Item 7.01. Regulation FD Disclosure.
A special committee of independent and disinterested directors formed by the
board of directors of Liberty Broadband Corporation, a Delaware corporation
("Liberty Broadband"), and a special committee of independent and disinterested
directors formed by the board of directors of GCI Liberty, Inc., a Delaware
corporation ("GCI Liberty"), have informed Liberty Broadband and GCI Liberty
that the special committees have reached a preliminary understanding regarding a
possible exchange ratio ("Possible Exchange Ratio") for a potential business
combination transaction between Liberty Broadband and GCI Liberty (the
"Potential Combination"), in which Liberty Broadband would acquire all of the
outstanding shares of Series A common stock, Series B common stock, and Series A
Cumulative Redeemable Preferred Stock ("GCI Liberty Preferred Stock"), of GCI
Liberty in a stock-for-stock merger. The Possible Exchange Ratio, which remains
subject to the negotiation of mutually acceptable transaction agreements, would
consist of (i) 0.5800 of a share of Liberty Broadband Series C common stock for
each outstanding share of GCI Liberty Series A common stock, (ii) 0.5800 of a
share of Liberty Broadband Series B common stock for each outstanding share of
GCI Liberty Series B common stock, and (iii) one share of a newly issued series
of preferred stock of Liberty Broadband ("Liberty Broadband Preferred Stock")for
each outstanding share of GCI Liberty Preferred Stock, with the new Liberty
Broadband Preferred Stock bearing substantially identical terms and conditions
to the GCI Liberty Preferred Stock. GCI Liberty's outstanding equity awards
would be converted into equivalent equity awards at Liberty Broadband with
respect to the applicable series of Liberty Broadband stock payable in the
Potential Combination with respect to the series of GCI Liberty stock underlying
the applicable award, in each case, with vesting to continue based on the
original vesting schedule of the underlying award. No such awards are expected
to be accelerated in the Potential Combination.
The special committees of each of GCI Liberty and Liberty Broadband also reached
a preliminary understanding with John C. Malone, Chairman of the Board of each
of GCI Liberty and Liberty Broadband, pursuant to which, at the closing of the
Potential Combination, Mr. Malone would agree to receive shares of Liberty
Broadband Series C common stock in lieu of an equal number of shares of Liberty
Broadband Series B common stock he would be entitled to receive in the Potential
Combination such that Mr. Malone would have beneficial ownership of not more
than approximately 49% of Liberty Broadband's aggregate outstanding voting power
("Target Voting Power") immediately following the closing (which is equal to the
aggregate voting power in Liberty Broadband beneficially owned by Mr. Malone at
the date of this report). Mr. Malone would also have the right to exchange such
shares of Liberty Broadband Series C common stock for Liberty Broadband Series B
common stock, on a one-for-one basis, to preserve his Target Voting Power
following the occurrence of any voting dilution events.
Prior to any negotiations, including any discussions regarding a Possible
Exchange Ratio or regarding any arrangements with Mr. Malone, the special
committees of GCI Liberty and Liberty Broadband were formed and agreed with each
other and with Mr. Malone that any Potential Combination would be subject to and
conditioned upon (i) the negotiation by, and approval of, each special committee
and (ii) approval by a non-waivable vote of the holders of a majority of the
voting power of the outstanding shares of each company not held by Mr. Malone or
any other interested parties.
Liberty Broadband expects that there will be continued discussions between and
among the special committees and Mr. Malone regarding a Potential Combination
and related matters, including the negotiation of mutually acceptable
transaction agreements. There can be no assurance, however, that any
discussions that occur hereafter will result in the entry into definitive
agreements concerning a Potential Combination or, if such definitive agreements
are reached, that such definitive agreements will contain transaction terms
consistent with those described above, nor can there be any assurance that a
Potential Combination will ultimately be consummated. Discussions concerning a
Potential Combination may be terminated at any time and without prior notice.
Liberty Broadband does not intend to disclose developments with respect to the
foregoing unless and until the special committees and the boards of directors of
each of GCI Liberty and Liberty Broadband have approved a specific transaction,
if any, except as may be required by law.
This Current Report on Form 8-K is being furnished to the Securities and
Exchange Commission under Item 7.01 of Form 8-K in satisfaction of the public
disclosure requirements of Regulation FD and shall not be deemed "filed" for any
purpose.
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Forward-Looking Statements
This Current Report on Form 8-K 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. These forward-looking
statements generally can be identified by phrases such as "possible,"
"potential," "intends" or "expects" or other words or phrases of similar import
or future or conditional verbs such as "will," "may," "might," "should,"
"would," "could," or similar variations. Similarly, statements herein that
describe the Possible Exchange Ratio or the Potential Combination, including its
financial and operational impact, and other statements of the parties' or
management's plans, expectations, objectives, projections, beliefs, intentions,
goals, and statements about the benefits of the Potential Combination, and other
statements that are not historical facts are also forward-looking statements. It
is uncertain whether any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do, what impact they will
have on the results of operations and financial condition of the combined
companies or the price of Liberty Broadband or GCI Liberty stock. These
forward-looking statements involve certain risks and uncertainties, many of
which are beyond the parties' control, that could cause actual results to differ
materially from those indicated in such forward-looking statements, including,
but not limited to, the unpredictability of the commercial success of Liberty
Broadband's or GCI Liberty's respective businesses or operations; potential
adverse reactions or changes to business or employee relationships, including
those resulting from the announcement or completion of the transactions; the
risk that any announcements relating to the Potential Combination could have
adverse effects on the market price of common stock of Liberty Broadband or GCI
Liberty; the ability of the parties to consummate the Potential Combination on a
timely basis or at all and the satisfaction of the conditions precedent to
consummation of the Potential Combination, including, but not limited to,
approval by the stockholders of Liberty Broadband and GCI Liberty; the
possibility that the transactions may be more expensive to complete than
anticipated, including as a result of unexpected factors or events; the ability
to successfully integrate the businesses; the ability of Liberty Broadband to
implement its plans, forecasts and other expectations with respect to GCI
Liberty's business after the completion of the Potential Combination and realize
expected benefits; the diversion of management's attention from ongoing business
operations and opportunities; and litigation relating to the transactions. These
forward-looking statements speak only as of the date of this Current Report on
Form 8-K, and Liberty Broadband expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any forward-looking
statement contained herein to reflect any change in Liberty Broadband's or GCI
Liberty's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based. Please refer to the
publicly filed documents of Liberty Broadband and GCI Liberty, including the
most recent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, for
additional information about Liberty Broadband and GCI Liberty and about the
risks and uncertainties related to the business of each of Liberty Broadband and
GCI Liberty which may affect the statements made in this Current Report on Form
8-K.
No Offer or Solicitation
This document shall not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
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