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SEC Filings

PREM14A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form PREM14A on 06/26/2015
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and, in the case of A/N, the common stock into which its units are exchangeable, subject to a minimum to be agreed, unless the managing underwriter advises Charter that the inclusion of the shares would adversely affect the offering, in which case shares to be sold by any other Charter shareholders and A/N and Liberty shall be offered on a pro rata basis to the extent of the size of the secondary offering that the managing underwriter deems advisable.

Termination

The foregoing agreements with respect to registration) will terminate with respect to A/N or Liberty once such person beneficially owns less than 5% equity ownership of Charter.

Transaction Steps

The transaction steps for implementing the A/N—Charter transaction are anticipated to be as set forth in Annex A. The parties will work together in good faith following the Closing to agree to any changes to such steps that may be mutually beneficial or that may be necessary to reduce a potential detriment to either party. [Annex to include steps from EY deck]

Requirements in Up-C Structure

Distributions to partners in Charter Holdco must be pro rata, except to the extent provided below

 

Charter and its subsidiaries may not hold material assets or liabilities outside of Charter Holdco

 

Charter’s capital structure must be mirrored in its economic interest in the Charter Holdco. Without limiting the generality of the foregoing, if Charter issues equity to acquire assets, Charter will drop the assets down into Charter Holdco in exchange for an equivalent amount of units. A/N and Liberty will have pre-emptive rights in connection with any such issuances of equity to the extent provided in the Stockholders’ Agreement.

 

Expenses of Charter must be reimbursed by Charter Holdco and therefore borne by both the shareholders of Charter and A/N. The LLC agreement and exchange agreement also shall include such other provisions as are requisite or customary in a 1:1 Up-C structure.

 

Charter will be the managing member of Charter Holdco. The Managing Member must have discretion to issue management incentive shares and matching units at Charter Holdco, diluting both Charter’s shareholders and A/N (subject to pre-emptive rights to the extent provided in the Stockholders’ Agreement).

Principles for Tax Distributions

Cash distributions to be made quarterly (with annual true-ups) at the highest marginal tax rate for an individual living in New York—currently approximately 52%

 

Cash distributions to be made pro rata to the partners based on the partner with the highest proportionate taxable income allocation, including the effect of Section 704(c), and are intended to have no distortive effect on the pro rata entitlement of each partner to distributions from Charter Holdco

 

The Managing Member may limit pro rata tax distributions to the amount required by the highest taxable income allocation to a non-Charter member of Charter Holdco.

 

The Managing Member may waive its entitlement to tax distributions and, instead, issue a non-pro-rata “advance” to A/N, which will accrue interest at a money market rate and will reduce A/N’s exchange value into cash or Charter stock.

 

B-73