Common Stock Warrants

9 Months Ended

Sep. 30, 2011

Common Stock Warrants

Common Stock Warrants

Note 14 Common Stock Warrants

As discussed in Note 11, Debt, on August 12, 2011, the Company entered into the New Credit Facilities.  In connection with the Unsecured Term Loan, the Company issued two tranches of warrants to the lenders under the Unsecured Term Loan.  The first tranche of warrants provides holders with the right to purchase up to 1,125,000 shares of the Company’s Class A common stock at an exercise price of $17.50 per share.  The second tranche of warrants provides holders with the right to purchase up to 1,250,000 shares of the Company’s Class A common stock at an exercise price of $15.00 per share.  Both tranches of warrants expire two years after the issuance date and are subject to price protection provisions, which allow for the reduction in the exercise price of the warrants in the event that the Company subsequently issues common stock at a price lower than the exercise price of the warrants.  Simultaneously with any reduction in exercise price, the number of shares of Class A common stock that may be purchased upon exercise of the warrants would be increased proportionately so that after such adjustment, the aggregate exercise price payable for the adjusted number of warrants is the same as the aggregate exercise price in effect immediately prior to such adjustment.  The Company accounted for these warrants as derivative liabilities in accordance with ASC 815.

The Company estimated the fair value of these warrants using a simulation approach, under Level 3 of the fair value hierarchy.  The fair value is recorded in other noncurrent liabilities on the balance sheet, with adjustments recorded as other income or expense, net.  The estimated fair value on the issuance date and at September 30, 2011, was $2.7 and $1.6, respectively.

In connection with the Plan, holders of the Predecessor Company’s Senior Subordinated Notes who voted in favor of the Plan received warrants, each eligible to purchase 1.04 shares, as adjusted, of Class A common stock of the Successor Company.  The warrant agreement provides provisions to adjust the quantity and strike price in certain events of dilution, including the issuance of new equity instruments at a price that is below market value.  During the three months ended September 30, 2011, as a result of the issuance of warrants, at a price below market value, in connection with the Unsecured Term Loan, we adjusted the initial exercise price from $45.09 to $43.31, with the exercise price of each warrant increasing over the course of time through February 19, 2014, subject to future adjustment, as follows:

· $45.65 after 36 months;

· $46.22 after 39 months;

· $46.78 after 42 months; and

· $47.35 after 45 months.

The Company has accounted for these warrants as equity instruments in accordance with ASC 815, and as such, are classified in stockholders’ equity.