The Board of Directors
Charter Communications, Inc.
May 23, 2015
billion of cash, (b) 10.3 million preferred units of Charter Holdco with an aggregate liquidation value of $2.5 billion (the Holdco Preferred Units),
(c) 34.3 million (subject to adjustment as provided in the BH Agreement in the event that the TWC Transactions are consummated prior to the BH Transaction) common units of Charter Holdco (the Holdco Common Units), and
(d) 1 Class B common share of New Charter (the Class B Share and, together with the Holdco Preferred Units and the Holdco Common Units, the New Equity; the aggregate amount of such cash to be paid and the
New Equity to be issued, the BH Consideration; the BH Consideration and the TWC Consideration are collectively referred to herein as the Consideration) (the BH Transaction and,
together with the TWC Transactions, the Transactions).
Capitalized terms used but not defined in this letter have the
meanings ascribed thereto in the TWC Agreement and, if not defined in the TWC Agreement, have the meanings ascribed thereto in the BH Agreement. The terms and conditions of the Transactions are more fully set forth in the Agreements.
You have requested our opinion as to the fairness, from a financial point of view, to the Company of the TWC Consideration to be paid by the
Company for the TWC Common Stock pursuant to the TWC Agreement.
In arriving at our opinion, we have, among other things:
||reviewed (A) a draft of the TWC Agreement, dated May 23, 2015, (B) a draft of the BH Amendment, dated May 23, 2015, (C) the Existing BH Agreement, and (D) a draft of the Amended and
Restated Stockholders Agreement (the Stockholders Agreement), dated as of May 23, 2015, among A/N, Charter, New Charter, and Liberty Broadband Corporation (Liberty); |
||reviewed certain publicly available business and financial information relating to TWC, BH, and the Company; |
||reviewed certain internal financial estimates and other data relating to the business and financial prospects of the Company, TWC, and BH that were provided to us by the management of the Company and not publicly
available, including financial forecasts and estimates for the fiscal year ending 2015 (and, with respect to BH, also for the fiscal year ended 2014); |
||reviewed certain internal financial information and other data relating to the business and financial prospects of the Company, after giving pro forma effect to (A) the TWC Transactions and (B) the TWC
Transactions and the BH Transaction, in each case, that were provided to us (and prepared) by the management of the Company and not publicly available, including financial forecasts and estimates for the fiscal years ending 2015 through 2019 (as
well as certain estimates for utilization of tax assets beyond 2019 through the full utilization of such tax assets); |
||reviewed certain estimates of dis-synergies and synergies, in each case, for (A) the fiscal years ending 2016 through 2019 with respect to the Company and TWC, (B) the fiscal years ending 2016 through 2019
with respect to the Company, BH, and TWC, and (C) the fiscal years ending 2014 and 2015 with respect to the Company and BH (collectively, the Transaction Effects), prepared by the management of the Company; |
||conducted discussions with members of the senior management of the Company, BH, and TWC concerning the business and financial prospects of the Company, BH, and TWC, as well as the Transaction Effects; |
||reviewed current and historical market prices of the Companys Class A common stock (the Company Common Stock) and TWCs common stock; |