Comcast to recast non-voting K shares into common stock
27 Oct 2015
Cable and internet giant Comcast Corp has proposed to reclassify its 347 million nonvoting K shares as regular common stock, while preserving the founding Roberts family's 33-per cent voting rights and ownership, the company has said.
Accordingly, Comcast Corporation on Monday announced the decision of its board of directors to approve a proposal to amend and restate the company's amended and restated articles of incorporation in order to reclassify each share of Comcast Class A special common stock CMCSK into one share of Comcast Class A Common Stock CMCSA, subject to shareholder approval.
The Roberts family retains effective control of the Philadelphia-based cable giant through super-voting B shares. Each B share carries 15 votes. Brian L. Roberts is chairman and CEO of Comcast.
To preserve this 33-per cent control while folding the K shares into common stock, the power of the common shares will fall to 0.12 votes per share from 0.14.
Comcast's board said the reclassification will benefit Comcast's shareholders by, among other things, eliminating investor confusion caused by having two classes of publicly traded stock and improving the trading liquidity of Comcast's publicly traded stock.
Comcast has filed a preliminary proxy statement with the Securities and Exchange Commission (SEC).
It will now hold a special meeting of its shareholders to vote on the reclassification as soon as practicable. In order to become effective, the reclassification must be approved by the affirmative vote of a majority of the votes cast by holders of Comcast's Class A Common Stock and Class A Special Common Stock, in each case voting separately as a class, and its Class A Common Stock and Class B Common Stock, voting together as a single class.
Shareholders of record as of the close of business on 20 October 2015 are entitled to vote at the special meeting.
Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC have advised Comcast's board that, subject to the assumptions and qualifications set forth in the respective opinion, the one-for-one reclassification ratio is fair from a financial point of view, to holders of both Class A Common Stock and Class A Special Common Stock.
The changes will be reviewed by federal regulators and will need shareholder approval.
K shares were first issued in the mid-1980s for Comcast to acquire other cable companies and compensate employees. They carried the same economic rights as Comcast common shares but had no votes in corporate governance.
Until recently, the K shares (traded under the symbol "CMCSK") traded at a 2 percent discount to Comcast's common stock (CMCSA).
Comcast Corporation is a global media and technology company with two primary businesses, Comcast Cable and NBC Universal. Comcast Cable is one of the USA's largest video, high-speed internet and phone providers to residential customers under the XFINITY brand and also provides these services to businesses.
NBC Universal operates news, entertainment and sports cable networks, the NBC and Telemundo broadcast networks, television production operations, television station groups, Universal Pictures and Universal Parks and Resorts.
