Form 4: Apollo Global Management Executive Enters Forward Sale Contract for 500,000 Shares

Joshua Harris, through MJH Partners II LLC, entered into a forward sale contract for up to 500,000 shares of Apollo Global Management stock, with settlement terms based on a variable price mechanism.

Summary

• Joshua Harris, through his affiliated entity MJH Partners II LLC, has entered into a forward sale contract with an unaffiliated bank for up to 500,000 shares of Apollo Global Management common stock.
• The transaction involves a delayed draw variable share forward sale, where the number of shares to be delivered or the cash equivalent is determined by the stock's price at settlement relative to a floor and cap price.
• MJH Partners III LLC, a subsidiary of MJH Partners II LLC, is the entity directly involved in the agreement, and has pledged 500,000 shares as collateral.
• The agreement allows for up to twelve settlement components, with the possibility of prepayments from the bank.
• The settlement price will be compared to a floor price and a cap price, both determined by the bank's hedging activity, to determine the final number of shares or cash to be delivered.

Sentiment

Score: 5

Explanation: The document describes a standard financial transaction. It is neither particularly positive nor negative for the company's outlook. The sentiment is neutral.

Positives

• The agreement allows for potential prepayments from the bank, providing MJH Partners III LLC with flexibility.
• Joshua Harris retains voting and dividend rights on the pledged shares during the term of the pledge.

Negatives

• The agreement obligates MJH Partners III LLC to deliver up to 500,000 shares of Apollo Global Management stock or an equivalent amount of cash to the bank.
• The final number of shares to be delivered is subject to the stock's price at settlement, which introduces uncertainty.

Risks

• The variable nature of the forward sale contract exposes MJH Partners III LLC to market risk, as the final number of shares to be delivered depends on the stock price at settlement.
• If the settlement price is below the floor price, MJH Partners III LLC will be required to deliver the full number of shares.
• The agreement involves a complex settlement mechanism with multiple components and potential prepayments, which could be difficult to manage.

Future Outlook

The settlement of the forward sale contract will depend on the future price of Apollo Global Management stock, with the final number of shares or cash to be delivered determined by the settlement price relative to the floor and cap prices.

Management Comments

• Each of the Reporting Persons disclaims beneficial ownership of the reported securities except to the extent of his or its pecuniary interest therein.
• This report shall not be deemed an admission that the Reporting Persons are a member of a group or the beneficial owner of any securities not directly owned by the applicable Reporting Person.

Industry Context

Forward sale contracts are a common tool used by executives and major shareholders to manage their stock holdings and potentially monetize their positions while retaining some control and upside potential. This transaction is not unusual for individuals with significant holdings in publicly traded companies.

Comparison to Industry Standards

• Forward sale contracts are a common financial instrument used by corporate insiders to manage their equity positions.
• The variable settlement terms, based on floor and cap prices, are a standard feature of these types of agreements.
• The use of a pledge of shares as collateral is also a typical practice in forward sale transactions.
• Similar transactions can be seen with other large cap companies such as Blackstone, KKR, and Brookfield Asset Management where executives use similar strategies to manage their holdings.

Stakeholder Impact

• The transaction may have a minor impact on shareholders, as it involves a potential future sale of shares by a major shareholder.
• The transaction does not directly impact employees, customers, or suppliers.

Next Steps

• The settlement of the forward sale contract will occur over time, with up to twelve components.
• The bank will establish its initial hedge position, which will determine the floor and cap prices.
• MJH Partners III LLC may elect to receive prepayments from the bank for some or all portions of the transaction.

Key Dates

Keywords

forward sale contract, Apollo Global Management, Joshua Harris, MJH Partners II LLC, MJH Partners III LLC, stock pledge, variable share, settlement price, floor price, cap price