Tracking Stocks |
9 Months Ended |
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Sep. 30, 2016 | |
| Tracking Stocks | |
| Targeted or Tracking Stock [Table Text Block] |
(2) Tracking Stocks During November 2015, 鶹app’s board of directors authorized management to pursue a recapitalization of the Company’s common stock into three new tracking stock groups, one to be designated as the 鶹app Braves common stock, one to be designated as the 鶹app Media common stock and one to be designated as the 鶹app SiriusXM common stock (the “Recapitalization”), and to cause to be distributed subscription rights related to the 鶹app Braves common stock following the creation of the new tracking stocks.
The Recapitalization was completed on April 15, 2016 and the newly issued shares commenced trading or quotation in the regular way on the Nasdaq Global Select Market or the OTC Markets, as applicable, on Monday, April 18, 2016.In May 2016, the IRS completed its review of the Recapitalization and notified 鶹app that it agreed with the nontaxable characterization of the transaction. The operating results prior to the Recapitalization are attributed to 鶹app stockholders in the aggregate. However, the information in the following footnotes has been presented by tracking stock groups for all periods presented in order to enhance the information provided to users of these financial statements.
Following the creation of the tracking stocks, SeriesA, SeriesB and SeriesC 鶹app Braves common stock trade under the symbols BATRA/B/K respectively, SeriesA, SeriesB and SeriesC 鶹app Media common stock trade under the symbols LMCA/B/K, respectively, and SeriesA, SeriesB and SeriesC 鶹app SiriusXM common stock trade under the symbols LSXMA/B/K, respectively. Series A and Series C of each of the 鶹app Braves common stock and the 鶹app Media common stock trade on the Nasdaq Stock Market and Series B of each of these stocks trades on the OTC Markets. In addition, each series (Series A, Series B and Series C) of the 鶹app SiriusXM common stock trades on the Nasdaq Global Select Market.
In the Recapitalization, each issued and outstanding share of 鶹app’s existing common stock was reclassified and exchanged for (a) 1 share of the corresponding series of 鶹app SiriusXM common stock, (b) 0.1 of a share of the corresponding series of 鶹app Braves common stock and (c) 0.25 of a share of the corresponding series of 鶹app Media common stock on April 15, 2016. Cash was paid in lieu of the issuance of any fractional shares.
In addition, following the creation of the new tracking stocks, 鶹app distributed to holders of its 鶹app Braves common stock subscription rights to acquire shares of SeriesC 鶹app Braves common stock in order to raise capital to repay the Intergroup Note (as defined below) and for working capital purposes.In the rights distribution, 鶹app distributed 0.47 of a Series C 鶹app Braves subscription right for each share of Series A, Series B or Series C 鶹app Braves common stock held as of 5:00 p.m., New York City time, on May 16, 2016. Fractional Series C 鶹app Braves subscription rights were rounded up to the nearest whole right. Each whole Series C 鶹app Braves subscription right entitled the holder to purchase, pursuant to the basic subscription privilege, one share of 鶹app’s Series C 鶹app Braves common stock at a subscription price of $12.80, which was equal to an approximate 20% discount to the trading day volume weighted average trading price of 鶹app’s Series C 鶹app Braves common stock for the 18-day trading period ending on May 11, 2016.Each Series C 鶹app Braves subscription right also entitled the holder to subscribe for additional shares of Series C 鶹app Braves common stock that were unsubscribed for in the rights offering pursuant to an oversubscription privilege. The rights offering commenced on May 18, 2016, which was also the ex-dividend date for the distribution of the Series C 鶹app Braves subscription rights. The rights offering expired at 5:00 p.m. New York City time, on June 16, 2016 and was fully subscribed with 15,833,634 shares of Series C 鶹app Braves common stock issued to those rightsholders exercising basic and, if applicable, oversubscription privileges. Approximately $150 million of the proceeds from the rights offering were used to repay the outstanding balance on the Intergroup Note and accrued interest to 鶹app.The remaining proceeds will be used for future development costs attributed to the 鶹app Braves Group. In September 2016, the IRS completed its review of the distribution of the Braves rights and notified 鶹app that it agreed with the nontaxable characterization of the distribution.
Additionally, as a result of the Recapitalization, the Convertible Notes (note 9) are convertible into cash based on the product of the conversion rate specified in the indenture and the basket of tracking stocks into which each outstanding share of Series A 鶹app common stock has been reclassified (the “Securities Basket”). The Series A 鶹app Braves common stock component of the Securities Basket was subsequently adjusted pursuant to anti-dilution adjustments arising out of the distribution of subscription rights to purchase shares of Series C 鶹app Braves common stock made to all holders of 鶹app Braves common stock. Furthermore, the Company entered into amended agreements with the counterparties with regard to adjustments related to the Recapitalization to the outstanding Series A common stock warrants as well as the outstanding cash convertible note hedges and purchased call options. See note 9 for a more detailed discussion of the amendments made to these financial instruments as a result of the Recapitalization.
A tracking stock is a type of common stock that the issuing company intends to reflect or "track" the economic performance of a particular business or "group," rather than the economic performance of the company as a whole. While the 鶹app SiriusXM Group, 鶹app Braves Group and 鶹app Media Group have separate collections of businesses, assets and liabilities attributed to them, no group is a separate legal entity and therefore cannot own assets, issue securities or enter into legally binding agreements. Therefore, the 鶹app SiriusXM Group, 鶹app Braves Group and 鶹app Media Group do not represent separate legal entities, but rather represent those businesses, assets and liabilities that have been attributed to each respective group. Holders of tracking stock have no direct claim to the group's stock or assets and therefore, do not own, by virtue of their ownership of a 鶹app tracking stock, any equity or voting interest in a public company, such as SIRIUS XM or Live Nation, in which 鶹app holds an interest and that is attributed to a 鶹app tracking stock group, such as the 鶹app SiriusXM Group or the 鶹app Media Group.Holders of tracking stock are also not represented by separate boards of directors. Instead, holders of tracking stock are stockholders of the parent corporation, with a single board of directors and subject to all of the risks and liabilities of the parent corporation.
The 鶹app SiriusXM common stock is intended to track and reflect the separate economic performance of the businesses, assets and liabilities attributed to the 鶹app SiriusXM Group. 鶹app attributed to the 鶹app SiriusXM Group its subsidiary SIRIUS XM, corporate cash, and its margin loan obligation incurred by a wholly-owned special purpose subsidiary of 鶹app. As of September 30, 2016, the 鶹app SiriusXM Group has cash and cash equivalents of approximately $611 million, which includes $572 million of subsidiary cash. On October 26, 2016, SIRIUS XM’S board of directors declared the first quarterly dividend on SIRIUS XM common stock in the amount of $0.01 per share of common stock payable on November 30, 2016 to stockholders of record as of the close of business on November 9, 2016.SIRIUS XM’S board of directors expects that this dividend will be the first of regular quarterly dividends, in an aggregate amount of $0.04 per share of common stock per year.
The 鶹app Braves common stock is intended to track and reflect the separate economic performance of the businesses, assets and liabilities attributed to the 鶹app Braves Group. 鶹app attributed to the 鶹app Braves Group its subsidiary, Braves Holdings, LLC (“Braves Holdings”), which indirectly owns the Atlanta Braves Major League Baseball Club (“ANLBC”) and certain assets and liabilities associated with ANLBC’s stadium and mixed use development project (the “Development Project”), corporate cash and all liabilities arising under a note from Braves Holdings to 鶹app, with a total capacity of up to $165 million of borrowings by Braves Holdings (the “Intergroup Note”) relating to funds borrowed and used for investment in the Development Project. As previously discussed, $150 million was outstanding under the Intergroup Note that was repaid during June 2016 using proceeds from the subscription rights offering, and the Intergroup Note agreement was cancelled. The remaining proceeds were attributed to the 鶹app Braves Group. As of September 30, 2016, the 鶹app Braves Group has cash and cash equivalents of approximately $109 million, which includes subsidiary cash. The 鶹app Media common stock is intended to track and reflect the separate economic performance of the businesses, assets and liabilities attributed to the 鶹app Media Group. 鶹app attributed to the 鶹app Media Group all of the businesses, assets and liabilities of 鶹app other than those specifically attributed to the 鶹app Braves Group or the 鶹app SiriusXM Group, including 鶹app’s interests in Live Nation, minority equity investments in Time Warner, Inc. (“Time Warner”) and Viacom, Inc. (“Viacom”), the recovery received in connection with the Vivendi lawsuit, cash as well as 鶹app’s 1.375% Cash Convertible Notes due 2023 and related financial instruments. As of September 30, 2016, the 鶹app Media Group has cash and cash equivalents of approximately $220 million. Additionally, as discussed in more detail in note 6, on September 7, 2016 鶹app, through its indirect wholly owned subsidiary 鶹app GR Cayman Acquisition Company, entered into two definitive stock purchase agreements relating to the acquisition of Delta Topco Limited (“Delta Topco”), the parent company of Formula 1, a global motorsports business. The first purchase agreementwas completed on September 7, 2016 and provided for the acquisition of slightly less than a 20% minority stake in Formula 1 on an undiluted basis.On October 27, 2016 under the terms of the first purchase agreement, 鶹app acquired an additional incremental equity interest of Delta Topco, maintaining 鶹app’s investment in Delta Topco on an undiluted basis and increasing slightly to 19.1% on a fully diluted basis. 鶹app’s interest in Delta Topco and by extension Formula 1 is attributed to the 鶹app Media Group. It is expected that 鶹app will acquire 100% of the fully diluted equity interests of Delta Topco, other than a nominal number of shares held by certain Formula 1 teams, in a closing under the second purchase agreement (and following the unwind of the first purchase agreement) upon the satisfaction of certain conditions, including certain regulatory and stockholder approvals as discussed in note 6. The second closing is expected to occur in the first quarter of 2017. 鶹app’s anticipated acquired interest in Formula 1, along with existing Formula 1 cash and debt (which will be non-recourse to 鶹app), will be attributed to the 鶹app Media Group, which will be renamed the Formula One Group upon completion of the second closing (subject to stockholder approval), and the ticker symbols for the Series A, Series B and Series C 鶹app Media Group tracking stocks will be changed from LMC (A/B/K), respectively, to FWON (A/B/K), respectively. As part of the Recapitalization, the 鶹app Media Group initially held a 20% intergroup interest in the 鶹app Braves Group. As a result of the rights offering, the number of notional shares representing the intergroup interest held by the 鶹app Media Group was adjusted to 9,084,940, representing a 15.5% intergroup interest in the 鶹app Braves Group at September 30, 2016. The intergroup interest is a quasi-equity interest which is not represented by outstanding shares of common stock; rather, the 鶹app Media Group has an attributed value in the 鶹app Braves Group which is generally stated in terms of a number of shares of Series C 鶹app Braves common stock issuable to the 鶹app Media Group with respect to its interest in the 鶹app Braves Group. The intergroup interest may be settled, at the discretion of the Board of Directors, through the transfer of newly issued shares of 鶹app Braves common stock, cash and/or other assets to the 鶹app Media Group. Accordingly, the intergroup interest attributable to the 鶹app Media Group is presented as an asset and the intergroup interest attributable to the 鶹app Braves Group is presented as a liability in the attributed financial statements and the offsetting amounts between tracking stock groups are eliminated in consolidation. The intergroup interest will remain outstanding until the redemption of the outstanding interest, at the discretion of the Company’s Board of Directors, through transfer of securities, cash and/or other assets from the 鶹app Braves Group to the 鶹app Media Group. See Exhibit 99.1 to this Quarterly Report on Form 10-Q for unaudited attributed financial information for 鶹app's tracking stock groups. |