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|CHARTER COMMUNICATIONS, INC. /MO/ filed this Form PREM14A on 06/26/2015|
equity awards will be converted into equity awards with respect to New Charter Class A common stock, after giving effect to the Stock Award Exchange Ratio (as defined under The Merger AgreementTreatment of TWC Equity Awards).
Net actuarial gains (losses) and prior service credits are included in TWCs accumulated other comprehensive loss component of equity and reclassified into the results of operations based on service period assumptions. Because TWCs equity, including accumulated other comprehensive loss, is eliminated in the opening balance sheet pursuant to acquisition accounting, the results for the periods following the TWC transactions will not include any impact from the amortization of these deferred net actuarial gains (losses) and prior service credits.
The increase was estimated using a preliminary average useful life of 6 years for property, plant and equipment and 9 years for customer relationships. Customer relationships are amortized using an accelerated method (sum of the years digits) to reflect the period over which the relationships are expected to generate cash flows. The effect of a one-year decrease in the weighted average useful lives of property, plant and equipment and customer relationships would be an increase to depreciation and amortization expense of approximately $243 million and $1.1 billion for the three months ended March 31, 2015 and year ended December 31, 2014, respectively, while the effect of a one-year increase would result in a decrease of approximately $183 million and $806 million for the three months ended March 31, 2015 and year ended December 31, 2014, respectively. The pro forma adjustments are based on current estimates and may not reflect actual depreciation and amortization once the purchase price allocation is finalized and final determination of useful lives is made.
Although the nature of the debt financing may be secured through various combinations of bank debt, unsecured notes and secured notes, for pro forma purposes, we have assumed issuing $21.1 billion in new first lien debt (including bank debt and senior secured notes) and $2.5 billion unsecured notes at an estimated 4.8% weighted average cost of debt. A 0.125% change in interest rates would increase (decrease) interest expense by $7 million and $27 million for the three months ended March 31, 2015 and year ended December 31, 2014, respectively.