Tracking Stocks |
9 Months Ended |
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Sep. 30, 2017 | |
| Tracking Stocks | |
| Tracking Stocks |
(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 Internal Revenue Service (“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.
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.
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 traded 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. Shortly following the Second Closing (as defined below) of the acquisition of Formula 1, the 鶹app Media Group and 鶹app Media common stock were renamed the 鶹app Formula One Group (the “Formula One Group”) and the 鶹app Formula One common stock, respectively, and the corresponding ticker symbols for the Series A, Series B and Series C 鶹app Media common stock were changed to FWONA/B/K, respectively. Each series (Series A, Series B and Series C) of the 鶹app SiriusXM common stock trades on the Nasdaq Global Select Market. Series A and Series C 鶹app Braves common stock trade on the Nasdaq Global Select Stock Market and Series B 鶹app Braves common stock is quoted on the OTC Markets. Series A and Series C 鶹app Formula One common stock continue to trade on the Nasdaq Global Select Market and the Series B 鶹app Formula One common stock continues to be quoted on the OTC Markets. Although the Second Closing, and the corresponding tracking stock name and the ticker symbol change, were not completed until January 23 and 24, 2017, respectively, historical information of the 鶹app Media Group and 鶹app Media common stock is referred to herein as the Formula One Group and 鶹app Formula One common stock, respectively, for all periods presented.
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. The rights offering was fully subscribed on June 16, 2016 with 15,833,634 shares of Series C 鶹app Braves common stock issued at a price per share of $12.80 to those rights holders 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 (the “Braves Group”). In September 2016, the IRS completed its review of the distribution of the 鶹app Braves subscription 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 (as defined in note 10) are convertible into cash based on the product of the conversion rate specified in the related 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 certain outstanding Series A common stock warrants as well as certain outstanding cash convertible note hedges and purchased call options. See note 10 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, Braves Group and Formula One 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, Braves Group and Formula One 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 Formula One 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, 2017, the 鶹app SiriusXM Group has cash and cash equivalents of approximately $234 million, which includes $74 million of subsidiary cash. During the nine months ended September 30, 2017, SIRIUS XM declared a cash dividend each quarter, and has paid in cash an aggregate amount of $140 million, of which 鶹app has received $95 million. In addition, on October 3, 2017, SIRIUS XM’s board of directors declared a quarterly dividend on its common stock in the amount of $0.011 per share of common stock payable on November 30, 2017 to stockholders of record as of the close of business on November 9, 2017. 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 Braves Group. 鶹app attributed to the 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 of the subscription rights offering were attributed to the Braves Group. As of September 30, 2017, the Braves Group has cash and cash equivalents of approximately $129 million, which includes subsidiary cash. The 鶹app Formula One common stock is intended to track and reflect the separate economic performance of the businesses, assets and liabilities attributed to the Formula One Group. 鶹app attributed to the Formula One Group all of the businesses, assets and liabilities of 鶹app, other than those specifically attributed to the 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”), cash, an intergroup interest in the Braves Group, 鶹app’s 1.375% Cash Convertible Notes due 2023 and related financial instruments, 鶹app’s 2.25% Exchangeable Senior Debentures due 2046 and 鶹app’s 1% Cash Convertible Notes due 2023. Additionally, as discussed in more detail in note 3, 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, the parent company of Formula 1, a global motorsports business. The first purchase agreement was 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 was attributed to the Formula One Group. 鶹app acquired 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) on January 23, 2017 (the “Second Closing”). As of September 30, 2017, the Formula One Group has cash and cash equivalents of approximately $420 million, which includes $274 million of subsidiary cash. As part of the Recapitalization, the Formula One Group initially held a 20% intergroup interest in the Braves Group. As a result of the rights offering, the number of notional shares representing the intergroup interest held by the Formula One Group was adjusted to 9,084,940, representing a 15.5% intergroup interest in the Braves Group at September 30, 2017. The intergroup interest is a quasi-equity interest which is not represented by outstanding shares of common stock; rather, the Formula One Group has an attributed value in the Braves Group which is generally stated in terms of a number of shares of Series C 鶹app Braves common stock issuable to the Formula One Group with respect to its interest in the 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 Formula One Group. Accordingly, the intergroup interest attributable to the Formula One Group is presented as an asset and the intergroup interest attributable to the 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 a transfer of securities, cash and/or other assets from the Braves Group to the Formula One 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. |