QVC Group, Inc 8-K, filed Aug 26, 2020
QVC Group, Inc. (QVCAQ)
About this 8-K
QVC Group, Inc filed this 8-K on August 26, 2020, reporting on events of August 21, 2020.
Items reported
- Item 3.03: Change to shareholders' rights
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 3.03. Material Modification to Rights of Security Holders
The information set forth in Item 5.03 of this Current Report on Form 8-K is incorporated herein by reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
On August 24, 2020, Qurate Retail, Inc. (“Qurate Retail”) filed a Certificate of Designations (the “Certificate of Designations”) for its newly-created 8.0% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), with the Secretary of State of the State of Delaware that became effective upon filing. The Certificate of Designations designates the Series A Preferred Stock and establishes its preferences, limitations, voting powers and relative rights, which are described below.
Priority. The Series A Preferred Stock ranks senior to the shares of common stock of Qurate Retail, with respect to dividend rights, rights of redemption and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of Qurate Retail’s affairs. Shares of Series A Preferred Stock are not convertible into shares of common stock of Qurate Retail.
Dividends. Holders of the Series A Preferred Stock are entitled to receive quarterly cash dividends at a rate of 8.0% per annum of the liquidation price (as described below) on a cumulative basis, during the term. If declared, accrued dividends will be payable quarterly on each dividend payment date, beginning December 15, 2020 and thereafter on each March 15, June 15, September 15, and December 15 during the term (or, if such date is not a business day, the next business day after such date). If Qurate Retail fails to pay dividends or the applicable redemption price with respect to any redemption within 30 days after the applicable dividend payment or redemption date, the dividend rate will increase as provided by the Certificate of Designations. Accrued dividends that are not paid within 30 days after the applicable dividend payment date will be added to the liquidation price until paid together with all dividends accrued thereon.
The ability of Qurate Retail to declare or pay any dividend on, or purchase, redeem, or otherwise acquire, any of its common stock or any other stock ranking on parity with the Series A Preferred Stock will be subject to restrictions if Qurate Retail does not pay all dividends and all redemption payments on the Series A Preferred Stock, subject to certain exceptions as set forth in the Certificate of Designations.
Distributions upon Liquidation, Dissolution or Winding Up. Upon Qurate Retail’s liquidation, winding-up or dissolution, each holder of shares of the Series A Preferred Stock will be entitled to receive, before any distribution is made to the holders of Qurate Retail common stock, an amount equal to the liquidation price plus all unpaid dividends (whether or not declared) accrued from the immediately preceding dividend payment date, subject to the prior payment of liabilities owed to Qurate Retail’s creditors and the preferential amounts to which any stock senior to the Series A Preferred Stock is entitled.
The Series A Preferred Stock has a liquidation price equal to the sum of (i) $100, plus (ii) all accrued and unpaid dividends (whether or not declared) that have been added to the liquidation price.
Mandatory and Optional Redemption. The Series A Preferred Stock is subject to mandatory redemption on March 15, 2031 at the liquidation price plus all unpaid dividends (whether or not declared) accrued from the most recent dividend payment date.
On or after the fifth anniversary of the original issue date of the Series A Preferred Stock (the “Original Issue Date”), Qurate Retail may redeem all or a portion of the outstanding shares of Series A Preferred Stock, at the liquidation price plus all unpaid dividends (whether or not declared) accrued from the most recent dividend payment date plus, if the redemption is (x) on or after the fifth anniversary of the Original Issue Date but prior to its sixth anniversary, 4.00% of the liquidation price, (y) on or after the sixth anniversary of the Original Issue Date but prior to its seventh anniversary, 2.00% of the liquidation price and (z) on or after the seventh anniversary of the Original Issue Date, zero.
The Certificate of Designations provides certain mechanisms for partial redemption and places certain restrictions on Qurate Retail in the event it does not have funds legally available to satisfy its redemption obligations.
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Extraordinary Transactions. If any Extraordinary Transaction (as defined in the Certificate of Designations) occurs that is a merger or consolidation immediately after which the shares of Series A Preferred Stock will not remain outstanding, the holders of Series A Preferred Stock will be entitled, at the sole discretion of the board of directors of Qurate Retail (the “Board”), either (i) to a cash payment equal to the liquidation price plus all accrued and unpaid dividends (whether or not declared) since the immediately preceding dividend payment date, and the shares of Series A Preferred Stock will be cancelled, or (ii) to receive substitute preferred stock of the surviving entity or its parent entity with substantially identical powers, preferences and rights (with limited exceptions, which may include the grant of additional powers, preferences or rights, including voting rights) (“Substitute Preferred Stock”), in each case, upon the conversion or exchange of such shares of Series A Preferred Stock in connection with such Extraordinary Transaction.
If any other Extraordinary Transaction occurs, at the sole discretion of the Board, (i) the Series A Preferred Stock will remain outstanding without a material and adverse change to its powers, preferences or rights, (ii) the Series A Preferred Stock will be converted into or exchanged for Substitute Preferred Stock, or (iii) all, but not less than all, of the shares of the Series A Preferred Stock may be redeemed within 90 days after such Extraordinary Transaction, for cash equal to the liquidation price plus all unpaid dividends (whether or not declared) accrued since the immediately preceding dividend payment date.
Voting Power. Holders of the Series A Preferred Stock will not have any voting rights or powers, except as specified in the Certificate of Designations or as required by Delaware law.
Preferred Stock Directors. So long as the aggregate liquidation price of the outstanding shares of Series A Preferred Stock exceeds 25% of the aggregate liquidation price of the shares of Series A Preferred Stock issued on the Original Issue Date (the “Threshold Amount”), holders of Series A Preferred Stock will have the following director election rights.
Whenever dividends on any shares of the Series A Preferred Stock have not been declared and paid for two consecutive dividend periods (a “Dividend Nonpayment”), the size of the Board will automatically increase by one and the holders of the Series A Preferred Stock, voting together as a single class with holders of any and all Voting Parity Stock (as defined in the Certificate of Designations), will be entitled, at Qurate Retail’s next stockholders meeting, to elect one additional member of the Board (the “Preferred Dividend Director”). In addition, whenever Qurate Retail fails to pay the applicable redemption price in full with respect to any redemption of the Series A Preferred Stock or fails to make a payment with respect to the Series A Preferred Stock as required by the Certificate of Designations in connection with a liquidation or an Extraordinary Transaction (a “Nonpayment”), the size of the Board will automatically increase by two (if a Dividend Nonpayment has previously occurred and not been rescinded) or by three and the holders of the Series A Preferred Stock, voting together as a single class with holders of any and all Voting Parity Stock, will be entitled, at Qurate Retail’s next stockholders meeting, to vote for the election of these additional members of the Board (each, a “Nonpayment Director,” and, together with the Preferred Dividend Director, the “Preferred Stock Directors”); provided, that the Board will not include more than three Preferred Stock Directors. Notwithstanding the foregoing, the Certificate of Designations prohibits the election or appointment of any Preferred Stock Director if it would cause Qurate Retail to violate the corporate governance requirements of the Nasdaq Stock Market, including the requirement that the Board have a majority of independent directors. Subject to certain exceptions, if a Dividend Nonpayment or Nonpayment has occurred, the holders of at least 25% of the then-outstanding shares of the Series A Preferred Stock and any Voting Parity Stock may request a special meeting of stockholders to elect Preferred Stock Directors.
The Preferred Stock Directors will not be subject to the board classification provisions of Qurate Retail’s restated certificate of incorporation and will stand for reelection annually, so long as the holders of the Series A Preferred Stock continue to have such voting powers. Preferred Stock Directors may be removed, with or without cause, only by a majority of the voting power of the Series A Preferred Stock and Voting Parity Stock. The Preferred Dividend Director’s term will automatically expire when the Threshold Amount is no longer outstanding or the Dividend Nonpayment is cured. The Nonpayment Directors’ terms will automatically expire when the Threshold Amount is no longer outstanding or the Nonpayment is cured.
The foregoing summary of the Certificate of Designations does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Certificate of Designations, which is attached hereto as Exhibit 3.1 and is incorporated herein by reference.
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Item 7.01. Regulation FD Disclosure.
On August 21, 2020, Qurate Retail announced that an authorized committee of its Board of Directors declared a special dividend (the “Dividend”) on each outstanding share of its common stock consisting of (i) a special cash dividend in the amount of $1.50 per common share, for an aggregate cash dividend of approximately $633 million, and (ii) a special dividend of 0.03 shares of Series A Preferred Stock, having an initial liquidation price of $100 per share of Series A Preferred Stock, with cash to be paid in lieu of fractional shares.
The committee of the Board of Directors has declared a record date of 5:00 p.m., New York City time, on August 31, 2020 for the Dividend and set a distribution date of 5:00 p.m., New York City time, on September 14, 2020. The distribution of the shares of Series A Preferred Stock remains subject to the satisfaction or waiver, as applicable, of the following conditions: registration of the Series A Preferred Stock under the Securities Exchange Act of 1934, approval for listing the Series A Preferred Stock on the Nasdaq Global Select Market, receipt of an opinion of tax counsel, and no revocation of the Dividend prior to the distribution date.
This Item 7.01 and the press release attached hereto as Exhibit 99.1 are being furnished to the Securities and Exchange Commission under Item 7.01 of Form 8-K in satisfaction of the public disclosure requirements of Regulation FD and shall not be deemed "filed" for any purpose.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| | |
Exhibit No. | | Description |
3.1 | | Certificate of Designations of 8.0% Series A Cumulative Redeemable Preferred Stock. |
99.1 | | |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 25, 2020
| QURATE RETAIL, INC. | |
| | |
| | |
| By: | /s/ Katherine C. Jewell |
| | Name: Katherine C. Jewell |
| | Title: Assistant Vice President and Secretary |
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Exhibit 3.1
Certificate of Designations
OF
8.0% SERIES A CUMULATIVE redeemable PREFERRED STOCK
OF
QURATE RETAIL, INC.
Qurate Retail, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify that a duly authorized committee of the Board of Directors (the “Committee”) of the Corporation duly adopted the following resolutions on August 20, 2020 in accordance with Section 151(g) of the General Corporation Law of the State of Delaware:
“RESOLVED, that pursuant to the authority expressly vested by Article IV, Section C of the Restated Certificate of Incorporation of the Corporation and in accordance with Section 151(g) of the General Corporation Law of the State of Delaware, the Committee hereby creates, authorizes and provides for the issuance of a new series of preferred stock consisting of 13,500,000 shares, out of the authorized and unissued shares of preferred stock, and that the designation and number of shares thereof, the powers, preferences and relative, participating, optional or other rights of such shares, and the qualifications, limitations or restrictions thereof, are as follows:
The designation of the series of preferred stock, par value $0.01 per share, of the Corporation authorized hereby is 8.0% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”). The total number of the authorized and unissued shares of the preferred stock of the Corporation designated as the Series A Preferred Stock initially shall be 13,500,000.
“Agent Members” shall have the meaning set forth in Section 19 of this Certificate of Designations.
“Board of Directors” or “Board” shall mean the Board of Directors of the Corporation and, unless the context indicates otherwise, also shall mean, to the extent permitted by law, any committee thereof authorized, with respect to any particular matter, to exercise the power of the Board of Directors of the Corporation with respect to such matter.
“Business Day” shall mean any weekday that is not a day on which banking institutions in New York, New York are authorized or required by law, regulation or executive order to be closed.
“Capital Stock” shall mean any and all shares of capital stock of the Corporation.
“Certificate of Designations” shall mean this Certificate of Designations of 8.0% Series A Cumulative Redeemable Preferred Stock of the Corporation, as may be amended from time to time.
“Certificate of Incorporation” shall mean the Restated Certificate of Incorporation of the Corporation, as amended from time to time.
“Close of Business” means 5:00 p.m., New York City time.
“Common Stock” shall mean (i) the Series A Common Stock, (ii) the Series B Common Stock, (iii) the Series C common stock, par value $0.01 per share, of the Corporation, and (iv) all shares of any other class or series of common stock of the Corporation hereafter authorized.
“Corporation” shall mean Qurate Retail, Inc., a Delaware corporation.
“Debt Instrument” shall mean any note, bond, debenture, indenture, guarantee or other instrument or agreement evidencing any Indebtedness, whether existing at the effective time of this Certificate of Designations or thereafter created, incurred, assumed or guaranteed.
“Depositary” shall have the meaning set forth in Section 19 of this Certificate of Designations.
“Dividend Amount” shall mean, for any Dividend Payment Date, the amount accrued and payable by the Corporation as a dividend per share of Series A Preferred Stock, as determined pursuant to Section 3(a) of this Certificate of Designations (and as such amount is subject to adjustment from time to time pursuant to Sections 3(b) and 3(c) of this Certificate of Designations).
“Dividend Director Event” shall have the meaning set forth in Section 9(a)(i) of this Certificate of Designations.
“Dividend Nonpayment” shall have the meaning set forth in Section 3(b) of this Certificate of Designations.
“Dividend Nonpayment Rate” shall mean the Stated Rate plus one and a half percent (1.50%) per annum of the Liquidation Price of each share of Series A Preferred Stock.
“Dividend Payment Date” shall mean March 15, June 15, September 15 and December 15 of each year, commencing with December 15, 2020.
“Dividend Period” shall mean the period from and including the Original Issue Date to (but not including) the first Dividend Payment Date and each three (3) month period from and including the Dividend Payment Date for the preceding Dividend Period to (but not including) the Dividend Payment Date for such Dividend Period.
“Dividend Rate” shall mean the dividend rate accruing on the Series A Preferred Stock, as applicable from time to time pursuant to this Certificate of Designations.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Extraordinary Transaction” shall mean the consummation of an exchange, consolidation, merger or similar transaction (whether effected in a single transaction or series of related transactions) by the Corporation with another Person the result of which is the holders of shares of Common Stock immediately prior to the transaction, or prior to the first transaction if a series of related transactions, ceasing to own, directly or indirectly, securities representing, immediately following such transaction or series of related transactions, (x) if immediately prior to such transaction or series of related transactions the Series B Common Stock represents twenty percent (20%) or more of the outstanding Voting Power of the Corporation, at least fifty percent (50%) of the outstanding Common Stock and Voting Power of the Corporation or the successor entity (or if the Corporation or the successor entity is a direct or indirect wholly owned subsidiary of another entity immediately following such transaction or series of related transactions, any such direct or indirect parent entity of the Corporation or such successor entity), or (y) if immediately prior to such transaction or series of related transactions the Series B Common Stock represents less than twenty percent (20%) of the outstanding Voting Power of the Corporation, at least fifty percent (50%) of the outstanding Common Stock of the Corporation or the successor entity (or if the Corporation or the successor entity is a direct or indirect wholly owned subsidiary of another entity immediately following such transaction or series of related transactions, any such direct or indirect parent entity of the Corporation or such successor entity).
“Extraordinary Transaction Redemption Date” shall mean (i) the date determined by the Board of Directors, which shall be a Business Day and shall be no less than ten (10) days after the date on which the Corporation provides a Notice of Redemption and (ii) if any shares of Series A Preferred Stock remain outstanding following such date, any date thereafter on which shares of Series A Preferred Stock are redeemed pursuant to Section 7 of this Certificate of Designations.
“Extraordinary Transaction Redemption Price” with respect to each share of Series A Preferred Stock shall mean the Liquidation Price of such share plus all unpaid dividends (whether or not declared) on such share accrued from (and including) the most recent Dividend Payment Date to (but not including) the Extraordinary Transaction Redemption Date.
“Global Preferred Shares” shall have the meaning set forth in Section 19 of this Certificate of Designations.
“Holder” means each Person in whose name shares of Series A Preferred Stock are registered on the stock register of the Corporation, who shall be treated by the Corporation and the Transfer Agent as the record owner of those shares of Series A Preferred Stock for the purpose of making payment and for all other purposes.
“Indebtedness” shall mean (i) any liability, contingent or otherwise, of the Corporation or any Subsidiary (x) for borrowed money (whether or not the recourse of the lender is to the whole of the assets of the Corporation or any Subsidiary or only to a portion thereof), (y) evidenced by a note, debenture or similar instrument (including a purchase money obligation) given other than in connection with the acquisition of inventory or similar property in the ordinary course of business, or (z) for the payment of money relating to indebtedness represented by obligations under a lease that is required to be capitalized for financial accounting purposes in accordance with generally accepted accounting principles; (ii) any liability of others described in the preceding clause
(i) which the Corporation or any Subsidiary has guaranteed or which is otherwise its legal liability; (iii) any obligations secured by any mortgage, pledge, lien, encumbrance, charge or adverse claim affecting title or resulting in an encumbrance against any real or personal property, or a security interest of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction) to which the property or assets of the Corporation or any Subsidiary are subject whether or not the obligations secured thereby shall have been assumed by or shall otherwise be the Corporation’s or any Subsidiary’s legal liability; and (iv) any amendment, renewal, extension or refunding of any liability of the types referred to in clause (i), (ii) or (iii) above.
“Junior Stock” shall mean the Common Stock and any other class or series of Capital Stock now existing, or authorized after, the effective time of this Certificate of Designations other than the Series A Preferred Stock, any class or series of Parity Stock, and any class or series of Senior Stock.
“Liquidation Event” shall have the meaning set forth in Section 4 of this Certificate of Designations.
“Liquidation Nonpayment” shall have the meaning set forth in Section 3(c) of this Certificate of Designations.
“Liquidation Price” measured per share of the Series A Preferred Stock as of any date of determination shall mean the sum of (i) $100.00 plus (ii) an amount equal to all unpaid dividends (whether or not declared) accrued with respect to such share which pursuant to Section 3(d) of this Certificate of Designations have been added to and then remain part of the Liquidation Price as of such date.
“Mandatory Redemption” shall have the meaning set forth in Section 5(b) of this Certificate of Designations.
“Mandatory Redemption Price” with respect to each share of Series A Preferred Stock, shall mean the Liquidation Price of such share plus all unpaid dividends (whether or not declared) on such share accrued from (and including) the most recent Dividend Payment Date to (but not including) (i) the Scheduled Redemption Date or (ii) in the case of shares of Series A Preferred Stock that remain outstanding following the Scheduled Redemption Date, the date on which such shares are redeemed pursuant to Section 5 of this Certificate of Designations.
“Nonpayment” shall have the meaning set forth in Section 3(c) of this Certificate of Designations.
“Nonpayment Director” shall have the meaning set forth in Section 9(a)(ii) of this Certificate of Designations.
“Nonpayment Director Event” shall have the meaning set forth in Section 9(a)(ii) of this Certificate of Designations.
“Nonpayment Rate” shall mean the Stated Rate plus one and a half percent (1.50%) per annum of the Liquidation Price of each share of Series A Preferred Stock; provided, that the
Nonpayment Rate shall increase by one quarter of one percent (0.25%) commencing on the Dividend Payment Date immediately following the Nonpayment and for each subsequent Dividend Period thereafter so long as such Nonpayment fails to be cured; provided, further, that such increases will cease at such time as the Nonpayment Rate equals the Stated Rate plus three percent (3.00%) per annum of the Liquidation Price of each share of Series A Preferred Stock. For the avoidance of doubt, in no event will the Nonpayment Rate exceed 11.00% per annum of the Liquidation Price.
“Notice of Redemption” shall have the meaning set forth in Section 5(d) of this Certificate of Designations.
“Optional Redemption” shall have the meaning set forth in Section 5(a) of this Certificate of Designations.
“Optional Redemption Date” shall mean (i) the date as determined by the Board of Directors, which shall be a Business Day and shall be no less than ten (10) days after the date on which the Corporation provides a Notice of Redemption and (ii) if any shares of Series A Preferred Stock selected for redemption remain outstanding following such date, any date thereafter on which shares of Series A Preferred Stock are redeemed pursuant to Section 5 of this Certificate of Designations.
“Optional Redemption Price” shall mean, with respect to each share of Series A Preferred Stock to be redeemed, the sum of (i) the Liquidation Price plus (ii) all unpaid dividends (whether or not declared) on such share accrued from (and including) the most recent Dividend Payment Date to (but not including) the Optional Redemption Date plus (iii) if the Optional Redemption Date of such share is (x) on or after the fifth anniversary of the Original Issue Date but prior to the sixth anniversary of the Original Issue Date, four percent (4.00%) of the Liquidation Price of such share of Series A Preferred Stock, (y) on or after the sixth anniversary of the Original Issue Date but prior to the seventh anniversary of the Original Issue Date, two percent (2.00%) of the Liquidation Price of such share of Series A Preferred Stock and (z) on or after the seventh anniversary of the Original Issue Date, zero (0.00).
“Original Issue Date” shall mean the date on which shares of Series A Preferred Stock are first issued.
“Parity Stock” shall mean any class or series of Capital Stock authorized after the effective time of this Certificate of Designations that expressly ranks on a parity basis with the Series A Preferred Stock as to the dividend rights, rights of redemption and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.
“Person” shall mean any natural person, corporation, company, limited liability company, general or limited partnership, trust, estate, proprietorship, joint venture, association, organization or other entity.
“Preferred Director Termination Event” shall mean the occurrence of an event described in Sections 9(d)(ii)(x) or (y) or Sections 9(d)(iii)(x) or (y) of this Certificate of Designations.
“Preferred Directors” shall mean the directors appointed and elected to the Board of Directors pursuant to Section 9 of this Certificate of Designations.
“Preferred Dividend Director” shall have the meaning set forth in Section 9(a)(i) of this Certificate of Designations.
“Record Date” for the dividends payable on any Dividend Payment Date shall mean the date fifteen (15) days immediately preceding such Dividend Payment Date; provided, that if such date is not a Business Day, the Record Date shall be the next succeeding Business Day after such date.
“Record Holder” means a Holder of record of the Series A Preferred Stock as such Holder appears on the stock register of the Corporation at the Close of Business on the Record Date with respect to a Dividend Payment Date or on the Special Record Date, as applicable.
“Redemption Date” shall mean the Scheduled Redemption Date, the Optional Redemption Date or the Extraordinary Transaction Redemption Date, as applicable.
“Redemption Nonpayment” shall have the meaning set forth in Section 3(c) of this Certificate of Designations.
“Redemption Price” shall mean the Mandatory Redemption Price, the Optional Redemption Price or the Extraordinary Transaction Redemption Price, as applicable.
“Registrar” shall mean the Transfer Agent acting in its capacity as registrar for the Series A Preferred Stock, and its successors and assigns.
“Scheduled Redemption Date” shall mean March 15, 2031.
“SEC” shall mean the U.S. Securities and Exchange Commission.
“Senior Stock” shall mean any class or series of Capital Stock authorized after the effective time of this Certificate of Designations that expressly ranks senior to the Series A Preferred Stock and has preference or priority over the Series A Preferred Stock as to dividend rights, rights of redemption and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.
“Series A Common Stock” shall mean the Series A common stock, par value $0.01 per share, of the Corporation.
“Series A Preferred Stock” shall mean the 8.0% Series A Cumulative Redeemable Preferred Stock of the Corporation.
“Series B Common Stock” shall mean the Series B common stock, par value $0.01 per share, of the Corporation.
“Special Record Date” shall have the meaning set forth in 3(c)Section 3(d) of this Certificate of Designations.
“Stated Rate” shall mean eight percent (8.0%) per annum of the Liquidation Price of each share of Series A Preferred Stock.
“Subsidiary” shall mean any company or corporate entity for which a Person owns, directly or indirectly, an amount of the voting securities, other voting rights or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests, more than 50% of the equity interests of such company or corporate entity).
“Substitute Preferred Stock” shall have the meaning set forth in Section 6(a) of this Certificate of Designations.
“Threshold Amount” shall have the meaning set forth in Section 9(a) of this Certificate of Designations.
“Transfer Agent” shall mean the Person designated by the Corporation to act as transfer agent, Registrar and paying agent for the Series A Preferred Stock, and its successors and assigns; provided that the Corporation may, in its sole discretion, remove and replace the transfer agent, Registrar and paying agent for the Series A Preferred Stock at any time and from time to time.
“Voting Parity Stock” means any class or series of Parity Stock upon which voting powers for the election of directors upon nonpayment of dividends or failure to redeem shares when required have been conferred and are exercisable at the time of determination.
“Voting Power” shall mean the total number of votes of the outstanding Voting Stock of any Person.
“Voting Stock” shall mean (a) with respect to the Corporation, shares of Capital Stock that constitute Voting Securities as defined in the Certificate of Incorporation and (b) with respect to any Person other than the Corporation, any shares of capital stock or interests of such Person having the right to vote generally in any election of directors of the board of directors of such Person or other similar governing body.
Subject to the prior payment in full of any Debt Instrument and other liabilities owed to the Corporation’s creditors and the preferential amounts to which any Senior Stock is entitled, in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (a “Liquidation Event”), the Holders of shares of the Series A Preferred Stock shall be entitled to receive from the assets of the Corporation available for distribution to the stockholders, before any payment or distribution shall be made to the holders of any Junior Stock, an amount in property or cash or a combination thereof, as determined by the Board of Directors in good faith, per share, equal to the Liquidation Price plus all unpaid dividends (whether or not declared) accrued to, but excluding, the date of distribution of amounts payable to Holders of Series A Preferred Stock in connection with such liquidation, dissolution or winding up of the Corporation since (and including) the immediately preceding Dividend Payment Date (or, if such date of distribution occurs prior to the first Dividend Payment Date, since (and including) the Original Issue Date) (the “Liquidation Dividend Amount”), which payment shall be made pari passu with any such payment made to the holders of any Parity Stock. The Holders of shares of Series A Preferred Stock shall be entitled to no other or further distribution of or participation in any
remaining assets of the Corporation after receiving in full the amount set forth in the immediately preceding sentence. Notwithstanding anything herein to the contrary, including Section 3(c)(ii) of this Certificate of Designations, if, upon distribution of the Corporation’s assets in liquidation, dissolution or winding up, the assets of the Corporation to be distributed among the Holders of shares of Series A Preferred Stock and to all holders of any Parity Stock shall be insufficient to permit payment in full (a) to Holders of shares of Series A Preferred Stock, the Liquidation Price and the Liquidation Dividend Amount and (b) to holders of any Parity Stock, any preferential amounts to which they are entitled, then the entire assets of the Corporation to be distributed to Holders of shares of Series A Preferred Stock and holders of such Parity Stock shall be distributed pro rata to such holders based upon the aggregate of the full preferential amounts to which the shares of Series A Preferred Stock and such Parity Stock would otherwise respectively be entitled. Neither the consolidation or merger of the Corporation with or into any other corporation or corporations nor the sale, transfer or lease of all or substantially all the assets of the Corporation shall itself be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this Section 4 of this Certificate of Designations.
The holders of shares of Series A Preferred Stock shall have no voting rights whatsoever pursuant to this Certificate of Designations, except as expressly specified herein or required by applicable law. Notwithstanding anything to the contrary herein, and without limiting the generality of the foregoing, no vote or consent of holders of shares of Series A Preferred Stock will be required for (a) the creation or designation of any class or series of Junior Stock or Parity Stock, or (b) any amendment, alteration or repeal of a provision of the Certificate of Incorporation or this Certificate of Designations (i) that would increase the number of authorized shares of preferred stock of the Corporation or the number of authorized shares of Series A Preferred Stock or that would decrease the number of authorized shares of preferred stock of the Corporation or the number of authorized shares of Series A Preferred Stock (but not below the number of shares of preferred stock of the Corporation or Series A Preferred Stock, as the case may be, then outstanding), (ii) except as otherwise required by law, that would not require a vote or consent of the holders of Series A Preferred Stock pursuant to Section 6 of this Certificate of Designations, (iii) to cure any ambiguity, omission, inconsistency or mistake in this Certificate of Designations or the Certificate of Incorporation that does not adversely affect the powers, preferences or rights of the Series A Preferred Stock set forth in this Certificate of Designations, or (iv) to make any provision with respect to matters or questions relating to the Series A Preferred Stock that is not inconsistent with the provisions of this Certificate of Designations and that does not adversely affect the powers, preferences or rights of the Series A Preferred Stock set forth in this Certificate of Designations.
provided that in no event will the Holders of Series A Preferred Stock and the holders of any Voting Parity Stock, collectively, have the right to elect more than three (3) directors to the Board of Directors pursuant to the terms of the Series A Preferred Stock or Voting Parity Stock.
The Holders of shares of Series A Preferred Stock will not have any preemptive right to subscribe for or purchase any Capital Stock or other securities which may be issued by the Corporation.
Notwithstanding anything set forth in the Certificate of Incorporation or this Certificate of Designations, the Board of Directors, or any duly authorized committee thereof, without the vote of the Holders of shares of Series A Preferred Stock, may authorize and issue additional shares of Capital Stock.
Shares of Series A Preferred Stock shall not be subject to or entitled to the operation of a retirement or sinking fund.
Except as may otherwise be required by law and except for the equitable rights and remedies that may otherwise be available to Holders of Series A Preferred Stock, the shares of Series A Preferred Stock shall not have any powers, designations, preferences, or relative, participating, optional or other rights, other than those specifically set forth in this Certificate of Designations.
If physical certificates representing shares of Series A Preferred Stock are issued, the Corporation shall replace any mutilated certificate at the Holder’s expense upon surrender of that certificate to the Transfer Agent. The Corporation shall replace certificates representing shares of Series A Preferred Stock that become destroyed, stolen or lost at the Holder’s expense upon delivery to the Corporation and the Transfer Agent of satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be required by the Transfer Agent and the Corporation.
All notices or communications referred to in this Certificate of Designations or otherwise in respect of the Series A Preferred Stock shall be sufficiently given if given in writing and delivered by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate of Incorporation or the Bylaws and by applicable law. All notices hereunder shall be deemed to have been given upon the earlier of (i) receipt thereof, (ii) three (3) Business Days after the mailing thereof if sent by registered, certified mail or first class mail with postage prepaid, (iii) with respect to Section 7(b) of this Certificate of Designations, the date of public announcement if given by the Corporation by public announcement (such as by broadly disseminated press release) or (iv) one (1) Business Day after the mailing thereof if sent by overnight courier, addressed: (x) if to the Corporation, to its principal place of business (Attention: Chief Legal Officer), (y) if to any Holder of Series A Preferred Stock, to such Holder at the address of such Holder as listed in the stock record books of the Corporation (which may include the records of the Transfer Agent) or (z) to such other address as the Corporation or any such Holder, as the case may be, shall have designated by notice similarly given. However, in the case of Series A Preferred Stock in the form of Global Preferred Shares (as defined below), the Corporation shall be permitted to send notices or communications to Holders of shares of Series A Preferred Stock pursuant to the procedures of the Depositary (as defined below), and notices and communications that the Corporation sends in this manner will be deemed to have been properly sent to such Holders in writing.
Notwithstanding any provision in this Certificate of Designations to the contrary, any provision contained in this Certificate of Designations and any right of the Holders of Series A Preferred Stock granted hereunder may be waived as to all shares of Series A Preferred Stock (and the Holders thereof) upon the written consent of the Board of Directors (or an authorized committee thereof) and the Holders of a majority of the shares of Series A Preferred Stock then outstanding. Except as provided in this Section 17 of this Certificate of Designations, the Holders of shares of Series A Preferred Stock shall not be entitled to act by written consent.
During any period in which the Corporation is not subject to Section 13 or 15(d) of the Exchange Act and any shares of Series A Preferred Stock are outstanding, the Corporation will use its reasonable efforts to (a) transmit by mail (or other permissible means under the Exchange Act) to all Holders of Series A Preferred Stock, as their names and addresses appear on the record books of the Corporation and without cost to such Holders, copies of the annual reports on Form 10-K and quarterly reports on Form 10-Q that the Corporation would have been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if it were subject thereto (other than any exhibits that would have been required); and (b) promptly, upon request, supply copies of such reports to any Holders or prospective Holder of Series A Preferred Stock. The Corporation will use its reasonable efforts to mail (or otherwise provide) the information to the Holders of shares of Series A Preferred Stock within fifteen (15) days after the respective dates by which a periodic report on Form 10-K or Form 10-Q, as the case may be, in respect of such information would have been required to be filed with the SEC, if the Corporation were subject to Section 13 or 15(d) of the Exchange Act, in each case, based on the dates on which the Corporation would be required to file such periodic reports if it were a “non-accelerated filer” within the meaning of the Exchange Act.
The Series A Preferred Stock shall be issued initially in the form of one or more fully registered global certificates (“Global Preferred Shares”) to a custodian for a securities depositary (the “Depositary”) that is a “clearing agency” under Section 17A of the Exchange Act (or with such other custodian as the Depositary may direct), and registered in the name of the Depositary or its nominee, duly executed by the Corporation and authenticated by the Transfer Agent. The number of shares of Series A Preferred Stock represented by Global Preferred Shares may from time to time be increased or decreased by adjustments made on the records of the Transfer Agent and the Depositary as hereinafter provided. Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under these terms of the shares of Series A Preferred Stock with respect to any Global Preferred Shares held on their behalf by the Depositary or by the Transfer Agent as the custodian of the Depositary or under such Global Preferred Shares, and the Depositary may be treated by the Corporation, the Transfer Agent and any agent of the Corporation or the Transfer Agent as the absolute owner of such Global Preferred Shares for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Corporation, the Transfer Agent or any agent of the Corporation or the Transfer Agent from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of the Depositary governing the exercise of the rights of a Holder of a beneficial interest in any Global Preferred Shares.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations to be executed by its duly authorized officer on this 24th day of August, 2020.
Exhibit 99.1
August 21, 2020
Qurate Retail Announces Declaration of Special Dividend of Cash and Preferred Stock to Common Stock Holders
ENGLEWOOD, Colo.-- Qurate Retail, Inc. ("Qurate Retail") (Nasdaq: QRTEA, QRTEB) today announced that an authorized committee of its Board of Directors declared a special dividend on each outstanding share of its common stock consisting of (i) a special cash dividend in the amount of $1.50 per common share, for an aggregate cash dividend of approximately $633 million, and (ii) a special dividend of 0.03 shares of newly issued 8.0% Series A Cumulative Redeemable Preferred Stock (the “Preferred Shares”), having an initial liquidation price of $100 per Preferred Share, with cash to be paid in lieu of fractional shares.
The distribution ratio for the Preferred Share dividend is equivalent to $3.00 in initial liquidation preference per common share, for an aggregate issuance of approximately $1.3 billion aggregate liquidation preference. Holders of the Preferred Shares are entitled to receive quarterly cash dividends at a rate of 8.0% per annum on a cumulative basis, beginning December 15, 2020 and thereafter on each March 15, June 15, September 15 and December 15 during the term. The Preferred Shares will be non-voting, except in limited circumstances as required by law, will be subject to mandatory redemption on March 15, 2031 and are expected to trade separately from the common shares on the Nasdaq Global Select Market under the ticker symbol QRTEP following the date of distribution. The distribution of the Preferred Shares is intended to be tax-free to shareholders, other than any cash paid in lieu of fractional shares. John Malone and Greg Maffei, each a member of Qurate Retail’s board of directors, have indicated their intention to be long-term holders of the preferred, which will collectively represent approximately 8% of the Preferred Shares expected to be outstanding on the distribution date.
The committee of the Board of Directors has declared a record date of 5:00 p.m., New York City time, on August 31, 2020 for the dividend and set a distribution date of 5:00 p.m., New York City time, on September 14, 2020. The distribution of the Preferred Shares remains subject to the satisfaction or waiver, as applicable, of the following conditions: registration of the Preferred Shares under the Securities Exchange Act of 1934, approval for listing on the Nasdaq Global Select Market, receipt of an opinion of tax counsel, and no revocation of the dividend prior to the distribution date.
Additional detail regarding the special dividend are expected to be announced by press release at a later date, including details on the ex-dividend date and when-issued trading.
Forward-Looking Statements
This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements about the special dividend, including the timing and amount and the listing of the Preferred Shares on the Nasdaq Global Select Market. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied
by such statements, including, without limitation, regulatory matters affecting our businesses, continued access to capital on terms acceptable to Qurate Retail, satisfaction of the conditions to the distribution of the Preferred Shares, changes in law and government regulations, the availability of investment opportunities, and general market conditions (including as a result of COVID-19). These forward-looking statements speak only as of the date of this press release, and Qurate Retail expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Qurate Retail's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Please refer to the publicly filed documents of Qurate Retail, including the most recent Forms 10-K and 10-Q, for additional information about Qurate Retail and about the risks and uncertainties related to Qurate Retail's business which may affect the statements made in this press release.
About Qurate Retail, Inc.
Qurate Retail, Inc. operates and owns interests in a broad range of digital commerce businesses. Qurate Retail, Inc.’s businesses and assets consist of QVC (and its subsidiaries, including HSN), Zulily and the Cornerstone Brands (collectively, the Qurate Retail Group) as well as various green energy and other investments.
Contacts
Qurate Retail, Inc.
Courtnee Chun, 720-875-5420
Qurate Retail, Inc.
NASDAQ:QRTEA/QRTEB
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