An odd situation, Liberty Acquisition's purchase of Spain Promotora de Informaciones
So I was going through the recent 13F aka holdings filing for Whitney Tilson's T2 Partners Hedge Fund that just came out today and I noticed that one of the fund's newest and largest holdings is good old John Malone's Liberty Acquisition Holdings Corp. (LIA).
With tracking stocks, mergers, spin-offs, etc... Mr. Malone has never met a confusing situation that he didn't like. This one doesn't seem to be any different. That's probably a good thing because confusion often creates opportunity.
I am looking up all of this as I go along and thinking out loud here so bear with me.
I am not familiar with Liberty Acquisitions but from what I can gather it is a U.S. Special Purpose Acquisition Company set up by Malone to make well um acquisitions. I believe that the opportunity with LIA surrounds its acquisition of a debt-laden Spanish media company called Spain Promotora de Informaciones aka "Prisa."
The companies recently announced a revised merger agreement. Supposedly this new merger agreement is more attractive for Liberty Acquisition shareholders. For every LIA share, they are eligible to receive 1.5 Prisa Class A ordinary shares, 3.0 Prisa Class B non-voting convertible shares or NVCS, and $0.50 in cash in exchange for each share of Liberty common stock held. These shares do not currently trade on U.S. listed exchanges, but Prisa plans to create ADS for them in the near future. Each of the Class B shares is mandatorily convertible in 3.5 years and is entitled to receive EURO0.175 of minimum dividends per annum, which are cumulative until mandatory conversion subject to the existence of distributable profits or Class B share premium reserve.
Clear as mud right? I actually believe that T2 bought the LIA warrants. The warrants will receive 0.45 Prisa Class A ordinary shares and $0.90 in cash in exchange for each warrant they hold. That seems a little simpler to me. I wonder is the price per Class A share is related to Prisa's pink sheet listing or if it is a direct translation of its share price listed on some sort of Euro exchange? Here's a link to the pink sheet quote for Prisa:
At $2.55/share times 0.45 shares PLUS $0.90 in cash per LIA warrant we're talking about $2.0475/share worth of Prisa and Cash for each warrant which is currently trading at only $1.35. That amounts to a nearly instantaneous 50% return when this transaction is consummated, assuming that there's no move in Prisa's share price...which is a big assumption.
If T2 finds this situation interesting, there might be something here. Who knows when they bought their shares though. Since this 13-F is from Q2 it certainly was before the amended agreement was announced on August 4th. I'm going to have to look around for more information on this situation. Having said that, I'm certainly not going to just assume that this is a good deal because T2 is doing it and jump right in without understanding it.
Is anyone out there familiar with Liberty Acquisition in general or specifically the Prisa acquisition?