SCHEDULE 13D/A: Major Shareholders Update Holdings in Atlanticus Holdings Corp, Disclosing Charitable Donations and Pledged Shares

An amendment to Schedule 13D reveals key beneficial ownership changes for Atlanticus Holdings Corp, including recent charitable share donations by DKH Capital, LLC and details on significant pledged stock holdings.

Summary

• David G. Hanna, Kimberly M. Hanna, DKH Capital, LLC, Dove Ventures, LLC, and Bravo Two Company, Inc. as Trustee for Rainbow Trust Two Nevada have filed an Amendment No. 5 to Schedule 13D for Atlanticus Holdings Corp.
• DKH Capital, LLC donated 100,000 shares of Atlanticus Holdings Corp common stock to a public charity on November 19, 2024.
• DKH Capital, LLC previously donated 100,000 shares of Atlanticus Holdings Corp common stock to a public charity on February 13, 2023.
• As of November 19, 2024, David G. Hanna beneficially owns 8,162,504 shares, representing 43.6% of the Issuer's common stock. This includes 264,432 shares with sole voting/dispositive power and 7,898,072 shares with shared voting/dispositive power.
• Kimberly M. Hanna beneficially owns 3,573,072 shares, representing 24.2% of the Issuer's common stock, all with shared voting/dispositive power.
• DKH Capital, LLC beneficially owns 3,573,072 shares, representing 24.2% of the Issuer's common stock, all with shared voting/dispositive power.
• Dove Ventures, LLC beneficially owns 4,000,000 shares, representing 21.3% of the Issuer's common stock, all with shared voting/dispositive power.
• Bravo Two Company, Inc. as Trustee for Rainbow Trust Two Nevada beneficially owns 325,000 shares, representing 2.2% of the Issuer's common stock, all with shared voting/dispositive power.
• Beneficial ownership percentages are based on 14,738,862 shares of common stock outstanding as of October 29, 2024.
• David G. Hanna's beneficial ownership includes 1,000 shares underlying a currently exercisable stock option award.
• Dove Ventures, LLC's beneficial ownership includes 4,000,000 shares underlying Series A Convertible Preferred Stock.
• David G. Hanna shares voting and dispositive power over Dove's shares with his brother Frank J. Hanna.
• Kimberly M. Hanna has sole voting and dispositive power over DKH Capital, LLC's shares, but shared power is attributed to David G. Hanna due to his Executive Chairman role.
• David G. Hanna is the President, Secretary, and Treasurer and sole owner of Bravo Two Company, Inc., trustee for Rainbow Trust Two Nevada.
• The filing excludes 3,598,072 shares of common stock pledged to an entity controlled by David G. Hanna to secure a loan to an entity controlled by Frank J. Hanna, as the pledge agreement does not grant voting or dispositive power prior to default.
• Additionally, 3,273,072 shares held by DKH Capital, LLC are pledged to secure a loan from an entity controlled by Frank J. Hanna, also without granting voting or dispositive power prior to default.

Sentiment

Score: 5

Explanation: The document is a factual disclosure of beneficial ownership changes and existing arrangements, with no explicit positive or negative financial performance indicators or strategic shifts that would significantly alter sentiment.

Positives

• The charitable donations by DKH Capital, LLC could be viewed positively from a corporate social responsibility perspective.

Negatives

• The donations of shares reduce the overall holdings of the reporting persons, though this is a voluntary action.

Risks

• A significant number of shares (3,598,072 shares controlled by David G. Hanna and 3,273,072 shares held by DKH Capital, LLC) are pledged as collateral for loans. While voting and dispositive power are not granted prior to default, a default could lead to a change in ownership or control of these shares, potentially impacting the company's stock price or governance.

Future Outlook

The Reporting Persons may from time to time purchase additional securities or dispose of existing holdings, depending on market conditions, price, and other investment considerations. There are no present plans for extraordinary corporate transactions, changes in the Board or management, capitalization, or dividend policy, though Reporting Persons reserve the right to develop such plans and engage in discussions with management or other shareholders.

Management Comments

• "Mr. Hanna's principal occupation is Executive Chairman of the Board of Directors of the Issuer. In this capacity, Mr. Hanna takes, and will continue to take, an active role in the Issuer's management and strategic direction."

Industry Context

NA

Corporate Governance

Related Party Transactions

• Issuance of 400,000 shares of Series A Convertible Preferred Stock to Dove Ventures, LLC in exchange for satisfaction of a $40.0 million debt. Dove Ventures, LLC is owned by trusts where David G. Hanna and Frank J. Hanna (brothers) are beneficiaries and control the trustees.
• Pledge of 3,598,072 shares of common stock to an entity controlled by David G. Hanna to secure a loan to an entity controlled by Frank J. Hanna and his immediate family.
• Pledge of 3,273,072 shares of common stock held by DKH Capital, LLC to secure a loan from an entity controlled by Frank J. Hanna.

Stakeholder Impact

• Shareholders: Provides transparency on significant beneficial ownership, including direct and indirect holdings, and clarifies the terms of Series A Convertible Preferred Stock which ranks senior to common stock in liquidation. The pledged shares represent a potential future change in ownership if loan defaults occur. The Stockholders Agreement outlines rights related to major share sales.
• Creditors: The Series A Convertible Preferred Stock was issued in satisfaction of a $40.0 million debt, converting a liability into equity. The pledged shares serve as collateral for loans, which is relevant for the lenders involved.

Next Steps

• Reporting Persons may purchase additional securities of the Issuer or rights/options to purchase such securities.
• Reporting Persons may sell, trade, or otherwise dispose of all or some holdings in the Issuer.
• The Issuer may, at its option, redeem shares of Series A Convertible Preferred Stock on or after January 1, 2025.
• A majority of the holders of Series A Convertible Preferred Stock may request the Issuer to offer to redeem all of the Series A Convertible Preferred Stock on or after January 1, 2024.
• Reporting Persons may review or reconsider their position with respect to the Issuer and may develop plans or proposals related to corporate transactions, management changes, or other matters.

Key Dates

Keywords

Atlanticus Holdings Corp, SEC filing, Schedule 13D, beneficial ownership, common stock, Series A Convertible Preferred Stock, stock options, charitable donation, pledged shares, corporate governance, major shareholder, insider holdings