These excerpts taken from the DIS 8-K filed Feb 10, 2006.
Pursuant to the Separation Agreement, Disney will engage in a series of restructuring transactions (the Restructuring) to effect the transfer to Spincos subsidiaries of all the assets and liabilities of the Spinco Business and the transfer to Disneys subsidiaries of all assets and liabilities not belonging to the Spinco Business. Following the Restructuring and pursuant to the terms and conditions set forth in the Separation Agreement, Disney will distribute to holders of Disney common stock (other than shares held in the treasury of Disney), all of the outstanding shares of Spinco common stock owned by Disney, either, in Disneys sole discretion, through a pro-rata distribution of Spinco common stock in a spin-off, an exchange of Spinco common stock for Disney common stock in a split-off, or a combination thereof (the Distribution and, together with the Restructuring, the Separation).
Under the terms of the Separation Agreement, Spinco will incur debt financing (the Financing) in an amount expected to be between $1.4 billion and $1.65 billion depending upon the market price of Citadels common stock over a measurement period ending prior to closing. Disney will retain the proceeds of the Financing, and the corresponding debt obligation will remain with Spinco.
This SEPARATION AGREEMENT, dated as of February 6, 2006 (this Agreement), is entered into by and between The Walt Disney Company, a Delaware corporation (TWDC), and ABC Chicago FM Radio, Inc., a Delaware corporation and an indirect, wholly-owned subsidiary of TWDC (Spinco and, together with TWDC, the Parties and each, a Party).
W I T N E S S E T H
WHEREAS, TWDC indirectly through its wholly-owned Subsidiaries is engaged in the Business;
WHEREAS, the TWDC Board of Directors has determined that it would be in the best interests of TWDC and its stockholders (i) to engage in the Restructuring, (ii) to distribute to holders of TWDC Common Stock (other than shares held in the treasury of TWDC), as provided for herein, all of the outstanding shares of Spinco Common Stock owned by TWDC, either, at TWDCs sole discretion, through a pro-rata distribution of Spinco Common Stock in a spin-off, an exchange of Spinco Common Stock for TWDC Common Stock in a split-off or a combination thereof (the Distribution and, together with the Restructuring, the Separation) and (iii) pursuant to an Agreement and Plan of Merger, dated as of the date hereof (the Merger Agreement), by and among TWDC, Spinco, Citadel Broadcasting Corporation, a Delaware corporation (Company) and Alphabet Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Company (Merger Sub), to merge Merger Sub with and into Spinco in accordance with applicable Law, whereupon the separate corporate existence of Merger Sub shall cease and Spinco shall be the Surviving Corporation;
WHEREAS, it is the intention of the Parties that, for U.S. federal income tax purposes, (i) the transactions undertaken in connection with the Separation will qualify as tax-free transactions under Sections 332, 351, 355, 361, 368 and other applicable provisions of the Code, (ii) the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code, and (iii) this Agreement and the Merger Agreement is a plan of reorganization within the meaning of Section 1.368-2(g) and 1.368-3(a) of the Treasury Regulations; and
WHEREAS, the Parties intend this Agreement, including the exhibits and schedules hereto, to set forth the arrangements between them regarding the Separation.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the Parties hereby agree as follows: