Liberty Media has cut most of its preferred stake in Barnes & Noble, the companies announced Thursday.  The sale will close April 8.

Liberty will lose one of its seats on the board as a result; one of its directors will remain.  Liberty will also keep 10% of its stake, steps that B&N Chairman Leonard Riggio emphasized in a statement designed to minimize the negative impact of the news.  “Liberty’s decision to retain a portion of its investment and have active involvement on our board underscores Liberty’s ongoing commitment to Barnes & Noble,” he said. 

Liberty will also lose consent and pre-emptive rights, which will give B&N “greater flexibility to accomplish their strategic objectives,” according to Liberty CEO Greg Maffei.

Stockholders were not convinced; shares dropped over 13% in the day’s trading. 

Liberty’s involvement with Barnes & Noble started with a $1 billion offer to buy the company back in May of 2011 (see “Liberty Media Offers $1 Billion for Barnes & Noble”).  Liberty’s John C. Malone didn’t sound all that excited about it, though, saying of the business that summer, “It’s kind of like the people that survive a small pox epidemic.  If you’re still alive, well, maybe you got a chance of a long life” (see “B&N Buyer:  Bookselling Today Is Like Surviving a Small Pox Epidemic”).

By August, the deal was off, with Liberty agreeing to buy preferred shares worth $204 million, which gave Barnes & Noble badly needed cash (see “Liberty Media’s Takeover of Barnes & Noble Is Off”).

Liberty probably made out pretty well on the deal; its preferred shares carried a right to convert to common shares at $17 a share; the price at close on Thursday, even after the drop, was $19.12.  The preferred shares also paid a dividend of 7.8%.