SEC Form 4 · accession 0001209191-17-010035
STARZ ENTERTAINMENT CORP /CN/ · STRZ
Statement of changes in beneficial ownership, as filed. Original on EDGAR ↗
Reporting owners
Discovery Communications, Inc.
10% Owner · Other
Discovery Lightning Investments LTD
10% Owner · Other
Period of report
Feb 10, 2017
Accepted (ET)
Feb 13, 2017 · 4:42 pm EST
Rule 10b5-1 plan
unknown — predates the checkbox
Issuer CIK
0000929351
Table I — non-derivative securities
| Security | Date | Code | Shares | Price | A/D | Owned after | D/I | Nature of ownership |
|---|---|---|---|---|---|---|---|---|
| Common SharesF1,F2 | Feb 10, 2017 | J | 5,000,000 | — | D | 0 | I | By subsidiary |
| Class A Voting SharesF1,F2 | Feb 10, 2017 | J | 2,500,000 | — | A | 2,500,000 | I | By subsidiary |
| Class B Non-Voting SharesF1,F2 | Feb 10, 2017 | J | 2,500,000 | — | A | 2,500,000 | I | By subsidiary |
Table II — derivative securities
| Security | Conv. / exercise price | Date | Code | Shares | A/D | Exercisable | Expires | Underlying | Underlying shares | Owned after | D/I |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Call option (obligation to sell)F4,F5,F6,F7,F8,F9,F2,F3 | $52.677 | Feb 10, 2017 | J | 2,500,000 | A | — | — | Common Shares | 2,500,000 | 0 | I |
| Call option (obligation to sell)F4,F5,F6,F7,F8,F9,F2,F3 | $52.677 | Feb 10, 2017 | J | 2,500,000 | D | — | — | Units of Class A Voting Shares and Class B Non-Voting Shares | 2,500,000 | 2,500,000 | I |
| Put option (right to sell)F4,F5,F6,F7,F8,F9,F2,F3 | $33.167 | Feb 10, 2017 | J | 2,500,000 | D | — | — | Common Shares | 2,500,000 | 0 | I |
| Put option (right to sell)F4,F5,F6,F7,F8,F9,F2,F3 | $33.167 | Feb 10, 2017 | J | 2,500,000 | A | — | — | Units of Class A Voting Shares and Class B Non-Voting Shares | 2,500,000 | 2,500,000 | I |
Explanation of responses
- F1Pursuant to a reclassification exempt under Rule 16b-7 (the "Reclassification"), each common share, no par value (the "Common Shares"), was reclassified into 0.5 Class A voting shares, no par value (the "Class A Voting Shares"), and 0.5 Class B non-voting shares, no par value (the "Class B Non-Voting Shares").
- F2The shares are held directly by Discovery Lightning Investments Limited, an indirect wholly-owned subsidiary of Discovery Communications, Inc.
- F3As reported on a previously filed Form 4, on November 12, 2015, Discovery Lightning Investments Limited ("Discovery"), a wholly-owned subsidiary of Discovery Communications Inc., entered into a Collar Transaction (the "Transaction") with an unaffiliated bank (the "Bank"), pursuant to which Discovery wrote covered call options and purchased put options over an aggregate of 2,500,000 Common Shares.
- F4In connection with the Reclassification, pursuant to a notice dated February 10, 2017 given by the Bank, the terms of the Transaction were adjusted in a transaction exempt under Rule 16b-7 to reflect the Reclassification, with no changes to the economic rights and obligations of either Discovery or the Bank. As adjusted, the Transaction relates to 2,500,000 units, each consisting of 0.5 Class A Voting Shares and 0.5 Class B Non-Voting Shares, for an aggregate of 1,250,000 Class A Voting Shares and 1,250,000 Class B Non-Voting Shares.
- F5The Transaction continues to be divided into three individual tranches (each a "Tranche") with each Tranche divided into 25 individual components (each a "Component"); the expiration dates of the options included in the Components constituting Tranche 1 are the 25 trading days from July 25, 2019 through August 28, 2019, inclusive; the expiration dates of the options included in the Components constituting Tranche 2 are the 25 trading days from October 23, 2020 through November 30, 2020, inclusive; and the expiration dates of the Components constituting Tranche 3 are the 25 trading days from January 25, 2022 through March 1, 2022, inclusive.
- F6Each Component relates to 16,667 Class A Voting Shares and 16,667 Class B Non-Voting Shares (or, in the case of the options included in the Components having the final expiration date for each Tranche, 16,658.5 Class A Voting Shares and 16,658.5 Class B Non-Voting Shares) in the case of Tranche 1 and Tranche 2 and 16,659 Class A Voting Shares and 16,659 Class B Non-Voting Shares in the case of Tranche 3).
- F7On the relevant expiration date for each Component: the call option will automatically be exercised if the Settlement Price is greater than $52.677 (the "Call Strike Price"); the put option will automatically be exercised if the Reference price is less than or equal to $33.167 (the "Put Strike Price"); and the call right and the put right will expire unexercised if the Reference Price is greater than the Put Strike Price but less than the Call Strike Price.
- F8The "Settlement Price" means the sum of (i) the volume weighted average trading price of a Class A Voting Share multiplied by 0.5 and (ii) the volume weighted average trading price of a Class B Non-Voting Share multiplied by 0.5, in each case on the expiration date for the relevant Component. The options will be settled in cash unless Discovery elects physical settlement. As reported on a previously filed Form 4, in exchange for the Bank's entering into the Transaction, Discovery paid the Bank a premium of $3,599,595 and pledged 2,500,000 Common Shares of the Issuer to the Bank to secure its obligations under the Transaction.
- F9In connection with the Reclassification, the Pledged Shares were replaced with 1,250,000 Class A Voting Shares and 1,250,000 Class B Non-Voting Shares (the "Pledged Shares"). In most circumstances, Discovery retains voting rights in the Pledged Shares during the term of the pledge, but Discovery is obligated to share with the Bank the economic benefit of any dividends paid during the term of the pledge based on a formula that takes into account a theoretical hedging position by the Bank.
Remarks
As a result of certain agreements among the Reporting Persons, the Issuer and certain other shareholders of the Issuer, the Reporting Persons may be deemed members of a "group", within the meaning of Rule 13d-5(b)(1) under the Securities Exchange Act of 1934, as amended (the" Act"), with such other shareholders, that beneficially owns more than 10% of the Class A Voting Shares of the Issuer. These agreements are described in, and filed as exhibits to, the Issuer's Current Report on Form 8-K filed with the Securities Exchange Commission on November 10, 2015. This filing is being made as a precautionary matter and shall not be deemed an admission that any of the Reporting Persons is a member of a group or subject to the reporting requirements of Section 16 of the Act.