Charter, Arris Ink Warrant Agreement

Charter can purchase up to 6 million shares of Arris based on product sales
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Charter Communications has agreed to purchase up to 6 million shares of Arris over the next two years based on certain product sales, according to a new warrant agreement that tightens ties between the MSO and one of its key vendors.

Per the agreement, detailed in this 8-K filing, Charter may purchase up to 6 million of Arris ordinary shares. The warrants, which expire on Sept. 30, 2023, are set to vest in three tranches through 2018, based on the amount of good and services Charter purchases from Arris.

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A set percentage of the purchases tied to the warrant agreement must be for goods and services included in Arris’s Network & Cloud segment for 2016, 2017 and 2018, the filing said.

Arris, which announced a similar warrants agreement with Comcast earlier this year (for up to 8 million shares), noted that if Charter fully maximized its share allotment under the agreement, its percentage of shares in Arris would be less than 5%.

Arris and Charter are also joint owners of ActiveVideo, a vendor that is helping to underpin Charter’s new cloud-based Spectrum Guide.  Arris and Charter closed that $135 million deal in May 2015. Arris owns 65% of the joint venture and serves as the sales channel for ActiveVideo’s CloudTV platform.