Liberty Broadband Corporation Closes Private Offering of $860 Million of 3.125% Exchangeable Senior Debentures Due 2054

Rhea-AI Summary

Liberty Broadband (Nasdaq: LBRDA, LBRDK, LBRDP) has successfully closed its private offering of $860 million in 3.125% exchangeable senior debentures due 2054. These debentures are exchangeable for Charter Communications Class A common stock, with an initial exchange price of approximately $393.05 per share. The offering includes an additional $60 million from the partial exercise of an option granted to initial purchasers. Liberty Broadband may redeem these debentures on or after December 15, 2028, and holders have the option to require a purchase on that date. The company used proceeds to repay $540 million in borrowings, and repurchased $300 million of its 3.125% debentures due 2053. The debentures were offered to Qualified Institutional Buyers and are not registered under the Securities Act of 1933.

Positive

• Closed $860 million private offering of 3.125% exchangeable senior debentures.
• Option to redeem debentures on or after December 15, 2028, offering flexibility.
• Used proceeds to repay $540 million of borrowings, reducing debt obligations.
• Repurchased $300 million of 3.125% debentures due 2053, potentially reducing future interest expenses.

Negative

• None.

Insights

Financial Analyst

Liberty Broadband's recent private offering of $860 million in exchangeable senior debentures showcases a strategic financial maneuver. Exchangeable debentures are essentially bonds that can be converted into shares of another company—in this case, Charter Communications. The exchange price set at approximately $393.05 per share of Charter's Class A common stock suggests Liberty Broadband's confidence in Charter's future stock performance.

From a financial perspective, these debentures offer a 3.125% interest rate, which is relatively low given the long duration until maturity in 2054. By issuing debentures, Liberty Broadband is able to raise significant capital while leveraging its stake in Charter without immediate equity dilution. This move also demonstrates their commitment to managing their capital structure efficiently, as evidenced by the repayment of $540 million in borrowings and the repurchase of $300 million in other debentures due in 2053.

For retail investors, the redemption options and interest payments are important aspects to consider. The debentures can be redeemed by Liberty Broadband or at the holder's request in late 2028, offering some flexibility. However, the long timeframe until maturity and the specialized nature of the offering, which is limited to Qualified Institutional Buyers, may deter some retail investment. Additionally, the quarterly interest payments starting from December 2024 add a predictable income stream, which could appeal to income-focused investors.

Market Research Analyst

The choice to make these debentures exchangeable for Charter Communications stock reflects Liberty Broadband's confidence in both its own financial strategy and Charter's market position. Charter, being a significant player in the telecommunications industry, offers strong growth potential, especially as demand for high-speed internet and wireless services continues to rise.

This move also indicates a potential long-term belief in the synergy and strength of Charter's business model. By aligning the bond's value with Charter's stock, Liberty Broadband is effectively betting on the latter's market stability and growth, which in turn could positively affect Liberty Broadband's valuation.

For a retail investor, understanding the underlying value of Charter Communications becomes essential. Charter's ongoing performance, market trends in telecommunications and broader economic factors will directly affect the perceived value of these debentures. It's worth noting that Liberty Broadband's action to tie a significant financial instrument to Charter reflects its strategic alignment and long-term business foresight.

ENGLEWOOD, Colo.--(BUSINESS WIRE)-- Liberty Broadband Corporation (“Liberty Broadband”) (Nasdaq: LBRDA, LBRDK, LBRDP) announced today that it has closed its previously announced private offering of $860 million aggregate original principal amount of its 3.125% exchangeable senior debentures due 2054 (the “Debentures”), exchangeable for Charter Communications, Inc. (“Charter”) Class A common stock, inclusive of Debentures in an aggregate original principal amount of $60 million issued pursuant to the exercise of an option granted to the initial purchasers, which was partially exercised.

Upon an exchange of Debentures, Liberty Broadband, at its option, may deliver shares of Charter Class A common stock or the value thereof in cash or any combination of shares of Charter Class A common stock and cash. Initially, 2.5442 shares of Charter Class A common stock are attributable to each $1,000 original principal amount of Debentures, representing an initial exchange price of approximately $393.05 for each share of Charter Class A common stock. A total of 2,188,012 shares of Charter Class A common stock are initially attributable to the Debentures. Interest is payable quarterly on March 31, June 30, September 30 and December 31 of each year, commencing December 31, 2024. The Debentures may be redeemed by Liberty Broadband, in whole or in part, on or after December 15, 2028. Holders of Debentures also have the right to require Liberty Broadband to purchase their Debentures on December 15, 2028. The redemption and purchase price will generally equal 100% of the adjusted principal amount of the Debentures plus accrued and unpaid interest to the redemption date, plus any final period distribution.

In connection with the closing of the private offering of the Debentures, Liberty Broadband repaid $540 million of borrowings under the margin loan agreement of Liberty Broadband’s indirect, wholly-owned special purpose entity, and repurchased a total of $300 million in aggregate principal amount of Liberty Broadband’s 3.125% exchangeable senior debentures due 2053 pursuant to individually privately negotiated transactions.

The Debentures have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Debentures were offered by means of an offering memorandum solely to “Qualified Institutional Buyers” pursuant to, and as that term is defined in, Rule 144A of the Securities Act.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the Debentures nor shall there be any sale of Debentures in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state.

About Liberty Broadband Corporation

Liberty Broadband Corporation (Nasdaq: LBRDA, LBRDK, LBRDP) operates and owns interests in a broad range of communications businesses. Liberty Broadband’s principal assets consist of its interest in Charter Communications and its subsidiary GCI. GCI is Alaska’s largest communications provider, providing data, wireless, video, voice and managed services to consumer and business customers throughout Alaska and nationwide. GCI has delivered services over the past 40 years to some of the most remote communities and in some of the most challenging conditions in North America.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240701490154/en/

Liberty Broadband Corporation

Shane Kleinstein, 720-875-5432

Source: Liberty Broadband Corporation

FAQ

What is the amount raised in Liberty Broadband's private offering?

Liberty Broadband raised $860 million from its private offering of 3.125% exchangeable senior debentures due 2054.

When are Liberty Broadband's new debentures due?

The 3.125% exchangeable senior debentures issued by Liberty Broadband are due in 2054.

What is the exchange price for Charter Communications stock in Liberty Broadband's debentures?

The initial exchange price for Charter Communications Class A common stock is approximately $393.05 per share.

How many shares of Charter Class A stock are attributable to the new debentures?

A total of 2,188,012 shares of Charter Class A common stock are initially attributable to the debentures.

What was Liberty Broadband's use of proceeds from the debenture offering?

The proceeds were used to repay $540 million in borrowings and repurchase $300 million of 3.125% debentures due 2053.

When can Liberty Broadband redeem the new debentures?

Liberty Broadband can redeem the debentures, in whole or in part, on or after December 15, 2028.

What interest rate do Liberty Broadband's new debentures carry?

The debentures carry an interest rate of 3.125%, payable quarterly.