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Consolidation
* * * Times Mirror controls the assets of the LLC
through the management agreement, which specifically
states that Times Mirror has no fiduciary duty to the
holder of Acquisition Parent [MB Parent] and may use
its discretion as to the use of the assets. Times
Mirror may have the LLC buy its own debt instruments or
Times Mirror stock, make business acquisitions or any
other transaction to the benefit of Times Mirror. The
only limitation is that Times Mirror may not upstream
LLC assets to itself.
Times Mirror owns all of the common stock of
Acquisition Parent and the 20% vote it carries. The
ownership of the common stock provides Times Mirror
with 100% of the residual ownership and value of
Acquisition Parent following redemption of the
preferred stock, which is virtually assured in at least
20 years due to the redemption rights and certain put
and call options. The equity value of the preferred
stock is limited to its stated (redemption) value and
fixed dividend payments.
Times Mirror has the ability to ensure that the Board
of Directors of Acquisition Parent may not do anything
that may affect the control or viability of the LLC.
Certain board actions require the unanimous vote of the
Board. These include:
• the incurrence of indebtedness or guarantees of
indebtedness of Acquisition Parent
• the sale, transfer or other disposition, pledge or
assignment of any portion or all of its LLC
interest
• the issuance of any other securities of
Acquisition Parent
All of these factors indicate that Times Mirror not
only controls the assets of the LLC, but also is the
beneficiary of all of the ownership risks and rewards
of the LLC. * * *
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