GCI LIBERTY, INC. : Other Events (form 8-K)

November 24, 2020 at 04:33 pm EST

Item 8.01. Other Events.





The following disclosure supplements the joint proxy statement/prospectus filed
by GCI Liberty, Inc. ("GCI Liberty") and Liberty Broadband Corporation ("Liberty
Broadband"), in each case, filed with the Securities and Exchange Commission
(the "SEC") on October 30, 2020 (collectively, the "Joint Proxy
Statement/Prospectus") in connection with the solicitation of proxies by each
company's board of directors for each company's respective Special Meeting of
Stockholders described therein and any adjournment or postponement thereof. This
supplemental information should be read together with the Joint Proxy
Statement/Prospectus, which should be read in its entirety. Terms used in this
filing and not otherwise defined herein have the meanings given to them in the
Joint Proxy Statement/Prospectus.



On August 6, 2020, GCI Liberty and Liberty Broadband entered into the merger
agreement under which Liberty Broadband agreed to acquire all of the outstanding
shares of GCI Liberty in a stock-for-stock merger (the "Combination"). As
further described below, the parties have determined to supplement the
disclosures in the Joint Proxy Statement/Prospectus with the information below.

Litigation Relating to the Combination¾Hollywood Firefighters' Pension Fund, et al. v. GCI Liberty, Inc., et al.





Allegations



On October 9, 2020, a putative class action complaint was filed by two purported
GCI Liberty stockholders in the Court of Chancery of the State of Delaware under
the caption Hollywood Firefighters' Pension Fund, et al. v. GCI Liberty, Inc.,
et al. On October 11, 2020, a new version of the complaint was filed, and the
case has been assigned Case No. 2020-0880. The lawsuit names as defendants GCI
Liberty, as well as the members of the GCI Liberty board of directors. The
lawsuit alleges, among other things, that Mr. Gregory B. Maffei, a director and
the President and Chief Executive Officer of Liberty Broadband and GCI Liberty,
and Mr. John C. Malone, the Chairman of the Board of Directors of Liberty
Broadband and GCI Liberty, in their purported capacities as controlling
stockholders and directors of GCI Liberty, and the other directors of GCI
Liberty, breached their fiduciary duties by approving the Combination. The
lawsuit further alleges that the Combination violates Section 203 of the General
Corporation Law of the State of Delaware ("DGCL") and that the Joint Proxy
Statement/Prospectus that was filed in connection with the Combination misstates
and omits material information. The lawsuit also alleges that various prior and
current relationships among members of the GCI Liberty special committee,
Mr. Malone and Mr. Maffei render the members of the GCI Liberty special
committee not independent. GCI Liberty and Liberty Broadband believe this
lawsuit is without merit.

Stipulation and Proposed Order





The lawsuit seeks certification of a class action, declarations that
Messrs. Maffei and Malone and the other directors of GCI Liberty breached their
fiduciary duties and that the Combination violates Section 203 of the DGCL, an
injunction barring the stockholder vote and the Combination, and the recovery of
damages and other relief. On October 15, 2020, the plaintiffs filed a motion for
expedited proceedings. On October 27, 2020, after a hearing, the Court granted
the motion. On November 6, 2020, the Court entered an order setting a hearing on
the plaintiffs' motion for preliminary injunction for December 7, 2020.



                                       2


On November 21, 2020, the plaintiffs and defendants filed a stipulation and
proposed order (the "Agreed Stipulation and Order") describing an agreement
reached among them, including plaintiffs' agreement to dismiss their claim that
the Combination violates Section 203 of the DGCL as moot and to withdraw their
motion for preliminary injunction in return for certain agreements by Mr. Malone
and Mr. Maffei described below. The parties also requested the Court cancel the
hearing on that motion scheduled for December 7, 2020, and stay further
discovery pending the outcome of the stockholder vote on the Combination. For
more information, see the section of the Joint Proxy Statement/Prospectus titled
"Special Factors-Litigation Relating to the Combination."



As part of the agreement reached among the parties to the lawsuit, Mr. Malone
and Mr. Maffei each agreed that he will convert each outstanding share of GCI
Liberty Series B common stock he beneficially owns immediately prior to the
effective time into one share of GCI Liberty Series A common stock. As a result,
Mr. Malone and Mr. Maffei will each be entitled to receive 0.580 of a share of
non-voting Liberty Broadband Series C common stock for each such share of GCI
Liberty Series A common stock beneficially owned prior to the Combination.
Neither Mr. Malone nor Mr. Maffei will be entitled to receive any shares of
Liberty Broadband Series B common stock in the Combination. Consequently, the
Exchange Agreement entered into among Liberty Broadband, Mr. Malone and the JCM
Trust will terminate by its terms at the effective time since none of Mr. Malone
nor the JCM Trust will have the right to receive any shares of Liberty Broadband
Series B common stock in the Combination. In addition, Mr. Maffei agreed that
immediately following the exercise of any options to acquire Liberty Broadband
Series B common stock that Mr. Maffei holds as a result of the Combination, he
will exchange each share of Liberty Broadband Series B common stock issued upon
such exercise for one share of non-voting Liberty Broadband Series C common
stock. Mr. Maffei also agreed that this exchange obligation will remain in
effect even if those options to acquire Liberty Broadband Series B common stock
are transferred by him.

In addition, in connection with the execution of the Agreed Stipulation and Order, GCI Liberty has determined to provide the following supplemental disclosures:





Independence Considerations



From time to time, Mr. Maffei and Mr. Gregg L. Engles, a member of the GCI
Liberty special committee, have socialized, travelled and played golf together.
For example, in late January of 2020, Mr. Engles and his wife, and Mr. Maffei
and his wife, were among a group of individuals who vacationed together at a
property belonging to Mr. Maffei, which Mr. Engles and his wife, and Mr. Maffei
and his wife, flew to together on a corporate aircraft, during which time they
played golf together. Messrs. Maffei and Engles are both members of Cherry Hills
Country Club in Cherry Hills Village, Colorado, and The Tower Club in Denver,
Colorado. They both served on the Dartmouth College Board of Trustees for some
of the same time, during which time Mr. Engles donated $10 million to Dartmouth
College and traveled with Mr. Maffei to and from the school on private aircraft
owned by one or the other of them or their businesses. Messrs. Maffei and Engles
also served together on the Dartmouth President's Leadership Council and
Campaign Executive Committee. In addition, Mr. Maffei previously made a donation
of $25,000 or less to a charitable event to support research for a genetic
disorder that afflicts one of Mr. Engles' family members, and at which Mr.
Engles was honored.



On occasion, Mr. Maffei has socialized with Anthony J. Magro, Senior Managing
Director of Evercore, which served as financial advisor to the GCI Liberty
special committee in connection with the Combination. On one such occasion,
Messrs. Maffei and Magro attended a Dartmouth alumni reunion weekend in Vail,
Colorado in February 2020, during which Mr. Magro stayed at Mr. Maffei's house
in Vail.


During the summer of 2020, one of Mr. Maffei's sons worked as an Investment
Banking Summer Analyst at Evercore and received an offer to join Evercore as an
employee after he graduates from college. Mr. Maffei's son had no involvement
with the proposed Combination.



                                       3

Voting Power of Messrs. Malone and Maffei in Liberty Broadband immediately following the Combination





As a result of the Agreed Stipulation and Order described above, at the
effective time, based solely on outstanding stock information for GCI Liberty
capital stock and Liberty Broadband common stock as of September 30, 2020, and
assuming exercise of options and other rights to acquire securities held by such
persons and exercisable within 60 days after September 30, 2020, Mr. Malone is
expected to beneficially own shares of Liberty Broadband capital stock
representing approximately 45.8% of the outstanding voting power upon the
effective time, and Mr. Maffei is expected to beneficially own shares of Liberty
Broadband capital stock representing approximately 1.0% of the outstanding
voting power upon the effective time.. See "Pro Forma Security Ownership of
Liberty Broadband Management" below for additional information regarding the
expected ownership of Liberty Broadband capital stock by Liberty Broadband's
directors and executive officers at the effective time.

Equity Stake of GCI Liberty Stockholders in Liberty Broadband immediately following the Combination





As a result of the Agreed Stipulation and Order described above, at the
effective time, based solely on their ownership of GCI Liberty capital stock and
excluding any shares of Liberty Broadband common stock held by such stockholders
prior to the Combination, former GCI Liberty stockholders (in the aggregate) are
expected to receive in the Combination shares of Liberty Broadband Series C
common stock, Liberty Broadband Series B common stock and Liberty Broadband
Preferred Stock representing approximately 36.1%, 3.9% and 100.0%, respectively,
of the total number of outstanding shares of Liberty Broadband Series C common
stock, Liberty Broadband Series B common stock and Liberty Broadband Preferred
Stock, respectively, based on approximately 169.6 million, 2.5 million and
7.2 million shares of Liberty Broadband Series C common stock, Liberty Broadband
Series B common stock and Liberty Broadband Preferred Stock, respectively,
currently expected to be outstanding immediately following the effective time.
As a result, former GCI Liberty stockholders (in the aggregate and excluding any
shares of Liberty Broadband common stock held by such stockholders prior to the
effective time) are expected to own shares of Liberty Broadband Series B common
stock and Liberty Broadband Preferred Stock representing approximately 6.2% of
the aggregate voting power of outstanding shares of Liberty Broadband capital
stock, based on approximately 26.5 million, 2.5 million and 7.2 million shares
of Liberty Broadband Series A common stock, Liberty Broadband Series B common
stock and Liberty Broadband Preferred Stock, respectively, currently expected to
be outstanding immediately following the effective time (calculated using the
number of shares outstanding at Liberty Broadband and GCI Liberty as of
September 30, 2020). Additionally, former GCI Liberty stockholders (in the
aggregate and excluding any shares of Liberty Broadband common stock held by
such stockholders prior to the effective time) are expected to own 33.3% of the
outstanding Liberty Broadband capital stock currently expected to be outstanding
immediately following the effective time.

Pro Forma Security Ownership of Liberty Broadband Management





The following table sets forth information with respect to the estimated
ownership by each person who is expected to serve as an executive officer or
director of Liberty Broadband and all of such persons as a group, of shares of
Liberty Broadband Series A common stock, Liberty Broadband Series B common
stock, Liberty Broadband Series C common stock and Liberty Broadband Preferred
Stock, assuming that the effective time had occurred at 5:00 p.m., New York City
time, on September 30, 2020. The following table takes into account the effect
of the agreements contained in the Agreed Stipulation and Order.



The security ownership information for Liberty Broadband capital stock has been
estimated based upon outstanding stock information for Liberty Broadband common
stock and GCI Liberty capital stock as of September 30, 2020, and, in the case
of percentage ownership and voting power information, has been estimated based
upon (1) 26,495,183 shares of Liberty Broadband Series A common stock,
(2) 2,549,469 shares of Liberty Broadband Series B common stock, (3) 169,559,110
shares of Liberty Broadband Series C common stock and (4) 7,199,697 shares of
Liberty Broadband Preferred Stock expected to be outstanding following the
effective time after giving effect to the agreements contained in the Agreed
Stipulation and Order. The percentage voting power is presented on an aggregate
basis for all series of Liberty Broadband capital stock excluding Liberty
Broadband Series C common stock, which is non-voting.



Shares of Liberty Broadband common stock issuable upon exercise or conversion of
options, warrants and convertible securities that were exercisable or
convertible on or within 60 days after September 30, 2020 (including GCI Liberty
equity awards exercisable or convertible on or within 60 days after
September 30, 2020 that are deemed converted into Liberty Broadband equity
awards at the effective time, see the section of the Joint Proxy
Statement/Prospectus titled "Special Factors-The Merger Agreement-Treatment of
Equity Awards") are deemed to be outstanding and to be beneficially owned by the
person holding the options, warrants or convertible securities for the purpose
of computing the percentage ownership of that person and for the aggregate
percentage owned by the directors and executive officers as a group, but are not
treated as outstanding for the purpose of computing the percentage ownership of
any other individual person. In addition, the table below gives effect to the
agreements contained in the Agreed Stipulation and Order.



                                       4


For purposes of the following presentation, beneficial ownership of shares of
Liberty Broadband Series B common stock, though convertible on a one-for-one
basis into shares of Liberty Broadband Series A common stock, are reported as
beneficial ownership of Liberty Broadband Series B common stock only, and not as
beneficial ownership of Liberty Broadband Series A common stock.



The number of shares indicated as owned by the following persons includes
interests in shares that would have been held by the Liberty Media 401(k) plan
as of September 30, 2020. The shares held by the trustee of the Liberty Media
401(k) Savings Plan for the benefit of these persons are voted as directed


by
such persons.



So far as is known to Liberty Broadband, the persons indicated below have sole
voting and dispositive power with respect to the shares indicated as owned by
them, except as otherwise stated in the notes to the table.



                                                 Amount and Nature of             Percent     Voting
                                     Title of    Beneficial Ownership            of Series    Power
Name                                  Series        (In thousands)                  (%)       (%)(1)
John C. Malone                       LBRDA                       1,269 (2)             4.8       45.8
Chairman of the Board                LBRDB                       2,364 (2)(3)(4)      92.7
                                     LBRDK                       5,489 (2)(3)(4)       3.2
                                     LBRDP                          ** (3)               *
Gregory B. Maffei                    LBRDA                         459 (2)             1.7        1.0
President, Chief Executive Officer   LBRDB                           9 (2)(3)(4)         *
and Director                         LBRDK                       4,271 (2)(3)(4)       2.5
                                     LBRDP                           -                   -
Gregg L. Engles                      LBRDA                           -                   -          -
Director                             LBRDB                           -                   -
                                     LBRDK                           2                   *
                                     LBRDP                           -                   -
Julie D. Frist                       LBRDA                           -                   -          -
Director                             LBRDB                           -                   -
                                     LBRDK                       1,147 (2)               *
                                     LBRDP                           -                   -
Richard R. Green                     LBRDA                          ** (2)               *          *
Director                             LBRDB                           -                   -
                                     LBRDK                          25 (2)(3)            *
                                     LBRDP                           -                   -
Sue Ann Hamilton                     LBRDA                          **                   *          *
Director                             LBRDB                           -                   -
                                     LBRDK                           2                   *
                                     LBRDP                           -                   -
J. David Wargo                       LBRDA                          37 (2)               *          *
Director                             LBRDB                           -                   -
                                     LBRDK                         223 (2)(5)            *
                                     LBRDP                           2                   *
John E. Welsh III                    LBRDA                           5                   *          *
Director                             LBRDB                           -                   -
                                     LBRDK                          18 (2)               *
                                     LBRDP                           -                   -




                                       5





                                                                  Amount and Nature of                Percent        Voting
                                                    Title of      Beneficial Ownership               of Series       Power
Name                                                 Series          (In thousands)                     (%)          (%)(1)
Albert E. Rosenthaler                              LBRDA                             17                       *             *


Chief Corporate Development Officer                LBRDB


          -                       -
                                                   LBRDK                             90 (3)                   *
                                                   LBRDP                              -                       -
Brian J. Wendling                                  LBRDA                             **                       *             *
Chief Accounting Officer and                       LBRDB                              -                       -
Principal Financial Officer                        LBRDK                             18 (3)                   *
                                                   LBRDP                              -                       -
Renee L. Wilm                                      LBRDA                              -                       -             -
Chief Legal Officer                                LBRDB                              -
                                                   LBRDK                             **                       *
                                                   LBRDP                              -                       -


All directors and executive officers as a group    LBRDA


      1,787 (2)                 6.7          46.9
                                                   LBRDB                          2,373 (2)(3)(4)          93.1
                                                   LBRDK                         11,286 (2)(3)(4)(5)        6.6
                                                   LBRDP                              2                       *






* Less than 1%

** Less than 1,000 shares

(1) Estimated voting power takes into account the effect of the agreements

contained in the Agreed Stipulation and Order. Materials provided by Evercore

to the GCI Liberty special committee and filed with the related

Schedule 13e-3 as exhibits (c)(2), (c)(9) and (c)(10) present certain pro

forma security ownership of Liberty Broadband management without giving

effect to the agreements contained in the Agreed Stipulation and Order.

(2) Information with respect to shares of Liberty Broadband common stock

beneficially owned by Mr. Malone, Mr. Maffei, Mrs. Frist, Mr. Green,

Mr. Wargo and Mr. Welsh is set forth in "-Security Ownership of Liberty


     Broadband Management" in the Joint Proxy Statement/Prospectus.

(3) Information with respect to shares of GCI Liberty capital stock beneficially

owned by Mr. Malone, Mr. Maffei, Mr. Green, Mr. Rosenthaler and Mr. Wendling

is set forth in "Security Ownership of Certain Beneficial Owners and

Management of GCI Liberty-Security Ownership of GCI Liberty Management"


     below.

(4) Gives effect to agreements contained in the Agreed Stipulation and Order.

(5) Includes 799 shares of Liberty Broadband Series C common stock that would be

held by Mr. Wargo's spouse and 7,447 shares of Liberty Broadband Series C

common stock that would be held by Mr. Wargo's brother as to which, in each


     case, Mr. Wargo has disclaimed beneficial ownership.




                                       6

Caution Regarding Forward-Looking Statements





This Current Report on Form 8-K includes forward-looking statements. All
statements other than statements of historical fact are "forward-looking
statements" for purposes of federal and state securities laws. Words such as
"will," "would," "estimated," "expected" or the negative of such terms or other
variations thereof and words and terms of similar substance used in connection
with any discussion of future plans, actions, or events identify forward-looking
statements. Similarly, statements herein that describe the 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. 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 ability of
the parties to consummate the Combination on a timely basis or at all and the
satisfaction of the conditions precedent to consummation of the Combination,
including, but not limited to, approval by the stockholders of GCI Liberty and
Liberty Broadband and regulatory approvals. 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 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, including its Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q, as well as the Joint
Proxy Statement/Prospectus any amendments or supplements to that document, for
additional information about GCI Liberty and about the risks and uncertainties
related to the business of GCI Liberty which may affect the statements made in
this Current Report on Form 8-K.



Additional Information


Nothing in this Current Report on Form 8-K shall constitute a solicitation to
buy or an offer to sell any securities of Liberty Broadband or GCI Liberty, nor
shall it constitute an offer, solicitation, or any sale in any jurisdiction in
which such offer, solicitation, or sale is unlawful. The offer and sale of
shares in the Combination will only be made pursuant to Liberty Broadband's
effective registration statement. Liberty Broadband's stockholders, GCI
Liberty's stockholders and other investors are urged to read the Joint Proxy
Statement/Prospectus included in the registration statement on Form S-4 filed
regarding the Combination and any other relevant documents filed with the SEC,
as well as any amendments or supplements to those documents, because they will
contain important information about the Combination. Copies of these SEC filings
are available free of charge at the SEC's website (http://www.sec.gov). Copies
of the filings together with the materials incorporated by reference therein are
also available, without charge, by directing a request to Liberty Broadband,
12300 Liberty Boulevard, Englewood, Colorado 80112, Attention: Investor
Relations, Telephone: (720) 875-5700 or to GCI Liberty, Inc., 12300 Liberty
Boulevard, Englewood, Colorado 80112, Attention: Investor Relations, Telephone:
(720) 875-5900.

Participants in the Solicitation





Liberty Broadband and GCI Liberty and their respective directors and executive
officers and other persons may be deemed to be participants in the solicitation
of proxies in respect of the Combination. Information about Liberty Broadband's
directors and executive officers is available in Liberty Broadband's definitive
proxy statement for its 2020 annual meeting of stockholders, which was filed
with the SEC on April 10, 2020. Information about GCI Liberty's directors and
executive officers is available in GCI Liberty's definitive proxy statement for
its 2020 annual meeting of stockholders, which was filed with the SEC on
April 10, 2020. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, are contained in the Joint Proxy
Statement/Prospectus included in the registration statement on Form S-4 filed
with the SEC and other relevant materials to be filed with the SEC, as well as
any amendments or supplements to those documents, regarding the Combination when
they become available. Investors should read the Joint Proxy
Statement/Prospectus included in the registration statement on Form S-4
carefully before making any voting or investment decisions. You may obtain free
copies of these documents from Liberty Broadband and GCI Liberty as indicated
above.



                                       7

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