| | | The problem we have is there are three legal entities in this structure as I wrote before:
- ParCo (QVC Group)
- HoldCo (Liberty Interactive LLC which owns 100% of QVC, Inc)
- OpCo (QVC Inc)
Each one can technically file separately or together but even if they file together it doesn't mean the capital structure is consolidated into one entity. Consolidation would come into play if the finances of each company were inseperable but QVC, Inc (OpCo) has clear financial separation as it files its own SEC documents, they're audited, and they really only pay dividends to ParCo.
If the ParCo files the preferred equity sit above common equity and thus they would get claim on liquidation. Likely not made whole by any means but they would get whatever they could over QVCGA/QVCGB. The issue could come up on any administrative claims ParCo could have too that bleed cash.
I think reality is if QVC, Inc files it will drag the rest of the ship down anyway because the real cash flows come from the dividend QVC, Inc kicks to the parent groups.
ParCo/HoldCo don't have free claim to the $100M cash sitting at CBI either so they have ~$462M between the two as of last 10-Q and at least $200M of that belongs to LI LLC which has it's own string of debt, DTL, and the $1,740M intercompany promissory note to deal with.
So I agree that just because the preferred was spun out of nothing doesn't change that it still has a place in the ParCo claims BUT it requires the ParCo to have capital to satisfy the recovery and that's a different story.
-Sean |
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