Liberty Media said late Thursday that it plans to issue two new tracking stocks, Liberty Media Group and Liberty Broadband. The latter would include its interests in Charter Communications and Time Warner Cable, as well as satellite company True Position.
Liberty owns a 27% interest in Charter and a minority interest in TWC.
According to a statement, record holders of Liberty’s Series A and Series B common stock would receive one share of the corresponding series of Liberty Media tracking stock and four shares of the corresponding series of Liberty Broadband tracking stock for each share of Liberty’s common stock held by them as of the effective date. In addition, stockholders will also receive a subscription right to acquire one additional series A or series B share of Liberty Broadband tracking stock for every five shares of series A or five shares of series B Liberty Broadband tracking stock they receive in the distribution.
“We are creating two new tracking stocks, Liberty Media and Liberty Broadband,” said Liberty CEO Greg Maffei in a statement,. “This is another step in Liberty’s process of offering investors greater choice, transparency and focus. We expect to complete the creation of the new tracking stocks by the third quarter. In light of the tracking stock distribution, our offer for SiriusXM is no longer applicable. Depending on market conditions, we look forward to further discussions with the SiriusXM Special Committee. We remain enthusiastic owners of 53% of SiriusXM.”
The creation of Liberty Broadband comes about a month after Charter’s attempt to take over Time Warner Cable was thwarted by a larger bid from cable giant Comcast. Whether the company could use the tracker as a vehicle to make another offer for Time Warner Cable was not clear. Liberty chief financial officer Courtnee Ulrich did not immediately return a call for comment.
“We remain very excited about our investments in the cable sector and Charter Communications,” said Liberty chairman John Malone in a statement. “We think [Charter CEO] Tom Rutledge and his team are successfully executing their strategy to upgrade the network to all digital and accelerate Charter’s growth. We believe the creation of the Liberty Broadband tracking stock and the concurrent rights offering will provide us greater flexibility to, among other things, support Charter in its expansion efforts.”
The subscription rights are being issued to raise capital for general corporate purposes of the Liberty Broadband Group, including investment in new business opportunities to be attributed to that group. The subscription rights will:
• Enable the holders to acquire shares of the applicable series of Liberty Broadband tracking stock at a 20% discount to the 20-trading day volume weighted average trading price of Liberty Broadband tracking stock following the closing of the Distribution.
• Become publicly traded, once the exercise price has been established.
• Expire forty trading days following the closing of the Distribution.
Liberty expects that the Series A and Series B Liberty Broadband tracking stock will trade under the symbols “LBRDA” and “LBRDB,” respectively, and that the Series A and Series B Liberty Media tracking stock will trade under the symbols “LMCA” and “LMCB,” respectively, which are currently used by Liberty’s Series A and Series B common stock, in each case, on the Nasdaq Stock Market. The creation of the tracking stocks will be subject to various conditions, including the requisite approval of the holders of Liberty’s common stock at a stockholders’ meeting and the receipt of the opinion of tax counsel.
Liberty also announced that it plans to sell, pursuant to the terms of the Share Repurchase Agreement, dated as of Oct. 9 between Liberty and SiriusXM, the SiriusXM shares remaining to be sold under that agreement.