Liberty Latin America Ltd. Subscription Rights Offering
Basis Allocation for Liberty Latin America Class A, Class B and Class C Common Shares
Record Date: |
September 8, 2020 |
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First Trading Date: |
September 11, 2020 |
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Transaction: On September 10, 2020, Liberty Latin America commenced a rights distribution offering pursuant which each holder of Liberty Latin America’s Class A common shares, Class B common shares and Class C common shares (together, the “Liberty Latin America Common Shares”) received 0.2690 of a subscription right (“Class C Right” or “LILAR”) to purchase one Class C common share for each Liberty Latin America Common Shares held, at a discounted purchase price of $7.14 per share. Fractional Class C Rights will be rounded up to the nearest whole right.
Basis Allocation – U.S. Tax:
Under Section 307(b) of the Internal Revenue Code of 1986, as amended (the "IRC"), the tax basis of any subscription rights you receive should generally be zero because the fair market value of the subscription rights was less than 15% of the fair market value of the stock with respect to which such rights were distributed. However, under IRC Section 307(b)(2) and the Treasury regulations promulgated thereunder, a taxpayer may make an election to allocate tax basis to the subscription rights with their timely filed U.S. federal income tax return for the taxable year in which the distribution of rights were received.
Basis Allocation Example if Election is Made Under IRC Section 307(b)(2) to Allocate Basis to Rights:
The following example assumes a shareholder owns 1000 shares of the relevant series of Class A and Class C common stock and has made a valid election under IRC Section 307(b)(2) to allocate basis in such holder's common stock between such stock and the rights in proportion to their relative fair market values. The example rounds the number of subscription rights up to the nearest whole right.
First Trading Activity:
|
Hi |
Low |
Average |
Date |
LILA |
$9.23 |
$8.66 |
$8.95 |
9/11/2020 |
LILAB* |
- |
- |
- |
- |
LILAK |
$8.99 |
$8.50 |
$8.75 |
9/11/2020 |
LILAR |
$2.24 |
$1.62 |
$1.93 |
9/11/2020 |
*As there was no active trading activity for the Class B common shares (LILAB) on September 11, 2020, we are only providing an illustration of the basis allocation information regarding the Class A common shares (LILA) and Class C common shares (LILAK). There are several potential methods for determining the fair market values of the Class B common shares for the purposes of allocating tax basis following the transactions. Please consult your tax advisor regarding the allocation of basis amongst your shares.
Basis Allocation:
|
Average |
Shares |
Total |
Percent |
LILA |
$8.95 |
1000 |
$8,945.00 |
94.51% |
LILAR |
$1.93 |
269 |
$519.17 |
5.49% |
|
|
|
|
|
LILAK |
$8.75 |
1000 |
$8,750.00 |
94.40% |
LILAR |
$1.93 |
269 |
$519.17 |
5.60% |
This is not tax advice. Please note that the information above is provided solely as a convenience to shareholders. Liberty Latin America Ltd. does not provide its shareholders with tax advice and the information above is not intended to provide tax advice. Liberty Latin America Ltd. encourages its shareholders to consult with their own tax advisors with their specific questions pertaining to their own tax positions.
Split-off of Liberty Global's Latin America and Caribbean businesses ("LiLAC Group") 2017
Distribution of Liberty Latin America Class A, Class B and Class C Common Shares
Date of distribution: |
December 29, 2017 |
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First trading date post-distribution: |
January 2, 2018 |
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Transaction: On December 29, 2017, Liberty Global plc effected the Split-Off by distributing to holders of its LiLAC Ordinary Shares as a dividend: (i) one Liberty Latin America Class A common share for each Class A LiLAC Ordinary Share, (ii) one Liberty Latin America Class B common share for each Class B LiLAC Ordinary Share, and (iii) one Liberty Latin America Class C common share for each Class C LiLAC Ordinary Share, in each case, held by such shareholder as of the distribution date, in accordance with the Liberty Global plc articles and applicable law. Immediately following the distribution, the LiLAC Ordinary Shares were redesignated as deferred shares (with virtually no economic rights) and those deferred shares were transferred for no consideration to a third-party designee.
December 29, 2017 Basis Allocation – U.S. Tax:
The U.S. Federal tax basis of each Liberty Latin America common share received in the split-off should be the same as the U.S. Federal tax basis of the LiLAC Group share exchanged.
This is not tax advice. Please note that the information above is provided solely as a convenience to shareholders. Liberty Latin America Ltd. does not provide its shareholders with tax advice and the information above is not intended to provide tax advice. Liberty Latin America Ltd. encourages its shareholders to consult with their own tax advisors with their specific questions pertaining to their own tax positions.