Liberty Media’s LN Shell Game

Liberty Media, which acquired roughly 14.6 percent of Live Nation after the latter company’s merger with Ticketmaster Entertainment, announced Feb. 25 it has moved some attributions of stock and debt securities between its Liberty Interactive stock group and Liberty Capital, including its LN stake.

The attribution of LN shares were moved from Liberty Interactive to Liberty Capital. Attribution of some $1.4 billion in debt securities issued by Liberty Media moved from the Capital to Interactive stock groups, as did an aggregate of $830.2 million in net taxable income and $807 million in cash.

For accountants keeping score at home, the taxable income is to be recognized ratably in tax years 2014-18 as a result of the cancellation in April 2009 of $400 million in face amount of 2029 exchangeables and $350 million in face amount of 2030 exchangeables.

“Today we have announced a change in the attribution of three issuances of exchangeable debt as well as our existing stake in Live Nation,” Liberty Media President/CEO Gregory Maffei said in a statement. “The amount of cash reattributed to the Liberty Interactive group is sufficient to pay the 2013 debt maturities attributed to Liberty Interactive in full.

“In addition, we believe that the attribution of this exchangeable debt puts these issuances of long-term debt with unique tax characteristics in the hands of the tracking stock group that is best positioned to take advantage of those tax characteristics, and will have positive effects on the liquidity and free cash flow of the Liberty Interactive group,” Maffei continued.

“Also, since Liberty has recently made a cash tender offer for an additional stake in Live Nation on behalf of the Liberty Capital group, the reattribution of our existing interest will low our entire Live Nation stake to reside in the single tracking stock group best positioned for that investment.”