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SEC Filings

PREM14A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form PREM14A on 06/26/2015
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during which LionTree provided advice to Charter, and the decision to enter into the merger agreement was solely that of the Charter board of directors. LionTree did not, however, recommend any specific type or amount of merger consideration to Charter or the Charter board of directors, nor did it recommend that any specific type or amount of merger consideration constituted the only appropriate consideration for the transaction.

The following is a summary of the material analyses reviewed by LionTree in connection with LionTree’s presentation to the Charter board of directors and opinion rendered on May 23, 2015. The order of the analyses does not represent relative importance or weight given to those analyses by LionTree. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of LionTree’s analyses.

For purposes of its analyses, LionTree reviewed a number of financial and operating metrics, including:

 

    enterprise value, calculated as the value of the relevant company’s outstanding equity securities (taking into account its outstanding options, warrants and other convertible securities) based on the relevant company’s closing stock price, or equity value, plus net debt (calculated as outstanding indebtedness, preferred stock and capital lease obligations less the amount of cash on its balance sheet) plus interests of others in majority (but not wholly owned) subsidiaries, or minority interests, less interests in entities for which the relevant company owns less than 50% of the equity, or associates, as of a specified date;

 

    adjusted enterprise value, calculated as enterprise value less the net present value of the relevant company’s tax attributes;

 

    earnings before interest, taxes, depreciation and amortization, adjusted for certain one-time items and stock-based compensation expense, which we refer to in this section as Adjusted EBITDA; and

 

    Adjusted EBITDA minus capital expenditures, which we refer to in this section as Adjusted EBITDA minus Capex.

Unless the context indicates otherwise, enterprise values and equity values derived from the selected companies analyses described below were calculated using the closing price of Charter common stock, and the common stock of the selected publicly traded companies listed below as of May 22, 2015 (other than Cablevision, for which the closing price on May 19, 2015 was used), and transaction values for the target companies derived from the selected transactions analysis described below were calculated as of the public announcement date of the relevant transaction based on the estimated purchase prices paid in the selected transactions. Accordingly, this information may not reflect current or future market conditions.

In addition, unless the context indicates otherwise, (i) per share amounts for Charter Class A common stock were calculated on a fully diluted basis, using the treasury stock method; (ii) Pro Forma Charter refers to New Charter after giving effect to the mergers and, where indicated, the BHN transactions; (iii) Option A assumes that all TWC stockholders (other than Liberty Broadband and Liberty Interactive) elect, in accordance with the merger agreement, to receive $100 cash and 0.5409 Charter Class A common shares for each share of TWC common stock; and (iv) Option B assumes that all TWC stockholders (other than Liberty Broadband and Liberty Interactive) elect, in accordance with the merger agreement, to receive $115 cash and 0.4562 Charter Class A common shares for each share of TWC common stock. Estimates of 2015 Adjusted EBITDA for Charter and TWC were based on Charter management projections.

Financial Analyses

Selected Companies Analysis. LionTree calculated certain valuation multiples based on certain financial data for Charter and certain selected companies. The selected companies consisted of publicly traded companies primarily engaged in the U.S. cable industry with enterprise values in excess of $5 billion. For each of Charter

 

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