NEW YORK — Sony Pictures Entertainment Inc., Liberty Media and their two partners in the acquisition of Telemundo Group Inc. will increase the $539 million price for the Spanish-lingo broadcaster by 8% if the buyers don’t get Federal Communications Commission approval by next August, the group said in an SEC filing Friday.
That would raise the price from $44 a share by 29¢ for every month the deal is delayed after August.
This provision appears designed to appease shareholders concerned about the likelihood that a lengthy FCC review will delay closing of the deal, as Sony and Liberty both face regulatory issues. Sony is a foreign company, which limits its stake in Telemundo to 25%, while Liberty is an affiliate of cabler Tele-Communications Inc., which limits its voting stake to 5%.
The companies have structured the deal to meet these requirements. Their two partners, Apollo Management and Bastion Capital, will emerge with 50.1% of the common stock while Sony will have just under 25% and Liberty will have 5% voting stock and 20% non-voting.
The SEC filing says the price will be raised seven months after the buyers seek permission with the FCC for the deal, or by Aug. 1, whichever is earlier.
The filing also revealed that Telemundo will pay the group $17.5 million in fees to terminate the deal if another bidder tops their offer.
That’s not a particularly high termination fee and could fuel talk on Wall Street that another bidder, most likely Clear Channel Communications, will make a higher offer. But so far investors show little sign of believing these rumors, as Telemundo stock continues to trade under the $44 offer price. It closed Friday up 12¢ to $41.43.
The filing, which included a copy of the merger agreement signed by the four partners, also revealed that Sony, Liberty, Apollo and Bastion have contributed a total of $273 million in equity to finance the deal. The four also have committed to pay more money if the price has to be increased.
Of the equity, $200 million is going to finance the Telemundo deal, sources said Friday, and that amount is split equally between the four partners. This is a higher amount of equity than might be expected but Telemundo already has close to $200 million in debt and, given its current operating losses, may not be able to handle too much of the acquisition debt.
The remaining $73 million is put up just by Sony and Liberty.