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.
GCI Liberty 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.
GCI Liberty 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 GCI Liberty or
Liberty Broadband 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 GCI Liberty's or Liberty Broadband'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 GCI Liberty or Liberty Broadband; 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 GCI
Liberty and Liberty Broadband; 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 GCI Liberty
expressly disclaims any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statement contained herein to reflect any
change in GCI Liberty's or Liberty Broadband'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 GCI Liberty and
Liberty Broadband, including the most recent Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q, for additional information about GCI Liberty and
Liberty Broadband and about the risks and uncertainties related to the business
of each of GCI Liberty and Liberty Broadband 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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