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|CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 425 on 11/25/2015|
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 20, 2015
Charter Communications, Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
400 Atlantic Street
Stamford, Connecticut 06901
(Address of principal executive offices including zip code)
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Issuance of 5.750% Senior Notes due 2026
On November 20, 2015 (the Closing Date), CCOH Safari, LLC (the Escrow Issuer), an indirect subsidiary of Charter Communications, Inc. (Charter or the Company), issued $2.5 billion aggregate principal amount of 5.750% Senior Notes due 2026 (the Notes). The Notes were sold to qualified institutional buyers in reliance on Rule 144A and outside the United States to non-U.S. persons in reliance on Regulation S. The Notes have not been registered under the Securities Act of 1933, as amended (the Securities Act), or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
The offering and sale of the Notes resulted in net proceeds of approximately $2.5 billion. The net proceeds of this issuance, together with the proceeds of the July 23, 2015 issuance by CCO Safari II, LLC of $15.5 billion in aggregate principal amount of senior secured notes, the August 24, 2015 borrowings by Charter Communications Operating, LLC (Charter Operating) of a Term H loan in the aggregate principal amount of $1.0 billion and a Term I loan in the aggregate principal amount of $2.8 billion, additional senior secured bank loans expected to be incurred by Charter Operating (including the committed incremental Term A loan in an aggregate principal amount of up to $2.0 billion), additional borrowings under the Charter Operating revolving credit facility and additional debt, if needed, to be incurred by subsidiaries of the Company will be used to fund the cash portion of the purchase price for the previously announced transaction with Time Warner Cable Inc. (the Time Warner Cable Transaction) and the previously announced acquisition of Bright House Networks, LLC (the Bright House Transaction and, together with the Time Warner Cable Transaction, the Transactions), to pay related fees and expenses and for general corporate purposes.
As described in more detail below, the gross proceeds of the offering and sale of the Notes are being held in escrow. The release of the proceeds to the Company (the Escrow Release) is subject to the satisfaction of certain conditions, including the closing of the Time Warner Cable Transaction. Substantially concurrently with the Escrow Release, the Notes will become obligations of the Companys subsidiaries, CCO Holdings, LLC (CCO Holdings) and CCO Holdings Capital Corp. (together with CCO Holdings, the Issuers) and the Escrow Issuer will merge into CCO Holdings.
In connection therewith, the Escrow Issuer and the Issuers entered into the following agreements:
On the Closing Date, the Escrow Issuer and the Issuers entered into a base indenture (the Base Indenture) with The Bank of New York Mellon Trust Company, N. A., as trustee (the Trustee), providing for the issuance of senior secured notes generally. The Base Indenture is supplemented by the First Supplemental Indenture, dated as of the Closing Date, between the Escrow Issuer and the Trustee, providing for the issuance and terms of the Notes (the Supplemental Indenture and, together with the Base Indenture, the Indenture). The Indenture provides, among other things, that the Notes are initial obligations of the Escrow Issuer, backed by a first-priority security interest in the proceeds of the Notes and other amounts held in escrow pursuant to the Escrow Agreement described below. Interest is payable on the Notes on each February 15 and August 15, commencing February 15, 2016. From and after the Escrow Release, at any time prior to February 15, 2021, the Issuers may redeem some or all of the outstanding Notes at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest and special interest, if any, on such Notes to the redemption date, plus an applicable make-whole premium. On or after February 15, 2021, the Issuers may redeem some or all of the Notes at the applicable redemption price set forth in the Supplemental Indenture. In addition, at any time from and after the Escrow Release until February 15, 2019, the Issuers may redeem up to 40% of the aggregate principal amount of the Notes using net proceeds from certain equity offerings, at a redemption price equal to 105.750% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date. If the Escrow Release occurs, the Notes will be general unsecured obligations of the Issuers.
The terms of the Indenture, among other things, limit the ability of the Issuers to incur additional debt and issue preferred stock; pay dividends or make other restricted payments; make certain investments; grant liens; allow restrictions on the ability of certain of its subsidiaries to pay dividends or make other payments; sell assets; merge or consolidate with other entities; and enter into transactions with affiliates.
The Indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest; breach of other covenants or agreements in the Indenture; failure to pay certain other indebtedness; failure to pay certain final judgments; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes of such series to be due and payable immediately.
Registration Rights Agreement
In connection with the sale of the Notes, the Escrow Issuer entered into an Exchange and Registration Rights Agreement with respect to the Notes, dated November 20, 2015 (the Registration Rights Agreement), with Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, UBS Securities LLC and Deutsche Bank Securities Inc., as representatives of the several Purchasers (as defined in the Registration Rights Agreement). Under the Registration Rights Agreement, the Escrow Issuer has agreed to file a registration statement with respect to an offer to exchange the Notes for a new issue of substantially identical notes registered under the Securities Act, to cause the exchange offer registration statement to be declared effective and to consummate the exchange offer no later than 365 days after the Escrow Release. The Escrow Issuer may be required to provide a shelf registration statement to cover resales of one or more series of Notes under certain circumstances. If the foregoing obligations are not satisfied, the Escrow Issuer may be required to pay holders of the Notes additional interest at a rate of 0.25% per annum of the principal amount thereof for 90 days immediately following the occurrence of any registration default. Thereafter, the amount of additional interest will increase by an additional 0.25% per annum of the principal amount thereof to 0.50% per annum of the principal amount thereof until all registration defaults have been cured.
In connection with the issuance and sale of the Notes, the Escrow Issuer, U.S. Bank National Association, as escrow agent (the Escrow Agent), and the Trustee entered into an escrow agreement dated November 20, 2015 (the Escrow Agreement). Pursuant to the Escrow Agreement, the Escrow Issuer deposited into an escrow account the gross proceeds from the offering of the Notes together with an amount sufficient to pay accrued and unpaid interest from the issue date of the Notes to, but excluding, February 15, 2016. No later than February 8, 2016, the Escrow Issuer will be required to deposit an additional amount that, together with the amount of escrowed property on deposit in the escrow account on such date, will be sufficient to pay accrued and unpaid interest on the Notes to, but excluding, August 15, 2016, and no later than August 8, 2016, the Escrow Issuer will be required to deposit in the escrow account an additional amount sufficient to pay accrued and unpaid interest on the Notes to, but excluding, the latest possible date for a special mandatory redemption. Prior to the Escrow Release, the Notes will be secured by a first-priority security interest in the escrow accounts and all deposits and investment property therein to the Trustee for the benefit of the holders of the Notes. The Escrow Release will be subject to the satisfaction of certain conditions, including the closing of the Time Warner Cable Transaction.
Copies of the Base Indenture, the Supplemental Indenture, the forms of the Notes, the Registration Rights Agreement and the Escrow Agreement are filed herewith as Exhibits 4.1, 4.2, 4.3, 10.1 and 10.2, respectively, and are each incorporated herein by reference. The foregoing descriptions of the Indenture, the Notes, the Registration Rights Agreement and the Escrow Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of those documents.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information under Indentures in Item 1.01 above is incorporated herein by reference.
ITEM 8.01. OTHER EVENTS.
On November 20, 2015, the Company completed the issuance and sale of the Notes and issued a press release announcing the closing. The press release announcing the closing of the sale of the Notes is attached as Exhibit 99.1.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
Important Information For Investors And Shareholders
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction between Time Warner Cable Inc. (Time Warner Cable) and Charter, Charters subsidiary, CCH I, LLC (New Charter), filed with the Securities and Exchange Commission (the SEC) a registration statement on Form S-4 that includes a joint proxy statement of Charter and Time Warner Cable that also constitutes a prospectus of New Charter (the Joint Proxy Statement/Prospectus). The registration statement was declared effective by the SEC on August 20, 2015, and Charter and Time Warner Cable commenced mailing the definitive Joint Proxy Statement/Prospectus to their respective stockholders on or about August 20, 2015. This Current Report is not a substitute for the Joint Proxy Statement/Prospectus or registration statement or for any other document that Charter or Time Warner Cable may file with the SEC or send to Charters and/or Time Warner Cables stockholders in connection with the proposed transactions. On September 21, 2015, Charters and Time Warner Cables respective stockholders each approved the merger agreement at their respective special meetings. INVESTORS AND SECURITY HOLDERS OF CHARTER AND TIME WARNER CABLE ARE URGED TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders are able to obtain free copies of the registration statement and the definitive Joint Proxy Statement/Prospectus and other documents filed with the SEC by Charter, New Charter or Time Warner Cable through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Charter or New Charter are or will be available free of charge on Charters website at http://www.charter.com, in the Investor & News Center near the bottom of the page, or by contacting Charters Investor Relations Department at 203-905-7955. Copies of the documents filed with the SEC by Time Warner Cable are or will be available free of charge on Time Warner Cables website at http://ir.timewarnercable.com or by contacting Time Warner Cables Investor Relations Department at 877-446-3689.
Charter and Time Warner Cable and their respective directors and certain of their respective executive officers may be considered participants in the solicitation of proxies with respect to the proposed transactions under the rules of the SEC. Information about the directors and executive officers of Charter is set forth in the definitive Joint Proxy Statement/Prospectus and in Charters Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 24, 2015, and its proxy statement for its 2015 annual meeting of stockholders, which was filed with the SEC on March 18, 2015. Information about the directors and executive officers of Time Warner Cable is set forth in the definitive Joint Proxy Statement/Prospectus and Time Warner Cables Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 13, 2015, as amended April 27, 2015, its proxy statement for its 2015 annual meeting of stockholders, which was filed with the SEC on May 18, 2015 and its Current Reports on Form 8-K, which were filed with the SEC on June 1, 2015 and August 6, 2015. These documents can be obtained free of charge from the sources indicated above.
Cautionary Statement Regarding Forward-Looking Statements
This communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies and prospects, both business and financial. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described under Risk Factors from time to time in our filings with the SEC. Many of the forward-looking statements contained in this communication may be identified by the use of forward-looking words such as believe, expect, anticipate, should, planned, will, may, intend, estimated, aim, on track, target, opportunity, tentative, positioning, designed, create, predict, project, seek, would, could, continue, ongoing, upside, increases and potential, among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this communication are set forth in our Annual Report on Form 10-K and other reports or documents that we file from time to time with the SEC, and include, but are not limited to:
Risks Related to the Transactions
Risks Related to Our Business
All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of this communication.
Pursuant to the requirements of the Securities Exchange Act of 1934, Charter Communications, Inc. has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 24, 2015