Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Liberty Global, Inc. (1316631) 10-Q published on May 06, 2013 at 5:11 pm
Reporting Period: Mar 30, 2013
We are exploring strategic alternatives with respect to our wireless operations in Chile, including alternatives involving the expanded use of mobile virtual network operator (MVNO) arrangements. In the event we were to decide to expand the use of MVNO arrangements, we might determine to dispose of some or all of our wireless network. Any such disposal would entail the disposal of owned equipment and the exit of tower and related real estate operating lease agreements associated with our wireless network in Chile. At March 31, 2013, the carrying value of our owned wireless network assets in Chile was $93.3 million and the remaining payments due under our tower and real estate operating leases in Chile were $123.9 million. We expect that the disposal of any portion of the Chilean wireless network would lead to accelerated depreciation of the impacted assets and restructuring charges with respect to the remaining rentals of the impacted operating leases. Under certain circumstances, a change in our Chilean wireless strategy could also lead to a decision to prepay the VTR Wireless Bank Facility, as defined in note 7.
On April 25, 2013, the net proceeds from the issuance of the UPC Holding 6.75% Senior Notes were used to redeem in full (a) UPC Holding’s €300.0 million ($384.7 million) principal amount of 8.0% senior notes due 2016 (the UPC Holding 8.0% Senior Notes) and (b) UPC Holding’s €400.0 million ($512.9 million) principal amount of 9.75% senior notes due 2018 (the UPC Holding 9.75% Senior Notes). Our obligations with respect to the UPC Holding 8.0% Senior Notes and the UPC Holding 9.75% Senior Notes were legally discharged with the trustee on March 26, 2013 and March 27, 2013, respectively, in connection with the issuance of the UPC Holding 6.75% Senior Notes. The trustee, in turn, paid all amounts due to the holders of the UPC Holding 8.0% Senior Notes and UPC Holding 9.75% Senior Notes on April 25, 2013. We incurred aggregate debt extinguishment losses of $85.5 million during the first quarter of 2013, which include (i) $35.6 million of redemption premiums related to the UPC Holding 8.0% Senior Notes and the UPC Holding 9.75% Senior Notes, (ii) the write-off of $24.5 million of unamortized discount related to the UPC Holding 9.75% Senior Notes, (iii) the write-off of $19.0 million of deferred financing costs associated with the UPC Holding 8.0% Senior Notes and the UPC Holding 9.75% Senior Notes and (iv) $6.4 million of aggregate interest incurred on the UPC Holding 8.0% Senior Notes and the UPC Holding 9.75% Senior Notes between the respective dates that we and the trustee were legally discharged, as described above.
Virgin Media Acquisition Litigation. On February 12, 2013, February 19, 2013 and March 26, 2013, respectively, three purported shareholders of Virgin Media filed lawsuits in the Supreme Court of the State of New York, New York County against the members of the Virgin Media board of directors, Virgin Media, LGI, New Liberty Global and certain LGI subsidiaries challenging the proposed transaction. All three plaintiffs purport to sue on behalf of the public stockholders of Virgin Media and allege that the members of the Virgin Media board of directors breached their fiduciary duties to Virgin Media stockholders in connection with the sale of Virgin Media to LGI by, among other things, failing to secure adequate consideration, failing to engage in a fair sales process and failing to disclose material information in the joint proxy statement/prospectus. The complaints allege that LGI, New Liberty Global and certain LGI subsidiaries aided and abetted the alleged breaches of fiduciary duty by Virgin Media’s board of directors. The complaints seek, among other things, an injunction of the proposed transaction, rescission in the event that the proposed transaction is consummated and plaintiffs’ attorneys’ fees and costs. Certain of the plaintiffs also seek damages. On April 10, 2013, the three actions were consolidated in the Commercial Division of the Supreme Court of the State of New York, and a preliminary injunction hearing was tentatively scheduled for the week ending May 31, 2013. The defendants intend to vigorously defend against the claims asserted. Given, among other matters, that discovery has not yet been completed, we are not in a position to reasonably estimate the range of loss that might be incurred in the event of an unfavorable outcome in this matter.
On April 26, 2013, LGE HoldCo V B.V. (LGE HoldCo), our wholly-owned subsidiary, entered into a limited recourse margin loan agreement (the LGE Margin Loan) with a financial institution. The LGE Margin Loan provides for the ability of LGE HoldCo to incur debt through additional facilities, which could be used to fund purchases of additional Ziggo shares up to a maximum of 48.0 million in the aggregate across all facilities. Any amounts borrowed under the LGE Margin Loan can be used for general corporate purposes, including distributions and/or loans to other subsidiaries of LGI. Any drawdown under the LGE Margin Loan is subject to the satisfaction of certain conditions, including delivery to the facility agent of certain customary conditions precedent. The LGE Margin Loan does not contain any financial covenants and provides for certain adjustment events and customary events of default. The LGE Margin Loan includes various lender early termination events (which are subject to materiality and other thresholds), including with respect to de-listing of the Ziggo shares, changes to the Ziggo share price and average daily trading volume of the Ziggo shares over a 30-day period and a change of control of LGE HoldCo.
In connection with the closing of the Virgin Media Acquisition, we expect to use (i) the amounts included in the Virgin Media Escrow Accounts ($3,548.8 million at March 31, 2013), (ii) availability under the Virgin Media Credit Facility and (iii) existing liquidity of LGI and Virgin Media to fund (a) the cash component of the consideration for the Virgin Media Acquisition, (b) the repayment of Virgin Media’s existing bank credit facility, (c) amounts that may be required to repurchase the VM 2021 and 2022 Notes pursuant to the applicable “Change of Control” provisions of the underlying indentures and (d) certain fees and expenses related to the transaction. On May 3, 2013, a notice of change of control and offer to purchase the VM 2021 and 2022 Notes was launched by Virgin Media and will remain open until midnight New York City time on June 7, 2013 unless extended or earlier terminated. We believe we and Virgin Media have sufficient sources of liquidity to fund the aforementioned cash requirements. For information concerning the pending Virgin Media Acquisition, see note 2 to our condensed consolidated financial statements.