Charter closed the Cox and Liberty Broadband transactions, and Cox Enterprises holds its 26 percent through units and a single share

Both deals closed on the same day.

Charter Communications completed its combination with Cox Communications and its acquisition of Liberty Broadband Corporation effective 19 August, and set out the terms of both in a Form 8-K filed on 20 August. The cash went out in two pieces. A subsidiary of Cox Enterprises received $3.5bn for the equity of the Cox commercial fibre and managed information technology and cloud businesses, and a further $724m for the contribution of the residential cable business. It also received roughly 33.6 million common units of Charter Communications Holdings priced at $353.64, and 60.0 million convertible preferred units carrying a $6.0bn liquidation preference and a 6.875 percent coupon, convertible at $477.41. About $12bn of Cox debt and finance leases stays outstanding at Charter subsidiaries. Charter puts the total at just over 46 million Charter shares equivalent, and Cox Enterprises at about 26 percent of fully diluted shares outstanding on an as converted and as exchanged basis.

The one share that carries the votes

Cox NewCo also contributed $1.00, and in exchange Charter issued it one share of a new class of common stock. That single Class C share carries a number of votes reflecting the voting power of every Charter Holdings unit the Cox entity holds, converted and exchanged. So the economics sit in partnership units and the votes sit in one share at the parent.

The agreement caps what those votes do. Cox Enterprises may not acquire more than 30 percent of Charter equity, and Advance/Newhouse Partnership may not exceed 19 percent. Any shares held above a voting cap, 30 percent for Cox and 15 percent for Advance/Newhouse, must be voted in proportion to the public stockholders on all but certain specified matters. Neither is permitted to form a group with the other within the meaning of Regulation 13D.

The board, and what happened to the options

The board is now thirteen. Alexander C. Taylor, Dallas Clement and Mark Greatrex were appointed as Cox Enterprises designees, and the board determined that each of them qualifies as independent under the published Nasdaq listing requirements. Taylor, who is chairman and chief executive of Cox Enterprises, was appointed chairman of the Charter board, and Eric L. Zinterhofer, the previous non-executive chairman, became lead independent director. Two Liberty designees, Martin E. Patterson and J. David Wargo, ceased to be directors, and the third, Balan Nair, stays on as an independent director filling the seat left by John D. Markley, Jr., who told the board on 14 August that he intended to retire on completion.

Liberty Broadband holders received 0.236 of a Charter Class A share for each share held, with cash in lieu of fractions. Charter retired about 38.6 million of its own shares that Liberty owned and issued about 33.9 million to Liberty holders, a net reduction of roughly 4.7 million shares, and it assumed about $840m of Liberty net debt that it says will be repaid shortly after closing. Every Liberty stock option was cancelled for no consideration, because every one of them carried an exercise price above the value of the merger consideration.