- Proxy Statement - Merger or Acquistion (definitive) (DEFM14A)

 

 

The following summary highlights material information from this proxy statement/prospectus. It does not contain all of the information that may be important to you. You are urged to read carefully this entire proxy statement/prospectus (including the annexes) and other documents which are referred to in this proxy statement/prospectus in order to fully understand the transaction. See “Where You Can Find More Information” on page 347. Most items in this summary include a page reference directing you to a more complete description of those items. The basis of presentation of financial information of Prisa in this proxy statement/prospectus is under IFRS as issued by IASB, while the basis of presentation of financial information of Liberty is under U.S. GAAP.

 

The Companies

 

Prisa (see page 158)

 

Promotora de Informaciones, S.A., which operates under the commercial name “Prisa,” was incorporated in the city of Madrid on January 18, 1972. Prisa is the leading multimedia group in Spain and Portugal and believes it is one of the leading multimedia groups in the Spanish-speaking world. Prisa operates in more than 20 countries, including Brazil, Mexico and Argentina as well as many other Latin American countries and the United States, with almost 15,000 employees worldwide. Prisa shares are listed on four Spanish stock exchanges (Madrid, Barcelona, Bilbao and Valencia) and have been traded through the Spanish stock market interconnection system since June 2000.

 

Prisa’s principal business operations are:

 

 

Prisa operates a digital platform that provides services and support to each of the principal business operations discussed above. Prisa also sells media advertising and promotes and produces musical events. Prisa is the leader in Spain, and believes it is one of the leaders in the Spanish-speaking world, in daily newspapers through El País , in radio through Cadena SER and in education and publishing through Grupo Santillana de Ediciones, S.L., or Santillana. Through Sogecable, S.A.U., or Sogecable, and its digital platform, Digital+ , Prisa is also the leader in pay television in Spain. In specialized press, Prisa ranks second in Spain in sports press through AS and second in financial press through Cinco Días.

 

Grupo Media Capital SGPS, S.A., or Media Capital, a Prisa subsidiary, operates TVI, the leading free-to-air television network in Portugal. Media Capital also operates an audiovisual production business as well as a radio network, produces music recordings and distributes films and video/DVDs.

 

Prisa is domiciled in Spain, its legal form is a public limited liability company and its activity is subject to Spanish legislation and particularly to the Spanish Companies Law. Prisa has been in continuous operation since its public deed of incorporation was executed, and it has perpetual existence. Prisa’s registered office is located in Madrid, Spain, at Gran Vía, number 32 28013, and its telephone number at its registered office is +34 (91) 330 10 00.

 

Liberty (see page 280)

 

Liberty is a Delaware blank check company formed on June 27, 2007. Liberty’s business plan is to complete a business combination with one or more operating businesses. Its business plan is not limited to a particular industry.

A registration statement for Liberty’s IPO was declared effective on December 6, 2007. On December 12, 2007, Liberty sold 103,500,000 units in its IPO (including 13,500,000 units pursuant to the underwriters’ over-allotment option). Each unit consists of one share of common stock and one-half of one warrant. Each whole warrant entitles the holder to purchase one share of Liberty’s common stock at a price of $5.50 commencing on Liberty’s consummation of a business combination, provided that there is an effective registration statement covering the shares of common stock underlying the warrants in effect. The warrants expire on December 12, 2013, unless earlier redeemed. Liberty’s founders, including Liberty’s sponsors, Berggruen Acquisition Holdings Ltd. and Marlin Equities II, LLC, purchased an aggregate of 25,875,000 shares of common stock and 12,937,500 warrants prior to Liberty’s IPO for a total purchase price of approximately $25,000, and Liberty’s sponsors purchased in equal amounts an aggregate of 12,000,000 warrants at a price of $1.00 per warrant ($12.0 million in the aggregate) in a private placement that occurred immediately prior to Liberty’s IPO.

 

Liberty received net proceeds of $1,016.7 million from its IPO (including proceeds from the exercise by the underwriters of their over-allotment option) and sale of the sponsors’ warrants. Of those net proceeds, approximately $27.4 million is attributable to the portion of the underwriters’ discount which has been deferred until Liberty’s consummation of a business combination (an obligation which Citigroup and Barclays have agreed with Liberty to reduce to an aggregate of approximately $20.6 million). The net proceeds were deposited into a trust account and will be part of the funds to be distributed to Liberty’s public stockholders in the event Liberty is unable to complete a business combination. Unless and until a business combination is consummated, the proceeds held in the trust account will not be available to Liberty. For a more complete discussion of Liberty’s financial information, see “Information about Liberty and Liberty Virginia—Selected Historical Financial Information of Liberty.”

 

Liberty’s equity securities trade on the NYSE Amex (formerly known as the American Stock Exchange). Its units trade under the symbol “LIA.U.” On December 19, 2007, the warrants and common stock underlying Liberty’s units began to trade separately on the NYSE Amex under the symbols “LIA.WS” and “LIA,” respectively.

 

Liberty’s principal executive office is located at 1114 Avenue of the Americas, 41st Floor, New York, New York 10036, and its telephone number is (212) 380-2230.

 

Liberty Virginia (see page 280)

 

Liberty Virginia is a Virginia corporation formed on April 30, 2010. It is a wholly owned subsidiary of Liberty, formed for the sole purpose of effectuating the reincorporation merger and the share exchange. Liberty Virginia has not engaged and, prior to the reincorporation merger, will not engage in any activities other than activities incidental to its formation and in connection with or contemplated by the business combination agreement. Liberty Virginia’s principal executive office is located at 1114 Avenue of the Americas, 41st Floor, New York, New York 10036, and its telephone number is (212) 380-2230.

 

Risk Factors

 

You should carefully read and consider the risks related to Prisa’s business, the risks related to the business combination and the risks related to a failure to consummate the business combination before deciding whether to vote for the proposals presented in this proxy statement/prospectus and whether to make an election for the $10.00 per share cash alternative or a mixed consideration election. Some of the most important risks are summarized below.

 

Risks Related to Prisa (see page 36)

 

 

 

Risks Related to the Business Combination (see page 44)

 

 

Risks Related to a Failure to Consummate the Business Combination (see page 51)

 

 

 

Reasons for the Business Combination

 

Liberty’s Reasons for the Business Combination (see page 84)

 

In reaching its conclusion to approve the business combination and to recommend that Liberty stockholders approve the business combination agreement, the Liberty board of directors considered a number of positive, negative and other factors, including, among others:

 

 

 

Prisa’s Reasons for the Business Combination (see page 95)

 

In reaching its conclusion to approve the business combination, the Prisa board of directors considered a number of positive, negative and other factors, including, among others:

 

 

The Business Combination and the Business Combination Agreement

 

General

 

Upon the terms and subject to the conditions of the business combination agreement, and in accordance with the Delaware General Corporation Law, or DGCL, and the Virginia Stock Corporation Act, or VSCA, the first step of the business combination will be the merger of Liberty with and into Liberty Virginia, with Liberty Virginia as the surviving corporation in the merger. This step is referred to in this proxy statement/prospectus as the reincorporation merger. At that time each share of Liberty common stock issued and

outstanding, other than any shares held in the treasury of Liberty, will convert automatically into one share of Liberty Virginia common stock, and each certificate previously representing shares of Liberty common stock will thereafter represent shares of Liberty Virginia common stock, and each share of Liberty preferred stock then issued and outstanding, other than any shares held in the treasury of Liberty, will convert automatically into one share of Liberty Virginia preferred stock of the same series, and each certificate previously representing shares of Liberty preferred stock will thereafter represent shares of Liberty Virginia preferred stock of the same series. Each then-outstanding warrant to purchase shares of Liberty common stock will automatically represent a right to purchase one share of Liberty Virginia common stock on the same terms and conditions. This reincorporation merger will be followed immediately by the share exchange and exchange of warrants described below, and thus you will not receive any Liberty Virginia share or warrant certificates.

 

Each share of Liberty common stock outstanding immediately prior to the effective time of the reincorporation merger with respect to which a stockholder of Liberty shall have validly exercised its redemption rights pursuant to Liberty’s restated certificate of incorporation will be converted into one share of Liberty Virginia common stock. However, holders of such shares will automatically be deemed to have exercised redemption rights pursuant to the Liberty Virginia articles of incorporation and, therefore, such shares will represent only the right to be redeemed for cash, in an amount per share calculated in accordance with the Liberty restated certificate of incorporation and Liberty Virginia articles of incorporation, which is currently estimated to be $9.87. Following the consummation of the reincorporation merger and immediately prior to the statutory share exchange with Prisa, Liberty Virginia will redeem such shares in accordance with the provisions of the Liberty restated certificate of incorporation and the Liberty Virginia articles of incorporation. All such redeemed Liberty Virginia shares will no longer be outstanding and each holder of any such redeemed Liberty Virginia share will cease to have any rights with respect thereto, except the right to receive such redemption cash payments. Liberty believes that the reincorporation merger is consistent with Liberty’s restated certificate of incorporation and the disclosure in Liberty’s IPO prospectus because the reincorporation merger will occur only if the business combination is consummated, and will not limit the stockholder protections contained in Liberty’s restated certificate of incorporation.

 

Upon the terms and subject to the conditions of the business combination agreement and in accordance with the VSCA and the Spanish Companies Law, immediately following the reincorporation merger, Liberty Virginia and Prisa will effect a statutory share exchange whereby each share of Liberty Virginia common stock (other than shares as to which redemption rights have been validly exercised, which will have been cancelled) and each share of Liberty Virginia preferred stock will be acquired by Prisa and exchanged for the right to receive the consideration that the stockholder has elected or is otherwise entitled to receive described below under “— Consideration to be Received in the Business Combination.” Upon the effectiveness of the share exchange, Liberty Virginia will be a wholly owned subsidiary of Prisa. The separate corporate existence of each of Prisa and Liberty Virginia will continue following the share exchange. In connection with the business combination, all outstanding Liberty warrants will be exchanged for the consideration set forth in the warrant agreement amendment. See “— The Warrant Agreement Amendment.”

 

Consideration to be Received in the Business Combination (see page 101)

 

As a result of the business combination, Prisa will automatically become the holder and owner of 100% of the outstanding shares of Liberty Virginia common stock and Liberty Virginia preferred stock.

 

Holders of Liberty common stock (other than shares as to which redemption rights have been validly exercised) may make an election for the $10.00 per share cash alternative or a mixed consideration election with respect to each share of Liberty common stock they hold. If a holder validly elects the $10.00 per share cash alternative, the holder will be entitled to receive $10.00 in cash without interest for each share of Liberty common stock for which cash is elected. If the holder makes a valid mixed consideration election, the holder will be entitled to receive 1.5 Prisa Class A ordinary shares, 3.0 Prisa Class B convertible non-voting shares, $0.50 in cash and cash in lieu of fractional shares. If the holder makes no election or an invalid election, the holder will be entitled to receive the mixed consideration. Prisa will not be required to complete the business combination if holders of Liberty common stock validly elect to receive the $10.00 per share cash alternative or exercise redemption rights for a total of more than 80 million shares of Liberty common stock. In addition,

if valid elections for the $10.00 per share cash alternative or redemptions have been made with respect to more than 80 million shares of Liberty common stock, each of Prisa and Liberty has the right to terminate the business combination agreement.

 

In connection with the business combination, Liberty has separately negotiated and entered into preferred stock purchase agreements with its sponsors and certain third party investors, pursuant to which the sponsors and investors agreed to purchase shares of specified newly created series of Liberty non-voting preferred stock, for an aggregate purchase price of $500 million. The purpose of these sales is to provide additional funds that may be used to make the required payments to those Liberty stockholders who elect to receive the $10.00 per share cash alternative in the business combination. All shares of preferred stock to be issued by Liberty under the preferred stock purchase agreements will be exchanged in the business combination for a combination of cash and/or Prisa Class A ordinary shares and Prisa Class B convertible non-voting shares. The relative amounts of cash and Prisa shares to be received by the preferred stockholders in the business combination will vary depending upon the total number of shares of Liberty common stock as to which the holder elects the $10.00 per share cash alternative or validly exercises their redemption rights, as described in this proxy statement/prospectus.

 

Article Fifth of Liberty’s restated certificate of incorporation provides that a “Business Combination” means the “acquisition” by Liberty of one or more operating businesses through a “merger, stock exchange, asset acquisition, reorganization or similar business combination.” Liberty’s IPO prospectus stated that Liberty was formed to acquire a then currently unidentified operating business through a merger, stock exchange, asset acquisition, reorganization or similar business combination, that Liberty would not become a holding company for a minority interest in a target business, and that if Liberty were to acquire less than 100% of a target business Liberty would only do so if it acquired greater than 50% of the outstanding equity interests or voting power of one or more target businesses. The business combination with Prisa is structured such that Liberty itself is not acquiring anything, but rather its stockholders are exchanging their shares of Liberty common stock for a majority of the outstanding equity interests in the target business, and former Liberty security holders may hold less than 50% of the total voting power of Prisa immediately following the business combination. Liberty’s board of directors believes that the transactions contemplated by the business combination agreement satisfy the definition of a “Business Combination” contained in Liberty’s restated certificate of incorporation and as described in Liberty’s IPO prospectus because (i) the definition, by its terms, does not require that Liberty be the surviving or resulting entity in a “Business Combination,” (ii) “acquisitions” are frequently structured in a way that the “acquiring” entity is not technically the surviving entity, often for tax or regulatory reasons and (iii) former Liberty security holders will own at least 50% of the total equity securities of Prisa outstanding immediately following the consummation of the business combination. Liberty’s board has always believed, based on advice from its counsel, that it had broad discretion in the types of business combinations that could be presented to its stockholders. As described in this proxy statement/prospectus, Liberty and Prisa believe that the Virginia share exchange was the most beneficial structure that was available to effect the business combination. In connection with this proxy statement/prospectus, Liberty has confirmed its belief that the contemplated transactions constitute a valid business combination by obtaining an opinion from its special Delaware counsel, which opinion is to be issued prior to the effectiveness of the registration statement of which this proxy statement/prospectus forms a part, that while the matter has not been settled as a matter of Delaware law and, accordingly, is not entirely free of doubt, the proposed business combination with Prisa satisfies the definition of a “Business Combination” contained in Article Fifth of Liberty’s restated certificate of incorporation. Notwithstanding Liberty’s board’s belief, however, it is possible that stockholders of Liberty who purchased their shares in Liberty’s IPO and who have not exercised their redemption rights could attempt to bring claims against Liberty on the basis that the structure of the proposed business combination was not contemplated by or disclosed in Liberty’s IPO prospectus. Even if you do not pursue such claims, others may do so. Liberty and Prisa cannot predict whether stockholders will bring such claims or whether such claims would be successful.

 

Prisa will not issue any fractional shares to any holder of Liberty common stock who has elected or is otherwise entitled to receive the mixed consideration or to holders of Liberty Virginia preferred stock in the business combination. In lieu of the issuance of any such fractional shares, each Liberty stockholder who otherwise would be entitled to receive such fractional share will receive cash. In the case of the Prisa ADS-As,

the amount of cash will be determined by multiplying (i) the average of the closing sale prices per Prisa ordinary share on the Spanish Continuous Market Exchange for the ten trading days ending on the business day immediately preceding the date that the share exchange becomes effective by (ii) the fraction of a share (rounded to the nearest one hundredth when expressed in decimal form) which such holder would otherwise be entitled to receive. In the case of Prisa ADS-NVs, the amount of cash will be equal to the portion of the stated value corresponding to such fraction of a Prisa Class B convertible non-voting share.

 

The 1.5 Prisa Class A ordinary shares and cash deliverable as part of the mixed consideration for each share of Liberty common stock had a value of approximately $5.04 on August 4, 2010 (based on the closing price of Prisa ordinary shares on the Spanish Continuous Market Exchange on August 3, 2010 (€2.29) and a dollar to euro exchange rate on that date of 1.323) and approximately $4.14 on October 25, 2010 (based on the closing price of Prisa ordinary shares of €1.74 and the dollar to euro exchange rate on such date of 1.396). The mixed consideration also includes 3.0 Prisa Class B convertible non-voting shares for each share of Liberty common stock; however, there is currently no public trading market for Prisa Class B convertible non-voting shares. The actual value in U.S. dollars of the mixed consideration to be received per share of Liberty common stock for holders receiving the mixed consideration will depend on the exchange rate and the market price of Prisa ordinary shares and market value of the Prisa Class B convertible non-voting shares on the closing date of the proposed business combination.

 

At the effective time of the share exchange, each then outstanding Liberty warrant will be automatically exchanged for a combination of cash and Prisa ADSs in accordance with the terms of the warrant agreement amendment. See “— The Warrant Agreement Amendment.”

 

Conditions to Completion of the Business Combination (see page 113)

 

The consummation of the business combination is subject to the fulfillment or waiver of a number of conditions, including:

 

 

Separately, Prisa’s obligation to complete the business combination is subject to the satisfaction or waiver by Prisa of several conditions including:

 

 

 

Liberty’s obligation to complete the business combination is also separately subject to the satisfaction or waiver by Liberty of several conditions including:

 

 

 

Termination of the Business Combination Agreement (see page 115)

 

The parties may terminate the business combination agreement at any time prior to the completion of the business combination by their mutual written consent.

 

In addition, the business combination agreement may be terminated by either party in the following circumstances:

 

 

The Warrant Agreement Amendment (see page 64)

 

In connection with the proposed business combination, Liberty is proposing to amend the terms of the second amended and restated warrant agreement, dated as of December 6, 2007, between Liberty and Continental Stock Transfer & Trust Company, as warrant agent, referred to as the warrant agreement. The proposed amendment provides that, in connection with the consummation of the business combination, each then outstanding Liberty warrant will, automatically and without any action by the warrantholder, be exchanged for warrant consideration consisting of:

 

 

The mix of cash and Prisa shares deliverable for each Liberty warrant had a value of approximately $2.26 on August 4, 2010 (based on the closing price of Prisa ordinary shares on the Spanish Continuous Market Exchange on August 3, 2010 (€2.29) and the dollar to euro exchange rate on that date of 1.323) and approximately $1.99 on October 25, 2010 (based on the closing price of Prisa ordinary shares of €1.74 and a dollar to euro exchange rate on such date of 1.396). The actual value in U.S. dollars of the consideration to be received per warrant will depend on the exchange rate and the market price of Prisa ordinary shares on the closing date of the proposed business combination. The aggregate cash consideration deliverable to Liberty’s warrantholders (after giving effect to the sale by the sponsors of all of their warrants to Liberty for nominal consideration pursuant to the sponsor surrender agreement) is approximately $46.7 million, of which $149,040 is attributable to the remaining founders’ warrants.

 

The Prisa Class A ordinary shares will be represented by Prisa ADS-As.

 

As a result of the warrant agreement amendment, upon the consummation of the business combination, each registered holder of warrants (other than Prisa) would cease to have any rights with respect to the warrants, other than the right to receive the warrant consideration.

 

Related Agreements and Transactions (see page 117)

 

Concurrent with the execution of the original business combination agreement on March 5, 2010, Rucandio, S.A., or Rucandio, the parent company in Prisa’s existing controlling shareholder group, entered into a transaction support agreement with Liberty, pursuant to which, among other things, it agreed to vote or exercise its right to consent with respect to all ordinary shares of Prisa that it beneficially owns in favor of certain matters to be considered by Prisa’s shareholders in connection with the business combination. Also concurrently with the execution of the original business combination agreement on March 5, 2010, Liberty’s sponsors entered into a sponsor support agreement with Prisa pursuant to which they agreed to be counted as present at the special meeting of Liberty warrantholders to consider the warrant agreement amendment, and to vote or exercise their right to consent with respect to all of the warrants held by each of them in favor of the warrant agreement amendment.

 

Liberty’s sponsors have also entered into the sponsor surrender agreement, pursuant to which they agreed to sell to Liberty, immediately prior to the closing of the business combination, for nominal consideration, a total of approximately 24.8 million Liberty warrants (constituting all of the Liberty warrants held by the sponsors but excluding the 165,600 Liberty warrants held by the other founders) and approximately 3.3 million shares of Liberty common stock. Liberty will pay the sponsors a total of $825 for the Liberty warrants and shares which are being returned. In addition, if the total amount of cash payable to Liberty common stockholders who have exercised redemption rights or elected to receive the $10.00 per share cash alternative is greater than $525 million, the sponsors have agreed to sell to Liberty an additional 2.6 million shares of Liberty common stock for a total purchase price of $260 and, if the total amount of cash payable to Liberty common stockholders who have exercised redemption rights or elected to receive the $10.00 per share cash alternative is greater than $750 million, the sponsors have agreed to sell to Liberty an additional 500,000 of Liberty common stock for a total purchase price of $50. After giving effect to the consummation of the transactions contemplated by the sponsor surrender agreement, each of the sponsors would hold (i) 11,123,900 shares of Liberty common stock, if the total amount of cash payable to Liberty common stockholders who have exercised redemption rights or elected to receive the $10.00 per share cash alternative is equal to or less than $525 million, (ii) 9,823,900 shares of Liberty common stock, if the total amount of cash payable to Liberty common stockholders who have exercised redemption rights or elected to receive the $10.00 per share cash alternative is greater than $525 million but equal to or less than $750 million and (iii) 9,573,900 shares of Liberty common stock if the total amount of cash payable to Liberty common stockholders who have exercised redemption rights or elected to receive the $10.00 per share cash alternative is greater than $750 million.

 

In connection with the execution of the business combination agreement, Liberty also entered into separate preferred stock purchase agreements with the Liberty sponsors and certain third parties, pursuant to which the Liberty sponsors and the third-party investors agreed to purchase certain specified classes of newly-created shares of Liberty’s preferred stock for an aggregate purchase price of $500 million. The proceeds resulting from the sale of the Liberty preferred stock may be used by Prisa and Liberty to help fund the required payments pursuant to the share exchange to those stockholders of Liberty who make an election to receive the $10.00 per share cash alternative pursuant to the terms of the business combination agreement.

 

Among the third parties that entered into preferred stock purchase agreements with Liberty, HSBC and Santander are creditors of Prisa. HSBC serves as administrative agent for the lending banks, and is also a lending bank, under Prisa’s bridge loan agreement and syndicated loan and credit facility. As of June 30, 2010, Prisa and its subsidiaries owed HSBC and Santander and their respective affiliates an aggregate of €1.586 billion. Of this total, €766 million was owed to HSBC under Prisa’s bridge loan agreement, syndicated loan and credit facility, subordinated credit facility and hedging contracts and €820 million was owed to Santander or its affiliate, Banco Español de Crédito, S.A., known as Banesto, under Prisa’s bridge loan agreement, syndicated loan and credit facility, hedging contracts and other loan facilities. No amounts were owed to HSBC or Santander as of June 30, 2010 in respect of the variable cash compensation discussed in “Information About Prisa—Liquidity and Capital Resources—Bank Borrowings—Prisa Bridge Loan Agreement.” One of the preferred stock purchase agreements with HSBC provides for a $2 million cash payment by Liberty to HSBC at the closing of the business combination. Liberty and HSBC negotiated this

payment after Prisa had received the necessary consents from its lending banks with respect to the extension of the maturity date of Prisa bridge loan agreement discussed in “Information About Prisa—Liquidity and Capital Resources—Bank Borrowings—Prisa Bridge Loan Agreement” and “—Liquidity and Capital Resources—Refinancing Master Agreement.”

 

Restructuring of Prisa’s Indebtedness (see page 121)

 

As a result of the contemplated restructuring of Prisa’s indebtedness, and based on the indebtedness of Prisa as of June 30, 2010 and assuming cash from Liberty’s trust account in the amount of $870 million becomes available to Prisa as a result of the business combination, that $1,457 million becomes available to Prisa as a result of completion of the pending asset dispositions included in the refinancing master agreement as described in this proxy statement/prospectus and a dollar to euro exchange rate of 1.362 as of September 30, 2010, it is expected that Prisa will reduce its debt to the lenders under its outstanding facilities from approximately €4,842 million to approximately €3,397 million.

 

Prisa expects to use $1,968 million to reduce its debt to the lenders under its outstanding facilities and expects to retain $360 million for working capital purposes and to fund planned operational restructuring initiatives, transaction costs and taxes related to these transactions as described in “Use of Proceeds of Restructuring.”

 

Management Following the Business Combination (see page 99)

 

Generally, the management of Prisa will not be affected or altered by the business combination. Prisa expects that Mr. Martin Franklin and Mr. Nicolas Berggruen will join Prisa’s board of directors in connection with the business combination. Prisa has also expressed its willingness to increase the number of members of its board of directors to up to 17, and to increase the number of independent directors ( consejeros independientes ) such that independent directors would represent a majority of the members of the Prisa board of directors. Prisa also expects to enter into an employment agreement with its chief executive officer, Juan Luis Cebrián.

 

Interests of Liberty’s Directors and Executive Officer in the Business Combination (see page 96)

 

When you consider the recommendation of Liberty’s board of directors to vote in favor of the approval of the business combination proposal and the warrant amendment proposal, you should keep in mind that Liberty’s directors and executive officer have interests in the business combination and warrant agreement amendment that are different from, or in addition to, your interests as a stockholder or warrantholder. These interests include, among other things:

 

 

 

 

 

Interests of Prisa’s Directors and Officers in the Business Combination (see page 98)

 

No member of Prisa’s board of directors, nor any officer of Prisa, will be entitled to receive any special compensation or other similar incentive if the business combination with Liberty is approved, other than, as a condition precedent to the completion of the business combination, Prisa will enter into an employment agreement with Mr. Juan Luis Cebrián, Prisa’s current chief executive officer. This employment agreement will provide for an employment term of no fewer than three years and such other terms as are mutually agreeable to Prisa and Mr. Cebrián.

 

Additionally, Cortés, Abogados, of which Prisa director Matías Cortés Domínguez is a partner, provided legal advisory services and legal counsel to Prisa related to the business combination and the debt restructuring, and the firm will receive compensation in respect of those services in accordance with the guidelines set forth by the Madrid Bar Association.

 

Material U.S. Federal Income Tax Consequences (see page 146)

 

In general, a U.S. holder (as defined in “Material U.S. Federal Income Tax Consequences”) whose (i) shares of Liberty Virginia common stock are exchanged in the share exchange for cash, and, if applicable, Prisa ADS-As and Prisa ADS-NVs representing Prisa Class A ordinary shares and Prisa Class B convertible non-voting shares, respectively, and (ii) Liberty Virginia warrants are exchanged in the warrant exchange for cash and Prisa ADS-As should recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the cash, and, if applicable, the fair market value of the Prisa ADSs on the date of the exchange received with respect to such Liberty common stock or warrants and the U.S. holder’s adjusted

tax basis in such Liberty common stock or warrants. The exchange of shares of Liberty common stock or warrants for shares of Liberty Virginia common stock and warrants in the reincorporation merger should be treated for U.S. federal income tax purposes as a reorganization under Section 368 of the Internal Revenue Code and therefore no gain or loss will be recognized upon any such exchange.

 

Spanish Tax Consequences (see page 151)

 

In general, a Qualifying Shareholder (as defined in “Material Spanish Tax Considerations”) should not be subject to the imposition of Spanish tax, including value added tax, as a result of the reincorporation merger, the share exchange or the receipt by such Qualifying Shareholder of Prisa Class A ordinary shares and Prisa Class B convertible non-voting shares.

 

Accounting Treatment (see page 122)

 

The transaction contemplated by the business combination agreement will be accounted for as an “acquisition” by Prisa of Liberty, and the accounting of the transaction will be similar to that of a capital infusion, as the only significant pre-combination assets of Liberty consist of cash and cash equivalents. No intangible assets or goodwill will be recognized as a result of the transaction; accordingly, Prisa will record the equity issued in exchange for Liberty securities based on the value of the assets and liabilities received as of the closing date of the transaction.

 

Regulatory Matters (see page 98)

 

Prisa and Liberty are not aware of any regulatory approvals required for the consummation of the business combination in either Spain or the United States. Procedurally, the issuance of the Prisa Class A ordinary shares, the Prisa Class B convertible non-voting shares and the Prisa warrants will require that the related increase in Prisa’s share capital be recorded in a public deed before a Spanish notary. A prospectus must be filed with and approved by the CNMV prior to the granting of the public deed. The duly recorded public deed must then be submitted for registration at the Spanish commercial registry, and the newly issued shares registered with Iberclear in the name of the depositary, which then would issue the Prisa ADSs.

 

The Prisa Warrant Issuance (see page 112)

 

The business combination agreement contemplates that Prisa will, in connection with the consummation of the business combination, issue 1.1 warrants in respect of each outstanding Prisa ordinary share to holders of record as of a date prior to the consummation of the share exchange (referred to as the Prisa warrant issuance). Each warrant would be exercisable at any time by the holder for one Prisa Class A ordinary share at an exercise price of €2.00 per warrant, and would expire 3.5 years after issuance (referred to as the Prisa warrants).

 

If the CNMV requires Prisa to grant certain preemptive rights in favor of its existing shareholders, Prisa will conduct a rights offering either in lieu of the Prisa warrant issuance or in conjunction with an alternate Prisa warrant issuance. In either case, the increase of capital to Prisa and the amount of dilution to Prisa shareholders resulting from the issuance of new Prisa Class A ordinary shares and/or the exercise of the alternate Prisa warrants will be the same as if the Prisa warrant issuance had been effected on the terms described in this proxy statement/prospectus, assuming all of the Prisa warrants had been exercised. If Prisa is required to conduct a rights offering, it will be conducted in accordance with Spanish law and in consultation with and subject to the approval of the CNMV.

 

Matters to be Considered at the Special Meeting of Warrantholders and Stockholders (see pages 64 and 67)

 

The warrant amendment proposal is the only matter to be considered and voted upon at the special meeting of Liberty’s warrantholders. At the special meeting of Liberty’s stockholders, stockholders will be asked to vote upon the reincorporation proposal and the business combination proposal. However, unless the reincorporation proposal is approved at the special meeting of stockholders, the business combination proposal will not be presented to the stockholders of Liberty. Liberty will also present the liquidation proposal to its stockholders at the special meeting. Finally, Liberty is seeking stockholder approval to adjourn or postpone the special meeting of

Liberty stockholders to a later date, or dates, in the event there are not sufficient votes at the time of the special meeting to approve the reincorporation proposal, the business combination proposal and/or the liquidation proposal.

 

The Liberty Board of Directors Recommends that Liberty Stockholders Vote “FOR” Approval of the Reincorporation Proposal, “FOR” Approval of the Business Combination Proposal and that Liberty Warrantholders Vote “FOR” Approval of the Warrant Amendment Proposal (see pages 66, 74 and 99)

 

After careful consideration, Liberty’s board of directors has unanimously determined that each of the reincorporation proposal and the business combination agreement is advisable, fair to and in the best interests of Liberty and its stockholders. Accordingly, Liberty’s board of directors has unanimously approved and declared advisable the reincorporation merger, the business combination and the business combination agreement and unanimously recommends that stockholders vote or instruct that their vote be cast “FOR” the approval of each of the reincorporation proposal and the business combination proposal.

 

After careful consideration, Liberty’s board of directors has also unanimously determined that the warrant amendment proposal is in the best interests of Liberty and its warrantholders. Accordingly, Liberty’s board of directors has unanimously approved the warrant agreement amendment and unanimously recommends that warrantholders vote or instruct that their vote be cast “FOR” the approval of the warrant amendment proposal.

 

Finally, Liberty’s board of directors has also unanimously approved the stockholder adjournment proposal and unanimously recommends that stockholders vote or instruct that their vote be cast “FOR” the approval of the stockholder adjournment proposal.

 

In considering the recommendation of Liberty’s board of directors to vote “FOR” the warrant amendment proposal, the reincorporation proposal, the business combination proposal and the stockholder adjournment proposal, you should be aware that Liberty’s executive officer and directors have interests in the business combination that are different from, or in addition to, your interests as a stockholder and/or warrantholder, as more fully described above.

 

The Liquidation Proposal

 

Plan of Distribution (see page 154)

 

At the special meeting you will also be asked to approve Liberty’s dissolution and a plan of distribution of Liberty, as contemplated by Liberty’s restated certificate of incorporation. If either (or both) the reincorporation proposal or the business combination proposal is not approved or Liberty does not otherwise consummate the business combination, stockholder approval of Liberty’s dissolution and a plan of distribution is required by Liberty’s restated certificate of incorporation. If the business combination is consummated, Liberty’s board of directors intends to abandon the liquidation proposal without further action by Liberty’s stockholders in accordance with Section 275 of the Delaware General Corporation Law.

 

All of the founders have agreed with Liberty and the underwriters of Liberty’s IPO to vote all of their shares of Liberty common stock in favor of the liquidation proposal.

 

The following describes briefly the material terms of the proposed dissolution and plan of distribution of Liberty. This information is provided to assist stockholders in reviewing this proxy statement/prospectus and considering the proposed dissolution and plan of distribution, but does not include all of the information contained therein and may not contain all of the information that is important to you regarding the liquidation proposal. To understand fully the dissolution and plan of distribution being submitted for stockholder approval, you should carefully read this proxy statement/prospectus, including the accompanying copy of the plan of distribution attached as Annex O, in its entirety.

 

If the liquidation proposal is approved by Liberty’s stockholders and not abandoned by Liberty’s board of directors as described in this proxy statement/prospectus, Liberty anticipates that it will:

 

 

 

If the liquidation proposal is approved by Liberty’s stockholders and not abandoned by Liberty’s board of directors as described in this proxy statement/prospectus, Liberty will distribute to the holders of shares of Liberty common stock (other than as to founders shares), in proportion to their respective equity interests, an aggregate sum equal to the amount in the trust account (including approximately $27.4 million representing the original amount of the deferred portion of the underwriters’ discounts and commissions). Liberty expects to pay the costs of its dissolution and liquidation from its working capital. If such funds are insufficient (which Liberty does not expect to be the case), Mr. Berggruen and Mr. Franklin have agreed to pay the funds necessary to complete such liquidation.

 

Unless the liquidation proposal is abandoned by Liberty’s board of directors, which it intends to do if the business combination is consummated, Liberty expects to distribute the funds in its trust account to the holders of its common stock promptly following the filing of its certificate of dissolution with the Delaware Secretary of State after stockholder approval of the liquidation proposal and the adoption of the plan of distribution by its board of directors. If Liberty has assets beyond the proceeds held in the trust account that exceed its accrued liabilities and any contingency reserve, it will distribute that excess cash in accordance with the plan of distribution.

 

As of June 30, 2010, the trust account balance was approximately $1,022 million. In addition to the amounts held in Liberty’s trust account, as of June 30, 2010 there was approximately $7.3 million in current assets, subject to outstanding current liabilities of approximately $5.9 million as of that date. Liberty’s net assets would be available to be distributed on a pro rata basis to its holders of common stock if the liquidation proposal is approved and not abandoned by Liberty’s board of directors as described in this proxy statement/prospectus. Liberty expects, however, that after giving effect to additional expenses accrued and to be accrued through the liquidation date, no additional amounts would be available for distribution to its common stockholders in liquidation. If the business combination is not completed and the liquidation proposal is approved by Liberty’s stockholders, Liberty expects that Liberty stockholders will receive approximately $9.87 per share upon liquidation of Liberty.

 

Liberty intends to pursue any applicable federal or state tax refunds arising out of its business activities from inception through completion of its dissolution and winding-up. To the extent Liberty is successful in obtaining such refunds, any funds obtained will be used by Liberty to satisfy its obligations to creditors in accordance with its plan of distribution. Liberty does not anticipate that any creditor will make any claims with respect to amounts held in the trust account.

 

As a result of Liberty’s liquidation, for United States federal income tax purposes, stockholders will generally recognize gain or loss equal to the difference between (i) the amount of cash distributed to them, and (ii) their adjusted tax basis in shares of common stock. Certain stockholders, including stockholders that are “non-United States holders,” are subject to special rules.

 

You should consult your tax advisor as to the tax effects of the plan of distribution and Liberty’s dissolution in your particular circumstances.

 

Under Delaware law, stockholders will not have dissenters’ rights in connection with the dissolution and plan of distribution.

 

Under Delaware law, if Liberty distributes to stockholders the proceeds currently held in the trust account, but fails to pay or make adequate provision for its liabilities, each of its stockholders could be held

liable for amounts due to Liberty’s creditors to the extent of the stockholder’s pro rata share of the liabilities not so discharged or the total amount received by such stockholder, whichever is less.

 

The Liberty Board of Directors Unanimously Recommends that Liberty Stockholders Vote “FOR” the Liquidation Proposal (see page 156)

 

After careful consideration, Liberty’s board of directors has also unanimously determined that Liberty’s dissolution and plan of distribution is in the best interests of Liberty and its stockholders. Accordingly, Liberty’s board of directors has unanimously approved the liquidation proposal of Liberty and unanimously recommends that stockholders vote or instruct that their vote be cast “FOR” the approval of the liquidation proposal. If the business combination is consummated, Liberty’s board of directors intends to abandon the liquidation proposal without further action by Liberty’s stockholders in accordance with Section 275 of the Delaware General Corporation Law.

 

The business combination agreement discussed in this proxy statement/prospectus is part of Prisa’s overall capital restructuring plan that is designed to help bring debt service and maturities in line with expected operating cash flow generation. In addition to the business combination agreement, Prisa has entered into agreements for disposition of portions of several of its business units, which are referred to in this proxy statement/prospectus as the asset dispositions, while still retaining control over those business units. Additionally, Prisa has agreed, subject to the satisfaction of specified conditions, with its lenders under its bridge loan agreement and syndicated loan and credit facility and with certain individual lenders under credit facilities of Prisa and its subsidiaries to amend the terms of those agreements and extend the maturity of the bridge loan agreement, which agreements are referred to in this proxy statement/prospectus as the lending amendments. As described in “Use of Proceeds of the Restructuring,” Prisa intends to use the proceeds from the business combination and the asset dispositions to satisfy the specified conditions in its lending agreements regarding prepayments of the facilities in exchange for extensions of the maturity of the bridge loan agreement and the amendment of certain other terms and conditions of those facilities. There can be no assurances that the asset dispositions will be successfully completed or completed on the same terms as described in this proxy statement/prospectus or that the conditions to the lending amendments will be satisfied, and even if the asset dispositions are completed and the conditions to the lending amendments are satisfied, and the business combination is consummated, that the overall capital restructuring plan will have the intended results.

 

On September 7, 2010, Prisa made available certain unaudited financial information about its operating results for the eight months ended August 31, 2010. See Annex L to this proxy statement/prospectus. The unaudited financial information set forth in Annex L should be read in conjunction with Prisa’s audited consolidated balance sheets as of December 31, 2009 and 2008 and Prisa’s audited consolidated income statements for the years ended December 31, 2009, 2008 and 2007, and Prisa’s unaudited consolidated financial statements as of and for the six months ended June 30, 2010 and 2009, all of which are included in this proxy statement/prospectus.

 

 

Agreement for Sale of up to 35% of Media Capital

 

On September 28, 2009, Prisa entered into an agreement with the Portuguese company Ongoing Strategy Investments SGPS, S.A., or Ongoing, for the sale of up to 35% of the share capital of Media Capital. Among other businesses, Media Capital owns Portugal’s leading television station, TVI, and the Plural production company. On March 31, 2010, Prisa announced that the Portuguese Antitrust Authority had failed to approve the transaction based on the failure of Ongoing to comply with the condition imposed by the Authority that Ongoing sell its stake in Sociedade Gestora de Participações Sociais, S.A., or Impresa, which controls the second most watched television channel by audiences in Portugal. There are no outstanding obligations under this agreement.

 

Also, on March 31, 2010, Prisa announced that it was receiving expressions of interest from new Portuguese investors to acquire a minority stake in Media Capital. Prisa can make no guarantee, however, that a definitive agreement will be reached or as to the eventual terms of any such agreement. Completion of a sale of a minority interest in Media Capital by November 30, 2010, is a condition to the extension of the maturity of the bridge loan agreement from November 30, 2010 to May 19, 2013.

 

Agreement with DLJ South American Partners LC and DLJSAP Publishing Coöperatief U.A. for Sale of 25% of Santillana

 

On September 28, 2009, Prisa entered into an agreement with DLJ South American Partners LC, or DLJSAP, and its affiliate DLJSAP Publishing Coöperatief U.A., for the sale of 25% of the share capital of Santillana for an aggregate purchase price of $362 million. DLJSAP’s offer was based on an agreed enterprise value of $1.45 billion for Santillana. On December 15, 2009, Prisa and DLJSAP signed an investment

agreement related to the transaction. The transaction was completed on April 29, 2010, and Prisa received proceeds of $369 million (€279 million as of the date of the transaction). The shareholders agreement became effective upon the closing. DLJSAP will receive an annual preferred dividend equal to 7.0% of its investment. The present value of the perpetual financial liability resulting from the dividend payable on the preferred shares amounted to €117.7 million as of June 30, 2010.

 

Agreement with Telefónica, S.A. for Sale of 22% of Pay Television Business

 

On November 25, 2009, Prisa and its subsidiary Sogecable entered into an agreement with Telefónica, S.A., or Telefónica, for the sale of 21% of Sogecable’s pay television business, DTS Distribuidora de Televisión Digital, S.A., or DTS (into which CanalSatélite Digital, S.L., or Canal Satélite, was merged in March 2010 in order to combine Prisa’s two pay television companies). Prisa expects to receive approximately €485 million in cash from the sale of the interest in DTS. The purchase price was based on an agreed enterprise value of DTS of €2,350 million. In conjunction with the sale, the companies also signed a shareholders agreement to govern the management of DTS, to become effective after the merger, which contemplates representatives of Telefónica joining the DTS board of directors. On January 29, 2010, the parties amended the November 25, 2009 agreement, whereby Telefónica agreed to purchase an additional 1% interest in DTS, for a total of 22%.

 

The transaction has not yet been completed. The agreement has been submitted for approval by the antitrust authorities of the European Commission, which, on March 11, 2010, decided to refer the file to the Spanish competition authorities. On July 1, 2010, the Spanish competition authority began the second phase of its review. The approval procedure has so far been typical of such processes. Additionally, the agreement will require the approval of Sogecable’s lenders under its syndicated loan and credit facility and contains certain other customary closing conditions.

 

Agreement with Gestevisión Telecinco, S.A. for Sale of 22% of Pay Television Business and Integration of Free Television Businesses

 

On April 14, 2010, Prisa and Sogecable entered into an agreement with Gestevisión Telecinco, S.A., or Telecinco, for the sale of 22% of Sogecable’s pay television business, DTS (into which Canal Satélite was merged in March 2010 in order to combine Prisa’s two pay television companies), and the contribution of Cuatro, Sogecable’s free television business, to Telecinco. Prisa expects to receive approximately €485 million in cash for the sale of the 22% interest in DTS and approximately 18.3% of Telecinco’s share capital in respect of the contribution of Cuatro. The purchase price for the 22% interest in DTS was based on an agreed enterprise value of DTS of €2,350 million. The agreement with Telecinco provides that in no event will the purchase price to be paid by Telecinco be greater than the purchase price paid by Telefónica under its agreement with Prisa and Sogecable to purchase a 22% interest in DTS. Additionally, the purchase price to be paid by Telecinco is subject to adjustment if within 12 months from the closing of the sale transaction, Sogecable sells shares to a third party based on a lower enterprise value.

 

In conjunction with the sale, the parties have agreed to enter into a shareholders agreement related to the operation of Digital+. In addition, Prisa and Telecinco have agreed that each will participate in the governing bodies of Telecinco and DTS according to the percentage of their respective capital holdings.

 

The transaction has not yet been completed, but Prisa expects to complete it once the appropriate authorizations (including those relating to antitrust, discussed above under “— Agreement with Telefónica, S.A. for Sale of 22% of Pay Television Business”) have been obtained and certain other customary closing conditions have been satisfied.

 

Pursuant to a refinancing master agreement among Prisa, the lenders party thereto and HSBC, as administrative agent, each of the lenders under the syndicated loan and credit facility and the bridge loan agreement and certain individual lenders under credit facilities of Prisa and its subsidiaries, or the lender group, agreed to consent to the restructuring of Prisa’s debt, including the modification of the terms and

conditions of the bridge loan agreement. The refinancing master agreement was effective as of April 19, 2010. The refinancing master agreement extended the maturity date of the bridge loan until July 30, 2010. As of July 29, 2010, Prisa’s lenders have granted an extension for the maturity of the bridge loan until November 30, 2010. On or prior to November 30, 2010, provided that the conditions to effectiveness described in the refinancing master agreement are satisfied, the bridge loan agreement will automatically be further amended to, among other things, extend the maturity date until May 19, 2013. For a discussion of the refinancing master agreement, see “Information About Prisa—Liquidity and Capital Resources—Refinancing Master Agreement.”

 

Agreement with In-store Broadcasting Networks to Develop Communications Media Distribution Business

 

On August 21, 2009, Prisa announced that it had reached an agreement with the U.S. company In-store Broadcasting Network, LLC, or IBN, to develop a communications media distribution business in shops, department stores and supermarkets in Spain and Latin America. IBN operates in retail media with over 150 million users in its network. Prisa and IBN will create a new company, Prisa IBN International, to be 50% owned by each participant, which will use IBN’s patented media distribution technology. Prisa will contribute its experience and music and audiovisual production content, as well as its commercial distribution network. Prisa and IBN continue to work towards a final definitive agreement and no material investments have been carried out as of the date hereof. Prisa cannot guarantee if or when a definitive agreement will be reached with IBN or the terms upon which such an agreement will be reached.

 

Agreement for the Acquisition of up to 60% of V-me Media Inc.

 

On March 31, 2010, Prisa’s subsidiary Sogecable entered into a purchase agreement to acquire a stake in the Spanish-speaking television network V-me Media Inc., or V-me, the fourth largest television operator in the U.S. Hispanic market. Prisa’s original acquisition of a 12% interest in the share capital of V-me was made on October 20, 2009. The agreement provides that Prisa will make additional acquisitions and take control of the network in the future. Prisa has also agreed to provide to V-me capital and content to enable it to accelerate its development and growth in the U.S. Hispanic market. Under the terms of the March 31, 2010 agreement, Prisa (through Sogecable) acquired an additional $4 million stake in V-me, bringing its total cumulative voting interest in V-me to 23%.

 

Prisa has also agreed to make an additional investment in V-me in 2010 of $10 million in cash, and another investment in 2011 of $19 million also in cash. An additional $5 million investment will be made during these two years by contributing audiovisual rights, bringing Sogecable’s cumulative voting interest to approximately 51% of V-me and resulting in effective control of the company. Sogecable would acquire additional shares of V-me representing an additional 10% of V-me’s equity on an as-converted basis for no additional consideration if certain revenue targets are not met.

 

Purchase and Sale Agreement for Shares of Dédalo Grupo Gráfico, S.L.

 

In March 2010, Prisa entered into a reciprocal purchase and sale agreement with the majority shareholders of Dédalo Grupo Gráfico, S.L., or Dédalo, a group of companies engaged in the printing of newspapers, magazines and books, related to the Ibersuizas Group, for 40% of the shares of Dédalo. Under this agreement, Prisa has a call option on the remaining 60% of the share capital of Dédalo. Prisa has also granted the current majority shareholders of Dédalo a put option that they may exercise if Dédalo or any of its subsidiaries become subject to insolvency proceedings. The exercise price for both the call and the put option is €1.00. In addition, Prisa agreed to indemnify the majority shareholders of Dédalo against third-party claims that may arise as a result of actions taken to defend Prisa’s interests.

 

The following table presents financial data of Prisa as of and for the years ended December 31, 2009, 2008, 2007, 2006 and 2005 and for the 6-month periods ended June 30, 2010 and 2009. You should read this information in conjunction with Prisa’s historical consolidated financial statements, including the related notes. Prisa’s financial data as of and for the years ended December 31, 2009, 2008 and 2007 and for the 6-month periods ended June 30, 2010 and 2009 are derived from its audited financial statements for those years and its unaudited 6-month periods, respectively, included in this proxy statement/prospectus—see “Promotora de Informaciones, S.A. and subsidiaries—Financial Statements.” Prisa’s financial data as of and for the years ended December 31, 2006 and 2005 are derived from Prisa’s audited financial statements for those years which are not included in this proxy statement/prospectus. The historical results below and elsewhere in this proxy statement/prospectus may not be indicative of Prisa’s future performance.

 

Prisa’s consolidated financial statements are presented in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, and as approved by the European Union, and the year-end financial statements have been audited. The IFRS approved by the European Union differ in some aspects to IFRS published by the IASB; however these differences do not have a relevant impact on Prisa’s consolidated financial statements for the years presented. Accordingly, they present fairly Prisa’s consolidated equity and financial position at December 31, 2009. For additional information see Prisa’s financial statements and the accompanying notes in this proxy statement/prospectus.

 

In comparing the information for 2007, 2006 and 2005 the following changes in the scope of consolidation should be taken into account: