Charter 2015 Annual Report Download - page 17

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a wholly owned subsidiary of New Charter; and Nina Company III, LLC, a wholly owned subsidiary of New Charter, pursuant
to which the parties will engage in a series of transactions that will result in Charter and TWC becoming wholly owned subsidiaries
of New Charter (the “TWC Transaction”), on the terms and subject to the conditions set forth in the Merger Agreement. After
giving effect to the TWC Transaction, New Charter will be the new public company parent that will hold the operations of the
combined companies. Upon consummation of the TWC Transaction, each outstanding share of TWC common stock (other than
TWC stock held by Liberty Broadband Corporation ("Liberty Broadband") and Liberty Interactive Corporation (collectively, the
"Liberty Parties")), will be converted into the right to receive $100 in cash and shares of New Charter Class A common stock
("New Charter common stock") equivalent to 0.5409 shares of Charter Class A common stock. Each stockholder of TWC will
also have the option to elect to receive for each outstanding share of TWC common stock (other than TWC stock held by the
Liberty Parties) $115 in cash and shares of New Charter common stock equivalent to 0.4562 shares of Charter common stock.
Upon consummation of the TWC Transaction, each share of TWC common stock held by the Liberty Parties will be converted
into New Charter common stock. The total enterprise value of TWC based on the estimated value of purchase price consideration
is approximately $79 billion, including cash, equity and TWC debt to be assumed. The value of the consideration will fluctuate
based on the number of shares outstanding and the market value of Charter's Class A common stock on the acquisition date, among
other factors. In certain circumstances a termination fee may be payable by either Charter or TWC upon termination of the TWC
Transaction as more fully described in the Merger Agreement.
Bright House Transaction
On March 31, 2015, we entered into a definitive Contribution Agreement (the “Contribution Agreement”), which was amended
on May 23, 2015 in connection with the execution of the Merger Agreement, with Advance/Newhouse Partnership (“A/N”), A/
NPC Holdings LLC, New Charter and Charter Communications Holdings, LLC (“Charter Holdings”), our wholly owned subsidiary,
pursuant to which Charter would become the owner of the membership interests in Bright House Networks, LLC (“Bright House”)
and any other assets (other than certain excluded assets and liabilities and non-operating cash) primarily related to Bright House
(the “Bright House Transaction”). At closing, Charter Holdings will pay to A/N approximately $2 billion in cash and issue to A/
N convertible preferred units of Charter Holdings with a face amount of $2.5 billion which will pay a 6% coupon, and approximately
34.3 million common units of Charter Holdings that are exchangeable into New Charter common stock on a one-for-one basis
with a value of approximately $6 billion.
Liberty Transaction and Debt Financing for the TWC Transaction and Bright House Transaction
Assuming that all TWC stockholders (excluding the Liberty Parties) elect the $100 per share cash option, the cash portion of the
consideration for the TWC Transaction is expected to be approximately $28 billion and the cash portion of the Bright House
Transaction is approximately $2 billion. In connection with the TWC Transaction, Charter and Liberty Broadband entered into an
investment agreement, pursuant to which Liberty Broadband agreed to invest $4.3 billion in New Charter at the closing of the
TWC Transaction to partially finance the cash portion of the TWC Transaction consideration. In connection with the Bright House
Transaction, Liberty Broadband agreed to purchase at the closing of the Bright House Transaction $700 million of New Charter
Class A common stock (or, if the TWC Transaction is not consummated prior to the completion of the Bright House Transaction,
Charter Class A common stock).
Charter expects to finance the remaining cash portion of the purchase price of the TWC Transaction and Bright House Transaction
with additional indebtedness and cash on the companies’ balance sheets. In 2015, we issued $15.5 billion CCO Safari II, LLC
("CCO Safari II") senior secured notes, $3.8 billion CCO Safari III, LLC ("CCO Safari III") senior secured bank loans and $2.5
billion CCOH Safari, LLC ("CCOH Safari") senior unsecured notes. Charter has remaining commitments of approximately $2.7
billion from banks to provide incremental senior secured term loan facilities and senior unsecured notes, as well as an incremental
$1.7 billion revolving facility. In addition, the bank commitments provide for a $4.3 billion bridge facility if all TWC stockholders
(other than the Liberty Parties) elect the $115 per share cash option, in the event Charter is unable to issue senior unsecured notes
in advance of the closing of the TWC Transaction.
Regulatory Approval Process
We have made all of the necessary filings of applications for the TWC Transaction and the Bright House Transaction. The Federal
Communications Commission (“FCC”) comment cycle closed mid-November, and we are working closely with the FCC and the
Department of Justice to make sure they have all the information they need to evaluate the merits of the transactions. The FCC’s
informal 180-day clock for approval will run to March 25, 2016 although the FCC could stop and restart the clock later if they
determined to do so. We have received approval or authorization from all necessary state authorities except California, Hawaii
and New Jersey, with California currently having a schedule indicating an order being issued in June 2016. We have filed a motion
in California seeking to expedite the timing of the California proceeding although we cannot predict the outcome of our efforts
to seek an earlier decision. We have obtained approvals exceeding the threshold closing condition for franchise authorities approving