Liberty Interactive to invest $2.4 billion in Liberty Broadband
The proceeds of this investment will be used by Liberty Broadband to fund, in part, its agreement to acquire $4.3 billion of Charter stock. Liberty Broadband’s acquisition will be made in support of (and contingent upon) the closing of the Charter-TWC merger.
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). Liberty Interactive’s investment in Liberty Broadband will be funded using cash on hand and will be attributed to the Liberty Ventures Group.
Liberty Interactive (along with third party investors, all of whom will invest on the same terms as Liberty Interactive) will purchase newly issued shares of Liberty Broadband Series C common stock at a per share price of $56.23 (equal to Liberty Broadband’s net asset value on a sum-of-the parts basis).
In the aggregate, Liberty Broadband has entered into subscription agreements with respect to $4.4 billion of its Series C Shares. Liberty Interactive’s investment in Liberty Broadband is subject to customary closing conditions and funding will only occur upon the completion of the Charter-TWC merger. Liberty Broadband intends to seek stockholder approval for the issuance of the Series C Shares 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.
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. ■