Form 4: Carlyle Group Entities Report Receipt of CommScope Holding Company Preferred Stock Dividend

Carlyle Group and related entities report receiving shares of CommScope Holding Company Series A Convertible Preferred Stock as a payment-in-kind dividend.

Summary

• On September 30, 2024, Carlyle Group and several related entities reported the acquisition of CommScope Holding Company Series A Convertible Preferred Stock.
• These shares were received as a payment-in-kind dividend on existing holdings of the same series of preferred stock.
• The dividend rate for the Series A Convertible Preferred Stock is 5.5% per year, payable quarterly.
• Carlyle Partners VII S1 Holdings, L.P. is the record holder of the securities.
• The number of shares of Common Stock of the Issuer deliverable upon conversion of each share of Series A Convertible Preferred Stock is initially equal to 36.3636 shares, subject to customary anti-dilution adjustments.
• The Preferred Stock is convertible at any time and has no stated maturity.
• 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.

Sentiment

Score: 6

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

Positives

• The receipt of preferred stock as a dividend provides Carlyle Group with additional equity in CommScope.
• The dividend payments on the preferred stock provide a steady income stream.

Future Outlook

The Series A Convertible 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 ownership adjustments and dividend distributions related to CommScope's capital structure, particularly concerning preferred stock held by major investors like Carlyle Group. Such transactions are common among companies with complex capital structures and significant private equity involvement.

Comparison to Industry Standards

• Payment-in-kind dividends are not uncommon in preferred stock arrangements, particularly in situations where companies are managing cash flow or have complex capital structures.
• The 5.5% dividend rate is within a reasonable range for preferred stock, although the specific rate would depend on CommScope's credit rating and overall market conditions at the time of issuance.
• The conversion ratio of 36.3636 shares of common stock per share of preferred stock is a key economic term that would have been negotiated based on the relative valuation of the common and preferred stock at the time of the preferred stock issuance.

Stakeholder Impact

• The dividend payment impacts shareholders by distributing value, albeit in the form of preferred stock for Carlyle Group.
• The potential conversion of preferred stock into common stock could dilute existing common shareholders in the future.

Key Dates