Opinion ID: 1921994
Heading Depth: 1
Heading Rank: 1

Heading: Challenged Transactions [5]

Text: The split-off of Hughes was accomplished in a series of transactions and announced to the public for the first time on April 9, 2003. Five days before the announcement, GM, as the 100% shareholder, caused Hughes to amend its certificate of incorporation to increase the number of authorized shares of Hughes common stock and Hughes Class B common stock from 1 million shares to 2.5 billion shares. [6] Several other amendments were also made, e.g., an excess shares provision was added to the certificate of incorporation and Hughes' board of directors was staggered. [7] Just before the split-off of Hughes was accomplished, Hughes paid a special dividend to its sole shareholder, GM, of $275 million in cash. [8] The split-off occurred by GM's redemption of each GMH share in exchange for one share of Hughes' common stock, shares which Hughes had previously issued to GM. [9] GM sold its economic interest in Hughes to TNCL in the form of Hughes Class B common stock. [10] GM received a combination of cash ($3.1 billion) and stock (28.6 million News Corp. Preferred American Depository Shares (News ADSs)) from TNCL. [11] The News ADSs were valued at approximately $1.0 billion, bringing the total compensation from TNCL to GM to $4.1 billion. [12] Including the $275 million dividend, GM received a total of $4.375 billion in compensation for divesting itself of Hughes, with $3.375 billion of that amount in cash. [13] Immediately following the foregoing transactions, TNCL acquired an additional interest in Hughes via the merger of a subsidiary of TNCL into Hughes (the Merger), leaving TNCL with approximately a 34% interest in Hughes. [14] The former GMH shareholders therefore received a combination of Hughes common stock and News ADSs in exchange for their GMH shares. [15] TNCL later transferred its interest in Hughes to another subsidiary of TNCL, Fox Entertainment. [16]