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PREM14A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form PREM14A on 06/26/2015
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together with the convertible preferred units, would imply a pro forma A/N ownership stake in Charter of 30%, on an as-converted, as-exchanged basis. On September 26, 2014, Charter replied, proposing consideration that would imply A/N ownership of Charter of 28.06% and basing its proposal on a price per Charter share of $154.53 for purposes of valuing Charter equity-linked consideration, and A/N further replied on September 30, 2014 with a proposal for an A/N stake of 28.5% and using the $154.53 price as the basis for the conversion price of the convertible preferred units. On October 1, 2014, Charter wrote again to Bright House repeating Charter’s 28.06% proposal.

On October 9, 2014, A/N proposed to Charter a choice between two separate sets of financial and governance terms for the potential combination depending on whether or not the Divestiture Transactions were completed. On October 13, 2014, representatives of Charter met with representatives of A/N to discuss the parties’ positions regarding governance arrangements following the potential combination, including the ownership threshold for A/N and Liberty Media to have consent rights over the selection of the Chairman of Charter, and whether board action would require the approval of a simple majority of all directors or two of three groups of directors designated by A/N, the directors designated by Liberty Media and the remaining directors. The group met again on October 16, and the Charter representatives agreed to continue the negotiations on the basis of a non-binding proposal of a 28.5% pro forma A/N ownership stake in the combined company, contingent on completion of the Comcast transactions. The parties also agreed to a proposal that (subject to certain exceptions) board action following the potential combination would require the approval of a simple majority of an 11-member board rather than two of three of the director groups as described above.

On October 21, 2014, after exchanging a further draft of the non-binding term sheet that laid out the material terms of the potential combination, representatives of Charter and its advisors met with representatives of Bright House and its advisors at the offices of Sabin in New York, New York. The parties agreed that the term sheet was sufficiently advanced that it should be sent to Liberty Media for review.

On October 24, 2014, Liberty Media sent a mark-up of the term sheet to Charter reflecting its comments. Among other changes to the governance arrangements, Liberty Media proposed a number of additional consent rights for Liberty Media, elimination of the voting cap that had been proposed for Liberty Media, and that A/N grant Liberty Media a proxy (the “Bright House Proxy”) to vote as many of A/N’s shares in Charter as would be required to increase Liberty Media’s total voting stake in Charter to 25.01%. Liberty Media’s markup also proposed that Charter grant Liberty Media preemptive rights to maintain its pro rata ownership stake in Charter after the closing of the combination with Bright House in connection with any issuance of equity securities of Charter after signing, and that Charter grant A/N similar preemptive rights in connection with any post-closing issuances.

Later in the afternoon of October 24, 2014, the members of Charter’s board of directors other than the directors designated by Liberty Media (Dr. Malone and Messrs. Huseby, Maffei and Nair) met to discuss the term sheet and also considerations regarding the potential combination with Bright House. During the meeting, the directors also reviewed the potential conflicts of interest of Goldman Sachs and Wachtell Lipton, as well as the potential conflicts of interest of all directors present at the meeting. The independent directors resolved to form a working group comprising Eric L. Zinterhofer, Chairman of Charter, John D. Markley Jr. and Lance Conn to meet as necessary to consider and negotiate the potential transaction. Because LionTree advised the Charter board of directors that they had a substantial historic and ongoing relationship with Liberty, the independent directors of the Charter board of directors negotiated and considered the transactions with Liberty without the participation of LionTree.

Over the course of the next several weeks, Liberty Broadband, which following its spin-off from Liberty Media held the shares of Charter formerly held by Liberty Media, with the advice of Baker Botts L.L.P. (“Baker Botts”), its legal advisor, and Charter, acting through the independent directors and with the advice of Wachtell Lipton and Goldman Sachs continued to negotiate, without the involvement of A/N, the proposed governance and other terms of the potential combination with Bright House. During the negotiations over the scope and nature of Liberty Broadband’s preemptive rights, on November 11, 2014, Liberty Broadband proposed to commit at the signing of the proposed combination to purchase not less than $650 million of Charter Class A common stock at closing at a price of $154.53 per share. On November 18, 2014, Mr. Zinterhofer, together with

 

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