Ingrid Chung - Goldman Sachs - Analyst
"Going back to DIRECTV, we’ve gotten a couple of questions from the audience regarding the equity collar and how that plays out?
Greg Maffei - Liberty Media Corporation - President, CEO
Yes. So the history is LMDIA, Liberty went and bought a whole bunch of incremental shares, about 79 million using a collar and a borrowing. So we borrowed the money from a financial intermediary who collared the stock and then lent us the money to buy the 79 million shares against the puts out of the collar. The stock is about flat, maybe up a little from where we struck the collar so it’s not a plus or minus at the moment. It’s not — the collar’s probably about where it was struck. Neither in the money, nor a cost to the Company. It has effectively a change of controls, so upon the closing of the DTV merger, it could be called by the intermediary. We’re in discussions with the intermediary who may want to change the terms of the collar or the rates. It’s very low right now. It’s paying about LIBOR plus 25. Because effectively the institution is borrowing from itself, given that they wrote the put, they’re lending us the money against the puts out of the collar. It’s a very low cost loan which is why we liked it. One of the things that’s just occurred is that DIRECTV has gone out and done a $2 billion bond issue very successfully, about 225 over LIBOR, Treasury’s very attractive issue that will give them the flexibility, they’re refinancing some of their existing debt, about $900 million being called and give them the flexibility to pay the collar off or not depending on what the terms the intermediary offers. DIRECTV has the flexibility to do either.
Hopefully we’ll reach a successful accommodation with the financial intermediary. But again, we’re not beholden to that. In the event that the collar gets unwound, which eventually it will be unwound as the loan matures, that will cause upward pressure on the stock because it’s a net short position and unwinding it will cause upward pressure on the stock."