newly created Prisa Class A ordinary
shares, 3.0 newly created Prisa Class B convertible non-voting shares and $0.50 in cash. Such
election can be made for all or any portion of each stockholders shares. The Prisa shares to be
issued as part of the Mixed Consideration will be issued in the form of separate Prisa American
Depositary Shares representing the Class A ordinary shares and the Class B convertible non-voting
shares. The basic rights of the Class A ordinary shares and of the Class B convertible non-voting
shares of Prisa governed by Spanish law are contained in proposed amended by-laws of Prisa to be
adopted in connection with the consummation of the Proposed Business Combination. A more detailed
description of the rights of the Class B convertible non-voting shares will be contained in the
resolutions to be adopted by Prisas shareholders authorizing the Class B convertible non-voting
shares at the special meeting of Prisas shareholders to be called for approving the Proposed
Business Combination, and are summarized in Schedule I to the Business Combination Agreement.
On
August 4 and August 13, 2010, the Company entered into separately negotiated Preferred Stock Purchase
Agreements (each, a Preferred Stock Purchase Agreement) with the Sponsors and certain entities
(each, including each Sponsor, an Investor), pursuant to which those Investors agreed to purchase
certain specified series of newly-created shares of the Companys preferred stock. The aggregate
proceeds from the sale of all series of such preferred stock will be
$500 million, which proceeds
may be used by Prisa and the Company to help fund the required payments to those stockholders of
the Company who elect to receive the Cash Consideration pursuant to the terms of the Business
Combination Agreement. Under the terms of the several Preferred Stock Purchase Agreements the
Company will issue and sell an aggregate of 50,000 shares of a new series of preferred stock to be
designated as Series A Preferred Stock, for a purchase price of $1,000 per share (all of which will
be purchased by the Sponsors), an aggregate of 300,000 shares of a new series of preferred stock to
be designated as Series B Preferred Stock, for a purchase price of $1,000 per share, an aggregate
of ten shares of a new series of preferred stock to be designated as Series C Preferred Stock, for
a purchase price of $1.00 per share, an aggregate of 50,000 shares of a new series of preferred
stock to be designated as Series D Preferred Stock, for a
purchase price of $1,000 per share, and an aggregate of 100,000
shares of a new series of preferred stock to be designated as Series
E Preferred Stock, for a purchase price of $1,000 per share. All shares of preferred stock so issued and sold by the Company will be
exchanged in the Proposed Business Combination for a combination of
cash and/or Mixed Consideration,
as set forth in the Business Combination Agreement.
In connection with, and as a condition to the consummation of, the Proposed Business
Combination, the Company is proposing to amend (the Warrant Amendment) the terms of the Second
Amended and Restated Warrant Agreement, dated as of December 6, 2007, between the Company and
Continental Stock Transfer & Trust Company (as Warrant Agent). The proposed Warrant Amendment (as revised on August 4, 2010 pursuant to the Business Combination Agreement)
provides that, in connection with the consummation of the transactions contemplated by the Business
Combination Agreement, each Company warrant outstanding immediately prior to the effective time of
the share exchange described above will, automatically and without any action by the warrantholder,
at the effective time of the share exchange, be exchanged by Prisa and transferred by such holder
to Prisa for consideration (collectively, the Warrant Consideration) consisting of:
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cash in the amount of $0.90 per outstanding warrant to be
delivered by Liberty Virginia (for aggregate cash consideration to the Companys warrant holders of approximately $46.7 million, after giving effect to the sale by the Sponsors of all of their warrants to Liberty for nominal consideration pursuant to the terms of the amended and restated Securities Surrender Agreement, as described below); and
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Prisa American Depositary Shares representing 0.45 newly issued
Prisa Class A ordinary shares per outstanding warrant.
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17
LIBERTY ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
The transaction contemplated by the Business Combination Agreement will be accounted for as an
acquisition by Prisa of the Company, and the accounting of the business combination transaction
will be similar to that of a capital infusion, as the only significant pre-combination assets of
the Company consist of cash and cash equivalents. No intangible assets or goodwill will be
recognized by Prisa as a result of the transaction; accordingly, Prisa will record the equity
issued in exchange for the Companys securities based on the value of the assets and liabilities received
as of the closing date of the Proposed Business Combination.
On August 4, 2010, the Company entered into an amended and restated Securities Surrender
Agreement with the Sponsors (restating and superseding in its entirety the Securities Surrender
Agreement entered into between the Company and the Sponsors on May 7, 2010), pursuant to which the
Sponsors agreed to sell to the Company, and the Company agreed to purchase from the Sponsors,
immediately prior to the Reincorporation Merger, (1) an
aggregate of approximately 3.3 million shares of the Companys common stock and all of the approximately
24.8 million Company warrants held by them for an aggregate
purchase price of $825, (2) an
aggregate of an additional 2.6 million shares of the Companys common stock for an aggregate
purchase price of $260 if the total amount of cash payable in the Proposed Business Combination to
the Companys stockholders who exercise their redemption rights or elect to receive the Cash
Consideration exceeds $525 million and (3) an aggregate of an additional 500,000 shares of the Companys common stock
for an aggregate purchase price of $50 if the total amount of cash
payable in the Proposed Business Combination to the Companys stockholders who exercise their
redemption rights or elect to receive the Cash Consideration exceeds
$750 million. The obligation of the Sponsors
to sell all such securities expires if the Business Combination Agreement is terminated for any
reason.
As a result of the Sponsors agreement to sell a portion of their securities to the Company,
the Companys underwriters of the Offering have agreed, pursuant to an amended and restated letter
agreement dated August 4, 2010, to reduce the deferred portion of their underwriters discount by
approximately $6.9 million, to approximately $20.6 million. This amended and restated letter
agreement restates and supersedes in its entirety the letter agreement entered into between the
Company and the underwriters on May 7, 2010, pursuant to which the underwriters had agreed to
reduce the deferred portion of their underwriters discount by $3.0 million.
NOTE JSUBSEQUENT EVENTS
On August 4, 2010, in connection with the execution and delivery of the Business Combination
Agreement, the Companys board of directors authorized the creation and issuance of the Series A
preferred stock, Series B preferred stock, Series C preferred stock, Series D preferred stock and
Series E preferred stock to be issued and sold pursuant to the Preferred Stock Purchase Agreements. Also on August 4, 2010, the Companys underwriters
of the Offering agreed, pursuant to an amended and restated letter agreement, to reduce the
deferred portion of their underwriters discount by approximately $6.9 million, to approximately
$20.6 million. See Note I.
18
ITEM. 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We were formed on June 27, 2007. We plan to effect a merger, stock exchange, asset
acquisition, reorganization or similar Business Combination with an operating business or
businesses which we believe have significant growth potential. We consummated our initial public
offering on December 12, 2007.
We have neither engaged in any operations nor generated any revenues from operations to date.
Our entire activity since inception has been to prepare for and consummate our initial public
offering and to identify and investigate targets for a Business Combination. We will not generate
any operating revenues until consummation of a Business Combination. We generate non-operating
income in the form of interest income on cash and cash equivalents.
Net loss for the three months ended June 30, 2010 was approximately $2.9 million, which
consisted of approximately $0.1 million in interest income offset by approximately $0.8 million in
formation and administrative expenses and $2.5 million of Business Combination fees and expenses,
less approximately $0.2 million for income taxes. Net income for the three months ended June 30,
2009 was approximately $0.4 million, which consisted of approximately $1.0 million in interest
income offset by approximately $0.3 million in formation and administrative expenses and
approximately $0.3 million for income taxes. Net loss for the six months ended June 30, 2010 was
approximately $8.3 million, which consisted of approximately $0.2 million in interest income offset
by approximately $1.8 million in formation and administrative expenses and $7.3 million of Business
Combination fees and expenses, less approximately $0.5 million for income taxes. Net income for
the six months ended June 30, 2009 was approximately $1.3 million, which consisted of approximately
$3.0 million in interest income offset by approximately $0.6 million in formation and operating
expenses and approximately $1.1 million for taxes. Please see Note B to the Companys financial
statements Summary of Significant Accounting Policies Stock-based compensation and Note D
Related Party Transactions. The trustee of the Trust Account will pay any taxes resulting
from interest accrued on the funds held in the Trust Account out of the funds held in the Trust
Account.
Proposed Business Combination with Prisa
On March 5, 2010, we entered into a business combination agreement with Promotora de Informaciones, S.A. (Prisa), which agreement was amended and restated in its
entirety pursuant to an amended and restated business combination agreement entered into by us and
Prisa on August 4, 2010 (as so amended and restated, the Business Combination Agreement), regarding a proposed business combination (the
Proposed Business Combination). Consummation of the Proposed Business Combination is
subject to the satisfaction of a number of conditions, including the approval of our stockholders and the shareholders
of Prisa.
19
Pursuant to the Business Combination Agreement, we have formed a new, wholly-owned Virginia
corporation (Liberty Virginia). At the closing of the Proposed Business Combination, we will
merge with and into Liberty Virginia (the Reincorporation Merger), with Liberty Virginia
surviving the merger and our stockholders and warrantholders becoming stockholders and
warrantholders of Liberty Virginia. Immediately following the Reincorporation Merger, Liberty
Virginia will effect a statutory share exchange with Prisa under the Virginia Stock Corporation Act
and applicable Spanish law, pursuant to which Liberty Virginia will become
a wholly-owned subsidiary of Prisa and the stockholders and warrantholders of Liberty Virginia will
receive the consideration described below.
As a result of the Proposed Business Combination, Prisa will become the owner of 100% of the
outstanding shares of Liberty Virginia stock and each share of Liberty Virginia common stock (other
than shares held by our stockholders who have validly exercised their redemption rights) will be exchanged for the right to receive either, at the option of the stockholder,
(1) $10.00 in cash (the Cash Consideration) or (2) the following consideration (the Mixed
Consideration): 1.5 newly created Prisa Class A ordinary shares, 3.0 newly created Prisa Class B
convertible non-voting shares and $0.50 in cash. Such election can be made for all or any portion
of each stockholders shares. The Prisa shares to be issued as part of the Mixed Consideration
will be issued in the form of separate Prisa American Depositary Shares representing the Class A
ordinary shares and the Class B convertible non-voting shares. The basic rights of the Class A
ordinary shares and of the Class B convertible non-voting shares of Prisa governed by Spanish law
are contained in proposed amended by-laws of Prisa to be adopted in connection with the
consummation of the Proposed Business Combination. A more detailed description of the rights of
the Class B convertible non-voting shares will be contained in the resolutions to be adopted by
Prisas shareholders authorizing the Class B convertible non-voting shares at the special meeting
of Prisas shareholders to be called for approving the Proposed Business Combination, and are
summarized in Schedule I to the Business Combination Agreement.
On
August 4 and August 13, 2010, we entered into separately negotiated Preferred Stock Purchase Agreements
(each, a Preferred Stock Purchase Agreement) with the Sponsors and certain entities (each,
including each Sponsor, an Investor), pursuant to which those Investors agreed to purchase
certain specified series of newly-created shares of our preferred stock. The aggregate proceeds
from the sale of all series of such preferred stock will be $500 million, which proceeds may be
used by Prisa and us to help fund the required payments to those stockholders of Liberty who elect
to receive the Cash Consideration pursuant to the terms of the Business Combination Agreement.
Under the terms of the several Preferred Stock Purchase Agreements we will issue and sell an
aggregate of 50,000 shares of a new series of preferred stock to be designated as Series A
Preferred Stock, for a purchase price of $1,000 per share (all of which will be purchased by the
Sponsors), an aggregate of 300,000 shares of a new series of preferred stock to be designated as
Series B Preferred Stock, for a purchase price of $1,000 per share, an aggregate of ten shares of a
new series of preferred stock to be designated as Series C Preferred Stock, for a purchase price of
$1.00 per share, an aggregate of 50,000 shares of a new series of preferred stock to be
designated as Series D Preferred Stock, for a purchase price of
$1,000 per share,
and an aggregate of 100,000 shares of a new series of preferred stock
to be designated as Series E Preferred Stock, for a purchase price of
$1,000 per share. All
shares of preferred stock so issued and sold by us will be exchanged in the Proposed Business
Combination for a combination of cash and/or Mixed Consideration, as set forth in the Business
Combination Agreement.
In connection with, and as a condition to the consummation of, the Proposed Business
Combination, we are proposing to amend (the Warrant Amendment) the terms of the Second Amended
and Restated Warrant Agreement, dated as of December 6, 2007, between us and Continental Stock
Transfer & Trust Company (as Warrant Agent). The proposed Warrant Amendment (as revised on August
4, 2010 pursuant to the Business Combination Agreement) provides that, in connection with the
consummation of the transactions contemplated by the Business Combination Agreement, each of our
warrants outstanding immediately prior to the effective time of the share exchange described above will, automatically and without any
action by the warrantholder, at the effective time of the share exchange, be exchanged by Prisa and
transferred by such holder to Prisa for consideration (collectively, the Warrant Consideration)
consisting of:
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cash in the amount of $0.90 per outstanding warrant to be delivered by Liberty Virginia (for
aggregate cash consideration to our warrant holders of approximately $46.7 million, after
giving effect to the sale by our sponsors of all of their warrants to Liberty for nominal
consideration pursuant to the terms of the Sponsor Surrender
Agreement, as described below); and
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Prisa American Depositary Shares representing 0.45 newly issued Prisa Class A ordinary shares
per outstanding warrant.
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The transaction contemplated by the Business Combination Agreement will be accounted for as an
acquisition by Prisa of us, and the accounting of the business combination transaction will be
similar to that of a capital infusion, as our only significant pre-combination assets consist of
cash and cash equivalents. No intangible assets or goodwill will be recognized by Prisa as a
result of the transaction; accordingly, Prisa will record the equity issued in exchange for our
securities based on the value of the assets and liabilities received as of the closing date of the
Proposed Business Combination.
20
On August 4, 2010, we entered into an amended and restated securities surrender agreement with
our sponsors (restating and superseding in its entirety the securities surrender agreement entered
into between us and the sponsors on May 7, 2010) (as so amended and restated, the Sponsor
Surrender Agreement), pursuant to which the sponsors agreed to sell to us, and we agreed to
purchase from the sponsors, immediately prior to the Reincorporation Merger, (1) an aggregate of
approximately 3.3 million shares of our common stock and all of the approximately 24.8 million
Liberty warrants held by them for an aggregate purchase price of $825, (2) an aggregate of an
additional 2.6 million shares of our common stock for an aggregate purchase price of $260 if the
total amount of cash payable in the Proposed Business Combination to our stockholders who exercise
their redemption rights or elect to receive the Cash Consideration exceeds $525 million and (3) an
aggregate of an additional 500,000 shares of our common stock
for an aggregate purchase price of $50 if the total amount of cash payable in the Proposed Business Combination to
our stockholders who exercise their redemption rights or elect to receive the Cash Consideration
exceeds $750 million. The
obligation of the sponsors to sell all such securities expires if the Business Combination
Agreement is terminated for any reason.
As a result of the sponsors agreement to sell a portion of their securities to us, the
underwriters of our initial public offering have agreed, pursuant to an amended and restated letter
agreement dated August 4, 2010, to reduce the deferred portion of their underwriters discount by
approximately $6.9 million, to approximately $20.6 million. This amended and restated letter
agreement restates and supersedes in its entirety the letter agreement entered into between us and the underwriters on May 7, 2010, pursuant to which the underwriters had agreed to reduce the
deferred portion of their underwriters discount by $3.0 million.
Off-Balance Sheet Arrangements
We have never entered into any off-balance sheet financing arrangements and have never
established any special purpose entities. We have not guaranteed any debt or commitments of other
entities or entered into any options on non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations,
purchase obligations or other long-term liabilities.
Liquidity and Capital Resources
The net proceeds from (i) the sale of the units in our initial public offering (including the
underwriters over-allotment option), after deducting approximately $57.7 million to be applied to
underwriting discounts, offering expenses and working capital and (ii) the sale of the sponsors warrants for a purchase price of $12.0
million, was approximately $1,016.7 million. All of these net proceeds were placed in trust,
except for $0.1 million that was used for working capital.
We expect to use substantially all of the net proceeds of our initial public offering to
acquire one or more target businesses, including identifying and evaluating prospective target
businesses, selecting one or more target businesses, and structuring, negotiating and consummating
the Business Combination. If the Business Combination is paid for using stock or debt securities,
we may apply the cash released to us from the Trust Account for general corporate purposes,
including for maintenance or expansion of operations of the acquired business or businesses, the
payment of principal or interest due on indebtedness incurred in consummating our initial Business
Combination, to fund the purchase of other companies, or for working capital.
As of June 30, 2010, we had cash outside of the Trust Account of approximately $6.8 million,
cash held in the Trust Account of approximately $1,022 million and total liabilities of
approximately $337.4 million (which includes approximately $307.1 million of common stock which is
subject to possible redemption and related deferred interest). We believe that the funds available to us
outside of the Trust Account will be sufficient to allow us to operate until December 12, 2010,
assuming that an initial Business Combination is not consummated during that time. Of the funds
held outside of the Trust Account, we anticipate using these funds to cover the due diligence and
investigation of a target business or businesses; legal, accounting and other expenses associated
with structuring, negotiating and documenting an initial Business Combination; and office space,
administrative services and secretarial support prior to consummating a Business Combination.
21
If the funds available to us outside of the Trust Account are insufficient to cover our
expenses, we may be required to raise additional capital, the amount, availability and cost of
which is currently unascertainable. In this event, we could seek such additional capital through
loans or additional investments from our sponsors, Mr. Berggruen or our directors, but, except for
the co-investment, none of such sponsors, Mr. Berggruen or our directors is under any obligation to
advance funds to, or invest in, us. Any such interest income not used to fund our working capital
requirements or repay advances from our founders or for due diligence or legal, accounting and
non-due diligence expenses will be usable by us to pay other expenses that may exceed our current
estimates.
As of June 30, 2010, the underlying assets of our Trust Account consisted of shares of the
JPMorgan U.S. Government Money Market Fund (the JPMorgan Fund), the Goldman Sachs Financial
Square Federal Fund (the Goldman Fund) and the Federated Government Obligation Class Fund (the
Federated Government Fund, and together with the JPMorgan Fund and the Goldman Fund, the
Funds). According to the relevant prospectus of each Fund:
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J.P. Morgan Investment Management Inc. serves as investment adviser to the JPMorgan
Fund, which under normal conditions, invests its assets exclusively in debt securities
issued or guaranteed by the U.S. government, or by U.S. government agencies or
instrumentalities and repurchase agreements fully collateralized by U.S. Treasury and
U.S. government securities;
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Goldman Sachs Asset Management, L.P. serves as investment adviser to the Goldman
Fund, which limits its investments only to certain U.S. Treasury obligations and U.S.
government securities; and
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Federated Investment Management Company serves as investment adviser to the Federated Government Fund, which
invests in short-term U.S. Treasury obligations and U.S. government obligations,
including repurchase agreements collateralized by U.S. treasury and government agency
securities.
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As of June 30, 2010, we believe, based on publicly available information, that our position in
each of the Funds accounted for no more than 5% of the total assets of any such Fund. We and the
trustee of the Trust Account continuously monitor the Funds in this volatile market environment and
expect to take whatever actions we and the trustee deem appropriate with respect to protecting and
preserving the assets contained in the Trust Account.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.
Market risk is a broad term for the risk of economic loss due to adverse changes in the fair
value of a financial instrument. These changes may be the result of various factors, including
interest rates, foreign exchange rates, commodity prices and/or equity prices. Approximately
$1,016.7 million of the net offering proceeds (which includes $27.4 million of the proceeds
attributable to the underwriters discount) has been placed into the Trust Account maintained by
Continental Stock Transfer & Trust Company, acting as trustee. As of June 30, 2010, the balance of
the Trust Account was approximately $1,022 million. The proceeds held in trust are invested in
U.S. government securities, defined as any Treasury Bill issued by the United States having a maturity of 180 days or less and/or in any
open ended money market(s) selected by us meeting the conditions of Sections (c)(2), (c)(3) and
(c)(4) of Rule 2a-7 under the Investment Company Act of 1940. Thus, we are subject to market risk
primarily through the effect of changes in interest rates on government securities. The effect of
other changes, such as foreign exchange rates, commodity prices and/or equity prices, does not pose
significant market risk to us. As of June 30, 2010, the effective annualized interest rate payable
on our investment was approximately 0.04% (based upon the average yield earned during the last
reported monthly period). Assuming no other changes to our holdings as of June 30, 2010, a 0.04%
decrease in the yield on our investment as of June
22
30, 2010 would result in a decrease of approximately $0.1 million in the interest earned on our investment for the following quarterly
period. We have not engaged in any hedging activities since our inception. We do not expect to
engage in any hedging activities with respect to the market risk to which we are exposed.
ITEM 4. Controls and Procedures.
We evaluated the effectiveness of our disclosure controls and procedures, as defined in the
Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Nicolas
Berggruen, our Chief Executive Officer, participated in this evaluation. Based upon that
evaluation, Mr. Berggruen concluded that our disclosure controls and procedures were effective as
of the end of the period covered by the report.
As a result of the evaluation completed by Mr. Berggruen, we have concluded that there were no
changes during the fiscal quarter ended June 30, 2010 in our internal controls over financial
reporting, which have materially affected, or are reasonably likely to materially affect, our
internal controls over financial reporting.
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings.
None.
ITEM 1A. Risk Factors
Other than the additional risk factors set forth below, there have been no material changes in
our risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2009.
Risks Related to the Proposed Business Combination with Prisa
Libertys current directors either directly or beneficially own shares of Liberty common stock and
warrants and have other interests in the Proposed Business Combination that are different from, or
in addition to, yours. If the Proposed Business Combination is not approved, the securities held
by them will likely become worthless.
Libertys sponsors, Berggruen Holdings and Marlin Equities, have agreed to act together for
the purpose of acquiring, holding, voting or disposing of Liberty shares of common stock and are
deemed to be a group for reporting purposes under the Exchange Act. As of the date of this
report, Libertys sponsors and their affiliates beneficially own, in the aggregate, approximately
20% of the issued and outstanding shares of Liberty common stock. Mr. Berggruen is deemed to
beneficially own 9.9% of the issued and outstanding shares of common stock, and Mr. Franklin is
deemed to beneficially own 9.9% of the issued and outstanding shares of common stock. All of the shares of Liberty common stock
that they are deemed to beneficially own and control are owned indirectly through their respective
affiliates.
In addition, Libertys founders beneficially own warrants to purchase 24,937,500 shares of
Liberty common stock, or approximately 32.5% of the total outstanding warrants. Of these warrants,
12,937,500 were purchased by Libertys founders as part of the founders units in a private
placement for an aggregate purchase price of $25,000 for such founders units, and 12,000,000 were
purchased by Libertys sponsors for $12.0 million immediately prior to the consummation of
Libertys IPO. In light of
23
the amount of consideration paid, and, notwithstanding that, pursuant
to the Sponsor Surrender Agreement, the sponsors will be required to
sell all of their Liberty warrants (approximately 28.4 million) and
between approximately 3.3 million and 6.4 million of
their shares of Liberty common stock to Liberty for nominal consideration immediately prior to the
consummation of the Business Combination Agreement, the founders will likely significantly benefit
from the consummation of the Proposed Business Combination, even if the Proposed Business
Combination causes the market price of Libertys securities to significantly decline. Furthermore,
the $12.0 million purchase price of the 12,000,000 sponsors warrants will be included in the
working capital that is distributed to the Liberty public stockholders in the event of Libertys
dissolution and liquidation. This may influence the founders motivation for promoting the
Proposed Business Combination and/or soliciting proxies for the approval of the Proposed Business
Combination and related matters. Libertys common stock and warrants held by the founders had an
aggregate market value (without taking into account any discount that may be attributed to such
securities due to their restricted nature or any exercise limitations of the founders warrants) of
approximately $285 million based on the closing sale prices of $9.95 and $1.10, respectively, on
the NYSE Amex on July 30, 2010. These securities are subject to lock-up agreements and, subject to
certain exceptions, may not be sold, assigned or transferred until after Liberty consummates a
business combination, and the founders have waived any rights to receive any liquidation proceeds
that may be distributed upon Libertys liquidation in respect of shares they acquired prior to
Libertys IPO. Therefore, if either the warrant amendment proposal is not approved by the Liberty
warrantholders or the business combination proposal is not approved by the Liberty stockholders,
and Liberty is required to commence proceedings to dissolve and liquidate, the shares and warrants
held directly or beneficially by the founders will be worthless.
In addition, in considering the recommendation of Libertys board of directors that Libertys
stockholders and warrantholders vote in favor of the Proposed Business Combination and the Warrant
Amendment, Libertys stockholders and warrantholders should also be aware that (i) it is currently
anticipated that Messrs. Berggruen and Franklin, each of whom is a current member of Libertys
board of directors, will each be a director of Prisa following the Proposed Business Combination
and will be compensated for such service in the same manner as the other directors of Prisa, and
(ii) if the business combination proposal is not approved and Liberty has not completed an
alternative business combination by December 12, 2010, the shares of common stock and warrants held
by Libertys directors will be worthless because Libertys directors are not entitled to receive
any of the net proceeds of Libertys IPO that may be distributed upon liquidation of Liberty.
In addition, if Liberty dissolves and liquidates prior to the consummation of a business
combination, Messrs. Berggruen and Franklin, pursuant to certain written agreements executed in
connection with Libertys IPO, will be personally liable for any successful claims made by various
vendors of Liberty for services rendered or products sold to Liberty and by potential target
businesses who entered into written agreements, such as a letter of intent or confidentiality
agreement, with Liberty and who did not waive all of their rights to make claims against the
proceeds in the trust account.
Libertys directors will not receive reimbursement for any out-of-pocket expenses incurred by
them on Libertys behalf incident to identifying, investigating and consummating a business
combination to the extent such expenses exceed the amount not required to be retained in the trust
account, unless a business combination is consummated. Libertys directors have, as part of the Proposed
Business Combination, negotiated the repayment of some or all of any such expenses, insofar as the
Business Combination Agreement permits up to approximately $44.6 million of funds in the trust account to be
applied to deferred underwriting fees and commissions and Libertys transaction expenses.
These personal and financial interests of the directors may have influenced their decision as
members of the board of directors to approve and adopt the Business Combination Agreement and the
Warrant Amendment. Additionally, the exercise of the directors discretion in agreeing to changes
or
24
waivers in the terms of the Business Combination Agreement or the Warrant Amendment prior to the
vote by the stockholders or warrantholders, as applicable, may result in a conflict of interest
when determining whether such changes or waivers are appropriate and in the stockholders or
warrantholders, as applicable, best interest.
Because the market price of Prisa ordinary shares will fluctuate and because there is currently no
trading market for the Prisa Class B convertible non-voting shares, Liberty stockholders who elect to receive the Mixed Consideration cannot be
sure of the value of the consideration they will receive when the Proposed Business Combination is
completed, and the value may be less than what you originally paid for your shares of Liberty
common stock.
If the Proposed Business Combination is completed, Prisa will automatically become the holder
and owner of 100% of the outstanding shares of Liberty Virginia common stock and each share of
Liberty Virginia common stock for which the holder did not validly
exercise redemption rights or elect to receive the $10.00 per share cash alternative will
be exchanged for the right to receive consideration consisting of (i) 1.5 newly created Prisa Class A
ordinary, (ii) 3.0 newly created Prisa Class B convertible non-voting shares, each represented by
Prisa ADSs, and (iii) $0.50 in cash, as well as cash in lieu of fractional shares. The value of Prisa ADSs may vary significantly
from the closing price of Prisa ordinary shares on the date the Proposed Business Combination was
announced, on the date the parties entered into the amended and restated Business Combination Agreement, on the date of this quarterly report, and thereafter. Any change in the market price of
Prisa ordinary shares prior to completion of the Proposed Business Combination will affect the
market value of the consideration that Liberty stockholders entitled to receive the Mixed Consideration and warrantholders will receive when
the Proposed Business Combination is completed. In addition, no trading market for the Prisa Class
B convertible non-voting shares currently exists and therefore Liberty stockholders cannot be sure
of the price at which the shares will trade if the Proposed Business Combination is completed.
Also, changes in the U.S. dollar/euro exchange rate prior to completion of the Proposed Business
Combination will affect the value in U.S. dollars of the consideration that Liberty stockholders entitled to receive the Mixed Consideration
and warrantholders will receive when the Proposed Business Combination is completed. There will be
no adjustment to the exchange ratios for changes in the market price of Prisa ordinary shares,
Liberty common stock or the U.S. dollar/euro exchange rate. Neither Liberty nor Prisa is permitted
to terminate the Business Combination Agreement or resolicit the vote of either companys
shareholders solely because of changes in the market prices of either companys stock.
The market value of the Mixed Consideration and the consideration in the warrant exchange and the
U.S. dollar/euro exchange rate will also continue to fluctuate following completion of the Proposed
Business Combination. Stock price changes may result from a variety of factors, including general
market and economic conditions, changes in Prisas businesses, operations and prospects, and
regulatory considerations. The market for common shares of companies in Prisas industry may be
volatile. Many of these factors are beyond Prisas control. You should obtain current market
quotations for Prisa ordinary shares (and the U.S. dollar/euro exchange rate) and for shares of
Liberty common stock.
Therefore, the value of the Prisa ADSs you receive in the Proposed Business Combination,
either upon or after the completion of the Proposed Business Combination, may be lower than what
you originally paid for your corresponding shares of Liberty common stock prior to the Proposed
Business Combination.
Because Prisa is a holding company and its assets are held primarily by its subsidiaries,
Prisa may not be able to pay dividends on its Class B convertible non-voting shares, even if it
has sufficient distributable profits on a consolidated basis to make such payments.
The Prisa Class B convertible non-voting shares to be issued in connection with the business
combination will be entitled to receive a minimum annual dividend of 0.175, but only to the extent
that Prisa has sufficient distributable profits for the applicable year, as that term is defined
by the Spanish Corporation Law, or sufficient premium reserve created by the issuance of the Class
B convertible non-voting shares. If Prisa has no distributable profits in a given year or
insufficient premium reserve created by the issuance of the Prisa Class B convertible non-voting
shares, then no dividend will be payable for such year, and if Prisa has distributable profits in a
given year or premium reserve created by the issuance of the Prisa Class B convertible non-voting
shares which are insufficient to pay the annual dividend in full, then a partial dividend will be
paid for such year, up to the amount of such distributable profits
and premium reserve created by the
issuance of the Prisa Class B convertible non-voting shares (so long as there is no legal
restriction against such payment). Any unpaid dividends will accumulate from year to year.
25
Under the Spanish Corporation Law, the determination of whether Prisa has distributable
profits does not take into account the assets or profits of any of Prisas subsidiaries. Prisa is a
holding company with no significant operating assets other than through its ownership of shares of,
or other interests in, its subsidiaries. Prisa receives substantially all of its operating income
from its subsidiaries. Prisas subsidiaries are separate and distinct legal entities and they will
have no obligation, contingent or otherwise, to pay dividends or distribute any amounts to Prisa,
or to otherwise make any funds available to Prisa, to allow Prisa to
pay dividends on the Prisa Class B
convertible non-voting shares. In addition, the ability of Prisas subsidiaries to pay dividends or
make distributions to Prisa may be subject to, among other things, applicable laws and/or
restrictions contained in agreements or debt instruments to which such subsidiaries are bound. In
addition, third parties own substantial interests in certain of Prisas subsidiaries and,
accordingly, Prisa must share with minority shareholders any dividends paid by these subsidiaries.
Prisa had, on a non-consolidated basis, a loss in 2009 and a distributable profit of approximately
37.2 million in 2008.
Although Prisa has agreed to propose to its shareholders a resolution requiring Prisa to
exercise its voting rights to cause its subsidiaries to deliver distributable profits to Prisa,
there can be no assurance that the subsidiaries will be able to distribute such profits to Prisa,
or that the amount of the distributable profits will be enough to allow Prisa to pay the minimum
annual dividend on the Prisa Class B convertible non-voting shares. As a result, Prisa may not be
able to pay all or a portion of the dividend payable on the Prisa Class B convertible non-voting
shares, even if Prisa and its subsidiaries, on a consolidated basis, have profits in an amount
greater than that needed to pay the minimum annual dividend.
The
amount of the premium reserve created by the issuance of the Prisa Class B convertible
non-voting shares will be fixed prior to closing of the business combination as the difference
between the issuance price of the Prisa Class B convertible non-voting shares and the nominal amount of
such shares (0.10). The premium reserve created by the issuance
of the Prisa Class B convertible
non-voting shares may be reduced as a result of losses in Prisa.
If you fail to vote or abstain from voting on the business combination proposal, you may not
exercise your redemption rights to cause the redemption of your shares of Liberty common stock for
a pro rata portion of the trust account in which a substantial portion of the proceeds of
Libertys IPO are held, including any interest earned thereon through the date that is two days
prior to the date of the special meeting of Liberty stockholders.
Stockholders holding shares of Liberty common stock issued in Libertys IPO who vote against
the business combination proposed may elect to have their shares redeemed for cash equal to a
pro
rata
portion of the trust account in which a substantial portion of the proceeds of Libertys IPO
are held, including any interest earned thereon through the date that is two days prior to the date of
the special meeting of Liberty stockholders. Any stockholder who seeks to exercise this redemption
right must, with respect to all its shares, (i) vote against the business combination proposal,
(ii) give (and not subsequently withdraw) written notice to Liberty of its election to require
Liberty to redeem its shares for cash by marking the appropriate box on its proxy card or
delivering the required notice to Liberty at its executive offices and (iii) tender its shares of
Liberty common stock in the manner provided in the definitive proxy statement for the special
meeting of Libertys stockholders to consider the Proposed Business Combination, no later than
immediately prior to the vote on the business combination proposal at the special meeting of
Liberty stockholders (or any adjournment or postponement of the meeting). Any stockholder who
fails to vote or who abstains from voting on the business combination proposal (including by
failing to give instructions to a broker who holds the stockholders shares in street name) may
not exercise his or her redemption rights and will not receive a
pro rata
portion of the trust
account
26
in which a substantial portion of the proceeds of Libertys IPO are held, including any
interest earned thereon through the date that is two days prior to the date of the special meeting
of Liberty stockholders. However, these Liberty stockholders may still elect to receive the $10.00 cash alternative in
the business combination by following the instructions to be contained in the definitive proxy
statement/prospectus relating to such special meeting.
Liberty expects to incur significant costs associated with the Proposed Business Combination,
whether or not the Proposed Business Combination is completed, and if Liberty incurs costs in
excess of a specified amount, Prisa will not be obligated to consummate the Proposed Business
Combination.
Whether or not the Proposed Business Combination is completed, Liberty expects to incur
significant costs associated with the Proposed Business Combination, including due diligence,
legal, accounting and other expenses associated with structuring, negotiating and documenting the
Proposed Business Combination. If the parties do not consummate the Proposed Business Combination,
and if time permits Liberty to seek an alternative business combination, then the costs Liberty
will have incurred with respect to its proposed business combination with Prisa will reduce the
amount of cash otherwise available to complete an alternative business combination. Liberty
estimates that it will incur significant transaction costs associated with the Proposed Business
Combination. In addition, if the combination of deferred underwriting fees and commissions and
Libertys transactions expenses exceed approximately $44.6 million, then Liberty will have failed to comply with a
closing condition contained in the Business Combination Agreement, and Prisa will not be obligated
to close the Proposed Business Combination.
There are significant limitations on Libertys right to make damage claims against Prisa for the
breach of any representations and warranties or covenants made by Prisa in the Business Combination
Agreement.
Liberty does not have a right under the terms of the Business Combination Agreement to make
indemnification claims after the closing of the Proposed Business Combination against Prisa under
any circumstances including for a breach by Prisa of the representations and warranties made to
Liberty or for a violation by Prisa of certain covenants and agreements in the Business Combination
Agreement and related documents, and in any event, Liberty Virginia (Libertys successor) will be a
wholly owned-subsidiary of Prisa after the closing.
Supermajority and other voting provisions in Prisas bylaws, along with the existence of a
controlling shareholder group, may have the effect of discouraging potentially interested parties
from seeking to acquire Prisa or otherwise influence the outcome of significant matters affecting
Prisas shareholders.
Following the completion of the Proposed Business Combination, Prisas bylaws will require a
75% supermajority shareholder vote to approve bylaw amendments, increases or reductions in Prisas
share capital, mergers and similar extraordinary transactions, changes in the size of Prisas board
of directors and, in some cases, the election of directors nominated by shareholders. Prisas controlling shareholder group, which currently controls over 70%
of the total outstanding share capital of Prisa, is expected to control over 30% of Prisas total
voting power upon completion of the Proposed Business Combination. As a result, these bylaw
provisions may have the effect of rendering more difficult or discouraging an acquisition of Prisa
not supported by the controlling shareholder group or otherwise precluding corporate actions that
the controlling shareholder group opposes, even if supported by a majority of Prisas voting
shares.
27
As a foreign private issuer under the rules and regulations of the SEC Prisa, is exempt from a
number of rules under the Exchange Act and may be permitted to file less or different information
with the SEC than a company incorporated in the United States or otherwise subject to these rules.
Prisa is considered a foreign private issuer under the Exchange Act and is therefore exempt
from certain rules under the Exchange Act, including the proxy rules, which impose certain
disclosure and procedural requirements for proxy solicitations for U.S. and other issuers.
Moreover, Prisa is not required to file periodic reports and financial statements with the SEC as
frequently or within the same time frames as U.S. companies with securities registered under the
Exchange Act; Prisa is not required to file financial statements prepared in accordance with or
reconciled to U.S. GAAP so long as its financial statements are prepared in accordance with IFRS as
issued by the IASB, which do not differ from IFRS as adopted by the European Union; and it is not
required to comply with Regulation FD, which imposes restrictions on the selective disclosure of
material information to shareholders. In addition, Prisas officers, directors and principal
shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16
of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales
of Prisa Class A ordinary shares. Accordingly, after the Proposed Business Combination, if you
continue to hold Prisa ADSs, you may receive less or different information about Prisa than you
currently receive about Liberty.
Prisa could lose its status as a foreign private issuer under current SEC rules and
regulations if more than 50% of Prisas outstanding voting securities become directly or indirectly
held of record by U.S. holders and one of the following is true: (i) the majority of Prisas
directors or executive officers are U.S. citizens or residents; (ii) more than 50% of Prisas
assets are located in the U.S.; or (iii) Prisas business is administered principally in the United
States. If Prisa loses its status as a foreign private issuer in the future, it will no longer be
exempt from the rules described above and, among other things, will be required to file periodic
reports and annual and quarterly financial statements as if it were a company incorporated in the
United States. If this were to happen, Prisa would likely incur substantial costs in fulfilling
these additional regulatory requirements and members of Prisas management would likely have to
divert time and resources from other responsibilities to ensuring these additional regulatory
requirements are fulfilled.
Prisa has not previously operated as a foreign private issuer in the United States and fulfilling
its obligations as a foreign private issuer after the Proposed Business Combination may be
expensive and time consuming.
Prisa has not previously been required to prepare or file periodic and other reports with the
SEC or to comply with the other requirements of U.S. federal securities laws applicable to public
companies, such as Section 404 of the Sarbanes-Oxley Act of 2002. Although Prisa currently
maintains separate legal and compliance and internal audit functions, and although Prisa is a
public company in Spain with its shares listed on the
Mercado Continuo
and thus has to comply with
the securities laws and regulations that apply to Prisa in Spain (including rules with respect to
corporate governance practices, reporting requirements and accounting rules), Prisa has not
previously been required to establish and maintain disclosure controls and procedures and internal
controls over financial reporting as will be required with respect to a public company with
substantial operations and shares registered in the United States.
Under the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC, as well
as the rules of the New York Stock Exchange, where Prisa intends to apply for listing of the Prisa
ADSs, Prisa may be required to implement additional corporate governance practices and adhere to a
variety of reporting requirements and accounting rules. However, as a foreign private issuer,
Prisa may be exempt from some corporate governance practices, reporting requirements and accounting
rules under the rules of the New York Stock Exchange and under the Sarbanes-Oxley Act of 2002. For
example, Prisa is
28
permitted to follow its home country corporate governance practices in lieu of
the New York Stock Exchange rules with some exceptions so long as it discloses the ways in which
its corporate governance practices differ from those followed by U.S. issuers under New York Stock
Exchange listing standards. As an additional example, the Sarbanes-Oxley Act of 2002 gives foreign
private issuers certain exemptions from the requirement that each member of the foreign private
issuers audit committee be independent.
Compliance with obligations from which foreign private issuers are not exempt may require
members of Prisas management and its finance and accounting staff to divert time and resources
from other responsibilities to ensuring these additional regulatory requirements are fulfilled and
may increase Prisas legal, insurance and financial compliance costs.
Prisa must become compliant with Section 404 of the Sarbanes-Oxley Act of 2002 to the extent it is
not already compliant in a relatively short time frame.
After completion of the Proposed Business Combination, Section 404 of the Sarbanes-Oxley Act
of 2002 will require Prisa to document and test the effectiveness of its internal controls over
financial reporting in accordance with an established control framework and to report on its
managements conclusion as to the effectiveness of these internal controls over financial reporting
beginning with the fiscal year ending December 31, 2011. Prisa will also be required to have an
independent registered public accounting firm test the internal controls over financial reporting
and report on the effectiveness of such controls for the fiscal year ending December 31, 2011 and
subsequent years. In addition, the independent registered public accounting firm will be required
to report on the effectiveness of the internal controls. Any delays or difficulty in satisfying these requirements
could adversely affect future results of operations and Prisas share price.
Prisa may incur significant costs to comply with any of these requirements with which it is
not currently compliant. Additionally, Prisa may in the future discover areas of internal controls
over financial reporting that need improvement, particularly with respect to any businesses
acquired in the future. Neither Liberty not Prisa can assure you that remedial measures will
result in adequate internal controls over financial reporting in the future. Any failure to
implement any required new or improved controls, or difficulties encountered in their
implementation, could materially adversely affect its results of operations or could cause Prisa to
fail to meet its reporting obligations in the United States. If Prisa is unable to conclude that
it has effective internal controls over financial reporting, or if its auditors are unable to
provide an unqualified report regarding the effectiveness of internal controls over financial
reporting as required by Section 404, investors may lose confidence in the reliability of Prisas
financial statements, which could result in a decrease in the value of its securities. In
addition, failure to comply with Section 404 by the required deadline could potentially subject
Prisa to sanctions or investigation by the SEC or other regulatory authorities.
There is no guarantee that, once listed, the Prisa ADSs will continue to qualify for listing on the
exchange for any period of time, and the failure to have the ADSs listed for either reason may
negatively affect the value of Prisa ADSs.
Prisa intends to seek to have its ADSs approved for listing on the New York Stock Exchange
prior to consummation of the Proposed Business Combination so that as soon as practicable following
the closing of the Proposed Business Combination, the ADSs can begin trading, and it is a mutual
condition to closing of the Proposed Business Combination that the ADSs be admitted to trading only
subject to official notice of the issuance of the ADSs. There are no guarantees that, once listed,
the Prisa ADSs will continue to qualify for listing on the exchange, and the Prisa ADSs may become
subject to trading and other restrictions imposed by the exchange for failure to meet certain
listing standards or
29
the ADSs may be delisted by the exchange. If the Prisa ADSs are ever in the
future delisted, the holders could face significant consequences, including:
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a limited availability for market quotations for Prisas securities;
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reduced liquidity with respect to Prisas securities;
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a determination that Prisas ADSs are a penny stock which will require brokers
trading in Prisa ADSs to adhere to more stringent rules and possibly result in a
reduced level of trading activity in the secondary trading market for Prisa ADSs;
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limited amount of news and analyst coverage for Prisa in the United States; and
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a decreased ability to issue additional securities or obtain additional financing in
the future.
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Shareholders may decide to sell Liberty common stock and Prisa shares, which could cause a decline
in their market prices.
Some holders of Liberty common stock may be disinclined to own shares of a company that is not
a U.S. company or has its primary listing outside the United States. This or other factors could result in the sale
of shares of Liberty common stock prior to the parties consummating the Proposed Business
Combination (in addition to exercises by Liberty stockholders of their redemption rights) or the
sale of Prisa ADSs after completion of the Proposed Business Combination. In addition, the market
price of Liberty common stock and Prisa ordinary shares and Prisa ADSs may be adversely affected by
arbitrage activities occurring prior to completion of the Proposed Business Combination. These
sales, or the prospects of such sales in the future, could adversely affect the market price for,
and the ability to sell in the market, shares of Liberty common stock before the Proposed Business
Combination is completed, Prisa shares before and after completion of the Proposed Business
Combination and Prisa ADSs after the completion of the Proposed Business Combination.
Prisa may fail to realize all of the anticipated benefits of the Proposed Business Combination.
The success of the Proposed Business Combination will depend, in part, on Prisas ability to
realize the anticipated benefits from the availability of the cash currently in Libertys trust
account to Prisa following the completion of the Proposed Business Combination. To realize these
anticipated benefits, Prisa must successfully manage and apply Libertys cash, including for the
purposes of completing its anticipated debt restructuring and anticipated asset sales.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
We did not engage in any unregistered sales of equity securities during the three months ended
June 30, 2010.
Use of Proceeds from Initial Public Offering
On December 12, 2007, we closed our initial public offering of 103,500,000 units (which
included 13,500,000 purchased by the underwriters pursuant to their over-allotment option) with
each unit consisting of one share of common stock and one-half (1/2) of one warrant to purchase one
share of our common stock at a price of $5.50 per share. All of the units registered were sold at
an offering price of $10.00 per unit and generated gross proceeds of $1,035 million. The
securities sold in our initial public offering were registered under the Securities Act of 1933 on
a registration statement on Form S-1 (No.
30
333-145559). The SEC declared the registration statement
effective on December 6, 2007. Citigroup Global Market Inc. acted as sole bookrunning manager and
representative of Lehman Brothers Inc.
We received net proceeds of approximately $1,016.7 million from our initial public offering
(including proceeds from the exercise by the underwriters of their over-allotment option). Of
those net proceeds, approximately $27.4 million is attributable
to the original amount of the deferred underwriters
discount. Expenses related to the offering totaled approximately $57.7 million. The net proceeds
were deposited into the Trust Account and will be part of the funds distributed to our public
stockholders in the event we are unable to complete a Business Combination. The remaining proceeds
($100,000) became available to be used to provide for business, legal and accounting due diligence
on prospective transactions and continuing general and administrative expenses. Unless and until a
Business Combination is consummated, the proceeds held in the Trust Account will not be available
to us, except to pay any income taxes and up to $10.35 million can be taken from the interest
earned on the Trust Account to fund our working capital. These proceeds will be used in addition
to the $100,000, to pay for business, legal, and accounting due diligence on prospective
acquisitions and continuing general and administrative expenses This limitation on our working
capital will preclude us from declaring and paying dividends. The net proceeds deposited into the
Trust Account remain on deposit in the Trust Account and earned approximately $0.2 million for the
six months ended June 30, 2010 and approximately $3.0 million for the six months ended June 30,
2009.
ITEM 3. Defaults upon Senior Securities.
Not applicable.
ITEM 4. (Removed and Reserved).
Not applicable.
ITEM 5. Other Information.
Not applicable.
ITEM 6. Exhibits.
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Exhibit
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Number
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Description
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2.1
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Business Combination Agreement dated as of March 5, 2010, by and
between Prisa and Registrant (5)
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2.2
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Amendment No. 1, dated as of March 15, 2010, to Business
Combination Agreement by and between Prisa and Registrant (6)
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2.3
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Amendment No. 2, dated as of April 5, 2010, to Business Combination
Agreement by and between Prisa and Registrant (7)
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Amendment No. 4, dated as of May 7, 2010, to Business Combination
Agreement by and between Prisa and Registrant (8)
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3.1
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Restated Certificate of Incorporation (1)
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3.2
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Bylaws (2)
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4.1
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Specimen Unit Certificate (2)
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4.2
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Specimen Common Stock Certificate (2)
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4.3
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Second Amended and Restated Warrant Agreement dated December 6,
2007 between Continental Stock Transfer & Trust Company and the
Registrant (3)
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4.4
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Specimen Public Warrant Certificate (included in Exhibit 4.3)
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31
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Exhibit
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Number
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Description
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4.5
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Specimen Private Warrant Certificate (included in Exhibit 4.3)
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4.6
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Amended Form of Warrant Amendment Agreement (8)
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10.1
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Registration Rights Agreement among the Registrant and the
Founders, dated December 6, 2007 (4)
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10.2
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Founders Units Subscription Agreement dated as of August 9, 2007
by and between the Registrant and Berggruen Holdings (formerly
known as Berggruen Freedom Holdings, Ltd.) (2)
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10.3
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Founders Units Subscription Agreement dated as of August 9, 2007
by and between the Registrant and Marlin Equities (2)
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10.4
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Founders Units Subscription Agreement dated as of August 9, 2007
by and between the Registrant and James N. Hauslein (2)
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10.5
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Founders Units Subscription Agreement dated as of August 9, 2007
by and between the Registrant and Nathan Gantcher (2)
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10.6
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Founders Units Subscription Agreement dated as of August 9, 2007
by and between the Registrant and Paul B. Guenther (2)
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10.7
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Amended and Restated Sponsors Warrant and Co-Investment Units
Subscription Agreement dated as of December 6, 2007 by and between
the Registrant and Berggruen Acquisition Holdings (3)
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10.8
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Amended and Restated Sponsors Warrant and Co-Investment Units
Subscription Agreement dated as of December 6, 2007 among the
Registrant and Marlin Equities (3)
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10.9
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Investment Management Trust Agreement by and between the Registrant
and Continental Stock Transfer & Trust Company, dated December 12,
2007 (3)
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10.10
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Berggruen
Holdings (4)
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10.11
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Marlin
Equities (4)
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10.12
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Nicolas
Berggruen (4)
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10.13
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Martin E.
Franklin (4)
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10.14
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and James N.
Hauslein (4)
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10.15
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Nathan
Gantcher (4)
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10.16
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Paul B.
Guenther (4)
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10.17
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Promissory Note, dated August 9, 2007, issued to Berggruen Holdings
(formerly known as Berggruen Freedom Holdings, Ltd.) (2)
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10.18
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Promissory Note, dated August 9, 2007, issued to Marlin Equities (2)
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10.19
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Form of Letter Agreement among the Registrant and Berggruen
Holdings, Inc. providing office space to the Registrant (2)
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10.20
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Form of Berggruen Holdings Ltd Employee Letter Agreement (1)
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10.21
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Form of Indemnification Agreement by and between the Registrant and
each of its officers and directors, dated
December 6, 2007 (4)
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10.22
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Transaction Support Agreement between Registrant and Rucandio,
S.A., dated March 5, 2010 (English translation) (5)
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10.23
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Securities Surrender Agreement, dated May 7, 2010, among the
Registrant and the Sponsors (8)
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10.24
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Form of Letter Agreement Regarding Reduction in Deferred Discount
dated May 7, 2010 (8)
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31.1*
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Chief Executive Officer Certification Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
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32
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Exhibit
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Number
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Description
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32.1*
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Chief Executive Officer Certification Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
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99.1
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Form of Charter of Audit Committee (2)
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99.3
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Form of Charter of Compensation Committee (2)
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*
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Filed Herewith
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(1)
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Incorporated by reference to the corresponding exhibit filed with the Registrants Quarterly
Report on Form 10-Q filed with the SEC on August 8, 2008.
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(2)
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Incorporated by reference to the corresponding exhibit filed with the Registration Statement
on Form S-1 (File No. 333-145559) with the SEC on August 17, 2007.
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(3)
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Incorporated by reference to the corresponding exhibit filed with the Registrants Current
Report on Form 8-K filed with the SEC on December 12, 2007.
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(4)
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Incorporated by reference to the corresponding exhibit filed with the Registrants Annual
Report on Form 10-K filed with the SEC on March 11, 2008.
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(5)
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Incorporated by reference to the corresponding exhibit filed with the Registrants Current
Report on Form 8-K filed with the SEC on March 10, 2010.
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(6)
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Incorporated by reference to the corresponding exhibit filed with the Registrants Current
Report on Form 8-K filed with the SEC on March 18, 2010.
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(7)
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Incorporated by reference to the corresponding exhibit filed with the Registrants Current
Report on Form 8-K filed with the SEC on April 8, 2010.
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(8)
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Incorporated by reference to the corresponding exhibit filed with the Registrants Current
Report on Form 8-K filed with the SEC on May 7, 2010.
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33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
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August 16, 2010
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LIBERTY ACQUISITION HOLDINGS CORP.
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/s/ Nicolas Berggruen
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By:
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Nicolas Berggruen
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Title:
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President and Chief Executive Officer
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(principal executive officer, principal
financial officer and chief accounting officer)
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EXHIBIT INDEX
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Exhibit
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Number
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Description
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2.1
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Business Combination Agreement dated as of March 5, 2010, by and
between Prisa and Registrant (5)
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2.2
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Amendment No. 1, dated as of March 15, 2010, to Business
Combination Agreement by and between Prisa and Registrant (6)
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2.3
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Amendment No. 2, dated as of April 5, 2010, to Business Combination
Agreement by and between Prisa and Registrant (7)
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Amendment No. 4, dated as of May 7, 2010, to Business Combination
Agreement by and between Prisa and Registrant (8)
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3.1
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Restated Certificate of Incorporation (1)
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3.2
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Bylaws (2)
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4.1
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Specimen Unit Certificate (2)
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4.2
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Specimen Common Stock Certificate (2)
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4.3
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Second Amended and Restated Warrant Agreement dated December 6,
2007 between Continental Stock Transfer & Trust Company and the
Registrant (3)
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4.4
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Specimen Public Warrant Certificate (included in Exhibit 4.3)
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4.5
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Specimen Private Warrant Certificate (included in Exhibit 4.3)
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4.6
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Amended Form of Warrant Amendment Agreement (8)
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10.1
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Registration Rights Agreement among the Registrant and the
Founders, dated December 6, 2007 (4)
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10.2
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Founders Units Subscription Agreement dated as of August 9, 2007
by and between the Registrant and Berggruen Holdings (formerly
known as Berggruen Freedom Holdings, Ltd.) (2)
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10.3
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Founders Units Subscription Agreement dated as of August 9, 2007
by and between the Registrant and Marlin Equities (2)
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10.4
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Founders Units Subscription Agreement dated as of August 9, 2007
by and between the Registrant and James N. Hauslein (2)
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10.5
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Founders Units Subscription Agreement dated as of August 9, 2007
by and between the Registrant and Nathan Gantcher (2)
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10.6
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Founders Units Subscription Agreement dated as of August 9, 2007
by and between the Registrant and Paul B. Guenther (2)
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10.7
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Amended and Restated Sponsors Warrant and Co-Investment Units
Subscription Agreement dated as of December 6, 2007 by and between
the Registrant and Berggruen Acquisition Holdings (3)
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10.8
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Amended and Restated Sponsors Warrant and Co-Investment Units
Subscription Agreement dated as of December 6, 2007 among the
Registrant and Marlin Equities (3)
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10.9
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Investment Management Trust Agreement by and between the Registrant
and Continental Stock Transfer & Trust Company, dated December 12,
2007 (3)
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10.10
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Berggruen
Holdings (4)
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10.11
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Marlin
Equities (4)
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10.12
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Nicolas
Berggruen (4)
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10.13
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Martin E.
Franklin (4)
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10.14
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and James N.
Hauslein (4)
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Exhibit
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Number
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Description
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10.15
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Nathan
Gantcher (4)
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10.16
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Amended and Restated Letter Agreement dated as of December 6, 2007
among the Registrant, Citigroup Global Markets Inc. and Paul B.
Guenther (4)
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10.17
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Promissory Note, dated August 9, 2007, issued to Berggruen Holdings
(formerly known as Berggruen Freedom Holdings, Ltd.) (2)
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10.18
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Promissory Note, dated August 9, 2007, issued to Marlin Equities (2)
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10.19
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Form of Letter Agreement among the Registrant and Berggruen
Holdings, Inc. providing office space to the Registrant (2)
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10.20
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Form of Berggruen Holdings Ltd Employee Letter Agreement (1)
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10.21
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Form of Indemnification Agreement by and between the Registrant and
each of its officers and directors, dated
December 6, 2007 (4)
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10.22
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Transaction Support Agreement between Registrant and Rucandio,
S.A., dated March 5, 2010 (English translation) (5)
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10.23
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Securities Surrender Agreement, dated May 7, 2010, among the
Registrant and the Sponsors (8)
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10.24
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Form of Letter Agreement Regarding Reduction in Deferred Discount
dated May 7, 2010 (8)
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31.1*
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Chief Executive Officer Certification Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
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32.1*
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Chief Executive Officer Certification Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
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99.1
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Form of Charter of Audit Committee (2)
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99.3
|
|
Form of Charter of Compensation Committee (2)
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|
|
|
*
|
|
Filed Herewith
|
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(1)
|
|
Incorporated by reference to the corresponding exhibit filed with the Registrants Quarterly
Report on Form 10-Q filed with the SEC on August 8, 2008.
|
|
(2)
|
|
Incorporated by reference to the corresponding exhibit filed with the Registration Statement
on Form S-1 (File No. 333-145559) with the SEC on August 17, 2007.
|
|
(3)
|
|
Incorporated by reference to the corresponding exhibit filed with the Registrants Current
Report on Form 8-K filed with the SEC on December 12, 2007.
|
|
(4)
|
|
Incorporated by reference to the corresponding exhibit filed with the Registrants Annual
Report on Form 10-K filed with the SEC on March 11, 2008.
|
|
(5)
|
|
Incorporated by reference to the corresponding exhibit filed with the Registrants Current
Report on Form 8-K filed with the SEC on March 10, 2010.
|
|
(6)
|
|
Incorporated by reference to the corresponding exhibit filed with the Registrants Current
Report on Form 8-K filed with the SEC on March 18, 2010.
|
|
(7)
|
|
Incorporated by reference to the corresponding exhibit filed with the Registrants Current
Report on Form 8-K filed with the SEC on April 8, 2010.
|
|
(8)
|
|
Incorporated by reference to the corresponding exhibit filed with the Registrants Current
Report on Form 8-K filed with the SEC on May 7, 2010.
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