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PREM14A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form PREM14A on 06/26/2015
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votes to be determined by the number of Charter Holdings common units held (or that would be held upon exchange or conversion of preferred units) by A/N. The term sheet also provided for certain governance rights, including a number of board seats in proportion to A/N’s equity ownership and consent rights over certain major corporate actions.

On June 19, 2014, Charter sent a revised version of the term sheet to A/N proposing limits on A/N’s influence over Charter following a transaction, particularly in conjunction with the existing share ownership and governance rights of Liberty Media Corporation (“Liberty Media”), then Charter’s largest stockholder. Among other changes, the revised term sheet proposed a voting cap of 23.5% of Charter’s outstanding Class A common stock for each of A/N and Liberty Media, that A/N would be permitted to designate three members of Charter’s 11-member board of directors for so long as A/N maintained a voting interest of at least 20% in Charter, that board action would require the approval of majorities of two out of three of the groups of directors (i.e., the directors designated by A/N, the directors designated by Liberty Media and the remaining directors), and that A/N and Liberty Media would be prohibited from acting in concert.

On June 26, 2014, representatives of Goldman, Sachs & Co. (“Goldman Sachs”) and LionTree Advisors, LLC (“LionTree”), Charter’s financial advisors, and representatives of Wachtell, Lipton, Rosen & Katz (“Wachtell Lipton”), Charter’s legal advisor, had a telephonic meeting with representatives of UBS, A/N’s financial advisor, and Sullivan & Cromwell LLP (“Sullivan & Cromwell”) and Sabin, Bermant & Gould LLP (“Sabin”), A/N’s legal advisors, to discuss the governance provisions in the term sheet. On July 2, 2014, A/N sent Charter a presentation regarding the operations and financial condition of Bright House. Over the following month, Charter and A/N exchanged drafts of the term sheet that included the parties’ respective positions on call rights over preferred units of Charter Holdings, exceptions to the A/N and Liberty Media voting caps, board designation rights, percentage ownership thresholds at which A/N and Liberty Media would lose board designation and other governance rights and cure periods for falling below such thresholds, consent rights of A/N, exceptions to transfer restrictions, and registration rights.

On July 29, 2014, the Charter board of directors met and discussed the proposed combination with Bright House. Over the next several weeks, the parties continued to exchange drafts of the term sheet setting forth the parties’ positions on the topics noted above, as well as the assumption of outstanding Bright House debt and allocation of certain tax attributes and risks and, during this period, representatives of LionTree and Goldman Sachs had calls with representatives of UBS on several occasions to discuss the potential combination. On September 8, 2014, Thomas M. Rutledge, President and Chief Executive Officer of Charter, and other representatives of Charter met with Steven A. Miron, Chief Executive Officer of Bright House, and other representatives of A/N and Bright House to discuss further details regarding the governance rights that Bright House would have following consummation of the potential combination. During this meeting, A/N provided Charter with a presentation containing financial and operational information regarding Bright House.

On September 12, 2014, Charter sent a letter to A/N outlining non-binding proposed financial terms for a combination between Charter and Bright House. The letter stated that Charter valued Bright House at an enterprise value of $9.275 billion. On a cash-free, pension-free basis and on the assumption of Bright House debt of $514 million at closing, the letter proposed consideration comprising $1.5 billion in cash, $2.5 billion of convertible preferred units of Charter Holdings with a 6% coupon and exchangeable into common units of Charter Holdings, common units of Charter Holdings exchangeable into 30.3 million shares of Charter common stock, representing $4.811 billion at Charter’s share price of $158.80 as of September 11, 2014, and future cash payments for 50% of the cash tax savings realized by Charter from the incremental amortization expense of any tax basis step-up generated from an exchange of Bright House’s Charter Holdings common units for Charter Class A common stock. Also included in the letter was a revised version of the term sheet laying out Charter’s proposal regarding governance and other terms of the potential combination, and an explanation of Charter’s proposed treatment of outstanding issues.

On September 18, 2014, A/N replied to Charter proposing that Charter pay A/N consideration of $1.5 billion in cash, $2.5 billion of convertible preferred units of Charter Holdings and common units of Charter Holdings that,

 

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