14. EQUITY

Preferred Stock

5,000,000 shares of Preferred Stock were authorized as at June 30, 2018 and December 31, 2017.

One share of Series A Convertible Preferred Stock (the "Series A Preferred Share") was issued and outstanding as at June 30, 2018 and December 31, 2017. The Series A Preferred Share is convertible into 11,211,449 shares of Class A common stock on the date that is 61 days after the date on which the ownership of our outstanding shares of Class A common stock by a group that includes TW Investor and its affiliates would not be greater than 49.9%. The Series A Preferred Share is entitled to one vote per each share of Class A common stock into which it is convertible and has such other rights, powers and preferences, including potential adjustments to the number of shares of Class A common stock to be issued upon conversion, as are set forth in the Certificate of Designation for the Series A Preferred Share.

200,000 shares of Series B Preferred Shares were issued and outstanding as at June 30, 2018 and December 31, 2017 (see Note 13, "Convertible Redeemable Preferred Shares"). As of June 30, 2018, the 200,000 Series B Preferred Shares were convertible into approximately 111.1 million shares of Class A common stock.

Class A and Class B Common Stock

440,000,000 shares of Class A common stock and 15,000,000 shares of Class B common stock were authorized as at June 30, 2018 and December 31, 2017. The rights of the holders of Class A common stock and Class B common stock are identical except for voting rights. The shares of Class A common stock are entitled to one vote per share and the shares of Class B common stock are entitled to ten votes per share. Shares of Class B common stock are convertible into shares of Class A common stock on a one-for-one basis for no additional consideration and automatically convert into shares of Class A common stock on a one-for-one basis when the number of shares of Class B common stock is less than 10% of the total number of shares of common stock outstanding. Holders of each class of shares are entitled to receive dividends and upon liquidation or dissolution are entitled to receive all assets available for distribution to holders of our common stock. Under our bye-laws, the holders of each class have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares.

There were 252.1 million and 145.5 million shares of Class A common stock outstanding at June 30, 2018 and December 31, 2017, respectively, and no shares of Class B common stock outstanding at June 30, 2018 or December 31, 2017.

As at June 30, 2018, TW Investor owns 64.4% of the outstanding shares of Class A common stock. In connection with the exercise of warrants by Warner Media and TW Investor (described below), each of them issued standing proxies to the independent directors of the Company, pursuant to which it granted the right to vote the shares received on the exercise of those warrants (the “Warrant Shares”) on all matters other than a change in control. In accordance with these proxies, the Warrant Shares will be voted in proportion to votes cast at a general meeting of the Company, excluding such Warrant Shares. As a result of the standing proxies, after giving effect to its ownership of the Series A Preferred Share, TW Investor has a 44.7% voting interest in the Company.

Warrants

On May 2, 2014, we issued 114,000,000 warrants in connection with a rights offering. Each warrant was exercisable until May 2, 2018 and entitled the holder thereof to receive one share of our Class A common stock at an exercise price of US$ 1.00 per share in cash. During the six months ended June 30, 2018, 105,652,401 warrants were exercised, including 100,926,996 by Warner Media (formerly Time Warner, Inc. at date of exercise) and TW Investor, resulting in net proceeds to us of approximately US$ 105.7 million. Of the 114,000,000 issued warrants, 202,175 expired unexercised on May 2, 2018.

Accumulated Other Comprehensive Loss

The movement in accumulated other comprehensive loss during the six months ended June 30, 2018 comprised the following:



	Currency translation adjustment, net			Unrealized (loss) / gain on derivative instruments designated as hedging instruments			TOTAL Accumulated Other Comprehensive Loss
BALANCE December 31, 2017	$	(184,256	)	$	(3,182	)	$	(187,438	)
Other comprehensive (loss) / income before reclassifications:
Foreign exchange loss on intercompany loans ⁽¹⁾	(3,524		)	—			(3,524		)
Foreign exchange loss on the Series B Preferred Shares	(7,677		)	—			(7,677		)
Currency translation adjustment	(11,867		)	—			(11,867		)
Change in the fair value of hedging instruments	—			(5,595		)	(5,595		)
Amounts reclassified from accumulated other comprehensive loss:
Changes in fair value reclassified to interest expense	—			1,231			1,231
Changes in fair value reclassified to other non-operating income, net ⁽²⁾	—			1,436			1,436
Net other comprehensive income	(23,068		)	(2,928		)	(25,996		)
BALANCE June 30, 2018	$	(207,324	)	$	(6,110	)	$	(213,434	)


⁽¹⁾	Represents foreign exchange losses on intercompany loans that are of a long-term investment nature which are reported in the same manner as translation adjustments.

⁽²⁾

We expect to repay a portion of the 2021 Euro Loan with the expected proceeds from the Divestment Transaction (see Note 5, "Long-term Debt and Other Financing Arrangements"). This anticipated reduction of principal amounts owing in respect of the 2021 Euro Loan will reduce future interest payments that the interest rate swap maturing on November 1, 2019 is designed to hedge. To maintain the effectiveness of the interest rate swap, we have de-designated a portion of the notional amount to align with the principal balance of the 2021 Euro Loan principal that will remain after the application of Divestment Transaction proceeds. For the portion de-designated, all related fair value adjustments including those previously recognized in accumulated other comprehensive income / loss are recognized in other non-operating income, net in our condensed consolidated statements of operations and comprehensive income / loss (see Note 12, "Financial Instruments and Fair Value Measurements").