Skydance Tells Directors And Executives Not To Trade Class B Stock During 401(k) Blackout
A blackout that began October 5 and is expected to end the week of October 18 covers stock the insiders got through their jobs.
Skydance sent its directors and executive officers a blackout notice on October 15, barring them from trading Class B stock they acquired through their service or employment, according to an 8-K filed Thursday. The freeze tracks a trading halt in the Paramount Global 401(k) Plan's Class B stock fund, tied to the Warner Bros. Discovery merger.
What the notice restricts
The notice, signed by General Counsel and Secretary Stephanie Kyoko McKinnon, cites Section 306 of the Sarbanes-Oxley Act and an SEC rule, Regulation BTR. It bars insiders from buying, selling, exercising or transferring Class B stock, related equity or derivative securities, warrants or options, if acquired through their role as a director or executive officer.
The ban reaches holdings in which an insider has a financial interest, such as trades by family members in the same household and certain entities.
Exemptions exist, including bona fide gifts, transfers by will or inheritance law, and sales of stock not acquired through service. The notice calls them limited. For anyone holding both kinds of shares, a sale is treated as covered unless the seller can identify the source of the shares sold. It adds that "criminal and civil penalties may be imposed" on directors and executive officers who violate the rules.
The blackout is separate from, and on top of, restrictions under the company's insider trading policy.
Why the 401(k) plan is frozen
After the merger closed on October 6, Skydance distributed warrants on October 13 to Class B holders of record on October 5. The Ellisons, Gerald Cardinale, RedBird Capital Partners Fund IV and their affiliates were excluded, as were the Paramount Global 401(k) Plan and the Paramount Global Master Trust.
The plan could not hold warrants because federal retirement-plan law prohibits it. It is due to receive additional Class B shares instead, under a formula approved by State Street Global Advisors Trust Company, the fund's independent fiduciary. Those shares are still to come.
Until then, plan participants cannot move money into or out of the Class B fund, or take a loan, withdrawal or distribution from the portion invested in it. Skydance issued 470,746,773 warrants, with an initial exercise price of $12.00 per share, subject to customary anti-dilution adjustments.
Timing and what to watch
The blackout began October 5 at 4 p.m. New York time and is expected to end during the week of October 18. The company said it could not give the usual 15 days' advance notice because of events it called unforeseeable or beyond its reasonable control.
Skydance stock closed at $7.26 on Thursday, up 2.83% from the prior session, before the filing became public after the close.
The General Counsel can confirm the actual end date by mail at 1515 Broadway, New York, or by phone at (212) 258-6000.
The company says the actual end date of the blackout is available from its General Counsel, with the expected window set for the week of October 18.
Sources
- 8-K Filing — Skydance Corp (SKYD) — SEC EDGAR
- Exhibit tm2626659d15_ex99-1.htm — Skydance Corp 8-K exhibit — SEC EDGAR
