8-KOther EventsExhibits & Filings

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Corporate Update (Sep 9, 2015)

Filed September 9, 2015For Securities:CHTR

Summary

This Form 8-K filing by Charter Communications, Inc. (CHTR) primarily serves as a supplement to its previously filed Joint Proxy Statement/Prospectus concerning the proposed mergers with Time Warner Cable Inc. (TWC) and related transactions. The filing announces a Memorandum of Understanding (MOU) to settle litigation concerning the TWC merger, thereby aiming to avoid further legal entanglements and potential injunctions. It also provides updated financial disclosures and clarifications related to the merger terms, including selected precedent transaction multiples, discounted cash flow analysis inputs, and projected unlevered free cash flow figures for the combined entity. Key for investors is the resolution of litigation that could have delayed or disrupted the significant merger. The supplemental disclosures offer more granular financial projections and deal term clarifications, such as the handling of fractional shares, which are crucial for understanding the potential future performance and value of the combined company. While the company maintains it denies all allegations in the settled litigation, the settlement is presented as a pragmatic step to facilitate the merger's progression.

Key Highlights

  • 1Charter Communications and Time Warner Cable (TWC) have reached a Memorandum of Understanding (MOU) to settle litigation related to their proposed merger, aiming to prevent delays or injunctions.
  • 2The settlement involves supplemental disclosures to the Joint Proxy Statement/Prospectus, providing additional details on the merger's financial aspects.
  • 3Updated financial analyses include revised selected precedent transaction multiples and discounted cash flow (DCF) analysis inputs (discount rates).
  • 4New projected unlevered free cash flow figures for the combined entity (New Charter) are disclosed for fiscal years 2016-2019, with and without the Bright House Networks (BHN) transaction.
  • 5Clarifications are provided regarding the calculation and handling of cash payments for fractional shares for both TWC and Charter stockholders.
  • 6The filing details the potential accretive impact of the merger on Charter's levered free cash flow per share for calendar years 2016 and 2017 under various merger consideration scenarios.
  • 7A Form of Proxy and Right of First Refusal Agreement related to Liberty Broadband and Advance/Newhouse Partnership has been disclosed to address litigation claims.

Frequently Asked Questions

The primary purpose of this 8-K filing is to provide supplemental information and disclosures to the Joint Proxy Statement/Prospectus previously filed by Charter Communications and Time Warner Cable (TWC) concerning their proposed merger. It announces a settlement for litigation concerning the TWC merger and updates financial details and merger terms.

The settlement of the New York litigation, through the MOU, aims to resolve claims that could have led to injunctions or damages, thereby allowing the merger process to proceed more smoothly and with reduced risk of delay. While Charter and TWC deny wrongdoing, the settlement avoids the burden and expense of further litigation.

The filing includes updated financial analyses, such as revised multiples from selected precedent transactions, adjusted discount rates for DCF analyses, and projected unlevered free cash flows for the combined company (New Charter) from 2016 to 2019. It also details the potential accretive impact on levered free cash flow per share for 2016 and 2017 under different deal consideration scenarios.

Neither TWC nor New Charter will issue fractional shares. Instead, any fractional shares that a stockholder would otherwise receive will be rounded down to the nearest whole number, and the stockholder will receive cash, without interest, for that fractional share. The cash amount is calculated based on the Charter Class A common stock closing price just before the merger closing.