AT&T Corp. has received a favorable ruling from the Internal Revenue
Service regarding its plans for a tax-free spinoff of its Liberty Media Group
AT&T has been waiting for the IRS ruling ever since it announced in
November that it would spin off Liberty to satisfy some of the conditions
imposed by the Federal Communications Commission in that agency's approval of
AT&T's merger with MediaOne Group Inc.
AT&T needed the favorable ruling because the company faced a $5 billion
to $7 billion tax bill if it were to express an intention to spin off the
programming arm prior to the two-year anniversary of AT&T's March 1999
merger with Tele-Communications Inc.
AT&T said in a press release that it intends to spin off Liberty as a
separate asset-based stock by midsummer. After that transaction is completed,
the company said Liberty chairman John Malone will resign his seat on the
AT&T board of directors. Malone remains one of the largest individual
holders of AT&T stock.
AT&T said the move will give Liberty better access to capital; allow it
to use its stock as currency in acquiring, merging or partnering with other
companies; and help the public markets to better value the company.
After the spinoff, Liberty shares will be traded on the New York Stock
Exchange under the symbols LMC.A and LMC.B. AT&T intends to redeem class-A
and class-B Liberty tracking stock in exchange for corresponding classes of
shares of Liberty common stock.
AT&T said in the statement that it needs to complete certain
reorganization steps, which require some reviews, before the split-off can be