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C » Topics » Effect on voting power of holders of common stock.

This excerpt taken from the C DEF 14A filed Jun 18, 2009.

Effect on voting power of holders of common stock.

The Interim Securities will generally vote together as one class with holders of the common stock, except as otherwise provided by applicable law. The Interim Securities will not, however, be entitled to vote on any of the Common Stock Amendments. Therefore, the conversion of the Interim Securities into shares of common stock will only affect the voting power of holders of common stock with respect to matters that as a matter of Delaware law require a class vote of holders of common stock in that the currently existing common stock may have the ability, in a class vote, to block the adoption of a proposal. After the conversion of the Interim Securities, the current holders of common stock would vote on such matters with the holders of common stock issued upon conversion of the Interim Securities.

 

15

Table of Contents

After approval of the Authorized Share Increase and conversion of the Interim Securities into shares of common stock, we will have the following approximate numbers of shares of common stock issued and outstanding based on the levels of participation in our Exchange Offers indicated below:

 

Level of participation

in the Exchange Offers(1)(2)

  

(A)

Approximate number

of issued and

outstanding shares of

common stock as of the

Record Date

(millions of shares)

  

(B)

Approximate number

of issued and

outstanding shares of

common stock after

approval of the Authorized

Share Increase and

conversion of Interim

Securities into shares of

common stock

(millions of shares)

  

(C)

Approximate dilution of

blocking power of issued

and outstanding shares of

common stock as of the

Record Date (3)

     25%

  

  6,974.4

  

16,243.6

  

57.1%

     50%

  

  8,439.0

  

19,285.2

  

56.2%

66 2/3%

     9,415.4   20,953.9   55.1%

     75%

  

  9,906.6

  

21,445.0

  

53.8%

   100%

  

11,404.6

  

22,943.1

  

50.3%

 

(1) The same assumptions and methods of calculation as set forth in footnotes (1)-(4) to the table on page 12 and footnotes (2)-(7) to the table on page 7 above apply to the levels of participation in the table above.
(2) Each level of participation reflects (i) the conversion by the Private Holders of all 3,846 Interim Securities held by them into common stock at a conversion rate of 1,000,000 shares of common stock per Interim Security, and (ii) the conversion by the USG of all 3,846 Interim Securities held by it that were issued to the USG to match on a “dollar for dollar” basis the participation by the Private Holders, at the same conversion rate, resulting in an aggregate of 7,692,000 million shares of common stock issued to the Private Holders and the USG upon conversion of the Interim Securities. In addition, participation in the Exchange Offers by holders of the Public Preferred Depositary Shares will result in the issuance of additional Interim Securities to the USG, which will then be converted into common stock. In the case of the 25% participation level, participation by 34.35% of each series of Public Preferred Depositary Shares would result in the issuance to the USG of an additional approximately $5.125 billion of Interim Securities for the USG to match on a “dollar for dollar” basis the participation in the Exchange Offers, or approximately 1,577.2 additional Interim Securities, that have a liquidation preference of $3.25 million per Interim Security, which additional Interim Securities would convert into approximately 1,577.2 million shares of common stock. A similar calculation was used for each of the participation scenarios in the table above.
(3) Equal to 1.00 – (Column A/Column B), expressed as a percentage. “Blocking power” refers to the power to block matters that pursuant to applicable law require a vote of holders of common stock voting as class without the Interim Securities.

Following approval of the Authorized Share Increase and conversion of the Interim Securities into common stock, and assuming 100% participation in the Exchange Offers, the holders of our common stock outstanding as of the Record Date will lose significant voting power with respect to their ability to veto matters that require a vote of holders of common stock voting as a class. However, as described above, if the Authorized Share Increase is not approved prior to the Trigger Date, the warrants will become exercisable to purchase 790 million shares of common stock at a significant discount to the current per-share price, and if these warrants are exercised, your voting power will decrease.

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