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|CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 8-K on 05/29/2015|
Charter has agreed to pay TWC a $2 billion termination fee, in certain circumstances, if the parties fail to obtain required Department of Justice or FCC approvals, or a $1 billion termination fee, in certain circumstances, if the parties fail to obtain certain other required regulatory approvals. In addition, TWC has agreed to pay Charter a $2 billion termination fee, and Charter has agreed to pay TWC a $1 billion termination fee, in certain circumstances relating to a third-party alternative transaction or a change in the other partys board recommendation.
The foregoing description of the Merger Agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed herewith as Exhibit 2.1 and is incorporated herein by reference.
In connection with the Merger Agreement, Charter and Liberty entered into an Investment Agreement, pursuant to which Liberty agreed to invest $4.3 billion in New Charter to partially finance the cash portion of the Merger Consideration. New Charter will issue shares to Liberty based on the same Merger Consideration value that is being paid to the TWC stockholders. The Liberty investment is subject to several conditions, including Charter stockholder approval (excluding Liberty-owned shares), satisfaction of conditions set out in the Merger Agreement and HSR Act clearance.
Charter and the Liberty Parties also entered into a Contribution Agreement, pursuant to which the Liberty Parties agreed to exchange their respective shares of TWC common stock for shares of New Charter common stock equivalent to 1.106 shares of Charter common stock for each share of TWC common stock. The obligations of the parties to complete the exchange under the Liberty Contribution Agreement are conditioned on the satisfaction of conditions set out in the Merger Agreement.
The foregoing descriptions of the Liberty Contribution Agreement and Investment Agreement do not purport to be complete, and are qualified in their entirety by reference to the full text of the Liberty Contribution Agreement and the Investment Agreement, respectively, which are filed herewith as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.
In connection with the Merger Agreement, the Company entered into the Stockholders Agreement. The Companys existing stockholders agreement with Liberty will remain in effect until the earlier of the closing of the Mergers or the closing of the contribution (as defined in the BHN Contribution Agreement) (BHN Contribution), although certain provisions of the Stockholders Agreement became effective upon execution thereof. In connection with the execution of the Stockholders Agreement, and in addition to Libertys agreement to purchase $4.3 billion of New Charter common stock pursuant to the Investment Agreement, Liberty agreed to purchase, prior to and contingent upon the closing of the BHN Contribution from New Charter $700 million of New Charter common stock for $172.9963 per share.
Under the terms of the Stockholders Agreement, the number of New Charter directors will be fixed at 13, and will include New Charters chief executive officer. Upon the closing of the BHN Contribution, two designees selected by A/N and three designees selected by Liberty will become members of the board of directors. The remaining seven directors will be independent directors selected by the nominating committee of the New Charter board by the approval of both a majority of the committee and a majority of the directors that were not appointed by either A/N or Liberty. Going forward, Liberty will be entitled to designate three nominees to be elected as director and A/N will be entitled to designate two nominees to be elected as director, in each case provided that each maintains certain specified voting or equity ownership thresholds, provided that each nominee must meet any applicable requirements or qualifications. Each of A/N and Liberty will be entitled to nominate one or more directors to each of the committees of the Charter board of directors, subject to applicable stock exchange listing rules and certain specified voting or equity ownership thresholds for each of A/N and Liberty, and provided that the nominating and compensation committees will have at least a majority of directors independent from A/N, Liberty and New Charter (Unaffiliated Directors). The nominating committee will be comprised of three Unaffiliated Directors, and one designee of each of A/N and Liberty. A/N and Liberty also will have certain other committee designation and other governance rights.