CORRECTING & REPLACING Liberty Interactive Announces Extraordinary Cash Distribution & Reference Share Adjustment on its Seni...
17 August 2013 - 6:30AM
Business Wire
Please replace the corrected release dated July 23, 2013 with
the following corrected version due to further revisions
throughout.
The corrected release reads:
LIBERTY INTERACTIVE ANNOUNCES EXTRAORDINARY
CASH DISTRIBUTION AND REFERENCE SHARE ADJUSTMENT ON ITS SENIOR
EXCHANGEABLE DEBENTURES RELATING TO SPRINT COMMON STOCK
Liberty Interactive LLC (“Liberty”), a subsidiary of Liberty
Interactive Corporation (Nasdaq: LINTA, LINTB, LVNTA, LVNTB),
announced today that it will make an extraordinary cash
distribution to holders of record on July 24, 2013, of its 4.0%
Senior Exchangeable Debentures due 2029 and 3.75% Senior
Exchangeable Debentures due 2030 (the “Debentures”). The cash
distribution to be made per $1,000 principal amount of each
Debenture is indicated in the table below (the “Extraordinary
Distribution”). The distribution date for the Extraordinary
Distribution is August 7, 2013.
The Extraordinary Distribution is being made by Liberty as a
result of the closing of the merger transaction (the “Merger
Transaction”) between Sprint Nextel Corporation (“Sprint Nextel”)
and SoftBank Corp. Stockholders of Sprint Nextel were given the
election (the “Merger Consideration Election”), for each share of
Sprint Nextel Series 1 common stock held by them, to receive either
(i) one share of common stock, par value $0.01 share (“Sprint
Common Stock”), of a new corporation named “Sprint Corporation”
(“Sprint”) or (ii) cash in the amount of $7.65, subject to
proration and reallocation pursuant to the terms of the Merger
Transaction. Sprint has publicly announced that, in connection with
the Merger Consideration Election, Sprint has issued an aggregate
of 850,899,628 shares of Sprint Common Stock and paid an aggregate
of $16,639,999,897 in exchange for the 3,026,063,027 shares of
Sprint Nextel Series 1 common stock that were eligible to
participate in the Merger Consideration Election.
Under the Indenture relating to the Debentures, the Merger
Consideration Election constituted a “reference share offer” which
requires a “reference share offer adjustment” to the number of
reference shares underlying each Debenture. Hence, in addition to
the Extraordinary Distribution, Liberty has made a “reference share
proportionate reduction” to the number of reference shares
underlying the Debentures. The following table illustrates the
payments and reference share adjustments being made by Liberty.
Extraordinary Distribution and
Reference Share Proportionate Reduction
4.0% Debentures 3.75% Debentures
Pre-merger Exchange Ratio(shares
per bond)
Sprint Nextel: 11.4743CenturyLink:
.7860
Sprint Nextel: 8.3882CenturyLink:
.5746
Post-merger Exchange
Ratio(shares per bond)
Sprint : 3.2265CenturyLink: .7860
Sprint: 2.3587CenturyLink: .5746
Cash Distribution per bond $63.0960 $46.1258
Total Cash Distribution $29,578,250
$21,217,832
In accordance with the Indenture, the principal amount of the
Debentures is to be reduced by the amount of each extraordinary
cash distribution that we pay on the Debentures. In addition, the
adjusted principal amount is to be further reduced on each
successive semi-annual interest payment date to the extent
necessary to cause the semi-annual interest payment on that date to
represent the payment by Liberty, in arrears, of an annualized
yield equal to the stated cash coupon rate on the adjusted
principal amount of the Debentures. In no event will the reductions
to the principal amount of the Debentures affect the amount of the
semi-annual interest payments received by holders of the
Debentures, which will continue to be a rate of interest equal to
the stated cash coupon rate per annum of the original principal
amount of the Debentures. The following table illustrates the
adjustment made to the principal amount of the Debentures
attributable to the Extraordinary Distribution.
BeginningAdjustedPrincipalAmount
perBond
PrincipalAdjustment
perBond
EndingAdjustedPrincipalAmount
perBond
Beginning
TotalPrincipalOutstanding
Ending
TotalPrincipalOutstanding
4.0% Debentures $1000.0000 $63.0960
$936.9040 $468,782,000 $439,203,750
3.75%
Debentures $1000.0000 $46.1258 $953.8742
$459,999,000 $438,781,168
For federal income tax purposes the debentures are treated as
"contingent payment debt instruments" and the holders are required
to recognize interest income based on the "comparable yield" as
originally determined for the debentures. As of the time of their
issuance, a "projected payment schedule" was prepared for the
debentures which would produce the comparable yield. The
extraordinary cash distribution does not change the original
comparable yield or the original projected payment schedule, and
accordingly does not change the amount of interest income holders
are required to recognize as taxable income, except to the extent
described in the next sentence. Liberty intends to treat the
extraordinary cash distribution on each bond as a positive
adjustment pursuant to Treasury Regulation Section 1.1275-4(b)(6),
and therefore as additional interest on such bond. Each holder
should consult their tax advisor to determine the proper tax
treatment of such distribution.
About Liberty Interactive LLC
Liberty Interactive LLC is a wholly owned subsidiary of Liberty
Interactive Corporation and owns interests in a broad range of
electronic retailing, media, communications, and entertainment
businesses.
Liberty Interactive CorporationCourtnee Ulrich, 720-875-5420
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