Liberty Interactive (QVCA, QVCB, LVNTA, LVNTB) and GNCMA entered into a definitive agreement whereby Liberty Interactive will acquire GCI through a reorganization in which certain Liberty Ventures Group assets and liabilities will be contributed to GCI in exchange for a controlling interest in GCI. Liberty Interactive will then effect a tax-free separation of its controlling interest in the combined company (to be named GCI Liberty, Inc.) to the holders of Liberty Ventures common stock in full redemption of all outstanding shares of such stock. The split-off of Liberty Interactive’s interest in GCI Liberty is expected to be completed by the first quarter of 2018.
Also, prior to the split-off of GCI Liberty, GCI Liberty intends to execute and draw down in full on a $500 million margin loan against its 42.7 million Series C shares of Liberty Broadband. Concurrent with the split-off, a portion of proceeds drawn on the margin loan may be distributed to Liberty Interactive to be used within one year for the repurchase of QVC Group stock or to pay down debt. The amount of such proceeds depends upon the portion of Liberty Interactive’s 1.75% Charter exchangeable debentures that are not exchanged for mirror debentures of GCI Liberty.
Shareholders of GCI will receive total consideration of $32.50 per share comprised of $27.50 per share in GCI Liberty Class A common stock and $5.00 in newly issued Series A preferred shares, based on a Liberty Ventures reference price of $43.65. The Series A preferred shares will accrue dividends at an initial rate of 5% per annum and will be redeemable upon the 21st anniversary of the closing. There will be no premium paid on the GCI Class B shares.
Additionally, the deal will eliminate the tracking stock structure making the new company eligible for inclusion in stock indices.