ENGLEWOOD, Colo. & ANCHORAGE, Alaska--(BUSINESS WIRE)--
Liberty Interactive Corporation (to be renamed Qurate Retail Group,
Inc., but herein referred to as "LIC") (Nasdaq: QVCA / QRTEA, QVCB /
QRTEB) and GCI Liberty, Inc. ("GCI Liberty") (Nasdaq: GLIBA, GLIBP)
announced the completion of LIC's previously announced acquisition of
GCI Liberty (formerly General Communication, Inc. or GCI) and series of
transactions that effected the split-off of GCI Liberty.
"We are pleased to complete the acquisition of GCI and subsequent
split-off of GCI Liberty. GCI has made significant investments over the
past 30 years to build a state of the art network for Alaska, and we
welcome the team and look forward to its continued success as part of
the Liberty family," said Greg Maffei, GCI Liberty President and CEO.
"With GCI Liberty and Qurate now trading as asset-backed stocks, we
believe this better highlights the value of their underlying assets."
"This transaction is a win for our shareholders, customers, and
employees. As part of a larger company, GCI will be even better
positioned to compete, innovate, and serve Alaskans and our customers
nationwide," said Ron Duncan, CEO of GCI. "I am deeply proud of the
contributions that GCI employees have made, and will make, to Alaska's
development as the 49th state. All of us at GCI are grateful for our
customers' support over the years, and we will continue to work hard to
retain that support in the years ahead."
After market close on March 8, 2018, LIC's board of directors approved
the previously announced reattribution of certain assets and liabilities
from LIC's Liberty Ventures Group to its QVC Group, which was effective
immediately. In the reattribution, certain assets and liabilities of the
Liberty Ventures Group were reattributed to the QVC Group based on
closing prices on March 8th (as applicable), as detailed
below. As previously announced, LIC intends to rebrand the QVC Group
as Qurate Retail Group after closing, with the formal name change to
Assets: (approximate value
ILG ($475m after-tax)(2)
FTD ($122m after-tax)(2)
Private assets(3) ($83m)
Green Energy Investments ($172m)
Tax benefits - stock options ($12m)
Liabilities: (approximate value
1.75% debentures (defined below) ($583m)(4)
Earlier today, LIC contributed to GCI Liberty the remaining assets and
liabilities attributed to its Liberty Ventures Group following the
reattribution in exchange for newly-issued shares of GCI Liberty Class A
common stock ("GLIBA") and Class B common stock ("GLIBB"), representing
a controlling interest in GCI Liberty, upon which GCI Liberty became a
subsidiary of LIC.
After the contribution, at 4:01 p.m., New York City time, LIC effected a
tax-free separation of its controlling interest in GCI Liberty by
redeeming each outstanding share of its Series A Liberty Ventures common
stock ("LVNTA") and Series B Liberty Ventures common stock ("LVNTB") for
one share of GLIBA and GLIBB, respectively (the "split-off").
The reattribution, contribution and split-off follow the previously
announced automatic conversion of each outstanding share of GCI
Liberty's former Class A-1 common stock and Class B-1 common stock into
0.63 of a share of GLIBA and 0.2 of a share of its Series A Cumulative
Redeemable Preferred Stock ("GLIBP"), which occurred on March 8th.
GLIBP shares have a 21-year term, $25 per share liquidation preference
and 1/3 vote per share with no conversion feature. GLIBP shares have a
5% initial dividend rate that increases to 7% upon the reincorporation
of GCI Liberty in Delaware, which is expected to be completed as soon as
practical after closing.
As a result of the transactions, LIC no longer holds an equity interest
in GCI Liberty. Following the split-off, there are approximately 105
million shares of GLIBA, 4.5 million shares of GLIBB, and 7.3 million
shares of GLIBP outstanding, and former Liberty Ventures stockholders
hold approximately 79% of the common equity of GCI Liberty and an
approximate 83% voting interest in GCI Liberty based on shares
outstanding as of closing.
After giving effect to the split-off, the assets of GCI Liberty consist
of its subsidiaries GCI and Evite and interests in Liberty Broadband,
Charter and Lending Tree.
Prior to the split-off, GCI under the terms of its stock appreciation
rights agreement with Searchlight ALX, Ltd. (the "Searchlight SAR")
settled its obligations under the agreement for approximately $80
million, which was funded using additional borrowings under GCI's credit
facility. Simultaneous with closing, GCI Liberty repaid GCI's $75
million Searchlight Note using cash at GCI Liberty. Also prior to the
split-off, GCI Liberty drew down in full on a $1 billion margin loan
against its 42.7 million Series C shares of Liberty Broadband
Corporation ("LBRDK"). A portion of the proceeds drawn on the margin
loan were distributed to LIC in connection with the reattribution to be
used within one year for the repurchase of QVC Group stock or to pay
After giving effect to the transactions, the cash balance at GCI Liberty
is approximately $466 million, based on GCI and Liberty Ventures Group
cash balances as of December 31, 2017, pro-forma for the $1 billion
LBRDK margin loan draw less cash reattributed to the QVC Group and
approximately $75 million of cash used to repay the Searchlight Note, as
As previously announced, LIC's outstanding 1.75% Charter exchangeable
debentures due 2046 (the "1.75% debentures") were reattributed to the
QVC Group at the closing, together with approximately $583 million of
cash equal to the net present value of principal and cash interest
payments through the put/call date (October 2023).
Following the split-off, LIC will benefit from an indemnity obligation
from GCI Liberty with respect to any payments made by LIC in excess of
the adjusted principal amount of the debentures to any holder that
exercises its exchange right on or before the put/call date, less any
potential tax benefit to LIC from the retirement of such debentures at a
premium. GCI Liberty is supporting this obligation with a negative
pledge in favor of LIC on 2.2 million Charter shares at GCI Liberty that
are referenced by the 1.75% debentures. In addition, LIC has agreed to
use its commercially reasonable efforts to repurchase the outstanding
debentures within 6 months following the closing, on terms and
conditions reasonably acceptable to GCI Liberty. GCI Liberty will
reimburse LIC for the difference between the purchase price of the
tendered debentures and the amount of cash delivered in the
reattribution with respect to the tendered debentures, less any
potential tax benefit to LIC from retiring such debentures at a premium.
GCI Liberty's indemnity obligation and the number of shares subject to
the negative pledge will be ratably reduced with respect to any
debentures repurchased by LIC.
GCI Liberty may (but is not required to) complete an offering of Charter
exchangeable debentures, proceeds of which may be used to reimburse LIC
with respect to the aforementioned tender offer. The amount needed to
fund is estimated at approximately $283 million based on $750 million
principal outstanding and the bonds trading at $116 as of March 8, 2018.
As a result of these transactions, LIC has delisted LVNTA and LVNTB, and
as a result, LVNTA and LVNTB will no longer trade on the NASDAQ Global
Select Market, the QVC Group will cease to function as a tracking stock
and will effectively become a regular common stock. Beginning on Monday,
March 12, 2018, LIC's Series A and Series B QVC Group common stock will
no longer trade under the symbols "QVCA" and "QVCB," respectively, and
will begin trading under the symbols "QRTEA" and "QRTEB," respectively,
in connection with the rebranding. GCI Liberty's Class A common stock
and preferred stock are expected to commence trading in the regular way
under the symbols "GLIBA" and "GLIBP," respectively, on Monday, March 12th.
GCI Liberty intends to cause its Class B common stock to be quoted on
the OTC Markets as soon as practicable following the closing date.
However, LIC and GCI Liberty can give no assurances as to the timing of
the quotation or the symbol under which GCI Liberty's Class B common
stock will be quoted.
Following the split-off, the assets of LIC (which will become Qurate
Retail Group) consist of its subsidiaries QVC, HSN, zulily, the
Cornerstone Brands, certain green energy investments, interests in ILG
and FTD and other private assets(3). Pro-forma for the
reattribution, the cash balance at LIC is approximately $1.4 billion
based on QVC Group's cash balance as of December 31, 2017.
On March 8, 2018, LIC's board of directors authorized the additional
repurchase of approximately $700 million of LIC common stock. The total
repurchase authorization for LIC as of January 31, 2018, pro-forma for
this new authorization, is approximately $1.3 billion. Additionally, the
GCI Liberty board of directors authorized the repurchase of $650 million
of GCI Liberty common stock, which replaces any previous authorization
in place at GCI.
This press release includes certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995,
including statements concerning the QVC Group following the split-off
and the trading, listing and quotation of the GCI Liberty capital stock,
the rebranding of LIC and the QVC Group and related legal change in
name, the timing of the proposed reincorporation of GCI Liberty from
Alaska to Delaware and repurchases of the 1.75% debentures by LIC. These
forward-looking statements involve many risks and uncertainties that
could cause actual results to differ materially from those expressed or
implied by such statements, including, without limitation, the listing
and quotation of GCI Liberty capital stock, the completion of conditions
to the reincorporation, market conditions. These forward-looking
statements speak only as of the date of this press release, and each of
LIC and GCI Liberty expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statement
contained herein to reflect any change in LIC's or GCI Liberty's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based. Please refer to the
publicly filed documents of LIC and GCI Liberty, including their most
recent Forms 10-K, for additional information about LIC and GCI Liberty
and about the risks and uncertainties related to LIC's and GCI Liberty's
respective businesses which may affect the statements made in this press
About Liberty Interactive Corporation (to be
renamed Qurate Retail Group)
Qurate Retail Group operates and owns interests in a broad range of
digital commerce businesses. Qurate Retail Group's businesses and assets
consist of, among other things, its subsidiaries QVC, Inc., HSN, Inc.,
and zulily, llc and its interests in ILG and FTD.
About GCI Liberty, Inc.
GCI Liberty, Inc. (Nasdaq: GLIBA, GLIBP) operates and owns interests in
a broad range of communications businesses. GCI Liberty's principal
assets consist of its subsidiary GCI and interests in Charter
Communications and Liberty Broadband Corporation. GCI is the largest
communications provider in Alaska, providing data, wireless, video,
voice and managed services to consumer and business customers
throughout Alaska and nationwide. GCI has delivered services for nearly
40 years to some of the most remote communities and in some of the most
challenging conditions in North America. GCI Liberty's other businesses
and assets consist of its subsidiary Evite and its interest in Lending
Total reattributed cash of $1,048m includes $583m to be used towards
tender offer for 1.75% debentures reattributed from Liberty Ventures
Represents fair value of investments in ILG and FTD net of tax.
Includes estimated fair value of Sound Ventures, Quid, Brit+Co and
Liberty Israel Venture Fund II.
Represents NPV of principal and cash interest payments through
put/call date (10/2023) as of 3/8/2018.
Includes Liberty Interactive's 4.00%, 3.75%, 3.50% and 0.75%
exchangeable debentures; based on third party valuation.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180309005836/en/
Liberty Interactive Corporation and GCI Liberty, Inc.
Source: Liberty Interactive Corporation
News Provided by Acquire Media