8-KSecurities & ListingOther EventsExhibits & Filings

Liberty Media Corp 8-K Report, Unregistered Securities Sale (Dec 14, 2016)

Filed December 14, 2016For Securities:FWONKFWONAFWONB

Summary

This Form 8-K filing by Liberty Media Corporation (FWONK) on December 14, 2016, details significant developments related to its acquisition of Formula 1. The company announced the execution of Investment Agreements with third-party investors for an aggregate of approximately $1.55 billion. These funds, raised through the sale of Series C Liberty Media common stock (LMCK) at $25.00 per share, will partially finance the cash consideration for the acquisition of all of Delta Topco, the parent company of Formula 1. The transaction structure is designed to offset cash payments to selling shareholders with proceeds from this third-party investment, thereby reducing the cash component and increasing the stock component of the consideration. The filing also highlights that the consummation of the Formula 1 acquisition is contingent upon Liberty Media's stockholders approving the issuance of LMCK shares, a vote scheduled for January 17, 2017, at a special meeting. The overall structure of the deal and the funding from these investment agreements is subject to the successful closing of the Formula 1 Acquisition and stockholder approval.

Key Highlights

  • 1Liberty Media has entered into Investment Agreements with third-party investors to raise approximately $1.55 billion through the sale of its Series C Liberty Media common stock (LMCK) at $25.00 per share.
  • 2The proceeds from these investments will be used to fund a portion of the cash consideration for the acquisition of Delta Topco, the parent company of Formula 1.
  • 3The structure of the deal adjusts the payment to Delta Topco's selling shareholders: cash consideration will increase by the investment proceeds, and LMCK shares issued to them will decrease accordingly.
  • 4Liberty Media is seeking stockholder approval for the issuance of LMCK shares in connection with the Formula 1 Acquisition, including shares sold to third-party investors, at a special meeting on January 17, 2017.
  • 5Stockholder approval of the share issuance is a non-waivable condition for the closing of the Formula 1 Acquisition.
  • 6Both third-party investors and selling shareholders will be subject to a six-month lock-up period following the closing of the Formula 1 Acquisition.
  • 7The total maximum number of LMCK shares to be issued at closing to selling shareholders and third-party investors is approximately 138 million.

Frequently Asked Questions

The primary purpose of the Investment Agreements is to secure approximately $1.55 billion in funding from third-party investors. This funding will be used to partially finance the cash component of Liberty Media's acquisition of Delta Topco, the parent company of Formula 1, and will offset the amount of cash Liberty Media needs to pay directly to the selling shareholders.

The stockholder vote is critical because Liberty Media requires shareholder approval to issue the Series C Liberty Media common stock (LMCK) in connection with the Formula 1 Acquisition. This approval includes the shares to be issued to the third-party investors as well as those going to the selling shareholders. Without this approval, the entire Formula 1 Acquisition cannot close, and the investment agreements will terminate.

The investment structure impacts the consideration by increasing the cash component payable to the selling shareholders by the amount of the proceeds received from the third-party investment. Conversely, the number of Liberty Media's Series C common stock (LMCK) shares that would have been issued to selling shareholders is decreased by the number of LMCK shares actually sold to the third-party investors. Liberty Media itself does not retain the proceeds from this specific sale of shares.

Both the third-party investors and the selling shareholders of Delta Topco will be subject to certain lock-up restrictions for a period of six months after the closing of the Formula 1 Acquisition. This means they generally cannot sell the shares they receive during this period, subject to specific exceptions outlined in the agreements.