8-KAcquisitions & DispositionsFinancial EventsRegulation FD+1

Liberty Media Corp 8-K Report, Acquisition Completed (May 3, 2013)

Filed May 3, 2013For Securities:FWONKFWONAFWONB

Summary

Liberty Media Corporation (FWONK) has announced the completion of its acquisition of a significant stake in Charter Communications, Inc. (Charter) on May 1, 2013. The acquisition involved purchasing approximately 26.9 million shares of Charter's Class A common stock and over 1.1 million warrants. This strategic move was funded through a combination of $1.2 billion in cash on hand and $1.4 billion in new debt, arranged through multiple margin loan agreements with various financial institutions. In conjunction with the acquisition, Liberty Media has also gained board representation at Charter. Four new directors affiliated with Liberty Media, including John C. Malone and Gregory B. Maffei, were appointed to Charter's board. This acquisition and associated debt financing represent a material event for Liberty Media, impacting its asset base and financial obligations.

Key Highlights

  • 1Completed acquisition of approximately 26.9 million shares of Charter Communications (CHTR) Class A common stock.
  • 2Acquired 1.1 million warrants in Charter Communications.
  • 3Acquisition financed by $1.2 billion in cash and $1.4 billion in new debt from three separate margin loan agreements.
  • 4New Liberty Media designees appointed to Charter's Board of Directors, including John C. Malone and Gregory B. Maffei.
  • 5Total debt financing for the acquisition amounts to $1.4 billion, with maturities ranging from October 2014 to May 2016.
  • 6The margin loan agreements are secured by pledged shares of publicly traded stocks, including Sirius XM Radio Inc. (SIRI) for one agreement.
  • 7Financial statements and pro-forma information for the acquired business will be filed by amendment later.

Frequently Asked Questions

The acquisition involved purchasing 26,858,577 shares of Charter Common Stock at $95.50 per share and warrants at $95.50 per warrant less their exercise price. While the total cash outlay for shares is approximately $2.56 billion, the total cost including warrants is not explicitly stated as a single sum in this filing but is part of the overall financing.

Liberty Media funded the acquisition using $1.2 billion of cash on hand and borrowed $1.4 billion through three separate margin loan agreements with Merrill Lynch International, Nomura Securities, and Citibank, N.A.

The debt consists of three margin loan agreements with maturities ranging from October 30, 2014 (for the $2.0 billion facility with Merrill Lynch) to June 1, 2014 (for the $300 million facility with Nomura) and May 1, 2015 (for the $670 million facility with Citibank), though some lenders have options to extend maturities.

The debt is secured by liens on various assets. The margin loan with Merrill Lynch is secured by a basket of publicly traded common stocks, including Sirius XM Radio Inc. shares. The Nomura loan is secured by Charter Common Stock, and the Citibank loan is secured by Charter Common Stock as well.