Liberty makes additional distributions on two series of exchangeables

By Angela McDaniels

Tacoma, Wash., Sept. 30 – Liberty Interactive Corp. subsidiary Liberty Interactive LLC said it made additional distributions to holders of its 1% senior exchangeable debentures due 2043 and its 0.75% senior exchangeable debentures due 2043.

Holders of the 1% debentures as of Sept. 15 received an additional distribution of $2.2879 per debenture, according to a press release.

The additional distribution is attributable to the portion of a quarterly dividend paid by HSN, Inc. on Sept. 22 in excess of $0.18 per share. Payments of additional distributions attributable to excess regular cash dividends do not result in a reduction to the principal amount of the debentures, the company noted.

Holders of the 1% debentures also received on Friday a quarterly interest payment of $2.50 per $1,000 original principal amount of debentures, and the principal amount of the debentures was adjusted to $863.3887 from $863.7294.

Under the indenture for the debentures, the original principal amount of the 1% debentures is reduced in an amount equal to each extraordinary distribution made to holders of the debentures. After that, the adjusted principal amount is further reduced on each successive quarterly interest payment date to the extent necessary so that the quarterly interest payment represents the payment of an annualized yield of 1% of the adjusted principal amount.

This latter adjustment, to the extent it is made through a particular extraordinary distribution that results in a reduction to the principal amount of the debentures, takes effect on the second succeeding interest payment date after the payment of that extraordinary distribution.

To date, Liberty has made one extraordinary distribution to holders of the debentures. On March 19, 2015, Liberty made an extraordinary distribution of $134.58 per $1,000 original principal amount, due to payment by HSN of a special cash dividend of $10.00 per share to HSN shareholders of record as of Feb. 9, 2015.

Reductions to the principal amount of the debentures do not affect the amount of the quarterly interest payments, which will continue to be at a rate of 1% of the original principal amount per year.

0.75% debentures

Meanwhile, holders of the 0.75% debentures as of Sept. 15 received an additional distribution of $2.2009 per debenture on Friday.

The additional distribution is attributable to the regular quarterly dividends paid by Time Warner Inc. of $0.4025 and by Time Inc. of $0.19, each on Sept. 15. Payments of additional distributions attributable to regular cash dividends do not result in a reduction to the principal amount of the debentures.

Holders of the 0.75% debentures also received on Friday a quarterly interest payment of $1.875 per $1,000 original principal amount of debentures, and the principal amount of the debentures was adjusted to $384.4147 from $385.5668.

Under the indenture for the debentures, the original principal amount of the debentures is reduced in an amount equal to each additional distribution made to holders of the debentures attributable to an extraordinary distribution that is made on reference shares. Thereafter, the adjusted principal amount is further reduced on each successive quarterly interest payment date to the extent necessary to cause the quarterly interest payment to represent the payment of an annualized yield of 0.75% of the adjusted principal amount.

This latter adjustment, to the extent it is made by reason of a particular additional distribution that results in a reduction to the principal amount of the debentures, takes effect on the second succeeding interest payment date after the payment of that additional distribution.

To date, Liberty has made one additional distribution that was attributable to an extraordinary distribution made on reference shares. On June 16, Liberty made an additional distribution of $614.4332 per $1,000 original principal amount of the debentures attributable to the extraordinary cash distribution made to former holders of common stock of Time Warner Cable, Inc. on May 18 in connection with the mergers involving Charter Communications, Inc. and Time Warner Cable. The additional distribution was based on the average transaction consideration paid in the merger.

Adjustments to the principal amount of the debentures do not affect the amount of the quarterly interest payments received by holders of the debentures, which will continue to be a rate equal to 0.75% of the original principal amount per year.

As of Friday, $1,770,614 principal amount of 0.75% debentures remained outstanding.

Englewood, Colo.-based Liberty Interactive owns interests in electronic retailing, media, communications and entertainment businesses.

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