Form 4: Carlyle Group Entities Receive Payment-in-Kind Dividend in CommScope Convertible Preferred Stock

Carlyle Group entities received 16,646 shares of CommScope Holding Company's Series A Convertible Preferred Stock as a payment-in-kind dividend on December 31, 2024.

Summary

• On December 31, 2024, several entities associated with The Carlyle Group received a payment-in-kind dividend in the form of 16,646 shares of Series A Convertible Preferred Stock of CommScope Holding Company, Inc.
• The shares were received as a dividend on existing holdings of the Series A Convertible Preferred Stock.
• Each share of the Preferred Stock is initially convertible into 36.3636 shares of CommScope common stock, subject to anti-dilution adjustments.
• The Preferred Stock pays a cumulative dividend at a rate of 5.5% per year, payable quarterly in arrears.
• Carlyle Partners VII S1 Holdings, L.P. is the record holder of the securities.
• The Carlyle Group Inc. and its related entities may be deemed to share beneficial ownership of the securities, but each disclaims beneficial ownership except to the extent of their pecuniary interest.

Sentiment

Score: 6

Explanation: The document is a routine SEC filing related to a dividend payment. It doesn't contain information that would significantly sway investor sentiment positively or negatively.

Positives

• The receipt of the payment-in-kind dividend increases Carlyle's holdings in CommScope.
• The Preferred Stock provides a steady income stream through its cumulative dividend.

Future Outlook

The Preferred Stock will remain outstanding indefinitely unless converted, repurchased, or redeemed by the Issuer. The Issuer may mandatorily convert the Preferred Stock into Common Stock at any time after the three-year anniversary of the issuance, if certain conditions are met.

Industry Context

This filing reflects ongoing investment activity by a major private equity firm (Carlyle Group) in a publicly traded communications infrastructure company (CommScope). It is typical for large shareholders to receive dividends, sometimes in the form of additional shares, which can impact the company's capital structure and ownership distribution.

Comparison to Industry Standards

• Payment-in-kind dividends are not uncommon in preferred stock structures, particularly when companies are looking to conserve cash.
• The 5.5% dividend rate is within the typical range for preferred stock, but the specific terms (conversion ratio, redemption options) would need to be compared to similar preferred stock issuances by comparable companies to assess its relative attractiveness.
• Companies like American Tower, Crown Castle, and SBA Communications are peers of CommScope in the communications infrastructure space, but they do not have identical capital structures, making direct comparisons challenging.

Stakeholder Impact

• The dividend payment impacts shareholders by potentially diluting common stock value upon conversion of the preferred stock.
• The dividend payment impacts the creditors by increasing the liabilities of the company.

Key Dates