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PREM14A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form PREM14A on 06/26/2015
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revised version of the term sheet to Baker Botts and Sullivan & Cromwell. On the same day, A/N granted access to Charter and its representatives to a virtual data room containing information about Bright House that had been requested by Charter. The parties exchanged mark-ups of the term sheet over the next several weeks. On February 20, 2015, Wachtell Lipton sent a draft of the BHN contribution agreement to Sullivan & Cromwell and, on February 28, 2015, Sullivan & Cromwell sent a mark-up of the draft BHN contribution agreement to Wachtell Lipton. Among other changes, the mark-up cut back substantially the representations and warranties that Charter had proposed that A/N provide regarding Bright House and its business and limited the scope of indemnification by A/N for breaches of those representations and warranties, and added a termination fee of $400 million to be paid by Charter in the event of a termination of the BHN contribution agreement following a recommendation by Charter’s board of directors against the combination, or if Charter’s stockholders voted against the combination.

On March 1, 2015, Mr. Zinterhofer, Mr. Rutledge, and Mr. Maffei met with Mr. Miron in Utah and informed him that, given the recent rise in Charter’s stock price, Charter would not be willing to proceed with the potential combination on the basis of a reference price of $154.53 per share of Charter Class A common stock as the basis for valuing Charter equity-linked consideration, the price that previously had been the basis for discussions.

On March 5, 2015, Charter’s board of directors met to discuss the potential combination, including a proposal for the acquisition of Bright House based on the 60-day volume weighted average price of Charter Class A common stock prior to signing as the basis for valuing Charter equity-linked consideration, and pointed out that this would incentivize A/N not to delay its response because the weighted average price would increase day-by-day for as long as Charter’s stock price remained higher than $154.53 per share. On March 11, 2015, Charter sent Bright House a revised draft of the term sheet proposing an acquisition of Bright House by Charter for consideration comprised of $1.5 billion in cash (and the assumption of $514 million in debt), $2.5 billion value of convertible preferred units of Charter Holdings, common units of Charter Holdings that would be exchangeable into Charter Class A common stock valued at $5.93 billion based on the 60-day weighted average price of Charter Class A common stock prior to public announcement of the transaction, and voting Class B common stock of Charter with no economic rights. The reference price per share for the Liberty Broadband investment, now to be an aggregate investment of $700 million, in Charter Class A common stock would be increased to the same 60-day weighted average price. On March 12, 2015, various news outlets reported that Charter and A/N were discussing the possibility of an acquisition of Bright House by Charter. Mr. Rutledge and Mr. Miron agreed to disregard, by making a corresponding adjustment to the 60-day weighted average price, the effects of those reports on Charter’s stock price in determining the price used to value Charter equity-linked consideration to be received by A/N and the reference price for the Liberty Broadband investment.

After a number of phone calls among Wachtell Lipton, Sullivan & Cromwell and Sabin, Wachtell Lipton sent a revised draft of the contribution agreement to Sullivan & Cromwell on March 22, 2015 addressing, among other things, the circumstances under which A/N would be required to pay a termination fee in connection with TWC exercising the ROFO, adjustments for working capital and debt, and the scope of and limitations on indemnification provisions.

On March 24, 2015, the directors of Charter other than those designated by Liberty Broadband met to discuss the potential combination of Bright House and Charter. The directors agreed that Charter should continue to pursue the potential combination on substantially the terms proposed in the March 11, 2015 term sheet.

On March 25, 2015, Wachtell Lipton sent a draft of the BHN/Liberty stockholders agreement to Baker Botts and to Sullivan & Cromwell. On the same day, Sullivan & Cromwell sent a revised draft of the BHN contribution agreement to Wachtell Lipton. Over the next several days, Wachtell Lipton, Baker Botts and Sullivan & Cromwell exchanged drafts of the BHN/Liberty stockholders agreement and Wachtell Lipton and Sullivan & Cromwell exchanged drafts of the BHN contribution agreement, in each case reflecting the ongoing negotiations between the parties.

 

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