Liberty Broadband Announces Agreement with Charter to Invest $5 billion in connection with Time Warner Cable Merger & Bright ...
26 May 2015 - 8:08PM
Business Wire
Newly Issued Liberty Broadband Shares to be
Purchased by Liberty Interactive Corporation and Other Third
Parties including Coatue, JANA and Soroban
Liberty Broadband Corporation (Nasdaq: LBRDA, LBRDK) (“Liberty
Broadband”) announced today that it has entered into an agreement
with Charter Communications, Inc. (“Charter”) to invest $4.3
billion at a price of $176.95 per share in connection with (and
contingent upon) the closing of today’s announced proposed merger
with Time Warner Cable Inc. (“TWC”) by Charter. Liberty Broadband
has also reaffirmed its commitment to purchase an additional $700
million at a price of $173 per share in connection with Charter’s
proposed acquisition of Bright House Networks from Advance/Newhouse
Partnership (“A/N”). In connection with these transactions, it is
expected that Charter will undergo a corporate reorganization,
resulting in a current subsidiary of Charter becoming the publicly
traded parent company (“New Charter”).
“Charter’s transactions with Time Warner Cable and Bright House
are the fulfillment of the cable consolidation we have advocated.
This combination joins three strong operators under Tom Rutledge
and his team and adds meaningful scale to enable innovation for the
benefit of customers and shareholders,” said Greg Maffei, President
and CEO of Liberty Broadband. “We are excited to invest
substantially behind this and continue as Charter’s largest
shareholder.”
In support of the TWC merger, Liberty Broadband will purchase
$4.3 billion of stock in New Charter (the “Charter Shares”) using
the proceeds from $4.4 billion of subscriptions for newly issued
shares of Liberty Broadband’s Series C common stock (the “Series C
Shares”), at a price per share of $56.23 (equal to Liberty
Broadband’s net asset value on a sum-of-the parts basis). The
purchasers of the Series C Shares are Liberty Interactive
Corporation through Liberty Ventures Group and third party
investors, including Coatue Management LLC, JANA Partners LLC and
Soroban Capital Partners LP (“Soroban”), which will all invest on
the same terms. Soroban, which also holds a position in TWC, has
agreed to vote its TWC shares in favor of the Charter-TWC merger.
The Series C Share subscriptions are subject to customary closing
conditions and funding will only occur upon the completion of the
TWC merger. Each of Charter and Liberty Broadband intends to seek
stockholder approval for the issuance of the Charter Shares and the
Series C Shares, respectively, in accordance with the rules and
requirements of the Nasdaq Stock Market. If, for any reason,
Liberty Broadband does not receive the requisite stockholder
approval for the issuance of the Series C Shares, the purchasers
will instead acquire a limited number of Series C Shares, together
with shares of a newly issued series of non-convertible preferred
stock of Liberty Broadband.
In connection with the TWC merger, Liberty Broadband has also
entered into an agreement with Charter pursuant to which it has
agreed to vote all of its shares of Charter’s Class A common stock
in favor of Charter’s merger with TWC, the issuance of the Charter
Shares and any related proposals. Liberty Broadband and Liberty
Interactive have also entered into an agreement with Charter which
provides that Liberty Broadband and Liberty Interactive will
exchange, in a tax-free transaction, the shares of TWC common stock
held by each company for shares of New Charter Class A common stock
(subject to certain limitations). In addition, Liberty Interactive
has also agreed to grant Liberty Broadband a proxy over the shares
of New Charter Stock it receives in the exchange, along with a
right of first refusal with respect to the underlying New Charter
Stock.
Separately, Liberty Broadband has reaffirmed its commitment to
purchase up to $700 million in New Charter Stock at a per share
price of $173 in connection with the Bright House acquisition,
which Liberty Broadband intends to fund through cash on hand. As
previously announced, A/N and Liberty Broadband will enter into a
proxy agreement, pursuant to which A/N will grant Liberty Broadband
a five-year proxy to vote shares of New Charter held by A/N, capped
at 7% of New Charter’s outstanding shares (which is an increase
from the previously announced 6% cap). Liberty Broadband is
expected to control approximately 25.01% of the aggregate voting
power of New Charter following the completion of the TWC merger and
the Bright House acquisition and is expected to be New Charter’s
largest stockholder.
The terms of a new stockholders agreement among Charter, New
Charter, Liberty Broadband and Bright House (which will become
effective upon the closing of the Bright House acquisition) remain
substantially the same as previously announced, except that the
restrictions on Liberty Broadband’s ability to utilize its New
Charter Stock in connection with financing transactions have been
eliminated and Bright House will be entitled to designate two
(instead of three) director nominees, among other things.
The TWC merger is subject to approval by stockholders of both
Charter and TWC, as well as regulatory approval and other customary
conditions to closing. The Bright House acquisition is subject to
several conditions, including the completion of the TWC merger
(subject to certain exceptions if TWC enters into another sale
transaction), Charter stockholder approval, a separate stockholder
vote on the Liberty Broadband transactions, and regulatory
approval.
Baker Botts LLP is serving as counsel to Liberty Broadband.
Forward-Looking Statements
This press release includes certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements about the completion of Charter’s
corporate reorganization, the TWC merger and Bright House
acquisition transactions, the effectiveness of the new stockholders
agreement, the anticipated ownership percentages of Liberty
Broadband following the closing, Liberty Broadband’s issuance of
Series C Shares to third party investors, Liberty Broadband’s
additional investments in Charter and other matters that are not
historical facts. These forward-looking statements involve many
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by such statements,
including, without limitation, the receipt of required approvals,
including stockholder and regulatory. These forward looking
statements speak only as of the date of this press release, and
Liberty Broadband expressly disclaims any obligation or undertaking
to disseminate any updates or revisions to any forward-looking
statement contained herein to reflect any change in Liberty
Broadband’s expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based. Please refer to the publicly filed documents of Liberty
Broadband, including the most recent Forms 10-K and 10-Q, for
additional information about Liberty Broadband and about the risks
and uncertainties related to Liberty Broadband’s business which may
affect the statements made in this press release.
About Liberty Broadband
Corporation
Liberty Broadband Corporation (Nasdaq: LBRDA, LBRDK) is
comprised of, among other things, its interest in Charter
Communications, its subsidiary TruePosition and a minority equity
investment in Time Warner Cable.
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