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SPINOFF and MERGER Verizon and New Communications Holdings/Frontier Communications
Issue:How do I enter the Verizon spinoff that merged with Frontier Communications?
Cause:Verizon spun off a group of landline businesses. This spinoff was then immediately merged into Frontier Communications. These transactions were completed on June 7, 2010
Resolution:This is entered as two transactions. First enter the spinoff from Verizon and then the merger of the spinoff into Frontier Communications.
1.
The Spinoff
Below is the information needed to enter the spinoff. The normal spinoff transaction screen is used for this transaction. If you are not familiar with entering a spinoff, you can find information at this web address:
http://www.iclub.com/support/kb/default.asp?page=normal_spinoff
The spinoff company did not trade on any exchange. The price per share of Frontier will be used as a proxy for the spinoff price per share.
Add the spinoff company to your securities. The name of the spinoff was New Communications Holdings. It was referred to as “SPINCO” in Verizon literature. You can use SPINCO as the ticker symbol for the spinoff.
Transaction date: 6/30/2010
Parent Company: Verizon Communication
Remaining Basis percentage: 94.27%
Spinoff Security: New Communications Holdings
Shares Received: (# of Verizon shares) x .24004
Price per share: 7.09
Cash Received: leave this blank. You should not have received any cash for fractional shares of the spinoff.
2. The Merger
The merger transaction screen is used for this entry. If you are not familiar with entering a normal merger, you can find information about this topic at this web address:
http://www.iclub.com/support/kb/default.asp?page=normal_spinoff.
Add Frontier Communications to your security list. Its ticker symbol is FTR.
Transaction date: 7/1/2010
Old Security: New Communications Holdings (SPINCO)
Old Security Price per share: 7.09
Cash Received: check your broker statement for the amount
New Security: Frontier Communications (FTR)
Shares Received: (# of Verizon shares) x .24004
Price Per Share: 7.09
Note that the shares received in the merger are exactly the same as the shares received in the spinoff. Remember to include the fractional shares. The sale of the fractional shares was based on an average price of Frontier so it will probably
not match the Price per share entered for the merger. The opening prices of Verizon and Frontier on July 1, 2010 were used in calculating the entries for this article.
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