Charter 2015 Annual Report Download - page 48

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and results of operations of New Charter issued after completion of the TWC Transaction, the Bright House Transaction and
Liberty transactions will reflect New Charter balances and results after completion of the TWC Transaction, the Bright House
Transaction and Liberty transactions, but will not be restated retroactively to reflect the historical financial position or results of
operations of New Charter for periods prior to the TWC Transaction, the Bright House Transaction and Liberty transactions. Under
the acquisition method of accounting, the total purchase price will be allocated to TWC’s and Bright House’s tangible assets and
liabilities and identifiable intangible assets based on their fair values as of the date of completion of the TWC Transaction, the
Bright House Transaction and Liberty transactions.
The excess of the purchase price over those fair values will be recorded as goodwill. Charter, TWC and Bright House expect that
the TWC Transaction and the Bright House Transaction will result in the creation of goodwill based upon the application of the
acquisition method of accounting. To the extent the value of goodwill or intangibles becomes impaired, New Charter may be
required to incur material charges relating to such impairment. Such a potential impairment charge could have a material impact
on New Charter’s operating results.
Risks Related to the TWC Transaction
Completion of the TWC Transaction is subject to a number of conditions and if these conditions are not satisfied or waived,
the TWC Transaction will not be completed.
The obligations of Charter and TWC to complete the TWC Transaction is subject to satisfaction or waiver of a number of conditions,
including, among others:
• expiration or termination of any applicable waiting period (or extension thereof) under the HSR Act relating to the
transactions contemplated by the merger agreement (solely with respect to the obligations of each of Charter, New Charter,
Merger Subsidiary One, Merger Subsidiary Two and Merger Subsidiary Three to complete the TWC Transaction, without
the imposition of any burdensome condition);
• (i) adoption of an order, and release of the full text thereof, by the FCC granting its consent to the transfer of control or
assignment of the licenses issued by the FCC to TWC or any of its subsidiaries or affiliates, (ii) approval of certain LFAs,
such that the sum of the aggregate number of video subscribers of TWC belonging to franchise areas for which either (x)
no LFA consent is required or (y) if LFA consent is required, such consent shall have been obtained, shall be no less than
85% of the aggregate number of video subscribers of TWC and (iii) authorizations of state public utilities commissions
whose consent is required in connection with the transactions contemplated by the merger agreement (solely with respect
to the obligations of each of Charter, New Charter, Merger Subsidiary One, Merger Subsidiary Two and Merger Subsidiary
Three to complete the TWC Transaction, in each case without the imposition of any burdensome condition);
• except for the conditions described in the two preceding bullets, (i) absence of (x) any applicable law of a governmental
authority of competent jurisdiction enacted or promulgated after the date of the merger agreement in a jurisdiction in
which any of Charter, TWC or their respective subsidiaries has substantial operations and (y) any order of a governmental
authority of competent jurisdiction that, in each case, (1) imposes any burdensome condition or (2) prohibits completion
of the TWC Transaction and the violation of which would result in criminal liability, and (ii) the absence of any injunction
(whether temporary, preliminary or permanent) by any governmental authority of competent jurisdiction that imposes a
burdensome condition or prohibits completion of the TWC Transaction;
• approval for the listing on NASDAQ of the shares of New Charter Class A common stock to be issued in the TWC
Transaction, subject only to official notice of issuance;
• accuracy of the representations and warranties made in the merger agreement by the other party, subject to certain
materiality thresholds;
• performance in all material respects by the other party of the material obligations required to be performed by it at or
prior to completion of the TWC Transaction;
• the absence of a material adverse effect on the other party;
• receipt of a certificate executed by an executive officer of the other party as to the satisfaction of the conditions described
in the preceding three bullets with respect to such other party; and
• delivery of opinions of Wachtell, Lipton, Rosen & Katz, in the case of Charter, and Paul, Weiss, Rifkind, Wharton &
Garrison LLP, in the case of TWC, with respect to certain tax aspects of the TWC Transaction.
There can be no assurance that the conditions to closing of the TWC Transaction will be satisfied or waived or that the TWC
Transaction will be completed. There can be no assurance that these conditions will not result in the abandonment or delay of the
TWC Transaction. The occurrence of any of these events individually or in combination could have a material adverse effect on
the companies’ results of operations and the trading price of the TWC common stock or Charter Class A common stock.